iii
AMENDED AND RESTATED LOAN AGREEMENT
BY AND BETWEEN
COLONIAL DOWNS, L.P.,
COLONIAL HOLDINGS, INC.
AND
CD ENTERTAINMENT LTD.
CLOSING DATE: AUGUST 30, 2000
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS 2
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1.1 DEFINITIONS. 2
1.2 INTERPRETATION. 13
1.3 ACCOUNTING PRINCIPLES. 13
2. AGREEMENT TO BORROW AND LEND 14
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2.1 AGREEMENT TO BORROW AND LEND. 14
2.2 THE NOTE. 14
2.3 TERM. 14
3. LOAN INTEREST RATES, PAYMENTS AND FEES 14
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3.1 INTEREST RATE OPTIONS. 14
3.2 DEFAULT INTEREST AND LATE PAYMENT CHARGE. 16
3.3 INTEREST RATE UNASCERTAINABLE. 16
3.4 PAYMENTS. 16
3.5 INTEREST PAYMENT DATES. 16
3.6 OPTIONAL PREPAYMENTS. 17
3.7 PRINCIPAL PAYMENTS. 17
3.8 ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES. 17
3.9 CLOSING FEES. 18
4. AFFIRMATIVE COVENANTS 18
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4.1 PRESERVATION OF EXISTENCE. 18
4.2 PAYMENT OF LIABILITIES, INCLUDING IMPOSITIONS. 18
4.3 COMPLIANCE WITH LAWS. 18
4.4 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. 18
4.5 VISITATION RIGHTS. 18
4.6 MAINTENANCE OF INSURANCE. 19
4.7 NOTICE. 20
4.8 PERFORMANCE OF OBLIGATIONS. 20
4.9 CERTIFICATE OF NO REMEDIES EVENT. 20
4.10 TITLE TO LAND AND IMPROVEMENTS. 21
4.11 FURTHER ASSURANCES. 21
4.12 ESTOPPEL CERTIFICATE. 21
4.13 REPAIRS. 22
4.14 EMPLOYEE BENEFIT PLANS. 22
4.15 NOTICES REGARDING MULTIEMPLOYER PENSION AND WELFARE PLANS. 22
4.16 LICENSES AND PERMITS. 22
5. NEGATIVE COVENANTS 23
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5.1 CHANGES IN ORGANIZATIONAL DOCUMENTS. 23
5.2 TRANSFER OF LAND AND IMPROVEMENTS. 23
5.3 LIQUIDATION OR MERGER. 23
5.4 JUDGMENTS. 23
5.5 LEASING OF PREMISES. 24
5.6 MATERIAL ADVERSE CHANGE. 24
5.7 CONDUCT OF BUSINESS. 25
5.8 CREATION OF LIENS. 25
5.9 VALUE OF COLLATERAL. 25
5.10 TRANSFER OF PERSONALTY. 25
5.11 DISPOSITION OF RENTS. 25
5.12 PENSION PLANS AND BENEFIT ARRANGEMENTS. 26
5.13 ERISA PROHIBITED TRANSACTION. 27
6. DISBURSEMENT MATTERS 27
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6.1 PROCEDURES. 27
7. REPORTING REQUIREMENTS 28
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7.1 ENVIRONMENTAL REPORTS AND TITLE REPORTS. 28
8. REPRESENTATIONS AND WARRANTIES 28
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8.1 DUE FORMATION; CAPACITY. 28
8.2 POWER AND AUTHORITY. 30
8.3 VALIDITY AND BINDING EFFECT. 30
8.4 NO CONFLICT. 30
8.5 OTHER AGREEMENTS. 30
8.6 NO CONDITIONAL DEFAULT OR REMEDIES EVENT. 30
8.7 NO LITIGATION OR INVESTIGATIONS. 31
8.8 FINANCIAL STATEMENTS. 31
8.9 IMPOSITIONS. 31
8.10 TITLE ASPECTS. 31
8.11. ZONING AND GOVERNMENTAL APPROVALS. 31
8.12 UTILITIES. 33
8.13 SECURITY INTERESTS. 33
8.14 DEED OF TRUST. 33
8.15 ENVIRONMENTAL MATTERS. 34
8.16 INSURANCE. 34
8.17 PENSION PLANS AND BENEFIT ARRANGEMENTS. 34
9. DEFAULTS AND REMEDIES 35
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9.1 EVENTS OF DEFAULT. 35
9.2 REMEDIES. 37
9.3 NOTICE OF SALE. 39
10. MISCELLANEOUS 39
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10.1 MODIFICATIONS, AMENDMENTS OR WAIVERS. 39
10.2 NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED. 39
10.3 REIMBURSEMENT AND INDEMNIFICATION OF THE LENDER BY THE BORROWER;
IMPOSITIONS. 41
10.4 HOLIDAYS. 41
10.5 NOTICES. 41
10.6 SEVERABILITY. 42
10.7 GOVERNING LAW. 42
10.8 PRIOR UNDERSTANDING. 42
10.9 DURATION; SURVIVAL. 42
10.10 SUCCESSORS AND ASSIGNS. 43
10.11 COUNTERPARTS. 43
10.12 EXCEPTIONS. 43
10.13 CONSENT TO JURISDICTION. 43
10.14 NO THIRD PARTIES BENEFITED. 44
10.15 AUTHORITY TO FILE NOTICES. 44
10.16 INTERPRETATION. 44
10.17 STATUS OF PARTIES. 44
10.18 BROKERAGE FEE. 46
10.19 WAIVER OF JURY TRIAL. 46
LIST OF SCHEDULES AND EXHIBITS
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Schedules:
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Schedule I - Loan Documents
Schedule II - Names, Addresses, Telephone and Telecopier Numbers of Parties
Schedule III - Excluded Debt
Schedule IV - Excluded Equipment
Exhibits:
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Exhibit A - Refinanced Debt
Exhibit B - Required Deliveries at Closing
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") made as of the 30th
day of August, 2000, by and between COLONIAL DOWNS, L.P., a Virginia limited
partnership (the "Partnership"), COLONIAL HOLDINGS, INC., a Virginia corporation
(the "Corporation") (the Partnership and the Corporation shall be referred to
collectively as the "Borrower"), and CD ENTERTAINMENT LTD., an Ohio limited
liability company (the "Lender") as assignee of and successor in interest to PNC
Bank National Association, a national banking association ("PNC").
WITNESSETH:
WHEREAS, the Partnership formerly was indebted to PNC pursuant to a deed of
trust note in the original principal amount of $10,000,000 and a line of credit
note in the original principal amount of $5,000,000, both dated as of June 26,
1997 (the "PNC Debt");
WHEREAS, to evidence the PNC Debt, the Partnership executed certain loan
documents identified on Schedule I attached hereto (the "PNC Loan Documents");
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WHEREAS, the Lender has repaid the PNC Debt on behalf of the Partnership and, in
connection therewith, PNC has assigned to the Lender all of its right, title and
interest in and to the PNC Loan Documents pursuant to an Assignment of even date
hereof, by and among PNC, the Lender, the Partnership, the Corporation and
Stansley Racing Corp., a Virginia corporation ("SRC");
WHEREAS, the Lender and the Partnership have revised the terms and conditions of
the repayment of the PNC Debt, as assigned to the Lender, and have set forth the
repayment terms in a consolidated promissory note in the original principal
amount of $15,000,000 of even date herewith, made by the Partnership in favor of
the Lender (the "Term Note");
WHEREAS, the Corporation is indebted to the Lender pursuant to the promissory
notes in the original principal amounts and containing the terms as summarized
and set forth on Exhibit A attached hereto (the "Refinanced Debt");
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WHEREAS, the Corporation and the Lender have revised the terms and conditions of
the repayment of the Refinanced Debt and have agreed to consolidate the
Refinanced Debt into a single promissory note in the original principal amount
of $10,700,000, which amount shall include a line of credit in the amount of
$650,000 for additional advances that the Lender has agreed to make available to
the Corporation (the "Line of Credit Note"); and
WHEREAS, the Lender is willing to extend the loans as set forth in the Term Note
and the Line of Credit Note upon the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of their mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound hereby, covenant and agree as follows:
1. DEFINITIONS1. DEFINITIONS
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1.1 DEFINITIONS.1.1 DEFINITIONS.
In addition to words and terms defined elsewhere in this Agreement, the
following terms shall have the following meanings:
"Acceleration Event" shall mean (i) the occurrence of any uninsured damage
to or loss due to theft or destruction to any of the Collateral which a Borrower
is financially unable to replace or (ii) any of the Loan Documents shall cease
to be legal, valid and binding agreements, enforceable against a Borrower in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with their terms) or become judicially declared to be
ineffective or inoperative or shall in any way cease to give or provide the
respective liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby or (iii) any party shall
obtain an order or decree in any court of competent jurisdiction enjoining the
Lender or a Borrower from carrying out the terms and conditions of any of the
Loan Documents and such order or decree is not vacated or stayed within ninety
(90) days after the filing thereof.
"Affiliate" as to any Person shall mean any other Person which (i) directly
or indirectly controls, is controlled by, or is under common control with such
Person; (ii) which beneficially owns or holds more than 50% of any class of the
voting stock (or in the case of a Person which is not a corporation, more than
50%) of the equity interest) of such Person; or (iii) more than 50% of the
voting stock (or in the case of a Person which is not a corporation, more than
50% of the equity interest) of which is beneficially owned or held, directly or
indirectly, by such Person. "Control," as used herein, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or trust, as the
case may be.
"Agreement" shall mean this Amended and Restated Loan Agreement as the same
may be supplemented, amended, renewed or replaced from time to time in writing
by the parties hereto, including all schedules and exhibits hereto.
"Assignment of Leases and Rents" shall mean that certain Assignment of
Leases and Rents originally made from the Partnership to PNC as collateral for
the PNC Debt, which has assigned its rights thereunder to the Lender, as the
same may be amended, replaced or supplemented from time to time in writing by
the Partnership and Lender.
"Assignment of Management Agreement" shall mean that Assignment of
Management Agreement from the Partnership and SRC originally made to PNC as
collateral for the PNC Debt, which has assigned its rights thereunder to the
Lender, as the same has been or may be amended in writing from time to time by
the parties thereto.
"Authorized Officer" shall mean those persons designated by written notice to
the Lender from a Borrower, who are authorized to execute notices, reports and
other documents required hereunder. A Borrower may amend such list of persons
from time to time by giving written notice of such amendment to the Lender.
"Benefit Arrangement" shall mean at any time an "employee benefit plan,"
within the meaning of Section 3(3) of ERISA, which is neither a Pension Plan, a
Multiemployer Pension Plan, nor a Multiemployer Welfare Plan and which is
maintained, sponsored or otherwise contributed to, by any member of the ERISA
Group.
"Borrower" shall mean each of Colonial Downs, L.P., a Virginia limited
partnership and Colonial Holdings, Inc., a Virginia corporation.
"Borrower Documents" shall mean the Partnership's limited partnership agreement,
the certificate of limited partnership and all amendments thereto and the
Corporation's articles of incorporation, bylaws and all amendments thereto.
"Business Day" shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Cleveland, Ohio.
"Closing Date" shall mean the date hereof. Closing shall take place at the
offices of Baker & Hostetler, LLP, 3200 National City Center, 1900 East 9th
Street, Cleveland, Ohio 44114-3485 or such other place as the parties may
agree.
"Closing Fee" shall mean the Corporation's payment to the Lender, on the Closing
Date, of the amount of $150,000.
"COBRA Violation" shall mean a failure by a Borrower or any member of the ERISA
Group to comply with the group health plan continuation coverage requirements of
Section 601 et seq. of ERISA.
"Collateral" shall mean the real estate and personal property encumbered by each
of the Deed of Trust, the Second Deed of Trust and the Hampton Deed of Trust,
the security pledged pursuant to the Pledge Agreements and all other security
pledged pursuant to this Agreement and the Collateral Documents, with the
exception only of the Excluded Equipment.
"Collateral Documents" shall mean the Deed of Trust, the Second Deed of Trust,
the Hampton Deed of Trust, the Assignment of Rents and Leases, the Assignment of
Management Agreement, the Pledge Agreements and the Financing Statements.
"Conditional Default" shall mean an event or condition which, with the passage
of time, the giving of notice, or a determination by the Lender, as provided
herein, or any combination of the foregoing, would constitute a Remedies Event,
provided that any failure to make a payment required under in Section 9.l(a)
shall not constitute a Conditional Default or a Remedies Event until the period
of time following the due date for any payment provided for thereunder, if any,
shall have expired.
"Deed of Trust" shall mean that certain Deed of Trust and Security Agreement
given by the Partnership and the Corporation to Lawyers Title Realty Services,
Inc., a Virginia corporation, as trustee, dated as of June 26, 1997 and recorded
in the Clerk's Office of the Circuit Court of New Kent County, Virginia, at Deed
Book 247, Page 25, for the benefit of PNC, which has assigned its rights
thereunder to the Lender, securing among other things, the Term Note, as the
same may be amended, replaced or supplemented from time to time in writing with
the prior written consent of the Lender.
"Default Rate" shall mean interest at a rate per annum which shall be four
percent (4%) above the Prime Rate.
"Dollar," "U. S. Dollar" and the symbol "$" shall mean the lawful money of the
United States of America.
"Environmental Complaint" shall mean any written complaint setting forth a cause
of action for personal or property damage or equitable relief, order, notice of
violation, citation, request for information issued pursuant to any
Environmental Law or by an Official Body, subpoena or other written notice of
any type relating to, arising out of, or issued pursuant to any Environmental
Law or any Environmental Conditions, as the case may be.
"Environmental Conditions" shall mean any adverse change in the conditions of
the environment, including, without limitation, the work place, natural
resources (including flora or fauna), soil, surface water, ground water, any
actual or potential drinking water supply sources, substrata or the ambient air,
caused by the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, emptying, discharging,
injecting, escaping, leaching, disposal, dumping, threatened release or other
management or mismanagement of Regulated Substances resulting from the use of,
or operations on, the Land.
"Environmental Indemnity Agreement" shall mean that certain Hazardous Materials
Certificate and Indemnity Agreement originally from the Partnership to PNC,
which has assigned its rights thereunder to the Lender, as the same may be
amended, replaced or supplemented from time to time in writing by the parties
thereto with the prior written consent of the Lender.
"Environmental Laws" shall mean all federal, state and local laws, rules and
regulations, including permits, judicial and administrative orders, judgments,
consent decrees issued, or entered into, pursuant thereto, relating to pollution
or protection of human health or the environment or employee safety in the work
place.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended or supplemented from time to time, and any successor statute
of similar import, and the rules and regulations thereunder, as from time to
time in effect.
"ERISA Group" shall mean, at any time, a Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with a
Borrower, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Event of Default" or "Events of Default" shall have the meaning assigned to
those terms in Section 9.1.
"Excluded Equipment" shall mean the items listed on Schedule IV attached
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hereto.
"Exhibits" shall mean those schedules and exhibits attached hereto and made
a part hereof, including Schedule I - Loan Documents; Schedule II - Names,
Addresses, Telephone and Telecopier Numbers of Parties; Schedule III - Excluded
Indebtedness; Schedule IV - Excluded Equipment, Exhibit A - Refinanced Debt and
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Exhibit B - Required Deliveries at Closing.
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"Expiration Date" shall mean the earlier of (i) June 30, 2005, which date
is five (5) years following the Closing Date, as such date may be extended, or
(ii) the date upon which the Loan is accelerated pursuant to this Agreement.
"Financing Statements" shall mean the financing statements which the Lender may
from time to time require in order to perfect its security interest in the
collateral described in the Deed of Trust, the Second Deed of Trust, the Hampton
Deed of Trust, the other Collateral Documents and this Agreement pursuant to the
applicable Uniform Commercial Code.
"Force Majeure" shall mean an act of God, labor dispute, an industrial
action of any kind (including, without limitation, a strike, interruption,
slowdown, and other similar action on the part of labor), a lockout, war
(declared or undeclared), civil war, sabotage, blockage, revolution, riot,
insurrection, civil disturbance, terrorism, epidemic, tornado, hurricane,
landslide, lightning, earthquake, flood, storm, fire, adverse weather
conditions, act of eminent domain, laws, rules, regulations or orders of
governmental authority, explosion, breakage or accident to machinery or
equipment or pipe or transmission line or other facility, embargo, inability to
obtain or delay in obtaining equipment, materials, or transport, or any event
similar to the foregoing which is not within the reasonable control of a
Borrower, and which has an adverse effect on the ability of a Borrower to
perform its obligations.
"Free Cash Flow" shall mean the earnings of the Corporation plus
depreciation and amortization less all taxes, Interest Expense, amounts expended
on capital expenditures, principal payments, plus or minus any changes in the
working capital of the Corporation, all calculated in accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles as are in effect
from time to time, and applied on a consistent basis (except for changes in
application in which a Borrower's independent certified public accountants
concur) both as to classification of items and amounts.
"Governmental Approvals" shall mean all consents, licenses, permits and all
other authorizations or approvals required by Official Bodies with respect to
the construction, completion, use and occupancy of the Improvements.
"Guarantors" shall mean collectively, the Corporation and SRC, and each
individually a Guarantor and shall refer to the guaranty of the Term Note and
the Line of Credit Note.
"Guaranty" of any Person shall mean any obligation of such Person guaranteeing
or in edict guaranteeing any liability or obligation of any other Person in any
manner, whether directly or indirectly, including, without limiting the
generality of the foregoing, any agreement to indemnify or hold harmless any
other Person, any performance bond or other suretyship arrangement and any other
form of assurance against loss, except endorsement of negotiable or other
instruments for deposit or collection in the ordinary course of business.
"Hampton Deed of Trust" shall mean that certain Deed of Trust, dated August 26,
1998, given by the Partnership to David F. Belkowitz and James W. Theobald, as
trustees, for the benefit of the Corporation, recorded in the Clerk's Office for
the City of Hampton, Virginia at Deed Book 1255, Page 388, which was assigned to
the Lender by Assignment dated August 26, 1998 and recorded November 17, 1998 in
Deed Book 1264, Page 559, securing the Line of Credit Note, as the same may be
amended from time to time.
"Hampton SWF" shall mean the satellite wagering facility owned and operated by
the Partnership located in Hampton, Virginia.
"Impositions" shall mean all (i) real estate and personal property taxes and
other taxes and assessments, water and sewer rates and charges and all other
governmental charges and any interest or costs or penalties with respect thereto
and charges for any easement or agreement maintained for the benefit of the Land
and Improvements and the Hampton SWF, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature whatsoever which
at any time may be assessed levied or imposed upon the Land or the Improvements,
or the rent or income received therefrom, or any use or occupancy thereof; and
(ii) other taxes, assessments, fees and governmental charges levied, imposed or
assessed upon or against a Borrower or any of its properties.
"Improvements" shall mean each of (i) the horse racing track and related
facilities located in New Kent County, Virginia including a grandstand, track
kitchen, barns and paddock, as such exist as of the date hereof; and (ii) the
Hampton SWF, including the trade fixtures and all personal property located
therein, as such exist as of the date hereof.
"Indebtedness" shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations under any letter of
credit, currency swap agreement, interest rate swap, cap, collar or floor
agreement or other interest rate management device, (iv) any other transaction
(including without limitation forward sale or purchase agreements, capitalized
leases and conditional sales agreements) having the commercial effect of a
borrowing of money entered into by such Person to finance its operations or
capital requirements (but not including trade payables and accrued expenses
incurred in the ordinary course of business which are not represented by a
promissory note or other evidence of indebtedness and which are not more than
thirty days (30) past due), or (v) any Guaranty for borrowed money.
Indebtedness of a Borrower shall not include any excluded Indebtedness set forth
on Schedule III.
"Insolvency Proceedings" shall mean an action or proceeding seeking any
reorganization, arrangement, composition, readjustment, liquidation or other
similar relief under the U.S. Bankruptcy Code or any present or future statute,
law, or regulation, or any proceedings for voluntary liquidation, dissolution or
other winding up, or the appointment of any trustee, receiver, liquidator or
conservator or similar official (whether in a proceeding or otherwise), or any
assignment for the benefit of creditors or any marshaling of assets.
"Interest Expense" shall mean, for any period, all interest expense
incurred by each Borrower and with the interest payments prorated over the
applicable period.
"Interest Payment Date" shall mean each date specified for the payment of
interest in Section 3.5.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended or supplemented from time to time, and any successor statute
of similar import, and the rules and regulations thereunder, as from time to
time in effect.
"Land" shall include (i) the real property owned by the Corporation identified
in Exhibit A to each of the Deed of Trust and the Second Deed of Trust; and (ii)
---------
the real property owned by the Partnership identified in Exhibit A to the
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Hampton Deed of Trust, together with all rights in and to all easements, rights
and privileges benefiting the Land.
"Law" shall mean any law (including common law), or constitution, statute,
treaty, regulation, rule, ordinance, or order applicable to a Borrower or
Lender, as the context so indicates, or any injunction, writ, decree or award of
any Official Body, to which a Borrower or the Lender, as the context so
indicates, is a party.
"Lease" shall mean the Agreement to Lease, dated March 21, 1997, between
Holdings as landlord and the Partnership as tenant.
"Lender Debt" shall mean all obligations, liabilities and indebtedness of a
Borrower to the Lender, its successors, assigns or participants, evidenced by,
arising under or directly relating to the Loan Documents, whether as principal,
guarantor, surety or otherwise, secured or unsecured, joint and/or several,
absolute or contingent, due or not due, matured and unmatured, original,
renewed, extended, refinanced or replaced, now existing or hereafter incurred or
created, consensual or created by law, and including principal (whether
resulting from advances made by the Lender or from indebtedness purchased by the
Lender), interest, yield protection payments, premiums, fees, expenses
(including reasonable collection expenses), taxes, charges, commissions and
reasonable attorneys' fees actually incurred, including indemnification
obligations of a Borrower with respect to any claims that may be made against
the Lender whether arising before or after payment of Lender Debt or any
assignment or participation of Lender Debt, and including all obligations,
liabilities and indebtedness of each Borrower to the Lender incurred or arising
after the commencement of any case by or against a Borrower under the U. S.
Bankruptcy Code, specifically including any post-petition interest or advances.
"LIBOR" shall mean the interest rate per annum (rounded to the nearest
one-sixteenth (1/16) of one percent (1%)) equal to the London Interbank Offered
Rate as published in the Wall Street Journal for a maturity equal to one (1)
-------------------
year, as reported on August 29, 2000.
"Lien" shall mean any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement of any nature whatsoever,
whether voluntary or involuntarily given, including but not limited to any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing),
other than any of the foregoing created under the Deed of Trust, the Second Deed
of Trust or the Hampton Deed of Trust.
"Line of Credit Note" shall mean that certain Amended and Restated Line of
Credit Note in the original principal amount of $10,700,000, representing the
balance of the Refinanced Debt in the amount of $10,050,000 and the additional
line of credit in the amount of $650,000, granted by the Lender to the
Corporation.
"Loan" shall mean the loan from the Lender to each Borrower pursuant to this
Agreement in the aggregate principal amount of $25,700,000, as evidenced by the
Notes.
"Loan Documents" shall mean, collectively, the PNC Loan Documents set forth on
Schedule I attached hereto, and the loan documents evidencing the Line of Credit
---------
Note as the same may be amended, replaced or supplemented from time to time.
"Loan Document" shall mean any of the Loan Documents.
"Management Agreement" shall mean the Amended and Restated Management and
Consulting Agreement among the Partnership, Stansley Management Corp., SRC and
Maryland-Virginia Racing Circuit, Inc., a Virginia corporation, as the same may
be amended, replaced or supplemented from time to time.
"Mandatory Principal Payments" shall have the meaning assigned to such term in
Section 3.7 hereof.
"Material Adverse Change" shall mean any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Agreement or any other
Loan Document, (b) is or could reasonably be expected to be material and adverse
to the business properties, assets, financial condition, results of operations
or prospects, as a whole, of a Borrower or a Guarantor, (c) impairs materially
or could reasonably be expected to impair materially the ability of a Borrower
or a Guarantor to duly and punctually pay or perform its obligations under the
Loan Documents, or (d) impairs materially or could reasonably be expected to
impair materially the ability of the Lender to enforce its legal remedies
pursuant to this Agreement or any other Loan Document.
"Multiemployer Pension Plan" shall mean any employee pension benefit plan
(within the meaning of Section 3(2) of ERISA) which is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA and to which a Borrower or any
Person is then making or accruing an obligation to make contributions or, within
the preceding five Plan years, has made or bad an obligation to make such
contributions.
"Multiemployer Welfare Plan" shall mean any employee welfare benefit plan
(within the meaning of Section 30) of ERISA) established and maintained pursuant
to one or more collective bargaining agreements and contributed to by two or
more unrelated employers.
"Multiple Employer Pension Plan" shall mean a Pension Plan which has two or more
contributing sponsors (including a Borrower or any member of the ERISA Group) at
least two of whom are not under common control, as such a plan is described in
Sections 4063 and 4064 of ERISA.
"Notes" or "Note" shall mean, individually or collectively, the Term Note and
the Line of Credit Note.
"Official Body" shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor.
"Pension Plan" shall mean at any time an employee pension benefit plan
(including a Multiple Employer Pension Plan but not a Multiemployer Pension
Plan) which is covered by Title IV of ERISA or is subject to the minimum funding
standards under Section 412 of the Code and either (i) is maintained by any
member of the ERISA Group for employees of any member of the ERISA Group, or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such tine a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
"Permitted Encumbrances" shall mean each of the following: (i) the Liens,
assignments and security interests in favor of the Lender pursuant hereto; (ii)
the easements, restrictions, reconveyance rights and other matters created under
the Deed of Trust, the Second Deed of Trust and the Hampton Deed of Trust; (iii)
the easements, restrictions, encumbrances and other matters described in and
permitted to exist under the terms of the Deed of Trust, the Second Deed of
Trust and the Hampton Deed of Trust; (iv) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation; (v)
deposits of cash or readily marketable securities to secure public or statutory
obligations of a Borrower; (vi) materialmen's, mechanics', vendors', or other
like liens incurred in the ordinary course of business with respect to
obligations or which are being contested in accordance with the provisions of
this Agreement; (vii) liens created by or resulting from any legal proceedings
(including legal proceedings instituted by a Borrower) which are being contested
in accordance with the provisions of this Agreement; and (viii) zoning
restrictions, easements, licenses, restrictions on the use of real property or
minor irregularities in title thereto; none of the foregoing shall, in the
opinion of the Lender, materially detract from the value or impair the use of
the Land and the Improvements, together with such other matters as may be
expressly consented to in writing by the Lender; and real estate taxes on the
Land and Improvements not yet due and payable.
"Person" shall mean any individual, corporation, partnership, association, joint
stock company, trust, unincorporated organization, joint venture, government or
political subdivision or agency thereof, or any other entity.
"Pledge Agreements" shall mean the Pledge Agreements originally provided from
the Corporation and SRC to PNC, which has assigned its interest thereunder to
Lender, as the same may be amended, replaced or supplemented from time to time
in writing by the Corporation, SRC and the Lender.
"Prime Rate" shall mean the interest rate as published in the Wall Street
-----------
Journal in the Money Rates section as the "prime rate." Each interest rate
-
referred to and determined by reference to the Prime Rate shall change
automatically from time to time, effective as of the effective date of each
change in the Prime Rate.
"Principal Office" shall mean c/o Jacobs Entertainment, Inc., 425 West Lakeside
Avenue, Suite 601, Cleveland, Ohio 44113.
"Prohibited Transaction" shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which
neither an individual nor a class exemption has been issued by the United States
Department of Labor and for which a statutory exemption is not available.
"Project" shall mean the Land and Improvements.
"Remedies Event" shall mean the occurrence of an Event of Default or an
Acceleration Event.
"Regulated Substances" shall mean any substance, including the chemical
compounds, constituents and degradation products thereof, the generation,
manufacture, processing, distribution, treatment, storage, disposal, transport,
recycling, reclamation, use, reuse or other management or mismanagement of which
is regulated by the Environmental Laws.
"Regulation U" shall mean Regulation U, T, G or X as promulgated by the Board of
Governors of the Federal Reserve System, as amended from time to time.
"Reportable Event" means a reportable event described in Section 4043 of ERISA
and regulations thereunder with respect to a Pension Plan or Multiemployer
Pension Plan.
"Second Deed of Trust" shall mean that certain Second Deed of Trust, dated March
21, 1997, from the Corporation to David F. Belkowitz and James W. Theobald, as
trustees, for the benefit of the Lender, recorded in the Office of the Circuit
Court of New Kent County, Virginia, at Deed Book 242, Page 277, securing the
Line of Credit Note, as the same may be amended from time to time.
"SWFs" shall mean the satellite wagering facilities licensed to the Partnership
for operation by the Virginia Racing Commission.
"Solvent" shall mean, with respect to any party on a particular date, that on
such date (i) the fair value of the property of such party is greater than the
total amount of liabilities; (ii) the present fair market value of the assets of
such party is not less than the amount that will be required to pay the probable
liability of such party on its debts as they become absolute and matured; (iii)
such party is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business; and (iv) such party does not intend to, and does not
believe that it will, incur debts or liabilities beyond such party's ability to
pay such debts and liabilities as they mature.
"Term Note" shall mean that certain Amended and Restated Note of even date
herewith, given by the Partnership to the Lender in the aggregate principal
amount of $15,000,000, representing the PNC Debt as assigned to the Lender, as
the same may be amended, renewed, replaced or supplemented from time to time.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as enacted in
each applicable jurisdiction.
1.2 INTERPRETATION.1.2 INTERPRETATION.
Unless the context of this Agreement otherwise clearly requires, references
to the plural include the singular, the singular the plural and the part the
whole, "or" has the inclusive meaning represented by the phrase "and/or," and
"including" has the meaning represented by the phrase "including without
limitation." References in this Agreement to "determination" of or by the
Lender shall be deemed to include good faith estimates by the Lender (in the
case of quantitative determinations) and good faith beliefs by the Lender (in
the case of qualitative determinations). Whenever the Lender is granted the
right herein to act in its sole discretion or to grant or withhold consent or
approval, such right shall be exercised in good faith. The words "hereof,"
"herein," "hereunder" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
section and other headings contained in this Agreement and the Table of Contents
preceding this Agreement are for reference purposes only and shall not control
or affect the construction of this Agreement or the interpretation thereof in
any respect. Section, subsection, schedule and exhibit references are to
sections, subsections, schedules and exhibits to this Agreement unless otherwise
specified.
1.3 ACCOUNTING PRINCIPLES.1.3 ACCOUNTING PRINCIPLES.
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP.
<PAGE>
2. AGREEMENT TO BORROW AND LEND2. AGREEMENT TO BORROW AND LEND
-------------------------------- --------------------------------
2.1 AGREEMENT TO BORROW AND LEND.2.1 AGREEMENT TO BORROW AND LEND.
Subject to the terms, provisions and conditions contained in this Agreement
in reliance upon the representations and warranties set forth herein, the Lender
agrees to lend to each Borrower in the aggregate, the amount of the Loan.
2.2 THE NOTES.2.2 THE NOTES.
The Loan is and shall be evidenced by the Notes, and the Loan shall bear
interest calculated and payable as provided in Section 3 below. Each Borrower
shall pay the outstanding principal of its portion of the Loan and all unpaid
interest accrued on the Loan and all other sums then owing under the Loan
Documents in full on the Expiration Date. The unpaid amounts of the Loan, as
set forth on the books and records of the Lender or other holder of the Notes
maintained in the ordinary course of business, shall be presumptive evidence of
the principal amount thereof owing and unpaid, absent manifest error, but the
failure to record any such amount on the books and records shall not limit or
affect the obligations of either Borrower hereunder or under the Notes to make
payments of principal and interest on the Loan when due.
2.3 TERM.2.3 TERM.
The term of the Loan shall commence on the Closing Date and shall terminate
on the Expiration Date.
3. LOAN INTEREST RATES, PAYMENTS AND FEES3. LOAN INTEREST RATES, PAYMENTS
---------------------------------------- -----------------------------
AND FEES
--------
3.1 INTEREST RATE.3.1 INTEREST RATE OPTIONS.
Each Borrower shall pay interest in respect of the outstanding unpaid
principal amount of its portion of the Loan at the rate per annum of LIBOR plus
three percent (3%) from the date of any advance of principal. Interest shall
accrue based upon a 360 day calendar year for each of the actual days elapsed.
The Lender shall maintain a record of each advance of principal, principal
payment, interest accrual and interest payment. The interest rate upon each
advance of principal shall be determined as of the date of the advance and shall
remain fixed for the term of the Loan until such advance and all accrued
interest thereon shall be repaid in full. If at any time the designated rate
applicable to any portion of the Loan made by the Lender exceeds the highest
lawful rate, the rate of interest on the Loan shall be limited to the highest
lawful rate.
<PAGE>
3.2 DEFAULT INTEREST AND LATE PAYMENT CHARGE.3.2 DEFAULT INTEREST AND
LATE PAYMENT CHARGE.
To the extent permitted by Law, upon the occurrence and during the
continuation of any Remedies Event, each Borrower shall pay interest on the
entire principal amount then outstanding and all other sums due under its
portion of the Loan at a rate per annum equal to the Default Rate. The Default
Rate shall accrue before and after judgment has been entered. In addition, a
Borrower shall pay upon demand by the Lender a late payment charge equal to five
percent (5%) of the amount of any payment due from such Borrower under the Loan,
prior to maturity or acceleration, which is not received by the Lender within
ten (10) days after the date such payment is due. Each Borrower acknowledges
that the increased interest rate and the late payment charge provided for herein
reflect, among other things, the fact that the Loan has become a substantially
greater risk given its default status and that the Lender is entitled to
additional compensation for such risk.
3.3 INTEREST RATE UNASCERTAINABLE.3.3 INTEREST RATE UNASCERTAINABLE.
If, on any date on which the interest rate set forth in Section 3.1 would
otherwise be determined, the Lender shall have determined (which determination
shall be conclusive absent manifest error) that: (i) adequate and reasonable
means do not exist for ascertaining such interest rate; or (ii) an event or
condition has occurred which materially and adversely affects the applicable U.
S. eurodollar markets, the interest rate hereunder shall be the Prime Rate plus
4%.
3.4 PAYMENTS.3.4 PAYMENTS.
All payments and prepayments to be made in respect of principal, interest,
the Closing Fee or other amounts due from a Borrower to the Lender hereunder
shall be payable prior to 12:00 noon, Eastern Time, on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by a Borrower, and without setoff, counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue. Such
payments shall be made to the Lender at its Principal Office in U. S. Dollars
and in immediately available funds. The Lender's statement of account ledger or
other relevant record shall, in the absence of manifest error, be conclusive as
the statement of the amount of principal of and interest on the Loan and other
amounts owing under this Agreement and shall be deemed an "account stated."
3.5 INTEREST PAYMENT DATES.3.5 INTEREST PAYMENT DATES.
Interest on the Loan shall be due and payable in arrears on the first (1st)
day of each calendar month commencing on September 1, 2000 and on the first
(1st) day of each calendar month thereafter throughout the term of the Loan and
on the Expiration Date or upon acceleration of a Note.
3.6 OPTIONAL PREPAYMENTS.3.6 OPTIONAL PREPAYMENTS.
A Borrower shall have the right at its option from time to time to prepay
its portion of the Loan in whole or part at any time without premium or penalty.
Whenever a Borrower desires to prepay any part of the Loan, it shall provide a
prepayment notice to the Lender at least five (5) Business Days prior to the
date of prepayment setting forth the date, which shall be a Business Day, on
which the proposed prepayment is to be made, and the total principal amount of
such prepayment, which shall not be less than $100,000. The principal amount of
the portion of the Loan for which a prepayment notice is given shall be due and
payable on the date specified in such prepayment notice.
3.7 PRINCIPAL PAYMENTS.3.7 PRINCIPAL PAYMENTS.
Beginning on June 30, 2002 and on June 30 of each calendar year thereafter,
throughout the remaining term of the Loan, each Borrower shall make annual
payments (the "Mandatory Principal Payments") of the outstanding principal
balance of its portion of the Loan in the amount of $1,000,000. Additionally,
with each Mandatory Principal Payment, the Corporation shall make additional
principal payments as available in the amount of fifty percent (50%) of its Free
Cash Flow for the previous year ended December 31, as repayment of the Line of
Credit Note.
3.8 ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.3.8 ADDITIONAL
COMPENSATION IN CERTAIN CIRCUMSTANCES.
(a) Increased Costs or Reduced Return on Borrowing, Other Expenses,
-------------------------------------------------------------------
Etc. If: (a) the Lender incurs any expense, cost, claims or fees ("Costs"),
either at the time of the closing of the refinancing of the PNC Debt or at
anytime thereafter in connection with the refinancing of the PNC Debt and such
Costs are passed through or charged to the Lender thereunder; or (b) any law,
guideline or interpretation or any change in any Law, guideline or
interpretation or application thereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or other
Official Body shall result in a Cost to the Lender, then the Lender may from
time to time notify a Borrower of the amount determined in good faith, (which
determination shall be conclusive absent manifest error) to be necessary to
compensate the Lender for such Cost. Such notice shall set forth in reasonable
detail the basis for such determination. Such amount shall be due and payable
by such Borrower to the Lender within ten (10) Business Days after such notice
is given.
3.9 CLOSING FEES.3.9 CLOSING FEES.
The Borrower agrees to pay to the Lender on or before the Closing Date, as
consideration for the Loan, the Closing Fee.
4. AFFIRMATIVE COVENANTS4. AFFIRMATIVE COVENANTS
---------------------- ----------------------
Each Borrower hereby covenants and agrees that, from the date hereof and
until the Notes have been paid in full and all other obligations hereunder shall
have been performed and discharged, it shall comply at all times with the
following affirmative covenants:
4.1 PRESERVATION OF EXISTENCE.4.1 PRESERVATION OF EXISTENCE.
Each Borrower shall maintain its existence and its license or qualification
and good standing in each jurisdiction in which the nature of its business makes
such licensing or qualification necessary or appropriate.
4.2 PAYMENT OF LIABILITIES, INCLUDING IMPOSITIONS.4.2 PAYMENT OF
LIABILITIES, INCLUDING IMPOSITIONS.
Each Borrower shall duly pay and discharge all liabilities to which it is
subject or which are asserted against it at such times and in the manner set
forth in the Deed of Trust, the Second Deed of Trust and the Hampton Deed of
Trust, as applicable.
4.3 COMPLIANCE WITH LAWS.4.3 COMPLIANCE WITH LAWS.
Each Borrower shall comply with all applicable Laws in all material
respects, including, but not limited to, all Environmental Laws.
4.4 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.4.4 KEEPING OF RECORDS
AND BOOKS OF ACCOUNT.
Each Borrower shall maintain and keep proper books of record and account
which enable it to issue financial statements and reports and in which full,
true and correct entries shall be made in all material respects of all its
dealings and business and financial affairs.
4.5 VISITATION RIGHTS.4.5 VISITATION RIGHTS.
Each Borrower shall permit any of the officers or authorized employees or
representatives of the Lender to visit and inspect the Project and to examine
and make excerpts from its books and records and discuss its affairs, finances
and accounts with its officers, all in such reasonable detail and at such
reasonable times during normal business hours and as often as the Lender may
reasonably request, provided (i) the Lender shall provide reasonable notice
prior to any visit or inspection and a reasonable opportunity to participate in
such visit or inspection, and (ii) the Lender agrees to keep confidential any
information obtained that is not generally available to the public.
4.6 MAINTENANCE OF INSURANCE.4.6 MAINTENANCE OF INSURANCE.
(a) Each Borrower shall obtain the insurance coverages specified in
this Section 4.6(a). The insurer issuing any such policy shall certify to the
Lender that (1) losses will be adjusted only with the approval of the Lender,
(2) loss payments will be payable to the Lender, such payments to be applied in
the manner set forth in the Deed of Trust, Second Deed of Trust or Hampton Deed
of Trust, as applicable, either to the restoration, repair or replacement of the
Improvements or to the payment of the Loan, (3) the interest of the Lender shall
be insured regardless of any breach or violation by a Borrower of any
warranties, declarations or conditions contained in such policy, and (4) if such
insurance is canceled or materially changed or if any reinsurance is canceled
for any reason whatsoever, such insurer will promptly notify the Lender and such
cancellation or change shall not be effective as to the Lender for thirty (30)
days after receipt by the Lender of such notice. Each Borrower shall deliver to
the Lender evidence of each renewal policy in a form acceptable to the Lender
not less than thirty (30) days prior to the expiration of the original policy or
preceding renewal policy (as the case may be); and to deliver to the Lender,
upon the Lender's request, receipts or other evidence that the premiums thereon
have been paid in accordance with the Policy. The insurer or reinsurer for all
such policies shall be rated A-IX by A.M. Best, or such other rating reasonably
acceptable to the Lender. The form, content, insurers and reinsurers of all
insurance policies required under this Agreement and the Deed of Trust, Second
Deed of Trust or Hampton Deed of Trust, as applicable, shall be satisfactory to
the Lender in accordance with the standards established in this Section 4.6.
(i) Fire and Extended Coverage Insurance. Fire and Extended Coverage
--------------------------------------
Insurance insuring the Improvements and all materials (installed and
uninstalled), supplies and other personal property on the Land against loss or
damage by fire, vandalism, burglary, theft, riot, earthquake and other hazards
insured against by extended coverage insurance and such other insurance
(including, but not linked to, business interruption insurance covering loss of
net earnings, including rental income, and costs associated with the period of
project restoration, malicious mischief insurance and flood insurance if in a
Federal flood prone area) as may be specified by the Lender from time to time,
in amounts acceptable to the Lender and to be evidenced by an Accord Form 27
Evidence of Insurance (or such other equivalent form as may be acceptable to the
Lender).
(ii) Public Liability Insurance. Commercial general liability insurance in
---------------------------
connection with the Land and Improvements, and automobile liability insurance
covering all motor vehicles used in connection with the Land and Improvements,
all in amounts and with insurers reasonably acceptable to the Lender. Each
Borrower shall cause the insurer to name the Lender as an additional insured
under such coverage.
(iii) Workers' Compensation Insurance. Workers' compensation and
---------------------------------
employer's liability insurance covering all liability in connection with the
Land and Improvements under applicable Laws with respect to each Borrower and
the Contractor.
(b) Each Borrower shall insure its properties and assets (other than
the Land and Improvements which are required to be insured in the manner
provided in subsection (a) above) against loss or damage by fire and such other
insurable hazards as such assets are commonly insured (including business
interruption) and in such amounts as similar properties and assets are insured
by prudent companies in similar circumstances carrying on similar businesses and
against public liability for damages and against other risks (including errors
and omissions) in amounts normally carried by prudent companies carrying on
similar businesses and reasonably satisfactory to the Lender.
4.7 NOTICE.4.7 NOTICE.
Each Borrower shall give prompt written notice to the Lender (a) of any
action or proceeding instituted by or against it which constitutes a Conditional
Default or a Remedies Event under this Agreement, or (b) of a default by a
Borrower under any other material contract, instrument or agreement to which it
is a party or by which it or any of its properties or assets may be bound or to
which it or any of its properties or assets may be subject, which default could
be reasonably expected to result in a Material Adverse Change.
4.8 PERFORMANCE OF OBLIGATIONS.4.8 PERFORMANCE OF OBLIGATIONS.
Each Borrower shall duly pay, perform and discharge all of its obligations
hereunder and under the other Loan Documents.
4.9 CERTIFICATE OF NO REMEDIES EVENT.4.9 CERTIFICATE OF NO REMEDIES
EVENT.
At the reasonable request of the Lender, each Borrower shall furnish to the
Lender a certificate signed by an officer of such Borrower, that to the best of
his or her knowledge, such Borrower has kept, observed, complied with, fulfilled
and performed in all material respects every term, covenant and condition in
this Agreement and the other Loan Documents on its part to be kept and performed
(or, if such should not be the fact, specifying the nature of such
non-compliance); that no Conditional Default or Remedies Event exists (or if one
exists, specifying the nature thereof); that no event has occurred or is
threatened which if continued would permit the holder of any Indebtedness of a
Borrower or to which its property is subject to accelerate the maturity thereof
or enforce any Lien securing the same; that no material litigation or
administrative proceeding has been instituted by or against a Borrower (or, if
such should not be the fact, then the facts and circumstances relating to such
event or litigation in detail) and covering such other matters relating to a
Borrower, the Loan or the Collateral as the Lender may reasonably require.
4.10 TITLE TO LAND AND IMPROVEMENTS.4.10 TITLE TO LAND AND IMPROVEMENTS.
Except as approved by the Lender in writing, each Borrower shall retain its
interest in the Land and Improvements until the Lender Debt has been
indefeasibly paid in cash and satisfied in full.
4.11 FURTHER ASSURANCES.4.11 FURTHER ASSURANCES.
Each Borrower shall, from time to time, at its expense, faithfully preserve
and protect the Lender's lien on and security interest in the Collateral as a
continuing first priority perfected lien, subject only to the Permitted
Encumbrances, and shall take such other action as the Lender may reasonably
request from time to time in order to preserve, perfect and protect the liens
granted under the Collateral Documents, to exercise and enforce the Lender's
rights and remedies thereunder and with respect to the Collateral and to carry
out the terms of this Agreement and the other Loan Documents.
4.12 ESTOPPEL CERTIFICATE.4.12 ESTOPPEL CERTIFICATE.
At any time or times, within ten (10) Business Days after written demand by
the Lender therefor, each Borrower shall deliver to the Lender a certificate
duly executed and in form reasonably satisfactory to the Lender, stating and
acknowledging, to the best of a Borrower's knowledge, the then unpaid principal
balance, and interest due and unpaid under the Loan, the fact that there are no
defenses, offsets or counterclaims thereto (or, if such should not be the fact,
then the facts and circumstances relating to such defenses, offsets or
counterclaims) and such other matters as the Lender may reasonably require.
4.13 REPAIRS.4.13 REPAIRS.
Each Borrower shall maintain and keep the Land and the Improvements and all
properties and assets of such Borrower in good working order and condition and
make all necessary and proper repairs and replacements thereto.
4.14 EMPLOYEE BENEFIT PLANS.4.14 EMPLOYEE BENEFIT PLANS.
The Borrower and all members of the ERISA Group shall comply with ERISA,
the Internal Revenue Code and other applicable Laws applicable to any of them
with respect to Benefit Arrangements, Pension Plans, Multiemployer Pension
and/or Welfare Plans, except where such failure, alone or in conjunction with
any other failure, would not result in a Material Adverse Change. Without
limiting the generality of the foregoing, a Borrower shall cause all of the
Pension Plans maintained by such Borrower or any member of the ERISA Group to be
funded in accordance with the minimum funding requirements of ERISA, and shall
make, in a timely manner, all contributions due to Pension Plans, Benefit
Arrangements and Multiemployer Pension and Welfare Plans, except where such
failure, alone or in conjunction with any other failure, would not result in a
Material Adverse Change.
4.15 NOTICES REGARDING MULTIEMPLOYER PENSION AND WELFARE PLANS.4.15
NOTICES REGARDING MULTIEMPLOYER PENSION AND WELFARE PLANS.
Promptly upon becoming aware of the occurrence thereof, a Borrower shall
notify the Lender (including the nature of the event and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto) of:
(a) any Prohibited Transaction which could subject such Borrower to a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Internal Revenue Code in connection with any Multiemployer
Pension or Welfare Plan; and
(b) any partial or complete withdrawal by such Borrower from a
Multiemployer Pension or Welfare Plan or assertion thereof, where such
withdrawal or asserted withdrawal is likely to result in withdrawal liability.
4.16 LICENSES AND PERMITS.4.16 LICENSES AND PERMITS.
Each Borrower shall take all actions necessary to maintain and keep in good
standing all licenses, permits and other approvals necessary for the operation
and occupancy of the Land and Improvements and for the conduct of horse racing
and wagering at the Land and Improvements. Each Borrower shall keep the Lender
advised of the status of such licenses, permits and other approvals and shall
provide the Lender with copies of any notices from the Virginia Racing
Commission or other Official Body threatening the suspension or revocation of
any such license, permit or approval promptly following the receipt thereof by
such Borrower.
5. NEGATIVE COVENANTS5. NEGATIVE COVENANTS
------------------- -------------------
Each Borrower hereby covenants and agrees that, from the date hereof and
until the Lender Debt has been paid in full and all other obligations hereunder
shall have been performed and discharged, it shall comply at all times with the
following negative covenants:
5.1 CHANGES IN ORGANIZATIONAL DOCUMENTS.5.1 CHANGES IN ORGANIZATIONAL
DOCUMENTS.
Each Borrower shall not amend or modify, or permit the amendment or
modification of, in any material respect, the Borrower Documents without
providing prior written notice to the Lender and obtaining the prior written
consent of the Lender.
5.2 TRANSFER OF LAND AND IMPROVEMENTS.5.2 TRANSFER OF LAND AND
IMPROVEMENTS.
Each Borrower shall not voluntarily or by operation of law, directly or
indirectly, sell, convey, transfer, assign, pledge, encumber, or permit to be
sold, conveyed, transferred, assigned, pledge, or encumbered its interest in or
any part of the Land or the Improvements, or any license issued by the Virginia
Racing Commission, without the prior written consent of the Lender having been
obtained. Any transaction which is prohibited under this Section 5.2 shall be
null and void to the extent permitted by applicable Law. The Lender shall not
be under any obligation to allege or show any impairment of the Collateral, and
the Lender may pursue any legal or equitable remedies for default, without such
allegation or showing, notwithstanding the foregoing.
5.3 LIQUIDATION OR MERGER.5.3 LIQUIDATION OR MERGER.
Each Borrower shall not liquidate, dissolve, consolidate or merge with or
into any other corporation, partnership or other entity or permit any other
corporation, partnership or other entity to consolidate or merge with or into it
without the prior written consent of the Lender.
5.4 JUDGMENTS.5.4 JUDGMENTS.
Each Borrower shall not permit any formal judgment obtained against it in
excess of $50,000 to remain unpaid for a period of thirty (30) days following
the entry thereof without obtaining a stay of execution or bonding or causing
such judgment to be bonded.
5.5 LEASING OF PREMISES.5.5 LEASING OF PREMISES.
Except as may be permitted under the Deed of Trust, Second Deed of
Trust or Hampton Deed of Trust, a Borrower shall not, without the prior written
approval of the Lender, terminate, amend, modify, extend, enter into, or give
any consent to any tenant under any lease, with the exception of the Lease.
5.6 MATERIAL ADVERSE CHANGE.5.6 MATERIAL ADVERSE CHANGE.
Each Borrower shall not take any action or omit to take any action which
would cause a Material Adverse Change in the business, assets, operation or
financial condition, of a Borrower to occur.
<PAGE>
5.7 CONDUCT OF BUSINESS.5.7 CONDUCT OF BUSINESS.
Each Borrower shall not conduct any business or activity, the nature of
which would differ in any material respect from that presently conducted by it
or contemplated hereunder without the Lender's prior written consent.
5.8 CREATION OF LIENS.5.8 CREATION OF LIENS.
Except for Permitted Encumbrances and except as otherwise specifically
contemplated by the Loan Documents, each Borrower shall not create, incur,
assume or suffer to exist or be created, or permit any pledge of, or any deed of
trust, mortgage, Lien, charge, security interest or encumbrances of any nature
with respect to the Land or the Improvements, or assign, pledge or in any way
transfer or encumber its rights to receive income from the Land or the
Improvements.
5.9 VALUE OF COLLATERAL.5.9 VALUE OF COLLATERAL.
Each Borrower shall not take any action which would result in any material
impairment of the value of any Collateral.
5.10 TRANSFER OF PERSONALTY.5.10 TRANSFER OF PERSONALTY.
Except as provided under the Permitted Encumbrances, each Borrower shall
not voluntarily or by operation of law, directly or indirectly, sell, assign,
transfer, encumber, pledge, mortgage, hypothecate, convey or otherwise dispose
of any interest in or any part of any personalty located upon the Land or the
Improvements or used or intended to be used in connection therewith, or any of
the licenses, permits or other approvals necessary for the operation and
occupancy of the Land and Improvements, the conduct of live racing at the horse
racing facility in New Kent County, Virginia, or the conduct of wagering
activities at the Hampton SWF, provided that each Borrower may dispose of any
worn out personal property as long the same is promptly replaced, to the extent
necessary, with personal property that is the functional equivalent of the
replaced property within such time as would not impair the operation of the
Project.
5.11 DISPOSITION OF RENTS.5.11 DISPOSITION OF RENTS.
Except as provided in the Loan Documents, and except as provided under the
Permitted Encumbrances, each Borrower shall not consent to or commit any sale,
conveyance, pledge, mortgage, hypothecation or other disposition of any rents or
other funds arising from the Land or the Improvements.
<PAGE>
5.12 PENSION PLANS AND BENEFIT ARRANGEMENTS.5.12 PENSION PLANS AND
BENEFIT ARRANGEMENTS.
A Borrower and members of the ERISA Group shall not:
(a) fail to satisfy the minimum funding requirements of ERISA and the
Internal Revenue Code with respect to any Pension Plan;
(b) request a minimum funding waiver from the Internal Revenue Service with
respect to any Pension Plan;
(c) engage in a Prohibited Transaction with any Pension Plan, Benefit
Arrangement or Multiemployer Pension or Welfare Plan which, alone or in
conjunction with any other circumstances or set of circumstances resulting in
liability under ERISA, would constitute a Material Adverse Change;
(d) permit the aggregate actuarial present value of all benefit liabilities
(whether or not vested) under each Pension Plan, determined on a plan
termination basis, as disclosed in the most recent actuarial report completed
with respect to such Plan, to exceed, as of any actuarial valuation date, the
fair market value of the assets of such Plan;
(e) fail to make when due any contribution to any Multiemployer Pension or
Welfare Plan that such Borrower or any member of the ERISA Group may be required
to make under any agreement relating to such Multiemployer Plan, or any Law
pertaining thereto;
(f) withdraw (completely or partially) from any Multiemployer Pension or
Welfare Plan or withdraw (or be deemed under Section 4062(e) of ERISA to
withdraw) from any Multiple Employer Pension Plan, where any such withdrawal is
likely to result in a material liability of a Borrower or any member of the
ERISA Group;
(g) terminate, or institute proceedings to terminate, any Pension Plan,
where such termination is likely to result in a material liability to a
Borrower or any member of the ERISA Group;
(h) make any amendment to any Pension Plan with respect to which security is
required under Section 307 of ERISA; or
(i) fail to give any and all notices and make all disclosures and
governmental filings required under ERISA or the Internal Revenue Code, where
such failure is likely to result in a Material Adverse Change.
<PAGE>
5.13 ERISA PROHIBITED TRANSACTION.5.13 ERISA PROHIBITED TRANSACTION.
Neither a Borrower, nor members of the ERISA Group shall take any action
which would result in the Loan constituting a Prohibited Transaction between
such Borrower and Lender.
6. DISBURSEMENT MATTERS6. DISBURSEMENT MATTERS
--------------------- --------------------
6.1 PROCEDURES.6.1 PROCEDURES.
The Lender shall make disbursements upon the mutual agreement of a Borrower
and the Lender, subject to satisfaction of all the conditions to Closing set
forth herein. The Lender shall not be obligated to make any disbursement until
a Borrower, at its expense, shall have fulfilled all conditions of this
Agreement applicable thereto, including, without limitation, the delivery and
approval of the items referred to on Exhibit B attached hereto on or before the
---------
Closing Date, and satisfaction of the following conditions:
(a) No portion of the Improvements shall have been damaged by fire or
other casualty and no condemnation or taking of the Land or the Improvements or
any material portion thereof shall be pending or threatened;
(b) The Lender shall have received all duly executed Loan Documents; and the
Collateral Documents and other documents to be placed of record shall have been
duly recorded and filed in all appropriate offices;
(c) The security interest in all property described in the Collateral
Documents shall have been duly perfected and shall be a valid and enforceable
first lien subject to Permitted Encumbrances except with respect to the Second
Deed of Trust which shall be a valid and enforceable second lien;
(d) The Closing Fee shall have been paid on or before the Closing Date.
(e) No Remedies Event or Conditional Default shall have occurred and be
continuing under this Agreement, or any of the other Loan Documents; and
(f) The representations and warranties of each Borrower contained in Article
8 hereof shall be true and accurate on and as the Closing Date, and each
Borrower shall have performed and complied with all covenants and conditions
hereof.
<PAGE>
7. REPORTING REQUIREMENTS7. REPORTING REQUIREMENTS
----------------------- -----------------------
7.1 ENVIRONMENTAL REPORTS AND TITLE REPORTS.7.1 ENVIRONMENTAL REPORTS
AND TITLE REPORTS.
(a) Title Reports. At option of the Lender, once each calendar year
--------------
until the Lender Debt has been repaid in full, the Lender may request and a
Borrower shall deliver within fifteen (15) days of such request, an updated
title report on the Project, prepared and issued by the same title insurance
company that provided to the Lender the lender's policy of title insurance in
connection with the assignment of the Deed of Trust. After the occurrence of a
Remedies Event and so long thereafter as such Remedies Event shall remain
uncured, a Borrower will furnish such title reports, endorsements or policies as
the Lender shall require. If a Borrower fails to deliver the title updates,
reports, endorsements or policies required pursuant to this Section, the Lender
may obtain such item(s) and Borrower will reimburse the Lender for costs
incurred upon demand.
(b) Environmental Reports Within sixty (60) days following the request of
----------------------
the Lender, which, in the absence of a Remedies Event, or prior to such time
that the Lender believes that there has been a breach of the Environmental
Indemnity Agreement, may be made once each calendar year (but such request may
be made at any time following the occurrence of a Remedies Event and so long
thereafter as such Remedies Event shall remain uncured, or if the Lender has
reason to believe there has been a breach of the Environmental Indemnity
Agreement until the Loan has been repaid in full), a Borrower shall cause an
environmental audit of the Project to be prepared at Borrower's sole and
reasonable cost and expense, which environmental audit will be in the form and
performed by a consultant approved by the Lender, and if the applicable Borrower
does not respond to the Lender's request within sixty (60) days, the Lender
shall cause an environmental audit of such Project and, upon demand, such
Borrower will reimburse the Lender for all costs incurred.
8. REPRESENTATIONS AND WARRANTIES8. REPRESENTATIONS AND WARRANTIES
-------------------------------- --------------------------------
The Borrower hereby warrants and represents to the Lender as follows:
8.1 DUE FORMATION; CAPACITY.8.1 DUE FORMATION; CAPACITY.
Each Borrower is duly organized, validly existing and in good standing
under the Laws of the Commonwealth of Virginia, and has full power and authority
to own or lease and operate properties, and to conduct is affairs as now being
conducted and as proposed to be conducted. The sole general partner of the
Partnership is SRC and the sole limited partner of the Partnership is the
Corporation.
<PAGE>
8.2 POWER AND AUTHORITY.8.2 POWER AND AUTHORITY.
Each Borrower has full power and authority to enter into, execute, deliver
and carry out this Agreement and the other Loan Documents to which it is a
party, and to perform its partnership obligations hereunder and thereunder and
all such actions have been duly authorized by all necessary proceedings on its
part.
8.3 VALIDITY AND BINDING EFFECT.8.3 VALIDITY AND BINDING EFFECT.
This Agreement and the other Loan Documents which are required to be
executed and delivered prior to Closing Date pursuant to the terms of this
Agreement, have been duly and validly executed and delivered by each Borrower
and, to the best knowledge of each Borrower, by all other parties thereto. This
Agreement and the other Loan Documents constitute legal, valid and binding
obligations of each Borrower enforceable against it in accordance with their
respective terms.
8.4 NO CONFLICT.8.4 NO CONFLICT.
Neither the execution and delivery of this Agreement and the other Loan
Documents nor the consummation of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or thereof,
will conflict with, constitute a default under or result in any breach of (i)
the terms and conditions of the Borrower Documents; (ii) the Lease Agreement
between the Borrower and the Partnership for the horse racing facility in New
Kent County, Virginia; or (ii) any Governmental Approval, any applicable Law or
any material agreement or instrument to which a Borrower is a party or by which
a Borrower or the Property (as defined in the Deed of Trust, Second Deed of
Trust or Hampton Deed of Trust) is bound.
8.5 OTHER AGREEMENTS.8.5 OTHER AGREEMENTS.
Each Borrower is not a party to any agreement or instrument that materially
and adversely affects its present or proposed business, properties or assets,
operation or conditions, financial or otherwise and is not in default of the
performance, observance, or fulfillment of any of the material obligations,
covenants or conditions set forth in any material agreement or instrument to
which it is a party, including the Lease Agreement between the Corporation and
the Partnership for the horse racing facility in New Kent County, Virginia.
8.6 NO CONDITIONAL DEFAULT OR REMEDIES EVENT.8.6 NO CONDITIONAL
DEFAULT OR REMEDIES EVENT.
No Conditional Default has occurred and no condition exists or will be
caused by any disbursement of Loan proceeds which will constitute a Conditional
Default or Remedies Event.
8.7 NO LITIGATION OR INVESTIGATIONS.8.7 NO LITIGATION OR INVESTIGATIONS.
There is no pending or, to a Borrower's knowledge, threatened litigation or
governmental investigation which questions the capacity, ability or authority of
a Borrower to execute, deliver and perform the provisions of the Loan Documents
to which it is a party, or if determined adversely to a Borrower, would
reasonably be expected to cause a Material Adverse Change.
8.8 FINANCIAL STATEMENTS.8.8 FINANCIAL STATEMENTS.
The information, financial statements and other financial data furnished by
a Borrower to the Lender are true and correct in all material respects and
present fairly the financial condition of a Borrower as of the date of such
statements or data.
8.9 IMPOSITIONS.8.9 IMPOSITIONS.
All returns for Impositions required to have been filed by a Borrower have
been timely filed and payment has been made, or will be made prior to the date
upon which any penalty or fine may be imposed, for all Impositions which have or
may become due pursuant to said returns or to assessments received except to the
extent that any such Imposition may be contested in a manner consistent with the
Deed of Trust, Second Deed of Trust and Hampton Deed of Trust.
8.10 TITLE ASPECTS.8.10 TITLE ASPECTS.
Each Borrower has a good and marketable title to the Land, subject only to
Permitted Encumbrances. Each Borrower has been granted all easements
appropriate for the operation of the Improvements.
8.11. ZONING AND GOVERNMENTAL APPROVALS.8.11. ZONING AND
GOVERNMENTAL APPROVALS.
To the best knowledge of each Borrower, the use and occupancy of the
Improvements conforms in all material respects to all applicable Laws, all
existing Governmental Approvals and all covenants, conditions and restrictions
contained in a deed, lease or other instrument or agreement covering or
affecting all or any portion of the Land. All Governmental Approvals (except to
the extent the same are of a nature so as not to be obtainable until a later
stage of construction or completion of the Improvements) have been obtained and
are valid and in full force and effect.
<PAGE>
8.12 UTILITIES.8.12 UTILITIES.
All utility and municipal services necessary for the use and occupancy of
the Improvements are available to the Land and have sufficient capacity to
operate the Improvements for their intended purposes, including water supply,
storm and sanitary sewer facilities, electricity and telephone facilities.
8.13 SECURITY INTERESTS.8.13 SECURITY INTERESTS.
Upon proper filing and continuation and the Lender's receipt of the stock
of SRC, pledged under the Pledge Agreements, the Liens and security interests
granted or to be granted to the Lender pursuant to this Agreement and the other
Loan Documents, as assigned from PNC, constitute and will continue to constitute
valid perfected first priority security interests under the Uniform Commercial
Code, Virginia law or other applicable Law, entitled to all the rights, benefits
and priorities provided by the Uniform Commercial Code, Virginia law or any
other Law.
8.14 DEED OF TRUST.8.14 DEED OF TRUST.
(a) The Liens granted in the Deed of Trust, as assigned from PNC to the
Lender and granted in the Hampton Deed of Trust, constitute a valid perfected
first priority Lien under applicable Law, and the property secured thereby is
subject to no other prior Liens or encumbrances except for the Permitted
Encumbrances. All action as is necessary or advisable to establish (and assign,
as applicable) such Lien and its priority as described in the preceding
sentence, including recordation of the Deed of Trust and the Hampton Deed of
Trust and any necessary assignments thereof in the appropriate offices, the
payment of any transfer fees, recording fees or other fees will be taken
promptly following the Closing Date, and there will be, upon execution, delivery
and recordation of the assignment of the Deed of Trust, no necessity for any
further action in order to protect, preserve and continue such Lien and such
priority.
(b) The Lien granted in the Second Deed of Trust, as amended,
constitutes a valid perfected second Lien under applicable law, and the Property
secured thereby is subject to no other prior Liens or encumbrances except for
the Permitted Encumbrances. All such action as is necessary or advisable to
establish such Lien and its priority as described in the preceding sentence
including recordation of an Amendment to the Second Deed of Trust in the
appropriate offices, the payment of any transfer fees, recording fees or other
fees will be taken as soon as possible following the Closing Date and there will
be upon execution, delivery and recordation of an Amendment to the Second Deed
of Trust, no necessity for any further action to protect, preserve and continue
such Lien and such priority.
8.15 ENVIRONMENTAL MATTERS.8.15 ENVIRONMENTAL MATTERS.
The Environmental Indemnity Agreement is hereby incorporated herein by this
reference.
8.16 INSURANCE.8.16 INSURANCE.
All insurance policies and bonds furnished to the Lender by a Borrower are
valid and in full force and effect. No notice has been given or claim made and,
to the best of each Borrower's knowledge, no grounds presently exist to cancel
or void any of such policies or bonds or to reduce the coverage provided
thereby. In each Borrower's reasonable judgment, such policies and bonds
provide adequate coverage in amounts sufficient to insure the assets and risks
of a Borrower in accordance with prudent business practices.
8.17 PENSION PLANS AND BENEFIT ARRANGEMENTS.8.17 PENSION PLANS AND
BENEFIT ARRANGEMENTS.67
(a) A Borrower and each member of the ERISA Group are in compliance in
all material respects with any applicable provisions of ERISA with respect to
all Benefit Arrangements, Pension Plans and Multiemployer Pension and Welfare
Plans. There has been no Prohibited Transaction with respect to any Benefit
Arrangement or any Pension Plan or, to the best knowledge of such Borrower, with
respect to any Multiemployer Pension Plan or Multiple Employer Pension Plan,
which could result in any material liability of such Borrower or any other
member of the ERISA Group. A Borrower and all members of the ERISA Group have
made when due any and all payments required to be made under any agreement
relating to a Multiemployer Pension Plan or a Multiple Employer Pension Plan or
any Law pertaining thereto. With respect to each Pension Plan and Multiemployer
Pension Plan, a Borrower and each member of the ERISA Group (i) have fulfilled
in all material respects their obligations under the minimum funding standards
of ERISA, (ii) have not incurred any liability to the PBGC, and (iii) have not
had asserted against them any penalty for failure to fulfill the minimum funding
requirements of ERISA.
(b) To the best of each Borrower's knowledge, each Multiemployer
Pension or Welfare Plan and Multiple Employer Pension Plan is able to pay
benefits thereunder when due.
(c) Neither Borrower nor any other member of the ERISA Group has
instituted or intends to institute proceedings to terminate any Pension
Plan.
(d) No event requiring notice to the PBGC under Section 302(f)(4)(A) of
ERISA has occurred or is reasonably expected to occur with respect to any
Pension Plan, and no amendment with respect to which security is required under
Section 307 of ERISA has been made or is reasonably expected to be made to any
Plan.
(e) The aggregate actuarial present value of all benefit liabilities
(whether or not vested) under each Pension Plan, determined on a loan
termination basis, as disclosed in, and as of the date of, the most recent
actuarial report for such Plan, does not exceed the aggregate fair market value
of the assets of such Pension Plan.
(f) Neither Borrower nor any other member of the ERISA Group has incurred or
reasonably expects to incur any material withdrawal liability under ERISA to any
Multiemployer Pension or Welfare Plan or Multiple Employer Pension Plan.
Neither Borrower nor any other member of the ERISA Group has been notified by
any Multiemployer Pension Plan or Multiple Employer Pension Plan that such
Multiemployer Pension Plan or Multiple Employer Pension Plan has been terminated
within the meaning of Title IV of ERISA, and, to the best knowledge of each
Borrower, no Multiemployer Pension Plan or Multiple Employer Pension Hart is
reasonably expected to be reorganized or terminated, within the meaning of Title
IV of ERISA.
(g) To the extent that any Benefit Arrangement is insured, a Borrower and
all members of the ERISA Group have paid when due all premiums required to be
paid for all periods through and including the Closing Date. To the extent that
any Benefit Arrangement is funded other than with insurance, a Borrower and all
members of the ERISA Group have made when due all contributions required to be
paid for all periods through and including the Closing Date. There has been no
COBRA violation by either Borrower or any member of the ERISA Group which could
result in any material liability to such Borrower.
9. DEFAULTS AND REMEDIES9. DEFAULTS AND REMEDIES
----------------------- -----------------------
9.1 EVENTS OF DEFAULT.9.1 EVENTS OF DEFAULT.
The following shall be deemed to be Events of Default under this Agreement
(whatever the reason therefor and whether voluntary, involuntary or effected by
operation of Law):
(a) A Borrower shall fail to make any payment of principal or interest
with respect to the Loan within ten (10) days following the date on which such
payment shall become due (except for the payment of principal and interest due
on the Expiration Date, which if not paid in full on such date, shall constitute
on Event of Default), or a Borrower shall fail to pay within ten (10) days after
written notice any other amount owing hereunder or under the other Loan
Documents;
(b) Any representation or warranty made at any time by a Borrower or any
Guarantor herein or in any other Loan Documents or in any certificate, other
instrument or written statement furnished by a Borrower or any Guarantor
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect;
(c) A Borrower shall fail to make any deposit of funds required under this
Agreement within ten (10) days after written demand by the Lender or such longer
period of time, if any, expressly provided for in this Agreement;
(d) A Borrower shall fail to comply with any other covenant contained in
this Agreement or any of the other Loan Documents which calls for the payment of
money and shall not cure that failure within ten (10) days after written demand
by the Lender;
(e) A Borrower or any Guarantor shall fail to comply with any covenant
contained in this Agreement or any of the other Loan Documents, other than those
defaults referred to in the other subparagraphs of this Section 9.1, and shall
not cure that failure within thirty (30) days after written notice thereof by
the Lender to such Borrower and the Guarantors or such shorter period of time
for cure specified in any Loan Document (such grace period to be applicable only
in the event such default can be remedied by corrective action of such Borrower
or the applicable Guarantor as determined by the Lender in its reasonable
discretion), provided that, in the event that such default cannot be remedied
with reasonable due diligence during such thirty (30) day period, such default
shall not constitute an Event of Default so long as such Borrower or the
applicable Guarantor continues with reasonable due diligence to attempt to
remedy the same for such additional period of time as may be required not to
exceed an additional ninety (90) days;
(f) A Borrower or any Guarantor shall cease to be Solvent or shall be unable
to pay its respective debts as the same shall mature or there shall be filed by
or against (unless dismissed within sixty (60) days after any involuntary
filing) such Borrower or any Guarantor a petition in bankruptcy or a petition
seeking the appointment of a receiver, trustee or conservator for such Borrower
or any Guarantor or any portion of its respective properties or seeking
reorganization or to effect a plan or other arrangement with or for the benefit
of creditors, or a Borrower shall consent to the appointment of a receiver,
trustee or conservator;
(g) Any Lien or encumbrance, other than a Permitted Encumbrance, is entered
against the Land or Improvements and such Lien or encumbrance is not discharged,
vacated or bonded within fifteen (15) Business Days after the filing thereof;
(h) Any final judgment(s) for the payment of money in excess of $50,000
shall be entered against a Borrower or any Guarantor by a court having
jurisdiction which is not discharged, vacated, bonded or stayed pending appeal
within a period of thirty (30) days from the date of entry of such judgment(s);
(i) Any of the following occurs: (i) any Reportable Event, which the Lender
determines in good faith constitutes grounds for the termination of any Pension
Plan by the PBGC or the appointment of a trustee to administer or liquidate any
Pension Plan, shall have occurred and be continuing; (ii) proceedings shall have
been instituted or other action taken to terminate any Pension Plan, or a
termination notice shall have been file with respect to any Pension Plan; (iii)
a trustee shall be appointed to administer or liquidate any Pension Plan; (iv)
the PBGC shall give notice of its intent to institute proceedings to terminate
any Pension Plan or Pension Plans or to appoint a trustee to administer or
liquidate any Pension Plan; and, in the case of the occurrence of (i), (ii),
(iii) or (iv) above, the Lender determines in good faith that the amount of a
Borrower's liability is likely to cause a Material Adverse Change; (v) a
Borrower or any member of the ERISA Group shall fail to make any contributions
when due to a Pension Plan or a Multiemployer Pension Plan; (vi) a Borrower or
any member of the ERISA Group shall make any amendment to a Pension Plan with
respect to which security is required under Section 307 of ERISA; (vii) a
Borrower or any member of the ERISA Group shall withdraw completely or partially
from a Multiemployer Pension Plan; (viii) a Borrower or any member of the ERISA
Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to
withdraw) from a Multiple Employer Pension Plan; or (ix) any applicable Law,
rule or regulation is adopted, changed or interpreted by any governmental
authority or agency or court with respect to or otherwise affecting one or more
Pension Plans, Multiemployer Pension Plans or Benefit Arrangements and, with
respect to any of the events specified in (v), (vi), (vii), (viii) or (ix), the
Lender determines in good faith that any such occurrence would be reasonably
likely to materially and adversely affect the total enterprise represented by a
Borrower and the other members of the ERISA Group;
(j) An Event of Default shall occur under any other note, loan agreement or
other credit facility between a Borrower and the Lender; or
(k) An acceleration of the maturity of any Indebtedness in an amount in
excess of $100,000 shall occur under any note, loan agreement or other credit
facility between a Borrower and any party other than the Lender.
9.2 REMEDIES.9.2 REMEDIES.
Following the occurrence of a Remedies Event, the Lender may exercise any
or all of the following rights and remedies:
(a) The Lender may declare the unpaid principal amount of the Notes
then outstanding and all interest accrued thereon and all other indebtedness of
each Borrower to the Lender hereunder and thereunder to be immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived.
(b) The Lender shall have the right, in addition to all other rights and
remedies available to it, without notice to each Borrower or the Guarantors, to
setoff against and apply to the then unpaid balance of the Loan and all other
obligations of such Borrower hereunder or under any other Loan Document any debt
owing to, and any other funds held in any manner for the account of such
Borrower.
(c) Whether or not the Lender shall have accelerated the maturity of the
Loan pursuant to any of the foregoing provisions of this Section 9.2, the Lender
may proceed to protect and enforce the Lender's rights by suit in equity, action
at law and/or other appropriate proceeding, for the specific performance of any
covenant or agreement contained in this Agreement or the other Loan Documents
and, as to any amount that shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or to enforce any other legal or
equitable right of the Lender.
(d) From and after the date on which the Lender has taken any action
pursuant to this Section 9.2 and until the Notes have been paid in full, any and
all proceeds received by the Lender from any sale or other disposition of any
Collateral, or any part thereto or the exercise of any other remedy by the
Lender, shall be applied as follows:
(i) first, to reimburse the Lender for out-of-pocket costs, expenses
and disbursements, including without limitation, reasonable attorneys' fees and
legal expenses actually incurred by the Lender in connection with realizing on
any Collateral or collection of any obligations of each Borrower or the
Guarantor under any of the Loan Documents, including advances made subsequent to
a Remedies Event by the Lender or for the reasonable maintenance, preservation,
protection or enforcement of, or realization upon, any Collateral, including
without limitation, advances for Impositions, insurance, repairs and the like
and reasonable expenses incurred to sell or otherwise realize on, or prepare for
sale or other realization on, any of the Collateral;
(ii) second, to the repayment of all Lender Debt, whether of principal,
interest, fees, expenses or otherwise; and
(iii) the balance, if any, as required by Law.
(e) The Lender shall have all of the rights and remedies contained in
this Agreement and the other Loan Documents (including the right to appoint a
receiver and all other rights described in the Deed of Trust). In addition, the
Lender shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable Law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by Law.
(f) The Lender shall have the further right to enter the Land and
Improvements and take any and all actions necessary, in its judgment, to secure,
winterize, protect and preserve the Improvements and any materials or supplies
located on the Land.
9.3 NOTICE OF SALE.9.3 NOTICE OF SALE.
Any notice required to be given to the Lender of a sale, lease, or other
disposition of any Collateral or any other intended action by the Lender, if
given at least fifteen (15) Business Days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to such Borrower.
10. MISCELLANEOUS10. MISCELLANEOUS
------------- -------------
10.1 MODIFICATIONS, AMENDMENTS OR WAIVERS.10.1 MODIFICATIONS,
AMENDMENTS OR WAIVERS.
The Lender and a Borrower may from time to time enter into written
agreements amending or changing any provision of this Agreement or any other
Loan Document (except as otherwise expressly provided herein) or the rights of
the Lender or a Borrower hereunder or thereunder, or may grant written waivers
or consents to a departure from the due performance of the obligations of a
Borrower hereunder or thereunder.
10.2 NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED.10.2
NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED.
No course of dealing and no delay or failure of the Lender in exercising
any right, power, remedy or privilege under this Agreement or any other Loan
Document shall affect any other or future exercise thereof or operate as a
waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. To the extent permitted by Law, the rights and remedies of
the Lender under this Agreement and any other Loan Document are cumulative and
not exclusive of any rights or remedies which it would otherwise have. Any
waiver, consent or approval of any kind or character on the part of the Lender
of any breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing.
<PAGE>
10.3 REIMBURSEMENT AND INDEMNIFICATION OF THE LENDER BY THE BORROWER;
IMPOSITIONS.10.3 REIMBURSEMENT AND INDEMNIFICATION OF THE LENDER BY THE
BORROWER; IMPOSITIONS.
Each Borrower agrees unconditionally upon demand to pay to or reimburse the
Lender and to indemnify, defend and to hold the Lender harmless against (i)
liability for the payment of all reasonable out-of-pocket costs, expenses and
disbursements, including but not limited to reasonable fees and expenses of
counsel actually incurred by the Lender subsequent to the Closing Date (a)
relating to any amendments, waivers or consents pursuant to the provisions
hereof, and (b) all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be actually imposed on, incurred by or asserted
against the Lender arising out of this Agreement or any other Loan Document,
provided that a Borrower shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements, if the same results from the Lender's gross
negligence or willful misconduct. Each Borrower agrees unconditionally to pay
all stamp, document, transfer, recording or filing taxes or fees and similar
Impositions (except for taxes on the overall net income of any Lender and except
for franchise taxes) now or hereafter determined by any Official Body to be
actually due and payable in connection with this Agreement or any other Loan
Document, and each Borrower agrees unconditionally to save the Lender harmless
from and against any and all present or future claims, liabilities or losses
with respect to or resulting from any omission to pay or delay in paying any
such taxes, fees or other similar Impositions, except as otherwise provided
herein.
10.4 HOLIDAYS.10.4 HOLIDAYS.
Whenever any payment or action to be made or taken hereunder shall be
stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day, and any such
extension of time shall be included in computing interest or fees, if any, in
connection with such payment or action.
10.5 NOTICES.10.5 NOTICES.
All notices, requests, demands, directions and other communications
(collectively, "notices") given to or made upon any party hereto under the
provisions of this Agreement shall be by telephone (except for default notices
and notices to the Lender of funding requirements) or in writing (including
telex or facsimile communication) unless otherwise expressly required hereunder
and shall be delivered or sent by telex or facsimile to the respective parties
at the addresses and numbers set forth on Schedule II hereto or in accordance
-----------
with any subsequent written direction from any party to the others. All notices
shall, except as otherwise expressly herein provided, be effective (i) in the
case of telex or facsimile, when received or when sender receives appropriate
confirmation of transmittal, (ii) in the case of hand delivered notice, when
hand delivered, (iii) in the case of telephone, when telephoned to the
individual specified in Schedule II, provided, however, that in order to be
------------
effective, telephonic notices must be confirmed in writing no later than the
next Business Day by letter, facsimile or telex, (iv) if given by mail, four (4)
days after such communication is deposited in the mails with first class postage
prepaid, return receipt requested, and (v) if given by any other means
(including by air courier), when delivered.
10.6 SEVERABILITY.10.6 SEVERABILITY.
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
10.7 GOVERNING LAW.10.7 GOVERNING LAW.
This Agreement shall be deemed to be a contract under the Laws of the
Commonwealth of Virginia and for all purposes shall be governed by and construed
and enforced in accordance with the Laws of the Commonwealth of Virginia without
regard to its conflicts of laws principles.
10.8 PRIOR UNDERSTANDING.10.8 PRIOR UNDERSTANDING.
This Agreement, together with the other Loan Documents, supersedes all
prior understandings and agreements, whether written or oral, between the
parties hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.
10.9 DURATION; SURVIVAL.10.9 DURATION; SURVIVAL.
All representations and warranties of each Borrower contained herein or
made in connection herewith shall survive the making of the Loan and shall not
be waived by the execution and delivery of this Agreement, any investigation by
the Lender, or payment in full of the Notes in each case. All covenants and
agreements of each Borrower contained herein relating to the payment of
principal, interest, premiums, additional compensation or expenses and
indemnification, including those set forth in the Notes and Sections 3.8 and
10.3 hereof, shall survive payment in full of the Notes.
<PAGE>
10.10 SUCCESSORS AND ASSIGNS.10.10 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the benefit of the
Lender and each Borrower and their respective successors and assigns, except
that a Borrower may not assign or transfer any of its rights and obligations
hereunder or any interest herein. The Lender may, at its own cost, make
assignments of or sell participations in all or any part of the Loan to one or
more banks or other entities. In the case of an assignment, the Lender shall
provide written notice thereof to each Borrower. Upon receipt and acceptance by
the Lender of the written agreement of such assignee to be bound by the terms
hereof, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would have if it had been a signatory
hereunder, and upon surrender of the Notes, each Borrower shall execute and
deliver a replacement Note to the assignee in an amount equal to the amount of
the portion of the Loan assumed by it and a new Note to the Lender in an amount
equal to the Loan retained by it hereunder. In the case of a participation, the
participant's rights against the Lender in respect of such participation shall
be those set forth in the agreement executed by the Lender in favor of the
participant relating thereto and shall not include any voting rights, except for
voting rights limited to any increase in the principal amount of the Loan, any
reduction in the applicable interest rate or fees, and any postponement of any
scheduled payment of principal, interest or fees. All of the Lender's
obligations under this Agreement or any other Loan Documents shall remain
unchanged and all amounts payable by each Borrower hereunder or thereunder shall
be determined as if the Lender had not sold such participation.
10.11 COUNTERPARTS.10.11 COUNTERPARTS.
This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall be
an original, and all such counterparts shall together constitute one and the
same instrument.
10.12 EXCEPTIONS.10.12 EXCEPTIONS.
The representations and warranties and covenants contained herein shall be
independent of each other and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
10.13 CONSENT TO JURISDICTION.10.13 CONSENT TO JURISDICTION.
EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION
OF THE COURT OF THE CITY OF RICHMOND AND THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF VIRGINIA (RICHMOND DIVISION), AND WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND AGREES THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO A BORROWER AT THE
ADDRESSES PROVIDED FOR IN SECTION 10.5 HEREOF AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH BORROWER WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE.
10.14 NO THIRD PARTIES BENEFITED.10.14 NO THIRD PARTIES BENEFITED.
This Agreement is made and entered into for the sole protection and benefit
of each Borrower and the Lender. No trust fund is created by this Agreement and
no other persons or entities will have any right of action under this Agreement
or any right against the Lender to obtain any proceeds of the Loan.
10.15 AUTHORITY TO FILE NOTICES.10.15 AUTHORITY TO FILE NOTICES.
Each Borrower irrevocably appoints the Lender as its attorney-in-fact,
which appointment shall be coupled with an interest, with full power of
substitution, to file for record, at each Borrower's cost and expense and in
each Borrower's name, any notices that the Lender considers reasonably necessary
or desirable to protect the Collateral.
10.16 INTERPRETATION.10.16 INTERPRETATION.
Whenever the context requires, all words used in the singular will be
construed to have been used in the plural, and vice versa, and each gender will
include any other gender. The captions of the articles, sections, schedules and
exhibits of this Agreement are for convenience only and do not define or limit
any terms or provisions. In the event of a conflict between the terms of the
other loan Documents and the terms of this Agreement, the terms of this
Agreement shall control.
10.17 STATUS OF PARTIES.10.17 STATUS OF PARTIES.
It is understood and agreed that the relationship of the parties hereto is
that of borrower and lender and that nothing contained herein or in any of the
other Loan Documents shall be construed to constitute a partnership, joint
venture or co-tenancy among a Borrower or the Lender.
<PAGE>
10.18 BROKERAGE FEE.10.18 BROKERAGE FEE.
Each Borrower represents to the Lender that no broker or other person is
entitled to a brokerage fee or commission as a result of a Borrower's actions or
undertakings and agrees to hold the Lender harmless from all claims for
brokerage commissions which may be made as a result of such actions or
undertakings, if any.
10.19 WAIVER OF JURY TRIAL.10.19 WAIVER OF JURY TRIAL.
EACH BORROWER AND THE LENDER EACH WAIVES THE RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS RELATED
TO ANY OF THE LOAN DOCUMENTS. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY MADE BY EACH BORROWER AND THE LENDER AND EACH ACKNOWLEDGES THAT
NEITHER BORROWER NOR THE LENDER NOR ANY PERSON ACTING ON BEHALF OF EITHER OF
THEM HAS OR HAVE MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. EACH BORROWER AND THE
LENDER EACH FURTHER ACKNOWLEDGES THAT EACH OF THEM HAS BEEN REPRESENTED (OR HAS
HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN
THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED BY ITS OWN FREE
WILL, AND THAT EACH BORROWER AND THE LENDER EACH HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL. EACH BORROWER AND THE LENDER EACH AGREES THAT
THE OBLIGATIONS EVIDENCED BY THIS AGREEMENT ARE EXEMPTED TRANSACTIONS UNDER THE
TRUTH-IN-LENDING ACT 9 15 U.S.C. SECTION 1061, ET SEQ. EACH BORROWER AND THE
LENDER EACH FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING OF
THIS WAIVER PROVISION.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement under seal as of the day and year first
above written.
BORROWER:
ATTEST/WITNESS: COLONIAL DOWNS, L.P., a Virginia
limited partnership
By: Stansley Racing Corp., a Virginia
corporation
Its: General Partner
______________________________ By: ________________________
Name: Ian M. Stewart
Title: President
BORROWER:
ATTEST/WITNESS: COLONIAL HOLDINGS, INC.,
a Virginia corporation
______________________________ By: ____________________________
Name: Ian M. Stewart
Title: President
LENDER:
ATTEST/WITNESS: CD ENTERTAINMENT LTD., an Ohio
limited liability company
By: Jacobs Entertainment, Ltd., its
Managing Member
By: ___________________________
Name: Jeffrey P. Jacobs, President
<PAGE>
SCHEDULE I
LOAN DOCUMENTS
--------------
1. CONSTRUCTION LOAN AGREEMENT, by and between Colonial Downs, L.P.
-----------------------------
("Borrower") and PNC Bank, National Association ("PNC"), dated June 26, 1997;
-
2. DEED OF TRUST NOTE, in the amount of $10,000,000.00 made by Borrower in
--------------------
favor of PNC, dated June 26, 1997;
3. REVOLVING LINE OF CREDIT AGREEMENT, by and between Borrower and PNC,
--------------------------------------
dated June 26, 1997;
4. REVOLVING CREDIT NOTE, in the amount of $5,000,000.00 made by Borrower in
---------------------
favor of PNC, dated June 26, 1997;
5. DEED OF TRUST AND SECURITY AGREEMENT, from Borrower and Colonial Downs
---------------------------------------
Holdings, Inc. ("Holdings") to Lawyers Title Realty Services, Inc. as Trustee
for the benefit of PNC, filed for record on July 31, 1997;
6. ASSIGNMENT OF RENTS AND LEASES, made by Borrower in favor of PNC and
----------------------------------
filed July 31, 1997;
7. AGREEMENT OF GUARANTY AND SURETYSHIP (PAYMENT), made by Richard E. Jacobs
----------------------------------------------
for the benefit of PNC;
8. AGREEMENT OF GUARANTY AND SURETYSHIP (PAYMENT), made by Jeffrey P. Jacobs
----------------------------------------------
for the benefit of PNC;
9. AGREEMENT OF GUARANTY AND SURETYSHIP (PAYMENT), made by Holdings for the
-----------------------------------------------
benefit of PNC;
10. AGREEMENT OF GUARANTY AND SURETYSHIP (PAYMENT), made by Stansley Racing
-----------------------------------------------
Corp. ("Stansley") for the benefit of PNC;
11. AGREEMENT OF GUARANTY AND SURETYSHIP (COMPLETION), made by Richard E.
----------------------------------------------------
Jacobs for the benefit of PNC;
12. AGREEMENT OF GUARANTY AND SURETYSHIP (COMPLETION), made by Jeffrey P.
----------------------------------------------------
Jacobs for the benefit of PNC;
13. AGREEMENT OF GUARANTY AND SURETYSHIP (COMPLETION), made by Holdings for
--------------------------------------------------
the benefit of PNC;
14. AGREEMENT OF GUARANTY AND SURETYSHIP (COMPLETION), made by Stansley for
--------------------------------------------------
the benefit of PNC;
15. ASSIGNMENT OF CONSTRUCTION AND DEVELOPMENT DOCUMENTS, by and between
--------------------------------------------------------
Borrower and PNC;
16. ASSIGNMENT OF MANAGEMENT AGREEMENT, by and between Borrower, Stansley
-------------------------------------
and PNC;
17. ASSIGNMENT OF DEVELOPMENT AGREEMENT, by and between Borrower and PNC;
--------------------------------------
18. PLEDGE AGREEMENT, between Holdings and PNC;
-----------------
19. PLEDGE AGREEMENT, between Stansley and PNC;
-----------------
20. UCC-1 FINANCING STATEMENTS, filed with:
----------------------------
(a) Virginia State Corporation Commission, dated July 31, 1997; and
(b) New Kent County Circuit Court, dated July 31, 1997;
21. HAZARDOUS MATERIALS CERTIFICATE AND INDEMNITY AGREEMENT, made by
------------------------------------------------------------
Borrower, Holdings, Richard E. Jacobs and Jeffrey P. Jacobs in favor of PNC;
22. SUBORDINATION AGREEMENT, (Second Deed of Trust to Ground Lease), among
------------------------
Chesapeake Forest Products Company, Delmarva Properties, Inc., Lawyers Title
realty Services, Inc. and PNC.
<PAGE>
------
SCHEDULE II
NAMES, ADDRESSES, TELEPHONE
AND TELECOPIER NUMBERS OF PARTIES
---------------------------------
Colonial Downs, L.P.
10515 Colonial Downs Parkway
New Kent, Virginia 23124
Telephone: (804) 966-7223
Telecopier: (804) 966-1567
Attn: Ian M. Stewart
Colonial Holdings, Inc.
10515 Colonial Downs Parkway
New Kent, Virginia 23124
Telephone: (804) 966-7223
Telecopier: (804) 966-1567
Attn: Ian M. Stewart, President
with copies to:
----------------
James L. Weinberg, Esquire
Hirschler, Fleischer, Weinberg
Cox & Allen
P.O. Box 500
701 East Byrd Street
Richmond, Virginia 23219
and
Lender:
CD Entertainment Ltd.
c/o Jacobs Entertainment, Inc.
425 West Lakeside Avenue, Suite 601
Cleveland OH 44113
Attn: Jeffrey P. Jacobs, President
Telephone: (216) 861-4080
Telecopier: (216) 861-6315
<PAGE>
------
With a copy:
--------------
Stephen P. Owendoff, Esquire
Hahn Loeser Parks LLP
3300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2301
<PAGE>
SCHEDULE III
EXCLUDED DEBT
-------------
1. Reconciliation of simulcast horse racing par-mutuel pools made monthly to
settle obligations arising in the normal course of business through the
Borrower's "hubbing" arrangements. A "hub" coordinates the broadcast of
simulcast horse races from sending and receiving racetracks; the placement of
wagers on such broadcasts; the setting of pari-mutuel odds based on such wages,
and the pay out of winning wagers.
2. Any liabilities of the Borrower for horsemen purses or contributions
thereto to the extent the Borrower has funded such liabilities by deposits to
the appropriate accounts pursuant to agreements with the horsemen.
3. Monthly management fee payable to the Maryland Jockey Club in the
ordinary course of business pursuant to a Management and Consulting Agreement,
dated as of April 22, 1996, by and among Colonial Downs, L.P., Stansley
Management Corp., Stansley Racing Corp., and Maryland-Virginia Racing Circuit,
Inc. (an affiliate of the Maryland Jockey Club).
4. Promissory Note, dated January 15, 1999, payable to the Maryland-Virginia
Racing Circuit, Inc., in the original principal amount of $1,450,000.
5. Performance bonds for deposits to the thoroughbred and harness horsemen
purse accounts.
<PAGE>
SCHEDULE IV
EXCLUDED EQUIPMENT
------------------
ITEM QUANTITY
---- --------
Window Washing Equipment 1
Security Camera System
Tram Pullers 3
Timing Systems (Infield Only)
Finish Line Lighting
Starting Gates 2
Harness Gates
Mid-size Tractors 3
Large Tractors 3
Trash Dumpsters
Manure Bins (10 x 10) Concrete 30
Copy Machines
Fax Machines
Medical Waste Dumpster
Mutuel Line Office Camera System 10
Horse Walkers
Tote equipment to be leased from Auto Tote or other nationally recognized tote
equipment manufacturer.
Computer equipment to be used in connection with the operation of the
racetrack's pari-mutuel operations.
Television and satellite dishes used for export and import broadcasts of
simulcast horse races.
Lighting used to illuminate the racetrack surfaces for night racing.
Point of sale cash registers for food and beverage operations.
Office furniture for corporate headquarters.
<PAGE>
EXHIBIT A
REFINANCED DEBT
---------------
Convertible subordinated note payable to CD Entertainment, maturing September
2000, with interest payable quarterly at a rate of 7.25%, collateralized by a
second deed of trust on the Racetrack
$ 5,500,000
Convertible subordinated note payable to CD Entertainment, maturing August 2000,
with an interest rate of 8.5%,
collateralized by a deed of trust on the Hampton Racing Center
$ 1,000,000
Note payable to CD Entertainment, bearing interest at the prime rate, payable in
two equal installments during the years 2000 and 2001
$ 900,000
Note payable to CD Entertainment, maturing August 2001, with monthly interest
payment at the Lender's cost of funds plus one-half percent (approximately 8.7%
at March 31, 2000)
$ 300,000
Note payable to CD Entertainment, maturing September 2001, with monthly interest
payment at the Lender's cost of funds plus one-half percent (approximately 8.7%
at March 31, 2000)
$ 475,000
Letter of Credit to CD Entertainment, maturing September, 2000
$ 1,875,000
TOTAL $10,050,000
<PAGE>
EXHIBIT B
REQUIRED DELIVERIES AT CLOSING
------------------------------
1. An opinion or opinions of counsel acceptable to Lender and its counsel
(including local counsel), to be delivered on the Closing Date in form and scope
satisfactory to Lender, to the effect (in addition to other matters which Lender
may require to be favorably addressed) that (i) Borrower is duly organized,
validly existing and in good standing under the laws of the respective
jurisdictions of their formation; (ii) Borrower is duly qualified to do business
in the jurisdiction in which the Land is located, and Borrower has all requisite
power and authority to operate the Project and to enter into, perform and
consummate all aspects of the transactions contemplated hereby; (iii) neither
the making of the Loan nor the realization on Lender's collateral for the Loan
in the jurisdiction in which the Land is located is deemed to be the doing of
business by Lender in such jurisdiction; (iv) the Loans and the making thereof
are not subject to any state or local taxes; (v) all Loan Documents and other
documents to be executed by or on behalf of Borrower have been duly executed and
are valid and binding upon and enforceable against the Borrowers in accordance
with the respective terms of each, except as the same may be limited by
bankruptcy, insolvency and similar laws affecting the rights of creditors
generally; (vi) there is no action, proceeding or investigation pending or
to the knowledge of counsel threatened (or any basis therefore known to counsel)
which questions the validity of the Loan or the transactions contemplated hereby
or the ability of Borrower or from performing their respective obligations under
the Loan Documents; and (vii) the performance of and compliance with the
provisions hereof and the other documents referred to herein will not result in
or be in conflict with or constitute a default under any agreement, instrument,
document, decree, order of which counsel is aware or any federal, state or local
law, statute, rule, regulation or ordinance applicable to or affecting each
Borrower.
2. Copies of the articles of incorporation, bylaws and resolutions of the
Corporation and such articles, bylaws and resolutions to be certified as of the
Closing Date by the Secretary of the Borrower;
3. Good standing certificates (to the extent available with respect to such
entity) of a recent date of each Borrower and Stansley Racing Corporation;
4. A certificate, to be dated as of the Closing Date, of the identity and
incumbency of officers of each Borrower.
5. The delivery and recording, as applicable of the executed Loan Document
as follows, to the reasonable satisfaction of the Lender:
(a) Agreement;
(b) Notes; and
(c) Amendment to Second Deed of Trust.
