Exhibit 1.1
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THE CHUKCHANSI ECONOMIC DEVELOPMENT AUTHORITY
AS ISSUER
$153,000,000 14 1/2% Senior Notes due 2009
Purchase Agreement
September 24, 2002
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THE CHUKCHANSI ECONOMIC DEVELOPMENT AUTHORITY
$153,000,000
14 1/2% Senior Notes due 2009
PURCHASE AGREEMENT
September 24, 2002
New York, New York
DRESDNER KLEINWORT
WASSERSTEIN - GRANTCHESTER, INC.
BANC OF AMERICA SECURITIES LLC
as Initial Purchasers
c/o DRESDNER KLEINWORT
WASSERSTEIN - GRANTCHESTER, INC.
1301 Avenue of the Americas
New York, New York 10019
Ladies & Gentlemen:
The Chukchansi Economic Development Authority (the "Authority"), a
wholly-owned unincorporated enterprise of the Picayune Rancheria of Chukchansi
Indians (the "Tribe"), proposes to issue and sell to Dresdner Kleinwort
Wasserstein - Grantchester, Inc., a Delaware corporation and Banc of America
Securities LLC, a Delaware limited liability company (the "Initial
Purchasers"), acting severally and not jointly, $153,000,000 in aggregate
principal amount of 14 1/2% Senior Notes due 2009 (the "Series A Notes"),
subject to the terms and conditions set forth herein (the "Offering"). The
Series A Notes will be issued pursuant to an indenture (the "Indenture"), to
be dated the Closing Date (as defined below), among the Authority, the Tribe
and U.S. Bank, N.A., a national banking association, as trustee (the
"Trustee"). The obligations of the Authority under the Notes (as defined
below) will be secured by security interests in or pledges of (the "Senior
Notes Security Interests") certain assets of the Authority (the "Senior Notes
Collateral"). The Notes are more fully described in the Offering Memorandum
referred to below. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Indenture.
1. Issuance of Securities.
1.1. The Authority proposes, upon the terms and subject to the
conditions set forth herein, to issue and sell to the Initial Purchasers,
acting severally and not jointly, an aggregate of $153,000,000 in principal
amount of the Series A Notes. The Series A Notes and the Series B
Notes (as defined below) issuable in exchange therefor are collectively
referred to herein as the "Notes."
1.2. Upon original issuance thereof, and until such time as the same
is no longer required under the applicable requirements of the Securities Act
of 1933, as amended (the "Act"), the Series A Notes (and all securities issued
in exchange therefor or in substitution thereof) shall bear the legend
contained in the section entitled "Notice to Investors" in the Offering
Memorandum for the time period and upon the other terms stated in the Offering
Memorandum.
2. Offering.
2.1. The Series A Notes will be offered and sold to the Initial
Purchasers pursuant to one or more exemptions from the registration
requirements under the Act. The Authority and Cascade Entertainment Group,
LLC, a California limited liability company (the "Manager") have prepared a
preliminary offering memorandum, dated September 4, 2002 (the "Preliminary
Offering Memorandum"), and a final offering memorandum, dated September 24,
2002 (the "Offering Memorandum"), relating to the Authority, the Tribe, the
Manager and the Series A Notes.
2.2. The net proceeds from the issuance of the Series A Notes
together with the proceeds from certain other note issuances will be deposited
by the Authority into certain collateral and disbursement accounts pursuant to
the Cash Collateral and Disbursement Agreement (as set forth on Schedule I-A)
and will be used to finance the development, construction, equipping and
opening of the gaming facility and related amenities to be built on Indian
lands of the Tribe (the "Chukchansi Gold Resort & Casino").
2.3. The Initial Purchasers have advised the Authority that the
Initial Purchasers will make offers (the "Exempt Resales") of the Series A
Notes on the terms set forth in the Offering Memorandum, as amended and
supplemented, solely to persons whom the Initial Purchasers reasonably believe
to be "qualified institutional buyers," as defined in Rule 144A under the Act
("QIBs"). The QIBs are referred to herein as the "Eligible Purchasers." The
Initial Purchasers will offer the Series A Notes to such Eligible Purchasers
initially at a price equal to 100% of the principal amount thereof. Such price
may be changed at any time without notice.
2.4. Holders (including subsequent transferees) of the Series A Notes
will have the registration rights set forth in the Registration Rights
Agreement relating thereto (the "Registration Rights Agreement"), in the form
set forth in Exhibit A, to be dated the Closing Date, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Authority will agree to file with the Securities and Exchange Commission
(the "Commission"), under the circumstances set forth therein, (a) a
registration statement under the Act (the "Exchange Offer Registration
Statement") relating to the Authority's 14 1/2% Series B Senior Notes due 2009
(the "Series B Notes") to be offered in exchange for the Series A Notes (the
"Exchange Offer") and (b) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Act (the "Shelf Registration
Statement" and, together with the Exchange
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Offer Registration Statement, the "Registration Statements") relating to the
resale by certain holders of the Series A Notes, and to use its reasonable
best efforts to cause such Registration Statements to be declared and remain
effective and usable for the periods specified in the Registration Rights
Agreement to consummate the Exchange Offer.
2.5. The Notes will be secured obligations and the Authority will
enter into the documents and agreements set forth on Schedule I-A hereto
(collectively the "Authority Security Documents") that will provide for the
grant of the Senior Notes Security Interests in the Senior Notes Collateral to
the Trustee for the benefit of the holders of the Notes. The Senior Notes
Security Interests will secure the payment and performance when due of all the
obligations of the Authority under the Notes, the Indenture and the Authority
Security Documents.
2.6. The Notes will also be secured, to a limited extent, by funds of
the Manager pursuant to the documents and agreements set forth on Schedule I-B
hereto (collectively the "Manager Security Documents") that will provide for
the grant of security interests (the "Manager Security Interests") in certain
collateral set forth therein (the "Manager Collateral") to the Trustee for the
benefit of the holders of the Notes.
2.7. The following documents are hereinafter collectively referred to
as the "Transaction Documents":
(a) this Agreement;
(b) the Manager Agreement, dated as of the Closing Date, between the
Manager and the Trustee;
(c) the Indenture;
(d) the Notes;
(e) the Indenture, dated as of the Closing Date, among the Authority,
the Tribe and U.S. Bank, N.A., a national banking association, as trustee (the
"Senior Subordinated PIK Notes Trustee"), with respect to $14,800,000
aggregate principal amount of the Authority's Senior Subordinated Pay-in-Kind
Notes due 2009 with contingent interest (the "Senior Subordinated PIK Notes");
(f) the Indenture, dated as of the Closing Date, among the Authority,
the Tribe and U.S. Bank, N.A., a national banking association, as trustee (the
"Subordinated PIK Notes Trustee"), with respect to $12,000,000 aggregate
principal amount of the Authority's Subordinated Pay-in-Kind Notes due 2009
with contingent interest (the "Subordinated PIK Notes");
(g) the Intercreditor Agreement, dated as of the Closing Date, among
the Trustee, the Senior Subordinated PIK Notes Trustee, the Subordinated PIK
Notes Trustee, Credit Provider Group, LLC, the Manager, the Authority and the
Tribe;
(h) the Registration Rights Agreement;
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(i) the Authority Security Documents; and
(j) the Manager Security Documents.
2.8. The following documents are hereinafter collectively referred to
as the "Material Agreements":
(a) the Second Amended and Restated Management Agreement, dated as of
July 16, 2002, as amended, among the Tribe, the Authority and the Manager (the
"Management Agreement");
(b) the Amended and Restated Development Agreement, dated as of June
15, 2001, as amended, among the Tribe, the Authority and the Manager (the
"Development Agreement");
(c) the Agreement Between Owner and Construction Manager where
Construction Manager is also the Constructor, dated July 26, 2002, as amended,
between the Authority and Walton Construction Company, Inc. ("Walton") (the
"Construction Management Agreement"),
(d) the Letter Agreement, dated September 23, 2002, between the
Manager and Walton amending and modifying the terms of the Construction
Management Agreement (the "Letter Agreement"); and
(e) the Agreement Between Owner and Architect with Descriptions of
Designated Services and Terms and Conditions, dated August 28, 2002, between
the Authority and Morris & Brown Architects, Ltd. (the "Architect's
Agreement").
3. Purchase, Sale and Delivery.
3.1. On the basis of the representations, warranties and covenants
contained in this Agreement, and subject to its terms and conditions, the
Authority agrees to issue and sell to the Initial Purchasers, and each Initial
Purchaser, severally and not jointly, agrees, subject to the provisions of
Section 14.2, to purchase from the Authority the respective principal amount
of Series A Notes as set forth on Exhibit B hereto opposite such Initial
Purchasers' name, comprising all of the Series A Notes offered hereby. The
purchase price for the Series A Notes will be equal to 87.816% of the
principal amount of the Series A Notes.
3.2. Delivery of the Series A Notes shall be made against payment
therefor, at the offices of Latham & Watkins, 885 Third Avenue, New York, New
York, 10022-4802, or such other location in New York, New York as may be
mutually acceptable (the "Closing"). Such delivery and payment shall be made
at 10:00 a.m., New York City time, on October 8, 2002 or at such other time as
shall be agreed upon by the Initial Purchasers and the Authority in writing.
The time and date of such delivery and payment are herein called the "Closing
Date."
3.3. On the Closing Date, one or more Series A Notes in definitive
global form, registered in the name of Cede & Co., as nominee of The
Depository Trust Company ("DTC"),
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having an aggregate amount corresponding to the aggregate principal amount of
the Series A Notes (whether one or more, the "Global Note") sold pursuant to
Exempt Resales to Eligible Purchasers shall be delivered by the Authority to
Dresdner Kleinwort Wasserstein - Grantchester, Inc., for the account of the
Initial Purchasers, against payment by the Initial Purchasers of the purchase
price therefore, by wire transfer of same day funds, to an account designated
by the Authority; provided, however, that the Authority shall give at least
two business days' prior written notice to the Initial Purchasers of the
information required to effect such wire transfer. The form of the Global Note
shall be made available to the Initial Purchasers for inspection not later
than 10:00 a.m. on the business day immediately preceding the Closing Date.
4. Agreements of the Authority.
4.1. The Authority covenants and agrees with each Initial Purchaser
as follows:
(a) To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission or other federal or state regulatory authority
of any stop order suspending the qualification or exemption from qualification
of any Notes for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by any state securities commission or other
regulatory authority and (ii) of the happening of any event that makes any
statement of a material fact made in the Preliminary Offering Memorandum or
the Offering Memorandum untrue or that requires the making of any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum
in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading. The Authority shall use its best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Notes under any state securities or Blue Sky
laws and, if at any time any state securities commission or other federal or
state regulatory authority shall issue an order suspending the qualification
or exemption of any Notes under any state securities or Blue Sky laws, the
Authority shall use its best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Authority without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as the Initial Purchasers may reasonably
request. The Authority consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) For so long as the Series A Notes are outstanding, not to amend
or supplement the Offering Memorandum during such period as, in the opinion of
the Initial Purchasers and their counsel, the Offering Memorandum is required
by law to be delivered to Eligible Purchasers and in connection with
market-making activities of the Initial Purchasers, unless the Initial
Purchasers shall previously have been advised thereof and shall not have
objected thereto within five (5) business days after being furnished a copy
thereof. The
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Authority shall promptly prepare, upon the Initial Purchasers' request, any
amendment or supplement to the Offering Memorandum that may be necessary or
advisable in connection with Exempt Resales or such market-making activities.
(d) If, during the period referred to in 4(c) above, any event shall
occur or condition shall exist as a result of which, in the opinion of counsel
to the Authority or counsel to the Initial Purchasers, it becomes necessary or
advisable to amend or supplement the Offering Memorandum in order to make the
statements therein, in light of the circumstances existing when such Offering
Memorandum is delivered to an Eligible Purchaser, not misleading, or if, in
the opinion of the Initial Purchasers or counsel to the Initial Purchasers, it
is necessary or advisable to amend or supplement the Offering Memorandum to
comply with applicable law, to promptly prepare an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein as so
amended or supplemented will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law.
(e) To cooperate with the Initial Purchasers and counsel to the
Initial Purchasers, in connection with the qualification or registration of
the Series A Notes under the securities or Blue Sky laws of such jurisdictions
as the Initial Purchasers may reasonably request and to continue such
qualification or registration in effect so long as required for the Exempt
Resales and to file such consents to service of process or other documents as
may be necessary in order to give effect to such qualification or
registration; provided, however, that the Authority shall not be required in
connection therewith to register or qualify as a foreign entity in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to service of process in suits or taxation, in each case, other
than as to matters and transactions relating solely to the Preliminary
Offering Memorandum, the Offering Memorandum or Exempt Resales, in any
jurisdiction where it is not now so subject.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, the
Authority agrees to pay and be responsible for all costs, expenses, fees and
taxes incident to the performance of the obligations of the Authority
hereunder, including: (i) all the fees and expenses incurred in connection
with the preparation, printing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation,
financial statements) and all amendments and supplements thereto required
pursuant hereto, including the mailing and delivering of copies thereof to the
Initial Purchasers in the quantities reasonably requested by the Initial
Purchasers, (ii) all the fees and expenses incurred in connection with the
preparation (including, without limitation, duplication costs) and delivery of
all agreements, correspondence and all other documents, including the
preliminary and final Blue Sky Memorandum, prepared and delivered in
connection herewith and with the Exempt Resales, (iii) all costs and expenses
related to the issuance, transfer and delivery by the Authority of the Series
A Notes to the Initial Purchasers, (iv) all the fees and expenses incurred in
connection with the qualification or registration of the Notes for offer and
sale under the securities or Blue Sky laws of the several states (including,
without limitation, the cost of printing and producing a preliminary and final
Blue Sky Memorandum and the reasonable fees and disbursements of counsel to
the Initial Purchasers relating thereto), (v) the costs of preparing
certificates for the
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Notes (including, without limitation, printing and engraving, if required,
thereof), (vi) the fees, disbursements and expenses of the Authority's counsel
and accountants, (vii) the reasonable fees and expenses of the Independent
Construction Consultant, (viii) all fees and expenses (including fees and
expenses of counsel) incurred by the Authority in connection with the approval
of the Notes by DTC for "book-entry" transfer, (ix) the rating of the Notes by
rating agencies, if any, (x) the reasonable fees and expenses of the Trustee
and its counsel incurred in connection with the Indenture and the Notes, (xi)
the reasonable fees and expenses of the Disbursement Agent and its counsel
pursuant to its obligations under the Cash Collateral and Disbursement
Agreement, (xii) the performance by the Authority of its obligations under the
Transaction Documents, (xiii) "roadshow" travel and other expenses incurred in
connection with the marketing and sale of the Notes (other than out-of-pocket
expenses incurred by the Initial Purchasers for travel, meals and lodging) as
set forth in the Engagement Letter, dated as of April 4, 2002, among Dresdner
Kleinwort Wasserstein, Inc., a Delaware corporation, the Tribe, the Authority
and the Manager, (the "Engagement Letter"), (xiv) all expenses (exclusive of
fees of counsel to the Initial Purchasers) and listing fees incurred in
connection with the application for quotation of the Series A Notes in the
NASD Automated Quotation System - PORTAL ("PORTAL"), (xv) all costs and
expenses related to the Exchange Offer and the Registration Statements, (xvi)
such other reimbursable expenses of the Initial Purchasers as set forth in the
Engagement Letter and (xvii) all other costs and expenses incident to the
performance of the obligations of the Authority hereunder for which provision
is not otherwise made in this Section.
(g) To apply the proceeds from the sale of the Series A Notes as set
forth under the caption "Use of Proceeds" in the Offering Memorandum and in
compliance with the Cash Collateral and Disbursement Agreement.
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(i) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes in a manner that would require
the registration under the Act of the sale to the Initial Purchasers or the
Eligible Purchasers of the Series A Notes or to take any other action that
would result in the sale of the Series A Notes pursuant hereto or the Exempt
Resales not being exempt from registration under the Act.
(j) For so long as any of the Notes remain outstanding during any
period in which the Authority is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder or beneficial owner of Notes in connection with any
sale thereof and any prospective purchaser of such Notes from such holder or
beneficial owner, upon request, information required to be delivered to
holders and prospective purchasers of the Notes pursuant to Rule 144A(d)(4)(1)
under the Act (or any successor provision thereto) in order to permit
compliance with Rule 144A in connection with resales by such holders or
beneficial owners of the Notes.
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(k) To comply with all of its agreements set forth in the
Registration Rights Agreement and all of its agreements set forth in the
representation letters to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(l) To effect the inclusion of the Series A Notes in PORTAL and to
obtain approval of the Series A Notes by DTC for "book-entry" transfer.
(m) For so long as the Notes are outstanding, to deliver, without
charge, to the Initial Purchasers and each record holder of Notes, as any of
them may reasonably request, promptly upon request, copies of all reports,
financial statements and proxy or information statements filed by the
Authority or any successor thereto with the Commission, the NASD or any
national securities exchange and such other publicly available information
concerning the Authority or its successors or any of its respective
subsidiaries, including, without limitation, press releases.
(n) Except as permitted by the Act, the Authority will not distribute
any (i) preliminary offering memorandum, including, without limitation, the
Preliminary Offering Memorandum, (ii) offering memorandum, including, without
limitation, the Offering Memorandum, or (iii) other offering material in
connection with the offering and sale of the Notes.
(o) To cause the Exchange Offer to be made in the appropriate form to
permit the Series B Notes registered pursuant to the Act to be offered in
exchange for the Series A Notes and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(p) To do and perform all things required or necessary to be done and
performed under this Agreement by it prior to the Closing Date and to satisfy
all conditions precedent to the delivery of the Series A Notes.
5. Agreements of the Tribe.
5.1. The Tribe covenants and agrees with the Initial Purchasers as
follows:
(a) To advise the Initial Purchasers promptly and, if requested by
the Initial Purchasers, to confirm such advice in writing, of the happening of
any event that makes any statements of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires the
making of any additions to or changes in the Preliminary Offering Memorandum
or the Offering Memorandum in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes in a manner that would require
the registration under the Act of the sale to the Initial Purchasers or the
Eligible Purchasers of the Series A Notes or to take any other action that
would
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result in the sale of the Series A Notes pursuant hereto or the Exempt
Resales not being exempt from registration under the Act.
(c) To take any other actions reasonably requested by the Authority
or the Initial Purchasers to enable the Authority to comply with its
obligations set forth in Section 4 hereof.
6. [Intentionally Omitted].
7. Representations and Warranties.
7.1. The Tribe and the Authority (collectively, the "Chukchansi
Parties"), jointly and severally, represent and warrant to the Initial
Purchasers that:
(a) The Preliminary Offering Memorandum as of its date did not, and
the Offering Memorandum as of the date hereof does not and as of the Closing
Date will not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in this
paragraph shall not apply to statements in or omissions from the Preliminary
Offering Memorandum and the Offering Memorandum (or any supplement or
amendment thereto) made in reliance upon and in conformity with information
relating to the Initial Purchasers furnished to the Authority in writing by
the Initial Purchasers expressly for use therein, it being understood that the
only information so furnished by the Initial Purchasers to the Authority is
that set forth in Section 10 hereof. No stop order preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any amendment
or supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act, has been issued. The Authority has not distributed any offering
material in connection with the offering and sale of the Series A Notes other
than the Preliminary Offering Memorandum and the Offering Memorandum.
(b) The Tribe is an Indian tribe within the meaning of Indian Gaming
Regulatory Act of 1988, as amended ("IGRA"), with the authority to enter into
and perform its obligations under each of the Transaction Documents and
Material Agreements to which it is a party.
(c) The Constitution of the Tribe (the "Constitution"), approved
November 7, 1988, was duly and validly adopted by the Tribe, is the only
constitution of the Tribe and is the valid and governing law of the Tribe.
(d) The tribal council referred to in the Constitution (the "Tribal
Council") is the governing body of the Tribe, and all members of the Tribal
Council are validly serving.
(e) The Tribal-State Compact between the State of California and the
Tribe, dated September 10, 1999, as amended, (the "Compact"), has been duly
and validly authorized, executed and delivered by each of the State of
California and the Tribe, has been duly approved
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by the Secretary of the Interior of the United States, as required by IGRA,
such approval has been duly published in the Federal Register in accordance
with IGRA, and no further action is required to make the Compact effective.
The Compact complies with the requirements of IGRA in all respects material to
the ability of each of the Tribe and the Authority to perform their respective
obligations under each of the Transaction Documents and Material Agreements to
which they are a party. As of the date hereof, the Chukchansi Parties are in
compliance with all material terms and conditions of the Compact.
(f) The Financial Source Licensing Regulation of the Tribal Gaming
Commission (the "Tribal Licensing Regulation") applies to the Notes.
Regulation CGCC-2 of the California Gambling Control Commission (the "State
Bond Regulation") applies to the Notes. The Indenture complies with the
requirements for an indenture described in Section (g) of the State Bond
Regulation.
(g) In accordance with the Tribal Licensing Regulation, no person who
purchases less than 10% of the aggregate principal amount of the issued and
outstanding Series A Notes and no federally or state-regulated bank or savings
and loan association is required to be licensed as a "financial source" under
the Compact. No person holding Series A Notes, other than the Persons
purchasing in the initial distribution of the Series A Notes, is required to
be licensed as a financial source under the Compact prior to purchasing the
Series A Notes provided, that neither any holder that is not licensed or
exempted from licensing by the Tribal Gaming Commission, nor any person acting
on behalf of the holder, will have any right to enforce any payment obligation
relating to the Series A Notes against any revenues, property, or rights of
the Authority or the Tribe, or any branch, department, agency,
instrumentality, division, subsidiary, enterprise, authority or wholly-owned
corporation or business of the Tribe until such time as the holder is licensed
by the Tribal Gaming Commission.
(h) On June 26, 2002, the Tribe received its gaming device licenses
from the California Gambling Control Commission for the use of 1,250 slot
machines as permitted under Section 4.3.2.2 of the Compact. The Tribe received
an additional 200 gaming licenses from the California Gambling Control
Commission on September 5, 2002. The licensing fee required for the issuance
of such gaming device licenses has been remitted to the proper Gaming
Authority. The Compact requires the Tribe to have the first 1,250 gaming
devices in commercial operation on or before June 25, 2003. The Compact
requires the Tribe to have the additional 200 gaming devices in commercial
operation on or before September 4, 2003.
(i) The Tribal Council has duly and validly adopted the Tribal Gaming
Ordinance of the Tribe (the "Gaming Ordinance"). As required by IGRA, the
Gaming Ordinance was duly approved by the NIGC on December 3, 2001, and an
amendment to the Gaming Ordinance was duly approved on February 15, 2002. The
Gaming Ordinance (i) has not been further amended or repealed and is in full
force and effect as the law of the Tribe, (ii) authorizes the class II and
class III gaming within the meaning of IGRA that is proposed to be conducted
by the Authority, (iii) satisfies the requirements under IGRA that the Tribe
adopt a gaming ordinance prior to engaging in class II or class III gaming and
(iv) complies in all material respects with the requirements of the Compact
and IGRA.
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(j) The Tribal Council has the requisite power and authority to adopt
the Ordinance dated June 15, 2001 entitled "Ordinance of the Picayune
Rancheria Establishing and Governing the Chukchansi Authority," as amended on
July 13, 2002 and July 30, 2002, (the "Authority Ordinance") as the law of the
Tribe. The Authority Ordinance (i) was duly and validly adopted by the Tribal
Council, (ii) is in full force and effect, (iii) has not been further amended
or repealed in any manner and (iv) is the governing law of the Tribe.
(k) The Authority (i) is a wholly-owned unincorporated enterprise of
the Tribe and is not a separate entity from the Tribe for federal or state
income tax purposes, (ii) is governed by a board of directors (the "Board of
Directors") which has the requisite power and authority to adopt Resolution
No. 2002A-05 authorizing the Authority to (A) enter into the Transaction
Documents and Material Agreements to which the Authority is a party and (B)
pledge the revenue and assets of the Chukchansi Gold Resort & Casino in
accordance with the Transaction Documents and (iii) has the requisite power
and authority to own, lease and operate its properties, including the
"Authority Assets" as defined in the Authority Ordinance, to conduct its
business as described in the Offering Memorandum and to enter into and perform
its obligations under the Transaction Documents to which it is a party. The
Board of Directors has duly adopted the resolution referenced in clause (ii)
above and is in full force and effect and has not been amended or repealed in
any manner. The Authority has not, and will not, create any instrumentality,
subdivision or subunit; the Authority has not, and will not, form, acquire or
own any Subsidiary.
(l) The Chukchansi Parties have all requisite power and authority
necessary to enter into, execute, deliver and perform their obligations, if
any, under each of the Transaction Documents and Material Agreements to which
either of them is a party and to consummate the transactions contemplated
hereby and thereby, including, without limitation, the power and authority
necessary to issue, sell and deliver the Notes in accordance with and upon the
terms and conditions set forth in this Agreement, the Indenture, the
Registration Rights Agreement and the Offering Memorandum.
(m) No initiative or referendum rights exist for the members of the
Tribe permitting any member or any number of members of the Tribe to call for
or conduct, in any manner, a review of any actions taken by the Authority or
the Tribal Council, whether by way of an initiative, referendum or otherwise,
with respect to any authorization, execution, delivery or performance of its
obligations under this Agreement or the Transaction Documents or the Material
Agreements to which it is a party, by the Authority or the Tribal Council or
any actions contemplated to be taken by the Authority or the Tribal Council in
connection therewith, except as set forth in Article XI of the Constitution
(the "Constitution Referendum Right"). No vote or other action has ever
occurred or been taken in connection with the Constitution Referendum Right,
and no vote or petition for a vote is pending or threatened with respect to
any exercise of the Constitutional Referendum Right in connection with any
matter that would reasonably be expected to (A) individually or in the
aggregate, have a material adverse effect on the business, condition
(financial or otherwise), results of operations, properties, affairs or
prospects of the Authority, taken as a whole, or the ability of the Authority
to timely perform its obligations under the Transaction Documents and Material
Agreements to which it is a party, (B) interfere with or adversely affect the
issuance or marketability of the Series A Notes to be issued on the
11
Closing Date, or (C) in any manner draw into question the validity of this
Agreement, the Compact or any other Transaction Document or Material Agreement
to which it is a party, the transactions described in the Offering Memorandum
or prohibit or prevent the Authority from using the proceeds of this Offering
in the manner described in the Offering Memorandum under the caption "Use of
Proceeds" (any of the events set forth in clauses (A), (B) or (C), a
"Chukchansi Material Adverse Effect"). The Constitution Referendum Right does
not permit the disavowal of contracts entered into by the Tribe or the
Authority, nor the abridgement of rights created under such contracts. The
Constitution Referendum Right is limited to the extent that any such proposed
referendum seeks to compel the Tribal Council or the Authority to act in a
manner which violates the statutes of the United States, specifically
including the Indian Civil Rights Act.
(n) The Authority has no securities listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted in
a United States automated inter-dealer quotation system.
(o) This Agreement has been duly and validly authorized, executed and
delivered by the Chukchansi Parties and (assuming the due authorization,
execution and delivery hereof by or on behalf of the Initial Purchasers) is
the valid and legally binding obligation of the Chukchansi Parties,
enforceable against each of them in accordance with its terms, except that (i)
such enforceability of the rights to indemnity and contribution hereunder may
be limited by federal or state securities laws or principles of public policy,
(ii) such enforceability may be subject to applicable bankruptcy, insolvency,
fraudulent conveyance or transfer, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and (iii) such
enforceability may be subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(p) The Indenture has been duly and validly authorized by the
Chukchansi Parties and, when duly executed and delivered by the Chukchansi
Parties (assuming the due authorization, execution and delivery thereof by the
Trustee), will be the valid and legally binding agreement of the Chukchansi
Parties, enforceable against them in accordance with its terms, except that
(i) such enforceability may be subject to applicable bankruptcy, insolvency,
fraudulent conveyance or transfer, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and (ii) such
enforceability may be subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity). On the
Closing Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission applicable to
an indenture which is qualified thereunder. The Indenture conforms as to legal
matters to the description thereof contained in the Offering Memorandum.
(q) The Series A Notes have been duly and validly authorized by the
Authority for issuance and sale to the Initial Purchasers pursuant to this
Agreement and, when issued and authenticated in accordance with the terms of
the Indenture and delivered against payment therefor in accordance with the
terms hereof and thereof, will be the valid and legally binding obligations of
the Authority, enforceable against it in accordance with their terms and
12
entitled to the benefits of the Indenture, except that (i) such enforceability
may be subject to applicable bankruptcy, insolvency, fraudulent conveyance or
transfer, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and (ii) such enforceability may be subject to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The Series A Notes conform as to legal
matters to the description thereof contained in the Offering Memorandum.
(r) The Series B Notes have been duly and validly authorized for
issuance by the Authority and, when issued and authenticated in accordance
with the terms of the Registration Rights Agreement and the Indenture, will be
the valid and legally binding obligations of the Authority, enforceable
against it in accordance with their terms and entitled to the benefits of the
Indenture, except that (i) such enforceability may be subject to applicable
bankruptcy, insolvency, fraudulent conveyance or transfer, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and (ii) such enforceability may be subject to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity). The Series B Notes conform as to legal matters to the description
thereof contained in the Offering Memorandum.
(s) The Registration Rights Agreement has been duly and validly
authorized by the Chukchansi Parties and, when duly executed and delivered by
the Chukchansi Parties (assuming the due authorization, execution and delivery
thereof by the Initial Purchasers), will be the valid and legally binding
agreement of the Chukchansi Parties, enforceable against them in accordance
with its terms, except that (i) such enforceability may be subject to
applicable bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and (ii) such enforceability may be subject to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The Registration Rights Agreements conforms
as to legal matters to the description thereof contained in the Offering
Memorandum.
(t) Each of the Transaction Documents to which the Tribe and/or the
Authority are a party (other than those described in clauses (n) through (r)
above) has been, duly and validly authorized by the Authority and the Tribe,
to the extent that they are a party thereto. Each such Transaction Document,
when executed and delivered by the Authority and the Tribe, to the extent that
they are a party thereto, will be (assuming the due authorization, execution
and delivery thereof by or on behalf of each of the other parties thereto) the
valid and legally binding obligation of the Authority and Tribe, respectively,
enforceable against them in accordance with its terms, except that (i) such
enforceability of the rights to indemnity and contribution thereunder, if any,
may be limited by federal or state securities laws or principles of public
policy, (ii) such enforceability may be subject to applicable bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and (iii) such
enforceability may be subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(u) The Material Agreements to which the Chukchansi Parties are a
party are in full force and effect as of the date hereof, enforceable against
them, as applicable, in accordance with their respective terms, except insofar
as indemnification and contribution
13
provisions may be limited by applicable law or equitable principles and
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. As of the date hereof, there are no
defaults or events of default, that with notice, the passage of time or
otherwise could be a default, under any provisions of such Material Agreements
by any party thereto.
(v) Each of the Transaction Documents and the Material Agreements
described in the Offering Memorandum conform as to legal matters to the
description thereof contained in the Offering Memorandum.
(w) When issued, the Notes will rank senior in right of payment with
all of the Authority's other unsubordinated indebtedness.
(x) No law of the Tribe imposes any restrictions on the rate, yield
or return payable by or on behalf of the Tribe or the Authority on its
indebtedness.
(y) At Closing, each parcel of land on which the Chukchansi Gold
Resort & Casino is proposed to be located, together with all improvements
related thereto included within the meaning of "Gaming Facility" as defined in
the Compact (collectively, the "Casino Site"), will constitute Indian land,
within the meaning of IGRA, over which the Tribe has jurisdiction and on which
class II and class III gaming is permitted to be conducted by the Authority
under IGRA. At Closing, the Casino Site will be owned in absolute fee simple
by the Tribe or held by the United States in trust for the benefit of the
Tribe, subject to no mortgage, lien, easement, interest, estate or other
encumbrance that could result in a Chukchansi Material Adverse Effect.
(z) The Authority has the exclusive right to own and operate, collect
the revenues, and pledge the revenues and assets of the Chukchansi Gold Resort
& Casino, subject to the ownership rights of the Tribe in and to the real
property related thereto and the rights of the Manager pursuant to the
Management Agreement. The Authority has all necessary and desirable access and
right to enter onto the lands of the Tribe for the purpose of operating the
Chukchansi Gold Resort & Casino and conducting the business of the Authority.
(aa) Neither Chukchansi Party is and, after giving effect to the
Offering, will be (i) in violation of any of its organizational, statutory or
legal documents, (ii) in default in the performance of any bond, debenture,
note, indenture, mortgage, deed of trust or other agreement or instrument to
which it is a party or by which it is bound or to which any of its properties
is subject, or (iii) in violation of the Compact or any local, tribal, state
or federal law, statute, ordinance, rule, regulation, requirement, judgment or
court decree (including, without limitation, any requirement, regulation or
decree under IGRA or the Compact applicable to a Chukchansi Party or any of
its assets or properties (whether owned or leased) other than, in the case of
clauses (ii) and (iii), any default or violation that would not reasonably be
expected to have a Chukchansi Material Adverse Effect). Except as disclosed in
the Offering Memorandum, to the best knowledge of each Chukchansi Party, there
exists no condition that, with notice, the passage of time or otherwise, would
constitute a default under any such document or instrument which default would
have a Chukchansi Material Adverse Effect. Each Chukchansi Party is and has
been in compliance with all local, state and federal statutes, laws,
ordinances, rules and
14
regulations applicable to its properties and its business, except where the
failure so to be in compliance would not have a Chukchansi Material Adverse
Effect.
(bb) None of (i) the execution, delivery or performance by the
Chukchansi Parties of this Agreement or the other Transaction Documents and
Material Agreements to which either of them is a party, (ii) the issuance and
sale of the Series A Notes, the Senior Subordinated PIK Notes and the
Subordinated PIK Notes by the Authority in connection herewith or certain
Transaction Documents, and (iii) the consummation by the Chukchansi Parties of
the transactions contemplated hereby and thereby or described in the Offering
Memorandum under the caption "Use of Proceeds" will (A) violate, conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under (or an event that with notice or the lapse of time, or both,
would constitute a default), or require consent under (other than consents
which were previously obtained or will have been obtained on or before
Closing), or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of either Chukchansi Party, or an
acceleration of any indebtedness of either Chukchansi Party, except for liens,
charges, and encumbrances contemplated thereby, (B) violate or conflict with
any organizational, statutory or legal document of such Chukchansi Party, (C)
assuming compliance with all applicable state securities and "blue sky" laws
and assuming compliance by the Initial Purchasers and each Eligible Purchaser
of the Section 6.4.6 of the Compact, and the State Bond Regulation, violate or
conflict with any statute, rule or regulation applicable to either Chukchansi
Party or any of its respective assets or properties (including, but without
limitation, any Gaming Law), (D) violate or conflict with any judgment,
decree, order, statute, law, ordinance, rule or regulation of any court or any
public, governmental or regulatory agency, body or authority having
jurisdiction over a Chukchansi Party or any of its respective assets or
properties or (E) violate or conflict with any provision of any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which either Chukchansi Party is a party or by which either
Chukchansi Party or its respective properties is or may be bound.
(cc) Other than as described in the Offering Memorandum, no consent,
approval, authorization or order of, or filing, registration, qualification,
license or permit of or with, (i) any court or governmental, regulatory or
administrative agency or authority having jurisdiction over the Chukchansi
Parties or any of their respective properties or assets (including, without
limitation, the Secretary of the Interior or any Gaming Authority), or (ii)
any other person is required for the execution, delivery and performance by
the Chukchansi Parties of this Agreement and the other Transaction Documents
or Material Agreements to which either of them is a party and the consummation
of the transactions contemplated hereby and thereby, except (A) such as have
been or will be obtained and made on or prior to the Closing Date (or, in the
case of the Registration Rights Agreement, will be obtained and made under the
Act, the Trust Indenture Act, and state securities or Blue Sky laws and
regulations), (B) the recordings and filings contemplated by Section 7.1(ee)
hereof, and any additional filings required after the Closing Date to perfect
or maintain perfection as contemplated in Section 7.1(ee) hereof, (C) routine
organizational filings and renewals of licenses, (D) routine filings under the
Act and the Exchange Act, (E) filings with the applicable Gaming Authority or
(F) where the failure to obtain any such consent, approval, authorization or
order of, or filing, registration, qualification, license or permit would not,
individually or in the aggregate, reasonably be expected to result in a
Chukchansi Material Adverse Effect.
15
(dd) Other than as described in the Offering Memorandum, there are no
pending or threatened tribal, state or federal legal, regulatory or
governmental actions, suits or proceedings (i) to which the Chukchansi Parties
are a party which could materially adversely affect the business, property,
financial condition or operations of the Chukchansi Authority, (ii) which
question the validity of the Constitution, including any amendments thereto,
the membership or governance of the Tribe, the Transaction Documents or the
Material Agreements to which either of them is a party, the Compact, the
Authority Ordinance, the Gaming Ordinance, the State Bond Regulation, the UCC
(as defined below), the Arbitration Code (as defined below) or any action
taken or to be taken by the Tribal Council or the Authority, or (iii) which
has as the subject thereof any property owned, leased or possessed by the
Chukchansi Parties, where in any such case (A) there is a reasonable
possibility that such action, suit or proceeding might be determined adversely
to the Chukchansi Parties and (B) any such action, suit or proceeding if so
determined adversely to the Chukchansi Parties, would reasonably be expected
to result in a Chukchansi Material Adverse Effect or adversely affect the
consummation of the transactions contemplated by Offering Memorandum.
(ee) Upon the:
(i) execution and delivery to the Trustee of each of the Authority
Security Documents; and
(ii) filing of the UCC-1 financing statements as contemplated by the
Authority Security Documents,
the Trustee will have a valid, duly perfected, first priority security
interest in all of the Senior Notes Collateral listed in the Authority
Security Documents, subject to any Liens permitted by the Authority Security
Documents, as security for the payment of the obligations of the Authority
under Indenture and the Notes. The actions, recordings and filings described
in the immediately preceding sentence are the only actions, recordings and
filings necessary to publish notice of and perfect the rights of the Trustee
in all of the Senior Notes Collateral, except for such additional actions,
recordings and filings as the Authority, the Initial Purchasers and the
Trustee may determine prior to the Closing Date.
(ff) Other than as provided in Section 9310 of the UCC (as defined
below), no filing, recording or other act is required under any law, rule or
ordinance of the Tribe to perfect and maintain the perfection of the first
priority lien on the Senior Notes Collateral created by the Security
Documents.
(gg) Except as set forth in the Offering Memorandum, there is (i) no
action, suit, investigation or proceeding before or by any court, arbitrator
or governmental agency, body or official, domestic or foreign, now pending or,
to the best knowledge of the Authority, threatened or contemplated, to which
the Authority is or may be a party or to which the business or property of the
Authority, is or may be subject, (ii) no statute, rule, regulation or order
that has been enacted, adopted or issued by any governmental agency or that,
to the best knowledge of the Authority, has been proposed by any governmental
body and (iii) no injunction, restraining order or order of any nature by a
federal or state court or foreign court of competent jurisdiction
16
to which the Authority is or may be subject or to which the business, assets
or property of the Authority is or may be subject, that, in the case of
clauses (i), (ii) and (iii) above, (A) is required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum and that is not so
disclosed or (B) would reasonably be expected to have a Chukchansi Material
Adverse Effect or adversely affect the consummation of the transactions
contemplated by this Agreement.
(hh) Except as set forth in the Offering Memorandum, the Authority
owns, or as of the Closing Date, will be licensed or otherwise have the right
to use, all trademarks, service marks, trade names, patents and copyrights
used in or necessary for the conduct of its business except for where any such
failure to do so, individually or in the aggregate, would not have a
Chukchansi Material Adverse Effect. Except as set forth in the Offering
Memorandum, the use, in connection with the business and operations of the
Authority, of such trademarks, service marks, trade names, patents and
copyrights does not infringe on the rights of any person, except such
infringements which, individually or in the aggregate, would not have a
Chukchansi Material Adverse Effect. Except as set forth in the Offering
Memorandum, the Authority has not received any notice of infringement of or
conflict with asserted rights of others with respect to any patent, patent
application, trademark, service mark, trade name or copyright which, singly or
in the aggregate, if the subject of any unfavorable decision, ruling or
finding, would have a Chukchansi Material Adverse Effect.
(ii) No action has been taken by the Authority and no statute, rule,
regulation or order has been enacted, adopted or issued by any governmental
agency that prevents the issuance of the Notes or prevents or suspends the use
of the Offering Memorandum; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction has been issued
that prevents the issuance of the Notes or prevents or suspends the sale of
the Notes in any jurisdiction referred to in Section 4.1(e) hereof; and every
request of any securities authority or agency and any Gaming Authority of any
jurisdiction for additional information has been complied with in all material
respects.
(jj) All material tax returns required to be filed by the Authority,
to the extent that the Chukchansi Parties are not exempt from paying taxes or
filing tax returns, have been so filed. All taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities or that are due and payable have been
paid, other than those being contested in good faith and for which adequate
reserves have been provided or those currently payable without penalty or
interest, to the extent that the Chukchansi Parties are not exempt from paying
taxes, filing tax returns or withholding taxes. To the knowledge of the
Chukchansi Parties, there are no material proposed additional tax assessments
against the Chukchansi Parties, or the assets or the property of the
Chukchansi Parties, except those tax assessments for which adequate reserves
have been established.
(kk) There is no material unfair labor practice complaint, grievance
or arbitration pending or, to the best knowledge of the Authority, threatened
against it. To the best knowledge of the Authority, no collective bargaining
organizing or union activities are taking place with respect to the Authority.
The Authority has not violated (i) any federal, state or local law or foreign
law relating to discrimination in hiring, promotion or pay of employees or
(ii) any
17
applicable wage or hour laws. No material labor dispute with the employees of
the Authority exists, or to the best of the Authority's knowledge, is
threatened or imminent.
(ll) The Authority has never offered or has any obligation or
liability, contingent or otherwise, with respect to a pension plan ("ERISA
Plan") subject to Title IV of the Employee Retirement Income and Security Act
of 1974, as amended ("ERISA"), or Section 412 of the Internal Revenue Code of
1986, as amended (the "Code").
(mm) Neither Chukchansi Party has violated any federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, "Environmental Laws"), which violation would
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, condition (financial or otherwise), results of
operations, properties affairs or prospects of the Chukchansi Parties, taken
as a whole.
(nn) Neither Chukchansi Party is subject to any alleged liability, or
to the best knowledge of either Chukchansi Party, potential liability
(including, without limitation, alleged or potential liability or
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damages, personal injuries or penalties) arising
out of, based on or resulting from (i) the presence or release into the
environment of any Hazardous Material (as defined below) at any location,
whether or not owned by a Chukchansi Party, as the case may be, or (ii) any
violation or alleged violation of any Environmental Law, which alleged or
potential liability or violation or alleged violation would reasonably be
expected to have a Chukchansi Material Adverse Effect. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
(B) any "hazardous waste" as defined by the Resource Conservation and Recovery
Act, as amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl, and (E) any material, substance or waste classified
or regulated as toxic, hazardous, pollutant or contaminant or words of similar
meaning under or within the meaning of any other applicable law relating to
protection of the environment.
(oo) Each Chukchansi Party possesses, and is operating in compliance
with, all certificates, approvals, orders, franchises, authorities, licenses
(including, without limitation, Gaming Licenses) or permits issued by the
appropriate local, state, federal, tribal or foreign regulatory agencies or
bodies (including any Gaming Authority) as are necessary to own and lease its
properties and as are legally required for the operation of the Authority's
businesses as presently conducted or as described in the Offering Memorandum
(collectively, all such legally required certificates, approvals, orders,
franchises, authorities, licenses and permits are referred to herein as
"Licenses"), all of which are valid and in full force and effect except as
would not reasonably be expected to have a Chukchansi Material Adverse Effect
and except for such Licenses which the Chukchansi Parties would not
customarily possess at the date hereof but which will be obtained in the
ordinary course of development of the Chukchansi Gold Resort & Casino. Neither
Chukchansi Party has received any notice of proceedings relating to, limiting,
suspending, modifying, revoking or failing to renew any of such Licenses. The
descriptions in the Offering Memorandum of local, state, federal, tribal or
foreign statutes, laws, ordinances, rules and regulations governing the
Chukchansi Parties and their respective businesses,
18
including, without limitation, any proposed amendments or additions to any
such statutes, laws, ordinances, rules or regulations, are accurate in all
material respects and fairly present the information required to be shown
therein. Neither Chukchansi Party has received any notice of the enactment,
amendment or repeal of any such statutes, laws, ordinances, rules or
regulations required to be described in the Offering Memorandum, except for
such enactments, amendments or repeals as are described in the Offering
Memorandum.
(pp) The contemplated operation and use of the Chukchansi Gold Resort
& Casino and the construction of the Chukchansi Gold Resort & Casino in the
manner set forth in the Offering Memorandum will be, at the time of
construction and operation, as applicable, in compliance with all applicable
municipal, county, state, tribal and federal laws, regulations, ordinances,
standards, order and other regulations, where the failure to comply therewith
would not, individually or in the aggregate, have a material adverse effect on
the business, condition (financial or otherwise), results of operations,
properties affairs or prospects of the Chukchansi Parties, taken as a whole.
Under currently applicable Gaming Laws, the Chukchansi Gold Resort & Casino
may be used for the purposes contemplated in the Offering Memorandum, the
Indenture, the Notes and the Authority Security Documents.
(qq) The Initial Purchasers have been furnished with a copy of the
plans and specifications for the construction of the Chukchansi Gold Resort &
Casino and other necessary expenditures. The anticipated schedule of
construction of the Chukchansi Gold Resort & Casino is as set forth in the
Offering Memorandum. The anticipated cost of construction of the Chukchansi
Gold Resort & Casino (including interest, legal, architectural, engineering,
planning, zoning and other similar costs) does not exceed the amounts for such
costs set forth under the caption "Use of Proceeds" in the Offering
Memorandum. In addition, each of the other amounts set forth in the section
entitled "Sources and Uses of Funds" under the caption "Use of Proceeds" in
the Offering Memorandum are based upon reasonable assumptions as to all
matters material to the estimates set forth therein and are not expected to
exceed the amounts set forth for such items.
(rr) On the Closing Date, the Authority will be insured by recognized
and financially sound institutions with policies covering its properties,
operations, personnel and businesses, in such amounts and with such
deductibles and covering such losses and risks as are consistent with industry
practice to protect the Authority and its business as in effect on the Closing
Date.
(ss) The Authority maintains or has contracted with the Manager to
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
19
(tt) Burnett + Company LLP, who has certified or will certify that
the financial statements and schedules of the Authority and included as part
of the Preliminary Offering Memorandum and the Offering Memorandum, are
independent auditors with regard to the Authority as required by the Act and
the rules and regulations promulgated thereunder.
(uu) The historical financial statements of the Authority, together
with related schedules and notes thereto, included in the Offering Memorandum
comply as to form in all material respects with the requirements of the Act,
the Exchange Act and the rules and regulations promulgated thereunder,
including, without limitation, Regulation S-X, and present fairly the
financial position of the Authority, as of the dates indicated and the results
of operations and cash flows of the Authority, for the periods specified
therein. Such historical financial statements (including the related notes and
schedules) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods specified
therein, and subject, in the case of interim statements, to normal recurring
adjustments. Except as set forth in the Offering Memorandum, since the date of
the latest of such historical financial statements, there has been no material
increase in the Indebtedness (as defined in the Offering Memorandum) of the
Authority, taken as a whole, and there has been no material adverse change in
the financial position, results of operations or business of the Authority,
taken as a whole. The other financial and statistical information and data of
the Authority, included in the Offering Memorandum, have been fairly stated in
all material respects in relation to the relevant financial statements, of the
Authority, from which such information has been derived.
(vv) Since the respective dates as of which information is given in
the Offering Memorandum and except as set forth in the Offering Memorandum (i)
there has not been any material adverse change in the business, condition
(financial or otherwise), results of operations, properties, affairs or
prospects of the Authority, taken as a whole (a "Chukchansi Material Adverse
Change"), or any development that is reasonably expected to result in a
Chukchansi Material Adverse Change, in the indebtedness of the Authority from
that set forth in the Offering Memorandum and (ii) the Authority has not
incurred any liabilities or obligations, direct, indirect or contingent, that
are material, individually or in the aggregate, to the Authority, taken as a
whole, and that are required to be disclosed on a balance sheet or notes
thereto in accordance with generally accepted accounting principles and are
not disclosed on the latest balance sheet or notes thereto included in the
Offering Memorandum. Since the date as of which information is presented in
the Offering Memorandum, there has not been a Chukchansi Material Adverse
Change, or any development that would be reasonably expected to result in a
Chukchansi Material Adverse Change. The Tribe has no obligations, indebtedness
(for borrowed money or otherwise), for which recourse may be had against any
assets of the Authority or the Casino Site, except obligations set forth in
the Transaction Documents or the Material Agreements to which the Tribe is a
party, and the Tribe will incur no such obligations.
(ww) Except as disclosed in the Offering Memorandum, no relationship,
direct or indirect, exists between or among either of the Chukchansi Parties
on the one hand, and the directors, officers, employees, representatives,
members or council persons or Affiliates, of either of the Chukchansi Parties
on the other hand, which would be required by the Act to be
20
described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 filed with the
Commission.
(xx) The Authority has been advised of the rules and requirements
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"). The Authority will not be, after (i) receipt of payment for the Notes
or (ii) the transactions contemplated by the Offering Memorandum, subject to
the Investment Company Act and will conduct its business in a manner so that
it will not become subject to the Investment Company Act.
(yy) There are no holders of securities of the Authority who, by
reason of the Authority's execution of this Agreement or any other Transaction
Document to which it is a party or the consummation by the Authority of the
transactions contemplated hereby and thereby, have the right to request or
demand that the Authority register under the Act or analogous foreign laws and
regulations securities held by them other than pursuant to the Registration
Rights Agreement.
(zz) Since the date of the Preliminary Offering Memorandum the
Authority has not (i) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of the Notes (other than the Initial
Purchasers) or (ii) paid or agreed to pay to any person (other than the
Initial Purchasers) any compensation for soliciting another to purchase any
other securities of the Authority other than as contemplated by this
Agreement.
(aaa) No registration of the Series A Notes under the Act is required
for the sale of the Series A Notes to the Initial Purchasers as contemplated
hereby or for the Exempt Resales, assuming (i) that the purchasers who buy the
Series A Notes in the Exempt Resales are Eligible Purchasers and (ii) the
accuracy of the Initial Purchasers' representations regarding the absence of a
general solicitation in connection with the sale of the Series A Notes to the
Initial Purchasers and the Exempt Resales contained herein. No form of general
solicitation or general advertising (as defined in Regulation D under the Act)
was used by the Authority or any of its representatives (other than the
Initial Purchasers, as to which the Authority makes no representation or
warranty) in connection with the offer and sale of any of the Series A Notes
thereof or in connection with Exempt Resales, including, but not limited to,
articles, notices or other communications published in any newspaper,
magazine, or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as the
Notes have been issued and sold by the Authority within the six-month period
immediately prior to the date hereof.
(bbb) The execution and delivery of this Agreement, the other
Transaction Documents to which the Authority is a party and the sale of the
Series A Notes to be purchased by the Eligible Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986 by reason of (i) the Authority being
a disqualified person or party in interest (as those terms are defined in
ERISA or Section 4975 of the Code) with respect to any employee benefit plan
or (ii) any assets of any employee benefit plan maintained by the Authority.
The representation made by the Authority in the preceding sentence is made in
reliance upon and subject to the accuracy of, and compliance
21
with, the representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Memorandum under the caption "Notice
to Investors."
(ccc) The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources which the Authority
believes to be reliable and accurate in all material respects.
(ddd) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as of
its date, contains the information specified in, and meets the requirements
of, Rule 144A(d)(4) under the Act.
(eee) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the Trust Indenture Act.
(fff) The Uniform Commercial Code of the Tribe (the "UCC") was duly
and validly adopted by the Tribal Council, and is a valid law of the Tribe. No
applicable law, ordinance, rule, regulation or resolution of the Tribe or any
agency, subdivision, department, commission or enterprise (each a
"Governmental Component") thereof conflicts with or contravenes the UCC of the
Tribe.
(ggg) The Arbitration Code of the Tribe (the "Tribal Arbitration
Code") was duly and validly adopted by the Tribal Council, and is a valid law
of the Tribe. No applicable law, ordinance, rule, regulation or resolution of
the Tribe, any Governmental Component thereof or any court of the Tribe
conflicts with or contravenes the Tribal Arbitration Code of the Tribe.
(hhh) Resolution Nos. 2002-30 and 2002-45 of the Tribal Council and
Resolution Nos. 2002-A-05 and 2002-A-6 of the Board of Directors (the
"Approving Resolutions") were duly and validly adopted by the Tribal Council
and the Board of Directors, respectively, and approve the execution, delivery
and performance by the Chukchansi Parties of the Transaction Documents and
Material Agreements to which either of them is a party, the waiver of
sovereign immunity as set forth herein and therein and all other matters set
forth herein or therein, and is a valid law of the Chukchansi Tribe. No
applicable law, ordinance, rule, regulation or resolution of the Tribe or any
Governmental Component thereof conflicts with or contravenes the Approving
Resolutions.
(iii) The waivers of sovereign immunity (including the related
agreements to submit claims to binding arbitration) by the Chukchansi Parties
contained in this Agreement and each of the Transaction Documents and the
Material Agreements to which either of them is a party are in compliance with
all applicable federal, state, local government, tribal and Governmental
Component laws, ordinances, rules, regulations and resolutions, and are
irrevocable waivers, valid and legally binding on the Chukchansi Parties,
enforceable against each in accordance with their respective terms and no
further action is required to make them effective.
(jjj) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the Senior Subordinated PIK
Notes and the Subordinated PIK Notes, the application of the proceeds from the
issuance of the Notes, the Senior Subordinated
22
PIK Notes and the Subordinated PIK Notes and the consummation of the
transactions contemplated thereby as set forth in the Offering Memorandum,
will violate Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part
221) or Regulation X (12 C.F.R. Part 224) promulgated by the Board of
Governors of the Federal Reserve System or analogous foreign laws and
regulations.
(kkk) Except pursuant to this Agreement and the Engagement Letter and
except as disclosed in the Offering Memorandum, there are no contracts,
agreements or understandings between the Chukchansi Parties and any other
person that would give rise to a valid claim against the Chukchansi Parties
for a brokerage commission, finder's fee or like payment in connection with
this Offering, the issuance of the Notes or the development and construction
of the Chukchansi Gold Resort & Casino (other than as set forth in the
Material Agreements to which they are a party).
(lll) There exist no conditions that would constitute a default (or
an event which with notice or the lapse of time, or both, would constitute a
default) under any of the Transaction Documents to which the Chukchansi
Parties are a party.
(mmm) Each certificate signed by any board member or officer of the
Authority and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by the
Authority to the Initial Purchasers as to the matters covered thereby.
(nnn) Neither Chukchansi Party is required to pay any U.S federal or
California state income taxes. The Chukchansi Parties shall treat the Notes as
indebtedness for U.S. federal income tax purposes.
(ooo) As of August 31, 2002, an aggregate of $11.7 million has been
spent in connection with the design, development and construction of the
Chukchansi Gold Resort & Casino.
The Chukchansi Parties acknowledge that the Initial Purchasers and,
for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 10.1 hereof, counsel for the Tribe and the Authority,
counsel for the Initial Purchasers and counsel for the Manager will rely upon
the accuracy and truth of the foregoing representations and hereby consent to
such reliance.
7.2. The Manager represents and warrants to the Authority and the
Initial Purchasers that:
(a) The Manager is duly organized and is validly existing as a
limited liability company in good standing under the laws of the State of
California. The Manager is duly qualified to conduct its business as described
in the Offering Memorandum, and is duly qualified and in good standing as a
foreign organization in each jurisdiction in which the character or location
of its properties (owned, leased or licensed) or the nature or conduct of its
business requires such qualification, except where the failure to be so
qualified or in good standing does not and would not reasonably be expected to
(i) individually or in the aggregate, have a material adverse effect on the
business, condition (financial or otherwise), results of operations,
23
properties, affairs or prospects of the Manager, taken as a whole, (ii)
interfere with or adversely affect the issuance or marketability of the Notes
or (iii) in any manner draw into question the validity of this Agreement or
any other Transaction Document or Material Agreements to which it is a party,
the transactions described in the Offering Memorandum (any of the events set
forth in clauses (i), (ii) or (iii), a "Manager Material Adverse Effect"). The
Manager has no subsidiaries.
(b) All the issued and outstanding Equity Interests of the Manager
have been duly and validly authorized and issued and were not issued in
violation of or subject to any preemptive or similar rights. Other than
pursuant to existing employee compensation arrangements or as set forth in the
Manager's operating agreement as in effect on the date hereof, there are no
outstanding rights, warrants or options to acquire from the Manager, or
instruments convertible into or exercisable or exchangeable for, or agreements
or understandings with the Manager with respect to the sale or issuance of,
any equity interests in the Manager.
(c) The Manager has all requisite organizational power and authority
necessary (i) to enter into and perform its obligations under each of the
Transaction Documents and Material Agreements, to the extent that it is a
party thereto, and to consummate the transactions contemplated hereby and
thereby, and (ii) to own, lease and license its properties and conduct its
business as now being conducted and as described in the Offering Memorandum.
(d) This Agreement has been duly and validly authorized, executed and
delivered by the Manager and (assuming the due authorization, execution and
delivery hereof by or on behalf of the other parties hereto) is the valid and
legally binding obligation of the Manager, enforceable against it in
accordance with its terms, except that (i) such enforceability of rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws or principles of public policy, (ii) such enforceability may
be subject to applicable bankruptcy, insolvency, fraudulent conveyance or
transfer, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and (iii) such enforceability may be subject to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(e) Each of the Material Agreements, to the extent that the Manager
is a party, has been, duly and validly authorized by the Manager. Each such
Material Agreement, has been duly executed and delivered by the Manager, and
(assuming the due authorization, execution and delivery thereof by or on
behalf of each of the other parties thereto) is the valid and legally binding
obligation of the Manager, enforceable against it in accordance with its
terms, except that (i) such enforceability of the rights to indemnity and
contribution thereunder, if any, may be limited by federal or state securities
laws or principles of public policy, (ii) such enforceability may be subject
to applicable bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and (iii) such enforceability may be subject to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(f) Each of the Transaction Documents (other than that described in
clause (d) above), to the extent that the Manager is a party, has been, duly
and validly authorized by the
24
Manager. Each such Transaction Document, when executed and delivered by the
Manager, will be (assuming the due authorization, execution and delivery
thereof by or on behalf of each of the other parties thereto) the valid and
legally binding obligation of the Manager, enforceable against it in
accordance with its terms, except that (i) such enforceability of the rights
to indemnity and contribution thereunder, if any, may be limited by federal or
state securities laws or principles of public policy, (ii) such enforceability
may be subject to applicable bankruptcy, insolvency, fraudulent conveyance or
transfer, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and (iii) such enforceability may be subject to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(g) The Manager is not and, after giving effect to the Offering and
the transactions contemplated by the Transaction Documents, will not be, in
violation of its articles of organization or limited liability company
agreement and is not and will not be in default in any respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any indenture,
mortgage, deed of trust or any other agreement or instrument to which the
Manager is a party or to which it or its properties or assets are subject
which violation or default would have a Manager Material Adverse Effect. There
exists no condition that, with notice, the passage of time or otherwise, would
constitute a default under any such document or instrument which default would
have a Manager Material Adverse Effect. The Manager is and has been in
compliance with all local, state, federal and tribal statutes, laws,
ordinances, rules and regulations applicable to its properties (whether owned
or leased) and its business, except where the failure so to be in compliance
would not have a Manager Material Adverse Effect.
(h) The execution, delivery or performance by the Manager of this
Agreement or any of the other Transaction Documents to which it is a party
will not (i) violate, conflict with, or result in a breach of any of the terms
or provisions of, or constitute a default (or an event which with notice or
the lapse of time, or both, would constitute a default), or require consent
(other than consents which were previously obtained or will have been obtained
on or before Closing) under, or result in the creation or imposition of, any
lien, charge or encumbrance upon any property or assets of the Manager, or an
acceleration of any indebtedness of the Manager, except for liens, charges and
encumbrances contemplated thereby, (ii) violate or conflict with any provision
of the articles of organization or limited liability company agreement of the
Manager, (iii) assuming compliance with all applicable state securities and
"blue sky" laws, violate or conflict with any provision of any judgment,
decree, order, statute, law, ordinance, judgment, rule or regulation of any
court or any public, governmental (including tribal) or regulatory agency or
body having jurisdiction over the Manager or any of its assets or properties
and (iv) violate or conflict with any provision of any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to which
the Manager is a party or by which it or its property is or may be bound.
(i) Except as disclosed in the Offering Memorandum, no consent,
approval, authorization or order of, or filing, registration, qualification,
license or permit of or with, any court or any public, governmental or
regulatory agency or body having jurisdiction over the Manager or any of its
respective properties or assets (including, without limitation, the Gaming
25
Authorities) is required for the execution, delivery and performance by the
Manager of this Agreement or any of the other Transaction Documents or
Material Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby, except for (i) such as have been
or will be obtained and made on or prior to the Closing Date (or, in the case
of the Registration Rights Agreement, will be obtained and made under the Act,
the Trust Indenture Act, and state securities or Blue Sky laws and
regulations), (ii) the recordings and filings contemplated by Section 7.2(j)
hereof, and any additional filings required after the Closing Date to perfect
or maintain perfection as contemplated in Section 7.2(j) hereof, (iii) routine
corporate filings and renewals of licenses, (iv) routine filings under the Act
and the Exchange Act, (v) filings with the applicable Gaming Authority and
(vi) those which the failure to obtain the same would not, individually or in
the aggregate, have a Manager Material Adverse Effect.
(j) Upon the
(i) execution and delivery to the Trustee of each of the Manager
Security Documents; and
(ii) filing of the UCC-1 financing statements as contemplated by the
Manager Security Documents,
the Trustee will have a valid, duly perfected, first priority security
interest in all of the Manager Collateral set forth in the Manager Security
Documents, subject to any Liens permitted by the Manager Security Documents,
as security for payment of the obligations of the Authority under the
Indenture and the Notes, or such other obligations as are set forth in the
Manager Security Documents. The actions recordings and filings described in
the immediately preceding sentence are the only actions, recordings and
filings necessary to publish notice of and perfect the rights of the Trustee
in all of the Manager Collateral set forth in the Manager Security Documents,
except for such additional actions, recordings and filings as the Manager, the
Initial Purchasers and the Trustee may determine prior to the Closing Date.
(k) Except as set forth in the Offering Memorandum, there is (i) no
action, suit, investigation or proceeding before or by any court, arbitrator
or governmental agency, body or official, domestic, tribal or foreign, now
pending or, to the best knowledge of the Manager, threatened or contemplated,
to which the Manager is or may be a party or to which the business or property
of the Manager, is or may be subject, (ii) no statute, rule, regulation or
order that has been enacted, adopted or issued by any governmental agency or
that, to the best knowledge of the Manager, has been proposed by any
governmental body and (iii) no injunction, restraining order or order of any
nature by a federal, state or tribal court or foreign court of competent
jurisdiction to which the Manager is or may be subject or to which the
business, assets or property of the Manager is or may be subject, that, in the
case of clauses (i), (ii) and (iii) above, (A) is required to be disclosed in
the Preliminary Offering Memorandum and the Offering Memorandum and that is
not so disclosed or (B) would reasonably be expected to have a Manager
Material Adverse Effect or adversely affect the consummation of the
transactions contemplated by this Agreement.
26
(l) The Manager possesses, and is operating in compliance with, all
certificates, approvals, orders, franchises, authorities, licenses (including,
without limitation, Gaming Licenses) or permits issued by the appropriate
local, state, federal, tribal or foreign regulatory agencies or bodies
(including any Gaming Authority) as are necessary to own and lease its
properties and as are legally required for the operation of its business as
presently conducted (collectively, all such legally required certificates,
approvals, orders, franchises, authorities, licenses and permits are referred
to herein as "Manager Licenses"), all of which are valid and in full force and
effect except as would not reasonably be expected to have a Manager Material
Adverse Effect. The Manager has not received any notice of proceedings
relating to, limiting, suspending, modifying, revoking or failing to renew any
of such Manager Licenses. The descriptions in the Offering Memorandum of
local, state, federal, tribal or foreign statutes, laws, ordinances, rules and
regulations governing the Manager and its businesses, including, without
limitation, any proposed amendments or additions to any such statutes, laws,
ordinances, rules or regulations, are accurate in all material respects and
fairly present the information required to be shown therein. The Manager has
not received any notice of the enactment, amendment or repeal of any such
statutes, laws, ordinances, rules or regulations required to be described in
the Offering Memorandum, except for such enactments, amendments or repeals as
are described in the Offering Memorandum.
(m) No other person other than the Manager and those disclosed in
writing to the NIGC has an interest in the Material Agreements to which the
Manager is a party which is required to be disclosed to the NIGC.
(n) There are no management contracts or collateral agreements
relating to the Chukchansi Gold Resort & Casino within the meaning of IGRA
except for the Material Agreements and the Transaction Documents set forth in
clauses (i) and (j) of the definition of Transaction Documents.
(o) All material tax returns required to be filed by the Manager in
all jurisdictions have been so filed. All taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges due or claimed to
be due from such entities or that are due and payable have been paid, other
than those being contested in good faith and for which adequate reserves have
been provided or those currently payable without penalty or interest. To the
knowledge of the Manager, there are no material proposed additional tax
assessments against the Manager, or the assets or property of the Manager,
except those tax assessments for which adequate reserves have been
established.
(p) The Manager maintains a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
27
(q) KPMG LLP, who has certified or will certify that the financial
statements and schedules relating to the Manager and included as part of the
Preliminary Offering Memorandum and the Offering Memorandum, are independent
auditors with regard to the Manager as required by the Act and the rules and
regulations promulgated thereunder.
(r) The historical financial statements of the Manager, together with
related schedules and notes thereto, included in the Offering Memorandum
comply as to form in all material respects with the requirements of the Act,
the Exchange Act and the rules and regulations promulgated thereunder,
including, without limitation, Regulation S-X, and present fairly the
financial position of the Manager, as of the dates indicated and the results
of operations and cash flows of the Manager, for the periods specified
therein. Such historical financial statements (including the related notes and
schedules) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods specified
therein, and subject, in the case of interim statements, to normal recurring
adjustments. Except as set forth in the Offering Memorandum, since the date of
the latest of such historical financial statements, there has been no material
increase in the Indebtedness (as defined in the Offering Memorandum) of the
Manager, and there has been no material adverse change in the financial
position, results of operations or business of the Manager. The other
financial and statistical information and data of the Manager included in the
Offering Memorandum have been fairly stated in all material respects in
relation to the relevant financial statements, of the Manager, from which such
information has been derived.
(s) Since the respective dates as of which information is given in
the Offering Memorandum (i) there has not been any material adverse change in
the business, condition (financial or otherwise), results of operations,
properties affairs or prospects of the Manager, taken as a whole (a "Manager
Material Adverse Change"), or any development that is reasonably expected to
result in a Manager Material Adverse Change from that set forth in the
Offering Memorandum, (ii) no dividend or distribution of any kind shall have
been declared, paid or made by the Manager on its equity interests and (iii)
the Manager has not incurred any liabilities or obligations, direct, indirect
or contingent, that are material, individually or in the aggregate, to the
Manager, taken as a whole, and that are required to be disclosed on a balance
sheet or notes thereto in accordance with generally accepted accounting
principles and are not disclosed on the latest balance sheet or notes thereto
included in the Offering Memorandum. Since the date as of which information is
presented in the Offering Memorandum, there has not been a Manager Material
Adverse Change, or any development that would be reasonably expected to result
in a Manager Material Adverse Change.
(t) Other than the Engagement Letter, there are no contracts,
agreements or understandings between the Manager and any other party that
would give rise to a valid claim against the Manager for a brokerage
commission, finder's fee or like payment in connection with this Offering or
the issuance of the Notes.
(u) There exist no conditions that would constitute a default (or an
event which with notice or the lapse of time, or both, would constitute a
default) under any of the Transaction Documents or Material Agreements to
which it is a party.
28
(v) Each certificate signed by any officer of the Manager and
delivered to the Initial Purchasers, or counsel for the Initial Purchasers,
shall be deemed to be a representation and warranty by the Manager to the
Initial Purchasers as to the matters covered thereby.
The Manager acknowledges that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 10.1 of hereof, counsel for the Tribe and the Authority, counsel for
the Initial Purchasers and counsel for the Manager will rely upon the accuracy
and truth of the foregoing representations and hereby consents to such
reliance.
7.3. Each Initial Purchaser, severally and not jointly, represents,
warrants and covenants to the Authority and agrees that:
(a) It is a QIB, with such knowledge and experience in financial and
business matters as are necessary in order to evaluate the merits and risks of
an investment in the Series A Notes.
(b) It (i) is not acquiring the Series A Notes with a view to any
distribution thereof that would violate the Act or the securities laws of any
state of the United States or any other applicable jurisdiction and (ii) will
be reoffering and reselling the Series A Notes only to QIBs in reliance on the
exemption from registration requirements of the Act provided by Rule 144A.
(c) No form of general solicitation or general advertising has been
or will be used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Series A Notes, included, but
not limited to, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio,
or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt
Resales, it will solicit offers to buy the Series A Notes only from, and will
offer to sell the Series A Notes only to, Eligible Purchasers. Such Initial
Purchaser further (i) agrees that it will offer to sell the Series A Notes
only to, and will solicit offers to buy the Series A Notes only from Eligible
Purchasers that such Initial Purchaser reasonably believes are QIBs or
Accredited Investors (ii) acknowledges and agrees that, in the case of such
QIBs and Accredited Investors, that such Series A Notes will not have been
registered under the Act and may be resold, pledged or otherwise transferred
only (A)(a) to a person who the seller reasonably believes is a QIB in a
transaction meeting the requirements of Rule 144A, (b) to an Accredited
Investor in a transaction meeting the requirements of Rule 144 under the Act,
that, prior to such transfer, furnishes the Trustee a signed letter containing
certain representations and agreements relating to the registration of
transfer or such Series A Notes or (c) in accordance with another exemption
from the registration requirements of the Act (and based upon an opinion of
counsel if the Authority so requests), (B) to the Authority, (C) pursuant to
an effective registration statement under the Act, and (D) in each case, in
accordance with any applicable securities laws of any state of the United
States or any other applicable jurisdiction and (iii) acknowledges that it
will, and each
29
subsequent holder is required to, notify any purchaser of the security
evidenced thereby of the resale restrictions set forth in (ii) above.
Each Initial Purchaser acknowledges that for purposes of the opinions
to be delivered to it pursuant to Section 10.1 hereof, counsel for the Tribe
and the Authority, counsel for the Initial Purchasers and counsel for the
Manager will rely upon the accuracy and truth of the foregoing representations
and hereby consent to such reliance.
8. Indemnification.
8.1. The Authority agrees to indemnify and hold harmless (a) each
Initial Purchaser, (b) affiliates of each Initial Purchaser, (c) each person,
if any, who controls either Initial Purchaser or its affiliates within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, (d) the
respective officers, directors, partners, employees, representatives and
agents of each Initial Purchaser or their respective affiliates or any
controlling persons to the fullest extent lawful and (e) their respective
successors and assigns, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to
reasonable attorneys' fees and any and all expenses reasonably incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Authority will not be liable in any such case to the extent, but only
to the extent, that any such loss, liability, claim, damage or expense arises
out of or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in
conformity with information provided by such Initial Purchaser to the
Authority as set forth in Section 10 of this Agreement. This indemnity
agreement will be in addition to any liability which the Authority may
otherwise have, at common law or otherwise, including under this Agreement,
and shall be binding upon the Authority's successors and assigns.
8.2. The Manager agrees to indemnify and hold harmless (a) each
Initial Purchaser, (b) affiliates of each Initial Purchaser, (c) each person,
if any, who controls either Initial Purchaser or its affiliates within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, (d) the
respective officers, directors, partners, employees, representatives and
agents of each Initial Purchaser or their respective affiliates or any
controlling persons to the fullest extent lawful and (e) their respective
successors and assigns, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to
reasonable attorneys' fees and any and all expenses reasonably incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid
in settlement of any claim or litigation), joint or
30
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum or the Offering Memorandum,
or in any supplement thereto or amendment thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Manager will not be liable in any such case to the
extent, but only to the extent, that any such loss, liability, claim, damage
or expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information provided by an Initial Purchaser to the
Authority as set forth in Section 10 of this Agreement. This indemnity
agreement will be in addition to any liability which the Manager may otherwise
have, at common law or otherwise, including under this Agreement, and shall be
binding upon the Manager's successors and assigns.
8.3. Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless (a) the Authority, (b) the Manager, (c) affiliates
of the Authority or the Manager, (d) each person, if any, who controls the
Authority or the Manager within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, (e) the officers, directors, partners,
employees, representatives and agents of the Authority and the Manager and (f)
their respective successors and assigns, against any losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to
reasonable attorneys' fees and any and all expenses reasonably incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage
or expense arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information provided by such Initial Purchaser to the
Authority as set forth in Section 11 of this Agreement; provided, however,
that in no case shall an Initial Purchaser be liable or responsible for any
amount in excess of the discounts and commissions received by such Initial
Purchaser as set forth on the cover of the Offering Memorandum. This indemnity
will be in addition to any liability which such Initial Purchaser may
otherwise have, at common law or otherwise, including under this Agreement,
and shall be binding upon the Authority's successors and assigns.
8.4. Promptly after receipt by an indemnified party under Sections
8.1, 8.2 or 8.3 above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
an indemnifying party under such subsection, notify each
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party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure so to notify the indemnifying party
shall not relieve the indemnifying party or parties from any liability which
they may have hereunder except to the extent that it has been prejudiced in
any material respect by such failure or from any liability which it may
otherwise have). In case any such action is brought against any indemnified
party, and it notifies the indemnifying party or parties of the commencement
thereof, the indemnifying party or parties will be entitled to participate
therein, and to the extent they may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless (a) the employment
of such counsel shall have been authorized in writing by the indemnifying
party or parties in connection with the defense of such action, (b) the
indemnifying party or parties shall not have employed counsel reasonably
satisfactory to the indemnified party to take charge of the defense of such
action within a reasonable time after notice of commencement of the action or
(c) such indemnified party or parties, based upon the advice of counsel, shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying party or parties shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
of counsel shall be borne by the indemnifying party or parties; provided,
however, that the indemnifying party or parties shall only be liable for the
reasonable legal expenses of one counsel (in addition to any local counsel)
for all indemnified parties in each jurisdiction in which any claim or action
arising out of the same general allegations or circumstances is brought.
Anything in this subsection to the contrary notwithstanding, the indemnifying
party or parties shall not be liable for any settlement of any claim or action
effected without their prior written consent, provided, however, that such
consent was not unreasonably withheld or delayed. The indemnifying party or
parties will not, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
9. Contribution.
9.1. In order to provide for contribution in circumstances in which
the indemnification provided for in Section 8 is for any reason other than by
its terms held to be unavailable from the indemnifying party or parties or is
insufficient to hold harmless a party indemnified thereunder, the Authority
and the Manager, on the one hand, and the Initial Purchasers, on the other
hand, shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnification provision
(including any investigation, legal and other expenses incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting in the case of losses, liabilities,
claims, damages and expenses suffered by the Authority or the Manager, any
contribution received by
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the Authority or the Manager from persons, other than the Initial Purchasers,
who may also be liable for contribution, including persons who control the
Authority or the Manager within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and the respective officers, directors,
partners, employees, representatives and agents of the Authority or the
Manager) to which the Authority, the Manager, and the Initial Purchasers may
be subject, in such proportion as is appropriate to reflect the relative
benefits received by the Authority and the Manager, on the one hand, and the
Initial Purchasers, on the other hand, from the offering of the Series A Notes
or, if such allocation is not permitted by applicable law or indemnification
is not available as a result of the indemnifying party not having received
notice as provided in Section 8.4, in such proportion as is appropriate to
reflect not only the relative benefits referred to above but also the relative
fault of the Authority and the Manager, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the actions, statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Authority and the Manager, on the one hand, and the
Initial Purchasers, on the other hand, shall be deemed to be in the same
proportions as (a) the total proceeds from the offering of the Series A Notes
(net of discounts and commissions but before deducting expenses) received by
the Authority and (B) the discounts and commissions received by the Initial
Purchasers, respectively, in each case as set forth in the Offering
Memorandum. The relative fault of the Authority and the Manager, on the one
hand, and of the Initial Purchasers, on the other hand, shall be determined by
reference to, among other things, whether the breach by an indemnifying party
of any of the representations and warranties set forth in Section 7 of this
Agreement by such indemnifying party or the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Authority, the Manager or the
Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Authority, the Manager and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 9, (x) in no case shall an
Initial Purchaser be required to contribute any amount in excess of the amount
by which the discounts and commissions applicable to the Series A Notes
purchased by such Initial Purchaser pursuant to this Agreement exceeds the
amount of any damages which such Initial Purchaser has otherwise been required
to pay by reason of any untrue or alleged untrue statement or any omission or
alleged omission and (y) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
9.2. For purposes of this Section 9, (a) each person, if any, who
controls the Initial Purchasers within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, is an affiliate of the Initial Purchasers,
and the respective officers, directors, partners, employees, representatives
and agents of the Initial Purchasers, their respective affiliates or any
controlling person shall have the same rights to contribution as the Initial
Purchasers, and (b) each person, if any, who controls the Authority or the
Manager within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, is an affiliate of either of them and the respective officers,
directors, partners, employees, representatives and agents of the Authority
and the Manager, their
33
respective affiliates or any controlling person shall have the same rights to
contribution as the Authority and the Manager, subject, in each case, to
clauses (x) and (y) of Section 9.1 above. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party under this Section 9, notify such party or
parties from whom contribution may be sought, but the failure to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 9 or otherwise. No party shall be liable for contribution with respect
to any action or claim settled without their prior written consent, provided
that such written consent was not unreasonably withheld.
10. Conditions of Initial Purchasers' Obligations.
10.1. The obligations of the Initial Purchasers to purchase and pay
for the Series A Notes, as provided herein, shall be subject to the
satisfaction of the following conditions:
(a) All of the representations and warranties of the Chukchansi
Parties contained in this Agreement shall be true and correct on the date
hereof and on the Closing Date with the same force and effect as if made on
and as of the date hereof and the Closing Date, respectively. The Chukchansi
Parties shall have performed or complied with all of the agreements and
covenants herein contained and required to be performed or complied with by
each of them at or prior to the Closing Date.
(b) All of the representations and warranties of the Manager
contained in this Agreement shall be true and correct on the date hereof and
on the Closing Date with the same force and effect as if made on and as of the
date hereof and the Closing Date, respectively.
(c) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 10:00 a.m., New York City
time, on the second day following the date of this Agreement or at such later
date and time as to which the Initial Purchasers may agree, and no stop order
suspending the qualification or exemption from qualification of the Series A
Notes in any jurisdiction referred to in Section 4(e) shall have been issued
and no proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(d) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Closing Date, prevent the issuance of the Series A
Notes; no action, suit or proceeding shall have been commenced and be pending
against or affecting or, to the knowledge of the Tribe or the Authority,
threatened against the Tribe or the Authority before any court or arbitrator
or any governmental body, agency or official that if adversely decided would
reasonably be expected to have a Chukchansi Material Adverse Effect or a
Manager Material Adverse Effect, respectively.
(e) Each of the Initial Purchasers and each person to whom the
Initial Purchasers have agreed to resell 10% or more by principal amount of
Series A Notes shall be licensed as a "financial source" and determined
suitable to purchase the Series A Notes, or
34
exempted from such requirements, pursuant to the Compact, the Tribal Licensing
Regulation and the State Bond Regulation.
(f) No stop order shall have been issued preventing the use of the
Offering Memorandum, or any amendment or supplement thereto, or which would
reasonably be expected to have a Chukchansi Material Adverse Effect.
(g) The Initial Purchasers shall have received certificates, dated
the Closing Date, signed on behalf of the Authority and the Tribe, in form and
substance reasonably satisfactory to the Initial Purchasers, confirming, as of
the Closing Date, the matters set forth in paragraphs (a) and (d) of this
Section 10.1 and that, as of the Closing Date, the obligations of the
Authority and the Tribe to be performed hereunder on or prior thereto have
been duly performed.
(h) The Initial Purchasers shall have received certificates, dated
the Closing Date, signed on behalf of the Manager, in form and substance
reasonably satisfactory to the Initial Purchasers, confirming, as of the
Closing Date, the matters set forth in paragraphs (b) and (d) of this Section
10.1.
(i) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Initial Purchasers and counsel to the Initial Purchasers, of (i) Skadden,
Arps, Slate, Meager & Flom LLP to the effect set forth in Exhibit C-1 hereto,
(ii) Jacobson, Buffalo, Schoessler & Magnuson LTD to the effect set forth in
Exhibit C-2 hereto, (iii) Monteau & Peebles, LLP to the effect set forth in
Exhibit C-3 hereto, and (iv) Katten Muchin Zavis Rosenman to the effect set
forth in Exhibit C-4 hereto.
(j) At the time this Agreement is executed and at the Closing Date,
the Initial Purchasers shall have received from KPMG LLP and Burnett + Company
LLP, independent auditors, dated as of the date of this Agreement and as of
the Closing Date, customary comfort letters addressed to each Initial
Purchaser, and in form and substance satisfactory to the Initial Purchasers
and counsel for the Initial Purchasers with respect to the financial
statements and certain financial information of the Authority and the Manager
contained in the Offering Memorandum.
(k) The Initial Purchasers shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, of Latham & Watkins, counsel for the Initial Purchasers, covering
such matters as are customarily covered in such opinions.
(l) Latham & Watkins shall have been furnished with such documents,
in addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 10.1 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(m) Prior to the Closing Date, the Authority shall have furnished to
the Initial Purchasers such further information, certificates and documents as
the Initial Purchasers may reasonably request.
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(n) With respect to any Transaction Document to be executed on the
Closing Date, the Authority and each of the other parties thereto shall have
entered into each such Transaction Document to which each is a party. With
respect to any Material Agreement entered into prior to the Closing Date, such
Material Agreement shall be in full force and effect, and as of the date
hereof, there shall not be any defaults or events of default, that with
notice, the passage of time or otherwise could be a default, under any
provisions of such Material Agreements by any party thereto. The Initial
Purchasers shall have received executed copies of each Transaction Document
and Material Agreement.
(o) The Manager and the Trustee shall have entered into the Manager
Agreement substantially in the form set forth in Exhibit D hereto.
(p) The Authority shall have received all governmental and regulatory
approval required to be obtained prior to the Closing Date pursuant to the
Transaction Documents.
(q) All parties required to be licensed in connection with the
issuance and sale of the Series A Notes, the Senior Subordinated PIK Notes and
the Subordinated PIK Notes under the Compact or any other rules or regulations
have been so duly licensed by the appropriate Gaming Authority.
(r) Each Tribal Gaming Agency shall have provided a complete
exclusion from the licensing requirements of Section 6.4.6 of the Compacts for
(i) all federally-regulated or state-regulated banks, savings and loans or
other federally- or state-regulated lending institutions, (ii) any agency or
the federal, state or local government or (iii) any investor, who, alone or in
conjunction with other, holds less than 10% of any outstanding indebtedness
evidenced by the bonds issued by such Tribe.
(s) The Tribe and the Authority shall have received all requisite
approvals from the National Indian Gaming Commission in connection with each
of the Transaction Documents and Material Agreements to which either of them
are a party.
(t) There shall be no significant or material disputes between the
Manager, the Tribe, the Authority, on the one hand, and Walton, on the other
hand, with respect to or arising out of the Construction Management Agreement
and the Letter Agreement or the matters contemplated thereby.
(u) The Construction Management Agreement and the Letter Agreement
are in full force and effect and no "Suspension of Work" notice is currently
in effect, after giving effect to the consummation of the transactions
contemplated by the Transaction Documents.
(v) The Change Order contemplated and required to be executed and
delivered under the terms of the Letter Agreement, identical in all material
respects to the terms of Section A thereof (the "Change Order"), shall have
been duly authorized, executed and delivered by the Manager and Walton on or
before September 24, 2002.
36
(w) The Change Order shall have been duly authorized, executed and
delivered by the Authority.
(x) The grading site work on the Chukchansi Gold Resort & Casino
shall have commenced.
(y) The Manager shall have deposited $4,450,000 into an escrow
account (the "Escrow") pursuant to the terms of the Letter Agreement. The
documentation for the Escrow (a) shall irrevocably require the escrow holder
to wire transfer all funds then on deposit in the Escrow to the Trustee for
deposit into the Construction Disbursement Account (as defined in the Cash
Collateral and Disbursement Agreement (as set forth on Schedule I-A)) upon
receipt of written notice from the Manager that the Closing has occurred and
(b) shall otherwise be satisfactory to the Initial Purchasers.
(z) The Manager shall deliver the Satisfaction Notice (as defined in
the Construction Management Agreement) to Walton on the Closing Date.
(aa) The Subordinated PIK Notes shall be in full force and effect.
(bb) The Authority shall have issued the Senior Subordinated PIK
Notes.
(cc) The Trustee shall have received executed copies of each UCC-1
financing statement signed by the Authority naming the Trustee as secured
party and filed in such jurisdictions as the Initial Purchasers may reasonably
require.
(dd) The Trustee shall have received executed copies of each UCC-1
financing statement signed by the Manager naming the Trustee as secured party
and filed in such jurisdictions as the Initial Purchasers may reasonably
require.
(ee) All documents and agreements shall have been filed, and other
actions shall have been taken, as may be required to perfect the Senior Notes
Security Interests of the Trustee in the Senior Notes Collateral and to accord
the Trustee the priorities over other creditors of the Authority as
contemplated by the Offering Memorandum and the Transaction Documents. All
consents to assignment of documents and agreements shall have been executed by
the third parties named therein.
(ff) All documents and agreements shall have been filed, and other
actions shall have been taken, as may be required to perfect the Manager
Security Interests of the Trustee in the Manager Collateral and to accord the
Trustee the priorities over other creditors of the Manager as contemplated by
the Offering Memorandum and the Transaction Documents. All consents to
assignment of documents and agreements shall have been executed by the third
parties named therein.
(gg) The Notes shall have been approved for trading on PORTAL.
All opinions, certificates, letters and other documents required by
this Section 9.1 to be delivered by each of the Authority and the Tribe will
be in compliance with the provisions hereof
37
only if they are reasonably satisfactory in form and substance to the Initial
Purchasers. The Authority and the Tribe shall furnish the Initial Purchasers
with such conformed copies of such opinions, certificates, letters and other
documents as it shall reasonably request.
10.2. Conditions of the Chukchansi Parties' Obligations. Each of the
Initial Purchasers and each person to whom the Initial Purchasers have agreed
to resell 10% or more by principal amount of Series A Notes shall be licensed
as a "financial source" and determined suitable to purchase the Series A
Notes, or exempted from such requirements, pursuant to the Compact, the Tribal
Licensing Regulation and the State Bond Regulation.
11. Initial Purchasers' Information.
11.1. The Tribe, the Authority and each Initial Purchaser severally
acknowledge that the statements with respect to the offering of the Series A
Notes set forth (a) in the eleventh and thirteenth paragraphs on the cover
page of the Offering Memorandum and (b) in the fourth, sixth, seventh
(excluding the first sentence thereof), ninth, eleventh (excluding the first
two sentences thereof), twelfth and fourteenth paragraphs in the section
entitled "Plan of Distribution" in the Offering Memorandum constitute the only
information furnished to the Authority in writing by or on behalf of the
Initial Purchasers expressly for use in the Offering Memorandum.
12. Waiver of Sovereign Immunity, Arbitration and Non-Impairment.
12.1. Irrevocable Waiver of Sovereign Immunity. Each of the
Chukchansi Parties hereby unconditionally and irrevocably waives its sovereign
immunity and any and all defenses based thereon with respect to any claim,
demand, dispute, action or cause of action arising under or in any way
connected with or related or incidental to this Agreement, as the same may be
amended or modified from time to time, whether now existing or hereafter
arising and whether sounding in tort, contract or otherwise (collectively
"Permitted Claims"). Such waiver shall extend (a) to permit the
interpretation, enforcement and the seeking of legal or equitable relief and
remedies (whether through an award or granting of specific performance,
injunction, mandamus, damages or otherwise) by the parties hereto (and their
successors and assigns permitted hereunder) through arbitration proceedings as
herein provided, and (b) to permit judicial actions to compel, enter judgment
upon, enforce, modify or vacate any award or interim injunctive relief related
to the arbitration proceedings in any of the Applicable Courts described in
Section 12.2 below.
In connection with the foregoing waiver of sovereign immunity by each
Chukchansi Party:
(a) Duration. The duration of such waiver shall commence on the date
hereof and continue with respect to each Chukchansi Party until one year after
all obligations of such Chukchansi Party hereunder have been completely
performed and amounts, if any, owed hereunder from a Chukchansi Party have
been indefeasibly paid in full;
(b) Grantees. The grantee(s) of the waiver are each party hereto,
together with their successors and assigns hereunder;
38
(c) Scope. The scope of the waiver applies to all Permitted Claims;
(d) Property and Funds. The only assets or rights against which any
award, judgment or other order for relief arising from this waiver may be
enforced are Authority Assets as defined in the Authority Ordinance, whether
held in the name of the Authority, the Tribe or any branch, department,
agency, instrumentality, division, subsidiary, authority, enterprise,
corporation, business or other entity directly or indirectly owned or
controlled in whole or in part by either the Authority or the Tribe.
Notwithstanding the foregoing, any revenues or other property transferred by
the Authority to any other Chukchansi Party in compliance with the Notes and
the Transaction Documents shall, upon transfer, no longer constitute Authority
Assets;
(e) Jurisdictions. The courts with jurisdiction with respect to the
Permitted Claims are the Applicable Courts (as defined in Section 12.2 below)
(subject to the obligation of each Chukchansi Party to submit to arbitration
as provided herein); and
(f) Governing Law. The law applicable to the waiver and the Permitted
Claims shall be the internal laws of the State of New York, except where
application of the uniform commercial code of the State of New York will not
recognize a lien and the perfection of a lien on any Authority Assets as
security for any performance of a Chukchansi Party hereunder, and the UCC of
the Tribe will recognize the lien or the perfection of the lien, in which case
the law the Tribe, as applicable, that recognizes the lien and perfection
shall apply.
12.2. Designation of Applicable Courts and Jurisdictions. Each
Chukchansi Party hereby irrevocably consents to the following courts,
jurisdictions and venues for the judicial actions described in Section 12.1
above (the "Applicable Courts"): (a) the United States District Court for the
Southern District of New York, and all courts to which any appeal therefrom
may be available; (b) any court of the State of New York, and all courts to
which any appeal therefrom may be available; (c) if none of the foregoing
courts shall have or accept jurisdiction, then any other federal or state
court, and all courts to which any appeal therefrom may be available and (d)
if none of the foregoing courts shall have or accept jurisdiction, then any
court of the Tribe (in the case of any Permitted Claim to which the Tribe or
the Authority is a party).
12.3. Additional Waivers as to Tribal Courts. Each of the Chukchansi
Parties hereby unconditionally and irrevocably waives the jurisdiction of any
tribal courts now or hereafter existing or created with respect to any
Permitted Claim, except as provided in clause (d) of Section 12.2 above. Each
of the Chukchansi Parties unconditionally and irrevocably waives the
application of any rule or doctrine relating to exhaustion of tribal remedies
or comity that might otherwise require a Permitted Claim be heard in a tribal
court.
12.4. Agreement not to Contest. In connection with any Permitted
Claim, each of the Chukchansi Parties agrees it will not dispute before or in
any court, arbitration panel or other forum, the validity and binding effect
of its waiver of sovereign immunity, consent to arbitration proceedings,
consent to judicial proceedings, or waivers of the right to assert application
of any rules or doctrines of exhaustion of tribal remedies or comity with
respect to tribal court, all to the extent contained herein.
39
12.5. Arbitration. All Permitted Claims must be resolved by binding
arbitration under the commercial arbitration rules of the American Arbitration
Association (the "AAA"), as modified by this Section 12.5. Notwithstanding any
other provision of this Section 11, an arbitrator shall not have the power to
compel, negate, assume, usurp or in any manner affect any Governmental Action
unless any Governmental Action or failure to take any Governmental Action
constitutes a breach of this Agreement by the Tribe or the Authority.
"Governmental Action" means any resolution, ordinance, statute, regulation,
order or decision regardless of how constituted having the force of law or
legal authorization of the Tribe, the Authority or any instrumentality or
agency of the Tribe.
(a) Commencement of Proceedings. An arbitration proceeding may be
commenced only by the Tribe, the Authority or the Initial Purchasers, by the
filing of a Statement of Claim (within the meaning of the AAA rules) with the
AAA and serving a copy thereof on the other parties affected by the Permitted
Claim. A single arbitrator shall hear the Permitted Claim, and shall be
selected in accordance with the rules of the AAA.
(b) Qualification of Arbitrators. No person shall be eligible to
serve as an arbitrator if the person is related to, affiliated with or has
represented in a legal capacity any party to the arbitration proceeding or any
party to this Agreement. The arbitrator shall be an attorney admitted to
practice and in good standing before the highest court of a state, who is
experienced in advising clients in connection with commercial borrowings or
the issuance of debt securities.
(c) Discovery. Any party shall be permitted to engage in any
discovery permitted under the rules of the AAA. However, all discovery shall
be completed within 90 days following the initial filing of the Statement of
Claim.
(d) Hearing. The hearing on the arbitration shall be held in the City
of Los Angeles, California, and commence and be completed no more than 30 days
after the close of discovery, and the arbitrator shall render an award in
writing within 30 days of the completion of the hearing, which shall contain
findings of facts and conclusions of law. The parties hereto further agree
that any arbitrator appointed hereunder may award interim injunctive relief
before the final arbitration award. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator.
(e) Enforcement. Proceedings to enter judgment upon, enforce, modify
or vacate any award or interim injunctive relief may be commenced in any of
the Applicable Courts. Any such proceedings shall be governed (i) by the
Federal Arbitration Act, if the matter will be heard in federal court, (ii) by
the applicable state arbitration code, if the matter will be heard in state
court, and (iii) by the Tribal Arbitration Code, if the matter will be heard
in a tribal court, provided that the standards of review of the award in all
cases shall be consistent with the Federal Arbitration Act.
(f) Prohibition on Punitive Damages. Each party hereto agrees that
each party has equal bargaining power and that each has freely entered into
this agreement after such consultation with its attorneys as it has deemed
advisable, and that notwithstanding any other
40
provision herein, no arbitrator shall have the power to award punitive damages
and any such award shall be null and void and of no effect.
(g) Validity of Arbitration Provisions. Each party hereto agrees that
these arbitration provisions are valid, binding and enforceable, and, to the
extent permitted by law, waives any defense or claim to the contrary.
(h) Full faith and credit. The Chukchansi Parties and the tribal
courts of the Tribe now or hereafter existing shall give full faith and credit
to any award, order or decree rendered in any arbitration or by any federal or
state court in accordance with this Section 12.5, and, to the extent
reasonably necessary, shall issue such orders and exercise such legal powers
as may reasonably be necessary to effectuate the same. The Tribe shall cause
the police powers of the Tribe to be available to secure and support any such
enforcement efforts with respect to the Tribe or the Authority, and all police
or other law enforcement officials of the Tribe to carry out any orders that
may be entered by the Tribe or its tribal court pursuant to this Section 12.5.
The Chukchansi Parties agree that judgment enforcement remedies generally
available throughout the State of New York may be applied on lands held by or
in trust for or under the control of the Tribe with respect to any matter that
is a proper subject of arbitration under this Section 12.5.
12.6. Non-Impairment. No Chukchansi Party or any of its Affiliates
will: (i) adopt, enact, promulgate or otherwise place into effect any law or
legal requirement that impairs or interferes, or could impair or interfere, in
any manner, with any right or remedy of another party hereunder or their
successors and assigns (it being understood and agreed that any such law or
legal requirement that is adopted, enacted, promulgated or otherwise placed
into effect without the prior written consent of any affected party, successor
or assign shall be void and of no effect); or (ii) demand, impose or receive
any tax, charge, assessment, fee or other imposition or impose any regulatory
or licensing requirement against a party, their successors or assigns, except
in connection with licensing required by the Compact.
13. Survival of Representations and Agreements.
13.1. All representations, warranties, covenants and agreements of
the Tribe, the Authority, the Manager and the Initial Purchasers contained in
this Agreement, including the agreements contained in Sections 4.1(f) and
14.4, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Initial Purchasers, any controlling
person thereof, or by or on behalf the Tribe or the Authority or any
controlling person thereof, and shall survive delivery of and payment for the
Series A Notes to and by the Initial Purchasers. The agreements contained in
Sections 4.1(f) and 14.4 shall survive the termination of this Agreement,
including any termination pursuant to Section 14.
14. Effective Date of Agreement; Termination.
14.1. This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
14.2. The Initial Purchasers, severally and not jointly, shall have
the right to terminate this Agreement at any time prior to the Closing Date by
notice to the Authority, without liability
41
on the Initial Purchasers' part to the Authority if, on or prior to such date,
(a) the Authority, the Tribe or the Manager shall have failed, refused or been
unable to perform in any material respect any agreement on its part to be
performed hereunder, (b) any other condition to the obligations of the Initial
Purchasers hereunder as provided in Section 9 is not fulfilled when and as
required in any material respect, (c) in the reasonable judgment of the
Initial Purchasers, any material adverse change shall have occurred since the
respective dates as of which information is given in the Offering Memorandum
in the condition (financial or otherwise), business, properties, assets,
liabilities, prospects, net worth, results of operations or cash flows of the
Authority, other than as set forth in the Offering Memorandum, or (d)(i) any
domestic or international event or act or occurrence has materially disrupted,
or in the opinion of such Initial Purchaser will in the immediate future
materially disrupt, the market for the Authority's securities or for
securities in general; or (ii) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange, the Chicago Board Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the
Nasdaq National Market shall have been suspended or materially limited, or
minimum or maximum prices for trading shall have been established, or maximum
ranges for prices for securities shall have been required, on such exchange or
the Nasdaq National Market, or by such exchange or other regulatory body or
governmental authority having jurisdiction; or (iii) a banking moratorium
shall have been declared by federal or state authorities, or a moratorium in
foreign exchange trading by major international banks or persons shall have
been declared; or (iv) there is an outbreak or escalation of armed hostilities
involving the United States on or after the date hereof, or if there has been
a declaration by the United States of a national emergency or war, the effect
of which shall be, in the Initial Purchaser's judgment, to make it inadvisable
or impracticable to proceed with the offering or delivery of the Series A
Notes on the terms and in the manner contemplated in the Offering Memorandum;
or (v) there shall have been such a material adverse change in general
economic, political or financial conditions or if the effect of international
conditions on the financial markets in the United States shall be such as, in
the Initial Purchasers' judgment, makes it inadvisable or impracticable to
proceed with the purchase of the Series A Notes on the terms and in the manner
contemplated in the Offering Memorandum.
14.3. Any notice of termination pursuant to this Section 14 shall be
by telephone or facsimile and, in either case, confirmed in writing by letter.
14.4. If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to clause (d) of Section 14.2, in
which case each party will be responsible for its own expenses), or if the
sale of the Series A Notes provided for herein is not consummated because any
condition to the obligations of the Initial Purchasers set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Authority or the Tribe to perform any agreement herein to which they are a
party or comply with any provision hereof, the Authority shall, upon demand,
reimburse the Initial Purchasers for all reasonable out-of-pocket expenses
(including, without limitation, the fees and expenses of the Initial
Purchasers' counsel), incurred by the Initial Purchasers in connection
herewith, or if the sale of the Series A Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth herein is not satisfied or because of any refusal, inability or
failure on the part of the Manager to perform any agreement herein to which it
is a party or comply with any provision hereof, the Manager shall, upon
demand, reimburse the
42
Initial Purchasers for all reasonable out-of-pocket expenses (including,
without limitation, the fees and expenses of the Initial Purchasers' counsel),
incurred by the Initial Purchasers in connection herewith.
15. Notice.
15.1. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, shall be mailed, delivered,
telecopied and confirmed in writing or sent by a nationally recognized
overnight courier service guaranteeing delivery on the next business day and:
(a) if sent to the Initial Purchasers, sent to:
c/o Dresdner Kleinwort Wasserstein - Grantchester, Inc.
1301 Avenue of the Americas
New York, New York 10019
Attention: General Counsel
Telecopy: (212) 969-7850
with a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Gary A. Kashar
Telecopy: (213) 891-8763;
(b) if sent to the Manager, sent to:
Cascade Entertainment Group, LLC
7915 Folsom Blvd.
Sacramento, California 95826-2611
Attention: Chief Financial Officer
Telecopy: (916) 387-7458
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California, 90071
Attention: Nick Saggese
Telecopy: (213) 687-5600;
43
(c) if sent to the Tribe or the Authority, sent to:
46575 Road 417
Coarsegold, California 93614
Attention: Tribal Chairman
Telecopy: (559) 683-0599
with a copy to:
Monteau & Peebles, LLP
12100 West Center Road, Suite 202
Bel Air Plaza
Omaha, Nebraska 68144-3960
Attention: John Peebles
Telecopy: (402) 333-4053
16. Parties.
16.1. This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Tribe, the Authority, the Manager, the Initial Purchasers
and any controlling person of such parties, and their respective successors
and assigns, and no other person shall have or be construed to have any legal
or equitable right, remedy or claim under or in respect of or by virtue of
this Agreement or any provision herein contained. The term "successors and
assigns" shall not include a purchaser, in its capacity as such, of Notes from
the Initial Purchasers.
17. Construction.
17.1. The internal law of the State of New York, including, without
limitation, Section 5-1401 of the New York General Obligations Law, shall
govern and be used to construe this Agreement.
18. Captions.
18.1. The captions included in this Agreement are included solely for
convenience of reference and are not to be considered a part of this
Agreement.
19. Counterparts.
19.1. This Agreement may be executed in various counterparts which
together shall constitute one and the same instrument.
(Signature Page Follows)
44
If the foregoing correctly sets forth the understanding among the
Initial Purchasers and the Authority please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among us.
Very truly yours,
PICAYUNE RANCHERIA OF CHUKCHANSI
INDIANS
a federally recognized tribe
By: /s/ Dixie Jackson
-----------------------------
Name: Dixie Jackson
Title: Chairperson
THE CHUKCHANSI ECONOMIC
DEVELOPMENT AUTHORITY
a wholly-owned unincorporated
enterprise of the Picayune
Rancheria of Chukchansi Indians
By: /s/ Dixie Jackson
---------------------------
Name: Dixie Jackson
Title: Chairperson
Acknowledged and agreed to as of
the date first above written:
CASCADE ENTERTAINMENT GROUP, LLC
a California Limited Liability Company
By: /s/ Russell S. Pratt
-----------------------------
Name: Russell S. Pratt
Title: President
S-1
Accepted and agreed to as of
the date first above written:
DRESDNER KLEINWORT WASSERSTEIN - GRANTCHESTER, INC.
a Delaware corporation
for itself and the other Initial Purchaser
named in Exhibit B
By: /s/ Ashish Bhutani
----------------------------------------
Name: Ashish Bhutani
Title: CEO, NA
S-2
SCHEDULE I-A
AUTHORITY SECURITY DOCUMENTS
1. Pledge and Security Agreement, dated as of the Closing Date, from the
Authority and the Tribe in favor of the Trustee for the benefit of
the holders of the Notes.
2. Cash Collateral and Disbursement Agreement, dated as of the Closing
Date, among the Disbursement Agent (as defined therein), the Trustee,
the Independent Construction Consultant (as defined therein), the
Authority and the Tribe.
3. Cash Accumulation Account Contribution Agreement, dated as of the
Closing Date, among the Disbursement Agent (as defined therein), the
Trustee, the Authority and the Manager.
4. The Promissory Note, the form of which is set forth as an attachment
to the Cash Accumulation Account Contribution Agreement, to be
executed by the Authority in favor of the Manager.
5. Any Deposit Account Control Agreement as defined in the Cash
Collateral and Disbursement Agreement.
6. Letter of Credit Drawdown Agreement, dated as of the Closing Date,
among Credit Provider Group, LLC, a Delaware limited liability
company, the Authority, the Tribe, the Manager and the Trustee.
7. The irrevocable $15.0 million Letter of Credit provided by Credit
Provider Group, LLC to the Authority in accordance with the Letter of
Credit Drawdown Agreement and any replacement thereof pursuant to the
provisions of the Letter of Credit Drawdown Agreement.
8. The Promissory Note, the form of which is set forth as an attachment
to the Letter of Credit Drawdown Agreement, to be executed by the
Authority in favor of Credit Provider Group, LLC.
9. UCC-1 financing statements as contemplated by and required by the
foregoing.
10. Construction Manager's Agreement, dated as of the Closing Date,
between Walton and the Authority.
11. Pledge and Security Agreement, dated as of the Closing Date, from the
Authority and the Tribe in favor of the Trustee for the benefit of
the holders of the Notes (wherein the tribal UCC has sole
jurisdiction).
12. Management Fees Note, the form of which is set forth as an attachment
to the Cash Accumulation Account Contribution Agreement, dated as of
the Closing Date, executed by the Manager for the benefit of the
Authority.
Schedule I-A
SCHEDULE I-B
MANAGER SECURITY DOCUMENTS
1. Cash Accumulation Account Contribution Agreement, dated as of the
Closing Date, among the Disbursement Agent (as defined therein), the
Trustee, the Authority and the Manager.
2. Letter of Credit Drawdown Agreement, dated as of the Closing Date,
among Credit Provider Group, LLC, a Delaware limited liability
company, the Authority, the Tribe and the Trustee.
3. UCC-1 financing statements as contemplated by and required by the
foregoing.
4. Manager Repayment Note, the form of which is set forth as an
attachment to the Cash Accumulation Account Contribution Agreement,
dated as of the Closing Date, executed by the Authority to and for
the benefit of the Manager.
5. Letter of Credit Note, the form of which is set forth as an
attachment to the Letter of Credit Drawdown Agreement, dated as of
the Closing Date, executed by the Authority for the benefit of the
Manager.
6. Management Fees Note, the form of which is set forth as an attachment
to the Cash Accumulation Account Contribution Agreement, dated as of
the Closing Date, executed by the Manager for the benefit of the
Authority.
Schedule I-B
EXHIBIT B
List of Initial Purchasers
Principal Amount of
Purchaser Series A Notes
- --------- ---------------
Dresdner Kleinwort Wasserstein - Grantchester, Inc................. $122,400,000
Banc of America Securities LLC..................................... $ 30,600,000
Total.......................................................... $153,000,000
B-1