FEDERAL DEPOSIT INSURANCE CORPORATION
4 Park Plaza Mailing Address:
Xxxxxx, Xxxxxxxxxx 00000 X.X. Xxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
March 18, 1997
J.B.A. Investments, Inc.
x/x Xxxx X. Xxxxxxxx
Xxxxxxxx Xxxxx
Xxxx Blvd. and Road 32A
Xxxxx, Xxxxxxxxxx 00000
RE: PLEDGED SHARES OF DUNES HOTELS AND CASINOS INC.
Ladies and Gentlemen:
J.B.A. Investments, Inc., a Nevada corporation ("JBA"), has
previously entered into that certain Amended and Restated J.B.A.
Pledge Agreement, dated as of November 30, 1989 (the "JBA Pledge
Agreement"), with the Federal Deposit Insurance Corporation, a
corporation organized under the laws of the United States, acting
in its corporate capacity, and as successor and assignee of
Eurekabank, formerly known as Eureka Federal Savings and Loan
Association (the "FDIC"). Concurrently with the execution of the
JBA Pledge Agreement, Xxxx X. Xxxxxxxx and Xxxxx Xxxxxxxx
(collectively, "Xxxxxxxx") entered into that certain Debtor-
Creditor Agreement (the "Debtor-Creditor Agreement") with the
FDIC. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the JBA Pledge
Agreement.
THE JBA PLEDGE AGREEMENT
Pursuant to Sections 2 and 3 of the JBA Pledge Agreement,
JBA pledged certain collateral (the "Pledged Collateral") as
security for the fulfillment of all obligations of Xxxxxxxx and
the other Xxxxxxxx Parties under the Settlement Documents,
whether for payment of principal, interest, fees, expenses or
otherwise, and all obligations of JBA existing under the JBA
Pledge Agreement (collectively, the "Obligations").
The Pledged Collateral included all of JBA's right and
interest, whether then existing or acquired after the execution
of the JBA Pledge Agreement, in and to the following:
1. All shares of common stock (the "Dunes Shares") of
Dunes Hotels and Casinos Inc. ("Dunes") then owned by
JBA (the "Pledged Dunes Shares");
2. The certificates representing the Pledged Dunes Shares;
3. All dividends, cash, instruments and other property
from time to time received, receivable or otherwise
distributed in respect of or in exchange for any all or
all of the Pledged Dunes Shares; and
4. All additional shares of stock of Dunes from time to
time acquired by JBA in any manner, and the
certificates representing such additional shares, and
all dividends, cash, instruments and other property
from time to time received, receivable or otherwise
distributed in respect of or in exchange for any all or
all of such Dunes Shares.
The Pledged Dunes Shares included 3,400,000 shares of the
common stock of Dunes, including 3,000,000 shares of the common
stock of Dunes evidenced by certificates numbers 12260-12319,
copies of which are attached for your reference. Such
certificates are, and since the date of the JBA Pledge Agreement
have continuously been, in the possession or held for the benefit
of the FDIC.
Section 7(b) of the JBA Pledge Agreement provides, among
other things, that upon the occurrence and during the continuance
of an Event of Default or an event which, with the giving of
notice or the lapse of time, or both, would become an Event of
Default, all rights of JBA to exercise the voting and other
consensual rights pertaining to the Pledged Collateral, including
the Pledged Dunes Shares, which it would otherwise be entitled to
exercise pursuant to Section 7(a) of the JBA Pledge Agreement,
and to receive the dividends, distributions and interest payments
which it would otherwise be authorized to receive (all of which
amounts were to be immediately paid to the FDIC on behalf of
Xxxxxxxx) pursuant to Section 7(a) of the JBA Pledge Agreement
shall cease, and all such rights shall thereupon become vested in
the FDIC, which shall thereupon have the sole right to exercise
such voting and other consensual rights and to receive such
dividends, distributions and interest payments and apply the same
to the General Debt as required by the Debtor-Creditor Agreement.
In additional, Section 9 of the JBA Pledge Agreement provides for
additional remedies upon the occurrence and continuation of an
Event of Default. These additional remedies, include, without
limitation, the right of the FDIC to sell the Pledged Dunes
Shares upon and during the occurrence of an Event of Default.
THE DEBTOR-CREDITOR AGREEMENT
Section 8.01(a) of the Debtor-Creditor Agreement provides
that the failure to make the payment of principal or interest on
the General Debt, when and as the same shall become due and
payable, whether at maturity thereof, on a date fixed for
prepayment, or by acceleration or otherwise, shall, at the sole
discretion of the FDIC, be deemed an Event of Default.
Xxxxxxxx has failed, and continues to fail, to make payments
of principal and interest on the General Debt when the same
became due and payable. On January 25, 1993 and again on
February 12, 1993, Eurekabank (predecessor-in-interest to the
FDIC) sent, and Xxxxxxxx and the Xxxxxxxx Parties received,
Notices of Default pursuant to Sections 8.01, 8.02(a) and 9.10 of
the Debtor-Creditor Agreement, declaring Xxxxxxxx in default of
its obligations under, among other things, the Debtor-Creditor
Agreement. On May 11, 1995, the FDIC sent, and Xxxxxxxx and the
Xxxxxxxx Parties received, Notices of Default pursuant to
Sections 8.01, 8.02(a) and 9.10 of the Debtor-Creditor Agreement,
declaring Xxxxxxxx in default of its obligations under, among
other things, the Debtor-Creditor Agreement. On August 28, 1996,
judgment was entered in the matter of in FDIC V. XXXX X.
XXXXXXXX, ET AL., Case No. CV-S-95-00679-PMP (LRL), by the United
States District Court for the District of Nevada, wherein said
Court specifically found that Xxxxxxxx had failed, and continues
to fail, to make payments of principal and interest on the
General Debt when the same became due and payable and said Court,
among other things, granted the FDIC judgment for specific
performance of the Debtor-Creditor Agreement.
An Event of Default under the Debtor-Creditor Agreement
having occurred and continuing, notice is hereby given to JBA and
Dunes that all rights of JBA to exercise the voting and other
consensual rights pertaining to the Pledged Collateral, including
the Pledged Dunes Shares, shall hereby cease, and all such rights
are hereby vested in the FDIC, who shall hereby have the sole
right to exercise such voting and other consensual rights and to
receive such dividends, distributions and interest payments with
respect to the Pledged Collateral, including the Pledged Dunes
Shares. The FDIC further reserves the right to demand of Dunes,
or petition a court of competent jurisdiction to require, that a
special meeting of the stockholders of Dunes be called to
consider such matters as may be lawfully considered and acted
upon at such meeting.
The exercise by the FDIC of its rights under the JBA Pledge
Agreement shall not be deemed to be a waiver or in derogation of
any right or remedy available to the FDIC, either pursuant to the
JBA Pledge Agreement, the Debtor-Creditor Agreement, the Consent
Judgment or otherwise, nor shall the exercise by the FDIC of any
of its rights under the JBA Pledge Agreement be deemed to be a
waiver of any other rights or of any Event of Default and any
failure by the FDIC to exercise any rights under the JBA Pledge
Agreement, the Debtor-Creditor Agreement, the Consent Judgment or
otherwise shall not be deemed to be a waiver of or an
acquiescence to any Event of Default.
Very truly yours,
Federal Deposit Insurance Corporation
By: /s/ R. Xxxxxxx Xxxxx
Name: R. Xxxxxxx Xxxxx
Title: Credit Specialist
cc: Xxxx X. Xxxxxxxx Dunes Hotels and Casinos Inc.
Xxxxx Xxxxxxxx 0000 Xxxxx Xxxxxxx Xx., #000
x/x Xxxxxxxx Xxxxx Xxx Xxxxx, Xxxxxx 00000
Xxxx Blvd. and Road 32A
Davis, California 95616
Dunes Hotels and Casinos Inc. Xxxxx Xxxx
c/o CT Corporation c/o Anderson Farms
0000 Xxxxxxxx Xxxx Xxxx. and Road 32A
Xxx Xxxx, XX 00000 Xxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxx Xxxxx X. Xxxxxxx
c/o Maxim Hotel & Casino 000 Xxx Xxxxx Xxxx. So., #206
000 X. Xxxxxxxx Xxxx Xxx Xxxxx, Xxxxxx 00000
Xxx Xxxxx, Xxxxxx 00000
Xxxxxx & Xxxxxxxx Xxxxxxxx X. Xxxxx
3800 Xxxxxx Xxxxxx Parkway, Xxxxxx Xxxxxxx & Xxxx LLP
7th Floor 000 Xxxxx Xxxxx Xxx, 00xx
Xxx Xxxxx, Xxxxxx 00000 Floor
Attention: Xxxxxxx X. Xxx Xxxxxxx, Xxxxxxxxxx 00000
Xxxxxx, Esq.
J.B.A. Investments, Inc.
c/x Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx, 0xx Xx.
Xxx Xxxxx, XX 00000
