Document:

ex10-20.htm

Exhibit 10.20

 

U.S. $65,000,000

 

AMENDED AND RESTATED LOAN AGREEMENT,

 

dated as of December 21, 2012,

 

among

 

TROPICANA LAS VEGAS, INC.,

as the Borrower,

 

VARIOUS FINANCIAL INSTITUTIONS,

as the Lenders,

 

WELLS FARGO PRINCIPAL LENDING, LLC,

as the Lead Arranger,

 

and

WELLS FARGO BANK, N.A.,

as the Administrative Agent.

 

  

  

  

 

TABLE OF CONTENTS

 

Page

 

	ARTICLE I          DEFINITIONS AND ACCOUNTING TERMS	 
	 	 
	
SECTION 1.1           Defined Terms

	2
	 	 
	ARTICLE II          LOAN COMMITMENTS, NOTES AND EXTENSION OPTIONS	 
	 	 
	
SECTION 2.1           Loan Commitment

	33
	 	 
	
SECTION 2.1.1        Loan Commitments

	 33
	 	 
	
SECTION 2.1.2        Letter of Credit Commitments

	 34
	 	 
	
SECTION 2.1.3        Lenders Not Required to Make Loans

	 34
	 	 
	
SECTION 2.1.4        Issuer Not Required to Issue Letters of Credit

	 35
	 	 
	
SECTION 2.2           Reduction of the Loan Commitment Amount

	 35
	 	 
	
SECTION 2.3           Borrowing Procedure

	 35
	 	 
	
SECTION 2.3.1        Borrowing Procedure

	
 35

	 	 
	
SECTION 2.3.2        Loans

	36 
	 	 
	
SECTION 2.4           Letter of Credit Issuance Procedures

	36 
	 	 
	
SECTION 2.4.1        Other Lenders’ Participation

	 
	 	 
	
SECTION 2.4.2        Letter of Credit Disbursements

	 37
	 	 
	
SECTION 2.4.3        Reimbursement

	 38
	 	 
	
SECTION 2.4.4        Deemed Letter of Credit Disbursements

	 38
	 	 
	
SECTION 2.4.5        Nature of Letter of Credit Reimbursement Obligations

	 39
	 	 
	
SECTION 2.5           Notes

	 39
	 	 
	
SECTION 2.6           Register

	 40
	 	 
	ARTICLE III        REPAYMENTS, PREPAYMENTS, INTEREST AND FEES	 
	 	 
	
SECTION 3.1           Repayments and Prepayments; Application

	 40
	 	 
	
SECTION 3.1.1         Repayments and Prepayments

	 40
	 	 
	
SECTION 3.1.2         Application

	 42
	 	 
	
SECTION 3.2            Interest Provisions

	 42
	 	 
	
SECTION 3.2.1         Interest Rates

	 42
	 	 
	
SECTION 3.2.2         Post-Default Rates

	 42
	 	 
	
SECTION 3.2.3         Payment Dates

	 42
	 	 
	
SECTION 3.3            Fees

	 43
	 	 
	
SECTION 3.3.1         Commitment Fee

	 43

 

  

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SECTION 3.3.2          Undrawn Letter of Credit Fee

	43 
	 	 
	
SECTION 3.3.3          Letter of Credit Issuance Fee

	43 
	 	 
	
SECTION 3.4           Payments from Interest Reserve Account

	43 
	 	 
	ARTICLE IV        CAPITAL COSTS, LENDER’S TAX AND CERTAIN OTHER PROVISIONS	 
	 	 
	
SECTION 4.1           Increased Capital Costs

	43 
	 	 
	
SECTION 4.2           Lender’s Tax

	44 
	 	 
	
SECTION 4.3           Payments, Computations, etc

	46 
	 	 
	
SECTION 4.4           Sharing of Payments

	46 
	 	 
	
SECTION 4.5           Setoff

	47 
	 	 
	
SECTION 4.6           Mitigation

	47 
	 	 
	
SECTION 4.7           Replacement of Lenders

	47 
	 	 
	ARTICLE V         CONDITIONS PRECEDENT TO EFFECTIVENESS AND LOANS	 
	 	 
	
SECTION 5.1           Conditions Precedent to Loan Commitments and Effectiveness of this Agreement

	49
	 	 
	
SECTION 5.1.1          Authority of the Borrower and the Guarantors

	49
	 	 
	
SECTION 5.1.2          Incumbency of the Borrower and the Guarantors

	50
	 	 
	
SECTION 5.1.3          Corporate Proceedings

	50
	 	 
	
SECTION 5.1.4          Financial Information, etc

	50
	 	 
	
SECTION 5.1.5          Permits

	51
	 	 
	
SECTION 5.1.6          Searches

	51
	 	 
	
SECTION 5.1.7          Fees

	51
	 	 
	
SECTION 5.1.8          Information pursuant to Anti-Terrorism Laws

	51
	 	 
	
SECTION 5.1.9          No Material Adverse Effect

	51
	 	 
	
SECTION 5.1.10        No Defaults

	51
	 	 
	
SECTION 5.1.11        No Restrictions

	51
	 	 
	
SECTION 5.1.12        No Violation of Certain Regulations

	52
	 	 
	
SECTION 5.1.13        Representations and Warranties

	52
	 	 
	
SECTION 5.1.14        Funding of Interest Reserve Account

	52
	 	 
	
SECTION 5.1.15        Insurance

	52
	 	 
	
SECTION 5.1.16        Property Management Agreement

	52

 

  

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SECTION 5.1.17        Key Person Management Agreement

	 52
	 	 
	
SECTION 5.1.18        Title Policy; Title Documents

	 53
	 	 
	
SECTION 5.1.19        Zoning Information

	 53
	 	 
	
SECTION 5.1.20        Delivery of Loan Documents

	 53
	 	 
	
SECTION 5.1.21        Opinions of Counsel

	 54
	 	 
	
SECTION 5.1.22        Service of Process

	 54
	 	 
	
SECTION 5.1.23        Other Documents

	 54
	 	 
	
SECTION 5.1.24        Satisfactory Form and Substance

	 54
	 	 
	
SECTION 5.1.25         Loan Documents

	 54
	 	 
	
SECTION 5.2            Conditions Precedent to all Loans and the Issuance of Letters of Credit

	 54
	 	 
	
SECTION 5.2.1          Commitment Conditions

	 55
	 	 
	
SECTION 5.2.2          Compliance with Warranties, No Default, etc

	 55
	 	 
	
SECTION 5.2.3          No Events of Default

	 55
	 	 
	
SECTION 5.2.4          Borrowing Request

	 55
	 	 
	
SECTION 5.2.5          Additional Documents

	 55
	 	 
	
SECTION 5.2.6          Title Insurance Policy Endorsements

	 56
	 	 
	
SECTION 5.2.7          No Restriction

	 56
	 	 
	
SECTION 5.2.8          Fees, Expenses, etc

	 56
	 	 
	
SECTION 5.2.9          Loan Documents

	 56
	 	 
	
SECTION 5.2.10        Security Interests

	 57
	 	 
	
SECTION 5.2.11        No Restrictions

	 57
	 	 
	
SECTION 5.2.12        Required Documents

	 57
	 	 
	
SECTION 5.2.13        Satisfactory Legal Form

	 57
	 	 
	ARTICLE VI        REPRESENTATIONS AND WARRANTIES	 
	 	 
	
SECTION 6.1           Organization, etc

	 58
	 	 
	
SECTION 6.2           Due Authorization, Non-Contravention, etc

	 58
	 	 
	
SECTION 6.3           Governmental Approval, Regulation, etc

	 58
	 	 
	
SECTION 6.4           Validity, etc

	 58
	 	 
	
SECTION 6.5           No Material Misstatement

	 59

 

  

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SECTION 6.6           No Material Adverse Effect

	 59
	 	 
	
SECTION 6.7           Litigation, Labor Controversies, etc

	 59
	 	 
	
SECTION 6.8           Taxes

	 59
	 	 
	
SECTION 6.9           Pension and Welfare Plans

	 59
	 	 
	
SECTION 6.10         Permits

	 59
	 	 
	
SECTION 6.11         Representations and Warranties

	 60
	 	 
	
SECTION 6.12         Environmental Warranties

	 60
	 	 
	
SECTION 6.13         Intellectual Property

	 61
	 	 
	
SECTION 6.14         Regulations U and X

	 61
	 	 
	
SECTION 6.15         Security Interests

	 61
	 	 
	
SECTION 6.16         Existing Defaults

	 62
	 	 
	
SECTION 6.17         Contingent Liabilities

	 62
	 	 
	
SECTION 6.18         Business, Debt, Contracts, etc

	 62
	 	 
	
SECTION 6.19         Utilities

	 62
	 	 
	
SECTION 6.20         Sufficiency of Interests

	 63
	 	 
	
SECTION 6.21         Foreign Person

	 63
	 	 
	
SECTION 6.22         Building Code Violations

	 63
	 	 
	
SECTION 6.23         Fees and Enforcement

	 63
	 	 
	
SECTION 6.24         ERISA Compliance

	 63
	 	 
	
SECTION 6.25         Labor Disputes; Acts of God; Casualty and Condemnation

	 63
	 	 
	
SECTION 6.26         Liens

	 64
	 	 
	
SECTION 6.27         Offices; Location of Collateral

	 64
	 	 
	
SECTION 6.28         Government Regulation

	 64
	 	 
	
SECTION 6.29         Brokers

	 64
	 	 
	
SECTION 6.30         Subsidiaries

	 64
	 	 
	
SECTION 6.31         Anti-Terrorism Laws

	 64
	 	 
	
SECTION 6.31.1        Anti-Terrorism Laws

	 65
	 	 
	
SECTION 6.31.2        Executive Order No. 13224

	 65
	 	 
	
SECTION 6.31.3        OFAC

	 65
	 	 
	
SECTION 6.32         Key Person Management Agreement

	 65

 

  

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ARTICLE VII       COVENANTS

	 
	 	 
	
SECTION 7.1           Affirmative Covenants

	 66
	 	 
	
SECTION 7.1.1          Financial Information, Reports, Notices, etc

	 66
	 	 
	
SECTION 7.1.2          Compliance with Laws, etc

	 68
	 	 
	
SECTION 7.1.3          Maintenance of Property; Operation; Reserves

	 69
	 	 
	
SECTION 7.1.4          Insurance

	 69
	 	 
	
SECTION 7.1.5          Books and Records

	 69
	 	 
	
SECTION 7.1.6          Environmental

	 70
	 	 
	
SECTION 7.1.7          Additional Collateral

	 70
	 	 
	
SECTION 7.1.8          Use of Proceeds

	 70
	 	 
	
SECTION 7.1.9          Repayment of Indebtedness

	 71
	 	 
	
SECTION 7.1.10        Compliance with Legal Requirements

	 71
	 	 
	
SECTION 7.1.11        Security Interest in Newly Acquired Property

	 71
	 	 
	
SECTION 7.1.12        Proper Legal Forms

	 71
	 	 
	
SECTION 7.1.13        Preserving the Security

	 71
	 	 
	
SECTION 7.1.14        Event of Loss

	 72
	 	 
	
SECTION 7.1.15        Application of Loss Proceeds

	 72
	 	 
	
SECTION 7.1.16        Interest Reserve Account

	 75
	 	 
	
SECTION 7.1.17        ERISA Compliance

	 76
	 	 
	
SECTION 7.1.18        Licenses and Permits

	 76
	 	 
	
SECTION 7.1.19        Leases

	 76
	 	 
	
SECTION 7.1.20        Key Person Management Agreement

	 77
	 	 
	
SECTION 7.1.21        Property Management Agreement

	 77
	 	 
	
SECTION 7.2           Negative Covenants

	 77
	 	 
	
SECTION 7.2.1          Business Activities

	 78
	 	 
	
SECTION 7.2.2          Indebtedness

	 78
	 	 
	
SECTION 7.2.3          Liens

	 78
	 	 
	
SECTION 7.2.4          Investments

	 78
	 	 
	
SECTION 7.2.5          Restricted Payments, etc

	 79
	 	 
	
SECTION 7.2.6          Rental Obligations

	 79

 

  

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SECTION 7.2.7          Take or Pay Contracts

	 79
	 	 
	
SECTION 7.2.8          Consolidation, Merger, etc

	 80
	 	 
	
SECTION 7.2.9          Restrictions on Dispositions

	 80
	 	 
	
SECTION 7.2.10        Modification of Certain Agreements

	 82
	 	 
	
SECTION 7.2.11        Transactions with Affiliates

	 83
	 	 
	
SECTION 7.2.12        Negative Pledges, Restrictive Agreements, etc

	 83
	 	 
	
SECTION 7.2.13        Sale and Leaseback

	 83
	 	 
	
SECTION 7.2.14        Hazardous Substances

	 83
	 	 
	
SECTION 7.2.15        No Other Powers of Attorney

	 84
	 	 
	
SECTION 7.2.16        Agent for Service of Process

	 84
	 	 
	
SECTION 7.2.17        Anti-Terrorism Laws

	 84
	 	 
	
SECTION 7.2.18        Financial Covenants

	 84
	 	 
	
SECTION 7.2.19        Management Agreement and Management Services Agreement

	 85
	 	 
	
SECTION 7.2.20        Capital Expenditures

	 85
	 	 
	
ARTICLE VIII      EVENTS OF DEFAULT

	 
	 	 
	
SECTION 8.1           Listing of Events of Default

	 86
	 	 
	
SECTION 8.1.1          Non-Payment of Obligations

	 86
	 	 
	
SECTION 8.1.2          Breach of Warranty

	 86
	 	 
	
SECTION 8.1.3          Non-Performance of Certain Covenants and Obligations

	 86
	 	 
	
SECTION 8.1.4          Non-Performance of Other Covenants and Obligations

	 86
	 	 
	
SECTION 8.1.5          Default on Other Indebtedness

	 87
	 	 
	
SECTION 8.1.6          Judgments

	 87
	 	 
	
SECTION 8.1.7          Pension Plans

	 87
	 	 
	
SECTION 8.1.8          Change of Control

	 87
	 	 
	
SECTION 8.1.9          Bankruptcy, Insolvency, etc

	 87
	 	 
	
SECTION 8.1.10        Impairment of Security, etc

	 88
	 	 
	
SECTION 8.1.11        Abandonment of the Property, the Improvements or Easements

	 88
	 	 
	
SECTION 8.1.12        Government Authorizations

	 88

 

  

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SECTION 8.1.13        Borrower’s Gaming Licenses

	 89
	 	 
	
SECTION 8.1.14        Key Person Management Agreement

	 89
	 	 
	
SECTION 8.1.15        Property Management Agreement

	 89
	 	 
	
SECTION 8.1.16        Material Adverse Effect

	 89
	 	 
	
SECTION 8.2            Action if Bankruptcy

	 89
	 	 
	
SECTION 8.3            Action if Other Event of Default

	 89
	 	 
	
ARTICLE IX        THE ADMINISTRATIVE AGENT

	 
	 	 
	
SECTION 9.1            Designation of the Administrative Agent

	 92
	 	 
	
SECTION 9.2            Funding Reliance, etc

	 93
	 	 
	
SECTION 9.3            Exculpation

	 94
	 	 
	
SECTION 9.4            Successors

	 94
	 	 
	
SECTION 9.5            Loans by the Administrative Agent

	 95
	 	 
	
SECTION 9.6            Credit Decisions

	 95
	 	 
	
SECTION 9.7            Copies, etc

	 95
	 	 
	
SECTION 9.8            Consultants and Reports

	 95
	 	 
	
ARTICLE X          MISCELLANEOUS PROVISIONS

	 
	 	 
	
SECTION 10.1          Waivers, Amendments, etc

	 96
	 	 
	
SECTION 10.2          Notices

	 97
	 	 
	
SECTION 10.3          Payment of Fees, Costs and Expenses

	 97
	 	 
	
SECTION 10.4          Indemnification

	 98
	 	 
	
SECTION 10.5          Survival

	 99
	 	 
	
SECTION 10.6          Severability

	 100
	 	 
	
SECTION 10.7          Headings

	 100
	 	 
	
SECTION 10.8          Execution in Counterparts, Effectiveness, etc

	 100
	 	 
	
SECTION 10.9          Governing Law; Entire Agreement

	 100
	 	 
	
SECTION 10.10        Successors and Assigns

	 100
	 	 
	
SECTION 10.11        Sale and Transfer of Loans and Notes; Participations in Loans and Notes

	 101
	 	 
	
SECTION 10.11.1      Assignments

	 101
	 	 
	
SECTION 10.11.2      Participations

	 103

 

  

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SECTION 10.12        Cooperation by the Borrower and the Guarantors; Acknowledgment and Agreement by Borrower of Syndication

	 104
	 	 
	
SECTION 10.13        Other Transactions; Publicity

	 104
	 	 
	
SECTION 10.14        Execution by Authorized Representative

	 104
	 	 
	
SECTION 10.15        Forum Selection and Consent to Jurisdiction

	 105
	 	 
	
SECTION 10.16        Waiver of Jury Trial; Judicial Reference

	 106
	 	 
	
SECTION 10.17        Maximum Rate of Interest

	 106
	 	 
	
SECTION 10.18        Time of Essence

	 106
	 	 
	
SECTION 10.19        Consent or Approval of the Administrative Agent, the Issuer and the Lenders

	 107
	 	 
	
SECTION 10.20        No Third Party Beneficiary

	 107
	 	 
	
SECTION 10.21        Cumulative Remedies

	 107
	 	 
	
SECTION 10.22        Estoppel Certificates

	 108
	 	 
	
SECTION 10.23        Amendment and Restatement

	 108
	 	 
	
SECTION 10.24        Release

	 108

  

-viii-

  

 

	
SCHEDULE I

	-	

Disclosure Schedule

	
SCHEDULE II

	
-

	
Permits

	
SCHEDULE III

	
-

	
Insurance

	
SCHEDULE IV

	
-

	
Schedule of Security Filings

	 	 	 
	
EXHIBIT A

	-	

Description of Land

	
EXHIBIT B-1

	-	

Form of Revolving A Note

	
EXHIBIT B-2

	-	

Form of Revolving B Note

	
EXHIBIT B-3

	-	

Form of Revolving C Note

	
EXHIBIT C

	-	

Form of Borrowing Request

	
EXHIBIT D

	-	

Form of Letter of Credit Issuance Request

	
EXHIBIT E

	-	

Form of Solvency Certificate

	
EXHIBIT F

	-	

Form of Compliance Certificate

	
EXHIBIT G

	-	

Form of Lender Assignment Agreement

	
EXHIBIT H

	-	

Form of Tax Certificate

	
EXHIBIT I

	-	

Form of Third Amendment to Deed of Trust

 

  

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AMENDED AND RESTATED LOAN AGREEMENT

AMENDED AND RESTATED LOAN AGREEMENT (this “Agreement”), dated as of December 21, 2012, among TROPICANA LAS VEGAS, INC., a Nevada corporation (the “Borrower”), the various lenders that are or may become a party to this Agreement (referred to individually as a “Lender” and collectively as the “Lenders”) and WELLS FARGO BANK, N.A., a national banking association (“Wells Fargo”), in its capacity as administrative agent for the Lenders (in such capacity, the “Administrative Agent”) and in its capacity as the issuer of the Letters of Credit (in such capacity, the “Issuer”). Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to such terms in Article I hereof.

W I T N E S S E T H:

WHEREAS, the Borrower is the owner of the real property upon which is constructed a 1,772-room hotel, resort and casino presently branded as the Tropicana Resort and Casino (the “Improvements”) located at 3801 Las Vegas Boulevard South, Las Vegas, Clark County, Nevada 89109, as more particularly described on Exhibit A annexed hereto and made a part hereof (the “Land”; together with the Improvements, the “Property”); and

WHEREAS, the Borrower, the Lenders, The Foothill Group, Inc. (“Foothill”), in its capacity as administrative agent for the Lenders and as lead arranger, and Wells Fargo, in its capacity as the Issuer, have heretofore entered into that certain Loan Agreement (the “Original Loan Agreement”) dated as of March 17, 2010 (the “Original Closing Date”), as amended by that certain First Amendment to Loan Agreement, dated as of April 26, 2011 (the “First Amendment”), as further amended by that certain Second Amendment to Loan Agreement and Limited Duration Waiver Agreement, dated as of August 26, 2011 (the “Second Amendment”), and as further amended by that certain Third Amendment to Loan Agreement, dated as of July 2, 2012 (the “Third Amendment”; the Original Loan Agreement, as amended by the First Amendment, the Second Amendment and the Third Amendment, is hereinafter referred to as the “Existing Loan Agreement”); and

WHEREAS, pursuant to that certain Successor Agent Agreement dated as of December 28, 2010, Foothill resigned from its position as Administrative Agent under the Existing Loan Agreement and the Required Lenders appointed Wells Fargo as the successor Administrative Agent under the Loan Documents; and

WHEREAS, pursuant to the terms of the Existing Loan Agreement, (i) certain revolving loans were made to the Borrower for the purposes of financing the completion of the renovation of the Improvements and to fund ongoing working capital and other general corporate purposes of the Borrower and (ii) certain loans (the “Delayed Draw Term Loans”) were made to the Borrower for the purpose of financing the construction and build-out of a night club and related amenities; and

WHEREAS, subject to the terms of this Agreement, the Delayed Draw Term Loans shall be recast as Revolving C Loans as set forth herein; and

  

  

  

 

WHEREAS, the Borrower, the Administrative Agent and the Lenders have agreed to amend and restate the Existing Loan Agreement in its entirety as set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.1 Defined Terms. The following terms (whether or not bolded) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

“Account Bank” means the Administrative Agent, or such other account administrator reasonably acceptable to the Administrative Agent, as shall be party to a tri-party reserve account agreement among the Borrower, the Administrative Agent and such account administrator.

“Administrative Agent” is defined in the preamble and includes each other Person as shall have subsequently been appointed as the successor Administrative Agent pursuant to Section 9.4.

“Affected Lender” is defined in clause (a) of Section 4.7.

“Affiliate” means, relative to any Person, any other Person which, directly or indirectly, controls, is controlled by, or is under common control with, such Person (excluding, however, any trustee under, or any committee with responsibility for administering, any Plan). With respect to any Lender, Approved Fund or the Issuer, a Person shall be deemed to be “controlled by” another Person if such other Person possesses, directly or indirectly, power to vote fifty-one percent (51%) or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors, managing general partners or managers, as the case may be. With respect to all other Persons, a Person shall be deemed to be “controlled by” another Person if such other Person possesses, directly or indirectly, power

(a)     to vote ten percent (10%) or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors, managing general partners or managers, as the case may be; or

(b)     to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

“Affiliate Transaction” is defined in Section 7.2.11.

“Agreement” means, on any date, this Loan Agreement as originally in effect on the Effective Date and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified.

  

-2-

  

 

“Anti-Terrorism Laws” means any of the following:

(a)     Executive Order No. 13224;

(b)     the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of Federal Regulations);

(c)     the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations);

(d)     the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations);

(e)     the USA Patriot Act;

(f)      all other present and future Legal Requirements of any Governmental Instrumentality addressing, relating to, or attempting to eliminate, terrorist acts and acts of war; and

(g)     any regulations promulgated pursuant thereto or pursuant to any Legal Requirement governing terrorist acts and acts of war.

“Appraiser” means Snyder Valuation or any other Person designated from time to time by the Administrative Agent which is a MAI certified appraiser to serve as the appraiser under this Agreement.

“Approved Fund” means, relative to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is advised or managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“Assignee Lender” is defined in Section 10.11.1.

“Assignment of Leases and Rents” means, on any date, an Assignment of Leases and Rents and Profits as originally in effect on the date on which each such instrument is recorded, made by the Borrower, as the assignor, to the Administrative Agent (for its benefit and the benefit of the Lenders), as the assignee, as amended by the First Amendment to Assignment of Leases and Rents and the Second Amendment to Assignment of Leases and Rents and as thereafter from time to time further amended, supplemented, amended and restated or otherwise modified.

“Assignment of Permits, Contracts and Agreements” means, on any date, the Assignment of Permits, Contracts and Agreements as originally in effect on the Original Closing Date, made by the Borrower, in favor of the Administrative Agent for the benefit of the Secured Parties (and including all applicable, necessary or required third-party consents, releases or subordinations), and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified.

 

  

-3-

  

“Authorized Representative” means, relative to any Person, those of its officers, partners, managers or managing members (in the case of a limited liability company) whose signatures and incumbency have been certified to the Administrative Agent in a certificate of such Person delivered to the Administrative Agent.

“Blocked Person” is defined in Section 6.31.2.

“Board of Directors” means, relative to any Person, (x) for so long such Person is a corporation, the Management Board or Board of Directors, as the case may be (as such terms are defined in the Organizational Documents of such Person) appointed pursuant to the Organizational Documents of such Person or (y) on and after such time as such Person is no longer a corporation, the substantially equivalent governing body of such Person.

“Board of Managers” means, relative to any Person, (x) for so long such Person is a limited liability company, the Management Board or Board of Managers, as the case may be (as such terms are defined in the Organizational Documents of such Person) appointed pursuant to the Organizational Documents of such Person or (y) on and after such time as such Person is no longer a limited liability company, the board of directors or substantially equivalent governing body of such Person.

“Borrower” is defined in the preamble.

“Borrower's Certificate” means a certificate in form and substance reasonably satisfactory to the Administrative Agent duly completed and executed by an Authorized Representative of the Borrower for the purpose of certifying as to the matters contained therein.

“Borrowing” means, as the context may require:

(a) the making of any Loans by a Lender required to make such Loans pursuant to a Borrowing Request delivered in accordance with Section 2.3; or

(b) the issuance of any Letter of Credit, or the extension of any Letter of Credit Stated Expiry Date of any existing Letter of Credit, by the Issuer.

“Borrowing Request” means a Loan request and certificate duly executed by an Authorized Representative of the Borrower substantially in the form of Exhibit C hereto.

“Business Day” means any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York, New York.

“Capital Expenditures” means, for any period, the aggregate amount of all expenditures of the Borrower for fixed or capital assets made during such period which, in accordance with GAAP, would be classified as capital expenditures.

“Capital Stock” means, relative to any Person, any and all shares, interests (including Membership Interests), participations or other equivalents (however designated, whether voting or non-voting) of such Person's capital, whether now outstanding or issued after the Effective Date.

  

-4-

  

 

“Capitalized Lease Liability” means, relative to any Person, any monetary obligation of such Person under any leasing or similar arrangement which, in accordance with GAAP, would be classified as a capitalized lease, and, for purposes of this Agreement and each other Loan Document, the amount of such obligation shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a premium or a penalty.

“Cash Contributions to Capital” means optional contributions, including to cure or avoid a Default that would otherwise exist under the Loan Documents, made by the Guarantors in cash to the Borrower, which contributions were either (x) not made as a loan but made in exchange for Borrower's Preferred Stock, or (y) made as a shareholder loan for tax purposes, which loan shall be unsecured and subordinated to the Lien of the Secured Parties in a manner that is satisfactory to the Administrative Agent, and, in either case, made on terms and conditions otherwise satisfactory to the Administrative Agent as determined in good faith.

“Cash Equivalent Investment” means, at any time, (u) Dollars, (v) securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six (6) months from the date of acquisition, (w) certificates of deposit and eurodollar time deposits with maturities of six (6) months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six (6) months and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson Bank Watch Rating of “B” or better, (x) repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in item (v) and (w) entered into with any financial institution meeting the qualifications specified in item (w), (y) commercial paper having the highest rating obtainable from Moody's or S&P and in each case maturing within six (6) months after the date of acquisition and (z) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in items (w)-(y) of this definition.

“CERCLA” is defined in clause (a) of the definition of “Environmental Law”.

“CERCLIS” means the Comprehensive Environmental Response Compensation Liability Information System List.

“Change of Control” shall have occurred if:

(a)     Trilliant and any Person of which Trilliant possesses power to vote one hundred percent (100%) of the securities (on a fully diluted basis) having ordinary voting power shall fail, directly or indirectly, to own free and clear of all Liens at least thirty percent (30%) of the Capital Stock of Holdings and to Control Holdings; or

(b)     Holdings shall fail, directly or indirectly, to own free and clear of all Liens at least one hundred percent (100%) of the Capital Stock of Holdings Intermediary and to Control Holdings Intermediary; or

  

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(c)     Holdings Intermediary shall fail, directly or indirectly, to own free and clear of all Liens at least one hundred percent (100%) of the Capital Stock of the Borrower and to Control the Borrower; or

(d)     the Borrower at any time ceases to own, directly, the Property and, directly or indirectly, the non-Real Property Security free and clear of all Liens (other than Permitted Liens and Liens in favor of the Secured Parties).

“Claim” means, relative to any Person, any and all present and future claims, expenses, obligations, liabilities, losses, damages, injuries (to person, property, or natural resources), penalties, stamp or other similar taxes, actions, suits, judgments, reasonable costs and expenses (including reasonable attorney's fees) of whatever kind or nature, whether or not well founded, meritorious or unmeritorious, demanded, asserted or claimed against such Person including any liability resulting from any delay or omission to pay any such claims.

“Code” means the Internal Revenue Code of 1986, and the regulations thereunder, in each case as amended, reformed or otherwise modified from time to time.

“Commitment Fee” is defined in Section 3.3.1.

“Compliance Certificate” means a certificate duly completed and executed by an Authorized Representative of the Borrower substantially in the form of Exhibit F hereto, together with such changes thereto as the Administrative Agent may from time to time reasonably request for the purpose of monitoring the Borrower's compliance with its covenants contained herein.

“Condemnation Proceeds” means relative to any property or asset, all awards, amounts, damages, compensation, payments and proceeds (including Instruments) received by any Person in respect of any condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of all or a portion of such property or asset, or confiscation of all or a portion of such property or asset, or the requisition of the use of all or a portion of such property or asset, or any settlement in lieu thereof.

“Contingent Liability” means, relative to any Person, any agreement, undertaking or arrangement by which such Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Indebtedness of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount of the debt, obligation or other liability guaranteed thereby.

“Contract” means any contract entered into from time to time by the Borrower with any Person for performance of services or sale of goods or services in connection with the construction, development, operation or maintenance of the Property, including all construction and project management agreements, architectural and engineering agreements, and warranties and guarantees, as the same may from time to time be amended, supplemented, amended and restated or otherwise modified in accordance with the Loan Documents.

  

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“Control” means, relative to any Person, the possession of the power (directly or indirectly) to direct or cause the direction of all decisions regarding the existence and operations of such Person or the power to vote a sufficient percentage of Capital Stock so as to select management and to control all decisions regarding such Person to be made by the owners thereof. “Controlling” and “Controlled” have meanings correlative thereto.

“Controlled Group” means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.

“Debt Service” means the actual aggregate debt service obligation (including, without limitation, all principal repayments or interest and other amounts payable or accrued from time to time under any of the Loan Documents of the Borrower) due from the Borrower under the Loan Documents for the most recently ended Fiscal Quarter.

“Deed of Trust” means, on any date, the Deed of Trust, Assignment of Leases and Rents and Profits, Security Agreement and Fixture Filing as originally in effect on the date on which it is originally recorded, made by the Borrower, as the trustor/grantor, to the trustee named therein for the benefit of the Administrative Agent, on behalf of the Secured Parties, as beneficiaries, covering the Property, as amended by the First Amendment to Deed of Trust and the Second Amendment to Deed of Trust and as thereafter from time to time further amended, supplemented, amended and restated or otherwise modified.

“Default” means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default.

“Defaulting Lender” means any Lender with respect to which a Lender Default is in effect.

“Disclosure Schedule” means the Disclosure Schedule attached hereto as Schedule I, as it may be amended, supplemented, amended and restated or otherwise modified from time to time by the Borrower with the written consent of the Administrative Agent.

“Dollar” and the symbol “$” mean lawful money of the United States.

“Easement” means any easement appurtenant, easement in gross, license agreement or other right running for the benefit of the Borrower or appurtenant to the Property, including those easements and licenses described in each applicable Title Policy.

“EBITDA” means for any applicable period, the sum (without duplication) of

(a) Net Income for such period,

plus

  

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(b) the amount deducted by the Borrower, in determining Net Income for such period, representing

(i) Interest Expense of the Borrower;

plus

(ii) the amount deducted, in determining Net Income, of all federal, state and local income taxes (whether paid in cash or deferred) of the Borrower or, if the Borrower is treated as a pass through entity or is not treated as a separate entity for United States federal income tax purposes, the amount of Restricted Payments made by the Borrower in accordance with Section 7.2.5 hereof;

plus

(iii) depreciation and amortization;

plus

(iv) non-cash stock-based compensation expense;

plus

(v) the amount of Cash Contributions to Capital;

plus

(vi) the amount of non-operating costs, including one-time non-recurring expenses and management fees;

“EBITDA Shortfall” is defined in 7.2.18.

“EBITDA Trigger Amount” is defined in Section 7.1.21 hereof.

“Effective Date” means the date this Agreement becomes effective pursuant to Section 10.8 and upon the satisfaction of the conditions precedent in Section 5.1 hereof.

“Eligible Assignee” means (A) any of the following entities: (i) a commercial bank organized under the laws of the United States or any state thereof; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof; and (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof (provided that (x) such bank is acting through a branch or agency located in the 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); or (B) a Lender, an Affiliate of a Lender or an Approved Fund.

“Environmental Claim” means any and all obligations, liabilities, losses, administrative, regulatory or judicial actions, suits, demands, decrees, Claims, Liens, judgments, warning notices, notices of noncompliance or violation, investigations, proceedings, removal or remedial actions or orders, or damages (foreseeable and unforeseeable, including consequential and punitive damages), penalties, fees, out-of-pocket costs, expenses, disbursements, attorneys' or consultants' fees, relating in any way to any Environmental Law or any Permit issued under any such Environmental Law including (x) any and all Claims by Governmental Instrumentalities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (y) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Substances or arising from alleged injury or threat of injury to health, safety or the environment.

  

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“Environmental Indemnity” means, on any date, the Environmental Indemnity Agreement from the Borrower and the Guarantors for the benefit of the Administrative Agent, on behalf of the Secured Parties, and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified.

“Environmental Law” means any of:

(a)     the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.) (“CERCLA”);

(b)     the Federal Water Pollution Control Act (33 U.S.C. Section 1251, et seq.) (“CWA”);

(c)     the Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.) (“RCRA”);

(d)     the Atomic Energy Act of 1954 (42 U.S.C. Section 2011, et seq.);

(e)     the Clean Air Act (42 U.S.C. Section 7401, et seq.);

(f)      the Emergency Planning and Community Right to Know Act (42 U.S.C. Section 11001, et seq.);

(g)     the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136, et seq.) (“FIFRA”);

(h)     the Oil Pollution Act of 1990 (P.L. 101-380, 104 Stat. 486);

(i)      the Safe Drinking Water Act (42 U.S.C. Sections 300f, et seq.) (“SDWA”);

(j)      the Surface Mining Control and Reclamation Act of 1974 (30 U.S.C. Sections 1201, et seq.);

(k)     the Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.) (“TSCA”);

  

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(l)       the Hazardous Materials Transportation Act (49 U.S.C. Section 1801, et seq.) (“HMTA”);

(m)    the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C. Section 7901, et seq.) (“UMTRCA”);

(n)     the Occupational Safety and Health Act (29 U.S.C. Section 651, et seq.) (“OSHA”);

(o)     the Nevada Hazardous Materials law (NRS Chapter 459);

(p)     the Nevada Solid Waste/Disposal of Garbage or Sewage law (NRS 444.440 to 444.650, inclusive);

(q)     the Nevada Water Controls/Pollution law (NRS Chapter 445A);

(r)      the Nevada Air Pollution law (NRS Chapter 445B);

(s)      the Nevada Cleanup of Discharged Petroleum law (NRS 590.700 to 590.920, inclusive);

(t)      the Nevada Control of Asbestos law (NRS 618.750 to 618.850);

(u)     the Nevada Appropriation of Public Waters law (NRS 533.324 to 533.4385, inclusive);

(v)     the Nevada Artificial Water Body Development Permit law (NRS 502.390);

(w)    the Nevada Protection of Endangered Species, Endangered Wildlife Permit (NRS 503.585) and Endangered Flora Permit law (NRS 527.270); and

(x)      all other Federal, state and local Legal Requirements which govern Hazardous Substances, and the regulations adopted and publications promulgated pursuant to all such foregoing laws;

in each case, as amended by an amendment thereto or succeeded by a successor law, statute or regulation thereto.

“Environmental Matter” means any:

(a)     release, emission, entry or introduction into the air including the air within buildings and other natural or man-made structures above ground in quantities or concentrations exceeding standards set by Environmental Laws;

(b)     discharge, release or entry into water including into any river, watercourse, lake or pond (whether natural or artificial or above ground or which joins or flows into any such water outlet above ground) or reservoir, or the surface of the riverbed or of other land supporting such waters, ground waters, sewer or the sea in quantities or concentrations exceeding standards set by Environmental Laws;

 

  

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(c)     deposit, disposal, keeping, treatment, importation, exportation, production, transportation, handling, processing, carrying, manufacture, collection, sorting or presence of any Hazardous Substance in quantities or concentrations exceeding standards set by Environmental Laws (including, in the case of waste, any substance which constitutes a scrap material or an effluent or other unwanted surplus substance arising from the application of any process or activity (including making it reusable or reclaiming substances from it) and any substance or article which is required to be disposed of as being broken, worn out, contaminated or otherwise spoiled);

(d)     nuisance, noise, health and safety at work, industrial illness, industrial injury due to environmental factors, environmental health problems (including asbestosis or any other illness or injury caused by exposure to asbestos) or genetically modified organisms; or

(e)     conservation, preservation or protection of the natural or man-made environment or any living organisms supported by the natural or man-made environment.

“Environmental Reports” means each phase I environmental report or site assessment delivered to the Administrative Agent and the Lenders in connection with the execution and delivery of the Existing Loan Agreement.

“Equity Interest” means, relative to any Person, Capital Stock and all warrants, options or other rights to acquire Capital Stock (excluding, however, any debt security that is convertible into, or exchangeable for, Capital Stock prior to any such conversion) of such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections thereto.

“Event of Default” is defined in Section 8.1.

“Event of Loss” means, relative to any property or asset (tangible or intangible, real or personal), (x) any loss, destruction or damage of such property or asset, (y) any actual condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of all or a part of such property or asset, or confiscation of all or a part of such property or asset or the requisition of the use of all or a part of such property or asset or (z) any settlement in lieu of item (y).

“Executive Order No. 13224” shall mean Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

“Existing Loan Agreement” is defined in the second recital.

 

  

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“Fee Letter” means the confidential letter agreement, dated the Effective Date, made by and among the Borrower, the Guarantors and the Administrative Agent, on behalf of the Lenders and the Issuer.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to

(a)     the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York; or

(b)     if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three (3) federal funds brokers of recognized standing selected by it.

“FF&E” means all furnishings, fixtures and equipment at, on or about the Improvements.

“Financial Covenant Commencement Date” is defined in Section 7.2.18(b).

“Financial Projections” is defined in Section 7.1.1 (p).

“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, and the regulations thereunder, in each case as amended, reformed or otherwise modified from time to time.

“First Amendment to Assignment of Leases and Rents” means that certain First Amendment to Assignment of Leases and Rents and Profits, made by and between the Borrower and the Administrative Agent, for the benefit of the Lenders, dated as of July 2, 2012.

“First Amendment to Deed of Trust” means that certain First Amendment to Deed of Trust, Assignment of Leases and Rents and Profits, Security Agreement and Fixture Filing, made by and between the Borrower and the Administrative Agent, for the benefit of the Lenders, dated as of July 2, 2012.

“First Priority” means, with respect to any Lien created in any Collateral pursuant to any of the Loan Documents, that such Lien is the only Lien (other than Permitted Liens) to which such Collateral is subject.

“Fiscal Quarter” means a calendar quarter ending on the last day of March, June, September or December.

“Fiscal Year” means, any period of twelve (12) consecutive calendar months ending on December 31; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the “2009 Fiscal Year”) refer to the last day of the applicable Fiscal Year.

“Foothill” is defined in the preamble.

 

  

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“F.R.S. Board” means the Board of Governors of the Federal Reserve System or any successor thereto.

“GAAP” is defined in Section 1.4.

“Gaming Equipment” means the gaming equipment and gaming devices which are regulated gaming devices under any Nevada Gaming Law (such as slot machines, cashless wagering systems and associated equipment) together with all improvements and/or additions thereto.

“Gaming License” means any and all duly issued and valid licenses, approvals, registrations, findings of suitability and authorizations relating to gaming at the Property under the Nevada Gaming Laws or required by the Nevada Gaming Authorities or necessary for the operation of gaming and the sale of alcohol at the Property.

“Governmental Instrumentality” means any national, state or local government, any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity (including the Nevada Gaming Authorities, any zoning authority, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the F.R.S. Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law.

 

“Guarantors” means, collectively, the Parent Guarantors and the Subsidiary Guarantors.

 

“Guaranty” means, on any date, the Payment Guaranty as originally in effect on the Original Closing Date, from the Guarantors, jointly and severally, in favor of the Administrative Agent for the benefit of the Secured Parties, and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified.

“Hazardous Substances” means (statutory acronyms and abbreviations having the meaning given them in the definition of “Environmental Laws”) substances defined as “hazardous substances,” “pollutants” or “contaminants” in Section 101 of the CERCLA; those substances defined as “hazardous waste,” “hazardous materials” or “regulated substances” by the RCRA; those substances designated as a “hazardous substance” pursuant to Section 311 of the CWA; those substances defined as “hazardous materials” in Section 103 of the HMTA; those substances regulated as a hazardous chemical substance or mixture or as an imminently hazardous chemical substance or mixture pursuant to Sections 6 or 7 of the TSCA; those substances defined as “contaminants” by Section 1401 of the SDWA, if present in excess of permissible levels; those substances regulated by the Oil Pollution Act; those substances defined as a pesticide pursuant to Section 2(u) of the FIFRA; those substances defined as a source, special nuclear or by-product material by Section 11 of the AEA; those substances defined as “residual radioactive material” by Section 101 of the UMTRCA; those substances defined as “toxic materials” or “harmful physical agents” pursuant to Section 6 of the OSHA); those substances defined as hazardous wastes in 40 C.F.R. Part 261.3; those substances defined as hazardous waste constituents in 40 C.F.R. Part 260.10, specifically including Appendices VII and VIII of Subpart D of 40 C.F.R. Part 261; those substances designated as hazardous substances in 40 C.F.R. Parts 116.4 and 302.4; those substances defined as hazardous substances or hazardous materials in 49 C.F.R. Part 171.8; those substances regulated as hazardous materials, hazardous substances or toxic substances in 40 C.F.R. Part 1910; those substances defined as hazardous materials, hazardous substances or toxic substances in any other Environmental Laws; and those substances defined as hazardous materials, hazardous substances or toxic substances in the regulations adopted pursuant to said laws, whether or not such regulations or publications are specifically referenced herein.

 

  

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“herein”, “hereof”, “hereto”, “hereunder” and similar terms contained in this Agreement or any other Loan Document referred to in this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document.

“Holdings” means Tropicana Las Vegas Hotel and Casino, Inc., a Delaware corporation.

“Holdings Intermediary” means Tropicana Las Vegas Intermediate Holdings, Inc., a Delaware corporation.

“Impermissible Qualification” means, relative to the opinion or certification of any independent public accountant as to any financial statement of the Borrower or any of the Guarantors, any qualification or exception to such opinion or certification

(a)     which is of a “going concern” or similar nature;

(b)     which relates to the limited scope of examination of matters relevant to such financial statement; or

(c)     which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause an Event of Default under Section 8.1.2.

“Imposition” means any real estate tax, payment in lieu of taxes or other assessment (including pursuant to restrictive covenants, deed restrictions or association documents) levied, assessed or imposed against the Property, and any water rates, sewer rentals or other governmental, quasi-governmental, association, municipal or public dues, charges or impositions, of every nature and to whomever assessed, that may now or hereafter be levied or assessed upon the Property, or upon the rents, issues, income, proceeds or profits thereof, whether the Imposition is levied directly or indirectly against the Property or as excise taxes or income taxes.

“Improvements” is defined in the first recital.

“including” and “include” means including, without limiting the generality of any description preceding such term, and, for purposes of this Agreement and each other Loan Document, the parties hereto agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned.

 

  

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“Indebtedness” means, relative to any Person, without duplication:

(a)     all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(b)     all obligations, contingent or otherwise, relative to the face amount of all letters of credit (or reimbursement agreements in respect thereof), whether or not drawn, and banker's acceptances issued for the account of such Person;

(c)     all obligations of such Person as lessee under leases which have been or should be, in accordance with GAAP, recorded as Capitalized Lease Liabilities;

(d)     whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding, however, prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; and

(e)     all Contingent Liabilities of such Person in respect of any of the foregoing.

For all purposes of this Agreement, (x) the Indebtedness of any Person shall include the proportion of Indebtedness of any partnership in which such Person is a general partner or joint venturer to the extent that such Indebtedness is recourse to such Person and (y) the amount of any Indebtedness outstanding as of any date shall be the principal amount thereof, together with any interest thereon that is more than thirty (30) days past due.

“Indemnified Liabilities” is defined in Section 10.4.

“Indemnified Parties” is defined in Section 10.4.

“Independent Consultant” means any Appraiser, insurance consultant, environmental consultant, or any other consultant or service provider engaged by the Administrative Agent or the Lenders pursuant to this Agreement.

“Instrument” means any Contract, agreement, indenture, mortgage, deed of trust, document or writing (whether by formal agreement, letter or otherwise) under which any obligation is evidenced, assumed or undertaken, or any Lien (or right or interest therein) is granted or perfected.

“Insurance Premiums” means, for each applicable period, the insurance premiums for liability, casualty, environmental and other insurance required by the Loan Documents to be maintained by the Borrower during such period with respect to the Property.

“Insurance Proceeds” means all awards, amounts, damages, compensation, payments, settlements and proceeds (including Instruments) received by any Person in respect of any damage or destruction to the Improvements, or any portion thereof, including the proceeds of any insurance policy required to be maintained by the Borrower pursuant to Section 7.1.4.

 

  

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“Insurance Requirement” means any provisions of any insurance policy covering or applicable to the Borrower, the Property, the Improvements thereon or any portion thereof, all requirements of the issuer of any such policy and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any body exercising similar functions) applicable to or affecting the Property, the Improvements thereon or any portion thereof, any use or condition thereof or the Borrower as set forth on Schedule III hereto.

“Interest Expense” means, for any period, the aggregate cash interest expense (net of cash interest income) of the Borrower (including, to the extent the Borrower has any Contingent Liability in respect of such interest expense, the interest expense of other Persons) for such period, as determined in accordance with GAAP, including the portion of any payments made in respect of Capitalized Lease Liabilities allocable to interest expense, but excluding, however, deferred financing costs and other non-cash interest expense.

“Interest Rate” means, as the context may require, the Revolving A Loan Interest Rate, the Revolving B Loan Interest Rate or the Revolving C Loan Interest Rate.

“Interest Reserve Account” means that certain interest-bearing account entitled “Interest Reserve Account” and established by the Borrower with the Administrative Agent.

“Investment” means, relative to any Person,

(a)     any loan or advance made by such Person to any other Person (including Affiliates) (excluding, however, commission, travel, petty cash and similar advances to officers and employees made in the ordinary course of business);

(b)     any Contingent Liability of such Person incurred in connection with loans or advances described in clause (a);

(c)     any ownership or similar interest held by such Person in any other Person; and

(d)     any other item that is or would be classified as an investment on a balance sheet of such Person prepared in accordance with GAAP.

The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property at the time of such Investment.

“Joint Venture” means any entity in which any Parent Guarantor, the Borrower and/or a Subsidiary of the Borrower, collectively and in the aggregate, own not more than fifty percent (50%) of the outstanding equity interests in and pursuant to which any Parent Guarantor, the Borrower and/or a Subsidiary of the Borrower, in association with the other owner(s) of such Joint Venture, own, develop and operate one or more lines of business at the Property such as, by way of example but not limitation, restaurants, bars or nightclubs.

 

  

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“Key Person Management Agreement” means that certain Employment Agreement entered into by and between the Borrower and the Key Person Manager dated as of July 1, 2009.

“Key Person Manager” means Alex Yemenidjian.

“Key Person Management Assignment and Subordination Agreement” means that certain assignment and subordination agreement entered into by and among the Borrower, the Key Person Manager and the Administrative Agent, for the benefit of the Secured Parties, with respect to the Key Person Management Agreement, in form and substance reasonably satisfactory to the Administrative Agent, as originally in effect on the date of its execution and delivery pursuant to the terms of the Existing Loan Agreement, and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified in accordance with the terms hereof.

“Knowledge” means, at any time and relative to any matter, knowledge which such Person or, if applicable, the Authorized Representative of such Person has after reasonable and customary inquiry of such Persons.

“Land” is defined in the first recital.

“Leases” means, relative to any Real Property or the Improvements thereon, any leases, subleases, lettings, licenses, concessions, operating agreements, management agreements, arrangements and all other agreements affecting such Real Property or Improvements, that the owner or such Real Property has entered into, taken by assignment, taken subject to, or assumed, or has otherwise become bound by, now or in the future, that give any Person the right to conduct its business on, or otherwise use, operate or occupy, all or any portion of such Real Property or Improvements, together with all amendments, extensions, and renewals of the foregoing, together with all rental, occupancy, service, maintenance or any other similar agreements pertaining to the use or occupation of, or the rendering of services at such Real Property, the Improvements thereon or any part thereof.

“Legal Requirement” means, relative to any Person or property, all laws (including Nevada Gaming Laws, if applicable), statutes, codes, regulations, rules, acts, ordinances, permits, licenses, authorizations, directions, decrees, orders and requirements of all Governmental Instrumentalities, departments, commissions, boards, courts, authorities, agencies, officials and officers, and any deed restrictions, restrictive covenants or other requirements of record, applicable to such Person or such property, or any portion thereof or interest therein or any use or condition of such property or any portion thereof or interest therein (including those relating to zoning, planning, subdivision, building, safety, health, use, environmental quality and other similar matters).

“Lender” is defined in the preamble and means any Lender which has made a Loan Commitment or holds a Loan, including any Person that becomes a Lender pursuant to Section 10.11.1.

“Lender Assignment Agreement” means a lender assignment agreement substantially in the form of Exhibit G hereto.

 

  

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“Lender Default” means (x) the refusal (which has not been retracted) of a Lender to make available its portion of any Borrowing (other than a refusal based upon a good faith determination by such Lender that the applicable conditions in Article V have not been satisfied) or (y) a Lender having notified the Administrative Agent or the Borrower that it does not intend to perform its obligations under Section 2.4.

“Lenders' Environmental Liability” means any and all losses, liabilities, obligations, penalties, Claims, litigation, demands, defenses, costs, judgments, suits, proceedings, damages (including consequential damages), disbursements or expenses of any kind or nature whatsoever (including reasonable attorneys' fees at trial and appellate levels and reasonable consultants' and experts' fees and disbursements and expenses incurred in investigating, defending against or prosecuting any litigation, Claim or proceeding) which may at any time be imposed upon, incurred by or asserted or awarded against any Lender or any of such Lender's parent and subsidiary corporations, and their Affiliates, shareholders, directors, officers, employees, and agents in connection with or arising from:

(a)     any Hazardous Substances on, in, under or affecting all or any portion of the Property, the Improvements thereon, the groundwater thereunder, or any surrounding areas thereof;

(b)     any misrepresentation, inaccuracy or breach of any warranty, contained in Section 6.12;

(c)     any violation or Claim of violation by the Borrower of any Environmental Laws; or

(d)     the imposition of any Lien for damages caused by, or the recovery of any costs for the cleanup, release or threatened release of, Hazardous Substances from the Property or the Improvements thereon or in connection with any property owned or formerly owned by the Borrower.

“Lender's Tax” is defined in Section 4.2.

“Letters of Credit” means standby letters of credit issued or to be issued by the Issuer for the account of the Borrower pursuant to Section 2.4.

“Letter of Credit Commitment” means, (x) relative to the Issuer, such Issuer's obligation to issue or extend the Letter of Credit Stated Expiry Date pursuant to Section 2.1.2 and (y) relative to each Revolving A Lender (other than the Issuer) that has a Revolving A Loan Commitment, the obligation of such Revolving A Lender to participate in the Letters of Credit pursuant to Section 2.4.1 in an amount equal to such Revolving A Lender's Percentage of the Letter of Credit Commitment Amount (as such Percentage is set forth below such Revolving A Lender's signature hereto or in a Lender Assignment Agreement).

“Letter of Credit Commitment Amount” means Five Million Dollars ($5,000,000), as such amount may be permanently reduced from time to time pursuant to Section 2.2.

 

  

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“Letter of Credit Commitment Termination Date” means the date on which any Revolving A Loan Commitment Termination Event occurs.

“Letter of Credit Disbursement” is defined in Section 2.4.2.

“Letter of Credit Disbursement Date” is defined in Section 2.4.2.

“Letter of Credit Issuance Request” means a Letter of Credit request and certificate duly executed by an Authorized Representative of the Borrower substantially in the form of Exhibit D hereto.

“Letter of Credit Outstandings” means, on any date, an amount equal to the sum of

(a) the then aggregate amount which is undrawn and available under all issued and outstanding Letters of Credit,

plus

(b) the then aggregate amount of all unpaid and outstanding Letter of Credit Reimbursement Obligations.

“Letter of Credit Reimbursement Obligation” is defined in Section 2.4.3.

“Letter of Credit Stated Expiry Date” is defined in Section 2.4.

“Lien” means, relative to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest therein).

“Loan” means, as the context may require, a Revolving A Loan, a Revolving B Loan or a Revolving C Loan.

“Loan Commitment” means, as the context may require, the Revolving A Loan Commitment, the Revolving B Loan Commitment or the Revolving C Loan Commitment.

“Loan Commitment Amount” means, as the context may require, the Revolving A Loan Commitment Amount, the Revolving B Loan Commitment Amount or the Revolving C Loan Commitment Amount.

“Loan Commitment Termination Date” means, as the case may be, the Revolving A Loan Commitment Termination Date, the Revolving B Loan Commitment Termination Date or the Revolving C Loan Commitment Termination Date.

“Loan Commitment Termination Event” means, as the case may be, the occurrence of a Revolving A Loan Commitment Termination Event, a Revolving B Loan Commitment Termination Event or a Revolving C Loan Commitment Termination Event.

 

  

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“Loan Documents” means, collectively, this Agreement, the First Amendment to Loan Agreement, the Second Amendment to Loan Agreement, the Third Amendment to Loan Agreement, each Note, each Borrowing Request, the Security Agreement, the Trademark Security Agreement, the Deed of Trust, the First Amendment to Deed of Trust, the Second Amendment to Deed of Trust, the Assignment of Leases and Rents, the First Amendment to Assignment of Leases and Rents, the Second Amendment to Assignment of Leases and Rents, the Assignment of Permits, Contracts and Agreements, the Guaranty, the Environmental Indemnity, the Pledge Agreement, the Property Management Assignment and Subordination Agreement, the Key Person Management Assignment and Subordination Agreement, Subordination and Estoppel, the Omnibus Reaffirmation Agreement, the Second Omnibus Reaffirmation Agreement, the Fee Letter, the Preferred Rights Fee Letter and any other agreement, certificate, document or Instrument delivered by the Borrower or any Guarantor in connection with this Agreement and such other agreements, whether or not specifically mentioned herein or therein.

“Loss Proceeds” is defined in clause (a) of Section 7.1.15.

“Loss Proceeds Account” is defined in clause (a) of Section 7.1.15.

“Loss Proceeds Deficiency” is defined in clause (g) of Section 7.1.15.

“L/C Issuance Fee” is defined in Section 3.3.4.

“Management Fees” is defined in Section 7.1.21 hereof.

“Mandatory Prepayment” is defined in clause (b) of Section 3.1.1.

“Material Adverse Effect” means any change, effect, fact, event or circumstance which, materially and adversely affects (i) the financial condition, operations, assets, or business, of the Borrower and the Guarantors, taken as a whole (except for circumstances or events attributable to general economic conditions), (ii) the ability of the Borrower or any Guarantor to perform their respective obligations under the Loan Documents or (iii) the validity or enforceability of the Loan Documents or the rights, remedies, options or benefits of the Lenders thereunder.

“Material Lease” means any Lease with an annual total rent in excess of $40,000.

“Members” means, relative to any Person which is a limited liability company, the Persons owning a Membership Interest therein.

“Membership Interest” means, relative to any Person which is a limited liability company, a membership interest or a limited liability company interest, as the case may be, of such Person.

“Moody's” means Moody's Investors Service, Inc., a Delaware corporation, or any successor thereto.

“Net Income” means, for any period, the aggregate of all amounts (including extraordinary losses) which, in accordance with GAAP, would be included in determining net income on the financial statements of the Borrower for such period (excluding, however, all amounts in respect of any extraordinary gains and any non-cash income).

 

  

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“Nevada Gaming Authority” means the Nevada Gaming Commission, the Nevada State Gaming Control Board or the Clark County Liquor and Gaming Licensing Board.

“Nevada Gaming Law” means the Nevada Gaming Control Act, as codified in Chapter 463 of the NRS, as amended from time to time, and the regulations of the Nevada Gaming Commission promulgated thereunder, as amended from time to time, and Clark County Code Sections 8.04.010 to 8.04.310 and 8.20.010 to 8.20.580, as amended from time to time.

“Non-Defaulting Lender” means and includes each Lender other than a “Defaulting Lender”.

“Non-U.S. Lender” is defined in Section 4.2.

“Note” means, as the context may require, a Revolving A Note, a Revolving B Note or a Revolving C Note.

“NRS” means the Nevada Revised Statutes.

“Obligations” means (w) all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the Borrower under this Agreement to any Secured Party of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, pursuant to the terms of any of the Loan Documents, including all interest, fees, charges, expenses, attorneys' fees, consultants' fees and accountants' fees chargeable to the Borrower in connection with such Person's dealings with the Borrower and payable by the Borrower hereunder or thereunder; (x) any and all sums advanced by the Secured Parties in order to preserve the Security or preserve any Secured Parties' security interest in the Security, including all protective advances; (y) the reasonable expenses of preparing and negotiating any amendment, modification or amendment and restatement of any of the Loan Documents including all fees, charges, expenses, attorneys' fees, consultants' fees and accountants' fees; and (z) in the event of any proceeding for the collection or enforcement of, or any “working out” of, the Obligations, the reasonable expenses of negotiating or restructuring of the Obligations (whether or not any such restructure is consummated) or a retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Security, or of any exercise by any Secured Party of its rights under the Loan Documents, together with reasonable attorneys' fees and court costs.

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“Official Records” means the official real property records of Clark County, Nevada.

“Omnibus Reaffirmation Agreement” means that certain Omnibus Amendment and Reaffirmation Agreement made by and among the Borrower, the Guarantors, WFPI and the Administrative Agent, for its benefit and the benefit of the Secured Parties, dated as of July 2, 2012.

 

  

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“Ongoing Investment” is any Investment listed in Item 7.2.4(a) on the Disclosure Schedule.

“Organizational Document” means, relative to any Person, its certificate or articles of incorporation, by-laws, certificate of partnership, partnership agreement, certificate of formation, articles of organization, operating agreement, limited liability company or operating agreement and all shareholder agreements, voting trusts and similar arrangements applicable to any of such Person's partnership interests, limited liability company interests or authorized shares of capital stock.

“Original Closing Date” is defined in the second recital.

“Parent Guarantors” means, collectively, Holdings and Holdings Intermediary.

“Partial Condemnation” means any condemnation or eminent domain proceeding or action (other than a Total Condemnation) by any Governmental Instrumentality (including, but not limited to, any transfer made in lieu of, or in anticipation of, the exercise of such taking), whether for any permanent or temporary use, occupancy or other interest affecting a portion of the Property.

“Participant” is defined in Section 10.11.2.

“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.

“Pension Plan” means a “pension plan”, as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA or any other applicable substantially similar state or territorial law (excluding, however, a multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which the Borrower or any corporation, trade or business that is, along with the Borrower, a member of a Controlled Group, has liability or a reasonable expectation of liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five (5) years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.

“Percentage” means, relative to any Lender, the applicable percentage set forth opposite its signature to this Agreement, as such percentage may be adjusted from time to time pursuant to Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to Section 10.11.1 or Section 4.7, as the case may be.

“Permit” means any building, construction, zoning, land use, environmental, utility agreement or other permit, license, franchise, approval, consent and authorization (including central bank and planning board approvals from applicable Governmental Instrumentalities and approvals required under the Nevada Gaming Law) required for or in connection with the ownership, use, occupation or operation of the Property and the transactions provided for in this Agreement and the other Loan Documents.

 

  

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“Permitted Asset Sale” is defined in Section 7.2.9(a).

“Permitted Lien” means any of the following types of Liens (excluding, however, any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA, any such Lien relating to or imposed in connection with any Environmental Claim and any such Lien expressly prohibited by any applicable terms of any of the Loan Documents):

(a)     Liens securing the Obligations under the Loan Documents;

(b)     Liens set forth in Item 7.2.3 of the Disclosure Schedule;

(c)     (x) Liens for Impositions or (y) statutory Liens of landlords, and carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business, in the case of each of items (x) and (y), with respect to amounts that either (1) are not yet delinquent or (2) are being diligently contested in good faith by appropriate proceedings; provided, however, that, in each case, any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor and the Borrower either has obtained a title insurance endorsement insuring against losses arising therewith or has bonded such Lien within ninety (90) days after becoming aware of the existence of such Lien;

(d)     Easements, rights-of-way, avigational servitudes, restrictions, minor defects or irregularities in title and other similar charges or encumbrances which do not interfere in any material respect with the ordinary conduct of business of the Borrower, the Property or the Improvements thereon;

(e)     licenses of patents, trademarks and other intellectual property rights granted by the Borrower in the ordinary course of business;

(f)      Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (excluding, however, obligations for the payment of borrowed money), incurred in the ordinary course of business so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Security on account thereof, (x) for amounts not yet overdue or (y) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five (5) days) are being contested in good faith by appropriate proceedings, so long as (1) such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts and (2) in the case of a Lien with respect to any portion of the Security, such contest proceedings conclusively operate to stay the sale of any portion of the Security on account of such Lien;

(g)     Liens for Taxes, assessments or governmental charges or Claims, the payment of which is not at the time due and payable or which is being contested in good faith by appropriate governmental proceedings promptly instituted and diligently contested, so long as (x) such reserve or other appropriate provision, if any, as shall be required in conformity with generally accepted accounting principles shall have been made therefor and (y) in case of any charge or Claim which has or may become a Lien against any of the Security, such contest proceedings conclusively operate to stay the sale of any portion of the Security to satisfy such charge or Claim;

 

  

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(h)     Liens created by or resulting from any litigation or legal proceeding in the ordinary course of business which is being contested in good faith by appropriate proceedings; provided, however, that, in each case, any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; and

(i)      Liens consisting of any right of offset, or statutory bankers' lien, on deposit bank accounts made in the ordinary course of business.

“Permitted Retail Transaction” is defined in Section 7.2.9(b).

“Person” means any natural person, corporation, limited liability company, partnership, joint venture, joint stock company, firm, association, trust or unincorporated organization, government, governmental agency, Governmental Instrumentality, court or any other legal entity, whether acting in an individual, fiduciary or other capacity.

“Plan” means any Pension Plan or Welfare Plan.

“Pledge Agreement” means, on any date, the Pledge Agreement, as in effect on the Original Closing Date, by and among Holdings, Holdings Intermediary, the Borrower and the Administrative Agent, for the benefit of the Secured Parties, and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified in accordance with the terms thereof.

“Preferred Rights Fee Letter” means the confidential letter agreement, dated the Effective Date, made by and among the Borrower, the Guarantors and the Lenders.

“Preferred Stock” means any Capital Stock with preferential right of payment of dividends or distributions, as applicable, or upon liquidation, dissolution or winding up.

“Process Agent” is defined in Section 10.15.

“Property” is defined in the first recital.

“Property Management Agreement” means that certain Property Management Agreement entered into pursuant to Section 7.1.21 hereof between Borrower, as owner, and the Property Manager, as manager, in form and substance reasonably satisfactory to the Administrative Agent.

“Property Management Assignment and Subordination Agreement” means an assignment, subordination, non-disturbance and attornment agreement entered into by and among the Borrower, the Property Manager and the Administrative Agent, for the benefit of the Secured Parties, with respect to the Property Management Agreement, in form and substance reasonably satisfactory to the Administrative Agent, as originally in effect on the date of its execution and delivery pursuant to the terms hereof, and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified in accordance with the terms hereof.

 

  

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“Property Manager” means Trilliant Management I, L.P., a Delaware limited partnership, or any other Person with experience managing hotel casino properties comparable to the Property and otherwise reasonably acceptable to the Administrative Agent.

“Quarterly Payment Date” means the last Business Day of each Fiscal Quarter.

“Real Property” means, relative to any Person, such Person's present and future right, title and interest (including any leasehold estate) in

(a)     any plots, pieces or parcels of land;

(b)     any improvements, buildings, structures and fixtures now or hereafter located or erected thereon or attached thereto of every nature whatsoever;

(c)     any other interests in property constituting appurtenances to such plots, pieces or parcels of land, or which hereafter shall in any way belong, relate or be appurtenant thereto; and

(d)     all other rights and privileges thereunto belonging or appertaining and all extensions, additions, improvements, betterments, renewals, substitutions and replacements to or of any of the rights and interests described in clause (c).

“Register” is defined in Section 2.6.

“Release” means a “release”, as such term is defined in CERCLA.

“Releasees” is defined in Section 10.24.

“Required Lenders” means, at any time,

(a)     Non-Defaulting Lenders holding greater than fifty percent (50%) of the aggregate outstanding principal amount of the Loans then held by such Non-Defaulting Lenders, plus the Loan Commitment Amount (inclusive of the Letter of Credit Outstandings of such Non-Defaulting Lenders) of such Non-Defaulting Lenders, or

(b)     if no Loans are then outstanding, Lenders holding greater than fifty percent (50%) of the Loan Commitments,

provided, however, that (x) amendments affecting only one class of Lenders will require the approval of the Non-Defaulting Lenders holding greater than fifty percent (50%) of the aggregate principal amount of the Loans, Letters of Credit or Loan Commitments for such class and (y) with respect to the matters set forth in clauses (a) through (g) of Section 10.1, the consent of all of the Non-Defaulting Lenders in the same class shall be required with respect to matters affecting such class and the consent of all of the Non-Defaulting Lenders of all classes shall be required with respect to all other matters except as otherwise set forth in clauses (a) through (g) of Section 10.1.

 

  

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“Restoration” means the repair and restoration of the Improvements to the condition that it was in immediately prior to the applicable Event of Loss.

“Restricted Payment” is defined in Section 7.2.5.

“Retail Parcel” is defined in clause (b) of Section 7.2.9.

“Retail Project” is defined in clause (b) of Section 7.2.9.

“Retainage Amount” means, at any given time, amounts which have accrued and are owing under the terms of a construction contract for work or services already provided but which at such time (and in accordance with the terms of the construction contract) are being withheld from payment to the contractor, until certain subsequent events (e.g., completion benchmarks) have been achieved under such construction contract, which shall be ten percent (10%) of the costs for all work under a construction contract; provided, that, (i) no amount shall be withheld with regard to any construction contract where the party thereto solely supplies materials to the Property and (ii) no amount withheld shall exceed the amount permitted under NRS 624.609.

“Revolving A Lender” means any Lender which has made a Revolving A Loan Commitment or holds a Loan.

“Revolving A Loan” is defined in Section 2.1.1.

“Revolving A Loan Commitment” means, on any date, relative to any Revolving A Lender, such Revolving A Lender's Percentage of the Revolving A Loan Commitment Amount reduced by the principal amount of any Revolving A Loans made by such Revolving A Lender as of such date. The Revolving A Loan Commitment of each Revolving A Lender is set forth below such Revolving A Lender's signature hereto or in a Lender Assignment Agreement.

“Revolving A Loan Commitment Amount” means the aggregate principal amount of Revolving A Loans that the Revolving A Lenders are obligated to make pursuant to Section 2.1.1. The Revolving A Loan Commitment Amount shall not exceed Fifty Million Dollars ($50,000,000) of which (x) all or a portion may be used to reimburse the Issuer for draws under the Letters of Credit and (y) the balance thereof, may be used by the Borrower for the purposes permitted under Section 7.1.8.

“Revolving A Loan Commitment Termination Date” means the date on which any Revolving A Loan Commitment Termination Event occurs. Upon the occurrence of a Revolving A Loan Commitment Termination Event, the Revolving A Loan Commitments shall terminate automatically and without any further action.

 

  

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“Revolving A Loan Commitment Termination Event” means

(a)     the Stated Maturity Date;

(b)     the occurrence of any Event of Default described in Section 8.1.9; or

(c)      the occurrence and continuance of any other Event of Default and either (x) the declaration of all or any portion of the Revolving A Loans to be immediately due and payable pursuant to Section 8.3 or (y) the giving of notice by the Administrative Agent, acting at the direction of the Required Lenders, to the Borrower that the Revolving A Loan Commitments have been terminated.

Upon the occurrence of any event described above, the Revolving A Loan Commitments shall terminate automatically without any further action.

“Revolving A Loan Interest Rate” means, on any date and relative to all Revolving A Loans, the fixed rate of interest per annum equal to four percent (4.00%).

“Revolving A Note” means, on any date, a promissory note of the Borrower payable to any Revolving A Lender, in the form of Exhibit B-1 hereto (as such promissory note may thereafter from time to time be amended, supplemented, amended and restated, endorsed or otherwise modified), evidencing the aggregate Indebtedness of the Borrower to such Revolving A Lender resulting from outstanding Revolving A Loans, and also means all other promissory notes accepted from time to time in substitution or replacement therefor or renewal thereof.

“Revolving B Lender” means any Lender which has made a Revolving B Loan Commitment or holds a Loan.

“Revolving B Loan” is defined in Section 2.1.1.

“Revolving B Loan Commitment” means, on any date, relative to any Revolving B Lender, such Revolving B Lender's Percentage of the Revolving B Loan Commitment Amount reduced by the principal amount of any Revolving B Loans made by such Revolving B Lender as of such date. The Revolving B Loan Commitment of each Revolving B Lender is set forth below such Revolving B Lender's signature hereto or in a Lender Assignment Agreement.

“Revolving B Loan Commitment Amount” means the aggregate principal amount of Revolving B Loans that the Revolving B Lenders are obligated to make pursuant to Section 2.1.1. The Revolving B Loan Commitment Amount shall not exceed Five Million Dollars ($5,000,000) of which (x) all or a portion may be used to reimburse the Issuer for draws under the Letters of Credit and (y) the balance thereof, may be used by the Borrower for the purposes permitted under Section 7.1.8.

“Revolving B Loan Commitment Termination Date” means the date on which any Revolving B Loan Commitment Termination Event occurs. Upon the occurrence of a Revolving B Loan Commitment Termination Event, the Revolving B Loan Commitments shall terminate automatically and without any further action.

“Revolving B Loan Commitment Termination Event” means

(a)     the Stated Maturity Date;

 

  

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(b)     the occurrence of any Event of Default described in Section 8.1.9; or

(c)      the occurrence and continuance of any other Event of Default and either (x) the declaration of all or any portion of the Revolving B Loans to be immediately due and payable pursuant to Section 8.3 or (y) the giving of notice by the Administrative Agent, acting at the direction of the Required Lenders, to the Borrower that the Revolving B Loan Commitments have been terminated.

Upon the occurrence of any event described above, the Revolving B Loan Commitments shall terminate automatically without any further action.

“Revolving B Loan Interest Rate” means, on any date and relative to all Revolving B Loans, the fixed rate of interest per annum equal to five percent (5.00%).

“Revolving B Note” means, on any date, a promissory note of the Borrower payable to any Revolving B Lender, in the form of Exhibit B-2 hereto (as such promissory note may thereafter from time to time be amended, supplemented, amended and restated, endorsed or otherwise modified), evidencing the aggregate Indebtedness of the Borrower to such Revolving B Lender resulting from outstanding Revolving B Loans, and also means all other promissory notes accepted from time to time in substitution or replacement therefor or renewal thereof.

“Revolving C Lender” means any Lender which has made a Revolving C Loan Commitment or holds a Loan.

“Revolving C Loan” is defined in Section 2.1.1.

“Revolving C Loan Commitment” means, on any date, relative to any Revolving C Lender, such Revolving C Lender's Percentage of the Revolving C Loan Commitment Amount reduced by the principal amount of any Revolving C Loans made by such Revolving C Lender as of such date. The Revolving C Loan Commitment of each Revolving C Lender is set forth below such Revolving C Lender's signature hereto or in a Lender Assignment Agreement.

“Revolving C Loan Commitment Amount” means the aggregate principal amount of Revolving C Loans that the Revolving C Lenders are obligated to make pursuant to Section 2.1.1. The Revolving C Loan Commitment Amount shall not exceed Ten Million Dollars ($10,000,000) of which (x) all or a portion may be used to reimburse the Issuer for draws under the Letters of Credit and (y) the balance thereof, may be used by the Borrower for the purposes permitted under Section 7.1.8.

“Revolving C Loan Commitment Termination Date” means the date on which any Revolving C Loan Commitment Termination Event occurs. Upon the occurrence of a Revolving C Loan Commitment Termination Event, the Revolving C Loan Commitments shall terminate automatically and without any further action.

“Revolving C Loan Commitment Termination Event” means

(d)     the Stated Maturity Date;

 

  

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(e)     the occurrence of any Event of Default described in Section 8.1.9; or

(f)      the occurrence and continuance of any other Event of Default and either (x) the declaration of all or any portion of the Revolving C Loans to be immediately due and payable pursuant to Section 8.3 or (y) the giving of notice by the Administrative Agent, acting at the direction of the Required Lenders, to the Borrower that the Revolving C Loan Commitments have been terminated.

Upon the occurrence of any event described above, the Revolving C Loan Commitments shall terminate automatically without any further action.

“Revolving C Loan Interest Rate” means, on any date and relative to all Revolving C Loans, the fixed rate of interest per annum equal to six percent (6.00%).

“Revolving C Note” means, on any date, a promissory note of the Borrower payable to any Revolving C Lender, in the form of Exhibit B-3 hereto (as such promissory note may thereafter from time to time be amended, supplemented, amended and restated, endorsed or otherwise modified), evidencing the aggregate Indebtedness of the Borrower to such Revolving C Lender resulting from outstanding Revolving C Loans, and also means all other promissory notes accepted from time to time in substitution or replacement therefor or renewal thereof.

“S&P” means Standard & Poor's Rating Group, Inc., a New York corporation, or any successor thereto.

“Second Amendment to Assignment of Leases and Rents” means that certain Second Amendment to Assignment of Leases and Rents and Profits, made by and between the Borrower and the Administrative Agent, for the benefit of the Lenders, dated as of December 21, 2012.

“Second Amendment to Deed of Trust” means that certain Second Amendment to Deed of Trust, Assignment of Leases and Rents and Profits, Security Agreement and Fixture Filing, made by and between the Borrower and the Administrative Agent, for the benefit of the Lenders, dated as of December 21, 2012.

“Second Omnibus Reaffirmation Agreement” means that certain Second Omnibus Amendment and Reaffirmation Agreement made by and among the Borrower, the Guarantors, WFPI and the Administrative Agent, for its benefit and the benefit of the Secured Parties, dated as of the Effective Date.

“Secured Party” means the Lenders, the Issuer, the Administrative Agent and each of their respective successors, transferees and assigns.

“Security” means all Real Property and personal property which is subject or is intended to become subject to the security interests or Liens granted by any of the Loan Documents.

“Security Agreement” means, on any date, the Security Agreement, as originally in effect on the Original Closing Date, between the Borrower and the Administrative Agent (for its benefit and the benefit of the Lenders) and as thereafter from time to time amended, supplemented, amended and restated or otherwise modified.

 

  

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“Solvency Certificate” means a solvency certificate to be executed and delivered by the chief financial or accounting Authorized Representative of the Borrower or any of the Guarantors substantially in the form of Exhibit E hereto.

“Stated Amount” of each Letter of Credit means the total amount available to be drawn under such Letter of Credit upon the issuance thereof.

“Stated Maturity Date” means April 2, 2018.

“Subsidiary” means, relative to any Person, any corporation, partnership or other business entity of which more than fifty percent (50%) of the outstanding Capital Stock (or other ownership interest) having ordinary voting power to elect the board of directors, managers or other voting members of the governing body of such Person (irrespective of whether at the time Capital Stock (or other ownership interest) of any other class or classes of such Person shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person or one or more other Subsidiaries of such Person.

“Subsidiary Guarantors” means, collectively, each of the Parent Guarantor's direct and indirect wholly-owned subsidiaries (other than the Borrower) set forth on Item 6.30 of the Disclosure Schedule and any other Subsidiary that becomes a Subsidiary Guarantor pursuant to a joinder agreement to the Guaranty in accordance with Section 7.2.8 hereof.

“Tax” means any federal, state, local, foreign or other tax, levy, impost, fee, assessment or other government charge, including income, estimated income, business, occupation, franchise, property, payroll, personal property, sales, transfer, use, employment, commercial rent, occupancy, franchise or withholding taxes, and any premium, including interest, penalties and additions in connection therewith.

“Tax Certificate” means a Tax Certificate substantially in the form of Exhibit H hereto.

“Title Insurer” means First American Title Insurance Company or any other nationally reputable title insurance company that is reasonably acceptable to the Administrative Agent.

“Title Policy” means the title insurance policy described in Section 5.1.18.

“Total Condemnation” means any condemnation or eminent domain proceeding or action (including but not limited to any transfer made in lieu of or in anticipation of the exercise of such taking) by any Governmental Instrumentality, whether for any permanent or temporary use, occupancy or other interest affecting such portion of the Property or the Improvements as, when so taken or condemned, would leave, in the Administrative Agent's good faith determination, a balance of the Property or Improvements that, due either to the area so taken or the location of the part so taken in relation to the part not taken, would not, under economic conditions, physical constraints, zoning laws, building regulations and other Legal Requirements then existing, readily accommodate a new or reconstructed building or buildings and other improvements of a type fully comparable to the Improvements prior to giving effect to of such taking or condemnation.

 

  

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“Trademark Security Agreement” means, on any date, the Trademark Security Agreement executed and delivered by an Authorized Representative of the Borrower, as originally in effect on the Original Closing Date, and as amended, supplemented, amended and restated or otherwise modified thereafter from time to time.

“Transaction” means the transactions contemplated by the Loan Documents.

“Trilliant” means Trilliant Gaming Nevada Inc., a Delaware corporation.

“Trilliant & H/2 Side Letter” means that certain letter agreement dated as of January 28, 2010 by and among Trilliant, H/2 Special Opportunities Ltd. and Foothill.

“UCC” means the Uniform Commercial Code of the jurisdiction the law of which governs the document with respect to the term used.

“Undrawn L/C Fee” is defined in Section 3.3.3.

“United States” or “U.S.” means the United States of America, its fifty states and the District of Columbia.

“Unsuitable Lender” is defined in clause (b) of Section 4.7.

“USA Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001), as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

“Welfare Plan” means a “welfare plan”, as such term is defined in Section 3(1) of ERISA.

“WFPI” means Wells Fargo Principal Investments, LLC, a Delaware limited liability company.

“Withdrawal Period” is defined in clause (b) of Section 4.7.

SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in each other Loan Document, the Disclosure Schedule, or any Borrowing Request, Compliance Certificate, notice or other communications delivered from time to time in connection with this Agreement or any other Loan Document.

SECTION 1.3 Cross-References. Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any item or clause are references to such item or clause of such Article, Section or definition.

 

  

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SECTION 1.4 Accounting and Financial Determinations. Unless otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, and all accounting determinations and computations hereunder or thereunder shall be made, in accordance with, those generally accepted accounting principles (“GAAP”) applied in the United States in the preparation of the unaudited financial statements of the Borrower, prepared as of the end of each Fiscal Year and a statement of earnings and cash flow of the Borrower for such Fiscal Year, as prepared by a nationally recognized independent public accountant acceptable to the Administrative Agent.

ARTICLE II

LOAN COMMITMENTS, NOTES AND EXTENSION OPTIONS

SECTION 2.1 Loan Commitment. On the terms and subject to the conditions of this Agreement (including, without limitation, Article II and Article V), (i) each Lender severally agrees to make Loans pursuant to its Loan Commitment as described in Sections 2.1.1, 2.1.2, and 2.1.3, (ii) the Issuer agrees that it will issue Letters of Credit, and (iii) each Revolving A Lender that has a Revolving A Loan Commitment severally agrees that it will purchase a participation interest in such Letters of Credit pursuant to Section 2.4.1 and that such Revolving A Lender shall fund promptly, to the extent of its then existing Revolving A Loan Commitment, the amount of any Letter of Credit Reimbursement Obligation required to be funded by such Revolving A Lender in accordance with Section 2.4.3. No Lender shall have any liability for the failure of another Lender to make its Loan Commitment available or to advance such Lender's Percentage of any Loans to be made to the Borrower; provided, however, any Lender hereunder shall have the right to fund such Defaulting Lender's Percentage of a Loan in which case the Lender's Percentage for the Defaulting Lender and such Lender funding such Defaulting Lender's Percentage of a Loan shall be adjusted to reflect such funding by such Lender and payments and repayments of amounts due to the Defaulting Lender shall be subject and subordinate to the repayment in full of the Lenders which are not Defaulting Lenders and such Defaulting Lender shall have no right to participate in any decision under Section 10.1.

SECTION 2.1.1 Loan Commitments. From time to time on any Business Day occurring from and after the Effective Date but prior to the applicable Loan Commitment Termination Date:

(a)     each Revolving A Lender that has a Revolving A Loan Commitment will make a revolving loan (relative to such Revolving A Lender, its “Revolving A Loan”) to the Borrower equal to such Revolving A Lender's Percentage of the aggregate amount of each Borrowing of the Revolving A Loans requested by the Borrower to be made on such day. The balance of the Revolving A Loan Commitments shall only be available to the Borrower from time to time to reimburse the Issuer for, or fund drawings of, one or more Letters of Credit up to the maximum aggregate Stated Amount of $5,000,000. The Revolving A Loan Commitment Amount shall not exceed $50,000,000 of which (x) all or a portion thereof may be used to reimburse the Issuer for draws under the Letters of Credit to be issued by the Issuer and delivered for the account of the Borrower and (y) the balance thereof, must be used by the Borrower in accordance with Section 7.1.8. On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow the Revolving A Loans, the proceeds of which shall be used by the Borrower in accordance with Section 7.1.8.

 

  

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(b)     each Revolving B Lender that has a Revolving B Loan Commitment will make a revolving loan (relative to such Revolving B Lender, its “Revolving B Loan”) to the Borrower equal to such Revolving B Lender's Percentage of the aggregate amount of each Borrowing of the Revolving B Loans requested by the Borrower to be made on such day. The Revolving B Loan Commitment Amount shall not exceed $5,000,000 and must be used by the Borrower in accordance with Section 7.1.8. On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow the Revolving B Loans, the proceeds of which shall be used by the Borrower in accordance with Section 7.1.8.

(c)     each Revolving C Lender that has a Revolving C Loan Commitment will make a revolving loan (relative to such Revolving C Lender, its “Revolving C Loan”) to the Borrower equal to such Revolving C Lender's Percentage of the aggregate amount of each Borrowing of the Revolving C Loans requested by the Borrower to be made on such day. The Revolving C Loan Commitment Amount shall not exceed $10,000,000 and must be used by the Borrower in accordance with Section 7.1.8. On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow the Revolving C Loans, the proceeds of which shall be used by the Borrower in accordance with Section 7.1.8.

SECTION 2.1.2 Letter of Credit Commitments. From time to time on any Business Day occurring from and after the Effective Date but prior to the Letter of Credit Commitment Termination Date, the Issuer will

(a)      issue one or more Letters of Credit in form reasonably satisfactory to the Borrower and the Issuer for the account of the Borrower in the Stated Amount requested by the Borrower on such day; or

(b)     extend the Letter of Credit Stated Expiry Date of an existing Letter of Credit previously issued in accordance with clause (a) of this Section 2.1.2 to a date not later than five (5) Business Days immediately preceding the Stated Maturity Date.

SECTION 2.1.3 Lenders Not Required to Make Loans. No Lender shall be required to make any Loan if, after giving effect thereto, the aggregate outstanding principal amount of:

(a)     all Revolving A Loans

(i)  of all Revolving A Lenders with a Revolving A Loan Commitment would exceed the Revolving A Loan Commitment Amount reduced by the aggregate amount of the outstanding Revolving A Loans and the aggregate amount of all Letter of Credit Outstandings issued by Revolving A Lenders; or

 

  

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(ii) of such Revolving A Lender with a Revolving A Loan Commitment would exceed such Revolving A Lender's Revolving A Loan Commitment reduced by the aggregate amount of such Revolving A Lender's outstanding Revolving A Loans and such Revolving A Lender's percentage of the aggregate amount of all Letter of Credit Outstandings;

(b)           all Revolving B Loans

(i)  of all Revolving B Lenders with a Revolving B Loan Commitment would exceed the Revolving B Loan Commitment Amount; or

(ii) of such Revolving B Lender with a Revolving B Loan Commitment would exceed such Revolving B Lender's Revolving B Loan Commitment reduced by the aggregate amount of such Revolving B Lender's outstanding Revolving B Loans; or

(c)           all Revolving C Loans

(i)  of all Revolving C Lenders with a Revolving C Loan Commitment would exceed the Revolving C Loan Commitment Amount; or

(ii) of such Revolving C Lender with a Revolving C Loan Commitment would exceed such Revolving C Lender's Revolving C Loan Commitment reduced by the aggregate amount of such Revolving C Lender's outstanding Revolving C Loans;

provided, however, in no event shall the foregoing prohibit or restrict any Lender from acquiring another Lender's Loan Commitment in accordance with Section 10.11.

SECTION 2.1.4      Issuer Not Required to Issue Letters of Credit. The Issuer shall not be required to issue any Letter of Credit if, after giving effect thereto (x) the aggregate amount of all Letter of Credit Outstandings would exceed the Letter of Credit Commitment Amount or (y) the sum of the aggregate amount of all Letter of Credit Outstandings plus the aggregate principal amount of all Revolving A Loans then outstanding would exceed the Revolving A Loan Commitment Amount.

SECTION 2.2 Reduction of the Loan Commitment Amount. The Borrower may, from time to time on any Business Day occurring after the Effective Date, voluntarily reduce, as applicable, the Loan Commitment Amount on the Business Day so specified by the Borrower; provided, however, that no such reduction of the Loan Commitment Amount shall apply to Letter of Credit Outstandings and all such reductions shall require at least one (1) Business Day's prior written notice to the Administrative Agent and be permanent. Any partial reduction of the Loan Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral multiple of $500,000. Any such reduction shall be made pro rata according to the respective Percentage of the relevant Lender.

 

  

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SECTION 2.3 Borrowing Procedure. Loans shall be made by the Lenders in accordance with this Section 2.3.

SECTION 2.3.1 Borrowing Procedure. On the terms and subject to the conditions of this Agreement, by delivering a Borrowing Request to the Administrative Agent on or before 10:00 a.m. Pacific time on a Business Day, the Borrower may from time to time irrevocably request, on not less than one Business Day's notice, that a Borrowing be made. On the terms and subject to the conditions of this Agreement, each Borrowing shall be made on the Business Day specified in such Borrowing Request. On or before 2:00 p.m. Pacific time on such Business Day, each Lender that has a Loan Commitment to make the Loans being requested shall deposit with the Administrative Agent same day funds in an amount equal to such Lender's Percentage of the requested Borrowing. Such deposit will be made to an account which the Administrative Agent shall specify from time to time by notice to the Lenders. To the extent funds are received from the Lenders, the Administrative Agent shall make such funds available to the Borrower by wire transfer to the account specified in the Borrowing Request.

SECTION 2.3.2 Loans. On the terms and subject to the conditions of this Agreement prior to a Loan Commitment Termination Event, the Borrower may from time to time irrevocably request that Loans in addition to Loans then outstanding be made by the Lenders. Any such request for such Loans shall be made in accordance with Section 2.3.1; provided, however, that any of the Loans which are advanced by the Lenders to reimburse the Issuer for, or fund draws under, a Letter of Credit shall be made in accordance with Sections 2.4.1 and 2.4.2.

SECTION 2.4 Letter of Credit Issuance Procedures. By delivering to the Administrative Agent a Letter of Credit Issuance Request on or before 11:00 a.m. Pacific time, on a Business Day prior to the Letter of Credit Commitment Termination Date, the Borrower may from time to time irrevocably request, on not less than two (2) Business Days' prior notice (or such later date and time as the Issuer may agree to, in the Issuer's sole and absolute discretion) in the case of a request for the extension of the Letter of Credit Stated Expiry Date of a Letter of Credit, that the Issuer issue, or extend the Letter of Credit Stated Expiry Date of, as the case may be, one or more irrevocable Letters of Credit for the purposes described in Section 7.1.8. Each Letter of Credit Issuance Request shall specify (a) the number of Letters of Credit to be issued (not to exceed three (3) Letters of Credit per request), (b) the proposed date of issuance (which shall be a Business Day), (c) the face amount of each Letter of Credit, (d) the Letter of Credit Stated Expiry Date, (e) the name and address of the beneficiary, (f) either the verbatim text of each proposed Letter of Credit or the proposed terms and conditions thereof and (g) a precise description of any documents to be presented by the beneficiary which, if presented by the beneficiary prior to the expiration date of the Letter of Credit, would require the Issuer to make payment under the Letter of Credit; provided, however, that the Issuer, in its reasonable discretion, may require changes in the text of any proposed Letter of Credit or any such documents; and provided further, however, that no Letter of Credit shall require payment against a conforming draft to be made thereunder on the same Business Day that such draft is presented in the office designated by the Issuer in such Letter of Credit if such presentation is made after 10:00 a.m. (in the time zone of such office of the Issuer) on such Business Day. Each Letter of Credit shall by its terms be stated to expire on a date (its “Letter of Credit Stated Expiry Date”) no later than the earlier to occur of (x) five (5) Business Days immediately preceding the Stated Maturity Date or (y) one (1) year from the date of its issuance. The Issuer will make available to the beneficiary thereof the original of each Letter of Credit which it issues hereunder. The issuance of a Letter of Credit under this Section 2.4 shall be deemed to be a Borrowing under the Loan Commitment in the Stated Amount of such Letter of Credit.

 

  

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SECTION 2.4.1 Other Lenders' Participation. Upon the issuance of each Letter of Credit pursuant hereto, and without further action, each Revolving A Lender (other than the Issuer) shall be deemed to have irrevocably purchased, to the extent of its Letter of Credit Commitment, a participation interest in each such Letter of Credit (including any Letter of Credit Reimbursement Obligation with respect thereto), and each Revolving A Lender shall, to the extent of its then existing Revolving A Loan Commitment, be responsible for funding promptly (and in any event within one (1) Business Day) to the Issuer the amount of any Letter of Credit Reimbursement Obligation which has not otherwise been reimbursed by the Borrower in accordance with Section 2.4.3. In addition, each Revolving A Lender shall, to the extent of its Loan Commitment, be entitled to receive interest payable pursuant to Section 3.2 with respect to any Letter of Credit Reimbursement Obligation. To the extent that a Revolving A Lender has reimbursed the Issuer for a Letter of Credit Disbursement as required by this Section 2.4.1, such Revolving A Lender shall be entitled to receive its ratable portion of any amounts subsequently received (from the Borrower or otherwise) in respect of such Letter of Credit Disbursement. The obligations of each Revolving A Lender under this Section 2.4.1 are obligatory on the part of each Revolving A Lender, such obligations of each Revolving A Lender shall be performed whether or not a Default exists hereunder and whether or not the conditions set forth in Article V have been satisfied, shall be absolute, unconditional, and irrevocable, and shall be performed by each Revolving A Lender strictly in accordance with the terms and provisions of this Agreement, under any and all circumstances and irrespective of any set-off, counterclaim, or defense to payment which the Revolving A Lenders, individually or collectively, may have or have had against the Issuer. Notwithstanding anything to the contrary in this Section 2.4.1, so long as any Letter of Credit is outstanding, each of the Revolving A Lenders shall have the absolute obligation to make a Revolving A Loan on behalf of the Borrower for the benefit of the Issuer in accordance with Section 2.4.2.

SECTION 2.4.2 Letter of Credit Disbursements. The Issuer will notify the Borrower and the Administrative Agent promptly of the presentment for payment of any Letter of Credit, together with notice of the date (the “Letter of Credit Disbursement Date”) such payment shall be made (each such payment, a “Letter of Credit Disbursement”). Immediately thereafter, the Administrative Agent shall give telephonic and facsimile notice to the Revolving A Lenders of the presentation of such sight draft, the amount of such sight draft, the date on which payment thereon has been or will be made, and the Percentage of each Revolving A Lender in the amount of such sight draft together with a copy of the sight draft and accompanying documents. A copy of such sight draft, together with such accompanying documents, shall, for purposes of this Agreement, be deemed to be a Borrowing Request for a Revolving A Loan to each of the Revolving A Lenders. Subject to the terms and provisions of such Letter of Credit, the Issuer shall make such Letter of Credit Disbursement to the beneficiary (or its designee) of such Letter of Credit. Prior to 11:00 a.m. Pacific time on the first Business Day following the date on which notice was given by the Administrative Agent to the Revolving A Lenders, the Revolving A Lenders shall advance as an obligatory advance hereunder a Revolving A Loan to the Administrative Agent (whether or not the Borrower has satisfied the conditions set forth in Article V of this Agreement), for the account of the Issuer, in an amount equal to such Revolving A Lender's Percentage of the amount which the Issuer has disbursed under such Letter of Credit, together with interest thereon for the period from the Letter of Credit Disbursement Date through the date of such reimbursement. The Revolving A Loans made pursuant to this Section 2.4.2 shall be applied to the payment of such sight draft (and at the election of the Issuer be advanced directly to the beneficiary) and shall not be used for any other purpose. Without limiting in any way the foregoing and notwithstanding anything to the contrary contained herein or in any separate application for any Letter of Credit, the Borrower hereby acknowledges and agrees that it shall be obligated to reimburse the Issuer upon each Letter of Credit Disbursement by means of a Borrowing of Revolving A Loans made pursuant to this Section 2.4.2. Upon the occurrence and during the continuance of any Default of the type described in Section 8.1.9, all Revolving A Loans made by any Lender pursuant to this Section 2.4.2 shall be deemed to be such Revolving A Lender's Letter of Credit Reimbursement Obligations in accordance with Section 2.4.3.

 

  

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SECTION 2.4.3 Reimbursement. The obligation (a “Letter of Credit Reimbursement Obligation”) of the Borrower under Section 2.4.2 to reimburse the Issuer with respect to each Letter of Credit Disbursement (including interest thereon), and, upon the failure of the Borrower to reimburse the Issuer, each Revolving A Lender's obligation under Section 2.4.1 to reimburse the Issuer, shall be absolute, unconditional and irrevocable under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower or such Revolving A Lender, as the case may be, may have or have had against the Issuer or any other Revolving A Lender, including any defense based upon the failure of any Letter of Credit Disbursement to conform to the terms of the applicable Letter of Credit (if, in the Issuer's good faith opinion, such Letter of Credit Disbursement is determined to be appropriate) or any non-application or misapplication by the beneficiary of the proceeds of such Letter of Credit; provided, however, that after paying in full its Letter of Credit Reimbursement Obligation hereunder, nothing herein shall adversely affect the right of the Borrower or such other Lender, as the case may be, to commence any proceeding against the Issuer for any wrongful Letter of Credit Disbursement made by the Issuer under a Letter of Credit as a result of acts or omissions in violation of the terms of this Agreement or constituting gross negligence or willful misconduct on the part of the Issuer.

SECTION 2.4.4 Deemed Letter of Credit Disbursements. Upon the occurrence and during the continuance of any Default of the type described in Section 8.1.9 or, with notice from the Administrative Agent, upon the occurrence and during the continuance of any other Event of Default,

(a)         an amount equal to that portion of all Letter of Credit Outstandings attributable to the then aggregate amount which is undrawn and available under all Letters of Credit issued and outstanding hereunder shall, without demand upon or notice to the Borrower, be deemed to have been paid or disbursed by the Issuer under such Letters of Credit (notwithstanding that such amount may not in fact have been so paid or disbursed); and

(b)        the Borrower shall be immediately obligated to reimburse the Issuer for the amount deemed to have been so paid or disbursed by such Issuer, in which case the last four sentences of Section 2.4.2 shall apply (the Administrative Agent shall endeavor to give notice to the Borrower of its obligations under this Section unless prohibited by applicable law).

 

  

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Any amounts so payable by the Borrower pursuant to this Section 2.4.4 shall be deposited in cash with the Administrative Agent and held as collateral security for the Obligations in connection with the Letters of Credit issued by the Issuer, and the Administrative Agent shall make disbursements thereof from time to time to reimburse the Issuer for payments made by the Issuer with respect to Letters of Credit. At such time when the Defaults giving rise to the deemed disbursements hereunder shall have been cured or waived, the Administrative Agent shall return to the Borrower all amounts then on deposit with the Administrative Agent pursuant to this Section which have not been applied to the partial satisfaction of such Obligations.

SECTION 2.4.5 Nature of Letter of Credit Reimbursement Obligations. The Borrower and, to the extent set forth in Section 2.4.1, each Revolving A Lender shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Issuer (except to the extent of its own gross negligence or willful misconduct) shall not be responsible for:

(a)     the form, validity, sufficiency, accuracy, genuineness or legal effect of any Letter of Credit or any document submitted by any party other than the Issuer in connection with the application for and issuance of a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged;

(b)     the form, validity, sufficiency, accuracy, genuineness or legal effect of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or the proceeds thereof in whole or in part, which may prove to be invalid or ineffective for any reason;

(c)     failure of the beneficiary to comply in all material respects with conditions required in order to demand payment under a Letter of Credit;

(d)     errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, facsimile or otherwise; or

(e)     any loss or delay in the transmission or otherwise of any document or draft required in order to make a Letter of Credit Disbursement under a Letter of Credit.

None of the foregoing shall affect, impair or prevent the vesting of any of the rights or powers granted to the Issuer or any Revolving A Lender hereunder. In furtherance and not in limitation or derogation of any of the foregoing, any action taken or omitted to be taken by an Issuer in good faith (and not constituting gross negligence or willful misconduct) shall be binding upon the Borrower and each such Revolving A Lender, and shall not put such Issuer under any resulting liability to the Borrower or any such Lender, as the case may be.

SECTION 2.5 Notes. Each Lender's Loans shall be evidenced by a Note payable to the order of such Lender in a maximum principal amount equal to such Lender's applicable Percentage of the applicable Loan Commitment Amount. The Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender's Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal of, and the Interest Rate of such Loans. Such notations shall be conclusive and binding on the Borrower absent manifest error; provided, however, that the failure of any Lender to make any such notations shall not limit or otherwise affect any Obligations of the Borrower or any other Person.

 

  

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SECTION 2.6 Register. The Borrower hereby designates the Administrative Agent to serve as the Borrower's agent, solely for the purpose of this clause, to maintain a register (the “Register”) on which the Administrative Agent will record each Lender's Loan Commitment, the Loans made by each Lender and each repayment in respect of the principal amount of the Loans, annexed to which the Administrative Agent shall retain a copy of each Lender Assignment Agreement delivered to the Administrative Agent pursuant to Section 10.11.1. Failure to make any recordation, or any error in such recordation, shall not affect the Obligations. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person in whose name a Loan is registered (or, if applicable, to which a Note has been issued) as the owner thereof for the purposes of all Loan Documents, notwithstanding notice or any provision herein to the contrary. Any assignment or transfer of a Loan Commitment or the Loans made pursuant hereto shall be registered in the Register only upon delivery to the Administrative Agent of a Lender Assignment Agreement that has been executed by the requisite parties pursuant to Section 10.11.1. No assignment or transfer of a Lender's Loan Commitment or Loans shall be effective unless such assignment or transfer shall have been recorded in the Register by the Administrative Agent as provided in this Section 2.6.

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

SECTION 3.1 Repayments and Prepayments; Application.

SECTION 3.1.1 Repayments and Prepayments.

(a)     The Borrower shall repay in full the unpaid principal amount of the Loans upon the Stated Maturity Date. Prior thereto, from time to time on any Business Day, the Borrower may make a voluntary prepayment, in whole or in part, of the outstanding principal amount of the Loans; provided, however, that

(i)       all payments and prepayments of Loans shall be made in Dollars;

(ii)      all such voluntary prepayments shall require at least one (1) but no more than five (5) Business Days' prior written notice to the Administrative Agent; and

(iii)     all such voluntary prepayments shall be in an aggregate minimum amount of $500,000 and in integral multiples of $500,000.

 

  

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(b)     The Borrower shall make a mandatory prepayment of the Loans (each, a “Mandatory Prepayment”) under the circumstances set forth below, all such prepayments to be applied as set forth in Section 3.1.2:

(i)      Within five (5) Business Days after a Change of Control and a demand for payment by the Administrative Agent, in the amount of all Obligations outstanding;

(ii)     Simultaneously upon a sale, transfer or conveyance of all or a portion of the Property (other than the Permitted Retail Transaction), in the amount of all Obligations outstanding; provided, however, if such sale, transfer or conveyance is a Permitted Asset Sale in accordance with Section 7.2.9 (except for the Permitted Retail Transaction) and the net proceeds thereof have not otherwise been used to fund the purchase or acquisition of replacement assets, then in the amount of one hundred percent (100%) of the net proceeds of such Permitted Asset Sale;

(iii)     Within five (5) Business Days following the acceleration of the Loans pursuant to Section 8.2 or Section 8.3, in the amount of all Obligations outstanding;

(iv)     Subject to the provisions of Section 7.1.15 relating to retention and/or reinvestment of Loss Proceeds, the Borrower shall prepay the Loans in an aggregate amount equal to one hundred percent (100%) of the Loss Proceeds within five (5) Business Days after receipt of the same;

(v)     Except in connection with Cash Contributions to Capital, simultaneously upon (a) the issuance, transfer or sale of Capital Stock of the Borrower, (b) any public offering or private placement of equity securities of the Borrower, (c) any issuance of a security of the Borrower that is convertible or exchangeable into common stock or preferred stock, (d) any other securities of the Borrower involving any refinancing, tender or restructuring of existing indebtedness or (e) any recapitalization, extraordinary dividend, spin-off or divestiture of the Borrower, in each case, in an amount equal to fifty percent (50%) of the net cash proceeds received by the Borrower from such issuance, transfer or sale, whether or not permitted pursuant to Section 7.2.9; and

(vi)     Except in connection with Cash Contributions to Capital or as permitted pursuant to Section 7.2.2, simultaneously upon any debt issuance, in an amount equal to one hundred percent (100%) of the net cash proceeds received by the Borrower or any of its Subsidiaries from such debt issuance.

In addition to the Mandatory Prepayments required to be made pursuant to this clause (b) of this Section 3.1.1, the obligation of any Lender to make a Loan shall automatically terminate in full upon the occurrence of any event listed in items (i), (ii) (to the extent such Mandatory Prepayment is for all Obligations outstanding) and (iii) of this clause (b) of this Section 3.1.1 and, upon the occurrence of any event listed in items (iv) and (vi) of this clause (b) of this Section 3.1.1, the Loan Commitments shall be permanently reduced by an amount equal to the Mandatory Prepayment required by such item.

 

  

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SECTION 3.1.2 Application. Amounts paid or prepaid pursuant to Section 3.1.1 shall be applied as set forth in this Section 3.1.2.

(a)     So long as no Event of Default has occurred and is continuing, the Administrative Agent shall apply all amounts received in accordance with the provisions of this Agreement first, to all Obligations (other than principal and interest on the Loans), second, to accrued and unpaid interest on the Loans and third, to the outstanding principal amount of the Loans until they are fully repaid.

(b)     After an Event of Default has occurred and is continuing, all amounts received by the Administrative Agent shall be applied first, to the fees, costs and expenses of protecting and preserving the security interests of the Secured Parties under the Loan Documents, second, to the fees, costs and expenses of protecting and preserving the Security, third, to the fees, costs and expenses of enforcing the rights of the Secured Parties under this Agreement and the other Loan Documents, fourth, to all other Obligations due under this Agreement and the other Loan Documents (other than principal and interest on the Loans), fifth, to the Lenders for accrued and unpaid interest on the Loans, and, after all amounts evidenced and secured by the Loan Documents have been indefeasibly paid in full and the Borrower has performed its obligations under the Loan Documents, the balance, if any, shall be delivered to the Borrower.

SECTION 3.2 Interest Provisions. Interest on the outstanding principal amount of Loans shall accrue and be payable in accordance with this Section 3.2.

SECTION 3.2.1 Interest Rates. Subject to Sections 5.1 and 5.2, pursuant to an appropriately delivered Borrowing Request, the Borrower may request that Loans be made prior to Loan Commitment Termination Event, accruing interest at a rate equal to the applicable Interest Rate for such Loans.

SECTION 3.2.2 Post-Default Rates. From and after the occurrence of an Event of Default, the Borrower shall pay, but only to the extent not prohibited by law, interest (after as well as before judgment) on the Loans at a rate per annum equal to the applicable Interest Rate for such Loans, plus two percent (2.00%).

SECTION 3.2.3 Payment Dates. Interest accrued on each Loan shall be payable in arrears, without duplication:

(a)     on the Stated Maturity Date;

(b)     on each Quarterly Payment Date; and

(c)     on that portion of any Loan the Stated Maturity Date of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such acceleration.

 

  

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Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand.

SECTION 3.3 Fees. The Borrower agrees to pay the fees set forth in the Fee Letter. All such fees shall be nonrefundable. In addition, the Borrower agrees to pay the following fees when due:

SECTION 3.3.1 Commitment Fee. From and after the Effective Date and until the Stated Maturity Date, a nonrefundable fee with respect to the Loans (the “Commitment Fee”) in the amount of one-half of one percent (0.50%) per annum of the aggregate amount of the then existing respective Loan Commitment Amounts shall accrue on the average daily amount of respective Loan Commitment Amounts not advanced. The Commitment Fee shall be payable in arrears to the Lenders on each Quarterly Payment Date in proportion to such Lender's respective then existing Loan Commitment Amount.

SECTION 3.3.2 Undrawn Letter of Credit Fee. From and after the date that a Letter of Credit is issued until such time as such Letter of Credit is fully drawn or, if applicable, returned to the Issuer, the Borrower agrees to pay to the Administrative Agent, for the account of the Revolving A Lenders, a nonrefundable Letter of Credit fee (the “Undrawn L/C Fee”) in the amount of three-quarters of one percent (0.75%) per annum of the average daily undrawn portion of any and all Letters of Credit, such fees being payable on each Quarterly Payment Date in arrears to the Revolving A Lenders in proportion to such Revolving A Lenders' respective Percentage of the Stated Amount of such Letter of Credit. The Borrower further agrees to pay in advance on each Quarterly Payment Date to the Issuer the issuance fee as specified in the Fee Letter.

SECTION 3.3.3 Letter of Credit Issuance Fee. On the date that a Letter of Credit is issued, the Borrower shall pay the Issuer its customary and standard nonrefundable fee (the “L/C Issuance Fee”) generally charged by the Issuer for issuing letters of credit similar to the Letter of Credit.

SECTION 3.4 Payments from Interest Reserve Account. Notwithstanding anything to the contrary contained in this Article III, the various fees, costs and charges that may be imposed pursuant to this Article III may be funded from the Interest Reserve Account in accordance with the terms and conditions of Section 7.1.16 hereof.

ARTICLE IV

CAPITAL COSTS, LENDER'S TAX AND CERTAIN OTHER PROVISIONS

SECTION 4.1 Increased Capital Costs. If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other Governmental Instrumentality affects the amount of capital required or expected to be maintained by any Lender or any Person controlling such Lender, and such Lender determines (in its good faith reasonable discretion) that the rate of return on its or such controlling Person's capital as a consequence of the Loan Commitments or the Loans made by such Lender is reduced to a level below that which such Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by such Lender to the Borrower, the Borrower shall immediately pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return. A statement of such Lender as to any such additional amount or amounts shall include calculations thereof in reasonable detail. In determining such amount, such Lender may use any method of averaging and attribution that it (determines in its good faith reasonable discretion) shall deem applicable.

 

  

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SECTION 4.2 Lender's Tax. All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder (including fees) shall be made free and clear of and without deduction for any present or future excise, stamp or franchise taxes and other taxes, income taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and other taxes based on a Lender's net income, gross income or gross receipts imposed on such Lender by a Governmental Instrumentality located in (i) the jurisdiction where such Lender is organized or (ii) any jurisdiction in which such Lender maintains a lending office which is applicable to the Transactions contemplated hereunder (each such non-excluded item being called a “Lender's Tax”). In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Lender's Tax pursuant to any applicable Legal Requirement, then the Borrower will upon written notice

(a)     pay directly to the relevant authority the full amount required to be so withheld or deducted;

(b)     promptly forward to the Administrative Agent an official receipt or other documentation satisfactory to the Administrative Agent evidencing such payment to such authority; and

(c)     pay to the Administrative Agent for the account of the Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required.

Moreover, if any Lender's Tax is directly asserted against the Administrative Agent or any Lender with respect to any payment received by the Administrative Agent or such Lender hereunder, the Administrative Agent or such Lender may pay such Lender's Tax and the Borrower will promptly pay upon written notice such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such Person after the payment of such Lender's Tax (including any Lender's Tax on such additional amount) shall equal the amount such Person would have received had not such Lender's Tax been asserted.

If the Borrower fails to pay upon written notice any Lender's Tax when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, the Borrower shall indemnify the Lenders for any incremental Lender's Tax, interest or penalties that may become payable by any Lender as a result of any such failure. For purposes of this Section 4.2, a distribution hereunder by the Administrative Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Borrower.

 

  

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Each Lender that is organized under the laws of a jurisdiction other than the United States or a State thereof (for purposes of this Section 4.2, a “Non-U.S. Lender”) must, prior to the date such Lender becomes a Lender hereunder (or in the case of a Lender that becomes a party to this Agreement pursuant to Section 4.7 or any Assignee Lender, before it becomes a party hereto) (a) execute and deliver to the Borrower and the Administrative Agent one or more (as the Borrower or the Administrative Agent may reasonably request) United States Internal Revenue Service Form W-8BEN, Form W-8ECI, Form W-9, a Tax Certificate or such other forms or documents (or successor forms or documents as the Internal Revenue Service may from time to time prescribe), appropriately completed, certifying in each case that such Lender or Assignee Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and an applicable Internal Revenue Service Form W-8BEN, Form W-8ECI or Form W-9 or successor applicable form (if required by law), as the case may be, establishing an exemption from United States backup withholding tax or (b) if such Non-U.S. Lender is not a “bank” or other Person described in Section 881(c)(3) of the Code and cannot deliver either Form W-8BEN or Form W-8ECI pursuant to clause (a) above, execute and deliver to the Borrower and the Administrative Agent one or more (as the Borrower or the Administrative Agent may reasonably request) copies of the Tax Certificate, Form W-8BEN or Form W-8ECI (or any successor form) and any other certificate or statement of exemption required under the Code or Treasury Regulations issued thereunder, appropriately completed, certifying that such Lender or Assignee Lender is entitled to receive payments under this Agreement without deduction or withholding of United States federal income tax and establishing an exemption from United States backup withholding tax. All Lenders, other than Non-U.S. Lenders, shall, prior to the date on which any Loan is made (or in the case of a Lender that becomes a party to this Agreement pursuant to Section 4.7 or is an Assignee Lender, before such Lender becomes a party hereto), execute and deliver to the Borrower and the Administrative Agent one or more copies (as the Borrower or the Administrative Agent may reasonably request) of United States Internal Revenue Form W-9 or applicable successor form (if required by law), as the case may be, to establish exemption from United States backup withholding tax.

Each Lender which undertakes to deliver to the Borrower a Tax Certificate, a Form W-8BEN, Form W-8ECI or Form W-9 pursuant to the preceding paragraph shall further undertake to deliver to the Borrower (x) two further copies of said Tax Certificate, Form W-8BEN, Form W-8ECI or Form W-9 (if required by law), or applicable successor forms, or other manner of certification, as the case may be, on or before the date that such form expires or becomes obsolete or after the occurrence of an event requiring a change in the most recent form delivered by it to the Borrower and the Administrative Agent and (y) such extensions or renewals thereof as may be reasonably requested by the Borrower or the Administrative Agent, certifying in the case of a Tax Certificate, Form W-8BEN or Form W-8ECI that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless in any case an event (including any change in treaty, law or regulation) has occurred prior to the date on which such delivery would otherwise be required which renders all forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender advises the Borrower and the Administrative Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax, and in the case of a Form W-8BEN, Form W-8ECI or Form W-9, establishing an exemption from backup withholding.

 

  

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SECTION 4.3 Payments, Computations, etc. Unless otherwise expressly provided, all payments by the Borrower pursuant to the Loan Documents shall be made by the Borrower to the Administrative Agent for the pro rata account of the Lenders entitled to receive such payment. All such payments required to be made to the Administrative Agent shall be made, without setoff, deduction or counterclaim, not later than 11:00 a.m. Pacific time on the date due, in same day or immediately available funds, to such account as the Administrative Agent shall specify from time to time by notice to the Borrower. Funds received after that time shall be deemed to have been received by the Administrative Agent on the next succeeding Business Day. The Administrative Agent shall promptly remit in same day funds to each Lender its share, if any, of such payments received by the Administrative Agent for the account of such Lender. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 365 days or, if appropriate, 366 days. Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment.

SECTION 4.4 Sharing of Payments. If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan (other than pursuant to the terms of Section 4.1 or Section 4.2) in excess of its pro rata share of payments then or therewith obtained by all Lenders, such Lender shall purchase from the other Lenders such participations in Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender's ratable share (according to the proportion of

(a)     the amount of such selling Lender's required repayment to the purchasing Lender

to

(b)     total amount so recovered from the purchasing Lender)

of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including pursuant to Section 4.5) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

 

  

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SECTION 4.5 Setoff. Each Lender shall, upon the occurrence and during the continuance of any Default described in Section 8.1.9 or, with the consent of the Required Lenders, upon the occurrence and during the continuance of any other Event of Default, have the right to appropriate and apply to the payment of the Obligations owing to it (whether or not then due), and (as security for such Obligations) the Borrower hereby grants upon the execution of this Agreement to each Lender a continuing security interest in, any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with such Lender; provided, however, that any such appropriation and application shall be subject to the provisions of Section 4.4. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Lender may have.

SECTION 4.6 Mitigation. Each Lender agrees that if it makes any demand for payment under Section 4.1 or Section 4.2, it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, as determined in its sole discretion) to designate a different lending office if the making of such a designation would reduce or obviate the need for the Borrower to make payments under Section 4.1 or Section 4.2.

SECTION 4.7 Replacement of Lenders. Each Lender hereby severally agrees as set forth in this Section.

(a)     If (i) any Lender (an “Affected Lender”) makes demand upon the Borrower for (or if the Borrower is otherwise required to pay) amounts pursuant to Section 4.1 or Section 4.2 and the payment of such additional amounts are, and are likely to continue to be, more onerous in the reasonable judgment of the Borrower than with respect to the other Lenders or (ii) a Lender becomes a Defaulting Lender, then, in each case of the foregoing, the Borrower or the Issuer may, within thirty (30) days of receipt by the Borrower or the Issuer of such demand or notice (or the occurrence of such other event causing the Borrower to be required to pay such compensation) or from the date that such Lender becomes a Defaulting Lender, as the case may be, give notice in writing to the Administrative Agent and such Affected Lender or such Defaulting Lender, as the case may be, of its intention to replace such Affected Lender or such Defaulting Lender, as the case may be, with a financial institution designated in such notice. The Administrative Agent agrees to use commercially reasonable efforts to assist the Borrower or the Issuer in replacing such Affected Lender or Defaulting Lender, as the case may be. If the Administrative Agent shall, in the exercise of its reasonable discretion and within thirty (30) days of its receipt of such notice, notify the Borrower or the Issuer and such Affected Lender or such Defaulting Lender, as the case may be, in writing that the designated financial institution is satisfactory to the Administrative Agent (such consent not being required where such financial institution is already a Lender or an Approved Fund), then such Affected Lender or such Defaulting Lender, as the case may be, shall assign, in accordance with Section 10.11.1, all of its Loan Commitments, Loans, beneficial interests in the Notes and other rights and obligations under this Agreement and all other Loan Documents to such designated financial institution; provided, however, that (x) such assignment shall be without recourse, representation or warranty (except as to (A) such Affected Lender's or such Defaulting Lender's, as the case may be, then existing Loan Commitments and the outstanding principal amount of Loans held by such Affected Lender or such Defaulting Lender, as the case may be, and (B) the absence of Liens arising by, through and under the Affected Lender or such Defaulting Lender, as the case may be) and shall be on terms and conditions reasonably satisfactory to such Affected Lender and such designated financial institution, (y) the purchase price paid by such designated financial institution shall be in the amount of such Affected Lender's or such Defaulting Lender's, as the case may be, Loans together with all accrued and unpaid interest and fees in respect thereof, plus all other amounts (including the amounts demanded and unreimbursed under Section 4.1 and Section 4.2), owing to such Affected Lender or such Defaulting Lender, as the case may be, hereunder and (z) the Borrower shall pay to such Affected Lender (but not to any Defaulting Lender) and the Administrative Agent all reasonable out-of-pocket expenses incurred by such Affected Lender (but not any Defaulting Lender) and the Administrative Agent in connection with such assignment and assumption (including the processing fees described in Section 10.11.1).

 

  

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(b)     If any Nevada Gaming Authority or any other gaming authority with jurisdiction over the gaming business of the Borrower, as the case may be, shall determine that any Lender (an “Unsuitable Lender”) does not meet the suitability standards prescribed under any applicable Nevada Gaming Law or the suitability standards of such gaming authority, as the case may be, the Borrower may give notice in writing to the Administrative Agent, the Issuer and such Unsuitable Lender of its intention to replace such Unsuitable Lender with a financial institution designated in such notice. If the Administrative Agent and the Issuer shall, in the exercise of their reasonable discretion and promptly following its receipt of such notice, notify the Borrower and such Unsuitable Lender in writing that the designated financial institution is satisfactory to the Administrative Agent and the Issuer (such consent not being required where such financial institution is already a Lender or an Approved Fund), then such Unsuitable Lender shall assign, in accordance with Section 10.11.1, all of its Loan Commitments, Loans, beneficial interests in the Notes and other rights and obligations under this Agreement and all other Loan Documents (including Letter of Credit Reimbursement Obligations, if applicable) to such designated financial institution; provided, however, that (i) such assignment shall be without recourse, representation or warranty (except as to (x) such Unsuitable Lender's then existing Commitment Amount(s) and the principal amount of Loans held by such Unsuitable Lender and (y) the absence of Liens arising by, through and under the Unsuitable Lender) and shall be on terms and conditions reasonably satisfactory to such Unsuitable Lender and such designated financial institution, (ii) the purchase price paid by such designated financial institution shall be in the amount of such Unsuitable Lender's Loans and its Percentage of outstanding Letter of Credit Reimbursement Obligations, together with all accrued and unpaid interest and fees in respect thereof, plus all other amounts (including the amounts demanded and unreimbursed under Sections 4.1 and 4.2), owing to such Unsuitable Lender hereunder and (iii) the Borrower shall pay to the Unsuitable Lender, the Administrative Agent and the Issuer all reasonable out-of-pocket expenses incurred by the Unsuitable Lender and the Administrative Agent in connection with such assignment and assumption (including the processing fees described in Section 10.11.1); provided further, however, that if the Borrower fails to find a substitute financial institution within any time specified by the appropriate gaming authority for the withdrawal of such Unsuitable Lender (the “Withdrawal Period”), the Borrower shall prepay in full the outstanding principal amount of the Loans made by such Unsuitable Lender (without giving effect to Section 4.4) and shall be deemed to have requested a reduction in each of the aggregate amounts of the Loan Commitment Amounts relating to all Loan Commitments held by such Lender, in each case, in an amount equal to such Unsuitable Lender's then existing Loan Commitment Amounts.

 

  

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(c)     Upon the effective date of an assignment described in clause (a) or (b), the Borrower shall issue a replacement Note or Notes, as the case may be, to such replacement Lender and such institution shall become a “Lender” for all purposes under this Agreement and the other Loan Documents. Upon any such termination or assignment, such replaced Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of any provisions of this Agreement which by their terms survive the termination of this Agreement.

ARTICLE V

CONDITIONS PRECEDENT TO EFFECTIVENESS AND LOANS

SECTION 5.1 Conditions Precedent to Loan Commitments and Effectiveness of this Agreement. The Lenders shall have no Loan Commitments hereunder, and this Agreement shall not be effective, until the prior satisfaction of each of the conditions precedent hereinafter set forth in this Section 5.1.

SECTION 5.1.1 Authority of the Borrower and the Guarantors. The Administrative Agent shall have received each of the following items, which items shall be in form and substance reasonably satisfactory to the Administrative Agent: (u) a certified copy of the Organizational Documents of the Borrower, certified by an Authorized Representative of the Borrower, (v) a certified copy of the Organizational Documents of each Guarantor, certified by an Authorized Representative of such Guarantor, (w) a copy of one or more resolutions or other authorizations of the Board of Managers or Board of Directors, as applicable, of the Borrower certified by the Authorized Representative of such Board of Managers or Board of Directors, as applicable, as being in full force and effect on the Effective Date, authorizing Loans herein provided for, and the execution, delivery and performance of this Agreement, and any Instruments required hereunder or thereunder to which each such Person is a party, (x) a copy of one or more resolutions or other authorizations of the Board of Managers or Board of Directors, as applicable, of each Guarantor certified by an Authorized Representative of such Board of Managers or Board of Directors, as applicable, as being in full force and effect on the Effective Date, authorizing Loans herein provided for, and the execution, delivery and performance of this Agreement, and any Instruments required hereunder or thereunder to which each such Person is a party, (y) a structure or organizational chart of the Borrower and each Guarantor in reasonable detail and (z) a copy of a good standing certificate, dated a date within thirty (30) days of the Effective Date, for the Borrower and each Guarantor, from the state of organization of each such Person.

 

  

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SECTION 5.1.2 Incumbency of the Borrower and the Guarantors. The Administrative Agent shall have received a certificate from the Borrower and each Guarantor, signed by an Authorized Representative of the Borrower and such Guarantor, respectively, and dated as of the Effective Date, as to the incumbency of the Person or Persons authorized to execute and deliver the Loan Documents and any instruments or agreements required hereunder or thereunder to which each such Person is a party.

SECTION 5.1.3 Corporate Proceedings. All corporate, limited liability company, partnership and legal proceedings and all instruments in connection with the Transactions contemplated by this Agreement and the other Loan Documents shall be reasonably satisfactory in form and substance to the Administrative Agent and the Administrative Agent shall have received all information, legal and technical opinions and copies of all documents, including records of corporate, limited liability company or partnership proceedings and copies of any approval by any Governmental Instrumentality required in connection with the Transactions contemplated by the Loan Documents, which the Administrative Agent may have requested in connection herewith, such documents to be satisfactory in form and substance to the Administrative Agent and where appropriate to be certified by the requisite corporate, limited liability company or partnership officers or Governmental Instrumentalities.

SECTION 5.1.4 Financial Information, etc. The Administrative Agent shall have received each of the following items, which items shall be in form and substance reasonably satisfactory to the Administrative Agent:

(a)     copies of the audited financial statements for the Fiscal Year ending on or about December 31, 2011 for the Borrower and each Guarantor and each of their respective Subsidiaries, including therein, without limitation, consolidated balance sheets and related statements of income, stockholders' equity and cash flows of each such Person, in each case prepared in accordance with GAAP and as audited by a nationally recognized independent public accountant acceptable to the Administrative Agent (in each case, without any Impermissible Qualifications), together with all unaudited financial statements of the Borrower and its Subsidiaries for all Fiscal Quarters ending after December 31, 2011 that have been prepared and finalized prior to the Effective Date; and

(b)     copies of unaudited financial statements for the calendar months ended within the thirty (30) day period prior to the Effective Date for each of the Borrower and each Guarantor and each of their respective Subsidiaries, including therein, without limitation, consolidated balance sheets and related statements of income, stockholders' equity and cash flows of each such Person, in each case, certified as complete and correct by the chief financial or accounting Authorized Representative of such Person and prepared in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes).

 

  

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SECTION 5.1.5 Permits. Copies of all material Permits that have been issued prior to the date hereof relating to the Property shall have been delivered to the Administrative Agent.

SECTION 5.1.6 Searches. The Borrower shall deliver such UCC, bankruptcy, judgment, federal and state tax Lien, and such other searches of public records as the Administrative Agent may reasonably require with respect to the Borrower, each Guarantor and the Property.

SECTION 5.1.7 Fees. All amounts required to be paid to or deposited with the Administrative Agent, the Lenders and the Issuer and all taxes, fees and other costs payable in connection with the execution and delivery of this Agreement and the conditions set forth in this Section 5.1, shall have been paid or deposited, as the case may be. The Borrower shall have paid all fees, expenses and other charges then due and payable by it or by the Administrative Agent under any agreements between the Borrower or the Administrative Agent, including, without limitation, all fees, costs and expenses due and payable pursuant to Section 3.3 and, if then invoiced, pursuant to Section 10.3.

SECTION 5.1.8 Information pursuant to Anti-Terrorism Laws. The Borrower and each of the Guarantors shall have supplied the Lenders, the Issuer and the Administrative Agent with all information required under the Lender's Customer Identification Program (as defined in the Anti-Terrorism Laws) as stipulated by the Anti-Terrorism Laws.

SECTION 5.1.9 No Material Adverse Effect. There exists no Material Adverse Effect.

SECTION 5.1.10 No Defaults. No Default shall have occurred and be continuing.

SECTION 5.1.11 No Restrictions.

(a)     The making of the Loans, the issuance of the Letters of Credit, the receipt of proceeds of the Loans by the Borrower or the Liens on the Security in favor of the Secured Parties shall not breach or be in conflict with any Instrument related to the Indebtedness of any Person that owns any Capital Stock of the Borrower.

(b)     The Lenders shall be authorized to make the Loans, and the Issuer shall be authorized to issue the Letters of Credit, to the Borrower under all Legal Requirements, and no order, judgment or decree of any court, arbitrator or Governmental Instrumentality shall purport to enjoin or restrain the Lenders, the Issuer or the Administrative Agent from entering into this Agreement or any of the other Loan Documents to which any of them is a party.

(c)     Neither the making of the Loans, nor the receipt of proceeds of the Loans by the Borrower or any Person that owns, directly or indirectly, any Capital Stock of the Borrower or any other direct or indirect equitable, legal or beneficial interest in the Borrower shall violate any Legal Requirements applicable to such Person including, without limitation, any of the Anti-Terrorism Laws. None of the Borrower or any Person which owns, directly or indirectly any Capital Stock or any other direct or indirect equitable, legal or beneficial interest in the Borrower shall be the subject of any of the Anti-Terrorism Laws.

 

  

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SECTION 5.1.12 No Violation of Certain Regulations. The entering into of the Loan Documents by the Borrower and each of the Guarantors shall not violate any law, including Regulation T, Regulation U or Regulation X of the Board of Governors of the FRS Board.

SECTION 5.1.13 Representations and Warranties. Both before and after giving effect to the Loan Commitments and the funding of each Borrowing, the representations and warranties contained in Article VI and each other Loan Document are accurate as if made on the Effective Date (except those that relate to a different date).

SECTION 5.1.14 Funding of Interest Reserve Account. The Administrative Agent shall have received satisfactory evidence that an amount equal to $5,000,000 shall have been funded into the Interest Reserve Account.

SECTION 5.1.15 Insurance.

(a)     Insurance in Effect. Insurance complying with the Insurance Requirements shall be in place and in full force and effect with respect to the Improvements and the Property.

(b)     The Borrower's Insurance Certificates. The Borrower shall have delivered to the Administrative Agent certificates of insurance naming the Administrative Agent as (i) an additional insured with respect to every commercial general liability policy and (ii) a mortgagee and loss payee with respect to every property policy, and such certificates shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent.

SECTION 5.1.16 Property Management Agreement. The Property Management Agreement shall be in full force and effect and no breach shall exist thereunder.

SECTION 5.1.17 Key Person Management Agreement. The Key Person Management Agreement shall be in full force and effect and no breach shall exist thereunder.

SECTION 5.1.18 Title Policy; Title Documents. The Borrower shall have caused the Title Insurer to issue an endorsement to the ALTA title policy issued in connection with the Deed of Trust (the “Title Policy”), insuring the continuing First Priority of the Lien of the Deed of Trust as Security for the Loans on the Effective Date and insuring that (i) since the Original Closing Date there has been no change in the condition of title unless permitted by the Loan Documents and (ii) there are no intervening Liens or encumbrances (including inchoate mechanic's liens) which may then or thereafter take priority over the Lien of the Deed of Trust (other than the Permitted Liens).

 

  

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SECTION 5.1.19 Zoning Information. The Administrative Agent shall have received such zoning information for the Property and the Improvements as shall be reasonably acceptable to the Administrative Agent, confirming that the Property can be used for its intended purposes.

SECTION 5.1.20 Delivery of Loan Documents. The Administrative Agent and the Lenders shall have received duly executed counterparts of each of the documents listed below:

(a)     Counterparts of this Agreement, each duly executed and delivered by an Authorized Representative of the Borrower, each Lender, the Issuer and the Administrative Agent.

(b)     One or more Revolving C Notes in the principal amount of the Revolving C Loans, each duly executed and delivered by an Authorized Representative of the Borrower.

(c)     Counterparts of the Second Amendment to Deed of Trust and the Second Amendment to Assignment of Leases and Rents, each duly executed and delivered by an Authorized Representative of the Borrower, together with evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of the Second Amendment to Deed of Trust and the Second Amendment to Assignment of Leases and Rents in the Official Records, in each case, as may be necessary or, in the reasonable opinion of the Administrative Agent, desirable effectively to continue the valid, perfected First Priority Lien of the Deed of Trust and the Assignment of Leases and Rents against the Property, subject only to Permitted Liens.

(d)     Counterparts of the Second Omnibus Reaffirmation Agreement, each duly executed and delivered by an Authorized Representative of the Borrower and each of the Guarantors.

(e)     Counterparts of the Borrower's Certificate, each duly executed and delivered by an Authorized Representative of the Borrower.

(f)     Counterparts of Solvency Certificates, each duly executed and delivered by an Authorized Representative of the Borrower and each of the Guarantors.

(g)     Counterparts of the Fee Letter, duly executed and delivered by an Authorized Representative of the Borrower and each of the Guarantors.

(h)     Counterparts of the Preferred Rights Fee Letter, duly executed and delivered by an Authorized Representative of the Borrower and each of the Guarantors.

SECTION 5.1.21 Opinions of Counsel. The Administrative Agent and the Lenders shall have received opinions from the Borrower's and each Guarantors' New York counsel and Nevada counsel (including opinions as to the non-impairment of any Liens or security interests created under, or any guarantees made under, any Loan Document in favor of the Administrative Agent for the benefit of the Secured Parties), each addressed to the Administrative Agent, the Issuer and the Lenders which shall be in form and substance satisfactory to the Administrative Agent and the Lenders.

 

  

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SECTION 5.1.22 Service of Process. The Administrative Agent shall have received a conformation letter from a process agent, in form and substance satisfactory to the Administrative Agent, consenting to its appointment by the Borrower and each of the Guarantors as each such Person's agent to receive service of process located in New York, New York.

SECTION 5.1.23 Other Documents. The Administrative Agent and the Lenders shall have received such other documents and evidence as the Administrative Agent and the Lenders may reasonably request in connection with the Transactions.

SECTION 5.1.24 Satisfactory Form and Substance. All documents, closing certificates, resolutions, and certificates executed or submitted pursuant to Section 5.1 by the Borrower and each of the Guarantors, as applicable, shall be reasonably satisfactory in form and substance to the Administrative Agent, the Lenders and their respective counsels, and the Administrative Agent, the Lenders and their respective counsels shall have received all information, approvals, opinions, documents or instruments as the Administrative Agent, the Lenders or their respective counsel may reasonably request.

SECTION 5.1.25 Loan Documents. Each Loan Document shall be in full force and effect, without amendment since the respective date of its execution and delivery (other than amendments which are permitted by this Agreement or which have otherwise been approved by the Administrative Agent and the Lenders and, in each case, which have been delivered to the Administrative Agent and the Lenders), and in a form which was approved by the Administrative Agent and the Lenders, except as otherwise permitted pursuant to this Agreement. All obligations and requirements thereunder which are to be performed or satisfied, as the case may be, shall have been performed and satisfied in all material respects and both before and after giving effect to this Agreement and any Instruments required hereunder, no act, condition or event shall exist which, with the giving of notice and/or passage of time would constitute a breach or event of default thereunder.

SECTION 5.2 Conditions Precedent to all Loans and the Issuance of Letters of Credit. Not in limitation but in furtherance of the other conditions in this Agreement and the other Loan Documents after the Effective Date, the following conditions shall be satisfied prior to making any Loan or issuing any Letters of Credit; provided, however, the following conditions shall not apply to Sections 2.4.2, 2.4.3, 2.4.4 and 2.4.5.

SECTION 5.2.1 Commitment Conditions. The continued satisfaction of each of the conditions enumerated in Sections 5.1.1, 5.1.2, 5.1.3 and 5.1.4.

SECTION 5.2.2 Compliance with Warranties, No Default, etc. Both before and after giving effect to any Borrowing the following shall be true and correct:

(a)     the accuracy of the representations and warranties contained in Article VI as if made on the date of the Borrowing (except those that relate to a different date) unless the failure of the foregoing to be the case could not reasonably be expected to result in a Material Adverse Effect;

 

  

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(b)     except as disclosed by the Borrower to the Administrative Agent pursuant to Section 6.7 there exists

(i)     no material litigation which could reasonably be expected to have a Material Adverse Effect or which purports to affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document; and

(ii)     no material development shall have occurred in any litigation disclosed pursuant to Section 6.7 which could reasonably be expected to have a Material Adverse Effect.

SECTION 5.2.3 No Events of Default. No Default or Event of Default shall have occurred and be continuing or, after giving effect to such Borrowing, could reasonably be expected to result, as certified by the Borrower in the relevant Borrowing Request.

SECTION 5.2.4 Borrowing Request. The Administrative Agent shall have received a Borrowing Request for the Loan being requested or a Letter of Credit Issuance Request if a Letter of Credit is being requested or extended together with all attachments, exhibits and certificates which conform to the requirements of Section 2.3 or Section 2.4, as applicable. Each delivery of a Borrowing Request or Letter of Credit Issuance Request and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing (both immediately before and after giving effect to such Borrowing and the application of the proceeds thereof) the statements made in Section 5.2.2 and Section 5.2.3 are true and correct in all material respects.

SECTION 5.2.5 Additional Documents. With respect to any Loan Documents entered into or obtained, transferred or required since the date of the most recent Borrowing (if a subsequent Borrowing) there shall be redelivery of such matters as are described in Section 5.1.2, Section 5.2.9 (to the extent such Loan Document is in substitution of or is a replacement for another Loan Document) and, if requested by the Administrative Agent, Section 5.1.1, in each case to the extent not previously addressed. If such delivery or redelivery has not been made, the Borrowing shall not be made by the Administrative Agent until the conditions set forth herein have been satisfied.

SECTION 5.2.6 Title Insurance Policy Endorsements. The Administrative Agent shall have received an endorsement to the Title Policy in the form of an ALTA Revolving Loan Endorsement insuring the continuing First Priority of the Lien of the Deed of Trust as security for the Borrowing on the date such Borrowing is made and insuring that (i) there has been no change in the condition of title unless permitted by the Loan Documents and (ii) there are no intervening Liens or encumbrances (including inchoate mechanic's Liens) which may then or thereafter take priority over the Lien of the Deed of Trust or the Borrowing. The Lenders will not be required to make any Loans and the Issuer will not be required to issue any Letters of Credit while there exist any mechanics' Lien Claims against all or part of the Property or the Improvements (unless the Borrowing will be used to discharge such mechanic's lien Claims or unless the Borrower shall have delivered a bond in form and substance satisfactory to the Administrative Agent and in such amount determined by the Administrative Agent in its reasonable judgment to be adequate to cover the payment of such Lien).

 

  

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SECTION 5.2.7 No Restriction. No order, judgment or decree of any court, arbitrator or Governmental Instrumentality shall purport to enjoin or restrain the Borrower or any of the Guarantors, the Administrative Agent, the Issuer and/or any of the Lenders from making the Borrowing or issuing the Letter of Credit to be made by it on the date set forth in the Borrowing Request or the Letter of Credit Issuance Request, as applicable.

SECTION 5.2.8 Fees, Expenses, etc. All amounts required to be paid to or deposited with the Administrative Agent by the Borrower or any Guarantor and all taxes, fees and other costs payable in connection with the execution, delivery, recordation and filing of the documents and Instruments referred to in Section 5.1 and this Section 5.2 shall have been paid or deposited, as the case may be, in full. The Borrower shall have paid or arranged for payment out of the requested Borrowing or otherwise all fees, expenses and other charges then due and payable by it under this Agreement or the other Loan Documents, including, without limitation, all fees, costs and expenses due and payable pursuant to Section 3.3 and Section 10.3, if then invoiced.

SECTION 5.2.9 Loan Documents. Each of the Loan Documents shall be in full force and effect without amendment since the respective date of its execution and delivery, except as otherwise permitted pursuant to this Agreement and each certificate delivered by the Borrower with respect to any such document shall be true and correct in all material respects, as certified by the Borrower in the relevant Borrowing Request or Letter of Credit Issuance Request. All obligations and requirements thereunder which are to be performed or satisfied, as the case may be, shall have been performed and satisfied in all material respects and both before and after giving effect to this Agreement and any Instruments required hereunder, no act, condition or event shall exist which, with the giving of notice and/or passage of time would constitute a breach or event of default thereunder.

SECTION 5.2.10 Security Interests. All actions necessary or desirable (including all filings) in the opinion of the Administrative Agent to perfect or continue the perfection of the Administrative Agent's security interests in the Security having the exclusive First Priority contemplated therefor by this Agreement and the other Loan Documents (subject only to Permitted Liens) shall have been taken or made. All property, rights and assets required for the Property and the Improvements shall be free and clear of all Liens and encumbrances except for the Permitted Liens.

SECTION 5.2.11 No Restrictions. No order, judgment or decree of any court, arbitrator or Governmental Instrumentality shall purport to enjoin or restrain the Lenders, the Issuer or the Administrative Agent from making the requested Borrowing or issuing the requested Letter of Credit, as applicable, and no Legal Requirement shall prohibit, prevent or impair the Borrower or any Guarantor from performing their obligations under the Loan Documents to which they are a party or the ability of the Borrower to own and operate the Property and the Improvements. Neither the making of the requested Borrowing or the issuance of the requested Letter of Credit, nor the receipt of proceeds of the Loans by the Borrower or any Person which owns, directly or indirectly, any Capital Stock of the Borrower or any Guarantor (excluding any Capital Stock traded on a public exchange) or any other direct or indirect equitable, legal or beneficial interest in any such Person violates any Legal Requirement applicable to such Person including, without limitation, any of the Anti-Terrorism Laws. None of the Borrower, any Guarantor or any other Person which owns, directly or indirectly any Capital Stock or any other direct or indirect equitable, legal or beneficial interest in any such Person shall be the subject of any of the Anti-Terrorism Laws.

 

  

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SECTION 5.2.12 Required Documents. At least five (5) Business Days prior to the requested Borrowing or Letter of Credit, the Administrative Agent shall have received such other Instruments, documents and information pertaining to the Borrowing or Letter of Credit as the Administrative Agent or the Issuer, as applicable, may reasonably request, all in form and substance satisfactory to the Administrative Agent, the Lenders and, if applicable, the Issuer.

SECTION 5.2.13 Satisfactory Legal Form. All documents, certificates and/or instruments executed or submitted pursuant hereto by or on behalf of the Borrower, any of the Guarantors and any other Person shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel, shall satisfy the applicable provisions of Section 7.1.10 and the Administrative Agent and its counsel shall have received all information, approvals, opinions, documents or instruments as the Administrative Agent or its counsel may reasonably request.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

In order to induce the Lenders, the Administrative Agent and the Issuer to enter into this Agreement and to make the Loans and/or issue Letters of Credit hereunder, the Borrower represents and warrants unto the Administrative Agent, the Issuer and each Lender as set forth in this Article VI.

SECTION 6.1 Organization, etc. The Borrower and each of the Guarantors is validly organized and existing and in good standing under the laws of the state or jurisdiction of such Person's organization, is duly qualified to do business and is in good standing in each jurisdiction where the nature of its business requires such qualification; and has full power and authority and holds all requisite Permits to enter into and perform its Obligations under this Agreement and each of the other Loan Documents to which it is a party, and to consummate the Transactions and conduct its business as currently conducted by it and as contemplated by the Transactions.

SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution, delivery and performance by the Borrower and each of the Guarantors of each of the Loan Documents to which it is a party, and participation by the Borrower and each of the Guarantors, in the consummation of all aspects of the Transactions, and the execution, delivery and performance by the Borrower and each of the Guarantors of the other agreements executed and delivered in connection with the Transactions are, in each case, within such Person's powers, have been duly authorized by all necessary action, and do not

 

  

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(a)     contravene any of such Person's Organizational Documents;

(b)     contravene any contractual restriction binding on or affecting such Person;

(c)     contravene any Legal Requirement binding on or affecting such Person or the Property; or

(d)     result in, or require the creation or imposition of, any Lien on any portion of the Property (except as expressly permitted or required by this Agreement).

SECTION 6.3 Governmental Approval, Regulation, etc. No authorization or approval or other action by, and no notice to or filing with, any Governmental Instrumentality or regulatory body or other Person (other than those that are not required to have been made until after the Effective Date, and except for filings and registrations of any UCC financing statements, the Deed of Trust or intellectual property filings (all of which have been duly executed and delivered to the Administrative Agent on the Original Closing Date by the Borrower) necessary to record the Lenders' security interest in certain personal, real or intellectual property included in the Security) is required for the due execution, delivery or performance by the Borrower and each of the Guarantors of this Agreement and any other Loan Document to which it is a party, in each case, by the parties thereto, or the consummation of the Transactions.

SECTION 6.4 Validity, etc. Each of the Loan Documents will, on the due execution and delivery thereof by the Borrower and each Guarantor, constitute the legal, valid and binding obligation of such Person enforceable against it in accordance with its terms (except, in any case above, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally and by principles of equity).

SECTION 6.5 No Material Misstatement. The Borrower represents that (a) all factual information that has been or will be made available to the Administrative Agent, the Issuer or the Lenders by or on behalf of the Borrower is or will be, when furnished, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a fact or omit to state a fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements are made and (b) the projections that have been made available to the Administrative Agent, the Issuer or the Lenders by or on behalf of the Borrower have been prepared in good faith based upon reasonable assumptions.

SECTION 6.6 No Material Adverse Effect. There exists no Material Adverse Effect.

SECTION 6.7 Litigation, Labor Controversies, etc. There is no pending litigation, action, proceeding, labor controversy or other event which could affect the legality, validity or enforceability of this Agreement, the Notes or any other Loan Document, except as disclosed in Item 6.7 of the Disclosure Schedule.

 

  

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SECTION 6.8 Taxes.

(a)     The Borrower and each of the Guarantors have filed, or caused to be filed, all tax and informational returns that are required to have been filed by such Person in any jurisdiction, and have paid all Taxes shown to be due and payable on such returns and all other taxes and assessments payable by such Person, to the extent the same have become due and payable (other than those Taxes that it is contesting in good faith and by appropriate proceedings, with adequate, segregated reserves established for such Taxes) and, to the extent such Taxes are not due, has established reserves therefor by allocating amounts that are adequate for the payment thereof and are required by GAAP.

(b)     Neither the Borrower nor any Guarantor has incurred any Tax liability in connection with the Property or the other Transactions contemplated by the Loan Documents which has not been disclosed in writing to, and approved by, the Administrative Agent, except as set forth in Item 6.8(b) of the Disclosure Schedule.

SECTION 6.9 Pension and Welfare Plans. No steps have been taken by the Borrower or any Guarantor to terminate any Pension Plan, and no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which would reasonably be expected to result in a Material Adverse Effect. Except as disclosed in Item 6.9 in the Disclosure Schedule, neither the Borrower nor any Guarantor has any material Contingent Liability with respect to any post-retirement benefit under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Title I of ERISA.

SECTION 6.10 Permits. There are no material Permits that are required or will become required for the ownership and operation of the Property as it is presently operated other than the Permits described in Schedule II. Each Permit described in Schedule II as required to be obtained by the Effective Date is in full force and effect and is not subject to any appeals or further proceedings (other than with respect to renewal of such Permit from time to time) or to any unsatisfied condition (that is required to be satisfied by the Effective Date) that may allow modification or revocation. Each Permit described in Schedule II as not required to have been obtained by the Effective Date is of a type that is routinely granted on application except for approvals, licenses, authorizations and findings of suitability required under Nevada Gaming Laws for the operation of the Property as a casino or for the sale of alcoholic beverages. The Borrower is not in violation of any condition in any Permit that may reasonably be expected to result in a Material Adverse Effect.

SECTION 6.11 Representations and Warranties. As of the Effective Date, all representations and warranties of the Borrower and each Guarantor contained in the Loan Documents are true, correct and complete in all material respects and the Borrower hereby confirms each such representation and warranty made by it with the same effect as if set forth in full herein.

SECTION 6.12 Environmental Warranties. Except as set forth in Item 6.12 in the Disclosure Schedule and as set forth in the Environmental Reports delivered in connection with the Existing Loan Agreement:

 

  

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(a)     all facilities and property (including underlying groundwater) owned or leased by the Borrower have been, and continue to be, owned or leased by the Borrower in material compliance with all Environmental Laws;

(b)     there have been no past, and, to the Knowledge of the Borrower, there are no pending or threatened

(i)      Claims, complaints, notices or requests for information received by the Borrower with respect to any alleged violation of any Environmental Law, or

(ii)     complaints, notices or inquiries to the Borrower regarding potential liability under any Environmental Law relating to any Real Property;

(c)     to the Knowledge of the Borrower, there have been no Releases of Hazardous Substances at, on or under the Property that, singly or in the aggregate, have, or may reasonably be expected to have, a Material Adverse Effect;

(d)     the Borrower has been issued and is in compliance with all material Permits, approvals and other authorizations relating to Environmental Matters which are necessary for its businesses;

(e)     no property now or previously owned or leased by the Borrower is listed or proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up;

(f)      to the Knowledge of the Borrower, there are no current underground storage tanks, active or abandoned, including petroleum storage tanks, on or under the Land;

(g)     the Borrower has not directly transported or directly arranged for the transportation of any Hazardous Substances to any location which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the subject of federal, state or local enforcement actions or other investigations which could reasonably be expected to result in a Material Adverse Effect;

(h)     to the Knowledge of the Borrower, there are no polychlorinated biphenyls or friable asbestos present at the Property; and

(i)      to the Knowledge of the Borrower, no conditions exist at, on or under the Property which, with the passage of time, or the giving of notice or both, would give rise to a Material Adverse Effect under any Environmental Law.

SECTION 6.13 Intellectual Property. The Borrower owns or licenses (as the case may be) all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights and copyrights as the Borrower considers necessary for the conduct of the businesses of the Borrower without any infringement upon rights of other Persons and there is no individual patent, patent right, trademark, trademark right, trade name, trade name right, service mark, service mark right or copyright, the loss of which would result in a Material Adverse Effect except as may be disclosed in Item 6.13 in the Disclosure Schedule.

 

  

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SECTION 6.14 Regulations U and X. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Loans will be used to purchase or carry margin stock or otherwise for a purpose which violates, or would be inconsistent with, F.R.S. Board Regulation U or X. Terms for which meanings are provided in F.R.S. Board Regulation U or X or any regulations substituted therefor, as from time to time in effect, are used in this Section 6.14 with such meanings.

SECTION 6.15 Security Interests.

(a)     The security interests granted to the Secured Parties pursuant to the Loan Documents (i) constitute, as to personal property included in the Security, subject to the Nevada Gaming Laws, the filings, registrations and recordations set forth on Schedule IV hereto and, with respect to subsequently acquired personal property included in the Security, will constitute, a perfected security interest under the UCC and/or other applicable law, except for any subsequently issued certificate or instrument that constitutes collateral thereunder which will be perfected upon the delivery of such certificate or instrument to the Administrative Agent, and (ii) have been, and, with respect to such subsequently acquired property will be, perfected under the UCC and/or other applicable law as aforesaid, with (A) the First Priority contemplated thereby and (B) as between the Secured Parties and any third Persons, superior priority and rights over the rights of any such third Persons now existing or hereafter arising whether by way of mortgage, deed of trust, lien, security interests, encumbrance, assignment or otherwise, subject to Permitted Liens. All such action as is necessary has been taken to establish and perfect the Secured Parties' rights in and to the Security, including any recording, filing, registration, giving of notice or other similar action, subject to the filings, registrations and recordations set forth on Schedule IV hereto. As of the Effective Date, no filing, registration, recordation, re-filing or re-recording other than those listed on Schedule IV hereto is necessary to perfect and maintain the perfection of the interest, title or Liens of the Loan Documents, and on the Effective Date, all such filings or recordings will have been made except for any filings or recordings for Liens as to which the Title Insurer has issued or committed to issue a Title Policy. The Borrower has properly delivered or caused to be delivered to the Administrative Agent all Security that requires perfection of the Lien and security interest described above by possession.

(b)     No authorization, approval or other action by, and no notice to or filing with, any Governmental Instrumentality is required (except for those by or with the Nevada Gaming Authorities) for either (i) the pledge or grant by the Borrower of the Liens purported to be created in favor of the Secured Parties pursuant to any of the Loan Documents or (ii) the exercise by the Administrative Agent and the other Secured Parties of any rights or remedies in respect of any Security (whether specifically granted or created pursuant to any of the Loan Documents or created or provided for by applicable law), except for filings or recordings contemplated by clause (a) of this Section 6.15 or as set forth on Schedule IV hereto.

 

  

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(c)     Except such as may have been filed in favor of the Secured Parties as contemplated by clause (a) of this Section 6.15 as set forth on Schedule IV hereto or with respect to those Liens permitted under Section 7.2.3, no effective UCC financing statement, fixture filing or other instrument similar in effect covering all or any part of the Security is on file in any filing or recording office.

SECTION 6.16 Existing Defaults. There is no Default that has occurred and is continuing under any of the Loan Documents.

SECTION 6.17 Contingent Liabilities. The Borrower has no Contingent Liabilities in respect of Indebtedness except those authorized under, disclosed under or contemplated by the Loan Documents and not prohibited by this Agreement.

SECTION 6.18 Business, Debt, Contracts, etc. The Borrower has not conducted any business other than the business contemplated by the Loan Documents. The Borrower has no outstanding Indebtedness other than Indebtedness incurred, disclosed or permitted under the Loan Documents or liabilities other than those incurred, disclosed or permitted under the Loan Documents.

SECTION 6.19 Utilities. All utility services necessary for the operation of the Property for its intended purposes are available at the Property on commercially reasonable terms.

SECTION 6.20 Sufficiency of Interests. The Borrower does not own, lease or hold any option to own or lease any Real Property other than the Property, the Improvements thereon and the property listed in Item 6.20 of the Disclosure Schedule. Except for the Permitted Liens, the Borrower (x) owns good and marketable fee simple title to the Property, free and clear of all Liens and (y) has good legal and beneficial title to the property, assets and revenues on which it purports to grant Liens pursuant to the Loan Documents. The Borrower owns all of the property interests and has entered into all documents and agreements necessary to own the Property and to operate the Property in accordance with all Legal Requirements and as contemplated in the Loan Documents.

SECTION 6.21 Foreign Person. The Borrower is not a “foreign person” within the meaning of Sections 1445 or 7701 of the Code.

SECTION 6.22 Building Code Violations. Except as may be disclosed in Item 6.22 of the Disclosure Schedule, the Borrower represents that it has received no written notice from any Governmental Instrumentality of any material building or other similar violation with respect to the Property or the Improvements thereon and the Borrower does not otherwise have actual Knowledge that there are no such violations, other than violations either first occurring after the Effective Date.

SECTION 6.23 Fees and Enforcement. Other than amounts that have been paid in full or will have been paid in full by the Effective Date or the date when due for same, to the Borrower's Knowledge, no fees, Impositions or Taxes, including stamp, transaction, registration or similar taxes, are required to be paid for the legality, validity or enforceability of any of the Loan Documents.

 

  

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SECTION 6.24 ERISA Compliance. The Borrower and each member of the Controlled Group have fulfilled their obligations (if any) under the minimum funding standards of ERISA and the Code for each Pension Plan in compliance in all material respects with the currently applicable provisions of ERISA and the Code and have not incurred any material liability to the PBGC or a Pension Plan under Title IV of ERISA (other than liability for premiums due in the ordinary course). Neither the execution of this Agreement or the other Loan Documents nor the consummation of the Transactions is reasonably expected to constitute a “prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Code which is not exempt under (i) Section 408 of ERISA, (ii) under Section 4975(d) of the Code, (iii) regulations thereunder or (iv) an individual or class exemption.

SECTION 6.25 Labor Disputes; Acts of God; Casualty and Condemnation. As of the date hereof, neither the Improvements nor the business of the Borrower is affected by any strike, lockout or other labor dispute, act of the public enemy, or Event of Loss, except as set forth in Item 6.25 in the Disclosure Schedule. As of the date hereof, there is no proceeding of the type described in clauses (y) and (z) in the definition of Event of Loss is pending or, to the best Knowledge of the Borrower, threatened, affecting all or a portion of the Property or the Improvements.

SECTION 6.26 Liens. Except for Permitted Liens, the Borrower has not secured or agreed to secure any Indebtedness by any Lien upon any of its present or future revenues or assets or upon the Borrower's Equity Interests. The Borrower does not have outstanding any Lien or obligation to create Liens on or with respect to the Property, the Improvements or revenues therefrom other than Permitted Liens.

SECTION 6.27 Offices; Location of Collateral.

(a)     The chief executive office or chief place of business (as such term is used in Article 9 of the Uniform Commercial Code as in effect in the State of New York from time to time) of the Borrower is located in Clark County, Nevada. The Borrower's federal employer identification number is 27-0295690 and its organizational identification number is E0296852009-0.

(b)     All of the Security is, or when installed will be, located on the Property except as otherwise disclosed in Item 6.27 of the Disclosure Schedule.

(c)     The Borrower's books of accounts and records are located at the Property.

SECTION 6.28 Government Regulation. None of the Borrower nor any Guarantor is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act or the Interstate Commerce Act or registration under the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness, other than the Nevada Gaming Laws (from and after the date that such Person holds any Gaming License), or which may otherwise render all or any portion of the Obligations unenforceable. Incurrence of the Obligations under the Loan Documents complies with all applicable provisions of the Nevada Gaming Laws.

 

  

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SECTION 6.29 Brokers. The Borrower represents that no broker or finder was responsible for or involved with the parties in connection with the transactions contemplated by this Agreement and the other Loan Documents and that there is no obligation for the payment of any brokerage commission, compensation or fee of any kind with respect to this Agreement or any other Loan Document.

SECTION 6.30 Subsidiaries. The Borrower represents that:

(a)     100% of the Capital Stock of Holdings Intermediary is owned directly by Holdings;

(b)     100% of its Capital Stock is owned directly by Holdings Intermediary; and

(c)     it has no Subsidiaries and that the Parent Guarantors have no Subsidiaries except for those listed on Item 6.30 of the Disclosure Schedule.

SECTION 6.31 Anti-Terrorism Laws.

SECTION 6.31.1 Anti-Terrorism Laws. None of the Borrower, any Guarantor nor, to Borrower's Knowledge, any of their respective Affiliates is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

SECTION 6.31.2 Executive Order No. 13224. None of the Borrower, any Guarantor nor, to Borrower's Knowledge, any of their respective Affiliates is any of the following (each a “Blocked Person”):

(a)     a Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;

(b)     a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;

(c)     a Person or entity with which any bank or other financial institution is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(d)     a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224;

(e)     a Person or entity that is named as a “specially designated national” on the most current list published by OFAC at its official website or any replacement website or other replacement official publication of such list; or

(f)      a Person who is affiliated with a Person listed above.

 

  

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Neither the Borrower, any Guarantor nor, to the Borrower's Knowledge, any of their respective Affiliates (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224.

SECTION 6.31.3 OFAC. Neither the Borrower, any Guarantor nor, to the Borrower's Knowledge, any of their respective Affiliates is in violation of any rules or regulations promulgated by OFAC or of any economic or trade sanctions or engages in any transaction administered and enforced by OFAC or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any rules or regulations promulgated by OFAC.

SECTION 6.32 Key Person Management Agreement. Provided that the Key Person Management Agreement has not been terminated in accordance with the terms and provisions of the Loan Documents, the Key Person Management Agreement is in full force and effect, without amendment since the date of its execution and delivery, and all obligations and requirements thereunder which are to be performed or satisfied, as the case may be, have been performed and satisfied in all material respects, and no act, condition or event exists which, with the giving of notice and/or passage of time would constitute a breach or event of default thereunder.

ARTICLE VII

COVENANTS

SECTION 7.1 Affirmative Covenants. The Borrower agrees with the Administrative Agent, the Issuer and each Lender that, until all Loan Commitments and Letter of Credit Commitments have terminated and all Obligations have been indefeasibly paid and performed in full, the Borrower will perform or cause to be performed the obligations set forth in this Section 7.1.

SECTION 7.1.1 Financial Information, Reports, Notices, etc. The Borrower will furnish, or will cause to be furnished, to each Lender, the Issuer and the Administrative Agent copies of the following financial statements, reports, notices and information:

(a)     as soon as available and in any event within forty-five (45) days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower and each Guarantor, a copy of the quarterly unaudited financial statements for such Fiscal Quarter for the Borrower and each Guarantor, including therein a balance sheet of the Borrower and each Guarantor as of the end of such Fiscal Quarter and a statement of earnings and cash flow of the Borrower and each Guarantor for such Fiscal Quarter, certified as correct and complete in all material respects by the Borrower and prepared in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes);

(b)     as soon as available and in any event within one hundred twenty (120) days after the end of each Fiscal Year of the Borrower and each Guarantor, as applicable, a copy of the annual audited financial statements for such Fiscal Year for the Borrower and each Guarantor including therein a balance sheet of the Borrower and each Guarantor as of the end of such Fiscal Year and a statement of earnings and cash flow of the Borrower and each Guarantor for such Fiscal Year, in each case prepared in accordance with GAAP and as audited by a nationally recognized independent public accountant acceptable to the Administrative Agent (in each case, without any Impermissible Qualifications);

 

  

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(c)     as soon as available and in any event within forty five (45) days after the end of each of the first three (3) Fiscal Quarters of each Fiscal Year of the Borrower and each Guarantor, and within one hundred twenty (120) days after the end of the Fiscal Year of the Borrower and each Guarantor, a Compliance Certificate, executed by the chief financial or accounting Authorized Representative of each such Person, showing compliance with its covenants set forth in this Article VII and, once applicable, a calculation of EBITDA for each such prior Fiscal Quarter;

(d)     as soon as possible and in any event within five (5) Business Days after the occurrence of a Default under the Loan Documents, a statement of the chief executive, financial or accounting Authorized Representative of the Borrower setting forth details of such Default or other default, as the case may be, and the action which such Person has taken and proposes to take with respect thereto;

(e)     as soon as possible and in any event within five (5) Business Days after (x) the occurrence of any material adverse development with respect to any litigation, action, proceeding or labor controversy of the type and materiality described in Item 6.7 of the Disclosure Schedule, or (y) the commencement of any litigation, action, proceeding or labor controversy of the type and materiality described in Item 6.7 of the Disclosure Schedule, notice thereof and, to the extent the Administrative Agent reasonably requests, copies of all documentation relating thereto;

(f)      promptly after the sending or filing thereof, copies of all material reports, registration statements and financial statements delivered to any Governmental Instrumentality;

(g)     as soon as possible and in any event within five (5) Business Days after becoming aware of (v) the institution of any steps by the Borrower, any Guarantor or any other Person to terminate any Pension Plan if termination of such plan would reasonably be expected to result in a liability to the Borrower or any Guarantor in excess of $250,000, (w) the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under Section 302(f) of ERISA, (x) the taking of any action with respect to a Pension Plan which would reasonably be expected to result in the requirement that the Borrower, any Guarantor or any member of the Borrower's Controlled Group furnish a bond or other security to the PBGC or such Pension Plan, (y) the occurrence of any event with respect to any Pension Plan which would reasonably be expected to result in the incurrence by the Borrower or any Guarantor of any material liability, fine or penalty, notice thereof and copies of all documentation relating thereto or (z) any material increase in the Contingent Liability of the Borrower or any Guarantor with respect to any post-retirement Welfare Plan benefit, notice thereof and copies of all documentation relating thereto;

 

  

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(h)     promptly upon receipt thereof, copies of all detailed management letters submitted to the Borrower or any Guarantor by the independent public accountants referred to in clause (b) in connection with each audit made by such accountants of the books of the Borrower or any Guarantor;

(i)      as soon as possible, and in any event within five (5) days after receipt thereof, copies of all notices of termination or event of default or notice thereof or any requests for indemnification of any other party or any other notice relating to material rights or obligations with respect to the Material Leases pursuant to the terms thereof;

(j)      any change in the Authorized Representatives of the Borrower or any Guarantor and such notice shall include a certified specimen signature of any new Authorized Representative so appointed with respect to such Person and, if requested by the Administrative Agent, satisfactory evidence of the authority of such new Authorized Representative;

(k)     the occurrence or existence of any Environmental Matter requiring notice to a Governmental Instrumentality or with respect to which notice is received from a Governmental Instrumentality;

(l)      any Event of Loss or any event or development which could reasonably be expected to have a Material Adverse Effect;

(m)     promptly and in any event within five (5) days after the receipt thereof, any material notice received by any of the Borrower, Holdings or Holdings Intermediary from any Nevada Gaming Authority, including all NGC-1 Reports and all exception reports, which notice relates to the operation or maintenance of the Property or any Permit related thereto or any Equity Interest in any such Person;

(n)     if the Borrower obtains knowledge that one or more Person which owns, directly or indirectly, any Capital Stock of the Borrower, or any other holder at any time of any direct or indirect equitable, legal or beneficial interest therein is the subject of any of the Anti-Terrorism Laws;

(o)     such other information respecting the condition or operations, financial or otherwise, of the Borrower as required by the Loan Documents (including information and reports from the chief accounting or financial Authorized Representative of the Borrower, in such detail as the Administrative Agent, the Issuer or any Lender may reasonably request, with respect to the terms of and information provided pursuant to any Compliance Certificate), the Leases and as the Administrative Agent, the Issuer or any Lender may from time to time reasonably request; and

(p)     on or before November 30, 2014 and on or before November 30th of each Fiscal Year thereafter until the Stated Maturity Date, a detailed budget for the Property for the next Fiscal Year and EBITDA projections for the Property for the next Fiscal Year (the “Financial Projections”) in form and substance reasonably satisfactory to the Administrative Agent and the Lenders, and within twenty (20) days of the delivery thereof to the Administrative Agent and the Lenders, senior management of the Borrower shall make itself readily available to the Administrative Agent and the Lenders to meet and discuss such budget and Financial Projections.

 

  

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SECTION 7.1.2 Compliance with Laws, etc. The Borrower will comply with all applicable Legal Requirements, including:

(a)     the maintenance and preservation of the corporate or other organizational existence of the Borrower; and

(b)     the payment, before the same become delinquent, of all Taxes, Impositions, assessments and governmental charges imposed upon it or upon its property, except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves, if any, in accordance with GAAP shall have been set aside on its books.

SECTION 7.1.3 Maintenance of Property; Operation; Reserves. The Borrower will at all times continue to possess good and marketable fee-simple title to the Property and shall maintain, preserve, protect and keep the Property, the Improvements and other property owned or leased by it in good repair, working order and condition (ordinary wear and tear excepted), and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times. Unless otherwise properly contested as permitted under this Agreement, the Borrower shall pay, prior the same becoming delinquent, all non-disputed operating expenses, maintenance expenses and all other fees, costs and expenses, including Taxes, Impositions and Insurance Premiums, related to the Property and the Improvements thereon.

SECTION 7.1.4 Insurance. The Borrower shall maintain the insurance in compliance with the Insurance Requirements and shall comply with the requirements of such insurance policies.

SECTION 7.1.5 Books and Records.

(a)     The Borrower shall maintain adequate books, accounts and records with respect to the Property and the Improvements thereon in compliance in all material respects with the regulations of any Governmental Instrumentality having jurisdiction thereover and, with respect to financial statements, in accordance with GAAP. Subject to Nevada Gaming Laws, the Borrower shall permit employees, agents and accountants of the Administrative Agent at any reasonable time and upon reasonable prior notice to inspect the Property and the Improvements thereon, to examine or audit all of the Borrower's books, accounts and records pertaining or related to thereto, to make copies and memoranda thereof and, with respect to any Environmental Matters, to perform any tests or studies and prepare any reports reasonably required by the Administrative Agent based upon reasonable cause.

 

  

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(b)     The Borrower shall prepare all balance sheets, all statements of operations, equity amounts, cash flow and all other financial information of the Borrower and the Property in accordance with GAAP consistently applied such that the financial condition of the Borrower has been fairly presented as at the dates thereof and the results of its operations for the periods then ended, except that quarterly financial statements delivered pursuant to Section 7.1.1 need not include footnote disclosure and may be subject to ordinary year-end adjustment. All factual information that is made available to the Administrative Agent, any of the Lenders or the Issuer by or on behalf of the Borrower or any Guarantor is or shall be, when furnished, complete and correct in all material respects and shall not, when furnished, contain any untrue statement of a fact or omit to state a fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements are made. All projections that are made available to the Administrative Agent, any of the Lenders or the Issuer by or on behalf of the Borrower shall be prepared in good faith based upon reasonable assumptions.

SECTION 7.1.6 Environmental. The Borrower will:

(a)     use and operate the Property in material compliance with all Environmental Laws, keep all necessary material permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in material compliance therewith, and handle all Hazardous Substances at the Property in material compliance with all applicable Environmental Laws;

(b)     promptly notify the Administrative Agent and provide copies upon receipt of all material written Claims, complaints, notices or inquiries relating to potential liability under or non-compliance with, Environmental Laws in connection with the Property, and shall promptly resolve or diligently undertake to resolve any non-compliance with Environmental Laws and keep its property free of any Lien imposed by any Environmental Law; and

(c)     provide such information and certifications which the Administrative Agent may reasonably request from time to time to evidence compliance with this Section 7.1.6; provided that the Borrower shall not have to pay the cost of any third party reports requested by the Administrative Agent in connection therewith more than once during any 180-day period if such request is not based upon a reasonable belief of a change in status of the Property since the last time any such reports from third parties were provided.

SECTION 7.1.7 Additional Collateral. The Borrower shall cause the Administrative Agent to have at all times a First Priority perfected security interest in and Lien on (subject only to Permitted Liens) all of the property (real and personal) owned from time to time by the Borrower to the extent the same constitutes or would constitute “Security” under the Loan Documents. Without limiting the generality of the foregoing, the Borrower shall execute, deliver and/or file (as applicable) or cause to be executed, delivered and/or filed (as applicable), pledge agreement(s), security agreement(s), mortgage(s), Uniform Commercial Code (Form UCC-1) financing statements, Uniform Commercial Code termination statements, and other documentation necessary to grant and perfect such security interest and Lien, in each case in form and substance satisfactory to the Administrative Agent.

 

  

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SECTION 7.1.8 Use of Proceeds. The Borrower shall apply the proceeds of the Loans to fund ongoing working capital, expansion initiatives and other general corporate purposes of the Borrower. The Borrower shall ensure that no portion of the Loans will be used, disbursed or distributed for any purpose, or to any Person, directly or indirectly, in violation of this Agreement or any Legal Requirement including, without limitation, any of the Anti-Terrorism Laws and shall take all necessary action to comply with all Anti-Terrorism Laws with respect thereto.

SECTION 7.1.9 Repayment of Indebtedness. The Borrower shall repay all Indebtedness due under the Loan Documents in accordance with the terms hereof. In the case of any Indebtedness of the Borrower under any of the Loan Documents which is not an Obligation and the repayment of which is limited by any term of such Loan Documents, the Borrower shall repay such Indebtedness in accordance with such limitation.

SECTION 7.1.10 Compliance with Legal Requirements. The Borrower promptly and diligently shall (x) own, maintain and operate the Property in compliance with all applicable Legal Requirements, including the Permits, the Environmental Laws and the Nevada Gaming Laws and (y) procure, maintain and comply with, or cause to be procured, maintained and complied with, all Permits required for any ownership, financing, maintenance or operation of the Property or any part thereof at or before the time each such Permit becomes necessary therefor, as contemplated by the Loan Documents, except that the Borrower may, at its expense, contest by appropriate proceedings conducted in good faith the validity or application of any such Legal Requirements; provided, however, that (i) none of the Administrative Agent, the Lenders, the Issuer or the Borrower would be subject to any criminal liability for failure to comply therewith and (ii) all proceedings to enforce such Legal Requirements against the Administrative Agent, the Lenders or the Issuer are effectively stayed during the entire pendency of such contest.

SECTION 7.1.11 Security Interest in Newly Acquired Property. If the Borrower shall at any time acquire any interest in property or enter into any document or agreement after the Effective Date, relating to the development, renovation, maintenance or operation of the Property not otherwise subject to the Lien and security interests created by the applicable Loan Documents (with the priority contemplated thereby in favor of each Secured Party), the Borrower shall execute and deliver such Instruments reasonably satisfactory in form and substance to the Administrative Agent and deliver to the Administrative Agent, on behalf of the Secured Parties, consents with respect to the collateral assignment of any such document or agreement, so the same shall be made subject to the Lien and security interests created by the applicable Loan Documents (with the priority contemplated thereby in favor of each Secured Party).

SECTION 7.1.12 Proper Legal Forms. The Borrower shall take all action within its control required or advisable to ensure that each of the Loan Documents is in proper legal form.

 

  

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SECTION 7.1.13 Preserving the Security. The Borrower shall undertake all actions which are necessary or appropriate in the reasonable judgment of the Administrative Agent and as required by the Nevada Gaming Laws to (x) maintain the Secured Parties' respective security interests under the Loan Documents in the Security in full force and effect at all times (including the priority thereof) and (y) preserve and protect the Security and protect and enforce the Borrower's rights and title and the respective rights of the Secured Parties to the Security, including the making or delivery of all filings and recordations, the payments of fees and other charges, the issuance of supplemental documentation, the discharge of all Claims or other Liens (other than the Permitted Liens) adversely affecting the respective rights of the Secured Parties to and under the Security (except to the extent same is being contested in good faith by appropriate governmental proceedings promptly instituted and diligently contested, so long as (i) such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor and (ii) in case of any charge or Claim which has or may become a Lien against any of the Security, such contested proceedings conclusively operate to stay the sale of any portion of the Security to satisfy such charge or Claim which has or may become a Lien against any of the Security, such contested proceedings conclusively operate to stay the sale of any portion of the Security to satisfy such charge or Claim) and the publication or other delivery of notice to third parties.

SECTION 7.1.14 Event of Loss. As a material inducement for the Lenders, the Administrative Agent and the Issuer to enter into this Agreement, if any Event of Loss shall occur with respect to the Property or the Improvements or any part thereof, the Borrower shall (x) upon discovery or receipt of notice thereof, promptly provide written notice thereof to the Administrative Agent, (y) diligently pursue all of its rights to compensation against all relevant insurers, reinsurers and/or Governmental Instrumentalities, as applicable, in respect of such event and (z) not, without consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed), compromise or settle any Claim involving an amount in excess of $2,500,000 per Claim. Unless such Event of Loss is a Total Condemnation, the Borrower shall promptly commence and diligently prosecute Restoration of the Property and the Improvements affected thereby subject to the terms and provisions of Section 7.1.15. Notwithstanding any Event of Loss, the Borrower shall continue to make all payments required to be made pursuant to the Loan Documents in accordance with the terms thereof, the Obligations shall not be reduced until any Loss Proceeds shall have been actually received and applied by the Administrative Agent in accordance with Section 7.1.15, and the Administrative Agent shall not be limited to the interest paid as part of the Condemnation Proceeds but shall be entitled to receive interest at the applicable rate provided for herein.

SECTION 7.1.15 Application of Loss Proceeds.

(a)     All Insurance Proceeds and Condemnation Proceeds (collectively, “Loss Proceeds”) relating to the Property and the Improvements are hereby assigned to the Administrative Agent and shall be applied as provided in this clause (a). All Loss Proceeds in excess of $10,000,000 shall be paid by the insurers, reinsurers, Governmental Instrumentalities or other payors directly to the Administrative Agent for deposit in an account (the “Loss Proceeds Account”) which will be established by the Borrower and the Administrative Agent after the occurrence of an Event of Loss (and, prior to the occurrence of an Event of Default, as to which the Borrower shall have direct access); such Loss Proceeds shall be disbursed in accordance with the terms hereof. If any such Loss Proceeds in excess of $10,000,000 are paid directly to the Borrower or any other Person by any insurer, reinsurer, Governmental Instrumentality or such other payor, (x) such Loss Proceeds shall be received in trust for the Administrative Agent, (y) such Loss Proceeds shall be segregated from other funds of the Borrower or such other Person and (z) the Borrower shall deposit (or, if applicable, the Borrower shall cause such other Person to pay) such Loss Proceeds into the Loss Proceeds Account. In the event the Loss Proceeds are $10,000,000 or less, the Borrower shall be entitled to receive the Loss Proceeds directly and apply such Loss Proceeds to restoration in accordance with this Section 7.1.15.

 

  

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(b)     The Administrative Agent may participate in any action, suit or proceeding relating to any such proceeds, causes of action, claims, compensation, awards or recoveries, and the Borrower shall, from time to time, deliver to the Administrative Agent any instrument required to permit such participation or further evidence such Claim.

(c)     Subject to all Legal Requirements applicable to the Property and the Improvements, other than with respect to a Total Condemnation, the Administrative Agent shall make Loss Proceeds available to the Borrower for the Restoration of an Event of Loss, provided that each of the following conditions are met:

(i)      no Default shall have occurred and be continuing; provided, however, that if a Default that is not an Event of Default exists during such time as Loss Proceeds are in the Loss Proceeds Account, all Loss Proceeds shall remain in the Loss Proceeds Account and shall be available for the Restoration if such Default is cured prior to the expiration of any applicable cure period (but not thereafter and clause (k) of this Section 7.1.15 shall apply);

(ii)      the Borrower promptly commences Restoration and diligently continues same through completion;

(iii)     Restoration is being completed in accordance with all applicable Legal Requirements;

(iv)     the quality and character of the Property and the Improvements after Restoration shall be at least comparable, in the reasonable judgment of the Administrative Agent, to the quality and character of the Property and the Improvements immediately prior to such casualty or Partial Condemnation;

(v)      the Borrower delivers to the Administrative Agent a written undertaking that it will expeditiously commence and satisfactorily complete Restoration with due diligence in accordance with the terms of this Agreement; and

 

  

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(vi)     the Borrower delivers to the Administrative Agent evidence that the Loss Proceeds, together with any Loss Proceeds Deficiency, are sufficient to cover all costs of the Restoration.

In the event any of the foregoing conditions are not satisfied at any time or if the Event of Loss is a Total Condemnation, the disbursement of Loss Proceeds shall be made in accordance with clause (k) of this Section 7.1.15.

(d)     The Loss Proceeds (in excess of $10,000,000) shall be held in the Loss Proceeds Account and shall be pledged to the Administrative Agent, and until disbursed in accordance with the provisions of this Section 7.1.15, shall constitute additional security for repayment of the Loans. Loss Proceeds in the Loss Proceeds Account may be invested in Cash Equivalent Investments in accordance with the agreement covering the Loss Proceeds Account. Subject to clause (c) of this Section 7.1.15, the Loss Proceeds shall be disbursed by the Administrative Agent to the Borrower from time to time during the course of Restoration, upon receipt of evidence satisfactory to the Administrative Agent, providing that all materials installed and Work and labor performed in connection with the Restoration have either been paid for or are to be paid for out of the requested disbursement.

(e)     Subject to applicable Legal Requirements, in no event shall the Administrative Agent be obligated to make disbursements of Loss Proceeds in excess of an amount equal to the costs actually incurred from time to time for Work in place as part of the Restoration, minus the Retainage Amount. The final advance of Retainage Amount shall not be made until (A) ten (10) Business Days after the Administrative Agent has received reasonably satisfactory evidence that (y) the Restoration has been completed in accordance with the provisions of this Section 7.1.15 and (z) all Permits necessary for the re-occupancy and use of the Property have been obtained from all appropriate Governmental Instrumentalities, (B) the Administrative Agent receives evidence satisfactory to it that the costs of the Restoration have been paid in full in cash or will be paid in full out of the Retainage Amount, and (C) the Administrative Agent receives and approves an endorsement to the Title Policy insuring that the First Priority of the Lien of the Deed of Trust has not changed.

(f)      The Administrative Agent shall not be obligated to make disbursements of the Loss Proceeds more frequently than twice in any calendar month.

(g)     If at any time the Loss Proceeds or the undisbursed balance thereof shall not be sufficient to pay the balance of the total costs to be incurred in connection with the completion of the Restoration, the Borrower shall promptly deposit with the Administrative Agent cash or Cash Equivalent Investments in an amount equal to the deficiency (the “Loss Proceeds Deficiency”) before any further disbursement of the Loss Proceeds shall be made; provided, however, in the event that the Financial Covenant Commencement Date has commenced and Borrower is otherwise in compliance with such covenants, then Borrower may, in accordance with Section 2.3 and Section 5.2 hereof, request that Loans, in an amount not to exceed the then available Loan Commitment, be made by the Lenders for completion of the Restoration, after the utilization of the Loss Proceeds. The Loss Proceeds Deficiency deposited with the Administrative Agent shall be held by the Administrative Agent and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Loss Proceeds, and until so disbursed pursuant to this Section shall constitute additional security for the Obligations.

 

  

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(h)     Provided no Default shall have occurred and be continuing, if at any time the Loss Proceeds, together with any Loss Proceeds Deficiency, or the undisbursed balance thereof, shall be in excess of the balance of the total costs to be incurred in connection with the completion of the Restoration, the Administrative Agent shall pay such excess to the Borrower; provided, however, that if a Default shall have occurred and be continuing, the Administrative Agent shall continue to hold such excess and shall deliver same to the Borrower in accordance with this Section if such Default is cured prior to the expiration of any applicable cure period. No payment made to the Borrower pursuant to this Section shall in any event prevent the Administrative Agent from requiring the Borrower to make further Loss Proceeds Deficiency deposits in the event same shall be required pursuant to clause (g) of this Section 7.1.15.

(i)       So long as no Default has occurred and is continuing, any excess of Loss Proceeds (together with any earnings thereon) and the remaining balance, if any, of the Loss Proceeds Deficiency deposited with the Administrative Agent (together with any earning thereon) shall be remitted by the Administrative Agent to the Borrower after the Administrative Agent receives reasonably satisfactory evidence that Restoration has been substantially completed in accordance with the provisions of this Section and the receipt by the Administrative Agent of evidence satisfactory to the Administrative Agent that all costs incurred in connection with Restoration have been paid in full or are being contested as permitted under Section 7.1.13.

(j)       If the Property or the Improvements (or any portion thereof) are sold, through foreclosure or otherwise, prior to the receipt by the Administrative Agent of the Insurance Proceeds or Condemnation Proceeds (as applicable), the Administrative Agent shall have the right, whether or not a deficiency judgment shall have been sought, recovered or denied, to receive such Insurance Proceeds or Condemnation Proceeds (as applicable), or the portion thereof sufficient to pay the Obligations.

(k)     Subject to all Legal Requirements applicable to the Property and the Improvements, all Loss Proceeds (together with any earnings thereon) not required (i) to be made available for the Restoration, or (ii) to be returned to the Borrower as excess Loss Proceeds pursuant to clauses (h) or (i) of this Section 7.1.15, may be retained and applied by the Administrative Agent toward the payment of the Obligations, whether or not then due and payable or, at the discretion of the Administrative Agent, the same may be paid, either in whole or in part, to the Borrower. If the Administrative Agent shall receive and retain Loss Proceeds, the Lien of the Deed of Trust shall be reduced only by the amount thereof actually applied by the Administrative Agent in reduction of the principal amount of the Loans.

 

  

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SECTION 7.1.16 Interest Reserve Account. On the Effective Date, the Borrower shall have funded the Interest Reserve Account in an amount equal to $5,000,000. During the twenty-four (24) month period following the Effective Date, the Borrower shall deliver a written notice to the Administrative Agent at least three (3) Business Days prior to each Quarterly Payment Date requesting disbursements from the Interest Reserve Account in order to pay all interest payable or accrued from time to time under any of the Loan Documents due from the Borrower and to pay other fees, costs and charges permitted under Section 3.4 hereof with respect to the current Fiscal Quarter. Upon such written request of the Borrower, the Administrative Agent shall direct the Account Bank to disburse the amount requested by the Borrower for such payments to the Administrative Agent in accordance with the Loan Documents. In the event that the Borrower does not make such written request or otherwise make such required payments (interest or otherwise) in accordance with the Loan Documents, the Administrative Agent shall be permitted to unilaterally instruct the Account Bank to make the appropriate disbursement to the Administrative Agent for such required payments (interest or otherwise) and such amounts shall be disbursed to the Administrative Agent from the Interest Reserve Account. The Administrative Agent shall not be obligated to make any disbursement for such required payments (interest or otherwise) from and after the date which is twenty-four (24) months after the Effective Date. Each written notice delivered by the Borrower pursuant to this Section 7.1.16 shall specify the amount and the date on which such required payments (interest or otherwise) will become due and payable and if the Borrower fails to set forth such information, then, the Administrative Agent may revise the written notice to provide the correct information for such payments from the Interest Reserve Account. Provided that (i) no Default or Event of Default has occurred and is then continuing, (ii) the Borrower has delivered the annual budget for Fiscal Year 2015 to the Administrative Agent and the Administrative Agent have approved the same in accordance with Section 7.1.1(p) hereof and (iii) the Borrower and the Lenders have mutually agreed upon financial covenants for EBITDA for Fiscal Year 2015 in accordance with Section 7.2.18(b) hereof, then the Administrative Agent and the Lenders shall direct the Account Bank to disburse all amounts remaining in the Interest Reserve Account as of December 31, 2014 to the Borrower.

SECTION 7.1.17 ERISA Compliance. The Borrower and each member of the Controlled Group shall fulfill their obligations (if any) under the minimum funding standards of ERISA and the Code for each ERISA Plan in accordance with the currently applicable provisions of ERISA and the Code and shall not incur any liability to the PBGC or an ERISA Plan under Title IV of ERISA (other than liability for premiums due in the ordinary course).

SECTION 7.1.18 Licenses and Permits. The Borrower shall ensure that all material Permits, Gaming Licenses and consents and similar rights required from any Governmental Instrumentality for the ownership, use and operation of the Property are issued as required and, after issuance, are in full force and effect and shall comply with all of the provisions thereof applicable to it.

SECTION 7.1.19 Leases.

(a)     The Borrower shall at all times promptly and faithfully perform, or cause to be performed, in all material respects all of the covenants, conditions and agreements contained in all Leases, now or hereafter existing, on the part of the landlord, lessor or licensor thereunder to be kept and performed. The Borrower, at no cost or expense to the Administrative Agent, shall use commercially reasonable efforts to enforce, short of termination or litigation, the performance and observance of each and every material condition and covenant of each of the other parties under each Lease where, in the Borrower's judgment, it is economically practicable and otherwise desirable to do so.

 

  

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(b)     Each Lease executed after the date hereof shall state that such Lease and the leasehold estate created thereby are subject and subordinate to the Deed of Trust and the Assignment of Leases and Rents.

SECTION 7.1.20 Key Person Management Agreement. The Borrower shall at all times promptly and faithfully perform, or cause to be performed, in all material respects all of the covenants, conditions and agreements contained in the Key Person Management Agreement, now or hereafter existing, on the part of the Borrower thereunder to be kept and performed. The Borrower, at no cost or expense to the Administrative Agent, shall enforce, short of termination or litigation, the performance and observance of each and every material condition and covenant of the Key Person Manager under the Key Person Management Agreement where, in the Borrower's judgment, it is economically practicable to do so

SECTION 7.1.21 Property Management Agreement. The Borrower shall at all times promptly and faithfully perform, or cause to be performed, in all material respects all of the covenants, conditions and agreements contained in the Property Management Agreement on the part of the Borrower thereunder to be kept and performed. The Borrower, at no cost or expense to the Administrative Agent, shall enforce, short of termination or litigation, the performance and observance of each and every material condition and covenant of the Property Manager under the Property Management Agreement where, in the Borrower's judgment, it is economically practicable to do so. Notwithstanding anything contained herein to the contrary, all Base Fees, Incentive Fees (as such terms are defined in the Property Management Agreement) and other reimbursements and amounts payable to the Property Manager pursuant to the terms of the Property Management Agreement (the “Management Fees”) shall accrue without interest and not be disbursed by the Borrower to the Property Manager; provided, however, from and after the date on which EBITDA for the prior twelve (12) month period commencing after the Financial Covenant Effective Date is equal to or greater than $20,000,000 (the “EBITDA Trigger Amount”) (as tested on the last day of each calendar month), and provided no Default or Event of Default shall have occurred and be continuing, the Borrower shall be permitted to make payments of the Management Fees to the Property Manager in accordance with the terms of the Property Management Agreement, including all payment of all Management Fees that have otherwise accrued pursuant to the terms of this Section 7.1.21; provided further however, and for the avoidance of doubt, if at any time the EBITDA Trigger Amount shall be less than $20,000,000 for any twelve (12) consecutive calendar month period, then the Management Fees shall again accrue without interest and not be disbursed by the Borrower to the Property Manager until such time as the conditions in clauses (a) or (b) above are satisfied. Notwithstanding anything to the contrary contained herein, the Borrower shall be permitted to disburse from time to time a portion of the Management Fees to the Key Person Manager for reimbursement of certain tax liabilities actually incurred and paid for by the Key Person Manager, provided that, prior to the date of any such disbursement of Management Fees, the Key Person Manager shall have submitted to the Lenders a certificate executed by the Key Person Manager certifying that the amount of tax liability requested for reimbursement to the Key Person Manager has been actually incurred and paid for by the Key Person Manager.

 

  

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SECTION 7.2 Negative Covenants. The Borrower agrees with the Administrative Agent, the Issuer and each Lender that, until all Loan Commitments and Letter of Credit Commitments have terminated and all Obligations have been indefeasibly paid and performed in full, the Borrower will perform the obligations set forth in this Section 7.2.

SECTION 7.2.1 Business Activities. The Borrower will not engage in any business activity, except the ownership and operation of the Property and the Improvements and such activities as are reasonably incidental thereto and reasonably incidental to the Retail Project.

SECTION 7.2.2 Indebtedness. The Borrower will not directly or indirectly, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than Indebtedness in respect of the Loans, the other Obligations and Cash Contributions to Capital, except:

(a)     Indebtedness outstanding on the date hereof and identified in Item 7.2.2 on the Disclosure Schedule and any refinancing, refunding, renewals or extensions thereof (including refinancing of any fees and premiums incurred in connection therewith;

(b)     letters of credit, surety bonds and other similar forms of credit enhancement incurred in the ordinary course of business in an amount not to exceed $1,000,000;

(c)     Indebtedness with respect to Capitalized Lease Liabilities; and

(d)     other Indebtedness at any time outstanding in an aggregate principal amount not to exceed $3,000,000.

SECTION 7.2.3 Liens. The Borrower will not create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, or any proceeds, income or profits therefrom, or assign or convey any right to receive income therefrom, excluding, however,

(a)     Liens securing (x) the Obligations and (y) Permitted Liens;

(b)     Liens existing on the date hereof and identified in Item 7.2.3 on the Disclosure Schedule and any renewals or extensions thereof;

(c)     Liens in connection with Capitalized Lease Liabilities; and

(d)     Liens on property acquired or constructed by Borrower and in the proceeds thereof, that (i) were in existence at the time of the acquisition or construction, and (ii) secure only the unpaid portion of the acquisition or construction price for such property, or monies borrowed that were used to pay such acquisition or construction price.

 

  

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SECTION 7.2.4 Investments. The Borrower will not make, incur, assume or suffer to exist any Investment in any other Person, except:

(a)     Ongoing Investments;

(b)     Cash Equivalent Investments;

(c)     Joint Ventures pursuant to which the Borrower shall not invest more than $2,000,000 in any Fiscal Year;

(d)     Investments constituting (x) accounts receivable arising, (y) trade debt granted or (z) deposits made in connection with the purchase price of goods or services, in each case in the ordinary course of business; and

(e)     Investments in a Subsidiary or an Affiliate in connection with the Retail Project;

provided, however, that no Investment otherwise permitted by clauses (c) and (d) shall be permitted to be made if any Default has occurred and is continuing or would result therefrom.

SECTION 7.2.5 Restricted Payments, etc. On and at all times after the date hereof the Borrower will not

(a)     declare, pay or make any cash dividend or cash distribution on any Equity Interests (now or hereafter outstanding) of the Borrower or on any warrants, options or other rights with respect to any shares of any Equity Interests (now or hereafter outstanding) of the Borrower, or apply any of its funds to the purchase, redemption, sinking fund or other retirement of any shares of any Equity Interests (now or hereafter outstanding) of the Borrower, or warrants, options or other rights with respect to any shares of any Equity Interests (now or hereafter outstanding) of the Borrower (the foregoing prohibited acts being herein collectively referred to as “Restricted Payments”); provided, however, from and after the Financial Covenant Commencement Date, so long as no Event of Default has occurred and is continuing or would result therefrom, the Borrower shall be permitted to make Restricted Payments to its equity holders; or

(b)     make any payment or prepayment of principal of, or make any payment of interest on, any subordinated debt on any day other than the stated, scheduled maturity date for subordinated debt as set forth in the documents and Instruments memorializing such subordinated debt, or which would violate the subordination provisions of such subordinated debt or redeem, purchase or defease any subordinated debt or make any payment for purposes of funding any of the foregoing.

SECTION 7.2.6 Rental Obligations. The Borrower will not enter into at any time any arrangement which involves the leasing by the Borrower from any lessor of any Real Property (or any interest therein) except for leases of Real Property entered into in the ordinary course of business, provided that the aggregate annual rental for all such Real Property leases does not exceed $500,000.

 

  

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SECTION 7.2.7 Take or Pay Contracts. The Borrower will not enter into or be a party to any arrangement for the purchase of materials, supplies, other property or services if such arrangement by its express terms requires that payment be made by the Borrower or such other Person regardless of whether such materials, supplies, other property or services are in fact or can be required to be delivered or furnished to it.

SECTION 7.2.8 Consolidation, Merger, etc. The Borrower will not liquidate or dissolve, consolidate with, or merge into or with any other Person. Furthermore, the Borrower may create direct or indirect Subsidiaries provided that each such Subsidiary enters into a joinder agreement to the Guaranty to become a Subsidiary Guarantor thereunder, such joinder agreement to be in form and substance satisfactory to the Administrative Agent; provided, however, the Borrower may, without the consent of the Administrative Agent but with ten (10) Business Days' prior written notice to the Administrative Agent but subject to the limitations contained in clause (c) of Section 7.2.4, form a Joint Venture and such Joint Venture (or a Subsidiary if the Borrower has formed a Subsidiary for purposes of holding the Borrower's interest in such Joint Venture) shall not be required to become a Guarantor hereunder and the equity interest of such Joint Venture or Subsidiary, as applicable, which is owned by Borrower shall not be required to be pledged hereunder; and provided further, the Borrower may form a Subsidiary or an Affiliate for purposes of holding title to the Retail Parcel and such Subsidiary or Affiliate shall not be required to become a Subsidiary Guarantor hereunder, nor shall the Borrower be required to pledge the equity in any such Subsidiary as Security for the Borrower's Obligations hereunder and under the other Loan Documents.

SECTION 7.2.9 Restrictions on Dispositions.

(a)     Neither the Borrower nor any of the Subsidiary Guarantors shall, issue, sell, transfer, lease, contribute or otherwise convey (including by way of merger), or grant options, warrants or other rights with respect to, any of its or their assets (including accounts receivable and Capital Stock) to any Person, except in connection with Cash Contributions to Capital; provided, however, that the Borrower and its Subsidiary Guarantors may (x) make dispositions in the ordinary course of its business, and (y) dispose of obsolete, worn out or surplus assets or assets no longer used or useful in its the business, so long as (A) such disposition does not materially and adversely affect the ability of the Borrower to own and operate the Property in accordance with the Loan Documents and (B) the net proceeds thereof, with respect to the property described in clause (y), are either used to fund other property of utility to the Borrower or, if such funds have not otherwise been used to fund replacement assets, are delivered to the Administrative Agent to be applied against the Loans in accordance with Section 3.1.2. Each disposition set forth in the proviso of this Section 7.2.9 shall constitute a “Permitted Asset Sale”.

(b)     Notwithstanding anything to the contrary contained herein, the Borrower shall be permitted to transfer an approximately one (1) acre portion of the Property (the “Retail Parcel”) to a newly-formed and wholly-owned special purpose Subsidiary or Affiliate of the Borrower, whether in one or a series of transactions (such transaction or series of transactions, the “Permitted Retail Transaction”), subject to the satisfaction of each of the following conditions:

 

  

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(i)       the Borrower shall have delivered a copy of one or more resolutions or other authorizations of the Board of Directors of the Borrower certified by the Authorized Representative of such Board of Directors as being in full force and effect authorizing the Permitted Retail Transaction and the execution, delivery and performance of any and all Instruments, agreements and documents related thereto by the Borrower;

(ii)      such transfer of the Retail Parcel shall be evidenced by a deed conveying such Retail Parcel for the purpose of having a retail mall constructed on the Retail Parcel (the “Retail Project”), which deed shall be in form and substance reasonably satisfactorily to the Administrative Agent and the Lenders;

(iii)     the Borrower and the Administrative Agent shall have entered into an amendment of the Deed of Trust in the form of Exhibit I attached hereto reflecting the release of the Retail Parcel from the Lien of the Deed of Trust and the continuing First Priority Lien of the Deed of Trust, as amended, as Security for the Loans;

(iv)     in connection with the amendment of the Deed of Trust described in clause (iii) above, the Borrower shall have caused the Title Insurer to deliver to the Administrative Agent an endorsement to the Title Policy insuring the continuing First Priority of the Lien of the Deed of Trust as Security for the Loans and insuring that (i) since the Effective Date there has been no change in the condition of title to the Property except as permitted by the Loan Documents and (ii) there are no intervening Liens (including inchoate mechanics' liens) on the Property which may then or thereafter take priority over the Lien of the Deed of Trust (other than the Permitted Liens);

(v)      in connection with a transfer of the Retail Parcel, the Borrower shall obtain (x) a new survey of the Property evidencing the partitioning and conveyance of the Retail Parcel as a separate legal parcel, which survey shall be in form and substance reasonably acceptable to the Administrative Agent and the Lenders, and (y) evidence in form and substance reasonably acceptable to the Administrative Agent and the Lenders that the Retail Parcel constitutes a separate tax lot, and shall promptly deliver such survey and evidence to the Administrative Agent and the Lenders;

(vi)     any Liens, Instruments, agreements or other documents, including, without limitation, any restrictive covenants, declarations, reciprocal easement agreements or other access easements, rights-of-way or licenses, to be entered into by the Borrower and/or the owner of the Retail Project affecting all or any portion the Property shall be subject to the Administrative Agent's and the Lenders' prior written review and approval in their reasonable discretion, such review and approval in their reasonable discretion to be undertaken promptly;

 

  

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(vii)    both before and after giving effect to such transaction, no Default, Event of Default or Material Adverse Effect shall have occurred and be continuing or, after giving effect to the Permitted Retail Transaction, could reasonably be expected to result;

(viii)   the Administrative Agent and the Lenders shall have received an opinion of counsel to the Borrower, including the assumptions and qualifications contained therein, reasonably satisfactory to the Administrative Agent and the Lenders;

(ix)     the Borrower agrees to deliver to the Administrative Agent and the Lenders, promptly upon request, such documentation as the Administrative Agent or the Lenders may reasonably request regarding the status of construction of the Retail Project to be developed on the Retail Parcel;

(x)      the Borrower shall pay all out-of-pocket costs and expenses of the Administrative Agent and the Lenders, including, but not limited to reasonable attorneys' fees and expenses, incurred in connection with the Administrative Agent's and the Lenders' review and negotiation of any Instruments, agreements or documentation relating to the Permitted Retail Transaction and any subsequent administration thereof and the enforcement of the rights of the Administrative Agent and the Lenders in connection therewith;

(xi)     all amounts required to be paid to or deposited with the Administrative Agent and/or the Lenders and all Taxes, Impositions, fees and other costs payable in connection with the Loan Documents shall have been paid or deposited, as the case may be. The Borrower shall have paid all fees, expenses and other charges then due and payable by it under any agreements between the Borrower or the Administrative Agent and/or the Lenders, including, without limitation, all fees, costs and expenses due and payable pursuant to Section 3.3 and, if then invoiced, pursuant to Section 10.3; and

(xii)    the Borrower shall deliver to the Administrative Agent, promptly upon the consummation of the Permitted Retail Transaction, a true and correct copy of each Instrument, agreement or other document executed or delivered in connection with such transaction.

SECTION 7.2.10 Modification of Certain Agreements.

(a)     The Borrower will not directly or indirectly, enter into, amend, modify, terminate, supplement or waive a right under or permit or consent to the amendment, modification, termination, supplement or waiver of any of the provisions of, or grant any consent under:

(i)      the zoning classification of the Property or the Improvements or any portion thereof, the effect of which could reasonably be expected to have a Material Adverse Effect; or

 

  

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(ii)     the Organizational Documents of the Borrower.

(b)     Following an Event of Default under Section 8.1.1 or Section 8.1.9 hereof, or an acceleration of the Loans pursuant to Section 8.3 hereof, the Borrower will not, without, in each case, obtaining the Administrative Agent's prior written consent in its reasonable discretion, directly or indirectly, enter into, amend, modify, terminate, supplement or waive a right under or permit or consent to the amendment, modification, termination, supplement or waiver of any of the provisions of, or grant any consent under:

(i)      the Key Person Management Agreement; or

(ii)     the Property Management Agreement.

SECTION 7.2.11 Transactions with Affiliates. Except for the Permitted Retail Transaction, the Borrower will not sell, lease, transfer or otherwise dispose of any of its Real Property or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an “Affiliate Transaction”) without the prior written approval of the Administrative Agent which approval will not be unreasonably withheld or delayed.

SECTION 7.2.12 Negative Pledges, Restrictive Agreements, etc. The Borrower will not enter into any agreement (excluding, however, this Agreement and any other Loan Document) governing any Indebtedness prohibiting

(a)     the creation or assumption of any Lien upon its Real Property, revenues or assets, whether now owned or hereafter acquired; or

(b)     the ability of the Borrower to amend or otherwise modify any Loan Document.

SECTION 7.2.13 Sale and Leaseback. The Borrower will not enter into any agreement or arrangement with any other Person providing for the leasing by the Borrower of Real Property or personal property which has been or is to be sold or transferred by the Borrower to such other Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower.

SECTION 7.2.14 Hazardous Substances. Neither the Borrower nor any Guarantor shall release, emit or discharge into the environment any Hazardous Substances in violation of any Environmental Law, Legal Requirement or Permit.

SECTION 7.2.15 No Other Powers of Attorney. The Borrower shall not execute or deliver any (i) powers of attorney or (ii) any documents, instruments or agreements (other than the Loan Documents) if the execution of such powers of attorney, documents, instruments or agreements would result in or a cause a Default hereunder.

 

  

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SECTION 7.2.16 Agent for Service of Process. Other than the Process Agent as designated in Section 10.15 hereof, the Borrower shall not designate any process agent to receive, on the Borrower's behalf and on behalf of the Borrower's property, service of copies of the summons and complaint and any other process which may be served in any action or proceeding relating to the Transaction without the prior written consent of the Administrative Agent.

SECTION 7.2.17 Anti-Terrorism Laws. Neither the Borrower nor any Guarantor shall (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person; (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224; (iii) engage in on conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, (A) any of the prohibitions set forth in Executive Order No. 13224 or the USA Patriot Act, or (B) any prohibitions set forth in the rules or regulations issued by OFAC or any sanctions against targeted foreign countries, terrorism sponsoring organizations, and international narcotics traffickers based on U.S. foreign policy. The Borrower shall deliver, and shall cause each Guarantor to deliver, as applicable, to the Administrative Agent, the Issuer and the Lenders any certification or other evidence requested from time to time by the Administrative Agent, the Issuer and any Lender confirming compliance with this Section 7.2.17.

SECTION 7.2.18 Financial Covenants.

(a)     From and after the Effective Date, the Borrower shall not permit (i) the cash on hand with respect to gaming operations at the Property to be at any time less than the amounts required to comply with the minimum casino bankroll requirements set forth in the Nevada Gaming Laws and (ii) all other cash on hand with respect to the Property plus the amount of undrawn Loan Commitments available to the Borrower to be less than $2,000,000.

(b)     At each meeting held pursuant to clause (p) of Section 7.1.1 hereof until the Stated Maturity Date, the Borrower and the Lenders shall mutually agree upon financial covenants for minimum EBITDA for the next Fiscal Year, with the first testing date being March 31, 2015 (such date to be the “Financial Covenant Commencement Date”). The Borrower and the Lenders shall establish the required minimum EBITDA financial covenant that the Borrower shall maintain from and after the Financial Covenant Commencement Date for minimum EBITDA; provided, however, that in the event the Borrower does not meet such required financial covenant for minimum EBITDA, the Borrower or the Guarantors shall be entitled to cure such failure to meet such financial covenant by performing the following (a) within five (5) Business Days after the Borrower or any Guarantor has Knowledge that any such failure has occurred or (b) on or before the date that a Compliance Certificate indicating that any such failure has occurred is delivered pursuant to clause (c) of Section 7.1.1 hereof: by making a prepayment of the Loans in an amount equal to the difference between the required minimum EBITDA and the actual EBITDA (the “EBITDA Shortfall”) or by depositing into a controlled account to be held with the Account Bank as collateral security for the Obligations an amount equal to the EBITDA Shortfall.

 

  

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(c)     In the event that the Borrower shall elect to cure a breach of the minimum EBITDA requirement by depositing into a controlled account with the Account Bank the amounts required pursuant to clause (b) above and the Borrower shall thereafter satisfy the financial covenant for which such deposits were made for two (2) consecutive Fiscal Quarters (in each case, without giving effect to any amounts then on deposit in the controlled account held with the Account Bank referenced in clause (b) above) then the Borrower shall be entitled to receive a disbursement of the amounts then on deposit in such controlled account within ten (10) Business Days after receipt by the Administrative Agent of the Borrower's Compliance Certificate required by clause (c) of Section 7.1.1 together with a written request by the Borrower for the disbursement of such sums.

(d)     The Borrower agrees to execute any and all documents, certificates and/or instruments to (i) evidence the establishment of such minimum thresholds required by clause (a) above, including without limitation, an amendment to this Agreement and (ii) in the event that the Borrower shall elect to cure a breach of the minimum EBITDA requirement by depositing with the Account Bank the amounts required pursuant to clause (b) above, grant to the Administrative Agent, for its benefit and the benefit of the Secured Parties, (x) a perfected First Priority continuing security interest in each such account and all funds from time to time on deposit in each such account and (y) sole dominion and control over each such account and all funds from time to time on deposit in each such account.

SECTION 7.2.19 Management Agreement and Management Services Agreement. Except for the Property Management Agreement and the Key Person Management Agreement, following an Event of Default under Section 8.1.1 or Section 8.1.9 hereof or an acceleration of the Loans pursuant to Section 8.3 hereof, the Borrower shall not enter into or be a party to any management contract, management services agreement, advisor agreement, any agreement covering FF&E or any other contract material to the operation and management of the Property without the prior written approval of the Administrative Agent exercised in its reasonable discretion.

SECTION 7.2.20 Capital Expenditures.

(a)     Notwithstanding anything herein to the contrary, the Borrower shall not expend more than $18,000,000 in the annual aggregate on Capital Expenditures relating to the Property during either the 2013 Fiscal Year or the 2014 Fiscal Year; provided, that, for purposes of this clause (a), Capital Expenditures shall not include maintenance Capital Expenditures or construction costs incurred by the Borrower relating to the Retail Project; provided, further, that in the event that the Borrower expends less than $18,000,000 in Capital Expenditures in the 2013 Fiscal Year, such unspent amount may be carried over to and expended by the Borrower in the 2014 Fiscal Year.

(b)     No later than thirty (30) days prior to the end of the 2014, 2015, 2016 and 2017 Fiscal Years, the Borrower shall submit to the Lenders a detailed capital improvement and expenditure budget for the Property for the next Fiscal Year setting forth the Borrower's budgeted Capital Expenditures for the Property for such Fiscal Year.

 

  

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ARTICLE VIII

EVENTS OF DEFAULT

SECTION 8.1 Listing of Events of Default. Each of the following events or occurrences described in this Section 8.1 shall constitute an “Event of Default”.

SECTION 8.1.1 Non-Payment of Obligations. The Borrower shall default in the payment or prepayment when due of

(a)     any principal of or interest on any Loan, and, with respect to any Default in the payment of interest, such Default shall continue unremedied for a period of five (5) Business Days;

(b)     any Letter of Credit Reimbursement Obligation, and such Default shall continue unremedied for a period of five (5) Business Days; or

(c)     any fee described in Section 3.3 or of any other Obligation and such Default shall continue unremedied for a period of five (5) Business Days after notice thereof.

SECTION 8.1.2 Breach of Warranty. Any representation or warranty of the Borrower or any Guarantor made herein or in any other Loan Document or any other writing or certificate furnished by or on behalf of the Borrower or any Guarantor to the Administrative Agent, the Issuer or any Lender for the purposes of or in connection any Loan Document (including any certificates delivered pursuant to Article VI hereof) is or shall be incorrect when made or deemed to have been made in any material respect.

SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations. The Borrower shall default in the due performance and observance of any of its obligations under Sections 7.1.4, 7.1.14, 7.1.15, 7.1.16 or Section 7.2.

SECTION 8.1.4 Non-Performance of Other Covenants and Obligations. The Borrower or any Guarantor shall default in the due performance and observance of any Loan Document executed by it, and such default shall continue unremedied for a period of thirty (30) days (or such other period of time during which performance is required under the applicable Loan Document) after notice thereof shall have been given to the Borrower or such Guarantor, as applicable, by the Administrative Agent; provided, however, that if the default cannot reasonably be cured within such thirty (30) day period despite the Borrower's or such Guarantor's good faith and diligent efforts to do so, the cure period shall be extended as is reasonably necessary beyond such thirty (30) day period (but in no event longer than ninety (90) days in the aggregate) if remedial action reasonably likely to result in cure is promptly instituted within such thirty (30) day period and is thereafter diligently pursued until the default is cured.

 

  

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SECTION 8.1.5 Default on Other Indebtedness. A default shall occur in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Indebtedness of the Borrower in excess of $2,000,000 or any Guarantor in excess of $2,000,000 (other than Indebtedness described in Section 8.1.1) if the effect of such Default is to accelerate the maturity of any such Indebtedness or such Default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Indebtedness, or any trustee or agent for such holders, to cause or declare such Indebtedness to become due and payable or to require such Indebtedness to be prepaid, redeemed, purchased or defeased, or to cause an offer to purchase or redeem such Indebtedness to be required to be made, prior to its expressed maturity.

SECTION 8.1.6 Judgments. Any final, non-appealable judgment or order for the payment of money in excess of $10,000,000 individually or in the aggregate (excluding, however, any amounts fully covered by insurance (less any applicable deductible) or indemnification and as to which the insurer or the indemnifying party, as the case may be, has acknowledged its responsibility to cover such judgment or order) shall be rendered against the Borrower, any Guarantor, the Property or the Improvements and such judgment shall not have been vacated or discharged or stayed or bonded pending appeal within thirty (30) days after the entry thereof.

SECTION 8.1.7 Pension Plans. Any of the following events shall occur with respect to any Pension Plan:

(a)     the institution of any steps by the Borrower, any member of its Controlled Group or any other Person to terminate a Pension Plan if, as a result of such termination, the Borrower or any such member would reasonably be required to make a contribution to such Pension Plan, or would reasonably expect to incur a liability or obligation to such Pension Plan, in excess of $1,000,000; or

(b)     a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA and such failure continues for sixty (60) days or more.

SECTION 8.1.8 Change of Control. Any Change of Control shall occur.

SECTION 8.1.9 Bankruptcy, Insolvency, etc. The Borrower or any Guarantor shall:

(a)     become insolvent or generally fail to pay, or admit in writing its inability or unwillingness generally to pay, debts as they become due;

(b)     apply for, consent to, or acquiesce in the appointment of a trustee, receiver, sequestrator or other custodian for any substantial part of the property of any thereof, or make a general assignment for the benefit of creditors;

(c)     in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within ninety (90) days; provided, however, that the Borrower hereby expressly authorizes the Administrative Agent and each Lender to appear in any court conducting any relevant proceeding during such ninety (90) day period to preserve, protect and defend their rights under this Agreement and the other Loan Documents;

 

  

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(d)     permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect thereof, and, if any such case or proceeding is not commenced by the Person which is the subject of such case or proceeding, such case or proceeding shall be consented to or acquiesced in by such Person or shall result in the entry of an order for relief or shall remain for ninety (90) days undismissed; provided, however, that the Borrower hereby expressly authorizes the Administrative Agent and each Lender to appear in any court conducting any such case or proceeding during such ninety (90) day period to preserve, protect and defend their rights under the Loan Documents; or

(e)     take any action authorizing, or in furtherance of, any of the foregoing.

SECTION 8.1.10 Impairment of Security, etc. Any Loan Document, or any Lien granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of the Borrower or any Guarantor, as applicable, the effect of which could reasonably be expected to have a Material Adverse Effect or the Borrower or any Guarantor shall, directly or indirectly, repudiate any Loan Document or contest in any manner such effectiveness, validity, binding nature or enforceability; or, except as permitted under any Loan Document, any Lien securing any Obligation shall, in whole or in part, cease to be a perfected First Priority Lien, except as otherwise permitted hereunder.

SECTION 8.1.11 Abandonment of the Property, the Improvements or Easements. The Borrower shall abandon the Property or the Improvements thereon or the Easements associated therewith which are material and necessary for the purpose of owning, maintaining and operating the Property, or shall otherwise cease operations of the Property or shall sell or otherwise dispose of its interest in the Property or the Improvements.

SECTION 8.1.12 Government Authorizations.

(a)     Any Permit necessary for the ownership, maintenance, financing or operation of the Property or the Improvements thereon shall be modified, refused, rejected, suspended, revoked or canceled, or allowed to lapse or a notice of a material violation is issued under any Permit, by the issuing agency or other Governmental Instrumentality having or asserting jurisdiction, or any proceeding is commenced by any Governmental Instrumentality for the purpose of modifying, suspending, revoking or canceling any Permit and such modification, refusal, rejection, revocation or loss of such Permit or such notice of a material violation or proceeding (i) is reasonably likely to have a Material Adverse Effect or (ii) is not reinstated within thirty (30) days thereafter.

 

  

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(b)     The zoning classification necessary for the ownership, maintenance or operation of the Property (or any portion thereof) as they are currently being operated shall be modified, refused, rejected, suspended, revoked or canceled, or allowed to lapse or a notice of a material violation is issued in connection with any Legal Requirement related to such zoning classification or other land use regulations by the issuing agency or other Governmental Instrumentality having jurisdiction, or any proceeding is commenced by any Governmental Instrumentality for the purpose of modifying, suspending, revoking or canceling any such zoning classification and such modification, refusal, rejection, revocation or loss of such zoning classification or such notice of a violation or proceeding in connection with any such Legal Requirement is reasonably likely to have a Material Adverse Effect.

SECTION 8.1.13 Borrower's Gaming Licenses. The termination of any Gaming License held by or issued to the Borrower.

SECTION 8.1.14 Key Person Management Agreement. The termination of the Key Person Management Agreement unless such termination is made in accordance with the procedures set forth in the terms and provisions of the Key Person Assignment and Subordination Agreement.

SECTION 8.1.15 Property Management Agreement. The termination of the Property Management Agreement unless such termination is made in accordance with the procedures set forth in the terms and provisions of the Property Management Assignment and Subordination Agreement.

SECTION 8.1.16 Material Adverse Effect. The occurrence of a Material Adverse Effect.

SECTION 8.2 Action if Bankruptcy. If any Event of Default described in Section 8.1.9 shall occur pursuant to the terms thereof, the Loan Commitments and the Letter of Credit Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable without notice or demand.

SECTION 8.3 Action if Other Event of Default. If any Event of Default (other than any Event of Default described in Section 8.1.9) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Administrative Agent upon the direction of the Required Lenders, shall by notice to the Borrower declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable or the Loan Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment. Notwithstanding anything to the contrary contained herein, each Lender acknowledges and agrees that no Lender shall have the right to proceed individually against the Borrower, any of the Guarantors or any of the Security with respect to any rights or remedies under the Loan Documents, and that this sentence constitutes an explicit statement by each Lender precluding any such action. In addition to the foregoing, the Administrative Agent upon direction of the Required Lenders may, without further notice of default, presentment or demand for payment, protest or notice of non-payment or dishonor, or other notices or demands of any kind, all such notices and demands being waived (to the extent permitted by applicable law), exercise any or all rights and remedies at law or in equity (in any combination or order that the Lenders may elect, subject to the foregoing), including, without prejudice to the Lenders' other rights and remedies, the following:

 

  

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(a)     refuse, and the Lenders and the Issuer may suspend or terminate the Lenders' obligation to make additional Borrowings or issue additional Letters of Credit, to process Borrowing Requests or Letter of Credit Issuance Requests and to perform any other obligations of the Lenders or the Issuer which are expressly subject to there not being a Default under this Agreement; the remedy set forth in this clause (a) shall be exercised automatically upon an Event of Default with respect to the Borrower described in Section 8.1.9;

(b)     make or do the same in such manner and to such extent as the Lenders or the Issuer may deem necessary to protect the Security hereof, the Lenders and the Issuer being authorized to enter upon and take possession of the Property for such purposes, and any sums expended for such purposes shall become part of the Indebtedness evidenced and secured by the Deed of Trust;

(c)     commence, appear in and/or defend any action or proceedings purporting to affect the Security hereof, and/or any additional or other security therefor, the interests, rights, powers or duties of the Lenders or the Issuer hereunder, whether brought by or against the Borrower, the Lenders or the Issuer;

(d)     pay, purchase, contest or compromise any Claim, debt, Lien, charge or encumbrance that in the judgment of the Lenders or the Issuer may impair or reasonably appear to impair the security of any Deed of Trust or the other Loan Documents, the interests of the Lenders or the Issuer or the rights, powers and/or duties of the Lenders or the Issuer hereunder and any sums expended for such purposes shall become part of the Indebtedness evidenced and secured by the Loan Documents;

(e)     the Lenders and/or the Issuer (and their respective nominees and/or designees) are authorized either by themselves or by their agents or by a receiver appointed by a court of competent jurisdiction, to enter into and upon and take and hold possession of any portion or the Property and/or the Improvements thereon, both real and personal, and exclude the Borrower and all other Persons therefrom and thereupon the Lenders and/or the Issuer (or their respective nominees and/or designees) may, (u) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct business thereat, (v) take possession of all materials, supplies, tools, equipment and construction facilities and appliances located on the Property and perform any and all work and labor existing at the time the Lenders and/or the Issuer (or their respective nominees and/or designees) enter into possession of the Property and perform any and all work and labor necessary to operate and maintain the Property, and all sums expended in so doing, together with interest on such total amount at the rate set forth in Section 3.2.2, shall be repaid by the Borrower to the Lenders and/or the Issuer upon demand and shall be secured by the Loan Documents, (w) employ watchmen to protect the Property, (x) make alterations, additions, renewals, replacements and improvements to the Property, (y) exercise all rights and powers of the Borrower with respect to the Property and pursuant to or under the Loan Documents or any agreements relating to the Property, whether in the name of the Borrower or otherwise, including the right to make, cancel, enforce or modify any agreements relating to the Property, obtain and evict tenants and other Persons, and demand, sue for, collect and receive all earnings, revenues, rents, issues, profits and other income from the Property, and every part thereof, or any agreements relating to the Property and (z) apply the receipts therefrom to the payment of the Indebtedness evidenced and secured by the Loan Documents in accordance with the Loan Documents after deducting therefrom all expenses (including reasonable attorneys' fees and costs and expenses) incurred in connection with the aforesaid operations and all amounts to pay the Taxes, Impositions, assessments, insurance and other charges in connection with the Property as well as just and reasonable compensation for the services of the Administrative Agent, the Issuer, the Lenders and their counsel, agents and employees;

 

  

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(f)     exercise all rights and remedies under any Deed of Trust, any Assignment of Leases and Rents, the Security Agreement and the other Loan Documents;

(g)     institute an action, suit or proceeding in equity for the specific performance by the Borrower of any covenant, condition, or agreement contained herein or in any of the other Loan Documents;

(h)     apply, ex parte and without notice to any Person, for the appointment of a custodian, receiver, liquidator or conservator of the Property, without regard for the adequacy of the security for the Indebtedness evidenced and secured by the Loan Documents;

(i)      set off and apply all monies on deposit in any account or any other monies of the Borrower on deposit with the Administrative Agent to the satisfaction of the Obligations under all of the Loan Documents;

(j)      engage an Appraiser to obtain an appraisal of the Property which (i) complies with the appraisal standards set forth in FIRREA, (ii) is prepared in accordance with the Uniform Standards of Professional Appraisal Practice as promulgated by The Appraisal Foundation and the Standards of Professional Appraisal Practice and Code of Ethics of the Appraisal Institute and (iii) is otherwise in form and content reasonably satisfactory to the Administrative Agent; and

(k)     exercise any and all rights and remedies available to it under applicable law or any of the Loan Documents.

Except as otherwise set forth herein, all sums expended by the Lenders and/or the Issuer for any of the purposes described above shall be deemed to have been advanced to the Borrower under and pursuant to the provisions of this Agreement, shall bear interest at the rate of interest set forth in Section 3.2.2 and shall be secured by the Deed of Trust. The Administrative Agent, the Issuer or the Lenders (or their respective nominees and/or designees) may at any time discontinue any action or remedy commenced by it or them, as the case may be, or change any course of action undertaken by it or them, and in such event, the Administrative Agent, the Issuer and the Lenders (or their respective nominees and/or designees) shall not be bound by any requirements or limitations of time contained in any Deed of Trust or the other Loan Documents. For the foregoing purposes, the Borrower to the fullest extent permitted by law, hereby constitutes and appoints the Administrative Agent (or the Administrative Agent's nominee or designee) as the true and lawful agent and attorney-in-fact of the Borrower with full power of substitution and hereby empowers the Administrative Agent (and its nominee or designee) to take such action and require such performance as it deems necessary or desirable. This agency and power of attorney shall be deemed to be coupled with an interest and shall be irrevocable.

 

  

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ARTICLE IX

THE ADMINISTRATIVE AGENT

SECTION 9.1 Designation of the Administrative Agent. Each Lender and the Issuer hereby makes the following designations:

(a)     Each Lender and Issuer hereby designates Wells Fargo to act as the Administrative Agent under and for purposes of this Agreement and the other Loan Documents and authorizes Wells Fargo, in its capacity as the Administrative Agent, to act on behalf of the Lenders under this Agreement and the other Loan Documents. Subject to the terms and conditions hereof, Wells Fargo accepts such appointment and agrees to act as the Administrative Agent on behalf of the Lenders in accordance with the provisions of this Agreement and the other Loan Documents. Each Lender agrees that the Administrative Agent may delegate its rights and powers, as its deems appropriate in its sole discretion and that any such sub-agent shall implement all such rights and powers on behalf of the Administrative Agent that are required of the Administrative Agent on behalf of the Lenders. The Administrative Agent and any such sub-agent may perform any and all of their duties and exercise their rights and powers through their respective Affiliates, directors, officers, employees, agents and advisors. The exculpatory provisions of Section 9.3 shall apply to any such sub-agent and each such Affiliate, director, officer, employee, agent and advisor and to their respective activities. The Administrative Agent may replace such sub-agent upon consent of the Required Lenders and the exculpatory provisions of Section 9.3 shall apply to such replacement sub-agent.

(b)     Each Lender authorizes the Administrative Agent to act on behalf of such Lender under this Agreement and the other Loan Documents and, in the absence of other written instructions from the Required Lenders received from time to time by the Administrative Agent (with respect to which the Administrative Agent agrees that it will comply, except as otherwise provided in this Section or as otherwise advised by counsel in order to avoid contravention of applicable law), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Administrative Agent, by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto.

 

  

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(c)     Each Lender hereby indemnifies (which indemnity shall survive any termination of this Agreement) the Administrative Agent, pro rata according to such Lender's Percentage, from and against any and all liabilities, obligations, losses, damages, Claims, costs or expenses of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against, the Administrative Agent in any way relating to or arising out of this Agreement or the other Loan Documents, including reasonable attorneys' fees, consultants' fees and as to which the Administrative Agent is not reimbursed by the Borrower; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, Claims, costs or expenses (i) which are determined by a court of competent jurisdiction in a final proceeding to have resulted solely from the gross negligence or willful misconduct of the Administrative Agent or (ii) which arise from the failure of another Lender to advance such Lender's Percentage of any Loans to be made to the Borrower (in which case such other Lender shall have responsibility for indemnification therefor). The Administrative Agent shall not be required to take any action under any Loan Document, or to prosecute or defend any suit in respect of any Loan Document, unless the Administrative Agent is indemnified hereunder to its satisfaction. If any indemnity in favor of the Administrative Agent shall be or become, in the respective determination of the Administrative Agent, inadequate, the Administrative Agent may call for additional indemnification from the Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is given.

SECTION 9.2 Funding Reliance, etc. Unless the Administrative Agent shall have been notified by telephone, confirmed in writing, by any Lender by 2:00 p.m. Pacific time on the Business Day prior to a Borrowing that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent and, in reliance upon such assumption, make available to the Borrower a corresponding amount. If and to the extent that such Lender shall not have made such amount available to the Administrative Agent, such Lender and the Borrower severally agree to repay the Administrative Agent forthwith on demand such corresponding amount, together with interest thereon, for each day from the date the Administrative Agent made such amount available to the Borrower to the date such amount is repaid to the Administrative Agent, at the Interest Rate applicable at the time to Loans comprising such Borrowing in the case of the Borrower and at the Federal Funds Rate (in the case of a Lender) (for the first two (2) Business Days after which such amount has not been repaid) and thereafter at the Interest Rate applicable to Loans comprising such Borrowing. Nothing in this Section shall affect or impair the rights or remedies of the Borrower against such Lender so long as such amount and interest, if any, has been repaid by the Borrower to the Administrative Agent.

SECTION 9.3 Exculpation. The Administrative Agent shall have no obligations except those expressly set forth herein. Without limiting the generality of the foregoing, neither the Administrative Agent nor any of the Administrative Agent's directors, officers, employees or agents (i) shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (ii) shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing by the Required Lenders (or such other Lenders as shall be required by Section 10.1), (iii) except as expressly set forth herein, shall have any duty to disclose, and shall not be liable for failure to disclose any information relating to the Borrower that is communicated to or obtained by the Person serving as the Administrative Agent or any of the Administrative Agent's Affiliates, (iv) shall be liable for any action taken by the Administrative Agent with the consent or at the request of the Required Lenders (or such other number of Lenders as shall be required by Section 10.1), (v) shall be deemed to have knowledge of any Default unless and until written notice thereof is given to either the Administrative Agent by the Borrower or a Lender, (vi) shall be liable to any Lender for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for the Administrative Agent's own willful misconduct or gross negligence, (vii) shall be responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due execution of this Agreement or any other Loan Document, (viii) shall be responsible for the creation, perfection or priority of any Liens purported to be created by any of the Loan Documents, (ix) shall be responsible for the validity, genuineness, enforceability, existence, value or sufficiency of any collateral security or (x) shall have any duty to make any inquiry respecting the performance by the Borrower of its obligations hereunder or under any other Loan Document. Any inquiry which may be made by the Administrative Agent shall not obligate the Administrative Agent to make any further inquiry or to take any action. The Administrative Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement or writing which the Administrative Agent believes to be genuine and to have been presented by a proper Person.

 

  

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SECTION 9.4 Successors. The Administrative Agent may resign as such at any time upon at least thirty (30) days' prior notice to the Borrower and the Lenders. If the Administrative Agent at any time shall resign, the Required Lenders may, after consultation with the Borrower (but only if no Default then exists hereunder) appoint another Lender as a successor to the Administrative Agent which shall thereupon become the Administrative Agent hereunder. If no successor for the Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within thirty (30) days after the retiring Administrative Agent's giving notice of resignation, then the Required Lenders shall be appointed the successor Administrative Agent. Upon the acceptance of any appointment by a successor Administrative Agent hereunder, such successor Administrative Agent shall be entitled to receive from the retiring Administrative Agent such documents of transfer and assignment as such successor Administrative Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges, obligations and duties of such retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any Administrative Agent's resignation, the provisions of

(a)     this Article IX shall inure to its benefit as to any actions taken or omitted to be taken by such retiring Administrative Agent while it was the Administrative Agent under this Agreement; and

(b)     Section 10.3 and Section 10.4 shall continue to inure to its benefit.

 

  

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SECTION 9.5 Loans by the Administrative Agent. The Administrative Agent shall have the same rights and powers with respect to (x) the Loans made by it or any of its Affiliates, and (y) the Notes held by it or any of its Affiliates as any other Lender and may exercise the same as if it were not the Administrative Agent hereunder. Wells Fargo and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower and its Affiliates as if Wells Fargo were not the Administrative Agent hereunder.

SECTION 9.6 Credit Decisions. Each Lender acknowledges that it has, independently of the Administrative Agent and each other Lender, and based on such Lender's review of the financial information of the Borrower, the Guarantors, this Agreement, the other Loan Documents (the terms and provisions of which being satisfactory to such Lender) and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend its Loan Commitments. Each Lender also acknowledges that it will, independently of the Administrative Agent and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document.

SECTION 9.7 Copies, etc. The Administrative Agent shall give prompt notice to each Lender of each notice or request required or permitted to be given to the Administrative Agent by the Borrower pursuant to the terms of this Agreement and the other Loan Documents (unless concurrently delivered to the Lenders by the Borrower). The Administrative Agent will distribute to each Lender each document or instrument received for its account and copies of all other communications received by the Administrative Agent from the Borrower for distribution to the Lenders by the Administrative Agent in accordance with the terms of this Agreement or any other Loan Document.

SECTION 9.8 Consultants and Reports.

(a)     The Administrative Agent, in its sole discretion, may remove from time to time the Independent Consultants and appoint replacements as the Administrative Agent may choose in accordance with this Agreement. As soon as practicable, notice of any replacement Independent Consultant shall be given by the Administrative Agent to the Borrower and the Independent Consultant being replaced. All reasonable fees and expenses of the Independent Consultants (whether the original ones or replacements) shall be paid by the Borrower.

(b)     Each of the Independent Consultants shall be contractually obligated to the Administrative Agent to carry out the activities required of it in the Loan Documents and as otherwise requested by the Administrative Agent. The Borrower acknowledges that it will not have any cause of action or Claim against any Independent Consultant resulting from any decision made or not made, any action taken or not taken or any advice given by such Independent Consultant in the due performance in good faith of its duties except for the gross negligence and willful misconduct of the Independent Consultant; provided, however, the foregoing standard of care shall not affect the standard of care which is required under any letter or agreement pursuant to which an Independent Consultant was engaged or the rights, remedies and options of the Lenders under any such letter or agreement.

 

  

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ARTICLE X

MISCELLANEOUS PROVISIONS

SECTION 10.1 Waivers, Amendments, etc. The provisions of this Agreement and of each other Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by the Borrower and the Required Lenders; provided, however, that no such amendment, modification or waiver shall:

(a)     extend any Loan Commitment Termination Date or modify this Section without the consent of all Lenders;

(b)     increase the aggregate amount of any Lender's then existing Loan Commitment Amounts, increase the aggregate amount of any Loans required to be made by a Lender pursuant to its Loan Commitments or reduce any fees described in Article III payable to any Lender without the consent of such affected Lender;

(c)     extend the Stated Maturity Date for any Lender's Loan, or reduce the principal amount of or rate of interest on any Lender's Loan, without the consent of such Lender; provided, however, that any vote to rescind any acceleration made pursuant to Section 8.2 or 8.3 of amounts owing with respect to the Loans and other Obligations shall require the consent of the Required Lenders;

(d)     change the definition of “Required Lenders” or any requirement hereunder that any particular action be taken by all Lenders without the consent of all Lenders;

(e)     discharge the Lien of any Deed of Trust, release the Guarantors under the Guaranty other than in accordance with the terms thereof, or release any material portion of the other security interests granted pursuant to the Loan Documents, in each case, without the consent of all Lenders as expressly provided herein or therein;

(f)     increase the Stated Amount of any Letter of Credit unless consented to by the Issuer; or

(g)     affect adversely the interests, rights or obligations of the Administrative Agent, the Issuer or any Lender hereunder, unless consented to by the Administrative Agent, the Issuer or such Lender.

No failure or delay on the part of the Administrative Agent, the Issuer or any Lender in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Administrative Agent, the Issuer or any Lender under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.

 

  

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SECTION 10.2 Notices. All notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing and addressed, delivered or transmitted to such party at its address or facsimile number set forth below its signature hereto or set forth in the Lender Assignment Agreement or at such other address or facsimile number as may be designated by such party in a notice to the other parties. All such notices and communications shall be deemed to have been properly given if (x) hand delivered with receipt acknowledged by the recipient, (y) mailed, upon the fifth Business Day after the date on which it is deposited in registered or certified mail, postage prepaid, return receipt requested or (z) by Federal Express or other nationally-recognized express courier service with instructions to deliver on the following Business Day, on the next Business Day after delivery to such express courier service. Notices and other communications may also be properly given by facsimile but shall be deemed to be received upon automatic facsimile confirmation of receipt thereof by the intended recipient machine therefor with a copy of such notice or communication to be given in the manner provided in the second sentence of this Section; provided, however, that the failure to deliver a copy in accordance with the second sentence of this Section shall not invalidate the effectiveness of such facsimile notice.

SECTION 10.3 Payment of Fees, Costs and Expenses. The Borrower agrees to pay on demand all fees, costs and expenses of the Administrative Agent (including the reasonable fees and out-of-pocket expenses of counsel to the Administrative Agent and of local counsel, if any, who may be retained by counsel to the Administrative Agent) in connection with

(a)     the negotiation, preparation, execution and delivery of this Agreement and of each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements or other modifications to this Agreement or any other Loan Document as may from time to time hereafter be required, whether or not the transactions contemplated hereby are consummated;

(b)     the filing, recording, refiling or rerecording of any Loan Document or any Uniform Commercial Code financing statements relating thereto and all amendments, supplements, amendments and restatements and other modifications to any thereof and any and all other documents or instruments of further assurance required to be filed or recorded or refiled or rerecorded by the terms hereof or the terms of any Loan Document;

(c)     the preparation and review of the form of any document or instrument relevant to this Agreement or any other Loan Document; and

(d)     the preparation of any information or response required with respect to any investigative request or inquiry, approval, findings of suitability or any other response or communication involving a Governmental Instrumentality arising out of this Agreement, any other Loan Documents or any Obligation evidenced and secured by the Loan Documents or the participation in any public or investigatory hearing or meeting.

 

  

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The Borrower further agrees to pay, and to save the Administrative Agent, the Issuer and the Lenders harmless from all liability for, any stamp or other taxes which may be payable in connection with the execution or delivery of this Agreement, the Loans hereunder, or the issuance of the Notes or any other Loan Documents. The Borrower also agrees to reimburse the Administrative Agent, the Issuer and, following a Default of the nature set forth in Section 8.1.9 or an Event of Default, each Lender upon demand for all reasonable out-of-pocket expenses (including reasonable attorneys' fees and legal expenses of counsel and fees and expenses of consultants to the Administrative Agent, the Issuer and the Lenders, and, based upon the written advice of legal counsel that, in such counsel's judgment, having a common counsel for the Administrative Agent, the Issuer and the Lenders would present such counsel with a conflict of interest, of other separate counsel for each of the foregoing Persons selected by the Person so affected by such conflict in connection with (x) the negotiation of any restructuring or “work-out” with the Borrower, whether or not consummated, of any Obligations and (y) the enforcement of any Obligations.

SECTION 10.4 Indemnification. In consideration of the execution and delivery of this Agreement by each Lender and the extension of the Loan Commitments, the Borrower hereby indemnifies, exonerates and holds the Administrative Agent, the Issuer and each Lender and each of their respective officers, directors, employees and agents (collectively, the “Indemnified Parties”) free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, and expenses incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements, whether incurred in connection with actions (i) between or among the parties hereto or (ii) between or among one or more of the parties hereto and third parties (collectively, the “Indemnified Liabilities”), incurred by the Indemnified Parties or any of them as a result of, or arising out of, or relating to

(a)     any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Loans, including all Indemnified Liabilities arising in connection with the Transaction;

(b)     the entering into and performance of this Agreement and any other Loan Document by any of the Indemnified Parties (including any action brought by or on behalf of the Borrower as the result of any determination by the Required Lenders pursuant to Article VI not to fund the Loans); provided, however, that any such action is resolved in favor of such Indemnified Party;

(c)     any investigation, litigation or proceeding related to any acquisition or proposed acquisition by the Borrower of all or any portion of the stock or assets of any Person, whether or not the Administrative Agent, the Issuer or any Lender is party thereto;

(d)     any investigation, litigation or proceeding related to any environmental cleanup, audit, compliance or other matter relating to the protection of the environment or the Release by the Borrower;

 

  

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(e)     the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or releases from, the Property owned or operated by the Borrower of any Hazardous Substances (including any losses, liabilities, damages, injuries, costs, expenses or Claims asserted or arising under any Environmental Law), regardless of whether caused by, or within the control of, the Borrower; or

(f)      each Lender's Environmental Liability (the indemnification herein for any Environmental Claim shall survive repayment of the Notes and any transfer of the Property or other property of the Borrower by foreclosure or by a deed in lieu of foreclosure, regardless of whether caused by, or within the control of, the Borrower but such indemnification shall not apply to Environmental Matters first occurring (as opposed to first discovered) after any such transfer);

except for, in each case, any such Indemnified Liabilities arising for the account of a particular Indemnified Party by reason of the relevant Indemnified Party's gross negligence or willful misconduct. The Borrower and its successors and assigns hereby waive, release and agree not to make any Claim or bring any cost recovery action against the Administrative Agent, the Issuer or any Lender under CERCLA or any state equivalent, or any similar law now existing or hereafter enacted. It is expressly understood and agreed that to the extent that any of the Indemnified Parties is strictly liable under any Environmental Laws, the Borrower's obligation to such Person under this indemnity shall likewise be without regard to fault on the part of the Borrower with respect to the violation or condition which results in liability of such Person. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

SECTION 10.5 Survival. The obligations of the Borrower under Sections 4.1, 4.2, 10.3 and 10.4, and the obligations of the Lenders under Section 8.1, shall in each case survive any assignment from one Lender to another (in the case of Sections 10.3 and 10.4) and any termination of this Agreement, the payment in full of all the Obligations and the termination of all the Loan Commitments. The representations and warranties made by the Borrower in this Agreement and in each other Loan Document shall survive the execution and delivery of this Agreement and each such other Loan Document.

SECTION 10.6 Severability. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 10.7 Headings. The various headings of this Agreement and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such other Loan Document or any provisions hereof or thereof.

SECTION 10.8 Execution in Counterparts, Effectiveness, etc. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrower, the Administrative Agent, the Issuer and each Lender.

 

  

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SECTION 10.9 Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES AND EACH OTHER LOAN DOCUMENT (INCLUDING PROVISIONS WITH RESPECT TO INTEREST, LOAN CHARGES AND COMMITMENT FEES) SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSES SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES UNDER A LOAN DOCUMENT IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. This Agreement, the Notes and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede any and all prior agreements, written or oral, with respect thereto.

SECTION 10.10 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that:

(a)     the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the Administrative Agent, the Issuer and all Lenders, in their sole discretion; and

(b)     the rights of sale, assignment and transfer of the Lenders are subject to Section 10.11.

SECTION 10.11 Sale and Transfer of Loans and Notes; Participations in Loans and Notes. Each Lender may assign, or sell participations in, its Loans and Loan Commitments to one or more other Persons in accordance with this Section 10.11.

SECTION 10.11.1 Assignments.

(a)     Any Lender,

(i)      with the consent of the Borrower (prior to the existence of an Event of Default), such consent not to be unreasonably withheld, conditioned or delayed, the Administrative Agent and the Issuer, may at any time assign or sell all or any fraction of such Lender's total Loans and Loan Commitments and delegate to one or more commercial banks, funds or other financial institutions, and

(ii)     with notice to the Borrower, the Administrative Agent and the Issuer, but without the consent of the Borrower, the Administrative Agent or the Issuer, may assign and delegate to any of its Affiliates, any other Lender, any Approved Fund or any Eligible Assignee,

 

  

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(each Person described in either of the foregoing clauses as being the Person to whom such assignment and delegation is to be made, being hereinafter referred to as an “Assignee Lender”) in a minimum aggregate amount of $1,000,000 (or, if less, the entire remaining amount of such Lender's Loans and Loan Commitments) or such lesser amount agreed to by the Administrative Agent and the Issuer, provided, that such minimum aggregate amount shall not be applicable in the case of assignments by such Lender to another Lender, any Approved Fund or its Affiliate. Notwithstanding anything to the contrary contained herein, except during the existence and the continuance of an Event of Default, WFPI shall not be permitted to assign, whether by one or more assignments, in the aggregate, more than 49.9% of its interest in the Loans or its portion of the Loan Commitment without the prior consent of the Borrower, such consent not to be unreasonably withheld, conditioned or delayed, other than to any Affiliates of WFPI.

(b)     The Borrower, the Administrative Agent and the Issuer shall be entitled to continue to deal solely and directly with such Lender in connection with the interests so assigned and delegated to an Assignee Lender until

(i)       notice of such assignment and delegation, together with (A) payment instructions, (B) the Internal Revenue Service Forms or other statements contemplated or required to be delivered pursuant to Section 4.6 and (C) addresses and related information with respect to such Assignee Lender, shall have been delivered to the Borrower, the Administrative Agent and the Issuer by such Lender and such Assignee Lender;

(ii)      such Assignee Lender shall have executed and delivered to the Borrower, the Administrative Agent and the Issuer a Lender Assignment Agreement, accepted by the Administrative Agent and the Issuer; and

(iii)     the processing fees described below shall have been paid.

(c)     From and after the date that the Administrative Agent and the Issuer accept such Lender Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to have become a party hereto and to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee Lender in connection with such Lender Assignment Agreement, shall have the rights and obligations of a Lender hereunder and under the other Loan Documents, and (y) the assignor Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it in connection with such Lender Assignment Agreement, shall be released from its obligations hereunder and under the other Loan Documents with respect thereto. Within five (5) Business Days after its receipt of notice that the Administrative Agent and the Issuer have each received and accepted an executed Lender Assignment Agreement, subject, however, to clause (c), the Borrower shall execute and deliver to the Administrative Agent (for delivery to the relevant Assignee Lender) a new Note evidencing such Assignee Lender's assigned Loans and Loan Commitments and, if the assignor Lender has retained Loans and Loan Commitments hereunder, a replacement Note in the principal amount of the Loans and Loan Commitments retained by the assignor Lender hereunder (such Note to be in exchange for, but not in payment of, the Note then held by such assignor Lender). Each such Note shall be dated the date of the predecessor Note. The assignor Lender shall mark each predecessor Note “exchanged” and deliver each of them to the Borrower. Accrued interest on that part of each predecessor Note evidenced by a new Note, and accrued fees, shall be paid as provided in the Lender Assignment Agreement. Accrued interest on that part of each predecessor Note evidenced by a replacement Note shall be paid to the assignor Lender. Accrued interest and accrued fees shall be paid at the same time or times provided in the predecessor Note and in this Agreement. Such assignor Lender or such Assignee Lender must also pay a processing fee in the amount of $3,500 to the Administrative Agent upon delivery of any Lender Assignment Agreement. Any attempted assignment and delegation not made in accordance with this Section 10.11.1 shall be null and void. Notwithstanding anything to the contrary set forth above, any Lender may (without requesting the consent of the Borrower, the Administrative Agent or the Issuer) pledge its Loans to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank, and any Lender that is an investment fund that invests in bank loans may, without the consent of the Administrative Agent, the Issuer or the Borrower, pledge all or any portion of its interest and rights (but may not delegate any of its duties or obligations hereunder or under any other Loan Document, including its Loan Commitment(s), if any) to any trustee or any other representative of holders of obligations owed or securities issued by such investment fund as security for such obligations or securities.

 

  

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SECTION 10.11.2 Participations. Upon prior written notice to the Administrative Agent and the Issuer, any Lender may at any time sell to one or more commercial banks or other Persons (other than the Borrower, any Guarantor or an Affiliate of the Borrower or any Guarantor) (each of such commercial banks and other Persons being herein called a “Participant”) participating interests in any of the Loans, Loan Commitments, or other interests of such Lender hereunder; provided, however, that

(a)     no participation contemplated in this Section shall relieve such Lender from its Loan Commitments or its other obligations hereunder or under any other Loan Document;

(b)     such Lender shall remain solely responsible for the performance of its Loan Commitments and such other obligations;

(c)     the Borrower, each Guarantor and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and each of the other Loan Documents;

(d)     no Participant, unless such Participant is an Affiliate of such Lender or an Approved Fund or is itself a Lender, shall be entitled to require such Lender to take or refrain from taking any action hereunder or under any other Loan Document, except that such Lender may agree with any Participant that such Lender will not, without such Participant's consent, take any actions of the type described in clauses (a), (b) or (c) of Section 10.1; and

 

  

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(e)      the Borrower shall not be required to pay any amount under this Agreement that is greater than the amount which it would have been required to pay had no participating interest been sold.

The Borrower acknowledges and agrees that each Participant, for purposes of Sections 4.1, 4.2, 4.4 or 4.5 shall be considered a Lender. Each Participant shall only be indemnified for increased costs pursuant to Section 4.1 or Section 4.2 if and to the extent that the Lender which sold such participating interest to such Participant concurrently is entitled to make, and does make, a Claim on the Borrower for such increased costs. Any Lender that sells a participating interest in any Loan, Loan Commitment or other interest to a Participant under this Section 10.11.2 shall indemnify and hold harmless the Borrower and the Administrative Agent from and against any Taxes, penalties, interest or other costs or losses (including reasonable attorneys' fees and expenses) incurred or payable by the Borrower or the Administrative Agent as a result of the failure of the Borrower or the Administrative Agent to comply with its obligations to deduct or withhold any Taxes from any payments made pursuant to this Agreement to such Lender, the Issuer or the Administrative Agent, as the case may be, which Taxes would not have been incurred or payable if such Participant had been a Lender organized under the laws of a jurisdiction other than the United States that was entitled to deliver to the Borrower, the Administrative Agent, the Issuer or such Lender, and did in fact so deliver, a duly completed and valid Form W-8BEN, Form W-8ECI or W-9 (or applicable successor form) entitling such Participant to receive payments under this Agreement without deduction or withholding of any United States federal taxes.

SECTION 10.12 Cooperation by the Borrower and the Guarantors; Acknowledgment and Agreement by Borrower of Syndication.

(a)     The Borrower covenants and agrees actively to, and shall cause the Guarantors to, assist Wells Fargo, in all reasonable respects, in the syndication of the Loans, which assistance will require, among other things, that the Borrower and the Guarantors provide all information regarding the Transactions that Wells Fargo deems to be reasonably necessary to complete successfully the syndication. In addition, the Borrower also agrees to make certain members of its management and its consultants and advisors available upon reasonable prior notice during regular business hours to answer questions regarding the Transactions.

(b)     Notwithstanding anything to the contrary contained herein, the Borrower acknowledges and agrees that Wells Fargo, in its sole discretion, shall have the right to syndicate and/or grant participations in the Loans, the reasonable costs and expenses of which (including, without limitation, reasonable legal fees and expenses) shall be borne by the Borrower. Wells Fargo shall have the right to require, and the Borrower hereby agrees to execute, any and all necessary amendments to this Agreement, each other Loan Document (including, without limitation, an amendment to the allocation of the aggregate principal amount of the Loans), and to cause the Guarantors to reaffirm their obligations under the Loan Documents to which it is a party in respect of any such amendment, provided the Borrower shall not be required to pay, with the exception of the reasonable costs and expenses set forth in the preceding sentence of this Section 10.12(b), any amount under this Agreement or any other Loan Document, including, without limitation, as principal, interest or other fees, that is greater than the amount which it would have been required to pay had syndication not occurred (other than amounts set forth in this Section 10.12(b)) or increase its obligations or liabilities under the Loan Documents.

 

  

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SECTION 10.13 Other Transactions; Publicity. Nothing contained herein shall preclude the Administrative Agent, the Issuer or any other Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Affiliates in which the Borrower or such Affiliate is not restricted hereby from engaging with any other Person. The Administrative Agent shall have the right to publicly announce that Administrative Agent has made and closed the Loans to the Borrower.

SECTION 10.14 Execution by Authorized Representative. Any signature by any Authorized Representative on this Agreement, any Loan Document and any other Instrument and certificate executed or to be executed pursuant to or in connection with this Agreement or such other Loan Documents is provided only in such Authorized Representative's capacity as an officer or member of the Person in question and not in any way in such Authorized Representative's personal capacity.

SECTION 10.15 Forum Selection and Consent to Jurisdiction. EACH OF THE PARTIES HERETO AND ITS SUCCESSORS AND ASSIGNS AGREES THAT ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE ISSUER, THE LENDERS, THE BORROWER, OR THE GUARANTORS IN CONNECTION HEREWITH OR THEREWITH SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN (i) THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND (ii) SOLELY WITH RESPECT TO ACTIONS BROUGHT AGAINST IT AS A DEFENDANT, THE COMPETENT COURT OF ITS CORPORATE DOMICILE; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO SUCH JURISDICTIONS FOR SUCH PURPOSES AND, TO THE FULLEST EXTENT PERMITTED BY LAW, (A) IRREVOCABLY WAIVES ANY OBJECTION IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT; (B) IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; (C) IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH LITIGATION BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION IN ANY SUCH LITIGATION, WHICH IT MAY NOW OR HEREAFTER BE AFFORDED BY LAW, IN ANY OTHER FORUM. EACH OF THE PARTIES HERETO FURTHER AGREES THAT A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY MANNER PROVIDED BY LAW, SUBJECT TO THE PARTIES' RIGHT TO CONTEST SUCH JUDGMENT BY MOTION OR APPEAL ON ANY GROUNDS NOT EXPRESSLY WAIVED IN THIS SECTION 10.15. THE BORROWER HEREBY IRREVOCABLY APPOINTS CT CORPORATION SYSTEM (THE “PROCESS AGENT”), WITH AN OFFICE ON THE DATE HEREOF AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011, UNITED STATES, AS ITS AGENT TO RECEIVE, ON THE BORROWER'S BEHALF AND ON BEHALF OF THE BORROWER'S PROPERTY, SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE BORROWER IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS WITH COPY TO THE BORROWER. THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE AND/OR FORWARD SUCH PROCESS ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR NOTICES SPECIFIED IN SECTION 10.2. TO THE EXTENT THAT ANY OF THE PARTIES HERETO HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

  

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SECTION 10.16 Waiver of Jury Trial; Judicial Reference. THE ADMINISTRATIVE AGENT, THE ISSUER, THE LENDERS, AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE ISSUER, THE LENDERS OR THE BORROWER IN CONNECTION HEREWITH OR THEREWITH. THE ADMINISTRATIVE AGENT, THE ISSUER, THE LENDERS, AND THE BORROWER EACH ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THEM ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.

SECTION 10.17 Maximum Rate of Interest. Nothing contained in this Agreement or in any other Loan Documents shall be construed to permit the Lenders to charge or receive at any time interest, fees or other charges in excess of the amounts which the Lenders are legally entitled to charge and receive under any law to which such interest, fees or charges are subject. In no contingency or event whatsoever shall the compensation payable to the Lenders by any Person, howsoever characterized or computed, hereunder or under any of the other Loan Documents, exceed the highest rate permissible under any law to which such compensation is subject. There is no intention that the Lenders shall contract for, charge or receive compensation in excess of the highest lawful rate, and, in the event it should be determined that the Lenders have contracted for any rate of interest in excess of the highest lawful rate, then ipso facto such rate shall be reduced to the highest lawful rate so that no amounts shall be charged or received which are in excess thereof, and, in the event it should be determined that any excess over such highest lawful rate has been charged or received, the Lenders shall promptly refund such excess to the Person entitled thereto; provided, however, that, if lawful, any such excess shall be paid by the Borrower to the Lenders as additional interest (accruing at a rate equal to the maximum legal rate minus the rate provided for hereunder) during any subsequent period when regular interest is accruing hereunder at less than the maximum legal rate.

 

  

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SECTION 10.18 Time of Essence. Time is of the essence as to all times and dates set forth in or applicable to this Agreement with respect to all payments to be made by or on behalf of the Borrower hereunder; provided, however, that whenever any payment to be made under the Loan Documents shall be stated to be due on a day other than a Business Day, such payment may be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation of interest payable hereunder.

SECTION 10.19 Consent or Approval of the Administrative Agent, the Issuer and the Lenders.

(a)     Any request by the Borrower for consent or approval by one or more of the Administrative Agent, the Issuer and/or the Lenders under this Agreement or any of the other Loan Documents shall be given in writing in accordance with Section 10.2. Except where a specific time period for response is otherwise provided in this Agreement, the Administrative Agent from which such consent has been requested shall have five (5) Business Days and the Issuer and the Lenders shall have fifteen (15) Business Days to grant or deny any such request. If the Administrative Agent from which such consent has been requested fails to respond to any such request in writing within such five (5) Business Day period or the Issuer or the Lenders fail to respond to any such request in writing within such fifteen (15) Business Day period, the Borrower's request shall be deemed disapproved.

(b)     No Claims may be made by the Borrower or any other Person against the Administrative Agent, the Issuer, the Lenders, any Affiliate of the foregoing, or the officers, directors, employees, attorneys, consultants or agents of any of them for consequential or punitive damages in respect of any Claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or by the other Loan Documents, or an act, omission, or event occurring in connection therewith; and the Borrower, for itself and for all Persons claiming by, through and under it, waives, releases, and agrees not to sue upon any Claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

  

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SECTION 10.20 No Third Party Beneficiary. All conditions of the obligations of the Lenders to make Loans and the Issuer to issue Letters of Credit hereunder are imposed solely and exclusively for the benefit of the Secured Parties, and no Person (x) shall have standing to require satisfaction of such conditions or be entitled to assume that the Lenders will refuse to make Loans and the Issuer will refuse to issue Letters of Credit in the absence of strict compliance with any or all of such conditions or (y) shall, under any circumstances, be deemed to be a beneficiary under this Agreement or of such conditions, any or all of which may be waived in whole or in part by the Administrative Agent, the Issuer or the Lenders at any time if they, in their sole discretion, deem it advisable to do so. The waiver by the Administrative Agent, the Issuer or the Lenders at any time of any of such conditions shall be deemed to be made pursuant to, and not in modification of, this Agreement.

SECTION 10.21 Cumulative Remedies. No right or remedy conferred upon the Administrative Agent, the Issuer or the Lenders in this Agreement is intended to be exclusive of any other right or remedy contained in the other Loan Documents or at law and equity and every such right and remedy shall be cumulative and shall be in addition to every other right or remedy contained in the other Loan Documents and as now or hereafter available to the Lenders at law or in equity, by statute or otherwise.

SECTION 10.22 Estoppel Certificates. The Borrower shall execute and deliver, or cause to be executed and delivered, to the Administrative Agent all instruments and certificates as the Administrative Agent may reasonably request (including estoppel certificates certifying that the Loans and each of the Loan Documents are in full force and effect and that there are no defenses or offsets, Claims or counterclaims with respect thereto or if there are, stating the nature of such defenses, offsets, Claims or counterclaims) to effect, confirm or assure the rights, remedies and Liens intended to be granted to the Lenders under the Loan Documents.

SECTION 10.23 Amendment and Restatement. The terms and provisions of the Existing Loan Agreement are hereby amended and restated in their entirety as set forth in this Agreement, and the terms of this Agreement shall supersede and control in all respects the terms, covenants, agreements, rights, obligations and conditions of such Existing Loan Agreement.

SECTION 10.24 Release. The Borrower, for itself and for all Persons and entities claiming by, through or under it, in consideration of the execution and delivery of this Agreement by the Administrative Agent, the Lenders and the Issuer and for other good and valuable consideration, receipt whereof is hereby acknowledged, releases and discharges the Administrative Agent, each Lender and the Issuer (collectively, the “Releasees”), each Releasee's predecessors (including, without limitation, predecessors by virtue of merger), successors and assigns, and all officers, directors, employees, agents, representatives, insurers and attorneys of each Releasee from all actions, counterclaims, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims, and demands whatsoever, in law, admiralty or equity, which the Borrower and any of its successors and assigns ever had, now have or hereafter can, shall or may have, against the Releasees, from the beginning of the world to the Effective Date, related to or arising out of the Transaction.

 

  

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[Signature pages follow]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

	  	
BORROWER:

 

TROPICANA LAS VEGAS, INC.,

a Nevada corporation

 

 

By: /s/ Joanne M. Beckett

       Name: Joanne M. Beckett

       Title: Vice President & General Counsel

 

 

Address for Notices:

Tropicana Las Vegas, Inc.

3801 Las Vegas Boulevard South

Las Vegas, NV 89101

Attention: Joanne Beckett

Facsimile No.: (702) 739-2703

 

With a copy to:

Glaser, Weil, Fink, Jacobs, Howard & Shapiro, LLP

10250 Constellation Boulevard, 19th Floor

Los Angeles, CA  90067

Attention: Carolyn C. Jordan, Esq.

Facsimile: (310) 556-2920

 

  

S-1

  

 

	
 

	
ADMINISTRATIVE AGENT:

 

WELLS FARGO BANK, N.A.,

as Administrative Agent

 

 

 

By: /s/ Andrew J. Nyquist

       Name: Andrew J. Nyquist

       Title: Vice President

 

 

Address for Notices:

Wells Fargo Bank, National Association

625 Marquette Avenue, 11th Floor

MAC: N9311-110

Minneapolis, Minnesota 55402

Attention: Andrew Nyquist,

                   Tropicana Loan Agreement

Facsimile:  (612) 667-9825

 

With a copy to:

Thompson Hine LLP

335 Madison Avenue, 12th Floor

New York, NY 10017

Attention: Mildred Quinones-Holmes

Facsimile: (212) 344-6101

 

  

S-2

  

 

	  	
ISSUER:

 

WELLS FARGO BANK, N.A.,

as Issuer

 

 

By: /s/ R. Michael Bohannon

       Name: R. Michael Bohannon

       Title: SVP

 

 

 

Address for Notices:

Wells Fargo Bank, N.A.

2450 Colorado Avenue

Suite 3000 West

Santa Monica, California 90404

Attention: Nik Aggerwal

Facsimile No.: (310) 453-7470

With a copy to:

Mayer Brown LLP

1675 Broadway

New York, New York 10019

Attention: Michael V. Morelli, Esq. 

Facsimile No.: (212) 849-5564

 

  

S-3

  

 

	 	
LENDER:

	 	 
	
Lender's Percentage:

 

Loan Commitments: 100%

	
WELLS FARGO PRINCIPAL INVESTMENTS, LLC

 

 

 

By: /s/ R. Michael Bohannon

       Name: R. Michael Bohannon

       Title: Managing Director

 

 

 

Address for Notices:

Wells Fargo Principal Investments, LLC

2450 Colorado Avenue

Suite 3000 West

Santa Monica, California 90404

Attention: Michael Bohannon

Facsimile No.: (310) 453-7470

With a copy to:

Mayer Brown LLP

1675 Broadway

New York, New York 10019

Attention: Michael V. Morelli, Esq.

Facsimile No.: (212) 849-5564

 

 

S-4ex10-1.htm

Exhibit 10.1

 

COMMON STOCK PURCHASE AGREEMENT

 

DATED AS OF AUGUST 9, 2012

 

BY AND BETWEEN

 

VRDT CORPORATION

 

AND

 

GEM GLOBAL YIELD FUND LIMITED

 

  

  

  

 

TABLE OF CONTENTS

 

Page

	
ARTICLE I DEFINITIONS

	
1

	
Section 1.1

	
Definitions.

	
1

	 	 	 
	
ARTICLE II PURCHASE AND SALE OF COMMON STOCK

	
4

	
Section 2.1

	
Purchase and Sale of Stock

	
4

	
Section 2.2

	
The Shares

	
4

	
Section 2.3

	
Registration Statement

	
4

	
Section 2.4

	
Purchase Price and Effective Date

	
4

	
Section 2.5

	
Current Report.

	
4

	 	 	 
	
ARTICLE III REPRESENTATIONS AND WARRANTIES

	
5

	
Section 3.1

	
Representations and Warranties of the Company

	
5

	
Section 3.2

	
Representatives and Warranties of the Purchaser

	
11

	 	 	 
	ARTICLE IV COVENANTS 	12
	
Section 4.1

	
Securities Compliance

	
12

	
Section 4.2

	
Registration and Listing

	
13

	
Section 4.3

	
Warrants

	
13

	
Section 4.4

	
Registration Rights Agreement

	
13

	
Section 4.5

	
Compliance with Laws

	
13

	
Section 4.6

	
Keeping of Records and Books of Account

	
13

	
Section 4.7

	
Limitations on Holdings and Issuances

	
14

	
Section 4.8

	
Registration Statement

	
14

	
Section 4.9

	
Other Agreements and Other Financings

	
14

	
Section 4.10

	
Stop Orders

	
14

	
Section 4.11

	
Selling Restrictions; Volume Limitations

	
15

	
Section 4.12

	
Structuring Fee

	
15

	
Section 4.13

	
Non-Public Information

	
15

	
Section 4.14

	
DWAC Eligibility

	
15

	 	 	 
	
ARTICLE V OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES

	
16

	
Section 5.1

	
Opinion of Counsel and Certificate

	
16

	
Section 5.2

	
Conditions Precedent to the Obligation of the Company to Sell the Shares

	
16

	
Section 5.3

	
Conditions Precedent to the Obligation of the Purchaser To Accept a Draw Down and Purchase the Shares

	
17

	 	 	 
	
ARTICLE VI DRAW DOWN TERMS

	

18

	
Section 6.1

	
Draw Down Terms

	
18

	
Section 6.2

	
Aggregate Limit

	
19

	 	 	 
	
ARTICLE VII FINATION

	

20

	
Section 7.1

	
Term, Termination by Mutual Consent

	
20

 

  

  

  

 

	
Section 7.2

	
Other Termination

	
20

	
Section 7.3

	
Effect of Termination

	
20

	 	 	 
	
ARTICLE VIII INDEMNIFICATION

	

21

	
Section 8.1

	
General Indemnity

	
21

	
Section 8.2

	
Indemnification Procedures.

	
21

	 	 	 
	
ARTICLE IX MISCELLANEOUS

	

22

	
Section 9.1

	
Fees and Expenses

	
22

	
Section 9.2

	
Specific Enforcement, Consent to Jurisdiction

	
23

	
Section 9.3

	
Entire Agreement; Amendment

	
23

	
Section 9.4

	
Notices

	
23

	
Section 9.5

	
Waivers

	
24

	
Section 9.6

	
Headings

	
24

	
Section 9.7

	
Successors and Assigns

	
24

	
Section 9.8

	
Governing Law

	
25

	
Section 9.9

	
Survival

	
25

	
Section 9.10

	
Counterparts

	
25

	
Section 9.11

	
Publicity

	
25

	
Section 9.12

	
Severability

	
25

	
Section 9.13

	
Further Assurances.

	
25

 

  

  

  

 

COMMON STOCK PURCHASE AGREEMENT

 

This COMMON STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of August 9, 2012, is made by and between VRDT Corporation, a Delaware corporation (the “Company”) and GEM Global Yield Fund Limited, a company incorporated under the laws of the Cayman Islands (the “Purchaser”).

 

RECITALS

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Purchaser and the Purchaser shall purchase up to a maximum of Thirty Million Dollars ($30,000,000) of the Company’s common stock, $0.001 par value per share (the “Common Stock”).

 

NOW, THEREFORE, the parties hereto agree as follows:

 

 

AGREEMENT

 

ARTICLE I

DEFINITIONS

 

Section 1.1      Definitions.

 

(a)            “Aggregate Limit” shall have the meaning assigned to such term in Section 2.1 hereof.

 

(b)            “Articles” shall have the meaning assigned to such term in Section 3.1(c) hereof.

 

(c)            “Bylaws” shall have the meaning assigned to such term in Section 3.1(c) hereof.

 

(d)            “Commission” shall mean the Securities and Exchange Commission or any successor entity.

 

(e)            “Commission Documents” shall mean, as of a particular date, all reports, schedules, forms, statements and other documents filed by the Company with the Commission pursuant to the reporting requirements of the Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act, and shall include all information contained in such filings and all filings incorporated by reference therein.

 

(f)             “Common Stock” shall have the meaning assigned to such term in the Recitals.

 

(g)            “Daily Closing Price” shall mean the closing price of the Common Stock, as recorded by the Principal Market, on a particular day.

 

(h)            “Daily Trading Volume” shall mean, with respect to any Trading Day, the trading volume of the Ordinary Shares on the Principal Market, as reported by Bloomberg provided that block trades as identified by Bloomberg under the code “BTR” and individual trades of more than 100,000 Ordinary Shares (or such other figure as the parties may agree in writing) shall be disregarded for the purpose of calculating such trading volume.

 

  

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(i)             “Draw Down” means the transactions contemplated under Section 6.1 of this Agreement.

 

(j)             “Draw Down Amount” means the actual amount of proceeds to be paid by the Purchaser and received by the Company on the Settlement Date in connection with a Draw Down.

 

(k)            “Draw Down Amount Requested” shall mean the amount of a Draw Down requested by the Company in its Draw Down Notice as provided in Section 6.1(h) hereof.

 

(l)             “Draw Down Exercise Date” shall have the meaning assigned to such term in Section 6.1(h) hereof.

 

(m)           “Draw Down Limit” shall have the meaning assigned to such term in Section 6.1(a) hereof.

 

(n)           “Draw Down Notice” shall mean a notice sent by the Company to exercise a Draw Down as provided in Section 6.1(h) hereof.

 

(o)            “Draw Down Pricing Period” shall mean a period of ten (10) consecutive Trading Days commencing with the first Trading Day designated in the Draw Down Notice, or such other period mutually agreed upon by the Purchaser and the Company.

 

(p)            “Effective Date” shall mean the date of the execution and delivery this Agreement.

 

(q)            “Environmental Laws” shall have the meaning assigned to such term in Section 3.1(r) hereof.

 

(r)             “Event Period” shall have the meaning assigned to such term in Section 7.2 hereof.

 

(s)            “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.

 

(t)             “GAAP” shall mean generally accepted accounting principles in the United States of America as applied by the Company.

 

(u)            “Indebtedness” shall have the meaning assigned to such term in Section 3.1(k) hereof.

 

(v)            “Investment Period” shall have the meaning assigned to such term in Section 7.1 hereof.

 

(w)           “Market Capitalization” shall be calculated on the Trading Day preceding each Draw Down Pricing Period and shall be the product of (x) the number of shares of Common Stock outstanding and (y) the closing bid price of the Common Stock, both as determined by Bloomberg Financial LP using the DES and HP functions.

 

  

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(x)             “Material Adverse Effect” shall mean any effect on the business, operations, properties or financial condition of the Company that is material and adverse to the Company and its subsidiaries and affiliates, taken as a whole, and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to enter into and perform any of its obligations under this Agreement in any material respect.

 

(y)            “Material Agreements” shall have the meaning assigned to such term in Section 3.1(s) hereof.

 

(z)             “Material Change in Ownership” shall mean that (i) the owners of 5% or more of the outstanding Common Stock and (ii) the Company’s officers and directors, shall beneficially own in the aggregate less than 15% of the outstanding Common Stock.

 

(aa)          “Other Financing” shall have the meaning assigned to such term in Section 4.10(b) hereof.

 

(bb)          “Plan” shall have the meaning assigned to such term in Section 3.1(y) hereof.

 

(cc)          “Principal Market” shall mean the OTC Bulletin Board or any U.S. national securities exchange on which the Common Stock is traded.

 

(dd)          “Purchase Price” shall have the meaning assigned to such term in Section 6.1(a) hereof.

 

(ee)           “Registration Statement” shall mean the registration statement on Form S-1 or on Form S-3 (if the Company is eligible to use such form) under the Securities Act, to be filed by the Company with the Commission with respect to the registration of the Shares pursuant to the Registration Rights Agreement attached hereto as Exhibit A hereto (the “Registration Rights Agreement”).

 

(ff)            “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.

 

(gg)          “Settlement Date” shall have the meaning assigned to such term in Section 6.1(d) hereof.

 

(hh)          “Shares” shall mean, collectively, the registered shares of Common Stock of the Company issuable to the Purchaser upon exercise of any Draw.

 

(ii)            “Significant Subsidiary” shall have the meaning assigned to such term in Section 3.1(g) hereof.

 

(jj)            “Subsidiary” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other subsidiaries.

 

  

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(kk)          “Threshold Price” is the lowest price at which the Company may sell Shares during a Draw Down Pricing Period, as set forth in the Draw Down Notice.

 

(ll)            “Trading Day” shall mean a trading day on the Principal Market.

 

(mm)        “Warrants” shall have the meaning assigned to such term in Section 4.3 hereof.

 

ARTICLE II

PURCHASE AND SALE OF COMMON STOCK

 

Section 2.1      Purchase and Sale of Stock.  Subject to the terms and conditions of this Agreement, the Company shall issue and sell to the Purchaser and the Purchaser shall purchase from the Company during the Investment Period (as defined in Section 7.1) up to a maximum of $30,000,000 of Common Stock, provided that if the Company’s public float is less than $75,000,000, then the Company shall issue and sell to the Purchaser up to a maximum of one-third (1/3) of the public float (the “Aggregate Limit”) on a firm commitment basis. The aggregate dollar amount of all Draw Down Amounts pursuant to the terms and conditions of this Agreement shall not exceed the Aggregate Limit.

 

Section 2.2      The Shares.  The Company has or will have authorized and has or will have reserved, and covenants to continue to so reserve once reserved, free of preemptive rights and other similar contractual rights of stockholders, a sufficient number of its authorized but unissued shares of its Common Stock to cover the Shares to be issued in connection with all Draw Downs requested under this Agreement and to be issued in connection with the exercise of the Warrants, in any case prior to the issuance to the Purchaser of such Shares under this Agreement.

 

Section 2.3      Registration Statement.  The Company shall prepare and file a Registration Statement with the Commission in accordance with the provisions of the Securities Act and the Registration Rights Agreement but only after meeting the Registration Statement eligibility requirements.

 

Section 2.4      Purchase Price and Effective Date.  In consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Company agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase, that number of the Shares to be issued in connection with each Draw Down in accordance with the terms and conditions of this Agreement.

 

Section 2.5      Current Report. As soon as practicable, but in any event not later than 5:30 p.m. (New York time) on the fourth Trading Day immediately following the Effective Date, the Company shall file with the Commission a report on Form 8-K relating to the transactions contemplated by, and describing the material terms and conditions of, this Agreement (the “Current Report”). The Current Report shall include a copy of this Agreement as an exhibit. The Company heretofore has provided the Purchaser a reasonable opportunity to comment on a draft of such Current Report and has given due consideration to such comments.

 

  

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.1      Representations and Warranties of the Company.  The Company hereby makes the following representations and warranties to the Purchaser as of the date hereof and as of the Effective Date:

 

(a)            Organization, Good Standing and Power.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted.  As of the Effective Date, the Company does not have any Subsidiaries except as set forth in the Commission Documents or on Schedule 3.1(a) attached hereto.  The Company and each such Subsidiary is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary except for any jurisdiction in which the failure to be so qualified will not have a Material Adverse Effect.

 

(b)            Authorization, Enforcement.  The Company has the requisite corporate power and authority to enter into and perform this Agreement and to issue and sell the Shares in accordance with the terms hereof.  Except for approvals of the Company’s Board of Directors  or a committee thereof as may be required in connection with any issuance and sale of Shares to the Purchaser hereunder, the execution, delivery and performance of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and, except as contemplated by Section 2.2, no further consent or authorization of the Company or its Board of Directors or stockholders is required.  This Agreement has been duly executed and delivered by the Company.  This Agreement constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

 

(c)            Capitalization.  The authorized capital stock of the Company and the shares thereof issued and outstanding as of the Effective Date are set forth in the Commission Documents or on Schedule 3.1(c) attached hereto.  All of the outstanding shares of Common Stock have been duly and validly authorized, and are fully paid and nonassessable.  Except as set forth in the Commission Documents or as set forth on Schedule 3.1(c) attached hereto, as of the Effective Date, no shares of Common Stock are entitled to preemptive rights or registration rights and there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company.  Furthermore, except as set forth in the Commission Documents or on Schedule 3.1(c) attached hereto, as of the Effective Date, there are no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into shares of capital stock of the Company.  Except for customary transfer restrictions contained in agreements entered into by the Company in order to sell restricted securities or as set forth on Schedule 3.1(c) attached hereto, as of the Effective Date, the Company is not a party to, and it has no knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of the Company.  Except as set forth on Schedule 3.1(c) attached hereto, the offer and sale of all capital stock, convertible securities, rights, warrants, or options of the Company issued prior to the Effective Date complied with all applicable federal and state securities laws, and no stockholder has a right of rescission or damages with respect thereto which would have a Material Adverse Effect.  The Company has furnished or made available to the Purchaser true and correct copies of the Company’s Certificate of Incorporation as in effect on the Effective Date (the “Articles”), and the Company’s Bylaws as in effect on the Effective Date (the “Bylaws”).

 

  

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(d)            Issuance of Shares.  The Shares to be issued under this Agreement have been or will be (prior to issuance to the Purchaser hereunder) duly authorized by all necessary corporate action and, when paid for or issued in accordance with the terms hereof, the Shares shall be validly issued and outstanding, fully paid and nonassessable, and the Purchaser shall be entitled to all rights accorded to a holder of Common Stock.

 

(e)            No Conflicts.  The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated herein do not (i) violate any provision of the Company’s Articles or Bylaws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party, (iii) create or impose a lien, charge or encumbrance on any property of the Company under any agreement or any commitment to which the Company is a party or by which the Company is bound or by which any of its respective properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries are bound or affected, except, in all cases, for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect.  The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement, or issue and sell the Shares to the Purchaser in accordance with the terms hereof (other than any filings which may be required to be made by the Company with the Commission or the Principal Market subsequent to the Effective Date, including the Registration Statement and any registration statement, prospectus or prospectus supplement which may be filed pursuant hereto); provided, however, that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the representations, warranties and agreements of the Purchaser herein.

 

  

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(f)            Commission Documents, Financial Statements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and, except as disclosed in the Commission Documents or on Schedule 3.1(f) attached hereto, as of the Effective Date the Company has timely filed all Commission Documents.  The Company has delivered or made available to the Purchaser true and complete copies of the Commission Documents filed with the Commission since December 31, 2010 and prior to the Effective Date.  The Company has not provided to the Purchaser any information which, according to applicable law, rule or regulation, should have been disclosed publicly by the Company but which has not been so disclosed, other than with respect to the transactions contemplated by this Agreement.  As of their respective filing dates, the Commission Documents complied in all material respects with the requirements of the Exchange Act and other federal, state and local laws, rules and regulations applicable to it, and, as of its date, the Commission Documents did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the Commission Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto.  Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company and its subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

(g)            Subsidiaries.  The Commission Documents or Schedule 3.1(g) attached hereto set forth each Subsidiary of the Company as of the Effective Date, showing the jurisdiction of its incorporation or organization and showing the percentage of the Company’s ownership of the outstanding stock or other interests of such Significant Subsidiary.  Except as set forth in the Commission Documents or Schedule 3.1(g) attached hereto, none of such subsidiaries is a Significant Subsidiary.  “Significant Subsidiary” shall mean a “significant subsidiary” as defined in Regulation S-X.

 

(h)            No Material Adverse Effect or Material Change in Ownership.  Since the filing of the September 30, 2011 Form 10-Q, no Material Adverse Effect or any Material Change in Ownership has occurred or exists with respect to the Company.

 

(i)             No Undisclosed Liabilities.  Except as disclosed on Schedule 3.1(i) attached hereto, neither the Company nor any of its subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) that would be required to be disclosed on a balance sheet of the Company or any Subsidiary (including the notes thereto) in conformity with GAAP and are not disclosed in the Commission Documents.

 

(j)             No Undisclosed Events or Circumstances.  No event or circumstance has occurred or exists with respect to the Company or its subsidiaries or their respective businesses, properties, prospects, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

 

  

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(k)            Indebtedness.  The Commission Documents as of the date hereof and the Effective Date set forth all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments through such date.  For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $1,000,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others in excess of $1,000,000, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $1,000,000 due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is in default with respect to any Indebtedness, except as set forth on Schedule 3.1(k) attached hereto.

 

(l)             Title To Assets.  Each of the Company and its Subsidiaries has good and marketable title to all of their respective real and personal property reflected in the Commission Documents, free of any mortgages, pledges, charges, liens, security interests or other encumbrances, except for those indicated in the Commission Documents or on Schedule 3.1(l) attached hereto or those that do not or would not have a Material Adverse Effect.  All said real property leases of the Company are valid and subsisting and in full force and effect in all material respects.

 

(m)           Actions Pending.  There is no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary which questions the validity of this Agreement or the transactions contemplated hereby or any action taken or to be taken pursuant hereto or thereto.  Except as set forth on Schedule 3.1(m) attached hereto, there is no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Company, threatened, against or involving the Company, any Subsidiary or any of their respective properties or assets and which, if determined adversely to the Company or its Subsidiary, would have a Material Adverse Effect.

 

(n)            Compliance With Law.  The business of the Company and the subsidiaries has been and is presently being conducted in all material respects in accordance with all applicable federal, state and local governmental laws, rules, regulations and ordinances, except as set forth on Schedule 3.1(n) attached hereto, and except as, individually or in the aggregate, do not or would not have a Material Adverse Effect.  The Company and each of its subsidiaries have all franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it, except where the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, do not or would not have a Material Adverse Effect.

 

(o)            Certain Fees.  No brokers, finders or financial advisory fees or commissions will be payable by the Company or any Subsidiary with respect to the transactions contemplated by this Agreement.

 

(p)            Disclosure.  To the best of the Company’s knowledge, neither this Agreement or the Schedules hereto nor the Commission Documents or any other documents, certificates or instruments furnished to the Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by this Agreement contain any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made herein or therein, in the light of the circumstances under which they were made herein or therein, not misleading.

 

  

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(q)            Operation Of Business.  The Company or one or more of its subsidiaries owns or controls all patents, trademarks, service marks, trade names, copyrights, licenses and authorizations of the Company or its subsidiaries as set forth in the Commission Documents or on Schedule 3.1(q) attached hereto, and all rights with respect to the foregoing, which are necessary for the conduct of its business as now conducted without, to the Company’s knowledge, any conflict with the rights of others, except to the extent that any such conflict would not have a Material Adverse Effect.

 

(r)             Environmental Compliance.  Except as disclosed in the Commission Documents or on Schedule 3.1(r) attached hereto, the Company and each of its subsidiaries have obtained all material approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any Environmental Laws, except for any approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations the failure of which to obtain does not or would not have a Material Adverse Effect.  “Environmental Laws” shall mean all applicable laws relating to the protection of the environment including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous in nature.  Except for such instances as would not individually or in the aggregate have a Material Adverse Effect, to the best of the Company’s knowledge, there are no past or present events, conditions, circumstances, incidents, actions or omissions relating to or in any way affecting the Company or its subsidiaries that violate or could reasonably be expected to violate any Environmental Law after the Effective Date or that could reasonably be expected to give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related to the manufacture, processing, distribution, use, treatment, storage (including without limitation underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance.

 

(s)            Material Agreements.  Except as set forth in the Commission Documents, neither the Company nor any Subsidiary of the Company is a party to any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the Commission as an exhibit to an annual report on Form 10-K (collectively, “Material Agreements”).  The Company and each of its Subsidiaries has in all material respects performed all the obligations required to be performed by them to date under the Material Agreements, have received no notice of default by the Company thereunder and, to the best of the Company’s knowledge, are not in default under any Material Agreement now in effect, the result of which would have a Material Adverse Effect.

 

  

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(t)             Transactions With Affiliates.  Except as set forth in the Commission Documents or on Schedule 3.1(t) attached hereto, there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions exceeding $100,000 between (a) the Company or any Subsidiary, on the one hand, and (b) any person or entity who would be covered by Item 404(a) of Regulation S-K, on the other hand.

 

(u)            Securities Act.  The Company will comply in all material respects with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Shares hereunder.  The Registration Statement will comply, when so filed, in all material respects with the provisions of the Securities Act.  The Commission has not issued any order preventing or suspending the use of the Registration Statement.  The Registration Statement, in the form in which it will become effective, and also in such form as it may be amended or supplemented from time to time, will comply in all material respects with the provisions of the Securities Act and will not at any such time contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they are made, not misleading.  The Company has not distributed and, prior to the completion of the distribution of the Shares, will not distribute any offering material in connection with the offering and sale of the Shares other than the Registration Statement, the related prospectus or other materials, if any, permitted by the Securities Act.

 

(v)            Employees.  As of the date hereof and as of the Effective Date, the Company does not have any collective bargaining arrangements or agreements covering any of its employees, except as set forth in the Commission Documents or on Schedule 3.1(v) attached hereto.  As of the date hereof and as of the Effective Date, except as disclosed in the Registration Statement, the Commission Documents or Schedule 3.1(v), no officer, consultant or key employee of the Company whose termination, either individually or in the aggregate, would have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company.

 

(w)           Use of Proceeds.  The proceeds from the sale of the Shares will be used by the Company for general corporate purposes including acquisitions, investments, strategic partnerships and other working capital needs of the Company.

 

(x)            Investment Company Act Status.  The Company is not, and as a result of and immediately upon Effective Date will not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

 

(y)            ERISA.  No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan by the Company or any of its subsidiaries which is or would have a Material Adverse Effect.  The execution and delivery of this Agreement and the issue and sale of the Shares will not involve any transaction which is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended.  As used in this Section 3.1(y), the term “Plan” shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any Subsidiary or by any trade or business, whether or not incorporated, which, together with the Company or any Subsidiary, is under common control, as described in Section 414(b) or (c) of the Code.

 

  

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(z)            (Intentionally Omitted).

 

(aa)          Acknowledgment Regarding Purchaser’s Purchase of Shares.  The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereunder.  The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereunder and any advice given by the Purchaser or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereunder is merely incidental to the Purchaser’s purchase of the Shares.

 

Section 3.2      Representatives and Warranties of the Purchaser.  The Purchaser hereby makes the following representations and warranties to the Company:

 

(a)            Organization and Standing of the Purchaser.  The Purchaser is a company duly incorporated, validly existing and in good standing under the laws of the Cayman Islands.

 

(b)            Authorization and Power.  The Purchaser has the requisite corporate power and authority to enter into and perform this Agreement and to purchase the Shares in accordance with the terms hereof.  The execution, delivery and performance of this Agreement by Purchaser and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and no further consent or authorization of the Purchaser, its Board of Directors or stockholders is required.  This Agreement has been duly executed and delivered by the Purchaser.  This Agreement constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership, or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

 

(c)            No Conflicts.  The execution, delivery and performance of this Agreement and the consummation by the Purchaser of the transactions contemplated hereby and thereby or relating hereto do not and will not (i) result in a violation of such Purchaser’s charter documents or bylaws or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Purchaser is a party, (iii) create or impose or lien, charge or encumbrance on any property of the Purchaser under any agreement or any commitment to which the Purchaser is party or by which the Purchaser is bound or by which any of its respective properties or assets are bound, or (iv) result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to the Purchaser or its properties, except for such conflicts, defaults and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with the ability of the Purchaser to enter into and perform its obligations under this Agreement in any material respect.  The Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or to purchase the Shares in accordance with the terms hereof; provided, however, that for purposes of the representation made in this sentence, the Purchaser is assuming and relying upon the accuracy of the representations, warranties and agreements of the Company herein.

 

  

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(d)            Accredited Investor.  The Purchaser is an “accredited investor” as defined in Regulation D promulgated under the Securities Act.

 

(e)            Financial Risks. The Purchaser acknowledges that it is able to bear the financial risks associated with an investment in the Shares. The Purchaser is capable of evaluating the risks and merits of an investment in the Shares by virtue of its experience as an investor and its knowledge, experience, and sophistication in financial and business matters and the Purchaser is capable of bearing the entire loss of its investment in the Shares.

 

(f)             Information.  The Purchaser and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Shares which have been requested by the Purchaser.  The Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company.  The Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares.  The Purchaser understands that it (and not the Company) shall be responsible for its own tax liabilities that may arise as a result of this investment or the transactions contemplated by this Agreement.

 

ARTICLE IV

COVENANTS

 

The Company covenants with the Purchaser, and the Purchaser covenants with the Company, as follows, which covenants of one party are for the benefit of the other party, during the Investment Period.

 

Section 4.1      Securities Compliance.

 

(a)            The Company shall notify the Commission and the Principal Market, if applicable, in accordance with their rules and regulations, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Shares to the Purchaser. The Company agrees that it shall, within the time required under the Exchange Act file a report on Form 8-K disclosing this Agreement and the transaction contemplated hereby.

 

(b)            The Company shall take such action, if any, as is reasonably necessary in order to obtain an exemption for or to qualify any subsequent resale of the Shares by the Investor, in each case, under applicable securities or “Blue Sky” laws of the states of the United States in such states as is reasonably requested by the Investor from time to time, and shall provide evidence of any such action so taken to the Investor.

 

  

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Section 4.2      Registration and Listing.  The Company will take all action necessary to cause its Common Stock to continue to be registered under Sections 12(b) or 12(g) of the Exchange Act, will comply in all respects with its reporting and filing obligations under the Exchange Act and take all action necessary to maintain compliance with such reporting and filing obligations, and will not take any action or file any document (whether or not permitted by the Securities Act) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act, except as permitted herein.  The Company will take all action necessary to continue the listing or trading of its Common Stock and the listing of the Shares purchased by Purchaser hereunder on Principal Market or any relevant market or system, if applicable, and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Principal Market or any relevant market or system.  Notwithstanding this Section 4.2, the Company shall have no obligation to file a registration statement on Form S-1 at any time to fulfill any transaction between the parties.

 

Section 4.3      Warrants.

 

(a)           On the Effective Date, the Company shall deliver to the Purchaser a common stock purchase warrant, in the form attached hereto as Exhibit B (the “Warrant”), to purchase up to 12,000,000 shares of Common Stock at an exercise price per share of $0.85, with an expiration date that is the fifth anniversary of the Effective Date, subject to the terms and conditions of the Warrant.

 

Section 4.4      Registration Rights Agreement.  The Company and the Purchaser shall enter into the Registration Rights Agreement with respect to the Shares, dated the Effective Date, in the form of Exhibit A attached hereto.

 

Section 4.5      Compliance with Laws.

 

(a)            The Company shall comply, and cause each Subsidiary to comply, with all applicable laws, rules, regulations and orders (including without limitation Rule 415(a)(4) under the Securities Act) noncompliance with which would have a Material Adverse Effect.

 

(b)            The Purchaser shall comply with all applicable laws, rules, regulations and orders in connection with this Agreement and the transactions contemplated hereby.  Without limiting the foregoing, the Purchaser shall comply with the requirements of the Securities Act and the Exchange Act including without limitation Rule 415(a)(4) under the Securities Act and Rule 10b-5 and Regulation M under the Exchange Act.

 

Section 4.6      Keeping of Records and Books of Account.  The Company shall keep and cause each Subsidiary to keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.

 

  

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Section 4.7      Limitations on Holdings and Issuances.  Notwithstanding anything in this Agreement to the contrary, at no time may the Company issue, and at no time shall the Purchaser be obligated to purchase, any Shares which would result in the Purchaser beneficially owning, directly or indirectly, at the time of such proposed issuance more than 4.9% of the number of shares of Common Stock issued and outstanding as of the date of such proposed issuance; provided, however, that upon the Purchaser providing the Company with sixty-one (61) days notice (pursuant to Section 9.4 hereof) (the "Waiver Notice") that the Purchaser would like to waive this Section 4.7 with regard to any or all Shares issuable pursuant to this Agreement, this Section 4.7 will be of no force or effect with regard to all or a portion of the Shares referenced in the Waiver Notice until the date that the Purchaser notifies the Company (pursuant to Section 9.4 hereof) that the Purchaser revokes the Waiver Notice; provided, further, that during the sixty-one (61) day period prior to the expiration of the Investment Period, the Purchaser may waive this Section 4.7 by providing a Waiver Notice at any time during such sixty-one (61) day period.

 

Section 4.8      Registration Statement.  The Company shall cause the Registration Statement to be filed and seek that it be declared effective pursuant to the terms of the Registration Rights Agreement.  The Purchaser shall not be obligated to accept a Draw Down request from the Company unless the Registration Statement is then effective and the prospectus included in the Registration Statement is then current and in compliance with all applicable rules.

 

Section 4.9      Other Agreements and Other Financings.

 

(a)            The Company shall not enter into any agreement in which the terms of such agreement would restrict or impair the right to perform of the Company or any Subsidiary under this Agreement or the Articles.

 

(b)            The Company shall not enter into any agreement, the principal purpose of which is to secure an Other Financing (as defined below) during the Investment Period.  “Other Financing” shall mean an “equity line” that is substantially similar to the financing provided for under this Agreement.

 

Section 4.10     Stop Orders.  The Company will advise the Purchaser promptly and, if requested by the Purchaser, will confirm such advice in writing: (i) of the Company’s receipt of notice of any request by the Commission for amendment of or a supplement to the Registration Statement, any related prospectus or for additional information; (ii) of the Company’s receipt of notice of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of the suspension of qualification of the Shares for offering or sale in any jurisdiction or the initiation of any proceeding for such purpose; and (iii) of the Company becoming aware of the happening of any event, which makes any statement of a material fact made in the Registration Statement (as then amended or supplemented) untrue or which requires the making of any additions to or changes in the Registration Statement (as then amended or supplemented) in order to state a material fact required by the Securities Act to be stated therein or necessary in order to make the statements therein not misleading.  If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, the Company will make commercially reasonable efforts to obtain the withdrawal of such order at the earliest possible time.

 

  

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Section 4.11     Selling Restrictions; Volume Limitations.

 

(a)            The Purchaser covenants that during the Investment Period neither the Purchaser nor any of its affiliates nor any entity managed by the Purchaser will, directly or indirectly, sell any securities of the Company except the Shares that it owns or has the right to purchase pursuant to the provisions of a Draw Down Notice.  During the Investment Period, neither the Purchaser nor any of its affiliates nor any entity managed by the Purchaser will enter into a short position with respect to shares of Common Stock of the Company, including in any account of the Purchaser’s or in any account directly or indirectly managed by the Purchaser or any affiliate of the Purchaser or any entity managed by the Purchaser.  During the Investment Period, the Purchaser shall not grant any option to purchase or acquire any right to dispose or otherwise dispose for value of any shares of Common Stock or any securities convertible into, or exchangeable for, or warrants to purchase, any shares of Common Stock, or enter into any swap, hedge or other agreement that transfers, in whole or in part, the economic risk of ownership of the Common Stock, except for such sales permitted by the preceding two sentences.  In addition, on a daily Trading Day basis, the Purchaser agrees to restrict the volume of sales of Shares by the Purchaser, its affiliates and any entity managed by the Purchaser to no more than ten percent (10%) (or such other percentage based on the length of the Draw Down Pricing Period) of the Shares purchased pursuant to such Draw Down Notice.

 

(b)            In addition to the foregoing, in connection with any sale of the Company’s securities (including any short sale permitted by the preceding paragraph), the Purchaser shall comply in all respects with all applicable laws, rules, regulations and orders, including, without limitation, the requirements of the Securities Act and the Exchange Act, including, without limitation, Rule 415(a)(4) under the Securities Act and Regulation M and Rule 10b-5 under the Exchange Act.

 

Section 4.12     Structuring Fee.  The Purchaser will receive a structuring fee from the Company equal to two percent (2%) of the Aggregate Limit payable from the gross proceeds from the first Draw Down (the “Structuring Fee”).  If the Agreement is terminated pursuant to Section 7 hereof before a Draw Down occurs, then the Structuring Fee is due upon such termination of this Agreement.

 

Section 4.13     Non-Public Information.  Neither the Company nor any of its directors, officers or agents shall disclose any material non-public information about the Company to the Purchaser.

 

Section 4.14     DWAC Eligibility.  The Company shall cause the Common Stock and its transfer agent to be, at the time of each Draw Down, eligible to participate in the DWAC system, and there will be no impediments at the time of each Draw Down to use of the DWAC system that could adversely affect consummation of the transactions contemplated by this Agreement.

 

  

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ARTICLE V

OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES

 

Section 5.1      Opinion of Counsel and Certificate.  In connection with the execution and delivery of this Agreement, the Purchaser has received (i) an opinion of outside counsel to the Company, dated the Effective Date, in the form of Exhibit C hereto, and (ii) a certificate from the Company, dated the Effective Date, in the form of Exhibit D hereto.

 

Section 5.2      Conditions Precedent to the Obligation of the Company to Sell the Shares.  The obligation hereunder of the Company to issue and sell the Shares to the Purchaser under any Draw Down Notice is subject to the satisfaction or waiver of each of the conditions set forth below.  These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

 

(a)            Accuracy of the Purchaser’s Representations and Warranties.  Except for representations and warranties that are expressly made as of a particular date, the representations and warranties of the Purchaser in this Agreement shall be true and correct in all material respects as of the date when made and as of each Draw Down Exercise Date and each Settlement Date as though made at that time.

 

(b)            Registration Statement.  The Company shall have the necessary amount of Shares available to be registered pursuant to the Registration Rights Agreement.  The Company shall take all reasonable steps to have the Registration Statement declared effective by the Commission. There shall be no stop order suspending effectiveness of the Registration Statement.

 

(c)            Performance by the Purchaser.  The Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to each Draw Down Exercise Date and each Settlement Date, as applicable.

 

(d)            No Injunction.  No statute, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

(e)            No Suspension, Etc.  Trading in the Common Stock shall not have been suspended by the Commission or  Principal Market, and, at any time prior to each Draw Down Exercise Date and applicable Settlement Date, none of the events described in clauses (i), (ii) and (iii) of Section 4.11 hereof shall have occurred, trading in securities generally as reported on the Principal Market shall not have been suspended or limited, nor shall a banking moratorium have been declared either by the United States or State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Company, makes it impracticable or inadvisable to issue the Shares.

 

  

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(f)            No Proceedings or Litigation.  No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any of the officers, directors or affiliates of the Company seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

 

Section 5.3      Conditions Precedent to the Obligation of the Purchaser To Accept a Draw Down and Purchase the Shares.  The obligation hereunder of the Purchaser to accept a Draw Down and to acquire and pay for the Shares is subject to the satisfaction or waiver, at or before each Draw Down Exercise Date and each Settlement Date, of each of the conditions set forth below.  The conditions are for the Purchaser’s sole benefit and may be waived by the Purchaser at any time in its sole discretion.

 

(a)            Accuracy of the Company’s Representations and Warranties.  Except for representations and warranties that are expressly made as of a particular date, each of the representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Draw Down Exercise Date, as though made at that time, including, without limitation, under Section 3.1(h) hereof.

 

(b)            Registration Statement.  The Company shall have the necessary amount of Shares registered pursuant to the Registration Rights Agreement.  The Company shall take all reasonable steps to have the Registration Statement declared effective by the Commission.  There shall be no stop order suspending effectiveness of the Registration Statement.

 

(c)            No Suspension.  Trading in the Common Stock shall not have been suspended by the Commission or Principal Market, and, at any time prior to such Draw Down Exercise Date, trading in securities generally as reported on the Principal Market shall not have been suspended or limited, nor shall a banking moratorium have been declared either by the United States or State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to issue the Shares.

 

(d)            Performance by the Company.  The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to each Draw Down Exercise Date and each Settlement Date and shall have delivered the Compliance Certificate substantially in the form attached hereto as Exhibit E.

 

(e)            No Material Adverse Effect or Material Change in Ownership.  No Material Adverse Effect or Material Change in Ownership shall have occurred to the Company.

 

(f)            No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

  

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(g)            No Proceedings or Litigation.  No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any subsidiary, or any of the officers, directors or affiliates of the Company or any subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

 

(h)            Aggregate Limit.  The issuance and sale of the Shares issuable pursuant to such Draw Down Notice will not violate Section 6.2 hereof.

 

(i)            Shares Authorized.  The Shares issuable pursuant to such Draw Down Notice will have been duly authorized by all necessary corporate action of the Company.

 

(j)            Due Diligence. Prior to each Settlement Date and from time to time as reasonably requested by the Purchaser, the Company shall make available for inspection and review by the Purchaser, its advisors and representatives, and any underwriter participating in any disposition of the Shares on behalf of the Purchaser pursuant to the Registration Statement, any prospectus or prospectus supplement thereto, or any blue sky, FINRA or other filing, all financial and other records, all documents and filings with the Commission, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review.  In addition, the Company shall cause its officers, directors and employees to supply all such information reasonably requested by the Purchaser or any such representative, advisor or underwriter and to respond to all questions and other inquiries reasonably made or submitted by any such individuals or entities.

 

ARTICLE VI

DRAW DOWN TERMS

 

Section 6.1      Draw Down Terms.  Subject to the satisfaction of the conditions set forth in this Agreement, and subject to Section 6.2 below, the parties agree (unless otherwise mutually agreed upon by the parties in writing) as follows:

 

(a)            The Company may, in its sole discretion, issue a Draw Down Notice (as defined in Section 6.1(h) hereof) for a specified Draw Down Amount Requested.  The Purchaser shall be obligated to accept the Draw Down Notice, provided that the Purchaser, in its sole discretion, shall not be obligated to accept more than fifty percent (50%) of the Draw Down Amount Requested (less any reduction pursuant to Section 6.1(g) hereof) and shall have the option to purchase up to two hundred percent (200%) of the Draw Down Amount Requested.  Subject to Section 6.1(g) below, the Purchaser shall pay a per Share amount equal to ninety percent (90%) of the average Daily Closing Price during the Draw Down Pricing Period (the “Purchase Price”).  Subject to Section 4.7 hereof, the Draw Down Amount Requested shall not exceed four hundred percent (400%) (the “Draw Down Limit”) of the average daily trading volume for the ten (10) Trading Days immediately preceding the Draw Down Exercise Date; provided, however, that if the Company selects a Draw Down Pricing Period that is fewer than ten (10) consecutive Trading Days, the Draw Down Limit shall be reduced in proportion to the reduction made to the length of the Draw Down Pricing Period as mutually agreed upon by the Purchaser and the Company.

 

  

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(b)            Prior to commencement of the Draw Down Pricing Period, the Company shall deliver the Shares to be purchased in such Draw Down to the Purchaser.

 

(c)            Only one Draw Down shall be allowed in each Draw Down Pricing Period.

 

(d)            Each Draw Down shall be settled on the first Trading Day after the end of each Draw Down Pricing Period (the “Settlement Date”).

 

(e)            At the end of each Draw Down Pricing Period, the Purchaser’s total Draw Down commitment under this Agreement shall be reduced by the total amount of the Draw Down Amount for such Draw Down Pricing Period.

 

(f)             Each Draw Down will automatically expire immediately after the last Trading Day of each Draw Down Pricing Period.

 

(g)            If the Daily Closing Price on a given Trading Day in the Draw Down Pricing Period, multiplied by ninety percent (90%), is less than the Threshold Price, then the total amount of the Draw Down Amount Requested will be reduced by 1/10th (or such other fraction based on the length of the Draw Down Pricing Period) and no Shares will be purchased or sold with respect to such Trading Day.

 

(h)            As a condition to exercise of any Draw Down, the Company must (i) provide a notice to the Purchaser of the Company’s exercise of any Draw Down via facsimile transmission before commencement of trading on the first Trading Day of the Draw Down Pricing Period covered by such notice (the “Draw Down Notice”), substantially in the form attached hereto as Exhibit F and (ii) deliver the Shares to the Purchaser or its designees via DWAC, if the Company is approved for DWAC in an amount equal to the Draw Down Amount Requested (which amount shall be adjusted in the event that the amount accepted by the Purchaser pursuant to Section 6.1(a) hereof is different that the Draw Down Amount Requested).  The date the Company delivers the Draw Down Notice and the Shares in accordance with this Section 6.1(h) shall be a “Draw Down Exercise Date.”  The Draw Down Notice shall specify the Draw Down Amount Requested, set the Threshold Price for such Draw Down and designate the first Trading Day of the Draw Down Pricing Period that the Company wishes to grant to the Purchaser during the Draw Down Pricing Period.

 

(i)             On each Settlement Date, the Purchaser shall provide the Company a closing notice in the form of Exhibit H attached hereto and shall make payment for the Shares acquired pursuant to this Agreement to the Company’s designated account by wire transfer of immediately available funds, provided that the Shares were received by the Purchaser in accordance with 6.1(b) hereof.

 

(j)             Purchaser has agreed to invest in publicly traded companies in the company’s vertical markets subject to the Purchaser’s normal investment criteria and process.

 

Section 6.2      Aggregate Limit.  Notwithstanding anything to the contrary herein, in no event may the Company issue a Draw Down Notice to the extent that the sale of shares of Common Stock pursuant thereto and pursuant to all prior Draw Down Notices issued hereunder would cause the Company to sell or the Purchaser to purchase shares of Common Stock which in the aggregate are in excess of the Aggregate Limit.  If the Company issues a Draw Down Notice that otherwise would permit the Purchaser to purchase shares of Common Stock which would cause the aggregate purchases by Purchaser hereunder to exceed the Aggregate Limit, such Draw Down Notice shall be void ab initio to the extent of the amount by which the dollar value of shares or number of shares, as the case may be, of Common Stock otherwise issuable pursuant to such Draw Down Notice or together with the dollar value of shares or number of shares, as the case may be, of all other Common Stock purchased by the Purchaser pursuant hereto would exceed the Aggregate Limit.

 

  

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ARTICLE VII

FINATION

 

Section 7.1      Term, Termination by Mutual Consent.  Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically on the earlier of (i) twenty four (24) consecutive months from the Effective Date (the “Investment Period”) and (ii) the date the Purchaser shall have purchased the Aggregate Limit.  This Agreement may be terminated at any time by mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written consent.

 

Section 7.2      Other Termination.  The Company shall inform the Purchaser, and the Purchaser shall have the right to terminate this Agreement within the subsequent thirty (30) days (the “Event Period”), effective upon written notice to the Company under Section 9.4 in the Event Period, if during the Investment Period (x) the Company enters into a definitive agreement with any third party, the principal purpose of which is to secure any equity line financing which provides for an Other Financing as defined in 4.9(b) above, or (y) an event resulting in a Material Adverse Effect or Material Change in Ownership has occurred.  In such event, the Purchaser may terminate this Agreement upon one (1) business day’s prior written notice during the Event Period.

 

Section 7.3      Effect of Termination.  In the event of termination by the Company or the Purchaser, written notice thereof shall forthwith be given to the other party as provided in Section 9.4 and the transactions contemplated by this Agreement shall be terminated without further action by either party.  If this Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become void and of no further force and effect, except as provided in Section 9.9 hereof.  Nothing in this Section 7.3 shall be deemed to release the Company or the Purchaser from any liability for any breach under this Agreement, or to impair the rights of the Company and the Purchaser to compel specific performance by the other party of its obligations under this Agreement.

 

  

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ARTICLE VIII

INDEMNIFICATION

 

Section 8.1      General Indemnity.

 

(a)            Indemnification by the Company.  The Company will indemnify and hold harmless the Purchaser, GEM and each person who controls the Purchaser or GEM within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act from and against any losses, claims, damages, liabilities and expenses (including reasonable costs of defense and investigation and all attorneys’ fees) to which the Purchaser, GEM and each such controlling person may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained, or incorporated by reference, in the Registration Statement relating to Common Stock being sold to the Purchaser (including any prospectus relating thereto), or any amendment or supplement to it, or (ii) the omission or alleged omission to state in the Registration Statement or any document incorporated by reference in the Registration Statement, a material fact required to be stated therein or necessary to make the statements therein not misleading.  Pursuant to Section 8.2 hereof, the Company will reimburse the Purchaser, GEM and each such controlling person promptly upon demand for any legal or other costs or expenses reasonably incurred by the Purchaser, GEM or such controlling person in investigating, defending against, or preparing to defend against any such claim, action, suit or proceeding.

 

(b)            Indemnification by the Purchaser.  The Purchaser will indemnify and hold harmless the Company, each of its directors and officers, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act from and against any losses, claims, damages, liabilities and expenses (including reasonable costs of defense and investigation and all attorneys fees) to which the Company and each such controlling person may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions in respect thereof) arise out of or are based upon (i) an untrue statement, alleged untrue statement, omission or alleged omission, included in the Registration Statement in reliance upon, and in conformity with, written information furnished by the Purchaser to the Company for inclusion in the Registration Statement, or (ii) the omission or alleged omission to state in the Registration Statement a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, the untrue statement, alleged untrue statement, omission or alleged omission was made in reliance upon, and in conformity with, written information furnished by the Purchaser to the Company for inclusion in the Registration Statement.  Pursuant to Section 8.2 hereof, the Purchaser will reimburse the Company and each such director, officer or controlling person promptly upon demand for any legal or other costs or expenses reasonably incurred by the Company or the other person in investigating, defending against, or preparing to defend against any such loss, claim, damage, liability or expense.

 

Section 8.2      Indemnification Procedures.  Promptly after a person receives notice of a claim or the commencement of an action for which the person intends to seek indemnification under Section 8.1, the person will notify the indemnifying party in writing of the claim or commencement of the action, suit or proceeding; provided, however, that failure to notify the indemnifying party will not relieve the indemnifying party from liability under Section 8.1, except to the extent it has been materially prejudiced by the failure to give notice.  The indemnifying party will be entitled to participate in the defense of any claim, action, suit or proceeding as to which indemnification is being sought, and if the indemnifying party acknowledges in writing the obligation to indemnify the party against whom the claim or action is brought, the indemnifying party may (but will not be required to) assume the defense against the claim, action, suit or proceeding with counsel satisfactory to it.  After an indemnifying party notifies an indemnified party that the indemnifying party wishes to assume the defense of a claim, action, suit or proceeding, the indemnifying party will not be liable for any legal or other expenses incurred by the indemnified party in connection with the defense against the claim, action, suit or proceeding except that if, in the opinion of counsel to the indemnifying party, one or more of the indemnified parties should be separately represented in connection with a claim, action, suit or proceeding, the indemnifying party will pay the reasonable fees and expenses of one separate counsel for the indemnified parties.  Each indemnified party, as a condition to receiving indemnification as provided in Section 8.1, will cooperate in all reasonable respects with the indemnifying party in the defense of any action or claim as to which indemnification is sought.  No indemnifying party will be liable for any settlement of any action effected without its prior written consent.  No indemnifying party will, without the prior written consent of the indemnified party, effect any settlement of a pending or threatened action with respect to which an indemnified party is, or is informed that it may be, made a party and for which it would be entitled to indemnification, unless the settlement includes an unconditional release of the indemnified party from all liability and claims which are the subject matter of the pending or threatened action.

 

  

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If for any reason the indemnification provided for in this Agreement is not available to, or is not sufficient to hold harmless, an indemnified party in respect of any loss or liability referred to in Section 8.1 as to which it is entitled to indemnification thereunder, each indemnifying party will, in lieu of indemnifying the indemnified party, contribute to the amount paid or payable by the indemnified party as a result of such loss or liability, (i) in the proportion which is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and by the indemnified party on the other from the sale of Shares which is the subject of the claim, action, suit or proceeding which resulted in the loss or liability or (ii) if that allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits of the sale of such Shares, but also the relative fault of the indemnifying party and the indemnified party with respect to the statements or omissions which are the subject of the claim, action, suit or proceeding that resulted in the loss or liability, as well as any other relevant equitable considerations.

 

ARTICLE IX

MISCELLANEOUS

 

Section 9.1      Fees and Expenses.  Each party shall bear its own fees and expenses related to the transactions contemplated by this Agreement; provided, however, that the Company shall pay, at the Effective Date, all reasonable attorneys’ fees and expenses (exclusive of disbursements and out-of-pocket expenses) incurred by the Purchaser up to $15,000 in connection with the preparation, negotiation, execution and delivery of this Agreement.  In addition, the Company shall pay all reasonable attorneys’ fees and expenses incurred by the Purchaser in connection with any amendments, modifications or waivers of this Agreement.  The Company shall pay all stamp or other similar taxes and duties levied in connection with issuance of the Shares pursuant hereto.

 

  

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Section 9.2      Specific Enforcement, Consent to Jurisdiction.

 

(a)            The Company and the Purchaser acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that either party shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the other party and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which either party may be entitled by law or equity.

 

(b)            Each of the Company and the Purchaser (i) hereby irrevocably submits to the jurisdiction of the United States District Court and other courts of the United States sitting in the State of California for the purposes of any suit, action or proceeding arising out of or relating to this Agreement, and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.  Each of the Company and the Purchaser consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.

 

Section 9.3      Entire Agreement; Amendment.  This Agreement represents the entire agreement of the parties with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by either party relative to subject matter hereof not expressly set forth herein.  No provision of this Agreement may be amended other than by a written instrument signed by both parties hereto.

 

Section 9.4 Notices.  Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery, by telex (with correct answer back received), telecopy or facsimile (with telecopy or facsimile machine confirmation of delivery received) at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The address for such communications shall be:

 

  

23

  

	
If to the Company:

	
VRDT Corporation

	
  

	
12223 Highland Avenue, Suite 106-542

	
  

	
Rancho Cucamonga, California 91739

	
  

	
Telephone Number: (909) 786-1981

	
  

	
Fax:  (909) 647-9665

	
  

	
Attn:  General Counsel

 

	
If to the Purchaser:

	
GEM Global Yield Fund Limited

	
  

	
c/o CM Group

	
  

	
Commerce House

	
  

	
1 Bowring Road

	
  

	
Ramsey

	
  

	
Isle of Man

	
  

	
IM8 2LQ

 

	
With copies to:

	
Kramer Levin Naftalis & Frankel LLP

	
  

	
1177 Avenue of the Americas

	
  

	
New York, New York 10036

	
  

	
Telephone Number:  (212) 715-9100

	
  

	
Fax:  (212) 715-8000

	
  

	
Attention:  Christopher S. Auguste, Esq.

 

 

Either party hereto may from time to time change its address for notices by giving at least ten (10) days advance written notice of such changed address to the other party hereto.

 

Section 9.5      Waivers.  No waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.  No provision of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought.

 

Section 9.6      Headings.  The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

 

Section 9.7      Successors and Assigns.  The Neither party may assign this Agreement to any person without the prior consent of the other party.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.  The assignment by a party to this Agreement of any rights hereunder shall not affect the obligations of such party under this Agreement.

 

  

24

  

 

Section 9.8      Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect to the choice of law provisions.

 

Section 9.9      Survival.  The representations and warranties of the Company and the Purchaser contained in Article III and the covenants contained in Article IV shall survive the execution and delivery hereof until the termination of this Agreement, and the agreements and covenants set forth in Article VIII of this Agreement shall survive the execution and delivery hereof.

 

Section 9.10     Counterparts.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart.  In the event any signature is delivered by facsimile transmission, the party using such means of delivery shall cause four additional executed signature pages to be physically delivered to the other parties within five days of the execution and delivery hereof.

 

Section 9.11     Publicity.  On or after the Effective Date, the Company may issue a press release or otherwise make a public statement or announcement with respect to this Agreement or the transactions contemplated hereby or the existence of this Agreement (including, without limitation, by filing a copy of this Agreement with the Commission); provided, however, that prior to issuing any such press release, making any such public statement or announcement, the Company shall consult with the Purchaser on the form and substance of such press release or other disclosure.  In the event the Purchaser fails to comment on the form and substance of a press release within the time period proscribed by the law, the Company shall issue such press release without consulting the Purchaser.

 

Section 9.12     Severability.  The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement, and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

 

Section 9.13     Further Assurances.  From and after the date of this Agreement, upon the request of the Purchaser or the Company, each of the Company and the Purchaser shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.

 

  

25

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.

 

 

 

	 	 
VRDT CORPORATION

	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

	 	 
 
GEM GLOBAL YIELD FUND LIMITED

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

Signature Page - Common Stock Purchase Agreement

 

  

  

  

 

EXHIBIT A

Registration Rights Agreement

 

  

  

  

 

EXHIBIT B

Warrant

 

  

  

  

 

EXHIBIT C

Opinion of Counsel

 

  

  

  

 

EXHIBIT D

Certificate

 

  

  

  

EXHIBIT E

Compliance Certificate

 

  

  

  

 

EXHIBIT F

COMMON STOCK PURCHASE AGREEMENT

FORM OF DRAW DOWN NOTICE

 

  

  

  

 

EXHIBIT G TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF DRAW DOWN NOTICE

 

Reference is made to the Common Stock Purchase Agreement dated as of August 9, 2012, (the “Purchase Agreement”) by and between VRDT Corporation, a Delaware corporation (the “Company”) and GEM Global Yield Fund Limited, a company incorporated under the laws of the Cayman Islands.  Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Purchase Agreement.

 

In accordance with and pursuant to Section 6.1 of the Purchase Agreement, the Company hereby issues this Draw Down Notice to exercise a Draw Down request for the Draw Down Amount indicated below.

 

	
Draw Down Amount:

	  	  
	
Draw Down Pricing Period start date:

	  	  
	
Draw Down Pricing Period end date:

	  	  
	
Settlement Date:

	  	  
	
Draw Down Threshold Price:

	  	  
	
Dollar Amount and Number of Shares of Common Stock Currently Unissued under the Registration Statement:

	  	  
	
Dollar Amount and Number of Shares of Common Stock Currently Available under the Aggregate Limit:

	  	  

	Dated:	 	 	By:	 	 
	 	
 

	 	 	
Name:

	 
	 	
 

	 	 	
Title:

	 
	 	 	 	 	 	 
	 	 	 	 
Address:

	 
	 	 	 	Facsimile No	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 
Name:

	 	 	 	 
	 	 
Title:

	 	 	 	 

 

  

  

  

EXHIBIT H TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF CLOSING NOTICE

 

	
To:

	
[The Company]

 

Attention:  [●]

 

 

We refer to the common stock purchase agreement (the "Agreement") dated [●] 2012 between us, GEM Global Yield Fund Limited and yourselves and to the Draw Down Notice delivered to us on [●] 20[●].  Terms defined in the Agreement have the same meaning herein.

 

We hereby give you notice pursuant to Section 6.1(i) of the Agreement that we accept the Draw Down Notice, being [●] per cent. of the Draw Down Amount stated therein.  [The reason that such number of shares of Common Stock represents a smaller/greater number than the number of shares of Common Stock set forth in the Draw Down Notice is as follows: [●].]

 

The average of the Closing Bid Prices in the Pricing Period (excluding any Closing Bid Prices pursuant to Section 6.1(g)) is [●] and the resulting Purchase Price is [●] ([●] per cent. of such average Closing Bid Price).  The aggregate Purchase Price pursuant to this Closing Notice is therefore [●].  Copy extracts from Bloomberg showing each of the Closing Bid Prices during the Pricing Period are attached.

 

Please deliver such shares of Common Stock in accordance with the following instructions: [●].

 

Electronic book entry transfer requested (check one) (1) YES ____ NO _____

 

[CREST] Participant ID:                                                                      

 

[CREST] Account ID:                                                                      

 

 

 

 

	
 

	
Signed by: 

	 	 
	 	 	 	 
	 	Name:	 	 
	 	 	 	 
	 	Date: 	 	 
	 	 	 	 
	 	 
For and on behalf of

	 
	 	 	 	 
	 	 
Gem Global Yield Fund Limited

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