WAIVER AND AMENDMENT
Reference is made to that certain Amended and Restated Reducing
Revolving Loan Agreement dated as of March 19, 1996 (the "Loan Agreement") among
Station Casinos, Inc. ("Parent), Palace Station Hotel & Casino, Inc., Boulder
Station, Inc., Texas Station, Inc., St. Xxxxxxx Riverfront Station, Inc., Kansas
City Station Corporation, Bank of America, N.T. & S.A., as Managing Agent, and
the Banks party thereto. Capitalized terms used herein are used with the same
meanings as set forth in the Loan Agreement.
RECITALS
A. Parent proposes to finance the construction of a new Sunset
Station Hotel & Casino ("Project") to be constructed by its wholly-owned
Unrestricted New Venture Entity, Sunset Station, Inc. ("Sunset"), in Henderson,
Nevada through a series of transactions summarized as follows:
(i) Parent will lease certain equipment (the "Leased
Equipment") valued at up to $40,000,000 pursuant to an operating
lease (the "Equipment Lease") intended for security from a syndicate
of financial institutions (the "Lessors"). Parent will, in turn,
sublease the Leased Equipment to Sunset on substantially the same
terms (the "Equipment Sublease") as those contained in the Equipment
Lease. Parent's interests in the Leased Equipment and in its rights
under the Equipment Sublease will be pledged to the Lessors to support
its obligations under the Equipment Lease. The Equipment Lease does
not constitute Indebtedness under the Loan Agreement.
(ii) Sunset will borrow up to $110,000,000 of construction
financing (the "Construction Loan") from a syndicate of financial
institutions (the "Lenders") to construct the Project. The
Construction Loan will be secured by a first priority security
interest in all of Sunset's real and personal property, including the
Project. In addition, Parent will pledge to the Lenders all of the
capital stock of Sunset.
(iii) In connection with the Construction Loan, Parent will
provide a completion guaranty (the "Completion Guaranty") with respect
to the Project whereby any funds necessary to complete the Project as
planned will be provided by Parent and, if there is a delay in the
projected opening date, a daily cash contribution covering Project
expenses will be required. In addition, Parent has committed to
provide to Sunset up to $25,000,000 of supplemental
subordinated loans ("Supplemental Loans") as and when requested by
Sunset provided that at the time of such request the investment limits
of Section 9.15 of the Loan Agreement would not be exceeded by making
such loans.
(iv) The real property underlying the Project is comprised
of a fee simple parcel and a leasehold parcel under a Ground Lease,
both of which were originally acquired by Parent. As part of these
transactions, the fee simple parcel will be contributed to the capital
of Sunset and the Ground Lease will be assigned to Sunset, with Parent
remaining obligated on the Ground Lease.
(v) The term "Parent Funded Debt Ratio" as defined in
Section 1.1 of the Loan Agreement provides that components of such
ratio (essentially, EBITDA and Funded Debt) "shall be calculated for
Parent on a consolidated basis EXCEPT that such calculations shall
exclude any amounts or items attributable to Unrestricted New Venture
Entities" such as Sunset. Parent believes that it is proper and
consistent with the intent of that definition that, if EBITDA of
Sunset is not to be consolidated with the EBITDA of Parent and its
other Subsidiaries, the actual rental payments made by Sunset to
Parent under the Sublease should be included in the EBITDA of Parent.
(vi) The "deconsolidating" approach taken by the Loan
Agreement with respect to the Parent Funded Debt Ratio described above
was overlooked with respect to the other financial covenant applicable
to Parent in the Loan Agreement, Section 9.11 which provides for a
minimum Parent Tangible Net Worth.
B. The foregoing contemplated financing transactions raise various
issues under the Loan Agreement, including the following:
(i) The Sublease of the Leased Equipment, the contribution
of the fee simple parcel and the assignment of the Ground Lease to
Sunset may constitute a "Disposition" by Parent within the meaning of
Section 9.2 of the Loan Agreement, for which no exception applies;
(ii) The Lease may constitute a "Lien" on the Leased
Equipment within the meaning of Section 9.8 of the Loan Agreement, for
which no exception applies;
(iii) The Completion Guaranty, while intended to be permitted
by Section 9.9(e) of the Loan Agreement, is not technically covered
by the language of that Section under the current form of the Project
financing transactions;
(iv) The transactions between Parent and Sunset (including
the Completion Guaranty and Supplemental Loans) may be transactions
between Affiliates subject to Section 9.10 of the Loan Agreement, for
which no exception applies;
(v) Inclusion of the rent paid by Sunset to Parent under
the Sublease as part of EBITDA of Parent for purposes of the Parent
Funded Debt Ratio may not be permitted under a strict reading of the
definition of that term; and
(vi) Consistency in treatment of the two financial covenants
in the Loan Agreement applicable to Parent necessitates an amendment
to the definition of "Parent Tangible Net Worth."
C. On a unrelated subject, Parent has requested that permitted
Capital Expenditures for the Kansas City Project be increased by $35,000,000,
with the permitted Capital Expenditures for the St. Xxxxxxx Expansion Project
being reduced by $10,000,000 and for the Texas Expansion Project by $25,000,000.
ACTION
The Required Banks, acting pursuant to Section 14.2 of the Loan
Agreement, hereby take the action described in Paragraphs 1 and 2 below and,
together with the Borrowers and Parent, take the action described in
Paragraphs 3 and 4 below:
1. WAIVE any non-compliance with Sections 9.2, 9.8, 9.9(e), 9.10 and
any other Section of the Loan Agreement that may otherwise apply with respect to
the financing transactions for the Project described in the Recitals hereto.
2. APPROVE the interpretation of the proviso to the definition of
"Parent Funded Debt Ratio" that requires the EBITDA of Sunset to be excluded
from the consolidated EBITDA of Parent and its Subsidiaries but permits the
actual rental payments made by Sunset to Parent under the Sublease to be
included in the EBITDA of Parent.
3. AMEND the definition of "Parent Tangible Net Worth" contained in
Section 1.1 of the Loan Agreement by adding at the end thereof the following:
"; PROVIDED that Parent Tangible Net Worth shall be calculated on
a consolidated basis EXCEPT that such calculations shall exclude
the effect thereon of the results of operations of all
Unrestricted New Venture Entities."
4. AMEND Section 6.12 of the Loan Agreement by:
(a) striking the figures "$245,000,000" in clause (b)(i) thereof
and substituting therefor the figures "$280,000,000";
(b) striking the figures "$165,000,000" in clause (b)(ii)
thereof and substituting therefor the figures "$155,000,000"; and
(c) striking the figures "$37,000,000" in clause (b)(iv) thereof
and substituting therefor the figures "$12,000,000".
5. STIPULATE that the foregoing Waiver in Paragraph 1 hereof is
limited to the specific transactions described above in the Recitals and shall
not be construed to extend to any other or further transactions.
Dated: September 11, 0000
XXXX XX XXXXXXX NATIONAL TRUST SOCIETE GENERALE
AND SAVINGS ASSOCIATION, as
Managing Agent and a Bank
By /s/ Xxxxxx Xxxxxxxx
--------------------------
By /s/ Xxxxx Xxxxx
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BANK OF SCOTLAND XXXXX FARGO BANK, N.A.
By /s/ Xxxxxxxx Xxxxx
By /s/ Xxxxxxxxx Xxxxxxxx ---------------------------
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CIBC, INC. BANK OF AMERICA NEVADA
By /s/ Xxxx Xxxxxx
--------------------------- By /s/ Xxxx Xxxxxx
---------------------------
THE FIRST NATIONAL BANK OF THE SUMITOMO BANK, LIMITED
BOSTON
By /s/ Xxxxxxxx Xxxxx By
----------------------- -----------------------
ABN AMRO BANK, N.V., NBD BANK
SAN XXXXXXXXX XXXXXX
/s/ Xxxxxx Xxxxxx By /s/ Xxx Xxxxxx
By /s/ Xxxxxxx Xxxxxx -----------------------
-----------------------
THE NIPPON CREDIT BANK, LTD., THE LONG-TERM CREDIT BANK OF
LOS ANGELES AGENCY JAPAN, LTD., LOS ANGELES AGENCY
By /s/ Xxx Xxxxxxxx By
----------------------- -----------------------
FIRST SECURITY BANK OF UTAH, N.A. PNC BANK, NATIONAL ASSOCIATION,
SUCCESSOR BY MERGER TO
MIDLANTIC BANK, N. A.
By
-----------------------
By /s/ Xxxxxx X. Xxxxxx
-----------------------
Xxxxxx X. Xxxxxx
Vice President
IMPERIAL BANK BANK OF HAWAII
By /s/ By /s/ Xxxxxx Xxxxxxxx
----------------------- -----------------------
GIROCREDIT BANK AG DER CREDITANSTALT-BANKVEREIN, NEW
SPARKASSEN, GRAND CAYMAN YORK BRANCH
ISLAND BRANCH
/s/ Xxxx Xxxxxxx By /s/
By /s/ Xxxxxxx Xxxxx --------------------------
--------------------------
CREDIT LYONNAIS LOS ANGELES CREDIT LYONNAIS CAYMAN ISLAND
BRANCH BRANCH
By /s/ Xxxxxx Xxxxxxxxx By /s/ Xxxxxx Xxxxxxxxx
-------------------------- --------------------------
PALACE STATION HOTEL & CASINO, BOULDER STATION, INC.
INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------- --------------------------
TEXAS STATION, INC. ST. XXXXXXX RIVERFRONT STATION,
INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------- By: /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------
KANSAS CITY STATION STATION CASINOS, INC.
CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
By: /s/ Xxxxx X. Xxxxxxxxxxx --------------------------
--------------------------