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Sample Business ContractsHome: Sample Business Contracts:
LOAN AGREEMENT
dated as of
November 2, 2001
among
THCR MANAGEMENT SERVICES, LLC, as Borrower
and
TCW Leveraged Income Trust, L.P.
TCW Leveraged Income Trust II, L.P. and
TCW Leveraged Income Trust IV, L.P.,
as Lenders
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. DEFINITIONS........................................................1
1.1 Certain Defined Terms...................................................1
1.2 Accounting Terms.......................................................15
1.3 Other Definitional Provisions; Anniversaries...........................15
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES..................16
2.1 Loans and Notes........................................................16
2.2 Interest on the Loans..................................................17
2.3 Fees...................................................................17
2.4 Prepayments and Reductions in the Commitments..........................17
2.5 Use of Proceeds........................................................21
SECTION 3. CONDITIONS........................................................21
3.1 Conditions Precedent to the Effectiveness of this Agreement............21
3.2 Conditions Precedent to All Loans......................................25
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................25
4.1 Organization and Good Standing.........................................25
4.2 Authorization and Power................................................26
4.3 No Conflicts or Consents...............................................26
4.4 Enforceable Obligations................................................26
4.5 Properties; Liens......................................................26
4.6 Financial Condition....................................................27
4.7 Full Disclosure........................................................27
4.8 No Default.............................................................28
4.9 Compliance with Contracts, Etc.........................................28
4.10 No Litigation..........................................................28
4.11 Use of Proceeds; Margin Stock, Etc.....................................28
4.12 Taxes..................................................................28
4.13 ERISA..................................................................29
4.14 Government Regulation..................................................29
4.15 Capital Structure......................................................29
4.16 Intellectual Property..................................................29
4.17 Environmental Matters..................................................30
4.18 Permits................................................................31
4.19 Insurance..............................................................32
4.20 Labor Matters..........................................................32
4.21 Broker's or Finder's Fees..............................................32
SECTION 5. AFFIRMATIVE COVENANTS.............................................32
5.1 Financial Statements and Other Reports.................................32
5.2 Corporate Existence, Etc...............................................34
5.3 Payment of Taxes and Claims; Tax Consolidation.........................34
5.4 Maintenance of Properties; Insurance...................................35
</TABLE>
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5.5 Inspection.............................................................35
5.6 Compliance with Laws, Etc..............................................35
5.7 Maintenance of Accurate Records, Etc...................................35
5.8 Permits................................................................35
5.9 ERISA Compliance.......................................................36
5.10 Development Fee Reserve................................................36
SECTION 6. NEGATIVE COVENANTS................................................36
6.1 Indebtedness...........................................................36
6.2 Liens..................................................................36
6.3 Restricted Payments....................................................37
6.4 Restriction on Fundamental Changes.....................................37
6.5 Transactions with Shareholders and Affiliates..........................37
6.6 Business Activities; Future Collateral.................................37
6.7 Amendments to Charter Documents........................................38
6.8 Asset Sales............................................................38
6.9 Management Agreement and Development Agreement.........................38
6.10 Bank Loan..............................................................38
SECTION 7. EVENTS OF DEFAULT.................................................38
7.1 Failure To Make Payments When Due......................................38
7.2 Default in Other Agreements............................................39
7.3 Breach of Certain Covenants............................................39
7.4 Breach of Warranty.....................................................39
7.5 Other Defaults Under This Agreement or Loan Documents..................39
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc..................39
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc....................39
7.8 Judgments and Attachments..............................................40
7.9 Dissolution............................................................40
7.10 Guaranty...............................................................40
7.11 Liens..................................................................40
7.12 ERISA Event............................................................40
7.13 Change of Control......................................................40
7.14 Management Agreement Not Effective.....................................40
7.15 Termination of Management Agreement....................................41
7.16 Failure to Have Permits................................................41
7.17 Management Agreement...................................................41
7.18 Default Under Management Agreement.....................................41
7.19 Loss of License or Exemption...........................................41
SECTION 8. intentionally omitted.............................................42
SECTION 9. MISCELLANEOUS.....................................................42
9.1 Participations in and Assignments of Loans and Notes...................42
9.2 Expenses...............................................................44
9.3 Indemnity..............................................................44
9.4 Setoff.................................................................45
</TABLE>
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9.5 Amendments and Waivers.................................................45
9.6 Independence of Covenants..............................................46
9.7 Entirety...............................................................46
9.8 Notices................................................................46
9.9 Survival of Warranties and Certain Agreements..........................46
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative..................46
9.11 Severability...........................................................47
9.12 Headings...............................................................47
9.13 Applicable Law.........................................................47
9.14 Successors and Assigns; Subsequent Holders of Notes....................47
9.15 Counterparts; Effectiveness............................................47
9.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial...................47
9.17 Payments Pro Rata......................................................48
9.18 Taxes..................................................................49
9.19 Waiver of Stay, Extension or Usury Laws................................49
9.20 Requirements of Law....................................................50
9.21 Confidentiality........................................................50
9.22 Register...............................................................50
</TABLE>
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SCHEDULES:
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Schedule 1 Commitment Percentages
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Schedule A Options or Warrants
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Schedule B Existing Indebtedness
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Schedule C Environmental Matters
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Schedule D Existing Liens
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Schedule E Litigation
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Schedule F ERISA
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Schedule G Existing Investments
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Schedule H Intellectual Property
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Schedule I Permits
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Schedule J Financial Matters
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Schedule K Taxes
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EXHIBITS:
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Exhibit I-A Form of Tranche A Note
Exhibit I-B Form of Tranche B Note
Exhibit II Form of Notice of Borrowing
Exhibit III Form of Opinions
Exhibit IV Form of Security Agreement
Exhibit V Form of Guaranty
Exhibit VI Form of Escrow and Securities Account Control Agreement
Exhibit VII Form of Collateral Assignment and Security Agreement
Exhibit VIII Form of Consent to Collateral Assignment
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LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT (this "Agreement") is dated as of November
---------
2, 2001, and entered into by and among THCR Management Services, LLC, a Delaware
limited liability company (the "Borrower") and the Lenders named on the
--------
signature pages hereto and any Persons that become Lenders in accordance with
Section 9.1(a) (the "Lenders").
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RECITALS
WHEREAS, the Borrower desires that the Lenders extend a senior
secured credit facility to the Borrower on the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereby agree
as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement shall
---------------------
have the following meanings:
"Affiliate" means, with respect to any Person, any other
Person that, directly or indirectly, controls, is controlled by or is under
common control with, such Person. For purposes of this definition, "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have correlative meanings. A direct or indirect
owner of 10% or more of the equity securities of a Person shall be deemed to
control such Person.
"Affiliate Transaction" has the meaning ascribed to such term
in Section 6.5.
"Agreement" means this Loan Agreement dated as of November 2,
2001, as it may be amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms hereof.
"Amount of Unfunded Benefit Liabilities" means, with respect
to any Pension Plan, (a) if set forth on the most recent actuarial valuation
report with respect to such Pension Plan, the amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA) and (b) otherwise, the
excess of (i) the greater of the current liability (as defined in Section
412(l)(7) of the Internal Revenue Code) or the actuarial present value of the
accrued benefits with respect to such Pension Plan over (ii) the market value of
the assets of such Pension Plan.
"Arranger" means Jefferies & Company, Inc.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease, assignment or other transfer for value by the
Borrower (including any Sale and Leaseback Transaction and any merger or
consolidation) to any Person of any property or assets of the Borrower;
provided, however, that Asset Sales shall not include (i) dispositions of used,
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surplus
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or worn out equipment in the ordinary course of business, or (ii) a disposition
consisting of a Restricted Payment permitted under Section 6.3 hereof.
"Auditors" means either (a) a "Big 5" accounting firm or (b)
an internationally recognized firm of independent public accountants selected by
the Borrower and reasonably satisfactory to the Required Lenders.
"Bank Loan" means the Bank Loan Credit Agreement and all
security documents, payment guaranty agreements, subordination agreements,
pledge agreements, mortgages, notes and related documents and agreements entered
into in connection therewith or related thereto.
"Bank Loan Credit Agreement" means that certain Loan Agreement
dated as of October 17, 2001, by and among Twenty-Nine Palms Enterprises
Corporation, the Tribe, the lenders referred to therein and First National Bank,
as administrative agent.
"Bankruptcy Law" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute
or any other United States federal, state or local law or the Law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors, whether in effect on the date hereof or
hereafter.
"Bankruptcy Order" means any court order made in a proceeding
pursuant to or within the meaning of any Bankruptcy Law, containing an
adjudication of bankruptcy or insolvency, or providing for liquidation, winding
up, dissolution or reorganization, or appointing a custodian of a debtor or of
all or any substantial part of a debtor's property, or providing for the
staying, arrangement, adjustment or composition of indebtedness or other relief
of a debtor.
"Board of Directors" means, as to any Person, the board of
directors of such Person, the managers or members of such Person (if such Person
is a limited liability company) and any duly authorized committee of the board
of directors or managers.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and to
be in full force and effect on the date of such certification, and delivered to
the Lenders.
"Borrower" has the meaning ascribed to such term in the
introduction to this Agreement.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of New York or is a day on which
banking institutions therein located are authorized or required by law or other
governmental action to close.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of common stock and preferred stock of such Person and including any
warrants, options or rights to acquire any of the foregoing and
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instruments convertible into any of the foregoing, and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
---
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
-------
than 180 days from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within 180 days from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $250,000,000; (v) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (iv) above; (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Borrower to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a "Group") or to any Affiliates
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thereof (whether or not otherwise in compliance with the provisions of this
Agreement); (ii) the approval by the holders of Capital Stock of the Borrower of
any plan or proposal for the liquidation or dissolution of the Borrower (whether
or not otherwise in compliance with the provisions of this Agreement); (iii) the
failure by Trump Hotels & Casino Resorts Holdings, L.P. to beneficially own 100%
of the issued and outstanding Capital Stock of the Borrower; (iv) any "Change of
Control" as defined in that certain Indenture dated as of June 12, 1995 between
Trump Hotels & Casino Resorts Holdings, L.P., Trump Hotels & Casino Resorts
Funding, Inc. and First Bank National Association, as trustee; or (v) the
failure by Donald J. Trump to beneficially own (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 25% or more of either the then outstanding
membership interests of the Borrower or the combined voting power of the
Borrower's then outstanding voting securities.
"Closing Date" means the date on which the initial Loans are
made and the conditions set forth in Section 3.1 are satisfied or waived in
accordance with Section 9.5.
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"Collateral Assignment and Security Agreement" means that
certain Collateral Assignment and Security Agreement between the Borrower and
the Lenders, in form and substance satisfactory in all respects to the Lenders
and substantially in the form of Exhibit VII annexed hereto.
"Commission" means the Securities and Exchange Commission or
any successor thereof.
"Commitments" means, collectively, the Tranche A Commitments
and the Tranche B Commitments.
"Compact" means the Tribal-State Compact approved May 5, 2000
and published in the Federal Register on May 16, 2000, entered into between
Twenty-Nine Palms Enterprises Corporation and the State of California, as
amended.
"Consent to Collateral Assignment" means that certain Consent
to Collateral Assignment of Management Agreement executed by the Tribe and
Twenty-Nine Palms Enterprises Corporation, in form and substance satisfactory in
all respects to the Lenders and substantially in the form of Exhibit VIII
------------
annexed hereto.
"Contested Claim" means any Tax, Indebtedness or other claim
or liability (i) the validity or amount of which is being contested in good
faith by appropriate proceedings, timely instituted and diligently pursued, (ii)
for which adequate reserve, or other appropriate provision, if any, as required
in conformity with GAAP shall have been made, and (iii) with respect to which
(x) no Lien has been imposed by any Tax authority and (y) any right to execute
upon or sell any assets of the Borrower has not matured or has been and
continues to be effectively enjoined, superseded or stayed.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include (a)
-------- -------
obligations of the Borrower under the Management Agreement or (b) endorsements
of instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
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"Contractual Obligation" as applied to any Person, means any
provision of any Security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"Controlled Group" means (i) a controlled group of
corporations as defined in Section 1563(a) of the Internal Revenue Code or (ii)
a group of trades or businesses under common control, as defined in Section
414(c) of the Internal Revenue Code, of which the Borrower is a part or becomes
a part.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Borrower against fluctuations in currency values.
"Custodian" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator or similar official charged
with maintaining possession or control over property for one or more creditors,
whether under any Bankruptcy Law or otherwise.
"Default" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an Event
of Default.
"Development Fee" means any fee or payment received by Trump
Hotels & Casino Resorts Development Company, LLC under Section 6.1 of the
Development Agreement.
"Development Agreement" means the Gaming Facility Development
and Construction Agreement dated as of April 7, 2000 between the Tribe and Trump
Hotels & Casino Resorts Development Company, LLC, as amended.
"Development Fee Reserve" means the reserve provided for in
Section 3 of the Escrow and Securities Account Control Agreement.
"Disqualified Capital Stock" means that portion of any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the first anniversary of the Maturity Date.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Eligible Assignee" means (A) (i) a commercial bank organized
under the laws of the United States of America or any state thereof having a
combined capital and surplus of not less than $250,000,000; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof having a combined capital and surplus of not less than
$250,000,000; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof having a combined capital and surplus
of not less than $250,000,000; provided that (x) such bank is acting through a
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branch or agency located in the
5
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United States or (y) such bank is organized under the laws of a country that is
a member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities Act of
1933); and (B) any Lender and any Affiliate of any Lender.
"Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA (i) which is, or, at any time within the five
calendar years immediately preceding the date hereof, was at any time,
maintained or contributed to by the Borrower or any of its ERISA Affiliates or
(ii) with respect to which the Borrower retains any liability, including any
potential joint and several liability as a result of an affiliation with an
ERISA Affiliate or a party that would be an ERISA Affiliate except for the fact
the affiliation ceased more than five calendar years prior to the date hereof.
"Environmental Claim" means any notice, claim, demand, order,
direction (conditional or otherwise) or other communication by any governmental
authority or any Person alleging liability for any response or corrective
action, any damage, including, without limitation, personal injury (including
sickness, disease or death), tangible or intangible property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse effects on the
environment, or for fines or penalties, in each case arising under any
Environmental Law, including without limitation, relating to, resulting from or
in connection with Hazardous Materials and relating to the Borrower or any of
its properties or predecessors in interest, or Facilities.
"Environmental Laws" means federal, state, local and foreign
laws, ordinances, orders, rules, regulations, judgments, writs, decrees or
injunctions relating to pollution or protection of human health, safety or the
environment including, without limitation, ambient air, indoor air, soil,
surface water, groundwater, wetlands and other natural resources, land or
subsurface strata, including, without limitation, those relating to the Release
or threatened Release of Hazardous Materials or otherwise relating to the
generation, manufacture, use, storage, transport, treatment, distribution, or
disposal of Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C.(S) 9601 et seq.) ("CERCLA"), the Hazardous Materials Transportation Act
------ ------
(49 U.S.C.(S) 1801 et seq.), the Resource Conservation and Recovery Act (42
------
U.S.C.(S) 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.(S)
------
1251 et seq.), the Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Toxic
------ ------
Substances Control Act (15 U.S.C.(S) 2601 et seq.), the Federal Insecticide,
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Fungicide and Rodenticide Act (7 U.S.C.(S) 136 et seq.), the Occupational
------
Safety and Health Act (29 U.S.C.(S) 651 et seq.) and the Emergency Planning and
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Community Right-to-Know Act (42 U.S.C.(S) 11001 et seq.), each as amended or
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supplemented and each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate", as applied to any Person, means (i) any
corporation which is, or was at any time within the five calendar years
immediately preceding the date hereof, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time within the five calendar years
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immediately preceding the date hereof, a member; (ii) any trade or business
(whether or not incorporated) which is, or was at any time within the five
calendar years immediately preceding the date hereof, a member of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Internal Revenue Code of which that Person is, or was at any time within
the five calendar years immediately preceding the date hereof, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is, or was at any time within the five calendar years immediately
preceding the date hereof, a member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by the Borrower or any of its ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might reasonably be expected to
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of liability on the
Borrower or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the
withdrawal by the Borrower or any of its ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by the Borrower or any of its ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or
omission which could reasonably be expected to give rise to the imposition on
the Borrower or any of its ERISA Affiliates of fines, penalties, taxes or
related charges under Chapter 43 of the Internal Revenue Code or under Section
409 or 502(c), (i) or (l) or 4071 of ERISA in respect of any Employee Benefit
Plan; (ix) the assertion of a material claim (other than routine claims for
benefits) against any Employee Benefit Plan other than a Multiemployer Plan or
the assets thereof, or against the Borrower or any of its ERISA Affiliates in
connection with any such Employee Benefit Plan; (x) receipt from the Internal
Revenue Service of notice of the failure of any Pension Plan (or any other
Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code;
or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
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"Escrow and Securities Account Control Agreement" means that certain
Escrow and Securities Account Control Agreement among the Borrower, the Lenders
and the Bank of New York, as securities intermediary, in form and substance
satisfactory in all respects to the Lenders and substantially in the form of
Exhibit VI annexed hereto.
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"Event of Default" means any of the events set forth in Section 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute or statutes thereto.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Borrower or any
of its predecessors in interest.
"Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Borrower acting
reasonably and in good faith and shall be evidenced by a Board Resolution of the
Board of Directors of the Borrower delivered to the Lenders.
"Fee Letter" means the letter agreement dated September 27, 2001
between the Borrower and Jefferies & Company, Inc. pursuant to which the
Borrower committed to pay Jefferies & Company, Inc. certain fees.
"Financial Statements" means the balance sheets, statements of
operations, statements of cash flows and statements of changes in shareholder's
equity of the Borrower for the period specified, prepared in accordance with
GAAP and consistent with prior periods.
"Fiscal Year" means the fiscal year of the Borrower for accounting and
tax purposes, which for all years after the Closing Date shall end on December
31.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"Guarantor" means Donald J. Trump, an individual.
"Guaranty" means the Guaranty dated as of the date hereof executed by
the Guarantor in favor of the Lenders, in form and substance satisfactory in all
respects to the Lenders and substantially in the form of Exhibit V annexed
---------
hereto.
"Hazardous Materials" shall mean any pollutant, contaminant, toxic,
hazardous or extremely hazardous substance, constituent or waste, or any other
constituent, waste, material, compound, chemical or substance including, without
limitation, petroleum (including crude oil or any fraction thereof) or any
petroleum product, subject to regulation under any Environmental Law.
8
<PAGE>
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall have meanings
---------- -------- ---------- ---------
correlative to the foregoing); provided, however, that any amendment,
-------- -------
modification or waiver of any document pursuant to which Indebtedness was
previously Incurred shall only be deemed to be an Incurrence of Indebtedness if
and to the extent such amendment, modification or waiver (i) increases the
principal thereof or interest rate or premium payable thereon or (ii) changes to
an earlier date the stated maturity thereof or the date of any scheduled or
required principal payment thereon or the time or circumstances under which such
Indebtedness is required to be redeemed.
"Indebtedness" means with respect to any Person, without duplication,
(i) all indebtedness, obligations and liabilities of such Person for borrowed
money, (ii) all indebtedness, obligations and liabilities of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
Capitalized Lease Obligations of such Person, (iv) all obligations and
liabilities of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all indebtedness, obligations and
liabilities under any title retention agreement (but excluding trade accounts
payable and other accrued liabilities arising in the ordinary course of business
that are not overdue by 90 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and for
which appropriate reserves have been made), (v) all indebtedness, obligations
and liabilities for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) all Contingent
Obligations of such Person, (vii) all indebtedness, obligations and liabilities
under Currency Agreements and Interest Swap Obligations of such Person, (viii)
all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any, and (ix) all
indebtedness, obligations and liabilities of any other Person of the type
referred to in clauses (i) through (viii) which are secured by any Lien on any
property or asset of such Person.
"Indemnified Liabilities" has the meaning ascribed to such term in
Section 9.3.
"Indemnitees" has the meaning ascribed to such term in Section 9.3.
"Initial Tranche B Lending Date" means the first day on which Tranche
B Loans are advanced to the Borrower.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of the Borrower as currently conducted that are material
to the condition (financial or otherwise), business or operations of the
Borrower.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to
9
<PAGE>
receive from time to time periodic payments calculated by applying either a
floating or a fixed rate of interest on a stated notional amount in exchange for
periodic payments made by such other Person calculated by applying a fixed or a
floating rate of interest on the same notional amount and shall include, without
limitation, interest rate swaps, caps, floors, collars and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor code or statute.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee or
Contingent Obligation) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition by such Person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by, any other Person.
"Laws" means all applicable statutes, laws, ordinances, regulations,
rules, orders, judgments, writs, injunctions or decrees of any state,
commonwealth, nation, territory, possession, province, county, parish, town,
township, village, municipality or Tribunal, and "Law" means each of the
foregoing.
"Lenders" has the meaning ascribed to that term in the introduction to
this Agreement and shall include any assignee of any Loan, Notes or Commitments
to the extent of such assignment.
"Lending Date" means each date on which Loans are made by the Lenders
to the Borrower.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Litigation" means any action, suit, proceeding, claim, lawsuit,
arbitration and/or investigation conducted or threatened by or before any
Tribunal.
"Loan Documents" means this Agreement, the Notes, the Guaranty, the
Security Agreement, the Collateral Assignment and Security Agreement and the
Escrow and Securities Account Control Agreement.
"Loans" means, collectively, the Tranche A Loans and the Tranche B
Loans.
"Management Agreement" means the 29 Palms Management Agreement to be
entered into by the Borrower and Twenty-Nine Palms Enterprises Corporation.
"Management Fees" means all management fees and other compensation or
payments paid under the Management Agreement.
10
<PAGE>
"Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, liabilities, condition (financial or
otherwise), prospects or projections of the Borrower, (ii) a material adverse
effect on the ability of the Borrower to execute, deliver or perform its
obligations under the Loan Documents or on the legality, validity or
enforceability of this Agreement or any other Loan Document or any Lien created
thereunder, or (iii) the impairment of the ability of the Borrower to perform,
or the impairment of the ability of the Lenders to enforce, the Obligations.
"Material Contract" means any Contractual Obligation to which the
Borrower is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect.
"Maturity Date" means the fifth anniversary of the Closing Date.
"Multiemployer Plan" means a Pension Plan which is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means the proceeds in the form of cash or Cash
Equivalents (including payments in respect of deferred payment obligations when
received in the form of cash or Cash Equivalents other than the portion of any
such deferred payment constituting interest) received by the Borrower from an
Asset Sale net of (i) reasonable out-of-pocket expenses and fees relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (ii) taxes paid or payable after taking
into account any reduction in tax liability (or any consolidated, combined or
unitary tax liability) due to available tax credits, deductions, carry forward
items and any tax sharing arrangements, and (iii) repayment of Indebtedness that
is required pursuant to the terms of such Indebtedness to be repaid in
connection with such Asset Sale.
"Notes" has the meaning ascribed to such term in Section 2.1(e).
"Notice of Borrowing" means a notice substantially in the form of Exhibit
-------
II annexed hereto with respect to a proposed borrowing.
--
"Obligations" means all obligations of every nature of the Borrower from
time to time owed to the Lenders under the Loan Documents, whether for
principal, reimbursements, interest, fees, expenses, indemnities or otherwise,
and whether primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means, with respect to any Person, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Controller,
the Treasurer, the Secretary, any Assistant Secretary or any manager or member
of such Person.
"Officers' Certificate" means, as applied to any Person, a certificate
executed on behalf of such Person by two Officers; provided, however, that every
-------- -------
Officers' Certificate with respect to the compliance with a condition precedent
to the making of the Loans hereunder shall
11
<PAGE>
include (i) a statement that the officer or officers making or giving such
Officers' Certificate have read such condition and any definitions or other
provisions contained in this Agreement relating thereto, (ii) a statement that,
in the opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable the Person to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such condition
has been complied with; provided, however, such Officer's Certificate shall not
-------- -------
be construed to create any contractual liability for any Officer signing such
certificate.
"Other Taxes" has the meaning ascribed to such term in Section 9.18.
"Payment Guaranty Agreement" means the Payment Guaranty Agreement dated
as of October 17, 2001 by the Borrower in favor of the administrative agent
under the Bank Loan.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
to all or any of the Pension Benefit Guaranty Corporation's functions under
ERISA.
"Pension Plan" means an employee pension benefit plan as defined in
Section 3(2) of ERISA which is subject to the provisions of Title IV of ERISA
and which is maintained for employees of the Borrower or any member of the
Controlled Group.
"Percentage" means, (a) relative to any Tranche A Lender, the percentage
relating to the Tranche A Loans or the Tranche A Commitments set forth opposite
its name on Schedule 1 hereto or set forth in an assignment and assumption
----------
agreement, as such percentage may be adjusted from time to time pursuant to
assignment and assumption agreement(s) executed by such Lender and its Eligible
Assignee(s) who become Lender(s) hereunder and delivered pursuant to Section
9.1, and (b) relative to any Tranche B Lender, the percentage relating to the
Tranche B Loans or the Tranche B Commitments set forth opposite its name on
Schedule 1 hereto or set forth in an assignment and assumption agreement, as
----------
such percentage may be adjusted from time to time pursuant to assignment and
assumption agreement(s) executed by such Lender and its Eligible Assignee(s) who
become Lender(s) hereunder and delivered pursuant to Section 9.1.
"Permits" means the certificates, permits, licenses, franchises,
consents, approvals, authorizations and clearances involved in, relating to or
required in connection with the business, operations, assets, property or
prospects of the Borrower.
"Permitted Indebtedness" has the meaning ascribed to such term in Section
6.1.
"Permitted Investments" means:
(i) Investments existing on the Closing Date and described on Schedule
G;
(ii) Investments constituting (x) loans made under the Bank Loan Credit
Agreement and (y) the Management Agreement in Twenty-Nine Palms Enterprises
Corporation and the Tribe;
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<PAGE>
(iii) Investments in cash and Cash Equivalents;
(iv) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(v) Investments constituting the Payment Guaranty Agreement as in
effect on the Closing Date; and
(vi) Investments constituting the Subordination Agreement as in effect
on the Closing Date.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims not
delinquent;
(ii) statutory Liens of landlords or of mortgagees of landlords and
Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen
and other Liens imposed by Law incurred in the ordinary course of business for
sums not yet delinquent or constituting Contested Claims;
(iii) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceedings may be initiated
shall not have expired;
(iv) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Borrower,
including rights of offset and set-off;
(v) Liens arising from filing Uniform Commercial Code financing
statements regarding leases; and
(vi) Liens granted to the Escrow Agent under the Escrow and Securities
Account Control Agreement.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or sovereign nation or political subdivision thereof.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock or that is not Indebtedness that is convertible or
exchangeable into Capital Stock.
"Register" has the meaning ascribed to such term in Section 9.22.
"Release" means any spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, emitting,
leaching or migration of
13
<PAGE>
Hazardous Materials into the indoor or outdoor environment (including, without
limitation, the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), or into or out of any
Facility, including without limitation the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
"Reportable Event" has the meaning set forth in Section 4043 of ERISA,
but excluding any event for which the 30-day notice requirement has been waived
by applicable regulations of the PBGC.
"Required Lenders" means Lenders holding in the aggregate more than 50%
of the sum of (i) the outstanding principal amount of Loans and (ii) prior to
the termination of the Commitments, any unutilized Commitments.
"Restricted Payment" has the meaning ascribed to such term in Section
6.3.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Borrower of any property, whether owned by the Borrower at the
Closing Date or later acquired, which has been or is to be sold or transferred
by the Borrower to such Person or to any other Person from whom funds have been
or are to be advanced by such Person on the security of such Property.
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit sharing
agreement or arrangement, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute or statutes thereto.
"Security Agreement" means that certain Security Agreement between the
Borrower and the Lenders, in form and substance satisfactory in all respects to
the Lenders and substantially in the form of Exhibit IV annexed hereto.
---------
"Subsidiary," means, with respect to any Person, (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person, (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person, and
(iii) any other Person of which a majority in equity interests (in terms of
economic ownership) are owned, directly or indirectly, by such Person.
"Subordination Agreement" means the Subordination Agreement dated as of
October 17, 2001 by and between the Borrower and Trump Hotels & Casino Resorts
Development Company, LLC in favor of the lenders under the Bank Loan.
14
<PAGE>
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties, deductions, liabilities, withholdings or other charges of any nature
whatsoever, including interest penalties and additions to tax.
"Tranche A Loans" has the meaning set forth in Section 2.1(a).
"Tranche A Commitment" has the meaning set forth in Section 2.1(a)
"Tranche A Lenders" means the Lenders who hold Tranche A Commitments or
Tranche A Loans.
"Tranche A Notes" has the meaning set forth in Section 2.1(e).
"Tranche B Loans" has the meaning set forth in Section 2.1(b).
"Tranche B Commitment" has the meaning set forth in Section 2.1(b).
"Tranche B Lenders" means the Lenders that hold Tranche B Commitments or
Tranche B Loans.
"Tranche B Notes" has the meaning set forth in Section 2.1(e).
"Tribunal" means any government, any arbitration panel, any court or any
governmental department, commission, board, bureau, agency, authority or
instrumentality of the United States or any state, province, commonwealth,
nation, territory, possession, county, parish, town, township, village or
municipality, whether now or hereafter constituted and/or existing.
"Tribe" means the Twenty-Nine Palms Band of Luiseno Mission Indians of
California.
1.2 Accounting Terms. For the purposes of this Agreement, all accounting
----------------
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP.
1.3 Other Definitional Provisions; Anniversaries. Any of the terms defined
--------------------------------------------
in Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference. Except as otherwise provided
herein, where any provision in this Agreement refers to a specific agreement,
contract or document, such provision shall be construed to refer to such
agreement, contract or document as it may be amended, restated, supplemented or
otherwise modified from time to time (but without derogating from any
restriction on any such amendment, restatement, supplement or other
modification). The use in any of the Loan Documents of the words "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statements, term or matter.
Except as otherwise specified, all references herein to Sections, Exhibits and
Schedules shall refer to Sections, Exhibits and Schedules of this Agreement.
15
<PAGE>
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES
2.1 Loans and Notes.
---------------
(a) Tranche A Commitment. Subject to the terms and conditions of
--------------------
this Agreement and in reliance upon the representations and warranties of the
Borrower herein set forth, on the Closing Date each Tranche A Lender will make
loans (such loans, the "Tranche A Loans") to the Borrower equal to such Tranche
A Lender's Percentage of the aggregate amount of the Tranche A Loans requested
by the Borrower to be made on such day; provided that the aggregate amount of
all Tranche A Loans made to the Borrower shall in no event exceed $11,000,000.
No amounts paid or prepaid with respect to the Tranche A Loans may be
reborrowed. The Tranche A Lenders' commitments to make the Tranche A Loans to
the Borrower pursuant to this Section 2.1(a) are herein called individually, a
"Tranche A Commitment" and collectively, the "Tranche A Commitments."
(b) Tranche B Commitment. Subject to the terms and conditions of
-------------------
this Agreement and in reliance upon the representations and warranties of the
Borrower herein set forth, on any Business Day occurring on or after March 1,
2002 but prior to August 1, 2002, each Tranche B Lender will make loans (such
loans, the "Tranche B Loans") to the Borrower equal to such Tranche B Lender's
Percentage of the aggregate amount of the Tranche B Loans requested by the
Borrower to be made on such day; provided that the aggregate amount of all
--------
Tranche B Loans made to the Borrower shall in no event exceed $7,800,000;
provided however, that such $7,800,000 shall be commensurately reduced (on a
--------
dollar-for-dollar basis) by any additional aggregate loan principal procured by
Twenty-Nine Palms Enterprise Corporation under Section 2.1(b) of the Bank Loan
Credit Agreement; and provided further that Tranche B Loans will only be
-------- -------
advanced on one Business Day in a single borrowing. No amounts paid or prepaid
with respect to the Loans may be reborrowed. The Tranche B Lenders' commitments
to make the Tranche B Loans to the Borrower pursuant to this Section 2.1(b) are
herein called individually, a "Tranche B Commitment" and collectively, the
Tranche B Commitments."
(c) Notice of Borrowing. When the Borrower desires to borrow under
------------------
this Section 2.1, it shall deliver to each Lender a Notice of Borrowing no later
than 11:00 A.M. (New York time), at least one (1) Business Day in advance of the
proposed Lending Date. The Notice of Borrowing shall specify the proposed
Lending Date (which shall be a Business Day) and the type of Loan requested
(i.e. a Tranche A Loan or a Tranche B Loan) and notify each Lender of the amount
of its share of the Loan based on such Lender's Percentage and the other matters
covered by the Notice of Borrowing.
(d) Disbursement of Funds. No later than 12:00 Noon (New York time)
---------------------
on the Lending Date, each Lender will make available its pro rata share of the
Loan requested to be made on such date in the manner provided below. All amounts
shall be made available in Dollars and immediately available funds and the
Lenders promptly will deliver by wire transfer, to the account designated by the
Borrower, the aggregate of the amounts so made available.
(e) Notes. The Borrower shall execute and deliver to each Tranche A
-----
Lender on the Closing Date Notes dated the Closing Date and having a principal
amount equal to such Lender's Tranche A Commitments, substantially in the form
of Exhibit I-A annexed hereto (the
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<PAGE>
"Tranche A Notes"). The Borrower shall execute and deliver to each Tranche B
Lender on or prior to the Initial Tranche B Funding Date Notes dated the Initial
Tranche B Funding Date and having a principal amount equal to such Lender's
Tranche B Commitment, substantially in the form of Exhibit I-B annexed hereto
(the "Tranche B Notes" and together with the Tranche A Note, the "Notes").
(f) Scheduled Maturity of Loans. The Borrower shall pay in full the
---------------------------
outstanding amount of the Loans and all other Obligations owing hereunder no
later than the Maturity Date.
(g) Pro Rata Borrowings. The Tranche A Loans made under this
------------------
Agreement shall be made by the Tranche A Lenders pro rata on the basis of their
respective Percentages of the Tranche A Commitments. The Tranche B Loans made
under this Agreement shall be made by the Tranche B Lenders pro rata on the
basis of their respective Percentages of the Tranche B Commitments It is
understood that no Lender shall be responsible for any default by any other
Lender of its obligation to make its portion of the Loans hereunder and that
each Lender shall be obligated to make its portion of the Loans hereunder,
regardless of the failure of any other Lender to fulfill its Commitments
hereunder.
2.2 Interest on the Loans.
---------------------
(a) Rate of Interest. The Loans shall bear interest on the unpaid
---------------
principal amount thereof from the date made through maturity (whether by
prepayment, acceleration or otherwise) at a rate equal to nine percent (9%) per
annum.
(b) Interest Payments. Interest shall be payable in arrears on the
-----------------
second day of each month and upon any prepayment of the Loans (to the extent
accrued on the amount being prepaid) and at maturity of the Loans in respect of
any amounts paid on such date.
(c) Default Rate. At any time that a Default or Event of Default has
------------
occurred and is continuing, all Loans and other Obligations shall bear interest
payable upon demand at a rate which is 2.00% per annum in excess of the rate of
interest otherwise payable under this Agreement for the Loans.
(d) Computation of Interest. Interest on the Loans shall be computed
-----------------------
on the basis of a 360-day year and the actual number of days elapsed in the
period during which it accrues. In computing interest on the Loans, the date of
the making of the Loans shall be included and the date of payment shall be
excluded; provided, however, that if a Loan is repaid on the same day on which
-------- -------
it is made, one day's interest shall be paid on that Loan.
2.3 Fees. [Intentionally omitted.]
----
2.4 Prepayments and Reductions in the Commitments. Prior to the Maturity
---------------------------------------------
Date, payments and prepayments of Loans and reductions in the Commitments shall
or may be made as set forth below.
(a) Voluntary Prepayments. The Borrower at its option may, upon at
---------------------
least ten (10) days' written notice to the Lenders, prepay, without penalty or
premium, all or any part of the principal amount of outstanding Loans, together
with accrued interest on the principal so
17
<PAGE>
prepaid through the date of prepayment. All such voluntary partial prepayments
shall be in an aggregate minimum amount of $500,000 and an integral multiple of
$100,000 and shall be applied pro rata to the Tranche A Loans and the Tranche B
Loans.
(b) Mandatory Prepayments.
---------------------
(i) Tranche A Amortization. On the second day of each month,
----------------------
commencing on September 2, 2002, the Borrower shall make a scheduled repayment
of the Tranche A Loans in an amount equal to $220,000; provided, that the final
installment for the repayment by the Borrower of the Tranche A Loans shall be in
an amount, if such amount is different from that specified above, sufficient to
repay all amounts owing by the Borrower under this Agreement with respect to the
Tranche A Loans.
(ii) Tranche B Amortization. On the second day of each month,
----------------------
commencing on September 2, 2002, the Borrower shall make a scheduled repayment
of the Tranche B Loans in an amount equal to the outstanding principal of
Tranche B Loans as of September 2, 2002 divided by 50; provided that the final
installment for the repayment by the Borrower of the Tranche B Loans shall be in
an amount, if such amount is different from that specified above, sufficient to
repay all amounts owing by the Borrower under this Agreement with respect to the
Tranche B Loans.
(iii) Prepayments from Asset Sales. The Borrower shall prepay
---------------------------
Loans in an amount equal to the Net Cash Proceeds of any Asset Sale occurring
after the Closing Date on a date not later than the fifth (5/th/) Business Day
next succeeding the date of consummation of such Asset Sale or, in the case of
that portion of the purchase price which is deferred, the date of receipt of
such Net Cash Proceeds, whichever is later. Concurrently with the consummation
of an Asset Sale, the Borrower shall deliver to the Lenders an Officers'
Certificate demonstrating the derivation of Net Cash Proceeds from the gross
sales price of such Asset Sale. Any such prepayment shall be applied pro rata to
the Tranche A Loans and the Tranche B Loans.
(iv) Prepayments from Management Fees.
--------------------------------
(1) No later than twenty-one (21) days after the end of
each calendar month in which the Borrower receives a Management Fee, the
Borrower shall prepay a principal amount of the Tranche A Loans in an amount
equal to the excess of (x) the amount of Management Fees received by the
Borrower in the preceding month over (y) the sum of (A) prepayments made during
such calendar month pursuant to Sections 2.4(b)(i) and (ii) above in excess of
the principal payments received by Borrower in such calendar month pursuant to
the Bank Loan, (B) the amounts of interest paid during such calendar month
pursuant to Section 2.2(b) in excess of the interest payments received by
Borrower in such calendar month pursuant to the Bank Loan and (C) amounts
deposited during such month in the Development Fee Reserve (such excess, the
"Available Management Fees"); provided, however, the aggregate prepayments made
under this paragraph shall not exceed $2,750,000.
(2) Commencing on the date on which the Borrower has made
an aggregate of $2,500,000 in distributions to its members pursuant to Section
6.3 hereof or, following the commencement and during the continuance of any
proceedings, administrative or
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<PAGE>
otherwise, by the California Division of Gambling Control, the California
Gambling Commission or any other California State Gambling regulatory authority
regarding the exemption from licensure granted to the Lenders by the Twenty-Nine
Palms Gaming Commission (a "California State Review"), an aggregate of
-----------------------
$2,500,000 in (x) distributions to its members pursuant to Section 6.3 hereof
and (y) prepayment of Loans pursuant to clause (4) below, and following the
payment of amounts described in Section 2.4(b)(iv)(1) above, the Borrower shall,
no later than twenty-one (21) days after the end of each calendar month in which
the Borrower receives a Management Fee, prepay a principal amount of the Tranche
A Loans in an amount equal to one-third of the Available Management Fees;
provided, further, the aggregate prepayments made under this paragraph shall not
exceed $2,500,000;
(3) Commencing on the date upon which all prepayments
required under paragraph 2.4(b)(iv)(2) above have been made, no later than
twenty-one (21) days after the end of each calendar month in which the Borrower
receives a Management Fee, the Borrower shall prepay a principal amount of the
Tranche B Loans in an amount equal to one-half of the Available Management Fees;
provided, further, that the aggregate prepayments made under this paragraph
shall not exceed one-third of the initial principal amount of the Tranche B
Loans;
(4) In addition to the payments described in clauses (1)
through (3) above and whether or not payments are then required to be made
pursuant to clause (1) through (3) above, following the commencement and during
the continuance of any California State Review, no later than twenty-one (21)
days after the end of each calendar month in which the Borrower receives a
Management Fee, the Borrower shall prepay a principal amount of Loans equal to
40% of the Available Management Fees; provided that such amount shall be applied
first to the prepayment of the principal amount of the Tranche A Loans until all
such loans have been prepaid and second to the principal amount of Tranche B
Loans.
(v) Prepayments from Incurrence of Indebtedness.
-------------------------------------------
Concurrently with the Incurrence by the Borrower of any Indebtedness not
permitted under Section 6.1, the Borrower shall prepay the Loans in a principal
amount equal to the principal amount of such Indebtedness so Incurred. Any such
prepayment shall be applied pro rata to the Tranche A Loans and the Tranche B
Loans.
(vi) Prepayments from Prepayments or Assignments Under the
-----------------------------------------------------
Bank Loan. Concurrently with the receipt by the Borrower of (x) any prepayment
---------
of interest, principal or other amounts under the Bank Loan Credit Agreement or
(y) the proceeds from any assignment of, or sale of a participation interest in,
the Borrower's loans under the Bank Loan Credit Agreement, the Borrower shall
prepay the Loans in an aggregate amount of principal equal to the amount of any
such prepayment or such proceeds, as applicable. Any such prepayment shall be
applied pro rata to the Tranche A Loans and the Tranche B Loans.
(vii) Prepayments from Termination of the Bank Loan Credit
----------------------------------------------------
Agreement. Upon any termination of the Bank Loan Credit Agreement or repayment
---------
of all amounts owing thereunder, the Borrower will prepay the outstanding
principal of the Loans and all other Obligations in full, notwithstanding
Subsection (vi) above.
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<PAGE>
(viii) Reduction of Commitment from Reduction or Termination
-----------------------------------------------------
of Commitments under the Bank Loan Credit Agreement. Upon any reduction of the
---------------------------------------------------
additional aggregate loan commitment under Section 2.1(c) of the Bank Loan
Credit Agreement, the Borrower shall reduce the unused Tranche B Loan Commitment
in a principal amount equal to the amount of such reduction.
(ix) Prepayments from Management Agreement Termination.
-------------------------------------------------
Concurrently with the receipt of any payment by or on behalf of the Tribe in
connection with any termination or buyout of the Management Agreement, the
Borrower shall prepay the outstanding principal of the Loans and all other
Obligations in full.
(x) Notice. The Borrower shall notify the Lenders of any
------
prepayment to be made pursuant to Section 2.4(b)(iii)-(vi) at least two Business
Days prior to such prepayment date (unless shorter notice is satisfactory to the
Required Lenders).
(xi) Application of Prepayments. Any voluntary prepayments
--------------------------
of the Tranche A Loans under Section 2.4(a) or mandatory prepayments of the
Tranche A Loans under Section 2.4(b)(iii)-(vii) or (ix) shall be applied to the
outstanding principal installments of the Tranche A Loans in the inverse order
of the maturity thereof under Section 2.4(b)(i). Any voluntary prepayments of
the Tranche B Loans under Section 2.4(a) or mandatory prepayments of the Tranche
B Loans under Section 2.4(b)(iii)-(vii) or (ix) shall be applied to the
outstanding principal installments of the Tranche B Loans in the inverse order
of the maturities thereof under Section 2.4(b)(i).
(c) Optional Reduction in Commitments. The Borrower may, from time
---------------------------------
to time on any Business Day occurring after the Closing Date, voluntarily reduce
the amount of any undrawn Commitments on the Business Day so specified by the
Borrower; provided, however, that all such reductions shall require at least one
-------- -------
Business Day's prior notice to the Lenders and be permanent, any partial
reduction of any Commitments shall be in a minimum amount of $500,000 and in an
integral multiple of $100,000, and the Borrower may not reduce the Commitments
below the amount of its unfunded commitments under the Bank Loan Credit
Agreement; and provided, further, no reductions may be made to the Tranche A
Commitments while any Tranche B Commitments are outstanding. All reductions in
the Tranche A Commitments shall apply to each Tranche A Lender's Tranche A
Commitments on a pro rata basis and all reductions in the Tranche B Commitments
shall apply to each Tranche B Lender's Tranche B Commitments on a pro rata
basis.
(d) Manner and Time of Payment. All payments of principal and
--------------------------
interest hereunder and under the Notes by the Borrower shall be made without
defense, set-off or counterclaim and in same-day funds and delivered to the
Lenders, unless otherwise specified, not later than 12:00 Noon (New York time)
on the date due at the to such account as the Lenders shall have notified the
Borrower for the account of the Lenders; funds received by the Lenders after
that time shall be deemed to have been paid by the Borrower on the next
succeeding Business Day. All payments of any Obligations to be made hereunder or
under the Notes by the Borrower or any other obligor with respect thereto shall
be made solely in Dollars or such other currency as is then legal tender for
public and private debts in the United States of America.
20
<PAGE>
(e) Payments on Non-Business Days. Whenever any payment to be made
-----------------------------
hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, the payment shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder or under the Notes or of the fees hereunder, as the case may
be.
(f) Notation of Payment. Each Lender agrees that before disposing of
-------------------
any Notes held by it, or any part thereof (other than by granting participations
therein), such Lender will make a notation thereon of all principal payments
previously made thereon and of the date to which interest thereon has been paid
and will notify the Borrower of the name and address of the transferee of that
Note; provided, however, that the failure to make (or any error in the making
-------- -------
of) such a notation or to notify the Borrower of the name and address of such
transferee shall not limit or otherwise affect the obligations of the Borrower
hereunder or under such Notes with respect to the Loans and payments of
principal or interest on any such Note.
2.5 Use of Proceeds.
---------------
(a) Loans. The proceeds of the Tranche A Loans shall be used by the
-----
Borrower for the purposes of (i) making loans of up to $8,250,000 to Twenty-Nine
Palms Enterprises Corporation, as a part of the Bank Loan Credit Agreement and
(ii) paying fees, expenses and making required escrow deposits in connection
therewith and herewith. The proceeds of the Tranche B Loan shall be used by the
Borrower for the purposes of (i) making loans of up to $7,500,000 to Twenty-Nine
Palms Enterprises Corporation, pursuant to section 2.1(c) of the Bank Loan
Credit Agreement, and (ii) paying fees, expenses and making required escrow
deposits in connection therewith and herewith.
(b) Margin Regulations. No portion of the proceeds of any borrowing
------------------
under this Agreement shall be used by the Borrower in any manner which might
cause the borrowing or the application of such proceeds to violate the
applicable requirements of Regulation T, Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System or any other regulation of the
Board of Governors or to violate the Exchange Act, in each case as in effect on
the date or dates of such borrowing and such use of proceeds.
SECTION 3. CONDITIONS
3.1 Conditions Precedent to the Effectiveness of this Agreement. This
-----------------------------------------------------------
Agreement shall become effective on the date when each of the conditions
precedent set forth in this Section 3.1 have been satisfied (unless waived by
the Lenders or unless the deadline for delivery has been extended by the
Lenders). All such conditions may occur contemporaneously but shall be deemed to
have occurred simultaneously.
(a) On or before the Closing Date, all limited liability company and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto shall be reasonably
satisfactory in form and substance to the Lenders, and the Lenders shall have
received the following items, each of which shall be in form and substance
satisfactory to the Lenders and, unless otherwise noted, dated the Closing Date:
21
<PAGE>
(i) a certified copy of the Borrower's certificate of formation
or other organizational documents, together with a certificate of status,
compliance, good standing or like certificate issued by the appropriate
government officials of the jurisdiction of such Person's formation and of each
jurisdiction in which such Person owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing Date;
(ii) a copy of the Borrower's operating agreement, certified as of
the Closing Date by such Person's Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Borrower's Board of Directors approving
and authorizing the execution, delivery and performance of this Agreement, each
of the other Loan Documents and any other documents, instruments and
certificates required to be executed by the Borrower in connection herewith and
therewith and approving and authorizing the execution, delivery and payment of
the Notes, each certified as of the Closing Date by one of such Person's
Officers as being in full force and effect without modification or amendment;
(iv) signature and incumbency certificates of the Borrower's
officers executing this Agreement, the Notes, the other Loan Documents and the
Bank Loan;
(v) executed copies of this Agreement and the Notes substantially
in the form of Exhibit I-A and Exhibit I-B annexed hereto executed in accordance
with Section 2.1(e) drawn to the order of the Lenders and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President, a Vice
President, a manager or a member of the Borrower on behalf of the Borrower and
delivered to the Lenders;
(vii) originally executed copies of one or more favorable written
opinions of (i) Graham, Curtin & Sheridan, A Professional Association, counsel
for the Borrower and the Guarantor, and (ii) Gene Gambale, counsel for the
Twenty-Nine Palms Gaming Commission, substantially in the form of Exhibit III
annexed hereto (or otherwise in form and substance satisfactory to the Lenders)
and addressed to the Lenders, and such other opinions of counsel and such
certificates or opinions of accountants, appraisers or other professionals as
the Lenders shall reasonably request;
(viii) a certificate of the chief financial officer of the Borrower
addressed to the Lenders and in form and substance satisfactory to the Lenders,
attesting that, on a pro forma basis, the Borrower shall not be insolvent or
rendered insolvent, be left with an unreasonably small capital with which to
engage in its business or have incurred debts beyond its ability to pay as such
debts mature;
(ix) originally executed copies of (u) the Security Agreement,
executed and delivered by the Borrower, dated as of the Closing Date,
substantially in the form of Exhibit IV annexed hereto, (v) the Assignment
Agreement in the form attached as Exhibit B to the Bank Loan Credit Agreement
duly executed in blank by the Borrower assigning the Borrower's interest in the
Bank Loan Credit Agreement and delivery of the note under the Bank Loan duly
endorsed in blank to the Lenders, (w) the Guaranty, executed and delivered by
the Guarantor, dated as of the Closing Date, substantially in the form of
Exhibit V, (x) the Escrow and
22
<PAGE>
Securities Account Control Agreement, executed and delivered by the Borrower and
the securities intermediary, dated as of the Closing Date, substantially in the
form of Exhibit VI annexed hereto, (y) the Collateral Assignment and Security
Agreement, executed and delivered by the Borrower, dated as of the Closing Date,
substantially in the form of Exhibit VII annexed hereto, and (z) the Consent to
Collateral Assignment, executed by the Tribe and Twenty-Nine Palms Enterprises
Corporation, dated as of the Closing Date, substantially in the form of Exhibit
VIII annexed hereto;
(x) copies of Uniform Commercial Code financing statements (Form
UCC-1), naming the Borrower as a debtor and the Lenders as the secured party, or
other similar instruments or documents, to be filed under the Uniform Commercial
Code of all jurisdictions as may be necessary or, in the opinion of the Lenders,
desirable to perfect the security interests of the Lenders pursuant to the
Security Agreement;
(xi) certificates of insurance from one or more insurance
companies satisfactory to the Lenders, evidencing coverage required to be
maintained pursuant to this Agreement and each other Loan Document and naming
the Lenders as loss payee (in the case of property insurance) or additional
insured (in the case of liability insurance), as applicable; and
(xii) all such counterpart originals or certified copies of such
other documents, instruments, certificates and opinions as the Lenders may
reasonably request.
(b) The Lenders shall have completed, and be satisfied with the
results of, accounting, tax, legal and environmental due diligence
investigations of the Borrower.
(c) The corporate, tax, capital and ownership structure, shareholders
agreements and management of the Borrower shall be satisfactory to the Lenders
in all material respects.
(d) The Lenders shall have been granted first priority perfected
liens and guarantees to the extent required and described in this Agreement and
shall have received such other reports, documents and agreements as are
customarily delivered in connection with similar secured transactions or as the
Lenders shall have deemed appropriate.
(e) The Borrower shall have received all governmental, shareholder
and third party consents and approvals necessary or desirable in connection with
the financings and other transactions contemplated hereby (other than the
approval of the Management Agreement by the National Indian Gaming Commission)
and expiration of all applicable waiting periods without any action being taken
by any competent authority that could restrain, prevent or impose any materially
adverse conditions on the financings and other transactions contemplated hereby,
and no such Law or regulation shall be applicable which in the reasonable
judgment of the Lenders could have any such effect.
(f) No event or occurrence shall have occurred which has resulted or
could reasonably be expected to result in a Material Adverse Effect since the
end of the most recently ended Fiscal Year or in the facts and information as
represented to date.
(g) There shall be no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that purports
23
<PAGE>
to affect the Loans or the Notes or the other Loan Documents or that has had
or could reasonably be expected to have or result in a Material Adverse Effect
(other than the review of the Management Agreement by the National Indian Gaming
Commission).
(h) As of the Closing Date, the Borrower shall have no outstanding
Indebtedness (other than in connection with the Bank Loan and the Loans to be
made hereunder) and no liabilities other than as permitted in Section 6.1,
pursuant to the terms of the Escrow and Securities Account Control Agreement or
in respect of fees and expenses payable from the proceeds of the Loan and
permitted to be paid pursuant to the terms of this Agreement. Any and all
security interests in the assets of the Borrower granted in favor of holders of
Indebtedness, other than security interests granted to the Escrow Agent pursuant
to the terms of the Escrow and Securities Account Control Agreement, shall have
been terminated.
(i) On or before the initial Lending Date, the Borrower shall have
paid to (i) the Arranger all fees payable under the Fee Letter and (ii) the fees
and expenses incurred by the Lenders in connection with the negotiation,
preparation, execution and delivery of the Loan Documents and the transactions
related thereto (including the reasonable legal fees and out-of-pocket expenses
of counsel to the Lenders (including internal legal expenses)).
(j) On or before the Closing Date, the Borrower shall have performed
in all material respects all agreements which this Agreement provides shall be
performed on or before the Closing Date.
(k) Simultaneously with the making of the Loans by the Lenders, the
Borrower shall have delivered to the Lenders an Officers' Certificate from the
Borrower in form and substance satisfactory to the Lenders, certifying as to the
matters specified in Sections 3.2(a)(i) and (ii) and that the other conditions
set forth in this Section 3.1 are satisfied on and as of the Closing Date.
(l) None of the Borrower, the Tribe or Twenty-Nine Palms Enterprises
Corporation shall have sustained any loss or interference with respect to its
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, which loss or interference, in the sole
judgment of the Lenders, has had or could reasonably be expected to have a
Material Adverse Effect.
(m) The making of the Loans in the manner contemplated in this
Agreement shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other regulation of
the Board.
(n) The proposed terms of the Management Agreement shall be
satisfactory in all respects to the Lenders.
(o) The documents evidencing the Bank Loan shall (i) be in form and
substance satisfactory to the Lenders, and (ii) have been duly executed and
delivered and shall be in full force and effect and there shall have been no
continuing Default of Events of Default thereunder; and the initial advance
under the Bank Loan shall be made contemporaneously with the initial advance
hereunder.
24
<PAGE>
3.2 Conditions Precedent to All Loans. The obligation of each Lender to
---------------------------------
make any Loans (including the Loans made on the initial Lending Date) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 3.2.
(a) Compliance with Warranties, No Default, etc. Both before and after
-------------------------------------------
giving effect to any Loans, the following statements shall be true and correct:
(i) the representations and warranties set forth in Section 4
and in each other Loan Document shall, in each case, be true and correct in all
respects (with respect to representations and warranties qualified by
materiality or Material Adverse Effect) and in all material respects (with
respect to all other representations and warranties) with the same effect as if
then made (unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date unless such representations and warranties are
qualified by materiality or Material Adverse Effect, in which case such
representations and warranties shall be true and correct as of such earlier
date);
(ii) no event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute a Default or Event of Default.
(b) Notice of Borrowing, etc. The Lenders shall have received a Notice
------------------------
of Borrowing. Each of the delivery of a Notice of Borrowing and the acceptance
by the Borrower of the proceeds of such Loan shall constitute a representation
and warranty by the Borrower that on the date of such Loan (both immediately
before and after giving effect to such Loan and the application of the proceeds
thereof) the statements made in Section 3.2(a) are true and correct in all
material respects.
(c) Satisfactory Legal Form. All documents executed or submitted
-----------------------
pursuant hereto by or on behalf of the Borrower or the Guarantor shall be
reasonably satisfactory in form and substance to the Lenders and their
respective counsel; the Lenders and their respective counsel shall have received
all information, approvals, opinions, documents or instruments as the Lenders or
their respective counsel may reasonably request.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to make
the Loans, the Borrower represents and warrants to the Lenders that, at the time
of execution hereof and on each Lending Date, the following statements are true,
correct and complete:
4.1 Organization and Good Standing. The Borrower is duly organized and
------------------------------
existing and in good standing under the Laws of its jurisdiction of
organization. The Borrower has the requisite power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted and is duly qualified as a foreign organization and in
good standing in all jurisdictions in which it is doing business, except where
failure to be so qualified or in good standing, singly or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. The Borrower
does not own any Capital Stock and has no Subsidiaries.
25
<PAGE>
4.2 Authorization and Power. The Borrower has the requisite power and
-----------------------
authority, and has taken all action necessary, to execute, deliver and perform
its obligations under the Loan Documents and the Bank Loan and to issue the
Notes.
4.3 No Conflicts or Consents.
------------------------
(a) The execution and delivery of the Loan Documents and the Bank Loan,
the consummation of each of the transactions herein contemplated, the compliance
with each of the terms and provisions hereof or thereof, and the issuance,
delivery and performance of the Notes, do not and will not (i) violate any
material provision of any Law or any governmental rule or regulation applicable
to the Borrower, the Certificate of Formation, Operating Agreement or other
organizational documents of the Borrower or any order, judgment or decree of any
court or other agency of government binding on any of them, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Permit or any Contractual Obligation of or binding upon the
Borrower, (iii) result in or require the creation or imposition of any Lien upon
any of the properties or assets of the Borrower except for Liens created
pursuant to this Agreement, (iv) require any approval of stockholders or any
approval or consent of any Person except for such approvals or consents which
will be obtained on or before the Closing Date.
(b) No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery by the
Borrower of the Loan Documents or the Bank Loan or the consummation of the
transactions contemplated hereby or thereby, other than any such consent,
approval, authorization or order which has been obtained and remains in full
force and effect.
4.4 Enforceable Obligations. Each of the Loan Documents, the Bank Loan and
-----------------------
each other document or instrument to be delivered in connection therewith to
which the Borrower is a party has been duly authorized by the Borrower; each of
the Loan Documents, the Bank Loan and each other document or instrument to be
delivered in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Borrower; and each
of the Loan Documents and each other document or instrument to be delivered in
connection therewith to which the Borrower is a party (including the Bank Loan)
to be executed and delivered on or prior to the Closing Date is, and each of the
Loan Documents to be executed and delivered after the Closing Date (including
the Management Agreement) will be, upon such execution and delivery, the legal,
valid and binding obligations of the Borrower, enforceable in accordance with
their respective terms, except to the extent that the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization or similar Laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.5 Properties; Liens. The Borrower has good, sufficient and legal title to
-----------------
all its properties and assets, and all properties held under lease by it are
held under valid, subsisting and enforceable leases, and the Borrower is not in
default under any lease, except in each case for such defects or defaults that,
singly or in the aggregate, would not have a Material Adverse Effect. The only
assets of the Borrower are its interest in the Bank Loan, the Escrow Account and
the Management Agreement. Except for Permitted Liens, as reflected on Schedule D
26
<PAGE>
annexed hereto, or as permitted by this Agreement, all such properties and
assets owned or leased are so owned or leased free and clear of Liens.
4.6 Financial Condition.
-------------------
(a) Except as disclosed on Schedule J, the Borrower does not have
any material contingent liabilities, liabilities for Taxes or long-term leases,
unusual forward or long-term commitments or unrealized or unanticipated losses
from any unfavorable commitments. No events or developments which have had or
could reasonably be expected to have a Material Adverse Effect have occurred
since January 1, 2000.
(b) Assuming approval of the Management Agreement by the National
Indian Gaming Commission, upon giving effect to the Loans:
(i) The fair saleable value of the assets of the
Borrower, on a stand-alone basis, exceeds the amount that will be required to be
paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of the Borrower as they mature.
(ii) The assets of the Borrower, on a stand-alone basis,
do not constitute unreasonably small capital for the Borrower to carry out its
business as now conducted and as proposed to be conducted including the capital
needs of the Borrower, taking into account the particular capital requirements
of the business conducted by the Borrower, and projected capital requirements
and capital availability thereof in accordance with the business plan of the
Borrower.
(iii) The Borrower does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of Indebtedness of the Borrower).
The cash flow of the Borrower, after taking into account all anticipated uses of
the cash of each such Person, will at all times be sufficient to pay all amounts
on or in respect of debt of the Borrower when such amounts are required to be
paid.
(iv) The Borrower does not intend, and does not believe,
that final judgments against the Borrower in actions for money damages will be
rendered at a time when, or in an amount such that, the Borrower will be unable
to satisfy any such judgments promptly in accordance with their terms (taking
into account the maximum reasonable amount of such judgments in any such actions
and the earliest reasonable time at which such judgments might be rendered). The
cash flow of the Borrower, on a stand-alone basis, after taking into account all
other anticipated uses of the cash of the Borrower (including the payments on or
in respect of Indebtedness referred to in paragraph (iii) of this Section
4.6(b)), will at all times be sufficient to pay all such judgments promptly in
accordance with their terms.
4.7 Full Disclosure. The financial projections heretofore furnished to the
---------------
Lenders by the Borrower are complete, were prepared by or under the direction of
an officer or manager of the Borrower and were prepared in good faith on the
basis of information and assumptions that the Borrower believed to be fair,
complete and reasonable as of the date of such information, and which
assumptions are believed to be fair, complete and reasonable as of the date
hereof. All
27
<PAGE>
other factual information heretofore or contemporaneously furnished in writing
by or on behalf of the Borrower to the Lenders for purposes of or in connection
with this Agreement does not contain any untrue statement of a material fact or
omit to state any material fact necessary to keep the statements contained
herein or therein, in light of circumstances under which they were made, from
being misleading. No fact is known, no condition exists nor has any event
occurred which has not been disclosed herein or in any other document,
certificate or statement furnished to the Lenders for use in the transactions
contemplated hereby which, singly or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
4.8 No Default. No event has occurred and is continuing which constitutes
----------
a Default or an Event of Default.
4.9 Compliance with Contracts, Etc. The Borrower is not in violation
------------------------------
of (i) its certificate of formation, operating agreement or other organizational
documents or (ii) any material provision of any applicable Law, ordinance,
administrative or governmental rule or regulation, or (iii) any order, decree or
judgment of any Tribunal having jurisdiction over it; no event of default or
event that but for the giving of notice or the lapse of time, or both, would
constitute an event of default exists under any material Contractual Obligation
of the Borrower, except for those which would not result in a Material Adverse
Effect.
4.10 No Litigation. Except as described in Schedule E attached hereto,
-------------
there is no Litigation pending or, to the best knowledge of the Borrower,
threatened, by, against, or which may relate to or affect (a) any benefit plan
of the Borrower or any fiduciary or administrator thereof, or (b) the Borrower.
There are no outstanding injunctions or restraining orders prohibiting
consummation of any of the transactions contemplated by the Loan Documents.
There are no unsatisfied judgments against the Borrower or any of its businesses
or activities. Except as specifically noted on Schedule E, the Borrower has not
been advised that there is a reasonable likelihood of an adverse determination
of any Litigation which adverse determination, should it occur, would have a
Material Adverse Effect.
4.11 Use of Proceeds; Margin Stock, Etc. The proceeds of the Loans will be
----------------------------------
used solely for the purposes specified herein. None of such proceeds will be
used for the purpose of purchasing or carrying any Margin Stock within the
meaning of the applicable provisions of Regulation T, U or X, or for the purpose
of reducing or retiring any Indebtedness which was originally incurred to
purchase or carry a Margin Stock or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Borrower has not taken and will not take
any action which might cause any of the Loan Documents to violate the applicable
provisions of Regulation T, U or X, or any other regulation of the Board of
Governors of the Federal Reserve System.
4.12 Taxes. Except as set forth on Schedule K hereto, all Tax returns
-----
required to be filed by the Borrower have been filed and all such returns are
true, complete, and correct in all material respects. All Taxes that are due or
claimed to be due from the Borrower have been paid other than those (i)
currently payable without penalty or interest or (ii) being contested in good
faith and by appropriate proceedings and for which, in the case of both clauses
(i) and (ii), adequate reserves have been established on the books and records
of the Borrower in accordance with GAAP. There are no proposed Tax assessments
against the Borrower. To the best
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knowledge and belief of the Borrower, the accruals and reserves on the books and
records of the Borrower in respect of any Tax liability for any Taxable period
not finally determined are adequate to meet any assessments of Tax for any such
period.
4.13 ERISA.
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(a) The Borrower and each of its ERISA Affiliates are in compliance
in all material respects with all applicable provisions and requirements of the
Internal Revenue Code and ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and have
performed all their obligations under each Employee Benefit Plan.
(b) No ERISA Events have occurred or are reasonably expected to occur
which individually or in the aggregate resulted in or might reasonably be
expected to result in a liability of the Borrower or any of its ERISA Affiliates
in excess of $25,000 during the term of this Agreement.
(c) Except as disclosed on Schedule F annexed hereto and except to the
extent required under Section 4980B of the Internal Revenue Code, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employees of the Borrower or
any of its ERISA Affiliates.
(d) In accordance with the most recent actuarial valuations, the
Amount of Unfunded Benefit Liabilities individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation any Pension Plans
which have a negative Amount of Unfunded Benefit Liabilities), does not exceed
$25,000.
4.14 Government Regulation. The Borrower is not subject to regulation under
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the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 (as any of the preceding acts have been amended)
or other Law which regulates the Incurrence by the Borrower of Indebtedness,
including, but not limited to, Laws relating to common carriers or the sale of
electricity, gas, steam, water or other public utility services.
4.15 Capital Structure. The Borrower does not have any interest in any
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Person or any Investments (except Permitted Investments). All of the issued and
outstanding membership interests of the Borrower are validly issued. Except as
set forth on Schedule A, the Borrower has not granted or issued, or agreed to
grant or issue, any puts, calls or other similar rights to any Person obligating
the Borrower to purchase or redeem any Capital Stock or any options, warrants or
similar rights to any Person to acquire any shares of, or other Securities
convertible into, the Borrower's Capital Stock other than stock options or
phantom equity rights granted to directors, officers and employees in the
ordinary course of business.
4.16 Intellectual Property.
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(a) Schedule H annexed hereto sets forth a complete and correct list,
as of the Closing Date, of: (i) all patented or registered Intellectual Property
and pending patent applications or applications for registration of Intellectual
Property owned or filed by or on behalf of the Borrower; (ii) all trade names
and unregistered trademarks or service marks owned
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by or used by the Borrower; and (iii) all licenses of Intellectual Property to
which the Borrower is a party, either as licensee or licensor other than "off
the shelf" licenses. Except as set forth on Schedule H, the Borrower owns or is
licensed to use all Intellectual Property necessary to permit the operation of
its business as currently conducted.
(b) Except as disclosed in Schedule H, no claim has been asserted
by any Person with respect to the use of any such Intellectual Property, or
challenging or questioning the validity or effectiveness of any such
Intellectual Property. Except as disclosed in Schedule H, to the knowledge of
the Borrower, the use of such Intellectual Property by the Borrower does not
infringe on the rights of any Person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liabilities on the part of the
Borrower that would have a Material Adverse Effect.
4.17 Environmental Matters. Except as set forth in Schedule C annexed
---------------------
hereto:
(a) the operations of the Borrower (including, without
limitation, all operations and conditions at or in the Facilities) comply with
all Environmental Laws except for any such noncompliance which would not
reasonably be expected to have a Material Adverse Effect;
(b) the Borrower has obtained all Permits under Environmental
Laws necessary to its operations, and all such Permits are in full force and
effect, and the Borrower is in compliance with the terms and conditions of such
Permits except for any such failure to obtain, maintain or comply which would
not reasonably be expected to have a Material Adverse Effect;
(c) the Borrower has not received (i) a written Environmental
Claim except for an Environmental Claim which would not reasonably be expected
to have a Material Adverse Effect or (ii) any request for information under
Section 104 of CERCLA or comparable foreign or state laws regarding any matter
which could reasonably be expected to result in a Material Adverse Effect;
(d) the Borrower is not involved in any investigation, response
or corrective action relating to or in connection with any Hazardous Materials
at any Facility or at any other location except for such of the foregoing which
would not reasonably be expected to have a Material Adverse Effect;
(e) neither the Borrower nor any Facility is subject to any
judicial or administrative proceeding alleging the violation of or liability
under any Environmental Laws;
(f) neither the Borrower nor any of its operations or Facilities
are subject to any outstanding written order, decree or agreement with any
governmental authority or private party relating to (i) any actual or potential
violation of or liability under Environmental Laws or (ii) any Environmental
Claims except for such of the foregoing which would not reasonably be expected
to have a Material Adverse Effect;
(g) neither the Borrower nor, to the best of the Borrower's
knowledge, any predecessor of the Borrower has filed any notice under any
Environmental Law indicating past or present treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts
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260-270 or any state equivalent except for such notices which would not
reasonably be expected to have a Material Adverse Effect;
(h) to the best of the Borrower's knowledge, no Facilities are listed
or proposed for listing on the National Priorities List under CERCLA or listed
on the Comprehensive Environmental Response, Compensation and Liability
Information System List promulgated pursuant to CERCLA, or included on any
similar list maintained by any governmental authority except in each case for
such of the foregoing which would not reasonably be expected to have a Material
Adverse Effect;
(i) to the best of the Borrower's knowledge, no Hazardous Materials
exist on, under or about any Facility in a manner that would reasonably be
expected to give rise to an Environmental Claim having a Material Adverse
Effect, and the Borrower has not filed any notice or report of a Release of any
Hazardous Materials that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(j) neither the Borrower nor, to the best of the Borrower's knowledge,
any of its predecessors has disposed of, or arranged for the disposal or
treatment of, any Hazardous Materials in a manner or at any Facility or other
location that would reasonably be expected to give rise to an Environmental
Claim having a Material Adverse Effect; and
(k) to the best of the Borrower's knowledge, no underground storage
tanks, landfills or surface impoundments are on, at or under any Facility except
in each case for such of the foregoing which would not reasonably be expected to
have a Material Adverse Effect.
Notwithstanding anything in this Section 4.17 to the contrary, to the
best of the Borrower's knowledge, there are no past or present events,
conditions, circumstances or activities, including, without limitation, any
matter disclosed on Schedule C annexed hereto, which may interfere with
----------
compliance by the Borrower with any Environmental Law, or which may give rise to
any liability under any Environmental Law which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect.
4.18 Permits. Except with respect to approval of the Management Agreement
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by the National Indian Gaming Commission and as disclosed on Schedule I, the
Borrower has, and immediately after the Loans will have, all Permits that are
material to the condition (financial or otherwise), business, operations,
assets, property or prospects of the Borrower or required in connection with the
Borrower's business. The Borrower is (and will be immediately after the Loans)
in compliance with all applicable Laws of all Tribunals having jurisdiction over
the conduct of its business. All Permits are valid and in full force and effect
and will be valid and in full force and effect following the making of the
Loans. The Borrower is, and immediately after the Loans will be, in compliance
with its obligations under the Permits, and no event has occurred that allows,
or after notice or lapse of time would allow, cancellation, revocation or
termination of such Permits. Except as described on Schedule I hereto, to the
best of the Borrower's knowledge, the Borrower is not party to any
investigation, notice of violation, order or complaint before any court or
regulatory body or of any other proceedings which could in any manner threaten
or adversely affect the validity or continued effectiveness of the Borrower's
Permits.
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4.19 Insurance. The Borrower carries or is entitled to the benefits of
---------
insurance (including self-insurance) in such amounts and covering such risks as
is generally maintained by companies of established repute engaged in the same
or similar businesses, and all such insurance is (and will be immediately after
the Loans) in full force and effect.
4.20 Labor Matters. No labor disturbance by the employees of the Borrower
-------------
exists or, to the best knowledge of the Borrower, is threatened, and the
Borrower is not aware of any existing or imminent labor disturbance by the
employees of the Borrower's principal suppliers, manufacturers or customers that
could, singly or in the aggregate, have a Material Adverse Effect.
4.21 Broker's or Finder's Fees. Other than fees payable to Jefferies &
-------------------------
Company, Inc. and the Lenders, no broker's or finder's fees or commissions will
be payable by the Borrower with respect to any transaction contemplated hereby
and no similar fees or commissions will be payable by the Borrower for any other
services rendered to the Borrower in connection with the transactions
contemplated hereby and thereby. The Borrower represents, warrants, covenants
and agrees that it will indemnify the Lenders against, and hold each of them
completely harmless from and against, any and all claims, demands or liabilities
for broker's or finder's fees or similar fees or commissions asserted to have
been incurred in connection with any of the transactions contemplated hereby.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, until the Loans and the
Notes and all other amounts due under this Agreement have been indefeasibly paid
in full in cash and all Commitments have terminated, it shall fully and timely
perform all covenants in this Section 5 required to be performed by it.
5.1 Financial Statements and Other Reports. The Borrower will maintain a
--------------------------------------
system of accounting established and administered in accordance with sound
business practices to permit preparation of consolidated financial statements in
conformity with GAAP. The Borrower shall timely deliver to the Lenders the
information listed below in paragraphs (a) through (d) and shall timely give the
Lenders the notices listed below in paragraphs (e) through (k):
(a) Annual Financial Statements. As soon as available, but not later
---------------------------
than 90 days after each Fiscal Year end: (i) the annual audited Financial
Statements of the Borrower; (ii) a comparison in reasonable detail to the prior
year audited Financial Statements; (iii) the Auditors' unqualified opinion and
"Management Letter" subject to customary restrictions; (iv) a narrative
discussion of the financial condition and results of operations and the
liquidity and capital resources of the Borrower for such Fiscal Year, prepared
by the chief financial officer of the Borrower; and (v) a certificate signed by
the chief financial officer of the Borrower stating that no Default or Event of
Default has occurred and is continuing. All such Financial Statements shall be
prepared from and on a basis consistent with the books and records of the
Borrower. All such Financial Statements shall fairly represent the position of
the Borrower as at the respective dates thereof and the results of operations
and cash flows of the Borrower for the periods then ended.
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(b) Quarterly Financial Statements. As soon as available, but not
------------------------------
later than 45 days after the end of each of the first three fiscal quarters: (i)
Financial Statements of the Borrower as of the fiscal quarter then ended, and
for the Fiscal Year to date; (ii) a comparison in reasonable detail to the
Financial State |
