Exhibit 10.1

 

FORBEARANCE AGREEMENT WITH RESPECT TO
STATION CASINOS, INC.
6% SENIOR NOTES DUE 2012
73/4% SENIOR NOTES DUE 2016
61/2% SENIOR SUBORDINATED NOTES DUE 2014
67/8% SENIOR SUBORDINATED NOTES DUE 2016
AND
65/8% SENIOR SUBORDINATED NOTES DUE 2018

 

THIS FORBEARANCE AGREEMENT, dated as of March 2, 2009 (the “Forbearance
Agreement”), is between Station Casinos, Inc., a Nevada corporation (the
“Company”), and each holder (“Holder”) of Notes (as defined below) signatory
hereto.

 

WITNESSETH:

 

WHEREAS, the Company and Law Debenture Trust Company of New York, a New York
banking corporation, as trustee (the “Trustee”), entered into that certain
Indenture dated as of March 17, 2004 (the “2012 Senior Notes Indenture”) with
respect to the issuance of the Company’s 6% Senior Notes due 2012 (the “2012
Senior Notes”), Indenture dated as of August 1, 2006 (the “2016 Senior Notes
Indenture”) with respect to the issuance of the Company’s 73/4% Senior Notes due
2016 (the “2016 Senior Notes”), Indenture dated as of January 29, 2004 (the
“2014 Subordinated Notes Indenture”) with respect to the issuance of the
Company’s 61/2% Senior Subordinated Notes due 2014 (the “2014 Subordinated
Notes”), Indenture dated as of February 27, 2004 (the “2016 Subordinated Notes
Indenture”) with respect to the issuance of the Company’s 67/8% Senior
Subordinated Notes due 2016 (the “2016 Subordinated Notes”), and Indenture dated
as of March 13, 2006 (the “2018 Subordinated Notes Indenture” and together with
the 2012 Senior Notes Indenture, the 2016 Senior Notes Indenture, the 2014
Subordinated Notes Indenture and the 2016 Subordinated Notes Indenture, the
“Indentures”) with respect to the issuance of the Company’s 65/8% Senior
Subordinated Notes due 2018 (the “2018 Subordinated Notes” and together with the
2012 Senior Notes, 2016 Senior Notes, the 2014 Subordinated Notes and the 2016
Subordinated Notes, the “Notes”);

 

WHEREAS, as more fully set forth herein, a Default has occurred under the
Indentures and certain additional Defaults and Events of Default may occur
during the term of this Forbearance Agreement; and

 

WHEREAS, as of even date herewith the Company is entering into a forbearance
agreement (the “Bank Forbearance Agreement”), with the lenders (the “Lenders”)
under that certain Credit Agreement (the “Credit Agreement”), dated as of
November 7, 2007;

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and subject to the fulfillment of the conditions set
forth below, the parties hereto agree as follows:

 

1.                                       Incorporation of Terms and
Definitions.  Unless otherwise defined herein, all terms used in this
Forbearance Agreement shall have the meanings ascribed to such terms in the

 

--------------------------------------------------------------------------------

 

Indentures; and all references hereinafter made to the Indentures shall include
the terms and conditions effected by this Forbearance Agreement.

 

2.                                       Event of Default.  The Company hereby
acknowledges that each of (i) the failure by the Company to pay the interest due
and payable under the 2014 Subordinated Notes on February 1, 2009 on or prior to
March 3, 2009, (ii) the failure to pay the interest due and payable under the
2016 Senior Notes on February 15, 2009 on or prior to March 17, 2009, (iii) the
failure to pay the interest due and payable under the 2016 Subordinated Notes on
March 1, 2009 on or prior to March 31, 2009, and (iv) any Event of Default
arising as a result of the occurrence of a default under the Company’s
Completion Guaranty dated October 7, 2007 arising by reason of a demand for
performance by the Company thereunder or a cross default thereunder to the
Credit Agreement for Aliante Gaming LLC dated October 7, 2007 will constitute an
Event of Default under the Indentures (the “Specified Events of Default”).

 

3.                                       Forbearance; Direction to Trustee. 
Each Holder hereto agrees to (x) waive each Specified Event of Default during
the Forbearance Period (as defined below) and (y) forbear, and directs the
Trustee to forbear, from exercising its rights or remedies permitted to be taken
by it under the Indentures, the Notes or applicable law (including, without
limitation, the demand for immediate payment of interest on any overdue payment
of interest, the acceleration of the amounts outstanding under the Indentures
and the Notes, enforcement and collection actions (including set-off,
counterclaim and recoupment) and the commencement of or joining in with the
commencement of an involuntary case under applicable Bankruptcy Law or state
laws) as a result of or with respect to each Specified Event of Default
occurring or continuing during the Forbearance Period, in the case of each of
(x) and (y) for the period of time (the “Forbearance Period”) commencing on the
date hereof and ending on the earlier of (i) April 15, 2009, and (ii) the date
upon which this Forbearance Agreement terminates pursuant to Section 6 below
(such earlier date, the “Forbearance Termination Date”).  Each Holder hereto
agrees to request, and hereby does request, that the Trustee rescind any
acceleration of the amounts outstanding under the Indentures and the Notes that
may be declared by the Trustee as a result of any Specified Event of Default
occurring or continuing during the Forbearance Period.  Each Holder shall, if
necessary to facilitate the terms of this Forbearance Agreement and to the
extent such Holder is not the registered holder of the Notes it beneficially
owns, instruct the registered holder thereof to comply with the terms of this
Forbearance Agreement, including directing the registered noteholder to instruct
the Trustee to forbear from exercising any rights and remedies as provided above
and to the extent such holder is not the registered holder of the Notes it
beneficially holds, to instruct the registered holder thereof to comply with the
terms of the Forbearance Agreement.

 

4.                                       Ratification.  The Indentures and the
other related and ancillary documents remain in full force and effect and are
hereby ratified and affirmed in all respects.  The Company hereby reaffirms and
admits the validity and enforceability of the Indentures and the other related
and ancillary documents.

 

5.                                       Events of Termination.  For purposes
hereof, the term “Termination Event” shall mean the existence of any of the
following:

 

(a)          the termination of the Bank Forbearance Agreement or the
acceleration of the maturity of any obligations under the Credit Agreement;

 

--------------------------------------------------------------------------------

 

(b)         the occurrence of any Event of Default under the Indentures or the
Notes, other than the occurrence of a Specified Event of Default;

 

(c)          the filing of a bankruptcy case by or against the Company or any of
its subsidiaries, other than the filing of an involuntary bankruptcy petition
against the Company or any of its subsidiaries by the Holders or their
respective affiliates, in the circumstance in which no Termination Event
exists.  As used in this Agreement, “subsidiaries” means any entity in which the
Company, directly or indirectly, owns more than 50% of the equity interests as
of the time of determination;

 

(d)         the revocation, denial, failure to renew or suspension of any
license or permit covering any casino or gaming facility of the Company or any
of its subsidiaries by any gaming authority of any jurisdiction or the
appointment of a receiver, conservator or similar official with respect to any
such gaming facility;

 

(e)          any action by the Company outside the ordinary course of business,
except as may be required by generally accepted accounting principles in the
United States, that (x) gives rise to a change in the classification or
treatment of the Company for federal, state or local tax purposes (including,
but not limited to, changes caused by elections or revocations or rescissions of
elections), or (y) materially adversely effects the tax attributes (including,
but not limited to, net operating losses, tax credits, or tax basis in assets)
of the Company;

 

(f)            the commencement of any legal proceedings in any court or
governmental body of competent jurisdiction by the Company or any of its
subsidiaries or equityholders pursuant to which any legal remedy or relief is
sought with respect to, or which would be binding upon, or which would restrict,
restrain or enjoin the Trustee or the Holders from enforcing their rights under
the Indentures or the Notes;

 

(g)         a breach by the Company of any provision of this Forbearance
Agreement; and

 

(h)         except as otherwise provided herein, the Company or any of its
subsidiaries consummates, or enters into an agreement with respect to, a
transaction in excess of $10.0 million outside the ordinary course of business.

 

6.                                       Effect of Termination Event.  Upon the
occurrence of a Termination Event, this Forbearance Agreement shall terminate
without notice and, if such Termination Event occurs during the Forbearance
Period, the Holders may at any time thereafter proceed to exercise any and all
of their rights and remedies, including without limitation, their rights and
remedies in connection with any Specified Event of Default and any other Events
of Default under the Indentures.

 

7.                                       Representations and Warranties. In
order to induce the Holders to enter into this Forbearance Agreement, the
Company makes the following representations and warranties, all of which shall
survive the execution and delivery of this Forbearance Agreement:

 

(a)          The Company has all requisite corporate, partnership or other power
and authority to execute, deliver and perform their obligations under this
Forbearance Agreement.

 

--------------------------------------------------------------------------------

 

This Forbearance Agreement has been duly authorized, executed and delivered by
the Company, and does not conflict with, violate or result in a breach of or
require any consent under (i) any applicable law or regulation or from any
governmental agency or any of the terms of the charter or by-laws (or equivalent
constitutional documents) of the Company or any of its subsidiaries, or (ii) any
agreement or instrument to which the Company or any of its subsidiaries is a
party or to which it or any of its assets is bound or subject; and

 

(b)         This Forbearance Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms.

 

8.                                       Further Covenants.

 

(a)          Retention and Payment of Professionals. Concurrent with or prior to
the execution of this Forbearance Agreement, the Company shall have entered into
agreements providing for the payment of the fees and expenses of Kirkland &
Ellis LLP and Wachtell, Lipton, Rosen & Katz, in form and substance satisfactory
to the respective parties thereto (collectively, the “Fee Agreements”), and the
Company shall have paid or caused to be paid the retainers or initial payments
due under the Fee Agreements.  The Company shall negotiate in good faith the
terms of an engagement letter with Moelis & Company (following the execution
thereof, also a “Fee Agreement”).  After the execution of this Forbearance
Agreement, the Company shall continue to pay all amounts due and payable under
the Fee Agreements in accordance with their respective terms.

 

(b)         Due Diligence.  During the Forbearance Period, the Company shall,
and shall cause its subsidiaries and its and their respective officers,
employees and advisors to, comply in a timely manner with all reasonable
requests of the ad-hoc committee of Holders and their advisors for documentation
in connection with the Holders’ evaluation of the Company’s proposed plan of
reorganization or any successor plan or other alternative thereto, including
without limitation such information as the ad-hoc committee of Holders and their
advisors may reasonably request regarding the status of the Company’s
negotiations with the lenders under its senior secured credit facility and the
lenders under its CMBS loan.

 

(c)          Payments to Lenders. During the Forbearance Period, the Company
shall not make any payment to or for the benefit of the Lenders or the
Administrative Agent (as defined therein) under the Credit Agreement in the form
of a consent fee, waiver fee or forbearance fee, or otherwise, except for the
payment of regularly scheduled interest payments, principal payments required
pursuant to the terms of the Credit Agreement, customary agent fees, commitment
fees and letter of credit fees and the payment of fees and expenses in
connection with the restructuring in an amount not to exceed $10.0 million,
without the express written consent of the Holders of a majority in principal
amount of each series of Notes held by all Holders party hereto.

 

(d)         Incurrence of Debt.  During the Forbearance Period, the Company
shall not, and shall cause its subsidiaries not to, incur any indebtedness for
borrowed money in an amount greater than $5.0 million in the aggregate during
the Forbearance Period other than indebtedness incurred in the ordinary course
of business that is owed by the Company or its subsidiaries to the Company or a
subsidiary or reimbursement obligations in respect of outstanding letters of
credit.

 

--------------------------------------------------------------------------------

 

(e)          Prepayment of Debt.  During the Forbearance Period, the Company
shall not, and shall cause its subsidiaries not to, make any principal payment
on, or redeem, repurchase, defease or otherwise acquire or retire for value, in
each case prior to any scheduled repayment or scheduled maturity, any
indebtedness of the Company or its subsidiaries other than payments in the
ordinary course of business with respect to indebtedness owed by the Company or
its subsidiary to the Company or its subsidiary.

 

(f)            Transfers of Assets or Equity.  During the Forbearance Period,
the Company shall not, and shall cause its subsidiaries not to transfer, sell,
convey or otherwise dispose of, or incur any lien, security interest, or other
encumbrance on, directly or indirectly, (i) any assets of the Company or any of
its subsidiaries with a fair market value in excess of $15.0 million in the
aggregate during the Forbearance Period, other than any such transactions made
in the ordinary course of business, or (ii) any equity interest in any of the
Company’s subsidiaries, in each case regardless of whether such transaction is
otherwise permitted by the Indentures.

 

(g)         Dividends.  During the Forbearance Period, the Company shall not
declare or pay any dividend or make any other payment or distribution on account
of the Company’s equity securities or to the direct or indirect holders of the
Company’s equity securities in their capacity as such, other than reimbursement
of expenses incurred for travel, legal counsel, financial advisory services,
licensing costs or other similar expenses reasonably incurred as a result of a
direct or indirect equity interest in the Company or serving as a director of
the Company.

 

(h)         Repurchases of Equity; Payment of Fees.  During the Forbearance
Period, the Company shall not, and shall cause its subsidiaries not to,
purchase, redeem or otherwise acquire or retire for value any equity securities
of the Company and shall not, and shall not permit any of its subsidiaries to,
declare or pay any management fees or sponsor fees or consulting fees to any
affiliate of the Company other than to (i) the Company and its subsidiaries,
(ii) compensation paid in the ordinary course of business, consistent with past
practice, to any person who is an employee of the Company or any of its
subsidiaries.

 

(i)             Investments.  During the Forbearance Period, the Company shall
not, and shall cause its subsidiaries not to, make investments in any person in
excess of $15.0 million in the aggregate other than investments made in the
ordinary course of business, investments in joint ventures existing on the date
hereof and investments in previously-announced development opportunities.

 

(j)             Public Reporting of Agreement. As soon as reasonably practicable
and not later than one business day after the Effective Date, the Company shall
file or cause to be filed a Form 8-K with the U.S. Securities and Exchange
Commission, in form and substance reasonably acceptable to the ad-hoc committee
of Holders, generally describing the existence of this Forbearance Agreement and
its terms but not including any individual Holder’s ownership of Notes or the
identity of any individual Holder.

 

9.                                       Transfers of Notes.  Holders shall not
transfer Notes unless the transferee thereof shall agree to be bound by the
terms of this Forbearance Agreement, and any transfer in violation of this
paragraph 9 shall be null and void.  Holders will provide notice to the Company
of any sale, assignment or other transfer of Notes which they beneficially hold
and shall provide the

 

--------------------------------------------------------------------------------

 

Company with a joinder to this Forbearance Agreement, in form and substance
satisfactory to the Company, executed by the transferee.  Such notice and
joinder shall by delivered by as soon as reasonably practicable after such sale,
assignment or transfer and shall indicate the principal amount of the Notes
sold, assigned or transferred.

 

10.                                 Limitation; No Waiver.  This Forbearance
Agreement shall be limited precisely as written and shall not be deemed (a) to
be a consent granted pursuant to, or, except as expressly set forth herein, a
waiver or modification of, any other term or condition of the Indentures or any
of the instruments or agreements referred to therein, including, without
limitation, with respect to Defaults, Events of Default or Specified Events of
Default, or (b) to prejudice any other right or rights which Holders may now
have or have in the future under or in connection with the Indentures or any of
the instruments or agreements referred to therein.  No failure to exercise nor
any delay in exercising, on the part of the Company or the Holders of any right,
remedy, power or privilege under the Indentures or otherwise shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege operate as a waiver of any further or complete exercise
thereof.  No waiver shall be effective unless in writing. No waiver or
condonation of any breach on one occasion shall be deemed a waiver or
condonation on any other occasion.  In addition, the Company and the Holders
hereby agree that, during the pendency of this Forbearance Agreement, all
statutes of limitation and similar laws, rules and equitable theories with
respect to the time in which any Holder, on the one hand, or the Company, on the
other hand, may bring any claim or action against the other shall be tolled and
that the passage of such time shall not otherwise operate to the detriment of
the Company or the Holders with respect to such rights.

 

11.                                 Release.  By its execution hereof and in
consideration of the mutual covenants contained herein and other accommodations
granted to the Company hereunder, the Company, on behalf of itself and each of
its subsidiaries, and its or their successors, assigns and agents, hereby
expressly forever waives, releases and discharges any and all claims (including,
without limitation, cross-claims, counterclaims, and rights of setoff and
recoupment), causes of action (whether direct or derivative in nature), demands,
suits, costs, expenses and damages (collectively, the “Claims”) any of them may
have or allege to have as of the date of this Forbearance Agreement (and all
defenses that may arise out of any of the foregoing) of any nature, description,
or kind whatsoever, based in whole or in part on facts, whether actual,
contingent or otherwise, now known, unknown, or subsequently discovered, whether
arising in law, at equity or otherwise, against the trustee under each of the
Indentures and any Holder that has executed this Forbearance Agreement, their
respective affiliates, agents, principals, managers, managing members, members,
stockholders, “controlling persons” (within the meaning of the United States
federal securities laws), directors, officers, employees, attorneys,
consultants, advisors, agents, trusts, trustors, beneficiaries, heirs, executors
and administrators of each of the foregoing (collectively, the “Released
Parties”) arising out of this Forbearance Agreement, the Indentures, and any or
all of the actions and transactions contemplated hereby or thereby, including
any actual or alleged performance or non-performance of any of the Released
Parties hereunder or under the Indentures, other than any claims relating to the
inaccuracy of any representations made by any Holder as to the principal amount
of Notes held by such Holder.  The Company hereby acknowledges that the
agreements in this Section 11 are intended to be in full satisfaction of all or
any alleged injuries or damages arising in connection with the Claims.  In
entering into this Forbearance Agreement, the Company expressly disclaims any
reliance on

 

--------------------------------------------------------------------------------

 

any representations, acts, or omissions by any of the Released Parties and
hereby agrees and acknowledges that the validity and effectiveness of the
releases set forth above does not depend in any way on any such representation,
acts and/or omissions or the accuracy, completeness, or validity thereof, other
than representations made by any Holder with respect to the principal amount of
Notes held by such Holder.  Notwithstanding the foregoing, nothing set forth in
this Section 11 is intended to, nor shall anything set forth in this Section 8
be construed to, release any Claim that any Credit Party may hold against any
Released Party in its capacity as a lender, adviser or agent under: (i) the
Casino Sale Leaseback Transaction, (ii) the CMBS Facility and CMBS Loan
Documents, including the loans made thereunder, (iii) Land Loan Documents,
including the loans made thereunder, or (iv) the Head Office Sale Leaseback
Transaction (as each such term in this sentence is defined in the Bank
Forebearance Agreement.  The provisions of this paragraph shall survive the
termination or expiration of each the Forbearance Period and the termination of
the Indentures and the payment in full of all Notes.

 

12.                                 No Admission of Liability.  Neither the
negotiation, performance, nor the terms and conditions of this Forbearance
Agreement shall be deemed or construed to be an admission of any kind or nature
by the Holders for any purpose.

 

13.                                 Time of the Essence.  Time is of the essence
of this Forbearance Agreement.

 

14.                                 Entire Agreement.  This Forbearance
Agreement embodies the entire agreement and understanding among the parties
relating to the subject matter hereof and supersedes all prior proposals,
negotiation, agreements and understandings relating to such subject matter.  No
waiver of any provision of, amendment to or modification of any provision of
this Forbearance Agreement shall be effective without the written agreement of
the Company and the Holders.

 

15.                                 Effective Date.  This Forbearance Agreement
shall only become effective if and when the Company and holders of in excess of
50% of the aggregate principal amount of each series of Notes shall have
executed and delivered a counterpart to this Forbearance Agreement (such time,
the “Effective Date”).

 

16.                                 Governing Law.  THE INTERNAL LAW OF THE
STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FORBEARANCE
AGREEMENT, WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

 

17.                                 Waiver of Trial By Jury.  THE COMPANY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

18.                                 Execution in Counterparts; Facsimiles.  This
Forbearance Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall constitute
but one and the same instrument.  Delivery of an executed

 

--------------------------------------------------------------------------------

 

counterpart of a signature page by facsimile shall be effective as delivery of a
manually executed counterpart.

 

19.                                 Expenses.  Subject to the terms of the Fee
Agreements, the reasonable and documented fees and expenses of Kirkland & Ellis
LLP, Wachtell, Lipton, Rosen & Katz and, following execution of the Fee
Agreement, Moelis & Company in connection with this Forbearance Agreement,
including, but not limited to, those fees and expenses related to any
restructuring negotiations between Holders and the Company that are contemplated
herein, promptly shall be paid by the Company.

 

[Signatures on following pages]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Forbearance Agreement to
be duly executed all as of the date first written above.

 

 

 

STATION CASINOS, INC.

 

 

 

 

 

By:

/s/ Thomas M. Friel

 

Name:

Thomas M. Friel

 

Title:

Executive Vice President, Chief Accounting Officer and Treasurer

 

--------------------------------------------------------------------------------

 

 

AGREED AND ACKNOWLEDGED

 

 

 

 

HOLDERS:

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------