1
EXHIBIT 10.7
================================================================================
CREDIT AGREEMENT
among
THE RESORT AT SUMMERLIN, LIMITED PARTNERSHIP
THE RESORT AT SUMMERLIN, INC.
VARIOUS LENDING INSTITUTIONS,
GLEACHER NATWEST, INC.
AS ARRANGING AGENT,
and
NATIONAL WESTMINSTER BANK PLC,
AS ADMINISTRATIVE AGENT
------------------------------------
Dated as of December 30, 1997
------------------------------------
$100,000,000
================================================================================
2
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit............................................ 1
1.01 Commitment.......................................................... 1
1.02 Minimum Borrowing Amounts, etc...................................... 2
1.03 Notice of Borrowing, etc............................................ 2
1.04 Disbursement of Funds............................................... 3
1.05 Notes............................................................... 3
1.06 Conversions......................................................... 4
1.07 Pro Rata Borrowings................................................. 5
1.08 Interest............................................................ 5
1.09 Interest Periods.................................................... 6
1.10 Increased Costs, Illegality, etc.................................... 7
1.11 Compensation........................................................ 10
1.12 Change of Lending Office............................................ 10
1.13 Replacement of Lenders.............................................. 10
1.14 Joint and Several................................................... 11
SECTION 2. Fees; Commitments..................................................... 11
2.01 Fees................................................................ 11
2.02 Voluntary Reduction of Commitments.................................. 12
2.03 Mandatory Adjustments of Commitments, etc........................... 12
SECTION 3. Payments.............................................................. 13
3.01 Voluntary Prepayments............................................... 13
3.02 Mandatory Prepayments............................................... 13
3.03 Method and Place of Payment......................................... 16
3.04 Net Payments........................................................ 16
SECTION 4. Conditions Precedent.................................................. 18
4.01 Conditions Precedent to Closing Date................................ 18
4.02 Conditions Precedent to All Loans................................... 25
SECTION 5. Representations, Warranties and Agreements............................ 26
5.01 Status.............................................................. 26
5.02 Power and Authority................................................. 26
5.03 No Violation........................................................ 26
5.04 Litigation.......................................................... 26
(i)
3
Page
----
5.05 Use of Proceeds; Margin Regulations................................. 27
5.06 Governmental Approvals.............................................. 27
5.07 Investment Company Act.............................................. 27
5.08 Project Documents................................................... 27
5.09 True and Complete Disclosure........................................ 27
5.10 Financial Statements................................................ 28
5.11 Security Interests.................................................. 29
5.12 Representations and Warranties in Project Documents................. 29
5.13 Tax Returns and Payments............................................ 29
5.14 Compliance with ERISA............................................... 29
5.15 Subsidiaries........................................................ 30
5.16 Intellectual Property............................................... 30
5.17 Environmental Matters............................................... 30
5.18 Properties.......................................................... 31
5.19 Labor Relations..................................................... 31
5.20 Compliance with Statutes, etc....................................... 32
5.21 Access; Utilities................................................... 32
SECTION 6. Affirmative Covenants................................................. 33
6.01 Information Covenants............................................. 33
6.02 Books, Records and Inspections...................................... 35
6.03 Insurance........................................................... 36
6.04 Payment of Taxes.................................................... 37
6.05 Corporate Franchises................................................ 37
6.06 Compliance with Statutes, etc....................................... 37
6.07 Good Repair......................................................... 38
6.08 End of Fiscal Years; Fiscal Quarters................................ 38
6.09 Additional Security; Further Assurances............................. 38
6.10 ERISA............................................................... 39
6.11 Compliance with Environmental Laws.................................. 40
6.12 Construction of Improvements, etc................................... 40
SECTION 7. Negative Covenants.................................................... 42
7.01 Changes in Business................................................. 42
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc.............. 42
7.03 Liens............................................................... 43
7.04 Indebtedness........................................................ 45
7.05 Capital Expenditures................................................ 45
7.06 Advances, Investments and Loans..................................... 45
7.07 Creation of Subsidiaries............................................ 46
(ii)
4
Page
----
7.08 Prepayments of Indebtedness, etc.................................... 46
7.09 Dividends, etc...................................................... 47
7.10 Transactions with Affiliates........................................ 48
7.11 Interest Coverage Ratio............................................. 48
7.12 Leverage Ratio...................................................... 49
7.13 Fixed Charge Coverage Ratio......................................... 49
7.14 Limitation on Issuance of Stock..................................... 49
SECTION 8. Events of Default..................................................... 49
8.01 Payments............................................................ 50
8.02 Representations, etc................................................ 50
8.03 Covenants........................................................... 50
8.04 Default Under Other Agreements...................................... 50
8.05 Bankruptcy, etc..................................................... 50
8.06 ERISA............................................................... 51
8.07 Security Documents.................................................. 51
8.08 Subsidiary Guaranty................................................. 51
8.09 Judgments........................................................... 52
8.10 Project Documents................................................... 52
8.11 Gaming Authority.................................................... 52
8.12 Commencement Date................................................... 52
SECTION 9. Definitions........................................................... 53
SECTION 10. The Administrative Agent............................................. 76
10.01 Appointment........................................................ 76
10.02 Nature of Duties................................................... 76
10.03 Lack of Reliance on the Agents..................................... 77
10.04 Certain Rights of the Agents....................................... 77
10.05 Reliance........................................................... 77
10.06 Indemnification.................................................... 78
10.07 The Agents in Their Individual Capacities.......................... 78
10.08 Holders............................................................ 78
10.09 Resignation by an Agent............................................ 78
SECTION 11. Miscellaneous........................................................ 79
11.01 Payment of Expenses, etc........................................... 79
11.02 Right of Setoff.................................................... 80
11.03 Notices............................................................ 80
11.04 Benefit of Agreement............................................... 81
(iii)
5
Page
----
11.05 No Waiver; Remedies Cumulative..................................... 83
11.06 Payments Pro Rata.................................................. 83
11.07 Calculations; Computations......................................... 84
11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial........................................................ 84
11.09 Counterparts....................................................... 85
11.10 Effectiveness...................................................... 85
11.11 Headings Descriptive............................................... 85
11.12 Amendment or Waiver................................................ 85
11.13 Survival........................................................... 86
11.14 Domicile of Loans.................................................. 86
11.15 Confidentiality.................................................... 86
11.16 Lender Register.................................................... 86
11.17 Gaming Authorities, etc............................................ 87
ANNEX I -- Commitments
ANNEX II -- Lenders and Agents Addresses
ANNEX III -- Government Approvals
ANNEX IV -- Subsidiaries
ANNEX V -- Properties
ANNEX VI -- Existing Indebtedness
ANNEX VII -- Insurance Policies
ANNEX VIII -- Existing Liens
ANNEX IX -- Existing Investments
ANNEX X -- Litigation
EXHIBIT A-1 -- Form of Notice of Construction Loans
EXHIBIT A-2 -- Form of Notice of Term Conversion
EXHIBIT A-3 -- Form of Notice of Revolving Loans
EXHIBIT B-1 -- Form of First Mortgage Note
EXHIBIT B-2 -- Form of Revolving Note
EXHIBIT C -- Form of Section 3.04 Certificate
EXHIBIT D-1 -- Form of Opinion of Lionel Sawyer & Collins
EXHIBIT D-2 -- Form of Opinion of White & Case
EXHIBIT D-3 -- Form of Opinion of Schreck and Morris
EXHIBIT E -- Form of Officer's Certificate
EXHIBIT F-1 -- Form of Disbursement Agreement
EXHIBIT F-2 -- Form of Mortgage Notes Proceeds Agreement
EXHIBIT F-3 -- Form of Interest Escrow Agreement
(iv)
6
EXHIBIT F-4 -- Form of CC Continuation Agreement
EXHIBIT G -- Form of Subsidiary Guaranty
EXHIBIT H -- Form of Pledge Agreement
EXHIBIT I -- Form of Security Agreement
EXHIBIT J -- Form of Consent Letter
EXHIBIT K -- Form of Assignment Agreement
(v)
7
CREDIT AGREEMENT, dated as of December 30, 1997, among THE RESORT AT
SUMMERLIN, LIMITED PARTNERSHIP, a Nevada limited partnership, THE RESORT AT
SUMMERLIN, INC., a Nevada corporation, the lenders from time to time party
hereto (each, a "Lender" and, collectively, the "Lenders"), GLEACHER NATWEST,
INC., as Arranging Agent (the "Arranging Agent"), and NATIONAL WESTMINSTER BANK
PLC, as Administrative Agent (the "Administrative Agent" and together with the
Arranging Agent, collectively, the "Agents"). Unless otherwise defined herein,
all capitalized terms used herein and defined in Section 10 are used herein as
so defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set forth,
the Lenders are willing to make available to the Borrowers the credit facilities
provided for herein; and
NOW, THEREFORE, IT IS AGREED:
1. Amount and Terms of Credit
1.01 Commitment. Subject to and upon the terms and conditions
herein set forth:
(a) Each MN Lender severally agrees to make a loan (each a
"Construction Loan" and, collectively, the "Construction Loans") to the
Borrowers on one or more Drawdown Dates, which Construction Loans (i)
except as hereinafter provided, may, at the option of the Borrower, be
incurred and maintained as, and/or converted into, Base Rate Loans or
LIBOR Loans, provided that all Construction Loans made pursuant to the
same Borrowing shall, unless otherwise specifically provided herein,
consist entirely of Loans of the same Type, (ii) shall not exceed in
aggregate outstanding principal amount for any MN Lender after giving
effect to any incurrence of Construction Loans the MN Commitment of such
Lender then in effect and (iii) shall not exceed in aggregate principal
amount for all Construction Loans made by all Lenders on any Drawdown Date
the Drawdown Amount for such date. Each Lender with an MN Commitment-A
shall make a Construction Loan or Loans on the Closing Date in the full
amount of its MN Commitment-A, while each Lender with an MN Commitment-B
will only make Construction Loans under such MN Commitment-B on Drawdown
Dates occurring after the Closing Date. Once repaid, Construction Loans
may not be reborrowed.
8
(b) All the Construction Loans of each MN Lender outstanding on
the Conversion Date shall be converted into a term loan or loans (each a
"Term Loan" and, collectively, the "Term Loans"), which Term Loans may,
except as hereinafter provided, be maintained as, and/or converted into,
Base Rate Loans or LIBOR Loans, provided that (i) the Interest Periods
applicable to Construction Loans that are LIBOR Loans on the Conversion
Date shall continue in effect for the Term Loans resulting from the
conversion thereof until the stated expiration of such Interest Periods
and (ii) all Term Loans made pursuant to the same Borrowing shall, unless
specifically provided herein, consist entirely of Loans of the same Type.
Once repaid, Term Loans may not be reborrowed.
(c) The RC Lender is to make revolving loans (each a "Revolving
Loan" and, collectively, the "Revolving Loans") to the Borrowers from time
to time on and after the Conversion Date and prior to the Final Maturity
Date, which Revolving Loans (i) except as hereinafter provided, may, at
the option of the Borrowers, be incurred and maintained as, and/or
converted into, Base Rate Loans or LIBOR Loans, provided that all
Revolving Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Revolving Loans of the same Type,
(ii) may be repaid and reborrowed in accordance with the provisions hereof
and (iii) shall not exceed in principal amount at the time of incurrence
thereof the RC Commitment at such time.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
of each Borrowing shall not be less than the Minimum Borrowing Amount for such
Borrowing. More than one Borrowing may be incurred on any day, provided that at
no time shall there be outstanding more than four Borrowings of LIBOR Loans.
1.03 Notice of Borrowing, etc. (a) At least three Business Days
(one Business Day in the case of the Closing Date) prior to each Drawdown Date
on which the Borrowers desire to incur Construction Loans, the Borrowers shall
give the Administrative Agent at its Notice Office a written notice in the form
of Exhibit A-1 hereto (each a "Notice of Construction Loans"), which notice must
be accompanied by a Consultant's Confirmation.
(a) At least three Business Days prior to the Conversion Date, the
Administrative Agent shall have received a written notice of confirmation in the
form of Exhibit A-2 hereto (the "Notice of Term Conversion") executed by the
Borrowers with respect to the conversion of Construction Loans into Term Loans
to be made on the Conversion Date.
-2-
9
(b) Whenever the Borrowers desire to incur Revolving Loans, they
shall give the Administrative Agent at its Notice Office at least three Business
Days' prior written notice in the form of Exhibit A-3 hereof (each a "Notice of
Revolving Loans").
(c) Each Notice of Borrowing given pursuant to this Section 1.03
shall be irrevocable.
(d) Without in any way limiting the obligation of the Borrowers to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the
Administrative Agent in good faith to be from an Authorized Officer of each of
the Borrowers. In each such case, the Borrowers hereby waive the right to
dispute the Administrative Agent's record of the terms of such telephonic
notice.
1.04 Disbursement of Funds. (a) No later than 12:00 noon (New York
time) on the Drawdown Date specified in a Notice of Construction Loans, each
Lender will make available its share (as described in Section 1.07) of the
Construction Loans to be made on such date in the manner provided below. All
such amounts shall be made available to the Administrative Agent in U.S. dollars
and immediately available funds at the Payment Office and the Administrative
Agent promptly will deposit in the Mortgage Notes Proceeds Account the aggregate
of the amounts so made available in the type of funds received.
(a) No later than 12:00 Noon (New York time), on the date
specified in each Notice of Revolving Loans, the RC Lender will make available
the Revolving Loans requested to be made on such date to the Administrative
Agent in U.S. dollars and immediately available funds at the Payment Office and
the Administrative Agent promptly will deposit in the Borrowers' account at the
Payment Office the amount so made available by the RC Lender in the type of
funds received.
(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights,
which the Borrowers may have against any Lender as a result of any default by
such Lender hereunder.
1.05 Notes. (a) The Borrowers' obligation to pay the principal of,
and interest on, the Loans made to it by each Lender shall be evidenced (i) if
Construction Loans and/or Term Loans, by a promissory note substantially in the
form of Exhibit B-1 with blanks appropriately completed in conformity herewith
(each, a "First Mortgage Note" and, collectively, the "First Mortgage Notes")
and (ii)
-3-
10
if Revolving Loans, by a promissory note substantially in the form of Exhibit
B-2 with blanks appropriately completed in conformity herewith (each, a
"Revolving Note" and, collectively, the "Revolving Notes").
(a) The First Mortgage Note issued to an MN Lender shall (i) be
executed by the Borrowers, (ii) be payable to the order of such MN Lender and be
dated the Closing Date, (iii) be in a stated principal amount equal to the MN
Commitment of such Lender (or in the case of a new First Mortgage Note issued
after the Conversion Date, the Term Loans evidenced thereby at the time of
issuance) and be payable in the principal amount of the Construction Loans or
Term Loans evidenced thereby, (iv) mature on the Final Maturity Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans and LIBOR Loans, as the case may be, evidenced thereby, (vi) be
subject to mandatory repayment as provided in Section 3.02 and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(b) The Revolving Note issued to the RC Lender shall (i) be
executed by the Borrowers, (ii) be payable to the order of the RC Lender and be
dated the Conversion Date, (iii) be in a stated principal amount equal to the RC
Commitment and be payable in the principal amount of the Revolving Loans
evidenced thereby, (iv) mature on the Final Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base Rate
Loans and LIBOR Loans, as the case may be, evidenced thereby, (vi) be subject to
mandatory repayment as provided in Section 3.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(c) Each Lender will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrowers' obligations in respect of the
Loans made and not repaid.
1.06 Conversions. The Borrowers shall have the option to convert on
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans owing pursuant
to a single Facility into a Borrowing or Borrowings pursuant to such Facility of
another Type of Loan, provided that (i) no partial conversion of a Borrowing of
LIBOR Loans shall reduce the outstanding principal amount of the LIBOR Loans
made pursuant to such Borrowing to less than the Minimum Borrowing Amount
applicable thereto, (ii) Base Rate Loans may not be converted into LIBOR Loans
if a Default under Section 8.01 or an Event of Default is then in existence and
the Administrative Agent or the Required Lenders shall have determined in its or
their sole discretion not to permit such conversion and (iii) Borrowings of
LIBOR Loans resulting from this Section
-4-
11
1.06 shall be limited in number as provided in Section 1.02. Each such
conversion shall be effected by the Borrowers giving the Administrative Agent at
its Notice Office, prior to 12:00 Noon (New York time), at least three Business
Days' (or two Business Days', in the case of a conversion into Base Rate Loans)
prior written notice (or telephonic notice promptly confirmed in writing) (each,
a "Notice of Conversion") specifying the Loans to be so converted, the Type of
Loans to be converted into and, if to be converted into a Borrowing of LIBOR
Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Lender prompt notice of any such proposed
conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. (a) Each Lender will fund its MN
Commitment-A in full on the Closing Date. All Construction Loans made after the
Closing Date shall be made by each Lender pro rata on the basis of its
respective MN Commitment-B. All Revolving Loans shall be made by the RC Lender.
It is understood that no Lender shall be responsible for any default by any
other Lender in its obligation to make Loans hereunder and that each Lender
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fulfill its commitments
hereunder.
(b) If after giving effect to all Construction Loans made on the
Last Drawdown Date the B Lenders have remaining unutilized MN Commitments
(before any reduction thereto is effected pursuant to Section 2.03(c))
aggregating at least $1,000,000, then each B Lender will purchase from each A
Lender an assignment of such A Lender's Construction Loans in such principal
amount as will result in the percentage obtained by dividing the principal of
the Construction Loans of an MN Lender by its MN Commitment being the same for
each MN Lender. Such assignments will be effected pursuant to Section 11.04 but
without any processing fee being paid to the Administrative Lender.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Base Rate Margin plus the Base Rate in effect from time
to time.
(a) The unpaid principal amount of each LIBOR Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus LIBOR.
(b) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the Base Rate Margin plus 2.0%, provided that each
LIBOR Loan shall bear
-5-
12
interest after maturity (whether by acceleration or otherwise) until the end of
the Interest Period applicable to it at such maturity at a rate per annum equal
to 2.0% in excess of the rate of interest applicable thereto at such maturity.
In addition, the Applicable Margin for all Loans not covered by the preceding
sentence shall increase by 2% during each period when any of the covenants
specified in Section 7.11 to 7.14 are defaulted (i.e., commencing on the first
day of any such default and continuing until the last day of the first quarter
thereafter on which all of the covenants specified in Sections 7.11 through 7.13
are satisfied (or if earlier on the date on which common equity contributions
have been made to the Partnership that cure all the aforesaid defaults on a pro
forma basis)).
(c) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect of
each LIBOR Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, on any prepayment or conversion under Section
1.06 (other than the prepayment or conversion of any Base Rate Loan) (on the
amount prepaid or converted), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(d) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(e) The Administrative Agent, upon determining the interest rate
for any Borrowing of LIBOR Loans for any Interest Period, shall promptly notify
the Borrowers and the Lenders thereof.
1.09 Interest Periods. (a) At the time the Borrowers give a Notice
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of LIBOR Loans (in the case of the initial Interest Period
applicable thereto) or prior to 12:00 Noon (New York time) on the third Business
Day prior to the expiration of an Interest Period applicable to a Borrowing of
LIBOR Loans, they shall have the right to elect by giving the Administrative
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, three or, if after the Conversion Date,
six month period. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of LIBOR Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
-6-
13
occurring thereafter in respect of such Borrowing shall commence on the
day on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iii) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period with respect to a Borrowing of Revolving
Loans may be elected that would extend beyond the Final Maturity Date;
(v) no Interest Period with respect to any Borrowing of Term Loans
may be elected that would extend beyond any date upon which a Scheduled
Repayment is required to be made if, after giving effect to the selection
of such Interest Period, the aggregate principal amount of Term Loans
maintained as LIBOR Loans with Interest Periods ending after such date
would exceed the aggregate principal amount of Term Loans permitted to be
outstanding after such Scheduled Repayment; and
(vi) no Interest Period may be elected if a Default under Section
9.01 or an Event of Default is then in existence and the Administrative
Agent or the Required Lenders shall have determined in its or their sole
discretion not to permit such election.
(b) If upon the expiration of any Interest Period, the Borrowers
are not permitted to elect a new Interest Period to be applicable to the
respective Borrowing of LIBOR Loans, or in the case of Revolving Loans, have
failed to elect a new Interest Period to be applicable to the respective
Borrowing of LIBOR Loans, the Borrowers shall be deemed to have elected to
convert such Borrowing into a Borrowing of Base Rate Loans effective as of the
expiration date of such current Interest Period. If upon the expiration of any
Interest Period in respect of Construction Loans or Term Loans, the Borrowers
have failed to elect a new Interest Period to be applicable to the respective
Borrowing of LIBOR Loans as provided above, the Borrowers shall be deemed to
have elected a new Interest Period of one month for such Borrowing, effective as
of the expiration date of such expiring Interest Period.
-7-
14
1.010 Increased Costs, Illegality, etc. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):
(i) on any date for determining LIBOR for any Interest Period
that, by reason of any changes arising after the date of this Agreement
affecting the interbank Eurodollar market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the basis provided
for in the definition of LIBOR; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any LIBOR Loans (other than any increased cost or reduction in the amount
received or receivable resulting from the imposition of or a change in the
rate of taxes or similar charges) because of (x) any change since the
Closing Date in any applicable law, governmental rule, regulation,
guideline or order (or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not limited to,
a change in official reserve requirements, but in any event excluding
reserves payable pursuant to Section 1.10(c)) and/or (y) other
circumstances affecting the interbank Eurodollar market; or
(iii) at any time, that the making or continuance of any LIBOR Loan
has become unlawful by compliance by such Lender in good faith with any
law, governmental rule, regulation, guideline (or would conflict with any
such governmental rule, regulation, guideline or order not having the
force of law but with which such Lender customarily complies even though
the failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the Closing
Date which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on such date and (y) within ten Business
Days of the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrowers and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders). Thereafter (x) in the case of clause (i) above,
LIBOR Loans shall no longer be available until such time as the Administrative
Agent notifies the Borrowers and the Lenders that the circumstances giving rise
to such notice by the Administrative Agent no longer exist, and any Notice of
Revolving Loans or Notice of Conversion given by the Borrowers with respect to
LIBOR Loans which have not yet been incurred shall be
-8-
15
deemed rescinded by the Borrowers (and any Notice of Construction Loans given in
respect of LIBOR Loans shall be deemed to have been given in respect of Base
Rate Loans), (y) in the case of clause (ii) above, the Borrowers shall pay to
such Lender, upon written demand therefor, such additional amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as shall be
required to compensate such Lender for such increased costs or reductions in
amounts receivable hereunder (a written notice as to the additional amounts owed
to such Lender, showing the basis for the calculation thereof, submitted to the
Borrowers by such Lender shall, absent manifest error, be final and conclusive
and binding upon all parties hereto) and (z) in the case of clause (iii) above,
the Borrowers shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.
(b) At any time that any LIBOR Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrowers may (and
in the case of a LIBOR Loan affected pursuant to Section 1.10(a)(iii), the
Borrowers shall) either (i) if the affected LIBOR Loan is then being made
pursuant to a Notice of Revolving Loans, cancel said Loans by giving the
Administrative Agent telephonic notice (confirmed promptly in writing) thereof
on the same date that the Borrowers were notified by a Lender pursuant to
Section 1.10(a)(ii) or (iii), or (ii) convert each such LIBOR Loan into a Base
Rate Loan, provided that if more than one Lender is affected at any time, then
all affected Lenders must be treated the same pursuant to this Section 1.10(b).
(c) If any Lender shall have determined that after the Closing
Date, the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
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) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's or such
corporation's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender or such other
corporation could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's or such other corporation's
policies with respect to capital adequacy), then from time to time, within 15
days after demand by such Lender (with a copy to the Administrative Agent), the
Borrowers shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such other corporation for such reduction. Each
Lender, upon determining in good faith that any additional amounts will be
payable pursuant to this Section 1.10(c), will give prompt written notice
-9-
16
thereof to the Borrowers, which notice shall set forth the basis of the
calculation of such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrowers' obligations to pay
additional amounts pursuant to this Section 1.10(c) upon the subsequent receipt
of such notice.
(d) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Lender more than 180 days after such Lender obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the additional
costs of the type described in such Section, such Lender shall not be entitled
to compensation under Section 1.10, 2.06 or 4.04 for any amounts incurred or
accruing prior to the giving of such notice to the Borrowers.
1.011 Compensation. The Borrowers shall compensate each Lender, upon
its written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Lender
to fund its LIBOR Loans but excluding in any event the loss of anticipated
profits) which such Lender may sustain: (i) if for any reason (other than a
default by such Lender or the Administrative Agent) a Borrowing of LIBOR Loans
does not occur on a date specified therefor in a Notice of Borrowing or Notice
of Conversion (whether or not withdrawn by the Borrowers or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any prepayment, repayment or conversion of
any of its LIBOR Loans occurs on a date which is not the last day of an Interest
Period applicable thereto; (iii) if any prepayment of any of its LIBOR Loans is
not made on any date specified in a notice of prepayment given by the Borrowers;
or (iv) as a consequence of (x) any other default by the Borrowers to repay
LIBOR Loans when required by the terms of this Agreement or (y) an election made
pursuant to Section 1.10(b).
1.012 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), or 3.04 with respect to such Lender, it will, if requested by
the Borrowers, use reasonable efforts (subject to overall policy considerations
of such Lender) to designate another lending office for any Loans affected by
such event, provided that such designation is made on such terms that such
Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrowers or the right of any
Lender provided in Section 1.10 or 3.04.
1.013 Replacement of Lenders. (x) Upon the occurrence of any event
-10-
17
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
or Section 3.04 with respect to any Lender which results in such Lender charging
to the Borrowers increased costs in excess of those being generally charged by
the other Lenders, (y) if a Lender becomes a Defaulting Lender or a Disqualified
Lender and/or (z) in the case of a refusal by a Lender to consent to a proposed
change, waiver, discharge or termination with respect to this Agreement which
has been approved by the Required Lenders, the Borrowers shall have the right,
if no Default under Section 8.01 or Event of Default then exists, to replace
such Lender (the "Replaced Lender") with one or more other Eligible Transferees,
none of whom shall constitute a Defaulting Lender or a Disqualified Lender at
the time of such replacement (collectively, the "Replacement Lender") reasonably
acceptable to the Administrative Agent provided that (i) at the time of any
replacement pursuant to this Section 1.13, the Replacement Lender shall enter
into one or more Assignment Agreements pursuant to Section 11.04(b) (and with
all fees payable pursuant to said Section 11.04(b) to be paid by the Replacement
Lender) pursuant to which the Replacement Lender shall acquire all of the MN
Commitments, RC Commitment and outstanding Loans of, the Replaced Lender and, in
connection therewith, shall pay to (x) the Replaced Lender in respect thereof
the sum of (A) an amount equal to the principal of, and all accrued interest on,
all outstanding Loans of the Replaced Lender and (B) an amount equal to all
accrued, but theretofore unpaid, Fees owing to the Replaced Lender pursuant to
Section 3.01, and (ii) all obligations of the Borrowers owing to the Replaced
Lender (other than those specifically described in clause (i) above in respect
of which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Lender concurrently with such
replacement. Upon the execution of the respective Assignment Agreements, the
payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Lender, delivery to the Replacement Lender of the
appropriate Note or Notes executed by the Borrowers, the Replacement Lender
shall become a Lender hereunder and the Replaced Lender shall cease to
constitute a Lender hereunder, except with respect to indemnification provisions
applicable to the Replaced Lender under this Agreement, which shall survive as
to such Replaced Lender.
1.014 Joint and Several. All Loans shall be incurred by the
Borrowers on a joint and several basis, and obligations of the Borrowers
hereunder to pay any moneys shall constitute the joint and several obligations
of the Borrowers.
2. Fees; Commitments
2.01 Fees. (a) The Borrowers will pay to the Administrative Agent a
commitment fee (the "MN Commitment Fee") for the account of each MN Lender that
is a Non-Defaulting Lender for the period from and including the Closing Date
to, but not including, the Last Drawdown Date (or if earlier the date upon which
the Total MN Commitment has been terminated), computed at a per annum rate equal
to
-11-
18
0.50% multiplied by the average daily unutilized MN Commitment of such
Lender. Such MN Commitment Fees shall be due and payable in arrears on the last
Business Day of each March, June, September and December and on the Last
Drawdown Date (or if earlier the date upon which the Total MN Commitment is
terminated).
(a) The Borrowers will pay to the Administrative Agent a commitment fee (the "RC
Commitment Fee"), for the account of the RC Lender for the period from and
including the Conversion Date to, but not including, the Final Maturity Date,
computed at a per annum rate equal to 0.50% multiplied by the average daily
unutilized RC Commitment. Such RC Commitment Fees shall be due and payable in
arrears on the last Business Day of each March, June, September and December of
each year and on the date upon which the RC Commitment is terminated.
(b) The Borrowers will pay to the Administrative Agent for the pro
rata account of the MN Lenders at such time a prepayment fee (the "Prepayment
Fee") (x) on any prepayment of Construction Loans in an amount equal to 2% of
the aggregate principal of Construction Loans so repaid and (y) on any
prepayment of Term Loans prior to the second anniversary of the Conversion Date
in an amount equal to 2% of the aggregate principal of Term Loans so repaid.
(c) The Borrowers will pay to (x) each Agent on the Closing Date,
for its own account and/or for distribution to the Lenders, such fees as
heretofore agreed by the Borrowers and the Agents and (y) the Administrative
Agent from time to time when and as due, for its own account, such other fees as
agreed to between the Borrower and the Administrative Agent.
(d) All computations of Fees shall be made in accordance with
Section 11.07(b).
2.02 Voluntary Reduction of Commitments. Upon at least three
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Administrative Agent at its Notice Office (which notice shall be promptly
transmitted by the Administrative Agent to each of the Lenders), the Borrowers
shall have the right (x) at a time when it desires to concurrently prepay all of
the outstanding Construction Loans pursuant to Section 3.01, to terminate in
full the Total MN Commitment and (y) without premium or penalty, to terminate or
partially reduce the unutilized RC Commitment, provided that any partial
reduction of the RC Commitment pursuant to this Section 3.02 shall be in the
amount of at least $1,000,000.
2.03 Mandatory Adjustments of Commitments, etc. (a) The Total MN
Commitment shall terminate in its entirety on the Expiration Date unless the
Closing Date has occurred on or before such date.
-12-
19
(a) The MN Commitment of each Lender shall be reduced on the date
any prepayment of principal of Construction Loans of such Lender is made
pursuant to Sections 3.02(A)(c), (d) or (f) in an amount equal to such
repayment.
(b) The MN Commitment of each Lender shall (i) be reduced on the
Last Drawdown Date in an aggregate amount, if any, equal to the unutilized MN
Commitment of such Lender on such date after giving effect to any incurrence of
Construction Loans on such date and (ii) terminate in its entirety on the
Conversion Date.
(c) The RC Commitment shall terminate in its entirety on the Final
Maturity Date.
(d) The Total MN Commitment (if prior to the Conversion Date) and
the RC Commitment (if on or after the Conversion Date) shall terminate on the
date a Change of Control occurs.
3. Payments.
3.01 Voluntary Prepayments. The Borrowers shall have the right to
prepay (A) Construction Loans on any Business Day upon three Business Days'
prior written notice to the Administrative Agent (which notice shall be promptly
transmitted by the Administrative Agent to each of the Lenders) provided that
all outstanding Construction Loans are repaid at such time, the Total MN
Commitment is terminated effective at such time and the Prepayment Fee resulting
from such prepayment as provided in Section 2.01(c) is paid and (B) Term Loans
and/or Revolving Loans on the following terms and conditions: (i) the Borrowers
shall give the Administrative Agent at the Payment Office at least three
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) of their intent to prepay the Loans, whether such Loans are Term Loans
or Revolving Loans, the amount of such prepayment and (in the case of LIBOR
Loans) the specific Borrowing(s) pursuant to which made (which notice shall
promptly be transmitted by the Administrative Agent to each of the Lenders);
(ii) each partial prepayment shall be in an aggregate principal amount of at
least (x) $500,000, in the case of Revolving Loans and (y) $1,000,000, in the
case of Term Loans, provided that no partial prepayment of LIBOR Loans shall
reduce the aggregate principal amount of the Loans outstanding pursuant to a
Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto; (iii) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans; (iv) each prepayment of
Term Loans prior to the second anniversary of the Conversion Date shall be
accompanied by the payment of the Prepayment Fee required by Section 2.01(c);
and (v) each prepayment
-13-
20
of Term Loans pursuant to this Section 3.01 shall reduce the remaining Scheduled
Repayments of the Term Loans [on a pro rata basis (based upon the then remaining
principal amount of each such Scheduled Repayment)].
3.02 Mandatory Prepayments
(A) Requirements:
(a) (i) If on any date the sum of the aggregate outstanding
principal amount of Revolving Loans exceeds the RC Commitment as then in
effect, the Borrowers shall repay on such date the principal of Revolving
Loans in an aggregate amount equal to such excess.
(b) On each date set forth below, the Borrowers shall be required
to repay the principal amount of Term Loans set forth opposite such date
(each such repayment, as the same may be reduced as provided in Sections
4.01 and 4.02(B), a "Scheduled Repayment"):
Date Amount
---- ------
March 31, 2000 $5,000,000
June 30, 2000 $2,500,000
September 30, 2000 $2,500,000
December 31, 2000 $2,500,000
March 31, 2001 $2,500,000
June 30, 2001 $4,000,000
September 30, 2001 $4,000,000
December 31, 2001 $4,000,000
March 31, 2002 $4,000,000
June 30, 2002 $5,000,000
September 30, 2002 $5,000,000
December 31, 2002 $5,000,000
March 31, 2003 $5,000,000
June 30, 2003 $6,000,000
September 30, 2003 $6,000,000
December 31, 2003 $6,000,000
Final Maturity Date $31,000,000
(c) On the Business Day following the date of receipt thereof by
any Credit Party of the Cash Proceeds from any Asset Sale, an amount equal
to 100% of the Net Cash Proceeds from such Asset Sale shall be applied as
a mandatory repayment of principal of the then outstanding Construction
Loans or Term Loans, whichever may be then outstanding, provided that the
Net Cash Proceeds from any Asset Sale shall not be required to be used to
so repay
-14-
21
Loans to the extent the Borrowers elect, as hereinafter provided, to cause
such Net Cash Proceeds to be reinvested in Reinvestment Assets (a
"Reinvestment Election"). The Borrowers may exercise a Reinvestment
Election with respect to an Asset Sale if (x) no Event of Default exists
and (y) the Borrowers deliver a Reinvestment Notice to the Administrative
Agent on or prior to the Business Day following the date of the
consummation of the respective Asset Sale, with such Reinvestment Election
being effective with respect to the Net Cash Proceeds of such Asset Sale
equal to the Anticipated Reinvestment Amount specified in such
Reinvestment Notice.
(d) On the date following the date of receipt thereof by a
Borrower, an amount equal to 100% of the proceeds (net of underwriting
discounts and commissions and other reasonable fees and costs associated
therewith) of any sale or issuance of its equity or of any equity
contribution (other than (x) equity issued as provided in Section 4.01(q)
and (y) equity issued by the Partnership to Partners to the extent the
proceeds thereof are utilized to complete the Project) shall be applied as
a mandatory repayment of principal of the Construction Loans or Term
Loans, whichever may be then outstanding.
(e) On each date which is 90 days after the last day of each
fiscal year of the Partnership (commencing with the fiscal year ended
December 31, 1999), 75% of the first $15,000,000 of Excess Cash Flow for
such fiscal year plus 25% of any Excess Cash Flow for such fiscal year in
excess of $15,000,000 shall be applied as a mandatory repayment of
principal of the then outstanding Term Loans.
(f) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment
Amount, if any, for such Reinvestment Election shall be applied as a
mandatory repayment of principal amount of the Construction Loans or Term
Loans, whichever may be then outstanding.
(g) On the date which is 30 days after the Commencement Date, all
amounts, if any, remaining on deposit in the Mortgage Notes Proceeds
Account shall be applied as a mandatory repayment of principal of the then
outstanding Term Loans (provided that if such deposited amount is less
than $500,000 then such amount shall so be applied to repay principal of
then outstanding Revolving Loans (without reducing the RC Commitments).
(h) On the Interest Escrow Termination Date, all amounts then on
deposit in the Interest Escrow Account shall be applied to repay principal
of the then outstanding Term Loans.
-15-
22
(i) All outstanding Revolving Loans shall be repaid in full on the
earlier of (x) the date on which a Change of Control occurs and (y) Final
Maturity Date.
(j) All Construction Loans or Term Loans, whichever may be then
outstanding, will be repaid in full on the date on which a Change of
Control exists.
(B) Application:
(k) Each mandatory repayment of Term Loans required to be made
pursuant to Section 3.02(A)(c), (d), (e), (f), (g) and (h) shall be
applied to reduce the then remaining Scheduled Repayments on a pro rata
basis (based upon the then remaining Scheduled Repayments).
(l) With respect to each prepayment of Loans required by Section
3.02, the Borrowers may designate the Types of Loans which are to be
prepaid and the specific Borrowing(s) pursuant to which made, provided
that (i) if any prepayment of LIBOR Loans made pursuant to a single
Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount for such
Borrowing, such Borrowing shall be immediately converted into Base Rate
Loans; and (ii) each prepayment of any Loans made pursuant to a Borrowing
shall be applied pro rata among such Loans. In the absence of a
designation by the Borrowers as described in the preceding sentence, the
Administrative Agent shall, subject to the above, make such designation in
its sole discretion with a view, but no obligation, to minimize breakage
costs owing under Section 1.11.
3.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its pro rata share) account of
the Lenders entitled thereto, not later than 1:00 P.M. (New York time) on the
date when due and shall be made in immediately available funds and in lawful
money of the United States of America at the Payment Office, it being understood
that written notice by the Borrowers to the Administrative Agent to make a
payment from the funds in the Borrowers' account at the Payment Office shall
constitute the making of such payment to the extent of such funds held in such
account. Any payments under this Agreement which are made later than 1:00 P.M.
(New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
-16-
23
3.04 Net Payments. (a) All payments made by the Borrowers hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 3.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction (or by any political subdivision or
taxing authority thereof or therein) with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Lender pursuant to the laws
of the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Lender is located (or any
subdivision or taxing authority thereof or therein)) and all interest, penalties
or similar liabilities with respect to such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges (all such non-excluded taxes, levies,
imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, the Borrowers
agree to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note. If any
amounts are payable in respect of Taxes pursuant to the preceding sentence, the
Borrowers agree to reimburse each Lender, upon the written request of such
Lender, for taxes imposed on or measured by the net income or net profits of
such Lender pursuant to the laws of the jurisdiction in which such Lender is
organized or in which the principal office or applicable lending office of such
Lender is located (or of any subdivision or taxing authority therein or thereof)
and for any withholding of taxes as such Lender shall determine are payable by,
or withheld from, such Lender in respect of such amounts so paid to or on behalf
of such Lender pursuant to the preceding sentence and in respect of any amounts
paid to or on behalf of such Lender pursuant to this sentence. The Borrowers
will furnish to the Administrative Agent within 45 days after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Borrowers. The Borrowers agree to
indemnify and hold harmless each Lender, and reimburse such Lender upon its
written request, for the amount of any Taxes so levied or imposed and paid by
such Lender.
(a) Each Lender that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees to deliver to the Borrowers and the Administrative Agent on or prior to
the Closing Date, or in the case of a Lender that is an assignee or transferee
of an interest under this Agreement pursuant to Section 1.13 or 11.04 (unless
the respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Lender, (i) two accurate and complete
-17-
24
original signed copies of Internal Revenue Service Form 4224 or 1001 (or
successor forms) certifying to such Lender's entitlement to a complete exemption
from United States withholding tax with respect to payments to be made under
this Agreement and under any Note or (ii) if the Lender is not a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit C (any such certificate, a
"Section 3.04 Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Lender's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each such Lender agrees that, from time to time
after the Closing Date, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect, it
will deliver to the Borrowers and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001,
or Form W-8 and a Section 3.04 Certificate, as the case may be, and such other
forms as may be required in order to confirm or establish the entitlement of
such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Borrowers and the Administrative Agent of its
inability to deliver any such Form or Certificate in which case such Lender
shall not be required to deliver any such Form or Certificate pursuant to this
Section 3.04(b). Notwithstanding anything to the contrary contained in Section
3.04(a), but subject to Section 12.04(b) and the immediately succeeding
sentence, (x) the Borrowers shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or similar taxes imposed by the
United States from interest, fees or other amounts payable hereunder for the
account of any Lender which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes to
the extent that such Lender has not provided to the Borrowers Internal Revenue
Service Forms that establish a complete exemption from such deduction or
withholding and (y) the Borrowers shall not be obligated pursuant to Section
3.04(a) hereof to gross-up payments to be made to any such Lender in respect of
income or similar taxes imposed by the United States if (I) such Lender has not
provided to the Borrowers the Internal Revenue Service Forms required to be
provided to the Borrowers pursuant to this Section 3.04(b) or (II) in the case
of a payment, other than interest, to a Lender described in clause (ii) of the
last sentence of this Section 3.04(b) above, to the extent that such Forms do
not establish a complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 3.04 and except as set forth in Section 11.04(b), the
Borrowers agree to pay additional amounts and to indemnify each Lender in the
manner set forth in Section 3.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the immediately preceding sentence as
a result of any changes
-18-
25
after the Closing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of such Taxes.
4. Conditions Precedent
4.01 Conditions Precedent to Closing Date. This Agreement shall
become effective on the date (the "Closing Date") on which all the following
conditions have first been satisfied:
(a) Effectiveness; Notes. On or prior to the Initial Borrowing
Date, (i) this Agreement shall have been effective as provided in Section 11.10
and (ii) there shall have been delivered to the Administrative Agent for the
account of each MN Lender a First Mortgage Note executed by the Borrowers, in
the amount, maturity and as otherwise provided herein.
(b) Opinions of Counsel. On the Closing Date, the Administrative
Agent shall have received opinions, addressed to each Agent and each of the
Lenders and dated the Closing Date, from (i) Lionel Sawyer & Collins, special
counsel to the Borrowers, which opinion shall cover the matters set forth in
Exhibit D-1 hereto, (ii) White & Case, special counsel to the Administrative
Agent, which opinion shall cover the matters set forth in Exhibit D-2 hereto and
(iii) Schreck & Morris, special Nevada counsel to the Lenders, which opinion
shall cover the matters set forth in Exhibit D-3 and, in each case, such other
matters incident to the transactions contemplated herein as the Administrative
Agent may reasonably request and all of which opinions shall be in form and
substance satisfactory to the Administrative Agent.
(c) Proceedings. (I) The Administrative Agent shall have received
a certificate, dated the Closing Date, signed by an Authorized Officer of the
General Partner in the form of Exhibit E with appropriate insertions and
deletions, together with (x) copies of the certificate of incorporation, by-laws
or equivalent organizational documents of each Borrower, (y) the resolutions or
authorizations of each Borrower referred to in such certificate and all of the
foregoing shall be satisfactory to the Administrative Agent and (z) a statement
that all of the applicable conditions set forth in Sections 4.01(q) and 4.02
exist as of such date.
(II) On the Closing Date, all corporate, partnership and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement shall be satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent shall have
received all information and copies of all certificates, documents and papers,
including good standing certificates and any other records of corporate and
partnership proceedings
-19-
26
and governmental approvals, if any, which the Administrative Agent may have
requested in connection therewith, such documents and papers, where appropriate,
to be certified by proper corporate or governmental authorities.
(d) Adverse Change, etc. Since December 15, 1997, nothing shall
have occurred (and neither any Lender nor the Administrative Agent shall have
become aware of any facts or conditions not previously known) which the
Administrative Agent or the Required Lenders shall determine has had, or is
reasonably likely to have, (i) a Material Adverse Effect or (ii) a material
adverse effect on the rights or remedies of the Lenders or the Administrative
Agent hereunder or under any other Credit Document, or on the ability of the
Credit Parties to perform their obligations to the Lenders and the
Administrative Agent.
(e) Litigation. On the Closing Date, there shall be no actions,
suits or proceedings pending or notified to the Borrowers in writing (a) with
respect to this Agreement or any other Credit Document or (b) which the
Administrative Agent or the Required Lenders shall reasonably determine has had,
or is reasonably likely to have, (i) a Material Adverse Effect or (ii) a
material adverse effect on the rights or remedies of the Lenders or the
Administrative Agent hereunder or under any other Credit Document or on the
ability of the Credit Parties to perform their obligations to the Lenders and
the Administrative Agent.
(f) Contracts; etc. On or prior to the Closing Date, there shall
have been made available to the Administrative Agent true and correct copies of:
(i) the Construction Contract, the CC Continuation Agreement, the
HHC Agreements and the Completion Guaranty;
(ii) all material architectural contracts (including the Architect
Contract) and Plans and Specifications (which will only be made available
to the Consultant) for the construction of the Project (which Plans and
Specifications shall be prepared in accordance with industry standards by
the Architect), as well as all material engineering and other analyses
prepared and contracts not otherwise specified in this Section 4.01(f)
(including maintenance, management, leasing and service contracts) entered
into with respect thereto;
(iii) a detailed budget for the development and construction of the
Project (as the same may be amended in accordance with the terms hereof
(the "Budget"), prepared by the Borrowers and satisfactory to the
Administrative Agent setting forth on a line by line basis the total
Project Costs anticipated to be incurred in connection with the completion
of the Project (which shall not exceed $267.5 million);
-20-
27
(iv) a commercially reasonable timetable for the completion of the
Project (as the same may be amended in accordance with the terms hereof,
the "Timetable"), which shall show, on a monthly basis, the anticipated
progress of the work;
(v) the Regent License and Subordination Agreement;
(vi) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of the
most recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each Plan
that is a "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans," as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements, with or for the
benefit of current or former employees of any Borrower or any ERISA
Affiliate (provided that the foregoing shall apply in the case of any
multiemployer plan, as defined in 4001(a)(3) of ERISA, only to the extent
that any document described therein is in the possession of a Borrower or
any ERISA Affiliate or reasonably available thereto from the sponsor or
trustee of any such plan);
(vii) any collective bargaining agreements or any other similar
agreement or arrangements covering the employees of either Borrower;
(viii) all agreements entered into by any Borrower governing the
terms and relative rights of its capital stock or partnership interests;
(ix) any agreement with respect to the management of any Borrower;
(x) any material employment agreements entered into by any
Borrower;
(xi) any tax sharing, tax allocation and other similar agreements
entered into by any Borrower; and
(xii) all other material contracts to which any Borrower is party;
all of which shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall be in full force and effect on the Closing Date.
-21-
28
(g) Consultant Certificate. The Administrative Agent shall have
received a certificate dated the Closing Date and in form and substance
satisfactory to the Administrative Agent from the Consultant to the effect that
in its opinion (x) all construction permits necessary to construct the Project
have been obtained or should be obtainable in due course and (y) the Project is
reasonably capable of construction in accordance with the Budget, the Timetable
and the Plans and Specifications, provided that, at the election of the
Borrowers, this certificate will not have to be delivered on or prior to the
Closing Date but may be delivered subsequent thereto provided that no transfer
of funds from the Mortgage Notes Proceeds Account or the Subordinated Notes
Proceeds Account to the Disbursement Account shall be made until and unless such
certificate has been delivered to the Administrative Agent.
(h) Environmental Reports. The Administrative Agent shall have
received a "Phase I" environmental report with respect to the Project in form
and substance satisfactory to, and prepared by a qualified independent expert
satisfactory to, the Administrative Agent.
(i) FIRREA Appraisal. The Administrative Agent shall have received
an appraisal of the Project satisfying all the requirements of FIRREA and
prepared by an independent qualified appraiser selected by the Administrative
Agent that reflects to the Administrative Agent's satisfaction an as-built fair
market value for the Project of not less than the total Project Costs specified
in the Budget as in effect on the Closing Date, provided that, at the election
of the Borrowers, this appraisal will not have to be delivered on or prior to
the Closing Date but may be delivered subsequent thereto provided that no
transfer of funds from the Mortgage Notes Proceeds Account to the Disbursement
Account shall be made until and unless such certificate has been delivered to
the Administrative Agent.
(j) Fee Subordination. SCGC shall have authorized, executed and
delivered an agreement subordinating the $3 million development fees owed it by
the Partnership so that such fees will be reduced dollar for dollar to the
extent the total Project Costs on the Commencement Date (including such fees)
exceed $267.5 million (as the same may be modified, amended or supplemented from
time to time in accordance with the terms thereof and hereof, the "Subordinated
Fees Agreement"), which shall be in form and substance satisfactory to the
Administrative Agent.
(k) Account Agreements. (I) The Borrowers, the Administrative
Agent, the Subordinated Notes Trustee and First Security as Disbursement Agent
shall have executed and delivered a disbursement agreement substantially in form
of Exhibit F-1 (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "Disbursement Agreement")
establishing the conditions for the disbursement of funds to complete the
Project.
(II) The Borrowers, the Administrative Agent and First Security
shall
-22-
29
have executed and delivered a proceeds agreement substantially in the form of
Exhibit F-2 (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "Mortgage Notes Proceeds
Agreement") establishing the account (the "Mortgage Notes Proceeds Account")
into which the proceeds of all Construction Loans shall be deposited.
(III) The Borrowers, the Administrative Agent and First Security
shall have executed and delivered an escrow agreement substantially in the form
of Exhibit F-3 (as modified, amended and supplemented from time to time in
accordance with the terms thereof and hereof, the "Interest Escrow Agreement"),
and on the Closing Date the Borrowers shall have deposited in the Interest
Escrow Account $12.4 million.
(l) Subsidiary Guaranty. Each Subsidiary of the Partnership, if
any, shall have duly authorized, executed and delivered a Subsidiary Guaranty in
the form of Exhibit G hereto (as modified, amended or supplemented from time to
time in accordance with the terms hereof and thereof, the "Subsidiary
Guaranty"), and the Subsidiary Guaranty shall be in full force and effect.
(m) Security Documents. (I) Each Credit Party shall have each duly
authorized, executed and delivered a Pledge Agreement in the form of Exhibit H
(as modified, amended or supplemented from time to time in accordance with the
terms thereof and hereof, the "Pledge Agreement") and shall have delivered to
the Collateral Agent, as pledgee thereunder, all of the certificates
representing the Pledged Securities referred to therein, endorsed in blank or
accompanied by executed and undated stock powers, and the Pledge Agreement shall
be in full force and effect.
(II) Each Credit Party shall have each duly authorized, executed
and delivered a Security Agreement substantially in the form of Exhibit I (as
modified, supplemented or amended from time to time, the "Security Agreement")
covering all of such Credit Party's present and future Security Agreement
Collateral, in each case together with:
(i) executed copies of Financing Statements (Form UCC-1) in
appropriate form for filing under the UCC of each jurisdiction as may be
necessary to perfect the security interests purported to be created by the
Security Agreement;
(ii) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of recent date listing all effective
financing statements that name any Credit Party as debtor and that are
filed in the jurisdictions referred to in clause (i), together with copies
of such financing statements (none of which shall cover the Collateral
except (x) those with respect to which appropriate termination statements
executed by the
-23-
30
secured lender thereunder have been filed or delivered to the
Administrative Agent and (y) to the extent evidencing Permitted Liens);
(iii) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by the Security Agreement; and
(iv) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the Security
Agreement have been taken;
and the Security Agreement shall be in full force and effect.
(III) The Collateral Agent shall have received:
(v) a fully executed original of a deed of trust in form and
substance satisfactory to the Collateral Agent (as modified, supplemented
or amended from time to time, the "Mortgage"), which Mortgage shall cover
the Partnership's estates in all of the Project Property and which
Mortgage promptly following the Effective Date shall be recorded in Clark
County, Nevada to effectively create a valid and enforceable first
priority mortgage Lien (subject only to Permitted Encumbrances) on the
Project Property in favor of the Collateral Agent;
(vi) a fully executed original of a collateral assignment of leases
and rents in form and substance satisfactory to the Collateral Agent (as
modified, supplemented or amended from time to time, the "Assignment of
Leases and Rents"), which Assignment of Leases and Rents shall cover each
of the Project Properties, and which Assignment of Leases and Rents shall
be recorded in Clark County, Nevada to effectively create a valid and
enforceable first priority lien (subject only to Permitted Encumbrances)
on the Collateral described therein in favor of the Collateral Agent;
(vii) a mortgagee title insurance policy (or binding commitment to
issue such title insurance policy) issued by title insurers reasonably
satisfactory to the Collateral Agent (the "Mortgage Policy") in amounts
reasonably satisfactory to the Collateral Agent and assuring the
Collateral Agent that the Mortgage is a valid and enforceable first
priority mortgage Lien on the Project Property, free and clear of all
defects and encumbrances except Permitted Encumbrances, and the Mortgage
Policy shall be in form and substance reasonably satisfactory to the
Collateral Agent and (A) shall include an endorsement for future advances
under this Agreement, the Notes and the Mortgage, and for such other
matters that the Collateral
-24-
31
Agent in its discretion may reasonably request, (B) shall not include an
exception for mechanics' liens, and (C) shall provide for affirmative
insurance and such reinsurance (including direct access agreements) as the
Collateral Agent in its discretion may reasonably request; and
(viii) a survey in form and substance satisfactory to the Collateral
Agent of the Project Property, dated a recent date and certified in a
manner acceptable to the Collateral Agent by a licensed professional
surveyor satisfactory to the Administrative Agent.
(n) Insurance Policies. On the Closing Date, the Collateral Agent
shall have received evidence of insurance complying with the requirements of
Section 6.03 for the business and properties of the Borrowers, in form and
substance satisfactory to the Administrative Agent and, with respect to all
casualty insurance, naming the Collateral Agent as an additional insured and/or
loss payee, and stating that such insurance shall not be cancelled or revised
without at least 30 days' prior written notice by the insurer to the Collateral
Agent.
(o) Consent Letter. On the Closing Date, the Administrative Agent
shall have received a letter from CT Corporation System, substantially in the
form of Exhibit J hereto, indicating its consent to its appointment by each
Credit Party as its agent to receive service of process.
(p) Fees. On the Closing Date, the Borrowers shall have paid to
the Agents and the Lenders all Fees and expenses agreed upon by such parties to
be paid on or prior to such date.
(q) Capitalization. (I) On or prior to the Closing Date, the
Partners at such time shall have made permanent equity investments in the
Partnership (including the amount on deposit on the Closing Date in the
Partnership Funds Account) in cash of at least $67.5 million.
(II) On the Closing Date, the Borrowers shall have issued the
Subordinated Notes for gross cash proceeds of $100 million and shall have
deposited the net cash proceeds of such issuance into the Subordinated Notes
Proceeds Account.
(III) On the Closing Date, the Borrowers shall have delivered to the
Administrative Agent certified copies of the Partnership Funds Agreement, the
Subordinated Notes Proceeds Agreement and the Subordinated Notes Documents, all
of which shall be in full force and effect and in form and substance
satisfactory to the Administrative Agent.
4.02 Conditions Precedent to All Loans. The obligation of each
Lender to make any Loans (including on the Closing Date) is subject, at the time
-25-
32
of the making of such Loans, to the satisfaction of the following conditions:
(a) Notice of Borrowing. The Administrative Agent shall have
received a Notice of Borrowing meeting the requirements of Section 1.03
(accompanied by a Consultant's Confirmation in the case of the incurrence of
Construction Loans).
(b) No Default; Representations and Warranties. At the time of the
making of such Loans and also after giving effect thereto, (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties made
by any Credit Party contained herein or in the other Credit Documents shall be
true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, except to the extent that such representations and warranties
expressly relate to an earlier date.
The acceptance of the benefits of each incurrence of Loans shall constitute a
representation and warranty by the Borrowers to the Agents and each of the
Lenders that all of the applicable conditions specified in Section 4.01 (in the
case of Loans incurred on the Closing Date) and/or 4.02, as the case may be,
exist as of that time. All of the certificates, legal opinions and other
documents and papers referred to in Section 4.01, unless otherwise specified,
shall be delivered to the Administrative Agent at its Notice Office for the
account of each of the Lenders and, except for the Notes, in sufficient
counterparts for each of the Lenders and shall be satisfactory in form and
substance to the Administrative Agent.
5. Representations, Warranties and Agreements. In order to induce
the Lenders to enter into this Agreement and to make Loans hereunder, the
Borrowers make the following representations and warranties to, and agreements
with, the Lenders, all of which shall survive the execution and delivery of this
Agreement and the making of the Loans:
5.01 Status. Each of the Credit Parties (I) is a duly organized and
validly existing corporation or limited partnership, as the case may be, in good
standing under the laws of the jurisdiction of its organization (in the case of
each corporate Credit Party) and has the power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (ii) has duly qualified and is authorized to do business
and is in good standing in all jurisdictions where it is required to be so
qualified and where the failure to be so qualified would have a Material Adverse
Effect.
5.02 Power and Authority. Each Credit Party has the power and
authority to execute, deliver and carry out the terms and provisions of the
Credit Documents to which it is a party and has taken all necessary action to
authorize the execution, delivery and performance of the Credit Documents to
which it is a party.
-26-
33
Each Credit Party has duly executed and delivered each Credit Document to which
it is a party and each such Credit Document constitutes the legal, valid and
binding obligation of such Person enforceable in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally, and subject to
the effect of general principles of equity (regardless of whether considered in
a proceeding in equity or at law).
5.03 No Violation. Neither the execution, delivery and performance
by any Credit Party of the Credit Documents to which it is a party nor
compliance with the terms and provisions thereof (i) will contravene any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or (other than
pursuant to the Security Documents) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or assets
of any Credit Party pursuant to the terms of any indenture, mortgage, deed of
trust, agreement or other instrument to which such Credit Party is a party or by
which it or any of its property or assets are bound or to which it may be
subject or (iii) will violate any provision of the certificate of incorporation,
by-laws or equivalent organizational documents of any Credit Party.
5.04 Litigation. There are no actions, suits or proceedings pending
or, to the knowledge of either Borrower, threatened with respect to any Credit
Party that are reasonably likely to have (i) a Material Adverse Effect or (ii) a
material adverse effect on the rights or remedies of the Lenders or on the
ability of the Credit Parties to perform their obligations to them under the
other Credit Documents.
5.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
Construction Loans shall be utilized to finance Project Costs.
(a) The proceeds of all Revolving Loans may be used for the
working capital purposes of the Borrowers.
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
and no part of the proceeds of any Loan will be used to purchase or carry any
Margin Stock or to extend credit for the purpose of purchasing or carrying any
Margin Stock.
5.06 Governmental Approvals. Except for filings and recordings in
connection with the Security Documents, no order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any
-27-
34
subdivision thereof (including, without limitation, any Gaming Authority), is
required to authorize or is required in connection with (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
5.07 Investment Company Act. No Credit Party is an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
5.08 Project Documents. Each Project Document is in full force and
effect and no material breach has occurred and is continuing under any thereof.
5.09 True and Complete Disclosure. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of the
Credit Parties in writing to the Agents for purposes of or in connection with
this Agreement or any transaction contemplated herein is, and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of
any such Person in writing to any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided. The projections and pro
forma financial information contained in such materials are based on good faith
estimates and assumptions believed by the Borrowers to be reasonable at the time
made, it being recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results. There is no fact known to the Borrowers which would have a Material
Adverse Effect and which has not been disclosed herein or in such other
documents, certificates and statements furnished to the Lenders for use in
connection with the transactions contemplated hereby.
5.010 Financial Statements. (a) (i) The audited balance sheet of
each Borrower at December 31, 1996 and the related statements of operations,
partnership interests, shareholder equity and cash flows, which were examined
and reported on by Ernst & Young LLP, (ii) the unaudited balance sheet of each
Borrower and the related statements of operations, partnership interests,
shareholder equity and cash flows as of September 30, 1997, certified by the
chief financial officer of the Borrower and (iii) the audited consolidated
statements of financial position of SCGC at December 31, 1996 and the related
consolidated statements of operations, shareholders equity and cash flows for
the fiscal year then ended, which were examined and reported on by Ernst & Young
LLP, copies of all of which have heretofore been furnished to each Lender,
present fairly in all material respects the financial position of each Borrower
or SCGC, as the case may be, at the dates of said statements and, in the case of
the
-28-
35
SCGC statements the results for the periods covered thereby, in accordance with
GAAP, except to the extent provided in the notes to said financial statements
and, in the case of the September 30, 1997 financial statements, subject to
normal and recurring year-end audit adjustment. All such financial statements
have been prepared in accordance with GAAP and practices consistently applied
except to the extent provided in the notes to said financial statements. Nothing
has occurred since December 31, 1996 that has had or is reasonably likely to
have a Material Adverse Effect.
(a) Except as reflected in the financial statements and the notes
thereto described in Section 5.10(a) or fully disclosed in the Offering
Memorandum, there were as of the Closing Date no liabilities or obligations with
respect to either Borrower of a nature (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to the Borrowers taken as a whole, except as incurred in the
ordinary course of business consistent with past practices subsequent to
December 31, 1996, and as incurred hereunder and under the Subordinated Notes on
such date.
(b) On and as of the Closing Date, (i) the forecasted financial
information set forth in the Offering Memorandum (the "Financial Projections")
were prepared based upon the assumptions concerning various industry trends
described therein for the periods presented and (ii) the Financial Projections
were based on good faith and reasonable assumptions and estimates; provided that
no assurance can be given that the projected results will be realized or with
respect to the ability of the Partnership to achieve the projected results, and
while the Financial Projections are necessarily presented with numerical
specificity, the actual results achieved during the periods presented in all
likelihood will differ from the projected results and such differences may be
material.
(c) On and as of the Closing Date, the Budget, the Timetable, and
the Plans and Specifications were based on commercially reasonable assumptions
and estimates.
(d) The Budget, the Timetable and the Plans and Specifications are
realistic and the Borrowers reasonably expect that the same can be adhered to in
achieving the Commencement Date on or before the Completion Deadline.
5.011 Security Interests. On and after the Closing Date and after
giving effect to the filings described in the following sentence, each of the
Security Documents creates, as security for the Obligations purported to be
secured thereby, a valid and enforceable perfected security interest in and Lien
on all of the Collateral subject thereto, superior to and prior to the rights of
all third Persons and subject to no other Liens (other than Permitted Liens
relating thereto), in favor of the Collateral Agent for the benefit of the
Lenders. No filings or recordings are required in order to
-29-
36
perfect the security interests created under any Security Document except for
filings or recordings required in connection with any such Security Document
(other than the Pledge Agreement and any Account Agreement) which shall have
been made upon or prior to (or are the subject of arrangements, satisfactory to
the Administrative Agent, for filing on or promptly after the date of) the
execution and delivery thereof.
5.012 Representations and Warranties in Project Documents. All
representations and warranties of the Borrowers set forth in the Project
Documents, and to the knowledge of the Borrowers all representations and
warranties of all other parties set forth in the Project Documents, were true
and correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Closing Date as if such representations and warranties were made on and
as of such date.
5.013 Tax Returns and Payments. Each Credit Party (other than the
Partnership which at all times has been a partnership for all income tax
purposes) has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, except for
those contested in good faith and adequately disclosed and fully provided for on
the financial statements of the Borrowers in accordance with generally accepted
accounting principles. Each Credit Party has at all times paid, or has provided
adequate reserves (in the good faith judgment of the management of such Credit
Party) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to date
except such taxes or charges which are being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
5.014 Compliance with ERISA. No Credit Party nor any ERISA Affiliate
maintains, contributes to or is required to contribute to any Multiemployer
Plan. Except to the extent that all events and obligations described in the
following sentence of this Section 5.14 would not in the aggregate have a
Material Adverse Effect, each Plan (and each related trust, insurance contract
or fund) is in substantial compliance with its terms and with all applicable
laws, including, without limitation, ERISA and the Code; no Credit Party nor any
ERISA Affiliate has incurred or reasonably expects to incur, and to the
Borrowers' knowledge, no condition exists which presents a material risk to any
Credit Party or any ERISA Affiliate of incurring, any liability, nor has a Lien
been imposed against the assets of any Credit Party or any ERISA Affiliate, on
account of a Plan or Multiemployer Plan under the Code or ERISA; each Plan (and
each related trust, if any) which is intended to be qualified under Section
401(a) of the Code has received, or will in due course receive, a determination
letter from the Internal Revenue Service to the effect that it meets the
requirements of Sections 401(a) and 501(a) of the Code; no Reportable Event has
occurred; no Plan has an Unfunded Current Liability; no Plan which is subject to
-30-
37
Section 412 of the Code or Section 302 of ERISA has an accumulated funding
deficiency, within the meaning of such sections of the Code or ERISA, or has
applied for or received a waiver of an accumulated funding deficiency or an
extension of any amortization period, within the meaning of Section 412 of the
Code or Section 303 or 304 of ERISA; no proceedings have been instituted to
terminate or appoint a trustee to administer any Plan which is subject to the
Title IV of ERISA; no action, suit, proceeding, hearing or audit or, to the
knowledge of either Borrower, no investigation with respect to the
administration, operation or the investment of assets of any Plan (other than
routine claims for benefits) is pending, or to the knowledge of either Borrower
is, expected or threatened. No Credit Party maintains or contributes to (i) any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) the obligations with respect to which a
consequence of any termination or other extraordinary event (other than benefits
in the ordinary course) is reasonably likely to have a Material Adverse Effect
or (ii) any Plan, the obligations with respect to which are reasonably likely to
have a Material Adverse Effect.
5.015 Subsidiaries. On and as of the Closing Date neither Borrower
has any Subsidiary.
5.016 Intellectual Property. The Credit Parties have obtained all
material patents, trademarks, service marks, trade names, copyrights, licenses
(other than Gaming Licenses) and other rights, free from burdensome
restrictions, that are necessary for the operation of their businesses taken as
a whole as presently conducted and as proposed to be conducted.
-31-
38
5.017 Environmental Matters. (a) Each Credit Party is in compliance
with all applicable Environmental Laws governing its business the failure to
comply with which is reasonably likely to have a Material Adverse Effect, and no
Credit Party is liable for any penalties, fines or forfeitures for failure to
comply with any of the foregoing which is reasonably likely to have a Material
Adverse Effect. All licenses, permits, registrations or approvals required to
operate the Project under any Environmental Law shall have been secured prior to
when required, and the Credit Parties are in substantial compliance therewith,
except such licenses, permits, registrations or approvals the failure to secure
which or to comply with which is not reasonably likely to have a Material
Adverse Effect. No Credit Party is in any respect in noncompliance with, breach
of or default under any applicable writ, order judgment, injunction, or decree
to which such Credit Party is a party or which would affect the ability of such
Credit Party to operate any Real Property and no event has occurred and is
continuing which, with the passage of time or the giving of notice or both,
would constitute noncompliance, breach of or default thereunder, except in each
such case, such noncompliance, breaches or defaults as are not reasonably likely
to, in the aggregate, have a Material Adverse Effect. There are no Environmental
Claims pending or, to the knowledge of the Borrowers, threatened, which are
reasonably likely to have a Material Adverse Effect. There are no facts,
circumstances, conditions or occurrences on any Real Property at any time owned
or operated by any Credit Party or, to the knowledge of the Borrowers, on any
property adjacent to any such Real Property that could reasonably be expected
(i) to form the basis of a material Environmental Claim against any Credit Party
or any currently owned or operated Real Property of any Credit Party, or (ii) to
cause such currently owned or operated Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law, except in each such case, such
Environmental Claims or restrictions that individually, or in the aggregate, are
not reasonably likely to have a Material Adverse Effect.
(a) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property owned
or operated by a Credit Party or (ii) released on or from any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
5.018 Properties. Each Credit Party has good and marketable fee
title to, or a validly subsisting leasehold interest in, all properties owned or
leased by it, including all Real Property reflected in the balance sheets
referred to in Section 5.10(b), free and clear of all Liens, other than (i) as
referred to in the consolidated balance sheet or in the notes thereto or (ii)
otherwise permitted by Section 7.03. Annex V contains a true and complete list
of each Real Property owned or leased by the Borrowers as of the Closing Date
and the type of interest therein held by the Borrowers.
-32-
39
5.019 Labor Relations. No Credit Party is engaged in any unfair
labor practice that could reasonably be expected to have a Material Adverse
Effect. There is (i) no unfair labor practice complaint pending against any
Credit Party or threatened against any of them, before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against any Credit Party
or threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against any Credit Party or threatened against any Credit Party
and (iii) no union representation question existing with respect to the
employees of any Credit Party and no union organizing activities are taking
place, except with respect to any matter specified in clause (i), (ii) or (iii)
above, either individually or in the aggregate, such as is not reasonably likely
to have a Material Adverse Effect.
5.020 Compliance with Statutes, etc. (a) Each Credit Party is in
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by and all applicable Permits issued by, all
governmental bodies, in respect of the conduct of its business, the ownership of
its property and the construction and operation of the Project, except such
non-compliance as is not likely to, individually or in the aggregate, have a
Material Adverse Effect.
(a) All necessary governmental and third party approvals and
Permits (other than approvals and Permits as are immaterial to the construction
or operation of the Project) required to be obtained by the date upon which this
representation is being made or deemed made in connection with the ownership,
lease, construction and operation of the Project or any facilities or services
ancillary thereto and the other transactions contemplated by the Credit
Documents have been obtained and remain in full force and effect, and all
applicable waiting periods shall have expired without any action being taken by
any competent authority which restrains, prevents or imposes materially adverse
conditions upon the completion of the Project or the consummation of the
transactions contemplated by this Agreement and the Project Documents.
Additionally, there does not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified (i) challenging the legality, validity or
enforceability of any such Permit or the legality or validity of the process
pursuant to which such Permit was issued or (ii) prohibiting or imposing
materially adverse conditions.
5.021 Access; Utilities. (a) All roads necessary for the
construction of the Project exist and all roads necessary for the operation of
the Project either exist or will exist prior to the commencement date of such
operations.
(a) All utilities services and facilities necessary for the
construction of the Project (including, without limitation, water supply, storm
and sanitary sewer
-33-
40
facilities, gas, electrical and telephone facilities) will be available without
impediment or delay when required and all utility services necessary for the
operation of the Project will be available at or within the boundaries thereof
when needed.
(b) The Partnership possesses (or will possess when necessary with
respect to each phase of the Project) all rights and interests in property
(including, without limitation, all rights of ingress and egress) and all
material rights or contracts necessary for the construction, installation,
completion, operation and maintenance of the Project as contemplated by this
Agreement and the Project Documents.
6. Affirmative Covenants. The Borrowers hereby covenant and agree
that for so long as this Agreement is in effect and until the Commitments have
terminated, no Notes are outstanding and the Loans, together with interest, Fees
and all other Obligations incurred hereunder, are paid in full:
6.01 Information Covenants. The Borrowers will furnish to the
Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available and in any
event within 90 days after the close of each fiscal year of the Partnership, the
consolidated balance sheet of the Partnership, as at the end of such fiscal year
and the related consolidated statements of income, retained earnings and cash
flow for such fiscal year, in each case setting forth comparative figures for
the preceding fiscal year, examined by Ernst & Young LLP or such other
independent certified public accountants of recognized national standing whose
opinion shall not be qualified as to the scope of audit and as to the status of
the Partnership or any of its Subsidiaries as a going concern, together with a
certificate of such accounting firm stating that in the course of its regular
audit of the business of the Partnership and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of any Default or Event of Default
which has occurred and is continuing or, if in the opinion of such accounting
firm such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(b) Quarterly Financial Statements. As soon as available and in
any event within 45 days after the close of each fiscal quarter in each fiscal
year, the consolidated balance sheet of the Partnership and its Subsidiaries as
at the end of such quarter and the related consolidated statements of income,
retained earnings and cash flow for such quarter and for the elapsed portion of
the fiscal year ended with the last day of such quarter, and in each case
setting forth comparative figures for the corresponding periods in the prior
fiscal year and in the budget delivered in respect of the current fiscal year,
all of which shall be certified by the chief financial officer or controller of
the Partnership, subject to changes resulting from audit and normal yearend
audit adjustments.
-34-
41
(c) Monthly Reports. As soon as practicable, and in any event
within 45 days, after the end of each month the consolidated balance sheet of
the Partnership and its Subsidiaries, as at the end of such month, and the
related consolidated statements of income and cash flow for such month and for
the elapsed portion of the fiscal year ended with the last day of such month,
setting forth comparative figures for the corresponding periods in the prior
fiscal year and in the budget delivered in respect of the current fiscal year,
all of which shall be certified by the chief financial officer or controller of
the Partnership subject to changes resulting from audit and normal year-end
audit adjustments.
(d) Budgets; etc. Not more than 30 days after the commencement of
each fiscal year, a consolidated budget of the Project in reasonable detail for
such fiscal year. In addition, there shall be delivered, together with each
delivery of financial information pursuant to clause (c) above prior to the
Commencement Date, an update to the Budget giving effect to Project Costs
actually incurred.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 6.01(a), (b) and (c), a
certificate of the General Partner to the effect that no Default or Event of
Default exists or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate (x) in the case of the certificate
delivered pursuant to Sections 6.01(a) and (b), shall set forth the calculations
required to establish whether the Borrowers were in compliance with the
provisions of Sections 7.11 through 7.13, as at the end of such fiscal year or
quarter, as the case may be, and shall set forth the Leverage Ratio as of the
end of such year or quarter, and (y) in the case of the certificate delivered
pursuant to Section 6.01(a) for each fiscal year commencing with the fiscal year
ending December 31, 1999, shall set forth the amount of the Excess Cash Flow for
the fiscal year then ended.
(f) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after any officer of either Borrower obtains
knowledge thereof, notice of (x) the occurrence of any event which constitutes,
or is reasonably likely to become, a Default or Event of Default which notice
shall specify the nature thereof, the period of existence thereof and what
action the Borrowers propose to take with respect thereto and (y) the
commencement of or any materially adverse development in any litigation or
governmental proceeding pending against any Credit Party which is likely to have
a Material Adverse Effect or is likely to have a material adverse effect on the
ability of the Credit Parties to perform their obligations hereunder or under
any other Credit Document.
(g) Management Letters, etc. As soon as available and in any event
within 120 days after the end of each fiscal year, a copy of each "management
letter" and internal control or similar memoranda submitted to the Partnership
by its
-35-
42
independent accountants in connection with the annual audit made by it of the
books of the Partnership.
(h) Environmental Matters. Promptly after obtaining knowledge of
any of the following (but only to the extent that any of the following is
reasonably likely to (x) have a Material Adverse Effect, either individually or
in the aggregate, or (y) result in a remedial cost to the Credit Parties in
excess of $500,000, written notice of:
(i) any pending or threatened in writing Environmental Claim
against any Credit Party or any Real Property owned or operated by any
Credit Party;
(ii) any condition or occurrence on any Real Property owned or
operated by any Credit Party that (x) results in noncompliance by any
Credit Party with any applicable Environmental Law or (y) could reasonably
be anticipated to form the basis of an Environmental Claim against any
Credit Party or any such Real Property;
(iii) any condition or occurrence on any Real Property owned or
operated by any Credit Party that could reasonably be anticipated to cause
such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by any Credit Party of its interest in
such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on any Real
Property owned or operated by any Credit Party.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Credit Parties' response or proposed response thereto. In addition, the
Borrowers agree to provide the Lenders with copies of all material
communications by any Credit Party with any Person, government or governmental
agency relating to any of the matters set forth in clauses (I)-(iv) above, and
such detailed reports, if any, relating to any of the matters set forth in
clauses (I)-(iv) above as may reasonably be requested by the Administrative
Agent or the Required Lenders.
(i) Other Information. Promptly upon transmission thereof, (i)
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by any Credit Party,
(ii) copies of all financial statements, proxy statements, notices and reports
as any Credit Party shall send generally to analysts and the holders of the
Subordinated Notes in their
-36-
43
capacity as such holders (to the extent not theretofore delivered to the Lenders
pursuant to this Agreement) and with reasonable promptness, such other
information or documents (financial or otherwise) as the Administrative Agent on
its own behalf or on behalf of the Required Lenders may reasonably request from
time to time. In addition, the Partnership will provide to the Consultant all
material notices, reports and requests it receives under the Construction
Contract.
6.02 Books, Records and Inspections. (a) The Borrowers will, and
will cause the other Credit Parties to, permit, upon reasonable notice to the
General Partner specifying that the provisions of this Section 6.02 are being
exercised, officers and designated representatives of the Administrative Agent
or the Required Lenders to (at the Borrowers' expense) visit and inspect any of
the properties or assets of the Credit Parties in whomsoever's possession, and
to examine (and at the Borrowers' expense copy extracts from) the books of
account of the Credit Parties and discuss the affairs, finances and accounts of
the Credit Parties with, and be advised as to the same by, its and their
officers and independent accountants (the Borrowers hereby authorizing such
accountants to comply with the foregoing), all at such reasonable times and
intervals and to such reasonable extent as the Administrative Agent or the
Required Lenders may desire, it being understood and agreed that so long as no
Event of Default is then in existence, only one representative of each Lender
shall be permitted to participate at the Borrowers' expense in any such
visitation, inspection and/or examination pursuant to this clause (a).
(a) The Borrowers shall cooperate (and shall use their best
efforts to cause the General Manager to cooperate) with the Administrative Agent
in arranging for inspections from time to time by the Administrative Agent or
any representative of the Administrative Agent of the progress of construction
of the Project. In the course of such inspections, each of the Administrative
Agent and any representatives of the Administrative Agent shall be entitled to
inspect the Project Property, including, without limitation, (i) the
Improvements, (ii) all materials to be used in the construction of the
Improvements, (iii) all plans and shop drawings which are or may be kept at the
construction site, (iv) any contracts, bills of sale, statements, receipts or
vouchers in connection with the Improvements whether or not kept at the
construction site, (v) all work done, labor performed, materials furnished in
and about the Project Property, (vi) all books, contracts and records of the
Borrowers' agents and other entities as may be contractually bound to the
Borrowers to provide such records with respect to the construction of the
Improvements whether or not kept at the construction site, and (vii) any other
documents relating to the construction of the Improvements whether or not kept
at the construction site. In addition to the foregoing, the Borrowers shall use
reasonable efforts to insure that representatives of the Administrative Agent
shall be entitled to inspect (i) all books, contracts and records of the General
Manager and the Borrowers with respect to the Project (whether or not re-
lated to the construction thereof) and (ii) any other document of the General
Manager and the Borrowers relating to the Improvements whether or not re-
-37-
44
lated to the construction thereof and whether or not kept at the construction
site. The Borrowers will cooperate and instruct the General Manager and all
material subcontractors to cooperate with the Administrative Agent and any
representatives of the Administrative Agent so that they may perform their
respective responsibilities hereunder and to comply with the Administrative
Agent's requirements.
6.03 Insurance. (a) The Borrowers will, and cause the other Credit
Parties to, (i) maintain insurance on all its property in at least such amounts
and against at least such risks as is consistent and in accordance with industry
practice including physical damage insurance on all real and personal property
on an all risk basis (including the perils of flood and earthquake), covering
the repair and replacement costs of all such property and consequential loss
coverage for business interruption and extra expense and (ii) furnish to each
Lender, upon written request, full information as to the insurance carried. In
addition to the requirements of the immediately preceding sentence, the
Borrowers will at all times cause insurance of the types described in Annex VII
to be maintained (with the same scope of coverage as that described in Annex
VII) at levels which are at least as great as the respective amount described
opposite the respective type of insurance on Annex VII under the column headed
"Minimum Amount Required to be Maintained".
(a) All policies (including Mortgage Policies) or certificates (or
certified copies thereof) with respect to insurance (i) shall be endorsed to the
Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee or
as an additional insured), (ii) shall state that such insurance policies shall
not be cancelled without 30 days' prior written notice thereof by the respective
insurer to the Collateral Agent, (iii) shall provide that the respective
insurers irrevocably waive any and all rights of subrogation with respect to the
Collateral Agent and the Lenders, (iv) shall contain the standard
non-contributory mortgagee clause endorsement in favor of the Collateral Agent
with respect to hazard insurance coverage, (v) shall, except in the case of
public liability insurance and workers' compensation insurance, provide that any
losses shall be payable notwithstanding (A) any act or neglect of any Credit
Party, (B) the occupation or use of the properties for purposes more hazardous
than those permitted by the terms of the respective policy, (C) any foreclosure
or other proceeding relating to the insured properties or (D) any change in the
title to or ownership or possession of the insured properties and (vi) shall be
deposited with the Collateral Agent.
(b) If the Borrowers shall fail to maintain all insurance in
accordance with this Section 6.03, or shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Administrative Agent and/or
the Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and the Borrowers jointly and severally agree to
reimburse the Administrative Agent or the Collateral Agent, as the case may be,
for all costs and expenses of procuring such
-38-
45
insurance.
6.04 Payment of Taxes. The Borrowers will pay and discharge, and
will cause each other Credit Party to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become a
Lien or charge upon any properties of the Credit Parties, provided that no
Credit Party shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if (x) it
has maintained adequate reserves (in the good faith judgment of the General
Partner) with respect thereto in accordance with GAAP and (y) if in respect of
any Real Property, such Real Property is not subject to forfeiture as a result
thereof.
6.05 Corporate Franchises. The Borrowers will do, and will cause
each other Credit Party to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights,
franchises and authority, provided that any transaction permitted by Section
7.02 will not constitute a breach of this Section 6.05.
6.06 Compliance with Statutes, etc. The Borrowers will, and will
cause each other Credit Party to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign (including, without limitation, all
Gaming Authorities), in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not have a
Material Adverse Effect or would not have a material adverse effect on the
ability of the Credit Parties to perform their obligations under the Credit
Documents.
6.07 Good Repair. The Borrowers will, and will cause each other
Credit Party to, ensure that their properties and equipment used or useful in
its business in whomsoever's possession they may be, are kept in good repair,
working order and condition, normal wear and tear excepted, and that from time
to time there are made in such properties and equipment all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner useful or customary for
companies in similar businesses.
6.08 End of Fiscal Years; Fiscal Quarters. The Borrowers will, for
financial reporting purposes, cause (i) each of their, and each Subsidiary's,
fiscal years to end on December 31 of each year and (ii) each of their, and each
Subsidiary's, fiscal quarters to end on March 31, June 30, September 30 and
December 31 of each year.
6.09 Additional Security; Further Assurances. (a) The Borrowers
-39-
46
will, and will cause each other Credit Party to, grant to the Collateral Agent
security interests and mortgages in material properties acquired by any of them
after the Closing Date that are not subject to the Security Documents at the
time in effect as may be requested from time to time by the Administrative Agent
(collectively, the "Additional Mortgages"). All such security interests and
mortgages shall be granted pursuant to documentation reasonably satisfactory in
form and substance to the Administrative Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except as are permitted by Section 7.03. The
Additional Mortgages or instruments related thereto shall have been duly
recorded or filed in such manner and in such places as are required by law to
establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Mortgages and all taxes,
fees and other charges payable in connection therewith shall have been paid in
full.
(a) The Borrowers will, and will cause each other Credit Party to,
at the expense of the Borrowers, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, the
Borrowers shall cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance and other related documents as may be requested by the
Administrative Agent to assure itself that this Section 6.09 has been complied
with.
(b) The Borrowers agree that each action required above by this
Section 6.09 shall be completed as soon as possible, but in no event later than
30 days after such action is requested to be taken by the Administrative Agent
or the Collateral Agent, provided that in no event shall the Borrowers be
required to take any action, other than using their reasonable commercial
efforts without any material expenditure, to obtain consents from third parties
with respect to their compliance with this Section 6.09.
6.010 ERISA. As soon as possible and, in any event, within fifteen
days after the chief financial officer or chief executive officer of the General
Partner knows or has reason to know of the occurrence of any of the following
events (but in each case, only to the extent that it is reasonably likely that
the liability of the Credit Parties attributable to such event will be at least
$500,000), the Borrowers will deliver to each of the Lenders a certificate of
the Borrowers setting forth in reasonable detail as to such occurrence and the
action, if any, that the Credit Parties or ERISA Affiliates are required or
propose to take, together with any notices required or proposed to be given to
or filed with or by any Credit Party, ERISA Affiliate, the PBGC, a Plan or
Multiemployer Plan participant, the Plan or the Multiemployer Plan
-40-
47
administrator with respect thereto: that a Reportable Event has occurred; that
an accumulated funding deficiency, within the meaning of Section 412 of the Code
or Section 302 of ERISA, has been incurred or an application may reasonably be
expected to be or has been made for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code or Section 303 or 304
of ERISA with respect to a Plan or Multiemployer Plan; that any contribution
required to be made by any Credit Party or any ERISA Affiliate with respect to a
Plan or Multiemployer Plan that is subject to the funding requirements of
Section 412 of the Code or Section 302 of ERISA has not been timely made; that a
Plan or Multiemployer Plan has been or may reasonably be expected to be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; or that some action has been taken or proceedings have been instituted
which would be reasonably likely to cause any such termination, reorganization,
partition or declaration or result in the filing of any such application; that a
Plan has an Unfunded Current Liability; that proceedings may reasonably be
expected to be or have been instituted to appoint a trustee to administer a Plan
which is subject to Title IV of ERISA; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a
Multiemployer Plan; that any Credit Party or any ERISA Affiliate will or may
reasonably be expected to incur any liability to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan or Multiemployer Plan
under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or
502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B
of the Code; or that any Credit Party has incurred or is reasonably likely to
incur any liability as a consequence of any termination or other extraordinary
event (other than benefits in the ordinary course) in connection with any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan or Multiemployer Plan. Upon the
request of the Administrative Agent, the Borrowers will deliver to each of the
Lenders a complete copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) most recently required to be filed
with the Internal Revenue Service. In addition to any certificates or notices
delivered to the Lenders pursuant to the first sentence hereof, copies of any
material notices received by any Credit Party, or any ERISA Affiliate (i) from
any government agency with respect to any Plan or (ii) received from any
government agency or Plan administrator or sponsor or trustee with respect to
any Multiemployer Plan shall be delivered to the Lenders as soon as practicable,
but in no event later than 20 days, after such request is received.
6.011 Compliance with Environmental Laws. (i) The Borrowers will
-41-
48
comply, and will cause each other Credit Party to comply, with all Environmental
Laws applicable to the ownership, lease or use of all Real Property now or
hereafter owned, leased or operated by any Credit Party, will promptly pay or
cause to be paid all costs and expenses incurred in connection with such
compliance, and will keep or cause to be kept all such Real Property free and
clear of any Liens imposed pursuant to such Environmental Laws and (ii) no
Credit Party will generate, use, treat, store, release or dispose of, or permit
the generation, use, treatment, storage, release or disposal of Hazardous
Materials on any Real Property now or hereafter owned, leased or operated by any
Credit Party, or transport or permit the transportation of Hazardous Materials
to or from any such Real Property, except to the extent that the failure to
comply with the requirements specified in clause (i) or (ii) above, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. If required to do so under any applicable directive or
order of any governmental agency, the Borrowers agree to undertake, and cause
each other Credit Party to undertake, any clean up, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from any Real
Property owned, leased or operated by any Credit Party in accordance with, in
all material respects, the requirements of all applicable Environmental Laws and
in accordance with, in all material respects, such orders and directives of all
governmental authorities, except to the extent that the Credit Parties are
contesting such order or directive in good faith and by appropriate proceedings
and for which adequate reserves have been established to the extent required by
GAAP.
6.012 Construction of Improvements, etc. (a) The Borrowers will
cause the Commencement Date to occur on or before the Completion Deadline and
will meet any earlier construction deadlines contained in any of the Permits
and, in connection therewith will cause the construction and equipping of the
Improvements to be prosecuted with diligence and continuity in substantial
accordance with the Budget, Timetable and the Plans and Specifications.
(a) The Borrowers will only amend the Plans and Specifications to
the extent such amendment is commercially reasonable and does not materially
affect the design, structure, size or quality of the Improvements. The Borrowers
will submit to the Administrative Agent any such amendment in writing and
identify therein with particularity the proposed amendment to the Plans and
Specifications, together with a certificate of an Authorized Officer of the
General Partner that (i) such amendment is commercially reasonable and does not
materially affect the design, structure, size or quality of the Improvements,
and (ii) immediately following such amendment (x) the Plans and Specifications
will continue to provide for construction of Improvements which are
substantially consistent with the Budget and Timetable, and (y) the Plans and
Specifications will continue to call for construction which will permit the
Commencement Date to occur on or prior to the Completion Deadline. To the extent
any amendment to the Plans and Specifications is not commercially reasonable or
materially affects the design, structure, size or quality of the Improvements,
the
-42-
49
Borrowers shall obtain the prior written consent of the Required Lenders before
proceeding with such amendment.
(b) The Borrowers will only amend the Budget for the purposes of
increasing or decreasing, to the extent such amendment is commercially
reasonable, the amounts allocated for Line Items or adding or deleting Line
Items. The Borrowers will submit to the Administrative Agent any such amendment
in writing and identify therein with particularity the Line Item(s) to be
increased, decreased, added or deleted and the amounts of the Line Item(s) as
changed, together with a certification of an Authorized Officer of the General
Partner that (i) the change identified in such amendment is commercially
reasonable and (ii) immediately following such amendment (x) the Budget will
continue to provide for construction of Improvements which are substantially
consistent with the Timetable and the Plans and Specifications and which will
permit the Commencement Date to occur on or prior to the Completion Deadline,
and (y) the remaining Project Costs to achieve the Commencement Date on or prior
to the Completion Deadline will not exceed, when added to all expended Project
Costs, $267.5 million plus any additional cash equity theretofore contributed to
the Partnership by the Partners after the Closing Date for construction
purposes.
(c) The Borrowers will only amend the Timetable to the extent such
amendment is commercially reasonable. The Borrowers will submit to the
Administrative Agent such amendment in writing and identify with particularity
therein the dates and times to be changed, together with a certificate of an
Authorized Officer of the General Partner that (i) the change identified in such
amendment is commercially reasonable, and (ii) immediately following such
amendment the Timetable will continue to provide for a schedule and manner of
construction which is substantially consistent with the Budget and the Plans and
Specifications and which will permit the Commencement Date to occur on or prior
to the Completion Deadline.
(d) The Borrowers will within 60 days following the Closing Date
enter into a Construction Manager Agreement reasonably satisfactory to the
Administrative Agent provided that the Borrowers' obligations under this Section
6.12(e) may be waived by the Administrative Agent for good reason.
7. Negative Covenants. The Borrowers hereby covenant and agree
that for so long as this Agreement is in effect and until the Commitments have
terminated, no Notes are outstanding and the Loans, together with interest, Fees
and all other Obligations incurred hereunder, are paid in full:
7.01 Changes in Business. (a) The Partnership will not, and will
not permit any of its Subsidiaries, to engage in any business other than (x)
prior to the Commencement Date, the construction and development of the Project
and (y) on and after the Commencement Date, the ownership and operation of the
Project and the
-43-
50
related activities described in the Offering Memorandum.
(a) The General Partner will engage in no business or activity
other than in its capacity as general partner of the Partnership in connection
with the business of the Partnership permitted by clause (a) above.
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Borrowers will not, and will not permit any other Credit Party to, wind up,
liquidate or dissolve its affairs, or enter into any transaction of merger or
consolidation, or sell or otherwise dispose of all or any part of its property
or assets (other than obsolete equipment or excess equipment in the ordinary
course of business) or purchase, lease or otherwise acquire all or any part of
the property or assets of any Person (other than purchases or other acquisitions
of inventory, leases, materials and equipment in the ordinary course of
business) or agree to do any of the foregoing at any future time, except that
the following shall be permitted:
(a) any Subsidiary Guarantor may be merged or consolidated with or
into, or be liquidated into, the Partnership (so long as the Partnership
is the surviving entity) or another Subsidiary Guarantor, or all or any
part of the business, properties and assets of a Subsidiary Guarantor may
be conveyed, leased, sold or transferred to the Partnership or any
Subsidiary Guarantor;
(b) Project Costs may be incurred in connection with the
construction of the Project provided that the same are provided for in the
Budget;
(c) after the Commencement Date, Consolidated Capital Expenditures
will be permitted to the extent within the limitations set forth in
Section 7.05 hereof;
(d) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 7.06;
(e) the Partnership may lease (as lessee) personal property in the
ordinary course of business (so long as such lease does not create a
Capitalized Lease Obligation not otherwise permitted by Section 7.04(d));
(f) licenses or sublicenses by the Partnership of intellectual
property in the ordinary course of business, provided that such licenses
or sublicenses shall not interfere with the business of the Credit
Parties;
(g) to the extent it has not done so prior to the Closing Date,
the Partnership may transfer its rights under the HHC Option Agreement to
SCGC for nominal consideration to the extent otherwise permitted to do so
by the terms thereof;
-44-
51
(h) the Partnership may transfer its rights under the HHC
Agreements of first offer on four future resort casino sites in the
Summerlin community to a limited partnership or limited liability company
at least 85% controlled by SCGC (directly or indirectly) for an arms
length (as determined in good faith by the Board of Directors of the
General Partner) minority limited partnership or member interest therein
provided that such transferee remains so owned and does not further
transfer any of the rights it obtains from the Partnership;
(i) the Partnership may enter into leases as lessor of restaurant
and other concessionary space at the Project in accordance with customary
commercial practice and on commercially reasonable terms; and
(j) other sales or dispositions of assets provided that (v) no
Event of Default is then in existence, (w) the aggregate fair market value
for all properties the subject of such sales and dispositions shall not
exceed $1,000,000 in any fiscal year of the Partnership, (x) the
consideration for each such sale shall be in an amount in cash at least
equal to the fair market value thereof, (y) the Net Cash Proceeds of any
such sale are applied to repay the Loans to the extent required by Section
3.02(A)(c) and (z) the sale or disposition of the capital stock of any
Subsidiary of the Partnership shall be prohibited unless it is for all of
the outstanding capital stock of such Subsidiary.
7.03 Liens. The Borrowers will not, and will not permit any other
Credit Party to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property, revenues or assets of any kind (real or personal,
tangible or intangible) of any Credit Party whether now owned or hereafter
acquired, except:
(a) Liens securing payment of the Obligations granted pursuant to
any Credit Document;
(b) Liens on equipment securing Indebtedness incurred to finance
the purchase of such equipment and/or to refinance such equipment, in each
case to the extent such Indebtedness is permitted by Section 7.04(d);
(c) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;
(d) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or
-45-
52
being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books;
(e) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits (excluding any Liens under
ERISA), or to secure performance of tenders, statutory obligations, leases
and contracts (other than for borrowed money) entered into in the ordinary
course of business or to secure obligations on surety or appeal bonds;
(f) judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies;
(g) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrowers or their Subsidiaries;
(h) Liens arising out of leases or subleases granted by the
Partnership as permitted by Section 7.02(i) or otherwise in the ordinary
course of business of the Partnership; and
(i) Liens on the amounts deposited in the Subordinated Notes
Proceeds Account securing the Subordinated Notes, which Liens shall
terminate in respect of any amount transferred from such account to the
Disbursement Account at the time of any such transfer.
7.04 Indebtedness. The Borrowers will not, and will not permit any
other Credit Party to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Indebtedness owing by (i) any Subsidiary Guarantor to another
Subsidiary Guarantor or the Partnership and/or (ii) the Partnership to any
Subsidiary Guarantor;
(c) Indebtedness (x) of the Borrowers evidenced by the
Subordinated Notes, in an aggregate principal amount at any time
outstanding not to exceed
-46-
53
$100,000,000 plus the principal amount of Subordinated Notes issued to
satisfy interest due on the Subordinated Notes and (y) of the Subsidiary
Guarantors evidenced by the Subordinated Guaranties;
(d) Capitalized Lease Obligations of the Partnership and other
Indebtedness secured by Liens permitted by Section 7.03(b), provided that
the aggregate Indebtedness permitted by this clause (d) shall not exceed
$15,000,000 at any time outstanding;
(e) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade
terms in connection with purchases of goods and services, but excluding
all Indebtedness incurred through the borrowing of money and all
Contingent Obligations); and
(f) additional unsecured Indebtedness of the Partnership not
exceeding $5,000,000 at any time outstanding.
7.05 Capital Expenditures. On and after all Project Costs have been
expended, the Borrowers will not, and will not permit any other Credit Party to,
incur Consolidated Capital Expenditures provided that the Partnership may make
Consolidated Capital Expenditures of up to $8,000,000 in its fiscal year ending
December 31, 1999, $10 million in its next fiscal year and $12 million in each
subsequent fiscal year.
7.06 Advances, Investments and Loans. The Borrowers will not, and
will not permit any other Credit Party to, lend money or credit or make advances
to any Person, or purchase or acquire any stock, obligations or securities of,
or any other interest in, or make any capital contribution to any Person,
except:
(a) each Credit Party may invest in cash and Cash Equivalents;
(b) the Partnership and any Subsidiary may provide casino credit
at the Casino Property not exceeding $10,000,000 at any time outstanding
and/or acquire and hold accounts, chattel paper (as defined in the UCC)
and note receivables owing to them, in each case, if created or acquired
in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;
(c) the intercompany Indebtedness described in Section 7.04(b)
shall be permitted;
(d) the Borrowers and each Subsidiary Guarantor may acquire and
-47-
54
own investments (including stock, securities and/or debt obligations)
received in settlement of debts created in the ordinary course of business
or in satisfaction of judgments;
(e) the Partnership may make capital contributions of cash, Cash
Equivalents and other assets in Subsidiary Guarantors and the General
Partner may make capital contributions of any such type in the
Partnership; and;
(f) loans and advances to officers, directors and employees so
long as the aggregate principal of all such loans and advances does not
exceed $750,000 at any time outstanding.
7.07 Creation of Subsidiaries. The Borrowers will not, and will not
permit any other Credit Party to, create or acquire any other Subsidiary other
than a direct Wholly-Owned Subsidiary of the Partnership that is not a Gaming
Company and that executes a counterpart of the Subsidiary Guaranty, Pledge
Agreement and Security Agreement. Each new Subsidiary Guarantor created as
permitted by this Section 7.07 shall execute and deliver, or cause to be
executed, all other relevant documentation of the type described in Section 4 as
such new Subsidiary Guarantor would have had to deliver if such new Subsidiary
were a Credit Party on the Initial Borrowing Date.
7.08 Prepayments of Indebtedness, etc. The Borrowers will not, and
will not permit any other Credit Party to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due or paying interest in cash when interest may be satisfied by
issuance of additional Subordinated Notes) or exchange of the Subordinated
Notes;
(b) amend or modify, or permit the amendment or modification of,
any provisions of any Subordinated Note Documents; and/or
(c) amend, modify or change in any manner adverse to the interests
of the Lenders the certificate of incorporation (including, without
limitation, by the filing of any certificate of designation), bylaws or
equivalent organizational document of any Credit Party or any agreement
entered into by a Borrower with respect to its capital stock or
partnership interests, or (except as otherwise specifically permitted by
this Agreement and with change orders not in excess of $100,000 under the
Construction Contract to be permitted) any Project Document or enter into
any new agreement in any manner adverse to the interests of the Lenders
with respect to the capital stock or partnership interests
-48-
55
of either Borrower.
7.09 Dividends, etc. (a) The Borrowers will not, and will not
permit any other Credit Party to, declare or pay any dividends or distributions
(other than dividends or distributions payable solely in capital stock or
partnership interests of such Person) or return any capital to, its stockholders
or partners or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders or partners as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for a consideration, any
shares of any class of its capital stock or partnership interests now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares or partnership interests), or set aside
any funds for any of the foregoing purposes, or permit any other Credit Party to
purchase or otherwise acquire for consideration any shares of any class of the
capital stock or partnership interests of a Borrower, as the case may be, now or
hereafter outstanding (or any options or warrants or stock appreciation rights
issued by such Person with respect to its capital stock) (all of the foregoing
"Dividends"), except that:
(i) any Subsidiary of the Partnership may pay dividends to the
Partnership;
(ii) Summerlin, Inc. may pay dividends with the proceeds of the
management fees it is paid by the Partnership as permitted by Section 7.10
(viii); and
(iii) if no Event of Default exists, the Partnership may make
distributions to the Partners as Tax Allowance Amounts which are paid in
cash and made as distributions to all Partners.
(b) The Borrowers will not, and will not permit any other Credit
Party to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise restricts (A) the ability of any
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to the Partnership, (b) make loans or advances to the
Partnership or (c) transfer any of its properties or assets to the Partnership
or (B) the ability of any Credit Party to create, incur, assume or suffer to
exist any Lien upon its property or assets to secure the Obligations or (C) the
ability of any Credit Party to amend any Credit Document, other than
prohibitions or restrictions existing under or by reason of (i) this Agreement,
the other Credit Documents and the Subordinated Note Documents; (ii) applicable
law; (iii) customary non-assignment provisions entered into in the ordinary
course of business and consistent with past practices; (iv) any restriction or
encumbrance with respect to a Subsidiary imposed pursuant to an agreement which
has been entered into for the sale or disposition of all or substantially all of
the capital stock or assets of such
-49-
56
Subsidiary, so long as such sale or disposition is permitted under this
Agreement; and (v) Liens permitted under Section 7.03 and any documents or
instruments governing the terms of any Indebtedness or other obligations secured
by any such Liens, provided that such prohibitions or restrictions apply only to
the assets subject to such Liens.
7.010 Transactions with Affiliates. The Borrowers will not, and will
not permit any other Credit Party to, enter into, or cause, suffer or permit to
exist any arrangement or contract with, any of its other Affiliates unless such
arrangement or contract is on fair and reasonable terms, is an arrangement or
contract of the kind which would be entered into by a prudent Person in the
position of such Credit Party with a Person which is not one of its Affiliates
and, if the amount of the proposed transaction involves more than $1,000,000 is
approved by a majority of the independent directors of the General Partner, if
any, provided that the following shall be permitted: (i) Dividends permitted by
Section 7.09; (ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, or any stock options and stock ownership plans for the
benefit of employees, officers and directors, consultants and advisors approved
by the General Partner, (iii) the loans or advances to employees permitted by
Section 7.06(f); (iv) any transaction between Subsidiary Guarantors; (v)
indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Partnership and its Subsidiaries, in
each case in the ordinary course of business, (vi) transactions pursuant to
agreements in existence on the Closing Date which are (x) described in the
Offering Memorandum or (y) otherwise, in the aggregate, immaterial to the
Partnership and its Subsidiaries taken as whole; (vii) employment,
non-competition or confidentiality agreements entered into by the Partnership or
any of its Subsidiaries with its employees in the ordinary course of business,
(viii) so long as no Default or Event of Default exists, any payment of the
management fee to the General Partner in an amount not to exceed 3% of net
revenues ("Net Revenue Fee") plus 6% of consolidated net income before interest,
taxes, depreciation, amortization and management fees (net of the Net Revenue
Fee), (ix) the issuance of partnership interests in the Partnership, (x)
payments to SCRI for amounts allocated by SCRI to the Partnership for
compensation (whether deferred or current) of SCRI employees providing services
to the Partnership and related expenses; and (xi) the payment of the development
fee owing to SCGC on the Commencement Date and after giving effect to the
Subordinated Fees Agreement.
7.011 Interest Coverage Ratio. The Borrowers will not permit the
ratio of (i) Adjusted EBITDA to (ii) Consolidated Cash Interest Expense for any
Test Period ending at the end of any fiscal quarter of the Partnership set forth
below, to be less than the ratio set forth opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
-50-
57
June 30, 1999 through
December 31, 2000 2.00:1.0
March 31, 2001 through
December 31, 2001 2.25:1.0
Thereafter 2.50:1.0
7.012 Leverage Ratio. The Borrowers will not permit the Leverage
Ratio to exceed, as of the end of any fiscal quarter of the Partnership set
forth below, the ratio set forth opposite such fiscal quarter:
Fiscal Quarter Ratio
June 30, 1999 6.00:1.0
September 30, 1999 6.00:1.0
December 31, 1999 5.75:1.0
March 31, 2000 5.75:1.0
June 30, 2000 5.75:1.0
September 30, 2000 5.50:1.0
December 31, 2000 5.50:1.0
March 31, 2001 5.25:1.0
June 30, 2001 5.00:1.0
September 30, 2001 4.75:1.0
December 31, 2001 4.50:1.0
Thereafter 4.25:1.0
7.013 Fixed Charge Coverage Ratio. The Borrowers will not permit the
ratio of (i) Consolidated EBITDA less Consolidated Capital Expenditures to (ii)
Consolidated Fixed Charges for any Test Period to be less than the 1.10:1.0.
7.014 Limitation on Issuance of Stock. The Partnership will not
permit any of its Subsidiaries, directly or indirectly, to issue, sell, assign,
pledge or otherwise encumber or dispose of any shares of its capital stock or
other securities (or warrants, rights or options to acquire shares or other
equity securities), except, to the extent permitted by Section 7.06, or to
qualify directors if required by applicable law.
8. Events of Default Upon the occurrence of any of the following
specified events (each, an "Event of Default"):
8.01 Payments. The Borrowers shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for three or more Business Days, in the payment when due of any
interest on the Loans or any Fees or any other amounts owing hereunder or under
any other Credit Document; or
-51-
58
8.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any statement or certificate delivered, or required to be delivered, by it
pursuant hereto or thereto shall prove to be untrue in any material respect on
the date as of which made or deemed made; or
8.03 Covenants. (a) The Borrowers shall default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.09 or 7, or (b) any Credit Party default in the due performance or
observance by it of any term, covenant or agreement (other than those referred
to in Section 8.01, 8.02 or clause (a) of this Section 8.03) contained in this
Agreement or any other Credit Document and such default shall continue
unremedied for a period of at least 30 days after notice to the defaulting party
by the Administrative Agent or the Required Lenders;
8.04 Default Under Other Agreements. (a) Any Credit Party shall (i)
default in any payment with respect to any Indebtedness (other than the
Obligations) beyond the period of grace, if any, applicable thereto or (ii)
default in the observance or performance of any 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 holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause any such Indebtedness to become due
prior to its stated maturity; or (b) any such Indebtedness of a Credit Party
shall be declared to be due and payable, provided that it shall not constitute
an Event of Default pursuant to this Section 8.04 unless the aggregate principal
amount of all Indebtedness referred to in clauses (a) and (b) above exceeds
$1,000,000 at any one time; or
8.05 Bankruptcy, etc. Any Credit Party shall commence a voluntary
case concerning itself under Title 11 of the United States Code entitled
"Bankruptcy", as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against any Credit Party
and the petition is not controverted within 10 days, or is not dismissed within
60 days, after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of any Credit Party; or any Credit Party commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to or any Credit Party;
or there is commenced against any Credit Party any such proceeding which remains
undismissed for a period of 60 days; or any Credit Party is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; any Credit Party suffers any appointment of any
custodian or
-52-
59
the like for it or any substantial part of its property to continue undischarged
or unstayed for a period of 60 days; or any Credit Party makes a general
assignment for the benefit of creditors; or any corporate action is taken by any
Credit Party for the purpose of effecting any of the foregoing; or
8.06 ERISA. (a) Any Plan or Multiemployer Plan shall fail to
satisfy the minimum funding standard required for any plan year or part thereof
under Section 412 of the Code or Section 302 of ERISA or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code or Section 303 or 304 of ERISA, a Reportable Event shall
have occurred, any Plan which is subject to Title IV of ERISA shall have had or
is likely to have a trustee appointed to administer such Plan, any Plan or
Multiemployer Plan which is subject to Title IV of ERISA is, shall have been or
is likely to be terminated or to be the subject of termination proceedings under
ERISA, any Plan shall have an Unfunded Current Liability, a contribution
required to be made by any Credit Party, or an ERISA Affiliate with respect to a
Plan or Multiemployer Plan that is subject to the funding requirements of
Section 412 of the Code or Section 302 of ERISA has not been timely made, any
Credit Party or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971
or 4975 of the Code or on account of a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code, or any Credit Party has incurred or is likely to incur liabilities
pursuant to one or more employee welfare benefit plans (as defined in Section
3(1) of ERISA) that provide benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or Plans or
Multiemployer Plans; (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) such lien, security interest or
liability, individually, and/or in the aggregate, in the reasonable opinion of
the Required Lenders, could reasonably be expected to have, a Material Adverse
Effect; or
8.07 Security Documents. (a) Any Security Document shall cease to
be in full force and effect, or shall cease to give the Collateral Agent the
Liens or any of the material rights, powers and privileges purported to be
created thereby in favor of the Collateral Agent (including as a result of the
applicable Gaming Authorities failing to approve same in connection with the
issuance to the Partnership of a Gaming License), or (b) any Credit Party shall
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to any such Security Document;
or
8.08 Subsidiary Guaranty. The Subsidiary Guaranty or any provision
thereof shall cease to be in full force and effect, or any Subsidiary Guarantor
or any Person acting by or on behalf of such Subsidiary Guarantor shall deny or
disaffirm
-53-
60
such Subsidiary Guarantor's obligations under the Subsidiary Guaranty; or
8.09 Judgments. One or more judgments or decrees shall be entered
against any Credit Party involving a liability of $2,000,000 or more in the
aggregate for all such judgments and decrees for the Credit Parties (not paid or
to the extent not covered by insurance) and any such judgments or decrees shall
not have been vacated, discharged or stayed or bonded pending appeal within 60
days from the entry thereof; or
8.010 Project Documents. There shall occur and be continuing (i) a
default or an event of default by any Credit Party under any of the Project
Documents or (ii) any event or condition which could, either immediately or with
the giving of notice or lapse of time or both, enable any party to any Project
Document other than the Credit Parties to terminate or suspend its obligations
under such Project Document or (iii) a breach by any Credit Party of any term,
covenant or agreement contained in any Project Document or if, in any such case,
in the determination of the Required Lenders, such default, event of default,
event, condition or breach could reasonably be expected to have a Material
Adverse Effect on the completion of the Project, and remains uncured for 30 days
after the occurrence thereof; or
8.011 Gaming Authority. Any Gaming Authority having jurisdiction
over Project shall, after granting a Gaming License, revoke, not renew or
suspend same for more than 60 days (provided that action shall have been
commenced by the Partnership to cause any such action to be rescinded within 15
days of the occurrence thereof), or any such Gaming Authority shall have
appointed a conservator, supervisor or trustee to oversee any of the operations
of the Partnership; or the Partnership shall have been denied a material Gaming
License by the applicable Gaming Authority; or
8.012 Commencement Date The Commencement Date has not occurred by
Completion Deadline:
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Lenders, by written notice to the Borrowers, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against any Subsidiary
Guarantor or any Borrower, except as otherwise specifically provided for in this
Agreement (provided that, if an Event of Default specified in Section 8.05 shall
occur with respect to any Borrower, the result which would occur upon the giving
of written notice by the Administrative Agent as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such notice): (i)
declare the Total Commitment terminated, whereupon the
-54-
61
Commitment of each Lender shall forthwith terminate immediately and any
commitment fee shall forthwith become due and payable without any other notice
of any kind; (ii) declare the principal of and any accrued interest in respect
of all Loans and all obligations owing hereunder (including Unpaid Drawings) and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and (iii) subject to compliance with
applicable Gaming Laws, enforce, as Collateral Agent (or direct the Collateral
Agent to enforce), any or all of the Liens and security interests created
pursuant to the Security Documents.
9. Definitions. As used herein, the following terms shall have
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include in the singular number the plural and in
the plural the singular:
"A Lender" shall mean each MN Lender to the extent it has an MN
Commitment-A.
"Account Agreements" shall mean and include the Disbursement
Agreement, the Mortgage Notes Proceeds Agreement and the Partnership Funds
Agreement.
"Additional Mortgages" shall have the meaning provided in Section
6.09.
"Adjusted Cash Flow" for any fiscal year shall mean Consolidated Net
Income for such fiscal year (after provision for taxes and for the payment of
Tax Allowance Amounts) plus the amount of all net non-cash charges (including,
without limitation, depreciation, deferred tax expense, non-cash interest
expense, amortization and other non-cash charges) that were deducted in arriving
at Consolidated Net Income for such fiscal year, minus the amount of all
non-cash gains and gains from sales of assets (other than sales of inventory and
equipment in the normal course of business) that were added in arriving at
Consolidated Net Income for such fiscal year.
"Adjusted EBITDA" shall mean for any period (i) Consolidated EBITDA
for such period plus (ii) the amount, if any, on deposit in the Interest Escrow
Account on the last day of such period.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 10.09.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers
-55-
62
of such Person), controlled by, or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agents" shall have the meaning provided in the first paragraph of
this Agreement.
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time further modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrowers in connection therewith as the amount of the Net Cash Proceeds
from the related Asset Sale that the Borrowers intend to use to purchase,
construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean (i) in the case of
Construction Loans 3.00%; and (ii) in the case of Term Loans and Revolving
Loans, 2.75% less (in the case of this clause (ii) only) the Margin Reduction
Discount, if any.
"Applicable Eurodollar Margin" shall mean (i) in the case of
Construction Loans, 4.00% and (ii) in the case of Terms Loans and Revolving
Loans, 3.75% less (in the case of this clause (ii) only) the Margin Reduction
Discount, if any.
"Architect" shall mean Paul Steelman, Ltd.
"Architect Contract" shall mean the contract between the Partnership
and the Architect, as in effect on the Closing Date and as the same may be
subsequently amended, modified or supplemented pursuant to the terms thereof and
hereof.
"Arranging Agent" shall mean Gleacher NatWest, Inc.
"Asset Sale" shall mean and include (x) the sale, transfer or other
disposition by any Credit Party to any Person other than a Credit Party of any
asset of a Credit Party (other than (i) sales, transfers or other dispositions
in the ordinary course of business of obsolete or excess equipment and (ii) any
other sale that generates in the aggregate less than $500,000 of proceeds) and
(y) the receipt by the Credit Parties of casualty insurance and/or condemnation
proceeds in excess of
-56-
63
$500,000 that do not reimburse the Credit Parties for costs already expended and
are not to be promptly utilized to repair or replace the asset damaged or
condemned.
"Assignment Agreement" shall mean the Assignment Agreement in the
form of Exhibit K (appropriately completed).
"Assignment of Leases and Rents" shall have the meaning provided in
Section 4.01(m)(III)(ii).
"Authorized Officer" shall mean (x) in respect of the Partnership,
the General Partner acting through an Authorized Officer of the General Partner
and (y) with respect to the General Partner, any senior officer of the General
Partner designated as such in writing to the Administrative Agent by the General
Partner, in each case to the extent acceptable to the Administrative Agent.
"B Lender" shall mean each MN Lender to the extent it has an MN
Commitment-B.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Base Rate" shall mean the higher of (i) the Prime Lending Rate and
(ii) the Federal Funds Effective Rate plus 1/2 of 1%.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrowers" shall mean the Partnership and Summerlin, Inc.
"Borrowing" shall mean the incurrence of one Type of Loan pursuant
to a single Facility by the Borrowers from all of the Lenders having Commitments
with respect to such Facility on a pro rata basis on a given date (or resulting
from conversions on a given date), having in the case of LIBOR Loans the same
Interest Period; provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of LIBOR Loans.
"Budget" shall have the meaning provided in Section 4.01(f)(iii).
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, LIBOR Loans, any day which is a Business
Day described in clause (i) and which is also a day for trading by and between
banks in U.S. dollar deposits in the interbank
-57-
64
Eurodollar market.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Partnership or any of its Subsidiaries in each case taken
at the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Lender or
(y) any bank (or the parent company of such bank) whose short-term commercial
paper rating from Standard & Poor's Ratings Services, a division of McGraw-Hill,
Inc. ("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such
bank, an "Approved Lender"), in each case with maturities of not more than six
months from the date of acquisition, (iii) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Lender or Approved
Lender or by the parent company of any Lender or Approved Lender and commercial
paper issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an
"Approved Company"), or guaranteed by any industrial company with a long term
unsecured debt rating of at least A or A2, or the equivalent of each thereof,
from S&P or Moody's, as the case may be, and in each case maturing within six
months after the date of acquisition and (v) investments in money market funds
substantially all of whose assets are comprised of securities of the type
described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including insurance proceeds and any cash received by
way of deferred payment pursuant to a note receivable issued in connection with
such Asset Sale, other than the portion of such deferred payment constituting
interest, but only as and when so received) received by a Borrower and/or any
Subsidiary from such Asset Sale.
"Casino Property" shall mean the gaming casino that is to be part of
-58-
65
the Project, as more fully described in the Offering Memorandum.
"CC Continuation Agreement" shall mean a Continuation Agreement
substantially in the form of Exhibit F-4 hereto as the same may be amended,
modified or supplemented pursuant to the provisions thereof.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq.
"CERCLIS" means the Comprehensive Environmental Response
Compensation Liability Information System List.
"Change of Control" shall mean (i) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Partnership and its Subsidiaries; (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Partnership; (iii) Summerlin, Inc. ceases to be the sole general partner of the
Partnership with full rights of management; (iv) Summerlin, Inc. ceases to be
wholly-owned, directly or indirectly, by SCGC; or (v) SCGC and its affiliates
cease to own at least 51% of the limited partnership interests in the
Partnership.
"Closing Date" shall have the meaning provided in Section 4.01.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Closing Date
and any subsequent provisions of the Code, amendatory thereof, supplemental
thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Lenders.
"Commencement Date" shall mean the date on which the Casino Property
and the Hotel Properties comprising the Project commence full business as a
gaming casino and hotels.
"Commitment" shall mean, with respect to each Lender, such Lender's
MN Commitment and RC Commitment.
"Completion Deadline" shall mean July 2, 1999.
-59-
66
"Completion Guaranty" shall mean the guaranty issued by J.A. Jones
Inc. of the General Manager's obligations under the Construction Contract, as in
effect on the Closing Date and as the same may be subsequently amended, modified
or supplemented pursuant to the terms thereof and hereof.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all cash expenditures (including in all events all amounts expended
or capitalized under Capital Leases but excluding any amount representing
capitalized interest and Project Costs) by the Partnership and its Subsidiaries
during that period that, in conformity with GAAP, are or are required to be
included in the property, plant or equipment reflected in the consolidated
balance sheet of the Partnership and its Subsidiaries.
"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense for such period less any portion thereof not
required to be paid in cash on a current basis.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at
any time, the current liabilities of such Person and its Subsidiaries determined
on a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" shall mean, as of any date of determination, the
average during the fiscal quarter ended on such date of (x) the aggregate stated
balance sheet amount of all Indebtedness of the Partnership and its Subsidiaries
on a consolidated basis as determined in accordance with GAAP plus (y) any
Indebtedness for borrowed money of any other Person as to which the Partnership
and/or any of its Subsidiaries has created a guarantee or other Contingent
Obligation.
"Consolidated EBIT" shall mean, for any period, (A) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization or
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary losses less (B) the
amount for such period of gains on sales of assets (excluding sales in the
ordinary course of business) and other extraordinary gains, all as determined on
a consolidated basis in accordance with GAAP.
-60-
67
"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense and
(iii) amortization expense, all as determined on a consolidated basis in
accordance with GAAP. Consolidated EBITDA for any Test Period ending on or prior
to the fourth fiscal quarter end following the Commencement Date shall mean
Consolidated EBITDA for such Test Period (as determined without regard to this
proviso) that is annualized.
"Consolidated Fixed Charges" shall mean for any Test Period, the
sum, without duplication, of the amount for such period of (i) Consolidated Cash
Interest Expense, (ii) Tax Allowance Amounts paid by the Partnership and (iii)
scheduled principal payments on Consolidated Debt, all as determined for the
Partnership and its Subsidiaries on a consolidated basis in accordance with
GAAP.
"Consolidated Interest Expense" shall mean, for any period, (i)
total interest expense (including that attributable to Capital Leases in
accordance with GAAP) of the Partnership and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of the Partnership and its
Subsidiaries, including, without limitation, all the interest on Loans and on
all the Subordinated Notes; all commitment fees owed with respect to
Indebtedness for borrowed money; commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; and net costs under Interest Rate Agreements.
"Consolidated Net Income" shall mean for any period, the net income
(or loss) of the Partnership and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP, provided that there shall be excluded from the calculation thereof
(without duplication) (i) the income (or loss) of any Person (other than
Subsidiaries of the Partnership) in which any other Person (other than the
Partnership or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Partnership or any of its Subsidiaries by such Person during such period, (ii)
the income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary of the Partnership or is merged into or consolidated with the
Partnership or any of its Subsidiaries or that Person's assets are acquired by
the Partnership or any of its Subsidiaries and (iii) the income of any
Subsidiary of the Partnership to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.
"Construction Contract" shall mean the contract between the
Partnership and the General Manager for the construction of the Project on a
cost of
-61-
68
work plus fee basis, subject to a guaranteed maximum price of $133 million and
with liquidated damages payable by the General Manager if the Commencement Date
does not occur by the dates set forth therein, as in effect on the Closing Date
and as the same may be subsequently amended, modified or supplemented pursuant
to the terms thereof and hereof.
"Construction Management Contract" shall mean a contract that
provides for substantially the services described under the term "Construction
Management Contract" in the Offering Memorandum, as delivered to the
Administrative Agent in compliance with Section 6.12 and as the same may be
subsequently amended, modified or supplemented pursuant to the terms thereof and
hereof.
"Construction Loans" shall have the meaning provided in Section
1.01(a).
"Consultant" shall mean Nevada Construction Services, Inc.
"Consultant's Confirmation" shall mean a written confirmation from
the Consultant accompanying each Notice of Construction Loans that confirms that
the principal amount of Construction Loans requested in such Notice does not
exceed an amount equal to (x) the sum of Project Costs that have to be paid as
of the date of such Notice plus the aggregate Project Costs that are reasonably
expected to become payable prior to the next following quarter end less (y) the
aggregate principal amount then on deposit in the Proceeds Accounts.
"Contingent Obligations" shall mean as to any Person any obligation
of such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) 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 (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided that the term
Contingent Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability
-62-
69
in respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Conversion Date" shall mean the Commencement Date provided that
same has occurred on or prior to the Completion Deadline.
"Credit Documents" shall mean this Agreement, the Notes, the
Security Documents and the Subsidiary Guaranty.
"Credit Party" shall mean the Borrowers and the Subsidiary
Guarantors.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.
"Disbursement Account" shall have the meaning provided in the
Disbursement Agreement.
"Disbursement Agreement" shall have the meaning provided in Section
4.01(k)(I).
"Disqualified Lender" shall mean any Lender who has been determined
by a Gaming Authority in compliance with the authorized practices and procedures
of such Gaming Authority not to meet the applicable suitability standards under
the Gaming Laws for holding Loans.
"Dividends" shall have the meaning provided in Section 7.09.
"Drawdown Amount" shall mean for any Drawdown Date the aggregate
principal amount of Construction Loans to be made on such date as specified
pursuant to Section 1.03(a), which amount shall not be less than $10 million.
"Drawdown Date" shall mean (x) the Closing Date and (y) each of
March 31, 1998, June 30, 1998, September 30, 1998, December 31, 1998 and March
31, 1999.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other institutional "accredited investor" as defined in
Regulation D of the Securities Act.
-63-
70
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrowers or any Subsidiary solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 7401 et seq.;
the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act,
42 U.S.C. Section 3808 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section
2701 et seq. and any applicable state and local or foreign counterparts or
equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect as of
the Closing Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with any Credit Party would be deemed to be a "single
employer" (i) within the meaning of Sections 414(b), (c), (m) and (o) of the
Code or (ii) as a result of any Credit Party being or having been a general
partner of such person.
"Event of Default" shall have the meaning provided in Section 8.
"Excess Cash Flow" shall mean, for any fiscal year, the remainder of
(i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y) the decrease,
if any, in Working Capital from the first day to the last day of such fiscal
year, and (z)
-64-
71
to the extent not included in (x) above, the aggregate amount received by the
Borrowers and their Subsidiaries during such fiscal year on account of business
interruption insurance minus (ii) the sum of (x) the amount of Consolidated
Capital Expenditures (except to the extent financed through the incurrence of
Indebtedness) made during such fiscal year and (y) the increase, if any, in
Working Capital from the first day to the last day of such fiscal year and (z)
any scheduled repayments or prepayments of the principal amount of Term Loans
and/or other Indebtedness during such fiscal year.
"Expiration Date" shall mean January 31, 1998.
"Facility" shall mean any of the credit facilities established under
this Agreement, i.e., the MN Facility or the Revolving Facility.
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 2.01.
"Final Maturity Date" shall mean March 31, 2004.
"First Mortgage Notes" shall have the meaning provided in Section
1.05(a).
"First Security" shall mean First Security Trust Company of Nevada.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 7, including defined terms as used therein, are subject (to the
extent provided therein) to Section 11.07(a).
"Gaming Authority" shall mean any of the Nevada Gaming Commission,
the Nevada State Gaming Control Board, the Clark County Liquor and Gaming
Licensing Board, the City of Las Vegas and any other gaming regulatory body or
any agency which has, or may at any time after the Closing Date have,
-65-
72
jurisdiction over the gaming activities of the Partnership or any of its
Subsidiaries or any successor to such authority.
"Gaming Company" shall mean any person that is subject to the
jurisdiction of any Gaming Authority or that possesses any Gaming Licenses.
"Gaming Laws" shall mean the provisions of the Nevada Gaming Control
Act, as amended from time to time, all regulations of the Nevada Gaming
Commission promulgated thereunder, as amended from time to time, all ordinances,
rules and regulations adopted by the City of Las Vegas, as amended from time to
time, and all other laws, statutes, rules, rulings, order, ordinances,
regulations and other legal requirements of any Gaming Authority.
"Gaming License" shall mean any license, qualification, permit,
franchise or other authorization from any Gaming Authority required to own,
operate or otherwise conduct the gaming business of the Partnership and its
Subsidiaries, including all licenses, findings of suitability and registrations
granted under Gaming Laws.
"General Manager" shall mean J.A. Jones.
"General Partner" shall mean Summerlin, Inc.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"HHC Agreements" shall mean (i) the Development Declaration and
Option to Repurchase dated as of August 15, 1996, (ii) a Royalty Agreement dated
as of August 15, 1996, (iii) the Golf Course Agreement dated as of July 10, 1996
and (iv) an Agreement of Option to Purchase Real Estate (the "HHC Option
Agreement") in each case between the Partnership and Howard Hughes Corporation
and/or affiliates thereof, as in effect on the Closing Date and as any of the
foregoing may be subsequently amended, modified or supplemented in accordance
with the terms thereof and hereof.
"HHC Option Agreement" shall have the meaning provided in the
-66-
73
definition of HHC Agreements.
"Hotel Properties" shall mean the two hotels that are to be part of
the Project, as more fully described in the Offering Memorandum.
"Improvements" shall mean the hotels, casino and parking spaces to
be constructed on the Project Property in substantial accordance with the Plans,
with all landscaping and other off and on site work related thereto.
"Indebtedness" of any Person shall mean, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be recorded as a
liability on the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vii) all net obligations of such Person
under Interest Rate Agreements and (viii) all Contingent Obligations of such
Person, provided that Indebtedness shall not include trade payables and accrued
expenses, in each case arising in the ordinary course of business.
"Interest Escrow Account" shall mean the escrow account the subject
of the Interest Escrow Agreement.
"Interest Escrow Agreement" shall have the meaning provided in
Section 4.01(k)(III).
"Interest Escrow Termination Date" shall mean the last day of the
fifth calendar quarter ending after the Commencement Date.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, any interest rate cap agreement, any interest rate collar agreement
or other similar agreement or arrangement designed to protect the Borrower
against fluctuations in interest rates.
"J.A. Jones" shall mean J.A. Jones Construction, a North Carolina
corporation.
"Last Drawdown Date" shall mean March 31, 1999.
-67-
74
"Leasehold" of any Person means all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph of
this Agreement.
"Lender Default" shall mean (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any incurrence of
Construction Loans or Revolving Loans, as the case may be, or (ii) a Lender
having notified the Administrative Agent and/or the Borrowers that it does not
intend to comply with the obligations under Section 1.01(a) or (c), as the case
may be, in each case for any reason, including or as a result of the appointment
of a receiver or conservator with respect to such Lender at the direction or
request of any regulatory agency or authority.
"Lender Register" shall have the meaning provided in Section 11.16.
"Leverage Ratio" shall mean, at any date of determination, the ratio
of Consolidated Debt on such date to Consolidated EBITDA for the Test Period
ending on such date (or most recently ended).
"Liability Parties" shall mean and include the Credit Parties and
each other Person who directly or indirectly is providing credit support for the
Loans and/or the Project.
"LIBOR" shall mean with respect to each Interest Period for a LIBOR
Loan, the offered quotation to first-class banks in the interbank Eurodollar
market by the Administrative Agent for dollar deposits of amounts in same day
funds comparable to the outstanding principal amount of the LIBOR Loan of the
Administrative Agent for which an interest rate is then being determined with
maturities comparable to the Interest Period to be applicable to such LIBOR
Loan, determined as of 10:00 A.M. (London time) on the date which is two
Business Days prior to the commencement of such Interest Period.
"LIBOR Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
-68-
75
"Line Items" shall mean the line items in the Budget as in effect
from time to time.
"Loans" shall mean the Construction Loans, the Term Loans and the
Revolving Loans.
"Margin Reduction Discount" shall mean zero, provided that the
Margin Reduction Discount shall be increased to .25%, .50%, .75% or 1.00%, as
the case may be, as specified in clauses (i), (ii), (iii) or (iv) below, at any
time after the Commencement Date, when, and for so long as, the ratio set forth
in such clause has been satisfied as at the end of the then Relevant Test
Period:
(i) the Margin Reduction Discount shall be .25% in the event that
as at the end of the Relevant Test Period the Leverage Ratio is greater
than or equal to 4.0 to 1 but less than 4.5 to 1;
(ii) the Margin Reduction Discount shall be .50% in the event that
as of the end of the Relevant Test Period the Leverage Ratio is greater
than or equal to 3.5 to 1 but less than 4.0 to 1;
(iii) the Margin Reduction Discount shall be .75% in the event that
as at the end of the Relevant Test Period the Leverage Ratio is greater
than or equal to 3.0 to 1 but less than 3.5 to 1.0; and
(iv) the Margin Reduction Discount shall be 1.00% in the event that
as at the end of the Relevant Test Period the Leverage Ratio is less than
3.0 to 1.
The Leverage Ratio shall be determined for the Relevant Test Period, by delivery
of an officer's certificate of the General Partner to the Lenders pursuant to
Section 6.01(e), which certificate shall set forth the calculation of the
Leverage Ratio. The Margin Reduction Discount so determined shall apply, except
as set forth below, from the date on which such officer's certificate is
delivered to the Administrative Agent to the earlier of (x) the date on which
the next certificate is delivered to the Administrative Agent pursuant to
Section 6.01(e) and (y) the 45th day following the end of the fiscal quarter in
which such first certificate was delivered to the Administrative Agent (or 90
days if such fiscal quarter was the last fiscal quarter of a fiscal year).
Notwithstanding anything to the contrary contained above, the Margin Reduction
Discount shall be zero (y) if no officer's certificate has been delivered to the
Lenders pursuant to Section 6.01(e) which sets forth the Leverage Ratio for the
Relevant Test Period or the financial statements upon which any such
calculations are based have not been delivered, until such a certificate and/or
financial statements are delivered and (z) at all times when there shall exist a
Default under Section 8.01 or an Event of Default. It is understood and agreed
that the Margin Reduction Discount as
-69-
76
provided above shall in no event be cumulative and only the Margin Reduction
Discount available pursuant to either clause (i), (ii), (iii) or (iv), if any,
contained in this definition shall be applicable.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
the business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of the Credit Parties taken as a whole.
"Minimum Borrowing Amount" shall mean (i) for Revolving Loans,
$1,000,000 and (ii) for Construction Loans and Term Loans, $2,500,000.
"MN Commitment" shall mean, at any time, with respect to each
Lender, the amount, if any, set forth opposite such Lender's name on Annex I
hereto directly below the column entitled "MN Commitment" as the same may be
terminated pursuant to Section 2.03, with an "MN Commitment-A" and an "MN
Commitment-B" to be portions of an MN Commitment so designated on Annex I.
"MN Commitment Fee" shall have the meaning provided in Section
2.01(a).
"MN Facility" shall mean the Facility evidenced by the Total MN
Commitment.
"MN Lender" shall mean (x) prior to the Conversion Date, each Lender
with a MN Commitment and (y) on and after the Conversion Date, each Lender with
Term Loans outstanding.
"Mortgage" shall have the meaning provided in Section 4.01(m)(iii).
"Mortgage Notes Proceeds Account" and "Mortgage Notes Proceeds
Agreement" shall have the meanings provided in Section 4.01(k)(II).
"Mortgage Policy" shall have the meaning provided in Section
4.01(m)(III).
"NatWest" shall mean National Westminster Bank Plc.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale (including payment of
principal, premium and interest of Indebtedness secured by the assets the
subject of the Asset Sale and required to be, and which is, repaid under the
terms thereof as a result of such Asset Sale), and incremental taxes paid or
payable as a result thereof.
-70-
77
"Note" shall mean and include each First Mortgage Note and each
Revolving Note.
"Notice of Borrowing" shall mean and include a Notice of
Construction Loans, a Notice of Term Conversion and a Notice of Revolving Loans.
"Notice of Construction Loans" shall have the meaning provided in
Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice of Revolving Loans" shall have the meaning provided in
Section 1.03(c).
"Notice of Term Conversion" shall have the meaning provided in
Section 1.03(b).
"Notice Office" shall mean the office of the Administrative Agent at
175 Water Street, New York, New York or such other office as the Administrative
Agent may designate to the Borrowers from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent, the Arranging Agent, the Collateral Agent or any
Lender pursuant to the terms of this Agreement or any other Credit Document.
"Offering Memorandum" shall mean the Offering Memorandum dated
December 22, 1997 relating to the Subordinated Notes and the Notes, as in effect
on the Closing Date.
"Partners" shall mean at any time, the General Partner and the
limited partners of the Partnership at such time, which shall include SCGC.
"Partnership" shall mean The Resort at Summerlin, Limited
Partnership, a Nevada limited partnership.
"Partnership Funds Account" shall mean the deposit account referred
to in, and governed by, the Partnership Funds Agreement.
"Partnership Funds Agreement" shall mean the agreement among the
Borrowers, Summerlin, Inc. as Representative for the Partners in existence on
the Closing Date and First Security as Account Agent in respect of the funds
deposited in
-71-
78
the Partnership Funds Account, in the form delivered to the Administrative Agent
pursuant to Section 4.01(q)(III) and as the same may be subsequently amended,
modified or supplemented in accordance with the terms thereof and hereof.
"Payment Office" shall mean the office of the Administrative Agent
at 175 Water Street, New York, New York or such other office as the
Administrative Agent may designate to the Borrowers from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permits" shall mean any and all actions, approvals, certificates,
consents, waivers, exemptions, variances, franchises, orders, permits,
authorizations, rights or licenses of or from any governmental authority or
agency.
"Permitted Business" shall mean the business of developing and
constructing, or after the Construction Completion Date operating and managing,
the Project and businesses reasonably incidental thereto.
"Permitted Encumbrances" shall mean, with respect to the Project
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Administrative Agent.
"Permitted Liens" shall mean Liens described in Section 7.03.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) any Credit Party, or an ERISA Affiliate, and each
such plan for the five year period immediately following the latest date on
which a Credit Party or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Plans and Specifications" shall mean the plans and specifications
prepared in accordance with industry standards by or on behalf of the
Partnership by a licensed reputable engineering or architectural firm, as
applicable, for the renovation, construction and/or equipping, as the case may
be, of the Project in a first class manner consistent with the description of
the Project set forth in the Offering Memorandum, as the same may be amended in
accordance with the terms hereof. The Plans and Specifications shall include,
but not be limited to, architectural,
-72-
79
structural, mechanical and electrical plans and specifications, together with
all plan revisions and addenda to the specifications.
"Pledge Agreement" shall have the meaning provided in Section
4.01(m)(I).
"Pledged Securities" shall mean all the Pledged Securities as
defined in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean, at any time, the bank prime loan
rate published by the Board of Governors of the Federal Reserve System in
Federal Reserve Statistical Release H.15(519) entitled "Selected Interest Rates"
on such day (or if not a Business Day, on the last preceding Business Day) or,
if no such rate is published, the prime lending rate or base rate as announced
from time to time by the Administrative Agent (or by a New York money market
bank selected by the Administrative Agent).
"Proceeds Accounts" shall mean the Partnership Funds Account, the
Subordinated Notes Proceeds Account and the Mortgage Notes Proceeds Account.
"Project" shall mean the hotel, casino, spa complex, conference
center and related complex to be known as The Resort at Summerlin, as more fully
described in the Offering Memorandum.
"Project Costs" shall mean the amounts required to construct the
Project, which shall include all Line Items in the Budget (including
Construction Completion Reserves and Contingencies) as in effect from time to
time.
"Project Documents" shall mean the Subordinated Fees Agreement, the
Disbursement Agreement, the Partnership Funds Agreement, the Subordinated Notes
Proceeds Agreement, the Mortgage Notes, the Construction Contract, the
Construction Management Contract, the HHC Agreements, the Completion Guaranty,
the Architect Contract, the Budget, the Regent License and Subordination
Agreement, the Timetable and the Plans.
"Project Property" shall mean the Real Property on which the Project
is to be located.
"RC Commitment" shall mean the lesser of $10,000,000 and the excess,
if any, of $100,000,000 over the aggregate outstanding principal amount of
Construction Loans converted into Term Loans pursuant to Section 1.01(b), as the
same may be (x) reduced or terminated pursuant to Section 2.02, 2.03 or 8 or (y)
adjusted as a result of assignments pursuant to Section 1.13 and/or 11.04;
provided that if no Construction Loans are converted into Term Loans on the
-73-
80
Conversion Date pursuant to Section 1.01(b) the RC Commitment shall be zero.
"RC Commitment Fee" shall have the meaning provided in Section
2.01(b).
"RC Lender" shall mean such financial institution as is appointed by
the Borrowers prior to the Commencement Date with the consent of the
Administrative Agent and the agreement of such institution to make Revolving
Loans hereunder.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Regent License and Subordination Agreement" shall mean (i) the
License Agreement between the Partnership and Regent Hotels Worldwide, Inc. and
(ii) the Subordination, Stabilization and Assumption Agreement relating to
certain fees payable under such License Agreement, in each case as in effect on
the Closing Date and as the same may be subsequently amended, modified or
supplemented in accordance with the terms thereof and hereof.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrowers and their Subsidiaries as described in Section 7.01.
"Reinvestment Election" shall have the meaning provided in Section
3.02(A)(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the General Partner stating that the Borrowers, in good
faith, intend and expect to use all or a specified portion of the Net Cash
Proceeds of an Asset Sale to purchase, construct or otherwise acquire
Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
-74-
81
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrowers and their Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Administrative Agent, on behalf of the Required Lenders, shall have delivered a
written termination notice to the Borrowers, provided that such notice may only
be given while an Event of Default exists, (ii) the date occurring 350 days (or
175 days to the extent in respect of Designated Proceeds) after such
Reinvestment Election and (iii) the date on which the Borrowers shall have
determined not to, or shall have otherwise ceased to, proceed with the purchase,
construction or other acquisition of Reinvestment Assets with the related
Anticipated Reinvestment Amount.
"Release" means any spilling, leaking, pumping, pouring emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
any Hazardous Material or pollutant or contaminant into the environment
(including the abandonment or discarding of barrels, containers, and other
closed receptacles containing any Hazardous Material or pollutant or
contaminant).
"Relevant Test Period" shall mean, at any time, the Test Period
ending on the last day of the then most recently ended fiscal quarter of the
Partnership with respect to which an officer's certificate has been delivered to
the Lenders pursuant to Section 6.01(e).
"Required Lenders" shall mean Lenders (other than any Defaulting
Lenders or Disqualified Lenders) whose outstanding MN Commitments (if prior to
the Conversion Date) or (on and after the Conversion Date), Term Loans and RC
Commitment (or, if after the RC Commitment has been terminated, Revolving Loans)
constitute greater than 50% of (x) the MN Commitments of Non-Defaulting Lenders
that are not Disqualified Lenders or (y) the Term Loans and RC Commitment (or,
if after the RC Commitment has been terminated, the Revolving Loans) of
Non-Defaulting Lenders that are not Disqualified Lenders.
"Revolving Facility" shall mean the facility evidenced by the RC
Commitment.
"Revolving Loan" shall have the meaning provided in Section 1.01(c).
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"SCGC" shall mean Seven Circle Gaming Corporation, a Delaware
corporation.
-75-
82
"SCRI" shall mean Seven Circle Resorts, Inc., a Wholly Owned
Subsidiary of SCGC.
"Scheduled Repayment" shall have the meaning provided in Section
3.02(A)(b).
"SEC" shall have the meaning provided in Section 6.01(i).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Section 3.04 Certificate" shall have the meaning provided in
Section 3.04(b)(ii).
"Security Agreement" shall have the meaning provided in Section
4.01(m)(II).
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the relevant Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the Security
Agreement, the Mortgage, the Assignment of Leases and Rents, the Account
Agreements, the Interest Escrow Agreement and the CC Continuation Agreement.
"Subordinated Fees Agreement" shall have the meaning provided in
Section 4.01(j).
"Subordinated Guaranties" shall mean the unsecured guaranty or
guaranties by the Subsidiary Guarantors of the Subordinated Notes.
"Subordinated Notes" shall mean the 13% Senior Subordinated PIK
Notes due 2007 issued by the Borrowers and shall include the subordinated notes
with substantially identical terms and provisions issued in exchange therefor as
contemplated by the Offering Memorandum (the "Exchange Subordinated Notes").
"Subordinated Notes Documents" shall mean and include each of the
documents, instruments (including the Subordinated Notes) and other agreements
entered into by the Borrowers (including, without limitation, the Subordinated
Notes Indenture) relating to the issuance by the Borrowers of the Subordinated
Notes, as in effect on the Closing Date and as the same may be supplemented,
amended or modified from time to time in accordance with the terms hereof and
thereof.
-76-
83
"Subordinated Notes Indenture" shall mean the Indenture, dated as of
December 30, 1997, between the Borrowers and United States Trust Company of New
York as trustee thereunder, with respect to the Subordinated Notes.
"Subordinated Notes Proceeds Account" shall mean the deposit account
referred to in, and governed in, the Subordinated Notes Proceeds Agreement.
"Subordinated Notes Proceeds Agreement" shall mean the Agreement
among the Borrowers, the Subordinated Notes Trustee and First Security in the
form delivered to the Administrative Agent pursuant to Section 4.01(q)(III) and
as the same may be subsequently amended, modified or supplemented in accordance
with the terms thereof and hereof.
"Subordinated Notes Trustee" shall mean United States Trust Company
of New York as trustee under the Subordinated Notes Indenture.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Partnership.
"Subsidiary Guarantor" shall mean each Subsidiary of the Partnership
that has executed and delivered a counterpart of the Subsidiary Guaranty.
"Subsidiary Guaranty" shall have the meaning provided in Section
4.01(l).
"Summerlin, Inc." shall mean The Resort at Summerlin, Inc., a Nevada
corporation.
"Tax Allowance Amount" shall mean, with respect to any Partner, for
any calendar quarter, (i) 40% of the excess of (a) the estimated taxable income
allocable to such Partner arising from its ownership of a partnership interest
in the Partnership for the fiscal year through such calendar quarter over (b)
any losses of the Partnership for prior fiscal years and such fiscal year that
are allocable to such Partner that were not previously utilized in the
calculation of Tax Allowance Amounts minus (ii) prior distributions of Tax
Allowance Amounts for such fiscal year, all as determined by the General Partner
in good faith.
-77-
84
"Taxes" shall have the meaning provided in Section 3.04(a).
"Term Loan" shall have the meaning provided in Section 1.01(b).
"Test Period" shall mean (i) the period (taken as one accounting
period) commencing on the Commencement Date and ending on the next following
fiscal quarter end, (ii) the period (taken as one accounting period) commencing
on the Commencement Date and ending on the second following fiscal quarter end,
(iii) the period (taken as one accounting period) commencing on the Commencement
Date and ending on the third following fiscal quarter end, (iv) the period
(taken as one accounting period) commencing on the Commencement Date and ending
on the fourth following fiscal quarter end and (v) for any determination
thereafter, the four consecutive fiscal quarters of the Partnership (taken as
one accounting period) ending on the date of such determination.
"Timetable" shall have the meaning provided in Section 4.01(f)(iv).
"Total MN Commitment" shall mean the sum of the MN Commitments of
each of the Lenders.
"Transaction Documents" shall mean the Credit Documents, the
Subordinated Notes Documents and the Project Documents.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or LIBOR Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Voting Stock" shall mean, with respect to any corporation, the
outstanding stock of all classes (or equivalent interests) which ordinarily, in
the absence of contingencies, entitles holders thereof to vote for the election
of directors (or Persons performing similar functions) of such corporation, even
though the right so to vote has been suspended by the happening of such a
contingency.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in
-78-
85
such Subsidiary, other than directors' qualifying shares, is owned directly or
indirectly by such Person.
"Working Capital" shall mean the excess of Consolidated Current
Assets over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile transmission,
telegraph or cable.
10. The Administrative Agent.
10.01 Appointment. The Lenders hereby designate NatWest as
Administrative Agent (for purposes of this Section 10, the terms "Administrative
Agent" shall include NatWest in its capacity as Collateral Agent pursuant to the
Security Documents) and Gleacher NatWest, Inc. as Arranging Agent to act as
specified herein and in the other Credit Documents. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, each Agent to take such action on
its behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of such Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agents
may perform any of their duties hereunder by or through their respective
officers, directors, agents, employees or affiliates.
10.02 Nature of Duties. No Agent shall have any duties or
responsibilities except those expressly set forth in this Agreement and the
Security Documents. No Agent or any of its respective officers, directors,
agents, employees or affiliates shall be liable for any action taken or omitted
by them hereunder or under any other Credit Document or in connection herewith
or therewith, unless caused by their gross negligence or willful misconduct. The
duties of each Agent shall be mechanical and administrative in nature; no Agent
shall have by reason of this Agreement or any other Credit Document a fiduciary
relationship in respect of any Lender or the holder of any Note; and nothing in
this Agreement or any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon either Agent any obligations in
respect of this Agreement or any other Credit Document except as expressly set
forth herein or therein with respect to such Agent.
10.03 Lack of Reliance on the Agents. Independently and without
reliance upon either Agent, each Lender and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the
Liability Parties in
-79-
86
connection with the making and the continuance of the Loans and the taking or
not taking of any action in connection herewith and (ii) its own appraisal of
the creditworthiness of the Liability Parties and, except as expressly provided
in this Agreement, no Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender or the holder of any
Note with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter. No Agent shall be responsible to any Lender or the holder of any
Note for any recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document or the financial condition of any
Liability Party or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition of any
Liability Party or the existence or possible existence of any Default or Event
of Default.
10.04 Certain Rights of the Agents. If the Administrative Agent
shall request instructions from the Required Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Credit Document, the Administrative Agent shall be entitled to refrain from such
act or taking such action unless and until such Agent shall have received
instructions from the Required Lenders; and the Administrative Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, neither any Lender nor the holder of any Note shall have any right of
action whatsoever against the Administrative Agent as a result of the
Administrative Agent acting or refraining from acting hereunder or under any
other Credit Document in accordance with the instructions of the Required
Lenders.
10.05 Reliance. Each Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype, facsimile or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that such Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon advice of counsel
selected by such Agent.
10.06 Indemnification. To the extent an Agent is not reimbursed and
indemnified by the Borrowers, the Lenders will reimburse and indemnify such
Agent, in proportion to their respective Loans and commitments, for and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or
nature which may be imposed on, asserted against or incurred by such Agent in
performing its respective duties hereunder or under any other Credit Document,
in any way relating to or arising out
-80-
87
of this Agreement or any other Credit Document provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the gross negligence or willful misconduct of such Agent.
10.07 The Agents in Their Individual Capacities. With respect to its
obligation to make Loans under this Agreement, each Agent shall have the rights
and powers specified herein for a "Lender" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Lenders," "Required Lenders," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include the Agents in
their individual capacities. Each Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with any
Credit Party or any Affiliate of any Credit Party as if they were not performing
the duties specified herein, and may accept fees and other consideration from
the Borrowers or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.
10.08 Holders. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
10.09 Resignation by an Agent (a) The Administrative Agent may
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Borrowers and the Lenders. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below.
(a) Upon any such notice of resignation, the Required Lenders
shall appoint a successor Administrative Agent hereunder or thereunder who shall
be a commercial bank or trust company reasonably acceptable to the Borrowers.
(b) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, subject to compliance with
applicable Gaming Laws, the Administrative Agent, with the consent of the
Borrowers, shall then appoint a successor Administrative Agent who shall serve
as Administrative Agent hereunder or thereunder until such time, if any, as the
Lenders appoint a successor Administrative Agent as provided above.
-81-
88
(c) Subject to clause (e) below, if no successor Administrative
Agent has been appointed pursuant to clause (b) or (c) above by the 20th
Business Day after the date such notice of resignation was given by the
Administrative Agent, the Administrative Agent's resignation shall become
effective and the Required Lenders shall thereafter perform all the duties of
the Administrative Agent hereunder and/or under any other Credit Document until
such time, if any, as the Lenders appoint a successor Administrative Agent as
provided above.
(d) Notwithstanding anything to the contrary in this Section
10.09, to the extent required by applicable Gaming Laws, the incumbent
Administrative Agent shall remain the Collateral Agent for the Lenders with
respect to any Collateral for which a lienholder must be qualified under such
Gaming Laws until the new Administrative Agent can be so qualified (but the
incumbent Administrative Agent shall be entitled to the indemnities and other
protections provided to the Administrative Agent hereunder in such capacity).
(e) The Arranging Agent shall have no duties or responsibilities
hereunder or under the other Credit Documents.
-82-
89
11. Miscellaneous.
11.01 Payment of Expenses, etc. The Borrowers agree to: (i) whether
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agents in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of White & Case and Schreck and Morris) and of the Agents and each
of the Lenders in connection with the enforcement of the Credit Documents and
the documents and instruments referred to therein (including, without
limitation, the reasonable fees and disbursements of counsel for each Agent and
for each of the Lenders); (ii) pay and hold each of the Agents and Lenders
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes; and (iii) indemnify each Agent and each Lender, its
officers, directors, employees, representatives and agents from and hold each of
them harmless against any and all losses, liabilities, claims, damages or
expenses incurred by any of them as a result of, or arising out of, or in any
way related to, or by reason of, (a) an investigation, litigation or other
proceeding (whether or not an Agent or any Lender is a party thereto and whether
or not any such investigation, litigation or other proceeding is between or
among an Agent, any Lender, any Credit Party or any third Person or otherwise)
related to the entering into and/or performance of any Document or the use of
the proceeds of any Loans hereunder or the consummation of any transactions
contemplated in any Credit Document, and (b) any such investigation, litigation
or other proceeding relating to the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of any
Credit Party or any Real Property owned or operated by them, or the actual or
alleged presence or release of Hazardous Materials on, under or from any Real
Property at any time owned or operated by any of the Credit Parties, and in each
case including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified).
11.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Lender
-83-
90
(including, without limitation, by branches and agencies of such Lender wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Lender
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of such Credit Party purchased
by such Lender pursuant to Section 11.06(b), and all other claims of any nature
or description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Lender shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
11.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier, facsimile or cable communication) and
mailed, telegraphed, telexed, telecopied, faxed, cabled or delivered, if to a
Credit Party, at the address specified opposite its signature below or in the
other relevant Credit Documents, as the case may be; if to any Lender or Agent,
at its address specified for such Lender or Agent on Annex II hereto; or, at
such other address as shall be designated by any party in a written notice to
the other parties hereto. All such notices and communications shall be mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, and
shall be effective when received.
11.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, provided that the Borrowers may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Lenders. Each Lender may at any time grant participations in any
of its rights hereunder or under any of the Notes to another financial
institution, provided that (x) in the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that the participant shall be entitled to the benefits of
Sections 1.10, and 3.04 of this Agreement to the extent that such Lender would
be entitled to such benefits if the participation had not been entered into or
sold and (y) no Lender shall transfer, grant or assign any participation under
which the participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such amendment
or waiver would (i) extend the final scheduled maturity of any Note in which
such participant is participating (it being understood that any waiver of the
application of any prepayment or the method of any application of any prepayment
to, the amortization of the Term Loans shall not constitute an extension of the
final maturity date), or reduce the rate or extend the time of payment of
interest or Fees thereon (except in connection with a waiver of the
applicability of any post-default increase in interest
-84-
91
rates), or reduce the principal amount thereof, or increase such participant's
participating interest in any commitment over the amount thereof then in effect
(it being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in any commitments, or a mandatory prepayment, shall not
constitute a change in the terms of any commitment), (ii) release all or
substantially all of the Collateral or (iii) consent to the assignment or
transfer by any Credit Party of any of its rights and obligations under this
Agreement or any other Credit Document.
(a) Notwithstanding the foregoing, (x) any Lender may assign all
or a portion of its outstanding Construction Loans or Term Loans and/or (if
prior to the Conversion Date) its MN Commitment or (in the case of the RC
Lender) all of its RC Commitment and its rights and obligations hereunder to
another Lender (or an Affiliate of such assigning Lender), and (y) with the
consent of the Borrowers and the Administrative Agent (which consents shall not
be unreasonably withheld), any Lender may assign all or a portion of its
outstanding Construction Loans or Term Loans and/or (if prior to the Conversion
Date) its MN Commitment or (in the case of the RC Lender) all of its RC
Commitment and its rights and obligations hereunder to one or more Eligible
Transferees (including one or more Lenders). No assignment pursuant to the
immediately preceding sentence by a Lender (or by Lenders which are Affiliates
of each other) shall to the extent such assignment represents an assignment to
an institution other than one or more Lenders hereunder (or to an Affiliate of
an assigning Lender), be in an aggregate amount less than $2,500,000 unless the
entire Loans and Commitments of the assigning Lender (or group of Lenders which
are Affiliates) is so assigned. If any Lender so sells or assigns all or a part
of its rights hereunder or under the Notes, any reference in this Agreement or
the Notes to such assigning Lender shall thereafter refer to such Lender and to
the respective assignee to the extent of their respective interests and the
respective assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would if it were
such assigning Lender. Each assignment pursuant to this Section 11.04(b) shall
be effected by the assigning Lender and the assignee Lender executing an
Assignment Agreement (appropriately completed). At the time of any such
assignment, (i) either the assigning or the assignee Lender shall pay to the
Administrative Agent a nonrefundable assignment fee of $3,500, (ii) if prior to
the Conversion Date, Annex I shall be deemed to be amended to reflect the MN
Commitment of the respective assignee (which shall result in a direct reduction
to the MN Commitments of the assigning Lender) and of the other Lenders, and
(iii) the Borrowers will issue new Notes to the respective assignee and to the
assigning Lender in conformity with the requirements of Section 1.05. To the
extent of any assignment pursuant to this Section 11.04(b) to a Person which is
not already a Lender hereunder and which is not a United States Person (as such
term is defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes, the respective assignee Lender shall provide to the Borrowers and the
Administrative Agent the appropriate Internal Revenue Service Forms (and, if
applicable, a Section 3.04 Certificate) described in Section 3.04(b). To the
extent that an assignment of all or any portion of
-85-
92
a Lender's Commitments and related outstanding Obligations pursuant to this
Section 11.04(b) would, at the time of such assignment, result in increased
costs under Section 1.10, or 3.04 from those being charged by the respective
assigning bank prior to such assignment, then the Borrowers shall not be
obligated to pay such increased costs (although the Borrowers shall be obligated
to pay any other increased costs of the type described above resulting from the
changes specified in said Section 1.10 or 3.04 after the date of the respective
assignment). Each Lender and the Borrowers agree to execute such documents
(including without limitation amendments to this Agreement and the other Credit
Documents) as shall be necessary to effect the foregoing. Nothing in this clause
(b) shall prevent or prohibit any Lender (without having to obtain the consent
of the Borrowers and/or the Administrative Agent) from pledging all or any
portion of its Notes or Loans to secure obligations of such Lender, including
any pledge or assignments to a Federal Reserve Bank in support of borrowings
made by such Lender from such Federal Reserve Bank.
(b) Notwithstanding any other provisions of this Section 11.04, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrowers to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State or
would require any prior approval, qualification or other authorization from any
Gaming Authority.
(c) Each Lender initially party to this Agreement hereby
represents, and each Person that became a Lender pursuant to an assignment
permitted by this Section 11.04 will, upon its becoming party to this Agreement,
represent that it is an Eligible Transferee which makes or acquires loans in the
ordinary course of its business and that it will make or acquire loans for its
own account in the ordinary course of such business, provided that subject to
the preceding clauses (a) and (b), the disposition of any promissory notes or
other evidences of or interests in Indebtedness held by such Lender shall at all
times be within its exclusive control.
11.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of any Agent or any Lender in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and either Agent or any Lender shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which either Agent or any
Lender would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Agents or the Lenders to any other or further action in any circumstances
without notice or demand.
-86-
93
11.06 Payments Pro Rata. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of any Credit Party
in respect of any Obligations of such Credit Party hereunder, it shall
distribute such payment to the Lenders (other than any Lender that has expressly
waived its right to receive its pro rata share thereof) pro rata based upon
their respective shares, if any, of the Obligations with respect to which such
payment was received.
(a) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the respective Credit Party to such Lenders in such amount as
shall result in a proportional participation by all of the Lenders in such
amount, provided that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
11.07 Calculations; Computations. (a) The financial statements to be
furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrowers to the Lenders), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 7, including definitions used therein, [shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the SCGC December 31, 1996 historical
financial statements delivered to the Lenders pursuant to Section 5.10(a)] and
(y) that if at any time the computations determining compliance with Section 7
utilize accounting principles different from those utilized in the financial
statements furnished to the Lenders, such financial statements shall be
accompanied by reconciliation work-sheets.
(a) All computations of interest and Fees hereunder shall be made
on the actual number of days elapsed over a year of 360 days.
11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial. (a) This Agreement and the other Credit Documents and the rights and
obligations of the parties hereunder and thereunder shall be construed in
accordance
-87-
94
with and be governed by the law of the State of New York (subject as applicable
to the Gaming Laws). Any legal action or proceeding with respect to this
Agreement or any other Credit Document may be brought in the courts of the State
of New York or of the United States for the Southern District of New York, and,
by execution and delivery of this Agreement, each Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Borrower further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it, to the extent located
outside New York City, or by hand, to the extent located within New York City,
at its address for notices pursuant to Section 11.03, such service to become
effective 30 days after such mailing. Each Borrower hereby irrevocably
designates appoints and empowers CT Corporation System, with offices on the date
hereof located at 1633 Broadway, New York, New York 10019, as its agent for
service of process in respect of any such action or proceeding. Nothing herein
shall affect the right of any Agent or any Lender to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against a Borrower in any other jurisdiction.
(a) Each Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
(b) Each of the parties to this Agreement hereby irrevocably
waives all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the other Credit Documents or the
transactions contemplated hereby or thereby.
11.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrowers and the
Administrative Agent.
11.010 Effectiveness. This Agreement shall become effective on the
date on which, each Borrower, each Agent and each of the Lenders shall have
signed a copy hereof (whether the same or different copies) and shall have
delivered the same to the Administrative Agent at its Notice Office or, in the
case of the Lenders and the Agents, shall have given to the Administrative Agent
telephonic (confirmed in writing), written telex or facsimile transmission
notice (actually received) at such
-88-
95
office that the same has been signed and mailed to it.
11.011 Headings Descriptive. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
11.012 Amendment or Waiver. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrowers and the Required Lenders, provided that no
such change, waiver, discharge or termination shall, without the consent of each
Lender (other than a Defaulting Lender or a Disqualified Lender) directly
affected thereby, (i) extend the Final Maturity Date (it being understood that
any waiver of any prepayment of, or the method of application of any prepayment
to the amortization of, the Loans shall not constitute any such extension), or
reduce the rate or extend the time of payment of interest (other than as a
result of waiving the applicability of any postdefault increase in interest
rates) or Fees, or increase the commitment of any Lender over the amount thereof
then in effect (it being understood that a waiver of any Default or Event of
Default or of a mandatory reduction in any commitments shall not constitute a
change in the terms of any commitment of any Lender), (ii) amend, modify or
waive any provision of this Section 11.12, (iii) reduce the percentage specified
in, or (except to give effect to any additional facilities hereunder) otherwise
modify, the definition of Required Lenders, (iv) consent to the assignment or
transfer by any Borrower of any of its rights and obligations under this
Agreement or (v) release all or substantially all of the Collateral. No
provision of Section 10 may be amended without the consent of the Agents.
11.013 Survival. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 3.04, 10.06 or 11.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
11.014 Domicile of Loans. Each Lender may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or affiliate of
such Lender, provided that the Borrowers shall not be responsible for costs
arising under Section 1.10 or 3.04 resulting from any such transfer (other than
a transfer pursuant to Section 1.12 or 1.13) to the extent not otherwise
applicable to such Lender prior to such transfer.
11.015 Confidentiality. Subject to Section 11.04, the Lenders shall
hold all nonpublic information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrowers in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure to its Affiliates, employees, auditors, advisors or counsel or as
reasonably
-89-
96
required by any bona fide transferee or participant in connection with the
contemplated transfer of any Loans or participation therein (so long as such
transferee or participant agrees to be bound by the provisions of this Section
11.15) or as required or requested by any governmental agency or representative
thereof or pursuant to legal process, provided that, unless specifically
prohibited by applicable law or court order, each Lender shall notify the
Borrowers of any request by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Lender by such governmental agency) for disclosure of any such
nonpublic information prior to disclosure of such information, and provided
further that in no event shall any Lender be obligated or required to return any
materials furnished by any Borrower or any Subsidiary.
11.016 Lender Register. The Borrowers hereby designate the
Administrative Agent to serve as their agent, solely for purposes of this
Section 11.16, to maintain a register (the "Lender Register") on which it will
record the name and address of each Lender, the commitments from time to time of
each of the Lenders, the Loans made by each of the Lenders and each repayment in
respect of the principal amount of the Loans of each Lender. Failure to make any
such recordation, or any error in such recordation, shall not affect the
Borrowers' obligations in respect of such Loans. With respect to any Lender, the
transfer of the Commitments of such Lender and the rights to the principal of,
and interest on, any Loan shall not be effective until such transfer is recorded
on the Lender Register maintained by the Administrative Agent with respect to
ownership of such commitments and Loans and prior to such recordation all
amounts owing to the transferor with respect to such commitments and Loans shall
remain owing to the transferor. The registration of assignment or transfer of
all or part of any commitments and Loans shall be recorded by the Administrative
Agent on the Lender Register only upon the acceptance by the Administrative
Agent of a properly executed and delivered Assignment Agreement pursuant to
Section 11.04(b). The Borrowers agree to indemnify the Administrative Agent from
and against any and all losses, claims, damages and liabilities of whatsoever
nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties under this Section 11.16 other
than those resulting from the Administrative Agent's willful misconduct or gross
negligence. The Administrative Agent agrees to permit any authorized
representative of any Gaming Authority to inspect at any time during normal
business hours, or to be provided with, a copy of the Lender Register.
11.017 Gaming Authorities, etc (a) The Agents and each Lender agree
to cooperate with all Gaming Authorities in connection with the administration
of their regulatory jurisdiction over the Borrowers, including, without
limitation, the providing of such documents or other information as may be
required to be provided to any such Gaming Authority relating to the Agents, any
Lender or any Borrower, or to the Credit Documents (subject to any regulatory
restriction binding upon any such
-90-
97
Agent or Lender). Notwithstanding any other provision of this Agreement, the
Borrowers expressly authorize each Agent and Lender to cooperate with any Gaming
Authority as described above.
(b) Nothing in this Agreement or in any of the Credit Documents
shall be construed at any time to constitute a pledge of any shares of common
stock of Summerlin, Inc. or of any equity interests in the Partnership, any
restriction on the transfer of any shares of common stock of Summerlin, Inc., or
any agreement not to encumber any shares of common stock of Summerlin, Inc.
(c) The Lenders hereby acknowledge that (i) the Borrowers may be
required to disclose the identities of the Lenders to the Gaming Authorities
upon request; (ii) the Nevada Gaming Commission may in its discretion require
the Lenders to file an application, be investigated and be found suitable to
hold the Loans; (iii) the Nevada Gaming Commission may, in its discretion,
require the holder of any debt security of a company registered by the Nevada
Gaming Commission as a publicly traded corporation ("Registered Company") to
file an application, be investigated and be found suitable to own the debt
security of a Registered Company; and (iv) if the Nevada Gaming Commission
determines that a person is unsuitable to own such security, then pursuant to
the Nevada Gaming Control Act and the regulations promulgated thereunder, the
Registered Company can be sanctioned, including the loss of its approvals, if
without the prior approval of the Nevada Gaming Commission, it: (a) pays to the
unsuitable person any dividend, interest, or any distribution whatsoever; (b)
recognizes any voting right by such unsuitable person in connection with such
securities; (c) pays the unsuitable person remuneration in any form; or (d)
makes any payment to the unsuitable person by way of principal redemption,
conversion, exchange, liquidation, or similar transaction. The Borrowers will be
required to be registered by the Nevada Commission as Registered Companies upon
the issuance of the Exchange Subordinated Notes.
(d) Each Lender hereby agrees (to the extent permitted by law)
that if the Gaming Authorities determine that such Lender as a holder or
beneficial owner of Loans must be found suitable (whether as a result of a
foreclosure of the Casino Property or for any other reason), and if such Lender
either refuses to file an application or is found unsuitable, such Lender shall,
upon request of the Borrowers, dispose of such Lender's Loans and Commitments
within 30 days after receipt of such request or such earlier date as may be
ordered by the Gaming Authorities, provided that if such Lender does not so
dispose of its Loans and Commitments, then such Lender will be deemed to have
agreed that the provisions described in Section 11.17(c)(iv) will be applicable
to it. To the extent consented to by the Required Lenders, the Borrowers will
have the right to prepay all the Loans of a Disqualified Lender (without
prepaying any other Loans).
(e) To the extent any covenant restriction in this Agreement is
required
-91-
98
to be eliminated or modified in order for the Borrowers to obtain or maintain
any Gaming License, the Lenders will in good faith consider changing this
Agreement to provide for such elimination or modification, provided that the
Lenders have no obligation to agree to any thereof and notwithstanding any
provision of any such Gaming License a breach by the Borrowers of any such
affected covenant shall, unless otherwise agreed by the Required Lenders,
constitute a Default or Event of Default, as the case may be, hereunder
entitling the Lenders to exercise the remedies provided for in Section 8.
* * *
-92-
99
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
THE RESORT AT SUMMERLIN,
LIMITED PARTNERSHIP
By: The Resort at Summerlin, Inc.,
its General Partner
By__________________________________________
Name:
Title:
THE RESORT AT SUMMERLIN, INC.
By__________________________________________
Name:
Title:
NATIONAL WESTMINSTER BANK PLC,
Individually and as Administrative Agent
By__________________________________________
Name:
Title:
100
GLEACHER NATWEST, INC.,
as Arranging Agent
By__________________________________________
Name:
Title:
101
ANNEX I
COMMITMENTS
(PRIVATE) Lender MN MN MN
Commitment Commitment-A Commitment-B
National Westminster
Bank PLC $100,000,000 $60,000,000 $40,000,000
102
ANNEX II
LENDERS AND AGENTS ADDRESSES
National Westminster 175 Water Street
Bank Plc New York, New York 10038
Attention: Robert Karlovitz
Tel. No.: 212-602-4800
Fax No.: 212-602-4638
Gleacher NatWest, Inc. 660 Madison Avenue, 19th Floor
New York, New York 10021
Attention: Geoff Benson
Tel. No.: 212-418-4503
Fax No.: 212-418-4599