Exhibit 2.10
CASABLANCA RESORTS
$125,000,000 9.000% Senior
Secured Notes due 2012
$66,000,000 at maturity
($39,911,520 in gross proceeds)
12.750% Senior Subordinated Discount Notes due 2013
PURCHASE
AGREEMENT
December 10, 2004
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
Each of Virgin River Casino
Corporation, a Nevada corporation (“ Virgin River
”), RBG, LLC, a Nevada limited-liability company (“
RBG ”), and B & BB, Inc., a Nevada corporation
(“ B&BB ” and, collectively with Virgin
River and RBG, jointly and severally, the “ Issuers
”), each of the entities listed on Schedule I hereto
(the “ Guarantors ”), and, solely with respect
to Sections 5(s) , 6(p) , 6(s) and
6(bb) hereof, each of the Parent Pledgors (as defined
below), hereby agrees with you as follows:
1.
Issuance of
Securities. The Issuers propose to
issue and sell to Jefferies & Company, Inc. (the “
Initial Purchaser
”), and
the Initial Purchaser proposes to purchase from the Issuers, (i)
$125,000,000 aggregate principal amount of the Issuers’
9.000% Senior Secured Notes due 2012, Series A (the “
Series A Senior Secured Notes
”), and
(ii) $66,000,000 aggregate principal amount at maturity of the
Issuers’ 12.750% Senior Subordinated Discount Notes due 2013,
Series A (the “ Series
A Senior Subordinated Notes,” and together with the Series
A Senior Secured Notes, the “Series A Notes” ). The Series A Senior
Secured Notes and the Series A Senior Subordinated Notes each will
be issued pursuant to an indenture (the “ Senior Secured Indenture ” and the
“ Senior Subordinated
Indenture ” respectively, and
together, the “ Indentures ”), each to be dated as
of the Closing Date (as defined below), among the Issuers, the
Guarantors (as defined below), and The Bank of New York Trust
Company, N.A., as trustee (the “ Trustee ”). The Series A
Notes and the Series B Notes (as defined below), each with the
Guarantee (as defined below) endorsed thereon, collectively are
referred to herein as the “ Notes .”
Pursuant to each of the respective
Indentures, each of the Guarantors and any future guarantor which
becomes a party to such Indenture will jointly and severally, fully
and unconditionally guarantee, (i) on a senior secured basis, in
the case of the Senior Secured Notes (as defined below), and (ii)
on a senior subordinated unsecured basis, in the case of the Senior
Subordinated Notes (as defined below), in each case, to each holder
of such Notes and the Trustee, the payment and performance of the
Issuers’ obligations under such Indenture, such Notes and, in
the case of the Senior Secured Notes, the applicable Collateral
Agreements (as defined below), including the payment of principal,
interest, premium, if any, and Liquidated Damages (as defined in
the Indentures), if any, on such Notes (the “
Guarantees ”).
Pursuant to the terms of the
applicable Collateral Agreements, all of the respective obligations
of the Issuers and the Guarantors under the Senior Secured
Indenture, the Senior Secured Notes and the Guarantees of the
Senior Secured Notes will be secured by security interests in, or
pledges of (the
“ Security Interests
”), the following (the “ Collateral
”): (i) the existing and future assets (other than
certain excluded assets) of the Issuers and the Guarantors,
including, without limitation, all of the shares of capital stock
of and membership interests in the Guarantors, and (ii) upon the
receipt of the requisite Nevada gaming approvals, a pledge of all
of the shares of capital stock of and membership interests in the
Issuers owned by Robert R. Black, Sr. (“ Randy Black
”) and his affiliate, R. Black, Inc., a Nevada corporation
(“ RBI ” and, together with Randy Black, the
“ Parent Pledgors ” and such pledges, the
“ Parent Pledges ”).
The Series A Notes will be offered
and sold to the Initial Purchaser pursuant to an exemption from the
registration requirements under the Securities Act of 1933, as
amended (the “ Act ”). The Issuers have
prepared a preliminary offering circular, dated November 28, 2004
(the “ Preliminary Offering Circular ”), and a
final offering circular, dated December 10, 2004 (the “
Offering Circular ”), relating to the offer and sale
of the Series A Notes (the “ Offering
”).
Upon original issuance thereof, and
until such time as the same is no longer required under the
Indentures or the applicable requirements of the Act, the Series A
Notes shall bear the following legend:
THIS SECURITY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS
SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS (OR SUCH OTHER
PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(k) UNDER THE
SECURITIES ACT AS PERMITTING RESALES OF RESTRICTED SECURITIES BY
NON-AFFILIATES WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY
AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) (THE “RESALE RESTRICTION
TERMINATION DATE”) ONLY (A) TO THE ISSUERS, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A
PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL
BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING
OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
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“ACCREDITED INVESTOR,”
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR
SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) ABOVE TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE AND IN EACH CASE IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS OF ANY U.S. STATE OR ANY OTHER
APPLICABLE JURISDICTION.
2.
Agreement to Sell and
Purchase. On the basis of the
representations, warranties and agreements contained herein,
and subject to the terms and conditions hereof, the Issuers shall
issue and sell to the Initial Purchaser (and, in order to induce
the Initial Purchaser to purchase the Series A Notes, (i) the
Guarantors shall enter into the Guarantees, and (ii) the Parent
Pledgors (solely with respect to the Parent Pledges), the Issuers
and the Guarantors shall grant the Security Interests), and the
Initial Purchaser shall purchase from the Issuers, (a) $125,000,000
aggregate principal amount of Series A Senior Secured Notes and (b)
$66,000,000 aggregate principal amount at maturity ($39,911,520 in
gross proceeds) of Series A Senior Subordinated Notes. The
purchase price for the Series A Senior Secured Notes shall be
97.000% of the principal amount thereof, and the purchase price for
the Series A Senior Subordinated Notes shall be 97.000% of the
gross proceeds thereof.
3.
Terms of
Offering.
(a)
The Initial
Purchaser has advised the Issuers that the Initial Purchaser will
make offers to sell (the “ Exempt Resales ”) the Series A Notes
purchased by the Initial Purchaser hereunder on the terms set forth
in the Offering Circular, as amended or supplemented, solely to (a)
persons whom the Initial Purchaser reasonably believes to be
“qualified institutional buyers,” as defined in Rule
144A under the Act (“ QIBs ”), (b) non-U.S.
persons in reliance upon Regulation S under the Act (“
Regulation S Purchasers
”), and (c)
a limited number of institutional “accredited
investors,” as defined in Rule 501(a)(1), (2), (3) or (7)
under the Act that make certain representations and warranties to
the Initial Purchaser and the Issuers (“ Accredited Investors ” and, collectively
with QIBs and Regulation S Purchasers, “ Eligible Purchasers ), which representations and
warranties are set forth in the form of Accredited Investor Letter
attached as Annex A to the Offering Circular (the
“ Accredited Investor
Letter ”).
Holders of the
Series A Notes (including subsequent transferees) will have the
registration rights set forth in the registration rights agreement
(the “ Registration
Rights Agreement ”), to be executed on
and dated as of the Closing Date. Pursuant to the
Registration Rights Agreement, the Issuers and the Guarantors will
agree, among other things, (a) to file with the Securities and
Exchange Commission (the “ Commission ”) under the
circumstances set forth therein (i) a registration statement under
the Act (the “ Exchange
Offer Registration Statement ”) relating to, among
other things, the 9.000% Senior Secured Notes due 2012, Series B,
of the Issuers (the “ Series B Senior Secured Notes
” and,
together with the Series A Senior Secured Note, the
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“ Senior Secured Notes
”) and the 12.750% Senior Subordinated Notes due 2013, Series
B, of the Issuers (the “ Series B Senior Subordinated
Notes ” and, together with the Series A Senior
Subordinated Notes, the “ Senior Subordinated Notes
”; the Series B Senior Subordinated Notes, together with the
Series B Senior Secured Notes, the “ Series B Notes
”), each identical in all material respects to the Series A
Senior Secured Notes and the Series A Senior Subordinated Notes,
respectively, including with respect to the Guarantees thereof
(except that the Series B Notes shall have been registered pursuant
to such registration statement), to be offered in exchange for the
Series A Senior Secured Notes and the Series A Senior Subordinated
Notes, respectively (such offer to exchange being referred to as
the “ Registered Exchange Offer ”), and
(ii) under certain circumstances, a shelf registration statement
pursuant to Rule 415 under the Act (the “ Shelf
Registration Statement ” and, together with the Exchange
Offer Registration Statement, the “ Registration
Statements ”) relating to the resale by certain holders
of the Series A Notes, and (b) to cause such Registration
Statements to be declared effective, as applicable, as provided in
the Registration Rights Agreement.
On the Closing
Date, the Parent Pledgors (solely with respect to the Parent
Pledges), the Issuers and the Guarantors shall enter into certain
security and pledge agreements, deeds of trust and certain other
collateral documents (collectively, the “ Collateral Agreements ” and, the pledge
agreements governing the Parent Pledges, the “
Parent Pledge Agreements
”), that
will provide for the grant of the Security Interests in the
Collateral to the Trustee, as collateral agent for the Trustee and
the holders of the Senior Secured Notes (in such capacity, the
“ Secured Party
”).
The Security Interests will secure the payment and performance when
due of all of the respective obligations of the Issuers and the
Guarantors under the Senior Secured Indenture, the Senior Secured
Notes and the Guarantees of the Senior Secured Notes.
(b)
In addition, as
described in the Offering Circular under “Summary—The
Transactions,” on the Closing Date, concurrently with the
closing of this Offering, the Issuers and their affiliates will
effect the following transactions:
(1)
Equity
Contribution . Randy Black and RBI
will make a $16.0 million cash contribution to the Issuers (the
“ Equity
Contribution ”). To finance
$15.0 million of the Equity Contribution, RBI will issue a $15.0
million 8% convertible senior secured note (the “
Convertible Note ”) to a third party
pursuant to a Convertible Senior Secured Note Purchase Agreement,
to be dated December 20, 2004 (the “ Convertible Note Purchase Agreement
”), by and
among RBI, Randy Black, Trustee of the Robert R. Black, Sr. Gaming
Properties Trust u/a/d May 24, 2004, and the third party.
Pursuant to a pledge agreement (the “ Convertible Note Pledge Agreement
” and,
collectively with the Convertible Note and the Convertible Note
Purchase Agreement, the “ Convertible Note Documents ”), the Convertible
Note will be secured by a pledge of 33 1 / 3
% (subject to adjustment as provided in the Convertible Note Pledge
Agreement) of Randy Black’s direct and indirect interests in
the Issuers or any direct holding company that wholly owns each of
the Issuers. The transactions contemplated by the Convertible
Note Documents collectively are referred to herein as the
“ Convertible Note
Transactions .”
(2)
Redemption and
Purchase . The net proceeds from
the issuance and sale of the Series A Notes, together with existing
cash of the Issuers and the Equity Contribution, will be used to
redeem or purchase all of the equity interests in the Issuers not
owned by Randy Black or his affiliates and a certain minority
holder (the “ Redemption and Purchase ”) pursuant to
(i) the Agreement for Purchase and Sale or Redemption of
Equity Interests, dated
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November 22, 2004, by and among
James A. Black Gaming Properties Trust, Gary W. Black Gaming
Properties Trust, Michael T. Black Gaming Properties Trust, JORCO,
Inc., Marcus A. Hall, James Ritchie and Barry R. Moore, as Sellers,
and Randy Black, Virgin River and B&BB, as Purchaser, and (ii)
the Agreement for Purchase and Sale or Redemption of Equity
Interests, dated December 9, 2004, by and among Scott M. Nielson,
as Seller, and Randy Black and B&BB, as Purchaser (together,
the “Redemption Agreements ”). Immediately
following the Redemption and Purchase, the Issuers will be
beneficially owned by Randy Black and his affiliates, except for a
1.92% minority interest in RBG.
(3)
New Senior
Credit Facility . The Issuers will
enter into a new $15.0 million senior secured credit facility (the
“ New Senior Credit
Facility ”) and will repay all
outstanding amounts under, and have released all liens securing,
its existing credit facility (the “ Credit Facility Refinancing ”). In connection
with the Credit Facility Refinancing, the Trustee, on behalf of the
holders of Senior Secured Notes, and the lenders under the New
Senior Credit Facility will enter into an Intercreditor Agreement,
to be dated as of the Closing Date, in a form reasonably
satisfactory to the Initial Purchaser, which form shall be attached
as an exhibit to each of the Indentures (the “
Intercreditor Agreement
”).
This Agreement, the Indentures, the
Registration Rights Agreement, the Notes, the Guarantees and the
Collateral Agreements collectively are referred to herein as the
“ Note Documents .” The Redemption
Agreements, the Convertible Note Documents, the New Senior Credit
Facility and the Intercreditor Agreement, together with the Note
Documents, collectively are referred to herein as the “
Transaction Documents .” The transactions
contemplated by the Transaction Documents, including, without
limitation, the Offering and the application of the proceeds
therefrom as described in the Offering Circular (including for the
Redemption and Purchase), the issuance and sale of the Notes in
accordance with this Agreement, the creation, grant, recording and
perfection of the Security Interests, the Equity Contribution, the
Convertible Note Transactions and the Credit Facility Refinancing,
collectively are referred to herein as the “
Transactions .”
4.
Delivery and Payment.
Delivery
to the Initial Purchaser of and payment for the Series A Notes
shall be made at a Closing (the “ Closing ”) to be held at 9:00
a.m., New York City time, on December 20, 2004, (such time and
date, the “ Closing
Date ”) at the offices of
Kummer Kaempfer Bonner & Renshaw, 3800 Howard Hughes Parkway,
Seventh Floor, Las Vegas, Nevada 89109. The Closing Date and
the location of delivery of and the form of payment for the Series
A Notes may be varied by agreement between the Initial Purchaser
and the Issuers.
The Issuers shall deliver to the
Initial Purchaser two or more certificates representing the Series
A Notes (the “ Global Notes ”), each in
definitive form, registered in the name of Cede & Co., as
nominee of The Depository Trust Company (“ DTC
”), or such other names as the Initial Purchaser may request
upon at least one Business Day’s notice to the Issuers, in an
amount corresponding to the respective aggregate principal amounts
of the Series A Senior Secured Notes and the Series A Senior
Subordinated Notes sold pursuant to Exempt Resales to QIBs, to
Regulation S Purchasers and to Accredited Investors, respectively,
in each case against payment by the Initial Purchaser of the
purchase price therefore by immediately available Federal funds
bank wire transfer to such bank account as the Issuers shall
designate to the Initial Purchaser at least two Business Days prior
to the Closing. “ Business Day ” means any
day other than a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are
authorized by law, regulation or executive order to remain
closed.
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The Global Notes in definitive form
shall be made available to the Initial Purchaser for inspection at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4
Times Square, New York, New York 10036 (or such other place as
shall be acceptable to the Initial Purchaser) not later than the
close of business, New York City time, one Business Day immediately
preceding the Closing Date.
5.
Agreements of the Issuers and the
Guarantors. Each of the Issuers
and Guarantors, jointly and severally, hereby agrees, and Randy
Black (solely with respect to Section 5(s) below) hereby
agrees:
(a)
Certain
Events . To (i) advise the
Initial Purchaser promptly after obtaining knowledge (and, if
requested by the Initial Purchaser, confirm such advice in writing)
of (A) the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification
of any of the Series A Notes for offer or sale in any jurisdiction,
or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority, and (B) the
happening of any event that makes any statement of a material fact
made in the Offering Circular untrue or that requires the making of
any additions to or changes in the Offering Circular in order to
make the statements therein, in the light of the circumstances
under which they are made, not misleading, (ii) use its best
efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption from qualification of any
of the Notes under any state securities or Blue Sky laws, and (iii)
if at any time any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of any of the Series A Notes under any
such laws, use its best efforts to obtain the withdrawal or lifting
of such order at the earliest possible time.
(b)
Offering
Circular . To (i) furnish the
Initial Purchaser and those persons identified by the Initial
Purchaser to the Issuer, without charge, as many copies of the
Preliminary Offering Circular and the Offering Circular, and any
amendments or supplements thereto, as the Initial Purchaser may
request, and (ii) promptly prepare, upon the Initial
Purchaser’s request, any amendment or supplement to the
Offering Circular that the Initial Purchaser deems may be necessary
in connection with Exempt Resales (and the Issuers and the
Guarantors hereby consent to the use of the Preliminary Offering
Circular and the Offering Circular, and any amendments and
supplements thereto, by the Initial Purchaser in connection with
Exempt Resales) .
(c)
Notice of
Amendment or Supplement . Except as set forth
in Section 5(d) , not to amend or supplement the Offering
Circular prior to the Closing Date, or at any time prior to the
completion of the resale by the Initial Purchaser of all of the
Series A Notes, unless the Initial Purchaser shall previously have
been advised thereof and shall not have objected thereto within
three Business Days after being furnished a copy
thereof.
(d)
Preparation of
Amendments and Supplements . At any time prior to
the completion of the resale by the Initial Purchaser of all of the
Series A Notes, (i) if any event shall occur as a result of which,
in the reasonable judgment of the Issuers or the Initial Purchaser
or their respective counsel, it becomes necessary or advisable to
amend or supplement the Offering Circular in order to make the
statements therein, in the light of the circumstances under which
they were made and when such Offering Circular is delivered to an
Eligible Purchaser, not misleading, or if it is necessary to amend
or supplement the Offering Circular to comply with Applicable Law
(as defined below), forthwith to prepare an appropriate amendment
or supplement to the Offering Circular (in form and substance
satisfactory to the Initial Purchaser) so that as so amended
or
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supplemented,
(A) the Offering Circular will not include an untrue statement of
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made and when such Offering Circular is so
delivered, not misleading, and (B) the Offering Circular will
comply with Applicable Law, and (ii) if it becomes necessary or
advisable to amend or supplement the Offering Circular so that the
Offering Circular will contain all of the information specified in,
and meet the requirements of, Rule 144A(d)(4) under the Act,
forthwith to prepare an appropriate amendment or supplement to the
Offering Circular (in form and substance satisfactory to the
Initial Purchaser) so that the Offering Circular, as so amended or
supplemented, will contain the information specified in, and meet
the requirements of, such Rule.
(e)
Qualification
of Securities . To cooperate with the
Initial Purchaser and the Initial Purchaser’s counsel in
connection with the qualification of the Notes under the securities
or Blue Sky laws of such jurisdictions as the Initial Purchaser may
request and continue such qualification in effect so long as
reasonably required for Exempt Resales, and to file such consents
to service of process or other documents as may be necessary in
order to effect such qualification; provided , that none of
the Issuers or the Guarantors shall be required in connection
therewith to file any general consent to service of process or to
register or qualify as a foreign corporation in any jurisdiction
where it is not now so qualified or to subject itself to general
taxation in respect of doing business in any jurisdiction in which
it is not otherwise so subject.
(f)
Costs and
Expense s. Whether or not any
of the Transactions are consummated or this Agreement is
terminated, to pay (i) all costs, expenses, fees and taxes incident
to and in connection with the performance of the obligations of the
Issuers and the Guarantors under this Agreement, including:
(A) the preparation, printing and distribution of the Preliminary
Offering Circular and the Offering Circular and all amendments and
supplements thereto (including, without limitation, financial
statements and exhibits), and all preliminary and final Blue Sky
memoranda and all other agreements, memoranda, correspondence and
other documents prepared and delivered in connection herewith
(including the furnishing of copies of the foregoing to the Initial
Purchaser and such other persons as the Initial Purchaser may
designate), (B) the printing, processing and distribution
(including, without limitation, word processing and duplication
costs) and delivery of each of the Transaction Documents and any
other agreements or documents in connection with the Transactions,
(C) the preparation, issuance and delivery of the Notes, including
the fees and expenses of the Trustee and the Secured Party
(including fees and expenses of its counsel) and the cost of its
personnel, and all costs and expenses related to the delivery of
the Notes to the Initial Purchaser and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, and (D) the
qualification of the Notes for offer and sale under the securities
or Blue Sky laws of the several states (including, without
limitation, filing fees and fees and disbursements of the Initial
Purchaser’s counsel relating to such registration or
qualification and the preparation of memoranda related thereto);
(ii) all fees and expenses of the counsel and accountants of the
Issuers and the Guarantors; (iii) all expenses and listing fees in
connection with the application for quotation of the Series A Notes
in The PORTAL Market (“ PORTAL ”) of the National
Association of Securities Dealers, Inc. (the “
NASD ”); (iv) all fees and
expenses (including fees and expenses of counsel) of the Issuers in
connection with approval of the Notes by DTC for
“book-entry” transfer; (v) all fees charged by rating
agencies in connection with the rating of the Notes; (vi) the costs
and charges of any transfer agent, registrar and/or depositary
(including DTC); (vii) all costs and expenses of the Registered
Exchange Offer, the Exchange Offer Registration Statement and any
Shelf Registration Statement, as set forth in the Registration
Rights Agreement; (viii) all costs and
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expenses in
connection with the creation and perfection of the Security
Interests (including, without limitation, filing and recording
fees, search fees, taxes and costs of surveys and title policies);
(ix) all costs and expenses of the Transactions (including, without
limitation, filing and recording fees); and (x) all fees and
expenses (including reasonable fees and expenses of counsel)
incurred by the Initial Purchaser in connection with the
preparation, negotiation and execution of the Transaction Documents
and the consummation of the Transactions.
(g)
Use of
Proceeds . To use the proceeds
from the sale of the Series A Notes in the manner described in the
Offering Circular under the caption “Use of
Proceeds.”
(h)
Waiver of
Certain Laws . To the extent it may
lawfully do so, not to insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay,
extension usury or other law, wherever enacted, now or at any time
hereafter in force, that would prohibit or forgive the payment of
all or any portion of the principal of or interest on the Notes, or
that may affect the covenants or the performance of the Indentures
or any of the Collateral Agreements (and, to the extent it may
lawfully do so, each of the Issuers and Guarantors hereby expressly
waives all benefit or advantage of any such law, and covenants that
it shall not, by resort to any such law, hinder, delay or impede
the execution of any power granted to the Trustee in the Indentures
or to the Secured Party in the Collateral Agreements but shall
suffer and permit the execution of every such power as though no
such law had been enacted).
(i)
Security
Interests . To do and perform all
things required to be done and performed under the Collateral
Agreements prior to, on and after the Closing Date, including,
without limitation, all things necessary or advisable to obtain on
or prior to the Closing Date (i) all Permits (as defined below),
other than any gaming or liquor approvals required to be obtained
by a purchaser in a foreclosure sale, necessary for the granting,
perfection and enforcement of the Security Interests and for the
foreclosure by the Secured Party thereon following an Event of
Default (as defined in the Indentures), (ii) all termination
statements, deeds of trust releases and other documents necessary
to terminate any Liens (as defined in the Indentures) on the
Collateral (other than Liens created by the Indentures, Liens
created by the Collateral Agreements and Permitted Liens (as
defined in the Indentures)), and (iii) subject to the terms of the
Intercreditor Agreement, a valid and perfected, first priority
Security Interest with respect to each of the assets, shares of
capital stock and membership interests which are to constitute, as
of the Closing Date, the Collateral.
(j)
Integration
. Not to,
and to ensure that no affiliate (as defined in Rule 501(b) under
the Act) of the Issuers or the Guarantors will, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of
any “security” (as defined in the Act) that would be
integrated with the sale of the Series A Notes in a manner that
would require the registration under the Act of the sale to the
Initial Purchaser or of the offers or sales of Series A Notes
pursuant to Exempt Resales.
(k)
Rule 144A
Information . For so long as any of
the Series A Notes remain outstanding, during any period in which
any of the Issuers is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “
Exchange Act ”), to make available,
upon request, to any holder of the Notes in connection with any
sale thereof and any prospective Eligible Purchaser of such Notes
from such holder, the information required by Rule 144A(d)(4) under
the Act.
8
(l)
DTC
. To obtain
the approval of DTC for “book entry” transfer of the
Notes, and to comply with the representation letter of the Issuers
and the Guarantors to DTC relating to the approval of the Notes by
DTC for “book entry” transfer.
(m)
PORTAL
. To effect
the inclusion of the Series A Notes for trading in PORTAL and to
use its best efforts to maintain the inclusion of the Series A
Notes for trading in PORTAL for so long as the Series A Notes are
outstanding.
(n)
Reporting
Requirements . For so long as any of
the Notes remain outstanding, to furnish to the Initial Purchaser
copies of all reports and other communications (financial or
otherwise) furnished to the Trustee or to the holders of the Notes
and, as soon as available, copies of any reports or financial
statements furnished to or filed by the Issuers or the Guarantors
with the Commission or any national securities exchange on which
any class of securities of the Issuers or the Guarantors may be
listed.
(o)
No Selling
Efforts or General Solicitation . Except in connection
with the Registered Exchange Offer or the filing of the Shelf
Registration Statement, not to, and not to authorize or permit any
person acting on its behalf to, (i) distribute any offering
material in connection with the offer and sale of the Series A
Notes other than the Preliminary Offering Circular and the Offering
Circular and any amendments and supplements to the Offering
Circular prepared in compliance with Section 5(d ), or (ii)
solicit any offer to buy or offer to sell the Series A Notes by
means of any form of general solicitation or general advertising
(including, without limitation, as such terms are used in
Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(p)
No Similar
Offerings . Not to, directly or
indirectly, without the prior consent of the Initial Purchaser,
offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of (or announce any offer or sale of, contract to
sell, grant of any option to purchase or other disposition of) any
debt securities of any of the Issuers or Guarantors substantially
similar to the Notes or the Guarantees for a period of six months
after the date of the Offering Circular, except as contemplated by
the Registration Rights Agreement; provided , that the
foregoing will not apply to (i) the Notes or the Guarantees or (ii)
borrowings (not constituting the issuance of securities) from
financial institutions to the extent not prohibited by the
Indentures.
(q)
ERISA . At any time prior to
the completion of the resale by the Initial Purchaser of the Series
A Notes, to notify the Initial Purchaser promptly in writing if any
of the Issuers or Guarantors or any of their Affiliates becomes a
party in interest or a disqualified person with respect to any
employee benefit plan, and to identify such plans. The terms
“ERISA,” “Affiliates,” “party in
interest,” “disqualified person” and
“employee benefit plan” shall have the meanings as set
forth in Section 6(ll) hereof.
(r)
Performance of
Agreements . To do and perform all
things required or necessary to be done and performed by it under
the Transaction Documents prior to the Closing Date and to satisfy
all conditions precedent to the delivery of the Series A Notes and
the Guarantees and the granting, perfection and enforcement of the
Security Interests.
(s)
Termination of
Lease Agreement with MDW Mesquite, LLC.
To use their
respective best efforts to cause MDW Mesquite, LLC, a Nevada
limited-liability company
9
(“
MDW ”), in accordance with
the Operating Agreement of MDW, (i) to take all lawful action to
duly call prior to the Closing (including, without limitation, by
providing the requisite notice or obtaining waivers from all of the
members of such notice), and to duly hold as promptly as
practicable after the date hereof, a meeting of MDW’s members
for the purpose of voting on the approval of MDW’s execution
of the Lease Buy-Out and Condominium Conversion Management
Agreement by and between MDW, RBG and Randy Black (the
“ Lease
Termination Agreement
”), and
the consummation by MDW of the transactions contemplated thereby,
and (ii) to duly obtain at such meeting the approval of MDW’s
execution of the Lease Termination Agreement and the consummation
by MDW of the transactions contemplated thereby by members holding
a majority of the equity ownership interests in MDW; provided,
however, that such meeting need not be held if MDW has obtained
prior to the date of such meeting duly executed written consents
from all of the members of MDW to MDW’s execution of the
Lease Termination Agreement and the consummation by MDW of the
transactions contemplated thereby.
6.
Representations and Warranties of
the Issuers, the Guarantors and the Parent Pledgors.
Each of
the Issuers and Guarantors, jointly and severally, represents and
warrants to the Initial Purchaser, and the Parent Pledgors
represent and warrant with respect to themselves (but not the
Issuers or the Guarantors) to the Initial Purchaser solely with
respect to Sections 6(p) , 6(s) and 6(bb)
below, that:
(a)
Offering
Circular . The Preliminary
Offering Circular as of its date did not, and the Offering
Circular, as of its date does not and as of the Closing Date will
not, and each supplement or amendment thereto (if any) as of its
date will not, contain any untrue statement of a material fact or
omit to state any material fact (except, in the case of the
Preliminary Offering Circular, for pricing terms and other
financial terms intentionally left blank) necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing
representation and warranty made in this Section 6(a) shall
not apply to any statements or omissions made in reliance on and in
conformity with information relating to the Initial Purchaser
furnished in writing to the Issuers by the Initial Purchaser
specifically for inclusion in the Preliminary Offering Circular or
the Offering Circular. The parties hereto acknowledge that
for purposes of this Agreement (including this Section 6(a)
and Section 8 ) the only information furnished in writing to
the Issuers by the Initial Purchaser specifically for inclusion in
the Preliminary Offering Circular or the Offering Circular is the
information set forth (i) on the cover page of the Offering
Circular with respect to the price of the Notes, (ii) in the third
paragraph on page 176 of the Offering Circular concerning offering
the Notes for resale by the Initial Purchaser, (iii) in the sixth
paragraph on page176 of the Offering Circular concerning
market-making by the Initial Purchaser, (iv) in the first paragraph
on page 177 of the Offering Circular concerning stabilization by
the Initial Purchaser and (v) in the second paragraph on page 177
of the Offering Circular concerning the affiliation of the Initial
Purchaser and its affiliates with the Issuers and their affiliates
(such information described in the immediately preceding clauses
(i) through (v) of this Section 6(a) , the “
Furnished Informatio
n”).
Each of the Preliminary Offering Circular and the Offering
Circular, as of their respective dates contained, and the Offering
Circular, as of the Closing Date and as amended or supplemented,
will contain, all of the information specified in, and meet the
requirements of, Rule 144A(d)(4) under the Act.
(b)
144A
Eligibility . There are no
securities of the Issuers or the Guarantors that are the same class
(within the meaning of Rule 144A) as the Notes and that are
registered under the Exchange Act or listed on a national
securities exchange registered under Section 6 of the
10
Exchange Act or
quoted in a United States automated inter-dealer quotation
system. The Series A Notes are eligible for resale pursuant
to Rule 144A under the Act.
(c)
Due
Organization; Good Standing . Each of the Issuers
and Guarantors (i) has been duly organized, is validly
existing and is in good standing under the laws of its jurisdiction
of organization, (ii) has all requisite power and authority to
conduct and carry on its business and to own, lease, use and
operate its properties and assets as described in the Offering
Circular, and (iii) is duly qualified or licensed to do business
and is in good standing as a foreign limited liability company or
corporation, as the case may be, authorized to do business in each
jurisdiction in which the nature of its business or the ownership,
leasing, use or operation of its properties and assets requires
such qualification or licensing.
(d)
Subsidiaries
.
Immediately following the Closing, (i) the only subsidiaries of the
Issuers will be the Guarantors which are signatories hereto, (ii)
the Issuers will directly own 100% of the outstanding shares of
capital stock of or 100% of the membership interests, as
applicable, in each Guarantor, in each case, free and clear of all
Liens, except for Liens created by the Indentures, Liens created by
the Collateral Agreements and Permitted Liens and (iii) Randy Black
will own 100% of the outstanding shares of capital stock of each of
Virgin River and B&BB, Virgin River will own 94.23% of the
outstanding membership interests in RBG and the Parent Pledgors
will own an aggregate of 3.85% of the outstanding membership
interests in RBG, in each case, free and clear of all Liens, except
for Liens created by the Indentures, Liens created by the Parent
Pledge Agreements and Liens created by the Convertible Note
Documents. Except as disclosed in the Offering Circular,
there are no outstanding (i) securities convertible into or
exchangeable for any capital stock of or any membership interests
in, as the case may be, any of the Issuers or Guarantors, (ii)
options, warrants or other rights to purchase or subscribe for any
capital stock of or any membership interests in, or any securities
convertible into or exchangeable for any capital stock of or any
membership interests in, as the case may be, any of the Issuers or
Guarantors or (iii) contracts, commitments, agreements,
understandings, arrangements, undertakings, rights, calls or claims
of any kind relating to the issuance of any capital stock of or any
membership interests in, as the case may be, any of the Issuers or
Guarantors, any such convertible or exchangeable securities or any
such options, warrants or rights. Except as set forth above,
immediately following the Closing, none of the Issuers and
Guarantors will directly or indirectly own any capital stock of or
other equity interest in any person.
(e)
Capitalization
. All of
the outstanding shares of capital stock of or membership interests
in, as the case may be, each of the Issuers and each of the
Guarantors have been duly authorized, are validly issued, fully
paid and nonassessable, and were not issued in violation of, and
are not subject to, any preemptive or similar rights. The
table under the caption “Capitalization” in the
Offering Circular (including the footnotes thereto) sets forth, as
of its date, the pro forma capitalization of the Issuers and the
Guarantors, on a combined and consolidated basis, after giving
effect to the Transactions. Immediately following the
Closing, except as set forth in such table, none of the Issuers or
Guarantors will have any liabilities, absolute, accrued, contingent
or otherwise other than: (i) liabilities that are reflected
in the Issuer Financial Statements (as defined below), or (ii)
liabilities incurred subsequent to September 30, 2004, in the
ordinary course of business, consistent with past practice, that
would not, singly or in the aggregate, have a material adverse
effect on (A) the properties, business, prospects, operations,
earnings, assets, liabilities or condition (financial or otherwise)
of the Issuers and the Guarantors, taken as a whole, (B) the
ability of any of the Issuers or Guarantors to perform its
obligations under any of the
11
Transaction
Documents, (C) the enforceability of any of the Collateral
Agreements or the attachment, perfection or priority of any of the
Security Interests intended to be created thereby in any portion of
the Collateral or (D) the validity of any of the Transaction
Documents or the consummation of any of the Transactions (each, a
“ Material Adverse
Effect ”).
(f)
No Other
Registration Rights . Except for this
Agreement, the Registration Rights Agreement, the Redemption
Agreements and the Convertible Note Documents, there are no
contracts, commitments, agreements, arrangements, understandings or
undertakings of any kind to which any of the Issuers or Guarantors
is a party, or by which any of them is bound, granting to any
person the right (i) to require the Issuers or any Guarantor to
file a registration statement under the Act with respect to any
securities of the Issuers or any Guarantor or requiring the Issuers
or any Guarantor to include such securities
with the Notes registered pursuant to any registration statement,
or (ii) to purchase or offer to purchase any securities of any of
the Issuers or Guarantors.
(g)
Power and
Authority . Each of the Issuers
and Guarantors has all requisite power and authority to execute and
deliver, and to perform its obligations under, the Transaction
Documents to which it is a party and to consummate the Transactions
contemplated thereby.
(h)
Authorization
of this Agreement . This Agreement and
the Transactions contemplated hereby (including, without
limitation, the Offering and the issuance and sale of the Notes in
accordance with this Agreement) have been duly authorized by each
of the Issuers and Guarantors, and this Agreement has been validly
executed and delivered by, and is the legal, valid and binding
obligation of, each of the Issuers and Guarantors, enforceable
against each of the Issuers and Guarantors in accordance with its
terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally and (ii) any rights of
acceleration and the availability of equitable remedies may be
subject to general principles of equity (whether considered in a
proceeding in equity or at law).
(i)
Authorization
of Indentures . Each of the
Indentures and the Transactions contemplated thereby have been duly
authorized by each of the Issuers and Guarantors and, on the
Closing Date, the Indentures will have been validly executed and
delivered by, and will be the legal, valid and binding obligation
of, each of the Issuers and Guarantors, enforceable against each of
the Issuers and Guarantors in accordance with its terms, except
that such enforceability may be limited by (i) applicable
bankruptcy, insolvency or similar laws affecting creditors’
rights generally and (ii) any rights of acceleration and the
availability of equitable remedies may be subject to general
principles of equity (whether considered in a proceeding in equity
or at law). On the Closing Date, each of the Indentures will
conform to the requirements of the Trust Indenture Act of 1939, as
amended (the “ TIA ”), applicable to an
indenture that is required to be qualified under the
TIA.
(j)
Authorization
of Registration Rights Agreement . The Registration
Rights Agreement and the Transactions contemplated thereby have
been duly authorized by each of the Issuers and Guarantors and, on
the Closing Date, the Registration Rights Agreement will have been
validly executed and delivered by, and will be the legal, valid and
binding obligation of, each of the Issuers and Guarantors,
enforceable against each of the Issuers and Guarantors in
accordance with its terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency or similar laws
and (ii) any rights of acceleration and the availability of
equitable remedies may be subject to general principles of equity
(whether considered in a proceeding in equity or at
law).
12
(k)
Authorization
of Series A Notes . The Series A Notes
have been duly authorized by each of the Issuers for issuance and
sale to the Initial Purchaser pursuant to this Agreement and, on
the Closing Date, will have been validly executed, authenticated,
issued and delivered by the Issuers in accordance with the terms of
this Agreement and the respective Indentures. When the Series
A Notes have been issued, executed and authenticated in accordance
with the terms of the Indentures and delivered to and paid for by
the Initial Purchaser in accordance with the terms of this
Agreement, the Series A Notes will be legal, valid and binding
obligations of each of the Issuers, entitled to the benefits of the
respective Indentures and enforceable against each of the Issuers
in accordance with their terms, except to the extent that such
enforceability may be limited by (i) applicable bankruptcy,
insolvency or similar laws affecting creditors’ rights
generally and (ii) any rights of acceleration and the availability
of equitable remedies may be subject to general principles of
equity (whether considered in a proceeding in equity or at
law).
Upon and
following delivery to the Initial Purchaser, the Senior Secured
Notes rank and will rank on a parity with all senior Indebtedness
(as defined in the Indentures) of each of the Issuers and senior to
all other Indebtedness of each of the Issuers, in each case that is
outstanding on the date hereof or that may be incurred hereafter;
provided , that pursuant to the Intercreditor Agreement, the
Lien on the Collateral securing up to $15.0 million principal
amount of borrowings under the New Senior Credit Facility will be
senior to the Lien on the Collateral securing the Senior Secured
Notes. Upon and following delivery to the Initial Purchaser,
the Senior Subordinated Notes rank and will rank on a parity with
all senior subordinated Indebtedness of each of the Issuers, junior
to all senior Indebtedness of each of the Issuers and senior to all
subordinated Indebtedness of each of the Issuers, in each case that
is outstanding on the date hereof or that may be incurred
hereafter.
(l)
Authorization
of Series B Notes . The Series B Notes
have been duly authorized by each of the Issuers and, when issued
in the Registered Exchange Offer, (A) will have been validly
executed, authenticated, issued and delivered in accordance with
the terms of the respective Indentures, the Registration Rights
Agreement and the Registered Exchange Offer and (B) will be legal,
valid and binding obligations of each of the Issuers, entitled to
the benefits of the respective Indentures and enforceable against
each of the Issuers in accordance with their terms, except to the
extent that such enforceability may be limited by (i) applicable
bankruptcy, insolvency or similar laws affecting creditors’
rights generally and (ii) any rights of acceleration and the
availability of equitable remedies may be subject to general
principles of equity (whether considered in a proceeding in equity
or at law).
(m)
Authorization
of Guarantees of Series A Notes . The Guarantees to be
endorsed on the Series A Notes by each Guarantor has been duly
authorized by each such Guarantor and, on the Closing Date, will
have been validly executed and delivered by each such Guarantor in
accordance with the terms of the respective Indentures. When
the Series A Notes have been issued, executed and authenticated in
accordance with the terms of the respective Indentures and
delivered to and paid for by the Initial Purchaser in accordance
with the terms of this Agreement, the Guarantee of each Guarantor
endorsed on the Series A Notes will be the legal, valid and binding
obligation of each such Guarantor, enforceable against each such
Guarantor in accordance with its terms, except to the extent that
such enforceability may be limited by (i) applicable bankruptcy,
insolvency or similar laws affecting creditors’ rights
generally and (ii) any rights of acceleration and the availability
of equitable remedies may be subject to general principles of
equity (whether considered in a proceeding in equity or at
law).
13
The Guarantees to
be endorsed on the Senior Secured Notes rank and will rank on a
parity with all senior Indebtedness (as defined in the Indentures)
of each of the respective Guarantors and senior to all other
Indebtedness of the respective Guarantors, in each case that is
outstanding on the date hereof or that may be incurred hereafter;
provided , that pursuant to the Intercreditor Agreement, the
Lien on the Collateral securing up to $15.0 million principal
amount of borrowings under the New Senior Credit Facility will be
senior to the Lien on the Collateral securing the Guarantees of the
Senior Secured Notes. Upon and following delivery to the
Initial Purchaser, the Guarantees to be endorsed on the Senior
Subordinated Notes rank and will rank on a parity with all senior
subordinated Indebtedness of the respective Guarantors, junior to
all senior Indebtedness of the respective Guarantors and senior to
all subordinated Indebtedness of the respective Guarantors, in each
case that is outstanding on the date hereof or that may be incurred
hereafter.
(n)
Authorization
of Guarantees of Series B Notes . The Guarantees to be
endorsed on the Series B Notes by each Guarantor has been duly
authorized by each such Guarantor and, when the Series B Notes are
issued, will have been validly executed and delivered by each such
Guarantor in accordance with the terms of the respective
Indentures, the Registration Rights Agreement and the Registered
Exchange Offer. When the Series B Notes have been issued,
executed and authenticated in accordance with the terms of the
Registered Exchange Offer and the respective Indentures, the
Guarantee of each Guarantor endorsed on the Series B Notes will be
the legal, valid and binding obligation of each such Guarantor,
enforceable against each such Guarantor in accordance with its
terms, except to the extent that such enforceability may be limited
by (i) applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally and (ii) any rights of
acceleration and the availability of equitable remedies may be
subject to general principles of equity (whether considered in a
proceeding in equity or at law).
(o)
Authorization
of Collateral Agreements . Each of the
Collateral Agreements and the Transactions contemplated thereby
(including, without limitation, the creation, grant, recording and
perfection of the Security Interests, the execution and filing of
financing statements and the payment of any fees and taxes in
connection therewith) have been duly authorized by each of the
Issuers and Guarantors party thereto and, on the Closing Date, each
of the Collateral Agreements will have been validly executed and
delivered by, and will be the legal, valid and binding obligation
of, each of the Issuers and Guarantors party thereto, enforceable
against each of the Issuers and Guarantors party thereto in
accordance with its terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and (ii) any rights of
acceleration and the availability of equitable remedies may be
subject to general principles of equity (whether considered in a
proceeding in equity or at law).
(p)
Authorization
of Other Transaction Documents . Each of the other
Transaction Documents and the Transactions contemplated thereby
have been duly authorized by each of the Issuers, the Guarantors
and the Parent Pledgors party thereto, and when executed and
delivered by each of the Issuers , the Guarantors and the Parent
Pledgors party thereto, each of the Transaction Documents will have
been validly executed and delivered by, and, assuming due
authorization, execution and delivery by the other parties thereto,
will be the legal, valid and binding obligation of, each of the
Issuers, the Guarantors and the Parent Pledgors party thereto,
enforceable against each of the Issuers, the Guarantors and the
Parent Pledgors party thereto in accordance with its terms, except
that such enforceability may be limited by (i)
applicable
14
bankruptcy,
insolvency or similar laws affecting creditors’ rights
generally and (ii) any rights of acceleration and the availability
of equitable remedies may be subject to general principles of
equity (whether considered in a proceeding in equity or at
law). Each of the Parent Pledge Agreements and the
Transactions contemplated thereby have been duly authorized by each
of the Parent Pledgors party thereto, and when executed and
delivered by each of the Parent Pledgors party thereto, each of the
Parent Pledge Agreements will have been validly executed and
delivered by, and, assuming due authorization, execution and
delivery by the other parties thereto, will be the legal, valid and
binding obligation of, each of the Parent Pledgors party thereto,
enforceable against each of the Parent Pledgors party thereto in
accordance with its terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and (ii) any rights of
acceleration and the availability of equitable remedies may be
subject to general principles of equity (whether considered in a
proceeding in equity or at law).
(q)
No
Violation . None of the Issuers
and Guarantors is in violation of its certificate of incorporation,
bylaws, certificate of formation or operating agreement, as
applicable (collectively, the “ Charter Documents ”). None of the
Issuers and Guarantors is (i) in violation of any federal, state,
local or foreign statute, law or ordinance, or any judgment,
decree, rule, regulation or order, (including, without limitation,
the Nevada Gaming Control Act), in each case including the rules
and regulations promulgated thereunder (collectively,
“ Applicable Law
”), of any
government, governmental or regulatory agency or body (including,
without limitation, the Nevada Gaming Commission, the Nevada State
Gaming Control Board or other applicable gaming authority (each, a
“ Gaming
Authority ”)), court, arbitrator
or self-regulatory organization, domestic or foreign (each, a
“ Governmental
Authority ”), or (ii) in breach
of or default under any bond, debenture, note or other evidence of
indebtedness, indenture, mortgage, deed of trust, lease or any
other agreement or instrument to which any such person is a party
or by which any of them or any of their respective property is
bound (collectively, “ Applicable Agreements ”), other than, in the
case of each of the immediately preceding clauses (i) and (ii),
violations, breaches or defaults that would not, singly or in the
aggregate, have a Material Adverse Effect. There exists no
condition that, with the passage of time or otherwise, would
reasonably be expected to (x) constitute a violation of (A) the
Charter Documents or (B) Applicable Laws or (y) constitute a breach
of or default under any Applicable Agreement or (z) result in the
imposition of any penalty or the acceleration of any indebtedness,
other than, in the case of the immediately preceding clauses
(x)(B), (y) and (z), such violations, breaches, penalties or
defaults that would not, singly or in the aggregate, have a
Material Adverse Effect. All Applicable Agreements are in
full force and effect with respect to the Issuers and the
Guarantors and are legal, valid and binding obligations thereof,
and no default has occurred or is continuing thereunder, other than
such defaults that would not, singly or in the aggregate, have a
Material Adverse Effect.
(r)
No
Conflict . None of the
execution, delivery or performance of any of the Transaction
Documents, nor the compliance with the terms and provisions
thereof, nor the consummation of any of the Transactions shall
conflict with, violate, constitute a breach of or a default (with
the passage of time or otherwise) under, result in the imposition
of a Lien on any assets of or capital stock of or membership
interests in the Issuers or the Guarantors (except for Liens
created by the Indentures, Liens created by the Collateral
Agreements and Permitted Liens), or result in an acceleration of
indebtedness under or pursuant to, (i) the Charter Documents, (ii)
any Applicable Agreement or (iii) any Applicable Law, other than,
in the case of the immediately preceding clauses (ii) and (iii),
such conflicts ,violations, breaches, defaults, Liens or
acceleration
15
that would not,
singly or in the aggregate, have a Material Adverse Effect.
After giving effect to the Transactions, no Default or Event of
Default (each, as defined in the Indentures) will
exist.
(s)
Permits
. No
permit, certificate, authorization, approval, consent, license or
order of, or filing, registration, declaration or qualification
with, any Governmental Authority or any other person (collectively,
“ Permits
”) is
required by the Issuers or the Guarantors to own, lease, use and
operate their properties and assets and to conduct and carry on
their businesses as described in the Offering Circular, or by the
Parent Pledgors, the Issuers or the Guarantors in connection with,
or as a condition to, the execution, delivery or performance of any
of the Transaction Documents, the compliance with the terms and
provisions thereof or the consummation of any of the Transactions,
other than (i) such Permits as have been made or obtained on or
prior to the Closing Date, which Permits are in full force and
effect on the Closing Date, (ii) as may be required for Exempt
Resales under the securities or blue sky laws of the various
jurisdictions in which the Series A Notes are being offered by the
Initial Purchaser, (iii) the order of the Commission declaring the
Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, effective, (iv) the conversion of
the Convertible Note pursuant to the terms of the Convertible Note
Documents and (v) such Permits, the failure of which to make or
obtain would not, singly or in the aggregate, have a Material
Adverse Effect.
(t)
No
Proceedings . There is no action,
claim, suit, demand, hearing, notice of violation or deficiency, or
proceeding (including, without limitation, any investigation or
partial proceeding, such as a deposition), domestic or foreign
(collectively, “ Proceedings ”), pending or, to the
knowledge of the Issuers, threatened, either (i) in connection
with, or that seeks to restrain, enjoin or prevent the consummation
of, or that otherwise objects to, any of the Transaction Documents
or any of the Transactions, or (ii) that could, singly or in the
aggregate, have a Material Adverse Effect. None of the
Issuers or Guarantors is subject to any judgment, order, decree,
rule or regulation of any Governmental Authority that could, singly
or in the aggregate, have a Material Adverse Effect. No
injunction or order has been issued and no Proceeding is pending
or, to the knowledge of the Issuers, threatened that (i) asserts
that the offer, sale and delivery of the Series A Notes and the
Guarantees to the Initial Purchaser pursuant to this Agreement or
the initial resale of the Series A Notes and the Guarantees by the
Initial Purchaser in the manner contemplated by this Agreement is
subject to the registration requirements of the Act, or (ii) would
prevent or suspend the issuance or sale of the Notes, including the
Exempt Resales, or the use of the Preliminary Offering Circular,
the Offering Circular, or any amendment or supplement thereto, in
any jurisdiction.
(u)
Regulated
Persons . Each of the
Issuers’ and the Guarantors’ respective directors,
members, managers, officers, key personnel and persons holding a
five percent or greater equity or economic interest in any of the
Issuers or Guarantors (each of such persons, a “
Regulated Person ” and, collectively,
the “ Regulated
Persons ”) has, and is in
compliance with the terms and conditions of, all Permits
(including, without limitation, Permits with respect to engaging in
gaming operations) necessary or advisable to
own, lease, use and operate the properties and assets and to
conduct and carry on the businesses described
16
in the Offering
Circular, other than such Permits the failure of which to have
would not, singly or in the aggregate, have a Material Adverse
Effect (a “ Material
Permit ”). All Material
Permits are valid and in full force and effect. Each of the
Regulated Persons is in compliance with the terms and conditions of
all Permits (including, without limitation, Permits with respect to
engaging in gaming operations) necessary or advisable to own,
lease, use and operate the properties and assets and to conduct and
carry on the businesses described in the Offering Circular, other
than where such failure to be in compliance would not, singly or in
the aggregate, have a Material Adverse Effect. None of the
execution, delivery or performance of any of the Transaction
Documents, nor the compliance with the terms and provisions
thereof, nor the consummation of any of the Transactions, will
allow or result in, and no event has occurred which allows or
results in, or after notice or lapse of time would allow or result
in, the imposition of any material penalty under, or the revocation
or termination of, any Material Permit or any material impairment
of the rights of the holder of any Material Permit. None of
the Issuers or Guarantors has received any notice from any issuer,
and none of the Issuers or Guarantors has any reason to believe
that any issuer is considering limiting, conditioning, suspending,
modifying, revoking or not renewing any Material
Permit.
(v)
No
Investigations of Regulated Persons. To the knowledge of the
Issuers, (i) no Governmental Authority is investigating any
Regulated Person, and (ii) there is no basis for any Governmental
Authority to deny the renewal of the current Permits held by any of
the Regulated Persons.
(w)
Title to
Assets . Immediately following
the Closing, each of the Issuers and each of the Guarantors (i)
will have good and marketable title, free and clear of all Liens
(other than Liens created by the Indentures, Liens created by the
Collateral Agreements and Permitted Liens), to all property and
assets described in the Offering Circular as being or to be owned
by it, (ii) will enjoy peaceful and undisturbed possession under
all leases to which it is a party as lessee and (iii) will hold a
valid leasehold interest with respect to each such
lease.
(x)
Sufficiency
and Condition of Assets . The assets of each of
the Issuers and Guarantors include all of the assets and properties
necessary or required in, or otherwise material to, the conduct of
the businesses of each of them, and such assets are in working
condition, except where the failure of such assets to be in working
condition would not, singly or in the aggregate, have a Material
Adverse Effect. Without limiting the foregoing, each of the
properties of the Issuers and the Guarantors (including, without
limitation, all buildings, structures, improvements and fixtures
located thereon, thereunder, thereover or therein, and all
appurtenances thereto and other aspects thereof) is suitable,
sufficient, adequate and appropriate in all respects (including
physical, structural, operational, legal, practical and otherwise)
for its current and proposed use, operation and occupancy, except,
in each such case, for such failures to meet such standards as
would not, singly or in the aggregate, have a Material Adverse
Effect.
(y)
Insurance
. Each of
the Issuers and Guarantors maintains reasonably adequate insurance
covering its properties, operations, personnel and businesses
against losses and risks in accordance with customary industry
practice. All such insurance is outstanding and duly in
force.
(z)
Real
Property . No condemnation,
eminent domain, or similar proceeding exists, is pending or, to the
knowledge of the Issuers, is threatened, with respect to or that
could affect any real properties owned by the Issuers or any of the
Guarantors, except for such proceedings as would not, singly or in
the aggregate, have a Material Adverse Effect. No real
property owned by the Issuers or any of the Guarantors is subject
to any sales contract, option, right of first refusal or similar
agreement or arrangement with any third party. There is no
real property currently under contract or subject to an option in
favor of any of the Issuers or any of the
17
Guarantors,
except for real property which the failure of the Issuers or any of
the Guarantors to acquire, would not, singly or in the aggregate,
have a Material Adverse Effect.
(aa)
Related Party
Transactions . Except as disclosed
in the Offering Circular, there are no related party transactions
that would be required to be disclosed in the Offering Circular if
the Offering Circular were a prospectus included in a registration
statement on Form S-1 filed under the Act.
(bb)
Security
Interests . Upon execution and
delivery of the Collateral Agreements and the issuance of the
Notes, the Parent Pledge Agreements (upon the receipt of the
requisite Nevada gaming approvals) and the other Collateral
Agreements will create, in favor of the Secured Party, for the
benefit of the holders of the Senior Secured Notes, a legal, valid
and enforceable security interest in (subject to Permitted Liens),
all of the right, title and interest of the Issuers and Guarantors
in the Collateral and the proceeds thereof. Upon the filing
of the financing statements with the Secretary of State (or
equivalent government official) of the State in which such Issuer
or Guarantor is organized which sufficiently indicates all
Collateral, and, in addition, in the case of the Parent Pledge
Agreements, upon the receipt of the requisite Nevada gaming
approvals, the Security Interests will be valid and perfected,
subject only to the Intercreditor Agreement, and will constitute
first priority security interests (subject to Permitted Liens) in
such Collateral. As of the Closing Date, the Collateral will
be subject to no Liens other than Permitted Liens.
(cc)
Taxes . All material tax
returns required to be filed by any of the Issuers or by any of the
Guarantors in any jurisdiction (including foreign jurisdictions)
have been filed and, when filed, all such returns were accurate in
all material respects, and all taxes, assessments, fees and other
charges (including, without limitation, withholding taxes,
penalties and interest) due or claimed to be due from any of the
Issuers or from any of the Guarantors have been paid, other than
those being contested in good faith by appropriate proceedings, or
those that are currently payable without penalty or interest and,
in each case, for which an adequate reserve or accrual has been
established on the books and records of the Issuers or the
Guarantors, as applicable, in accordance with generally accepted
accounting principles of the United States, consistently applied
(“ GAAP
”).
Commencing with thei
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