SUPPLEMENTAL LOAN AGREEMENT
Dated as of September 25, 1996
This Supplemental Loan Agreement is made between Station Casinos,
Inc., a Nevada corporation ("Parent") and Sunset Station, Inc., a Nevada
corporation ("Sunset"). The parties hereto, for valuable consideration and
intending to be legally bound, hereby agree as follows:
Article I.
DEFINITIONS
Section 1.01 DEFINITIONS. As used in this Agreement, the
following terms shall have the meaning set forth below:
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in Nevada are authorized or required to close.
"COMMITMENT" means, collectively, (a) the commitment of Parent to
make Supplemental Loans to Sunset in an aggregate outstanding principal amount
of up to $25,000,000 pursuant to Section 2.01(a), subject to automatic reduction
of such amount pursuant to Section 2.04, (b) the commitment of Parent to make a
Supplemental Loan to Sunset in an amount sufficient to permit Sunset to exercise
its early termination option under Section 5.4 of the Sublease and (c) the
commitment of Parent to make a Supplemental Loan to Sunset in an amount
sufficient to permit Sunset to exercise the Purchase Option (as such term is
defined in the Sublease), but not to exceed the Purchase Option Exercise Amount
(as such term is defined in the Sublease) as it exists from time to time,
subject in the case of each of clauses (a), (b) and (c) to the terms and
conditions of Section 3.02.
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"INDEBTEDNESS" means, with respect to any person, all indebtedness
of such person for borrowed money or the deferred purchase price of assets sold
to such person.
"INDENTURES" means those certain Indentures dated as of June 1, 1993
(as amended), May 11, 1994 (as amended) and March 29, 1996 covering Parent's 9-
5/8% Senior Subordinated Notes Due 2003 and 2006.
"INDENTURE BASKET AMOUNT", as of any date of determination, the
aggregate amount of additional "Restricted Investments" which may as of such
date be made pursuant to Section 4.05 of each of the Indentures giving effect to
all "Restricted Payments" and "Restricted Investments" made by Parent prior to
such date. The terms "Restricted Investments" and "Restricted Payments" are
defined in the Indentures.
"INTEREST ACCRUAL DATE" means each March 31, June 30, September 30
and December 31, commencing with the first such date to occur after the initial
Supplemental Loan.
"INITIAL DRAWDOWN PERIOD" means the one-year period commencing on
the Initial Test Date; PROVIDED that a Supplemental Loan made under
Section 2.01(a) that is requested by Sunset based on its financial condition as
of the last day of the Initial Drawdown Period shall be deemed made within the
Initial Drawdown Period if made within forty-five (45) days after the Initial
Drawdown Period.
"INITIAL TEST DATE" means the last day of the first full calendar
quarter ending after the Project Completion Date.
"MATURITY DATE" means September 30, 2001.
"PARENT'S REVOLVING CREDIT FACILITY" means that certain Amended And
Restated Reducing Revolving Loan Agreement dated as of March 19, 1996 among
Parent, certain of its subsidiaries, Bank of America, N.T.&S.A. as Managing
Agent and the other banks party thereto, as the same may be amended.
"PROJECT COMPLETION DATE" means the date upon which the Sunset
Station Hotel & Casino is open for business to the
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general public with at least 95% of the planned hotel rooms ready for
occupancy, at least 95% of the planned casino space ready for gaming and
substantially all other amenities substantially complete.
"REVOLVER BASKET AMOUNT" means, as of any date of determination, the
aggregate amount of additional "New Venture Investments" in "Unrestricted New
Venture Entities" which may as of such date be made pursuant to Section 9.15 of
Parent's Revolving Credit Facility, giving effect to all such "New Venture
Investments" in "Unrestricted New Venture Entities" made by Parent prior to such
date. The terms "New Venture Investments" and "Unrestricted New Venture Entity"
are defined in the Parent's Revolving Credit Facility. For the purpose of
Section 5.03, the Revolver Basket Amount shall be deemed to include amounts of
"New Equity Proceeds" that have not been allocated to the Expansion/New Venture
Basket (as defined in the Parent's Revolving Credit Facility) and are therefore
available to be allocated under Section 9.15(d) of the Parent's Revolving Credit
Facility, PROVIDED that Parent shall allocate such "New Equity Proceeds" in
accordance with such Section 9.15(d) promptly upon receipt of a drawdown notice
under Section 2.02.
"SECOND DRAWDOWN PERIOD" means the one year period commencing on the
first day following the end of the Initial Drawdown Period; PROVIDED that a
Supplemental Loan made under Section 2.01(a) that is requested by Sunset based
on its financial condition as of the last day of the Second Drawdown Period
shall be deemed made during the Second Drawdown Period if made within forty-five
(45) days after the Drawdown Period.
"SUBLEASE" means that certain Sublease dated as of September 25,
1996 between Parent (as sublessor) and Sunset (as sublessee) covering certain
leased equipment to be installed at the Sunset Station Hotel & Casino.
"SUBLEASE BALANCE" shall mean the amount payable by Sunset in
connection with the exercise of the early termination option under Section 5.4
of the Sublease.
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"SUPPLEMENTAL LOANS" means the loans made and to be made by Parent
to Sunset pursuant to Section 2.01.
"THIRD DRAWDOWN PERIOD" means the period commencing on the first day
following the end of the Second Drawdown Period and ending on October 31, 2000.
Article II.
AMOUNT AND TERMS OF THE LOANS
Section 2.01 SUPPLEMENTAL CREDIT FACILITY. (a) Parent hereby
agrees, on the terms and conditions hereinafter set forth, to make Supplemental
Loans to Sunset from time to time during the period from the date hereof up to
and including October 31, 2000 in an aggregate principal amount not to exceed at
any time outstanding $25,000,000; PROVIDED that (i) Supplemental Loans made
during the Initial Drawdown Period shall not exceed $10,000,000,
(ii) Supplemental Loans made during the Second Drawdown Period shall not exceed
$10,000,000 and (iii) Supplemental Loans made during the Third Drawdown Period
shall not exceed $5,000,000, subject, in the case of each of clauses (i), (ii)
and (iii), to Section 3.02. Each Supplemental Loan under this Section 2.01(a)
shall be in an amount not less than $100,000 and shall be an integral multiple
thereof.
(b) Parent hereby agrees, on the terms and conditions
hereinafter set forth, and subject in any event to Sections 3.02 and 2.01(d), to
make a Supplemental Loan to Sunset at such time as the early termination option
is exercised under Section 5.4 of the Sublease in an amount sufficient to permit
Sunset to pay the early termination option exercise price.
(c) Parent hereby agrees, on the terms and conditions
hereinafter set forth, and subject in any event to Sections 3.02 and 2.01(d). to
make a Supplemental Loan to Sunset at such time as the Purchase Option (as such
term is defined in the Sublease) is exercised in an amount sufficient to permit
Sunset to pay the Purchase Option Exercise Amount (as such term is defined in
the Sublease).
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(d) No Supplemental Loan shall be made pursuant to Section
2.01(b) or 2.01(c) if the effect thereof is to reduce availability of the
Commitment under Section 2.01(a).
Section 2.02 DRAWDOWNS. Sunset shall give Parent written or
telephonic notice (effective upon receipt) of any Supplemental Loan at least one
(1) Business Day prior to the date of such Supplemental Loan. Not later than
1:00 o'clock p.m., Nevada time on the date specified in such notice for the
Supplemental Loan, and upon fulfillment of the applicable conditions set forth
in Section 3.02, Parent shall make the Supplemental Loan available to Sunset in
immediately available funds by crediting the amount thereof to Sunset's demand
deposit account with Bank of America Nevada.
Section 2.03 INTEREST. Sunset shall pay interest on the
outstanding and unpaid principal amounts of the Supplemental Loans at a rate per
annum equal to the interest rate then in effect for three month "Eurodollar
Loans" under Parent's Revolving Credit Facility; PROVIDED that such interest
shall be payable solely in the form of commensurate additions to the principal
of Supplemental Loans, such additions to be made on each Interest Accrual Date.
Parent shall provide Sunset with a written statement as of each Interest Accrual
Date setting forth the cumulative accrued interest on Supplemental Loans as of
such Interest Accrual Date, which shall be conclusive absent manifest error.
Section 2.04 AUTOMATIC REDUCTION OF COMMITMENT. The Commitment
available for Supplemental Loans under Section 2.01(a) shall automatically be
reduced to $15,000,000 on the first day of the Second Drawdown Period and to
$5,000,000 on the first day of the Third Drawdown Period, subject in each case
to Section 3.02.
Section 2.05 SUBORDINATION. The Supplemental Loans shall be
subordinated in right of payment to all other Indebtedness of Sunset, whether
existing at the date hereof or hereafter incurred. No payment or prepayment
(whether principal, interest or otherwise) with respect to Supplemental Loans
may in any event be made prior to the Maturity Date (EXCEPT for payment of "in-
kind" interest pursuant to Section
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2.03) nor shall Sunset be required to set aside any amount for the benefit of
Parent or the repayment of the Supplemental Loans prior to the Maturity Date.
No such payment with respect to Supplemental Loans may in any event be made
in any liquidation, reorganization, insolvency or similar proceeding of
Sunset unless the holders of all other Indebtedness of Sunset have been paid
in full in cash and, until the holders of such other Indebtedness have been
so paid in full, any distribution to which Parent would otherwise be entitled
with respect to Supplemental Loans shall instead be made to the holders of
such other Indebtedness of Sunset on a pro rata basis. Parent agrees that it
will hold in trust for the benefit of the holders of all other Indebtedness
of Sunset any payments received by it from time to time with respect to
Supplemental Loans.
Section 2.06 THE NOTE. The Supplemental Loans shall be evidenced
by the Note in the form attached hereto as Exhibit "A".
Section 2.07 USE OF PROCEEDS. Sunset agrees to use the proceeds
of the Supplemental Loans (a) made under Section 2.01(a) solely in the ordinary
course of its business, including satisfaction of its legal obligations to third
parties from time to time, (b) made under Section 2.01(b) solely for the purpose
of fulfilling its payment obligations in connection with the exercise of the
early termination option under the Sublease and (c) made under Section 2.01(c)
solely for the purpose of fulfilling its payment obligations in connection with
the exercise of the Purchase Option under the Sublease.
Article III.
CONDITIONS PRECEDENT
Section 3.01 CONDITIONS PRECEDENT TO INITIAL SUPPLEMENTAL LOAN.
The obligation of Parent to make the initial Supplemental Loan is subject to the
conditions precedent that Parent shall have received on or before the day of
such Supplemental Loan each of the following:
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(1) The Note duly executed by Sunset;
(2) Certified copies of the Articles of Incorporation and
Bylaws of Sunset and copies of Good Standing Certificates with respect to Sunset
issued by the Secretary of State of Nevada; and
(3) Certified copies of all corporate action taken by Sunset,
including resolutions of its Board of Directors authorizing the execution,
delivery and performance of this Agreement and the Note.
Section 3.02 CONDITIONS PRECEDENT TO ALL SUPPLEMENTAL LOANS. The
obligation of Parent to make any Supplemental Loan shall be subject to the
further conditions precedent that on the date of such Supplemental Loan:
(1) Giving effect thereto, such Supplemental Loan is within
the Indenture Basket Amount and no "Default" or "Event of Default" (as such
terms are defined in the Indentures) would occur under the Indentures as a
result of such Supplemental Loan; and
(2) Giving effect thereto, such Supplemental Loan is within
the Revolver Basket Amount and no "Default" or "Event of Default" (as such terms
are defined in the Parent's Revolving Credit Facility) would occur under the
Parent's Revolving Credit Facility as a result of such Supplemental Loan.
In the event that either of the foregoing conditions precedent is not satisfied
as of the date on which notice of a Supplemental Loan is received by Parent
pursuant to Section 2.02, such notice of Supplemental Loan shall be deemed to be
automatically renewed on each Business Day thereafter until such time as the
applicable condition precedent is satisfied and, if such condition is so
satisfied on a subsequent date, Parent shall be obligated to make such
Supplemental Loan notwithstanding clauses (a), (b) and (c) of
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the proviso to Section 2.01 or any reduction of the Commitment pursuant to
Section 2.04.
Article IV.
REPRESENTATIONS OF SUNSET
Sunset represents and warrants to Parent that:
Section 4.01 STATUS AND POWER. Sunset is a corporation duly
incorporated under the laws of Nevada, and has the corporate power and authority
to transact the business in which it is engaged and to consummate the
transactions contemplated by this Agreement.
Section 4.02 AUTHORITY. The execution, delivery and
performance by Sunset of this Agreement and the Note have been duly
authorized by all necessary corporate action and do not require the consent
of any other person or violate any provision of any law, judgment, indenture
or other material agreement to which it is a party.
Section 4.03 ENFORCEABILITY. This Agreement and the Note are
legal, valid and binding obligations of Sunset and enforceable against Sunset in
accordance with their terms except to the extent limited by bankruptcy and
similar laws affecting creditors' rights generally.
Article V.
REPRESENTATIONS AND COVENANTS OF PARENT
Section 5.01 ENFORCEABILITY. Parent represents that its
commitment to make Supplemental Loans set forth in Section 2.01 is a legal,
valid and binding obligation of Parent and enforceable against Parent in
accordance with its terms except to the extent limited by bankruptcy and similar
laws affecting creditors' rights generally.
Section 5.02 BASKET AMOUNTS. Parent represents that, as of the
date hereof, the Indenture Basket Amount is not
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less than $93,500,000 and the Revolver Basket Amount is not less than
$77,000,000.
Section 5.03 ACTIONS AFFECTING BASKETS. Parent covenants that,
other than the making of Supplemental Loans and other investments in Sunset, it
will not take any voluntary action that would reduce the Indenture Basket Amount
below 150% of the unused Commitment under clause (a) or below 105% of the unused
Commitment under clause (c) of the definition of the term "Commitment" then in
effect or that would reduce the Revolver Basket Amount below $35,000,000 for the
purpose of Supplemental Loans under Section 2.01(a) or below the Sublease
Balance for the purpose of Supplemental Loans under Section 2.01(c); PROVIDED
that, solely for the purpose of Supplemental Loans under Section 2.01(a), on and
after the date that is three months after the Project Completion Date, Parent
may reduce the Revolver Basket Amount, but not below $25,000,000. Parent
further covenants that if, on the Project Completion Date, the Revolver Basket
Amount is less than $25,000,000 for the purpose of Supplemental Loans under
Section 2.01(a) or less than the Sublease Balance for the purpose of
Supplemental Loans under Section 2.01(c), it will promptly allocate such "New
Equity Proceeds" as may be necessary and available under Section 9.15(d) of
Parent's Revolving Credit Facility to result in the Revolver Basket Amount being
$25,000,000 for the purposes of Supplemental Loans under Section 2.01(a) and
$105% of the then Sublease Balance for the purpose of Supplemental Loans under
Section 2.01(c).
Article VI.
EVENTS OF DEFAULT
Section 6.01 EVENTS OF DEFAULT. The occurrence of either of the
following shall be an Event of Default under this Agreement:
(1) Sunset shall fail to pay the principal amount due on the
Note on the Maturity Date; or
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(2) Any representations made in Article IV hereof shall prove
to have been incorrect, incomplete or misleading in any material respect as of
the date made; or
(3) Sunset institutes or consents to a proceeding relating to
it under a bankruptcy or insolvency law or for the appointment of a receiver or
any such proceeding is instituted against it without its consent and the same
continues undismissed or unstayed for 60 days.
Section 6.02 REMEDIES. Upon the occurrence of an Event of
Default, Parent may declare its obligation to make further Supplemental Loans to
be terminated and may declare the principal amount outstanding under the Note to
be due and payable, all without notice, presentment or demand, which are hereby
waived by Sunset; PROVIDED that none of the foregoing shall be effective until
the tenth (10) Business Day after Parent has notified the holders of all
Indebtedness of Sunset of its intent to do so. In addition, Parent may exercise
such remedies as are available under applicable laws to a creditor, subject to
the rights of the holders of other Indebtedness of Sunset as set forth in
Section 2.05.
Article VII.
MISCELLANEOUS
Section 7.01 AMENDMENTS AND WAIVERS. Any amendment to or waiver
of this Agreement must be in a writing that specifically refers to this
Agreement and that is signed by an authorized officer of both Parent and Sunset.
Section 7.02 ASSIGNMENTS. The rights of Sunset hereunder are
assignable (including by the grant of a security interest therein) without the
consent of Parent. The parties hereto agree that any amendment or waiver hereof
after Parent has been notified in writing of such assignment or security
interest shall not be effective without the written consent of any such assignee
or grantee of a security interest.
Section 7.03 COSTS AND EXPENSES. Each of the parties hereto
agrees to pay on demand all costs and expenses
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incurred by the other party in any legal proceeding to enforce the rights of
such party under this Agreement if such other party is the prevailing party
in such legal proceeding.
Section 7.04 INTEGRATION. This Agreement and the Note contains
the entire Agreement between the parties relating to the subject matter hereof
and supersedes all oral agreements and prior writings with respect thereto.
Section 7.05 GOVERNING LAW. This Agreement shall be governed by,
and constructed in accordance with, the laws of the State of Nevada.
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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
date first above written.
STATION CASINOS, INC.,
A Nevada Corporation
By /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxxx
Executive Vice President,
Chief Financial Officer
and Treasurer
SUNSET STATION, INC.,
A Nevada Corporation
By /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxxx
Vice President, Chief
Financial Officer and
Treasurer
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