THIS FORBEARANCE AGREEMENT (this “
Agreement ”), dated as of the 19th day of February,
2009 (the " Execution Date ”), is entered into by and
among Virgin River Casino Corporation, a Nevada corporation
(“ Virgin River ”), RBG, LLC, a Nevada limited
liability company (“ RBG ”), B & BB, Inc., a
Nevada corporation (“ B&BB ” and, together
with Virgin River and RBG, the “ Issuers ”),
Casablanca Resorts, LLC, a Nevada limited liability company
(“ Casablanca ”), Oasis Interval Ownership, LLC,
a Nevada limited liability company (“ Oasis Ownership
”), Oasis Interval Management, LLC, a Nevada limited
liability company (“ Oasis Management ”), Oasis
Recreational Properties, Inc., a Nevada corporation (“
Oasis Recreational ”), Black Gaming, LLC, a Nevada
limited liability company (“ Black Gaming ”), R.
Black, Inc., a Nevada corporation (“ R. Black ”
and, together with Casablanca, Oasis Ownership, Oasis Management,
Oasis Recreational, and Black Gaming, the “ Guarantors
” and, together with the Issuers, the “ Obligors
”) and Drawbridge Special Opportunities Advisors LLC, as
agent on behalf of certain funds and accounts (“
Drawbridge ”), BlackRock Financial Management, Inc.
High Yield Group, as investment advisors/sub-advisors for certain
accounts (“ BlackRock ”), Midland National Life
Insurance Company and 1888 FUND, LTD. (collectively, “
Guggenheim ”) and Silver Point Capital Offshore Fund
Ltd. (“ Silver Point ” and, together with
Drawbridge, BlackRock and Guggenheim, the “ Majority Note
Holders ”).
A. The Issuers and The Bank of New York
Trust Company, N.A., a national banking association (the “
Trustee ”), have entered into that certain Indenture
dated as of December 20, 2004 (together with all supplements
thereto, the “ Indenture ”), whereby the Issuers
issued 9.000% Senior Secured Notes due in 2012 in the aggregate
principal amount of $125,000,000 for the benefit of the Holders
thereof (together with all modifications, extensions, renewals and
replacements thereof, if any, the “ Senior Secured
Notes ”).
B. The Guarantors have each executed
guarantees in favor of the Holders of the Senior Secured Notes
(collectively, the “ Guarantees ”), guaranteeing
all of the Issuers’ obligations under the Senior Secured
Notes and the Indenture on the terms and conditions set forth in
such Guarantees and the Indenture. This Agreement, the Indenture,
the Senior Secured Notes, the Guarantees, and all mortgages, deeds
of trust, security agreements, pledge agreements, control
agreements, collateral assignment agreements and all other
agreements, instruments, and documents executed in connection with
the Indenture and Senior Secured Notes, including without
limitation the Collateral Agreements, are referred to collectively
herein as the “ Loan Documents ”.
C. The next installment of interest payable
on the Senior Secured Notes in the amount of Five Million Six
Hundred Twenty-Five Thousand Dollars ($5,625,000) (the “
Interest Payment ”) was due on January 15, 2009
(the “ Interest Due Date ”), with a thirty
(30) day grace period for the payment thereof (the “
Grace Period ”).
D. Issuers did not make the Interest
Payment on the Interest Due Date nor within the Grace Period, which
results in an Event of Default under the terms of the Indenture and
the Senior Secured Notes (the “ Payment Default
”).
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E. In addition to the Payment Default,
certain covenant defaults or other Events of Default may also occur
under the Indenture on or after the Grace Period (the “
Potential Other Defaults ” and, together with the
Payment Default, the “ Specified Defaults
”).
F. In the event any Specified Default
occurs, the Issuers have requested the Majority Note Holders, and
the Majority Note Holders have agreed, subject to and in accordance
with the terms and conditions set forth in this Agreement, to
forbear from exercising any of their rights or remedies under the
Loan Documents and from taking any action to cause the Trustee to
exercise any of the Trustee’s rights or remedies with respect
to the Specified Defaults, and, furthermore, in the event Trustee
does take any action with respect to any of the Specified Defaults,
to the extent provided for in the Loan Documents, to cause the
Trustee to forbear from exercising any of its rights or remedies
under the Loan Documents, in each case, until the Scheduled
Forbearance Termination Date (as defined below) (subject to
termination as set forth below).
NOW, THEREFORE, in consideration of the
foregoing premises and the mutual covenants hereinafter stated, and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Recitals . Each of the Issuers
hereby acknowledges and agrees that the recitals set forth above
are true and correct and that the total aggregate outstanding
obligations under the Indenture consists of the principal balance
of the Senior Secured Notes as of the Execution Date of
$125,000,000, plus all accrued and unpaid interest thereon, and any
other amounts that are due and owing under the Loan
Documents.
2. Defined Terms . All capitalized
terms used herein (including, without limitation, in the preamble
and preliminary statements hereof) that are not otherwise defined
shall have the meanings ascribed to such terms in the Indenture or
the Collateral Agreements, as applicable.
3. Reaffirmation of Loan Documents
. Each of the Issuers hereby acknowledges and reaffirms each and
all of the Issuers’ obligations, duties, covenants and
liabilities under the Loan Documents, including, but not limited
to, the obligation to pay all amounts due under the Senior Secured
Notes. Each of the Issuers further acknowledges and agrees that
(i) the Loan Documents are valid, binding and enforceable in
accordance with their terms and remain in full force and effect,
(ii) the liens and security interests granted pursuant to the
Collateral Agreements are valid, perfected and enforceable liens,
and all such liens and security interests and all Collateral
granted as security under the Collateral Agreements continues to be
and remains collateral for the indebtedness and obligations under
the Indenture, and (iii) there are no claims, demands, offsets
or defenses at law or in equity that would defeat or diminish the
Majority Note Holders’ present and unconditional right to
collect the indebtedness evidenced by the Senior Secured Notes and
to proceed to enforce the rights and remedies available to the
Majority Note Holders as provided in the Loan Documents or by
law.
4. Reaffirmation of Guarantees .
Each of the Guarantors hereby acknowledges and reaffirms all of the
Guarantors’ respective obligations, duties, covenants and
liabilities under the terms and conditions of the Guarantees,
including, but not limited to, the obligation to pay all amounts
due under their respective Guarantees. Each of the Guarantors
further acknowledges and agrees that (i) the Guarantees are
valid, binding and enforceable in accordance with their respective
terms and remain in full force and effect, and (ii) there are
no claims, demands, offsets or defenses at law or in equity that
would defeat or diminish the Majority Note Holders’ present
and unconditional right to collect the amounts due under the
Guarantees and to proceed to enforce the rights and remedies
available to the Majority Note Holders as provided in the
Guarantees or by law.
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(a) So long as none of the Issuers or
Guarantors defaults under the terms of this Agreement, and
otherwise subject to the terms and conditions set forth herein, the
Majority Note Holders agree to forbear from exercising any of their
rights or remedies under the Loan Documents and from taking any
action to cause the Trustee to exercise any of the Trustee’s
rights or remedies, in each case, arising out of the Specified
Defaults during the period commencing on the Effective Date and
terminating on the Termination Date (as defined below) (the “
Forbearance Period ”). Furthermore, in the event
Trustee does take any action with respect to any of the Specified
Defaults during the Forbearance Period, to the extent provided for
in the Loan Documents, Majority Note Holders shall cause the
Trustee to forbear from exercising any of its rights or remedies
under the Loan Documents. During the Forbearance Period, interest
shall continue to accrue on the entire unrepaid balance of the
Senior Secured Notes and on the Interest Payment in accordance with
Section 4.1 of the Indenture and in the Senior Secured Notes.
The “ Termination Date ” shall be the earlier to
occur of the Scheduled Forbearance Termination Date or the
occurrence of a Forbearance Event Default (as such terms are
defined below).
(b) Notwithstanding anything to the
contrary contained herein or in the Loan Documents, each of the
Obligors acknowledges and agrees that (i) except for the
limited forbearance set forth herein granted by the Majority Note
Holders, the actions of each of the Majority Note Holders in
entering into this Agreement shall not constitute or be construed
or deemed as (x) a waiver or relinquishment of, or estoppel to
assert, any rights or remedies under any of the Loan Documents,
applicable law or in equity, (y) a waiver of any Event of
Default or Default under the Loan Documents, or (z) an
amendment, modification or consent to any non-compliance to any
provision under the Loan Documents; (ii) except as set forth
herein, each of the Majority Note Holders reserves the right to
enforce each and every term of the Loan Documents; (iii) each
of the Majority Note Holders is under no duty or obligation of any
kind or any nature to grant any of the Issuers any additional
period of forbearance beyond that provided herein; (iv) the
actions of each of the Majority Note Holders in entering into this
Agreement are without prejudice to the right of each of the
Majority Note Holders to pursue any and all remedies under the Loan
Documents, pursuant to applicable law, or in equity available to it
in its sole discretion upon the termination (whether upon
expiration thereof, upon acceleration, or otherwise) of this
Agreement; (v) the Senior Secured Notes will remain in default
throughout the Forbearance Period and, but for this Agreement, the
Majority Note Holders would be entitled to exercise their rights
and remedies under the Loan Documents and applicable law in respect
of the Specified Defaults; (vi) the Obligors have no defenses,
setoffs, or counterclaims against the Majority Note Holders or,
alternatively, to the extent that any defenses, setoffs, or
counterclaims exist, the Obligors hereby waive any and all
defenses, setoffs, and counterclaims which they may have or claim
to have in respect of the obligations of the Obligors under the
Loan Documents; and (vi) the Forbearance Period will expire
automatically and without notice immediately upon the occurrence,
at any time prior to the expiration of the Forbearance Period, of
any breach, Default or Event of Default on the part of the Issuers
or Guarantors under this Agreement or, upon the expiration of the
Forbearance Period.
(c) The Scheduled Forbearance Termination
Date shall be March 9, 2009 (the “ Scheduled
Forbearance Termination Date ”), provided that
(i) on or before March 2, 2009, the Issuers deliver to
Morgan Joseph & Co., Inc. (“ Morgan Joseph
”) and Cadwalader, Wickersham & Taft LLP (“
CWT ” and, together with Morgan Joseph, the “
Professional Advisors ”) a summary of indicative terms
and conditions in respect of the restructuring of the obligations
under the Indenture, the Credit Agreement and any other
Indebtedness (the “ Term Sheet ”) and
(ii) on or before March 6, 2009, the Issuers deliver to
the Professional Advisors a 13-week cash flow forecast for the
succeeding 13 calendar weeks in form and substance acceptable to
the Professional Advisors.
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6. Cure . To the extent provided
for in the Loan Documents, the Majority Note Holders acknowledge
and agree that the Issuers shall have the right to cure the
Specified Defaults at any time during the Forbearance Period by
indefeasible payment of all Interest Payments and other amounts due
and owing under the Indenture, the Senior Secured Notes and the
Loan Documents.
7. Representations and Warranties by
Issuers and Guarantors . As a material inducement for Majority
Note Holders to enter into this Agreement, each of the Obligors
hereby represent and warrant to Majority Note Holders
that:
(a) Each of the Issuers and Guarantors have
full power and authority (and all necessary action has been taken)
to execute, deliver and perform its obligations under this
Agreement, and that this Agreement is binding upon and enforceable
against each of the Issuers and Guarantors in accordance with its
terms.
(b) Each of the Issuers’ and
Guarantors’ delivery and performance of this Agreement does
not and will not (i) violate any law, rule, regulation or
court order to which any of the Issuers or Guarantors are subject,
or (ii) conflict with or result in a breach of the articles of
formation, bylaws, operating agreement or other formation document
of any of the Issuers or Guarantors or any agreement or instrument
to which any of Issuers or Guarantors are a party or by which any
of Issuers or Guarantors are bound.
(c) As of the Execution Date, each of the
Obligors do not have cash or cash equivalents in any Deposit
Account, Securities Account or any other bank account or similar
account with a financial institution other than with those
institutions disclosed by the Obligors to either Morgan Joseph or
CWT and set forth on Schedule “A” hereof (the “
Disclosed Banks &rd
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