EXHIBIT 10.1
Execution Copy
$20,000,000
CREDIT AGREEMENT
among
AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
as the Borrower,
Certain Subsidiaries of the Borrower
From Time To Time Party Hereto,
as Guarantors,
The Several Lenders
from Time to Time Parties Hereto,
BEAR STEARNS CORPORATE LENDING INC.,
as Syndication Agent,
and
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
Dated as of January 29, 2004
BEAR, STEARNS & CO. INC., as Sole Lead Arranger and Sole Bookrunner
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS.......................................................... 1
1.1. Defined Terms................................................. 1
1.2. Other Definitional Provisions................................. 26
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS...................................... 27
2.1. Commitments................................................... 27
2.2. Procedure for Loan Borrowing.................................. 27
2.3. Commitment Fees, etc.......................................... 29
2.4. Termination or Reduction of Commitments....................... 29
2.5. L/C Commitment................................................ 29
2.6. Procedure for Issuance of Letter of Credit.................... 30
2.7. Fees and Other Charges........................................ 30
2.8. L/C Participations............................................ 31
2.9. Reimbursement Obligation of the Borrower...................... 32
2.10. Obligations Absolute.......................................... 32
2.11. Letter of Credit Payments..................................... 32
2.12. Applications.................................................. 33
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT........ 33
3.1. Optional Prepayments.......................................... 33
3.2. Mandatory Prepayments and Commitment Reductions............... 33
3.3. Conversion and Continuation Options........................... 34
3.4. Limitations on Eurodollar Tranches............................ 34
3.5. Interest Rates and Payment Dates.............................. 34
3.6. Computation of Interest and Fees.............................. 35
3.7. Inability to Determine Interest Rate.......................... 35
3.8. Pro Rata Treatment and Payments............................... 36
3.9. Requirements of Law........................................... 37
3.10. Taxes ..................................................... 38
3.11. Indemnity..................................................... 40
3.12. Change of Lending Office...................................... 41
3.13. Replacement of Lenders........................................ 41
3.14. Evidence of Debt.............................................. 41
3.15. Illegality.................................................... 42
3.16. Source of Loans............................................... 42
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................... 42
4.1. Financial Condition........................................... 42
4.2. No Change..................................................... 43
4.3. Corporate Existence; Compliance with Law...................... 43
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4.4. Power; Authorization; Enforceable Obligations................. 44
4.5. No Legal Bar.................................................. 44
4.6. Litigation.................................................... 44
4.7. No Default.................................................... 45
4.8. Ownership of Property; Liens.................................. 45
4.9. Intellectual Property......................................... 45
4.10. Taxes ..................................................... 45
4.11. Federal Regulations........................................... 45
4.12. Labor Matters................................................. 45
4.13. ERISA ..................................................... 45
4.14. Investment Company Act; Other Regulations..................... 46
4.15. Subsidiaries.................................................. 46
4.16. Use of Proceeds............................................... 46
4.17. Environmental Matters......................................... 46
4.18. Accuracy of Information, etc.................................. 47
4.19. Mortgages..................................................... 47
4.20. Solvency...................................................... 48
4.21. Senior Indebtedness........................................... 48
4.22. Regulation H.................................................. 48
4.23. Certain Documents............................................. 48
SECTION 5. CONDITIONS PRECEDENT................................................. 48
5.1. Conditions to Closing Date.................................... 48
5.2. Conditions to Availability Date............................... 49
5.3. Conditions to Each Extension of Credit........................ 51
SECTION 6. AFFIRMATIVE COVENANTS................................................ 52
6.1. Financial Statements.......................................... 52
6.2. Certificates; Other Information............................... 53
6.3. Payment of Obligations........................................ 54
6.4. Maintenance of Existence; Compliance.......................... 54
6.5. Maintenance of Property; Insurance............................ 54
6.6. Inspection of Property; Books and Records; Discussions........ 54
6.7. Notices....................................................... 55
6.8. Environmental Laws............................................ 56
6.9. Additional Collateral, etc.................................... 56
6.10. Further Assurances............................................ 58
6.11. Unrestricted Subsidiaries and Restricted Subsidiaries......... 58
SECTION 7. NEGATIVE COVENANTS................................................... 59
7.1. Financial Condition Covenants................................. 60
7.2. Indebtedness.................................................. 60
7.3. Liens......................................................... 62
7.4. Fundamental Changes........................................... 64
7.5. Disposition of Property....................................... 65
7.6. Restricted Payments........................................... 65
7.7. Investments................................................... 68
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7.8. Optional Payments and Modifications of Certain Debt Instrument.. 70
7.9. Transactions with Affiliates.................................... 70
7.10. Sales and Leasebacks............................................ 71
7.11. Hedge Agreements................................................ 71
7.12. Negative Pledge Clauses......................................... 71
7.13. Clauses Restricting Subsidiary Distributions.................... 72
7.14. Lines of Business............................................... 73
7.15. Amendments to Acquisition Documents............................. 73
7.16. Restrictions on Leasing and Dedication of Key Property.......... 73
SECTION 8. EVENTS OF DEFAULT...................................................... 74
SECTION 9. THE AGENTS............................................................. 77
9.1. Appointment..................................................... 77
9.2. Delegation of Duties............................................ 78
9.3. Exculpatory Provisions.......................................... 78
9.4. Reliance by Agents.............................................. 78
9.5. Notice of Default............................................... 79
9.6. Non-Reliance on Agents and Other Lenders........................ 79
9.7. Indemnification................................................. 79
9.8. Agent in Its Individual Capacity................................ 80
9.9. Successor Administrative Agent.................................. 80
9.10. Agents Generally................................................ 80
9.11. The Lead Arranger............................................... 80
SECTION 10. GUARANTEE............................................................. 81
10.1. Guarantee....................................................... 81
10.2. Rights of Reimbursement, Contribution and Subrogation........... 82
10.3. Amendments, etc. with respect to the Borrower Obligations....... 83
10.4. Guarantee Absolute and Unconditional............................ 83
10.5. Reinstatement................................................... 84
10.6. Payments........................................................ 84
SECTION 11. MISCELLANEOUS......................................................... 84
11.1. Amendments and Waivers.......................................... 84
11.2. Notices......................................................... 85
11.3. No Waiver; Cumulative Remedies.................................. 86
11.4. Survival of Representations and Warranties...................... 87
11.5. Payment of Expenses and Taxes................................... 87
11.6. Successors and Assigns; Participations and Assignments.......... 88
11.7. Adjustments; Set-off............................................ 91
11.8. Counterparts.................................................... 92
11.9. Severability.................................................... 92
11.10. Integration..................................................... 92
11.11. GOVERNING LAW................................................... 92
11.12. Submission To Jurisdiction; Waivers............................. 92
11.13. Acknowledgments................................................. 93
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11.14. Releases of Guarantees and Liens.............................. 93
11.15. Confidentiality............................................... 93
11.16. WAIVERS OF JURY TRIAL......................................... 94
11.17. Additional Guarantors......................................... 94
11.18. Gaming Laws................................................... 94
SCHEDULES:
1.1 Mortgaged Property
4.1 Dispositions
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.15 Subsidiaries
4.19 Mortgage Filing Jurisdictions
7.2 Existing Indebtedness
7.3 Existing Liens
7.7 Existing Investments
7.13 Existing Other Agreements
EXHIBITS:
A Form of Compliance Certificate
B Form of Group Member Certificate
C Form of Assignment and Assumption
D Forms of Legal Opinion
E Form of Exemption Certificate
F Form of Note
G Lenders; Commitments
H Form of Guarantor Addendum
I Forms of Mortgages
J Form of Indemnity Agreement
K Form of Pledge and Security Agreement
L Form of Tax Allocation Agreement
M Form of Subordination Agreement
N Forms of Title Policy
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CREDIT AGREEMENT, dated as of January 29, 2004 among AMERICAN CASINO
& ENTERTAINMENT PROPERTIES LLC, a Delaware limited liability company ("ACEP" or
the "Borrower"), certain Subsidiaries of ACEP from time to time party to this
Agreement (the "Guarantors"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "Lenders"), BEAR,
STEARNS & CO. INC., as sole lead arranger and sole bookrunner (in such capacity,
the "Lead Arranger"), BEAR STEARNS CORPORATE LENDING INC., as syndication agent
(in such capacity, the "Syndication Agent") and BEAR STEARNS CORPORATE LENDING
INC., as administrative agent for the Lenders and each other Agent (in such
capacity, the "Administrative Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"ACEP": as defined in the preamble to this Agreement.
"Acquisitions": the acquisitions of the Key Properties by ACEP
pursuant to the Acquisition Agreements.
"Acquisition Agreements": that certain membership interest purchase
agreement by and among ACEP, Starfire Holding Corporation and Carl C. Icahn, and
that certain contribution agreement by and among Stratosphere Corporation, ACEP,
American Real Estate Holdings Limited Partnership and American Entertainment
Properties Corp.
"Acquisition Documentation": collectively, the Acquisition
Agreements and all schedules, exhibits and annexes thereto and all side letters
and agreements affecting the terms thereof or entered into in connection
therewith.
"Administrative Agent": as defined in the preamble to this
Agreement.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent, the
Lead Arranger and the Administrative Agent, which term shall include, for
purposes of Section 9 only, the Issuing Lender.
"Aggregate Exposure": with respect to any Lender at any time, an
amount equal to (a) until the Availability Date, the amount of such Lender's
Commitment at such time and (b) thereafter, the amount of such Lender's
Commitment then in effect or, if the Commitments have been terminated, the
amount of such Lender's Extensions of Credit then outstanding.
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"Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": this Credit Agreement.
"Applicable Margin": for Eurodollar Loans, 3.25 percentage points
per annum and for Base Rate Loans, 2.25 percentage points per annum.
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Approved Fund": (a) a CLO and (b) with respect to any Lender that
is a fund which invests in commercial loans, any other fund that invests in
commercial loans and is managed or advised by the same investment advisor as
such Lender or by an Affiliate of such investment advisor.
"Arizona Charlie's Boulder": that certain hotel and casino located
on approximately 24 acres at 4575 Boulder Highway, Las Vegas, Nevada, together
with all other improvements (including any buildings) and property thereon.
"Arizona Charlie's Decatur": that certain hotel and casino located
on approximately 17 acres at 740 S. Decatur Boulevard, Las Vegas, Nevada,
together with all other improvements (including any buildings) and property
thereon.
"Asset Coverage Ratio": as of the last day of any period, the ratio
of (a) Net PP&E for all Key Properties on such day to (b) Consolidated First
Lien Debt on such day.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by clause
(a), (b), (c) or (d) of Section 7.5) that yields gross proceeds to any Group
Member (valued at the initial principal amount thereof in the case of non-cash
proceeds consisting of notes or other debt securities and valued at fair market
value in the case of other non-cash proceeds) in excess of $500,000.
"Assignee": as defined in Section 11.6(b).
"Assignment and Assumption": an Assignment and Assumption,
substantially in the form of Exhibit C.
"Attributable Debt": in respect of a sale and leaseback transaction,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction, including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP; provided,
however, that if such sale and leaseback transaction results in a Capital Lease
Obligation, the amount of Indebtedness represented thereby will be determined in
accordance with the definition of "Capital Lease Obligation."
"Availability Date": the date on which the conditions precedent set
forth in Section 5.2 shall have been satisfied.
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"Available Commitment": as to any Lender at any time, an amount
equal to the excess, if any, of (a) such Lender's Commitment then in effect over
(b) such Lender's Extensions of Credit then outstanding.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 0.50%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Reference Lender
as its prime rate in effect at its principal office in San Francisco (the Prime
Rate not being intended to be the lowest rate of interest charged by the
Reference Lender in connection with extensions of credit to debtors). Any change
in the Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Benefitted Lender": as defined in Section 11.7(a).
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower": as defined in the preamble to this Agreement.
"Borrower Credit Agreement Obligations": the collective reference to
the unpaid principal of and interest on the Loans and Reimbursement Obligations
and all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in this
Agreement after the maturity of the Loans and Reimbursement Obligations and
interest accruing at the then applicable rate provided in this Agreement after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
to any Agent or any Lender, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement or the other Loan Documents
or, any Letter of Credit, or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Agents or to the Lenders that are required to be paid by the Borrower pursuant
to the terms of any of the foregoing agreements).
"Borrower Hedge Agreement Obligations": the collective reference to
all obligations and liabilities of the Borrower (including, without limitation,
interest accruing at the then applicable rate provided in any Specified Hedge
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Lender or any Affiliate of any Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, any
Specified Hedge Agreement or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
3
(including, without limitation, all fees and disbursements of counsel to the
relevant Lender or affiliate thereof that are required to be paid by the
Borrower pursuant to the terms of any Specified Hedge Agreement).
"Borrower Obligations": the collective reference to (i) the Borrower
Credit Agreement Obligations, (ii) the Borrower Hedge Agreement Obligations, but
only to the extent that, and only so long as such obligations are secured by the
Collateral Documents, and (iii) all other obligations and liabilities of the
Borrower, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement (including, without limitation, all fees and
disbursements of counsel to the Agents or to the Lenders that are required to be
paid by each the Borrower pursuant to the terms of this Agreement).
"Borrowing Date": any Business Day specified by the Borrower as the
date on which the Borrower requests the Lenders to make Loans hereunder.
"Business": as defined in Section 4.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or California are authorized or required
by law to close, provided, that with respect to notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
such day is also a day for trading by and between banks in Dollar deposits in
the interbank eurodollar market.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock": (a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (c) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership interests; and
(d) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person but excluding from all of the foregoing (i) any debt securities
convertible into Capital Stock, whether or not such debt securities include any
right of participation with Capital Stock and (ii) Financing Participations.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of one year or less from the date of acquisition
issued by any Lender or by any commercial bank organized under the laws of the
United States or any state thereof having combined capital and surplus of not
less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's Investors Service,
Inc. ("Moody's"), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings
of commercial paper issuers generally, and maturing within
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one year from the date of acquisition; (d) repurchase obligations of any Lender
or of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days, with respect to securities
issued or fully guaranteed or insured by the United States government; (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A by
Moody's; (f) securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition; or
(g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this definition
or money market funds that (i) comply with the criteria set forth in Securities
and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, as
amended, (ii) are rated AAA by S&P and Aaa by Moody's and (iii) have portfolio
assets of at least $5,000,000,000.
"CLO": any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an affiliate of such
Lender.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date is January 29, 2004.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all property of the Group Members, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Collateral Document.
"Collateral Agent": Bear Stearns Corporate Lending Inc., in its
capacity as collateral agent for each of the Secured Parties (as defined in the
Pledge and Security Agreement).
"Collateral Documents": the collective reference to the Pledge and
Security Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent or the Collateral Agent purporting to
grant a Lien on any property of any Person to secure the obligations and
liabilities of any Group Member under any Loan Document.
"Commitment": as to any Lender, the obligation of such Lender, if
any, to make Loans and to participate in each Letter of Credit in an aggregate
principal and/or face amount not to exceed the amount set forth under the
heading "Commitment" under such Lender's name on Exhibit G for such Lender or in
the Assignment and Assumption pursuant to which such Lender became a party
hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Commitments is $20,000,000.
"Commitment Fee Rate": 0.50% per annum.
"Commitment Period": the period commencing on the Availability Date
and ending on the Termination Date.
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"Commonly Controlled Entity": an entity, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit A.
"Conduit Lender": any special purpose entity organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument,
subject to the consent of the Administrative Agent and (so long as no Default or
Event of Default has occurred and is continuing) ACEP (which consent shall not
be unreasonably withheld); provided, that the designation by any Lender of a
Conduit Lender shall not relieve the designating Lender of any of its
obligations to fund a Loan under this Agreement if, for any reason, its Conduit
Lender fails to fund any such Loan, and the designating Lender (and not the
Conduit Lender) shall have the sole right and responsibility to deliver all
consents and waivers required or requested under this Agreement with respect to
its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be
entitled to receive any greater amount pursuant to Section 3.9, 3.10, 3.11 or
10.5 than the designating Lender would have been entitled to receive in respect
of the extensions of credit made by such Conduit Lender or (b) be deemed to have
any Commitment.
"Consolidated Cash Flow": with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus,
without duplication:
(a) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Restricted Subsidiaries in connection with
an Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
(b) provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income; plus
(c) the Fixed Charges of such Person and its Restricted Subsidiaries
for such period, to the extent that such Fixed Charges were deducted in
computing such Consolidated Net Income; plus
(d) depreciation, amortization (including amortization of
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; minus
(e) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of business;
in each case, on a consolidated basis and determined in accordance with GAAP,
provided that with respect to the period ending on the last day of the calendar
quarter immediately after the
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Availability Date and each period prior thereto, Consolidated Cash Flow for such
period shall be on a combined basis and determined in accordance with GAAP.
"Consolidated First Lien Debt": at any date, the aggregate principal
amount of all Indebtedness of the Group Members at such date other than the
Senior Second Lien Notes and unsecured Indebtedness, determined on a
consolidated basis in accordance with GAAP.
"Consolidated First Lien Debt Leverage Ratio": as of the last day of
any fiscal quarter of ACEP, the ratio of (a) Consolidated First Lien Debt on
such day to (b) Consolidated Cash Flow for the Group Members for the four
consecutive fiscal quarters ending on such date.
"Consolidated Net Income": with respect to ACEP for any period, the
aggregate of the Net Income of the Group Members for such period, on a
consolidated basis, determined in accordance with GAAP; provided that:
(a) the Net Income of any Person that is not a Restricted Subsidiary
or that is accounted for by the equity method of accounting will be included
only to the extent of the amount of dividends or similar distributions paid in
cash to the specified Person or a Restricted Subsidiary of the Person;
(b) the Net Income of any Restricted Subsidiary will be excluded to
the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders;
(c) the cumulative effect of a change in accounting principles will
be excluded; and
(d) notwithstanding clause (a) above, the Net Income of any
Unrestricted Subsidiary will be excluded, whether or not distributed to the
specified Person or one of its Subsidiaries.
"Continuing Directors": the directors of ACEP on the Closing Date,
and each other director, if, in each case, such other director's nomination for
election to the board of directors of ACEP is recommended by at least 66-2/3% of
the then Continuing Directors or such other director receives the vote of the
Permitted Investors in his or her election by the shareholders of ACEP.
"Contractual Obligation": as applied to any Person, any provision of
any security issued by such Person or of any indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to which such Person is a
party or by which it or any of its property is bound or to which any of its
properties is subject.
"Control Investment Affiliate": as to any Person, any other Person
that (a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, "control" of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
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"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Disposition": with respect to any Property, any sale, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Disqualified Stock": any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case, at the option of the holder of the Capital Stock),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Capital Stock, in whole or in part, on or prior to the date
that is 91 days after the Termination Date. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders of the Capital Stock have the right to require ACEP to
repurchase such Capital Stock upon the occurrence of a change of control, event
of loss, an asset sale or other special redemption event will not constitute
Disqualified Stock if the terms of such Capital Stock provide that ACEP may not
repurchase or redeem any such Capital Stock pursuant to such provisions unless
such repurchase or redemption complies with Section 7.6 or where the funds to
pay for such repurchase was from the cash net proceeds of such Capital Stock and
such net cash proceeds was set aside in a separate account to fund such
repurchase. The amount of Disqualified Stock deemed to be outstanding at any
time for purposes of this Agreement will be the maximum amount that the Group
Members may become obligated to pay upon the maturity of, or pursuant to any
mandatory redemption provisions of, such Disqualified Stock, exclusive of
accrued dividends.
"Dollars" and "$": dollars in lawful currency of the United States.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"Equity Interests": Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Escrow and Security Agreement": the Escrow And Security Agreement,
dated as of January 29, 2004, by and among ACEP, Finance Co, American Real
Estate Holdings Limited Partnership, the Trustee and Fleet National Bank, a
national banking association organized under the laws of the United States, as
escrow agent.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
8
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum determined
on the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Telerate screen (or otherwise on such
screen), the "Eurodollar Base Rate" shall be determined by reference to such
other comparable publicly available service for displaying eurodollar rates as
may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Extensions of Credit": as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Loans held by such
Lender then outstanding, and (b) such Lender's Percentage of the L/C Obligations
then outstanding.
"Fair Market Value": the value that would be paid by a willing buyer
to an unaffiliated willing seller in a transaction not involving distress or
necessity of either party, determined in good faith by the board of directors of
ACEP (unless otherwise provided herein).
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
9
"Fee Letter" the letter agreement, dated as of January 29, 2004,
among the Borrower, the Administrative Agent and the Lead Arranger relating to,
among other things, the payment of certain fees and the syndication of the
Facilities.
"Financing Participations": a participation in the revenues
generated by specified equipment or a specified amenity that was financed, in
whole or in part, by the person receiving the participation.
"Fixed Charge Coverage Ratio": with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the specified Person or any of its Restricted Subsidiaries incurs, assumes,
guarantees, repays, repurchases, redeems, defeases or otherwise discharges any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio will be calculated giving pro forma effect to such incurrence,
assumption, Guarantee Obligation, repayment, repurchase, redemption, defeasance
or other discharge of Indebtedness, or such issuance, repurchase or redemption
of preferred stock, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the applicable four-quarter reference period. For
the purpose of calculating the Fixed Charge Coverage Ratio (or any component
thereof) at any time prior to the completion of the fourth full fiscal quarter
after the Availability Date (and the availability of internal financial
statements for such period), the Fixed Charge Coverage Ratio (and each component
thereof) shall be calculated as if the Acquisitions had occurred at a date prior
to the beginning of the fourth full fiscal quarter prior to the date of
determination and shall be based upon the historical combined financial
statements for such period as reflected in the historical combined financial
statements delivered to the Lenders on the Closing Date; provided that such
calculation shall give pro forma effect to the offering of the Senior Second
Lien Notes and the related interest, fees and expenses incurred in connection
with the Senior Second Lien Notes.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(a) acquisitions that have been made by the specified Person or any
of its Restricted Subsidiaries, including through mergers or consolidations, or
any Person or any of its Restricted Subsidiaries acquired by the specified
Person or any of its Restricted Subsidiaries, and including any related
financing transactions and including increases in ownership of Restricted
Subsidiaries, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date will be given pro forma
effect (in accordance with Regulation S-X under the Securities Act of 1933) as
if they had occurred on the first day of the four-quarter reference period;
(b) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
(and ownership interests therein) disposed of prior to the Calculation Date,
will be excluded;
(c) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses (and ownership
interests therein) disposed of prior to the Calculation Date, will be excluded,
but only to the extent that the obligations
10
giving rise to such Fixed Charges will not be obligations of the specified
Person or any of its Restricted Subsidiaries following the Calculation Date;
(d) any Person that is a Restricted Subsidiary on the Calculation
Date will be deemed to have been a Restricted Subsidiary at all times during
such four-quarter period;
(e) any Person that is not a Restricted Subsidiary on the
Calculation Date will be deemed not to have been a Restricted Subsidiary at any
time during such four-quarter period; and
(f) if any Indebtedness bears a floating rate of interest, the
interest expense on such Indebtedness will be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the entire
period (taking into account any obligations under Hedge Agreements applicable to
such Indebtedness if such obligation has a remaining term as at the Calculation
Date in excess of 12 months).
"Fixed Charges": with respect to any specified Person for any
period, the sum, without duplication, of:
(a) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued, including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedge Agreements in respect of interest
rates (excluding any accrued interest or interest paid in kind in respect of
Permitted Affiliate Subordinated Indebtedness); plus
(b) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period (excluding any
capitalized interest in respect of Permitted Affiliate Subordinated
Indebtedness); plus
(c) any interest on Indebtedness of another Person that is
guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries, whether or
not such Guarantee Obligation or Lien is called upon; plus
(d) the product of (i) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividends on preferred stock payable
solely in Equity Interests of ACEP (other than Disqualified Stock) or to ACEP or
a Restricted Subsidiary of ACEP, times (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, determined on a consolidated basis in accordance with
GAAP.
"Funding Office": the office of the Administrative Agent specified
in Section 11.2 or such other office as may be specified from time to time by
the Administrative Agent as its funding office by written notice to ACEP and the
Lenders.
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"GAAP": generally accepted accounting principles in the United
States as in effect from time to time except that for purposes of Section 7.1,
GAAP shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the most recent
audited financial statements referred to in Section 4.1(b). In the event that
any Accounting Change (as defined below) shall occur and such change results in
a change in the method of calculation of financial covenants, standards or terms
in this Agreement, then ACEP and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating ACEP's financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made. Until such
time as such an amendment shall have been executed and delivered by ACEP,
Administrative Agent and the Majority Lenders, all financial covenants,
standards and terms in this Agreement shall continue to be calculated or
construed as if such Accounting Changes had not occurred. "Accounting Changes"
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
"Gaming Authority": any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or other national government, any state, province or any city
or other political subdivision, including without limitation, the State of
Nevada, whether now or hereafter existing, or any officer or official thereof
and any other agency with authority thereof to regulate any gaming operation (or
proposed gaming operation) owned, managed or operated by the Sponsor, its
Related Parties, the Borrower or any of their respective Subsidiaries or
Affiliates.
"Gaming Laws": all applicable federal, state and local laws, rules
and regulations pursuant to which any Gaming Authority possesses regulatory,
licensing or permit authority over the ownership or operation of gaming
facilities, including, without limitation, the Nevada Gaming Control Act, as
codified in Chapter 463 of the Nevada Revised Statutes, as amended from time to
time, and the regulations of the Nevada Gaming Commission promulgated
thereunder.
"Gaming License": every license, franchise, approval or other
authorization required to own, lease, operate or otherwise conduct gaming
activities of any Group Member, including without limitation, all such licenses
granted under Nevada law, and the regulations promulgated in connection
therewith, and other applicable national, provincial or local laws.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Group Members": the collective reference to the Borrower and the
Restricted Subsidiaries, provided, that prior to the Availability Date, in
addition to each Restricted Subsidiary, each of Stratosphere Corporation and its
wholly-owned subsidiaries, Stratosphere Gaming Corp., Stratosphere Land
Corporation, Stratosphere Advertising Agency, Stratosphere Leasing, LLC and
Stratosphere Development, LLC, Arizona Charlie's, LLC, Charlie's Holding LLC and
Fresca, LLC shall be deemed Group Members solely for purposes of the Borrower's
obligations in respect of the delivery of its combined financial statements.
12
"Group Multiemployer Plan": a Group Plan that is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Group Plan": at a particular time, any "employee benefit plan" as
defined in Section 3(3) of ERISA that is covered by Title IV of ERISA which is
or was maintained, sponsored or contributed to by ACEP or a Group Member.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by
ACEP in good faith.
"Hedge Agreements": any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
the Group Members shall be a Swap Agreement.
"Indebtedness": of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money;
(b) all obligations of such Person for the deferred purchase price
of property or services (other than accrued expenses and current trade payables
incurred in the ordinary course of such Person's business);
(c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments;
13
(d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property);
(e) all Capital Lease Obligations or Attributable Debt of such
Person;
(f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements;
(g) all obligations of such Person, contingent or otherwise, to
purchase, redeem, retire or otherwise acquire for value any Capital Stock of
such Person;
(h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above;
(i) all obligations of the kind secured by (or for which the holder
of such obligation has an existing right, contingent or otherwise, to be secured
by) any Lien on property (including accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the payment
of such obligation; and
(j) for the purposes of Sections 7.2 and 8(e) only, all obligations
of such Person in respect of Hedge Agreements.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness expressly provide that such Person is not liable
therefor.
"Indemnity Agreements": each Indemnity Agreement executed and
delivered by each Group Member to the Administrative Agent (or the Collateral
Agent on its behalf) for the benefit of the Lenders substantially in the form of
Exhibit J.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"Intercreditor Agreement": the Intercreditor Agreement, dated as of
January 29, 2004, among the Collateral Agent, the Administrative Agent and the
Trustee, acting on behalf of the holders of the Senior Second Lien Notes.
14
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
of each March, June, September and December to occur while such Loan is
outstanding, the date on which such Loan is converted to a Eurodollar Loan and
the final maturity date of such Loan, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest Period,
(c) as to any Eurodollar Loan having an Interest Period longer than three
months, each day that is three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest Period, and
(d) as to any Loan, the date of any repayment or prepayment made in respect
thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six or (if
available to all Lenders) twelve months thereafter, as selected by the Borrower
by irrevocable notice to the Administrative Agent no later than 11:00 A.M., New
York City time, on the date that is three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period that would
extend beyond the Termination Date;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Loan.
"Investments": as defined in Section 7.7.
"Issuing Lender": a financial institution to be mutually agreed
between the Administrative Agent and the Borrower on or prior to the
Availability Date, in its capacity as issuer of any Letter of Credit.
"Key Properties": the Stratosphere, Arizona Charlie's Decatur and
Arizona Charlie's Boulder on the Closing Date, together with the other
properties that may be acquired after the Closing Date. A "Key Property" means
any of the foregoing Key Properties, together with the other properties that may
be acquired after the Closing Date.
"L/C Commitment": $10,000,000.
15
"L/C Fee Payment Date": the last day of each March, June, September
and December and the last day of the Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 2.9.
"L/C Participants": the collective reference to all the Lenders
other than the Issuing Lender.
"Lead Arranger": as defined in the recitals to this Agreement.
"Lease Transaction": as defined in Section 7.16.
"Lenders": as defined in the preamble hereto; provided, that unless
the context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.
"Letters of Credit": as defined in Section 2.5(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan Documents": this Agreement, the Fee Letter, the Collateral
Documents, the Indemnity Agreements, the Intercreditor Agreement and the Notes.
"Loans": as defined in Section 2.1(a).
"Majority Lenders": the holders (excluding for the purposes of this
definition, any Related Party or any Affiliate of any such Related Party unless
each of the Lenders has provided its written consent to each such Person
becoming a Lender in accordance with Section 11.6(ii)(F) hereof) of more than
50% the aggregate amount:
(a) until the Availability Date, of all Lenders' Commitments at such
time (exclusive of any Commitments held by any Related Party or any Affiliate of
any such Related Party unless each of the Lenders has provided its written
consent to each such Person becoming a Lender in accordance with Section
11.6(ii)(F) hereof); and
(b) thereafter, of all Lenders' Commitments then in effect
(exclusive of any Commitments held by any Related Party or any Affiliate of any
such Related Party unless each of the Lenders has provided its written consent
to each such Person becoming a Lender in accordance with Section 11.6(ii)(F)
hereof) or, if the Commitments have been terminated, the amount of all
Extensions of Credit then outstanding (exclusive of any Extensions of Credit
held by any Related Party or any Affiliate of any such Related Party unless each
of the Lenders has provided its written consent to each such Person becoming a
Lender in accordance with Section 11.6(ii)(F) hereof);
16
provided, that unless each of the Lenders has provided its written consent to
each such Person becoming a Lender in accordance with Section 11.6(ii)(F)
hereof, for the purposes of this definition, each Lender (other than any Related
Party or any Affiliate of any such Related Party) shall be deemed to hold the
portion of the Extensions of Credit then outstanding equal to (x) the percentage
which (i) such Lender's Commitment then constitutes of (ii) the difference
between the Total Commitments and the Commitments held by any Related Party or
any Affiliate of any Related Party (in each case of subclause (i) and subclause
(ii) of this clause (x), immediately preceding and without giving effect to such
termination of the Commitments) times (y) the aggregate amount of all Extensions
of Credit.
"Material Adverse Effect": a material adverse effect on (a) the
Acquisitions, (b) the business, assets, property, operations, condition
(financial or otherwise), results of operations or prospects of the Group
Members, taken as a whole, or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or remedies of the
Agents or the Lenders hereunder or thereunder or the validity, perfection or
priority of the Administrative Agent's (or the Collateral Agent's) Liens on the
Collateral.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"Material Gaming License": any Gaming License that the loss,
suspension, revocation, termination or material impairment of which,
individually or in the aggregate, would materially adversely affect any Key
Property and such Key Property is the principal asset of a Significant
Subsidiary or if such Key Property (considered separately) would constitute a
Significant Subsidiary if it were the only asset in a Significant Subsidiary.
"Mortgaged Properties": the real properties listed on Schedule 1.1,
as to which the Administrative Agent (or the Collateral Agent on its behalf) for
the benefit of the Lenders shall be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any
Group Member in favor of, or for the benefit of, the Administrative Agent (or
the Collateral Agent on its behalf) for the benefit of the Lenders substantially
in the form of Exhibit I.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or by the Disposition of any non-cash consideration received in
connection therewith or otherwise, but only as and when received) of such Asset
Sale or Recovery Event, net of attorneys' fees, accountants' fees, investment
banking fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset that is the subject
of such Asset Sale or Recovery Event (other than any Lien pursuant to a
Collateral Document) and other customary fees and expenses actually incurred in
connection therewith and net of taxes paid or reasonably estimated to be payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of Capital
17
Stock or any incurrence of Indebtedness, the cash proceeds received from such
issuance or incurrence, net of attorneys' fees, investment banking fees,
accountants' fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection therewith.
"Net Income": with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(a) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with: (i) any Asset
Sale; or (ii) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person
or any of its Restricted Subsidiaries;
(b) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss);
(c) any interest expense from Permitted Affiliate Subordinated
Indebtedness, whether paid or accrued; and
(d) any payments pursuant to the Tax Allocation Agreement.
"Net PP&E": for any date of determination, the value of the plant,
property and equipment related to a Key Property (other than any such Property
that constitutes an Excluded Asset (as defined in the Pledge and Security
Agreement)), as reflected on the consolidated balance sheet of the Group Members
for the last day of the most recently completed fiscal quarter required to be
delivered to the Lenders pursuant to Section 6.1, determined in accordance with
GAAP, less accumulated amortization, depletion, depreciation or similar charges
in respect of such plant, property and equipment.
"Nevada Gaming Authorities": the Nevada State Gaming Control Board,
the Nevada Gaming Commission, Clark County, Nevada and the City of Las Vegas,
Nevada.
"Non-Excluded Taxes": as defined in Section 3.10(a).
"Non-Recourse Financing": Indebtedness incurred in connection with
the construction, purchase or lease of personal or real property or equipment
(a) as to which the lender upon default may seek recourse or payment against any
Group Member only through the return or foreclosure or sale of the property or
equipment so constructed, purchased or leased and to any proceeds of such
property and Indebtedness and the related collateral account in which such
proceeds are held and (b) may not otherwise assert a valid claim for payment on
such Indebtedness against any Group Member or any other property of any Group
Member except in each case in the case of fraud and other customary non-recourse
exceptions.
"Non-Recourse Indebtedness": Indebtedness or Disqualified Stock, as
the case may be, or that portion of Indebtedness or Disqualified Stock, as the
case may be (a) as to which neither ACEP nor any of its Restricted Subsidiaries
(i) provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (ii) is directly or indirectly
liable as a guarantor or otherwise; (b) no default with respect to which
(including any rights that the holders of the Indebtedness may have to take
enforcement action against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of
18
any other Indebtedness of ACEP or any of its Restricted Subsidiaries to declare
a default on such other Indebtedness or cause the payment of the Indebtedness to
be accelerated or payable prior to its Stated Maturity; and (c) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of ACEP or any of its Restricted Subsidiaries.
"Non-U.S. Lender": as defined in Section 3.10(d).
"Notes": the collective reference to any promissory note evidencing
Loans.
"Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
any Group Member, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other obligations and
liabilities of such Group Member to any Agent or to any Lender (or, in the case
of Specified Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge
Agreement or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to any Agent or to any Lender that are required to be
paid by a Group Member pursuant hereto) or otherwise; provided, that (i)
obligations of any Group Member under any Specified Hedge Agreement shall be
secured pursuant to the Collateral Documents and guaranteed hereunder only to
the extent that, and for so long as, the other Obligations arising under this
Agreement are so secured and guaranteed and (ii) any release of Collateral or
Guarantors effected in the manner permitted by this Agreement shall not require
the consent of holders of obligations under Specified Hedge Agreements.
"Offering Memorandum": the offering memorandum dated January 15,
2004 prepared by the Borrower and American Casino & Entertainment Properties
Finance Corp. in connection with the offering of the Senior Second Lien Notes.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 11.6(c).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Percentage": as to any Lender at any time, the percentage which
such Lender's Commitment then constitutes of the Total Commitments (or, at any
time after the Commitments shall have expired or terminated, the percentage
which the aggregate principal amount of such Lender's Loans then outstanding
constitutes of the aggregate principal amount of the Loans then outstanding).
"Permitted Affiliate Subordinated Indebtedness": any Indebtedness of
any Group Member to an Affiliate of ACEP other than a Group Member (a) for which
no installment of
19
principal or installment of interest may be made if a Default or Event of
Default exists or is continuing (except that interest may accrue on Permitted
Affiliate Subordinated Indebtedness or be paid in the form of additional
Permitted Affiliate Subordinated Indebtedness or Capital Stock of ACEP that is
not Disqualified Stock), (b) for which no installment of principal matures
earlier than the date that is three months after the Termination Date, (c) for
which the payment of principal and interest is subordinated in right of payment
to the notes or any note at least to the extent set forth in Exhibit M hereto
and (d) under which no interest, premium or penalty is due or payable (other
than interest, premium and penalty payable in the form of additional Permitted
Affiliate Subordinated Indebtedness or Capital Stock of ACEP that is not
Disqualified Stock and except that interest may accrue on Permitted Affiliate
Subordinated Indebtedness) unless such amount may be paid as a Restricted
Payment.
"Permitted Indebtedness": as defined in Section 7.2(b).
"Permitted Investors": the collective reference to the Sponsor and
its Control Investment Affiliates.
"Permitted Payments to Parent": without duplication as to amounts
(a) payments to the Sponsor or American Entertainment Properties Corp., in the
aggregate, not to exceed $100,000 per annum; and (b) payments pursuant to the
Tax Allocation Agreement.
"Permitted Refinancing Indebtedness": any Indebtedness of ACEP or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to renew, refund, refinance, replace, defease or discharge
other Indebtedness of ACEP or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:
(a) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness renewed, refunded,
refinanced, replaced, defeased or discharged (plus all accrued interest on the
Indebtedness and the amount of all fees and expenses, including premiums, and
other expenses, incurred in connection therewith);
(b) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being renewed, refunded, refinanced, replaced, defeased or
discharged;
(c) if the Indebtedness being renewed, refunded, refinanced,
replaced, defeased or discharged is subordinated in right of payment to the
Loans, such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and is subordinated in right of payment to, the
Loans on terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being renewed, refunded, refinanced,
replaced, defeased or discharged;
(d) such Indebtedness is incurred either by ACEP or by the
Restricted Subsidiary who is the obligor on the Indebtedness being renewed,
refunded, refinanced, replaced, defeased or discharged; and
(e) if the Indebtedness being renewed, refunded, refinanced,
replaced, defeased or discharged is Indebtedness secured by a Permitted Lien on
Property that is not
20
Collateral, then such Permitted Refinancing Indebtedness may be secured by a
Lien on such other Property.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which ACEP or a Commonly Controlled Entity is
(or, if such plan is terminated at such time, is under Section 4069 of ERISA
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge and Security Agreement": the Pledge and Security Agreement
executed and delivered by each Group Member to the Administrative Agent (or the
Collateral Agent on its behalf) for the benefit of the Lenders substantially in
the form of Exhibit K.
"Principal Business": the casino gaming, hotel, retail, conference
center and entertainment mall and resort business (including, without
limitation, the business contemplated by the Key Properties) and any activity or
business incidental, directly related or similar thereto (including owning
interests in Subsidiaries, operating a conference center and meeting facilities
and owning and operating or licensing the operation of a retail and
entertainment facilities), or any business or activity that is a reasonable
extension, development or expansion thereof or ancillary thereto.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Project Assets" means, at any time, all of the assets then in use
on the Key Properties including any real estate assets, any buildings or
improvements thereon, and all equipment, furnishings and fixtures, but
excluding: (a) any obsolete property determined by ACEP's board of directors to
be no longer useful or necessary to the operations or support of such Key
Property and (b) any personal property leased from a third party in the ordinary
course of business.
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17(a).
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.
"Protective Advances": any advances with respect to (i) the payment
of any delinquent taxes or insurance premiums owed by any of the Group Members
with respect to the Key Properties, (ii) the removal of any Lien or encumbrance
on the Key Properties (other than Liens that are junior to the Lien of the
applicable Mortgage or other Collateral Document) or the defense of any of the
Group Members' title thereto or of the validity, enforceability, perfection or
priority of the Liens and security interests granted pursuant to the Collateral
Documents or (iii) the repair, maintenance, protection or preservation of the
value of the Key Properties or (in each case) any portion thereof, including,
without limitation, for payment of heating, gas, electric and other utility
bills.
21
"Qualified Counterparty": with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender or an Affiliate of a Lender.
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of any Group Member.
"Reference Lender": a financial institution to be mutually agreed
between the Administrative Agent and the Borrower on or prior to the
Availability Date.
"Register": as defined in Section 11.6(b).
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Related Parties": (1) Carl Icahn, any spouse and any child,
stepchild, sibling or descendant of Carl Icahn, (2) any estate of the Carl Icahn
or any person under clause (1), (3) any person who receives a beneficial
interest in the Sponsor from any estate under clause (2) to the extent of such
interest, (4) any executor, personal administrator or trustee who holds such
beneficial interest in ACEP for the benefit of, or as fiduciary for, any person
under clauses (1), (2) or (3) to the extent of such interest, (5) any
corporation, partnership, limited liability company, trust, or similar entity,
directly or indirectly owned or controlled by Carl Icahn or any other person or
persons identified in clauses (1) or (2).
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 2.9 for amounts drawn under
Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by any Group Member in
connection therewith that are not applied to repay the Loans pursuant to Section
3.2 as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which ACEP has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and that
ACEP (directly or indirectly through another Group Member) intends and expects
to use all or a specified portion of the Net Cash Proceeds of an Asset Sale to
make an Investment in or expenditures for acquiring or constructing properties
or assets that replace the assets that were the subject of the Asset Sale or to
acquire all or substantially all of the assets of or the majority of the Voting
Stock of a Principal Business or a Recovery Event to acquire or repair fixed or
capital assets useful in its business or to repair or replace the assets which
were the subject of such Recovery Event.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire or repair
fixed or capital assets useful in a Group Member's business or to repair or
replace the assets which were the subject of the relevant Recovery Event.
22
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring six months after such Reinvestment
Event and (b) the date on which ACEP shall have determined not to, or shall have
otherwise ceased to, acquire or repair fixed or capital assets useful in a Group
Member's business or repair or replace the assets which were the subject of the
relevant Recovery Event with all or any portion of the relevant Reinvestment
Deferred Amount.
"Related Agreements": the Acquisition Documentation and the Senior
Second Lien Note Indenture.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period is
waived under applicable regulations.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer, president or
chief financial officer of ACEP, but in any event, with respect to financial
matters, the chief financial officer of ACEP.
"Restricted Investment": an Investment not permitted by Section 7.7.
"Restricted Payments": as defined in Section 7.6.
"Restricted Subsidiary": any Subsidiary that is not an Unrestricted
Subsidiary.
"SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.
"Securities Act": the Securities Act of 1933, as amended.
"Senior Second Lien Note Indenture": the Indenture entered into by
the Borrower and the other Group Members in connection with the issuance of the
Senior Second Lien Notes, together with all instruments and other agreements
entered into by the Group Members in connection therewith.
"Senior Second Lien Notes": the senior notes of the Borrower and
American Casino & Entertainment Properties Finance Corp. issued pursuant to the
Senior Second Lien Note Indenture.
"Settlement Date": as defined in Section 2.2(d).
23
"Significant Subsidiary": any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1 - 02 of Regulation S -
X, promulgated pursuant to the Securities Act, as such Regulation is in effect
on the date of the Closing Date.
"Single Employer Plan": any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.
"Solvent": with respect to any Person, as of any date of
determination,
(a) the amount of the "present fair saleable value" of the assets of
such Person will, as of such date, exceed the amount of all "liabilities of such
Person, contingent or otherwise", as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors;
(b) the present fair saleable value of the assets of such Person
will, as of such date, be greater than the amount that will be required to pay
the liability of such Person on its debts as such debts become absolute and
matured;
(c) such Person will not have, as of such date, an unreasonably
small amount of capital with which to conduct its business; and
(d) such Person will be able to pay its debts as they mature. For
purposes of this definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"Specified Hedge Agreement": any Hedge Agreement (a) entered into by
(i) any Group Member and (ii) any Qualified Counterparty and (b) that has been
designated by such Agent or Lender, as the case may be, and ACEP, by notice to
the Administrative Agent, as a Specified Hedge Agreement. The designation of any
Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the
Qualified Counterparty that is a party thereto any rights in connection with the
management or release of any Collateral or of the obligations of any Guarantor
under the Pledge and Security Agreement.
"Sponsor": American Real Estate Partners, L.P.
"Stratosphere": that certain hotel, casino and tower located on
approximately 31 acres at 2000 Las Vegas Boulevard South, Las Vegas, Nevada,
together with all other improvements (including any buildings) and property
thereon.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a
24
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of ACEP.
"Syndication Agent": as defined in the preamble to this Agreement.
"Tax Allocation Agreement": that certain tax allocation agreement to
be entered into between American Entertainment Properties Corp., ACEP and the
Subsidiaries of ACEP substantially in the form of Exhibit L.
"Termination Date": (a) January 29, 2008 or (b) August 31, 2004 if
the conditions precedent set forth in Section 5.2 have not been satisfied (or
such earlier date as may be mutually agreed to in writing by the parties in the
event that the Administrative Agent and the Borrower determines that such
conditions precedent will not be met on or before August 31, 2004).
"Total Commitments": at any time, the aggregate amount of the
Commitments then in effect.
"Total Extensions of Credit": at any time, the aggregate amount of
the Extensions of Credit of the Lenders outstanding at such time.
"Transferee": any Assignee or Participant.
"Trustee": Wilmington Trust Company, as trustee under the Senior
Second Lien Indenture.
"Type": as to any Loan, its nature as an Base Rate Loan or a
Eurodollar Loan.
"United States": the United States of America.
"Unrestricted Subsidiary" (i) each Subsidiary described as an
Unrestricted Subsidiary on Schedule 4.15 as amended, supplemented or otherwise
modified from time to time and (ii) each other Subsidiary of a Group Member that
becomes an Unrestricted Subsidiary, in each case, in accordance with the
requirements of Section 6.11.
"Voting Stock": with respect to any Person that is a corporation,
any class or series of capital stock of such Person that is ordinarily entitled
to vote in the election of directors thereof at a meeting of stockholders called
for such purpose, without the occurrence of any additional event or contingency
and with respect to any other Person that is a limited liability company,
membership interests entitled to manage the operations or business of the
limited liability company.
"Weighted Average Life to Maturity": when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any date, the number
of years (calculated to the nearest one-twelfth) obtained by dividing (a) the
sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
of principal or liquidation preference, including payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest one
twelfth) that will elapse between such date and the making of such payment, by
(b) the then outstanding principal amount or liquidation preference, as
applicable, of such Indebtedness or Disqualified Stock, as the case may be.
25
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
1.2. Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the other Loan Documents
or any certificate or other document made or delivered pursuant hereto or
thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
(i) accounting terms relating to any Group Member not defined
in Section 1.1 and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under
GAAP;
(ii) the words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(iii) the word "incur" shall be construed to mean incur,
create, issue, assume, become liable in respect of or suffer to exist (and
the words "incurred" and "incurrence" shall have correlative meanings);
and
(iv) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, Capital Stock,
securities, revenues, accounts, leasehold interests and contract rights;
(v) references to agreements or other Contractual Obligations
shall, unless otherwise specified, be deemed to refer to such agreements
or Contractual Obligations as amended, supplemented, restated or otherwise
modified from time to time (subject to any applicable restrictions
hereunder); and
(vi) references herein to any Person shall be deemed to
include such Person's permitted successors and assigns.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) The expressions, "payment in full," "paid in full" and any other
similar terms or phrases when used herein with respect to the Obligations shall
mean the payment in full, in immediately available funds, of all the
Obligations.
26
(f) References to "days" shall mean calendar days, unless the term
"Business Days" shall be used. References to a time of day shall mean such time
in New York, New York, unless otherwise specified.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1. Commitments.
(a) Subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans ("Loans") to the Borrower from
time to time during the Commitment Period in an aggregate principal amount at
any one time outstanding which, when added to such Lender's Percentage of the
L/C Obligations then outstanding, does not exceed the amount of such Lender's
Commitment minus such Lender's Percentage of the aggregate amount of reserves
established by the Administrative Agent pursuant to Section 2.1(b) below. During
the Commitment Period the Borrower may use the Commitments by borrowing,
prepaying and reborrowing the Loans in whole or in part, all in accordance with
the terms and conditions hereof. The Loans may from time to time be Eurodollar
Loans or Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 3.3.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
the Administrative Agent shall have the right, in its discretion to establish
reserves against the Total Commitments with respect to amounts owing by any
Group Member to any Person to the extent secured by a Lien on, or trust over,
any portion of the Collateral in favor of the PBGC or a Multiemployer Plan, to
the extent that any such Lien or trust may be reasonably expected to have
priority over the Liens granted by any Group Member pursuant to the Collateral
Documents with respect to any portion of the Collateral, provided that in any
event, any such reserve shall not exceed the principal amount of the Obligations
so secured and such reserves shall be released upon satisfaction of such
Obligations.
(c) To the extent that the aggregate amount of all Lenders'
Extensions of Credit exceeds the difference between (i) the Total Commitment and
(ii) the aggregate amount of reserves established (and then in effect) by
Administrative Agent pursuant to Section 2.1(b) above, the Borrower shall
immediately prepay the Borrower Obligations to the extent of such excess.
(d) The Borrower shall repay all outstanding Loans on the
Termination Date.
2.2. Procedure for Loan Borrowing.
(a) A Borrower may borrow under the Commitments during the
Commitment Period on any Business Day, provided that such Borrower shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 12:00 Noon, New York City time, (a) three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (b) one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Loans) (provided that any such notice of a borrowing of Base
Rate Loans to finance payments required to be made pursuant to Section 3.5 may
be given not later than 10:00 A.M., New York City time, on the date of the
proposed borrowing), specifying (i) the amount and Type of Loans to be borrowed,
(ii) the requested Borrowing Date and (iii) in the case of Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Period therefor. Each borrowing under the Commitments shall be
in
27
an amount equal to (x) in the case of Base Rate Loans, $500,000 or a whole
multiple thereof (or, if the then aggregate Available Commitments are less than
$500,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$1,000,000 or a whole multiple of $500,000 in excess thereof. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Lender thereof. Each Lender will make the amount of its pro rata
share of each borrowing available to the Administrative Agent for the account of
the Borrower at the Funding Office prior to 12:00 Noon, New York City time, on
the Borrowing Date requested by the Borrower in funds immediately available to
the Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
(b) Each Lender and each Group Member hereby authorizes the
Administrative Agent, in its sole discretion, to make Protective Advances on
behalf of the Borrower (including in the event that the Borrower is unable to
satisfy with the conditions precedent to an Extension of Credit set forth in
Section 5) in accordance herewith.
(c) Unless the Administrative Agent shall have been notified by any
Lender prior to the date of borrowing that such Lender does not intend to make
available to the Administrative Agent its Percentage of the borrowing to be made
on such date, the Administrative Agent may assume that such Lender will make
such amount available to the Administrative Agent on the Settlement Date and the
Administrative Agent, in reliance upon such assumption, may but shall not be
obligated to make available the amount of the borrowing to be provided by such
Lender. If and to the extent such Lender shall not have so made available to the
Administrative Agent its Percentage of such borrowing on such date and the
Administrative Agent shall have so made available to the Borrower a
corresponding amount on behalf of such Lender, the Administrative Agent may
recover such amount on demand from such Lender. If such Lender does not pay such
corresponding amount promptly upon the Administrative Agent's demand therefor,
the Administrative Agent may promptly notify ACEP and the Borrower shall
immediately repay such corresponding amount to the Administrative Agent together
with accrued interest thereon at the interest rate otherwise applicable to the
outstanding Loans.
(d) Unless the Majority Lenders have instructed the Administrative
Agent to the contrary, the Administrative Agent on behalf of the Lenders may but
shall not be obligated to make Base Rate Loans under clause (b) above without
prior notice of the proposed borrowing to the Lenders, subject to the following
settlement arrangements:
(i) The amount of each Lender's Percentage of Loans shall be
computed weekly (or more frequently in the Administrative Agent's
discretion) and shall be adjusted upward or downward on the basis of the
amount of outstanding Loans as of 5:00 P.M. on the last Business Day of
the period specified by the Agent (such date, the "Settlement Date"). The
Administrative Agent shall deliver to each of the Lenders promptly after
the Settlement Date a summary statement of the amount of outstanding Loans
for such period. The Lenders shall transfer to the Administrative Agent
such amounts as are necessary so that (after giving effect to all such
transfers) the amount of Loans made by each Lender shall be equal to such
Lender's Percentage of the aggregate amount of Loans outstanding as of
such Settlement Date. If the summary statement is received by the Lenders
prior to 12:00 noon on any Business Day, each Lender shall make the
transfers described above in immediately available funds no later than
3:00 P.M. on the day such summary statement was received; and if such
summary statement is
28
received by the Lenders after 12:00 noon on such day, each Lender shall
make such transfers no later than 3:00 P.M. on the next succeeding
Business Day. The obligation of each of the Lenders to transfer such funds
shall be irrevocable and unconditional and without recourse to or warranty
by the Administrative Agent. Each of the Administrative Agent and the
Lenders agrees to mark its books and records on the Settlement Date to
show at all times the dollar amount of its Percentage of the outstanding
Loans.
(ii) To the extent that the settlement described above shall
not yet have occurred, upon repayment of Loans by the Borrower, the
Administrative Agent may first apply such amounts repaid directly to the
amounts made available by the Agent pursuant to this Section 2.2(d).
(iii) Because the Administrative Agent on behalf of the
Lenders may be advancing and/or may be repaid Loans prior to the time when
the Lenders will actually advance and/or be repaid Loans, interest with
respect to Loans shall be allocated by the Administrative Agent to each
Lender and to the Administrative Agent in accordance with (A) the amount
of Loans actually advanced by and repaid to each Lender and to the
Administrative Agent, and (B) the timing of each such advance by or
repayment to each Lender and Administrative Agent, and (x) shall accrue in
favor of Administrative Agent from and including the date such Loans are
so advanced by Administrative Agent to but excluding the date such Loans
are either repaid by the Borrower or actually settled by the applicable
Lender as described in this Section, and (y) shall accrue in favor of each
Lender from and including the date that such Lender funds to
Administrative Agent its Percentage of such Loans to but excluding the
date such Loans are repaid by the Borrower.
2.3. Commitment Fees, etc.
(a) Each Borrower agrees to pay to the Administrative Agent for the
account of each Lender a commitment fee for the period from and including the
Availability Date to the last day of the Commitment Period, computed at the
Commitment Fee Rate on the average daily amount of the Available Commitment of
such Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
Termination Date, commencing on the first of such dates to occur after the date
hereof.
(b) Each Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates previously agreed to in writing by the Borrower
and the Administrative Agent.
2.4. Termination or Reduction of Commitments. The Borrower shall
have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Commitments; provided that no such termination or
reduction of Commitments shall be permitted if, after giving effect thereto and
to any prepayments of the Loans made on the effective date thereof, the Total
Extensions of Credit would exceed the Total Commitments. Any such reduction
shall be in an amount equal to $1,000,000, or a whole multiple thereof, and
shall reduce permanently the Commitments then in effect.
2.5. L/C Commitment
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(a) Subject to the terms and conditions hereof, the Issuing Lender,
in reliance on the agreements of the other Lenders set forth in Section 2.8(a),
agrees to issue letters of credit ("Letters of Credit") for the account of the
Borrower on any Business Day during the Commitment Period in such form as may be
approved from time to time by the Issuing Lender; provided that the Issuing
Lender shall have no obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment
or (ii) the aggregate amount of the Available Commitments minus the aggregate
amount of reserves established (and then in effect) by the Administrative Agent
pursuant to Section 2.1(b) would be less than zero. Each Letter of Credit shall
(A) be denominated in Dollars, (B) have a face amount of at least $500,000
(unless otherwise agreed by the Issuing Lender) and (C) expire no later than the
earlier of (x) the first anniversary of its date of issuance and (y) the date
that is five Business Days prior to the Termination Date, provided that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).
(b) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
2.6. Procedure for Issuance of Letter of Credit. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will notify the Administrative Agent of the amount, the beneficiary and the
requested expiration of the requested Letter of Credit, and upon receipt of
confirmation from the Administrative Agent that after giving effect to the
requested issuance, the result of (a) the Available Commitments minus (b) the
aggregate amount of reserves established (and then in effect) by the
Administrative Agent pursuant to Section 2.1(b), would not be less than zero,
the Issuing Lender will process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower (with a copy to the Administrative Agent)
promptly following the issuance thereof. The Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the
Lenders, notice of the issuance of each Letter of Credit (including the amount
thereof).
2.7. Fees and Other Charges
(a) The Borrower will pay a fee on all outstanding Letters of Credit
at a per annum rate equal to the Applicable Margin then in effect with respect
to Eurodollar Loans, shared ratably among the Lenders and payable quarterly in
arrears on each L/C Fee Payment Date after the issuance date. In addition, the
Borrower shall pay to the Issuing Lender for its own account a fronting fee in
an amount equal to 0.125% (as of the Closing Date) of the undrawn and unexpired
amount of each Letter of Credit as agreed by the Borrower and the
30
Issuing Lender, payable quarterly in arrears on each L/C Fee Payment Date after
the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
2.8. L/C Participations
(a) The Issuing Lender irrevocably agrees to grant and hereby grants
to each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions set forth below, for such L/C Participant's own account and risk an
undivided interest equal to such L/C Participant's Percentage in the Issuing
Lender's obligations and rights under and in respect of each Letter of Credit
issued hereunder and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Administrative
Agent upon demand of the Issuing Lender an amount equal to such L/C
Participant's Percentage of the amount of such draft, or any part thereof, that
is not so reimbursed. The Administrative Agent shall promptly forward such
amounts to the Issuing Lender.
(b) If any amount required to be paid by any L/C Participant to the
Administrative Agent for the account of the Issuing Lender pursuant to Section
2.8(a) in respect of any unreimbursed portion of any payment made by the Issuing
Lender under any Letter of Credit is paid to the Administrative Agent for the
account of the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Administrative Agent for
the account of the Issuing Lender on demand an amount equal to the product of
(i) such amount, times (ii) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing Lender, times
(iii) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. If any such amount required to
be paid by any L/C Participant pursuant to Section 2.8(a) is not made available
to the Administrative Agent for the account of the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans. A certificate of the Issuing
Lender submitted to any L/C Participant with respect to any amounts owing under
this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 2.8(a), the Administrative
Agent or the Issuing Lender receives any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, including proceeds of
collateral applied thereto by the Issuing Lender), or any payment of interest on
account thereof, the Administrative Agent or the Issuing Lender, as the case may
be, will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the
31
event that any such payment received by Administrative Agent or the Issuing
Lender, as the case may be, shall be required to be returned by the
Administrative Agent or the Issuing Lender, such L/C Participant shall return to
the Administrative Agent for the account of the Issuing Lender the portion
thereof previously distributed by the Administrative Agent or the Issuing
Lender, as the case may be, to it.
2.9. Reimbursement Obligation of the Borrower. The Borrower agrees
to reimburse the Issuing Lender on the same Business Day on which the Issuing
Lender notifies ACEP of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft
so paid and (b) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices referred to herein in
Dollars and in immediately available funds. Interest shall be payable on any
such amounts from the date on which the relevant draft is paid until payment in
full in (i) until the Business Day next succeeding the date of the relevant
notice, at the rate set forth Section 3.5(b) and (ii) in the event that the
Borrower fails to satisfy the conditions precedent set forth in Section 5.3,
thereafter, at the rate set forth in Section 3.5(c). Each drawing under any
Letter of Credit shall (unless an event of the type described in clause (i) or
(ii) of Section 8(f) shall have occurred and be continuing with respect to the
Borrower, in which case the procedures specified in Section 2.8 for funding by
L/C Participants shall apply) constitute a request by the Borrower to the
Administrative Agent for a borrowing pursuant to Section 2.2 of Base Rate Loans
in the amount of such drawing and such amount shall constitute a Loan hereunder.
The Borrowing Date with respect to such borrowing shall be the first date on
which a borrowing of Loans could be made, pursuant to Section 2.2, if the
Administrative Agent had received a notice of such borrowing at the time the
Administrative Agent receives notice from the relevant Issuing Lender of such
drawing under such Letter of Credit.
2.10. Obligations Absolute. The Borrower's obligations under Section
2.9 shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that the Borrower
may have or have had against the Issuing Lender, any beneficiary of a Letter of
Credit or any other Person. The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 2.9 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among any Group Member and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of a Group Member against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to any Group Member.
2.11. Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify
ACEP of the date and
32
amount thereof. The responsibility of the Issuing Lender to ACEP in connection
with any draft presented for payment under any Letter of Credit shall, in
addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each draft)
delivered under such Letter of Credit in connection with such presentment are
substantially in conformity with such Letter of Credit.
2.12. Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 2, the provisions of this Section 2 shall apply.
SECTION 3. GENERAL PROVISIONS APPLICABLE
TO LOANS AND LETTERS OF CREDIT
3.1. Optional Prepayments. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon irrevocable notice delivered to the Administrative Agent no later than
11:00 A.M., New York City time, three Business Days prior thereto in the case of
Eurodollar Loans and no later than 11:00 A.M., New York City time, one Business
Day prior thereto in the case of Base Rate Loans, which notice shall specify the
date and amount of prepayment and whether the prepayment is of Eurodollar Loans
or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 3.11. Upon receipt of any
such notice the Administrative Agent shall promptly notify each Lender thereof.
If any such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein, together with accrued interest to
such date on the amount prepaid. Partial optional prepayments of Loans shall be
in an aggregate principal amount of $500,000 or a whole multiple thereof.
3.2. Mandatory Prepayments and Commitment Reductions
(a) If on any date any Group Member shall receive Net Cash Proceeds
from any Asset Sale (other than a sale of Capital Stock of ACEP) or Recovery
Event then, unless a Reinvestment Notice shall be delivered in respect thereof,
such Net Cash Proceeds shall be applied on such date toward the prepayment of
the Loans as set forth in Section 3.2(b); provided, that, notwithstanding the
foregoing, (i) the aggregate Net Cash Proceeds of Asset Sales and Recovery
Events that may be excluded from the foregoing requirement pursuant to a
Reinvestment Notice shall not exceed $5,000,000 in any fiscal year of ACEP and
(ii) on each Reinvestment Prepayment Date, an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event shall be
applied toward the prepayment of the Loans as set forth in Section 3.2(b);
provided, that any such prepayment shall not constitute a reduction of the
Commitments.
(b) The application of any prepayment pursuant to Section 3.2 shall
be made, first, to Base Rate Loans and, second, to Eurodollar Loans. Each
prepayment of the Loans under Section 3.2 shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.
(c) Any reduction of the Commitments shall be accompanied by
prepayment of the Loans to the extent, if any, that the Total Extensions of
Credit exceed the amount of the Total Commitments as so reduced, provided that
if the aggregate principal amount of Loans then outstanding is less than the
amount of such excess (because L/C Obligations constitute a portion thereof),
the Borrower shall, to the extent of the balance of such excess, replace
outstanding
33
Letters of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the Lenders in an
amount equal to 105% of such balance of such excess and otherwise on terms and
conditions satisfactory to the Administrative Agent.
3.3. Conversion and Continuation Options.
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to Base Rate Loans by giving the Administrative Agent prior irrevocable
notice of such election no later than 11:00 A.M., New York City time, on the
Business Day preceding the proposed conversion date, provided that any such
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Borrower may elect from time to time to convert
Base Rate Loans to Eurodollar Loans by giving the Administrative Agent prior
irrevocable notice of such election no later than 11:00 A.M., New York City
time, three Business Days preceding the proposed conversion date (which notice
shall specify the length of the initial Interest Period therefor), provided that
no Base Rate Loan may be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Majority Lenders have determined in its or their sole discretion not to permit
such conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan may be continued as such when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Majority
Lenders have determined in its or their sole discretion not to permit such
continuations, and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to Base Rate Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof.
3.4. Limitations on Eurodollar Tranches. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole
multiple of $100,000 in excess thereof and (b) no more than ten Eurodollar
Tranches shall be outstanding at any one time.
3.5. Interest Rates and Payment Dates.
(a) Each Eurodollar Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate applicable to such day plus the Applicable Margin.
34
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
equal to (x) in the case of Loans, the rate that would otherwise be applicable
thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in
the case of Reimbursement Obligations, the rate applicable to Base Rate Loans
plus 2%, and (ii) if all or a portion of any interest payable on any Loan or
Reimbursement Obligation or any commitment fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate then applicable to Base Rate Loans plus 2%, in each case, with respect
to clauses (i) and (ii) above, from the date of such non-payment until such
amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
3.6. Computation of Interest and Fees.
(a) Interest and fees payable pursuant hereto shall be calculated on
the basis of a 360-day year for the actual days elapsed, except that, with
respect to Base Rate Loans the rate of interest on which is calculated on the
basis of the Prime Rate, the interest thereon shall be calculated on the basis
of a 365- (or 366-, as the case may be) day year for the actual days elapsed.
The Administrative Agent shall as soon as practicable notify ACEP and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the Base Rate or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on the
day on which such change becomes effective. The Administrative Agent shall as
soon as practicable notify ACEP and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of ACEP, deliver to ACEP a statement
showing the quotations used by the Administrative Agent in determining any
interest rate pursuant to Section 3.5(a).
3.7. Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(i) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(ii) the Administrative Agent shall have received notice from
the Majority Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect
the cost to such Lenders (as conclusively certified by such Lenders) of
making or maintaining their affected Loans during such Interest Period,
35
the Administrative Agent shall give telecopy or telephonic notice thereof to
ACEP and the Lenders as soon as practicable thereafter. If such notice is given
(x) any Eurodollar Loans requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be
converted, on the last day of the then-current Interest Period, to Base Rate
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Loans to Eurodollar Loans.
3.8. Pro Rata Treatment and Payments.
(a) Each borrowing by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any commitment fee and any reduction of
the Commitments of the Lenders shall be made pro rata according to the
Percentages of the Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of the Borrower Obligations shall be applied as follows: (i) first, to
pay any costs or expenses reimbursable by any Group Member and then due to any
Agent under the Loan Documents until paid in full, (ii) second, to pay any costs
or expenses reimbursable by any Group Member and then due to any Lender under
the Loan Documents, on a ratable basis in accordance with the Lenders'
respective Percentages, until paid in full, (iii) third, to pay any fees then
due to any Agent under the Loan Documents until paid in full, (iv) fourth, to
pay any fees then due to any Lender under the Loan Documents, on a ratable basis
in accordance with the Lenders' respective Percentages, until paid in full, (v)
fifth, to pay interest due in respect of the Loans, on a ratable basis in
accordance with the Lenders' respective Percentages, until paid in full, (vi)
sixth, to pay the principal of all Loans, on a ratable basis in accordance with
the Lenders' respective Percentages, until paid in full, (vii) seventh, if an
Event of Default has occurred and is continuing, to Administrative Agent, to be
held by Administrative Agent, for the ratable benefit of Issuing Lender and the
Lenders, as cash collateral in an amount up to 105% of the then extant amount of
the L/C Obligations, until paid in full, and (viii) eighth, if an Event of
Default has occurred and is continuing, to pay any other Borrower Obligations
(including the provision of amounts to Administrative Agent, to be held by
Administrative Agent, for the benefit of the Qualified Counterparties that are a
party to any Specified Hedge Agreement, as cash collateral in an amount up to
the amount determined by Administrative Agent in its discretion as the amount
necessary to secure the Group Members' obligations in respect of the Specified
Hedge Agreements).
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any
36
extension of any payment of principal pursuant to the preceding two sentences,
interest thereon shall be payable at the then applicable rate during such
extension.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to Base Rate Loans, on
demand, from the Borrower.
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
3.9. Requirements of Law.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by Section 3.10 and changes in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any
37
other acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurodollar Rate hereunder;
or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this paragraph, it shall promptly
notify ACEP (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to ACEP (with a copy to the Administrative Agent) of a
written request therefor, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or such corporation for such
reduction.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to ACEP (with a copy to the Administrative
Agent) shall be conclusive in the absence of manifest error. Notwithstanding
anything to the contrary in this Section, no Borrower shall be required to
compensate a Lender pursuant to this Section for any amounts incurred more than
six months prior to the date that such Lender notifies ACEP of such Lender's
intention to claim compensation therefor; provided that, if the circumstances
giving rise to such claim have a retroactive effect, then such six-month period
shall be extended to include the period of such retroactive effect. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.10. Taxes.
(a) All payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on any Agent or any Lender as a result of a present or former connection between
such Agent or such Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from such Agent or such
Lender having executed, delivered or performed its
38
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes
are required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that no Borrower shall be required to increase any
such amounts payable to any Lender with respect to any Non-Excluded Taxes (i)
that are attributable to such Lender's failure to comply with the requirements
of paragraph (d) or (e) of this Section or (ii) that are United States
withholding taxes imposed on amounts payable to such Lender at the time such
Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Agent or Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the Agents and
the Lenders for any incremental taxes, interest or penalties that may become
payable by any Agent or any Lender as a result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to ACEP and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit E and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify ACEP at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to ACEP (or any other form of certification adopted by the
U.S. taxing authorities for such purpose). Notwithstanding any other provision
of this paragraph, a Non-U.S. Lender shall not be required to deliver any form
pursuant to this paragraph that such Non-U.S. Lender is not legally able to
deliver.
39
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to ACEP (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law and as
reasonably requested in writing by ACEP, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.
(f) If any Agent or any Lender determines, in its sole discretion,
that it has received a refund of any Non-Excluded Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 3.10, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 3.10 with
respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses of such Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, that each Borrower, upon the request of
such Agent or such Lender, agrees to repay the amount paid over to the Borrower
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to such Agent or such Lender in the event such Agent or
such Lender is required to repay such refund to such Governmental Authority.
This paragraph shall not be construed to require any Agent or any Lender to make
available its tax returns (or any other information relating to its taxes which
it deems confidential) to any Group Member or any other Person.
(g) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.11. Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense that such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from Eurodollar Loans after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day that is not the last day of an Interest
Period with respect thereto. In the case of clauses (a) and (c), such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section
submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
40
3.12. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 3.9 or 3.10(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
or postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to Section 3.9 or 3.10(a).
3.13. Replacement of Lenders. ACEP shall be permitted to replace any
Lender that:
(a) requests reimbursement for amounts owing pursuant to Section 3.9
or 3.10(a); or
(b) defaults in its obligation to make Loans hereunder,
with a replacement lender provided that:
(i) such replacement does not conflict with any Requirement of
Law;
(ii) no Event of Default shall have occurred and be continuing
at the time of such replacement;
(iii) prior to any such replacement, such Lender shall have
taken no action under Section 3.12 so as to eliminate the continued need
for payment of amounts owing pursuant to Section 3.9 or 3.10(a);
(iv) the replacement lender shall purchase, at par, all Loans
and other amounts owing to such replaced Lender on or prior to the date of
replacement;
(v) the Borrower shall be liable to such replaced lender under
Section 3.11 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating
thereto;
(vi) the replacement Lender, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent;
(vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 11.6 (provided
that the Borrower shall be obligated to pay the registration and
processing fee referred to therein);
(viii) until such time as such replacement shall be
consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 3.9 or 3.10(a), as the case may be; and
(ix) any such replacement shall not be deemed to be a waiver
of any rights that the Borrower, the Administrative Agent or any other
Lender shall have against the replaced Lender.
3.14. Evidence of Debt.
41
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing Indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 11.6(b), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type of such Loan and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from each Borrower to each Lender
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 3.14(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
(d) Each Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing any Loans of such
Lender, substantially in the forms of Exhibit F, with appropriate insertions as
to date and principal amount.
3.15. Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 3.11.
3.16. Source of Loans. The Agents and each Lender hereby represent
and warrant to the Borrower and Commonly Controlled Entity that no part of the
source of any Loan made hereunder constitutes assets of any "employee benefit
plan" within the meaning of Section 3(3) of ERISA.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement
and to make the Loans and issue or participate in the Letters of Credit, each
Group Member from time to time party hereto hereby represents and warrants to
each Agent and each Lender that:
4.1. Financial Condition.
42
(a) The unaudited pro forma combined balance sheet of the Group
Members as at September 30, 2003 (including the notes thereto) (the "Pro Forma
Balance Sheet"), copies of which have heretofore been furnished to each Lender,
has been prepared giving effect (as if such events had occurred on such date) to
(i) the consummation of the Acquisition, (ii) the Senior Second Lien Notes to be
issued on the Closing Date and the use of proceeds thereof and (iii) the payment
of fees and expenses in connection with the foregoing. The Pro Forma Balance
Sheet has been prepared based on the best information available to ACEP as of
the date of delivery thereof, and presents fairly on a pro forma basis the
estimated financial position of the combined Group Members as at September 30,
2003, assuming that the events specified in the preceding sentence had actually
occurred at such date.
(b) The audited combined balance sheets of the Group Members as at
December 31, 2000, December 31, 2001, and December 31, 2002, and, in the case of
the Availability Date, the audited or unaudited combined balance sheets of the
Group Members as at December 31, 2003 to the extent such statements are
available, and the related combined statements of income and of cash flows for
the fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from KPMG LLP present fairly the combined financial condition
of the Group Members as at such date, and the combined results of the operations
and its combined cash flows for the respective fiscal years then ended. The
unaudited combined balance sheet of the Group Members as at September 30, 2003
and, in the case of the Availability Date, March 31, 2004, if such balance sheet
is available, and the related unaudited combined statements of income and cash
flows for the year to date period ended on such date, present fairly the
combined financial condition of the Group Members as at such date, and the
combined results of its operations and its combined cash flows for the
nine-month period then ended (subject to normal year-end audit adjustments). All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein). No Group Member has any material Guarantee Obligations,
contingent liabilities and liabilities for taxes, or any long-term leases (other
than any Lease Transaction permitted hereunder) or unusual forward or long-term
commitments, including any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, that are not
reflected in the most recent financial statements referred to in this paragraph
other than, on the Availability Date, the Guarantee Obligations of the Group
Members that constitute Restricted Subsidiaries in respect of the Senior Second
Lien Notes. During the period from September 30, 2003 to and including the date
hereof there has been no Disposition by the Group Members of any material part
of its business or property other than pursuant to and in accordance with the
Acquisition Agreements except as described on Schedule 4.1.
4.2. No Change. Since September 30, 2003, there has been no
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.3. Corporate Existence; Compliance with Law. Each Group Member:
(a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization;
(b) has the power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged;
43
(c) is duly qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification except to
the extent that the failure to be so qualified would not have a Material Adverse
Effect; and
(d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4. Power; Authorization; Enforceable Obligations. Each Group
Member has the power and authority, and the legal right, to make, deliver and
perform the Loan Documents and the Related Agreements to which it is a party
and, in the case of the Borrower, to obtain extensions of credit hereunder. Each
Group Member has taken all necessary organizational action to authorize the
execution, delivery and performance of the Loan Documents and the Related
Agreements to which it is a party and, in the case of the Borrower, to authorize
the extensions of credit on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection the extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, the Related Agreements (excluding, on the Closing Date the
Acquisition Agreements), except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect (except as
specified in Schedule 4.4) and (ii) the filings referred to in Schedule 3 to the
Pledge and Security Agreement. Each Loan Document and each Related Agreement has
been duly executed and delivered on behalf of each Group Member party thereto.
This Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Group Member party
thereto, enforceable against each such Group Member in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5. No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of any Group Member and will
not result in, or require, the creation or imposition of any Lien on any of
their respective properties or revenues pursuant to any Requirement of Law or
any such Contractual Obligation (other than the Liens created by the Collateral
Documents). No Requirement of Law or Contractual Obligation applicable to any
Group Member could reasonably be expected to have a Material Adverse Effect.
4.6. Litigation. Except as set forth in Schedule 4.6, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of any Group Member, threatened by or
against any Group Member or against any of their respective properties or
revenues (a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect.
44
4.7. No Default. No Group Member is in default under or with respect
to any of its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.8. Ownership of Property; Liens. Each Group Member has title in
fee simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its other property, and none of
such property is subject to any Lien except as permitted by Section 7.3.
4.9. Intellectual Property. Each Group Member owns, or is licensed
to use, all Intellectual Property necessary for the conduct of its business as
currently conducted. No material claim has been asserted and is pending by any
Person challenging or questioning the use of any Intellectual Property or the
validity or effectiveness of any Intellectual Property, nor does any Group
Member know of any valid basis for any such claim. The use of Intellectual
Property by each Group Member does not infringe on the rights of any Person in
any material respect.
4.10. Taxes. Each Group Member has filed or caused to be filed all
Federal, state and other material tax returns that are required to be filed and
has paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
(other than any the amount or validity of that are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the applicable Group
Member); no tax Lien has been filed, and, to the knowledge of any Group Member,
no claim is being asserted, with respect to any such tax, fee or other charge
other than those permitted pursuant to Section 7.3 or as could not otherwise
have a Material Adverse Effect
4.11. Federal Regulations. No part of the proceeds of any Loans, and
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of FR Form G-3 or FR Form U-1, as
applicable, referred to in Regulation U.
4.12. Labor Matters. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any Group Member pending or, to the
knowledge of any Group Member, threatened; (b) hours worked by and payment made
to employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.
4.13. ERISA. Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect: (a) neither a Reportable Event nor
an "accumulated funding deficiency" (within the meaning of Section 412 of the
Code or Section 302 of ERISA) has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect to any
Single Employer Plan,; (b) each Plan has complied in all
45
material respects with the applicable provisions of ERISA and the Code; (c) no
termination of a Single Employer Plan has occurred, and no Lien in favor of the
PBGC or a Single Employer Plan has arisen, during such five-year period; (d) the
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits; and (e) neither ACEP nor any Commonly Controlled Entity (i) has had a
complete or partial withdrawal from any Multiemployer Plan, (ii) expect to incur
any withdrawal liability with respect to any Multiemployer Plan or (iii) has
received notice that any Multiemployer Plan is in Reorganization or is
Insolvent.
4.14. Investment Company Act; Other Regulations. No Group Member is
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Group
Member is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15. Subsidiaries. Except as disclosed to the Administrative Agent
by ACEP in writing from time to time after the Closing Date, (a) Schedule 4.15
(as such Schedule 4.15 may be amended, supplemented or otherwise modified from
time to time in connection with the creation or acquisition by any Group Member
of a new Subsidiary or the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary) sets forth the name and jurisdiction of incorporation
of each Subsidiary and, as to each such Subsidiary, the percentage of each class
of Capital Stock owned by any Group Member and (b) there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and
directors' qualifying shares) of any nature relating to any Capital Stock of a
Group Member, except as created by the Loan Documents and the Acquisition
Agreements. Schedule 4.15 (as so amended, supplemented or otherwise modified )
correctly identifies whether each such Subsidiary is a Restricted or an
Unrestricted Subsidiary.
4.16. Use of Proceeds. The proceeds of the Loans shall be used,
together with the proceeds of and the Letters of Credit, for general corporate
purposes.
4.17. Environmental Matters. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by any
Group Member (the "Properties") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances that constitute or constituted a violation of, or could
give rise to liability under, any Environmental Law;
(b) no Group Member has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the business operated by any Group Member
(the "Business"), nor does any Group Member have knowledge or reason to believe
that any such notice will be received or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
that could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been
46
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of any Group Member, threatened, under any
Environmental Law to which any Group Member is or will be named as a party with
respect to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of any Group Member in connection with the Properties, any
facilities or properties formerly owned, leased or operated by any Group Member
or otherwise in connection with the Business, in violation of or in amounts or
in a manner that could give rise to liability under Environmental Laws;
(f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or about
the Properties or violation of any Environmental Law with respect to the
Properties or the Business; and
(g) no Group Member has assumed any liability of any other Person
under Environmental Laws.
4.18. Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Offering Memorandum or
any other document, certificate or statement furnished by or on behalf of any
Group Member to the Administrative Agent or the Lenders, or any of them, for use
in connection with the transactions contemplated by this Agreement or the other
Loan Documents, contained as of the date such statement, information, document
or certificate was so furnished (or, in the case of the Offering Memorandum, as
of the date of this Agreement), any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements contained
herein or therein not misleading. The projections and pro forma financial
information contained in the materials referenced above are based upon good
faith estimates and assumptions believed by management of ACEP to be reasonable
at the time made, it being recognized by the Lenders that such financial
information as it relates to future events is not to be viewed as fact and that
actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. As of the date hereof, to the best of each Group Member's
knowledge after due inquiry, the representations and warranties contained in the
Acquisition Documentation are true and correct in all material respects. There
is no fact known to any Group Member that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents, in the Offering Memorandum or in any other documents,
certificates and statements furnished to the Administrative Agent and the
Lenders for use in connection with the transactions contemplated hereby and by
the other Loan Documents.
4.19. Mortgages. Each of the Mortgages is effective to create in
favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable Lien on the Mortgaged Properties described therein and
proceeds and products thereof, and when the Mortgages are filed in the offices
specified on Schedule 4.19, each such Mortgage shall
47
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Group Member in the Mortgaged Properties and the proceeds
thereof, as security for the Obligations (as defined in the relevant Mortgage),
in each case prior and superior in right to any other Person. Schedule 1.1
lists, as of the Closing Date and as of the Availability Date, each parcel of
owned real property and each leasehold interest in real property held by any
Group Member.
4.20. Solvency. Each Group Member is, and after giving effect to the
Acquisition and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.21. Senior Indebtedness. The Borrower Obligations constitute
"First Lien Obligations" under and as defined in the Intercreditor Agreement and
the Senior Second Lien Note Indenture. The Obligations of each Restricted
Subsidiary hereunder constitute "First Lien Obligations" of such Restricted
Subsidiary under and as defined in the Intercreditor Agreement and the Senior
Second Lien Note Indenture.
4.22. Regulation H. No Mortgage encumbers improved real property
that is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of 1968
(except any Mortgaged Properties as to which such flood insurance as required by
Regulation H has been obtained and is in full force and effect as required by
this Agreement).
4.23. Certain Documents. ACEP has delivered to each Lender a
complete and correct copy of the Related Agreements, including any amendments,
supplements or modifications with respect to any such Related Agreements.
SECTION 5. CONDITIONS PRECEDENT
5.1. Conditions to Closing Date. The effectiveness of this Agreement
and the obligations of each Agent and each Lender hereunder is subject to the
satisfaction of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by each Agent, each Lender, each Group
Member and each Person listed on Schedule 1.1A, (ii) the Fee Letter, executed
and delivered by the Borrower, (iii) the Intercreditor Agreement, executed and
delivered by the Trustee and the Collateral Agent and (iv) each other Loan
Document required to be executed on or before such date, executed by the
applicable party.
(b) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheet, and (ii) audited combined
financial statements of the Group Members for the 2000, 2001 and 2002 fiscal
years and the unaudited combined financial statement for the nine-month period
ended September 30, 2003, and such financial statements shall not, in the
reasonable judgment of the Lenders, reflect any material adverse change in the
combined financial condition of the Group Members as reflected in the financial
statements or projections contained in the Offering Memorandum.
(c) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each of the jurisdictions where the Group
Members are organized and where
48
assets of the Group Members are located, and such search shall reveal no liens
on any of the assets of the Group Members except for liens permitted by Section
7.3 or discharged on or prior to the Closing Date pursuant to documentation
satisfactory to the Administrative Agent.
(d) Fees. The Lenders and the Agents shall have received all fees
required to be paid, and all expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel not to exceed
$125,000), on or before the Closing Date.
(e) Group Member Certificate. The Administrative Agent shall have
received a certificate of each Group Member, dated the Closing Date,
substantially in the form of Exhibit B, with appropriate insertions and
attachments including the certificate of formation of each Group Member
certified by the relevant authority of the jurisdiction of organization of such
Group Member, and a good standing certificate for each Group Member from its
jurisdiction of organization.
(f) Legal Opinion. The Administrative Agent shall have received the
legal opinion of New York counsel to the Group Members in form and substance
satisfactory to the Administrative Agent.
(g) Miscellaneous. The Administrative Agent shall have received such
other documents, agreements, certificates and information as it shall reasonably
request.
5.2. Conditions to Availability Date. The agreement of each Lender
to make the initial extension of credit requested to be made by it is subject to
the satisfaction, prior to or concurrently with the making of such extension of
credit on the Availability Date (but in any event no later than August 31,
2004), of the following conditions precedent:
(a) Acquisitions, etc. The following events have occurred or
transactions shall have been consummated, in each case on terms and conditions
reasonably satisfactory to each Agent and each Lender:
(i) the Acquisitions; and
(ii) the Escrow Release Date (as defined under the Escrow and
Security Agreement) shall have occurred and none of the conditions
precedent to the occurrence of such event shall have been waived without
the prior written consent of the each of the Lenders, provided that any
such conditions precedent that require the perfection of the second
priority security interests in the Collateral of the Trustee or
enforceability of other rights in respect of the Collateral or otherwise
running to the benefit of the Trustee shall be deemed satisfied for
purposes of this Section 5.2(a) only to the extent that the first priority
security interest in the Collateral of the Administrative Agent (or the
Collateral Agent on its behalf) are perfected and the other rights in
respect of the Collateral running to the benefit of the Administrative
Agent (or the Collateral Agent on its behalf) are enforceable and are
otherwise satisfactory to the Administrative Agent, including, without
limitation, delivery of title policies to the Administrative substantially
in the form of Exhibit N-1 through N-4 hereto.
(b) Loan Documents. Each of the Group Members that has been formed
or acquired in connection with the Acquisitions shall have become a party to (i)
this Agreement, (ii) the Pledge and Security Agreement, (iii) the Intercreditor
Agreement, (iv) a Mortgage with respect to its respective Mortgaged Property,
and (v) each other Loan Document required to be
49
executed on or before such date, and each such agreement shall have been
executed by each such Group Member and delivered to the Administrative Agent.
Each such entity shall be a "Group Member" for purposes of each condition
precedent set forth in this Article 5, including, without limitation, the
requirement that such entity make each of the representations and warranties
hereunder and under each Loan Document.
(c) Financial Statements. The Lenders shall have received (i) the
audited combined financial statements of the Group Members for the 2003 fiscal
year and the most recently year to date quarterly period, in each case, to the
extent such audited combined financial statements are available and (ii)
unaudited interim combined financial statements of the Group Members for each
quarterly period ended subsequent to the date of the latest applicable financial
statements delivered pursuant to clause (i) of this paragraph as to which such
financial statements are available.
(d) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each of the jurisdictions where the Group
Members are organized and where assets of the Group Members are located, and
such search shall reveal no liens on any of the assets of the Group Members
except for liens permitted by Section 7.3 or discharged on or prior to the
Availability Date pursuant to documentation satisfactory to the Administrative
Agent.
(e) Fees. The Lenders and the Agents shall have received all fees
required to be paid, and all expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel, which, together
with the fees paid in respect thereof on the Closing Date, shall not exceed
$125,000), on or before the Availability Date. All such amounts may be paid with
proceeds of Loans made on the Availability Date and will be reflected in the
funding instructions given by ACEP to the Administrative Agent on or before the
Availability Date.
(f) Group Member Certificate. The Administrative Agent shall have
received a certificate of each Group Member, dated the Availability Date,
substantially in the form of Exhibit B, with appropriate insertions and
attachments including the certificate of formation of each Group Member
certified by the relevant authority of the jurisdiction of organization of such
Group Member, and a good standing certificate for each Group Member from its
jurisdiction of organization.
(g) Filings, Registrations and Recordings. Each document (including
any Uniform Commercial Code financing statement) required by the Collateral
Documents or under law or reasonably requested by the Administrative Agent to be
filed, registered or recorded in order to create in favor of the Administrative
Agent, for the benefit of the Lenders, a perfected Lien on the Collateral
described therein, prior and superior in right to any other Person (other than
with respect to Liens expressly permitted by Section 7.3), shall be in proper
form for filing, registration or recordation.
(h) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 4.2 of the Pledge
and Security Agreement and Section 6.5 hereof.
(i) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of New York counsel to the Group
Members, substantially in the form of Exhibit D-1; and
50
(ii) the legal opinion of local counsel in Nevada to the Group
Members substantially in the form of Exhibit D-2; and
(iii) the legal opinion such other special and local counsel
as may be required by the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(j) Pledged Stock; Stock Powers; Pledged Notes. The Collateral Agent
shall have received (i) the certificates representing the shares of Capital
Stock pledged pursuant to the Pledge and Security Agreement, together with an
undated stock power or assignment for each such certificate executed in blank by
a duly authorized officer, member or manager of the pledgor thereof and (ii)
each promissory note (if any) pledged to the Collateral Agent pursuant to the
Pledge and Security Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank) by the pledgor thereof.
(k) Additional Representations and Warranties. Each of the
representations and warranties made by any Group Member set forth in the Escrow
and Security Agreement shall be true and correct in all material respects
(except to the extent that any such representation or warranty is qualified by
materiality in which case, it shall be true and correct in all respects).
(l) Miscellaneous. The Administrative Agent shall have received such
other documents, agreements, certificates and information as it shall reasonably
request.
5.3. Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit except with respect to Section
5.3(d)) is subject to the satisfaction of the following conditions precedent:
(a) No Default or Event of Default shall have occurred and be
continuing (on a pro forma basis after giving effect to the extension of credit
contemplated thereby).
(b) Each of the representations and warranties made by any Group
Member in or pursuant to the Loan Documents shall be true and correct on and as
of such date as if made on and as of such date (except for any representation
and warranty that is as of a specific date) and after giving effect to the
extensions of credit requested to be made on such date.
(c) A Responsible Officer shall certify in writing to the
Administrative Agent that the incurrence of Indebtedness represented by the
requested extensions of credit is permitted under the Senior Second Lien Note
Indenture and that the debt so incurred will constitute "First Lien Obligations"
under and as defined in the Intercreditor Agreement and Senior Second Lien Note
Indenture.
(d) No Material Adverse Effect shall have occurred and be
continuing, or could reasonably be expected to result from such extension of
credit or the application of the proceeds thereof.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.3 have been satisfied.
51
SECTION 6. AFFIRMATIVE COVENANTS
Each Group Member from time to time party hereto hereby agrees that,
so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or Agent
hereunder, such Group Member shall and shall cause each other Group Member that
is a Subsidiary of such Group Member to:
6.1. Financial Statements. Furnish to the Administrative Agent and
each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of ACEP, a copy of:
(i) the audited consolidating and consolidated balance sheet
of the Group Members (or, prior to the end of the first fiscal year
following the Availability Date, the audited combined balance sheet of the
Group Members) as at the end of such year;
(ii) the related audited consolidating and consolidated (or
combined, as applicable) statements of income; and
(iii) the related audited consolidated (or combined, as
applicable) statements of cash flows for such year;
setting forth in each case in comparative form the figures for the previous
year, reported on without a "going concern" or like qualification or exception,
or qualification arising out of the scope of the audit, by KPMG LLP or other
independent certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of ACEP:
(i) the unaudited consolidating (if such statements have been
prepared by the Group Members) and consolidated balance sheet of the Group
Members (or, prior to the end of the first fiscal quarter following the
Availability Date, the unaudited combined balance sheet of the Group
Members) as at the end of such quarter;
(ii) the related unaudited consolidating (if such statements
have been prepared by the Group Members) and consolidated (or combined, as
applicable) statements of income; and
(iii) the related unaudited consolidated (or combined, as
applicable) statement of cash flows for such quarter and the portion of
the fiscal year through the end of such quarter;
setting forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or
52
officer, as the case may be, and disclosed therein). If ACEP has designated any
of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual
financial information required by the preceding paragraph shall include a
reasonably detailed presentation, either on the face of the financial statements
or in the footnotes thereto of the financial condition and results of operations
of the Group Members separate from the financial condition and results of
operations of the Unrestricted Subsidiaries.
6.2. Certificates; Other Information. Furnish to the Administrative
Agent and each Lender (or, in the case of clause (g), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1,
(i) a certificate of a Responsible Officer stating that, to
the best of each such Responsible Officer's knowledge, each Group Member
during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate; and
(ii) in the case of quarterly or annual financial statements,
(x) a Compliance Certificate containing all information and calculations
necessary for determining compliance by the Group Members with the
provisions of this Agreement referred to therein as of the last day of the
fiscal quarter or fiscal year of ACEP, as the case may be, and (y) to the
extent not previously disclosed to the Administrative Agent, a listing of
any Intellectual Property acquired by any Group Member since the date of
the most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Availability Date);
(c) as soon as available, and in any event no later than the last
day of each fiscal year of ACEP, a detailed consolidated and consolidating
projected income statement of the Group Members as of the end of the following
fiscal year, and a description of the underlying assumptions applicable thereto
(collectively, the "Projections"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections are based on reasonable estimates, information and assumptions and
that such Responsible Officer has no reason to believe that such Projections are
incorrect or misleading in any material respect;
(d) if ACEP is not then a reporting company under the Securities
Exchange Act of 1934, as amended, within 45 days after the end of each fiscal
quarter of ACEP, a narrative discussion and analysis of the financial condition
and results of operations of Group Members for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of such
fiscal quarter, as compared to the actual financial condition and results of
operations comparable periods of the previous year;
53
(e) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior Second Lien
Note Indenture or the Acquisition Documentation;
(f) within five days after the same are sent, copies of all
financial statements and reports that ACEP sends to the holders of any class of
its debt securities or public equity securities and, within five days after the
same are filed, copies of all financial statements and reports that ACEP may
make to, or file with, the SEC; and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3. Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the relevant Group Member.
6.4. Maintenance of Existence; Compliance. (a) (i) Preserve, renew
and keep in full force and effect its organizational existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.5. Maintenance of Property; Insurance. (a) Keep all property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same business.
6.6. Inspection of Property; Books and Records; Discussions. (a)
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities, (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records during customary
business hours once each calendar quarter (excluding any visit by any Lender or
Affiliate thereof made for purposes other than an inspection), provided that at
any time after the occurrence and during the continuance of a Default or an
Event of Default, representatives of any Lender may visit and inspect any of the
properties of the Group Members and examine and make abstracts from any of the
books and records of the Group Members at any reasonable time and as often as
may reasonably be desired, (c) permit representatives of any Lender to discuss
the business, operations, properties and financial and other condition of the
Group Members with officers and employees of the Group Members at any reasonable
time and as often as may reasonably be desired, (d) after any Lender has
notified ACEP of its intent to do so, permit representatives of any Lender to
meet with their independent certified public accountants no more than once per
year (other than at any time after the occurrence and during the continuance of
a Default or an
54
Event of Default during which time such representatives may meet with their
independent certified public accountants at any reasonable time and as often as
may reasonably be desired), and (e) cooperate with the Administrative Agent in
the event that the Administrative Agent requests and conducts any appraisal of
the assets of the Group Members.
6.7. Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or proceeding
that may exist at any time between any Group Member and any Governmental
Authority, that in either case could reasonably be expected to have a Material
Adverse Effect;
(c) any litigation or proceeding affecting any Group Member (i) in
which the amount involved is $500,000 or more and not covered by insurance, (ii)
in which injunctive or similar relief is sought or (iii) which relates to any
Loan Document;
(d) the following events, as soon as possible and in any event
within 30 days after a Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Single Employer Plan, a
failure to make any required contribution to a Single Employer Plan, the
creation of any Lien in favor of the PBGC or a Single Employer Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or ACEP or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan, and in each case in clause (i) and
(ii), such event, together will all other such events, could reasonably be
expected to have a Material Adverse Effect;
(e) the following events, as soon as possible and in any event
within 30 days after a Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Group Plan, a failure to
make any required contribution to a Group Plan, the creation of any Lien in
favor of the PBGC or a Group Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Group Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or ACEP
or any Group Member or any Group Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of, any Group
Plan;
(f) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect; and
(g) promptly upon any Person becoming a Subsidiary of any Group
Member written notice setting forth with respect to such Person:
(i) the date on which such Person became a Subsidiary of the
Borrower,
(ii) whether such Subsidiary is a Restricted or an
Unrestricted Subsidiary, and
55
(iii) all of the data required to be set forth in Schedule
4.15 hereto with respect to all Subsidiaries of Group Member (it being
understood that such written notice shall be deemed to supplement Schedule
4.15 hereto for all purposes of this Agreement);
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action applicable Group Member proposes to take with
respect thereto.
6.8. Environmental Laws(a) . (a) Comply in all material respects
with, and ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9. Additional Collateral, etc.
(a) With respect to any property acquired after the Availability
Date by any Group Member (other than (x) any property described in paragraph
(b), (c) or (d) below, and (y) any property subject to a Lien expressly
permitted by Section 7.3(h)) as to which the Administrative Agent (or the
Collateral Agent on its behalf), for the benefit of the Lenders, does not have a
perfected first priority Lien, promptly:
(i) execute and deliver to the Administrative Agent (or the
Collateral Agent on its behalf) such amendments to the Pledge and Security
Agreement or such other documents as the Administrative Agent deems
necessary or advisable to grant to the Administrative Agent (or the
Collateral Agent on its behalf), for the benefit of the Lenders, a
security interest in such property; and
(ii) take all actions necessary or advisable to grant to the
Administrative Agent (or the Collateral Agent on its behalf), for the
benefit of the Lenders, a perfected first priority security interest in
such property, including the filing of Uniform Commercial Code financing
statements in such jurisdictions or take such other actions as may be
required by the Pledge and Security Agreement or by law or as may be
requested by the Administrative Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $2,000,000 or acquired
with the proceeds of any disposition of any property or assets constituting
Collateral acquired after the Closing Date by any Group Member (other than any
such real property subject to a Lien expressly permitted by Section 7.3(h)),
promptly:
(i) execute and deliver a first priority Mortgage, in favor of
the Administrative Agent (or the Collateral Agent on its behalf), for the
benefit of the Lenders, covering such real property;
56
(ii) if requested by the Administrative Agent, provide the
Lenders with (x) title and extended coverage insurance covering such real
property in an amount at least equal to the purchase price of such real
property (or such other amount as shall be reasonably specified by the
Administrative Agent) as well as a current ALTA survey thereof, together
with a surveyor's certificate and (y) any consents or estoppels reasonably
deemed necessary or advisable by the Administrative Agent in connection
with such Mortgage, each of the foregoing in form and substance reasonably
satisfactory to the Administrative Agent;
(iii) if requested by the Administrative Agent, deliver to the
Administrative Agent an environmental report, which report shall be in
form and substance reasonably satisfactory to the Administrative Agent;
and
(iv) if requested by the Administrative Agent, deliver to the
Administrative Agent (or the Collateral Agent on its behalf) legal
opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) With respect to any new Restricted Subsidiary created or
acquired after the Availability Date by any Group Member (which, for the
purposes of this paragraph (c), shall include any existing Restricted Subsidiary
that ceases to be an Unrestricted Subsidiary), subject to applicable Gaming
Laws, promptly:
(i) execute and deliver to the Administrative Agent (or the
Collateral Agent, as applicable) such amendments hereto and to the Pledge
and Security Agreement as the Administrative Agent deems necessary or
advisable to grant to the Administrative Agent (or the Collateral Agent on
its behalf), for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Restricted Subsidiary
that is owned by any Group Member;
(ii) deliver to the Administrative Agent (or the Collateral
Agent on its behalf) the certificates representing such Capital Stock,
together with undated stock powers or assignments, in blank, executed and
delivered by a duly authorized officer of the relevant Group Member;
(iii) cause such new Restricted Subsidiary (A) to become a
party hereto and to the Pledge and Security Agreement, (B) to take such
actions necessary or advisable to grant to the Administrative Agent (or
the Collateral Agent on its behalf) for the benefit of the Lenders a
perfected first priority security interest in the Collateral described in
the Pledge and Security Agreement with respect to such new Restricted
Subsidiary, including the filing of Uniform Commercial Code financing
statements in such jurisdictions and take such other actions as may be
required by the Pledge and Security Agreement or by law or as may be
requested by the Administrative Agent and (C) to deliver to the
Administrative Agent (or the Collateral Agent on its behalf) such other
documentation required to be delivered pursuant to the Pledge and Security
Agreement; and
(iv) if requested by the Administrative Agent, deliver to the
Administrative Agent (or the Collateral Agent on its behalf) legal
opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
57
(d) With respect to any new Unrestricted Subsidiary created or
acquired after the Availability Date by any Group Member, subject to applicable
Gaming Laws, promptly:
(i) execute and deliver to the Administrative Agent such
amendments hereto and to the Pledge and Security Agreement, as applicable,
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent (or the Collateral Agent on its behalf), for the
benefit of the Lenders, a perfected first priority security interest in
the Capital Stock of such new Subsidiary that is owned by any such Group
Member;
(ii) deliver to the Administrative Agent (or the Collateral
Agent on its behalf) the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the relevant Group Member, as the case may be,
and take such other action as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Administrative Agent's (or
the Collateral Agent's) security interest therein; and
(iii) if requested by the Administrative Agent, deliver to the
Administrative Agent (or the Collateral Agent on its behalf) legal
opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
6.10. Further Assurances. From time to time execute and deliver, or
cause to be executed and delivered, such additional instruments, certificates or
documents, and take all such actions, as the Administrative Agent may reasonably
request for the purposes of implementing or effectuating the provisions of this
Agreement and the other Loan Documents, or of more fully perfecting or renewing
the rights of the Administrative Agent and the Lenders with respect to the
Collateral (or with respect to any additions thereto or replacements or proceeds
thereof or with respect to any other property or assets hereafter acquired by
any Group Member which may be deemed to be part of the Collateral) pursuant
hereto or thereto. Upon the exercise by the Administrative Agent or any Lender
of any power, right, privilege or remedy pursuant to this Agreement or the other
Loan Documents which requires any consent, approval, recording qualification or
authorization of any Governmental Authority, the applicable Group Member will
execute and deliver, or will cause the execution and delivery of, all
applications, certifications, instruments and other documents and papers that
the Administrative Agent or such Lenders may be required to obtain from the
applicable Group Member for such governmental consent, approval, recording,
qualification or authorization.
6.11. Unrestricted Subsidiaries and Restricted Subsidiaries.
ACEP may designate any Subsidiary as an Unrestricted Subsidiary if:
(i) such designation is in compliance with Section 7.6;
(ii) after giving effect to such designation, such Subsidiary
does not own, directly or indirectly, 50% or more of the Capital Stock in
any Restricted Subsidiary;
(iii) such Subsidiary has no Indebtedness other than
Non-Recourse Indebtedness;
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(iv) such Subsidiary does not own any Key Property or portion
thereof or interest therein;
(v) such Subsidiary is not party to any agreement, contract,
arrangement or understanding with any Group Member other than any such
agreement, contract, arrangement or understanding the terms of which are
no less favorable to such Group Member than the terms that such member
could obtain at the time from Persons who are not Affiliates of a Group
Member (other than any agreement, contract, arrangement or understanding
described in Section 7.9(b)(iv));
(vi) such Subsidiary is a Person with respect to which no
Group Member has any direct or indirect obligation (a) to subscribe for
additional Equity Interests (unless the amount of such subscription could
be made as a Restricted Payment) or (b) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(vii) no Event of Default shall have occurred and be
continuing as a result from ACEP's election to so designate a Subsidiary.
ACEP may designate an Unrestricted Subsidiary as a Restricted Subsidiary if:
(a) the Indebtedness of such Unrestricted Subsidiary would have been
permitted under Section 7.2; and
(b) no Event of Default shall have occurred and be continuing or
shall result from such designation.
Any designation of a Restricted Subsidiary as an Unrestricted Subsidiary, and
any designation of an Unrestricted Subsidiary as a Restricted Subsidiary, shall
be evidenced by filing with the Administrative Agent a certified copy of the
resolution of the board of directors of ACEP giving effect to such designation
and an officer's certificate of ACEP certifying that such designation complies
with the applicable requirements set forth in this Section 6.11. Schedule 4.15
may be amended from time to time by ACEP in accordance with the following
sentence. Upon the designation of a Subsidiary as an Unrestricted Subsidiary or
a Restricted Subsidiary, Schedule 4.15 shall be amended to indicate the status
of such Subsidiary as an Unrestricted Subsidiary or a Restricted Subsidiary. Any
Restricted Subsidiary designated as an Unrestricted Subsidiary in accordance
with this Section 6.11 shall be released from its obligations under each Loan
Document to which it is a party and the Administrative Agent shall release and
discharge the Liens granted by such Unrestricted Subsidiary related to the
Collateral pursuant to such Loan Documents. The foregoing to the contrary
notwithstanding, in the event that ACEP designates any Subsidiary as an
Unrestricted Subsidiary without satisfying each of the requirements set forth in
this Section 6.11, such Subsidiary shall be deemed to be a Restricted Subsidiary
and such designation of such Subsidiary as an Unrestricted Subsidiary shall be
ineffective.
SECTION 7. NEGATIVE COVENANTS
Each Group Member from time to time party hereto hereby agrees that,
so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or Agent
hereunder, such Group Member shall not, and shall not permit any other Group
Member that is a Subsidiary of such Group Member to, directly or indirectly:
59
7.1. Financial Condition Covenants
(a) Minimum Asset Coverage Ratio. On and after the Availability
Date, permit the Asset Coverage Ratio as at the last day of any fiscal quarter
of ACEP (or, on the Availability Date, the most recently completed fiscal
quarter immediately preceding the Availability Date) to fall below 5.00 to 1.00
unless the Group Member shall have repaid Indebtedness to the extent necessary
to achieve an Asset Coverage Ratio equal to or above 5.00 to 1.00 within 5 days
after a Group Member is aware (after due inquiry) of such non-compliance (and in
any event prior to the date on which ACEP is required to deliver the applicable
financial statements, it being understood that if such financial statements are
not delivered on or before the date required pursuant to Section 6.1, the Group
Members shall be deemed not to be in compliance with this Section 7.1).
(b) Consolidated First Lien Debt Leverage Ratio. On and after the
Availability Date, permit the Consolidated First Lien Debt Leverage Ratio as at
the last day of any fiscal quarter of ACEP (or, on the Availability Date, the
most recently completed fiscal quarter immediately preceding the Availability
Date) to exceed 1.00 to 1.00 unless the Group Member shall have repaid
Indebtedness to the extent necessary to achieve a Consolidated First Lien Debt
Leverage Ratio equal to or less than 1.00 to 1.00 within 5 days after a Group
Member is aware (after due inquiry) of such non-compliance (and in any event
prior to the date on which ACEP is required to deliver the applicable financial
statements, it being understood that if such financial statements are not
delivered on or before the date required pursuant to Section 6.1, the Group
Members shall be deemed not to be in compliance with this Section 7.1).
7.2. Indebtedness
(a) Ratio Debt. No Group Member will, directly or indirectly, incur
any Indebtedness, and the Borrower will not issue any Disqualified Stock and
will not permit any of their Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that the Group Members may incur
Indebtedness (including Indebtedness acquired as a result of any merger or
acquisition) or issue Disqualified Stock or preferred stock, if the Fixed Charge
Coverage Ratio for the Borrower's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock or such preferred stock is issued, as the case may be, would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or the Disqualified Stock or the preferred stock had been
issued, as the case may be, at the beginning of such four-quarter period.
(b) Additional Permitted Debt. In addition, clause (a) above will
not prohibit the incurrence of the following items of Indebtedness
(collectively, "Permitted Indebtedness"):
(i) Indebtedness of any Group Member pursuant to any Loan
Document;
(ii) the Senior Second Lien Notes in an aggregate principal
amount of $215,000,000 or the exchange notes in respect thereof pursuant
to the Senior Second Lien Indenture;
(iii) (A) Indebtedness of the Borrower and American Casino &
Entertainment Properties Finance Corp. in respect of additional Senior
Second Lien
60
Notes (including any Senior Second Lien Notes issued pursuant to Section
4.09(b)(14) of the Senior Second Lien Indenture) and (B) Guarantee
Obligations of any Restricted Subsidiary in respect of such Indebtedness,
provided that such Indebtedness and the Liens in respect thereof are
subject to the Intercreditor Agreement;
(iv) Indebtedness (including, without limitation, Capital
Lease Obligations) secured by Liens permitted by Section 7.3(h) in an
aggregate principal amount not to exceed $10,000,000 at any one time
outstanding;
(v) the incurrence by any Group Member of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are
used to refund, refinance or replace Indebtedness (other than intercompany
Indebtedness) that was incurred under the first paragraph of this covenant
or clauses (iv), (v), (xi) or (xii) of this paragraph;
(vi) the incurrence by Group Members of intercompany
Indebtedness between or among Group Members; provided, however, that (a)
if the Borrower is the obligor on such Indebtedness, such Indebtedness
must be expressly subordinated to the prior payment in full in cash of all
Borrower Obligations, (b) if any other Group Member is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of its Obligations under Section 10; and (c) (i)
any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than a Group Member and
(ii) any sale or other transfer of any such Indebtedness to a Person that
is not a Group Member shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by a Group Member, as the case may be,
that was not permitted by this clause (v); provided that in the case of
clauses (a) and (b), that no restriction on the payment of principal,
interest or other obligations in connection with such intercompany
Indebtedness shall be required by such subordinated terms except during
the occurrence and continuation of a Default or Event of Default;
(vii) Hedge Agreements permitted under Section 7.11;
(viii) Guarantee Obligations by any Group Member of
Indebtedness of another Group Member that was permitted to be incurred by
another provision of this covenant; provided that if the Indebtedness
being guaranteed is subordinated to or pari passu with the Loans, then
such Guarantee Obligations shall be subordinated or pari passu, as
applicable, to the same extent as the Indebtedness guaranteed;
(ix) the incurrence by ACEP or any of its Restricted
Subsidiaries of Indebtedness in respect of workers' compensation claims,
self-insurance obligations, bankers' acceptances, performance and surety
bonds in the ordinary course of business;
(x) the incurrence by ACEP or any of its Restricted
Subsidiaries of Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds, so long as such
Indebtedness is covered within five business days;
(xi) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2 and any refinancings, refundings, renewals or extensions
thereof (without increasing, or shortening the maturity of, the principal
amount thereof);
61
(xii) the incurrence by any Group Member of Non-Recourse
Financing used to finance the construction, purchase or lease of personal
or real property used in the business of such Group Member; provided, that
the Indebtedness incurred pursuant to this clause (xii) (including any
refinancings thereof pursuant to clause (v) above) shall not exceed
$15,000,000 outstanding at any time;
(xiii) Indebtedness arising from any agreement entered into by
a Group Member providing for indemnification, purchase price adjustment or
similar obligations, in each case, incurred or assumed in connection with
an Asset Sale;
(xiv) the incurrence by a Group Member of Permitted Affiliate
Subordinated Indebtedness;
(xv) the incurrence by ACEP or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
at any time outstanding, including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (xv), not to exceed $10,000,000 at any one time
outstanding.
No Group Member will incur any Indebtedness (including Permitted Debt) that is
contractually subordinated in right of payment to any other Indebtedness of the
Group Members unless such Indebtedness is also contractually subordinated in
right of payment to the Obligations on substantially identical terms; provided,
however, that no Indebtedness of a Group Member shall be deemed to be
contractually subordinated in right of payment to any other Indebtedness of such
Group Member for purposes of this paragraph solely by virtue of being unsecured
or secured to a lesser extent or on a junior Lien basis. For purposes of
determining compliance with this covenant, in the event that an item of
Indebtedness meets the criteria of more than one of the categories of clause (a)
or (b) above, in each case, as of the date of incurrence thereof, the Borrower
shall, in its sole discretion, classify (or later reclassify in whole or in
part, in its sole discretion) such item of Indebtedness in any manner that
complies with this covenant and such Indebtedness will be treated as having been
incurred pursuant to such clauses, designated by the Borrower. The accrual of
interest, the accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional Indebtedness with the
same terms, the reclassification of preferred stock as Indebtedness due to a
change in accounting principles, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
will not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Stock for purposes of this covenant; provided, that in each such
case, that the amount thereof shall be included in Fixed Charges of ACEP as
accrued (to the extent applicable under the definition of Fixed Charges).
Notwithstanding any other provision of this covenant, the maximum amount of
Indebtedness that any Group Member may incur pursuant to this covenant shall not
be deemed to be exceeded solely as a result of fluctuations in exchange rates or
currency values. The amount of any Indebtedness outstanding as of any date will
be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness
issued with original issue discount; (2) the principal amount of the
Indebtedness, in the case of any other Indebtedness; and (3) in respect of
Indebtedness of another Person secured by a Lien on the assets of the specified
Person, the lesser of: (a) the Fair Market Value of such assets at the date of
determination; and (b) the amount of the Indebtedness of the other Person.
7.3. Liens. Create, incur, assume or suffer to exist any Lien upon
any of its property, whether now owned or hereafter acquired, except for:
62
(a) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Group Members, as the case may be, in
conformity with GAAP and such proceedings could not reasonably be expected to
result in the imminent sale, forfeiture or loss of any material portion of the
Collateral or any interest therein;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business that
are not overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Group Members, as the case
may be, in conformity with GAAP;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation, provided that such
deposit or deposits do not exceed $2,000,000 in the aggregate;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate,
are not substantial in amount and that do not in any case materially detract
from the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of any Group Member;
(f) leases or a leasehold mortgage in favor of a party financing the
lease of space, including, without limitation, construction or improvements
thereto within a Key Property; provided that (i) such lease or the lease
affected by such leasehold mortgage is permitted pursuant to Section 7.16, (ii)
no Group Member is liable for the payment of any principal of, or interest or
premium on, or any other amount in respect of, such financing and (iii) the
affected lease and leasehold mortgage are expressly made subject and subordinate
to the Lien of the applicable Mortgage, subject to Section 7.16(c);
(g) Liens in existence on the date hereof listed on Schedule 7.3,
securing Indebtedness permitted by Section 7.2(b)(xi), provided that no such
Lien is spread to cover any additional property after the Availability Date and
that the amount of Indebtedness secured thereby is not increased;
(h) Liens to secure Indebtedness permitted pursuant to Section
7.2(b)(iv) and (xii) and extending only to the personal or real property so
purchased or leased; provided, however, that, such Lien does not extend over the
real property secured under the Mortgages executed on the Availability Date (or
any Mortgages executed after the Availability Date with respect to any real
property acquired with the proceeds of any disposition of any property or assets
constituting Collateral);
(i) Liens securing the Obligations hereunder created pursuant to the
Collateral Documents;
(j) Liens securing Indebtedness incurred pursuant to Section
7.2(b)(ii) and (iii), provided that (A) such Liens are subject to the
Intercreditor Agreement and in accordance with
63
the Second Lien Trust Indenture and (B) no amounts may be deposited by any Group
Member with the Trustee (other than pursuant to the Escrow and Security
Agreement);
(k) any interest or title of a lessor under any lease entered into
by a Group Member in the ordinary course of its business and covering only the
assets so leased;
(l) licenses of patents, trademarks and other intellectual property
rights granted by any Group Member in the ordinary course of business and not
interfering in any material respect with the ordinary conduct of the business of
such Group Member;
(m) any judgment attachment or judgment Lien not constituting an
Event of Default;
(n) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(o) Liens arising from filing financing statements or other
instruments or documents relating solely to leases;
(p) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
(q) Liens incurred in the ordinary course of business of the Group
Members with respect to obligations that do not exceed $5,000,000 in the
aggregate at any one time outstanding;
(r) Liens on property of a Person existing at the time such Person
became a Group Member, is merged into or consolidated with or into, or wound up
into, one of a Group Member; provided, that such Liens were in existence prior
to the consummation of, and were not entered into in contemplation of, such
merger or consolidation or winding up and do not extend to any other assets
other than those of the Person acquired by, merged into or consolidated with a
Group Member;
(s) Liens on property existing at the time of acquisition thereof by
a Group Member; provided that such Liens were in existence prior to the
consummation of, and were not entered into in contemplation of, such
acquisition;
(t) Liens created pursuant to the Escrow and Security Agreement; and
(u) Liens in favor of a Group Member; provided that if such Liens
are on any Collateral, that such Liens are either collaterally assigned to the
Administrative Agent (or the Collateral Agent on its behalf) or subordinate to
the Lien in favor of the Administrative Agent securing the Obligations.
7.4. Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, or, in the case of any Restricted Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except that:
(a) any Group Member may be merged or consolidated with or into
another Group Member that is the Borrower or a Wholly Owned Subsidiary or,
subject to Section 7.7,
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with or into any Unrestricted Subsidiary, provided that if a Group Member (other
than the Borrower) merges with or is consolidated with or into the Borrower, the
Borrower is the surviving entity; and
(b) any Group Member may Dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to another Group Member that is the Borrower
or a Wholly Owned Subsidiary or, subject to Section 7.7, any Unrestricted
Subsidiary.
7.5. Disposition of Property. Except with respect to any
Disposition, the proceeds of which are applied in accordance with Section
3.2(a), dispose of any of its property, whether now owned or hereafter acquired
(including any issuance or sale by any Group Member of Capital Stock of their
respective Restricted Subsidiaries and any designation of a Restricted
Subsidiary as an Unrestricted Subsidiary), except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to a
Group Member that is the Borrower or a Wholly Owned Subsidiary; and
(e) the Disposition of other property having a fair market value not
to exceed $1,000,000 in the aggregate for any fiscal year of ACEP.
7.6. Restricted Payments. No Group Member shall, directly or
indirectly:
(a) declare or pay any dividend or make any other payment or
distribution on account of ACEP's or any Restricted Subsidiary's Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving any Group Member) or to the direct or indirect
holders of any Group Member's Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of ACEP or to a Group Member);
(b) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving ACEP) any Equity Interests of ACEP or any direct or indirect parent of
ACEP;
(c) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness of any Group
Member that is contractually subordinated to the Obligations (excluding any
intercompany Indebtedness between or among the Group Members), except a payment
of interest, other expenses or principal at the stated maturity on such
subordinated Indebtedness that is not Permitted Affiliate Subordinated
Indebtedness;
(d) purchase, redeem, defease or otherwise retire for value or pay
any interest, principal or other amount on any Permitted Affiliate Subordinated
Indebtedness (other than payment of interest in the form of additional Permitted
Affiliate Subordinated Indebtedness or
65
Equity Interests in ACEP (other than Disqualified Stock) or accrual of interest
on Permitted Affiliate Subordinated Indebtedness); or
(e) make any Restricted Investment (all such payments and other
actions set forth in these clauses (a) through (e) above being collectively
referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(i) no Default or Event of Default has occurred and is
continuing or would occur as a consequence of such Restricted Payment;
(ii) ACEP would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the most recently ended four-quarter period
for which financial statements are available, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the Section 7.2(a) and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by any Group Member after the
Closing Date (excluding Restricted Payments permitted by clauses (II),
(III), (IV), (VI), (VII), (VIII) and (IX) of the next succeeding
paragraph) is less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Income of ACEP for the period (taken
as one accounting period) from the Availability Date to the end of ACEP's
most recently ended fiscal quarter for which financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit);
provided, however, that to the extent any payments pursuant to the Tax
Allocation Agreement were excluded from the calculation of Consolidated
Net Income during the applicable period, for the purposes of this clause
(a), such payments pursuant to the Tax Allocation Agreement will be
deducted from Consolidated Net Income, plus
(B) 100% of the aggregate net cash proceeds received by ACEP since
the Availability Date as a contribution to its common equity capital or
received as cash proceeds of Permitted Affiliate Subordinated Indebtedness
of ACEP or from the issue or sale of Equity Interests of ACEP (excluding
Disqualified Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt
securities of ACEP that have been converted into or exchanged for such
Equity Interests (other than Equity Interests or Disqualified Stock or
debt securities) sold to a Subsidiary of ACEP, plus
(C) 100% of the lesser of (1) the sum of (I) the aggregate amount
received in cash and (II) the Fair Market Value of property received by
means of (X) the sale or other disposition (other than to a Group Member)
of Restricted Investments made by a Group Member and repurchases and
redemptions of such Restricted Investments from a Group Member and
repayments of loans or advances which constitute Restricted Investments by
a Group Member or (Y) the sale (other than to a Group Member) of the
Capital Stock of an Unrestricted Subsidiary or a distribution from an
Unrestricted Subsidiary (other than in each case to the extent the
Investment in such Unrestricted Subsidiary was made by a Restricted
Subsidiary pursuant to clause (IX) below or to the extent such Investment
constituted a Permitted Investment) or a dividend from an Unrestricted
Subsidiary and (2) the aggregate amount of Restricted Payments made to
make the Restricted Investment
66
so sold or disposed of or in the Capital Stock of the Unrestricted
Subsidiary so sold or disposed of (provided, however, that if the cash
received in any transaction described in clause (X) or (Y) of this clause
(C) plus the cash received from the disposition of any property received
in any such transaction is greater than the amount otherwise calculated
under this clause (c), then such greater cash amount may be added to this
clause (C) in lieu of such lesser amount), plus
(D) in case, after the date hereof, any Unrestricted Subsidiary has
been redesignated as a Restricted Subsidiary or has been merged,
consolidated or amalgamated with or into, or transfers or conveys assets
to, or is liquidated into a Group Member, and no Default or Event of
Default is then occurring or results therefrom, an amount equal to the
lesser of (1) the Fair Market Value of the Investments owned by ACEP and
the Restricted Subsidiaries in such Unrestricted Subsidiary at the time of
the redesignation, combination, transfer or liquidation (or of the assets
transferred or conveyed, as applicable) and (2) the aggregate amount of
Restricted Payments made in such Unrestricted Subsidiary.
So long as no Default or Event of Default has occurred and is continuing or
would be caused thereby, the preceding provisions will not prohibit:
(I) the payment of any dividend or the consummation of any
irrevocable redemption within 60 days after the date of declaration of the
dividend or giving of the redemption notice, as the case may be, if at the
date of declaration or notice, the dividend or redemption payment would
have otherwise complied with this Agreement;
(II) the making of any Restricted Payment in exchange for, or out of
the net cash proceeds of the substantially concurrent sale (other than to
a Subsidiary of ACEP) of, Equity Interests (other than Disqualified Stock)
or Permitted Affiliate Subordinated Indebtedness of ACEP or from the
substantially concurrent contribution of common equity capital to ACEP;
provided, however, that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition will be excluded from clause (iii)(B) above;
(III) the repurchase, redemption, defeasance or other acquisition or
retirement for value of Indebtedness of any Group Member that is
contractually subordinated to the Obligations with the net cash proceeds
from a substantially concurrent incurrence of Permitted Refinancing
Indebtedness with respect thereto;
(IV) the payment of any dividend (or, in the case of any partnership
or limited liability company, any similar distribution) by a Restricted
Subsidiary of ACEP to the direct holders of such Restricted Subsidiary's
Equity Interests on a pro rata basis;
(V) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of ACEP, any parent of ACEP or any
Restricted Subsidiary of ACEP held by any member of ACEP's (or any of its
Restricted Subsidiaries') management pursuant to any management equity
subscription agreement, stock option agreement or similar agreement;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $2,000,000;
(VI) the redemption or repurchase of any Equity Interests or
Indebtedness of ACEP or any of its Subsidiaries to the extent required by
any Gaming Authority or, if
67
determined in the good faith judgment of the board of directors of ACEP as
evidenced by a resolution of the board of directors that has been
delivered to the Administrative Agent, required to prevent the loss or to
secure the grant or establishment of any gaming license or other right to
conduct lawful gaming operations in the United States;
(VII) Permitted Payments to Parent;
(VIII) Restricted Payments pursuant to the terms of the Acquisition
Agreements and the payment of the balance of the intercompany debt owed by
Stratosphere Corporation to American Real Estate Holdings Limited
Partnership;
(IX) the one-time payment of a distribution of Cash Equivalents and
marketable securities to the Parent (the "Parent Distribution") to be paid
within twenty days of the Availability Date such that, at the Availability
Date after giving effect to the Parent Distribution, the purchase price of
the Acquisition, the payment of the balance of the intercompany debt owed
by Stratosphere Corporation to American Real Estate Holdings Limited
Partnership and any unpaid fees and expenses relating to the offering of
the Senior Second Lien Notes, ACEP and its Restricted Subsidiaries, on a
combined basis, would have cash no less than the sum of (x) $25,000,000
and (y) the amount of accrued interest on the Senior Second Lien Notes
from the Closing Date to, and including, the Availability Date; provided,
that from the Closing Date to the date of the Parent Distribution, except
as disclosed in the Offering Memorandum and contemplated in the
Acquisition Agreements, ACEP shall not take any actions and shall cause
its Affiliates not to take any actions that would cause the business of
the Key Properties to be conducted, in any material respect, other than in
the ordinary course.
(X) other Restricted Payments in an aggregate amount since the
Closing Date not to exceed $2,500,000.
For purposes of determining compliance with this covenant, in the event that a
proposed Restricted Payment meets the criteria of more than one of the
categories of Restricted Payments described in clauses (I) through (X) above, or
is permitted to be made pursuant to the first paragraph of this covenant, ACEP
shall, in its sole discretion, classify such Restricted Payment in any manner
that complies with this covenant. The amount of all Restricted Payments (other
than cash) will be the Fair Market Value on the date of the Restricted Payment
of the assets, property or securities proposed to be transferred or issued by
ACEP or such Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment.
7.7. Investments. Make any advance, loan, extension of credit (by
way of guaranty or otherwise) or capital contribution to, or purchase any
Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting a business unit of, or make any other investment in, any
Person (all of the foregoing, "Investments"), except:
(a) any Investments in ACEP, or any guarantor of the Senior Second
Lien Notes and of the Borrower Obligations or in any Restricted Subsidiary that
is not such a guarantor if the Investments in such Restricted Subsidiary that is
not such a guarantor from ACEP or any of the other Restricted Subsidiaries
aggregate less than $1,000,000;
(b) any Investments in Cash Equivalents;
68
(c) Investments by ACEP or any Restricted Subsidiary of ACEP in a
Person, if as a result of such Investment (i) such Person becomes a Group Member
or (b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
a Group Member;
(d) any Investment in assets useful in the business of the Group
Members made by any Group Member with the proceeds with any Reinvestment
Deferred Amount (including any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale in accordance with Section 3.10);
(e) any acquisition of assets or Capital Stock solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of ACEP;
(f) receivables owing to ACEP or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however, that
such trade terms may include such concessionary trade terms as ACEP or any such
Restricted Subsidiary deems reasonable under the circumstances;
(g) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;
(h) loans or advances to employees, former employees or directors of
ACEP or the Restricted Subsidiaries (i) to fund the exercise price of options
granted under the employment agreements or ACEP's stock option plans or
agreements, in each case, as approved by ACEP's board of directors or (ii) for
any other purpose not to exceed $2,000,000 in the aggregate at any one time
outstanding under this clause (ii);
(i) Investments received (i) in settlement of debts created in the
ordinary course of business and owing to ACEP and any Restricted Subsidiary
(including gaming debts in the ordinary course of business owed by a patron or
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any trade creditor or customer), (ii) in
satisfaction of judgments or (iii) settlement of litigation, arbitrations or
other disputes;
(j) Investments in any person engaged in the casino gaming, hotel,
retail, conference center and entertainment mall and resort business and any
activity or business incidental, directly related or similar thereto (including
owning interests in Subsidiaries, operating a conference center and meeting
facilities and owning and operating or licensing the operation of a retail and
entertainment facilities), or any business or activity that is a reasonable
extension, development or expansion thereof or ancillary thereto, which
Investment is made by the issuance of Equity Interests (other than Disqualified
Stock) of ACEP;
(k) any Investments having an aggregate Fair Market Value (measured
on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (k) since the Closing Date not to exceed the sum of
$20,000,000, plus the amount of cash repaid on any loan made pursuant to this
clause (k) not to exceed the respective original principal amounts of such
loans;
(l) any grant to any Subsidiary of ACEP of gaming or other rights
derivative of any Material Gaming License;
69
(m) Investments represented by obligations under any Hedge
Agreement;
(n) any Investments or loans made to third parties in connection
with such third parties' build out and development of property located at any of
the Key Properties not to exceed $10,000,000 in the aggregate at any one time
outstanding;
(o) repurchases of the Senior Second Lien Notes not otherwise
prohibited hereunder; and
(p) Investments existing on the Closing Date and described on
Schedule 7.7 and any Investments of the funds in the Note Proceeds Account (as
defined in the Senior Second Lien Indenture) in accordance with the investment
limitations in the Escrow Agreement (as defined in the Senior Second Lien
Indenture).
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment. If any Group Member Disposes of any Capital Stock of any Subsidiary
thereof or enters into any merger, consolidation or amalgamation, such that,
after giving effect to any such Disposition, merger, consolidation or
amalgamation, such Person is no longer a Wholly Owned Subsidiary of a Group
Member, such Group Member which owns such Person shall be deemed to have made an
Investment on the date of such Disposition, merger, consolidation or
amalgamation equal to the fair market value of the Capital Stock of such Person
owned by such Group Member after giving effect to such Disposition, merger,
consolidation or amalgamation. If a Restricted Subsidiary is designated as an
Unrestricted Subsidiary, the aggregate fair market value of all outstanding
Investments owned by the applicable Group Member in the Subsidiary so designated
will be deemed to be an Investment made as of the date of such designation.
7.8. Optional Payments and Modifications of Certain Debt
Instruments. (a) Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of or otherwise optionally or voluntarily
defease or segregate funds with respect to the Senior Second Lien Notes (other
than any such repurchase or redemption pursuant to a mandatory disposition
pursuant to and in accordance with Gaming Laws or as a result of an Asset Sale
Offer or Excess Loss Proceeds Offer in accordance with the Senior Second Lien
Indenture), (b) amend, modify, waive or otherwise change, or consent or agree to
any amendment, modification, waiver or other change to, any of the terms of the
Escrow and Security Agreement, the Senior Second Lien Note Indenture or the
Senior Second Lien Notes (other than any such amendment, modification, waiver or
other change that (i) would extend the maturity or reduce the amount of any
payment of principal thereof or reduce the rate or extend any date for payment
of interest thereon and (ii) does not involve the payment of a consent fee); or
(c) designate (or permit any other Person to designate) any Indebtedness (other
than obligations of a Group Member pursuant to the Loan Documents) as "First
Lien Obligations" or "Additional Permitted Senior Debt Obligations" (or any
other defined term having a similar purpose) for the purposes of the
Intercreditor Agreement or the Senior Second Lien Note Indenture.
7.9. Transactions with Affiliates.
(a) Enter into any transaction, including any purchase, sale, lease
or exchange of property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than any Group
Member) unless such transaction is (i) otherwise permitted under this Agreement,
(ii) in the ordinary course of business of the relevant Group
70
Member, and (iii) upon fair and reasonable terms no less favorable to the
relevant Group Member, than it would obtain in a comparable arm's length
transaction with a Person that is not an Affiliate.
(b) The following items will not be subject to the provisions of
this Section 7.9:
(i) any employment agreement, employee benefit plan, officer
or director indemnification agreement or any similar arrangement entered
into by ACEP or any of its Restricted Subsidiaries in the ordinary course
of business and payments pursuant thereto;
(ii) payment of reasonable directors' fees to Persons who are
not otherwise Affiliates of ACEP;
(iii) loans or advances to employees in the ordinary course of
business not to exceed $1,000,000 in the aggregate at any one time
outstanding; and
(iv) the provision of accounting, financial, management,
information technology and other ancillary services to Affiliates,
provided that the applicable Group Members are paid a fee equal to their
out of pocket costs and allocated overhead (including a portion of
salaries and benefits) as determined by ACEP in its reasonable judgment;
provided further that services under this clause shall not include
providing complimentaries or other benefits to customers of Affiliates.
7.10. Sales and Leasebacks. Enter into any arrangement with any
Person providing for the leasing by any Group Member of real or personal
property that has been or is to be sold or transferred by such Group Member to
such Person or to any other Person to whom funds have been or are to be advanced
by such Person on the security of such property or rental obligations of such
Group Member.
7.11. Hedge Agreements. Enter into any Hedge Agreement, except:
(a) Hedge Agreements entered into to hedge or mitigate risks to
which a Group Member has actual exposure (other than those in respect of Capital
Stock); and
(b) Hedge Agreements entered into in order to effectively cap,
collar or exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the any Group Member.
7.12. Negative Pledge Clauses. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of any Group
Member to create, incur, assume or suffer to exist any Lien upon any of its
property or revenues, whether now owned or hereafter acquired, to secure its
Obligations under the Loan Documents to which it is a party other than (a) this
Agreement and the other Loan Documents, (b) solely as to restrictions on Liens
securing liabilities other than the Obligations and the Senior Second Lien Note
Indenture and (c) any agreements governing any purchase money Liens or Capital
Lease Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby).
71
7.13. Clauses Restricting Subsidiary Distributions. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Group Member to:
(a) make Restricted Payments in respect of any Capital Stock of such
Subsidiary held by, or pay any Indebtedness owed to, any Group Member;
(b) make loans or advances to, or other Investments in, any Group
Member; or
(c) sell, lease or transfer any of its assets to any Group Member,
except for such encumbrances or restrictions existing under or by reason of:
(i) any restrictions existing under the Loan Documents;
(ii) any restrictions existing under the Senior Second Lien
Note Indenture;
(iii) agreements in effect on the Availability Date and
identified on Schedule 7.13 and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings of those agreements; provided, however, that the
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are not materially more
restrictive, taken as a whole, with respect to such dividend and other
restrictions than those contained in those agreements on the Availability
Date;
(iv) applicable law, rule or order of an applicable
governmental body;
(v) any instrument governing Indebtedness or Capital Stock of
a Person acquired by any Group Member as in effect at the time of such
acquisition (except to the extent such Indebtedness or Capital Stock was
incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired; provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this
Agreement to be incurred;
(vi) customary non-assignment provisions in leases entered
into in the ordinary course of business;
(vii) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on that property of
the nature described in clause (c) above;
(viii) any agreement for the sale or other disposition of a
Group Member that restricts distributions by that Group Member pending its
sale or other disposition;
(ix) Permitted Refinancing Indebtedness; provided, however,
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not materially more restrictive, taken as a
whole, than those contained in the agreements governing the Indebtedness
being refinanced;
72
(x) Liens securing Indebtedness otherwise permitted to be
incurred under the provisions of Section 7.3; and
(xi) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements, asset sale
agreements, stock sale agreements and other similar agreements entered
into in the ordinary course of business.
7.14. Lines of Business. Enter into any business, either directly or
through any Subsidiary, except for a Principal Business.
7.15. Amendments to Acquisition Documents. (a) Amend, supplement or
otherwise modify any term or provision of the Acquisition Documentation or any
such other documents except for any such amendment, supplement or modification
that could not reasonably be expected to have a Material Adverse Effect or (b)
waive the conditions set forth in Sections 8.1 or 9.4 of that certain membership
interest purchase agreement by and among ACEP, Starfire Holding Corporation and
Carl C. Icahn without the prior written consent of the Administrative Agent.
7.16. Restrictions on Leasing and Dedication of Key Property.
(a) ACEP will not, and will not permit any Group Member to lease,
sublease, or grant a license, concession or other agreement to occupy, manage or
use, as lessor or sublessor, any real or personal Project Assets owned or leased
by any Group Member for annual lease base rent, excluding common area
maintenance and percentage rent, exceeding $2,000,000 with respect to any
individual transaction (each, a "Lease Transaction"), other than the following
Lease Transactions:
(i) any Group Member may enter into a Lease Transaction with
respect to any Project Assets, within or outside the Key Properties, or
with any Person, provided that, in the reasonable opinion of ACEP, (a)
such Lease Transaction will not materially interfere with, impair or
detract from the operations of any of the Project Assets, and will in the
reasonable judgment of ACEP enhance the value and operations of the Key
Properties and (b) such Lease Transaction is at a fair market rent (in
light of other similar or comparable prevailing commercial transactions or
in the reasonable judgment of ACEP, otherwise enhances the value and
operations of any of the Key Properties) and contains such other terms
such that the Lease Transaction, taken as a whole, is commercially
reasonable and fair to such Group Member;
(ii) the transactions and agreements described under Section
7.9 to the extent such transactions or agreements constitute Lease
Transactions;
(iii) any Group Member may enter into a management or
operating agreement with respect to any Project Asset, including any hotel
with any Person (other than an Unrestricted Subsidiary or other Affiliate
of the Sponsor (other than a Group Member)); provided that (i) the manager
or operator has experience in managing or operating similar operations or
assets and (ii) such management or operating agreement is on commercially
reasonable and fair terms to such Group Member (in either case, in the
reasonable judgment of ACEP); and
(iv) any Group Member may enter into a Lease Transaction with
any of any other Group Member.
73
(b) Notwithstanding Section 7.16(a), (i) no gaming or casino
operations may be conducted on any Project Asset that is the subject of such
Lease Transaction other than by a Group Member; and (ii) no Lease Transaction
may provide that any Group Member may subordinate its fee or leasehold interest
to any lessee or any party providing financing to any lessee.
(c) The Administrative Agent shall at the request of any Group
Member enter into a commercially customary leasehold non-disturbance and
attornment agreement with the lessee under any Lease Transaction permitted under
this Section 7.16. Such agreement, among other things, shall provide that if the
interests of the applicable Group Member in the Project Assets subject to the
Lease Transaction are acquired by the Administrative Agent on behalf of the
Lenders (or the Collateral Agent on its behalf), whether by purchase and sale,
foreclosure, or deed in lieu of foreclosure or in any other way, or by a
successor to the Administrative Agent (or the Collateral Agent on its behalf),
including without limitation a purchaser at a foreclosure sale, then in each
case subject to any applicable law or Gaming License, (i) the interests of the
lessee in the Project Assets subject to the Lease Transaction shall continue in
full force and effect and shall not be terminated or disturbed, except in
accordance with the lease documentation applicable to the Lease Transaction, and
(ii) the lessee in the Lease Transaction shall attorn to and be bound to the
Administrative Agent on behalf of the Lenders (or the Collateral Agent on its
behalf), its successors and assigns under all terms, covenants and conditions of
the lease documentation applicable to the Lease Transaction. Such agreement
shall also contain such other provisions that are commercially customary and
that will not materially and adversely affect the Lien granted by the Collateral
Documents (other than pursuant to the terms of the applicable non-disturbance
agreement) as certified to the Administrative Agent by a Responsible Officer of
ACEP.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation,
or any other amount payable hereunder or under any other Loan Document, within
five days after any such interest or other amount becomes due in accordance with
the terms hereof; or
(b) any representation or warranty made or deemed made by any Group
Member herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) any Group Member shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section 6.4(a),
Section 6.5(b), Section 6.7(a), Section 6.6(b) and (c) or Section 7 of this
Agreement or Section 4 of the Pledge and Security or (ii) an "Event of Default"
under and as defined in any Mortgage shall have occurred and be continuing; or
(d) any Group Member shall default in the observance or performance
of any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and such
default shall continue
74
unremedied for a period of 30 days after notice to ACEP from the Administrative
Agent or the Majority Lenders (or in the case of any default in the observance
or performance of any agreement contained in Section 6.9, 10 days); or
(e) any Group Member:
(i) defaults in making any payment of any principal of any
Indebtedness (including any Guarantee Obligation, but excluding the Loans)
on the scheduled or original due date with respect thereto; or
(ii) defaults in making any payment of any interest on any
such Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or
(iii) defaults in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder
or beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
to become subject to a mandatory offer to purchase by the obligor
thereunder or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable;
provided, that a default, event or condition described in clause (i), (ii)
or (iii) of this paragraph (e) shall not at any time constitute an Event
of Default unless the items described in clauses (i), (ii) and (iii) of
this paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount equal to or in excess of
$5,000,000, in the aggregate; or
(f) (i) any Group Member shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or any Group Member shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Group Member any case, proceeding or other action of a
nature referred to in clause (i) above that (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against any Group Member any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets that results in the entry of
an order for any such relief that shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv)any Group Member shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
75
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan
except for any prohibited transaction resulting from the making of a Loan where
the representation made by the Agents or any Lender in Section 3.16 shall prove
to have been inaccurate, (ii) any "accumulated funding deficiency" (as defined
in Section 302 of ERISA), whether or not waived, shall exist with respect to any
Single Employer Plan or any Lien in favor of the PBGC or a Single Employer Plan
shall arise on the assets of any Group Member or any Commonly Controlled Entity,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is reasonably likely to
result in the termination of such Single Employer Plan for purposes of Title IV
of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV
of ERISA, (v) any Group Member or any Commonly Controlled Entity shall incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(h) one or more judgments or decrees shall be entered against any
Group Member involving in the aggregate a liability (not paid or fully covered
by insurance as to which the relevant insurance company has acknowledged
coverage) of $5,000,000 or more, and all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within 60 days
from the entry thereof; or
(i) any of the Collateral Documents shall cease, for any reason, to
be in full force and effect, or any Group Member or any Affiliate of any Group
Member shall so assert, or any Lien created by any of the Collateral Documents
shall cease to be enforceable and of the same effect and priority purported to
be created thereby; or
(j) the guarantee under Article 10 hereof shall cease, for any
reason, to be in full force and effect or any Group Member or any Affiliate of
any Group Member shall so assert; or
(k) (i) the direct or indirect sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the properties or
assets of ACEP and its Subsidiaries taken as a whole to any "person" (as that
term is used in Section 13(d) of the Exchange Act) other than the Sponsor or a
Related Party; (ii) the adoption of a plan relating to the liquidation or
dissolution of the Borrower; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation), the result of
which is that any "person" (as defined above), other than the Sponsor or the
Related Parties, becomes the "beneficial owner" (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 50% of the
voting power of ACEP; or (iv) after an initial public offering of ACEP or any
direct or indirect parent of ACEP (in either case, the "public company"), the
first day on which a majority of the members of the board of directors of the
public company are not Continuing Directors. For purposes of this clause (k),
any holding company whose only significant asset is the Capital Stock of ACEP
shall be disregarded and the beneficial ownership of such holding company shall
be attributed to ACEP and any Person which has entered into an agreement to
acquire any Capital Stock of ACEP shall not be deemed to have any beneficial
ownership of such Capital Stock until the closing of such acquisition; or
76
(l) the Liens securing the Senior Second Lien Notes or the
guarantees thereof shall cease, for any reason, to be validly subordinated to
the Liens securing the Obligations or the obligations of the Restricted
Subsidiaries under its guarantee hereunder, as the case may be, as provided in
the Intercreditor Agreement, or any Group Member, any Affiliate of any Group
Member, the Trustee or the holders of at least 25% in aggregate principal amount
of the Senior Second Lien Notes shall so assert; or
(m) revocation, termination, suspension or other cessation of
effectiveness of any Gaming License, which results in the cessation or
suspension of gaming operations for a period of more than 30 consecutive days at
any of the Key Properties (other than as a result of an Asset Sale);
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Majority Lenders, the Administrative Agent may, or upon the request of the
Majority Lenders, the Administrative Agent shall, by notice to ACEP declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate or exercise such other remedies under any of the Loan
Document; and (ii) with the consent of the Majority Lenders, the Administrative
Agent may, or upon the request of the Majority Lenders, the Administrative Agent
shall, by notice to ACEP, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to 105% of the aggregate then undrawn and unexpired amount
of such Letters of Credit. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Borrower hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower (or such other Person as may be
lawfully entitled thereto). Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by each Borrower.
SECTION 9. THE AGENTS
9.1. Appointment. Each Lender hereby irrevocably designates and
appoints each Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes such Agent, in
such capacity, to take such action on its
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behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
such Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, no Agent shall have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent. In
addition, each Lender hereby approves the appointment by the Administrative
Agent of the Collateral Agent pursuant to the terms set forth in the
Intercreditor Agreement and authorizes the Administrative Agent to as the "First
Lien Agent" under (and as defined in) the Intercreditor Agreement.
9.2. Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3. Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Group Member or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Group Member a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Group Member.
9.4. Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including counsel to
the Group Members), independent accountants and other experts selected by such
Agent. The Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. Each Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Agents shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance
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with a request of the Majority Lenders (or, if so specified by this Agreement,
all Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
9.5. Notice of Default. No Agent shall be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender or ACEP referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall promptly give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Majority Lenders (or, if so specified by this Agreement, all Lenders);
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
9.6. Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Group Member or any affiliate of
a Group Member, shall be deemed to constitute any representation or warranty by
any Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Group Members and
their affiliates and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Group Members and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Group Member or any affiliate
of a Group Member that may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7. Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by a Group Member and without
limiting the obligation of the Group Members to do so), ratably according to
their respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of,
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the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent's gross negligence or
willful misconduct. The agreements in this Section shall survive the payment of
the Loans and all other amounts payable hereunder.
9.8. Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Group Member as though such Agent were not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9. Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and ACEP. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Majority Lenders shall appoint
the Syndication Agent, or if the Syndication Agent does not accept such
appointment, such other Lender as a successor agent for the Lenders, which
successor agent shall (unless the Syndication Agent is appointed or an Event of
Default shall have occurred and be continuing) be subject to approval by ACEP
(which approval shall not be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 10 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Majority Lenders appoint a successor
agent as provided for above. The Syndication Agent may, at any time, by notice
to the Lenders and the Administrative Agent, resign as Syndication Agent
hereunder, whereupon the duties, rights, obligations and responsibilities of the
Syndication Agent hereunder shall automatically be assumed by, and inure to the
benefit of, the Administrative Agent, without any further act by the Syndication
Agent, the Administrative Agent or any Lender. After any retiring Administrative
Agent's resignation as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
9.10. Agents Generally. Except as expressly set forth herein, no
Agent shall have any duties or responsibilities hereunder in its capacity as
such.
9.11. The Lead Arranger. The Lead Arranger, in its capacity as such,
shall have no duties or responsibilities, and shall incur no liability, under
this Agreement and other Loan Documents.
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SECTION 10. GUARANTEE
10.1. Guarantee(a) . (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by each Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 10.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 10 or
affecting the rights and remedies of any Agent or any Lender hereunder.
(d) The guarantee contained in this Section 10 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of this Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by any Agent or any
Lender from the Borrower, any of the Guarantors, any other guarantor or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Borrower Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by such
Guarantor in respect of the Borrower Obligations or any payment received or
collected from such Guarantor in respect of the Borrower Obligations), remain
liable for the Borrower Obligations up to the maximum liability of such
Guarantor hereunder until the Borrower Obligations are paid in full, no Letter
of Credit shall be outstanding and the Commitments are terminated.
10.2. Rights of Reimbursement, Contribution and Subrogation. In case
any payment is made on account of the Obligations by any Guarantor or is
received or collected on account of the Obligations from any Guarantor or its
property:
(a) If such payment is made by the Borrower or from its property,
then, if and to the extent such payment is made on account of Obligations
arising from or relating to a Loan made to the Borrower or a Letter of Credit
issued for account of the Borrower, the Borrower shall not be entitled (A) to
demand or enforce reimbursement or contribution in respect of such payment from
any other Guarantor or (B) to be subrogated to any claim, interest, right or
remedy of any Lender against any other Person, including any other Guarantor or
its property.
(b) If such payment is made by a Guarantor or from its property,
such Guarantor shall be entitled, subject to and upon payment in full of the
Obligations, (A) to demand and enforce reimbursement for the full amount of such
payment from the Borrower and (B) to
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demand and enforce contribution in respect of such payment from each other
Guarantor which has not paid its fair share of such payment, as necessary to
ensure that (after giving effect to any enforcement of reimbursement rights
provided hereby) each Guarantor pays its fair share of the unreimbursed portion
of such payment. For this purpose, the fair share of each Guarantor as to any
unreimbursed payment shall be determined based on an equitable apportionment of
such unreimbursed payment among all Guarantors based on the relative value of
their assets and any other equitable considerations deemed appropriate by the
court.
(c) If and whenever (after payment in full of the Obligations) any
right of reimbursement or contribution becomes enforceable by any Guarantor
against any other Guarantor under Sections 10.2(a) and 10.2(b), such Guarantor
shall be entitled, subject to and upon payment in full of the Obligations, to be
subrogated (equally and ratably with all other Guarantors entitled to
reimbursement or contribution from any other Guarantor as set forth in this
Section 10.2) to any security interest that may then be held by the
Administrative Agent upon any Collateral granted to it under any Loan Document.
Such right of subrogation shall be enforceable solely against the Guarantors,
and not against the Lenders or the Agent, and neither the Administrative Agent
nor any other Lender or Agent shall have any duty whatsoever to warrant, ensure
or protect any such right of subrogation or to obtain, perfect, maintain, hold,
enforce or retain any Collateral for any purpose related to any such right of
subrogation. If subrogation is demanded by any Guarantor, then (after payment in
full of the Obligations) the Administrative Agent shall deliver to the
Guarantors making such demand, or to a representative of such Guarantors or of
the Guarantors generally, an instrument satisfactory to the Administrative Agent
transferring, on a quitclaim basis without any recourse, representation,
warranty or obligation whatsoever, whatever security interest the Administrative
Agent then may hold in whatever Collateral may then exist that was not
previously released or disposed of by the Administrative Agent.
(d) All rights and claims arising under this Section 10.2 or based
upon or relating to any other right of reimbursement, indemnification,
contribution or subrogation that may at any time arise or exist in favor of any
Guarantor as to any payment on account of the Obligations made by it or received
or collected from its property shall be fully subordinated in all respects to
the prior payment in full of all of the Obligations. Until payment in full of
the Obligations, no Guarantor shall demand or receive any collateral security,
payment or distribution whatsoever (whether in cash, property or securities or
otherwise) on account of any such right or claim. If any such payment or
distribution is made or becomes available to any Guarantor in any bankruptcy
case or receivership, insolvency or liquidation proceeding, such payment or
distribution shall be delivered by the person making such payment or
distribution directly to the Administrative Agent, for application to the
payment of the Obligations. If any such payment or distribution is received by
any Guarantor, it shall be held by such Guarantor in trust, as trustee of an
express trust for the benefit of the Lenders and the Agent, and shall forthwith
be transferred and delivered by such Guarantor to the Administrative Agent, in
the exact form received and, if necessary, duly endorsed.
(e) The obligations of the Guarantors under the Loan Documents,
including their liability for the Obligations and the enforceability of the
security interests granted thereby, are not contingent upon the validity,
legality, enforceability, collectibility or sufficiency of any right of
reimbursement, contribution or subrogation arising under this Section 10.2. The
invalidity, insufficiency, unenforceability or uncollectibility of any such
right shall not in any respect diminish, affect or impair any such obligation or
any other claim, interest, right or remedy at any time held by any Lender or
Agent against any Guarantor or its property. No Lender or Agent
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makes any representations or warranties in respect of any such right and shall
have no duty to assure, protect, enforce or ensure any such right or otherwise
relating to any such right.
Each Guarantor reserves any and all other rights of reimbursement, contribution
or subrogation at any time available to it as against any other Guarantor, but
(i) the exercise and enforcement of such rights shall be subject to Section
10.2(d) and (ii) neither the Administrative Agent nor any other Lender or Agent
shall ever have any duty or liability whatsoever in respect of any such right,
except as provided in Section 10.2(c).
10.3. Amendments, etc. with respect to the Borrower Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by any Lender or Agent may be rescinded by such Lender or Agent
and any of the Borrower Obligations continued, and the Borrower Obligations, or
the liability of any other Person upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
any Lender or Agent, and this Agreement and the other Loan Documents and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the requisite Lenders or all Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by any Lender or Agent for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. No Lender
or Agent shall have any obligation to protect, secure, perfect or insure any
Lien at any time held by it as security for the Borrower Obligations or for the
guarantee contained in this Section 10 or any property subject thereto.
10.4. Guarantee Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by any Agent or any
Lender upon the guarantee contained in this Section 10 or acceptance of the
guarantee contained in this Section 10; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 10; and all dealings between any Group Member, on the
one hand, and the Lenders and Agents, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 10. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon each Borrower or any of the Guarantors with respect to the Borrower
Obligations, notice of a Default or an Event of Default, notice of the amount of
the Borrower Obligations, subject, however, to such Guarantor's right to make
inquiry of Administrative Agent to ascertain the amount of the Borrower
Obligations at any reasonable time, notice of any adverse change in the
financial condition of the Borrower or of any other fact that might increase
such Guarantor's risk hereunder, any other notice or demand that any Guarantor
may otherwise be entitled to receive, and the benefit of any statute of
limitations affecting such Guarantor's liability hereunder or the enforcement
thereof (and any act that shall defer or delay the operation of any statute of
limitations applicable to the Borrower Obligations shall similarly operate to
defer or delay the operation of such statute of limitations applicable to such
Guarantor's liability hereunder (to the extent that the benefit of such statute
of limitations may not be waived under applicable law)). Each Guarantor
understands and agrees that the guarantee contained in this Section 10 shall be
construed as a continuing, absolute and unconditional guarantee of payment
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without regard to (1) the validity or enforceability of this Agreement or any
other Loan Document, any of the Borrower Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by any Secured Party, (2) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
any Lender or Agent, or (3) any other circumstance whatsoever (with or without
notice to or knowledge of the Borrower or such Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the
Borrower for the Borrower Obligations, or of such Guarantor under the guarantee
contained in this Section 10, in bankruptcy or in any other instance. When
making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against any Guarantor, any Lender or Agent may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such rights and
remedies as it may have against the Borrower, any other Guarantor or any other
Person or against any collateral security or guarantee for the Borrower
Obligations or any right of offset with respect thereto, and any failure by any
Lender or Agent to make any such demand, to pursue such other rights or remedies
or to collect any payments from the Borrower, any other Guarantor or any other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of any Lender or Agent against
any Guarantor. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
10.5. Reinstatement. The guarantee contained in this Section 10
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by any Secured Party upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
10.6. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars in immediately available funds at the Funding Office
specified in this Agreement.
SECTION 11. MISCELLANEOUS
11.1. Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 11.1. The
Majority Lenders and each Group Member party to the relevant Loan Document may,
or, with the written consent of the Majority Lenders, the Administrative Agent
and each Group Member party to the relevant Loan Document may, from time to
time:
(a) enter into written amendments, supplements or modifications
hereto and to the other Loan Documents for the purpose of adding any provisions
to this Agreement or the other Loan Documents or changing in any manner the
rights of the Lenders or of the Group Members hereunder or thereunder or
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(b) waive, on such terms and conditions as the Majority Lenders or
the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall:
(i) forgive the principal amount or extend the final scheduled
date of maturity of any Loan, reduce the stated rate of any interest or
fee payable hereunder (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates, which waiver
shall be effective with the consent of the Majority Lenders) and (y) that
any amendment or modification of defined terms used in the financial
covenants in this Agreement shall not constitute a reduction in the rate
of interest or fees for purposes of this clause (i)) or extend the
scheduled date of any payment thereof, or increase the amount or extend
the expiration date of any Lender's Commitment, in each case without the
written consent of each Lender directly affected thereby;
(ii) eliminate or reduce the voting rights of any Lender under
this Section 11.1 without the written consent of such Lender;
(iii) modify the definition of Majority Lenders, consent to
the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, release all
or substantially all of the Collateral or release all or substantially all
of the Restricted Subsidiaries from their obligations hereunder, in each
case without the written consent of all Lenders;
(iv) amend, modify or waive any provision of Section 9 without
the written consent of each Agent adversely affected thereby; or
(v) amend, modify or waive any provision of Sections 2.5 to
2.12 without the written consent of the Issuing Lender.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Group Members, the
Lenders, the Agents and all future holders of the Loans. In the case of any
waiver, the Group Members, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
11.2. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the Agents, and
as set forth in an administrative questionnaire delivered to the Administrative
Agent in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:
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The Borrower: American Casino & Entertainment Properties LLC
2000 Las Vegas Boulevard South
Las Vegas, NV 89104
Phone: (702)380-7777
Fax: (702)383-4738
Attention: Chief Financial Officer
with a copy to: Piper Rudnick LLP
1251 Avenue of the Americas
New York, New York 10020-1104
Phone: (212)835-6040
Fax: (212)884-8530
Attention: James Seery
The Administrative Agent
and the Syndication Agent: Bear, Stearns & Co. Inc.
83 Madison Avenue
8th Floor
New York, NY 10179
Phone: (212) 272-0920
Fax: (212) 272-4844
Attention: Evan Kaufman
email: ekaufman@bear.com
with a copy to: Bear, Stearns & Co. Inc.
383 Madison Avenue
8th Floor
New York, NY 10179
Phone: (212)272-9430
Fax: (212)272-9184
Attention: Steve O'Keefe
email: sokeefe@bear.com
provided that any notice, request or demand to or upon any Agent, the Issuing
Lender or the Lenders shall not be effective until received.
Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Section 2 unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or ACEP
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.
11.3. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The
86
rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
11.4. Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans and other extensions of credit hereunder.
11.5. Payment of Expenses and Taxes. Each Borrower agrees:
(a) to pay or reimburse each Agent for all its out-of-pocket costs
and expenses reasonably incurred in connection with the development, preparation
and execution of, and any amendment, supplement or modification to, this
Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to such Agent and filing and recording fees and
expenses, with statements with respect to the foregoing to be submitted to ACEP
prior to the Closing Date or the Availability Date, as the case may be (in the
case of amounts to be paid on such date) and from time to time thereafter on a
quarterly basis or such other periodic basis as such Agent shall deem
appropriate;
(b) to pay or reimburse each Lender and Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to each Lender and of counsel
to such Agent;
(c) to pay, indemnify, and hold each Lender and Agent harmless from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other taxes, if
any, that may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and
(d) to pay, indemnify, and hold each Lender and Agent and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an "Indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including any
of the foregoing relating to the use of proceeds of the Loans or the
unauthorized use by Persons of information or other materials sent through
electronic, telecommunications or other information transmission systems that
are intercepted by such Persons and the reasonable fees and expenses of legal
counsel in connection with claims, actions or proceedings by any Indemnitee
against any Group Member under any Loan Document (all the foregoing in this
clause (d)), collectively, the "Indemnified Liabilities"),
provided, that no Borrower shall have any obligation hereunder to any Indemnitee
with respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross
87
negligence or willful misconduct of such Indemnitee. Without limiting the
foregoing, and to the extent permitted by applicable law, each Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
11.5 shall be payable not later than 10 days after written demand therefor.
Statements payable by the Borrower pursuant to this Section 11.5 shall be
submitted to the Borrower as set forth in Section 11.2, or to such other Person
or address as may be hereafter designated by the Borrower in a written notice to
the Administrative Agent. The agreements in this Section 11.5 shall survive
repayment of the Loans and all other amounts payable hereunder.
11.6. Successors and Assigns; Participations and Assignments
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any affiliate of the Issuing Lender that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section (and any such attempted assignment or transfer in violation of the
provisions of this Section 11.6 shall be null and void).
(b) (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees (each, an "Assignee") all
or a portion of its rights and obligations under this Agreement (including all
or a pro rata portion of its Commitment, Reimbursement Obligations and the Loans
at the time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:
(A) ACEP, provided that no consent of ACEP shall be required
for an assignment to a Lender, an affiliate of a Lender, an Approved Fund or, if
an Event of Default has occurred and is continuing, any other Person; and
(B) the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment to an Assignee that is
a Lender, an Affiliate of a Lender or an Approved Fund immediately prior to
giving effect to such assignment.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an
affiliate of a Lender or an Approved Fund or an assignment of the entire
remaining amount of the assigning Lender's Commitments, Reimbursement
Obligations or Loans, the amount of the Commitments, Reimbursement Obligations
or Loans of the assigning Lender subject to each such assignment (determined as
of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $1,000,000 unless
each of ACEP and the Administrative Agent otherwise consent, provided that (1)
no such consent of ACEP shall be required if an Event of Default has occurred
and is continuing and (2) such amounts shall be aggregated in respect of each
Lender and its affiliates or Approved Funds, if any;
88
(B) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; provided that the Lead Arranger shall
not be required to pay any such fee;
(C) the Assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an administrative questionnaire;
(D) in the case of an assignment to a CLO, the assigning
Lender shall retain the sole right to approve any amendment, modification or
waiver of any provision of this Agreement and the other Loan Documents, provided
that the Assignment and Assumption between such Lender and such CLO may provide
that such Lender will not, without the consent of such CLO, agree to any
amendment, modification or waiver that (1) requires the consent of each Lender
directly affected thereby pursuant to the proviso to the second sentence of
Section 9.1 and (2) directly affects such CLO;
(E) each of the Lenders hereunder shall have expressly
consented in writing to any assignment or transfer of the Loans to any Related
Party or any Affiliate thereof; and
(F) each of the Lenders hereunder shall have expressly
consented in writing to the acquisition by any Related Party or any Affiliate of
the right to vote as a Lender hereunder or the Trustee's replacing the First
Lien Agent (as defined in the Intercreditor Agreement) as the Controlling Party
(as defined in the Intercreditor Agreement).
Anything contained herein to the contrary notwithstanding, neither the payment
of any fees shall nor the consent of any Person shall be required if such
assignment is in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the business or loan
portfolio of the assigning Lender.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) below, from and after the effective date specified in each
Assignment and Assumption the Assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
3.9, 3.10, 3.11 and 11.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 11.6
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.
(iv) The Administrative Agent shall maintain at one of its offices a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
the Issuing Lender and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for
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inspection by the Borrower, the Issuing Lender and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an Assignee, the Assignee's completed
administrative questionnaire (unless the Assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(c) (i) Any Lender may, without the consent of ACEP or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitments,
Reimbursement Obligations and the Loans owing to it); provided that (A) such
Lender's obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Administrative Agent,
the Issuing Lender and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any provision of this Agreement, and shall not provide that such Lender shall
withhold its agreement with or consent to any such amendment, modification or
waiver or any such enforcement action without the consent of such Participant;
provided that such agreement may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver that
(1) requires the consent of each Lender directly affected thereby pursuant to
the proviso to the second sentence of Section 11.1 and (2) directly affects such
Participant. Subject to paragraph (c)(ii) of this Section, each Borrower agrees
that each Participant shall be entitled to the benefits of Sections 3.9, 3.10 or
3.11 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 11.7(b)
as though it were a Lender, provided such Participant shall be subject to
Section 11.7(a) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 3.9 or 3.10 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with ACEP's
prior written consent. Any Participant that is a Non-U.S. Lender shall not be
entitled to the benefits of Section 3.10 unless such Participant complies with
Section 3.10(d). Anything contained herein to the contrary notwithstanding, no
Lender may sell or otherwise transfer a participation in any portion of such
Lender's rights or obligations hereunder to a Related Party or to an Affiliate
of any Related Party, and any such attempted sale or other transfer of any such
participation in violation of the provisions of this Agreement shall be null and
void.
(d) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
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assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or Assignee for such Lender as a party hereto.
(e) Each Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (d) above.
(f) Notwithstanding the foregoing, any Conduit Lender may assign any
or all of the Loans it may have funded hereunder to its designating Lender
without the consent of ACEP or the Administrative Agent and without regard to
the limitations set forth in Section 11.6(b). Each Borrower, each Lender and the
Administrative Agent hereby confirms that it will not institute against a
Conduit Lender or join any other Person in instituting against a Conduit Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued by
such Conduit Lender; provided, however, that each Lender designating any Conduit
Lender hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage or expense arising out of its inability to
institute such a proceeding against such Conduit Lender during such period of
forbearance.
11.7. Adjustments; Set-off
(a) Except to the extent that this Agreement expressly provides for
payments to be allocated to a particular Lender or to the Lenders, if any Lender
(a "Benefitted Lender") shall, at any time after the Loans and other amounts
payable hereunder shall immediately become due and payable pursuant to Section
8, receive any payment of all or part of the Obligations owing to it, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in Section
8(f), or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of the Obligations
owing to such other Lender, such Benefitted Lender shall purchase for cash from
the other Lenders a participating interest in such portion of the Obligations
owing to each such other Lender, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Borrower,
any such notice being expressly waived by each Borrower to the extent permitted
by applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower, as the case may be. Each Lender agrees
promptly to notify ACEP and the Administrative Agent after any such setoff and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such setoff and application.
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11.8. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with ACEP and the Administrative Agent.
11.9. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.10. Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Group Members, the Agents and the Lenders
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by any Agent or any Lender
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Loan Documents.
11.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.12. Submission To Jurisdiction; Waivers. Each Group Member hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts
of the State of New York, New York County, the courts of the United States
for the Southern District of New York, and appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Group Member at its address set forth in Section 11.2 or
at such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
92
(v) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
11.13. Acknowledgments. Each Group Member hereby acknowledges that:
(i) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(ii) no Agent or Lender has any fiduciary relationship with or duty
to any Group Member arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Agents
and Lenders, on one hand, and the Group Members, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
(iii) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Group Members and the Lenders.
11.14. Releases of Guarantees and Liens
(a) Notwithstanding anything to the contrary contained herein or in
any other Loan Document, the Administrative Agent is hereby irrevocably
authorized by each Lender (without requirement of notice to or consent of any
Lender except as expressly required by Section 11.1) to take any action
requested by a Group Member having the effect of releasing any Collateral or
guarantee obligations (i) to the extent necessary to permit consummation of any
transaction not prohibited by any Loan Document or that has been consented to in
accordance with Section 11.1 or (ii) under the circumstances described in
paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations and the
other obligations under the Loan Documents (other than obligations under or in
respect of Hedge Agreements) shall have been paid in full, the Commitments have
been terminated and no Letters of Credit shall be outstanding, the Collateral
shall be released from the Liens securing the Obligations created by the
Collateral Documents and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent (or the Collateral Agent
on its behalf) under the Collateral Documents shall terminate, all without
delivery of any instrument or performance of any act by any Person.
11.15. Confidentiality. Each Agent and each Lender agrees to keep
confidential all non-public information provided to it by any Group Member
pursuant to this Agreement that is designated by such Group Member as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to any Agent, any other Lender or any
Lender Affiliate, (b) subject to an agreement to comply with the provisions of
this Section, to any actual or prospective Transferee or any direct or indirect
counterparty to any Hedge Agreement (or any professional advisor to such
counterparty), (c) to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates, (d) upon the
request or demand of any Governmental Authority, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) that has been publicly
disclosed, (h) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency
93
that requires access to information about a Lender's investment portfolio in
connection with ratings issued with respect to such Lender, or (i) in connection
with the exercise of any remedy hereunder or under any other Loan Document.
11.16. WAIVERS OF JURY TRIAL. EACH GROUP MEMBER, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
11.17. Additional Guarantors. Each Subsidiary of the Borrower that
is required to become a party to this Agreement pursuant to Section 6.10 and
6.11 of this Agreement shall become a Guarantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of a Guarantor Addendum
in the form of Exhibit H hereto.
11.18. Gaming Laws. All rights, remedies and powers provide in this
Agreement may be exercised only to the extent that the exercise thereof does not
violate any applicable mandatory provision of the Gaming Laws and all provisions
of this Agreement are intended to be subject to all such provisions of the
Gaming Laws and to be limited solely to the extent necessary to not render the
provisions of this Agreement invalid or unenforceable, in whole or in part.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
AMERICAN CASINO & ENTERTAINMENT
PROPERTIES LLC, a Delaware limited
liability company
By:: /s/ Richard P. Brown
-------------------------------------
Name: Richard P. Brown
Title: President and Chief
Executive Officer
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BEAR, STEARNS & CO. INC., as Sole Lead
Arranger and Sole Bookrunner
By: /s/ Keith C. Barnish
-------------------------------------
Name: Keith C. Barnish
Title: Senior Managing Director
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent and as a Lender
By: /s/ Keith C. Barnish
-------------------------------------
Name: Keith C. Barnish
Title: Executive Vice President
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BEAR STEARNS CORPORATE LENDING INC.,
as Syndication Agent
By: /s/ Keith C. Barnish
-------------------------------------
Name: Keith C. Barnish
Title: Executive Vice President
97