EXHIBIT 10.2
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
among
MEZZCO, L.L.C.,
as the Company
and
the Purchasers named herein
Dated as of August 9, 2004
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.......................................................................... 1
1.1 Definitions.................................................................... 1
1.2 Accounting Terms............................................................... 27
ARTICLE II - AUTHORIZATION, PURCHASE, SALE AND TERMS OF THE SECURITIES; PAYMENTS................ 28
2.1 The Securities................................................................. 28
2.2 Purchase of the Securities..................................................... 29
2.3 Tax Nature of Securities....................................................... 29
2.4 Use of Proceeds................................................................ 30
2.5 Payments and Endorsements...................................................... 30
2.6 Redemptions and Mandatory Repurchase........................................... 32
2.7 Default Rate of Interest....................................................... 37
2.8 Maximum Legal Rate of Interest................................................. 38
2.9 Payment on Non-Business Days................................................... 38
2.10 Transfer and Exchange of Notes................................................. 38
2.11 Replacement of Notes........................................................... 38
2.12 Ranking........................................................................ 39
2.13 Funding Fee.................................................................... 39
ARTICLE III - CONDITIONS TO THE PURCHASERS' OBLIGATIONS.......................................... 39
3.1 Conditions to Funding.......................................................... 39
3.2 Release of Note Proceeds from Escrow........................................... 42
ARTICLE IV - REPRESENTATIONS AND WARRANTIES...................................................... 43
4.1 Authorization, Validity, and Enforceability of this Agreement and the
Securities Purchase Documents.................................................. 43
4.2 Organization and Qualification................................................. 44
4.3 Subsidiaries................................................................... 44
4.4 No Material Change............................................................. 44
4.5 Capitalization................................................................. 45
4.6 Solvency....................................................................... 45
4.7 Regulations U and X............................................................ 45
4.8 Broker's Fees.................................................................. 45
4.9 Disclosure..................................................................... 45
4.10 Investment Company and Public Utility Holding Company Status................... 45
4.11 Projections.................................................................... 46
4.12 Absence of Financing Statements, etc........................................... 46
4.13 Securities Act................................................................. 46
4.14 Registration Rights............................................................ 46
4.15 Material Agreements............................................................ 46
4.16 No Prior Activities............................................................ 47
4.17 Tax Classification............................................................. 47
4.18 Taxable Year................................................................... 47
ARTICLE V - REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PURCHASERS......................... 47
5.1 Authorization; Enforceability.................................................. 47
5.2 Investment Representations..................................................... 47
5.3 Legends........................................................................ 48
5.4 Delivery of Deed of Trust to Title Company..................................... 50
ARTICLE VI - AFFIRMATIVE COVENANTS OF THE COMPANY................................................ 50
6.1 Punctual Payment............................................................... 50
6.2 Rule 144A Information.......................................................... 50
6.3 Books and Records.............................................................. 51
6.4 Financial and Other Information................................................ 51
6.5 Notices........................................................................ 54
6.6 Taxes and Other Obligations.................................................... 56
6.7 Existence, Good Standing and Legal Requirements................................ 56
6.8 Discharge of Liens............................................................. 57
6.9 Security Agreement and Guaranties; Deliveries by Subsidiaries.................. 58
6.10 Use of Additional Capital for Renovation Capital Expenditures.................. 58
6.11 Ownership of Premises; Defense of Title........................................ 58
6.12 Management of Premises......................................................... 59
6.13 Leases......................................................................... 59
6.14 Maintenance, Operations, Repairs and Alterations............................... 60
6.15 Inspection by Noteholders...................................................... 60
6.16 ERISA.......................................................................... 61
6.17 Material Operating Agreements.................................................. 62
6.18 Reserve Fund for Renovations................................................... 62
6.19 Escrowed Funds to Reconfigure Theater.......................................... 63
6.20 Changes to Senior Credit Agreement and Senior Lenders.......................... 63
6.21 Debt Service Distributions..................................................... 63
6.22 Delivery of Business Plan...................................................... 63
6.23 Development Agreement for Time Share Premises.................................. 63
6.24 Further Assurances............................................................. 64
ARTICLE VII - CERTAIN NEGATIVE COVENANTS OF THE COMPANY.......................................... 65
7.1 Mergers, Consolidations, Sales or other Disposition; Disposition of Time
Share Premises................................................................. 65
7.2 Distributions.................................................................. 66
7.3 Guaranties..................................................................... 67
7.4 Debt........................................................................... 68
7.5 Prepayment; Certain Matters Relating to the Senior Debt........................ 68
7.6 Transactions with Affiliates................................................... 69
7.7 Business Conducted............................................................. 69
7.8 Liens.......................................................................... 70
7.9 Restricted Investments......................................................... 70
(ii)
7.10 Negative Pledge Clauses........................................................ 70
7.11 Restrictions on Subsidiary Distributions....................................... 70
7.12 Transaction Documents.......................................................... 70
7.13 Management Pool................................................................ 70
7.14 Organizational Documents....................................................... 71
7.15 Limited Activities............................................................. 71
7.16 Tax Classification............................................................. 71
7.17 Ownership of Subsidiaries...................................................... 71
ARTICLE VIII - EVENTS OF DEFAULT; ACCELERATION; ETC.............................................. 71
8.1 Events of Default and Acceleration............................................. 71
8.2 Remedies....................................................................... 74
8.3 Annulment of Certain Defaults by Senior Agent.................................. 74
8.4 Distribution of Proceeds....................................................... 75
ARTICLE IX - MISCELLANEOUS....................................................................... 75
9.1 No Waiver; Cumulative Remedies................................................. 75
9.2 Amendments, Waivers and Consents............................................... 75
9.3 Gaming Provisions.............................................................. 76
9.4 Ability to Update Disclosure Schedule.......................................... 77
9.5 Addresses for Notices, Etc..................................................... 77
9.6 Costs, Expenses and Taxes...................................................... 79
9.7 Assignability; Binding Agreement............................................... 79
9.8 Payments in Respect of Notes................................................... 79
9.9 Indemnification................................................................ 80
9.10 Survival of Representations and Warranties..................................... 81
9.11 Prior Agreements............................................................... 81
9.12 Severability................................................................... 81
9.13 Governing Law.................................................................. 81
9.14 Dispute Resolution............................................................. 81
9.15 Section Headings and Gender; Construction...................................... 82
9.16 Counterparts................................................................... 83
9.17 [Intentionally Omitted]........................................................ 83
9.18 Consent to Jurisdiction........................................................ 83
9.19 Effect of Judgment............................................................. 83
9.20 No Limitation.................................................................. 83
9.21 Specific Performance........................................................... 84
9.22 Actions by Noteholders......................................................... 84
9.23 Non-Disclosure................................................................. 84
9.24 Publicity...................................................................... 84
9.25 Limitation of Liability........................................................ 84
(iii)
SCHEDULES AND EXHIBITS
Exhibits
A Description of Energy Premises
B Intercreditor Agreement (Planet Hollywood)
C Intercreditor Agreement (Senior Debt)
D Investor Rights Agreement
E Form of Subsidiary Guaranty
F Planet Hollywood License Agreement
G Pledge Agreement
H Description of Premises
I Renovation Capital Expenditures
J Description of Theater
K Description of Time Share Premises
L Form of Senior Subordinated Secured Promissory Note
M Form of Warrants
N Wire Instructions
O Issue Price and Original Issue Discount
P Use of Proceeds
Q Form of Opinion of Jones Day
R Form of Opinion of Schreck Brignone
S Monthly Operating Report
T Form of Joinder Agreement
Disclosure Schedule
Section 4.1 Authorizations
Section 4.3 Subsidiaries
Section 4.5 Capitalization
Section 4.12 Financing Statements, etc.
Section 4.15 Material Agreements
Section 6.17 Material Operating Agreements
Section 7.3 Guaranties
Section 7.4 Debt
Section 7.8 Liens
(iv)
MezzCo, L.L.C.
c/o OpBiz, L.L.C.
3667 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Dated as of August 9, 2004
To the Purchasers Named in
Schedule 1 Hereto
Ladies and Gentlemen:
MezzCo, L.L.C., a Nevada limited liability company (the "Company"), hereby
agrees with you as follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. As used herein, the following terms shall have the
following respective meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"Acquisition" means the acquisition by OpBiz of the Aladdin Resort &
Casino and related assets on the terms and conditions set forth in the
Acquisition Agreement.
"Acquisition Agreement" means the Purchase and Sale Agreement dated
as of April 23, 2003 by and between OpBiz, as purchaser, and Aladdin Gaming, as
seller, as the same may be amended, supplemented and otherwise modified from
time to time in accordance with its terms.
"Acquisition Documents" means the Acquisition Agreement and all
other documents, agreements and certificates executed or delivered in connection
therewith from time to time.
"Affiliate" of a specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with, the specified Person, including, without limitation, any Person: (a) which
beneficially owns or holds, directly or indirectly, ten percent (10%) or more of
(i) any class of voting stock of the specified Person, or (ii) the Equity
Interests (with voting capacity) of a Person; or (b) who (i) is a director or
executive officer (or individual with similar responsibilities) of the specified
Person or (ii) if the Person does not have directors or executive officers, has
similar responsibilities to a director or executive officer. The term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of the specified
Person. The term "beneficial ownership" shall have the meaning set forth in Rule
13d-3 promulgated by the SEC under the Exchange Act. For the purpose of this
definition, (a) any Manager and any Affiliate of the foregoing shall be deemed
Affiliates of the Company, (b) Planet Hollywood shall be deemed an Affiliate of
the Company, and (c) any holder of Notes
shall not be deemed to be an Affiliate solely because such holder is the
beneficial owner of Notes.
"Agreement" means this Securities Purchase Agreement, as the same
may be amended, supplemented and otherwise modified from time to time in
accordance with its terms.
"Aladdin Bazaar" means Aladdin Bazaar, LLC, a Delaware limited
liability company.
"Aladdin Gaming" means Aladdin Gaming, LLC, a Nevada limited
liability company.
"Anniversary Date" means each one year anniversary of the Closing
Date.
"Applicable Law" means and includes statutes and rules and
regulations thereunder and interpretations thereof by any competent court or by
any governmental or other regulatory body charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time heretofore or hereafter made upon or otherwise issued
to the Company or any Noteholder by any central bank or other fiscal, monetary
or other Governmental Authority, whether or not having the force of law.
"Approved Officer" means, as to any Person that is a corporation,
limited liability company, limited partnership or similar entity, the president,
the chief executive officer, the chief operating or chief financial officer,
treasurer (or assistant treasurer), controller or any vice-president, manager,
managing member or other authorized Person, whose signatures and incumbency have
been certified to the Noteholders in a certificate delivered to the Noteholders.
"Asset Transfer" means any Disposition of any Property of the
Company or a Subsidiary (including, without limitation, any Equity Interests of
any Subsidiary, but excluding Casualty Events), without regard to the
consideration, if any, received therefor, including, without limitation, any
Disposition effected through a merger or consolidation.
"Associate" has the meaning given to such term in Rule 405
promulgated under the Securities Act.
"Bankruptcy Code" means the United States Bankruptcy Code (11
U.S.C. Section 101 et. seq.), as amended, and any successor statute applicable
to the Chapter 11 Case.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Nevada, Southern Division.
"Bay Harbour Investor" has the meaning assigned to such term in the
definition of "Investor Group".
"BH/RE" means BH/RE, L.L.C., a Nevada limited liability company.
2
"BH/RE-Starwood Agreement" means the Agreement, made and entered
into as of August 9, 2004, by and between Starwood Nevada, Sheraton, BH/RE,
Equity Co, OpBiz and, for certain purposes as described therein, Starwood Hotels
& Resorts Worldwide, Inc., a Maryland corporation.
"Board of Governors" means the Board of Governors of the Federal
Reserve System of the United States (or any successor).
"Boulevard Invest" means Boulevard Invest, LLC, a Delaware limited
liability company.
"Business" means collectively, (i) the rental of guest, conference
or banquet rooms at the Premises; (ii) the operation of the Casino at the
Premises; (iii) the operation of restaurant, bar or banquet services at the
Premises; (iv) the rental of commercial, entertainment or retail space to
tenants at the Premises; and (v) the operation of the Theater.
"Business Day" means any day excluding Saturday, Sunday and any day
which shall be in Nevada, Texas or the City of New York a legal holiday or a day
on which banking institutions are authorized by law or other governmental action
to close.
"Capital Expenditures" means all expenditures by the Company or a
Subsidiary for the acquisition or leasing (pursuant to a Capital Lease) of
assets or additions to Equipment (including replacements, capitalized repairs
and improvements) which are required to be capitalized under GAAP, and in any
event shall include Maintenance Capital Expenditures and Renovation Capital
Expenditures.
"Capital Lease" means any lease of Property by the Company or a
Subsidiary that, in accordance with GAAP, is required to be reflected as a
liability on the balance sheet of the Company or such Subsidiary.
"Capital Lease Obligations" means as to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and, for the purposes of this Agreement, (i) the amount of such obligations at
any time shall be the capitalized amount thereof at such time determined in
accordance with GAAP and (ii) shall exclude obligations of the Company or any
Subsidiary to Northwind under the Energy Service Agreement.
"Casino" means the portion of the Premises operated as a casino,
including entertainment and music areas, but excluding the Hotel Premises.
"Casualty Event" means the damage, destruction or Taking, as the
case may be, of Property, or any part thereof, of the Company or any Subsidiary.
3
"Change of Control" means (i) if at any time the Persons designated
by the Bay Harbour Investor, any Hotel Investor, the Earl Investor and the
Senior Lenders as managers or directors of OpBiz cease for any reason to
constitute a majority of the directors or, managers of OpBiz then in office (if
any), (ii) the Investor Group shall cease to directly or indirectly own and
control beneficially and of record, free and clear of all Liens, other
encumbrances or, unless otherwise (A) set forth in the Organizational Documents
of OpBiz provided to the Noteholders or any entity (x) formed by the Investor
Group, (y) that directly or indirectly holds any Equity Interest in any
Guarantor or OpBiz and (z) whose Organizational Documents have been approved in
writing by the Majority Holders prior to the Closing Date or (B) approved in
writing by the Majority Holders, voting agreements, restrictions or trusts of
any kind, Equity Interests of OpBiz entitling it, at the time a determination is
made hereunder, to manage and control the operations (either through control of
a board of directors or otherwise) of OpBiz, (iii) either (x) the Bay Harbour
Investor and the Earl Investor shall cease to directly or indirectly own and
control at least 50% of all Equity Interests with voting rights of OpBiz, free
and clear of all Liens, other encumbrances, or, unless otherwise (A) set forth
in the Organizational Documents of OpBiz provided to the Noteholders in
accordance with Section 3.1.2 or any other entity (x) formed by the Investor
Group, (y) that directly or indirectly holds any Equity Interest in any
Guarantor or OpBiz and (z) whose Organizational Documents have been approved in
writing by the Majority Holders prior to the Closing Date or (B) approved in
writing by the Majority Holders, voting agreements, restrictions or trusts of
any kind or (y) the Bay Harbour Investor, the Earl Investor and any Hotel
Investor or any Person that replaces such Hotel Investor with the prior written
consent of the Majority Holders shall cease to directly or indirectly own and
control at least 50% of all Equity Interests with voting rights of OpBiz, free
and clear of all Liens, other encumbrances or unless otherwise set forth in the
Organizational Documents of OpBiz or approved in writing by the Majority
Holders, voting agreements, restrictions or trusts of any kind, or (iv) the
Company shall cease to own, directly or indirectly, 100% of all Equity Interests
of its (A) OpBiz (other than as a result of a Qualified Public Offering) or (B)
any other Subsidiary that is not a Time Share Entity.
"Change of Control Notice" has the meaning assigned to such term in
Section 2.6.4.
"Chapter 11 Case" means Aladdin Gaming's case pending in the
Bankruptcy Court under Chapter 11 of the Bankruptcy Code.
"Closing" means the closing of the Acquisition and the simultaneous
release of the Note Proceeds from the Escrow Account.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively, all of the Property and assets
that are from time to time subject or required to be made subject to the Lien of
the Security Documents.
4
"Collateral Agent" means Post Advisory Group, L.L.C., as collateral
agent under the Security Documents until a successor replaces it in accordance
with the provisions of this Agreement and the Security Documents, and
thereafter, means each such successor.
"Company" has the meaning assigned to such term in the first
paragraph of this Agreement.
"Company's Plan" means a plan delivered to Aladdin Bazaar setting
forth any Renovation Capital Expenditures and other activities which the Company
believes shall require the prior consent of Aladdin Bazaar.
"Comparable Standards" means (a) with respect to the Hotel Premises,
the standards of management, operation and maintenance of a first-class hotel of
a like quality to the Walt Disney World Dolphin located at 1500 Epcot Resort
Boulevard, Lake Buena Vista, Florida 32830 or in the event that the Majority
Holders determine that the Walt Disney World Dolphin is closed or no longer
maintains the same standards as it did on the date of the Acquisition Agreement,
a Sheraton hotel located in a major city of the United States that is a vacation
destination center at a prime location as reasonably determined by the Majority
Holders which is comparable to the Hotel Premises in location, size, facilities,
quality and nature (or in the event that the Company has entered into a
Management Agreement with a Manager other than Sheraton, a hotel operated by
such Manager that the Majority Holders determines is similar to the Walt Disney
World Dolphin, (b) with respect to the Retail Shops, the standards of
management, operation and maintenance of a first-class retail shopping center
which is comparable to the Retail Shops in location, size, tenant composition,
facilities, quality and nature, (c) with respect to the Casino, the standards of
management, operation and maintenance of a first-class casino which is
comparable to the Casino in location, size, facilities, quality and nature, and
(d) with respect to the Theater, the standards of management, operation and
maintenance of a first- class theater which is comparable to the Theater in
location, size, facilities, quality and nature.
"Competitor" means (i) any Person that operates, or owns 50% or more
of the Equity Interests in, one or more casinos or casino/hotels, (ii) any
Person that engages in the management of one or more casinos or casino/hotels as
a material portion of its business, or (iii) any Person that directly or
indirectly is in control of, is controlled by or under common control with any
of the foregoing.
"Condition of the Business" means the financial condition and
results of operations of the Business or the Collateral (taken as a whole).
"Confidential Information" has the meaning assigned to such term in
Section 9.23.
"Confirmation Order" means the order of the Bankruptcy Court entered
on August 29, 2003 confirming the Plan of Reorganization in the Chapter 11 Case
in accordance with the provisions of the Bankruptcy Code as amended, modified or
supplemented from time to time.
5
"Consolidated" means, in respect of any Person, as applied to any
financial or accounting term, such term determined on a consolidated basis in
accordance with GAAP (except as otherwise required herein) for such Person and
all of its consolidated Subsidiaries.
"Deal Costs" means any fees, expenses or costs (including legal fees
and expenses) of the Issuer Group relating to the Acquisition Documents, this
Agreement or the Senior Credit Agreement or the transactions contemplated hereby
and thereby or described herein and therein (including, without limitation, the
formation of OpBiz, the Company, EquityCo and BH/RE), matters relating to
obtaining Gaming Licenses for and of the Issuer Group and compliance with Nevada
Gaming Laws and liquor licensing laws and the registration of BH/RE's voting
membership interests under the Exchange Act.
"Debt" means, without duplication, with respect to the Company and
its Consolidated Subsidiaries: (a) all obligations of such Person for borrowed
money or for the deferred purchase price of Property or services (other than
current accounts payable incurred in the ordinary course of business, and
accrued expenses and liabilities incurred in the ordinary course of business),
and all obligations evidenced by bonds, debentures, notes, or similar
instruments, and any other obligations which, in accordance with GAAP, are
required to be shown as a liability on such Person's balance sheet; (b) all
obligations and liabilities of any Person secured by any Lien on the Property of
the Company or any Subsidiary, with respect to which obligations and liabilities
neither the Company nor any of its Consolidated Subsidiaries shall have assumed
or become liable for the payment thereof; provided, however, that all such
obligations and liabilities which are limited in recourse to such Property shall
be included in Debt only to the extent of the book value of such Property that
would be shown on a Consolidated balance sheet of the Company and its
Consolidated Subsidiaries prepared in accordance with GAAP; (c) all obligations
or liabilities created or arising under any Capital Lease or conditional sale or
other title retention agreement with respect to Property acquired by the Company
or any of its Consolidated Subsidiaries, even if the rights and remedies of the
lessor, seller or lender thereunder are limited to repossession of such
Property; provided, however, that all such obligations and liabilities which are
limited in recourse to such Property shall be included in Debt only to the
extent of the book value of such Property that would be shown on a Consolidated
balance sheet of the Company and its Subsidiaries prepared in accordance with
GAAP; (d) all obligations and liabilities under Guaranties, indemnities, and for
reimbursement in connection with letters of credit and surety bonds; and (e) all
net Hedge Obligations. For the purposes of this Agreement, the Debt of any
Person shall include the proportion of Debt of any partnership in which such
Person is a general partner or joint venturer with liability for the
indebtedness of such Person but only to the extent of such Person's interest in
such general partnership or joint venture.
"Deed of Trust" means that certain Deed of Trust, Assignment of
Rents and Leases, Security Agreement and Fixture Filing, dated as of the Funding
Date, and executed by the Company in favor of the Trustee specified therein for
the benefit of the Collateral Agent.
"Deed of Trust Release Notice" has the meaning assigned to such term
in Section 2.6.6.
6
"Default" means any event or condition which, with notice, the
passage of time, or any combination thereof, would constitute an Event of
Default.
"Default Rate" has the meaning assigned to such term in Section 2.7.
"Developers" has the meaning assigned to such term in Section
6.23(a).
"Development Agreement" has the meaning assigned to such term in
Section 6.23(a).
"Development Agreement Conditions" has the meaning assigned to such
term in Section 6.23(a).
"Development/Entertainment Side Letter" means that certain letter
agreement dated June 30, 2004 by and among the Company and the Purchasers.
"Disclosure Schedule" means the disclosure schedule attached to this
Agreement as amended or supplemented from time to time pursuant to Section 9.4.
"Disposition" means with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer (including as a result of a
Taking), contribution or other disposition thereof.
"Distribution" means, in respect of any corporation, partnership,
joint venture, limited liability company or similar business entity: (a) the
payment or making of any dividend (other than a dividend in Equity Interests or
in the right to acquire Equity Interests), payment, preferred return or other
distribution of Property in respect of or in connection with its Equity
Interests or any other profit participation or economic interests; or (b) the
redemption, repurchase or other acquisition of (i) any of its Equity Interests,
(ii) any of its securities or debt instruments convertible into such Equity
Interests, or (iii) any option, warrant, or other right to acquire such Equity
Interests.
"Earl Investor" has the meaning assigned to such term in the
definition of "Investor Group".
"EBITDA" means with respect to the Company and its Consolidated
Subsidiaries for any period, without duplication, (a) the sum of (i) Net Income,
(ii) Interest Expense, (iii) federal, state and local income taxes deducted in
determining Net Income, and (iv) depreciation and amortization and other
non-cash items properly deducted in determining Net Income, in each case on a
consolidated basis for the Company and its Subsidiaries for such period,
calculated on a consolidated basis in accordance with GAAP, minus (b) non-cash
items properly added in determining Net Income for such period (calculated on a
Consolidated basis in accordance with GAAP).
7
"Energy Premises" means the real property on which the utility plant
owned and operated by Northwind is located and the adjoining optional
improvement site as described on Exhibit A and OpBiz's right, title and interest
in such utility plant.
"Energy Premises Lease" means that certain lease, dated December 3,
1997, as amended to date, between Northwind and Aladdin Gaming as amended by the
Settlement Agreement and assumed by Aladdin Gaming pursuant to the order of the
Bankruptcy Court dated December 9, 2002 and assigned to OpBiz under the
Acquisition Agreement.
"Energy Service Agreement" means that certain Energy Service
Agreement dated as of September 24, 1998 by and between Aladdin Gaming and
Northwind as amended by the Settlement Agreement and assumed by Aladdin Gaming
pursuant to the order of the Bankruptcy Court dated December 9, 2002 and
assigned to by OpBiz under the Acquisition Agreement.
"Environmental Laws" means all federal, state and local laws, rules,
regulations, ordinances, and consent decrees relating to health, safety,
hazardous substances, and environmental matters applicable to the business and
facilities of the Company or a Subsidiary (in each case whether or not owned by
it). Such laws and regulations include but are not limited to the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., as amended; the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended; the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., as amended; the Oil Pollution Act, 33 U.S.C. Section 2701
et seq., as amended; the Clean Air Act, 42 U.S.C. Section 7401 et seq., as
amended; the Hazardous Material Transportation Act, 49 U.S.C. Section 1801 et
seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.;
the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; the
Nevada Hazardous Materials law (NRS Chapter 459); the Nevada Solid
Waste/Disposal of Garbage or Sewage law (NRS 444.440 to 444.650, inclusive); the
Nevada Water Controls/Pollution law (NRS Chapter 445A); the Nevada Air Pollution
law (NRS Chapter 445B); the Nevada Cleanup of Discharged Petroleum law (NRS
590.700 to 590.920, inclusive); the Nevada Control of Asbestos law (NRS 618.750
to 618.850, inclusive); the Nevada Appropriation of Public Waters law (NRS
533.324 to 533.4385, inclusive); and the Nevada Artificial Water Body
Development Permit law (NRS 502.390).
"Equipment" means, with respect to the Company or any Subsidiary
thereof, all of such Person's now owned and hereafter acquired machinery,
equipment, furniture, furnishings, fixtures, and other tangible personal
property, including, without limitation, Gaming Equipment, data processing
hardware and software, computers, motor vehicles, trailers, aircraft, tools,
office equipment, store fixtures, and leasehold improvements, as well as all of
such Person's rights and interests with respect thereto under such leases of
such types of personal property (including, without limitation, options to
purchase); together with all component and auxiliary parts and supplies owned by
such Person and used or to be used in connection therewith, and all substitutes
for any of the foregoing, all manuals, drawings, instructions, warranties and
rights with respect thereto owned by such Person, and all proceeds and general
intangibles relating to all of the foregoing, including without limitation any
claims against third parties for loss or damage.
8
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such equity interest.
"EquityCo" means EquityCo, L.L.C., a Nevada limited liability
company.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder, as in effect
from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with the Company or any of its Subsidiaries would
be treated as a single employer under the provisions of Title I or Title IV of
ERISA.
"Escrow Account" has the meaning assigned to such term in the Escrow
Agreement.
"Escrow Agent" means JPMorgan Chase Bank, as escrow agent under the
Escrow Agreement until a successor replaces it in accordance with the provisions
of the Escrow Agreement, and thereafter, means each such successor.
"Escrow Agreement" means the Escrow Agreement of even date herewith
by and between the Company and the Escrow Agent, as the same may be amended,
supplemented and otherwise modified from time to time in accordance with its
terms.
"Escrowed Funds" means the Note Proceeds that are deposited and held
under the Escrow Agreement and all interest earned thereon.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, including all rules and regulations issued thereunder.
"Event of Default" has the meaning assigned to such term in Section
8.1.
"Fair Market Value" means the price at which a willing buyer under
no compulsion to buy would purchase Property from a willing seller under no
compulsion to sell in a transaction under customary terms and conditions for the
time and location, as determined in good faith by the Majority Holders.
"Final Determination" means (1) the entry of a decision of a court
of competent jurisdiction at such time as an appeal may no longer be taken from
such decision or (2) the execution of a closing agreement with the United States
Internal Revenue Service.
"Financing Costs" means any fees, expenses or costs (including legal
fees and expenses) of the Issuer Group relating to the issuance of the
Securities contemplated by this Agreement (including the Signing Fee, the
Funding Fee, the Placement Fee and the other reasonable legal fees and
out-of-pocket expenses of the Purchasers actually incurred in connection with
this Agreement).
9
"Fiscal Quarter" means any of the quarterly accounting periods of
the Company, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means the Company's Fiscal Year for financial
accounting purposes, which ends on December 31 of each year. Any reference in
this Agreement to "Fiscal Year" immediately followed by a specific year (e.g.,
Fiscal Year 2003) means the Fiscal Year ending on December 31 of such year.
"Follow-on Spending Basket" has the meaning assigned to such term in
Section 6.18.
"Freed-Up Amount" has the meaning given to such term in Section
6.18.
"Funded Debt" means, with respect to OpBiz, all Debt described in
the definition of "Debt" (other than clauses (d) and (e) of such definition)
that matures more than one year from the date of its creation or matures within
one year from such date but is renewable or extendible, at OpBiz' option, to a
date more than one year from such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during a
period of more than one year from such date, including, without limitation, all
current maturities and current sinking fund payments in respect of such Debt
whether or not required to be paid within one year from the date of its
creation. "Funded Debt" shall include the Senior Debt.
"Funding" has the meaning assigned to such term in Section 2.2.
"Funding Date" has the meaning assigned to such term in Section 2.2.
"Funding Fee" has the meaning assigned to such term in Section 2.13.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time and consistently applied.
"Gaming Authority" means any of the Nevada Gaming Commission, the
Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing
Board and any other gaming regulatory body or any agency which has, or may at
any time after the Closing Date have, jurisdiction over the gaming activities of
the Premises or any successor to such authority.
"Gaming Equipment" means the gaming equipment and gaming devices
which are regulated gaming devices under any Gaming Laws (including but not
limited to slot machines, gaming tables, cards, dice, cashless wagering systems
and tangible associated equipment (as defined in NRS 463.0136) together with all
improvements and/or additions thereto.
"Gaming Laws" means 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, the provisions of the
Clark County Code, as amended
10
from time to time, and all other laws, statutes, rules, rulings, orders,
ordinances, regulations and other Legal Requirements of any Gaming Authority.
"Gaming License" means any license, qualification, franchise,
accreditation, approval, registration, permit, finding of suitability or other
authorization relating to gaming, the gaming business or the operation of a
casino under the Gaming Laws or required by the Gaming Authorities or otherwise
necessary for the operation of gaming, the gaming business or a resort casino.
"Governmental Authority" means any national, state or local
government (whether domestic or foreign), any political subdivision thereof or
any other governmental or judicial, authority, body, agency, bureau or entity
(including the Gaming Authorities, any zoning authority, the Federal Deposit
Insurance Corporation, the Comptroller of the Currency or the Board of
Governors, any central bank or any comparable authority) or any arbitrator with
authority to bind the party at law.
"Gross-Up Amount" has the meaning assigned to such term in Section
2.5(b).
"Guarantor" means OpBiz and each direct and indirect domestic
Subsidiary of the Company (other than the Time Share Entity) created or acquired
after the date hereof.
"Guaranty" by any Person means all obligations of such Person which
in any manner directly or indirectly guarantee the payment or performance of any
indebtedness, dividend or other obligation of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against the payment or performance of all or any part of such
guaranteed obligations, including, without limitation, any Subsidiary Guaranty
and any such obligations incurred through an agreement: (a) to purchase the
guaranteed obligations or any Property constituting security therefor; or (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition.
"Hazardous Material" means any of those substances which are
regulated by, or which may form the basis of liability under, any Environmental
Law, including, without limitation, all substances identified under any
Environmental Law as a pollutant, contaminant, waste, solid waste, hazardous
waste, hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, or petroleum or petroleum-derived substance or
waste, and including, without limitation, any petrochemical or petroleum
products, radioactive materials, asbestos in any form which is friable, UREA
formaldehyde foam insulation, transformers or other equipment that contains
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas.
"Hedge Obligations" means all indebtedness and obligations of the
Company and its Subsidiaries set forth on any balance sheet of the Company
furnished to the Noteholders pursuant to Section 6.4 of this Agreement in
connection with interest rate swaps, caps or collar agreements or similar
agreements entered into by the Company or any Subsidiary providing for
11
protection against fluctuations in interest rates or currency exchange rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies.
"Hedging Agreements" means any and all agreements or documents
evidencing any Hedge Obligations.
"Hotel Investor" means any Person (other than the Earl Investor and
the Bay Harbour Investor) approved in writing by the Majority Holders to hold
Equity Interests, directly or indirectly of the Company and in any event shall
include Starwood if Sheraton becomes the Manager.
"Hotel Premises" means the portion of the Premises operated as a
hotel, including all rooms and suites, amenities, restaurants, conference
centers, meeting, banquet and other public rooms, spa, parking spaces and other
facilities of the hotel portion of the Premises, but excluding the Casino.
"Identified Hotel Manager" means any of Sheraton, Hilton Hotels
Corporation, Hyatt Corporation, Marriott International Inc. or Loew's Hotels
Holding Corporation (or any Affiliate of any of the foregoing primarily engaged
in the management of hotels of at least a like quality to a Sheraton), or any
replacement of comparable standing in the hotel management industry that is (i)
acceptable to the Majority Holders and (ii) identified on a list delivered to
the Noteholders by the Company no more frequently than once every two years,
commencing on the second Anniversary Date.
"Indemnified Liabilities" has the meaning assigned to such term in
Section 9.9.
"Indemnitees" has the meaning assigned to such term in Section 9.9.
"Initial Renovation Contracts" has the meaning assigned to such term
in Section 6.10.
"Intercreditor Agreement (Planet Hollywood)" means the License
Subordination Agreement dated as of the Funding Date and entered into among the
Purchasers, Planet Hollywood International, Inc., Planet Hollywood Memorabilia,
Inc. and OpBiz, in the form attached hereto as Exhibit B.
"Intercreditor Agreement (Senior Debt)" means the Subordination
Agreement dated as of the Closing Date among the Senior Agent and the
Purchasers, and consented to by the Company and OpBiz, as the same may be
amended, supplemented and otherwise modified from time to time in accordance
with its terms, in the form attached hereto as Exhibit C.
"Intercreditor Agreements" means, collectively, the Intercreditor
Agreement (Planet Hollywood) and Intercreditor Agreement (Senior Debt).
"Interest Expense" means, with respect to the Company for any
period, the aggregate interest expense of the Company and its Consolidated
Subsidiaries during such period
12
determined on a Consolidated basis, and shall in any event include, without
limitation, (i) the amortization of Debt discounts, (ii) the amortization of all
fees payable in connection with the incurrence of Debt to the extent included in
interest expense and (iii) the portion of any Capital Lease Obligation allocable
to interest expense (recognizing that, in any event, no portion of "Debt
Service" or "Return on Equity" under the Energy Service Agreement shall be
treated as interest expense on Capital Lease Obligations, regardless of GAAP,
but instead shall be treated as a component of EBITDA as set forth in the
definition of EBITDA).
"Interests" means (i) the Company's membership interests as
authorized under or in accordance with the Company's Second Amended and Restated
Operating Agreement as in effect on the date of this Agreement.
"Interest Payment Date" has the meaning assigned to such term in
Section 2.1(b).
"Interest Rate" has the meaning assigned to such term in Section
2.1(b).
"Investor Group" means, collectively, Robert Earl, an individual
resident in the State of Florida, or one or more Affiliates of such individual
(the "Earl Investor"), Bay Harbour Management, LC, a Florida company, or an
Affiliate thereof (the "Bay Harbour Investor"), and, at the option of the Earl
Investor and the Bay Harbour Investor (including for this purpose Douglas P.
Teitelbaum), a Hotel Investor or any successor to any of such Persons that the
Senior Agent has approved in writing.
"Investor Rights Agreement" means that certain Investor Rights
Agreement, dated as of the Closing Date, by and among the Noteholders, the
Company and EquityCo. in the form of Exhibit D attached hereto.
"Issuer Group" means OpBiz, the Company, EquityCo, BH/RE and the
owners of their Equity Interests and their equity sponsors.
"Knowledge" means the actual knowledge of an Approved Officer or
managing member of the Company or OpBiz.
"Leases" means, collectively, all space leases, occupancy
agreements, subleases, licenses, Permits, concessions or other agreements or
arrangements, whether written or oral, and all agreements for the use or
occupancy of all or any portion of the Premises, entered into by OpBiz or by any
Person on behalf of OpBiz or assumed by Aladdin Gaming and assigned to OpBiz in
connection with the Acquisition Agreement or the Confirmation Order, together
with any and all extensions or renewals thereof, excluding room rentals.
"Leasing Manager" means any leasing manager designated by OpBiz
pursuant to a Leasing Services Agreement and approved in writing by the Senior
Agent prior to the retention thereof.
13
"Leasing Services Agreement" means any contract or agreement
pursuant to which any Person other than OpBiz or an employee of OpBiz is granted
authority to manage the leasing of the Retail Shops or any other portion of the
Premises.
"Legal Requirements" means all laws, ordinances, rules, regulations,
codes, statutes, orders, permits, licenses, authorizations, directives and
requirements of any Governmental Authority applicable to the Company or any
Subsidiary, any Manager, any casino operator, the Noteholders or the Premises or
any portion thereof, including all applicable licenses, building codes, rent
stabilization laws, zoning, planning, use and subdivision ordinances, flood
disaster, health, safety and environmental laws and regulations, and the
Americans with Disabilities Act of 1990, Pub. L. No. 89-670, 104 Stat. 327
(1990), as amended, and all regulations promulgated pursuant thereto.
"Leverage Ratio" means the ratio of (i) Funded Debt of OpBiz as at
such date to (ii) EBITDA of OpBiz for the period of four Fiscal Quarters (or if
a lesser number of periods has elapsed from the Closing Date, EBITDA of OpBiz
annualized based on the number of Fiscal Quarters that have elapsed from the
Closing Date) most recently ended on or prior to such date.
"Lien" means any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute, or contract, and including,
without limitation, (a) a security interest, charge, claim, or lien arising from
a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, or conditional sale or a lease, consignment or
bailment for security purposes, or (b) any reservation, exception, encroachment,
easement, right-of-way, condition, restriction or other title exception or
encumbrance affecting Property.
"Maintenance Capital Expenditures" means any Capital Expenditures by
the Company or any of its Subsidiaries that are made to maintain, restore,
replace or refurbish the condition or usefulness of Property of the Company or
any of its Subsidiaries, or otherwise to support the continuation of such
Person's day-to-day operations as then conducted, but that are not properly
chargeable to repairs and maintenance in accordance with GAAP. Maintenance
Capital Expenditures shall for all purposes exclude Renovation Capital
Expenditures.
"Majority Holders" means the holder or holders of at least 50% in
principal amount of all Notes then outstanding.
"Management Agreement" means (a) the Management Contract for Planet
Hollywood Hotel and Casino, a Sheraton Hotel, between Sheraton and OpBiz, dated
April 23, 2003, together with the modifications thereto set forth in the
BH/RE-Starwood Agreement, and any other amendment or modification thereto made
in accordance with the terms of such agreement and Section 6.12 hereof or (b)
any other management agreement entered into in substitution, amendment or
modification of the foregoing which has been approved in writing by the Majority
Holders hereof prior to the effectiveness thereof.
"Manager" means (a) any Identified Hotel Manager or any other Person
approved in writing by the Majority Holders or (b) any replacement manager
designated by the Company
14
and approved in writing by the Majority Holders prior to the retention thereof;
provided, that the consent of the Majority Holders shall not be required in the
event that the Company replaces any Manager with an Identified Hotel Manager.
"Management Pool" means options to purchase up to 6,000 Class B
Units of the Company (subject to adjustments for splits, dividends,
recapitalizations and similar changes affecting the Class B Units) to employees
or management (other than Michael V. Mecca) of the Company and its Subsidiaries.
"Marketing Fees" has the meaning assigned to such term in Section
6.23(a).
"Material Adverse Effect" means an event has occurred or condition
exists that has or would reasonably be expected to have a material adverse
effect on the (i) Condition of the Business, (ii) gaming business (taken as a
whole) conducted by casinos located on the portion of Las Vegas Boulevard in
Clark County, Nevada bounded by Blue Diamond Road at the south end and Oakey
Boulevard at the north end, or (iii) on the validity or enforceability of this
Agreement, the Security Documents, the other Securities Purchase Documents or
the rights or remedies of the Noteholders or the Collateral Agent hereunder or
thereunder; provided, that the material adverse effect was not the direct or
indirect result of (x) any action or inaction of the Company or any Subsidiary
or Affiliate of the Company taken at the written request of any of the
Noteholders, the Collateral Agent or the Purchasers or (y) the lack of consent
by Aladdin Bazaar to the proposed Renovation Capital Expenditures set forth in
the Company's Plan.
"Material Operating Agreements" means (a) the Operating Agreements
set forth on Section 6.17 of the Disclosure Schedule (which shall include the
following agreements: the Management Agreement (if any), the Leasing Services
Agreement (if any), the Energy Premises Lease, the Energy Service Agreement, the
Parking Agreement, the REA, the Planet Hollywood License Agreement and any
casino operating agreement entered into in accordance with Section 6.17 of this
Agreement) and any contracts or agreements entered into in replacement thereof
or substitution therefor, and (b) any other Operating Agreements entered into
after the Funding Date by OpBiz or any Manager or any other Person on their
behalf with respect to the Premises or other Property, which (i) has a
noncancellable term which exceeds one (1) year in length and requires in excess
of an aggregate of $1,500,000 per annum in payments by or on behalf of OpBiz or
any Manager or (ii) requires in excess of an aggregate of $1,500,000 per annum
in payments by or on behalf of OpBiz or any Manager regardless of the term of
such Operating Agreement; provided, that contracts or agreements entered into in
respect of events or performances at the Theater or the Premises will be
excluded from Material Operating Agreements so long as any such contracts or
agreements (x) are entered into by OpBiz or any Manager with a headline
performing artist of international repute and standing and the average ticket
price for any such performance or event shall be at least $100 per ticket or (y)
have a term or duration of less than sixty (60) days and are entered into by
OpBiz or any Manager with a Person who is not covered by clause (x) above.
"Maturity Date" has the meaning assigned to such term in Section
2.1(a).
15
"Multiemployer Plan" means as to any Person, a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA and to which such Person is making, or
is obligated to make (or made or was obligated to make in the preceding
five-year period) contributions.
"Net Cash Proceeds" means the cash portion of Net Proceeds, when
received.
"Net Income" means with respect to the Company for any period, the
consolidated net income (or net loss) of the Company and its Subsidiaries for
such period but excluding any extraordinary gains or losses or any gains or
losses from the sale or disposition of assets other than in the ordinary course
of business, all computed and calculated in accordance with GAAP. For the
avoidance of doubt, Net Income will include the Distributions received by the
Company in respect of its interest in the Time Share Entity but will not include
any net income or net loss of the Time Share Entity.
"Net Proceeds" means, with respect to an Asset Transfer or Casualty
Event: (a) the gross amount of all cash and the Fair Market Value of all other
Property, received directly or indirectly by the Company or a Subsidiary (or an
Affiliate in the case of Net Proceeds received from a Disposition of the Time
Share Premises), or for its account, in connection with the Asset Transfer or
Casualty Event, whether at the time of such Asset Transfer or Casualty Event or
thereafter, including, without limitation, upon receipt of all payments of
principal of or interest on any note or other debt instrument issued as part of
the consideration for such Asset Transfer or Casualty Event; minus (b) the sum
of: (i) all reasonable commissions, legal fees, and other costs and expenses
incurred by the Company or any Subsidiary in connection with such Asset Transfer
or Casualty Event; (ii) payments on account of Debt (other than the Noteholder
Obligations) secured by the Property disposed of in such Asset Transfer or
Casualty Event, the payment of which Debt was required in order to consummate
such Asset Transfer or necessary as a result of such Casualty Event; (iii) the
Taxes of the Company (or of such Subsidiary, determined as if such Subsidiary
was the Company) attributable to such Asset Transfer or Casualty Event; and (iv)
appropriate amounts to be set aside by the Company or Subsidiary as a reserve,
in accordance with GAAP, against liabilities associated with the assets that are
the subject of the Asset Transfer or Casualty Event and which liabilities are
retained by the Company or Subsidiary after the Asset Transfer or Casualty Event
(including, without limitation, liabilities arising from indemnifications
provided in connection with such Asset Transfer or Casualty Event).
"New Withholding Taxes" has the meaning assigned to such term in
Section 2.5(b).
"Non-U.S. Lender" has the meaning assigned to such term in Section
2.5(c).
"Northwind" means Northwind Aladdin, LLC, a Nevada limited liability
company.
"Note Parties" means the Company and each of its Subsidiaries which
is a party to any of the Notes Documents.
16
"Note Proceeds" has the meaning assigned to such term in
Section 2.2.
"Noteholder Obligations" means (i) all indebtedness, obligations and
liabilities of the Company to any of the Noteholders, individually or
collectively, existing on the date of this Agreement or arising hereunder,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising or incurred
under the Notes Documents and (ii) either (A) the obligation of the Company to
pay the Redemption Price (as defined in the Warrants) prior to the expiration of
the Put Demand Period (as defined in the Warrants) or (B) any indebtedness
arising under the Put Note (as defined in the Warrants) issued or deemed to be
issued pursuant to the Warrants, or any other instruments at any time evidencing
any of the obligations referenced in clauses (i) or (ii).
"Noteholders" means the holder or holders from time to time of the
Notes.
"Notes" has the meaning assigned to such term in Section 2.1.
"Notes Documents" means this Agreement, the Notes, each Subsidiary
Guaranty, the Escrow Agreement, the Intercreditor Agreements, the
Development/Entertainment Side Letter, the Security Documents and each other
agreement, document and certificate delivered hereunder or thereunder by the
Company or any of its Subsidiaries other than the Warrants and the Investor
Rights Agreement.
"Offering Proceeds" means the Note Proceeds together with the
Required Equity Contribution.
"OID" has the meaning specified in Section 2.3(c).
"OpBiz" means OpBiz, L.L.C., a Nevada limited liability company, a
wholly-owned, direct Subsidiary of the Company.
"Operating Agreements" means, collectively, all agreements entered
into by the Company, any Subsidiary thereof or by any other Person on behalf of
the Company or any Subsidiary thereof or assumed by OpBiz under the Acquisition
Agreement, relating to the ownership, operation or maintenance of the Premises
or any other Property.
"Operating Costs" means any fees, expenses or costs incurred at or
prior to the Closing Date that do not constitute Renovation Capital Expenditures
but that relate to the planned renovation of the Premises into the "Planet
Hollywood Resort & Casino," or the operation of, or the preparation for assuming
responsibility for the operation of, the Premises (but without regard to whether
the Time Share Premises is included in the definition of "Premises") or the
"Planet Hollywood Resort & Casino" (including but not limited to salary and
other payments to Michael V. Mecca or other employees of OpBiz and marketing,
promotional and renovation planning costs).
"Operating Expenses" has the meaning assigned to such term in
Section 2.1(c).
17
"Organizational Documents" means, (a) for any corporation, the
Articles of Incorporation and by-laws of such and all amendments thereto, (b)
for any partnership, collectively, the general or limited partnership agreement,
as the case may be, with all amendments thereto, together with if appropriate, a
certificate of limited partnership and all amendments thereto, and (c) for any
limited liability company, the operating agreement and any other similar
agreements governing the organization of the limited liability company and the
management of its business and affairs, and all amendments thereto.
"Overage" has the meaning assigned to such term in Section 6.18.
"Parking Agreement" means that certain Common Parking Area Use
Agreement, dated as of February 26, 1998, by and between Aladdin Gaming and
Boulevard Invest (as successor in interest to Aladdin Bazaar), as amended and
modified by the terms of the Order of the Bankruptcy, entered October 7, 2002
and as assumed by Aladdin Gaming pursuant to an Order upon Motion to Assume
Executory Contract or Unexpired Lease of Non-Residential Real Property entered
by the Bankruptcy Court on December 10, 2002 and others and assumed by OpBiz
under the Acquisition Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor.
"Pension Plan" means any Plan which is subject to the provisions of
Title IV of ERISA.
"Permits" means all licenses, permits, franchises, authorizations,
certificates, approvals and consents, including, without limitation, all
certificates of occupancy, all environmental, liquor, health and safety licenses
of all Governmental Authorities which are material to the conduct of the
Business and the ownership, use, occupation and operation of the Premises.
"Permitted Investments" means (a) direct obligations issued by, or
guaranteed by, the United States government or issued by any agency thereof, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, Eurodollar time deposits, or overnight
bank deposits bankers' acceptance and other interest bearing deposits or
accounts having maturities of one year or less from the date of acquisition
issued by any bank or trust company organized under the laws of the United
States of America or any state thereof having combined capital and surplus of
not less than $100,000,000; (c) commercial paper of an issuer rated at least A-2
by Standard & Poor's Ratings Services ("S&P") or P-2 by Moody's Investors
Service, Inc. ("Moody's"), or carrying an equivalent rating by a nationally
recognized rating agency, and maturing within 270 days from the date of
acquisition; (d) repurchase obligations of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days with respect to securities issued or fully guaranteed or insured by the
United States government; (e) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at
18
least A by S&P or A by Moody's, or carry an equivalent rating by a nationally
recognized rating agency; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the requirements of clause (b) of this definition;
(g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition; or (h) all or a portion of the Senior Debt and the Notes.
"Permitted Liens" means: (a) Liens for Taxes, assessments,
governmental charges, levies or claims (i) not yet payable or (ii) being
contested in good faith and by proper proceedings diligently pursued, provided
that an adequate reserve shall have been made therefor by a Subsidiary of the
Company; (b) Liens to secure the Senior Debt; provided that such Liens do not
extend to the Collateral; (c) purchase money Liens upon Equipment granted in
connection with the acquisition of such Equipment by a Subsidiary of the Company
after the date hereof, including, but not limited to, pursuant to Capital Leases
and including any renewals or refinancings thereof, provided that (i) the Debt
incurred to finance each such acquisition is permitted by Section 7.4 (Debt),
and (ii) each such Lien attaches only to the Equipment acquired with the Debt
secured thereby and proceeds thereof; (d) deposits or pledges under workmen's
compensation, unemployment insurance, pensions, social security and other
similar laws (other than ERISA); (e) carriers', warehousemen's, mechanics',
materialmen's, repairmen's, landlord's and laborers' or other like Liens arising
in the ordinary course of business securing sums which are not overdue or which
are being contested in good faith through appropriate proceedings and for which
a Subsidiary of the Company has posted a bond as required by the Senior Agent or
Applicable Law; (f) deposits or pledges to secure performance in connection with
bids, tenders, contracts (other than contracts for the payment of borrowed
money) or Leases made in the ordinary course of business by a Subsidiary of the
Company; (g) deposits to secure public or statutory obligations of a Subsidiary
of the Company; (h) deposits to secure surety, appeal or customs bonds in
proceedings to which the Company or any Subsidiary is a party; (i) Liens arising
out of judgments or awards in respect of which the Company or any Subsidiary
shall in good faith be prosecuting an appeal or proceedings for review and in
respect of which the Company or any Subsidiary shall have secured a subsisting
stay of execution pending such appeal or proceedings for review, provided that
adequate reserves as shall be required by GAAP shall have been made therefor on
the applicable financial statements of the Company or as required by Applicable
Law; (j) leases of personal Property entered into in the ordinary course of
business, so long as the Lien attaches only to such personal Property; (k) Liens
listed on Section 7.8 of the Disclosure Schedule, including any renewals or
refinancings thereof, so long as the Liens do not cover any additional Property,
but only to the extent such Liens continue to secure Debt permitted by Section
7.4 (Debt); (l) Liens securing Debt of a newly acquired Person (or assets
thereof), which Person (or the assets thereof) was acquired after the Closing
Date pursuant to a transaction permitted under the terms of this Agreement and
which Liens were in existence at the time of acquisition by the Company of such
Person (or the assets thereof), and not incurred in contemplation of such
acquisition; (m) Liens existing on the Property at the time OpBiz acquires such
Property from Aladdin Gaming under the Acquisition Agreement and listed on
Section 7.8 of the Disclosure Schedule; (n) easements, zoning restrictions,
rights-of-way and similar encumbrances on real property (1) imposed by any
Applicable Law or arising in the ordinary course of business that do not secure
any obligations for borrowed money and do not
19
materially detract from the value of the affected property or interfere with the
ordinary conduct of business of a Subsidiary of the Company or (2) in the case
of the Trust Property, encumbrances disclosed on Exhibit B to the Deed of Trust
and the title insurance policy issued in connection with the closing of the
transactions contemplated by the Acquisition Agreement; (o) Liens securing the
Noteholder Obligations; and (p) other Liens permitted under the Deed of Trust.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
Governmental Authority, or any other entity.
"PIK Interest" has the meaning assigned to such term in
Section 2.1(b).
"Placement Fee" means the fee payable by the Company to Libra
Securities LLC, as exclusive placement agent of the Company, on the Closing Date
of 5.00% of the original principal amount of the Notes purchased by the
Purchasers on the Funding Date.
"Plan" means any pension plan, as defined in Section 3(2) of ERISA
(other than a Multiemployer Plan), which is maintained or contributed to by (or
to which there is an obligation to contribute of) the Company or an ERISA
Affiliate and each such plan for the five-year period immediately following the
latest date on which the Company or an ERISA Affiliate maintained, contributed
to or had an obligation to contribute to such plan.
"Plan of Reorganization" means the Revised First Amended Plan of
Reorganization of Aladdin Gaming, confirmed by the Bankruptcy Court on August
28, 2003, as the same may be amended, modified or otherwise supplemented from
time to time in accordance therewith.
"Planet Hollywood" means Planet Hollywood International, Inc.
together with its Affiliates.
"Planet Hollywood License Agreement" means the Amended and Restated
Planet Hollywood Resort & Casino License Agreement in the form attached hereto
as Exhibit F entered into by and between Planet Hollywood and OpBiz.
"Pledge Agreement" means the Pledge Agreement in the form attached
hereto as Exhibit G entered into by and between the Collateral Agent and the
Company and acknowledged by OpBiz.
"Premises" means the premises known as Aladdin Hotel and Casino and
related complexes located at Las Vegas Boulevard and Harmon Avenue in Clark
County, Nevada, as more particularly described in Exhibit H hereto, which
Premises include, without limitation, the Hotel Premises, the Retail Shops, the
Casino, the Time Share Premises, the Theater and the Energy Premises; provided,
however, that upon release by the Senior Agent of its Lien on the Time Share
Premises, the Premises shall not include the Time Share Premises.
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"Prepayment Premium" has the meaning assigned to such term in
Section 2.6.2.
"Pro Forma Financial Projections" has the meaning assigned to such
term in Section 6.22.
"Project Goals" means the 90% completion, on budget (as certified by
OpBiz's chief financial officer to the reasonable satisfaction of the Majority
Holders) (provided, however, if there is an Overage on any such project, such
certificate shall certify the amount of the Overage and if, and only if,
adequate reserves (in the reasonable determination of the Majority Holders)
shall have been made for such Overage or such Overage shall have been reserved
from, or paid out of, funds in the Follow-on Spending Basket, such project will
be deemed to be on budget for purposes of this determination) of (i) the Low
Rise Exterior, (ii) the Low Rise Interior and (iii) the Tower Facade (each as
defined in Exhibit L to the Senior Credit Agreement), and (iv) if the
reconfiguration of the Theater shall be financed from the proceeds of the
Theater Escrow Account in the event that OpBiz does not enter into an
entertainment agreement on the terms described in the Development/Entertainment
Side Letter, the reconfiguration of the Theater.
"Property" means any right or interest in or to property of any kind
whatsoever of the Company or any Subsidiary, whether real, personal or mixed and
whether tangible or intangible, including, without limitation, the Premises and
Equity Interests held by the Company or any Subsidiary.
"Purchaser" means each initial purchaser of the Notes described on
Schedule 1 hereto.
"Qualified Public Offering" shall mean an underwritten public
offering on a firm commitment basis lead managed by a nationally recognized
investment banking organization or organizations pursuant to an effective
registration statement under the Securities Act, covering the offer and sale of
Equity Interests or voting common equity securities of the Company or OpBiz or
any successor thereto (A) with respect to which the issuer of such securities
receives aggregate net proceeds attributable to sales for the account of the
issuer (after deduction of underwriting discounts and commissions) of not less
than $25 million, (B) with respect to which the gross equity value of the issuer
of such securities, valued at the initial public offering price, is at least
$100 million and (C) with respect to which such Equity Interests or voting
common equity securities are listed for trading on the New York Stock Exchange
or quoted on the NASDAQ National Market.
"Qualifying Entertainment Agreement" has the meaning assigned to
such term in Section 6.19.
"REA" means that certain Construction, Operation and Reciprocal
Easement Agreement dated as of February 26, 1998 among Aladdin Gaming, Boulevard
Invest (as successor in interest to Aladdin Bazaar) and Aladdin Music Holdings,
LLC, as amended by that certain (i) Amendment and Ratification of Construction,
Operation and Reciprocal Easement Agreement dated as of November 20, 2000
between Aladdin and Boulevard Invest (as successor
21
in interest to Aladdin Bazaar) which was recorded in the Official Records of
Clark County in Book 20001120, Document No.: 00858 and (ii) Second Amendment of
Construction, Operation and Reciprocal Easement Agreement between Aladdin and
Boulevard Invest (as successor in interest to Aladdin Bazaar) which was recorded
in the Official Records of Clark County in Book 20030331, Document No.: 04875 on
March 31, 2003, as further amended, modified or supplemented from time to time.
"Rents" means, all rents, additional rents, rental income, receipts,
management fees payable by tenants, cash, guarantees, letters of credit, bonds,
sureties or securities deposited thereunder to secure performance of the
lessee's, franchisee's, licensee's or obligee's obligations thereunder,
revenues, earnings, issues, profits and income, advance rental payments,
payments incident to assignment, sublease or surrender of a Lease, claims for
forfeited deposits, claims for damages and awards, now due or hereafter to
become due, with respect to any Lease.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Renovation Capital Expenditures" means those Capital Expenditures
made by the Company or any of its Subsidiaries for the purposes and in the
amounts set forth on Exhibit I (such Exhibit may be amended or supplemented by
the Company from time to time so long as the additional Renovation Capital
Expenditures are of the same scope as those originally set forth in such
Exhibit) or other Capital Expenditures approved by the Majority Holders in its
reasonable discretion to constitute Renovation Capital Expenditures in the
aggregate minimum amount of $100,000,000, provided that no approval by the
Majority Holders will be required after $90,000,000 has been spent on Renovation
Capital Expenditures if the Project Goals have been met. The Renovation Capital
Expenditures shall for all purposes exclude Maintenance Capital Expenditures. No
more than $150,000 of closing costs and fees may be reimbursed to the Company or
any Subsidiary from the $100,000,000 constituting Renovation Capital
Expenditures. For purposes of this Agreement, (i) up to $9,000,000 of Renovation
Capital Expenditures may be items that are not required to be capitalized under
GAAP and (ii) all professional, architectural, permitting, insurance and similar
fees and costs relating to such Capital Expenditures shall be deemed to be
Renovation Capital Expenditures hereunder irrespective of whether such items
would be determined to be "Renovation Capital Expenditures" as defined in the
Senior Credit Agreement.
"Reportable Event" means a Reportable Event as defined in Section
4043(b) of ERISA.
"Required Company Authorizations" means, with respect to any Person
that is a corporation, the resolutions of the board of directors of such Person
and of such Person's shareholders, with respect to any Person that is a limited
liability company, the resolutions of such Person's managers, board of directors
and members, and in the case of any limited partnership, limited liability
partnership or general partnership, the resolutions of such Person's
22
general partner or partners and limited partners, in each case as applicable and
as required under such Person's Organizational Documents and Applicable Law with
respect to any action taken, to be taken or purported to be taken.
"Required Equity Contribution" means the contribution of (A)
$40,000,000 of equity by EquityCo to the Company, including (i) $10 million
already deposited into an escrow account established under the Acquisition
Agreement and (ii) any additional deposits or payments required under the
Acquisition Agreement prior to the Closing Date and (iii) the capital
contributions described in Section 3.1.8, reduced by (B) any Financing Costs,
Deal Costs and Operating Costs; provided that the reduction for Financing Costs,
Deal Costs and Operating Costs that are applied to reduce the Required Equity
Contribution shall not exceed in the aggregate $13 million.
"Restricted Investment" means any investment by the Company or a
Subsidiary in any other Person for cash or other Property, including, without
limitation, in the form of an acquisition of Equity Interests, indebtedness or
other obligation, or by loan, advance or capital contribution, except the
following: (a) investments in Property acquired in the ordinary course of the
business of the Company or a Subsidiary to be used in the ordinary course of
such business; (b) investments in current assets arising from the sale or lease
of goods or rendition of services in the ordinary course of business of the
Company or a Subsidiary; (c) investments existing on the Funding Date including
in the Equity Interests of Subsidiaries and Affiliates; (d) Permitted
Investments; (e) investments arising under Hedging Agreements; (f) investments
in non-cash consideration received in connection with a permitted sale of
assets; (g) the Company's or any Subsidiary's (other than OpBiz or a Subsidiary
of OpBiz) investment, if any, in the Time Share Entity pursuant to the Time
Share Plan; (h) equity contributions to any Subsidiary that exists on the
Funding Date meeting the requirements of Section 7.17 or to a Subsidiary that is
organized or acquired after the Funding Date in compliance with Section 6.9,
provided that the foregoing shall not be deemed to permit the Company or any of
its Subsidiaries to acquire the Equity Interests of any Person other than a
wholly-owned Subsidiary in any manner; (i) loans or advances to officers,
directors, members, managers and employees of the Company or any Subsidiary made
in the ordinary course of business provided that the aggregate amount of such
loans or advances does not exceed $400,000 at any one time outstanding; (j)
investments arising from transactions by any Subsidiary of the Company with
customers or suppliers in the ordinary course of business, including, without
limitation, endorsements of negotiable instruments and Debt obligations and
other investments received in connection with the bankruptcy or reorganization
of customers and suppliers or in settlement of delinquent obligations of, or
other disputes with, customers or suppliers, arising in the ordinary course of
business; (k) repurchases of Warrants, Warrant Interests, Put Notes (as such
term is defined in the Warrants) and other Equity Interests to the extent
required or permitted by the Securities Purchase Documents; and (l) other
investments of the Subsidiaries of the Company not to exceed a net amount equal
to $200,000 in the aggregate outstanding at any time.
"Retail Shops" means, collectively, the portion of the Hotel
Premises or Casino Premises where retail shops are located.
"SEC" has the meaning assigned to such term in Section 6.2.
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"Securities" means collectively the Notes, Warrants and Warrant
Interests.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Securities Purchase Documents" means the Notes Documents, the
Warrants and the Investor Rights Agreement.
"Security Agreement" means the Security Agreement of even date
herewith entered into by and among the Collateral Agent, the Company and certain
of its Subsidiaries.
"Security Documents" means the Security Agreement, the Pledge
Agreement, the Deed of Trust, the UCC-1 financing statements and all similar
agreements entered into granting a Lien upon Property as security for payment of
the Noteholder Obligations.
"Securityholder" means any holder of Securities from time to time.
"Securityholder Party" has the meaning assigned to such term in
Section 9.23.
"Senior Agent" means The Bank of New York, Asset Solutions Division,
as administrative agent and collateral agent under the Senior Credit Agreement
and any other agent appointed in respect of the Senior Debt, and any successor
agent thereto appointed from time to time.
"Senior Credit Agreement" means the Amended and Restated Loan and
Facilities Agreement entered into in connection with the Closing, between OpBiz
and the Senior Agent, as from time to time amended and/or restated, renewed,
extended, refinanced or replaced in accordance with the terms of the
Intercreditor Agreement (Senior Debt).
"Senior Credit Documents" means the Senior Credit Agreement, the
notes issued thereunder, the security agreements and guaranty agreements
executed in connection therewith, the Intercreditor Agreement (Senior Debt), all
other documents, agreements and certificates (including, without limitation any
Additional Senior Agreements (as defined in the Intercreditor Agreement (Senior
Debt)) executed or delivered in connection therewith or in connection with any
other Senior Debt from time to time and any refunding, refinancing or
replacement thereof to the extent permitted under the Intercreditor Agreement
(Senior Debt).
"Senior Debt" has the meaning assigned to such term in the
Intercreditor Agreement (Senior Debt).
"Senior Debt Limit" has the meaning assigned to such term in the
Intercreditor Agreement (Senior Debt).
"Senior Lenders" means each lender under the Senior Credit Agreement
from time to time and its successors or permitted assigns.
24
"Settlement Agreement" means the Settlement Agreement and Releases,
dated as of November 6, 2002, by and among Aladdin Gaming, Northwind, John
Hancock Life Insurance Company, John Hancock Variable Life Insurance Company,
John Hancock Reinsurance Company Limited, State Street Bank and Trust Company
and Boulevard Invest (as successor in interest to Aladdin Bazaar), as amended by
that certain First Amendment to Settlement Agreement and Releases, dated as of
December 23, 2002.
"Sheraton" means Sheraton Operating Corporation, a Delaware
corporation.
"Significant Repair or Improvement" means any improvement,
alteration or addition constructed or made by OpBiz at the Premises, other than
initial tenant improvement and other initial work done inside the leased
premises pursuant to any Lease entered into by OpBiz, which (a) costs or is
reasonably estimated to cost in excess of $5,000,000, or (b) when aggregated
with all other improvements, alterations and additions constructed or made by
OpBiz at the Premises during such Fiscal Year, costs or is reasonably estimated
to cost in excess of $10,000,000. "Significant Repair or Improvement" shall
exclude improvements, alterations, additions, and repairs made with Renovation
Capital Expenditures.
"Signing Fee" has the meaning assigned to such term in Section 2.13.
"Solvent" means, when used with respect to any Person, that, as of
any date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" and "claim" shall have the meanings
set forth in the Bankruptcy Code.
"Starwood" means Starwood Hotels and Resorts Worldwide, Inc., a
Maryland corporation.
"Starwood Nevada" means Starwood Nevada Holdings, LLC, a Nevada
limited liability company.
"Subordinated Debt" means all Debt of the Company and any of its
Subsidiaries from any Person, including any extensions, renewals and
refinancings thereof, whether outstanding on the date hereof or hereafter
created or incurred, which is by its terms subordinate and junior to the
Noteholder Obligations on terms reasonably acceptable to the Noteholders and
which is permitted by this Agreement at the time it is created or incurred.
"Subsidiary" means, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary
25
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership,
limited liability company or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person; provided, however, that
"Subsidiary" shall not include the Time Share Entity. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to each direct or indirect Subsidiary or Subsidiaries of
the Company other than the Time Share Entity, unless the Time Share Entity is
OpBiz or has or will acquire any right or interest in the Collateral.
"Subsidiary Guaranty" means (a) the Guaranty of OpBiz, dated as of
the Closing Date, issued in favor of the Noteholders in the form attached hereto
as Exhibit E and (b) each other Guaranty of the Noteholder Obligations in the
form attached hereto as Exhibit E delivered by a Guarantor in accordance with
Section 6.9, as each may be amended, supplemented and otherwise modified from
time to time in accordance with its terms.
"Taking" (and its correlative meanings) means any temporary or
permanent taking by any Governmental Authority of the Premises or any portion
thereof through eminent domain, condemnation or other proceedings or by any
settlement or compromise of such proceedings, or any voluntary conveyance of
such property or any portion thereof during the pendency of any such
proceedings.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority and any and all liabilities (including interest, fines, penalties or
additions to tax) with respect to the foregoing.
"Term Sheet" means the "Terms of Mezzanine Loan" dated June 30, 2004
by an among the Purchasers, the Company, EquityCo, OpBiz, BH/RE and members of
the Investor Group.
"Terrorist Event" means the occurrence of an event which is an "act
of terrorism" (as defined in the Terrorism Risk Insurance Act of 2002, Public
Law No. 107-297) (other than an act that occurs in the premises of a United
States mission) which results in a Visitor Decrease of greater than five percent
during the calendar month in which such event occurs or the immediately
succeeding calendar month.
"Theater" means the Theater for Performing Arts located on the
Premises, described on Exhibit J.
"Theater Escrow Account" has the meaning assigned to such term in
Section 6.19.
"Time Share Disposition Notice" has the meaning assigned to such
term in Section 2.6.5.
26
"Time Share Entity" means the Company or any Subsidiary of the
Company (other than OpBiz or any subsidiary of OpBiz) to which the Company
contributes or otherwise makes a Disposition of the Time Share Premises in
accordance with the Deed of Trust.
"Time Share Plan" means a plan for the development of the Time Share
Premises that is consistent with the Development/Entertainment Side Letter and
in which no Affiliate of the Company (other than Starwood, Affiliates of
Starwood or any other developer of the Time Share Premises that is (a) approved
in writing by the Majority Holders and (b) not an Affiliate of the Bay Harbour
Investor or the Earl Investor but is an Affiliate of the Company) shall be
entitled to receive any payments in connection with the development of the Time
Share Premises or the sale of time share units, other than (i) as described in
the Development/Entertainment Side Letter, (ii) reimbursement of commercially
reasonable costs and expenses of OpBiz incurred in connection with the provision
of amenities or services to any such development and (iii) a licensing fee to
Planet Hollywood from a Developer (not to exceed 1% of net time share sales (net
of cancellations and defaults) or from any time share project, or any similar
fees in connection with another development such as a hotel or condominium or
condo-hotel by the Developer on the Time Share Premises).
"Time Share Premises" means the real property described on Exhibit K
hereto to be conveyed by Aladdin Gaming to the Company on the Closing Date.
"Transaction Documents" means the Securities Purchase Documents, the
Senior Credit Documents, the Planet Hollywood License Agreement, the Management
Agreement and the Acquisition Documents.
"Trust Property" has the meaning assigned to such term in the Deed
of Trust.
"Unrestricted Cash" has the meaning specified in Section 2.1(c).
"Visitor Decrease" means a decrease in the number of monthly visitor
volume to Las Vegas, Nevada (as published by the Las Vegas Convention and
Visitors Authority) compared to the number of monthly visitors to Las Vegas,
Nevada in the same calendar month of the immediately preceding year.
"Warrant Interests" has the meaning assigned to such term in Section
2.1(a).
"Warrants" has the meaning assigned to such term in Section 2.1(a).
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, and all financial data
submitted pursuant to this Agreement and all financial tests to be calculated in
accordance with this Agreement shall be prepared and calculated in accordance
with GAAP. All financial tests relating to the Company shall be calculated with
respect to the Company. If any changes in accounting principles are hereafter
occasioned by promulgation of rules, regulations, pronouncements or opinions by
or are otherwise required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), and any
27
of such changes results in a change in the method of calculation of, or affects
the results of such calculation of, any of the financial covenants, standards or
terms found herein, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenants, standards or
terms so as to reflect fairly and equitably such changes, with the desired
result that the criteria for evaluating the Company's financial condition and
results of operations shall be the same after such changes as if such changes
had not been made.
ARTICLE II - AUTHORIZATION, PURCHASE, SALE AND
TERMS OF THE SECURITIES; PAYMENTS
2.1 The Securities. (a) The Company has authorized (i) the issuance of
its Senior Subordinated Secured Notes due on the date which is seven (7) years
from the Closing Date (the "Maturity Date") in the aggregate original principal
amount of $87,000,000 in substantially the form set forth as Exhibit L attached
hereto (referred to herein individually as a "Note" and collectively as the
"Notes", which terms shall also include any notes delivered in exchange therefor
or replacement thereof), (ii) the issuance of Warrants for the purchase (subject
to adjustment as provided for therein) of an aggregate of 17,500 Units
representing Interests consisting of (x) Class B Units of the Company or (y) if
the holders thereof so elect, either Class A Units of the Company or a
combination of Class A Units and Class B Units (the "Warrant Interests"), all
exercisable at a price per unit of $0.01 (subject to adjustment), in
substantially the form set forth as Exhibit M attached hereto (individually as a
"Warrant" and collectively as the "Warrants", which terms shall also include any
warrants delivered in exchange or replacement therefor) and (iii) upon exercise
of the Warrants (or any of them), the issuance of the Warrant Interests
referenced therein.
(b) Commencing on the Funding Date, the Notes will accrue
interest on the unpaid principal amount thereof at an interest rate of 16% per
annum (the "Interest Rate") to be paid in cash semi-annually commencing on the
six month anniversary of the Closing Date and every six months thereafter (each
an "Interest Payment Date"), or if the Company so elects at any time and from
time to time in its sole discretion upon written notice to the Noteholders, to
be added to the unpaid principal amount of the Notes semi-annually ("PIK
Interest"); provided, that if the Closing Date does not occur on or before
November 30, 2004 and the Company redeems the Notes in accordance with the terms
of Section 2.6.1, then the interest on the Notes shall be an amount equal to the
interest earned on the Escrowed Funds in the Escrow Account. Interest on the
Notes shall be computed based on a 360-day year of twelve 30-day months. Cash
interest on the Notes elected to be paid by the Company shall be payable
semi-annually in arrears on each Interest Payment Date commencing on the six
month anniversary of the Closing Date, by wire transfer of immediately available
funds to one or more accounts designated by the Noteholders. On each Interest
Payment Date, the Company shall deliver a copy of Schedule I to the Notes to the
Noteholders, which shall detail the outstanding principal balance of the Notes
as of such date, including all PIK Interest previously added to the principal
amount thereof in accordance with this Section 2.1.
(c) Notwithstanding anything to the contrary in Section
2.1(b), if there is no event of default existing under the Senior Credit
Agreement and subject to the terms of the
28
Intercreditor Agreement (Senior Debt) and OpBiz's compliance with the provisions
of Section 8.2(d) of the Senior Credit Agreement, any cash Distributions from
OpBiz to the Company (other than Distributions received by the Company to pay
operating expenses of the Company, EquityCo and BH/RE that are consistent with
the restrictions set forth in Section 4.16 and Section 7.15 and to pay Taxes of
the Company ("Operating Expenses")) shall be used to pay accrued and unpaid
interest on the Notes in cash, with any additional interest owed under the Notes
being paid in cash or, at the sole discretion of the Company, in PIK Interest.
Seventy-five percent (75%) of any excess cash (other than cash received by the
Company from OpBiz to pay Operating Expenses) after paying all accrued and
unpaid interest owed under the Notes (other than capitalized PIK Interest),
shall be held in the Escrow Account pursuant to the terms of the Escrow
Agreement to cover future cash interest payments or other obligations under the
Notes. The remaining 25% of such excess cash may be used by the Company without
restriction, provided that no Distributions may be made from the proceeds of a
Qualified Public Offering or any subsequent offerings of Equity Interests other
than to redeem the Warrants or repay the Put Notes (the "Unrestricted Cash").
(d) Each certificate or other instrument representing the
Securities will be endorsed with the legends described in Section 5.3.
2.2 Purchase of the Securities. Subject to and in reliance upon the
representations, warranties, terms and conditions of this Agreement, the
Purchasers agree to purchase the Notes and the Warrants from the Company in such
amounts as are set forth opposite such Purchaser's name on Schedule 1
(collectively, the "Note Proceeds"). The Notes and the Warrants shall be
purchased at a closing (the "Funding") to be held at the offices of Goodwin
Procter LLP located in New York, New York or at such other location as agreed to
by the Company and the Purchasers, at 10:00 a.m. New York City time, on the date
on which this Agreement is executed and delivered and upon satisfaction or
waiver of the conditions described in Section 3.1 (the "Funding Date"). At the
Funding, the Company will issue one Note to each Purchaser in the principal
amount equal to the Note Proceeds paid by such Purchaser, payable to such
Purchaser or its registered assigns, one Warrant to purchase such Purchaser's
pro rata share of the Warrant Interests, against receipt of the issue price of
such Securities as determined in accordance with Section 2.3 hereof in
immediately available funds by wire transfer to an account or accounts
designated by the Company prior to the Funding (or in such other manner as is
set forth on Exhibit N); it being understood and agreed that each Purchaser may,
upon notice to the Company, deduct from the issue price the amount of any fees
due to such Purchaser hereunder, including, without limitation, pursuant to
Section 2.13.
2.3 Tax Nature of Securities.
(a) The Purchasers and the Company agree that the Notes are
debt for federal income tax purposes.
(b) Having considered all relevant facts and circumstances,
the Company and the Purchasers have concluded and agree that the issue price
(within the meaning of Section 1273 of the Code) of each Note, and the purchase
price of each Warrant, is as set
29
forth on Exhibit O, and that such amounts reflect the relative fair market
values of the Notes and Warrants.
(c) The Company and the Purchasers agree that the Notes are
being issued with original issue discount ("OID") within the meaning of Section
1273 of the Code which shall be taken into account by the Company and the
Purchasers for federal income tax purposes. The Company and the Purchasers agree
that the Notes are debt instruments described in Treasury Regulations Section
1.1272-1(c)(2) and therefore are governed by the rules set out in Treasury
Regulations Section 1.1272-1(c), including Section 1.1272-1(c)(5). The Company
and the Purchasers agree that any determination by the Company at any time
regarding the amount of OID on the Notes for any accrual period shall be subject
to the review and approval of the Purchasers.
(d) Any Noteholder may contact Thomas Avallone, c/o Planet
Hollywood International, Incorporated, 7958 West Sand Lake Road, Orlando,
Florida, 32819 who will, beginning no later than 10 days after the date that the
Notes are issued, promptly make available to the Noteholders upon request the
information described in Treasury Regulations Section 1.1275-3(b)(1)(i).
(e) The Company and the Purchasers agree that the Warrants
are merely unexercised options for federal income tax purposes.
(f) The Company and the Purchasers agree that the purchase
of the Notes and Warrants hereunder shall be a completed and closed transaction
for federal income tax purposes upon consummation of all transactions on the
Funding Date.
(g) The Company and the Purchasers agree that, in the event
the Closing Date has not occurred by November 30, 2004 and the Notes and
Warrants are repurchased for an amount equal to the Escrowed Funds pursuant to
Section 2.6.1(b), then this Agreement will have been rescinded within the
meaning of Revenue Ruling 80-58, 1980-1 C.B. 181 and have no effect for federal
income tax purposes, and all interest earned on amounts held under the Escrow
Agreement shall be paid over to the Purchasers and included in the gross income
of the Purchasers for federal income tax purposes.
(h) The Purchasers and the Company agree to adhere to this
Section 2.3 and Exhibit O for federal income tax purposes and not to take any
action or tax reporting position inconsistent herewith or therewith, unless (i)
otherwise required by a Final Determination and all parties to this Agreement
have been given an appropriate opportunity to participate in the proceedings
leading to such Final Determination, or (ii) the Company and the Purchasers
agree otherwise. The inclusion of this Section 2.3 is not an admission by any
Purchaser that it is subject to federal tax.
2.4 Use of Proceeds. The Company agrees to use the full proceeds of the
Notes for the purposes described on Exhibit P.
2.5 Payments and Endorsements.
30
(a) Except as otherwise provided herein, payments of
principal, cash interest and premium, if any, on the Notes shall be made without
set off or counterclaim, directly by wire transfer to the accounts designated,
respectively, in writing by the Noteholders, without any presentment or notation
of payment, except that prior to any transfer of any Note the holder thereof
shall endorse on such Note a record of the date to which interest has been paid
and all payments made on account of principal of such Note. All such payments
and prepayments of principal of and interest on the Notes shall be applied (to
the extent thereof) to all of the Notes pro rata based on the principal amount
outstanding and held by each holder thereof, except with respect to any
additional amounts payable under the second sentence of Section 2.5(b), which
shall be paid to the Noteholder or Noteholders on whose account such amounts
arise. The Company hereby authorizes each Noteholder to endorse on the Notes
held thereby the PIK Interest paid thereon based solely on the updated Schedule
1 delivered by the Company to such Noteholder relating to such Notes, and the
Company shall, upon the request of any Noteholder and in lieu of endorsement of
such PIK Interest, issue to such holder additional Notes evidencing the PIK
Interest paid on the Notes held by such Noteholder, in each case, promptly upon
the request of such holder, all of which shall be made, issued and otherwise
effected in accordance with the terms of Section 2.10.
(b) If Applicable Law imposes on the Company any obligation
to withhold or deduct Taxes, levies, imposts, duties, charges, fees, deductions
or withholdings from amounts payable hereunder or under any of the other Notes
Documents, the Company shall withhold or deduct the required amounts and
promptly remit the required payment to the relevant Governmental Authority,
delivering to affected Noteholders certificates or other satisfactory evidence
of amounts withheld or deducted and remitted. Anything herein to the contrary
notwithstanding, if any changes after the date of this Agreement in United
States federal, state or local Applicable Law including, without limitation, any
change in the rate of required withholding, shall impose on the Company any
obligation with respect to any amount payable by it hereunder or under any of
the other Notes Documents to withhold or deduct any Taxes, levies, imposts,
duties, charges, fees, deductions or withholdings (collectively, "New
Withholding Taxes") from amounts payable to a Non-U.S. Lender (as defined below
in Section 2.5(c)), the Company will pay to the Purchasers, on the date on which
such amount is due and payable hereunder or under such other Notes Document, in
accordance with Section 2.5(a), such additional amount (a "Gross-Up Amount") in
United States Dollars as shall be necessary to enable the Noteholders to receive
the same net amount which the Noteholders would have received on such due date
if no such obligation with respect to New Withholding Taxes had been imposed
upon the Company by such change in Applicable Law, provided, however that each
Non-U.S. Lender shall, at the request and expense of the Company, take whatever
action is reasonably required and practicable to reduce or eliminate the amount
of such New Withholding Taxes, and further provided that the Company shall have
no obligation to pay any Gross-Up Amount with respect to New Withholding Taxes
arising on account of such Non-U.S. Lender's permanent establishment or other
business activities within the United States exceeding those business activities
contemplated by this Agreement and the other Notes Documents. The Company will
deliver promptly to the affected Noteholders certificates or other valid
vouchers for all Taxes or other charges deducted from or paid with respect to
payments made by the Company hereunder or under such other Notes Document.
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(c) Each Noteholder (including the holder of a participation
in any Note) that is not a "United States Person" within the meaning Section
7701(a)(30) of the Code (a "Non-U.S. Lender") shall, if it wishes to take
advantage of any reduction or elimination of federal income tax withholding
available under applicable federal income tax law with respect to payments by
the Company, deliver to the Company:
(i) a properly completed and duly executed Form
W-8BEN, W-8 IMY (with accompanying documentation) or W-8ECI, as
applicable;
(ii) in the case of a Non-U.S. Lender claiming
exemption from federal income tax withholding under Code Sections
871(h) or 881(c) with respect to payments of "portfolio interest," a
duly executed certificate representing that such Non-U.S. Lender is
not a bank described in Code Section 881(c)(3)(A), a controlled
foreign corporation described in Code Section 881(c)(3)(C), or a
"10-percent shareholder" within the meaning of Code Sections
881(c)(3)(B) or 871(h)(3)(B); and
(iii) any other documentation as may be required under
applicable federal income tax law to qualify for exemption from or
reduction of federal income tax withholding on payments by the
Company under this Agreement and the other Notes Documents.
With respect to any payments made by the Company to a Non-U.S. Lender on or
after the delivery of such documentation the Company shall, to the extent
permitted under applicable federal income tax law, eliminate or reduce any
federal income tax withholding on payments to such Non-U.S. Lender.
(d) The obligations of the Company under this Section 2.5
shall survive the payment in full of all amounts due hereunder or under the
Notes.
2.6 Redemptions and Mandatory Repurchase.
2.6.1 Required Redemptions. (a) On the stated or accelerated
maturity date of the Notes, the Company will pay the principal amount of the
Notes then outstanding together with all accrued and unpaid interest thereon,
including, without limitation, all PIK Interest. No redemption of less than all
of the Notes shall affect the obligation of the Company to make the redemption
required by the preceding sentence. Unless the Notes (or a portion thereof) have
previously been redeemed or repurchased under Section 2.6.2, Section 2.6.4,
Section 2.6.5, Section 2.6.6, Section 2.6.7 or Section 2.6.8, the Company shall
redeem the outstanding principal amount of the Notes (including PIK Interest
capitalized pursuant thereto) in one installment in the principal amount of
$87,000,000 (or the then outstanding principal amount of the Notes) on the
Maturity Date.
(b) The Company shall, if the Closing Date has not occurred
by November 30, 2004, repurchase on such date all of the Notes and Warrants
issued by the Company to the Purchasers for a repurchase price equal to the
Escrowed Funds, which shall
32
be released from the Escrow Account to the Purchasers, pro rata, based upon the
principal amount of Notes purchased.
2.6.2 Optional Redemptions. In addition to the redemption or
repurchase of the Notes required under Section 2.6.1 and Section 2.6.4, and if
there is no event of default existing under the Senior Credit Agreement and
subject to the terms of the Intercreditor Agreement (Senior Debt) and OpBiz's
compliance with the provisions of Section 8.2(d) of the Senior Credit Agreement,
the Company may voluntarily redeem the outstanding principal amount of the Notes
(including PIK Interest capitalized thereto) in whole, or in part (in a minimum
amount of at least $1,000,000 and integral multiples of $100,000), together with
all accrued and unpaid interest on the amount so redeemed through the date of
redemption, at any time and from time to time at a redemption price equal to the
sum of the principal amount to be redeemed plus the prepayment premium indicated
below corresponding to the period in which the redemption occurs (such premium,
the "Prepayment Premium").
Period Prepayment Premium
------ ------------------
Funding Date through August 8, 2008 Noncallable
August 9, 2008 through August 8, 2009 8% of the principal
amount to be redeemed
August 9, 2009 through August 8, 2010 4% of the principal
amount to be redeemed
After August 9, 2010 None
Notwithstanding anything in this Agreement to the contrary, the Company may
redeem the Notes, together with all accrued and unpaid interest thereon
(including PIK Interest) at a redemption price equal to the sum of the principal
amount to be redeemed plus a premium of 16% prior to August 8, 2008 if (i) the
Company uses the proceeds of a public equity offering by the Company, OpBiz (but
only to the extent there is no event of default existing under the Senior Credit
Agreement and subject to the terms of the Intercreditor Agreement (Senior Debt)
and OpBiz's compliance with the provisions of Section 8.2(d) of the Senior
Credit Agreement), EquityCo and/or BH/RE to fund such redemption, and (ii) at
least 65% of the aggregate principal amount of the Notes remain outstanding
immediately after the occurrence of such redemption.
2.6.3 Notice of Redemptions; Pro Rata Redemptions. Written notice of
any redemption pursuant to Section 2.6.1, Section 2.6.2 or Section 2.6.7 shall
be given to the Noteholders at least 30 calendar days prior to the date of any
such redemption. Each redemption of the Notes pursuant to Section 2.6 shall be
made so that all outstanding Notes then held by each holder shall be redeemed in
a principal amount (including PIK Interest) which shall bear the
33
same ratio to the total unpaid principal amount (including PIK Interest) being
redeemed on all such Notes as the unpaid principal amount (including PIK
Interest) of the Notes then held by such holder bears to the aggregate unpaid
principal amount of such Notes.
2.6.4 Change of Control; Offer to Purchase. Notwithstanding any term
or provision in Section 2.6.2, no later than ten (10) Business Days prior to the
occurrence of a Change of Control, the Company shall furnish to each Noteholder
written notice (each a "Change of Control Notice") setting forth in reasonable
detail the facts and circumstances underlying such Change of Control. The
occurrence of a Change of Control shall constitute an irrevocable offer by the
Company to repurchase all of the Notes held by the Noteholders, at a purchase
price equal to 101% of the aggregate outstanding principal amount thereof on the
date the Change of Control occurs together with all other accrued and unpaid
interest on the amount so purchased through the date of repurchase. Following
receipt of any Change of Control Notice, each Noteholder shall advise the
Company, by written notice, within five (5) Business Days after receipt of such
offer, as to whether it desires to have all or any of the Notes held by it so
repurchased (in integral multiples of $100,000), specifying the principal amount
of the Notes to be sold by it (provided that if a Noteholder accepts such offer
but does not specify an amount it wishes to receive, it will be deemed to have
elected to sell all of the Notes held by it). If a Noteholder fails to respond
to such offer by the Company within the five (5) Business Day acceptance period,
such Noteholder shall be deemed not to have accepted such offer. The Company
shall then repurchase each Note with respect to which such offer was accepted on
the date on which such Change of Control occurs.
2.6.5 Mandatory Offer to Purchase Notes on Sale of Time Share
Premises. As soon as possible, and in any event within ten (10) Business Days
prior to the sale of the Time Share Premises by the Company to any Person (other
than an Affiliate) for a cash purchase price in excess of $14,000,000 (other
than to or for the benefit of a developer that has agreed to pay to OpBiz (or to
OpBiz and the Company, in the aggregate) annual contractual minimum marketing
fees as set forth in the Development/Entertainment Side Letter), the Company
shall furnish to each Noteholder written notice setting forth in reasonable
detail the facts and circumstances underlying such Disposition, including the
proposed date upon which the underlying transaction is to be consummated (each a
"Time Share Disposition Notice"). The occurrence of such sale shall constitute
an irrevocable offer by the Company to repurchase, at par, an amount of Notes
(together with all accrued and unpaid interest thereon) equal to each
Noteholder's pro rata share of $14,000,000 (with all amounts not used to
repurchase the Notes to be held in escrow by the Company for future payments of
cash interest and other amounts due in respect of the Notes, provided that any
amount in excess of $14,000,000 shall be applied as required by Section 4.3(a)
of the Senior Credit Agreement), on the date that the sale of the Time Share
Premises is consummated. Following receipt of any Time Share Disposition Notice,
each Noteholder shall advise the Company, by written notice, within five (5)
Business Days after receipt of such offer, as to whether it desires to have all
or any of the Notes held by it so repurchased, specifying the principal amount
of Notes to be sold by it (provided that if a Noteholder accepts such offer but
does not specify an amount it wishes to receive, it will be deemed to have
elected to sell all of the Notes held by it). If a Noteholder fails to respond
to such offer by the Company within the five (5) Business Day acceptance period,
such offer shall expire in accordance with its terms.
34
The Company shall then repurchase each Note with respect to which such offer was
accepted or portion thereof in accordance with this Section 2.6.5 on the date on
which the sale of the Time Share Premises occurs.
2.6.6 Mandatory Offer to Purchase Notes Upon Release of Deed of
Trust on Time Share Premises. If the Company desires to release the Deed of
Trust on the Time Share Premises other than in connection with (y) an assignment
of the Time Share Premises to a developer that has agreed to pay OpBiz and the
Company, in the aggregate, annual contractual minimum marketing fees as set
forth in the Development/Entertainment Side Letter, or (z) a sale of the Time
Share Premises to any Person (other than an Affiliate) for a cash purchase price
in excess of $14,000,000, then the Company shall furnish to each Noteholder a
written offer to repurchase, at par, an amount of Notes (together with all
accrued and unpaid interest thereon) equal to each Noteholder's pro rata share
of $14,000,000 (with all amounts not used to repurchase the Notes to be held in
escrow by the Company for future payments of cash interest and other amounts due
in respect of the Notes) on the date that the Deed of Trust is released (each a
"Deed of Trust Release Notice"). Following receipt of the Deed of Trust Release
Notice, each Noteholder shall advise the Company, by written notice, within ten
(10) Business Days after receipt of such offer, as to whether it desires to have
all or any of the Notes held by it so repurchased, specifying the principal
amount of Notes to be sold by it (provided that if a Noteholder accepts such
offer but does not specify an amount it wishes to receive, it will be deemed to
have elected to sell all of the Notes held by it). If a Noteholder fails to
respond to such offer by the Company within the ten (10) Business Day acceptance
period, such offer shall expire in accordance with its terms. The Company shall
then repurchase each Note with respect to which such offer was accepted or
portion thereof in accordance with this Section 2.6.6 on the date on which the
Deed of Trust is released.
2.6.7 Removal of Competition Restriction. Notwithstanding the
provisions of Section 2.6.2, the Company may, at any time furnish to each
Noteholder a written offer to repurchase the full amount of the outstanding
principal amount of the Notes (including capitalized PIK Interest), together
with all accrued and unpaid interest thereon through the date of redemption at a
redemption price equal to 108% of the principal amount of the Notes (including
capitalized PIK Interest) then outstanding. Such notice shall specify an
offering period of at least ten (10) Business Days. Following receipt of any
such offer, each Noteholder shall advise the Company, by written notice, within
ten (10) Business Days after receipt of such offer, as to whether it desires to
have all or any of the Notes held by it so repurchased, specifying the principal
amount of Notes to be sold by it; provided that if a Noteholder accepts such
offer but does not specify an amount it wishes to receive, it will be deemed to
have elected to sell all of the Notes held by it); provided further, that it is
understood that the Noteholders shall have no obligation to accept any such
repurchase offer. If a Noteholder fails to respond to such offer by the Company
within the ten (10) Business Day acceptance period, such offer shall expire in
accordance with its terms with respect to any such Noteholder. The Company shall
then repurchase each Note with respect to which such offer was accepted or
portion thereof in accordance with this Section 2.6.7 no later than the five (5)
Business Days after the expiration of the offer period specified in such notice.
Upon expiration of the offer period, and if applicable, completion of the
repurchase of any Notes tendered in such offer to purchase, the restrictions
35
contained in the penultimate sentence of Section 3.1 of the Planet Hollywood
License Agreement shall terminate with respect to the Noteholders and the
Noteholders shall be deemed to have irrevocably waived any rights and remedies
under the Planet Hollywood License Agreement related to any violation of such
restrictions.
2.6.8 Replacement of Unsuitable Securityholder. If any Gaming
Authority requires that a Securityholder be licensed, qualified or found
suitable under any applicable Gaming Law, and such Securityholder:
(a) fails to apply for a license, qualification or a finding
of suitability within 30 days (or such shorter period as may be required by the
applicable Gaming Authority) after being requested to do so by such Gaming
Authority; or
(b) is denied such license or qualification or not found
suitable; then such Securityholder shall have 60 days in which to sell all
Securities then held by such Securityholder and that are required by such Gaming
Authority to be sold to a Person reasonably acceptable to such Gaming Authority.
If such Securityholder does not effect such a sale within such 60 day period,
the Company shall then have the right, if required by the Gaming Authority:
(1) to require each such Securityholder to
transfer its Securities to a transferee designated by
the Company and acceptable to the Gaming Authority
(including to any other Securityholder, any member of
the Investor Group or an Affiliate of any member of the
Investor Group), within such time period after the
occurrence of the event described in clause (a) or (b)
above as may be required or approved by the Gaming
Authority, or
(2) to redeem the Securities then held by the
Securityholder.
In the event the Company exercises its right to designate a transferee pursuant
to clause (1) above or to redeem the Securities pursuant to clause (2) above,
the minimum purchase price or redemption price (as applicable) shall be: (x)
with respect to the Notes held by such Securityholder, an amount equal to the
aggregate outstanding principal amount of such Notes (including PIK Interest),
plus accrued and unpaid interest through the redemption date and (y) with
respect to any Warrants and Warrant Interests then held by such Securityholder,
an amount equal to the Redemption Price or the outstanding principal and accrued
but unpaid interest on any Put Notes (as such terms are defined in the Warrant)
(determined as of the date such Securityholder was required to dispose of its
securities pursuant to clause (a) or (b) above). All consideration payable
pursuant to this Section 2.6.8 shall be paid in one installment in immediately
available funds. The provisions of Section 2.6.2 shall not apply to any
redemption effected pursuant to this Section 2.6.8.
36
Immediately upon a determination by a Gaming Authority that a Securityholder
will not be licensed, qualified or found suitable and must dispose of its
Securities, such Securityholder will, to the extent required by applicable
Gaming Laws, have no further right:
(1) to (i) receive any dividend or interest or
any payment or distribution of any kind, including of
any share of the distribution of profits or cash or any
other property, or payments upon dissolution, from the
Company, other than a return of capital as required
above, (ii) exercise directly, or through any proxy,
trustee or nominee any voting right conferred by the
member's interest in the Company, (iii) participate in
the management of the Company or (iv) receive any
remuneration (other than the Redemption Price or the
outstanding principal and accrued but unpaid interest on
any Put Notes) in any form from the Company holding a
Gaming License for services rendered or otherwise; or
(2) to receive any interest, dividend, economic
interests or any other Distribution or payment with
respect to the Securities from the Company, except the
redemption prices referred to in Section (2) above.
The applicable Securityholder shall notify the Company in writing of any
transfer or redemption pursuant to this Section 2.6.8 as soon as practicable.
Any Securityholder that is required to apply for a license, qualification or a
finding of suitability shall be responsible for all fees and costs of applying
for and obtaining the license, qualification or finding of suitability and of
any investigation by the Gaming Authority.
2.6.9 Cancellation of Acquired Notes. The Company will promptly
cancel all Notes acquired by it pursuant to any purchase, redemption, prepayment
or tender for the Notes pursuant to any provision of this Agreement or otherwise
and no Notes may be issued in substitution or exchange for any such Notes.
2.7 Default Rate of Interest. If an Event of Default (other than under
Section 8.1(m)) has occurred and is continuing, from and after the date that the
underlying Default occurred, the entire outstanding unpaid principal balance of
the Notes (including PIK Interest) and any accrued but unpaid interest then due
and owing shall bear interest, payable on demand in cash or, if elected by the
Company, in PIK Interest, at the applicable Interest Rate plus 4% per annum, or
such lower rate as then may be the maximum rate permitted by Applicable Law (the
"Default Rate"); provided, however, that immediately upon the cessation or cure
of such Event of Default, if no other Event of Default (other than an Event of
Default under Section 8.1(m)) is then continuing, the Notes shall again bear
interest at the applicable Interest Rate as set forth in Section 2.1.
37
2.8 Maximum Legal Rate of Interest. Nothing in this Agreement or in the
Notes shall require the Company to pay interest at a rate in excess of the
maximum rate permitted by Applicable Law.
2.9 Payment on Non-Business Days. Whenever any payment required to be
made under any Transaction Document shall be due on a day which is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
payment of interest due.
2.10 Transfer and Exchange of Notes. The Company shall keep a register in
which it shall provide for the registration of the Notes and the registration of
transfers of Notes. The holder of any Note may, prior to maturity or prepayment
thereof, surrender such Note at the principal office of the Company for transfer
or exchange, and upon any such transfer or exchange shall notify the Company as
to the identity of the transferee. Within a reasonable time after the holder
notifies the Company in writing that it intends to transfer (or has transferred)
all or a portion of its Notes, the Company shall issue in exchange therefor
(without expense to such holder, other than transfer taxes, if any) another Note
in the same aggregate principal amount (or if requested by the holder in
denominations of $100,000 and multiples thereof, except in the case of a Note
for the balance of the aggregate amount of the Note so transferred), as of the
date of such issuance, as the unpaid principal amount of the Note so surrendered
and having the same maturity and rate of interest, containing the same
provisions and subject to the same terms and conditions as the Note so
surrendered (provided that no minimum shall apply to a liquidating distribution
of Notes to investors in a Noteholder and any Notes so distributed may be
subsequently transferred by such investor and its successors in the original
denomination thereof in compliance with the Securities Act but without further
restriction). Each new Note shall be made payable to such Person or Persons, or
assigns, as the holder of such surrendered Note may designate, and such transfer
or exchange shall be made in such a manner that no gain or loss of principal or
interest shall result therefrom. The Company shall have no obligation hereunder
or under any Note (including, without limitation, to furnish notices or
financial statements) to any Person other than the registered holder of each
such Note. The provisions of this Section 2.10 are intended to result in the
Notes being in "registered form" within the meaning of Code Section 163(f) and
Treasury Regulations Section 1.871-14(c), and shall be interpreted and applied
in conformity therewith.
2.11 Replacement of Notes. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Note and, if
requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Note the Company will issue a new Note of like tenor and amount and
dated the date to which interest has been paid, in lieu of such lost, stolen,
destroyed or mutilated Note; provided, however, if any Note of which a
Noteholder, its nominee, or any of its partners is the holder is lost, stolen or
destroyed, the affidavit of an authorized partner or officer of the holder
setting forth the circumstances with respect to such loss, theft or destruction
shall be accepted as satisfactory evidence thereof, and no indemnification bond
or other security shall be required as a condition to the execution and delivery
by the Company of a new Note in
38
replacement of such lost, stolen or destroyed Note other than the holders
written agreement to indemnify the Company.
2.12 Ranking. The Noteholder Obligations and the rights and remedies of
the Noteholders under the Notes Documents shall be senior in right of payment to
all Subordinated Debt of the Company. The Noteholder Obligations and the rights
and remedies of the Noteholders under the Notes Documents shall be subordinate
and junior in right of payment to and enforcement of the Senior Debt in the
manner and to the extent provided in the Intercreditor Agreement (Senior Debt).
THIS AGREEMENT AND ALL RIGHTS, REMEDIES, POWERS AND PRIVILEGES OF THE
SECURITYHOLDERS HEREUNDER ARE AND SHALL BE SUBJECT IN ALL RESPECTS TO THE
INTERCREDITOR AGREEMENT (SENIOR DEBT).
2.13 Funding Fee. The Company hereby agrees to pay each Purchaser or its
designee a funding fee equal to 0.375% of the original principal amount of the
Notes purchased by such Purchaser at Funding (the "Funding Fee"), and such fee
shall be in addition to (i) the amounts required to be paid pursuant to Section
3.1.2 (x) and (ii) the signing fee of to 0.375% of the aggregate original
principal amount of the Notes previously paid to the Purchasers (the "Signing
Fee") (provided that the Signing Fee shall be refunded in whole to the Company
if the Funding Date does not occur (other than by reason of an action or
inaction by the Company or its Affiliates (including failure of the Company or
an Affiliate to obtain any required Gaming License)). At the option of any
Purchaser by prior written notice to the Company, the Funding Fee may be paid to
such Purchaser by deducting such fee from the purchase price of the Notes and
Warrants.
ARTICLE III - CONDITIONS TO THE PURCHASERS' OBLIGATIONS
3.1 Conditions to Funding. The obligation of the Purchasers to purchase
the Notes and the Warrants at the Funding is subject to the following
conditions, all or any of which may be waived in writing by the Purchasers
purchasing a majority of the Notes to be issued on the Funding Date:
3.1.1 Representations and Warranties. Each of the representations
and warranties of the Company set forth in Article IV hereof and the other
Securities Purchase Documents shall be true and correct on the Funding Date
(except for representations and warranties that refer to a certain date, which
only need be true and correct as of such date).
3.1.2 Documentation at Funding. The Purchasers shall have received
prior to or at the Funding all of the following, each in form and substance
reasonably satisfactory to it and to Goodwin Procter LLP, special counsel to the
Purchasers:
(i) Certified copies of (i) all Organizational
Documents of the Company and OpBiz; (ii) the Required Company
Authorizations of the Company and OpBiz evidencing approval of this
Agreement, the other Securities Purchase Documents and all other
matters contemplated hereby and thereby; (iii) certified
39
copies of all documents evidencing any other consents and approvals,
including governmental approvals, if any, required to be obtained by
the Company or OpBiz with respect to this Agreement, the other
Securities Purchase Documents and all other matters contemplated
hereby or thereby (other than Gaming Approvals).
(ii) A certificate of the Secretary or an Assistant
Secretary or an authorized representative of the Company and OpBiz,
which certificate shall certify the names of the persons authorized
by the Company and OpBiz, respectively, to sign this Agreement, the
other Securities Purchase Documents and any other documents or
certificates to be delivered pursuant hereto or thereto by the
Company or OpBiz or any of their respective officers at or prior to
the Funding, together with the true signatures of such persons. The
Noteholders may conclusively rely on such certificate(s) until they
shall receive a further certificate of the Secretary or an Assistant
Secretary or an authorized representative of the Company or OpBiz
canceling or amending the prior certificate and submitting the
signatures of the persons named in such further certificate.
(iii) A certificate from the chief executive officer,
the president, the chief financial officer or an authorized
representative of the Company stating that, as of the Funding Date,
(i) the representations and warranties contained in Article IV
hereof are true and correct as of the Funding Date (except for
representations and warranties that refer to a certain date, which
only need be true and correct as of such date), (ii) no condition or
event has occurred and is continuing or will result from the
execution and delivery of this Agreement, any other Notes Documents,
or any other Securities Purchase Document that constitutes an Event
of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both, and (iii)
all the conditions set forth in this Article III hereof and in the
other Notes Documents required to be satisfied on or before the
Funding Date have been satisfied (other than those, if any, waived
in writing by Purchasers purchasing a majority of the Notes to be
issued on the Funding Date).
(iv) The Notes and the Warrants duly executed by the
Company and registered in name of the Purchasers.
(v) The Deed of Trust, in form and substance
reasonably satisfactory to Purchasers and the Purchasers' special
Nevada counsel, duly executed by the Company (to be filed in
accordance with Section 3.2.6).
(vi) (A) The Security Agreement, in form and substance
reasonably satisfactory to Purchasers and the Purchasers' special
Nevada counsel, duly executed by the Company and (B) the Pledge
Agreement, in form and substance reasonably satisfactory to
Purchasers and the Purchasers' special Nevada counsel, duly executed
by the Company and acknowledged by OpBiz.
40
(vii) The Investor Rights Agreement, in form and
substance reasonably satisfactory to Purchasers and the Purchasers'
special counsel, duly executed by the Company and EquityCo.
(viii) The Planet Hollywood License Agreement, in the
form attached hereto as Exhibit F, duly executed by Planet Hollywood
and OpBiz.
(ix) True and correct copies of the draft of the July
8, 2003 form of Senior Credit Agreement.
(x) Payment for the costs, expenses, Taxes and filing
fees identified in Section 9.6 as to which the Purchasers give the
Company notice prior to or at the Funding Date, including the
reasonable fees and expenses of Goodwin Procter LLP, special counsel
to the Purchasers.
(xi) A Subsidiary Guaranty, in the form attached
hereto as Exhibit E, executed by OpBiz.
(xii) Favorable opinions of Jones Day, counsel to the
Company, and Schreck Brignone, special Nevada counsel to the
Company, in the forms attached hereto as Exhibit Q and Exhibit R,
respectively.
(xiii) The Intercreditor Agreement (Senior Debt) in the
form attached hereto as Exhibit C, executed by the Company.
(xiv) The Intercreditor Agreement (Planet Hollywood) in
the form attached hereto as Exhibit B, executed by Planet Hollywood.
(xv) Such other documents referenced in any Exhibit
hereto or relating to the transactions contemplated by this
Agreement, in each case as the Purchasers or the Purchasers' special
counsel may reasonably request.
3.1.3 No Default. At the time of and immediately following the
Funding there shall exist no Event of Default and no condition, event or act
that, with the giving of notice or lapse of time, or both, would constitute such
an Event of Default (in each case, after giving effect to the terms of Article
VI, Article VII and Article VIII as if such terms were in effect on the Funding
Date, but with respect to covenants in Article VI (other than those contained in
Sections 6.5, 6.7, 6.9 and 6.20), only to the extent such covenants are required
to be performed on or prior to the Funding Date).
3.1.4 Compliance with this Agreement. The Company shall have
performed and complied in all material respects with all of its agreements set
forth or contemplated herein that are expressly required to be performed or
complied with or satisfied by it on or before the Funding Date.
41
3.1.5 No Material Adverse Effect. There shall not have occurred an
event or condition which has had, or could reasonably be expected to have, a
significant material adverse effect on (a) the business, condition (financial or
otherwise), operations, performance, properties, or prospects of the Las Vegas
gaming industry, taken as a whole, from the date of the Term Sheet, including,
without limitation, the reasonable consequences of any Terrorist Event in the
United States, but excluding general economic conditions and financial market
conditions, (b) the ability of the Company to perform its obligations under any
of the Securities Purchase Documents or (c) the ability of the Purchasers to
enforce the material provisions of the Securities Purchase Documents.
3.1.6 No Material Proceeding. No claim, action, suit, investigation,
litigation or proceeding, pending or threatened in writing, in any court or
before any arbitrator or Governmental Authority shall exist that (a) challenges
the Plan of Reorganization, the Securities Purchase Documents or the licenses
granted to OpBiz under the Planet Hollywood License Agreement and which in the
reasonable opinion of the Purchasers could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), operations,
performance, properties, assets, liabilities, business or prospects of the
Company or OpBiz or have a material adverse effect on the Notes, the other
Securities Purchase Documents or the Purchasers, or (b) was not disclosed in
writing to the Purchasers prior to the date of the Term Sheet and which, in the
reasonable opinion of the Purchasers, could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), operations,
performance, properties, assets, liabilities, business or prospects of the
Company or OpBiz.
3.1.7 No Legal Bar. There shall not be on the Funding Date any
condition under any Applicable Law which, in the reasonable judgment of the
Purchasers would prohibit the purchase of the Notes and Warrants hereunder.
3.1.8 Equity Contributions. BH/RE or its members shall have funded
(i) $20,000,000 (including $8.5 million of the amount already deposited by
EquityCo into an escrow account established under the Acquisition Agreement),
minus (ii) the aggregate amount of Financing Costs, Deal Costs and Operating
Costs (in an amount not to exceed $13,000,000 in the aggregate) into an escrow
account as contemplated by paragraph 2 of the BH/RE-Starwood Agreement.
3.2 Release of Note Proceeds from Escrow. The release of the Note
Proceeds from the Escrow Account at the Closing will be subject to the following
conditions, all or any of which may be waived in writing by the Majority
Holders:
3.2.1 Closing of the Acquisition. The simultaneous closing of the
Acquisition, including the acquisition of the Trust Property by the Company.
3.2.2 Equity Contribution. EquityCo shall have contributed the
Required Equity Contribution to the Company.
3.2.3 No Default. At the time of and immediately following the
Closing there shall exist no Event of Default and no condition, event or act
that, with the giving of notice or
42
lapse of time, or both, would constitute such an Event of Default (in each case,
after giving effect to events and conditions that arose between the Funding Date
and the Closing Date).
3.2.4 Compliance with this Agreement. The Company shall have
performed and complied in all material respects with all of its material
agreements set forth or contemplated herein that are expressly required to be
performed or complied with or satisfied by it on or before the Closing Date.
3.2.5 Certain Governmental Approvals. The Company shall have
obtained the Gaming License and the consent or approval of all Governmental
Authorities required, in the reasonable opinion of Jones Vargas, special Nevada
counsel to the Purchasers, to enter into and perform its obligations under the
Securities Purchase Documents.
3.2.6 Trust Property. The Company shall have advised the Collateral
Agent as to the timing of the Closing so that the Collateral Agent can deliver
the Deed of Trust to the Title Company to be filed immediately following the
Company's acquisition of the Trust Property Subject to Section 5.4, the
Collateral Agent covenants and agrees not to register, file or record the Deed
of Trust with any Governmental Authority in any jurisdiction unless and until
the Closing occurs.
3.2.7 Intercreditor Agreement (Senior Debt). The Company shall have
delivered to each of the Purchasers a copy of the Intercreditor Agreement
(Senior Debt) executed by the Senior Agent.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Purchasers as follows (which
representations and warranties shall survive the Closing), after giving effect
to the transactions contemplated by the Acquisition Agreement and the other
Transaction Documents as if such transactions had occurred on the Funding Date:
4.1 Authorization, Validity, and Enforceability of this Agreement and
the Securities Purchase Documents. Each Note Party has the requisite limited
liability company or other organizational power and authority to execute,
deliver, and perform this Agreement and/or the other Securities Purchase
Documents to which it is party, to incur the Noteholder Obligations, and to
grant a security interest in the Collateral pursuant to the Security Documents.
Each Note Party has taken all necessary limited liability company or other
organizational action (including, without limitation, obtaining any required
approval of its equity holders) to authorize its execution, delivery, and
performance of this Agreement and the other Securities Purchase Documents to
which it is a party, including, without limitation, the authorization of the
issuance and delivery of the Notes and the Warrants and, upon exercise of the
Warrants, the issuance and delivery of the Warrant Interests. Sufficient
Interests have been reserved by all necessary limited liability company or other
organizational action in connection with the prospective exercise of the
Warrants. None of the purchase of the Notes and the Warrants, or the issuance of
the Warrant Interests upon the exercise of the Warrants, is subject on the date
hereof to preemptive or other similar contractual rights. No consent, approval,
or authorization of, or filing with, any
43
Governmental Authority, and no consent of any other Person, is required to be
obtained by the Company or its Subsidiaries, including for the issuance and
delivery of the Notes and the Warrants and, upon exercise of the Warrants the
issuance and delivery of the Warrant Interests, in connection with the
execution, delivery, and performance of this Agreement and the other Securities
Purchase Documents by the Note Parties, except (i) (x) for those listed on
Section 4.1 of the Disclosure Schedule, (y) those already duly obtained and (z)
those required under any applicable Gaming Law and (ii) where the failure to
obtain any such other consent, approval, authorization or filing will not have a
Material Adverse Effect. This Agreement has been, and as of the Funding Date the
other Securities Purchase Documents will be duly executed and delivered by each
Note Party, and constitute or will constitute the legal, valid, and binding
obligation of such Note Party to the extent party thereto, enforceable against
such Person in accordance with their respective terms. Each Note Party's
execution, delivery, and performance of this Agreement does not, and each Note
Party's execution, delivery and performance of the other Securities Purchase
Documents to which it is a party will not, conflict with, or constitute a
violation or breach of, or constitute a default under, or result in the creation
or imposition of any Lien upon the Property of such Note Party (except as
contemplated by this Agreement and the other Securities Purchase Documents and
the Senior Credit Documents) by reason of the terms of (a) any mortgage, lease,
agreement, or instrument to which such Note Party is a party or which is binding
upon it, except where such conflict, violation, breach or default or Lien would
not reasonably be expected to have a Material Adverse Effect, (b) any judgment,
law, statute, rule or governmental regulation applicable to any Note Party,
except where such conflict, violation, breach or default or Lien would not
reasonably be expected to have a Material Adverse Effect or (c) Organizational
Documents of any Note Party.
4.2 Organization and Qualification. Each Note Party: (a) is duly formed
and organized and validly existing in good standing under the laws of its
jurisdiction of organization; (b) has all requisite limited liability company or
other organizational power and authority to conduct its business as presently
conducted and to own its Property; and (c) is qualified to do business as a
foreign limited liability company and in good standing in its jurisdiction of
organization and any other state where the failure to so qualify would
reasonably be expected to have a Material Adverse Effect.
4.3 Subsidiaries. Section 4.3 of the Disclosure Schedule contains a
correct and complete list of the name and relationship to the Company of each
and all of the Company's Subsidiaries. Each Subsidiary is (a) duly formed and
organized and validly existing in good standing under the laws of its state of
incorporation or other organization and (b) qualified to do business as a
foreign entity and in good standing in any state where the failure to so qualify
would reasonably be expected to have a Material Adverse Effect. Neither the
Company nor OpBiz is engaged in any joint venture or partnership with any other
Person.
4.4 No Material Change. Since the date of the latest financial
statements of the Company delivered to the Purchasers there has been no material
adverse change in the business, assets, liabilities, property, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries taken
as a whole.
44
4.5 Capitalization. As of the Closing Date, the Company will be 100%
owned by EquityCo, subject to dilution from the Warrants described herein and
from the options to purchase equity interests in the Company that will represent
an indirect 3% interest in the fully-diluted equity interests of OpBiz that will
be granted to Michael V. Mecca, the CEO of OpBiz (the "Mecca Options"), and
EquityCo will be owned 85% by BH/RE (subject to certain warrants to purchase
2.94% of BH/RE's equity interests in EquityCo granted by BH/RE to the Senior
Lenders and 15% by Starwood Nevada. The capitalization of BH/RE, EquityCo, the
Company and OpBiz is as set forth on Section 4.5 of the Disclosure Schedule.
Except as otherwise set forth on Section 4.5 of the Disclosure Schedule, there
are no options, warrants or rights to purchase Equity Interests or other
securities of the Company or OpBiz authorized, issued or outstanding, nor is the
Company or OpBiz obligated in any other manner to issue Equity Interests or
other securities. At Closing, the Warrants will represent 17.5% of the
fully-diluted Equity Interests of the Company (after taking into account
dilution from the Mecca Options but excluding dilution from the Management
Pool).
4.6 Solvency. The Company and OpBiz, taken as a whole, are Solvent.
4.7 Regulations U and X. Neither the Company nor any of its Subsidiaries
owns any "margin stock" as such term is defined in Regulation U, as amended, of
the Board of Governors. None of the Note Proceeds will be used, directly or
indirectly, (i) for the purpose of purchasing or carrying any margin stock or
(ii) for the purpose of reducing or retiring any Debt which was originally
incurred to purchase or carry margin stock or (iii) for any other purpose which
would cause any of the Noteholder Obligations under this Agreement to be a
"purpose credit" within the meaning of Regulation U or X of the Board of
Governors. Neither the Company nor its Subsidiaries has taken any action which
would cause this Agreement or any of the Securities Purchase Documents to
violate any regulation of the Board of Governors or to violate the Exchange Act
or any state securities laws.
4.8 Broker's Fees. The Company and its Subsidiaries have not made any
commitment or taken any action which will result in a valid claim for any
brokers, finders or similar fees or commitments in respect to the transactions
described in this Agreement or the other Securities Purchase Documents, other
than the Placement Fee. The Company agrees to defend the Noteholders and save
them harmless from all claims of any Person acting on behalf of the Company for
any such fees, and this indemnity shall include reasonable attorneys' fees and
legal expenses.
4.9 Disclosure. To the Knowledge of the Company, neither this Agreement
nor any document or written statement (other than the Pro Forma Financial
Projections) furnished to the Purchasers and prepared by or on behalf of the
Company or any Subsidiary hereunder contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading in any manner that is
reasonably likely to have a Material Adverse Effect.
4.10 Investment Company and Public Utility Holding Company Status.
Neither the Company nor any of its Subsidiaries is (a) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940, as amended, or (b) a "holding company"
45
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935, as amended.
4.11 Projections. The Company has heretofore furnished to the Purchasers
annual projected income statements of the Company and its Subsidiaries. The
projections are based upon assumptions that were, at the time made and at the
time such projections were furnished to the Purchasers, believed by the Company
to have been reasonable in light of the conditions which existed at the time the
projections were made and delivered to the Purchasers. As of the date made and
furnished to the Purchasers, the projections represented the Company's good
faith estimate of the projected results of operations of the Company and its
Subsidiaries, provided that no representation is made that the projections will
prove to be correct.
4.12 Absence of Financing Statements, etc. Except as disclosed on Section
4.12 of the Disclosure Schedule and with respect to Permitted Liens, there is no
financing statement, security agreement, chattel mortgage, real estate mortgage
or other document filed or recorded with any filing records, registry or other
public office, that purports to cover, affect or give notice of any present or
possible future Lien on, or security interest in, assets or Property of the
Company or OpBiz.
4.13 Securities Act. Except as disclosed in writing by the Company to the
Purchasers, neither the Company nor any Person acting on its behalf has to the
Knowledge of the Company (a) offered to sell the Securities or similar
securities to any other Person, or solicited written offers with respect thereto
from any other Person, so as to bring the issuance and sale of the Securities to
the Purchaser under the registration provisions of the Securities Act. Assuming
the accuracy of the representations and warranties of the Purchasers set forth
in Article V, the issuance of the Securities to the Purchasers pursuant to this
Agreement is not required to be registered under the Securities Act or
applicable state securities law.
4.14 Registration Rights. Other than pursuant to the terms of the
Investor Rights Agreement, no Person has specific contractual rights to cause
the Company to file any registration statement under the Securities Act relating
to any securities of the Company or any right to participate in any such
registration statement.
4.15 Material Agreements. Except for the Transaction Documents or as set
forth on Section 4.15 of the Disclosure Schedule attached hereto, neither the
Company nor OpBiz is a party to or otherwise bound or affected by any oral or
written:
(a) agreement, contract or commitment with any present or
former shareholder, director or officer;
(b) Material Operating Agreement;
(c) agreement, contract or commitment for the purchase of,
or payment for, supplies or products, or for the performance of services by a
third party, involving in any one case $100,000 or more, other than purchase
orders issued to vendors in the ordinary course of business;
46
(d) agreement, contract or commitment to sell or supply
products or to perform services, involving in any one case $100,000 or more,
other than purchase orders received from customers in the ordinary course of
business; and
(e) material agreement, contract or commitment expressly
restraining it from engaging or competing in any lines of business with any
Person, nor is any officer or employee of the Company subject to any such
agreement except where such limitation runs to the benefit of the Company.
4.16 No Prior Activities. Each of BH/RE, EquityCo and the Company was
formed solely for the purpose of carrying out the transactions contemplated by
the Transaction Documents. Except for obligations or liabilities (i) incurred in
connection with its formation, (ii) contained in or expressly permitted by the
Securities Purchase Documents, (iii) related to reporting obligations under the
Exchange Act (including the rules and regulations of the SEC) and other
Applicable Law, or (iv) incurred by the Company in connection with the Time
Share Plan or the acquisition and development of the Time Share Premises, none
of BH/RE, EquityCo or the Company has incurred or plans to incur, directly or
indirectly, any material obligations or liabilities or has engaged or plans to
engage in any material business activities of any type or kind whatsoever or has
entered or plans to enter into any material agreements or arrangements with any
Person.
4.17 Tax Classification. The Company has timely and properly filed with
the United States Internal Revenue Service an election, effective as of June 30,
2004, to be classified as an association taxable as a corporation for federal
tax purposes. Each of BH/RE and EquityCo is a partnership for federal tax
purposes.
4.18 Taxable Year. The taxable year of the Company for federal income tax
purposes will not end during the period beginning on the Funding Date and ending
on November 30, 2004.
ARTICLE V - REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
PURCHASERS
Each Purchaser severally represents and warrants to the Company as
follows:
5.1 Authorization; Enforceability. Such Purchaser has the requisite
power and authority to execute, deliver and perform its obligations under this
Agreement, each of the Notes Documents to which it is or will be a party and the
Investor Rights Agreement. This Agreement has been duly authorized, executed and
delivered by such Purchaser and constitutes, and each of the Notes Documents to
which it is or will be a party and the Investor Rights Agreement, when executed,
will be duly authorized, executed and delivered by such Purchaser and will
constitute a valid and binding agreement of such Purchaser, enforceable against
such Purchaser in accordance with their respective terms.
5.2 Investment Representations.
47
(a) Such Purchaser will acquire the Securities for
investment for its own account and not as a nominee or agent and not with a view
to the public resale or distribution thereof in violation of the Securities Act,
and such Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of the
Securities Act.
(b) Such Purchaser has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
offering of the Securities and to obtain additional information necessary to
verify any information to which such Purchaser has had access.
(c) Such Purchaser understands that the purchase of the
Securities involves substantial risk. Such Purchaser acknowledges that it is
able to bear the economic risk of its investment in the Securities for an
indefinite time period and has such knowledge and experience in financial or
business matters that such Purchaser is capable of evaluating the merits and
risks of an investment in the Securities.
(d) Such Purchaser is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act.
(e) Such Purchaser understands that the Securities will be
"restricted securities" under the Securities Act and Rule 144 promulgated by the
Commission thereunder ("Rule 144"), that such Purchaser are acquiring the
Securities from the Company in a transaction not involving a public offering,
and that under the Securities Act and applicable regulations thereunder such
Purchaser may resell such Securities without registration under the Securities
Act only in certain limited circumstances. Such Purchaser is familiar with Rule
144 and Rule 144A promulgated by the SEC under the Securities Act, each as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act. Such Purchaser understands that, except as provided in
the Investor Rights Agreement, the Company is and will not be under any
obligation to register any of the Securities. Such Purchaser understands that no
public market now exists for any of the Securities and that it is uncertain
whether a public market will ever exist for the Securities.
(f) At no time was such Purchaser presented with or
solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer of the Securities.
5.3 Legends.
(a) Such Purchaser understands that each certificate or
other instrument representing the Securities will be endorsed with the following
legend:
"THIS [INSTRUMENT] [CERTIFICATE] HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, HYPOTHECATED
48
OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT RELATING TO THE DISPOSITION OF
SECURITIES, (2) IN ACCORDANCE WITH APPLICABLE STATE SECURITIES AND
BLUE SKY LAWS AND (3) IN ACCORDANCE WITH APPLICABLE STATE GAMING
LAWS AND REQUIREMENTS AND RESTRICTIONS IMPOSED BY THE NEVADA GAMING
COMMISSION.
(b) Such Purchaser further understands that each certificate
or other instrument evidencing the Warrants or the Warrant Interests will be
endorsed with the following additional legend:
"THE MEMBERSHIP INTERESTS ISSUABLE UPON EXERCISE OF THIS WARRANT ARE
SUBJECT TO THE PROVISIONS OF A CERTAIN INVESTOR RIGHTS AGREEMENT,
DATED AS OF AUGUST 9, 2004, INCLUDING CERTAIN RESTRICTIONS ON
TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY OF SUCH
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT
CHARGE.
WHEN THE LIMITED LIABILITY COMPANY ISSUING THE OWNERSHIP INTEREST
REPRESENTED BY THIS CERTIFICATE HAS BEEN LICENSED BY OR REGISTERED
WITH THE NEVADA GAMING COMMISSION, THE PURPORTED SALE, ASSIGNMENT,
TRANSFER, PLEDGE, GRANTING OF ANY OPTION TO PURCHASE OR OTHER
DISPOSITION OF SUCH INTEREST SHALL BE INEFFECTIVE UNLESS APPROVED IN
ADVANCE BY THE COMMISSION. IF AT ANY TIME THE COMMISSION FINDS THAT
A MEMBER IS UNSUITABLE TO HOLD SUCH INTEREST, THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT SHALL BE SUBJECT
TO REDEMPTION AND/OR REPURCHASE, PURSUANT TO THE TERMS SET FORTH
HEREIN. BEGINNING ON THE DATE WHEN THE COMMISSION SERVES NOTICE OR A
DETERMINATION OF UNSUITABILITY PURSUANT TO APPLICABLE LAW UPON THE
COMPANY, IT SHALL BE UNLAWFUL FOR THE UNSUITABLE MEMBER (A) TO
RECEIVE ANY DIVIDEND OR INTEREST OR ANY PAYMENT OR DISTRIBUTION OF
ANY KIND, INCLUDING OF ANY SHARE OF THE DISTRIBUTION OF PROFITS OR
CASH OR ANY OTHER PROPERTY, OR PAYMENTS UPON DISSOLUTION, FROM THE
COMPANY, OTHER THAN A RETURN OF CAPITAL AS REQUIRED ABOVE; (B) TO
EXERCISE DIRECTLY OR THROUGH ANY PROXY, TRUSTEE OR NOMINEE ANY
VOTING RIGHT CONFERRED BY THE MEMBER'S INTEREST IN THE COMPANY; (C)
TO
49
PARTICIPATE IN THE MANAGEMENT OF THE COMPANY; OR (D) TO RECEIVE ANY
REMUNERATION IN ANY FORM FROM THE COMPANY OR FROM ANY COMPANY
HOLDING A GAMING LICENSE FOR SERVICES RENDERED OR OTHERWISE."
(c) Such Purchaser further understands that each certificate
or other instrument representing a Note will be endorsed on its face with the
following additional legend: "THIS DEBT INSTRUMENT WAS ISSUED WITH ORIGINAL
ISSUE DISCOUNT (OID)."
The Company need not register a transfer of Securities and may also instruct its
transfer agent not to register the transfer of such Securities, unless the
conditions specified in the legends set forth in subsections (a) and (b) of this
Section 5.3 are satisfied.
5.4 Delivery of Deed of Trust to Title Company. Upon written notice from
the Company, the Collateral Agent will deliver the originally executed Deed of
Trust to the Title Company (as such term is defined in the Acquisition
Agreement), subject to receipt from the Title Company of a written
acknowledgment and agreement that the Title Company has been instructed to
receive and will record the Deed of Trust in connection with the closing of the
transactions contemplated by the Acquisition Documents in accordance with the
written instructions of Collateral Agent, which shall be in form and substance
reasonably satisfactory to the Company.
ARTICLE VI - AFFIRMATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees that, from and after the Closing Date (a)
until all Noteholder Obligations (other than indemnities which are not then due
and payable) are discharged in full that the Company and each of its
Subsidiaries shall observe and abide by each of the covenants and agreements
contained in this Article VI, and (b) with respect to the holders of Warrants
and Warrant Interests, for so long as at least 20% of the Warrants and Warrant
Interests originally issued pursuant to this Agreement (without duplication)
remain outstanding (giving effect to any stock splits, stock combinations and
the like, but excluding the effects of any adjustments to the number of Warrants
made in connection with a merger or reorganization), to observe and abide by
each of the covenants and agreements contained in Sections 6.3 (Books and
Records), 6.4 (Financial and Other Information), 6.5 (Notices) and 6.7
(Existence, Good Standing and Legal Requirements):
6.1 Punctual Payment. The Company will duly and punctually pay or cause
to be paid the principal and interest on the Notes and the Company will duly and
punctually pay or cause to be paid all other amounts provided for in this
Agreement and the other Securities Purchase Documents to which it is a party,
all in accordance with the terms of this Agreement and the other Securities
Purchase Documents.
6.2 Rule 144A Information. Upon the request of any Noteholder, the
Company will provide any qualified institutional buyer designated by such
Noteholder, such financial and other information as the Noteholder may
reasonably determine to be necessary in order to permit compliance with the
informational requirements of Rule 144A(d)(iv)(i) under the Securities Act
50
in connection with the resale of the Notes if, at the time of request, the
Company is not subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act. For purposes of this Section 6.2, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A(a)(i) under
the Securities Act. The Noteholders agree that the Company will be deemed to
have satisfied this covenant if the most recent Quarterly Report on Form 10-Q or
Annual Report on Form 10-K filed with the Securities and Exchange Commission
(the "SEC") by BH/RE, any successor to BH/RE, or any other Person (if, but only
if, such report includes: (i) a very brief description of the nature of the
Company's business and the products and services it offers, and (ii) a recent
balance sheet and profit and loss and retained earnings statement (and similar
financial statements for such part of the preceding two fiscal years as the
Company has been in operation) into which the financial condition and results of
operations of the Company are consolidated) is either publicly available through
the SEC's EDGAR database or delivered to the prospective purchaser of the Notes.
6.3 Books and Records. The Company will, and will cause its Subsidiaries
to: (a) maintain, at all times, correct and complete books, records
and accounts in which complete, correct and timely entries are made
of its transactions in accordance with GAAP; (b) reflect by means of
appropriate entries in such accounts and in all financial statements
proper liabilities and reserves for all Taxes and proper provision
for depreciation and amortization of Property and bad debts, all in
accordance with GAAP; and (c) permit, upon reasonable prior notice
to the Company and during normal business hours, agents and
designated representatives of the Majority Holders to visit and
inspect any of the properties or assets of the Company and any of
its Subsidiaries and to examine the books of account of the Company
and any of its Subsidiaries and discuss the affairs, finances and
accounts of the Company and any of its Subsidiaries with, and be
advised as to the same by, the officers and independent accountants
of the Company or such Subsidiary, all at such reasonable times and
intervals and to such reasonable extent as the Majority Holders may
request; provided that no information obtained pursuant to clause
(c) may be shared with a Competitor.
6.4 Financial and Other Information. The Company will furnish to each
Noteholder (other than a Competitor) that, together with its
Affiliates and related investment funds, holds $1,000,000 or more in
principal amount of Notes one copy of each of the following:
(a) within 120 days after the end of each Fiscal Year,
commencing with Fiscal Year 2004, (i) Consolidated balance sheets and
Consolidated income statements showing the financial condition of the Company
and its Subsidiaries as of the close of such Fiscal Year and the results of
their operations during such year, and (ii) a Consolidated statement of members'
equity and a Consolidated statement of cash flow, as of the close of such Fiscal
Year, all the foregoing financial statements to be audited by a Big 4 or other
independent certified public accountants reasonably acceptable to the Majority
Holders, and to be in form and substance reasonably acceptable to the
Noteholders;
(b) within 30 days after the end of each fiscal month
unaudited Consolidated income statements of the Company and its Subsidiaries and
within 60 days after the end of each Fiscal Quarter unaudited Consolidated and
consolidating balance sheets and
51
Consolidated and consolidating income statements showing the financial condition
and results of operations of the Company and its Subsidiaries as of the end of
each such quarter, a Consolidated and consolidating statement of members' equity
and a Consolidated and consolidating statement of cash flow as of the end of
each such quarter, prepared and certified by an Approved Officer of the Company
as presenting fairly in all material respects the financial condition and
results of operations of the Company and its Subsidiaries and as having been
prepared in accordance with GAAP consistently applied, setting forth in the case
of each Consolidated statement in comparative form the corresponding figures for
the corresponding quarter of the preceding year and corresponding figures for
the period beginning with the first day of the current Fiscal Year and ending on
the last day of the relevant Fiscal Quarter and the corresponding period for the
previous Fiscal Year, in each case subject to footnotes and normal year-end
audit adjustments;
(c) (i) promptly after the same become publicly available,
copies of such registration statements, annual, periodic and other reports, and
such proxy statements and other information, if any, as shall be filed by the
Company or any Subsidiary with the SEC pursuant to the requirements of the
Securities Act or the Exchange Act; (ii) as soon as practicable, copies of all
material reports, forms, filings and financial information submitted by the
Company or any Subsidiary to any other Governmental Authority and all material
reports submitted to its interest holders; (iii) within 5 Business Days after
receipt by the Company or any Subsidiary thereof, copies of any exception
reports prepared by any Gaming Authority and (iv) within 5 Business Days of
filing by the Company or any Subsidiary with any Gaming Authority, copies of any
and all reports of borrowings on form 8.130 or its equivalent;
(d) concurrently with any delivery under (a) or (b) (solely
in the case of quarterly deliveries) above, a certificate of the firm or Person
referred to therein (which certificate furnished by the independent public
accountants referred to in paragraph (a) above may be limited to accounting
matters and disclaim responsibility for legal interpretations and shall be in a
form to be reasonably agreed upon by the Company, such independent public
accountants and the Majority Holders) certifying that during their audit or
preparation, as applicable, of such financial statements nothing has come to
its, his or her attention that would result in an Event of Default (including
recognizing (in the case of an audit performed by a Big 4 or other independent
certified public accountants reasonably acceptable to the Majority Holders),
provided, however, that the scope and purpose of their audit was not to
determine compliance with the terms of the Notes Documents or whether an Event
of Default has otherwise occurred); provided, however, that any certificate
delivered concurrently with (a) above shall be accompanied by a supplemental
certificate confirming the accuracy of the accountants' certificate and signed
by an the Chief Executive Officer or the Chief Financial Officer of the Company
or another Person duly authorized by the Company. The parties hereto agree that
in the case of any delivery under (b) above, a certificate from the Chief
Financial Officer or Chief Executive Officer of the Company shall satisfy the
requirements of this paragraph (d) in connection with whether an Event of
Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto;
52
(e) concurrently with any delivery under (a) or (b) (solely
in the case of quarterly deliveries) above, a management discussion and analysis
certified by the Company describing any differences between the reported
financial results under the financial statements delivered thereunder from the
budget required by Section 6.4(h), which shall include, among any other
information or explanation reasonably requested by the Majority Holders (i) the
calculation of EBITDA for the Fiscal Quarter last ended and (ii) a list of any
Capital Expenditures (including Renovation Capital Expenditures and Maintenance
Capital Expenditures) made during such Fiscal Quarter and shall set forth in
connection with any such Capital Expenditures made during such Fiscal Quarter,
the amount and nature of any such expenditure with attached copies of any
contracts entered into, invoices received and evidence of payment made with
respect to any such expenditure together with mechanic's liens releases in
connection with any payments made by the Company or any Subsidiary;
(f) concurrently with any delivery under (a) above, a
management letter prepared by the independent public accountants who reported on
the financial statements delivered under (a) above, with respect to the internal
audit and financial controls of the Company and its Subsidiaries;
(g) any gaming reports generated by the Company or any of
its Subsidiaries;
(h) as soon as available, but in any event not later than
December 31 of each Fiscal Year, OpBiz's annual internal operating budget (which
shall list with reasonable specificity OpBiz's good faith estimate of planned
Renovation Capital Expenditures through the third Anniversary Date, Maintenance
Capital Expenditures, and other Capital Expenditures) for the next Fiscal Year,
and as soon as prepared and available any amendments thereof prepared in the
ordinary course;
(i) as soon as available, but in any event not later than
December 31 of each Fiscal Year, a Consolidated and consolidating plan and
financial forecast for the next Fiscal Year and each subsequent Fiscal Year
through the Maturity Date of the Notes, including (i) forecasted Consolidated
and consolidating balance sheets and forecasted Consolidated and consolidating
statements of income and cash flows of the Company and its Subsidiaries for such
Fiscal Years, together with an explanation of the assumptions on which such
forecasts are based and (ii) such other information and projections for such
Fiscal Years as the Majority Holders may reasonably request;
(j) as soon as available, but in any event not later than 30
calendar days following the end of each fiscal month, a monthly operating report
for the month then ended which shall include items used by the Company and its
Subsidiaries in measuring their operating and financial performance in the
ordinary course which shall include, without limitation, the average daily room
rate, food and beverage revenue per room, gaming revenue and the other items set
forth on Exhibit S or as may otherwise be prepared by the Company in the
ordinary course of its management and financial reporting so long as any such
items are acceptable to the Majority Holders, together with such other
information reasonably requested by the Majority Holders;
53
(k) promptly upon receipt thereof, copies of all material
notices, reports, budgets, forecasts, proposals, studies, financial statements
and other information provided by any Manager, any casino operator or any
Leasing Manager;
(l) at the request of the Majority Holders, a copy of each
annual report or other filing filed with respect to each Plan of the Company or
any ERISA Affiliate;
(m) a monthly report on the progress of the renovations in
form and substance reasonably satisfactory to the Majority Holders, which in any
event shall include a narrative description of the progress to date, a
comparison between expenses incurred to date and budgeted expenses, a timeline
illustrating the remaining steps to be taken to completion, and projected
expenses to be incurred to completion; and
(n) such additional information as any Noteholder that,
together with its Affiliates and related investment funds, holds $1,000,000 or
more in principal amount of Notes, may from time to time reasonably request
regarding the financial and business affairs, operations or prospects of the
Company and its Subsidiaries.
6.5 Notices. In addition to any other notices required hereunder, the
Company shall notify, in writing, any Noteholder that together with its
Affiliates and related investments funds holds $1,000,000 or more in principal
amount of Notes of the following matters at the following times (except that in
the case of clause (a), the Company shall notify all Noteholders regardless of
the amount of Notes then held):
(a) Immediately after becoming aware of the existence of any
Event of Default or any "event of default" under the Senior Credit Documents;
(b) Immediately after becoming aware that (i) any Manager
has terminated a Management Agreement or otherwise ceased acting as Manager, or
(ii) any Leasing Manager has terminated a Leasing Services Agreement, or has
otherwise ceased managing such portions of the Premises or (iii) the Planet
Hollywood License Agreement has been terminated;
(c) Promptly after receiving notice (but in no event later
than five days after the earlier of (i) receiving such notice or (ii) the
occurrence of any such change) of a change in the composition of the members or
other equity holders of the Investor Group;
(d) Promptly after receiving notice (but in no event later
than five days after the earlier of (i) receiving such notice or (ii) the
occurrence of any such change) of any change in the composition of the board of
directors or other governing body that manages the operations of the Company or
OpBiz;
(e) Within five Business Days after becoming aware of:
(i) any material adverse change in the Property,
business, operations, or condition (financial or otherwise) or
prospects of the Company and
54
its Subsidiaries taken as a whole (including, without limitation any
Casualty Event);
(ii) any pending or threatened action, proceeding, or
counterclaim by any Person, or any pending or threatened
investigation by a Governmental Authority, which is reasonably
likely to have a Material Adverse Effect;
(iii) any pending or threatened strike, work stoppage,
material unfair labor practice claim, or other material labor
dispute which is reasonably likely to have a Material Adverse
Effect;
(iv) any violation of any law, statute, regulation, or
ordinance of a Governmental Authority applicable to the Company or
any Subsidiary, which is reasonably likely to have a Material
Adverse Effect; and
(v) the fact that the Company or any Subsidiary has
materially violated any Environmental Laws or that its compliance is
being investigated in respect of an alleged material failure to
comply with any Environmental Law.
(f) Not less than thirty (30) days prior to the Company or
OpBiz changing its name or the location of its chief executive office or its
jurisdiction of organization or formation;
(g) Within five (5) days of the Company's or OpBiz's receipt
or giving of same, a copy of any written notice under, pursuant to or in
connection with any Lease or Material Operating Agreement, (i) alleging a
default by the Company, OpBiz or Lessee or any other Persons thereunder, (ii)
setting forth a claim against the Company or OpBiz or any Manager in an amount
greater than $1,500,000 or (iii) exercising a renewal, extension, expansion or
termination option thereunder;
(h) Promptly upon receipt of same by the Company or any of
its Subsidiaries, a copy of any written notice or other written instrument which
might materially adversely affect the Premises, the Liens securing the
Noteholder Obligations or the Noteholders' rights and remedies under or with
respect to any Notes Document, including any written notice from a Governmental
Authority concerning any tax or special assessment, or any written notice of any
change in or alleged violation of any zoning ordinance, Permitted Lien, fire
ordinance, building code provision, or other Legal Requirement affecting the
Premises;
(i) Not more than thirty (30) days after the end of each
quarter: Permitted Liens described in clauses (a)(ii), (e) and (i) of the
definition thereof which are created during such quarter;
(j) Within 30 days after the end of each quarter, any sales
and other Dispositions of Property permitted by Section 7.1, consummated during
such quarterly period;
55
(k) Three Business Days prior to entering into any merger
permitted under paragraph (b) of Section 7.1; and
(l) Promptly following the Closing, notice of any Initial
Renovation Contracts entered into prior to the Closing Date, and thereafter
within ten (10) Business Days of the end of each fiscal quarter, notice of OpBiz
entering into any additional Initial Renovation Contracts.
Each notice given under this Section 6.5 shall describe the subject matter
thereof in reasonable detail and shall set forth the action that the Company has
taken or proposes to take with respect thereto.
6.6 Taxes and Other Obligations. The Company will, and will cause its
Subsidiaries to: (a) file when due all tax returns and other reports which it is
required to file, pay when due all Taxes against it or upon its Property,
income, and franchises, make all required withholding and other tax deposits,
and establish adequate reserves for the payment of all such items, and shall
provide to the Noteholders, upon request, reasonably satisfactory evidence of
its timely compliance with the foregoing, except in each case where the failure
to comply would not reasonably be expected to have a Material Adverse Effect;
(b) pay when due all Debt owed by it and perform and discharge in a timely
manner all other obligations undertaken by it, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect; and (c) duly
and promptly comply with the terms and provisions of each judgment, law,
statute, rule, and governmental regulation applicable to it and each contract,
mortgage, Lien, lease, indenture, order, instrument, agreement, or document to
which it is a party or by which it is bound, except in each case where the
failure to comply would not reasonably be expected to have a Material Adverse
Effect; provided, however, that the Company and its Subsidiaries shall not be
required to pay any Tax or Debt, or perform or discharge any other obligation,
that it is contesting in good faith by appropriate proceedings diligently
pursued, provided it has established and maintains adequate reserves (in the
good faith judgment of the management of such Person) with respect thereto in
accordance with GAAP.
6.7 Existence, Good Standing and Legal Requirements.
(a) The Company will, and will cause its Subsidiaries to,
maintain its corporate or limited liability company, as applicable, existence
and its qualification and good standing in Nevada and all other states necessary
to conduct the Business and own its Property, and shall obtain and take all
actions which may be required to preserve, renew and extend Permits (including,
without limitation, any Permits or authorizations relating to the sale of
alcohol), franchises and governmental authorizations necessary to conduct the
Business and own its Property and to operate and maintain the Premises in
accordance with the Notes Documents, the Management Agreement (if any), the
Leasing Services Agreement (if any), and any other Material Operating
Agreements, in each case except to the extent, other than with respect to
corporate or limited liability company, as applicable, existence, that the
failure to maintain the foregoing is not reasonably likely to have a Material
Adverse Effect. The Company shall, and shall cause its Subsidiaries to, comply
with all laws, rules, regulations and governmental orders (whether Federal,
state or local) (including, without limitation, all Gaming
56
Laws) applicable to the operation of such businesses whether now in effect or
hereafter enacted (including, without limitation, all Applicable Laws, rules,
regulations and governmental orders promulgated by any Gaming Authority and all
those relating to public and employee health and safety and all Environmental
Laws) and with any and all other Applicable Laws, rules, regulations and
governmental orders, except to the extent where such noncompliance is not
reasonably likely to have a Material Adverse Effect.
(b) The Company and its Subsidiaries shall have the right,
in good faith, to contest by appropriate legal proceedings, after notice to each
Noteholder that, together with its Affiliates and related investment funds,
holds $1,000,000 or more in principal amount of the Notes, but without cost or
expense to the Noteholders, the validity of any Legal Requirement and to
postpone the compliance therewith, provided that (i) such contest shall operate
to prevent the enforcement thereof, (ii) such contest shall be promptly and
diligently prosecuted by and at the expense of the Company or its Subsidiaries,
(iii) neither the Company, any of its Subsidiaries nor the Noteholders shall
suffer or would be the subject of any civil or criminal liabilities, penalties
or sanctions, (iv) the Company and its Subsidiaries shall comply with such
contested Legal Requirement if at any time all or any part of the Premises shall
be in danger of being foreclosed, sold, forfeited, or otherwise lost or
materially impaired or if such contest shall be discontinued, (v) the Company
shall agree to indemnify and hold harmless the Noteholders from and against any
liability and claims arising out of the postponement of the compliance with such
Legal Requirement, and (vi) the Company shall, prior to commencing any such
proceedings, furnish proof reasonably satisfactory to the Majority Holders that
it has established a reserve account in an amount not less than the amount of
any penalties, including interest and additional charges which may be incurred
as a result of such contest or has otherwise, to the reasonable satisfaction of
the Majority Holders, provided for the payment of such amounts.
6.8 Discharge of Liens.
(a) Removal by the Company. In the event that,
notwithstanding the covenants contained in Section 7.8, a Lien which is not a
Permitted Lien at any time encumbers any Collateral or any portion thereof, the
Company, at its option, shall either (i) promptly discharge or cause to be
discharged by payment to the lienor or Lien claimant or promptly secure removal
by bonding or deposit with the county clerk or otherwise or (ii) subject to the
provisions of the Intercreditor Agreement (Senior Debt), pledge cash collateral
to the Collateral Agent, for the benefit of the Noteholders, in an amount equal
to such Lien, within 30 days after the date of notice thereof; provided that,
compliance with the provisions of this Section 6.8 shall not be deemed to
constitute a waiver of the provisions of Section 6.8. The Company shall deliver
to the Collateral Agent upon written request therefor all receipts or other
reasonably satisfactory evidence of payment, bonding, deposit of Taxes,
assessments, Liens or any other item which may cause any such Lien to be filed
against any Collateral. The Company and each of its Subsidiaries shall fully
preserve the Lien and the priority of each Security Document without cost or
expense to the Collateral Agent or the Noteholders.
(b) Removal by the Collateral Agent. If the Company or any
of its Subsidiaries fails to promptly discharge, remove or pledge cash
collateral in respect of any such
57
Lien or mechanics' or materialmen's claim of Lien as described above, which is
not being contested by the Company or any of its Subsidiaries in good faith by
appropriate proceedings promptly instituted and diligently conducted, within 30
days after the receipt of notice thereof, then the Collateral Agent may, but
shall not be required to, procure the release and discharge of such Lien,
mechanics' or materialmen's claim of Lien and any judgment or decree thereon,
and in furtherance thereof may, in its reasonable discretion, effect any
settlement or compromise with the lienor or Lien claimant or post any bond or
furnish any security or indemnity as the Agent, in its reasonable discretion,
may elect. In settling, compromising or arranging for the discharge of any Liens
under this subsection, the Collateral Agent shall not be required to establish
or confirm the validity or amount of the Lien. The Company agrees that all
reasonable costs and expenses expended or otherwise incurred pursuant to this
Section 6.8 (including reasonable attorneys' fees and disbursements) by the
Collateral Agent shall be paid by the Company or its Subsidiaries in accordance
with the terms hereof. All such advances or expenditures by the Collateral Agent
shall payable as provided in Section 9.6.
6.9 Security Agreement and Guaranties; Deliveries by Subsidiaries. The
Company shall cause any Person that becomes a direct or indirect domestic
Subsidiary (whether created, acquired or otherwise) after the Funding Date to
deliver a Subsidiary Guaranty.
6.10 Use of Additional Capital for Renovation Capital Expenditures. The
Company shall cause OpBiz to spend no less than $100,000,000 of the Offering
Proceeds on Renovation Capital Expenditures (including amounts to reconfigure
the Theater). Without the approval of the Majority Holders, OpBiz may not enter
into contracts for Renovation Capital Expenditure projects (including contracts
to reconfigure the Theater) with an initial expected cost (i.e., excluding cost
overruns and the costs of change orders, expediting charges, and the like)
exceeding $88,000,000 (the "Initial Renovation Contracts"), plus the Freed-up
Amount, plus contracts that can be paid for other than with the Offering
Proceeds (for example, contracts paid for out of cash generated by the operation
of the Premises or contracts funded with additional common equity contributions
other than Required Equity Contributions).
6.11 Ownership of Premises; Defense of Title.
(a) OpBiz shall at all times be the sole legal and
beneficial owner of the Premises, subject only to (i) the Permitted Liens and
(ii) such other claims and interests as may be otherwise expressly allowed by
the terms of the Notes Documents.
(b) The Company will, or will cause OpBiz to, take all
reasonable actions necessary or proper to defend title to the Premises, subject
to Permitted Liens. The Company will indemnify and hold harmless the Noteholders
from and against any and all costs, expenses, loss, damage or liability
including any and all cost, expense, loss, damage or liability which the
Noteholders may suffer or incur by reason of the failure of the title to all or
any part of the Premises, subject to Permitted Liens.
58
6.12 Management of Premises.
(a) If OpBiz enters into a Management Agreement, the Hotel
Premises shall at all times be managed under the terms and conditions of such
Management Agreement. The Company shall cause any Management Agreement to remain
in full force and effect at all times, and shall cause OpBiz to comply with any
Management Agreement at all times, except where the failure to comply would not
reasonably be expected to have a Material Adverse Effect, or would result in a
material default under such agreements. The Company shall cause the Hotel
Premises to be at all times open for business as a hotel, the Retail Shops to be
open for business as a retail shopping center and the Casino to be open for
business as a casino, except to the extent necessary to undertake the Renovation
Capital Expenditures with due diligence in accordance with the provisions of
Section 6.10 hereof. The Company shall cause OpBiz to cause the Premises to be
at all times operated, managed and maintained, at all times and in the manner
and accordance with the standards required pursuant to any Management Agreement
(including all marketing, advertising, promotional and reservation programs),
except where the failure to comply would not reasonably be expected to have a
Material Adverse Effect, or would not result in a material default under such
agreements (if any) but in no event below Comparable Standards. The Company
shall not permit OpBiz to terminate or cancel any Management Agreement without
the prior written consent of the Majority Holders, which consent shall not be
unreasonably withheld or delayed. The Company shall not permit OpBiz to enter
into any other management agreement for management of the Hotel Premises or the
Casino which is not a "Management Agreement" as defined herein without the prior
written consent of the Majority Holders, which consent shall not be unreasonably
withheld or delayed. The Company shall not permit OpBiz to amend, modify or
waive any material provision of any Management Agreement except upon notice and
with the prior written consent of the Majority Holders, which consent shall not
be unreasonably withheld or delayed. The Company shall not permit OpBiz to
pledge, transfer, assign, mortgage or encumber its interest in any Management
Agreement or any interest therein, or allow to be encumbered OpBiz's interest in
any Management Agreement or any interest therein, except in each case, to the
Senior Agent as provided in the Senior Credit Documents. Notwithstanding the
above, the Company may replace any Manager with an Identified Hotel Manager
without the prior written consent of the Noteholders.
(b) The Company shall not permit OpBiz to consent to any
assignment by any Manager of its rights and obligations under any Management
Agreement except to the Senior Agent as provided in the Senior Credit Documents
without the prior written consent of the Majority Holders, which consent shall
not be unreasonably withheld or delayed.
6.13 Leases.
(a) Compliance with Leases. The Company shall cause OpBiz to
use commercially reasonable efforts to observe, perform, and discharge in all
material respects all material obligations, covenants, and warranties provided
for under the terms of the Leases to be kept, observed, and performed by OpBiz.
59
(b) Enforcement of Leases. The Company shall use its
commercially reasonable efforts to cause OpBiz to secure the performance of each
and every obligation, term, covenant, condition, and agreement to be performed
by any Lessee under the terms of the applicable Lease. The Company shall cause
OpBiz to appear in and defend any action or proceeding arising under, occurring
out of, or in any manner connected with, the Leases or the obligations, duties,
or liabilities of OpBiz or any Lessee, if an Event of Default under this
Agreement exists and is continuing, upon reasonable request by the Collateral
Agent to do so.
(c) No Transfer of Interest in Leases. The Company shall not
permit OpBiz to pledge, transfer, assign, mortgage, encumber, or allow to be
encumbered any Leases or Rents, except to the Senior Agent as provided in the
Senior Credit Documents.
6.14 Maintenance, Operations, Repairs and Alterations. The Company will,
and will cause its Subsidiaries to, maintain, preserve, protect and keep the
Premises and any Property owned or leased by such Person in good repair, working
order and condition (ordinary wear and tear excepted), and make all necessary
and proper repairs, renewals and replacements so that the Business may be
properly conducted at all times. The Company shall at all times cause the
Premises to be managed, operated and maintained as a luxury themed casino hotel
in accordance with standards at least equivalent to the Comparable Standards.
The theme of the Premises shall not be materially changed without the prior
written consent of the Majority Holders other than to the extent disclosed to
the Noteholders in writing prior to the Funding Date, provided that the
Noteholders hereby consent to the re-theming of the Premises as a Planet
Hollywood theme consistent with the Renovation Capital Expenditures described in
Exhibit I. The Theater shall be used to present events which are consistent with
the Development/Entertainment Side Letter, or absent an agreement with Clear
Channel or another Qualifying Entertainment Agreement, events that are
consistent with the first class nature of the complex, and consistent with the
Comparable Standards.
6.15 Inspection by Noteholders.
(a) From time to time and upon reasonable prior notice to
the Company (except in cases of Casualty Events or other similar emergencies in
which case no notice need be given), as required by the Majority Holders, the
Company shall, or shall cause OpBiz or any Manager to, permit the Noteholders
(other than a Competitor and any Noteholder that together with its Affiliates
and related investment funds holds less than $1,000,000 in principal amount of
Notes) and their agents and representatives, to enter upon any of the Premises
during normal business hours for the purpose of inspection thereof. Without
limitation of the foregoing, the Company shall, or shall cause OpBiz or any
Manager to, permit the Noteholders (other than certain Noteholders as provided
above) to enter upon the Premises, at any reasonable times during business hours
on reasonable notice, to inspect, examine or copy:
(i) All materials and shop drawings pertaining to the
performance of the Renovation Capital Expenditures and any other
Significant Repairs and Improvements;
60
(ii) Any contracts, bills of sale, statements, receipts
or vouchers pertaining to the Renovation Capital Expenditures and
any other Significant Repairs and Improvements;
(iii) All work done, labor performed or materials
furnished in connection with the Renovation Capital Expenditures and
any other Significant Repairs and Improvements; and
(iv) All books, contracts and records of the Company
and its Subsidiaries pertaining to the Significant Repairs and
Improvements.
(b) The Company shall cause OpBiz to keep in effect at all
times any material contractual arrangements as may be required by Legal
Requirements and all Permits.
6.16 ERISA. The Company shall, and shall use its reasonable best efforts
to cause each of its ERISA Affiliates to:
(a) Pay and discharge promptly any liability imposed upon it
pursuant to the provisions of Title IV of ERISA; provided, however, that neither
the Company nor any ERISA Affiliate shall be required to pay any such liability
if (1) the amount, applicability or validity thereof shall be diligently
contested in good faith by appropriate proceedings, and (2) such Person shall
have set aside on its books reserves which, in the opinion of the independent
certified public accountants of such Person, are adequate with respect thereto.
(b) Deliver to the Noteholders promptly and in any event
within five Business Days after (or within such other time period specified) (i)
the occurrence of any Reportable Event, a copy of the materials that are filed
with the PBGC, or the materials that would have been required to be filed if the
30-day notice requirement to the PBGC was not waived, (ii) the Company or any
ERISA Affiliate or an administrator of any Pension Plan files with participants,
beneficiaries or the PBGC a notice of intent to terminate any such Plan, a copy
of any such notice, (iii) within five Business Days, the receipt of notice by
the Company or any ERISA Affiliate or an administrator of any Pension Plan from
the PBGC of the PBGC's intention to terminate any Pension Plan or to appoint a
trustee to administer any such Plan, a copy of such notice, (iv) within 30 days
after, the filing thereof with the Internal Revenue Service, copies of each
annual report that is filed on Treasury Form 5500 with respect to any Pension
Plan, together with certified financial statements (if any) for the Plan and any
actuarial statements on Schedule B to such Form 5500, (v) five Business Days
after, the Company or any ERISA Affiliate knows or has reason to know of any
event or condition which might constitute grounds under the provisions of
Section 4042 of ERISA for the termination of (or the appointment of a trustee to
administer) any Pension Plan, an explanation of such event or condition, (vi)
the receipt by the Company or any ERISA Affiliate of an assessment of withdrawal
liability under Section 4201 of ERISA from a Multiemployer Plan, a copy of such
assessment, (vii) within five Business Days, the Company or any ERISA Affiliate
knows or has reason to know of any event or condition which might cause any one
of them to incur a liability under Section 4062, 4063, 4064 or 4069 of ERISA or
Section 412(n) or 4971 of the Code, an explanation of such event or condition,
(viii) the Company or any ERISA Affiliate knows or has
61
reason to know that an application is to be, or has been, made to the Secretary
of the Treasury for a waiver of the minimum funding standard under the
provisions of Section 412 of the Code, a copy of such application, and (ix) the
establishment of, or the incurrence of the obligation to contribute to, any
Pension Plan or Multiemployer Plan by the Company or any ERISA Affiliate, and in
each case described in clauses (i) through (iii) and (v) through (ix) together
with a statement signed by the Approved Officer of the Company setting forth
details as to such Reportable Event, notice, event or condition and the action
which the Company or such ERISA Affiliate proposes to take with respect thereto.
6.17 Material Operating Agreements.
(a) Compliance. The Company shall, and shall cause its
Subsidiaries to, observe, perform, and discharge in all material respects all
material obligations, covenants, and warranties provided for under the terms of
the Material Operating Agreements to be kept, observed, and performed by the
Company and its Subsidiaries.
(b) Delivery of Copies of Material Operating Agreements,
Etc. Within ten (10) days after execution of any Material Operating Agreement or
any amendment, modification, restatement, extension, renewal or supplement of
any Material Operating Agreement or termination of any Material Operating
Agreement, the Company shall deliver to each Noteholder that, together with its
Affiliates and related investment funds, holds $1,000,000 or more in principal
amount of the Notes, a complete copy of such Material Operating Agreement,
amendments, modifications, restatements, extensions, renewals or supplements.
(c) No Transfer of Interest in Material Operating Agreement.
The Company shall not, and shall not permit any of its Subsidiaries to, pledge,
transfer, assign any Material Operating Agreement except to the Senior Agent as
provided in the Senior Credit Documents.
6.18 Reserve Fund for Renovations. The Company shall contribute to OpBiz
and cause OpBiz to establish a reserve fund of $12 million from the Offering
Proceeds (the "Follow-on Spending Basket"). Amounts in the Follow-on Spending
Basket may be used by OpBiz to complete the Initial Renovation Contracts,
including to pay any cost overruns and the costs of any change orders,
expediting charges and the like. In addition, so long as (x) no Event of Default
has occurred and is continuing, (y) the Project Goals have been met in their
entirety, and (z) the Initial Renovation Contracts achieve 90% completion on
budget, as certified by OpBiz's chief executive officer or chief financial
officer to the reasonable satisfaction of the Majority Holders (provided,
however, if any such project is over budget (the aggregate amount of such
overage for all projects, collectively the "Overage") such certificate shall
certify the amount of the Overage and if, and only if, adequate reserves, in the
reasonable determination of the Majority Holders, shall have been made for such
Overage or such Overage shall have been reserved from or paid out of funds in
the Follow-on Spending Basket, such project will be deemed to be on-budget
solely for the purposes of determinations made with respect to the Follow-on
Spending Basket) then an amount (the "Freed-up Amount") of the Follow-on
Spending Basket may be contributed by the Company to OpBiz and used by OpBiz
(but, in the case of any funds to be used for any purpose other than reserving
or paying for any Overage,
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only if each of the conditions in clauses (x), (y) and (z) above are met), which
amount shall equal (A) the amount of the Follow-on Spending Basket, minus (B)
the amount of the Overage paid or reserved from the Follow-on Spending Basket
times (C) a percentage equal to (i) the total cost of Initial Renovation
Contracts that have become 90% complete and on budget, divided by (ii) the total
initial cost of all Initial Renovation Contracts, which initially will be
$88,000,000.
6.19 Escrowed Funds to Reconfigure Theater. At Closing, the Company shall
contribute to OpBiz and cause OpBiz to deposit $8,000,000 of the Note Proceeds
into an escrow account (the "Theater Escrow Account") to be used by OpBiz to
reconfigure the Theater in the event that OpBiz does not enter into an
entertainment agreement with a producer to reconfigure the Theater on terms and
conditions substantially similar to those contained in the
Development/Entertainment Side Letter (a "Qualifying Entertainment Agreement"),
provided that any such funds that are unspent following completion of the
reconfiguration of the Theater will be released to OpBiz. If OpBiz enters into a
Qualifying Entertainment Agreement, then the $8,000,000 shall be released to
OpBiz. All funds in the Theater Escrow Account, or released to OpBiz from the
Theater Escrow Account shall be used for Renovation Capital Expenditures or
otherwise in accordance with the Senior Credit Agreement.
6.20 Changes to Senior Credit Agreement and Senior Lenders. The Company
shall deliver a certified copy of the Senior Credit Agreement (and all
amendments, waivers, consents and other alterations thereof) to the Noteholders
no later than 3 Business Days prior to the execution thereof. The Company shall
also promptly advise the Noteholders as to the name and notice information for
any assignee of all or a portion of the Senior Debt of which it has Knowledge.
6.21 Debt Service Distributions. The Company shall, to the extent there
is no event of default existing under the Senior Credit Agreement and subject to
the terms of the Intercreditor Agreement (Senior Debt) and OpBiz's compliance
with the provisions of Section 8.2(d) of the Senior Credit Agreement, cause
OpBiz to make a quarterly cash Distribution of $1,500,000 to pay interest on the
Notes provided that: (i) at the time thereof and immediately after giving effect
thereto no Event or Event of Default (each as defined in the Senior Credit
Agreement) shall have occurred and be continuing, and (ii) the Leverage Ratio is
less than 5.00:1.00, or such lower ratio as in effect pursuant to a written
amendment, modification, waiver or consent to the Senior Credit Agreement.
6.22 Delivery of Business Plan. No later than December 31, 2004, the
Company shall deliver to each Noteholder (other than a Competitor) that,
together with its Affiliates and related investment funds, holds $1,000,000 or
more in principal amount of the Notes, a business plan for OpBiz that contains
monthly financial projections for the twelve months ending December 31, 2005 and
annual financial projections thereafter through December 31, 2010 ("Pro Forma
Financial Projections").
6.23 Development Agreement for Time Share Premises.
(a) The Company shall cause any agreement entered into by
the Company or any of its Subsidiaries for the development of a time share
project or another
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development such as a hotel or condominium or condo-hotel in accordance with the
terms of the Development/Entertainment Side Letter (the "Development Agreement")
to include the following terms: (i) the Company shall have a contractual right
to receive 50% of all fees paid to or received by or on behalf of the Company or
any of its Subsidiaries, collectively, or to which the Company or any of its
Subsidiaries collectively, are entitled to receive from, one or more time share
operators or developers (collectively, the "Developers") in respect of net
timeshare sales (net of cancellations and defaults) from any time share project,
or any similar fees in connection with another development such as a hotel or
condominium or condo-hotel by any such Developer on the Time Share Premises (the
"Marketing Fees"), and (ii) subject to the last sentence of this Section
6.23(a), the Developer shall agree to deposit, when due, the Marketing Fees
payable to the Company directly into a securities account of the Company that is
subject to a first-priority, valid and enforceable Lien of the Collateral Agent
pursuant to the Security Agreement and a Collateral Account Agreement (as
defined in the Security Agreement), which shall be reasonably satisfactory to
the Collateral Agent (the "Development Agreement Conditions"). The Company shall
provide the Majority Holders with a reasonable opportunity to review and comment
on the Development Agreement prior to its execution; it being understood that
the Company shall have no obligation to accept any comments provided by the
Majority Holders. For the avoidance of doubt, the Company and the Noteholders
acknowledge that (x) nothing in this Section 6.23(a) entitles any Time Share
Entity to receive more than 50% of the aggregate marketing or similar fees
payable to the Company, OpBiz and any Time Share Entity in respect of any
development on the Time Share Premises and (y) OpBiz shall be entitled to
receive 50% of such aggregate marketing or similar fees.
(b) If, on or before December 31, 2004, (i) OpBiz has not
entered into a Qualifying Entertainment Agreement or (ii) neither the Company
nor OpBiz has entered into a Development Agreement that satisfies the
Development Agreement Conditions, each holder of Warrants shall, as of January
1, 2005, receive an adjustment or increase in the number of Warrant Interests
issuable to such holder upon the exercise or conversion of its Warrants as
provided in Section 2.2(f)(iii) of the Warrants; provided that notwithstanding
the foregoing, if (x) OpBiz has entered into a Qualifying Entertainment
Agreement on or before December 31, 2004, and (y) prior to entering into a
Development Agreement that does not satisfy the Development Agreement
Conditions, OpBiz and/or the Company and the Collateral Agent have agreed, after
good faith negotiations, on an alternative set of conditions regarding the
matters that are the subject of Section 6.23(a), and entered into mutually
satisfactory amendments to the Security Agreement to give effect thereto, the
conditions of this Section 6.23(b) shall be deemed to have been satisfied, and
no adjustments or increases in the number of Warrant Interests issuable to any
such holder upon exercise or conversion of Warrants as provided in Section
2.2(f)(iii) will be made.
6.24 Further Assurances. From and after the date of this Agreement, upon
the request of the Noteholders, the Note Parties shall execute and deliver such
instruments, documents and other writings as may be reasonably necessary or
desirable to carry out the intent and purposes of the Notes Documents.
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ARTICLE VII - CERTAIN NEGATIVE COVENANTS OF THE COMPANY
The Company covenants and agrees that, from and after the Closing Date (a)
until all Noteholder Obligations (other than indemnities which are not then due
and payable) are discharged in full that the Company shall not and shall not
permit any of its Subsidiaries to directly or indirectly violate any of the
covenants and agreements contained in this Article VII , and (b) with respect to
the holders of Warrants, for so long as at least 20% of the Warrants and Warrant
Interests originally issued pursuant to this Agreement (without duplication)
remain outstanding (giving effect to any stock splits, stock combinations and
the like, but excluding the effects of any adjustments to the number of Warrants
made in connection with a merger or reorganization), to observe and abide by the
covenants contained in Section 7.6 (Transactions with Affiliates) and 7.7
(Business Conducted) and 7.16 (Tax Classification).
7.1 Mergers, Consolidations, Sales or other Disposition; Disposition of
Time Share Premises. Enter into any transaction of merger, reorganization, or
consolidation, or effect any Asset Transfer; or wind up, liquidate or dissolve,
or agree to do any of the foregoing, except:
(a) any Disposition of the Time Share Premises (1) to a
developer in accordance with (A) the terms of the Development/Entertainment Side
Letter and (B) Section 6.23, (2) to any Person (other than to an Affiliate), for
consideration including at least $14,000,000 in cash, (3) following a redemption
of Notes provided in Section 2.6.6, or (4) by the Company to any Time Share
Entity;
(b) a merger of any Subsidiary into the Company or any
Subsidiary provided that no amendments are made to the Organizational Documents
of any entity surviving or resulting from such merger;
(c) a sale or other Disposition with or without
consideration, of Property determined to be obsolete or surplus or unnecessary
to the business operations of the Company or its Subsidiaries in the discretion
of management exercised pursuant to normal commercial standards, so long as the
Fair Market Value of all such Property so disposed of in any Fiscal Year with
consideration does not exceed $1,000,000 in the aggregate, provided such
Property is promptly replaced with Property of equal or greater value;
(d) liquidations of Permitted Investments;
(e) Dispositions of assets resulting from a Casualty Event;
(f) sales, conveyances, or other Dispositions of inventory
in the ordinary course of business;
(g) any Subsidiary of the Company may sell, lease or
otherwise Dispose of assets to the Company or any wholly-owned Subsidiary of the
Company, provided that such Asset Transfer would not reasonably be expected to
have a Material Adverse Effect;
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(h) the Company and its Subsidiaries may Dispose of any
assets having a Fair Market Value not in excess of $1,000,000, provided that (i)
the aggregate sale proceeds of all assets subject to Dispositions pursuant to
this clause (h) shall not exceed $5,000,000 in any Fiscal Year, (ii) each such
Disposition is for Fair Market Value, (iii) at least 90% of the consideration
received in respect thereof is cash and (iv) the Net Cash Proceeds of such
disposition are applied or reinvested in accordance with the applicable
provisions of the Senior Credit Agreement;
(i) the Company and its Subsidiaries may remove or otherwise
Dispose of Property in connection with the making of Renovation Capital
Expenditures so long as the Net Cash Proceeds from any such Disposition are
applied or reinvested in accordance with the applicable provisions of the Senior
Credit Agreement;
(j) transfers of cash to Aladdin Gaming if required under
Section 2.10(d) of the Acquisition Agreement;
(k) other sales, transfers or other Dispositions of assets
not to exceed $500,000 in the aggregate in any Fiscal Year;
(l) a Change of Control transaction in which the Company
complies with the terms of Section 2.6.4; or
(m) a Qualified Public Offering.
7.2 Distributions. Directly or indirectly declare or make, or incur any
liability to make, any Distribution, other than:
(a) the Company may declare and pay dividends with respect
to its Equity Interests payable solely in additional Equity Interests;
(b) Subsidiaries may declare and pay dividends ratably with
respect to their Equity Interests;
(c) so long as at the time thereof and immediately after
giving effect thereto, no Event of Default shall have occurred and be
continuing, subject to the provisions of the Intercreditor Agreement (Senior
Debt) and OpBiz's compliance with the provisions of Section 8.2(d) of the Senior
Credit Agreement, OpBiz and the Company may make a Distribution in cash for
Operating Expenses; provided, that at the request of the Noteholders the Company
will provide the Noteholders with any documentation supporting its calculation
of any Distribution proposed to be made pursuant to this paragraph (c) for the
Noteholders' review and approval (which approval shall not be unreasonably
withheld or delayed) no later than five (5) Business Days prior to the estimated
date of such Distribution;
(d) so long as at the time thereof and immediately after
giving effect thereto, no Event of Default shall have occurred and be
continuing, and subject to the Gaming
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Laws and any requirements or restrictions of the Gaming Authority, the Company
may make a Distribution of Unrestricted Cash;
(e) to issue and repurchase the Warrants, the Warrant
Interests and any Put Notes pursuant to the terms thereof;
(f) OpBiz may make the Distributions contemplated by Section
6.21 (subject to the conditions set forth therein) and in Section 8.2 of the
Senior Credit Agreement;
(g) Any Subsidiary of the Company (other than OpBiz or any
Subsidiary of OpBiz) may make Distributions of Marketing Fees to the Company;
and
(h) to the extent there is no event of default existing
under the Senior Credit Agreement and subject to the terms of the Intercreditor
Agreement (Senior Debt) and OpBiz's compliance with the provisions of Section
8.2(d) of the Senior Credit Agreement, the Company may receive Distributions
from the proceeds of a Qualified Public Offering of OpBiz so long as such
Distributions are used to (i) pay fees and expenses related to such Qualified
Public Offering or (ii) for any other purpose not prohibited by the terms of
this Agreement.
7.3 Guaranties. Make, issue, or become liable on any Guaranty, except
(a) endorsements of instruments for deposit or collection in the ordinary course
of business, (b) Guaranties existing on the Closing Date as set forth on Section
7.3 of the Disclosure Schedule, (c) customary indemnities in the ordinary course
of business, and (d) Guaranties of Debt permitted by Section 7.4.
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7.4 Debt. Create, incur, assume, maintain or otherwise become liable or
be liable in respect of any Debt, other than: (a) the Noteholder Obligations and
the obligations in respect of the Securities Purchase Documents; (b) Debt of any
Subsidiary of the Company incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Leases and any
Debt assumed in connection with the acquisition of any such assets or secured by
a Lien on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Debt that do not increase the outstanding
principal amount thereof; provided, that the aggregate amount of Debt permitted
by this clause (b) shall not exceed $7,000,000; and, provided, further that such
Debt is incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement; (c) Capital Leases or other Debt
incurred in connection with the financing (including any modification,
refinancing or replacement thereof that does not, when taken as a whole, have an
adverse effect on the Purchasers) of the utility plant owned and operated by
Northwind and located on the Energy Premises, (d) Senior Debt permitted by the
Intercreditor Agreement (Senior Debt), (e) Debt listed on Section 7.4 of the
Disclosure Schedule of Aladdin Gaming assumed by OpBiz pursuant to the
Acquisition Agreement) and any renewals, extensions or refinancing thereof that
do not increase the aggregate outstanding principal amount thereof, plus accrued
and unpaid interest on the Debt refinanced, (f) the Guaranties permitted by
Section 7.3; (g) Debt of any Person that becomes a Subsidiary after the date
hereof, in accordance with the terms hereof, provided that such Debt exists at
the time such Person becomes a Subsidiary and is not created in contemplation of
or in connection with such Person becoming a Subsidiary and provided, further,
that neither the Company nor OpBiz becomes liable for any such Debt; (h) Debt of
any Subsidiary of the Company as an account party in respect of trade letters of
credit issued in the ordinary course of business; (i) [reserved]; (j) Debt of
the Subsidiaries of the Company in respect of performance bonds, bid bonds,
appeal bonds, surety bonds and similar obligations and trade letters of credit,
in each case provided in the ordinary course of business, and any extension,
renewal or refinancing thereof to the extent not provided to secure the
repayment of other Debt and to the extent that the amount of refinancing Debt is
not greater than the amount of Debt being refinanced; (k) Hedge Obligations
(provided, however, that the notional principal amount of any such Hedge
Obligations does not exceed the principal amount of indebtedness to which such
Hedge Obligation relates); (l) Debt incurred in connection with letters of
credit in the aggregate stated face amount of up to $90,000,000 that are
obtained for the benefit of OpBiz, the proceeds of draws under which shall be
applied for Renovation Capital Expenditure or as required by Sections 4.3(b) or
7.13 of the Senior Credit Agreement, provided that (i) any draw down of funds
under such letters of credit shall be treated as an equity investment by the
Company in OpBiz and (ii) the Company has posted cash collateral equal to the
face amount of such letters of credit outstanding from time to time (or if such
letters of credit are not fully cash collateralized, has a combination of
unrestricted cash on deposit in the Company's bank accounts and cash collateral
equal to the stated face amount of such letters of credit outstanding from time
to time); and (m) other unsecured Debt of Subsidiaries of the Company not to
exceed $500,000 in aggregate principal amount outstanding.
7.5 Prepayment; Certain Matters Relating to the Senior Debt.
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(a) Other than in accordance with their terms, voluntarily
prepay, redeem, purchase or retire any Debt, other than the Senior Debt, the
Noteholder Obligations and any Debt (including Capital Leases) related to the
utility plant owned and operated by Northwind and located on the Energy Premises
(or any refinancing or replacement thereof).
(b) Modify, amend or otherwise alter (or permit the
modification, amendment, or alteration of) the terms and provisions of the
Senior Debt or any Senior Credit Document other than in accordance with the
provisions of the Intercreditor Agreement (Senior Debt).
(c) With respect to Senior Debt entitled to the benefit of
the Intercreditor Agreement (Senior Debt) in excess of $530 million (as may be
reduced by payment of principal thereon, other than with respect to payments as
a result of permitted refinancings) (the "Additional Senior Debt"), use such
proceeds of Additional Senior Debt to pay, refinance or redeem the Notes.
7.6 Transactions with Affiliates. Except as set forth below or as
otherwise permitted hereunder, sell, transfer, distribute, or pay any money or
Property to any Affiliate, or lend or advance money or Property to any
Affiliate, or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any Property, of any Affiliate, or
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate except as permitted by Section 7.3 , except that:
(a) Distributions may be made to the extent provided in Section 7.2; (b)
customary and reasonable fees, indemnities and reimbursements may be paid to
officers and directors of the Company and its Subsidiaries; (c) the Company or
any of its Subsidiaries may enter into employment, noncompetition or
confidentiality agreements with their employees in the ordinary course of
business; (d) management fees may be paid by OpBiz to any Manager, and license
and/or franchise fees may be paid by OpBiz to Planet Hollywood pursuant to the
License Agreement (subject to the terms of the Intercreditor Agreement (Planet
Hollywood)); (e) loans or advances may be made to employees of the Company and
its Subsidiaries to fund moving and travel expenses and the exercise price of
options granted under employment agreements or stock option plans or agreements
of the Company or its Subsidiaries, not to exceed $400,000 outstanding at any
time; or (f) any transaction entered into by the Company in connection with the
financing, development or operation of the Time Share Premises in accordance
with the Time Share Plan or the sale or other transfer of the Time Share
Premises by the Company (i) to any Time Share Entity or (ii) to any Affiliate
pursuant to clause (3) of Section 7.1(a). Notwithstanding anything in the
preceding sentence to the contrary, the Company and its Subsidiaries may engage
in transactions with Affiliates in the normal course of business, in amounts and
upon terms fully disclosed to the Purchasers on a quarterly basis which are no
less favorable to the Company and its Subsidiaries than would be obtainable in a
comparable arm's length transaction with a third party who is not an Affiliate.
7.7 Business Conducted. Engage, directly or indirectly, in any line of
business other than that directly related to the Premises or the Time Share
Premises (which shall include the Time Share Plan) or reasonably incidental
thereto. The Company shall not discontinue the operation of the Premises or any
material portion thereof without the prior written consent of the Noteholders,
which consent shall not be unreasonably withheld or delayed.
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7.8 Liens. Create, incur, assume, or permit to exist any Lien on any
Property now owned or hereafter acquired by any of them, except (a) Permitted
Liens on Property of the Company, as set forth in clauses (a), (i), (n), (o) or
(p) of the definition of "Permitted Liens" set forth in Section 1.1 herein, but
only to the extent with respect to clause (p) that the Company owns the Time
Share Premises, (b) Permitted Liens on the Property of the Subsidiaries and (c)
Liens on unrestricted cash of the Company posted as collateral to secure the
Company's obligations under any letter of credit issued or permitted by Section
7.4(l).
7.9 Restricted Investments. Make any Restricted Investment.
7.10 Negative Pledge Clauses. Enter into or suffer to exist or become
effective any agreement which prohibits or limits the ability of the Company or
any of its Subsidiaries to create, incur, assume or suffer to exist the Liens
upon the Collateral contemplated by the Notes Documents to secure the Noteholder
Obligations or, in the case of any Guarantor, its obligations under the Security
Agreement, other than (a) this Agreement and the other Notes Documents, (b) the
Senior Credit Agreement and the other Senior Credit Documents, and (c) any other
agreements governing Permitted Liens, but only to the extent of the Property
subject to such Permitted Liens.
7.11 Restrictions on Subsidiary Distributions. Enter into or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (a) make Distributions in respect of any Equity
Interests of such Subsidiary held by, or pay any Debt owed to, the Company or
any other Subsidiary or (b) make investments in the Company or any other
Subsidiary, except in each case for such encumbrances or restrictions existing
under or by reason of any restrictions existing under the Securities Purchase
Documents or the Senior Credit Documents.
7.12 Transaction Documents. The Company will not, and will not permit any
of its Subsidiaries to, amend, supplement or otherwise modify the material terms
of, or waive any of the material provisions of or any material rights under the
Acquisition Agreement or the Planet Hollywood License Agreement or amend,
supplement or otherwise modify any of the terms of, or waive any of the
provisions of or any material rights under the Senior Credit Documents, except
for (a) amendments of and waivers of provisions of or material rights under the
Senior Credit Agreement and the Senior Credit Documents to the extent permitted
under the Intercreditor Agreement (Senior Debt) and (b) amendments to the
Acquisition Agreement to give effect to (i) the provisions of Sections III.1 and
III.5 of the Status Report of Aladdin Gaming filed with the Bankruptcy Court on
June 20, 2003, (ii) the cancellation of the "Cash Flow Note" contemplated by the
June 30, 2003 Settlement Agreement among OpBiz, Aladdin Gaming and various other
parties thereto and (iii) certain other technical changes and corrections to the
schedules and definitions in the Acquisition Agreement, which are in the
aggregate, immaterial.
7.13 Management Pool. The Company shall not increase the number of Equity
Interests available for issuance pursuant to the Management Pool or issue, or
authorize for issuance, Equity Interests from the Management Pool to Persons
other than to employees and independent directors of the Company and its
Subsidiaries who are not members, Affiliates or Associates of the Investor
Group.
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7.14 Organizational Documents. The Company shall not make, or permit
OpBiz to make, any amendment or modification (by merger or otherwise) to any
term or provision of its Organizational Documents, other than (i) amendments and
modifications made in connection with a Change of Control and a Qualified Public
Offering that are not adverse to the Securityholders, (ii) immaterial amendments
that are not adverse to the Securityholders, (iii) amendments to (or an
amendment and restatement of) the operating agreement of OpBiz, in form and
substance reasonably satisfactory to the Majority Holders (provided that the
Majority Holders shall not object to any amendment to the operating agreement of
OpBiz providing for the appointment of either Michael V. Mecca or a
representative of the Senior Lenders to such board of managers), in order
establish a board of managers (and related amendments to vest the power to
manage the affairs of OpBiz in such board of managers), and (iv) as required by
Gaming Laws.
7.15 Limited Activities. Except for obligations or liabilities (i)
incurred in connection with its formation, (ii) contained in or expressly
permitted by the Securities Purchase Documents, (iii) related to reporting
obligations under the Exchange Act (including the rules and regulations of the
SEC) and other Applicable Law, or (iv) incurred by the Company in connection
with the Time Share Plan, none of BH/RE, EquityCo or the Company will incur,
directly or indirectly, any material obligations or liabilities or will engage
in any material business activities of any type or kind whatsoever.
7.16 Tax Classification. No action will be taken by any Person which
would result in the Company not being classified as an association taxable as a
corporation for federal tax purposes.
7.17 Ownership of Subsidiaries. At all times prior to a Qualified Public
Offering, the Company shall directly or indirectly own 100% of all membership
interests and other Equity Interests of each of its Subsidiaries.
ARTICLE VIII - EVENTS OF DEFAULT; ACCELERATION; ETC.
8.1 Events of Default and Acceleration. It shall constitute an event of
default ("Event of Default") if any one or more of the following shall occur for
any reason on or after the Closing Date:
(a) (i) any failure to make any payment of principal on any
of the Notes or (ii) any failure to make any payment of cash interest, fees or
premium or other amount in respect of any of the Notes or any other Noteholder
Obligations (other than an amount referred to in clause (i) above) when due and
such failure shall continue for five or more days;
(b) any representation or warranty made by the Company or
any other Note Party in this Agreement, any of the other Securities Purchase
Documents, any financial statement, or any certificate furnished by or on behalf
of the Company or any other Note Party to the Noteholders pursuant to this
Agreement or the other Securities Purchase Documents shall prove to be untrue in
any material respect as of the date when made or furnished or deemed to
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have been made or furnished, and the Company shall have failed to cure any such
breach within thirty (30) days of receipt of notice thereof from the Majority
Holders;
(c) default shall occur in the observance or performance of
any of the covenants and agreements contained in this Agreement (other than
those which are the subject of clauses (a) and (b) above or otherwise specified
in this Section 8.1), or in any of the Notes or the other Notes Documents and
the Company shall fail to cure such default within a period of thirty (30) days
following receipt of notice thereof from the Noteholders;
(d) any default by the Company or any Subsidiary in any
payment of principal of or interest on any Debt for borrowed money in an
aggregate amount in excess of $5,000,000 (other than the Noteholder Obligations
or any Debt under the Senior Credit Documents (which is addressed in Section
8.1(m)) beyond any period of grace provided with respect thereto, or (unless the
subject of a good faith dispute) in the performance of any other agreement, term
or condition contained in any agreement under which any such Debt is created, if
the effect of such default is to cause, or permit the holder or holders of such
obligation to declare, such Debt to become due prior to its stated maturity,
unless such default has been waived by the holder or the holders of such Debt or
cured prior to acceleration of the Noteholder Obligations under Section 8.2;
(e) (i) the Company or any Subsidiary shall (x) be unable to
pay its debts generally as they become due, (y) make an assignment for the
benefit of its creditors, or (z) file a petition or application, or an answer,
or otherwise commence a proceeding, under any Applicable Law or statute of the
United States of America, any state thereof or any foreign country (other than
under the Bankruptcy Code), seeking reorganization or arrangement or similar
relief or otherwise to take advantage of any insolvency act, or for the
appointment of a receiver, trustee, liquidator or conservator of itself or of
the whole or any substantial part of its Property; (ii) there is commenced
against the Company or any Subsidiary any proceeding for any of the relief
described in clause (i)(z) above and such proceeding shall remain undismissed
and unstayed for a 60 day period; (iii) the Company or any Subsidiary by any act
in any such proceeding indicates its consent to or approval of or acquiescence
in such relief; or (iv) the Company or any Subsidiary takes any action for the
purpose of effecting any of the foregoing;
(f) (i) the Company or any Subsidiary shall commence a
voluntary case concerning itself under the Bankruptcy Code; (ii) there is
commenced against the Company or any Subsidiary an involuntary case under the
Bankruptcy Code and such proceeding shall remain undismissed and unstayed for a
60 day period; or (iii) the Company or any Subsidiary by any act in any such
proceeding indicates its consent to, approval of or acquiescence in such relief;
(g) (i) a court of competent jurisdiction shall enter (other
than under the Bankruptcy Code) an order, judgment or decree appointing a
custodian, receiver, trustee, liquidator or conservator of the Company or any
Subsidiary or of the whole or any substantial part of its Property, or (ii)
under the provisions of any law for the relief or aid of debtors other than the
Bankruptcy Code, a court of competent jurisdiction shall assume custody or
control of the Company or any Subsidiary or of the whole or any substantial part
of its Properties;
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(h) the Company or any Subsidiary shall file a certificate
of dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence any action or proceeding for dissolution, winding-up
or liquidation, or shall take any corporate action in furtherance thereof, in
each case, except as permitted by Section 7.1; or the Company or any Subsidiary
shall have commenced against it any action or proceeding for dissolution,
winding-up or liquidation, not otherwise permitted hereunder;
(i) any judgment in excess of $5,000,000 (in excess of
insurance coverage) is rendered against the Company or any Subsidiary, or there
is any attachment, injunction or execution against the Company or any Subsidiary
Property for an amount in excess of $5,000,000, unless such judgment,
attachment, injunction or execution is paid, stayed or dismissed within a period
of thirty (30) days after the first date on which the judgment creditor is
entitled to exercise its rights and remedies with respect to such judgment,
attachment, injunction or execution;
(j) any loss, theft, damage or destruction of any item or
items of Collateral occurs which: (i) causes a Material Adverse Effect; or (ii)
is in excess of $5,000,000 and is not adequately covered by insurance;
(k) any Gaming License shall be modified, refused,
suspended, revoked or canceled or allowed to lapse or if a notice of a material
violation is issued under any Gaming License by the issuing agency or other
Governmental Authority having jurisdiction, or any proceeding is commenced by
any Governmental Authority for the purpose of modifying in any materially
adverse respect, suspending, revoking or canceling any Gaming License in any
materially adverse respect, or any Governmental Authority shall have appointed a
conservator, supervisor or trustee to the Casino;
(l) this Agreement, any of the Security Documents or other
Notes Documents shall for any reason cease to be, or shall be asserted by any
Note Party not to be, a legal, valid and binding obligation of any Note Party,
enforceable in accordance with its terms, or the security interest or Lien
purported to be created by any of the Security Documents shall, for any reason
other than as a result of any action or inaction by the Collateral Agent, any
Noteholder or any representative thereof, cease to be, or be asserted by any
Note Party not to be, a valid, first priority perfected security interest in any
Collateral (except to the extent otherwise permitted under this Agreement or any
of the Security Documents);
(m) the occurrence and continuance of an "Event of Default"
(as defined in the Senior Credit Agreement) under the Senior Credit Documents;
(n) the Planet Hollywood License Agreement shall be
terminated for any reason or there shall be a default by any party to the Planet
Hollywood License Agreement which is not cured within any applicable cure period
thereunder; or
(o) Senior Debt exceeds the Senior Debt Limit; or
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(p) Following satisfaction of all of the Control Conditions
(as such term is defined on the Investor Rights Agreement), the Irrevocable
Proxy or the Power of Attorney delivered to the Collateral Agent pursuant to the
Investor Rights Agreement on the Funding Date shall fail, for whatever reason,
to provide the Collateral Agent with the rights, powers, remedies and benefits
set forth therein;
then, and in any such event, Noteholders holding greater than 50%, voting
together as a single class, in principal amount of the Notes may, by notice to
the Company, declare the entire unpaid principal amount of the Notes, plus all
interest accrued and unpaid thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Notes, all such accrued
interest and all such amounts shall become and be forthwith due and payable
(unless there shall have occurred an Event of Default under Sections 8.1(e), (f)
or (g), in which case all such amounts shall automatically become due and
payable), without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Company, and, in the case of
Events of Default under subsections (a) or (b) above, subject to the provisions
of the Intercreditor Agreement (Senior Debt), each Noteholder may proceed to
protect and enforce its rights by suit in equity, action at law and/or other
appropriate proceeding either for specific performance of any covenant,
provision or condition contained or incorporated by reference in this Agreement
or in aid of the exercise of any power granted in this Agreement.
8.2 Remedies. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Noteholders shall have
accelerated the maturity of the Notes, each Noteholder, subject to the
provisions of the Intercreditor Agreement (Senior Debt), if owed any amount with
respect to the Notes may proceed to protect and enforce its rights by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Notes Documents or any instrument pursuant to which the Noteholder
Obligations to such Noteholder are evidenced, including as permitted by
Applicable Law the obtaining of the ex parte appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of such
Noteholder; provided, that the sole and exclusive remedy of the Noteholders in
respect of a violation of the covenants contained in Section 6.10 or Section
6.23 of this Agreement shall be an adjustment to the number of Warrant Interests
issuable pursuant to the Warrants pursuant to the applicable clause of Section
2.2(f) thereof. Except as set forth in the proviso to the immediately preceding
sentence, no remedy herein conferred upon any Noteholder is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
8.3 Annulment of Certain Defaults by Senior Agent. The Senior Agent may,
by written instrument filed with the Company, rescind and annul any default or
violation of Section 8.1(m) of this Agreement, and its consequences, if the
Senior Agent (and, if relevant, the Senior Lenders) has rescinded and annulled
the relevant event of default in the Senior Credit Agreement, provided that such
event of default under the Senior Credit Agreement does not also constitute an
Event of Default under a section of this Agreement other than Section 8.1(m).
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8.4 Distribution of Proceeds. In the event that following the occurrence
or during the continuance of any Default or Event of Default, any Noteholder
receives any monies with respect to the amounts due hereunder, such monies shall
be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Noteholders for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or sustained
by the Noteholders in connection with the collection of such monies by the
Noteholders, for the exercise, protection or enforcement by the Noteholders of
all or any of the rights, remedies, powers and privileges of the Noteholders
under this Agreement or any of the other Notes Documents pro rata based on the
relative amount so incurred or sustained;
(b) Second, to all other Noteholder Obligations in such
order or preference as the Noteholders may determine; provided, however, that
Distributions shall be made among the Noteholders pro rata; and
(c) Third, the excess, if any, shall be returned to the
Company or to such other Persons as are entitled thereto.
ARTICLE IX - MISCELLANEOUS
9.1 No Waiver; Cumulative Remedies. No failure or delay on the part of
any Noteholder, in exercising any right, power or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law, except as provided
in the proviso to the first sentence of Section 8.2.
9.2 Amendments, Waivers and Consents. Any provision in this Agreement,
the Notes or the other Notes Documents to the contrary notwithstanding, changes
in or additions to this Agreement may be made, and compliance with any covenant
or provision herein set forth may be omitted or waived, if the Company shall, as
long as any Notes are outstanding, obtain consent thereto in writing from the
Majority Holders, and the Majority Holders shall, in any case, deliver copies of
such consent in writing to all other holders of Notes; provided that the consent
of each affected Noteholder shall be required to waive, extend, forgive or
otherwise alter the principal amount or other terms of the Notes or to cancel,
release or agree to discharge payment of any of the Noteholder Obligations, to
reduce or to postpone the date fixed for the payment of the principal (including
any required redemption) or interest payable on any Note to alter or amend any
provisions relating to prepayments, mandatory purchase or redemption, to release
Liens upon the Collateral or any Guarantor under any Guaranty, to alter the
terms of subordination (including, without limitation, the Intercreditor
Agreement (Senior Debt)), or to alter or amend the consent mechanism provided
for under Section 9.22 or this Section 9.2. Any waiver or consent may be given
subject to satisfaction of conditions stated therein and any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Written notice of any waiver or consent effected under this
subsection shall promptly be
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delivered by the Company to any holders who did not execute the same. Any
amendments or modifications made or purported to be made under this Section 9.2
shall be subject to the Intercreditor Agreement (Senior Debt).
9.3 Gaming Provisions. The Company and the Securityholders agree that if
the Company is licensed by the Gaming Authorities at any time during the term of
this Agreement, they will comply with all applicable Gaming Laws. If the Company
is so licensed, each Securityholder acknowledges and understands that (a) it
will be subject to being called forward by the Gaming Authorities, in their
discretion, for licensing, qualification or a finding of suitability as a lender
to a gaming licensee, and (b) to the extent the prior approval of the Gaming
Authorities is required pursuant to Applicable Law for the exercise, operation
and effectiveness of any remedy hereunder or under any other Notes Document, the
Warrant or the Investor Rights Agreement, or the taking of any action that may
be taken by a Securityholder hereunder or under any other Notes Document, the
Warrant or the Investor Rights Agreement, such remedy or action shall be subject
to any required approval of the Gaming Authorities.
(a) This Agreement is subject to the Gaming Laws.
(b) The Securityholders and the Collateral Agent agree to
cooperate with the Gaming Authorities in connection with the administration of
their regulatory jurisdiction over the Company and its Subsidiaries, including
the provision of such documents or other information as may be requested by the
Gaming Authorities relating to the Company or any of its Subsidiaries or to the
Notes Documents, the Warrants or the Investor Rights Agreement.
(c) To the extent that the exercise of any of the rights,
remedies and powers provided in this Agreement violates any applicable provision
of the Gaming Laws, then beginning on the date when the Commission serves notice
or a determination of unsuitability pursuant to Applicable Law upon the Company,
it shall be unlawful for the unsuitable member (i) to receive any dividend or
interest or any payment or distribution of any kind, including of any share of
the distribution of profits or cash or any other property, or payments upon
dissolution, from the Company, other than pursuant to Section 2.6.8, (ii) to
exercise directly or through any proxy, trustee or nominee any voting right
conferred by the member's interest in the Company, (iii) to participate in the
management interest of the Company or (iv) to receive any remuneration (other
than pursuant to Section 2.6.8) in any form from the Company or from any Company
holding a Gaming License for services rendered or otherwise.
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9.4 Ability to Update Disclosure Schedule and Exhibits. Between the date
of execution of this Agreement and the Closing Date, the Company shall have the
right to (a) update the Disclosure Schedule with respect to Sections 4.15, 6.17,
7.4 and 7.8 of this Agreement and update Exhibits A, H, I, J and K to conform
such exhibits to the corresponding exhibits in the Senior Credit Agreement. Any
such updates made with respect to the Disclosure Schedule shall be given
retroactive effect to the Funding Date in order to provide for such additional
information to be disclosed in connection with the Acquisition.
9.5 Addresses for Notices, Etc. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed (by first
class registered or certified mail, postage prepaid), sent by express overnight
courier service or electronic facsimile transmission with a copy by mail, or
delivered to the applicable party at the addresses indicated below:
If to the Company:
MezzCo, L.L.C.
c/o OpBiz, L.L.C.
3667 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: Joshua Revitz c/o Debbie Faint
Facsimile No.: (702) 785-5080
With copies to:
Jones Day
2727 North Harwood Street
Dallas, TX 75201-1515
Attention: Michael Weinberg, Esq.
Facsimile No.: (214) 969-5100
Bay Harbour Management, L.C.
885 Third Avenue, 34th Floor
New York, New York 10022
Attention: Joshua Revitz
Facsimile No.: (212) 371-7497
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If to the Noteholders:
At the address for notice specified on such
Noteholder's signature page to this Agreement.
With a copy to:
Goodwin Procter LLP
Exchange Place
53 State Street
Boston, MA 02109
Attention: Steven M. Ellis, Esq.
Facsimile No.: (617) 523-1231
If to any other holder of the Notes, at such holder's address for
notice as set forth in the transfer records of the Company
To the Senior Agent:
The Bank of New York
Asset Solutions Division
600 East Las Colinas Blvd.
Suite 1300
Irving, Texas 75039
Attention: Steve Jerard
Facsimile No.: (972) 401-8557
With a copy to Risk Management at the above address.
With copies to:
Kaye Scholer LLP
3 First National Plaza
Suite 4100
70 West Madison Street
Chicago, IL 60602-4231311
Attention: Michael Solow, Esq.
Facsimile No.: (312) 583-2360
Kaye Scholer LLP
1999 Avenue of the Stars
Suite 1600
Los Angeles, CA 90067
Attention: Michael Santoro, Esq.
Facsimile No.: (310) 229-1895
78
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall, when mailed or sent, respectively, be effective (i) three
days after being deposited in the mails, (ii) one Business Day after being
deposited with the express overnight courier service or sent by electronic
facsimile transmission (with receipt confirmed), respectively, addressed as
aforesaid or (iii) immediately upon confirmation of receipt by facsimile or
transmission by electronic mail by the recipient.
9.6 Costs, Expenses and Taxes. The Company agrees to pay all reasonable
out-of-pocket costs and expenses of the Noteholders (including reasonable legal
fees of one general legal counsel to the Noteholders and one Nevada counsel to
the Noteholders) in connection with the preparation, execution and delivery of
this Agreement, the Securities, the other Securities Purchase Documents and
other instruments and documents to be delivered hereunder, and in connection
with the consummation of the transactions contemplated hereby and thereby, as
well as all reasonable out-of-pocket costs and expenses incurred by the
Noteholders in connection with the amendment, waiver (whether or not such
amendment or waiver becomes effective) or enforcement of this Agreement, the
Notes, the other Securities Purchase Documents, and other instruments and
documents to be delivered hereunder and thereunder. In addition, the Company
agrees to pay (a) any and all stamp and other similar Taxes (expressly excluding
income and capital gain taxes) payable or determined to be payable by any
Noteholder in connection with the execution and delivery of this Agreement, the
Securities, the other Securities Purchase Documents, and the other instruments
and documents to be delivered hereunder or thereunder, (b) the expenses of
preparing Notes from time to time in connection with exchanges and transfers of
Notes, and (c) the expenses of delivering copies of Transaction Documents to
Noteholders. It is acknowledged that a $150,000 retainer has been provided to
the Purchasers to be applied to such fees and expenses. On each of the Funding
Date and the Closing Date, the Company shall reimburse the Purchasers for their
reasonable fees and expenses incurred and unpaid as of such date (it being
understood that the requirement to make such payments on such dates shall not,
in any case, limit the obligations of the Company to reimburse the Purchasers
for all of their reasonable fees and expenses, as described in the preceding
sentence).
9.7 Assignability; Binding Agreement. This Agreement may not be assigned
by the Company without the prior written consent of each other party hereto;
provided, however, that any Noteholder may assign this Agreement freely without
the consent of the Company if such assignor agrees to be bound by all the
obligations of a Noteholder hereunder. This Agreement shall be binding upon and
enforceable by, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns, and no others. Notwithstanding the
foregoing, nothing in this Agreement is intended to give any Person not named
herein the benefit of any legal or equitable right, remedy or claim under this
Agreement.
9.8 Payments in Respect of Notes. Each Noteholder and any successor
holder of the Notes by their acceptance thereof, agree that, except with respect
to any payments made to such Noteholder or successor holder of the Notes
pursuant to Section 2.5(b), Section 2.6.4, Section
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2.6.5, Section 2.6.6 or Section 2.6.7 with respect to all sums received by them
applicable to the payment of principal of or interest on the Notes equitable
adjustment will be made among them so that, in effect, all such sums shall be
shared ratably by all of the Noteholders whether received by voluntary payment,
by realization upon security, by the exercise of the right of set off, by
counterclaim or cross-action or by the enforcement of any or all of the Notes.
If any holder of the Notes receives any such payment on its Notes in excess of
its pro rata portion, then such holder receiving such excess payment shall
purchase for cash from the other holders an interest in their Notes in such
amounts as shall result in a ratable participation by all of the holders in the
aggregate unpaid amount of Notes then outstanding. The Company shall not have
any obligation to any Person under this Section 9.8.
9.9 Indemnification. In addition to the payment of expenses pursuant to
Section 9.6, whether or not the transactions contemplated by this Agreement
shall be consummated, the Company and OpBiz agree, jointly and severally, to
indemnify, pay and hold each Noteholder and the partners, members, officers,
directors, employees, beneficiaries, customers, attorneys and agents of each
Noteholder (collectively, the "Indemnitees") harmless from and against, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnitees shall be
designated a party thereto), which may be imposed on, incurred by, or asserted
against such Indemnitee, in any manner relating to or arising out of (i) this
Agreement, the Securities, and the other Transaction Documents (other than the
Senior Credit Documents) and all other matters related thereto or in connection
therewith, (ii) the Noteholders' agreement to purchase the Notes and the
Warrants, or the use or intended use of the proceeds of the Notes and the
Warrants hereunder, (iii) the violation of any securities law by the Company in
connection with or otherwise affecting the transactions contemplated by this
Agreement, unless the violation resulted from a breach by such Noteholder of its
representations contained in Article V, (iv) the failure of any of the parties
(other than the Noteholders) to the Transaction Documents to comply with any
law, rule or regulation applicable to the transactions contemplated thereby or
(v) any Environmental Law, or any Hazardous Substances (A) present on or under
the Premises (B) released from or onto the Premises, or (C) generated by the
Company (the "Indemnified Liabilities"); provided that the Company shall have no
obligation to an Indemnitee hereunder with respect to (a) Indemnified
Liabilities which are determined by a final court decision or arbitral award to
have resulted from the gross negligence or willful misconduct of that Indemnitee
or (b) any intentional violation of the Gaming Laws by a Noteholder. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, the Company shall contribute the maximum portion which it is permitted
to pay and satisfy under Applicable Law, to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them. The
provisions of this Section 9.9 will survive the termination of this Agreement
and the repayment of the Note Obligations unless otherwise agreed in writing by
the Company and each affected Noteholder.
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9.10 Survival of Representations and Warranties. All representations and
warranties made to the Noteholders in this Agreement, the Notes, the Securities
Purchase Documents or any other instrument or document delivered in connection
herewith or therewith, shall survive the execution and delivery hereof and
thereof, acceptance of the Notes, the Warrants and the Warrant Interests,
payment of the Notes or upon redemption, prepayment or otherwise, exercise of
the Warrants or termination of this Agreement, regardless of any investigation
made by the Noteholders or on behalf of the Noteholders.
9.11 Prior Agreements. This Agreement, the other Securities Purchase
Documents, the Development/Entertainment Side Letter and the other Transaction
Documents constitute the entire agreement between the parties and supersede the
Term Sheet and any prior understandings or agreements concerning the subject
matter hereof or thereof.
9.12 Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
9.13 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York. Notwithstanding the
foregoing, matters of law in this Agreement that are related to gaming in Nevada
shall be governed by the Nevada Gaming Control Act (NRS Chapter 463) and the
regulations of the Nevada Gaming Commission as enforced by the State Gaming
Control Board in their current form and as they may hereafter be amended from
time to time.
9.14 Dispute Resolution. Each party hereto hereby agrees as follows:
(a) All disputes, claims, or controversies arising out of or
relating to this Agreement or any of the other Securities Purchase Documents
(other than the Security Documents, the Subsidiary Guarantees, the Intercreditor
Agreements and the Escrow Agreement) or any agreement or document executed and
delivered as contemplated by any of them or the negotiation, breach,
termination, validity or performance hereof or the transactions contemplated
hereby or thereby that are not resolved by mutual agreement shall be resolved
solely and exclusively by binding arbitration to be conducted before
J.A.M.S./Endispute, Inc. or its successor. The arbitration shall be held in Las
Vegas, Nevada before a single arbitrator and shall be conducted in accordance
with the rules and regulations promulgated by J.A.M.S./Endispute, Inc. unless
specifically modified herein.
(b) The parties covenant and agree that the arbitration
hearing shall commence within twenty (20) days of the date on which a written
demand for arbitration is filed by any party hereto. In connection with the
arbitration proceeding, the arbitrator shall have the power to order the
production of documents by each party and any third-party witnesses. In
addition, each party may take up to three (3) depositions as of right, and the
arbitrator may in his or her discretion allow additional depositions upon good
cause shown by the moving party. However, the arbitrator shall not have the
power to order the answering of interrogatories or the response to requests for
admission. In connection with any arbitration, each party shall provide to the
other, no later than ten (10) Business Days before the date of the arbitration,
the identity of all Persons that may testify at the arbitration and a copy of
all documents that may be
81
introduced at the arbitration or considered or used by a party's witness or
expert, and a summary of the expert's opinions and the basis for said opinions.
The arbitrator's decision and award shall be made and delivered within ten (10)
days of the conclusion of the arbitration. The arbitrator's decision shall set
forth a reasoned basis for any award of damages or finding of liability. The
arbitrator shall not award punitive damages or any other damages that are
specifically excluded under the Securities Purchase Documents, and each party
hereby irrevocably waives any claim to such damages.
(c) The parties covenant and agree that they will
participate in the arbitration in good faith and, except as set forth below,
shall (i) bear their own attorneys' fees costs and expenses in connection with
the arbitration, and (ii) share equally in the fees and expenses charged by
J.A.M.S./Endispute, Inc. The arbitrator may in his or her discretion assess
costs and expenses (including the reasonable legal fees and expenses of the
prevailing party) against any party to a proceeding. Any party unsuccessfully
refusing to comply with an order of the arbitrators shall be liable for costs
and expenses, including attorneys' fees, incurred by the other party in
enforcing the award. This Agreement applies equally to requests for temporary,
preliminary or permanent injunctive relief, except that in the case of temporary
or preliminary injunctive relief any party may proceed in court without prior
arbitration for the limited purpose of avoiding immediate and irreparable harm.
The dispute resolution provisions of this Section 9.14 shall be enforceable in
any court of competent jurisdiction.
(d) Each of the parties hereto irrevocably and
unconditionally consents to the exclusive jurisdiction of J.A.M.S./Endispute,
Inc. to resolve all disputes, claims or controversies arising out of or relating
to this Agreement and the other Securities Purchase Documents (other than the
Security Documents, the Subsidiary Guarantees, the Intercreditor Agreements and
the Escrow Agreement) or the negotiation, breach, termination, validity or
performance hereof and or the transactions contemplated hereby and further
consents to the jurisdiction of the courts of the State of California for the
purposes of enforcing the arbitration provisions of this Agreement. Each party
further irrevocably waives any objection to proceeding before
J.A.M.S./Endispute, Inc. based upon lack of personal jurisdiction or to improper
venue and further irrevocably and unconditionally waives and agrees not to make
a claim in any court that arbitration before J.A.M.S./Endispute, Inc. has been
brought in an inconvenient forum. Each of the parties hereto hereby consents to
service of process by registered mail at the address to which notices are to be
given. Each of the parties hereto agrees that its or his submission to
jurisdiction and its or his consent to service of process by mail are made for
the express benefit of the other parties hereto. The provisions of this Section
9.14 will survive the termination of this Agreement and the repayment of the
Note Obligations unless otherwise agreed in writing by the Company and each
affected Noteholder.
9.15 Section Headings and Gender; Construction. The descriptive headings
in this Agreement have been inserted for convenience only and shall not be
deemed to limit or otherwise affect the construction of any provision hereof.
The use in this Agreement of the masculine pronoun in reference to a party
hereto shall be deemed to include the feminine or neuter, and vice versa, as the
context may require. The parties have participated jointly in the negotiation
and drafting of this Agreement and the other agreements, documents and
instruments executed and delivered in connection herewith with counsel
sophisticated in investment transactions. In the event an ambiguity or question
of intent or interpretation arises, this Agreement and the agreements, documents
and instruments
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executed and delivered in connection herewith shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement and the agreements, documents and instruments executed and
delivered in connection herewith.
9.16 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which when so executed and delivered shall be
taken to be an original; but such counterparts shall together constitute but one
and the same document. Delivery of an executed counterpart of a signature page
to this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement.
9.17 [Intentionally Omitted].
9.18 Consent to Jurisdiction. Except as provided in Section 9.14 above,
the Company and each Noteholder irrevocably submit to the non-exclusive
jurisdiction of arbitration in Las Vegas, Nevada to resolve all disputes, claims
or controversies arising out of or relating to (i) this Agreement or any other
agreement executed and delivered pursuant to this Agreement or the negotiation,
validity or performance hereof and thereof or the transactions contemplated
hereby and thereby, or (ii) the Notes, and further consents to the sole and
exclusive jurisdiction of the courts of the State of California for the purposes
of enforcing the arbitration provisions of Section 9.14 of this Agreement. Each
party further irrevocably waives any objection to proceeding before the
arbitrator in Las Vegas, Nevada based upon lack of personal jurisdiction or to
the laying of venue and further irrevocably and unconditionally waives and
agrees not to make a claim in any court that arbitration before the arbitrator
in Las Vegas, Nevada has been brought in an inconvenient forum. Each of the
parties hereto hereby consents to service of process by registered mail at the
address to which notices are to be given. Each of the parties hereto agrees that
its or his submission to jurisdiction and its or his consent to service of
process by mail is made for the express benefit of the other parties hereto.
9.19 Effect of Judgment. The Company and each Noteholder agree, to the
fullest extent it may effectively do so under Applicable Law, that a judgment in
any suit, action or proceeding of the nature referred to in Section 9.18 brought
in any such court shall, subject to such rights of appeal on issues as may be
available, be conclusive and binding upon the Company or such Noteholder and may
be enforced in the courts of the United States of America or the State of
California (or any other courts to the jurisdiction of which the Company or such
Noteholder is or may be subject) by a suit upon such judgment.
9.20 No Limitation. Nothing in Section 9.18 or 9.19, shall affect the
right of the Company or any Noteholder to serve process in any manner permitted
by law, or limit any right that the Company or any Noteholder may have to bring
proceedings against the other in the courts of any jurisdiction or to enforce in
any lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.
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9.21 Specific Performance. Upon breach or default by the Company with
respect to any obligation hereunder or under the Notes Documents, each
Noteholder shall be entitled to protect and enforce its rights at law, or in
equity or by other appropriate proceedings for specific performance of such
obligation, or for an injunction against such breach or default, or in aid of
the exercise of any power or remedy granted hereby or thereby or by law.
9.22 Actions by Noteholders. Except as provided in Section 9.2, wherever
in this Agreement action is required or permitted to be taken by, or consent is
required of, or a matter requires the satisfaction of, the Noteholders, such
action may be taken by, and/or such consent may be obtained from, and/or such
satisfaction may be expressed by, the Majority Holders; provided, however that
any Notes acquired by the Investor Group or their Affiliates or Associates shall
be not be entitled to vote in respect of any matter.
9.23 Non-Disclosure. Each Securityholder covenants and agrees that it and
any of its Affiliates, shareholders, partners, members, managers, directors, and
each of their respective employees, attorneys, advisors and other
representatives (each a "Securityholder Party") shall hold in strict confidence
(except as otherwise required by Applicable Law), and not use for any purpose or
in any manner other than pursuant to the transactions contemplated by this
Agreement and the other Securities Purchase Documents, any confidential,
proprietary or material non-public information obtained from the Company, any
Subsidiary, any member of the Investor Group or any of their respective
Subsidiaries or Affiliates, or from any other Securityholder in connection with
this Agreement or any Securities Purchase Document (collectively, "Confidential
Information"); provided that information generally known in the gaming industry
based on information received from Persons who had a right to disclose the same
to such Securityholder shall not be (and shall not be deemed to be) Confidential
Information hereunder. Each Securityholder shall not, and shall cause each
Securityholder Party not to, disclose any Confidential Information obtained by
such Person; provided, however, each Securityholder may disclose such
Confidential Information (a) to its examiners, Affiliates (including partners,
members and other investors in such Securityholder), outside auditors, counsel
and other professional advisors, (b) to any Securityholder or to any prospective
holder of Securities that is not a Competitor, provided that such prospective
holder is obligated to maintain the confidentiality thereof, (c) as required or
requested by any Governmental Authority or representative thereof or pursuant to
legal process and (d) to protect, enforce or define such Securityholder's rights
with respect to the Noteholder Obligations (but not to a Competitor). In no
event shall any Securityholder be obligated to return any materials furnished by
the Company.
9.24 Publicity. Except as may be required by Applicable Law, no party
hereto shall issue a publicity release or announcement or otherwise make any
public disclosure concerning this Agreement or the transactions contemplated
hereby, without prior approval by the other parties hereto. If any announcement
is required by law to be made by a party hereto, prior to making such
announcement such party will deliver a draft of such announcement to the other
parties and shall give the other parties an opportunity to comment thereon.
9.25 Limitation of Liability. No Noteholder shall have any liability to
the Company (whether sounding in tort, contract, or otherwise) for consequential
damages suffered by the Company in connection with, arising out of, or in any
way related to the transactions or
84
relationships contemplated by the Securities Purchase Documents, or any act,
omission or event occurring in connection therewith, or for any special,
multiple, exemplary or punitive damages, and the Company hereby waives, to the
maximum extent not prohibited by law, any right it may have to claim or recover
any of the foregoing.
[The remainder of this page has been left blank intentionally]
85
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the date first above written.
MEZZCO, L.L.C.,
a Nevada limited liability company
By: EQUITYCO, L.L.C.,
a Nevada limited liability company, its
sole member
By: /s/ Douglas Teitelbaum
----------------------------------------
Name: Douglas Teitelbaum
Title: Manager
SOLELY TO ACKNOWLEDGE THE COVENANTS
CONTAINED IN ARTICLE VI AND ARTICLE VII
AND TO CONFIRM ITS INDEMNITY AND
OTHER OBLIGATIONS UNDER SECTION 9.9,
SUBJECT TO THE INTERCREDITOR AGREEMENT
(SENIOR DEBT):
OPBIZ, L.L.C.,
a Nevada limited liability company
By: MEZZCO, L.L.C.,
a Nevada limited liability company, its
sole member
By: EQUITYCO, L.L.C.,
a Nevada limited liability company,
its sole member
By: /s/ Douglas Teitelbaum
----------------------------------------
Name: Douglas Teitelbaum
Title: Manager
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
PURCHASERS:
POST TOTAL RETURN FUND, L.P.
By: Post Advisory Group, LLC, its General
Partner
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
POST TOTAL RETURN OFFSHORE
FUND, LTD.
By: Post Advisory Group, LLC, its Authorized
Agent
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
c/o Post Advisory Group, LLC
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
POST OPPORTUNITY FUND, L.P.
By: Post Advisory Group, LLC, its General
Partner
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
SOUTH DAKOTA INVESTMENT COUNCIL
By: Post Advisory Group, LLC, its Authorized
Agent
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
c/o Post Advisory Group, LLC
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
DB DISTRESSED OPPORTUNITIES FUND, LTD.
By: Post Advisory Group, LLC, its Authorized
Agent
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
c/o Post Advisory Group, LLC
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
DB DISTRESSED OPPORTUNITIES FUND, L.P.
By: Post Advisory Group, LLC, its Authorized
Agent
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
c/o Post Advisory Group, LLC
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
MW POST PORTFOLIO FUND, LTD.
By: Post Advisory Group, LLC, its Authorized
Agent
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
c/o Post Advisory Group, LLC
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
MW POST OPPORTUNITY OFFSHORE FUND, LTD.
By: Post Advisory Group, LLC, its Authorized
Agent
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
c/o Post Advisory Group, LLC
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
HFR DS OPPORTUNITY MASTER TRUST
By: Post Advisory Group, LLC, its Authorized
Agent
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
c/o Post Advisory Group, LLC
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
SPHINX DISTRESSED FUND SPC
By: Post Advisory Group, LLC, its Authorized
Agent
By: /s/ Lawrence A. Post
----------------------------------------
Name: Lawrence A. Post
Title: Chief Investment Officer
ADDRESS FOR NOTICE:
c/o Post Advisory Group, LLC
11755 Wilshire Boulevard, Suite 1400
Los Angeles, CA 90025
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
CANYON CAPITAL ADVISORS, L.L.C.
By: /s/ Chris Evensen
----------------------------------------
Name: Chris Evensen
Title: Authorized Signatory
ADDRESS FOR NOTICE:
9665 Wilshire Boulevard, Suite 200
Beverly Hills, CA 90212
CANPARTNERS INVESTMENTS IV, L.L.C.
By: /s/ Chris Evensen
----------------------------------------
Name: Chris Evensen
Title: Authorized Signatory
ADDRESS FOR NOTICE:
c/o Canyon Capital Advisors, L.L.C.
9665 Wilshire Boulevard, Suite 200
Beverly Hills, CA 90212
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
CONTINENTAL CASUALTY COMPANY
By: /s/ Marilou R. McGin
----------------------------------------
Name: Marilou R. McGin
Title: Vice President and Assistant
Treasurer
ADDRESS FOR NOTICE:
333 South Wabash Avenue - 23 South
Chicago, IL 60685
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
JOHN HANCOCK HIGH YIELD FUND
By: /s/ Ismail Gunes
----------------------------------------
Name: Ismail Gunes
Title: Vice President Investment
Operations
ADDRESS FOR NOTICE:
101 Huntington Avenue
Boston, MA 02199
Notification for Future corporate actions
etc. (both required):
John Hancock High Yield Fund
C/O Bank of New York Securities Department
P.O. Box 11,203
New York, NY 10249
FAX (617) 330-6583
John Hancock High Yield Fund
C/O John Hancock Advisers, LLC
Attn: Investment Operations, 7th Floor
Private Placement Corporate Actions
101 Huntington Avenue
Boston, MA 02199-7603
FAX (617) 375-4808
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
ANDOVER CAPITAL PARTNERS LP
By: /s/ David Glancy
----------------------------------------
Name: David Glancy
Title: Managing Partner of the General
Partner
ADDRESS FOR NOTICE:
300 Brickstone Square, Suite 1004
Andover, MA 01810
Attention: Mr. Brian Kobelski
WITH A COPY TO:
Morgan Stanley
1221 Avenue of the Americas, 28th Floor
New York, NY 10020
Attention: John Marino
ANDOVER CAPITAL OFFSHORE
PARTNERS LTD.
By: /s/ David Glancy
----------------------------------------
Name: David Glancy
Title: Managing Partner of the Advisor
ADDRESS FOR NOTICE:
300 Brickstone Square, Suite 1004
Andover, MA 01810
Attention: Mr. Brian Kobelski
WITH A COPY TO:
Morgan Stanley
1221 Avenue of the Americas, 28th Floor
New York, NY 10020
Attention: John Marino
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
COCHRAN ROAD, LLC
By: /s/ Steven Golub
----------------------------------------
Name: Steven Golub
Title: Attorney-in-Fact
ADDRESS FOR NOTICE:
225 Broadway, Suite 1515
New York, NY 10007
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
YORK CREDIT OPPORTUNITIES FUND, L.P.
By: /s/ Adam J. Semler
----------------------------------------
Name: Adam J. Semler
Title: Chief Financial Officer
ADDRESS FOR NOTICE:
390 Park Avenue, 15th Floor
New York, NY 10022
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
/s/ Jeffrey D. Benjamin
--------------------------------------------
JEFFREY D. BENJAMIN
ADDRESS FOR NOTICE:
133 East 64th Street
New York, NY 10021
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]