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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 1998
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International Thoroughbred Breeders, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-9624 22-2332039
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
Route 70 and Haddonfield Road
Cherry Hill, New Jersey 08034
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 609-488-3838
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Item 5. Other Events.
On July 2, 1998, International Thoroughbred Breeders, Inc.
("ITB" or the "Company") entered into an agreement with Greenwood New Jersey,
Inc. ("Greenwood"), a wholly-owned subsidiary of Greenwood Racing, Inc. which
owns Philadelphia Park racetrack, the Turf Clubs and Phonebet, for the sale of
ITB's Freehold Raceway and the lease for a period of seven years of ITB's Garden
State Park facility and related assets. The agreement is subject to satisfaction
of a number of conditions, including without limitation, ITB stockholder
approval, the receipt by ITB of a fairness opinion from an independent
investment banker, a 30-day due diligence review by Greenwood and the receipt by
Greenwood of approval from applicable regulatory authorities. The purchase price
is $45 million, consisting of $33 million in cash and a seven-year
non-contingent promissory note in the amount of $12 million, with an additional
$10 million in contingent promissory notes becoming effective upon, among
other things, New Jersey's approval of off-track betting facilities or telephone
account pari-mutuel wagering on horse racing. Further adjustments could be made
to increase the purchase price if certain additional regulatory gaming changes
are approved in New Jersey in the future. Greenwood Racing, Inc. will guarantee
the performance by Greenwood of all obligations under the notes.
If the transaction is not completed by December 31, 1998,
either party has the right to terminate. Subject to various conditions,
including Greenwood's right of first refusal, ITB's Board has the right, at any
time prior to the closing, to exercise its fiduciary duties and accept a
superior proposal for the sale of Freehold Raceway and the Garden State
facility. The ITB Board is continuing to consider all of the Company's strategic
options to maximize stockholder value. The initial cash proceeds from the
Greenwood transaction will be used to reduce ITB's outstanding debt to its
primary lender. Upon the sale of Freehold Raceway and the lease or sale of the
Garden State Park facility, ITB will withdraw from any gaming business regulated
by the State of New Jersey. The ITB Board is considering alternatives for the
Company's future, including the acquisition of one or more operating businesses.
On July 2, 1998, ITB also entered into a Stipulation and
Agreement of Compromise, Settlement and Release to resolve the pending
stockholder derivative litigation in the Delaware Court of Chancery. The
settlement is subject to numerous conditions, including without limitation,
Delaware court approval following notice to ITB's stockholders, the consent of
ITB's primary lender and the issuance of certain orders by the U.S. bankruptcy
courts. The settlement will result in ITB's purchase from NPD, Inc. of
approximately 2.9 million shares of ITB's common stock for $4.6 million, plus
the assumption by ITB of NPD's $5.8 million promissory note now held by Robert
E. Brennan's Bankruptcy Trustee. The purchase price was reached in settlement of
certain claims against NPD and certain directors. The settlement also provides
for the return to AutoLend Group, Inc. of $2 million pledged to secure the NPD
note, plus accrued interest thereon.
Upon the mailing of the settlement notice to ITB's
stockholders, Michael C. Abraham, Charles R. Dees, Jr., Frank A. Leo and Kenneth
S. Scholl will resign from the Company's Board of Directors. Upon the purchase
of the NPD shares by ITB, Anthony Coelho, Nunzio P. DeSantis and Joseph Zappala
will also resign from the Board and terminate their employment and consulting
agreements with the Company. Following the foregoing director resignations, the
continuing ITB directors, Francis W. Murray and Robert J. Quigley, expect to
call an annual meeting of stockholders to elect directors.
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The settlement also contemplates the disposition of ITB's
non-operating El Rancho hotel and casino site in Las Vegas, Nevada. Of the
proceeds, a minimum of $44.2 million will be used to reduce ITB's outstanding
debt to the Company's primary lender. As part of the settlement, Las Vegas
Entertainment Network, Inc. will return to ITB for cancellation approximately
2.1 million shares of ITB common stock and terminate all of its contractual
arrangements with ITB.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
The following exhibits are filed as part of this Report:
10.1 Stipulation and Agreement of Compromise,
Settlement and Release dated July 2, 1998.
10.2 Asset Purchase Agreement dated as of July 2, 1998
by, between and among Greenwood New Jersey, Inc.,
Garden State Race Track, Inc., Freehold Raceway
Association, Atlantic City Harness, Inc., Circa
1800 and International Thoroughbred Breeders,
Inc., together with exhibits thereto.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
Dated: July 7, 1997 INTERNATIONAL THOROUGHBRED
BREEDERS, INC.
By: /s/ Nunzio P. DeSantis
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Nunzio P. DeSantis, President and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description of Document
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10.1 Stipulation and Agreement of Compromise, Settlement
and Release dated July 2, 1998.
10.2 Asset Purchase Agreement dated as of July 2, 1998 by,
between and among Greenwood New Jersey, Inc., Garden
State Race Track, Inc., Freehold Raceway Association,
Atlantic City Harness, Inc., Circa 1800 and
International Thoroughbred Breeders, Inc., together
with exhibits thereto.
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EXHIBIT 10.1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
ROBERT J. QUIGLEY, FRANK A. )
LEO AND THE FAMILY INVESTMENT )
TRUST (Henry Brennan as Trustee), )
)
Plaintiffs, )
)
v. ) C.A. No. 15919
)
NUNZIO P. DeSANTIS, MICHAEL )
ABRAHAM, ANTHONY COELHO, KENNETH )
W. SCHOLL, JOSEPH ZAPPALA, )
JOSEPH A. CORAZZI, and LAS VEGAS )
ENTERTAINMENT NETWORK, INC., a )
Delaware corporation, )
)
Defendants, )
)
and )
)
INTERNATIONAL THOROUGHBRED )
BREEDERS, INC., a Delaware )
corporation, )
)
Nominal Defendant. )
)
)
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)
)
INTERNATIONAL THOROUGHBRED )
BREEDERS, INC., a Delaware )
corporation, )
)
Nominal Defendant and )
Counterclaim Plaintiff, )
)
v. )
)
ROBERT J. QUIGLEY, FRANK A. )
LEO, FRANCIS W. MURRAY and )
CHARLES R. DEES, JR., )
)
Counterclaim Defendants. )
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STIPULATION AND AGREEMENT
OF COMPROMISE, SETTLEMENT AND RELEASE
The parties to the above-captioned consolidated civil action,
individually, hereby enter into the following Stipulation and Agreement of
Compromise, Settlement and Release (the "Stipulation") subject to the approval
of the Court:
WHEREAS,
A. International Thoroughbred Breeders, Inc., a Delaware
corporation ("ITB"), was founded in 1980 by Robert E. Brennan ("Brennan"), who
served as ITB's Chairman of the Board and Chief Executive Officer until 1995. By
December 1996, ITB had approximately 11.6 million shares outstanding, which were
owned by approximately 30,000 stockholders and traded on the American Stock
Exchange ("AMEX").
B. In August 1995, Brennan filed a voluntary petition for
bankruptcy protection in the United States Bankruptcy Court for the District of
New Jersey (the "New Jersey Bankruptcy Court"), captioned In the Matter of
Robert E. Brennan, Case No. 95-35502 (KGF) (USBC Dist. NJ) (the "Brennan
Bankruptcy Action"), as a result of a $75 million civil judgment against him in
favor of the Securities and Exchange Commission ("SEC") on a matter unrelated to
ITB. Brennan's bankruptcy estate included 2,904,016 shares of ITB common stock,
representing approximately 25% of ITB's then outstanding common stock.
C. Solely as a result of the SEC civil judgment against
Brennan, in late October 1995, the New Jersey Department of Law and Public
Safety, Division of Gaming Enforcement ("DGE") filed a complaint with the New
Jersey Casino Control Commission ("CCC") seeking to bar ITB's subsidiaries,
Garden State Race Track, Inc. and Freehold Racing Association, from conducting
business with any casino licensee. In response to the DGE complaint, Brennan
resigned
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from his positions at ITB and its subsidiaries. Pursuant to a settlement with
the DGE, Brennan agreed to divest his approximately 25% interest in ITB.
D. On December 5, 1996, Brennan entered into a stock purchase
agreement (the "Stock Purchase Agreement") in which he agreed to sell all of his
ITB shares to NPD, Inc. ("NPD"), which is owned 78% by Nunzio P. DeSantis
("DeSantis") and 22% by Anthony Coelho ("Coelho"). The purchase price for
Brennan's ITB shares was $11,616,064 (subject to certain potential post-closing
adjustments), half of which was payable at closing and half in the form of a
note in the amount of $5,808,032, plus interest (the "NPD Note"). The Stock
Purchase Agreement also provided that NPD would establish an unsecured $5
million revolving line of credit in favor of ITB (the "Revolving Line of
Credit"). Pursuant to the Stock Purchase Agreement, NPD pledged the purchased
shares as security for NPD's performance under the NPD Note, which shares are
currently held in escrow by Brennan's counsel, Cole, Schotz, Meisel, Forman &
Leonard, P.C. ("Cole Schotz"). Pursuant to the Stock Purchase Agreement, NPD
granted options to purchase portions of the purchased shares to (i) Robert Green
("Green"), (ii) AutoLend Group, Inc. ("AutoLend"), a publicly traded corporation
in which DeSantis is the chief executive officer and a substantial stockholder
and both DeSantis and Coelho are directors, and (iii) DeSantis.
E. On December 20, 1996, the ITB board of directors (the "ITB
Board") adopted a by-law provision requiring the affirmative vote of not less
than 75% of the entire ITB Board to effectuate certain transactions, including:
(i) a merger; (ii) the purchase or sale of assets for proceeds of at least $1
million; (iii) the issuance of capital stock, options, warrants or securities;
(iv) the execution of any employment, consulting or similar agreements with
officers, directors or key employees; (v) the borrowing of $3 million or more by
ITB; (vi) the filling of any vacancy on the
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ITB Board; (vii) the determination of management's nominees for election to the
ITB Board; and (viii) any future amendments by the ITB Board to ITB's by-laws
(the "Supermajority By-law").
F. On January 10, 1997, the New Jersey Bankruptcy Court
approved the first amendment to the Stock Purchase Agreement (the "First
Amendment") and authorized Brennan to sell his ITB shares to NPD in accordance
with the First Amendment. The First Amendment provides for limited guarantees by
DeSantis and AutoLend of NPD's obligations, and for AutoLend to pledge
$2,000,000 in cash collateral to Brennan to secure its guaranty, which
$2,000,000 is being held in escrow by Brennan's counsel, Cole Schotz, in an
interest-bearing account.
G. Upon the closing of the Stock Purchase Agreement on January
15, 1997, defendants DeSantis, Coelho, Kenneth S. Scholl ("Scholl"), Michael
Abraham ("Abraham") and Joseph Zappala ("Zappala") (collectively, the "Director
Defendants") became directors of ITB, representing a majority of the ITB Board.
However, Zappala's appointment to the ITB Board did not become effective until
January 25, 1997.
H. The Director Defendants contend that the ITB Board repealed
the Supermajority By-law during March 1997 in connection with the CSFB Loan
Agreement (defined below).
I. On September 10, 1997, a verified complaint was filed in
the Delaware Court of Chancery (the "Delaware Court") captioned John Mariucci,
Robert J. Quigley, Charles R. Dees, Jr., James J. Murray, Francis W. Murray,
Frank A. Leo and The Family Investment Trust (Henry Brennan as Trustee) v.
Nunzio P. DeSantis, Michael Abraham, Anthony Coelho, Kenneth W. Scholl and
Joseph Zappala and ITB (nominal defendant), C.A. No. 15918 (the "Section 225
Action"). The complaint in the Section 225 Action sought a declaration that
Frank Koenemund, John Mariucci and James W. Murray are directors of ITB and that
the individual defendants therein were never validly
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appointed to the ITB Board. Plaintiffs in the Section 225 Action alleged that
the resignations of Koenemund, Mariucci and Murray from the ITB Board in January
1997 were ineffective because NPD failed to lend monies to ITB pursuant to the
Revolving Line of Credit. The Delaware Court dismissed the Section 225 Action on
October 14, 1997.
J. On or about September 10, 1997 a verified derivative
complaint captioned Robert J. Quigley, Frank A. Leo and The Family Investment
Trust (Henry Brennan as Trustee) v. Nunzio P. DeSantis, Michael Abraham, Anthony
Coelho, Kenneth W. Scholl, Joseph Zappala, Joseph A. Corazzi and Las Vegas
Entertainment Network, Inc. and International Thoroughbred Breeders, Inc., C.A.
No. 15919-NC, was filed in the Delaware Court, alleging that the defendants
therein (collectively, the "Defendants") acted in contravention of ITB's
by-laws, Delaware law and the individual Defendants' fiduciary duties (the
"Quigley Action").
K. The complaint in the Quigley Action challenges certain
actions or transactions which were purportedly undertaken by ITB and various of
the Defendants since January 1997, allegedly at the behest of the Defendants and
purportedly without the requisite vote necessary under the Supermajority By-law,
in contravention of Delaware law and the Director Defendants' fiduciary duties,
including:
(1) A loan agreement (the "CSFB Loan Agreement") in
which Credit Suisse First Boston Mortgage Capital LLC ("CSFB") loaned $55
million to ITB (the "CSFB Loan") in exchange for (i) a first mortgage on the
land and buildings comprising the former El Rancho Hotel and Casino in Las
Vegas, Nevada owned by Orion Casino Corporation ("Orion"), a wholly-owned
subsidiary of International Thoroughbred Gaming Development Corporation, a
wholly-owned subsidiary of ITB, as described in Schedule K(1) attached hereto
and incorporated herein by reference (the "El Rancho Property"), (ii) a first
mortgage on the land and buildings comprising
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Garden State Race Track ("Garden State"), and (iii) a third mortgage on the land
and buildings comprising Freehold Raceway ("Freehold"). In connection with the
CSFB Loan Agreement, CSFB was granted warrants to purchase 546,847 ITB shares
immediately, and is entitled to receive warrants to purchase an additional
497,153 ITB shares upon the provision of additional funding to ITB.
(2) An agreement (the "Tri-Party Agreement") among
ITB, CSFB and Las Vegas Entertainment Network, Inc. ("LVEN"), of which Defendant
Joseph Corazzi ("Corazzi") is an officer and director, pursuant to which ITB
issued (i) 2,093,868 ITB shares to Casino-Co Corporation ("Casino-Co"), a
subsidiary of LVEN, purportedly in exchange for the satisfaction and
cancellation of a $10.5 million note from ITB to LVEN plus accrued interest and
(ii) 232,652 ITB shares to CSFB in consideration for CSFB's consent to such
transaction with LVEN. In connection with the Tri-Party Agreement, LVEN and
Casino-Co granted to DeSantis a proxy to vote the 2,093,868 ITB shares. The
Tri-Party Agreement also obligated ITB to issue additional ITB shares to LVEN in
exchange for the cancellation of LVEN's contingent, future interest in the
profits of the undeveloped El Rancho Property (the "Future Interest Purchase"),
and to issue additional shares of ITB stock to CSFB in consideration for CSFB's
consent to the Future Interest Purchase.
(3) An agreement between ITB and LVEN (the
"Bi-Lateral Agreement"), which allegedly would reduce ITB's recovery on its
investment in the El Rancho Property if the Future Interest Purchase is not
completed.
(4) A letter agreement between ITB and D&C Gaming
Corporation, a Delaware corporation ("D&C Gaming"), which is owned by DeSantis
and Corazzi, pursuant to which ITB paid D&C Gaming $600,000 for an option to
purchase potential leasehold interests in certain New Mexico racetracks (the
"New Mexico Leases").
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(5) The purchase of a racetrack in Ontario, Canada
(the "Ontario Racetrack"), by a company in which DeSantis holds an 80% interest.
(6) Agreements granting DeSantis, Coelho and Zappala
certain compensation packages, benefits and options to purchase ITB shares,
including:
(a) An agreement between ITB and DeSantis
granting DeSantis options to purchase 5 million shares of ITB stock, which
options are subject to stockholder approval.
(b) An agreement between ITB and Coelho
granting Coelho options to purchase 1 million shares of ITB stock, which options
are subject to stockholder approval.
(c) An employment agreement obligating ITB
to pay DeSantis $450,000 in base salary per year for ten years, plus bonuses,
six weeks paid vacation, $1,500 per month car allowance and a $5,000 per month
"non-accountable expense account."
(d) Consulting contracts obligating ITB to
pay each of Zappala and Coelho $10,000 per month, on a month-to-month basis.
L. The complaint in the Quigley Action alleges, among other
things, that the Director Defendants (i) ignored and continuously violated the
requirements of the Supermajority ByLaw; (ii) improperly and erroneously
announced that the Supermajority By-Law had been repealed; (iii) distorted ITB
Board minutes relating to the purported repeal of the Supermajority By-Law; (iv)
caused ITB to approve the Tri-Party Agreement, the Bi-Lateral Agreement and the
CSFB Loan Agreement in contravention of the Supermajority By-Law, Delaware law,
their fiduciary duties and in order to promote the interests of LVEN, DeSantis
and Corazzi; (v) caused ITB to enter into wasteful compensation, employment and
consulting agreements favoring DeSantis, Coelho and Zappala; (vi) caused ITB to
enter into the letter agreement with D&C Gaming in connection with the New
Mexico Leases in order to benefit DeSantis and Corazzi; (vii) usurped corporate
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opportunities relating to the New Mexico Leases and the Ontario Racetrack; and
(viii) manipulated ITB Board processes for their own advantage in contravention
of their fiduciary duties. The Quigley Action seeks a declaratory judgment that
the actions taken by the Director Defendants in alleged contravention of the
Supermajority By-Law, Delaware law and the fiduciary obligations of the Director
Defendants are void and should be rescinded. The Quigley Action also seeks to
recover alleged damages suffered by ITB in connection with the challenged
actions.
M. Defendants in the Quigley Action, except Corazzi (who filed
a motion to dismiss for lack of personal jurisdiction), filed answers to the
complaint in the Quigley Action denying the material allegations of the
complaint. Defendant ITB also asserted counterclaims (the "Counterclaims")
against plaintiffs Robert J. Quigley ("Quigley") and Frank A. Leo ("Leo"), and
joined the following persons as counterclaim-defendants: Francis W. Murray
("Murray") and Charles R. Dees, Jr. ("Dees") (collectively, the
"Counterclaim-Defendants").
N. ITB's Counterclaims challenge certain actions or
transactions purportedly taken by some or all of the Counterclaim-Defendants, in
contravention of Delaware law and the Counterclaim-Defendants' fiduciary duties,
including:
(1) The adoption of the Supermajority By-law by the
Counterclaim-Defendants on December 20, 1996, allegedly without disclosing its
adoption (i) in ITB's January 15, 1997 Information Statement filed with the SEC
or in any other SEC filings, (ii) to NPD, or (iii) to the Director Defendants,
who allegedly did not learn of the existence of the Supermajority By-law until
approximately March 1997.
(2) The Counterclaim-Defendants' continued assertions
that the Supermajority By-law was not validly repealed by the ITB Board.
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(3) The Counterclaim-Defendants' alleged continued
affiliation with Brennan, which has been the subject of a CCC and DGE
investigation.
(4) The Counterclaim-Defendants' alleged interference
with ITB's ability to engage a new independent auditor after ITB's former audit
firm, Moore Stephens, P.C., was terminated by ITB on or about August 6, 1997, in
the Counterclaim-Defendants' belief that a larger national firm would better
serve ITB's needs. ITB was delayed in retaining a new outside audit firm, and as
a result, was unable to comply with certain SEC reporting requirements, thereby
resulting in the suspension of trading in ITB stock on AMEX.
(5) The alleged purchase by Counterclaim-Defendants
Murray and Leo of a Florida cruise ship which is used for gaming.
(6) The alleged use of corporate charge cards and
cellular phones belonging to ITB for non-ITB business by Murray, and the
purchase by Murray, at ITB's expense, of computer and office equipment, which
has not yet been returned to ITB.
(7) The Counterclaim-Defendants' alleged attempts to
interfere with the discharge of duties by ITB employees.
O. ITB's Counterclaims allege that the Counterclaim-Defendants
(i) enacted, asserted the validity of, and opposed the removal of, the
Supermajority By-law purportedly in order to aid Brennan in continuing to
exercise control and influence over the business affairs of ITB; (ii) improperly
interfered with ITB's ability to arrange a second tranche of financing for ITB
from CSFB because of their continued assertion that the Supermajority By-law has
not been repealed; (iii) improperly interfered with ITB's ability to engage
independent auditors, thereby causing ITB to be delinquent in its SEC filings
and causing the suspension of trading in ITB's stock on AMEX; (iv) used
corporate funds for their personal benefit (Murray only); and (v) usurped ITB
corporate
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opportunities by acquiring interest in a Florida cruise ship used for gaming
(Murray and Leo only). The Counterclaims seek (i) injunctive relief enjoining
the Counterclaim-Defendants from, among other things, interfering in ITB's
day-to-day business operations, (ii) the establishment of a constructive trust
over certain assets purportedly owned or controlled by Murray and Leo, (iii) a
declaratory judgment that the purported Supermajority By-Law has been repealed,
and (iv) money damages.
P. The Counterclaim-Defendants denied all of the
Counterclaims. In further response to the Counterclaims, Murray brought a
counterclaim against ITB (the "Murray Counterclaim") alleging that ITB
wrongfully terminated Murray from his position at ITB and failed to pay certain
compensation to Murray. ITB filed an answer to the Murray Counterclaim denying
all material allegations therein.
Q. On or about September 11, 1997 a separate verified
derivative complaint captioned James Rekulak v. Nunzio P. DeSantis, Michael
Abraham, Anthony Coelho, Kenneth W. Scholl, Joseph Zappala, Joseph A. Corazzi
and Las Vegas Entertainment Network, Inc. and International Thoroughbred
Breeders, Inc., C.A. No. 15920-NC, was commenced in the Delaware Court alleging
that the defendants therein acted in contravention of ITB's by-laws, Delaware
law and the Director Defendants' fiduciary duties (the "Rekulak Action"). The
allegations made and the relief sought in the Rekulak Action are virtually
identical to those in the Quigley Action.
R. On or about October 30, 1997 a separate complaint captioned
Robert Wm. Green v. Nunzio P. DeSantis, Joseph Corazzi, Anthony Coelho, Las
Vegas Entertainment Network, Inc. and NPD, Inc. was filed in the United States
District Court for the District of New Jersey, alleging that the defendants
therein acted in contravention of ITB's by-laws, their fiduciary duties,
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and their contractual obligations in connection with Green's interests
pertaining to ITB (the "Green Action").
S. On or about November 17, 1997 a separate complaint
captioned NPD, Inc. v. Robert J. Quigley, Francis W. Murray, Frank A. Leo,
Charles R. Dees, Jr., John Mariucci, Frank Koenemund and James J. Murray, C.A.
No. 97-CV-5657, was filed in the United States District Court for the District
of New Jersey, alleging fraudulent and conspiratorial conduct by the defendants
therein in connection with the Stock Purchase Agreement (the "NPD Action").
T. Brennan contends in the Brennan Bankruptcy Action that NPD,
and thereby DeSantis and Coelho, breached their obligations under the Stock
Purchase Agreement to, among other things, fund the Revolving Line of Credit,
and that certain other actions taken by certain of the Defendants and NPD, as
alleged in the complaint in the Quigley Action, purportedly undermined the
ability of Brennan's bankruptcy estate to collect on the NPD Note, diluted and
devalued the ITB shares pledged by NPD pursuant to the Stock Purchase Agreement,
and allegedly interfered with the ability of Brennan's bankruptcy estate to
realize appreciation on the ITB shares (collectively, the "Bankruptcy Claims").
Accordingly, Brennan issued subpoenas in connection with the Brennan Bankruptcy
Action to compel the examination of two ITB officers. In response, a Stipulation
and Order was entered by the New Jersey Bankruptcy Court permitting Brennan, his
trustee in the Brennan Bankruptcy Action, Donald F. Conway (the "Bankruptcy
Trustee"), the unsecured creditors committee in the Brennan Bankruptcy Action
and the SEC to participate in certain discovery in the Quigley Action and the
Rekulak Action.
U. On January 14, 1998, the Quigley Action and the Rekulak
Action (collectively, the "Derivative Action") were consolidated by order of the
Delaware Court. Thereafter, the Delaware Court scheduled trial of the Derivative
Action to commence in late May
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1998. "Plaintiffs" hereinafter refers to the plaintiffs and Counterclaim-
Defendants in the Derivative Action.
V. On or about February 24, 1998, a complaint captioned Myron
Harris, derivatively on behalf of International Thoroughbred Breeders, Inc., a
Delaware corporation v. Nunzio P. DeSantis, Anthony Coelho, Kenneth W. Scholl,
Michael Abraham, Joseph Zappala, Frank A. Leo, Robert J. Quigley, Charles R.
Dees, Jr., and Francis W. Murray, C.A. No. 98-CV-517 (JBS) was filed in the
United States District Court for the District of New Jersey (the "Harris
Action"). The factual allegations and claims asserted in the Harris Action are
virtually identical to those in the Derivative Action, including the
Counterclaims. The defendants in the Harris Action have collectively moved to
dismiss the complaint on the grounds that the claims are duplicative of those
asserted in the prior pending Delaware Action in the Delaware Court, and that
judicial and party resources would be conserved if all such claims were pursued
in the Derivative Action. The Harris Action and the Actions (as defined below)
are sometimes hereafter collectively referred to as the "Litigations."
W. During the discovery in the Derivative Action, the parties
commenced (but did not complete) the production of documents, commenced the
deposition of Christopher C. Castens (ITB's general counsel), completed the
deposition of James J. Murray (a former ITB director), and commenced the
deposition of Roger A. Tolins (ITB's former outside counsel). As a result of the
parties' settlement agreement (the "Settlement") set forth in this Stipulation,
further discovery in the Derivative Action was discontinued.
X. In January 1998, the parties began negotiations regarding
the possible settlement of the Quigley Action, the Green Action, the NPD Action,
and the Bankruptcy Claims (collectively the "Actions"). Following vigorous and
protracted negotiations regarding the terms of
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the possible settlement of the Actions, the parties agreed to the Settlement.
The plaintiff in the Rekulak Action has agreed to dismiss his action with
prejudice upon the Delaware Court Approval (as defined in subsection 2(a)
below).
Y. In anticipation of the Settlement and the sale of the El
Rancho Property contemplated thereby, LVEN is negotiating the possible sale of
the El Rancho Property with third parties. In that regard, on March 27, 1998,
LVEN entered into an Acquisition Agreement (the "APW Acquisition Agreement"), by
and between itself and American Pastime West II LLC ("APW") pursuant to which
the entire El Rancho Property may be sold, subject to various enumerated terms
and conditions and pursuant to and in accordance with the Settlement. Pursuant
to the APW Acquisition Agreement, and subject to the various conditions,
representations and warranties therein, including without limitation,
representations and warranties by LVEN and APW, the El Rancho Property would be
sold for Sixty-Two Million Five Hundred Thousand Dollars ($62,500,000) (the "El
Rancho Purchase Price"), which El Rancho Purchase Price would be distributed in
accordance with the following schedule, to the extent such moneys exist: (i)
first, $44.2 million to either CSFB, to be applied in reduction of the CSFB Loan
in accordance with the terms of the CSFB Approval Agreement (as defined below),
or to any Alternative Lender (as defined below) in accordance with any agreement
therewith, as the case may be; (ii) second, to LVEN's share (as provided in the
APW Acquisition Agreement) of the costs of the closing of the sale of the El
Rancho Property; (iii) third, $4.375 million to Francis A. Zarro, Jr. (a
principal of APW); (iv) fourth, $7.1 million to DeSantis, less any amounts paid
to DeSantis or NPD pursuant to the Settlement; (v) fifth, $1 million to Zappala
(of which $200,000 will be paid by Zappala to ITB pursuant to Section 7 below);
and (vi) last, any remaining balance to LVEN.
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Z. On April 17, 1998, the ITB Board authorized the exploration
of strategic opportunities for ITB, including a possible merger or sale of all
of the Company's assets, and the possible hiring of a financial advisor to
assist in that activity. In connection with the ITB Board's exploration of
strategic opportunities for ITB, ITB negotiated an asset purchase/lease
agreement with Greenwood New Jersey, Inc. ("Greenwood"), a wholly-owned
subsidiary of Greenwood Racing, Inc. which is the operator of Philadelphia Park.
Subject to the satisfaction of numerous conditions by Greenwood and ITB,
including the receipt of a fairness opinion by the ITB Board and approval of the
transaction by the holders of a majority of ITB's common stock, Greenwood will
purchase all of the real property and related assets at Freehold and will lease
the real property and related assets at Garden State (the "Greenwood
Transaction"). Greenwood will purchase Freehold for $33 million cash and a $12
million non-contingent note payable in full within seven years after closing.
ITB also will receive $10 million in contingent notes from Greenwood, including
(i) a $5 million note payable in the event Greenwood receives, within three
years of closing, all approvals necessary to operate an off-track betting
facility ("OTB Facility") at Garden State; (ii) a $3 million note payable in the
event New Jersey enacts legislation within three years of closing that would
permit Garden State or Freehold to own and operate OTB Facilities other than at
Garden State; and (iii) a $2 million note payable in the event New Jersey enacts
legislation within three years of closing that permits Greenwood to engage in
New Jersey-based telephone account pari-mutuel wagering on horse racing and
through which Greenwood opens new accounts from New Jersey residents. Greenwood
Racing, Inc. will guarantee the performance by Greenwood of all obligations
under the notes and the notes will be secured by junior mortgages on Freehold.
The purchase price will be increased as follows: (i) if within five years of
closing, New Jersey enacts legislation permitting the operation of slot machines
at Garden State, Freehold or any OTB Facilities owned and operated by Greenwood
as a
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result of Greenwood's ownership of either Garden State or Freehold, Greenwood
will pay 10% of the gross wins from the slot machines for ten years; (ii) if
within two years of closing, New Jersey requires a portion of Atlantic City
casino gambling revenues to be paid to New Jersey race tracks, including Garden
State and Freehold, Greenwood will pay 50% of the net cash received for four
years; and (iii) if within two years of closing, New Jersey enacts any subsidy
that would produce direct measurable financial benefit to Garden State and/or
Freehold, Greenwood will pay 50% of net cash received for four years. In
addition, Greenwood will lease Garden State for $100,000 per year for seven
years, renewable for an additional three years. During the lease term, Greenwood
will have the option to purchase a ten acre parcel at fair market value, and
will have certain rights of first refusal in the event ITB seeks to sell Garden
State. In connection with the Greenwood lease, ITB may not sell Garden State to
any entity during the first year of the lease, and during the four years after
closing, ITB may not sell Garden State to any entity that will use Garden State
for horse racing or gambling. The foregoing is a summary, and the complete terms
of the proposed Greenwood Transaction will be available in ITB's public filings.
The proposed Settlement of the Actions is not dependent upon the consummation of
the Greenwood Transaction.
AA. In connection with the negotiations regarding the
Settlement of the Actions, and because CSFB would be affected by the terms of
the Settlement and because numerous defaults exist under the CSFB Loan Agreement
which ITB has requested that CSFB waive, the Plaintiffs began negotiations with
CSFB regarding the possible alteration of the CSFB Loan Agreement and the terms
of the CSFB Loan. In order to effectuate and reflect the terms of the
Settlement, CSFB and ITB are negotiating an agreement (the "CSFB Approval
Agreement") to be effective immediately upon the execution thereof by ITB, its
subsidiaries and CSFB following the unanimous approval thereof by the entire ITB
Board (the "CSFB Effective Date"), except with respect to those
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agreements contained therein which, by their terms, only become effective upon
the LVEN Effective Date or the NPD Effective Date (each as hereinafter defined),
as applicable. In the event that ITB and CSFB are unable to agree upon the terms
of the CSFB Approval Agreement, ITB expects to complete a financing arrangement
with an alternative lender (the "Alternative Lender"), to be entered into by the
parties thereto and approved by LVEN pursuant to Section 24 below, in order to
pre-pay the CSFB Loan and to proceed with this Settlement (the "Alternative
Financing Agreement").
BB. On May 18, 1998, the New Jersey Bankruptcy Court in the
Brennan Bankruptcy Action issued, ex parte, a temporary restraining order, as
amended by consent on May 27, 1998 (the "TRO"), which restrains and enjoins
Henry Brennan, as trustee for The Family Investment Trust, from transferring,
hypothecating, lending, distributing, disposing, concealing, dissipating or
otherwise effecting any change in the legal or beneficial interest in any
assets, funds or other property of The Family Investment Trust and any interest
therein. Although The Family Investment Trust (Henry Brennan as Trustee) has
agreed to settle the Actions pursuant to the terms of this Stipulation, as a
result of the TRO Henry Brennan is currently unable to execute this Stipulation.
Henry Brennan is promptly undertaking to obtain relief from the TRO in order to
execute this Stipulation.
CC. The parties to the Actions, through their attorneys, have
conducted extensive investigation and evaluation of the facts and legal
principles underlying their respective claims. In connection with their
investigation and evaluation, the parties' counsel have carefully reviewed
thousands of pages of documents produced in connection with the Section 225
Action and the Derivative Action, conducted factual and legal research
concerning the viability of their claims, conducted several formal and informal
fact interviews with relevant knowledgeable persons, and took certain
depositions.
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DD. After considering all of the above, all parties to the
Actions have concluded that: (i) under all of the circumstances, there are
uncertainties as to whether the various parties will prevail on their respective
claims raised in the Actions; (ii) continued prosecution of the Actions will be
costly; (iii) the Settlement as hereinafter described will benefit ITB and its
over 30,000 public stockholders; and (iv) under all of the circumstances
presented, further prosecution of the Actions or of any other actions between or
among the parties based upon the Settled Claims (as defined below) would not be
in the best interests of ITB or its stockholders. All parties to the Actions
therefore consider it desirable and in the best interests of the stockholders of
ITB to resolve finally all matters at issue in the Actions, and to that end, to
settle the Actions upon the terms hereinafter set forth.
EE. All parties in the Actions have vigorously denied, and
continue to deny, all liability with respect to the claims in the Actions, deny
that they engaged in any wrongdoing, including, without limitation, deny that
they committed any violation of law, deny that they breached any fiduciary
duties, and deny that any of them are subject to any liability whatsoever by
reason of the matters complained of in the Actions. The parties to the Actions
have nevertheless agreed, in the interests of all concerned, including ITB's
public stockholders, to settle and compromise the Actions on terms hereinafter
set forth in order to avoid further substantial expense to the parties, avoid
the inconvenience and distraction of burdensome and protracted litigation, and
in order to put to rest and finally terminate the Settled Claims (as hereinafter
defined).
NOW, THEREFORE, IT IS STIPULATED AND AGREED, subject to the
approval of the Delaware Court pursuant to Rule 23.1 of the Rules of the Court
of Chancery, as follows:
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THE SETTLEMENT
1. Upon the execution of this Stipulation by all persons and
entities hereto (the "Signing Date"), the parties shall immediately effect a
standstill of all of their respective proceedings as to the other parties hereto
in the Actions.
2. The Settlement shall be effective with respect to LVEN,
Corazzi, Casino-Co, CountryLand Properties, Inc. and Las Vegas Communications
Corporation (collectively, the "LVEN Parties") and, only to the extent necessary
under Section 4 hereof, to the other parties to this Stipulation, upon the date
on which the last of the following approvals is received and action is taken
(the "LVEN Effective Date"):
(a) execution of this Stipulation by The Family
Investment Trust (Henry Brennan as Trustee) and the final approval by the
Delaware Court of the Settlement and the expiration of all appeal periods, as
set forth in Section 20 below ("Delaware Court Approval"); and
(b) full execution of the CSFB Approval Agreement or
the Alternative Financing Agreement, as the case may be, and LVEN's approval
thereof as provided in Section 24 below.
3. The Settlement shall be effective with respect to all
parties other than the LVEN Parties upon the date on which the last of the
following approvals is received and action is taken (the "NPD Effective Date"):
(a) Delaware Court Approval;
(b) full execution of the CSFB Approval
Agreement or the Alternative Financing Agreement;
(c) approval by the New Jersey Bankruptcy
Court in the Brennan Bankruptcy Action (the "Brennan Bankruptcy Approval") of
(i) the assumption by ITB of the NPD
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Note in accordance with the terms of, and following the satisfaction of the
conditions with respect thereto set forth in, the CSFB Approval Agreement or the
Alternative Financing Agreement, as the case may be, (ii) the return of the $2.0
million cash collateral held by Cole Schotz to AutoLend plus all interest
actually accrued thereon in the account(s) in which the same has been
maintained, (iii) the release of claims as provided in Section 15 below and
Exhibit A hereto, (iv) the execution of this Stipulation by Brennan and (v) the
delivery by the Bankruptcy Trustee of releases substantially in the form
attached hereto as Exhibit A to all parties to the Stipulation and to CSFB in
the event the CSFB Approval Agreement is executed by ITB and CSFB (the
"Bankruptcy Trustee Releases");
(d) approval by the United States Bankruptcy Court
for the District of New Mexico (the "New Mexico Bankruptcy Court") with respect
to the AutoLend bankruptcy (the "AutoLend Bankruptcy Approval") of (i) the
termination of AutoLend's option to purchase the NPD Shares, (ii) the repayment
at a discount of the loan from AutoLend to NPD related to NPD's purchase of the
NPD Shares, and the termination of the related security documents, (iii) the
release of claims as provided in Section 15 below and Exhibit A hereto; and (iv)
the assumption of ITB's office lease in Albuquerque, New Mexico;
(e) each of Green, Casino-Co, LVEN, AutoLend and
DeSantis shall immediately and automatically release any and all of his or its
respective interests in and to the NPD Shares (collectively, the "NPD Pledge
Release") and shall, in form reasonably satisfactory to ITB and NPD, have
represented, warranted and certified such release in writing to ITB and NPD; and
(f) the Bankruptcy Trustee shall have delivered the
Bankruptcy Trustee Releases.
4. Upon the LVEN Effective Date, the parties agree as follows:
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(a) The Bi-Lateral Agreement and the Tri-Party
Agreement shall be deemed terminated immediately and automatically, and shall be
of no further force or effect.
(b) ITB shall: (i) deposit into escrow (the
"Escrow"), with an escrow agent (the "Escrow Agent") to be mutually agreed upon
by the Plaintiffs and Defendants, an executed and otherwise recordable Grant,
Bargain and Sale Deed (the "Deed"), with the "Grantee" name in blank, to the El
Rancho Property, such deed to be held in Escrow, subject to the provisions of
subsection 4(c) below in the event the CSFB Approval Agreement is executed by
ITB and CSFB, for a period commencing on the date of mailing of the Notice of
this Settlement to ITB's stockholders (the "Mailing Date") as required under
Section 21 below and ending on the earlier to occur of (A) the two hundred and
seventieth (270th) day thereafter, or (B) any earlier date or event provided for
in the CSFB Approval Agreement or the Alternative Financing Agreement, as the
case may be (the "Escrow Period"); (ii) execute appropriate escrow instructions
for the Escrow Agent, in customary form and mutually agreeable to the parties,
incorporating the terms hereof and the applicable terms set forth on Schedule
4(b), and otherwise specifically granting to LVEN the right to make a
Disposition Sale (as defined in subsection 4(b)(6) below) of the El Rancho
Property in accordance with the terms of the Stipulation, subject, however, to
the rights of either CSFB or the Alternative Lender with respect to the El
Rancho Property as set forth in the CSFB Approval Agreement or the Alternative
Financing Agreement, as the case may be; and (iii) provide appropriate limited
representations and warranties, in the form provided in Schedule 4(b) attached
hereto and incorporated herein by reference, to any purchaser of the El Rancho
Property if required in order to effect a Disposition Sale. During the Escrow
Period, LVEN will have, and is hereby granted, the exclusive right to make a
Disposition Sale of the El Rancho Property, subject, however, to the rights of
either CSFB or the Alternative Lender with respect to the El Rancho Property as
set forth
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in the CSFB Approval Agreement or the Alternative Financing Agreement, as the
case may be, and the rights of ITB under subsection 4(b)(4) below, upon the
following terms:
(1) ITB will continue to be responsible for
all operating costs incurred in the ordinary course of business (including
existing interest and other financing costs), but expressly excluding all
improvements or other capital expenditures associated with its ownership of the
El Rancho Property ("Carrying Costs"), during the one hundred twenty (120) day
period immediately following the Mailing Date (the "LVEN Exclusive Marketing
Period"), plus the Carrying Costs during an additional period of up to sixty
(60) days following the end of the LVEN Exclusive Marketing Period in the event
the LVEN Effective Date has not occurred (the "Extension Period"). After the
expiration of the LVEN Exclusive Marketing Period and the Extension Period, if
any, and through the remainder of the Escrow Period, LVEN shall pay ITB on or
before the fifth day of each consecutive calendar month, in advance, 50% of the
Carrying Costs for such calendar month; provided that if LVEN fails timely to
pay its share of the Carrying Costs for any month, the Escrow and the Escrow
Period shall immediately and automatically terminate. If the LVEN Exclusive
Marketing period terminates on other than the first day of a calendar month,
LVEN shall also pay ITB a pro rata portion of its share of Carrying Costs,
determined by the Per Diem Rate (as hereinafter defined), for the period from
and including the first calendar day following the termination of the LVEN
Exclusive Marketing Period and the Extension Period, if any, through the end of
that calendar month, such payment to be made on the first calendar day following
termination of the LVEN Exclusive Marketing Period and the Extension Period, if
any. LVEN's payment of its share of the Carrying Costs shall be in cash (US
dollars) by wire transfer of immediately available funds pursuant to written
wire transfer instructions given by ITB to LVEN from time to time and received
by LVEN at least two (2) business days prior to the date a payment is due. The
parties
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agree that the Carrying Costs, on a per diem basis, are Three Thousand One
Hundred and Sixty-One Dollars ($3,161.00) (the "Per Diem Rate"). Notwithstanding
the foregoing, the parties agree that nothing contained in this Stipulation,
including, without limitation, any agreement by LVEN to pay all or any portion
of the Carrying Costs, shall abrogate, terminate or modify, in any respect,
ITB's obligation to make all payments to CSFB as and when required under the
CSFB Loan Agreement.
(2) LVEN shall provide the Escrow Agent and
ITB with prior written notice of a Disposition Sale no less than five (5)
business days prior to the proposed closing date for such Disposition Sale or
such longer period as may be required by the Escrow Agent. LVEN shall deliver to
ITB and the Escrow Agent, within three (3) business days of the execution
thereof, any agreement (including any letter of intent) or amendment thereto
entered into by or on behalf of LVEN with respect to a Disposition Sale. LVEN
shall immediately provide ITB with copies of all notices given to or received by
or on behalf of LVEN with respect to any Disposition Sale.
(3) Prior to the expiration of the Escrow
Period, the Escrow Agent shall have the authority and the obligation to transfer
title to the El Rancho Property to any person or entity (including LVEN and its
subsidiaries, affiliates or other designee) designated in writing to the Escrow
Agent and ITB by LVEN, subject, however, to the rights of either CSFB or the
Alternative Lender with respect to the El Rancho Property as set forth in the
CSFB Approval Agreement or the Alternative Financing Agreement, as the case may
be, upon (i) the closing of a Disposition Sale (the "LVEN Closing"), (ii) the
immediate payment by LVEN or the purchaser upon the LVEN Closing of (A) $44.2
million in immediately available funds, which shall be paid directly by the
purchaser to either CSFB or the Alternative Lender, as the case may be, to
satisfy any and all mortgages of such parties on the El Rancho Property (the "El
Rancho Mortgage"), if required
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under either the CSFB Approval Agreement or the Alternative Financing Agreement,
as the case may be, and (B) an amount to ITB, paid in immediately available
funds, equal to the customary transaction costs, if any, incurred by ITB to
effect a Disposition Sale and the Carrying Costs incurred by ITB (less those
Carrying Costs actually received by ITB from LVEN during that period) during the
period from the end of the LVEN Exclusive Marketing Period and the Extension
Period, if any, through the date of the LVEN Closing and (iii) if the LVEN
Closing occurs within the LVEN Exclusive Marketing Period, then LVEN shall be
entitled to an offset against the payments under clause (ii) above equal to (A)
the Per Diem Rate, multiplied by (B) the number of days remaining in the LVEN
Exclusive Marketing Period following the date of the LVEN Closing. All payments
to ITB, CSFB or the Alternative Lender shall be in immediately available funds
by wire transfer pursuant to wire instructions given by ITB, CSFB or the
Alternative Lender, respectively. Any obligation of ITB to pay Carrying Costs
shall immediately cease upon the closing of a Disposition Sale.
(4) Following the expiration of the LVEN
Exclusive Marketing Period, ITB shall have the right to commence marketing
and/or negotiations for a sale or refinancing of the El Rancho Property by ITB
pursuant to subsection 4(b)(5) below or subsection 4(d)(2) below, as applicable,
contingent upon the expiration and termination of the Escrow Period and the
non-occurrence of an LVEN Closing during the Escrow Period.
(5) In the event that an LVEN Closing does
not occur within the LVEN Exclusive Marketing Period, ITB shall have the right
to sell (as defined in subsection 4(d)(3) below) the El Rancho Property prior to
the expiration of the Escrow Period for an amount not less than $56.2 million
(which includes $44.2 million to be paid directly by the purchaser to either
CSFB or the Alternative Lender, if required by the CSFB Approval Agreement or
the Alternative Financing
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Agreement, as the case may be, and $12.0 million to LVEN (out of which $12.0
million to LVEN, LVEN hereby directs that $2.0 million be paid over to NPD));
and all proceeds, in excess of the $44.2 million to be paid to either CSFB or
the Alternative Lender, if required by the CSFB Approval Agreement or the
Alternative Financing Agreement, as the case may be, and the $12.0 million to be
paid to LVEN, shall belong to ITB (subject to payment of such amounts to CSFB
while the CSFB Loan is outstanding); provided that ITB furnishes LVEN with sixty
(60) days prior written notice that ITB is prepared to close a sale of the El
Rancho Property subject only to the expiration of such sixty-day period and the
non-occurrence of an LVEN Closing during such sixty-day period; provided
further, that ITB closes such sale of the El Rancho Property within five (5)
business days following the expiration of such sixty-day notice period. Upon
such sale, the Escrow Period shall be deemed to expire and terminate; and
provided further, that if LVEN withdraws from this Stipulation pursuant to
Section 24 below, then $2.0 million shall be paid to NPD out of any proceeds
received from a sale of the El Rancho Property in excess of $44.2 million.
(6) For purposes of this subsection 4(b), a
"Disposition Sale" shall mean an all cash sale of the El Rancho Property (i)
resulting in net proceeds to CSFB or the Alternative Lender as provided in
subsection 4(b)(3) in immediately available funds, (ii) under commercially
reasonable terms of sale, (iii) with no indemnities from or post-closing
liabilities of ITB to the purchaser, other than the limited representations and
warranties set forth on Schedule 4(b) attached hereto, (iv) with a transfer of
all title to the El Rancho Property and all items of personal property located
thereon and owned by ITB and/or its affiliates by ITB to the purchaser pursuant
to the Deed and appropriate bills of sale and/or other instruments of transfer
as to such items of personal property and (v) with all excess sale proceeds
being paid to LVEN.
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(7) LVEN may exercise, only during the last
thirty (30) days of the Escrow Period, the Refinancing Option (as defined in
subsection 4(b)(7)(A)) and thereby extend the period during which LVEN may
effect a Disposition Sale for a period to be determined in accordance with the
provisions set forth in subsection 4(b)(7)(B) below (the "Extended Disposition
Option Period").
(A) For the purposes of this
subsection 4(b)(7), the "Refinancing Option" shall become exercisable by LVEN in
the event LVEN, at its sole expense, obtains for the sole benefit of ITB a loan
from a nationally recognized financial institution (the "El Rancho Lender") on
terms acceptable to LVEN and to ITB, which loan (the "Refinancing Loan") must
(i) be consummated not later than two days prior to the expiration of the Escrow
Period, (ii) be nonrecourse to ITB and, if required by the El Rancho Lender,
secured by a lien on any or all of the assets of ITB and its subsidiaries,
including, without limitation, the El Rancho Property, Freehold or Garden State
(if any of such assets are owned by ITB or its subsidiaries at the time of the
closing of the Refinancing Loan), provided that any such lien on Freehold or
Garden State shall be subordinate to any existing mortgage thereon, (iii) result
in the payment of $44.2 million in immediately available funds to either CSFB or
the Alternative Lender, as the case may be, (iv) result in the immediate and
unconditional release of the entire El Rancho Mortgage by CSFB or the
Alternative Lender, as the case may be, and (v) contain such other commercially
reasonable terms and conditions as are deemed necessary or desirable by either
ITB or LVEN. LVEN shall pay all costs and expenses incurred by LVEN and ITB, or
otherwise required to be paid by the borrower of such Refinancing Loan, with
respect to such Refinancing Loan.
(B) Upon closing of such Refinancing
Loan, LVEN shall have the right to effect a Disposition Sale (i) for a period
ending on the earlier of (y) 365 days from
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the expiration of the Escrow Period or (z) the date that is the midpoint of the
term of the Refinancing Loan and (ii) which results in the immediate payment
upon closing, net of all customary transaction costs incurred by ITB, of $44.2
million in immediately available funds to ITB.
(C) During the Extended Disposition
Option Period, LVEN shall be solely responsible for all Carrying Costs and, as a
precondition to ITB's acceptance of any Refinancing Loan from the El Rancho
Lender, LVEN shall deposit in an escrow account, on terms approved by LVEN and
ITB, an amount equal to the aggregate Carrying Costs for the term of the
Refinancing Loan.
(c) As presently contemplated by ITB, pursuant to the
CSFB Approval Agreement, if executed by ITB and CSFB, CSFB may have certain
rights to acquire the El Rancho Property on the terms set forth therein, which
rights become exercisable on the earlier of (i) the expiration of the Escrow
Period, without reference to any extension period, or (ii) the date on which a
voluntary or involuntary bankruptcy action is commenced with respect to ITB
and/or any of its subsidiaries. Accordingly, if the CSFB Approval Agreement is
executed by ITB and CSFB, subject to the rights of LVEN pursuant to subsection
4(b)(7), all of the documents delivered into the Escrow (the "Escrow Documents")
shall be held by the Escrow Agent for the joint benefit of LVEN and CSFB as
follows: (A) unless and until the date on which a voluntary or involuntary
bankruptcy action is commenced with respect to ITB and/or any of its
subsidiaries, throughout the Escrow Period (without reference to any extension
thereof), the Escrowed Documents shall be held for the benefit of LVEN in
accordance with the terms of this Stipulation, (B) from and after the date on
which a voluntary or involuntary bankruptcy action is commenced with respect to
ITB and/or any of its subsidiaries, whether during or after the Escrow Period
(without reference to any extension thereof), the Escrowed Documents shall be
held for the benefit of CSFB in accordance with the terms of the CSFB Approval
Agreement, and (C) following the expiration of the Escrow Period (without
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reference to any extension thereof), the Escrowed Documents shall be held for
the benefit of CSFB in accordance with the terms of the CSFB Approval Agreement.
Accordingly, if the CSFB Approval Agreement is executed by ITB and CSFB, the
Escrow Agent and the escrow instructions relating to the Escrow shall be subject
to CSFB's reasonable approval.
(d) If an LVEN Closing does not occur within the
Escrow Period or the Extended Disposition Option Period:
(1) ITB presently contemplates that, if the
CSFB Approval Agreement is executed, the Escrowed Documents shall remain in the
Escrow for the benefit of CSFB as set forth in subsection 4(c) above.
(2) ITB presently contemplates that, if the
CSFB Approval Agreement is executed, and if at any time following the expiration
or termination of the Period, ITB sells (as defined in subsection 4(d)(3) below)
or refinances the El Rancho Property for an amount in excess of the aggregate of
$44.2 million to be paid directly by the purchaser or lender, as applicable, to
CSFB plus an amount to ITB equal to the Carrying Costs incurred by ITB (less
amounts actually received by ITB from LVEN during the period) from the end of
the LVEN Exclusive Marketing Period and the Extension Period, if any, through
the termination of the Escrow Period, plus the customary transaction costs
incurred by ITB in such sale (the "Threshold Amount"), then LVEN shall receive
from such cash proceeds in excess of the Threshold Amount up to the next $12.0
million of cash sale proceeds over and above the Threshold Amount (the "LVEN
Payment"), out of which LVEN Payment LVEN hereby directs that the first $2.0
million be paid over to NPD; provided however, that if LVEN withdraws from the
Stipulation pursuant to Section 24 below, then the first $2.0 million of cash
proceeds in excess of the Threshold Amount shall be paid to NPD (the "NPD
Payment"). ITB shall be entitled to all proceeds in excess of the $44.2 million
payment to
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CSFB and the LVEN Payment or NPD Payment, as the case may be (subject to payment
of such excess amounts to CSFB while the CSFB Loan is outstanding).
(3) For purposes of subsections 4(b)(5) and
4(d)(2), a "sale" of the El Rancho Property shall be defined as an all-cash
asset transaction, which shall include for this purpose, but shall not be
limited to, a transfer by refinance, the sale of shares of stock in the entity
holding title to the El Rancho Property, or the merger or consolidation of the
entity holding title to the El Rancho Property with or into another entity. In
the event it is proposed that record or beneficial ownership of the El Rancho
Property be transferred in any other manner, ITB, prior to any such transaction,
shall obtain the written consent of LVEN, which consent will not be unreasonably
withheld and which will be conditioned upon such alternative transaction
maintaining LVEN's rights as provided herein or providing LVEN with economic
benefits equivalent to those provided herein; provided, however, that if the
CSFB Approval Agreement is executed by CSFB and ITB as presently contemplated,
no notice to, or consent by, LVEN shall be required with respect to an
acquisition of the El Rancho Property by CSFB or its designee in accordance with
the terms of the CSFB Approval Agreement or pursuant to a foreclosure or deed in
lieu of foreclosure following any subsequent default under the CSFB Loan
Agreement or the CSFB Approval Agreement.
(e) LVEN and Casino-Co shall (i) return to
ITB for immediate cancellation the 2,093,868 shares (the "LVEN Shares") of ITB
common stock which were previously issued to Casino-Co in consideration for the
prior cancellation of that certain $10.5 million promissory note from ITB to
LVEN (the "LVEN Note"), plus accrued interest on the LVEN Note, which LVEN Note
shall remain cancelled, and (ii) shall immediately and automatically release any
and all of their interests in and to the NPD Shares. At the time of the return
of the LVEN Shares to ITB, LVEN and Casino-Co shall simultaneously represent,
warrant and covenant to ITB, in a form reasonably
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satisfactory to ITB (with respect to clause (iv) below, the representation,
warranty and covenant shall also be made in writing to NPD, in a form reasonably
satisfactory to NPD), as follows (collectively, the "LVEN Shares Warranties"):
(i) LVEN and/or Casino-Co is the sole record and beneficial owner of the LVEN
Shares, and the LVEN Shares are free and clear of any and all claims, liens,
encumbrances, charges, pledges, assessments or interests of third parties of any
kind or nature whatsoever; (ii) LVEN and Casino-Co have full power, right and
authority to transfer the LVEN Shares to ITB, without restriction, and that upon
the transfer ITB will acquire good and valid title to the LVEN Shares free and
clear of any and all claims, liens, encumbrances, charges, pledges, assessments
or interests of third parties of any kind or nature whatsoever, so that after
the transfer of the LVEN Shares, ITB may freely exercise all rights of ownership
in and with respect to the LVEN Shares; (iii) there are no agreements,
arrangements or understandings affecting the transfer, ownership or voting of
the LVEN Shares; and (iv) LVEN and Casino-Co have released any and all of their
interests in and to the NPD Shares. The proxy from LVEN and Casino-Co to
DeSantis to vote all or any portion of the LVEN Shares shall be terminated
immediately and automatically and shall be of no further force or effect.
Subsequent to the Signing Date, LVEN and Casino-Co shall not transfer any
interest in the LVEN Shares except as necessary to consummate the Settlement,
and LVEN and Casino-Co shall be required to vote the LVEN Shares in favor of any
resolution approved unanimously by the ITB Board.
(f) With the sole exception of this
Stipulation, and the further agreements specified herein and contemplated
hereby, any and all employment agreements, consulting agreements, or other
agreements relating to any ITB securities, options, warrants, loan agreements or
notes, entertainment related agreements, and all other agreements or
arrangements of any kind or nature whatsoever between or among ITB or any of its
subsidiaries, on the one hand, and any of
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the LVEN Parties, on the other hand, shall be deemed terminated immediately and
automatically, and shall be of no further force and effect.
(g) Any and all ITB shares, warrants to
acquire ITB securities, pledges relating to ITB securities, options to acquire
ITB securities, and any and all other ITB securities held by any of the LVEN
Parties shall be deemed terminated immediately and automatically, and shall be
of no further force or effect.
5. Upon the NPD Effective Date, the parties agree that
immediately upon providing the NPD Share Warranties (as hereinafter defined) and
upon the dismissal of the Litigations with prejudice (in the event the CSFB
Approval Agreement is executed by ITB and CSFB, otherwise upon the dismissal of
the Actions and the Rekulak Action with prejudice), ITB shall purchase from NPD,
and NPD shall sell to ITB, for $4.6 million in immediately available funds and
the assumption of the NPD Note in accordance with subsection 6(a) below, the
2,904,016 shares of ITB common stock which NPD purchased (the "NPD Shares") for
an aggregate purchase price of $11,616,064 (half of which was paid in cash at
closing) from Brennan on January 15, 1997 (the "NPD Repurchase"). The price ITB
is to pay for the NPD Shares represents an approximately $2.2 million discount
from the original purchase price paid by NPD, plus interest paid thereon, in
consideration of the settlement of the allegations made against NPD in the
Actions. Following the NPD Repurchase, the NPD Shares shall become treasury
shares of ITB and, if the CSFB Approval Agreement is executed by ITB and CSFB,
such shares shall thereafter be held and dealt with in accordance with the terms
of the CSFB Approval Agreement. Prior to the consummation of the NPD Repurchase
and as a precondition to the NPD Repurchase, NPD, DeSantis and Coelho shall
severally, not jointly, represent, warrant and covenant to ITB, in a form
reasonably satisfactory to ITB, as follows (collectively, the "NPD Share
Warranties"): Except for (i) the pledge of the NPD
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Shares as security for the NPD Note and the lien created thereby (the "NPD Share
Pledge"), which NPD Note and obligations will be assumed by ITB immediately upon
consummation of the NPD Repurchase in accordance with the terms of, and
following the satisfaction of the conditions with respect thereto set forth in,
the CSFB Approval Agreement if executed by ITB and CSFB, and (ii) compliance
with any restrictions imposed by any New Jersey regulatory authorities, (1) NPD
is the sole beneficial and record owner of the NPD Shares, and the NPD Shares
are free and clear of any and all other claims, liens, encumbrances, charges,
pledges, assessments, options to purchase or other interests of third parties of
any kind or nature whatsoever (collectively, "Encumbrances"); (2) NPD has full
corporate power, right and authority to sell the NPD Shares to ITB, without
further restriction, and at the closing of the NPD Repurchase, ITB will acquire
good and valid title to the NPD Shares free and clear of any Encumbrances; (3)
there are no other agreements, arrangements or understandings affecting the
transfer, ownership or voting of the NPD Shares; and (4) the NPD Shares are not
subject to any Encumbrances by AutoLend, DeSantis, Casino-Co or any of their
affiliates. As between DeSantis and Coelho, any liability of DeSantis and Coelho
with respect to any misrepresentation of the above representations and
warranties shall be limited to their proportionate ownership of NPD (as of the
Signing Date, DeSantis owned 78% and Coelho owned 22% of NPD). Subsequent to the
Signing Date, NPD shall not transfer any interest in the NPD Shares except as
necessary to consummate the Settlement and NPD shall be required to vote the NPD
Shares in favor of any resolution approved unanimously by the ITB Board.
Notwithstanding anything in this Stipulation to the contrary, the NPD Repurchase
shall be conditioned upon the prior or simultaneous assumption by ITB of any and
all obligations and rights of NPD pursuant to the NPD Note (as provided in
subsection 6(a) below). The NPD Share Warranties shall survive the NPD
Repurchase.
6. Simultaneous with the NPD Repurchase, the parties agree as
follows:
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(a) In accordance with the terms of, and following
the satisfaction of the conditions with respect thereto set forth in, the CSFB
Approval Agreement if executed by ITB and CSFB, ITB shall immediately assume any
and all obligations and rights of NPD pursuant to the NPD Note (which has been
subsequently assigned to the Bankruptcy Trustee), upon which NPD shall be deemed
fully and finally released and discharged from any and all obligations
thereunder. Prior to ITB's assumption of any and all obligations and rights of
NPD pursuant to the NPD Note and as a precondition to such assumption, NPD shall
represent, warrant and covenant to ITB as follows (collectively, the "NPD Note
Warranties"): (1) NPD is the sole maker of the NPD Note, and the NPD Note is
free and clear of any and all claims, liens, encumbrances, charges, assessments
and interests of third parties of any kind or nature whatsoever (other than the
NPD Share Pledge); and (2) as to the then outstanding principal balance of the
NPD Note, the amount of all accrued and unpaid interest thereon and the amount
of any other sums then payable in connection therewith. Until ITB's assumption
of the NPD Note, NPD shall continue to pay interest in accordance with the terms
of the NPD Note.
(b) Cole Schotz shall return to AutoLend the
$2.0 million pledged by AutoLend to Brennan to secure the NPD Note, plus all
interest actually accrued thereon in the account(s) in which the same has been
maintained (the "$2 Million Cash Collateral").
(c) The Revolving Line of Credit shall be deemed
terminated immediately and automatically, and shall be of no further force or
effect.
(d) Upon the execution of this Stipulation, each of
the Director Defendants shall deliver duly executed unconditional written
resignations as directors, officers, employees and/or consultants of ITB to
Young, Conaway, Stargatt & Taylor, to be held in escrow by such firm, which
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resignations shall become effective and be released immediately by such firm
upon the completion of the NPD Repurchase, unless required to be released sooner
pursuant to Section 13 below.
(e) All agreements between or among D&C Gaming and
ITB or any of its subsidiaries shall be deemed terminated immediately and
automatically, and shall be of no further force or effect.
(f) With the sole exception of this Stipulation, and
the further agreements specified herein and contemplated hereby, any and all
employment agreements, consulting agreements, or other agreements relating to
any ITB securities, options, warrants, loan agreements or notes, entertainment
related agreements, and all other agreements or arrangements of any kind or
nature whatsoever between or among ITB and any of its subsidiaries, on the one
hand, and any of NPD and/or the Director Defendants, on the other hand, shall be
deemed terminated immediately and automatically, and shall be of no further
force and effect. The Director Defendants shall cause the actions listed on
Schedule 6(f) attached hereto and incorporated herein to occur by the dates
specified therein.
(g) Any and all ITB shares, warrants to acquire ITB
securities, pledges relating to ITB securities, options to acquire ITB
securities, and any and all other ITB securities held by any of the Director
Defendants and/or NPD shall be deemed terminated immediately and automatically,
and shall be of no further force or effect, with the sole exceptions of the NPD
Share Pledge and the shares of ITB common stock purchased by the Director
Defendants in the open market as set forth below:
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Name Number of ITB Shares
--------------- --------------------
Michael Abraham 5,000
Kenneth Scholl 1,000
7. Until the NPD Effective Date, the business and affairs of
ITB shall be operated in the ordinary course of business; provided, however,
that, except upon the prior written approval of Coelho and Quigley, ITB and its
subsidiaries will not approve, amend or terminate any agreement, or incur any
additional actual or contingent liabilities, expenses or obligations in excess
of $10,000. Until the NPD Repurchase, ITB and its subsidiaries shall not take
any of the following actions, other than as provided for in this Stipulation or
in a further agreement specified herein, without the prior unanimous approval of
the ITB Board, and in all events subject to the provisions of, and consents
required under, the CSFB Loan Agreement: (a) merge ITB or any ITB subsidiary
with any other corporation (excluding any merger of ITB or any subsidiary with
any other subsidiary of ITB); (b) purchase or sell assets of ITB or any
subsidiary for proceeds of $50,000 or more singly or in the aggregate; (c)
except for issuance of the Class B Preferred Stock (as defined below) (if such
class of stock is authorized and issued pursuant to the CSFB Approval Agreement,
if executed by ITB and CSFB), agree to issue, issue or register any capital
stock (common or preferred), options, warrants or any other securities of ITB or
its subsidiaries; (d) approve, terminate or amend any employment, consulting or
similar agreements with officers, directors, consultants or key employees of ITB
or any subsidiary; (e) cause ITB or any subsidiary to borrow $50,000 or more,
singly or in the aggregate; (f) except for the director to be elected by the
holder of the Class B Preferred Stock pursuant to the CSFB Approval Agreement,
if executed by ITB and CSFB, fill any vacancy on the ITB Board; (g) undertake
any actions relating to the holding of any meeting of ITB stockholders; (h)
declare or pay any dividend or otherwise make any distribution to ITB's
stockholders; (i)
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consummate any tender offer, restructuring, recapitalization or reorganization
involving ITB or any of its subsidiaries; or (j) amend ITB's by-laws. Until the
NPD Repurchase and, except as expressly provided in this Stipulation, without
the prior written approval of Coelho and Quigley, no payments shall be made to
any Directors other than those set forth on the Schedule of Director Payments
dated April 20, 1998, which Schedule has been approved by Quigley, Leo, Murray,
Dees and the Director Defendants, and has been filed with ITB. Zappala agrees to
pay to ITB immediately out of any payment Zappala may receive from either LVEN
or the purchaser of the El Rancho Property in connection with a Disposition
Sale, the lesser of $200,000 or 20% of any such payment he receives, if and only
to the extent that Zappala receives any such payment directly or indirectly. On
the date this Stipulation has been approved by the ITB Board and continuing
thereafter at the discretion of the ITB Board, ITB shall compensate Murray for
services to ITB on the terms set forth in the resolution adopted by the ITB
Board on December 20, 1996. Without the prior written approval of Quigley, Leo,
Murray, Dees and the Director Defendants, no party to this Stipulation shall
make any public statement or filing regarding the Settlement other than in
connection with securing the approvals contemplated by Sections 2 and 3 above.
8. The parties understand that AutoLend is prepared to make an
immediate application to the New Mexico Bankruptcy Court to secure the AutoLend
Bankruptcy Approval (the "AutoLend Application"). The parties understand that
the participants in the Brennan Bankruptcy Action are prepared to make an
immediate application to the New Jersey Bankruptcy Court to secure the Brennan
Bankruptcy Approval (the "Brennan Trustee Application"). In the event that the
AutoLend Application and the Brennan Trustee Application are not filed with the
respective Bankruptcy Courts within five (5) business days of the date the
Stipulation is filed with the Delaware Court, in a form reasonably acceptable to
the Plaintiffs and the Director Defendants, the Plaintiffs
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and the Director Defendants shall have the right to terminate this Stipulation
upon written notice to all parties hereto and to CSFB; subject, however, to the
provisions of the last sentence of Section 24 below.
9. The parties agree that, upon the NPD Effective Date, the
Director Defendants shall be indemnified for all counsel fees, costs and
disbursements incurred by them in the Derivative Action, the Section 225 Action,
the Brennan Bankruptcy Action, the Green Action, the NPD Action and the Harris
Action and/or incurred by ITB or its affiliates for services performed by
outside corporate, litigation or regulatory counsel, including Cozen and
O'Connor; Kozlov, Seaton, Romanini, Brooks & Greenberg; Young, Conaway, Stargatt
& Taylor; Ballard, Spahr, Andrews & Ingersoll; Morris, Nichols, Arsht & Tunnell;
Ashby & Geddes; and Tompkins, McGuire & Wachenfeld; and that all such counsel
fees, costs and disbursements incurred by the Director Defendants shall be paid
by ITB for the benefit of the Director Defendants. Subject to the occurrence of
the NPD Effective Date, the parties agree that no claim shall be made against
any of the Director Defendants, ITB or their respective counsel to repay, remit
or reimburse ITB or any other party for counsel fees, costs or disbursements
incurred in the Derivative Action, the Section 225 Action, the Brennan
Bankruptcy Action, the Green Action, the NPD Action, the Harris Action, any
regulatory matter or proceeding, or in the representation of ITB or its
affiliates.
10. The parties agree that, upon the NPD Effective Date,
Plaintiffs shall be indemnified for all counsel fees, costs and disbursements
incurred by them in the Quigley Action and Counterclaims therein, the Section
225 Action, the NPD Action and the Harris Action, including fees of their
outside litigation counsel including Richards, Layton & Finger; Morris, James,
Hitchens & Williams; Sonnenblick, Parker & Selvers, P.C.; Potter, Anderson &
Corroon; and Riordan & McKinzie; and that all such counsel fees, costs and
disbursements incurred by the Plaintiffs shall be
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paid by ITB for the benefit of the Plaintiffs. The parties agree that Robert W.
Green, the plaintiff in the Green Action, shall be reimbursed by ITB for all
counsel fees, costs and disbursements incurred by Green in connection with the
Green Action. The parties also agree that, if the CSFB Approval Agreement is
executed by ITB and CSFB, on the CSFB Effective Date and thereafter in
accordance with the CSFB Approval Agreement, CSFB shall be reimbursed by ITB for
all counsel fees, costs and disbursements incurred by CSFB pursuant to the CSFB
Approval Agreement. On or after the date this Stipulation is approved by the ITB
Board, ITB shall make prompt advances to the Plaintiffs for all counsel fees,
costs and disbursements incurred by them in the Quigley Action and the
Counterclaims therein, the Section 225 Action, the NPD Action and the Harris
Action.
11. The parties agree that: (i) for a period of not less than
six (6) years from the NPD Effective Date, ITB shall maintain and continue in
place directors and officers liability insurance coverage with respect to each
individual who is an ITB director as of the Signing Date in an amount not less
than the current aggregate limits of liability of the policies in place on the
date of this Stipulation, provided that the cost of such coverage does not
exceed 125% of the 1997 premium paid by ITB; and (ii) ITB will pursue the
recovery and reimbursement of fees, costs and disbursements to the extent
available under existing or renewal coverages for the benefit of the insureds
under such policies.
12. ITB shall indemnify each individual who is an ITB director
as of the Signing Date to the fullest extent permitted by ITB's by-laws and
certificate of incorporation as they exist on the date of this Stipulation.
13. (a) Immediately prior to the Mailing Date, all members of
the ITB Board shall execute and deliver to ITB's general counsel a written
consent, which shall be effective on the Mailing Date, amending Article III,
Section 2 of ITB's by-laws to reduce the authorized number of
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ITB directors to six. On the Mailing Date, each of Abraham, Scholl, Dees, and
Leo shall deliver to the general counsel of ITB a letter confirming such
individual's unconditional and immediate resignation as a director, officer and
consultant of ITB and all of its subsidiaries. In the event any remaining
director of ITB shall resign, die or become disabled after the Mailing Date and
prior to the date of the NPD Repurchase, ITB and the continuing directors agree
to take all actions as may be required to fill immediately the vacancy on the
ITB Board by electing immediately an individual designated by the Plaintiffs in
the event Murray or Quigley are the departing directors, or designated by the
Director Defendants in the event DeSantis, Coelho or Zappala are the departing
directors, provided that the continuing directors are reasonably satisfied with
the qualifications of any such designee and that the election of the designated
individual to the ITB Board will not violate, conflict with or result in any
material limitation on the ownership or operation of the business or assets of
ITB or any of its subsidiaries under any statute, law, rule, regulation,
ordinance or any final judgment, decree or order of any governmental agency. In
the event of a departure of a remaining director, the continuing directors agree
to take no actions until a new director is elected in accordance with this
Section 13(a).
(b) Subject to the approval and execution of the CSFB
Approval Agreement by ITB and CSFB, as of the CSFB Effective Date, the ITB Board
shall authorize a new class of preferred stock (the "Class B Preferred Stock")
entitling the holder thereof to elect, as a separate class by written consent or
vote at any meeting of the ITB stockholders, a director whose consent will be
required solely for any "Major Decision" by the ITB Board, as will be defined in
the CSFB Approval Agreement, if executed by ITB and CSFB. Shares of the Class B
Preferred Stock shall be issued, solely upon payment of the par value thereof,
to an independent director selected from a national firm that provides
independent directors. The Class B Preferred Stock shall
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be entitled to a dividend in an amount equal to the annual fee of the
independent director. The Class B Preferred Stock shall have no rights other
than with respect to any Major Decision or the limited dividend right. The Class
B Preferred Stock shall expire automatically 367 days after the repayment in
full of ITB's obligations under the CSFB Loan Agreement.
RELEASE OF CLAIMS
14. As of the LVEN Effective Date as to all Settled Claims
directly by or against any of the LVEN Parties and their Parties' Affiliates (as
defined below), and as of the NPD Effective Date as to all Settled Claims
directly by or against any of the Plaintiffs or Director Defendants and their
Parties' Affiliates, and as of the CSFB Effective Date as to all Settled Claims
directly by or against CSFB which refer to, or actually or potentially relate to
CSFB (but only if the CSFB Approval Agreement is executed by ITB and CSFB), all
claims, rights, demands, suits, liabilities, matters, issues, actions, causes of
action, damages, losses, obligations and matters of any kind or nature
whatsoever, asserted or unasserted, known or unknown, contingent or absolute,
suspected or unsuspected, disclosed or undisclosed, hidden or concealed, matured
or unmatured, material or immaterial, which have been, could have been, or in
the future can or might be asserted in the Actions or in any court, tribunal or
proceeding (including, but not limited to, any claims arising under federal or
state law relating to any fraud, breach of any duty or obligation, or otherwise)
(collectively, "Claims") by any parties to the Actions, or ITB (including its
predecessors, successors, assigns and any other person claiming by, through, in
the right of or on behalf of ITB whether by subrogation, assignment or
otherwise), against any or all of the parties to the Actions or CSFB (if the
CSFB Approval Agreement is executed by ITB and CSFB), their respective parent
entities, affiliates, associates or subsidiaries, and each of their respective
present or former officers, directors, stockholders, agents, employees,
attorneys, representatives, advisors, investment advisors, investment
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bankers, commercial bankers, trustees, general or limited partners, joint
ventures, heirs, executors, personal representatives, estates, administrators,
successors and assigns (collectively, the "Parties' Affiliates"), whether
individually, representatively, or derivatively, or in any other capacity, which
have arisen, could have arisen, arise now, or hereafter arise out of or relate
in any manner whatsoever, directly or indirectly, to the allegations, facts,
events, transactions, occurrences, statements, representations,
misrepresentations, omissions, or any other matter, thing or cause whatsoever,
or any series thereof, involved, set forth, or otherwise referred or related,
directly or indirectly, to: (i) the Litigations; (ii) the Settlement of the
Actions; (iii) the Plaintiffs' or Director Defendants' conduct as officers,
directors, consultants, stockholders and/or employees of ITB; (iv) the
Plaintiffs' or Defendants' ownership of ITB stock; (v) the Plaintiffs' or
Defendants' contractual relationships with ITB; (vi) any other matter involving
the business and affairs of ITB; (vii) as to CSFB only (if the CSFB Approval
Agreement is executed by ITB and CSFB), the CSFB Loan; and (viii) this
Stipulation, the Settlement and the CSFB Approval Agreement (if the CSFB
Approval Agreement is executed by ITB and CSFB) and the respective transactions,
indemnifications, and payments contemplated thereby (collectively, the "Settled
Claims"), shall be fully, finally and forever compromised, extinguished,
dismissed, discharged and released with prejudice, subject only to compliance
with the foregoing terms and conditions as set forth herein; provided, however,
that (A) the Settled Claims shall not include any claim that may exist or in the
future be asserted against Standard Capital Group, Inc. or any of its employees,
(B) the Settled Claims shall not include any claim that may exist or in the
future be asserted against CSFB or any of its employees unless the CSFB Approval
Agreement is executed by ITB and CSFB, and (C) the Settled Claims shall not
include any claim that may exist or in the future be asserted in connection with
the Greenwood
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Transaction by, against or among ITB, any of ITB's subsidiaries, Greenwood
Racing, Inc., Greenwood or any of their respective affiliates.
15. Upon the execution of this Stipulation, all parties to
this Stipulation (other than Brennan, who shall execute and deliver such release
upon receipt of the Brennan Bankruptcy Approval) shall deliver duly executed,
reciprocal releases, substantially in the form attached hereto as Exhibit A, to
Young, Conaway, Stargatt & Taylor and Richards, Layton & Finger to be held
jointly in escrow by such firms, which releases shall become effective and be
released jointly by such counsel as to the LVEN Parties on the LVEN Effective
Date and as to all other Parties upon the NPD Repurchase. Upon the NPD
Repurchase, all parties to this Stipulation (and AutoLend upon receipt of the
AutoLend Bankruptcy Approval) shall deliver a duly executed release to Cole
Schotz, in a form reasonably satisfactory to Cole Schotz, relating to that
firm's release of the $2 Million Cash Collateral to AutoLend. If the CSFB
Approval Agreement is executed by ITB and CSFB, all parties to this Stipulation
(other than Brennan, who shall execute and deliver such release upon receipt of
the Brennan Bankruptcy Approval) shall deliver duly executed releases,
substantially in the form attached hereto as Exhibit A, to CSFB, which releases
shall become effective immediately upon such delivery to CSFB.
16. The releases contemplated by Sections 14 and 15 of this
Stipulation extend to the Settled Claims that the parties hereto and ITB's
stockholders may not know or suspect to exist at the time of the release, which
if known, might have affected the decision to enter into this Stipulation. All
parties hereto and ITB's stockholders shall be deemed to waive any and all
provisions, rights and benefits conferred by any law of the United States,
including any state or territory thereof, or principle of common law, which
governs or limits a person's release of unknown claims. All parties hereto
acknowledge that they or ITB's stockholders may discover facts in
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addition to or different to those that they now know or believe to be true with
respect to the subject matters of this Stipulation, but that it is their
intention to fully, finally and forever settle and release any and all Settled
Claims known or unknown, suspected or unsuspected, which now exist, or
heretofore existed, or may hereafter exist, and without regard to the subsequent
discovery or existence of such additional or different facts.
17. On the LVEN Effective Date as to all Settled Claims
directly by or against any of the LVEN Parties and all such Parties' Affiliates,
and on the NPD Effective Date as to all Settled Claims directly by or against
any of the Plaintiffs or Director Defendants and all such Parties' Affiliates,
the respective Settled Claims shall be completely and finally compromised,
settled, released, discharged, and dismissed with prejudice upon and subject to
the terms and conditions of this Stipulation, and the Quigley Action, the Green
Action and the NPD Action, or respective portions thereof, shall be dismissed
with prejudice on the merits and without costs to any party (except as may be
set forth herein), and all claims therein shall be completely and finally
compromised, settled, released and discharged. If the CSFB Approval Agreement is
executed by ITB and CSFB, subject to the last sentence of Section 14, then on
the CSFB Effective Date as to all Settled Claims referring to, or actually or
potentially relating to, CSFB, such Settled Claims shall be deemed completely
and finally compromised, settled, released, discharged and dismissed with
prejudice.
SUBMISSION AND APPLICATION TO THE COURT
18. As soon as practicable after this Stipulation has been
executed, the parties shall jointly move the Delaware Court for approval of the
Settlement as provided herein, and for entry by the Court of the scheduling
order in the form attached hereto as Exhibit B (the "Scheduling Order").
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ORDER AND FINAL JUDGMENT
19. If this Stipulation and the Settlement contemplated herein
are approved by the Delaware Court, at or following the Settlement Hearing, the
parties will jointly request the Delaware Court to enter an Order and Final
Judgment in the form attached hereto as Exhibit D (the "Judgment"). Immediately
upon the entry of the Judgment by the Delaware Court, the parties shall
undertake all necessary and desirable actions to secure the immediate dismissals
of the Rekulak Action, the Green Action, the NPD Action and the Harris Action on
the grounds that such actions are barred and the claims therein are released
under the Judgment.
FINALITY OF SETTLEMENT
20. The approval by the Delaware Court of the Settlement shall
be considered final for purposes of this Stipulation upon the later to occur of
the following: (i) the expiration of the time for the filing or noticing of any
appeal or motion for reargument from the Delaware Court's Judgment approving the
Settlement; (ii) the date of final affirmance on any appeal or reargument; (iii)
the expiration of time for petitions for writs of certiorari and, if certiorari
is granted, the date of final affirmance following review pursuant to that
grant; or (iv) the final dismissal of any appeal or proceedings on certiorari.
NOTICE AND SETTLEMENT ADMINISTRATION COSTS
21. Notice of the Settlement and of the hearing for the
consideration of the Settlement by the Delaware Court (the "Settlement
Hearing"), substantially in the form attached hereto as Exhibit C (the
"Notice"), shall be sent to all stockholders of ITB. ITB shall assume the
administrative responsibility of providing the Notice in accordance with the
Scheduling Order, and ITB shall pay all costs and expenses incurred in providing
such Notice to stockholders of ITB. In
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addition, ITB, or its agents, shall use reasonable efforts to provide the Notice
to all beneficial owners of ITB stock by making additional copies of the Notice
available to any record owner of ITB stock who, prior to the Settlement Hearing,
requests the same for purposes of distribution to the beneficial stockholders of
ITB. The parties hereto (other than ITB) shall have no responsibility for any
such costs associated with such Notice regardless of whether the Settlement
becomes effective or is consummated. On or before the date of the Settlement
Hearing, counsel for ITB shall file with the Delaware Court an appropriate
affidavit evidencing compliance with this section regarding the preparation and
mailing of the Notice.
22. Except as provided in this Stipulation or the agreements
contemplated herein, the parties hereto shall bear no other expenses, costs,
damages or fees incurred by any party, or any present or former stockholder of
ITB, or by any attorney, expert, advisor, agent or representative of any of the
foregoing persons in connection with any of the Actions.
STIPULATION NOT AN ADMISSION
23. This Stipulation and all negotiations, statements and
proceedings in connection therewith shall not in any event be construed as, or
deemed to be evidence of, an admission or concession on the part of any of the
parties hereto, any present or former stockholder of ITB, or any other person,
of any liability or wrongdoing by them, or any of them, and shall not be offered
or received in evidence in any action or proceeding, or be used in any way in
any action or proceeding as an admission, concession or evidence of any
liability nor wrongdoing of any nature, and shall not be construed as, or deemed
to be evidence of, an admission or concession that the parties hereto, their
counsel, or any present or former stockholder of ITB, or any other person, has
or has not suffered any damage, as a result of the facts described in the
Actions or herein.
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24. Subject to the last sentence of this Section 24, this
Stipulation shall be null and void and of no further force and effect if it is
determined in good faith by all of the parties hereto that one or more of the
approvals required in Section 2 above is unable to be obtained; provided,
however, that (i) if all of the approvals required in Section 2 above are not
received within 180 days from the date of this Stipulation, then any party may
withdraw from this Stipulation upon written notice to all other parties hereto,
(ii) if LVEN (A) in its sole and absolute discretion, determines that the terms
and/or provisions of the CSFB Approval Agreement or the Alternative Financing
Agreement (if either is executed by ITB and either CSFB or the Alternative
Lender, as the case may be) would modify the Underlying Settlement Transaction
(as hereinafter defined) and adversely affect the rights of LVEN to the extent
that if such terms and/or conditions had been known to LVEN at the time of
execution hereof, LVEN would not have entered into this Stipulation upon the
terms provided herein, or (B) has failed for any reason by the date which is
fifteen (15) days from the date of this Stipulation to enter into an amendment
to the APW Acquisition Agreement in form and substance acceptable to LVEN, then
the LVEN Parties may withdraw from this Stipulation, or (iii) if either the CSFB
Approval Agreement or the Alternative Financing Agreement is not executed within
forty-five (45) days from the date of this Stipulation, then the LVEN Parties
may withdraw from this Stipulation upon written notice to and received by ITB on
or before the forty-eighth (48th) day following the date of this Stipulation. As
used herein, the term "Underlying Settlement Transaction" shall mean and refer
to the entirety of the agreements, procedures, mechanisms, valuations, and other
provisions, rights, obligations, waivers, releases and remedies negotiated and
bargained for by and between ITB and LVEN in this Stipulation, including without
limitation, those set forth in Section 4 above, determined without regard to any
reference herein to particular terms or provisions of the CSFB Approval
Agreement or any Alternative Financing Agreement or the
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<PAGE>
rights of such parties (all of which references were negotiated by and between
ITB and CSFB without any involvement of or participation by LVEN). In the event
that any party withdraws from this Stipulation under the aforementioned
circumstances (other than pursuant to clauses (i) and (ii) of the first sentence
of this Section 24), or in the event that the Settlement set forth herein is not
finally approved or does not become effective, then (a) this Stipulation shall
not be deemed to prejudice in any way the respective positions of the parties
hereto with respect to the Derivative Action, Green Action, NPD Action and
Brennan Bankruptcy Action, (b) the parties shall be restored to their respective
positions in the Actions existing immediately prior to the execution of this
Stipulation, without prejudice to any then existing or outstanding motions,
briefs, discovery requests or other positions whatsoever (including Corazzi's
pending motion in the Quigley Action to dismiss for lack of personal
jurisdiction), (c) the existence of this Stipulation, its contents, and the
negotiations relating hereto shall not be admissible in evidence or shall be
referred to for any purpose in the Derivative Action, Green Action, NPD Action
and Brennan Bankruptcy Action, or in any other litigation or proceeding, and (d)
this Stipulation shall become null and void and of no force and effect. In the
event that the LVEN Parties withdraw from this Stipulation pursuant to either
clause (i) or (ii) of the first sentence of this Section 24, then (a) this
Stipulation shall not be deemed to prejudice in any way the respective positions
of the parties hereto with respect to the Derivative Action, Green Action, NPD
Action and Brennan Bankruptcy Action as they relate to the LVEN Parties, (b) the
parties shall be restored to their respective positions in the Actions existing
immediately prior to the execution of this Stipulation solely as they relate to
the LVEN Parties, without prejudice to any then existing or outstanding motions,
briefs, discovery requests or other positions whatsoever (including Corazzi's
pending motion in the Quigley Action to dismiss for lack of personal
jurisdiction), (c) the existence of this Stipulation, its contents, and the
negotiations
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<PAGE>
relating hereto shall not be admissible in evidence or shall be referred to for
any purpose in the Derivative Action, Green Action, NPD Action and Brennan
Bankruptcy Action as they relate to the LVEN Parties, or in any other litigation
or proceeding relating to the LVEN Parties, and (d) the provisions of this
Stipulation as they relate to the LVEN Parties shall become null and void and of
no force and effect. If the CSFB Approval Agreement is executed by ITB and CSFB,
then notwithstanding the foregoing or anything else to the contrary contained
herein, the parties expressly acknowledge and agree that upon the CSFB Effective
Date, (a) all agreements set forth in the CSFB Approval Agreement, other than
those which, by their terms, only become effective upon the LVEN Effective Date
or NPD Effective Date, as applicable, and (b) all provisions set forth in this
Stipulation for the benefit of CSFB, including, without limitation, as set forth
in this Section 24 and the applicable provisions of Sections 4(b), 4(c), 4(d),
7, 10, 13(b), 14, 15, 17, 33, 36, 38 and 39 hereof (the agreements and
provisions described in the foregoing clauses (a) and (b) being collectively
referred to herein as the "CSFB Rights"), shall be and remain in full force and
effect and binding upon the parties thereto and hereto, respectively,
irrespective of whether or not (i) any approval required in Section 2 or 3
hereof is ever obtained, and/or (ii) this Stipulation shall become null and void
and of no further force and effect in accordance with any of the terms hereof;
it being further expressly acknowledged and agreed by the parties that all of
the CSFB Rights shall survive any termination or nullification of this
Stipulation in accordance with the terms hereof or otherwise.
25. Subject to the last sentence of Section 24, if applicable,
following the occurrence of the LVEN Effective Date, this Stipulation shall be
null and void and of no further force and effect with respect to all parties
hereto other than the LVEN Parties (the "Remaining Parties") if it is determined
in good faith by all of the Remaining Parties that one or more of the approvals
required in Section 3 above is unable to be obtained; provided, however, that if
the LVEN
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<PAGE>
Effective Date has occurred and all of the approvals required in Section 3 above
are not received within 180 days from the date of this Stipulation, then any of
the Remaining Parties may withdraw from this Stipulation upon written notice to
all other parties hereto. In the event that any Remaining Party withdraws from
this Stipulation, (i) this Stipulation shall not be deemed to prejudice in any
way the respective positions of the Remaining Parties with respect to the
Derivative Action, Green Action, NPD Action and Brennan Bankruptcy Action which
have not become Settled Claims upon the occurrence of the LVEN Effective Date,
(ii) the Remaining Parties shall be restored to their respective positions in
the Actions existing immediately prior to the execution of this Stipulation,
without prejudice to any then existing or outstanding motions, briefs, discovery
requests or other positions whatsoever, (iii) the existence of this Stipulation,
its contents and the negotiations relating hereto shall not be admissible in
evidence or shall be referred to for any purpose in the Derivative Action, Green
Action, NPD Action, and Brennan Bankruptcy Action, or in any other litigation or
proceeding (other than with respect to the provisions dealing with the LVEN
Parties), and (iv) this Stipulation (other than the provisions dealing with the
LVEN Parties) shall become null and void and of no force and effect; provided
that the withdrawal of the Remaining Parties from this Stipulation shall not
affect the continuing effectiveness of this Stipulation with respect to the LVEN
Parties and the provisions of the Stipulation dealing specifically with the LVEN
Parties (including, without limitation, Sections 2 and 4 hereof in their
entirety and the relevant portions of Sections 14 through 17 hereof) shall
remain in full force and effect, shall not be terminated hereby and shall be
binding on all parties hereto.
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<PAGE>
EXTENSIONS
26. Without further order of the Delaware Court, the parties
may agree to reasonable extensions of time to carry out any of the provisions of
this Stipulation.
ENTIRE AGREEMENT
27. This Stipulation, including all schedules and exhibits
attached hereto, together with the CSFB Approval Agreement (if executed by ITB
and CSFB), constitutes the entire agreement among the parties with regard to the
subject matter hereof and supersedes all prior agreements and undertakings, both
written and oral, among the parties with respect to the subject matter hereof.
This Stipulation may not be modified or amended or any of its provisions waived,
except by a writing executed by each of the parties whose interests are affected
by such modification, amendment or waiver.
NO WAIVER
28. Any failure by any party to insist upon the strict
performance by any other party of any of the provisions of this Stipulation
shall not be deemed a waiver of any of the provisions hereof, and such party,
notwithstanding such failure, shall have the right thereafter to insist upon the
strict performance of any and all of the provisions of this Stipulation to be
performed by such other party.
COUNTERPARTS
29. This Stipulation may be executed in any number of actual
or facsimile counterparts, all of which shall be considered one and the same
agreement, and shall become effective when such counterparts have been signed by
each of the parties and delivered to the other parties.
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<PAGE>
GOVERNING LAW
30. This Stipulation shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to the
conflict of law provisions thereof. Any action to enforce, construe or challenge
the provisions of this Stipulation, or otherwise arising out of or concerning
this Stipulation or any of the transactions contemplated hereby, shall be filed
exclusively in the Delaware Court and in no other court, and all parties hereto
consent to personal jurisdiction in the Delaware Court for any such action and
to the service of process by notice to each party's current legal counsel.
BEST EFFORTS
31. The parties and their attorneys agree to cooperate fully
with one another in seeking approval of the Settlement by the Delaware Court,
the New Jersey Bankruptcy Court and the New Mexico Bankruptcy Court, and to use
their respective good faith best efforts to effectuate, as promptly as
practicable, the consummation of this Stipulation and the Settlement provided
for hereunder (including all related transactions, agreements and approvals
described herein at the earliest possible times, substantially as provided
herein and in accordance with all applicable legal and regulatory requirements).
32. If any claims which are or would be subject to the release
and dismissal contemplated by the Settlement are asserted against any person in
any court prior to the LVEN Effective Date, the NPD Effective Date or the date
of the NPD Repurchase, the parties shall jointly, where possible, seek a
dismissal or stay of such proceedings and shall otherwise use their best efforts
to effect a withdrawal or dismissal of the claims. The parties further agree to
use their respective good faith best efforts to obtain any approvals, releases
or documents required herein. The Plaintiffs
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<PAGE>
and Director Defendants further agree to exercise their good faith best efforts
and to cooperate fully with ITB in connection with any SEC filings, the
resumption of trading of ITB securities on AMEX, the dismissal of the Rekulak
Action and the Harris Action, the AutoLend Application, the Brennan Bankruptcy
Application, the CSFB Approval Agreement or the Alternative Financing Agreement,
and the establishment and implementation of an Escrow Agreement in accordance
with Section 4(b) hereof.
SUCCESSORS AND ASSIGNS
33. This Stipulation shall be binding upon, and inure to the
benefit of, the successors, assigns, heirs and representatives of the parties
hereto; provided, however, that, except as set forth in the last sentence of
this Section 33, no rights hereunder may be assigned and no obligations
hereunder may be delegated without the prior written consent of all of the
parties hereto. Notwithstanding the foregoing prohibition of assignment or
delegation, the parties agree: (i) that LVEN may assign to the person
contracting with LVEN for the purchase of the El Rancho Property under a
Disposition Sale (the "Buyer") LVEN's rights under Section 4(b) of this
Stipulation to effect the Disposition Sale agreed to by LVEN and the Buyer, in
which event the Buyer's rights shall be deemed to include the Buyer's right, if
LVEN is in default of its obligations to such Buyer or under this Stipulation,
to acquire the El Rancho Property from ITB in accordance with this Stipulation,
free of any rights or claims of LVEN under its agreement with the Buyer; and
(ii) that if ITB is required under the terms of this Stipulation to convey title
to the El Rancho Property by a Disposition Sale but fails to do so, such Buyer
shall have the right to pursue an injunction or specific performance action
against ITB to compel the conveyance to such Buyer. To the extent that it is the
record owner of the El Rancho Property, Orion has joined in this Stipulation for
the sole and limited purpose of consenting to the rights of Buyer as aforesaid.
Additionally, if the CSFB Approval Agreement is
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executed by ITB and CSFB, all of the CSFB Rights shall inure to the benefit of
any successor, assign or participant of CSFB who acquires any interest in the
CSFB Loan, without the need for notice to, or the consent of, any party hereto
with respect to such succession, assignment or participation.
DUE AUTHORIZATION
34. Each of the parties hereto represents and warrants that
he, she or it (i) has all requisite power and authority to enter into this
Stipulation and (ii) has been duly authorized and empowered to execute, deliver
and consummate the agreements and transactions contemplated by this Stipulation;
provided, however, that the parties acknowledge that Brennan and the Bankruptcy
Trustee are not authorized to undertake any actions or assume any obligations
hereunder until the Brennan Bankruptcy Approval has been obtained, although they
are obligated to use their best efforts to obtain such approval.
NO ASSIGNMENT
35. Each of the parties hereto warrants and represents that
he, she or it has not assigned, encumbered or in any manner transferred (in
whole or in part) any claim or cause of action (i) referred to in the Derivative
Action, the Green Action, the NPD Action or the Brennan Bankruptcy Action or
(ii) which constitutes a Settled Claim.
NO THIRD PARTY BENEFICIARIES
36. Except as set forth in the proviso at the end of this
Section 36, the terms and provisions of this Stipulation are intended solely for
the benefit of the parties hereto and their respective successors and permitted
assigns, and it is not the intention of the parties to confer third party
beneficiary rights or remedies upon any other person or entity; provided,
however, that if the CSFB Approval Agreement is executed by ITB and CSFB, CSFB
shall become an express third party
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<PAGE>
beneficiary of this Stipulation with respect to all of the provisions set forth
herein for the benefit of CSFB, including, without limitation, as set forth in
this Section 36 and in Sections 4(b), 4(c), 4(d), 7, 10, 13(b), 14, 15, 17, 24,
33, 38 and 39 hereof.
INTERPRETATION
37. This Stipulation, together with all schedules and exhibits
hereto, shall be deemed to have been mutually prepared by all of the settling
parties and shall be interpreted as if the parties hereto participated in the
drafting and preparation hereof with equal and identical degrees of involvement.
SPECIFIC PERFORMANCE
38. The parties hereto acknowledge that damages would be an
inadequate remedy for any breach of the provisions hereof and agree that all
obligations of the parties hereunder shall be specifically enforceable.
Additionally, subject to the execution of the CSFB Approval Agreement by ITB and
CSFB, the parties hereto acknowledge that damages would be an inadequate remedy
for any breach of any of the CSFB Rights and agree that, at CSFB's election (a)
all of the CSFB Rights shall be specifically enforceable before the Delaware
Court and/or (b) a breach of any of the CSFB Rights shall be treated as an
"Event of Default" under the CSFB Loan Agreement, entitling CSFB to exercise all
of its rights and remedies under the CSFB Loan Agreement and the other documents
evidencing, securing and/or otherwise relating to the CSFB Loan (collectively,
the "CSFB Loan Documents"), except to the extent such CSFB Loan Documents are
modified under or pursuant to the terms of the CSFB Approval Agreement.
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<PAGE>
CSFB LOAN DOCUMENTS
39. The parties hereto expressly acknowledge and agree that
nothing contained in this Stipulation or in the CSFB Approval Agreement (if
executed by ITB and CSFB) shall abrogate, terminate, limit or modify any of
CSFB's rights and remedies at law, in equity and/or under the CSFB Loan
Documents, except to the extent such CSFB Loan Documents are modified under or
pursuant to the terms of the CSFB Approval Agreement (if executed by ITB and
CSFB), including, without limitation, CSFB's rights and remedies with respect to
any default under the CSFB Loan Agreement (other than those defaults being
waived pursuant to the CSFB Approval Agreement, if executed by ITB and CSFB),
including ITB's failure to repay the entire CSFB Loan upon the maturity thereof.
Except as expressly modified under or pursuant to the CSFB Approval Agreement
(if executed by ITB and CSFB), the terms of the CSFB Loan, as set forth in the
CSFB Loan Documents, including the payment terms and the maturity thereof, shall
be and remain unmodified and in full force and effect.
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<PAGE>
ANTI-DISPARAGEMENT
40. Immediately upon the execution of this Stipulation, no
party hereto shall disparage any other party hereto with respect to this
Stipulation or the subject matter of the Settled Claims.
/s/ Frank A. Leo
----------------------------------------
Frank A. Leo
/s/ Robert J. Quigley
----------------------------------------
Robert J. Quigley
/s/ Francis W. Murray
----------------------------------------
Francis W. Murray
/s/ Charles R. Dees, Jr.
----------------------------------------
Charles R. Dees, Jr.
----------------------------------------
The Family Investment Trust
Henry Brennan, Trustee
NPD, INC., a Delaware corporation
By: /s/ Nunzio P. DeSantis
----------------------------------------
Nunzio P. DeSantis, President
/s/ Nunzio P. DeSantis
----------------------------------------
Nunzio P. DeSantis
/s/ Anthony Coelho
----------------------------------------
Anthony Coelho
/s/ Michael Abraham
----------------------------------------
Michael Abraham
/s/ Joseph Zappala
----------------------------------------
Joseph Zappala
LAS VEGAS ENTERTAINMENT NETWORK,
INC., a Delaware corporation
By: /s/ Joseph A. Corazzi
----------------------------------------
Joseph A. Corazzi, President
COUNTRYLAND PROPERTIES, INC., a
Nevada corporation
By: /s/ Joseph A. Corazzi
----------------------------------------
Joseph A. Corazzi, President
<PAGE>
CASINO-CO CORPORATION, a Nevada
corporation
By: /s/ Joseph A. Corazzi
----------------------------------------
Joseph A. Corazzi, President
/s/ Joseph A. Corazzi
----------------------------------------
Joseph A. Corazzi
/s/ Kenneth S. Scholl
----------------------------------------
Kenneth S. Scholl
INTERNATIONAL THOROUGHBRED
BREEDERS, INC., a Delaware
corporation
By: /s/ Nunzio P. DeSantis
----------------------------------------
Nunzio P. DeSantis, President
D&C GAMING CORPORATION, a
Delaware corporation
By: /s/ Nunzio P. DeSantis
----------------------------------------
Nunzio P. DeSantis
/s/ James J. Murray
----------------------------------------
James J. Murray
/s/ John Mariucci
----------------------------------------
John Mariucci
<PAGE>
/s/ Frank Koenemund
----------------------------------------
Frank Koenemund
/s/ Robert W. Green
----------------------------------------
Robert W. Green
/s/ Robert E. Brennan
----------------------------------------
Robert E. Brennan
ORION CASINO CORPORATION, a
Nevada corporation
By: /s/ Nunzio P. DeSantis
----------------------------------------
Nunzio P. DeSantis, President
LAS VEGAS COMMUNICATION
CORPORATION, a Nevada corporation
By: /s/ Joseph A. Corazzi
----------------------------------------
Joseph A. Corazzi, President
July 2, 1998
<PAGE>
Schedule K-1
All that portion of the Northeast Quarter (NE 1/4) and that portion of
the Southeast Quarter (SE 1/4) of Section 9, Township 21 South, Range 61 East,
M.D.B.&M., more particularly described as Parcel One (1) as shown on Parcel Map
in File 37, Page 44, recorded March 22, 1998, as Document No. 1497782, Book 1538
of Official Records, Clark County, State of Nevada.
<PAGE>
Schedule 4(b)
Upon, and if required to effect, any Disposition Sale, ITB will provide
to any buyer (the "Buyer") under an asset purchase and sale agreement for a
Disposition Sale (the "Acquisition Agreement") (and/or Buyer's lender)
representations and warranties, and will take certain additional actions,
substantially in accordance with the following:
1. Upon LVEN's reasonable prior request, ITB, by separate instrument in form and
substance reasonably acceptable to Buyer (the "Representation Certificate"),
shall represent, warrant and covenant to the Buyer each of the following matters
set forth in Sections 1 through 9 hereof. Except as expressly provided herein,
the El Rancho Property is being sold by ITB, and purchased by the Buyer, in "as
is" and "where is" condition with all faults, including, without limitation, all
environmental conditions. ITB disclaims all implied warranties (including,
without limitation, those of fitness and merchantability).
a. ITB is a corporation, duly organized and validly existing under the
laws of the State of its formation. ITB has the power and authority to carry on
its present business, to enter into the Representation Certificate and the
Stipulation and, subject to CSFB's rights under the CSFB Approval Agreement, to
sell the El Rancho Property on the terms set forth in the Stipulation. The
execution and delivery of the Acquisition Agreement and of any transfer
documents thereunder, and the performance by ITB in connection with the
transactions contemplated thereunder and under the Stipulation, do not violate
or constitute an event of default under any material terms of material
provisions of any agreement, document, instrument, judgment, order or decree to
which ITB is a party or by which it is bound.
b. The individuals executing the Representation Certificate, the
Stipulation and any transfer documents on behalf of ITB have the legal power,
right and actual authority to bind ITB to the terms and conditions thereof. The
Representation Certificate and the Stipulation are valid and binding obligations
of ITB, enforceable in accordance with their terms, except as the same may be
affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or
equitable principles relating to or limiting the rights of contracting parties
generally.
c. There are with respect to the El Rancho Property, and to ITB's
knowledge, no (1) pending litigation, condemnation or other claim, to ITB's
knowledge, threatened in writing (whether or not asserted), (2) business
operations, and have been no business operations for at least five years in the
El Rancho Property, (3) accounts receivable, (4) accounts payable not current or
which will fail to be current through the date of closing, (5) service contracts
(except for security and microwave relay contracts), (6) leases,
tenants-in-possession or occupancy agreements of any kind, (7) hotel or other
booking arrangements or agreements for the use of all or any portion of the El
Rancho Property of any kind, (8) employees, employment agreements or union or
other labor obligations or (9) equipment leases or, except for the lien of the
CSFB Mortgage, liens on any furniture, fixtures and/or equipment now located at
the El Rancho Property, as of the date hereof and as of closing.
d. To ITB's knowledge, ITB has not received notice from any party,
including, without limitation, from any municipal, state, federal or other
governmental authority, of a violation of any
<PAGE>
zoning, building, fire, water, use, health, or other statute, ordinance, code or
(including, without limitation, any Environmental Laws or The Americans With
Disabilities Act, as amended) bearing on the construction, operation or use of
the El Rancho Property or any part thereof other than as to matters previously
cured, or that any investigation has been commenced or is contemplated
respecting any such possible violation.
e. To ITB's knowledge, there has never been any Hazardous Substances
used, handled, manufactured, generated, produced, stored, treated, processed,
transferred, or disposed of at or on the El Rancho Property, except in
compliance with all applicable Environmental Laws and that no Release or Threat
of Release has occurred at or on the El Rancho Property.
f. Any Records and Plans provided to Buyer by ITB are true, correct and
complete and the same have, to the extent applicable, been compiled in
accordance with generally accepted accounting principles consistently applied.
g. To ITB's knowledge, all improvements are permitted, conforming
structures under applicable zoning and building laws and ordinances in effect
when the improvements were constructed, the present uses thereof are permitted,
conforming uses under applicable zoning and building laws and ordinances and all
water, sewer, gas, electric, telephone, drainage and other utility equipment and
facilities in use at the El Rancho Property are installed and connected pursuant
to valid permits.
h. To ITB's knowledge, the Licenses and Permits delivered by ITB to
Buyer are true, correct and complete. To ITB's knowledge, each of the Licenses
and Permits is in full force and effect as of the date hereof and shall remain
in full force and effect through the closing date and no outstanding notice of
default or violation has been received by ITB with respect to any of the
Licenses and Permits.
i. To ITB's knowledge, there are no agreements or contracts concerning
the general operation and/or management of the El Rancho Property which will be
binding upon Buyer after the closing date of the Disposition Sale.
j. ITB owns good and marketable title to the real property included in
the El Rancho Property.
k. To ITB's knowledge, ITB has not commenced any proceedings which are
pending for the reduction of the assessed value of the real property that is
included in the El Rancho Property.
l. ITB has not entered into any brokerage, commission or other similar
agreements relating to the El Rancho Property which will be binding upon Buyer.
m. The following representations, warranties and covenants are limited
solely to those provisions of the Stipulation that are material to this
Disposition Sale: The Stipulation is in full force and effect and has not been
amended, modified or supplemented. As of the date hereof, ITB has neither
received nor sent any notice with respect to the Stipulation and ITB shall send
to Buyer a copy of any notice sent to ITB by LVEN under the Stipulation. ITB
shall not, without the prior
<PAGE>
written consent of Buyer, modify, amend or accept a termination of the
Stipulation by LVEN or accept an election or waiver of any right or privilege
thereunder by LVEN.
n. As used herein, the term "to ITB's knowledge" and its cognates shall
mean and refer to the actual knowledge, without any duty of investigation, of,
or receipt of notice by, the principal executive officer and principal financial
officer of ITB. ITB shall not be requested to provide any other representations,
warranties or covenants than are provided for in this Stipulation.
2. In receiving any of these representations, warranties or covenants, the
Buyer, pursuant to the Disposition Sale, acknowledges and agrees that ITB is not
a party to the Acquisition Agreement for the Disposition Sale and has no
obligations under such agreement.
3. Any request for due diligence materials from ITB shall be limited to those in
its possession. ITB shall have no liability for costs and expenses of due
diligence investigations.
4. Any request by Buyer for a Phase II audit of the El Rancho Property shall be
subject to ITB's prior approval and subject to reasonable restrictions of
confidentiality (so long as such Buyer is not made liable for criminal penalties
thereby), scope and qualifications of persons performing such work as ITB may
reasonably impose.
5. (a) LVEN shall indemnify, protect, defend and hold ITB harmless from and
against any costs, claims or expenses (including actual attorneys' fees and
expenses) arising out of any dealings had by LVEN with any broker, finder or
other middleman in connection with the Acquisition Agreement or the transactions
contemplated thereby or for claims or rights to claim a commission, finders fee
or other brokerage fee by any such broker, finder, middleman or other person in
connection with the Acquisition Agreement or the transactions contemplated
thereby. Any such indemnification shall survive the closing under such
Acquisition Agreement or, if closing does not occur, the termination of such
Acquisition Agreement.
(b) Buyer shall indemnify, protect, defend and hold ITB harmless from
and against any costs, claims or expenses (including actual attorneys' fees and
expenses) arising out of any dealings had by Buyer with any broker, finder or
other middleman claiming to have been engaged by or on behalf of Buyer in
connection with the Acquisition Agreement or the transactions contemplated
thereby or for claims or rights to claim a commission, finders fee or other
brokerage fee by any such broker, finder, middleman or other person in
connection with the Acquisition Agreement or the transactions contemplated
thereby. Any such indemnification shall survive the closing under such
Acquisition Agreement or, if closing does not occur, the termination of such
Acquisition Agreement.
6. In addition to the Grant Deed and other documents necessary to transfer the
El Rancho Property, ITB agrees to deliver to the Escrow Agent any other
incidental documents reasonably required by Buyer or the Escrow Agent to
consummate the purchase and sale of the El Rancho Property, and reasonably
acceptable to ITB, and provided that such additional documents shall not give
rise to any additional cost or liability to ITB and provided ITB is given
written notice by Buyer or Escrow Agent of the requirement for such incidental
documents within a reasonably sufficient time in advance of the scheduled date
of closing.
<PAGE>
7. ITB agrees to deliver to Buyer or any title company of Buyer evidence in form
and content reasonably satisfactory to Buyer and such title company that (a) ITB
is duly organized and validly existing under the laws of the state of its
formation, (b) the Stipulation, transfer documents and all other documents
delivered by ITB pursuant to the Disposition Sale have been duly executed and
delivered by ITB, (c) the performance by ITB of the transactions contemplated by
the Stipulation for a Disposition Sale have been duly authorized by all
necessary corporate, shareholder or other action of ITB and its shareholders and
(d) ITB acknowledges that ITB will not look to Buyer to be liable to ITB, its
shareholders, the Stipulation and/or litigation identified in the Stipulation
solely as a result of its purchase of the El Rancho Property (and not as a
result of the terms and conditions of the Acquisition Agreement for the
Disposition Sale).
8. Upon delivery of the Representation Certificate, ITB will agree that if any
representation and warranty contained therein is materially untrue when made,
then Buyer shall have the right to pursue specific performance and/or recovery
of monetary damages against ITB in connection with such misrepresentation or
breach of warranty.
9. Capitalized terms used herein shall have the following definitions:
a. Environmental Condition shall mean any condition with respect to
soil, surface waters, groundwater, land, stream sediments, surface or subsurface
strata, ambient air in any environmental medium compromising or surrounding the
real property that is part of the El Rancho Property, which could or does result
in any damage, loss, cost, expense, claim, demand, order or liability to or
against ITB or Buyer by any third party (including, without limitation, any
governmental entity), including, without limitation, any condition resulting
from the operation of ITB's business and/or the operation of the business of any
other property of ITB or operator in the vicinity of the El Rancho Property
and/or any activity or operation formerly conducted by any person or entity on
or off the El Rancho Property.
b. Environmental Laws shall mean all applicable present and future
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, agreements and
similar items, of or with any and all governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the United States, states
and political subdivisions thereof and all applicable judicial and
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment, including, without limitation (i)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. 9061 et seq.; the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901, et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. 1251, et seq.; and analogous state laws and
regulations; (ii) all requirements, including, but not limited to, those
pertaining to reporting, licensing, permitting, investigation and remediation of
emissions, discharges, releases or threatened releases of Hazardous Substances
into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances; and (iii) all requirements
pertaining to the protection of the health and safety of employees or the
public.
c. Hazardous substances shall mean (i) any toxic substance or hazardous
waste, substance or related material, or any pollutant or contaminate, (ii)
radon gas, asbestos in any form
<PAGE>
which is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment which contain dielectric fluid containing levels
of polychlorinated biphenals in excess of federal, state or local safety
guidelines, whichever are more stringent; (iii) any substance, gas, vapor,
energy, radiation, material or chemical which is or may be defined as or
included in the definition of "hazardous substances", "toxic substances",
"hazardous materials", "hazardous wastes" or words of similar import under any
Environmental Law"; and (iv) any other chemical, material, gas, vapor, energy,
radiation or substance, the exposure to or release of which is or may be
prohibited, limited or regulated by any governmental or quasi governmental
entity or authority that asserts or may assert jurisdiction over the El Rancho
Property or the operations or activity of the El Rancho Property or any
chemical, material, gas, vapor, energy, radiation or substance that does or may
pose a hazard to the health and/or safety of the occupants of the property or
the owners and/or occupants of property adjacent to or surrounding the El Rancho
Property.
d. Licenses and permits shall mean all licenses, permits,
registrations, certificates, authorizations and governmental approvals obtained
in connection with the design, construction, rehabilitation, use and/or
operation of the property.
e. Records and plans shall mean all building plans, specifications and
drawings, surveys, tax bills for the El Rancho Property for the last three (3)
tax years and for the current tax year to date, copies of all Licenses and
Permits and other documents related to the use, maintenance, repair, management,
construction and/or operation of the property.
f. Release shall mean any releasing, spilling, leaking, pumping,
pouring, admitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping into soil, surface waters, ground water, land, stream
sediments, surface or subsurface strata, abient air and any environmental medium
comprising or surrounding the El Rancho Property.
g. Threat of Release shall mean a substantial likelihood of a release
which requires action to prevent or mitigate damage to the soil, surface waters,
ground water, land, stream sediments, surface or subsurface strata, ambient air
in any environmental medium comprising or surrounding the property which may
result from such release.
10. If ITB is not the record owner of the El Rancho Property, ITB shall cause
the record owner to provide the representations and warranties and perform the
further actions set forth herein.
<PAGE>
Schedule 6(f)
The following shall occur:
1. ITB's lease for the Albuquerque office space shall be assumed by
AutoLend on or before the NPD Repurchase and the parties shall use
their best efforts to obtain from the landlord a release of ITB from
any liability under the lease upon such assumption. Upon such
assumption, AutoLend shall return to ITB any and all equipment
purchased by ITB for use at the Albuquerque office.
2. Any obligations or agreements for the employment of Jeff Ovington, Lynn
Budagher, Karen Klar and Linda Gonzalas by ITB or any of its
subsidiaries shall be terminated effective two weeks following the
Signing Date, without any obligation on the part of ITB to make
severance or any other payments to such individuals.
3. No payments shall be made by ITB or any of its subsidiaries for the use
or operation of any private airplanes after the Signing Date.
4. After the Signing Date, no expenditures shall be made or obligations
incurred by ITB for the El Rancho Property other than for normal
maintenance and emergency repairs, or payments for services already
provided not to exceed $225,000.
5. All moneys in the ITB bank account in Nevada shall be transferred to
ITB in New Jersey on or before the LVEN Effective Date and all moneys
in the ITB bank account in New Mexico shall be transferred to ITB on or
before the NPD Repurchase. Prior to the transfer of such moneys to ITB
in New Jersey, no disbursements in excess of $2,500 shall be made from
either account without the prior written approval of Coelho and
Quigley.
<PAGE>
Exhibit 10.2
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, is made and entered into as of the 2nd
day of July, 1998 (the "Agreement"), by, between and among GREENWOOD NEW JERSEY,
INC., a New Jersey corporation ("Buyer"), GARDEN STATE RACE TRACK, INC., a New
Jersey corporation ("GSRT"), FREEHOLD RACEWAY ASSOCIATION, a New Jersey
corporation ("FRA"), ATLANTIC CITY HARNESS, INC., a New Jersey corporation
("ACH"), and CIRCA 1850, INC., a New Jersey corporation ("Circa"), and
INTERNATIONAL THOROUGHBRED BREEDERS, INC., a Delaware corporation ("ITB"). FRA,
ACH and Circa are collectively referred to herein as "Freehold". GSRT, FRA, ACH
and Circa are collectively referred to herein as "Sellers", and each is referred
to individually as a "Seller".
BACKGROUND
Sellers are engaged principally in the business of conducting
thoroughbred and harness racing at Garden State Park in Cherry Hill, New Jersey
("GSP") and Freehold Raceway in Freehold, New Jersey ("Raceway"); and the
operation of pari-mutuel wagering at GSP and Raceway (which conduct and
operation is referred to herein as the "Business"). ITB also owns real property
in Las Vegas, Nevada, and will continue to own property in Cherry Hill, New
Jersey, as described below (the "Retained Assets"). The assets of the Retained
Assets are not being acquired by Buyer hereunder.
ITB owns one hundred percent (100%) of the outstanding capital stock of
each of the Sellers.
Greenwood Racing, Inc., a Delaware corporation ("Greenwood"), owns one
hundred percent (100%) of the outstanding capital stock of Buyer. Buyer desires
to buy substantially all of the assets of Sellers related to the Business, but
excluding the Retained Assets, and Sellers desire to sell such to Buyer pursuant
to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Purchase and Sale of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter defined),
Sellers shall sell, transfer and deliver to Buyer, by bill of sale, assignment
or other instruments of transfer in form and substance reasonably satisfactory
to Buyer, and Buyer shall purchase and accept from Sellers, free and clear of
all liens, claims, security interests and encumbrances whatsoever (except
certain "Assumed Obligations", as defined herein), the following property
(collectively the "Assets"):
<PAGE>
(a) Real Property. All the real property (including buildings and
facilities thereon and improvements thereto, and including the properties used
for parking lots), machinery, equipment, fixtures and other tangible personal
property of Sellers located at or used in the operation of Raceway, including
those assets identified on Schedule 1(a) attached hereto ("Raceway Assets"),
with title exceptions limited as described in Subparagraph 12(e) below. GSRT's
real property (including buildings and facilities therein and improvements
thereto, and including properties used for parking lots), machinery equipment,
fixtures and other tangible personal property located at and used in the
operation of GSP ("GSP Facility") are excluded from this sale, and will be
leased by GSRT to Buyer as described in Paragraph 7 below; however, materials,
supplies, prepaid expenses and inventories at or relating to the GSP Facility
("GSRT Assets") will be included in this sale.
(b) Licenses. All of Sellers' assignable governmental licenses,
permits and authorizations relating to the occupancy or operation of each of
Raceway and GSP (including, without limitation, racing and liquor licenses, to
the extent assignable) and identified in Schedule 1(b) attached hereto;
(c) Executory Contracts. Various leases, license agreements and
other executory contracts, and any trademarks or service marks or rights
therein, relating to the ownership or operation of Raceway or to the operation
of GSP or Sellers' racing and pari-mutuel businesses at Raceway or GSP; the
leases, license agreements and other executory contracts that are to be assigned
to Buyer (collectively, the "Executory Contracts") are identified in Schedule
1(c) attached hereto;
(d) Books and Records. All of Sellers' original books and records
(other than minute books, income tax records of each and documents applicable to
the assets owned by Sellers at GSP, as to which Buyer shall have reasonable
access after the Closing); subject to the right of Sellers and ITB (and their
duly authorized representatives) to have reasonable access to such books and
records after the Closing;
(e) Racing Accounts . The funds held by Sellers relating to the
conduct of racing at Raceway and GSP, as of the Effective Time, including
horsemans' accounts, trust accounts, standardbred and thoroughbred savings
accounts, outstanding ticket accounts, exchange accounts, lottery accounts,
mutual exchange accounts, purse accounts and other racing accounts ("Racing
Accounts") which accounts are identified in Schedule 1(e);
(f) Casino Simulcasting Funds. All of Sellers' interest in and
rights to Casino Simulcasting Special Fund payments for all periods after
January 1, 1998, whether paid or not by the Closing Date;
(g) Other Assets. All other assignable rights of Sellers necessary
for the operation of the racing and pari-mutuel businesses currently operated by
Sellers at the GSP Facility and Raceway and the good will of those businesses;
and all materials, supplies, prepaid expenses and inventories related to GSP and
Freehold and useable by Buyer; and
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<PAGE>
(h) Condition of Assets. All of Sellers' materials, supplies,
furniture, fixtures and equipment related to the Business, are being sold or
leased in an "as is" and "where is" condition.
2. Excluded Assets. Notwithstanding anything to the contrary contained
in Section 1 or elsewhere in this Agreement, the following items (collectively,
the "Excluded Assets") are not part of the sale and purchase contemplated
hereunder, are excluded from the Assets being conveyed hereunder, and shall
remain the property of the Sellers after the Effective Time (as hereinafter
defined):
(a) any of Sellers' cash and cash equivalents, but excluding Racing
Accounts;
(b) any of Sellers' accounts receivable as of the Effective Time,
except any accounts receivable relating to Racing Accounts or due Sellers from
the Casino Simulcasting Special Fund for periods after January 1, 1998 which
accounts receivable and amounts due shall be acquired by Buyer as of the
Effective Time ("Sellers Receivables");
(c) any of Sellers' tax refunds for period prior to the Effective
Time;
(d) the Retained Assets, except as otherwise specifically described
hereunder;
(e) any and all property or assets relating to the GSP Facility that
are to be leased to Buyer pursuant to the lease described in Paragraph 7 below;
(f) any minute books, stock records and corporate seals of the
Sellers;
(g) any shares of capital stock of Sellers, whether issued and
outstanding to ITB, held in treasury, or otherwise;
(h) Sellers' insurance policies and rights thereunder, listed in
Schedule 2(h) attached hereto;
(i) any property and assets expressly designated in Schedule 2(i);
and
(j) any and all other property or assets as may be identified in
writing by one or more Sellers and which are approved by the Buyer prior to the
Closing.
3. Collection of Sellers' Receivables. At the Closing or as soon
thereafter as feasible, Sellers shall deliver to Buyer a list of all Sellers'
Receivables then outstanding. After the Closing if Buyer shall receive payments
on account of Sellers' Receivables, Buyer shall promptly (taking into account
its normal accounting procedures) forward such payments directly to Sellers.
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<PAGE>
4. Assumption/Non-Assumption of Liabilities.
(a) Assumption of Certain Liabilities. At the Closing, Buyer shall
assume and shall discharge in accordance with their terms the obligations
attributable to the period on and after the Effective Time under the executory
contracts and agreements listed on Schedule 1(c), subject to the limitations set
forth in this Subparagraph 4(a) (collectively, the "Assumed Obligations"). At
the Closing, Sellers and Buyer will execute an assignment and assumption
agreement which will include Buyer's indemnification of Sellers for obligations
related to the Assumed Obligations from and after the Effective Time.
Notwithstanding the foregoing, Buyer or its assignee will only assume those
union contracts that it is required to assume by their terms, which contracts
may include those identified as items A1, A4, A8 and B5 on Schedule 1(c);
provided, however, neither Buyer nor its assignee shall assume or accept any
responsibility for contract breaches, statutory violations, wrongful
terminations, suspensions or lost wages that may be imposed by reason thereof.
Furthermore, Buyer will not assume the operating agreements related to GSP as
set forth on Schedule 1(c), but will make payments on account of those
agreements during the term of its operation of GSP, which operation will be
pursuant to the lease described in Paragraph 7 below.
(b) Non-Assumption of All Other Liabilities. It is expressly
acknowledged, understood and agreed by Sellers, that, except for the Assumed
Obligations, Buyer has not assumed, undertaken, agreed to perform or accepted
any responsibility for, and does not and will not, in any way, assume,
undertake, agree to perform or accept responsibility for, any debts, contracts,
liabilities, obligations or commitments of any Seller of any kind, whether such
debts, contracts, liabilities, obligations or commitments be absolute, known or
unknown, liquidated or unliquidated, contingent or otherwise pending or
threatened, or whether incurred before or after the Effective Time, including,
without limitation, trade or other accounts payable, debts, liabilities,
obligations or commitments of any Seller to its employees under any employee
benefit plans of any kind, any liabilities for wage, income, sales or other
taxes or any other liabilities or commitments of any and every kind, except for
vacation and personal days earned since January 1, 1998 and not taken or paid
for prior to the Closing Date, as to which Buyer or its assignee will reimburse
Sellers at the Closing for the amount of vacation and personal days earned but
not taken or paid for by the Closing. Furthermore, Buyer will not assume any
pension plan withdrawal liability arising prior to Buyer's operation of the
Business, and in the event Buyer is required to pay any such pension plan
withdrawal liability, it may offset the amount paid against its obligations
contained in the $12 Million Note described below; provided, however, Buyer will
be responsible for pension plan withdrawal liability, as follows: Multi-
employer Pension Plans. With respect to any multi-employer plan, within the
meaning of Section 4001(a) (3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), as to which Seller has any withdrawal liability as
of the Closing (which liability at December 31, 1996 was $267,447 related to
Raceway and $111,598 related to GSP)(the "Plans"), the parties agree pursuant to
Section 4204 of ERISA as follows:
(i) Buyer's Contribution Obligation. The Buyer shall contribute,
pursuant to an obligation to contribute, to each of the Plans for substantially
the same number of
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<PAGE>
contribution base units within the meaning of Section 4001(a)(11) of ERISA for
which a Seller had an obligation to contribute with respect to the Business
regarding each of such Plans.
(ii) Maintenance of Bond or Escrow. Unless exempted by the
Pension Benefit Guaranty Corporation, the Buyer shall provide to each Plan for a
period of five (5) plan years commencing with the first plan year beginning
after the Closing, a bond issued by a corporate surety company that is an
acceptable surety within the meaning of Section 4204(a) (2) (B) of ERISA, or an
amount held in escrow by a bank or similar financial institution satisfactory to
each respective Plan and to the applicable Seller, in an amount equal to the
greater of:
(A) the average annual contribution required to be made by
the applicable Seller with respect to the Business to such Plan for the three
(3) plan years preceding the plan year in which the Closing occurs; or
(B) the annual contribution that the Seller was required to
make with respect to the Business to such Plan for the last plan year before the
plan year in which the Closing occurs, with respect to each such Plan; payment
on the aforesaid bonds or escrows shall be made to a Plan if the Buyer withdraws
therefrom, or fails to make a contribution thereto when due, at any time during
the first five (5) plan years beginning after the Closing. Notwithstanding the
foregoing, if any such Plan is in reorganization, within the meaning of Section
4241 if ERISA, in the plan year in which the Closing occurs, the bond or escrow
to be furnished by the Buyer shall be in an amount equal to two hundred percent
(200%) of the amount described in (i) or (ii), whichever is applicable.
(iii) Sellers' Liability. If the Buyer withdraws from any Plan
in a complete withdrawal or a partial withdrawal with respect to the Business
before the last day of the fifth (5th) plan year of a Plan commencing after the
Closing, and fails to pay the Buyer's withdrawal liability to such Plan thereby
arising, then, except as set forth to the contrary in Subparagraph 4(a)(v), the
applicable Seller shall be secondarily liable to such Plan for any withdrawal
liability which such Seller would have had to the affected Plan or Plans but for
the provisions of Section 4204(a) of ERISA with respect to Seller's operation of
the Business during such Seller's ownership thereof.
(iv) Ascertaining Withdrawal Liability. Following the date
hereof, the Sellers and Buyer shall use their best efforts to ascertain from the
Plan administrators the amount of the Withdrawal Liability with respect to each
Plan.
(v) Sellers' Obligation. Notwithstanding any other provision of
this agreement: (A) all costs and expenses and outlays of Buyer in complying
with the provisions of Subparagraph 4(b) relating to the Plans, including, but
not limited to the costs or premiums for any bonds or escrows or letters of
credit posted in lieu thereof, any cash or other deposits required to secure
such bonds or letters of credit or to be deposited into any escrows, but
excluding contributions Buyer would be obligated to make for its actual
workforce for the actual hours worked by such workforce, shall be offset against
the payments due by Buyer under the Purchase Price Notes; and (B) neither ITB
nor the Sellers shall have any right to indemnification
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<PAGE>
or to assert a claim against Buyer or Greenwood Racing Inc. for the failure to
comply with Subparagraph 4(b) relating to the Plans.
(c) Closing Adjustments. As of the Effective Time and within 45 days
after the Closing Date Buyer and Sellers will prorate, as of the Effective Time,
utilities, real estate taxes, rents under the Leases, payments under and cash
deposits in connection with the Assumed Obligations, and such other items of
expense as may require proration, and if such overall adjustment reflects credit
to Sellers or to Buyer, a payment shall be made by Sellers or Buyer to the other
within twenty (20) days after such final adjustments are completed and accepted.
For purposes of the adjustment of cash deposits, the interests of Sellers and
Buyer will be equitably adjusted to result in the party which will benefit from
the deposit being responsible for providing the deposit.
5. Sellers' Employees. Except to the extent covered by a union contract
assumed by Buyer or its assignee pursuant to the terms of Subparagraph 4(a)
above, effective as of the Closing, Sellers will terminate the employment of
each of their employees, and Buyer or its assignee, will unilaterally offer
employment at will to those employees Buyer selects, on terms set by Buyer or
its assignee. To the extent required by law, Buyer, or its assignee intends to
negotiate in good faith with any union(s) representing the employees it employs,
following their employment by Buyer or its assignee.
6. The Purchase Price.
(a) In addition to assuming the Assumed Obligations, Buyer agrees to
pay an aggregate purchase price (the "Purchase Price") for the Assets, as
follows:
(i) Cash Portion of the Purchase Price. At the Closing Buyer
will pay to the Sellers an aggregate of Thirty-Three Million Dollars
($33,000,000) by wire transfer in federal funds allocated as set forth in
Subparagraph 6(b) below.
(ii) $12 Million Note. At the Closing Buyer shall deliver its
promissory note in the original principal amount of $12 Million (the "$12
Million Note"), in the form attached as Exhibit 6(a)(ii).
(iii) OTB Adjustment. In the event that within three years after
the Closing Date, the Buyer receives all licenses, consents, approvals and
permits necessary to operate an off track betting facility, meaning a simulcast
only pari-mutuel wagering facility that does not have to conduct live racing (an
"OTB Facility"), at the GSP Facility, then the Purchase Price shall be increased
by $5,000,000, and paid in accordance with the terms of the $5,000,000
Contingent Promissory Note attached hereto as Exhibit 6(a)(iii)(A). Further, in
the event that within three years after the Closing Date, legislation is enacted
within the State of New Jersey that would permit GSP or Raceway racetracks to
own and operate OTB Facilities (other than or in addition to any OTB Facility
established at GSP), then the Purchase Price shall be increased by an additional
$3,000,000, and paid in accordance with the terms of the $3,000,000 Contingent
Promissory Note attached hereto as Exhibit 6(a)(iii)(B).
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<PAGE>
(iv) Telephone Account Wagering Adjustment. In the event that
within three years after the Closing Date, New Jersey legislation is enacted to
permit the Buyer to engage in New Jersey based telephone account pari mutuel
wagering on horse racing ("Telephone Wagering"), and as a result of such
legislation, the Buyer opens new telephone accounts from New Jersey residents,
then the Purchase Price shall be increased by $2,000,000, and paid in accordance
with the terms of the $2,000,000 Contingent Promissory Note attached hereto as
Exhibit 6(a)(iv);
(v) Slot Adjustments.
(A) Installation of Slot Machines. In the event the State of
New Jersey by legislation adopted after the Closing Date and before the fifth
anniversary of Closing, permits the operation of slot machines at GSP or
Raceway; or at any OTB Facilities owned and operated by Buyer in New Jersey,
which OTB Facilities are permitted as a result of Buyer's ownership and
operation of GSP or Raceway, then Buyer shall pay to Sellers an amount equal to
10% of the gross win from slot machines (which shall be calculated as the amount
wagered on such machines less the amount paid out in cash, tokens or the cash
value of prizes awarded and any amount allocated to the future payment of
progressive jackpots, and any mandated taxation or other payments required by
the state legislation or regulations, including, for example, any purse
contributions) for a period of ten years from installation of the first slot
machine. The Buyer's obligation under this Subparagraph shall be paid to the
Sellers quarterly by the fifteenth of the month following the end of each fiscal
quarter of Buyer.
(B) Atlantic City Slot Machines. In the event the State of
New Jersey, either by legislation or regulations adopted within two years after
the Closing Date, requires a portion of Atlantic City casino gaming revenues to
be paid to the New Jersey race tracks, including GSP and Raceway, the Buyer
shall pay to Sellers 50% of the net cash received by Buyer from such payment
within 45 days of the receipt of such payments for a period of four years from
the first receipt of net cash, and will calculate the 50% after deduction of any
benefit, financial or otherwise, that may be received or be payable to horsemen
or breeders, such as purses, special funds or breeders awards.
(vi) Subsidy Adjustment. In the event that the State of New
Jersey, either by legislation or regulations adopted within two years after the
Closing Date, enacts any subsidy that would produce a direct measurable
financial benefit to the racetracks at GSP, Raceway or both (but not including
any benefit, financial or otherwise, that may be received by horsemen or
breeders such as purses, special funds or breeders awards), then 50% of the net
cash derived from such subsidy shall be paid to the Sellers within 45 days of
the receipt of such subsidy for a period of four years from the first receipt of
net cash.
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<PAGE>
(vii) Security. The $12 Million Note and the three Contingent
Promissory Notes identified in Paragraph 6 above (together the "Purchase Price
Notes") shall be secured by a junior mortgage on the Raceway Assets acquired by
the Buyer and a junior mortgage on any real property assets created or acquired
by the Buyer as a result of its acquisition of the assets described in Paragraph
1 hereof, including but not limited to the 10 acre parcel described in
Subparagraph 7(b) hereof and any other OTB Facilities developed in New Jersey by
the Buyer, but excluding any leasehold properties where the consent of the
landlord is required but not forthcoming. The form of the junior mortgage is
attached hereto as Exhibit 6(a)(vii). The Purchase Price Notes and collateral
documents shall be payable to or assigned on the Closing to a United States
based reputable financial institution acting as agent for the benefit of ITB and
the Sellers. All enforcement power and decisions shall be vested in and made by
the agent. Without limiting the right or remedies available to the agent, ITB's
rights with regard to such notes and collateral would be limited solely to the
right to receive proceeds thereof. In the event Buyer or a designee of Buyer is
the maker of the Purchase Price Notes, then Greenwood shall unconditionally
guarantee the Purchase Price Notes. The Purchase Price Notes shall be
subordinate to Buyer's senior financing related to the transactions and
businesses contemplated by this Agreement (including, without limitation,
financing for acquisition, construction and outfitting of the 10 Acre Parcel
described in the lease described in Paragraph 7 below, and any OTB Facility in
New Jersey), and substitutions or replacements of such financing ("Senior
Financing").
(viii) Inventory Adjustment. The Purchase Price will be
increased by the amount of Sellers' cost of the materials, supplies, prepaid
expenses and inventories acquired by Buyer from Sellers, and useable by Buyer,
based on a Closing inventory as of the Closing Date.
(b) Allocation of Purchase Price. As soon as practicable after the
date hereof, and prior to the Closing, the parties in good faith will agree to
an allocation of the Purchase Price among the assets; provided, however, that
the failure to reach agreement shall not be a basis for termination of this
Agreement or damages by or for any party.
(i) IRS Requirements. As soon as practicable after the Closing,
the Buyer and the Sellers will, in good faith, agree to an allocation of the
Purchase Price in accordance with Section 1060 of the Internal Revenue Code
("Code"), pursuant to the principles set forth in this Section 6(b) hereof. The
Buyer and Sellers will report the allocation of the Purchase Price in a manner
entirely consistent with such agreement in all tax returns and forms (including
without limitation, IRS Form 8594 filed with Buyer's and Sellers' respective
federal income tax returns for the taxable year that includes the Closing Date)
and in the course of any tax audit, tax review or tax litigation relating
thereto. The Buyer and Sellers shall cooperate with each other to prepare the
IRS Form 8594 in the manner required by this Section 6(b). The Buyer and Sellers
shall each deliver to the other a copy of the IRS Form 8594 it files with its
respective federal income tax return.
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<PAGE>
(ii) Allocation of Additional Amounts. Any additional payments
due Sellers pursuant to this Agreement and the Purchase Price Notes shall,
unless specifically otherwise allocated, be allocated to Sellers in proportion
to the allocation of this Subparagraph 6(b).
7. Lease of GSP Facility.
(a) Lease. At the Closing, Buyer will lease from GSRT and GSRT will
lease (as lessor) to Buyer, the real property (including buildings and
facilities thereof and improvements thereto) and machinery, equipment,
furniture, furnishings and fixtures located at and used in the operation of the
GSP Facility, pursuant to a lease agreement substantially in the form of Exhibit
7 hereto ("Lease").
(b) 10 Acre Parcel. Within thirty (30) days of the date hereof, the
parties shall agree to the specific location of and the Purchase Price for the
10 Acre Parcel referred to in the Lease by addendum to this Agreement. In the
event the parties are unable to agree to a purchase price within 30 days, a
single arbitrator selected under the rules of the American Arbitration
Association shall determine the purchase price prior to the Closing hereunder.
In lieu of a sale of the 10 Acre Parcel, Buyer agrees at Sellers' request to
consider in good faith an alternative form of this transaction, if such
alternative provides Buyer with the same business and economic terms as a sale.
8. Restrictive Covenants. In order to induce Buyer to execute this
Agreement and purchase the Assets hereunder for the purpose of operating the
Business, ITB and each Seller hereby covenant and agree as follows:
(a) Non-Competition. As to ITB and each Seller, but not any
individual, for a period of four (4) years following the Closing Date, they,
individually and collectively, shall not, directly or indirectly, either for
their own account or as a partner or joint venturer, or as an agent for any
person or entity other than Buyer, or as a shareholder (other than as the holder
of five percent (5%) or less of an exchange listed stock), owner or otherwise,
anywhere within the Territory (as hereinafter defined) engage in the business
which competes with the Business.
(b) Territory. For the purposes of this Agreement, the Territory
shall mean the States of New Jersey, Pennsylvania and Delaware.
(c) Non-Solicitation. ITB and each Seller for a period of four years
following the Closing Date, agrees that they, individually and collectively,
shall not, directly or indirectly, either for their own account or as a partner
or joint venturer, or as an agent for any person or entity other than Buyer, or
as a shareholder (other than as the holder of five percent (5%) or less of a
publicly traded security), owner or otherwise, solicit, attempt to solicit or
cause to be solicited for or on behalf of any business which competes with the
Business in the Territory, any party who is, as of the Closing Date, an employee
of any Seller.
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(d) Non-Disclosure. ITB and each Seller hereby covenants and agrees
that, for a period of four years after the Closing Date, they shall not,
individually or collectively, use for their benefit or disclose, communicate or
divulge to, or use for the direct or indirect benefit of any person, firm,
association or entity other than Buyer, any confidential information regarding
the business methods, business policies, procedures, techniques, research or
development projects or results, or other processes or knowledge not in the
public domain, used or developed by ITB or any Seller in or for the Business.
(e) Remedies. ITB and each Seller hereby acknowledges that the
restrictions contained in this Paragraph 8, in view of the nature of the
Business and the transactions contemplated by this Agreement, are reasonable and
necessary in order to protect the legitimate interests of Buyer, and that any
violation thereof would result in irreparable injuries to Buyer. ITB and each
Seller therefore acknowledges that, in the event of a violation of any of these
restrictions, Buyer shall be entitled to obtain from any court of competent
jurisdiction emergency, preliminary and permanent injunctive relief from the
person or entity violating such restrictions, as well as damages and an
equitable accounting of all earnings, profits and other benefits from such
person or entity arising from such violation, which rights will be cumulative
and in addition to any other rights or remedies to which Buyer may be entitled
in connection therewith.
(f) Enforceable. If for any reason, and to the extent that, any
paragraph or portion of a paragraph contained in this Paragraph 8 shall be held
by a court to be invalid or unenforceable, it is agreed that the same shall not
affect any other paragraph or portion hereof, but the remaining covenants and
restrictions or portions hereof shall remain in full force and effect; and that,
if such invalidity or enforceability is due to the unreasonableness of the time
or geographical area covered by any of such covenants and restrictions, the
covenants and restrictions contained in this Agreement shall nevertheless be
effective for such period of time and for such area as may be determined to be
reasonable by a court of competent jurisdiction.
9. Closing; Effective Date. Unless this Agreement has been terminated
pursuant to Section 22 hereof, the closing under this Agreement (the "Closing")
will take place at 10 a.m., Philadelphia time, on Thursday, September 3, 1998
(the "Closing Date") at the offices of Buyer's counsel in Philadelphia,
Pennsylvania, or at such other time or place as the parties shall mutually
agree. In the event all conditions to Closing are not met or waived by the
appropriate party by September 3, 1998, in the absence of an agreement by the
parties, the Closing Date shall be automatically changed to the third business
day after the last condition is met, and subject to Subparagraph 22(e), but not
later than December 31, 1998. Unless otherwise specified herein, the time and
date as of which the transactions provided for herein shall be deemed effective
(the "Effective Time") is 11:59 PM on the Closing Date.
10. Representations and Warranties of ITB and Sellers. ITB and each
Seller hereby jointly and severally represent and warrant to Buyer that:
(a) Organization; Authority. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey; has the corporate
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power and authority to own and use the Assets and to carry on the Business as it
is currently conducted; and is qualified to do business in each jurisdiction
wherein the conduct of the Business makes such qualification necessary. Each
Seller has the full corporate power, right and authority to make, execute,
deliver and perform this Agreement, and to take all steps and to do all things
necessary and appropriate to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate action on the part of each Seller and will
not contravene or violate or constitute a breach of the terms of Sellers'
applicable certificates of incorporation and by-laws.
(b) Binding Obligation - Sellers. This Agreement has been duly
executed and delivered by each Seller and constitutes the legal, valid and
binding obligation of each Seller, enforceable against each Seller in accordance
with its terms, except as limited by (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and transfer,
and other similar laws relating to or affecting the rights of creditors
generally, (ii) principles of equity (regardless of whether considered and
applied in a proceeding in equity or at law), and (iii) the effect of applicable
public policy on the enforceability of provisions relating to indemnification.
The execution, delivery and performance of this Agreement by each Seller will
not conflict with, result in a breach of, or entitle any party to terminate or
call a default under any contract, instrument, judgment, order, decree, law,
rule or regulation applicable to any Seller or by which any Seller is bound,
except as set forth in Schedule 10(e) hereto.
(c) Organization, Authority, Binding Obligation - ITB. ITB is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware; and is qualified to do business in each jurisdiction
wherein the conduct of its business makes such qualification necessary. ITB has
the full corporate power, right and authority to make, execute, deliver and
perform this Agreement, and to take all steps to do all things necessary and
appropriate to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary corporate action on the part of ITB and will not contravene or violate
or constitute a breach of the terms of ITB's constituent documents. This
Agreement has been duly executed and delivered by ITB and constitutes the legal,
valid and binding obligation of ITB, enforceable against ITB in accordance with
its terms, except as limited by (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and transfer,
and other similar laws relating to or affecting the rights of creditors
generally, (ii) principles of equity (regardless of whether considered and
applied in a proceeding in equity or at law), and (iii) the effect of applicable
public policy on the enforceability of provisions relating to indemnification.
The execution, delivery and performance of this Agreement by ITB will not
conflict with, result in a breach of, or entitle any party to terminate or call
a default under any contract, instrument, judgment, order, decree, law, rule or
regulation applicable to ITB or by which it is bound, except as set forth in
Schedule 10(e) hereto.
(d) Shareholder. ITB is the only shareholder of each Seller. There
are no warrants, options or any other documents or instruments in existence or
effect which give any other person or entity the right, contingent or otherwise,
to acquire or purchase any equity interest in any Seller from any Seller or from
ITB.
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(e) Consents. Except as provided on attached Schedule 10(e) no
consent of any party to any material contract or arrangement to which ITB or
Seller is a party, by which ITB or any Seller is bound or to which the Business
is subject, is required for the execution, delivery or performance of this
Agreement by ITB or the Sellers or the consummation of the transactions
contemplated hereby. No authorization, approval or consent of, and no
registration or filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery or performance
of this Agreement by ITB or the Sellers or the consummation of the transactions
contemplated hereby, except for the appropriate consents of the Racing
Commissions in New Jersey and Pennsylvania ("Racing Commissions") and such other
governing authorities as required ("Governing Authorities"), and compliance with
the Hart-Scott-Rodino Anti-Trust Improvement Act ("HSR").
(f) Litigation. Except as provided on attached Schedule 10(f), there
are no actions, suits, proceedings, orders, investigations or claims pending or,
to ITB and each Seller's knowledge, threatened against or relating to ITB, any
Seller, the Assets or the Business, or that would adversely affect this
Agreement, or that, if adversely determined, could have a material adverse
effect on any Seller or the Business, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, and, to the best
knowledge of ITB or any Seller, there is no basis for any of the foregoing.
(g) Taxes. Seller has delivered, or will when available deliver, to
Buyer the federal income tax returns of each Seller for the twelve month periods
ended June 30, 1996 and 1997. All federal, state, local and other tax returns
and/or reports which are required to be filed on or before the Closing Date by
each Seller have been, or will be, filed and all taxes indicated thereon as
being payable by any Seller, and all assessments, interest and penalties levied
thereon, have been paid by any Seller for all periods up through and including
the Effective Date. No tax return of any Seller is currently under audit by any
taxing authority. Each Seller has withheld all amounts required by law to be
withheld from payments made by it as of the Effective Date and has remitted or
will remit such amounts to the appropriate authorities within the times required
by law.
(h) Books and Records. The books and accounts and other business
records of each Seller relating to the Business and the Assets are complete and
fairly present the matters stated therein in all material respects, and all
transactions of each Seller have been accurately recorded therein. The accounts
listed on Schedule 1(e) represent all Racing Accounts of Sellers.
(i) Compliance with Laws. Each Seller is in compliance with all
applicable requirements of federal, state and local laws, regulations and
ordinances, and all applicable requirements of all governmental bodies or
agencies having jurisdiction over it and relating to each Seller or the
operation of the Business. No Seller has violated any laws relating to pollution
or protection of the environment. There are no pending, or, to the knowledge of
Sellers, threatened lawsuits or administrative proceedings against any Seller
that may materially
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adversely affect any Seller or the Business regarding environmental compliance,
control or liability. Specifically, as to environmental laws:
(A) Sellers have made available to the Buyer copies (to the
extent in the Sellers' possession) of all test results, studies and reports in
their possession and completed, regarding any Hazardous Materials generated at
GSP and Raceway and disposed of by the Sellers off-site, or regarding the
condition of the soil, water or ground water at GSP and Raceway, all of which
with the exception of the routine reports made in the regular course of the
Business; and
(B) Except as set forth in Schedule 10(i) hereto, Sellers are
not aware of Hazardous Materials or any present or former on-site land-fills,
settling ponds, disposal facilities or underground tanks at, on or under GSP and
Raceway.
(C) Except as set forth in Schedule 10(i) hereto, to the best of
Sellers' knowledge, each Seller is, and at all times has been, in compliance
with all Environmental Laws (as hereinafter defined). There has been no
complaint, order, directive, claim citation or notice by any governmental
authority or any other person or entity with respect to any alleged violations
of any Environmental Law or the occurrence of a Hazardous Discharge at, about or
from GSP and Raceway; or by reason of any business thereon conducted
("Environmental Claim"). Except as set forth in Schedule 10(i) hereto, no Seller
has any knowledge of an existing or potential Environmental Claim or violation
of any Environmental Law, nor has any Seller received any notification or has
any knowledge of alleged, actual or potential responsibility for, or any inquiry
or investigation regarding, any disposal, releases or threatened release at any
location of any Hazardous Materials generated or transported by any Seller; and
there has been no release of Hazardous Materials by any of the Sellers on, upon
or into the real property used by it, and, to the best knowledge of Sellers,
there has been no such release on, upon or into any real property in the
vicinity of GSP or Raceway property that, through soil or groundwater
contamination, has come to be located on the real property. No environmental
lien has attached to GSP or Raceway property.
(D) For purposes of this Subparagraph 10(i), "Environmental
Laws" shall mean all federal, state, district and local laws, all rules and
regulations promulgated thereunder, and all orders, judgments, notices, permits
or demand letters issued, promulgated or entered pursuant thereto, relating to
(i) releases, discharges, emissions or disposal to air, water, land or
groundwater; (ii) to the withdrawal or use of groundwater; (iii) to the use,
handling or disposal or polychlorinated bipheyls (PCBs), asbestos or urea
formaldehyde; (iv) to the treatment, storage, disposal or management of
hazardous substances (including, without limitation, petroleum, its derivatives,
by-products or other hydrocarbons), and any other solid, liquid or gaseous
substance, exposure to which is prohibited, limited or regulated, or may or
could pose a hazard to the health and safety of the occupants of the real
property or the property adjacent to or surrounding the real property; (v) to
the exposure of persons to toxic, hazardous, or other controlled, prohibited or
regulated substances; (vi) to the transportation, storage, disposal, management
or release of gaseous or liquid substances, including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended,
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the Toxic Substances Control Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and Recovery Act, as
amended, the Clean Water Act, as amended, the Safe Drinking Water Act, as
amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as
amended, the Occupation Safety and Health Act, as amended, ISRA, and all
analogous laws promulgated or issued by any state or other governmental
authority.
(j) Financial Statements. Each Seller maintains its books and
records on an accrual basis consistent with generally accepted accounting
principles and past practices. Each Seller has delivered to Buyer the audited
consolidated financial statements of ITB and its subsidiaries for the twelve
month periods ended June 30, 1996 and 1997, and the unaudited financial
statements for the nine months ended March 31, 1998 (the "Financial
Statements"). The Financial Statements will include internal financial
statements of GSRT and combined internal financial statements of FRA, ACH and
Circa. The Financial Statements are true, correct and complete in all material
respects, and fairly and accurately present the financial condition of ITB and
each Seller as of the date thereof and the results of the operations of each for
the period described therein, in all material respects, under generally accepted
accounting principles consistently applied in previous years. Since March 31,
1998, ITB and each subsidiary has operated the Businesses only in the ordinary
course; there has been no material adverse change in the financial condition,
results of operation, assets, business operations or liabilities of any Seller
or the Business. There are no debts, liabilities, obligations or commitments of
any Seller, long-term or short-term, contingent or otherwise, as of the
Effective Time, which are required to be disclosed under generally accepted
accounting principles and which are not set forth in the Financial Statements or
disclosed in this Agreement (including its schedules), except for liabilities
arising in the ordinary course of business since March 31, 1998 which are not
set forth in the Financial Statements. No debts, liabilities, obligations or
commitments have been incurred since March 31, 1998 other than in the ordinary
course of business.
(k) Insurance Policies. Schedule 10(k) contains a schedule of all
insurance policies owned or maintained by each Seller insuring or relating to
the Assets or the Business. Such list includes policy numbers, identities of
insurers, and a brief description of the nature of insurance included in each
such policy. All of such insurance policies are in full force and effect as of
the date hereof, and all premiums thereunder have been paid through the
Effective Time. No Seller has received a notice of cancellation or non-renewal
of any such policy or binder. All of Sellers' policies covering the Assets are
"occurrence" policies. Each Seller will continue to maintain such insurance
coverage in full force and effect through the Closing Date. Each Seller has
delivered or made available, or at or prior to the Closing will deliver or make
available, to Buyer true and correct copies of each of such insurance policies.
(l) [Reserved]
(m) Business; Competition. Except as set forth in Schedule 10(m),
Sellers are not presently conducting any business other than the Businesses. To
the best knowledge of ITB and each Seller, no employee of any Seller, has any
direct or indirect interest in any business competitive in the Territory with
the Businesses.
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(n) Intellectual Property.
(i) All copyrights, copyright applications, trademarks and
service marks (whether or not registered), trademark and service mark
applications, trade names and other proprietary rights owned by, used by or
licensed to the Sellers that are material to the Business (hereinafter referred
to, collectively, as the "Intellectual Property") are listed on Schedule 10(n)
hereto. Sellers hold no patents or patent applications.
(ii) All contracts, agreements, leases, licenses, franchises,
permits and other documents relating to any of the Intellectual Property,
including without limitation those authorizing Sellers' use thereof, are listed
on Schedule 10(n)(ii) hereto.
(iii) Sellers are either: (i) the owners of all right, title and
interest in and to the Intellectual Property, and all portions thereof, free and
clear of all liens, security interests, charges, encumbrances or other adverse
claims of any kind or nature; or (ii) have a valid right to use all such
Intellectual Property as it is currently being used. Sellers have not granted
any right or license to use the Intellectual Property, or any portion thereof,
to any third party.
(iv) To Sellers' knowledge, the operations of the Business, as
conducted on the date hereof do not infringe any patents, copyrights,
trademarks, service mark, trade secrets or other intellectual property rights of
any third party. No Seller has received any notice of any claim that the
Intellectual Property, or any portion thereof, infringes upon, violates or
conflicts with any patent, copyright, trademark, service mark, trade name, trade
secrets or other proprietary rights of any third party and, after due
investigation, Sellers have no reason to believe that there is any basis for
such claim of infringement, violation or conflict.
(v) To Sellers' knowledge, none of the computer software,
computer programs or computer systems created and owned by Sellers (the
"Computer Properties") included as part of the Intellectual Property contains or
will contain any "software locks" or any similar devices which, upon the
occurrence of a certain event, the passage of a certain amount of time, or the
taking of any action (or the failure to take action) by or on behalf of Sellers,
will cause the Computer Properties, or any component part thereof, to be
destroyed, erased, damaged or otherwise made inoperable.
(vi) To Sellers' knowledge, none of Sellers' directors,
officers, employees, agents or affiliates own any portion of or any rights in
the Intellectual Property. Any rights in or to any portion of the Intellectual
Property that were originally or previously owned by a director, officer or
employee of any Seller have been assigned and transferred to the Sellers. Other
than the Intellectual Property, Sellers do not require any patents, copyrights,
trademarks,
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service mark or other intellectual property rights to carry on the Business as
it is conducted on the date hereof.
(o) Ownership of the Assets. In the aggregate, the Sellers are the
true and lawful owner of the Assets and have good and clear record and
marketable title to the Assets, free and clear of all mortgages, security
interests, pledges, liens, encumbrances or charges of any kind, except for liens
held by Credit Suisse First Boston or any affiliate thereof ("CSFB"), or as
otherwise described on Schedule 10(o) hereto. As of the date hereof there are,
and as of the Closing Date there will be, no existing options, calls or
commitments of any kind relating to the Assets (other than the contracts
described on the schedules hereto) and Sellers are not obligated and will not be
obligated as of the Closing Date, to transfer the Assets except pursuant to the
provisions of this Agreement.
(p) No Misrepresentations. No statement made by any Seller or ITB in
any representation, warranty or covenant made by any Seller or ITB to Buyer in
this Agreement, or in any other document furnished by any Seller or ITB to Buyer
in connection with the transactions contemplated hereby, contains any untrue
statement of material fact, or omits to state a material fact required to be
stated to make such statement, in light of the circumstances in which such
statement was made, not misleading.
11. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to ITB as follows:
(a) Corporate Organization; Authority. Buyer is a corporation duly
organized and validly subsisting under the laws of the State of New Jersey and
has the power and authority to own the Assets and conduct the Business. Buyer
has the full corporate power, right and authority to make, execute, deliver and
perform this Agreement, and to take all steps and to do all things necessary and
appropriate to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Buyer have been duly authorized by
all necessary corporate action on the part of Buyer and will not contravene or
violate or constitute a breach of the terms of Buyer's Articles of Incorporation
or By-laws.
(b) Binding Obligation. This Agreement, and the Purchase Price Notes
when executed and delivered at the Closing, has been or will be (in the case of
the Purchase Price Notes) duly executed and delivered by Buyer and constitute
the legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as limited by (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent conveyance and
transfer, and other similar laws relating to or affecting the rights of
creditors generally, (ii) principles of equity (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating to
indemnification. The execution, delivery and performance of this Agreement by
Buyer will not conflict with, result in a breach of, or entitle any party to
terminate or call a default with respect to any contract, instrument, judgment,
order, decree, law, rule or regulation applicable to Buyer or by which Buyer is
bound.
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(c) Consents. No consent of any party to any contract or arrangement
to which Buyer is a party or by which it is bound is required for the execution,
consummation or performance of this Agreement by Buyer or the consummation of
the transactions contemplated hereby. No authorization, approval or consent of,
and no registration or filing with, any governmental or regulatory official,
body or authority is required in connection with the execution, delivery or
performance of this Agreement by Buyer or the consummation of the transactions
contemplated hereby, except obtaining licenses for Buyer from Racing Commissions
and Governing Authorities, as required, and compliance with HSR.
(d) Litigation. There are no actions, suits, proceedings, orders,
investigations or claims, pending or threatened, against or relating to Buyer
that would affect this Agreement, or, if adversely determined, could have a
material adverse affect on Buyer, at law or in equity, or before or by any
national, provincial, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, and there is no
basis for any of the foregoing.
(e) No Misrepresentations. No statement made by Buyer in any
representation, warranty or covenant made by Buyer to Sellers in this Agreement,
or in any other document furnished by Buyer to Sellers in connection with the
transaction contemplated hereby, contains any untrue statement of material fact,
or omits to state a material fact required to be stated to make such statement,
in light of the circumstances in which such statement was made, not misleading.
(f) Best Efforts to Obtain Approvals. Buyer will use its best
efforts to obtain as soon as practicable all necessary approvals, to the extent
such approvals are conditions to the closing of the transactions of this
Agreement.
(g) Mortgage on Future Assets. Upon the acquisition by Buyer of the
10 Acre Parcel and any other real estate acquired in fee by Buyer for an OTB
Facility developed in New Jersey by Buyer, Buyer shall immediately create a
mortgage thereon securing the Purchase Price Notes that is subordinate in
priority to Buyer's purchase money mortgage related to the acquisition of such
properties (including financing of the construction and/or operation of the OTB
Facilities), the senior indebtedness related to the acquisition of the assets
pursuant to this Agreement, and all replacements and substitutions thereof.
11A. Representation and Warranties of Greenwood. Greenwood hereby
represents and warrants to ITB and the Sellers that it is a corporation duly
organized and validly existing under the laws of the State of Delaware and has
the power and authority to execute and deliver the guarantee, guaranteeing the
performance by the Buyer of the Purchase Price Notes (the "Guarantee"). The
Guarantee will be in the form of Exhibit 11A hereto. The Guarantee, when
executed and delivered, will have been duly authorized, executed and delivered
by Greenwood and will constitute the legal, valid and binding agreements of
Greenwood enforceable in accordance with its terms, except as limited by (i)
bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation,
fraudulent conveyance and transfer, and other similar laws relating to or
affecting the rights of creditors generally, (ii) principles of equity
(regardless
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of whether considered and applied in proceeding in equity or at law), and (iii)
the effect of applicable public policy on the enforceability of provisions
relating to indemnification.
12. Conditions to Obligation of Buyer. Buyer's obligation to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
and fulfillment at or before the date of Closing of each of the following
conditions:
(a) Representations and Warranties True and Covenants Performed at
Closing. All representations and warranties of the Sellers and ITB made in or
pursuant to this Agreement shall be true and correct in all material respects at
and as of the Closing Date with the same force and effect as though made at and
as of the Closing Date; and each Seller and ITB shall have performed, observed
and complied in all material respects with all the obligations and conditions
required by this Agreement to be performed, observed or complied with by them at
or prior to the Closing.
(b) State Approvals. The approval of the Racing Commissions and
other Governing Authorities as required for the continued operations of the
Business by Buyer, as currently conducted, which approval shall be without any
new conditions or restrictions not now existing. The state approvals shall
include the issuance of all licenses necessary to permit Buyer to operate the
Businesses. To the extent the licenses now held by Sellers are not assignable to
Buyer, Sellers will surrender such licenses it holds to the state.
(c) Credit Approval. The approval of CSFB to the transactions
contemplated by this Agreement, and CSFB's execution of a non-disturbance
agreement for the Lease, and CSFB's subordination agreement to the covenant
attached to the Lease, all in form satisfactory to Buyer.
(d) HSR Approval. The filing of all required documentation pursuant
to the HSR and either (i) the expiration of the waiting period provided for
therein or (ii) receipt by the parties of written notification from the U.S.
Department of Justice and the Federal Trade Commission of the determination of
such agencies not to oppose the transactions contemplated by this Agreement.
(e) Title to Real Property . Buyer shall have received title
commitments issued by a recognized title insurance company at Buyer's expense
relating to the real property at GSP and Raceway (the "Real Property"), and
consistent with the following:
(i) Title to the Real Property shall be good and marketable, and
free and clear of all liens, restrictions, easements, encumbrances, leases,
tenancies and other title objections except for the Permitted Encumbrances (as
defined below). In addition, such title shall be insurable under an ALTA Owner's
Policy (Amended 1992), as aforesaid by any reputable title insurance company at
regular rates for coverage in the amount of the Purchase Price allocated to the
Real Property. Sellers, at Sellers' expense, shall take all necessary steps
reasonably required by Buyer's title insurance company to permit the issuance to
Buyer without additional premium of a title insurance policy without exceptions
for mechanics liens, bulk sales
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clearances, zoning, survey and such other customary endorsements as Buyer shall
reasonably request, with the cost of any required survey paid by the Sellers.
(ii) Buyer shall order a commitment to insure title
("Commitment") within five (5) days following the date of this Agreement, and
shall send Sellers a copy of the Commitment within twenty (20) days following
receipt of the Commitment and copies of all exceptions to title, together with a
list of those exceptions to title which are unacceptable to Buyer and copies of
all documents related to the exceptions ("Supporting Documents"); standard
utility, communications and road easements and rights of way and other easements
and restrictions that do not unreasonably interfere with the current use of the
Real Property; all other exceptions to title listed on the Commitment and not
declared unacceptable by Buyer shall be deemed acceptable ("Permitted
Encumbrances"). Sellers shall have twenty (20) days following their receipt of
the Commitment and the list of Permitted Encumbrances and Supporting Documents
("Sellers' Title Period") to notify Buyer of Sellers' unwillingness or inability
to deliver title subject only to the Permitted Encumbrances, in which event
Buyer shall have the option, to be exercised by notice to Sellers within ten
(10) days after receipt of Sellers' notice ("Buyer's Title Period"), to either
accept such title to the Premises as Sellers can provide (other than monetary
liens of an ascertainable amount, which shall be paid by Sellers at Closing from
the Cash Portion of the Purchase Price) or to terminate this Agreement. Failure
by Sellers to notify Buyer of Sellers' inability or unwillingness to deliver
title subject only to the Permitted Encumbrances within the Sellers Title Period
shall constitute Sellers' agreement to deliver title at Closing subject only to
the Permitted Encumbrances. Failure by Buyer to notify Sellers within Buyer's
Title Period of Buyer's decision to accept such title as Sellers are willing or
able to deliver or to terminate the Agreement shall constitute Buyer's
acceptance of such title as Sellers are able or willing to deliver.
(f) No Bankruptcy. No Seller nor ITB shall have admitted in writing
its inability to pay its debts generally as they become due, filed or consented
to the filing against it of a petition in bankruptcy or a petition to take
advantage of any insolvency act, made an assignment for the benefit of its
creditors, consented to the appointment of a receiver for itself for the whole
or any substantial part of its property, or had a petition in bankruptcy filed
against it, been adjudicated a bankrupt, or filed a petition or answer seeking
reorganization or arrangement under the federal bankruptcy law or any other
applicable law or statute of the United States of American or any other
jurisdiction.
(g) Other Consents. All consents, approvals and waivers from third
parties and governmental authorities and any other parties necessary to permit
the consummation of the transaction contemplated hereby shall have been
obtained.
(h) ISRA. Buyer shall have received from the Sellers either (at
Sellers' option); (a) a non-applicability letter; (b) a de minimis quantity
exemption; or (c) a non further action letter, from the Industrial Site
Evaluation Element, or its successor, of NJDEP, or its successor (the "ISRA
Determination"). If Sellers shall not have obtained such non-applicability
letter, exemption or approval (depending on that for which Sellers have made
application) not
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later than the Closing Date, then Sellers shall deliver an opinion of Sellers'
counsel that, in such counsel's opinion, ISRA is not applicable to the
transaction contemplated by this Agreement and Sellers agree to diligently
pursue and obtain at their own expense a non-applicability letter, a negative
declaration or no further action letter.
(i) Existing Litigation. The settlement, on the terms set forth in
the Stipulation (as hereinafter defined in Subparagraph 22(b)) of the actions
described in the Stipulation, and of all litigation between and among Greenwood
on the one hand, and ITB or any affiliate of ITB on the other hand, if any.
(j) No Adverse Litigation. There shall not be pending or threatened
any third party action or proceeding, by or before any court or other
governmental body which shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement, or which might reasonably be
expected to affect the right of Buyer to own, or control the Assets and which in
the judgment of Buyer, exercised in reasonable good faith makes it inadvisable
to proceed with the transactions contemplated herein. An action or proceeding
shall be deemed threatened for purposes of this Subparagraph if there is a
specific credible written threat known to the Sellers.
(k) No Damage to Assets. The risk of any loss or damage to the
assets and all liability with respect to injury and damage occurring in
connection therewith shall be the sole responsibility of the Sellers until the
completion of the Closing. If any material part of the Assets shall be damaged
by fire or other casualty prior to the completion of Closing, Buyer shall have
the right and options to: (i) terminate this Agreement; or (ii) proceed with
Closing and receive and retain the insurance proceeds arising from such
casualty.
(l) Deliveries. Sellers shall have delivered to Buyer the following:
(i) Possession of the Assets (or the right to obtain possession
on demand) together with deeds, bills of sale, endorsements, assignments,
certificates of title and other good and sufficient instruments of sale,
transfer, assignment and release as may be necessary, appropriate or desirable,
in form reasonably satisfactory to Buyer, to transfer to and effectively vest
good title in the Assets, free and clear of all liens, claims, security
interests and encumbrances whatsoever (except those permitted hereunder), in
Buyer.
(ii) The lease agreement for the GSP Facility substantially in
the form of Exhibit 7, hereto attached.
(iii) A list of all of Seller's Receivables then outstanding.
(iv) The opinion, dated as of the date of Closing, of Richards,
Layton & Finger, P.A., counsel to Sellers, in form and substance reasonably
satisfactory to counsel for
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Buyer. In rendering such opinion, Richards, Layton & Finger, P.A. may rely on
New Jersey counsel reasonably acceptable to Buyer.
(v) Each Seller shall have delivered to Buyer a certificate of
non- foreign status under Section 1445 of the Code.
(vi) An Assignment and Assumption Agreement related to the
Assumed Obligations.
(vii) Such other instruments and documents as may be reasonably
necessary to effect the consummation of the transactions contemplated by this
Agreement, in form and substance reasonably satisfactory to Buyer, as Buyer may
reasonably request.
13. Conditions to Obligation of Sellers and ITB. Sellers' and ITB's
obligation to consummate the transactions contemplated by this Agreement is
subject to the satisfaction and fulfillment at or before the date of Closing of
each of the following conditions:
(a) Representations and Warranties True and Covenants Performed at
Closing. All representations and warranties of Buyer made in or pursuant to this
Agreement shall be true and correct in all material respects at and as of
Closing with the same force and effect as though made at and as of Closing; and
Buyer shall have performed, observed and complied in all material respects with
all the obligations and conditions required by this Agreement to be performed,
observed or complied with by it at or prior to Closing.
(b) HSR Filing Fees. The filing of all required documentation
pursuant to the HSR, the payment by the Buyer of the applicable fees and either
(i) the expiration of the waiting period provided for therein or (ii) receipt by
the parties of written notification from the U.S. Department of Justice and the
Federal Trade Commission of the determination of such agencies not to oppose the
transactions contemplated by this Agreement.
(c) Fairness Opinion. ITB and Sellers shall have received an opinion
of a nationally recognized investment banking firm selected by ITB, and
satisfactory to Buyer in its reasonable judgment, confirmed on the Closing Date
that the transactions contemplated hereby are fair to the stockholders of ITB
from a financial point of view. Such opinion shall be in form and substance
reasonably satisfactory to counsel to Sellers. In rendering its opinion, the
investment banking firm shall take into consideration the views of the
operational personnel of the Sellers and the Buyer as to valuation.
(d) Creditor and Shareholder Approvals. The transaction contemplated
by this Agreement shall have been approved by CSFB and by a majority vote of the
shareholders of ITB entitled to vote generally in the election of the directors.
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(e) Government Approvals. All approvals required from the Racing
Commissions and other Governing Authorities as required to consummate the
transaction contemplated by this Agreement shall have been received and are in
full force and effect.
(f) Deliveries. Buyer shall have delivered to Sellers at the Closing
the following:
(i) Payment of the Cash Portion of the Purchase Price (subject
to the adjustments to be made pursuant to Section 4(c) hereof);
(ii) The Purchase Price Notes;
(iii) The Guaranty of the Purchase Price Notes by Greenwood;
(iv) An Assignment and Assumption Agreement related to the
Assumed Obligations;
(v) An opinion, dated as of the date of the Closing, of Fox,
Rothschild, O'Brien & Frankel, LLP, counsel to Buyer, in form and substance
satisfactory to counsel for Sellers. In rendering such opinion, such counsel may
rely upon other counsel reasonably acceptable to ITB; and
(vi) Such other instruments and documents as may be reasonably
necessary to effect the consummation of the transactions contemplated by this
Agreement, in form and substance reasonably satisfactory to Sellers, as Sellers
or ITB may reasonably request.
(g) Creditworthiness of Greenwood. Buyer has caused Greenwood to
provide Sellers' counsel with letters from Greenwood's Chief Financial Officer
containing certain financial information prior to or simultaneously with the
execution of this Agreement. The financial information consists of Greenwood's
handle, revenue, EBITDA and debt for the years ended December 31, 1995, 1996 and
1997, and the four months ended April 30, 1998. The financial condition of
Greenwood, and its creditworthiness as a guarantor of Buyer's Purchase Price
Notes, as disclosed to Sellers prior to the date hereof in such letters, shall
not have materially and adversely changed between the date of the disclosure and
the Closing Date. Not more than 10 nor less than 5 days prior to the Closing,
Buyer will provide ITB and Sellers updated information covering the financial
condition of Greenwood, in the manner and type furnished in such letters prior
to the date hereof. ITB and Sellers acknowledge that Greenwood will have, by the
Closing Date guaranteed Buyer's obligations to financing sources related to the
financing of the acquisition described herein, which guarantee will impact
Greenwood's creditworthiness, but not be deemed a material adverse change. All
financial information
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concerning Greenwood shall be kept confidential by ITB and Sellers. ITB' Board
of Directors has determined that the information provided to its counsel is
satisfactory to establish Greenwood's creditworthiness as a guarantor of Buyer's
Purchase Price Notes.
14. Conduct Pending Closing. From and after the execution and delivery
of this Agreement and until the Closing Date, except as otherwise provided
herein or with the prior written consent of Buyer, which consent will not be
unreasonably withheld:
(a) Operations. Each Seller will conduct its business and operations
substantially in the manner in which the same have heretofore been conducted,
and will use its best efforts to cause each Seller to (i) preserve its business
organization intact, (ii) keep available to it the services of its officers,
employees and agents, and (iii) preserve its relationship with customers,
suppliers, and other having dealings with it;
(b) Repairs. Each Seller will maintain all of its properties in
customary repair, order, and condition, reasonable wear and use and damage by
unavoidable casualty excepted, and will maintain insurance of such types and in
such amounts upon all of its properties and with respect to the conduct of its
business as are in effect on the date of this Agreement;
(c) Absence of Change. Each Seller will not (i) issue any shares or
any other securities; (ii) declare or pay any dividend or make any other
distribution of or with respect to its securities or purchase or redeem any
securities; (iii) pay any bonus or increase the rate of compensation of any of
its employees or enter into any new employment agreement or amend any existing
employment agreement; (iv) sell or transfer any assets other than in the
ordinary course of business; (v) incur any material obligations or liabilities,
including capital expenditures or enter into any material transaction; (vi)
amend its certificate of incorporation; or (vii) agree to do any of the
foregoing.
(d) Access to the Sellers' Properties and Records. From and after
the execution and delivery of this Agreement, the Sellers will afford to the
representatives of Buyer access, during normal business hours and upon
reasonable notice, to GSP and Raceway sufficient to enable Buyer to inspect the
assets and business of the Sellers, and the Sellers will furnish to such
representatives during such period all such information relating to the
foregoing investigation as Buyer may reasonably request; provided, however, that
any furnishing of such information to Buyer and any investigation by Buyer shall
not affect the right of Buyer to rely on the representations and warranties made
by the Sellers and ITB in or pursuant to this Agreement, so long as Buyer
promptly advises Sellers in writing if it has discovered facts which render a
representation or warranty untrue and provides Sellers an opportunity to cure a
breach of representation or warranty, and, provided further that Buyer will hold
in strict confidence all documents and information concerning the Sellers so
furnished, and, if the sale pursuant hereto shall not be consummated, (i) such
confidence shall be maintained and Buyer will not use or disclose to any person
any such document or information (except to the extent that such information can
be shown to be previously known to Buyer in the public domain, or later acquired
by Buyer from other legitimate sources) and (ii) any information furnished to
Buyer in written form (and any copies thereof) shall be returned to Sellers.
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(e) Notice of Material Developments. The Sellers will give prompt
written notice to Buyer of any material development actually known to them
affecting the Assets, properties, business, business prospects, financial
condition, or result of operation of the Sellers, including, without limitation,
any development which results in the inaccuracy of any of the representations
and warranties of the Sellers or ITB made herein. However, no disclosure
pursuant to this Subparagraph shall be deemed to amend or supplement any of such
representations and warranties or any of the schedules hereto.
(f) Publicity. No press release or other public announcement related
to this Agreement or the transactions contemplated hereby will be issued by any
party to this Agreement without the prior approval of the other parties hereto,
and to the extent practicable any press release will be issued jointly by the
parties; however, either party may make public disclosure which it believes
based on advice of counsel to be required by law (in which case such party will
consult with the other party prior to making such disclosure to the extent
practicable and will furnish a copy to the other party).
15. [Reserved]
16. Cooperation; Further Assurances.
(a) Cooperation. From the date hereof to the Closing the parties
will cooperate in a prompt and diligent fashion in obtaining approvals required
for the consummation of the transaction contemplated herein, and each Seller
shall, subject to Section 14(d) hereof, give Buyer and its representatives
access to the facilities of the Business, its records and personnel to permit
Buyer's continued due diligence.
(b) Bulk Sale. The Sellers shall cooperate with Buyer in connection
with the characterization of this transaction as a bulk sale for tax purposes,
and will file Form NJSA 54:32B-22(c) with the State of New Jersey.
(c) Brownfields Compliance. In the event Buyer, at its option,
desires to obtain the benefits which can inure to it under the New Jersey
Brownfield and Contaminated Site Remediation Act, P.L. 1997 ch. 278, et seq.
(the "Act"), the parties shall cooperate with each other, and, generally,
perform all acts and execute all documents, instruments, and certifications
necessary or appropriate to enable Buyer to obtain all benefits of such Act. The
reasonable and necessary costs in connection with obtaining these benefits (but
not any remediation costs, except such additional remediation costs associated
with compliance with the Act, if any, which Buyer agrees to assume for purposes
of obtaining the benefits of the Act, and which were not otherwise the
responsibility of the Sellers or ITB under this Agreement) will be paid by the
Buyer.
(d) Further Assurances. At the Closing and at all times thereafter,
each party hereto shall, upon the request of another, execute all documents,
instruments, certifications and further assurances and take all steps reasonably
necessary or appropriate to implement, confirm or perfect the transactions
contemplated under this Agreement.
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17. Indemnification.
(a) Subject to the limitations otherwise set forth in this Section
17, each Seller and ITB shall jointly and severally indemnify, hold harmless and
defend Buyer (and its officers and directors) from and against any and all
claims, liabilities, losses, damages, costs and expense, including reasonable
counsel fees and costs relating thereto, but excluding consequential damages
(each of the foregoing being referred to herein as a "Loss") incurred or
suffered by Buyer, directly or indirectly, by reason of: (i) any breach by any
Seller or ITB of any of the warranties, representations, covenants or agreements
made by any Seller or ITB contained in this Agreement; (ii) any and all debts,
obligations, duties or liabilities of or claims against any Seller not expressly
assumed by Buyer hereunder; (iii) any liability arising in connection with
sales, franchise, personal property, income, social security or other taxes
assessed against any Seller or ITB with respect to the period prior to the
Effective Time; (iv) any non-compliance by any Seller with any bulk sales act;
(v) any and all debts, obligations, duties, liabilities, commitments or claims
arising, or relating to events which occurred, prior to the Effective Time, out
of, or in connection with, any Seller, the Business or the Assets, unless
expressly assumed by Buyer hereunder; (vi) any costs, expenses, fines or damages
incurred by Buyer, related to environmental conditions or compliance with
Environmental Laws at GSP or Raceway; and (vii) any and all actions, suits,
proceedings, assessments, judgments, costs and expenses incident to any of the
foregoing, including, without limitation, any legal fees and other expenses
incurred in connection with the enforcement of Buyer's rights under this
Agreement, in the event Buyer is the prevailing party in any such enforcement
proceeding.
(b) Buyer shall indemnify, hold harmless and defend each Seller and
ITB from and against any Loss incurred or suffered by any Seller or ITB,
directly or indirectly, by reason of: (i) any breach by Buyer of any of the
warranties, representations, covenants or agreements made by Buyer contained in
this Agreement; and (ii) any and all debts, obligations, duties, liabilities,
commitments or claims arising, or relating to events which occurred, after the
Effective Time, out of, or in connection with, the Business or the Assets, but
excluding environmental matters as covered by the indemnification of
Subparagraph 17(a)(vi); (iii) any and all debts, obligations, duties or
liabilities of or claims against any Seller expressly assumed by Buyer
hereunder; and (iv) any and all actions, suits, proceedings, assessments,
judgments, costs and expenses incident to any of the foregoing, including,
without limitation, any legal fees and other expenses incurred in connection
with the enforcement of Seller's rights under this Agreement, in the event any
Seller is the prevailing party in any such enforcement proceeding; provided,
however, Buyer's indemnity as to the operation of GSP and the GSP Facility shall
apply only in respect of Losses arising out of Buyer's operation of the GSP
Facility pursuant to the lease referred to in Paragraph 7 hereof, or Buyer's
purchase of the GSP Facility or any portion thereof, in which case the indemnity
shall relate only to Losses related to the portion of the GSP Facility acquired
by Buyer.
(c) As soon as reasonably practical (but in no event later than
twenty days) after receipt by a party hereto (the "Indemnitee") of notice of any
Loss, in respect of which any other party may be liable under this Section 17,
the Indemnitee shall give written notice thereof
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to the other party or parties obligated to provide indemnification hereunder
(the "Indemnifying Party"). The Indemnitee may, at its option, claim indemnity
under this Section 17 as soon as a claim has been threatened by a third party,
regardless of whether an actual Loss has been suffered, so long as the
Indemnitee shall in good faith determine that such claim is not frivolous and
that the Indemnitee (or any director or officer of the Indemnitee) may be liable
or otherwise incur a Loss as a result thereof and shall give notice of such
determination to the Indemnifying Party. The Indemnitee shall permit the
Indemnifying Party, at its option and expense, to assume the defense of any such
claim by counsel reasonably satisfactory to the Indemnitee and to settle or
otherwise dispose of the same, provided that the Indemnitee may at all times,
and at its expense, participate in such defense, and provided, further, that the
Indemnifying Party shall not, in defense of any such claim, except with the
prior written consent of the Indemnitee, consent to the entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff in question to the Indemnitee and its
affiliates a release of all liabilities in respect of such claims, or that does
not result only in the payment of money damages by the Indemnifying Party.
(d) The failure of an Indemnitee to give prompt notice to an
Indemnifying Party specified in Section 17(c) above shall not release, waive or
otherwise affect the Indemnifying Party's obligation to indemnify hereunder,
except to the extent that the Indemnifying Party can demonstrate actual loss and
prejudice as a result of such failure.
(e) The amount of any payment or reimbursement for a Loss shall be
net of any tax benefit realized or to be realized by the Indemnitee and shall be
net of any insurance proceeds actually or to be received by the Indemnitee.
Except for fraud or any willful or knowing breach or misrepresentation, as to
which claims may be brought without limitation as to time or amount:
(i) No claim or action shall be brought under this Section 17
for breach of any representation, warranty or covenant under this Agreement
after a period of two years from the Closing Date unless written notice of such
claim or action is provided on or prior to the end of such period, except that
any claim or action brought for breach of any representation or warranty made in
or pursuant to Paragraph 10(g) (titled "Taxes") may be brought at any time until
the underlying tax obligation is barred by the application period of limitation
under federal or state laws relating thereto (as such period may be extended by
waiver), and except for any claim or action brought for breach of any
representation, warranty or covenant made in or pursuant to Paragraph 10(i) or
Subparagraph 7(a)(vi) relating to environmental matters, which may be brought
without time limit; provided, however, that Sellers' liability for environmental
matters may be limited as to the time and amount by mutual consent of the
parties hereto, following Buyer's due diligence concerning these matters, in
which case an amendment to this Agreement will set forth such limits.
(ii) The Sellers and ITB, as one party, and Buyer, as another
party, shall not be entitled to indemnification under this Section 17 unless,
and only when the aggregate
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of such party's claims exceeds $50,000, but then if such threshold is exceeded,
for the full amount of the claim, meaning the threshold is not a deductible.
18. Right of Offset. In addition to any other remedy available to Buyer
against Sellers and ITB hereunder or under any law or otherwise for any Loss for
which indemnification applies, Buyer shall, after written notice to Sellers and
ITB, given in the manner prescribed in Paragraph 21 below ("Notice"), be
entitled to offset the amount of any Loss for which indemnification under
Section 17 is available against any and all amounts payable hereunder by Buyer
to Sellers, including amounts due under the Purchase Price Notes; provided,
however, at the time the Notice is given to Sellers and ITB, the amount of the
offset will be paid into escrow to an escrow agent selected by Buyer, subject to
the approval of Sellers and ITB based on their reasonable judgment, until any
dispute related to the offset is resolved, as follows: In the event no Seller or
ITB objects to the offset within 20 days of their receipt of the Notice, the
amount in escrow (plus any interest earned thereon) shall be returned to Buyer
immediately. In the event a Seller or ITB disputes the offset, it shall provide
Buyer with the details of the dispute, including the amount not in dispute
(which amount shall be returned to Buyer) and the issue will be submitted to
arbitration in Cherry Hill, New Jersey, to be resolved under the regulations of
the American Arbitration Association then prevailing, by a single arbitrator
whose determination shall be binding, and which may award attorney fees and
costs.
19. Survival of Other Sections. The restrictive covenants contained in
Section 8, the indemnification obligations set forth in Section 17, subject to
the limitations set forth in Section 17(e), and the rights of offset contained
in Section 18 shall survive the Closing hereunder.
20. Expenses; Sales and Transfer Taxes. The parties hereto shall bear
their own respective expenses, including legal and accounting fees, incident to
the negotiation, preparation and carrying out of this Agreement. Buyer and
Sellers will jointly pay, in equal shares, any sales, transfer or business
privilege taxes and duties due upon or with respect to the transactions
contemplated by this Agreement, if any, except that Buyer shall pay HSR fees.
21. Miscellaneous.
(a) Notices. All notices, demands and other communications to be
made hereunder (each, a "Notice") shall be given in writing and shall be deemed
to have been duly given if personally delivered or sent by certified or
registered mail, first class postage prepaid, return receipt requested, to the
other party at the following address (or to such other address as may be given
by Notice by any party):
If to Buyer: Greenwood New Jersey, Inc.
3001 Street Road
Bensalem, PA 19020-8512
Attn: Robert W. Green, President
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With a copy to: Theodore A. Young, Esquire
Fox, Rothschild, O'Brien & Frankel,
LLP 2000 Market Street, 10th Floor
Philadelphia, PA 19103-3291
If to ITB or International Thoroughbred Breeders, Inc.
any Seller: Haddonfield Road and Route 70
Cherry Hill, NJ 08034
Attn: Chief Executive Officer
With a copy to: Kevin G. Abrams, Esquire
Richards, Layton & Finger, P.A.
One Rodney Square
P. O. Box 551
Wilmington, DE 19899
Telecopier: (302) 658-6548
Notice shall be deemed effective, if personally delivered, when delivered, and
if mailed, at midnight on the third business day after deposit in the U.S. mail.
(b) Successors and Assigns. No party hereto may assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of the other parties hereto, except that Buyer may assign its rights to
a wholly-owned subsidiary or other designee, in whole or in part, provided that
Buyer shall continue to be directly responsible for its obligations hereunder
notwithstanding said assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.
(c) Governing Law. This Agreement is to be governed, construed and
enforced in accordance with the laws of the State of New Jersey without regard
to any conflict of law provisions.
(d) Jurisdiction. Each party hereby irrevocably and unconditionally
agrees to be subject to the jurisdiction of the courts of the State of New
Jersey and the federal courts sitting in the State of New Jersey.
(e) Headings. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
(f) Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior written and oral negotiations, agreements and
writings, express or implied.
(g) Modification; Waiver. This Agreement may be modified, amended,
superseded, or extended, and the terms hereof may be waived, only by a written
instrument
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signed by all of the parties hereto or, in the case of a waiver, signed by the
party waiving compliance.
(h) Preservation of Rights. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right, power
or privilege, nor any single or partial exercise of any right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
(i) Provisions Severable. The provisions of this Agreement are
independent of and severable from each other. No provisions will be affected or
rendered invalid or unenforceable by virtue of the fact that for any reason any
one or more of any of the provisions hereof may be invalid or unenforceable in
whole or in part.
(j) Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties
hereto.
(k) Exhibits; Schedules. All exhibits and schedules to this
Agreement (if any) are hereby incorporated by reference into, and made a part
of, this Agreement. Written disclosure by ITB or Sellers on any schedule shall
be considered written disclosure on all schedules.
(l) No Broker or Finder. Each party hereto represents and warrants
to the other parties that it has not employed any broker or finder in connection
with the transactions contemplated by this Agreement and, further, that all
negotiations relative to the subject matter of this Agreement have been carried
on directly by such party, without the intervention of any other person,
although each of the parties hereto has retained the services of financial
advisors and attorneys, the fees of which will be paid by the retaining party.
(m) Construction. The Buyer and Sellers acknowledge that each and
its counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or schedules thereto.
22. Completion of Due Diligence by Buyer; Fiduciary Out.
(a) Buyer Termination. Buyer may terminate this Agreement if:
(i) for a period commencing on the date of this Agreement and
ending on the 30th day thereafter, or on such earlier day as Buyer, by written
notice to Sellers and ITB,
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elects (the "Due Diligence Period"), Buyer determines that it does not wish to
proceed with this transaction, or
(ii) by the 60th day following the date of this Agreement,
having exercised its diligent efforts to promptly secure financing, Buyer has
not received the firm commitment from a reputable financial institution stating
that it will finance the Cash Portion of the Purchase Price on terms
satisfactory to Buyer. Furthermore, as a condition to Closing of Buyer, in
addition to the conditions set forth in Paragraph 12 above, the financial
institution financing Buyer's acquisition, ITB, Sellers and Buyer shall have
executed and delivered an Intercreditor Agreement relating to the rights of the
financial institutions, ITB and Sellers as creditors of Buyer.
(b) Fiduciary Out; ITB Termination. ITB, any of the Sellers and any
of their officers, directors, employees, agents or representatives shall not, at
any time after the Due Diligence Period and prior to the Closing Date, directly
or indirectly, initiate, solicit, encourage or otherwise facilitate inquiries or
the making of proposals or offers with respect to a merger, liquidation,
recapitalization, reorganization, asset sale, share exchange, consolidation or
similar transaction involving ITB or any of the Sellers which transaction will
result in sale of Raceway and sale or lease of GSP (an "Acquisition Proposal"),
except as otherwise contemplated by the settlement stipulation (the
"Stipulation") in the litigation pending before the Delaware Court of Chancery,
styled Quigley v. DeSantis, C.A.No. 15919. Notwithstanding the foregoing, where
legally required for the discharge by the Board of Directors of ITB of its
fiduciary duties as determined in good faith on the basis of written advice of
counsel, ITB may engage in discussions or negotiations with any person relating
to an Acquisition Proposal. If (i) the Board of Directors of ITB shall conclude
in good faith that any Acquisition Proposal, whether solicited or unsolicited,
is reasonably capable of being completed, taking into account all legal,
financial, regulatory and other aspects of the Acquisition Proposal and would,
if consummated, result in a transaction more favorable to ITB's shareholders
from a financial point of view than the transactions contemplated by this
Agreement (any such more favorable Acquisition Proposal being referred to herein
as "Superior Proposal") and (ii) ITB shall accept such Superior Proposal prior
to the Closing Date, then ITB may terminate this Agreement, subject to the
rights of Buyer in Subparagraph 22(c). In the event of a termination after the
Due Diligence Period and prior to the Closing Date as a result of ITB's
determination to proceed with a Superior Proposal in the absence of or in
preference to any Buyer counter-proposal, ITB shall pay the sum of $1,000,000 to
Buyer. In the event a closing of an acquisition does not occur within 90 days of
ITB's determination to proceed with a Superior Proposal, ITB shall notify Buyer
as soon as the alternative acquisition is determined to have become not likely
to close and Buyer shall have 30 days to elect, at its option to reinstate this
agreement with dates adjusted to reflect the delay (crediting to the Purchase
Price the $1,000,000 if paid to Buyer pursuant to this Subparagraph). The 90 day
period may be extended up to an additional 90 days if at the end of the first 90
days all conditions to closing are met except required regulatory approvals, and
if such approvals are in the process of being diligently pursued; with the
extension, continuing until the approvals are obtained, 180 days pass or the
approval process is abandoned whichever is earlier. In addition, ITB may
terminate this Agreement if, during the period of 30 days commencing on the date
of
-30-
<PAGE>
this Agreement, ITB determines that any of the representations or warranties of
the Buyer are, to a material extent, inaccurate.
(c) Right of First Refusal. If ITB, in compliance with Subparagraph
22(b), from time to time accepts a Superior Proposal (the "Accepted Superior
Proposal") prior to the Closing Date, ITB shall immediately notify Buyer of this
fact and supply Buyer with a summary of the material terms of the Accepted
Superior Proposal. Any Accepted Superior Proposal approved by ITB shall provide
that, as a condition to ITB's obligation to consummate the Accepted Superior
Proposal, Buyer shall have 15 days to make its own Acquisition Proposal on the
same or superior terms and conditions (the "Buyer Counter-Proposal"). If the
Board of Directors of ITB shall conclude in good faith that the Buyer
Counter-Proposal, taking into account all legal, financial, regulatory and other
factors, is substantially as or more favorable to ITB's shareholders from a
financial point of view as the Accepted Superior Proposal, ITB shall terminate
the Accepted Superior Proposal and accept the Buyer Counter-Proposal.
(d) Mutual Agreement. ITB and Buyer by mutual agreement may
terminate this Agreement at any time.
(e) Lapse of Time. Either ITB or Buyer may terminate this Agreement
if the Closing shall not have occurred on or before September 3, 1998; provided,
however, neither ITB and the Sellers on one hand, nor Buyer on the other hand,
may terminate this Agreement until December 31, 1998 if (i) any have been the
cause of the delay in the Closing Date, or (ii) if all conditions to the Closing
have been met or can reasonably be expected to be met by December 31,1998,
except the obtaining of necessary regulatory approvals, in either of which
cases, no party hereto may terminate this Agreement prior to December 31, 1998.
Furthermore, in the event of an extension of the Closing Date past September 3,
1998, Buyer shall have an additional condition to Closing to those set forth in
Paragraph 12, that there shall not have occurred between the date hereof and the
Effective Time any material adverse change in the Assets, the Business, or the
prospects of the Business.
(f) Survival. In the event of termination as contemplated in this
section, this Agreement will forthwith become void and there will be no
liability on the part of the parties hereto or any of their affiliates,
directors, officers or shareholders, except that the obligations of the parties
under Section 14(d) and the payment obligation of ITB pursuant to Section 22(b),
if any, shall survive the termination of this Agreement.
(g) No Conflicts of Interest. ITB and Sellers acknowledge that a
principal of Buyer, Robert W. Green, is a shareholder of ITB, and has litigation
pending against certain directors of ITB ("Green Litigation"). Other than this
relationship, each party represents to the other parties to this Agreement that,
to the best of its knowledge, no shareholder, director, officer or affiliate of
such party has any conflict of interest or personal interest or benefit (direct
or indirect) in the transactions contemplated by this Agreement.
-31-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
GREENWOOD NEW JERSEY, INC.
By: /s/ Robert W. Green
---------------------------------
Robert W. Green, President
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
By: ________________________________
GARDEN STATE RACE TRACK, INC.
By: ________________________________
FREEHOLD RACEWAY ASSOCIATION
By: ________________________________
ATLANTIC CITY HARNESS, INC.
By: ________________________________
CIRCA 1850, INC.
By: ________________________________
-32-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
GREENWOOD NEW JERSEY, INC.
By:__________________________________
Robert W. Green, President
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
By:/s/ Nunzio P. DeSantis
----------------------------------
GARDEN STATE RACE TRACK, INC.
By:/s/ Nunzio P. DeSantis
----------------------------------
FREEHOLD RACEWAY ASSOCIATION
By:/s/ Nunzio P. DeSantis
----------------------------------
ATLANTIC CITY HARNESS, INC.
By:/s/ Nunzio P. DeSantis
----------------------------------
CIRCA 1850, INC.
By:/s/ Nunzio P. DeSantis
----------------------------------
-33-
<PAGE>
JOINDER OF GREENWOOD
Greenwood hereby joins this Agreement solely to make the
representations and warranties of Paragraph 11A; to agree to provide the
guarantee of Buyer's Purchase Price Notes in the form of Exhibit 11A; and to
consent to the security Buyer is to provide under Subparagraphs 6(a)(vii) and
11(g).
GREENWOOD RACING, INC.
By: /s/ Robert W. Green
-----------------------------
Robert W. Green, President
-34-
<PAGE>
JOINDER OF ITB SHAREHOLDERS
The undersigned shareholders of ITB join this Agreement for the purpose
of expressing their consent thereto and approval of the transactions
contemplated by the Agreement. The undersigned agree to use their best efforts
to cause the transactions contemplated by this Agreement to be consummated,
including their agreement that by written consent or at any meeting of
shareholders convened for the purpose of considering and acting upon the
Agreement and the transactions, that they will vote their shares in ITB in favor
of the Agreement and the transactions; provided, however, if the Company shall
have availed itself of the fiduciary out contained in Paragraph 22 of the
Agreement, the shareholders may rescind their consent or not vote in favor of
the transactions. The obligations of the undersigned shareholders of ITB under
this Joinder and under the Agreement shall terminate upon the termination of the
Agreement by ITB or Buyer in accordance with the terms of the Agreement, except
that the undersigned shareholders shall continue to be obligation with respect
to any Accepted Superior Proposal or Buyer Counter-Proposal approved by ITB and
except as otherwise contemplated by the Stipulation.
___________________________________
Frank A. Leo
NPD, Inc.
By:/s/ Nunzio P. DeSantis
--------------------------------
Nunzio P. DeSantis
LAS VEGAS ENTERTAINMENT, INC.
By: _______________________________
___________________________________
Michael C. Abraham
___________________________________
Kenneth Scholl
-35-
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
Schedules
1(a) Raceway real and personal property, machinery, equipment,
fixtures
1(b) Licenses
1(c) Executory Contracts
1(e) Racing Accounts
2(h) Excluded Insurance Policies
2(i) Other Excluded Assets
10(e) Consents
10(f) Litigation
10(i) Environmental Issues
10(k) Insurance Policies
10(m) Other business activities
10(n) Intellectual Property
10(n)(ii) Licenses of Intellectual Property
10(o) Liens
Exhibits
6(a)(ii) $12 Million Promissory Note
6(a)(iii)(A) $5,000,000 Contingent Promissory Note
6(a)(iii)(B) $3,000,000 Contingent Promissory Note
6(a)(iv) $2,000,000 Contingent Promissory Note
6(a)(vii) Mortgage and Security Agreement
7 Lease of GSP Facility
11A Greenwood Guaranty
-36-
<PAGE>
Exhibit 6(a)(ii) to
Asset Purchase Agreement
PROMISSORY NOTE
US$12,000,000.00 August __, 1998
______________, New Jersey
FOR VALUE RECEIVED, GREENWOOD NEW JERSEY, INC., a New Jersey
corporation with an address at 3001 Street Road, Bensalem, PA 19020-8512
("Borrower"), hereby promises to pay to the order of __________________ with an
address at ____________________("Lender"), acting as agent for Garden State Race
Track, Inc., a New Jersey corporation ("GSRT"), Freehold Raceway Association, a
New Jersey corporation ("FRA"), Atlantic City Harness, Inc., a New Jersey
corporation ("ACH") and Circa 1850, Inc., a New Jersey corporation ("Circa")
(collectively, the "Note Owners") (the legal holder from time to time of this
Note, including Lender as the initial holder, is sometimes hereinafter referred
to as "Holder"), the principal sum of TWELVE MILLION AND 00/100 DOLLARS
($12,000,000.00) (the "Loan"), together with interest on the unpaid principal
balance of this Note from the date hereof until the entire principal sum is paid
in full, in accordance with the provisions hereinafter set forth. The ownership
interest of each Note Owner in this Note is in proportion to the allocation set
forth in Paragraph 6(b) of the Asset Purchase Agreement dated as of June ___,
1998 by and among Borrower, the Note Owners and International Thoroughbred
Breeders, Inc., a Delaware corporation ("ITB") (the "Agreement").
1. Terms of Payment; Interest Rate. From the date hereof through and
including the date that the entire principal balance of this Note is paid in
full, interest shall accrue on the outstanding principal balance hereunder at
the rate of twelve percent (12%) per annum (the "Contract Rate"). Subject to the
terms of the intercreditor agreement between Lender and Borrower's Senior Lender
(as defined in the Agreement), the principal is payable quarterly, beginning on
[September 1, 2001 (month after third annual anniversary of Closing)] and on of
each [December 1], [March 1], [June 1] and [September 1] thereafter in the
amount of $300,000.00, with unpaid principal payable in full on [August 28,
2005, (the seventh anniversary of the Closing Date)]. Interest shall be payable
quarterly in arrears beginning on [September 1, 1998] and on each [December 1],
[March 1], [June 1] and [September 1] thereafter. Interest shall be computed on
the basis of a 365-day year and charged on the basis of the actual number of
days elapsed in the applicable payment period.
2. Acceleration and Prepayment. Subject to Borrower's Senior Lender
approval, Borrower shall make a prepayment of 50% of the then outstanding
principal balance of this Note upon the earlier of: (A) the installation and
commencement of full-time operation, open to the public, with all approvals
obtained, of not less than 500 slot machines on the premises of Philadelphia
Park when operated by Greenwood Racing, Inc., a Pennsylvania corporation
("Greenwood") or its affiliates, or (B) the successful conclusion of an IPO or
major capital transaction pursuant to which Greenwood receives a net cash
infusion of not less than an additional $50 Million (not including the financing
of this transaction). In addition, Borrower may make optional prepayments of all
or part of the outstanding principal balance hereof without penalty at any time,
provided that when making such prepayment Borrower pays all interest then
accrued hereunder. Any partial prepayment shall be applied first to the payment
of accrued but unpaid interest, and then to unpaid principal in the inverse
order of maturity.
<PAGE>
3. Security. This Note is secured by a mortgage and security agreement
given by Borrower to Lender, of even date herewith (the "Mortgage and Security
Agreement"). The Borrower has also promised to further secure this Note,
pursuant to Paragraph 11(g) of the Agreement, with a security agreement and
mortgage in favor of Lender on any other real estate assets, including the 10
Acre Parcel contemplated in the Agreement, acquired by Borrower for an off track
betting facility, meaning simulcast only pari-mutuel facilities that do not have
to conduct live racing, developed in New Jersey by Borrower. Borrower hereby
represents, warrants and covenants that its obligations under this Note are and
will continue to be pari passu in right of repayment and otherwise with its
other promissory notes it executed in favor of Lender in connection with the
Agreement. Borrower hereby covenants that it will keep all of its assets that
are encumbered by the Mortgage and Security Agreement or otherwise pledged to
the Lender as security for this Note free and clear of all liens, security
interests and other interests and encumbrances, except as necessary to finance
the Purchase Price (as defined in the Agreement), or as otherwise agreed to by
Lender in the Mortgage and Security Agreement or otherwise.
4. Location and Medium of Payments. All sums payable under this Note
shall be paid to Holder in legal tender of the United States of America, without
demand, defalcation, set-off or deduction at its address hereinabove set forth,
or at such other place as Holder may from time to time hereafter designate to
Borrower in writing, provided however, that Borrower shall, after written notice
to the Note Owners and ITB, given in the manner prescribed in Paragraph 21 of
the Agreement, be entitled to offset against any and all amounts payable under
the Agreement by Borrower to the Note Owners, including amounts due hereunder,
(a) the amount of any Loss (as defined in the Agreement) for which
indemnification under Section 17 of the Agreement is available, (b) the amount
of any multi-employer pension plan withdrawal liability incurred by Borrower, as
described in Section 4(b) of the Agreement, and (c) any amounts paid by Borrower
as Tenant pursuant to Section 4.01(b) of the Lease Agreement of even date
herewith between Borrower as Tenant and Garden State Race Track, Inc. as
Landlord for certain property located at at 2200-2290 Marlton Pike West, Cherry
Hill Township, Camden County, New Jersey.
5. Default. Each of the following events shall be deemed an "Event of
Default" hereunder: (a) the failure by Borrower to make any payment of principal
or interest or any other sum when due under this Note and such failure continues
for ten (10) days after Lender has given written notice of such failure to
Borrower; or (b) the failure by Borrower in the due performance and observance
of any other provision of this Note and such failure is not cured within thirty
(30) days after Lender has given written notice of such failure to Borrower; or
(c) any Event of Default under the Mortgage and Security Agreement; or (d) any
Event of Default of any note executed by Borrower in favor of Lender in
connection with the Agreement; or (e) any default (after expiration of any
applicable grace period) by Borrower in the payment of any indebtedness owed to
Borrower's Senior Lender in connection with the transaction contemplated in the
Agreement in the aggregate principal amount of US$50,000.00 or more, which
results in the acceleration of such indebtedness; or (f) the filing of any
bankruptcy petition by Borrower or the making by Borrower of any general
assignment for the benefit of creditors or the appointment of any receiver for
the assets or property of Borrower which is not stayed or discharged within 90
days after the commencement thereof; or (g) the commencement of any bankruptcy
proceeding against Borrower and/or the guarantor of this Note
2
<PAGE>
which shall not have been stayed or dismissed within ninety (90) days after the
commencement thereof.
6. Remedies. At any time after the occurrence of an Event of Default,
Holder, at its option upon notice to Borrower, may declare the whole of the
principal indebtedness evidenced hereby, together with all interest and other
charges due hereunder, immediately due and payable, without any further action
on the part of Holder; provided however, that, upon the occurrence of any of the
events specified in clauses (f) and (g) of Section 5 above, all amounts in
respect of principal and interest and all other amounts due and payable under
this Note shall automatically become due and payable without notice,
presentment, demand or protest. In addition, Holder shall have the right
immediately and without notice or other action, to set-off against Borrower's
liabilities to Holder (i) any money owed by Holder in any capacity to Borrower,
whether or not then due, and/or (ii) any money or other property of Borrower in
possession of Holder, and Holder shall be deemed to have exercised such right of
set-off and to have made a charge against any such money and/or property
immediately upon the occurrence of an Event of Default under this Note, even
though the actual book entries may be made at some time subsequent thereto.
The remedies of Holder, as provided herein or available at law
or in equity, shall be cumulative and concurrent and may be pursued singly,
successively or together, at the sole discretion of Holder and may be exercised
as often as occasion therefore shall occur.
7. Interest Following Event of Default. If any payment due under this
Note is not paid within ten (10) days of when due, Borrower shall pay interest
on all sums due hereunder at a rate ("Default Rate") equal to the lesser of (i)
the interest rate then in effect hereunder plus one percent (1%) per annum, or
(ii) the maximum rate permitted by law, from and after the occurrence of an
Event of Default hereunder until such Event of Default is cured.
8. Collection and Enforcement Costs. Borrower shall pay to Lender, upon
demand, all expenses incurred by Lender (i) in connection with the collection of
the Loan and/or the enforcement of Borrower's obligations under this Note, and
(ii) in curing any Event of Default under this Note including in any case,
without limitation, reasonable attorneys' fees, with interest thereon at the
Default Rate, from the date incurred by Lender to the date of repayment to
Lender. Any reference to "attorney's fees" shall include, but not be limited to,
those attorneys' or legal fees, costs and charges incurred by Lender in the
defense of actions arising hereunder and following an Event of Default the
collection, protection or set-off of any claim the Lender may have in a
proceeding under Title 11, United States Code. Attorneys' fees provided for
hereunder shall accrue whether or not Lender has provided notice of default or
of an intention to exercise its remedies for a default. By acceptance of this
Note, Lender agrees to pay Borrower, upon demand, all expenses, including
attorneys' fees, incurred by Borrower in the successful defense of a claim by
Lender that an Event of Default has occurred.
9. Agent. Notwithstanding that the party acting as agent for the Note
Owners may be replaced from time to time by the Note Owners, at any time, there
shall be only one agent acting on behalf of the Note Owners.
3
<PAGE>
10. Continuing Liability. The obligation of Borrower to pay the
principal, interest and all other sums due hereunder shall continue in full
force and effect and shall not be impaired, until the actual payment thereof to
Holder, and in case of any agreement given to secure the payment of this Note,
or in case of any agreement or stipulation extending the time or modifying the
terms of payment above recited, Borrower shall nevertheless continue to be
liable on this Note, as extended or modified by any such agreement or
stipulation, unless released and discharged in writing by Holder.
11. No Oral Changes; Waivers. This Note may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
a change is sought. Borrower hereby waives and releases Lender and its attorneys
from all errors, defects and imperfections in any proceedings instituted by
Lender with respect to this Note. Borrower and any future endorsers, sureties
and guarantors hereof, jointly and severally, waive presentment for payment,
demand, notice of nonpayment, notice of dishonor, protest of any dishonor,
notice of protest, and protest of this Note (except as otherwise expressly set
forth herein), and all other notices in connection with the delivery,
acceptance, performance, default, or enforcement of the payment of this Note,
and they agree that the liability of each of them shall be unconditional without
regard to the liability of any other party and shall not be in any manner
affected by an indulgence, extension of time, renewal, waiver or modification
granted or consented to by the Holder; and Borrower and all future endorsers,
sureties and guarantors hereof consent to any and all extensions of time,
renewals, waivers or modifications (if evidenced by such party's execution
thereof) that may be granted by the Holder hereof with respect to the payment or
other provisions of this Note, and to the release of collateral (if any), or any
part thereof, with or without substitution, and agree that additional makers,
endorsers, guarantors, or sureties may become parties hereto without notice to
them or affecting their liability hereunder.
Holder shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in writing
and signed by Holder, and then only to the extent specifically set forth
therein; a waiver on one event shall not be construed as continuing or as a bar
to or waiver of such right or remedy on a subsequent event. The acceptance by
Holder of payment hereunder that is less than payment in full of all amounts due
at the time of such payment shall not without the express written consent of
Holder: (i) constitute a waiver of the right to exercise any of Holder's
remedies at that time or at any subsequent time, (ii) constitute an accord and
satisfaction, or (iii) nullify any prior exercise of any remedy, except as
provided by law.
No failure to cause an acceleration of Borrower's obligations due
hereunder by reason of an Event of Default, acceptance of a past due installment
or indulgences granted from time to time shall be construed (i) as a novation of
this Note or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of such right of acceleration or of the right of Holder thereafter to
insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by the laws of the State of New Jersey; and, to the maximum extent permitted
by law, Borrower hereby expressly waives the benefit of any statute or rule of
law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing.
4
<PAGE>
To the maximum extent permitted by law, Borrower hereby waives and
renounces for itself, its successors and assigns, all rights to the benefits of
any moratorium, reinstatement, marshaling, forbearance, valuation, stay,
extension, redemption, appraisement and exemption now provided, or which may
hereafter be provided, by the Constitution and laws of the United States of
America and of any state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Note.
12. Taxes. Borrower shall pay the cost of all revenue, tax or other
stamps now or hereafter required by law at any time to be affixed to this Note.
13. Bind and Inure. This Note shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns.
14. Applicable Law. The provisions of this Note shall be construed and
enforceable in accordance with the laws of the State of New Jersey, without
regard to principles of conflict of laws.
15. Consent to Jurisdiction. Holder, by acceptance of this Note, and
Borrower irrevocably consent and agree that any action or proceeding arising
under this Note may be brought in any court of the State of New Jersey or a
federal court sitting in the State of New Jersey (each, a "New Jersey Court"),
and Borrower and Holder hereby submit to and accept with regard to any such
action or proceeding, for themselves and in respect of Borrower's property,
generally and unconditionally, the jurisdiction of any such New Jersey Court.
Borrower and Holder hereby irrevocably waive any objection that they may now or
hereafter have to (i) the exercise by any New Jersey Court of personal
jurisdiction over Borrower or Holder, and (ii) the laying of the venue of any
suit, action or proceeding arising out of or relating to this Note in the State
of New Jersey, and Borrower and Holder hereby irrevocably waive any claim that
the State of New Jersey is not a convenient forum for any suit, action or
proceeding. Borrower and Holder further agree that a final judgment obtained
against it in any such action or proceeding will be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America.
16. Invalidity. If any provision of this Note or the application hereof
to any person or circumstance shall, for any reason and to any extent, be
invalid or unenforceable, neither the remainder of this Note nor the application
of such provision to any other person or circumstance shall be affected thereby,
but rather the same shall be enforced to the greatest extent permitted by law.
17. Waiver of Jury Trial. Both Lender and Borrower hereby agree to
waive and do hereby waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto under or in connection with
this Note.
18. Usury. It is hereby expressly agreed that if from any circumstances
whatsoever fulfillment of any provision of this Note, at the time performance of
such provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under this Note that is in
excess of the limit of such validity. In no event shall Borrower be bound to pay
for the use, forbearance or detention of the money
5
<PAGE>
loaned pursuant hereto, interest of more than the current legal limit; the right
to demand any such excess being hereby expressly waived by Holder.
19. Notice. Any notice, demand, or request made hereunder shall be in
writing, signed by the party giving such notice, demand or request, and shall be
delivered personally, or delivered to a reputable overnight delivery service
providing a receipt or mailed by United States certified mail, postage prepaid
and return receipt requested, addressed as set forth below or to such other
address as theretofore may have been designated in writing by such party in
accordance with the terms of this provision. The effective date of any notice
given as provided in this Section shall be the date of delivery or, if delivery
in refused or otherwise not accepted, the date of such refusal or
non-acceptance.
If to Lender:
[name and address of agent]
with a copy to:
Kevin G. Abrams, Esquire
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Telecopier: 302/658/6548
If to Borrower:
Robert W. Green, President
Greenwood New Jersey, Inc.
3001 Street Road
Bensalem, PA 19020-8512
with a copy to:
Theodore A. Young, Esquire
Fox, Rothschild, O'Brien & Frankel, LLP
2000 Market Street, 10th Floor
Philadelphia, PA 19103-3291
Telecopier: 215/299/2150
20. Time of the Essence. Time is of the essence in this Note.
6
<PAGE>
IN WITNESS WHEREOF, Borrower has duly executed this Note as a sealed
instrument as of the day and year first above written.
BORROWER:
Sealed and delivered in GREENWOOD NEW JERSEY, INC.
the presence of:
___________________________ By: ___________________________(Seal)
Witness Name:
Title:
7
<PAGE>
Exhibit 6(a)(iii)(A)
to Asset Purchase
Agreement
CONTINGENT PROMISSORY NOTE
US$5,000,000.00 August __, 1998
_______________, New Jersey
FOR VALUE RECEIVED, GREENWOOD NEW JERSEY, INC., a New Jersey
corporation with an address at 3001 Street Road, Bensalem, PA 19020-8512
("Borrower"), hereby promises to pay to the order of __________________ with an
address at ____________________("Lender"), acting as agent for Garden State Race
Track, Inc., a New Jersey corporation ("GSRT"), Freehold Raceway Association, a
New Jersey corporation ("FRA"), Atlantic City Harness, Inc., a New Jersey
corporation ("ACH") and Circa 1850, Inc., a New Jersey corporation ("Circa")
(collectively, the "Note Owners") (the legal holder from time to time of this
Note, including Lender as the initial holder, is sometimes hereinafter referred
to as "Holder"), the principal sum of FIVE MILLION AND 00/100 DOLLARS
($5,000,000.00) (the "Loan"), together with interest on the unpaid principal
balance of this Note from the date the condition precedent referred to in
Paragraph 1 has occurred, if ever, until the entire principal sum is paid in
full, in accordance with the provisions hereinafter set forth. The ownership
interest of each Note Owner in this Note is in proportion to the allocation set
forth in Paragraph 6(b) of the Asset Purchase Agreement dated as of June ___,
1998 by and among Borrower, the Note Owners and International Thoroughbred
Breeders, Inc., a Delaware corporation ("ITB") (the "Agreement").
1. Condition Precedent to Borrower's Duties and Obligations. The
Borrower shall have no duties or obligations arising under this Note unless,
within three years after [August 28, 1998 (the Closing Date)] the Borrower
receives all licenses, consents, approvals and permits necessary to operate an
off track betting facility ("OTB Facility"), meaning a simulcast only pari-
mutuel wagering facility that does not have to conduct live racing, at the
Garden State Park Facility located in Cherry Hill, New Jersey (the "Condition").
This Note shall automatically become null and void three years after the date
hereof if the Condition has not been satisfied, and Lender shall execute and
deliver to Borrower, upon Borrower's demand, documents acceptable to Borrower
confirming the non-occurrence of the Condition and the null and void status of
this Note.
2. Terms of Payment; Interest Rate. From the date the Condition first
exists, through and including the date that the entire principal balance of this
Note is paid in full, interest shall accrue on the outstanding principal balance
hereunder at the rate of twelve percent (12%) per annum (the "Contract Rate").
Subject to the terms of the intercreditor agreement between Lender and
Borrower's Senior Lender (as defined in the Agreement), the principal is payable
quarterly beginning on the first day of the month following the later of [the
month after the third anniversary of the Closing] and month in which the
Condition has been met, and on each [September 1], [December 1], [March 1] and
[June 1] thereafter in the amount of $125,000.00, with unpaid principal payable
in full on [August 28, 2005, (the seventh anniversary of the Closing Date)].
Interest shall be payable quarterly in arrears beginning on [September 1, 1998]
and on each [December 1], [March 1], [June 1] and [September 1] thereafter.
Interest shall be computed on the basis of a 365-day year and charged on the
basis of the actual number of days elapsed in the applicable payment period.
<PAGE>
3. Acceleration and Prepayment. Subject to Borrower's Senior Lender
approval, Borrower shall make a prepayment of 50% of the then outstanding
principal balance of this Note upon the earlier of: (A) the installation and
commencement of full-time operation, open to the public, with all approvals
obtained, of not less than 500 slot machines on the premises of Philadelphia
Park when operated by Greenwood Racing, Inc., a Pennsylvania corporation
("Greenwood") or its affiliates, or (B) the successful conclusion of an IPO or
major capital transaction pursuant to which Greenwood receives a net cash
infusion of not less than an additional $50 Million (not including the financing
of this transaction). In addition, Borrower may make optional prepayments of all
or part of the outstanding principal balance hereof without penalty at any time,
provided that when making such prepayment Borrower pays all interest then
accrued hereunder. Any partial prepayment shall be applied first to the payment
of accrued but unpaid interest, and then to unpaid principal in the inverse
order of maturity.
4. Security. This Note is secured by a mortgage and security agreement
given by Borrower to Lender, of even date herewith (the "Mortgage and Security
Agreement"). The Borrower has also promised to further secure this Note,
pursuant to Paragraph 11(g) of the Agreement, with a security agreement and
mortgage in favor of Lender on any other real estate assets, including the 10
Acre Parcel contemplated in the Agreement, acquired by Borrower for an OTB
Facility developed in New Jersey by Borrower. Borrower hereby represents,
warrants and covenants that its obligations under this Note are and will
continue to be pari passu in right of repayment and otherwise with its other
promissory notes it executed in favor of Lender in connection with the
Agreement. Borrower hereby covenants that it will keep all of its assets that
are encumbered by the Mortgage and Security Agreement or otherwise pledged to
the Lender as security for this Note free and clear of all liens, security
interests and other interests and encumbrances, except as necessary to finance
the Purchase Price (as defined in the Agreement), or as otherwise agreed to by
Lender in the Mortgage and Security Agreement or otherwise.
5. Location and Medium of Payments. All sums payable under this Note
shall be paid to Holder in legal tender of the United States of America, without
demand, defalcation, set-off or deduction at its address hereinabove set forth,
or at such other place as Holder may from time to time hereafter designate to
Borrower in writing, provided, however, that Borrower shall, after written
notice to the Note Owners and ITB, given in the manner prescribed in Paragraph
21 of the Agreement, be entitled to offset against any and all amounts payable
under the Agreement by Borrower to the Note Owners, including amounts due
hereunder, (a) the amount of any Loss (as defined in the Agreement) for which
indemnification under Section 17 of the Agreement is available, (b) the amount
of any multi-employer pension plan withdrawal liability incurred by Borrower, as
described in Section 4(b) of the Agreement, and (c) any amounts paid by Borrower
as Tenant pursuant to Section 4.01(b) of the Lease Agreement of even date
herewith between Borrower as Tenant and Garden State Race Track, Inc. as
Landlord for certain property located at at 2200-2290 Marlton Pike West, Cherry
Hill Township, Camden County, New Jersey.
6. Default. Each of the following events shall be deemed an "Event of
Default" hereunder: (a) the failure by Borrower to make any payment of principal
or interest or any other sum when due under this Note and such failure continues
for ten (10) days after Lender has given written
2
<PAGE>
notice of such failure to Borrower; or (b) the failure by Borrower in the due
performance and observance of any other provision of this Note and such failure
is not cured within thirty (30) days after Lender has given written notice of
such failure to Borrower; or (c) any Event of Default under the Mortgage and
Security Agreement; or (d) any Event of Default of any note executed by Borrower
in favor of Lender in connection with the Agreement; or (e) any default (after
expiration of any applicable grace period) by Borrower in the payment of any
indebtedness owed to Borrower's Senior Lender in connection with the transaction
contemplated in the Agreement in the aggregate principal amount of US$50,000.00
or more, which results in the acceleration of such indebtedness; or (f) the
filing of any bankruptcy petition by Borrower or the making by Borrower of any
general assignment for the benefit of creditors or the appointment of any
receiver for the assets or property of Borrower which is not stayed or
discharged within 90 days after the commencement thereof; or (g) the
commencement of any bankruptcy proceeding against Borrower and/or the guarantor
of this Note which shall not have been stayed or dismissed within ninety (90)
days after the commencement thereof.
7. Remedies. At any time after the occurrence of an Event of Default,
Holder, at its option upon notice to Borrower, may declare the whole of the
principal indebtedness evidenced hereby, together with all interest and other
charges due hereunder, immediately due and payable, without any further action
on the part of Holder; provided however, that, upon the occurrence of any of the
events specified in clauses (f) and (g) of Section 6 above, all amounts in
respect of principal and interest and all other amounts due and payable under
this Note shall automatically become due and payable without notice,
presentment, demand or protest. In addition, Holder shall have the right
immediately and without notice or other action, to set-off against Borrower's
liabilities to Holder (i) any money owed by Holder in any capacity to Borrower,
whether or not then due, and/or (ii) any money or other property of Borrower in
possession of Holder, and Holder shall be deemed to have exercised such right of
set-off and to have made a charge against any such money and/or property
immediately upon the occurrence of an Event of Default under this Note, even
though the actual book entries may be made at some time subsequent thereto.
Notwithstanding the foregoing, no acceleration right or any other right to
collect payment hereunder shall exist in favor of Lender unless the Condition
shall have been satisfied within three years after the date of this Note and
prior to the date Lender seeks to exercise such right.
The remedies of Holder, as provided herein or available at law
or in equity, shall be cumulative and concurrent and may be pursued singly,
successively or together, at the sole discretion of Holder and may be exercised
as often as occasion therefore shall occur.
8. Interest Following Event of Default. If any payment due under this
Note is not paid within ten (10) days of when due, Borrower shall pay interest
on all sums due hereunder at a rate ("Default Rate") equal to the lesser of (i)
the interest rate then in effect hereunder plus one percent (1%) per annum, or
(ii) the maximum rate permitted by law, from and after the occurrence of an
Event of Default hereunder until such Event of Default is cured.
9. Collection and Enforcement Costs. Borrower shall pay to Lender, upon
demand, all expenses incurred by Lender (i) in connection with the collection of
the Loan and/or the enforcement of Borrower's obligations under this Note, and
(ii) in curing any Event of Default under
3
<PAGE>
this Note including in any case, without limitation, reasonable attorneys' fees,
with interest thereon at the Default Rate, from the date incurred by Lender to
the date of repayment to Lender. Any reference to "attorney's fees" shall
include, but not be limited to, those attorneys' or legal fees, costs and
charges incurred by Lender in the defense of actions arising hereunder and
following an Event of Default the collection, protection or set-off of any claim
the Lender may have in a proceeding under Title 11, United States Code.
Attorneys' fees provided for hereunder shall accrue whether or not Lender has
provided notice of default or of an intention to exercise its remedies for a
default. By acceptance of this Note, Lender agrees to pay Borrower, upon demand,
all expenses, including attorneys' fees, incurred by Borrower in the successful
defense of a claim by Lender that an Event of Default has occurred.
10. Agent. Notwithstanding that the party acting as agent for the Note
Owners may be replaced from time to time by the Note Owners, at any time, there
shall be only one agent acting on behalf of the Note Owners.
11. Continuing Liability. The obligation of Borrower to pay the
principal, interest and all other sums due hereunder shall continue in full
force and effect and shall not be impaired, until the actual payment thereof to
Holder, and in case of any agreement given to secure the payment of this Note,
or in case of any agreement or stipulation extending the time or modifying the
terms of payment above recited, Borrower shall nevertheless continue to be
liable on this Note, as extended or modified by any such agreement or
stipulation, unless released and discharged in writing by Holder.
12. No Oral Changes; Waivers. This Note may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
a change is sought. Borrower hereby waives and releases Lender and its attorneys
from all errors, defects and imperfections in any proceedings instituted by
Lender with respect to this Note. Borrower and any future endorsers, sureties
and guarantors hereof, jointly and severally, waive presentment for payment,
demand, notice of nonpayment, notice of dishonor, protest of any dishonor,
notice of protest, and protest of this Note (except as otherwise expressly set
forth herein), and all other notices in connection with the delivery,
acceptance, performance, default, or enforcement of the payment of this Note,
and they agree that the liability of each of them shall be unconditional without
regard to the liability of any other party and shall not be in any manner
affected by an indulgence, extension of time, renewal, waiver or modification
granted or consented to by the Holder; and Borrower and all future endorsers,
sureties and guarantors hereof consent to any and all extensions of time,
renewals, waivers or modifications (if evidenced by such party's execution
thereof) that may be granted by the Holder hereof with respect to the payment or
other provisions of this Note, and to the release of collateral (if any), or any
part thereof, with or without substitution, and agree that additional makers,
endorsers, guarantors, or sureties may become parties hereto without notice to
them or affecting their liability hereunder.
Holder shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in writing
and signed by Holder, and then only to the extent specifically set forth
therein; a waiver on one event shall not be construed as continuing or as a bar
to or waiver of such right or remedy on a subsequent event. The acceptance by
Holder of payment hereunder that is less than payment in full of all amounts due
at the time of such payment shall not without the express written consent of
Holder: (i) constitute a waiver of the right to exercise any of Holder's
remedies at that time or at any subsequent time, (ii) constitute an accord and
satisfaction, or (iii) nullify any prior exercise of any remedy, except as
provided by law.
4
<PAGE>
No failure to cause an acceleration of Borrower's obligations due
hereunder by reason of an Event of Default, acceptance of a past due installment
or indulgences granted from time to time shall be construed (i) as a novation of
this Note or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of such right of acceleration or of the right of Holder thereafter to
insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by the laws of the State of New Jersey; and, to the maximum extent permitted
by law, Borrower hereby expressly waives the benefit of any statute or rule of
law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing.
To the maximum extent permitted by law, Borrower hereby waives and
renounces for itself, its successors and assigns, all rights to the benefits of
any moratorium, reinstatement, marshaling, forbearance, valuation, stay,
extension, redemption, appraisement and exemption now provided, or which may
hereafter be provided, by the Constitution and laws of the United States of
America and of any state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Note.
13. Taxes. Borrower shall pay the cost of all revenue, tax or other
stamps now or hereafter required by law at any time to be affixed to this Note.
14. Bind and Inure. This Note shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns.
15. Applicable Law. The provisions of this Note shall be construed and
enforceable in accordance with the laws of the State of New Jersey, without
regard to principles of conflict of laws.
16. Consent to Jurisdiction. Holder, by acceptance of this Note, and
Borrower irrevocably consent and agree that any action or proceeding arising
under this Note may be brought in any court of the State of New Jersey or a
federal court sitting in the State of New Jersey (each, a "New Jersey Court"),
and Borrower and Holder hereby submit to and accept with regard to any such
action or proceeding, for themselves and in respect of Borrower's property,
generally and unconditionally, the jurisdiction of any such New Jersey Court.
Borrower and Holder hereby irrevocably waive any objection that they may now or
hereafter have to (i) the exercise by any New Jersey Court of personal
jurisdiction over Borrower or Holder, and (ii) the laying of the venue of any
suit, action or proceeding arising out of or relating to this Note in the State
of New Jersey, and Borrower and Holder hereby irrevocably waive any claim that
the State of New Jersey is not a convenient forum for any suit, action or
proceeding. Borrower and Holder further agree that a final judgment obtained
against it in any such action or proceeding will be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America.
17. Invalidity. If any provision of this Note or the application hereof
to any person or circumstance shall, for any reason and to any extent, be
invalid or unenforceable, neither the remainder of this Note nor the application
of such provision to any other person or circumstance shall be affected thereby,
but rather the same shall be enforced to the greatest extent permitted by law.
5
<PAGE>
18. Waiver of Jury Trial. Both Lender and Borrower hereby agree to
waive and do hereby waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto under or in connection with
this Note.
19. Usury. It is hereby expressly agreed that if from any circumstances
whatsoever fulfillment of any provision of this Note, at the time performance of
such provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under this Note that is in
excess of the limit of such validity. In no event shall Borrower be bound to pay
for the use, forbearance or detention of the money loaned pursuant hereto,
interest of more than the current legal limit; the right to demand any such
excess being hereby expressly waived by Holder.
20. Notice. Any notice, demand, or request made hereunder shall be in
writing, signed by the party giving such notice, demand or request, and shall be
delivered personally, or delivered to a reputable overnight delivery service
providing a receipt or mailed by United States certified mail, postage prepaid
and return receipt requested, addressed as set forth below or to such other
address as theretofore may have been designated in writing by such party in
accordance with the terms of this provision. The effective date of any notice
given as provided in this Section shall be the date of delivery or, if delivery
in refused or otherwise not accepted, the date of such refusal or
non-acceptance.
If to Lender:
[name and address of agent]
with a copy to:
Kevin G. Abrams, Esquire
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Telecopier: 302/658/6548
If to Borrower:
Robert W. Green, President
Greenwood New Jersey, Inc.
3001 Street Road
Bensalem, PA 19020-8512
6
<PAGE>
with a copy to:
Theodore A. Young, Esquire
Fox, Rothschild, O'Brien & Frankel, LLP
2000 Market Street, 10th Floor
Philadelphia, PA 19103-3291
Telecopier: 215/299/2150
21. Time of the Essence. Time is of the essence in this Note.
IN WITNESS WHEREOF, Borrower has duly executed this Note as a sealed
instrument as of the day and year first above written.
BORROWER:
Sealed and delivered in GREENWOOD NEW JERSEY, INC.
the presence of:
___________________________ By: ___________________________(Seal)
Witness Name:
Title:
7
<PAGE>
Exhibit 6(a)(iii)(B)
to Asset Purchase
Agreement
CONTINGENT PROMISSORY NOTE
US$3,000,000.00 August __, 1998
______________, New Jersey
FOR VALUE RECEIVED, GREENWOOD NEW JERSEY, INC., a New Jersey
corporation with an address at 3001 Street Road, Bensalem, PA 19020-8512
("Borrower"), hereby promises to pay to the order of __________________ with an
address at ____________________("Lender"), acting as agent for Garden State Race
Track, Inc., a New Jersey corporation ("GSRT"), Freehold Raceway Association, a
New Jersey corporation ("FRA"), Atlantic City Harness, Inc., a New Jersey
corporation ("ACH") and Circa 1850, Inc., a New Jersey corporation ("Circa")
(collectively, the "Note Owners") (the legal holder from time to time of this
Note, including Lender as the initial holder, is sometimes hereinafter referred
to as "Holder"), the principal sum of THREE MILLION AND 00/100 DOLLARS
($3,000,000.00) (the "Loan"), together with interest on the unpaid principal
balance of this Note from the date the condition precedent referred to in
Paragraph 1 has occurred, if ever, until the entire principal sum is paid in
full, in accordance with the provisions hereinafter set forth. The ownership
interest of each Note Owner in this Note is in proportion to the allocation set
forth in Paragraph 6(b) of the Asset Purchase Agreement dated as of June ___,
1998 by and among Borrower, the Note Owners and International Thoroughbred
Breeders, Inc., a Delaware corporation ("ITB") (the "Agreement").
1. Condition Precedent to Borrower's Duties and Obligations. The
Borrower shall have no duties or obligations arising under this Note unless,
within three years after [August 28, 1998 (the Closing Date),] legislation is
enacted within the State of New Jersey that would permit the racing associations
owned or controlled by Borrower operating Garden State Park in Cherry Hill, New
Jersey ("GSP") or Freehold Raceway in Freehold, New Jersey to own and operate
off track betting facilities ("OTB Facilities"), meaning simulcast only
pari-mutuel facilities that do not have to conduct live racing, other than or in
addition to any OTB Facility established at GSP and Borrower has received the
material consents, permits or approvals, if any, necessary to operate such an
OTB Facility (the "Condition"). This Note shall automatically become null and
void three years after the date hereof if the Condition has not been satisfied,
and Lender shall execute and deliver to Borrower, upon Borrower's demand,
documents acceptable to Borrower confirming the non-occurrence of the Condition
and the null and void status of this Note.
2. Terms of Payment; Interest Rate. From the date the Condition first
exists, through and including the date that the entire principal balance of this
Note is paid in full, interest shall accrue on the outstanding principal balance
hereunder at the rate of twelve percent (12%) per annum (the "Contract Rate").
Subject to the terms of the intercreditor agreement between Lender and
Borrower's Senior Lender (as defined in the Agreement), the principal is payable
quarterly beginning on the first day of the month following the later of [month
after third anniversary of Closing] and the month in which the Condition has
been met, and on each [Septemer 1], [December 1], [March 1] and [June 1]
thereafter with unpaid principal payable in full on [August 28, 2005, (the
seventh anniversary of the Closing Date)]. Interest shall be payable quarterly
in arrears beginning on
<PAGE>
[September 1, 1998] and on each [December 1], [March 1], [June 1] and [September
1] thereafter. Interest shall be computed on the basis of a 365-day year and
charged on the basis of the actual number of days elapsed in the applicable
payment period.
3. Acceleration and Prepayment. Subject to Borrower's Senior Lender
approval, Borrower shall make a prepayment of 50% of the then outstanding
principal balance of this Note upon the earlier of: (A) the installation and
commencement of full-time operation, open to the public, with all approvals
obtained, of not less than 500 slot machines on the premises of Philadelphia
Park when operated by Greenwood Racing, Inc., a Pennsylvania corporation
("Greenwood") or its affiliates, or (B) the successful conclusion of an IPO or
major capital transaction pursuant to which Greenwood receives a net cash
infusion of not less than an additional $50 Million (not including the financing
of this transaction). In addition, Borrower may make optional prepayments of all
or part of the outstanding principal balance hereof without penalty at any time,
provided that when making such prepayment Borrower pays all interest then
accrued hereunder. Any partial prepayment shall be applied first to the payment
of accrued but unpaid interest, and then to unpaid principal in the inverse
order of maturity.
4. Security. This Note is secured by a mortgage and security agreement
given by Borrower to Lender, of even date herewith (the "Mortgage and Security
Agreement"). The Borrower has also promised to further secure this Note,
pursuant to Paragraph 11(g) of the Agreement, with a security agreement and
mortgage in favor of Lender on any other real estate assets, including the 10
Acre Parcel contemplated in the Agreement, acquired by Borrower for an OTB
Facility developed in New Jersey by Borrower. Borrower hereby represents,
warrants and covenants that its obligations under this Note are and will
continue to be pari passu in right of repayment and otherwise with its other
promissory notes it executed in favor of Lender in connection with the
Agreement. Borrower hereby covenants that it will keep all of its assets that
are encumbered by the Mortgage and Security Agreement or otherwise pledged to
the Lender as security for this Note free and clear of all liens, security
interests and other interests and encumbrances, except as necessary to finance
the Purchase Price (as defined in the Agreement), or as otherwise agreed to by
Lender in the Mortgage and Security Agreement or otherwise.
5. Location and Medium of Payments. All sums payable under this Note
shall be paid to Holder in legal tender of the United States of America, without
demand, defalcation, set-off or deduction at its address hereinabove set forth,
or at such other place as Holder may from time to time hereafter designate to
Borrower in writing, provided however, Borrower shall, after written notice to
the Note Owners and ITB, given in the manner prescribed in Paragraph 21 of the
Agreement, be entitled to offset against any and all amounts payable under the
Agreement by Borrower to the Note Owners, including amounts due hereunder, (a)
the amount of any Loss (as defined in the Agreement) for which indemnification
under Section 17 of the Agreement is available, (b) the amount of any
multi-employer pension plan withdrawal liability incurred by Borrower, as
described in Section 4(b) of the Agreement, and (c) any amounts paid by Borrower
as Tenant pursuant to Section 4.01(b) of the Lease Agreement of even date
herewith between Borrower as Tenant and Garden State Race Track, Inc. as
Landlord for certain property located at at 2200-2290 Marlton Pike West, Cherry
Hill Township, Camden County, New Jersey.
<PAGE>
6. Default. Each of the following events shall be deemed an "Event of
Default" hereunder: (a) the failure by Borrower to make any payment of principal
or interest or any other sum when due under this Note and such failure continues
for ten (10) days after Lender has given written notice of such failure to
Borrower; or (b) the failure by Borrower in the due performance and observance
of any other provision of this Note and such failure is not cured within thirty
(30) days after Lender has given written notice of such failure to Borrower; or
(c) any Event of Default under the Mortgage and Security Agreement; or (d) any
Event of Default of any note executed by Borrower in favor of Lender in
connection with the Agreement; or (e) any default (after expiration of any
applicable grace period) by Borrower in the payment of any indebtedness owed to
Borrower's Senior Lender in connection with the transaction contemplated in the
Agreement in the aggregate principal amount of US$50,000.00 or more, which
results in the acceleration of such indebtedness; or (f) the filing of any
bankruptcy petition by Borrower or the making by Borrower of any general
assignment for the benefit of creditors or the appointment of any receiver for
the assets or property of Borrower which is not stayed or discharged within 90
days after the commencement thereof; or (g) the commencement of any bankruptcy
proceeding against Borrower and/or the guarantor of this Note which shall not
have been stayed or dismissed within ninety (90) days after the commencement
thereof.
7. Remedies. At any time after the occurrence of an Event of Default,
Holder, at its option upon notice to Borrower, may declare the whole of the
principal indebtedness evidenced hereby, together with all interest and other
charges due hereunder, immediately due and payable, without any further action
on the part of Holder; provided however, that, upon the occurrence of any of the
events specified in clauses (f) and (g) of Section 6 above, all amounts in
respect of principal and interest and all other amounts due and payable under
this Note shall automatically become due and payable without notice,
presentment, demand or protest. In addition, Holder shall have the right
immediately and without notice or other action, to set-off against Borrower's
liabilities to Holder (i) any money owed by Holder in any capacity to Borrower,
whether or not then due, and/or (ii) any money or other property of Borrower in
possession of Holder, and Holder shall be deemed to have exercised such right of
set-off and to have made a charge against any such money and/or property
immediately upon the occurrence of an Event of Default under this Note, even
though the actual book entries may be made at some time subsequent thereto.
Notwithstanding the foregoing, no acceleration right or any other right to
collect payment hereunder shall exist in favor of Lender unless the Condition
shall have been satisfied within three years after the date of this Note and
prior to the date Lender seeks to exercise such right.
The remedies of Holder, as provided herein or available at law
or in equity, shall be cumulative and concurrent and may be pursued singly,
successively or together, at the sole discretion of Holder and may be exercised
as often as occasion therefore shall occur.
8. Interest Following Event of Default. If any payment due under this
Note is not paid within ten (10) days of when due, Borrower shall pay interest
on all sums due hereunder at a rate ("Default Rate") equal to the lesser of (i)
the interest rate then in effect hereunder plus one percent (1%) per annum, or
(ii) the maximum rate permitted by law, from and after the occurrence of an
Event of Default hereunder until such Event of Default is cured.
<PAGE>
9. Collection and Enforcement Costs. Borrower shall pay to Lender, upon
demand, all expenses incurred by Lender (i) in connection with the collection of
the Loan and/or the enforcement of Borrower's obligations under this Note, and
(ii) in curing any Event of Default under this Note including in any case,
without limitation, reasonable attorneys' fees, with interest thereon at the
Default Rate, from the date incurred by Lender to the date of repayment to
Lender. Any reference to "attorney's fees" shall include, but not be limited to,
those attorneys' or legal fees, costs and charges incurred by Lender in the
defense of actions arising hereunder and following an Event of Default the
collection, protection or set-off of any claim the Lender may have in a
proceeding under Title 11, United States Code. Attorneys' fees provided for
hereunder shall accrue whether or not Lender has provided notice of default or
of an intention to exercise its remedies for a default. By acceptance of this
Note, Lender agrees to pay Borrower, upon demand, all expenses, including
attorneys' fees, incurred by Borrower in the successful defense of a claim by
Lender that an Event of Default has occurred.
10. Agent. Notwithstanding that the party acting as agent for the Note
Owners may be replaced from time to time by the Note Owners, at any time, there
shall be only one agent acting on behalf of the Note Owners.
11. Continuing Liability. The obligation of Borrower to pay the
principal, interest and all other sums due hereunder shall continue in full
force and effect and shall not be impaired, until the actual payment thereof to
Holder, and in case of any agreement given to secure the payment of this Note,
or in case of any agreement or stipulation extending the time or modifying the
terms of payment above recited, Borrower shall nevertheless continue to be
liable on this Note, as extended or modified by any such agreement or
stipulation, unless released and discharged in writing by Holder.
12. No Oral Changes; Waivers. This Note may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
a change is sought. Borrower hereby waives and releases Lender and its attorneys
from all errors, defects and imperfections in any proceedings instituted by
Lender with respect to this Note. Borrower and any future endorsers, sureties
and guarantors hereof, jointly and severally, waive presentment for payment,
demand, notice of nonpayment, notice of dishonor, protest of any dishonor,
notice of protest, and protest of this Note (except as otherwise expressly set
forth herein), and all other notices in connection with the delivery,
acceptance, performance, default, or enforcement of the payment of this Note,
and they agree that the liability of each of them shall be unconditional without
regard to the liability of any other party and shall not be in any manner
affected by an indulgence, extension of time, renewal, waiver or modification
granted or consented to by the Holder; and Borrower and all future endorsers,
sureties and guarantors hereof consent to any and all extensions of time,
renewals, waivers or modifications (if evidenced by such party's execution
thereof) that may be granted by the Holder hereof with respect to the payment or
other provisions of this Note, and to the release of collateral (if any), or any
part thereof, with or without substitution, and agree that additional makers,
endorsers, guarantors, or sureties may become parties hereto without notice to
them or affecting their liability hereunder.
Holder shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in writing
and signed by Holder, and then only to the extent specifically set forth
therein; a waiver on one event shall not be construed as continuing or as a bar
to or waiver of such right or remedy on a subsequent event. The acceptance by
Holder of payment hereunder that is less than payment in full of all amounts due
at the time of such payment shall not without the express written consent of
Holder: (i) constitute a waiver of the right to exercise any of Holder's
remedies at that time or at any
<PAGE>
subsequent time, (ii) constitute an accord and satisfaction, or (iii) nullify
any prior exercise of any remedy, except as provided by law.
No failure to cause an acceleration of Borrower's obligations due
hereunder by reason of an Event of Default, acceptance of a past due installment
or indulgences granted from time to time shall be construed (i) as a novation of
this Note or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of such right of acceleration or of the right of Holder thereafter to
insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by the laws of the State of New Jersey; and, to the maximum extent permitted
by law, Borrower hereby expressly waives the benefit of any statute or rule of
law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing.
To the maximum extent permitted by law, Borrower hereby waives and
renounces for itself, its successors and assigns, all rights to the benefits of
any moratorium, reinstatement, marshaling, forbearance, valuation, stay,
extension, redemption, appraisement and exemption now provided, or which may
hereafter be provided, by the Constitution and laws of the United States of
America and of any state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Note.
13. Taxes. Borrower shall pay the cost of all revenue, tax or other
stamps now or hereafter required by law at any time to be affixed to this Note.
14. Bind and Inure. This Note shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns.
15. Applicable Law. The provisions of this Note shall be construed and
enforceable in accordance with the laws of the State of New Jersey, without
regard to principles of conflict of laws.
16. Consent to Jurisdiction. Holder, by acceptance of this Note, and
Borrower irrevocably consent and agree that any action or proceeding arising
under this Note may be brought in any court of the State of New Jersey or a
federal court sitting in the State of New Jersey (each, a "New Jersey Court"),
and Borrower and Holder hereby submit to and accept with regard to any such
action or proceeding, for themselves and in respect of Borrower's property,
generally and unconditionally, the jurisdiction of any such New Jersey Court.
Borrower and Holder hereby irrevocably waive any objection that they may now or
hereafter have to (i) the exercise by any New Jersey Court of personal
jurisdiction over Borrower or Holder, and (ii) the laying of the venue of any
suit, action or proceeding arising out of or relating to this Note in the State
of New Jersey, and Borrower and Holder hereby irrevocably waive any claim that
the State of New Jersey is not a convenient forum for any suit, action or
proceeding. Borrower and Holder further agree that a final judgment obtained
against it in any such action or proceeding will be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America.
<PAGE>
17. Invalidity. If any provision of this Note or the application hereof
to any person or circumstance shall, for any reason and to any extent, be
invalid or unenforceable, neither the remainder of this Note nor the application
of such provision to any other person or circumstance shall be affected thereby,
but rather the same shall be enforced to the greatest extent permitted by law.
18. Waiver of Jury Trial. Both Lender and Borrower hereby agree to
waive and do hereby waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto under or in connection with
this Note.
19. Usury. It is hereby expressly agreed that if from any circumstances
whatsoever fulfillment of any provision of this Note, at the time performance of
such provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under this Note that is in
excess of the limit of such validity. In no event shall Borrower be bound to pay
for the use, forbearance or detention of the money loaned pursuant hereto,
interest of more than the current legal limit; the right to demand any such
excess being hereby expressly waived by Holder.
20. Notice. Any notice, demand, or request made hereunder shall be in
writing, signed by the party giving such notice, demand or request, and shall be
delivered personally, or delivered to a reputable overnight delivery service
providing a receipt or mailed by United States certified mail, postage prepaid
and return receipt requested, addressed as set forth below or to such other
address as theretofore may have been designated in writing by such party in
accordance with the terms of this provision. The effective date of any notice
given as provided in this Section shall be the date of delivery or, if delivery
in refused or otherwise not accepted, the date of such refusal or
non-acceptance.
If to Lender:
[name and address of agent]
with a copy to:
Kevin G. Abrams, Esquire
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Telecopier: 302/658/6548
<PAGE>
If to Borrower:
Robert W. Green, President
Greenwood New Jersey, Inc.
3001 Street Road
Bensalem, PA 19020-8512
with a copy to:
Theodore A. Young, Esquire
Fox, Rothschild, O'Brien & Frankel, LLP
2000 Market Street, 10th Floor
Philadelphia, PA 19103-3291
Telecopier: 215/299/2150
21. Time of the Essence. Time is of the essence in this Note.
IN WITNESS WHEREOF, Borrower has duly executed this Note as a sealed
instrument as of the day and year first above written.
BORROWER:
Sealed and delivered in GREENWOOD NEW JERSEY, INC.
the presence of:
___________________________ By: ___________________________(Seal)
Witness Name:
Title:
<PAGE>
Exhibit 6(a)(iv) to
Asset Purchase Agreement
CONTINGENT PROMISSORY NOTE
US$2,000,000.00 August __, 1998
_____________, New Jersey
FOR VALUE RECEIVED, GREENWOOD NEW JERSEY, INC., a New Jersey
corporation with an address at 3001 Street Road, Bensalem, PA 19020-8512
("Borrower"), hereby promises to pay to the order of __________________ with an
address at ____________________("Lender"), acting as agent for Garden State Race
Track, Inc., a New Jersey corporation ("GSRT"), Freehold Raceway Association, a
New Jersey corporation ("FRA"), Atlantic City Harness, Inc., a New Jersey
corporation ("ACH") and Circa 1850, Inc., a New Jersey corporation ("Circa")
(collectively, the "Note Owners") (the legal holder from time to time of this
Note, including Lender as the initial holder, is sometimes hereinafter referred
to as "Holder"), the principal sum of TWO MILLION AND 00/100 DOLLARS
($2,000,000.00) (the "Loan"), together with interest on the unpaid principal
balance of this Note from the date the condition precedent referred to in
Paragraph 1 has occurred, if ever, until the entire principal sum is paid in
full, in accordance with the provisions hereinafter set forth. The ownership
interest of each Note Owner in this Note is in proportion to the allocation set
forth in Paragraph 6(b) of the Asset Purchase Agreement dated as of June ___,
1998 by and among Borrower, the Note Owners and International Thoroughbred
Breeders, Inc., a Delaware corporation ("ITB") (the "Agreement").
1. Condition Precedent to Borrower's Duties and Obligations. The
Borrower shall have no duties or obligations arising under this Note unless,
within three years after [August 15, 1998 (the Closing Date),] the State of New
Jersey enacts legislation permitting telephone account pari-mutuel wagering on
horse racing ("Telephone Wagering") and as a result of the legislation Borrower
opens new telephone accounts from New Jersey residents (the "Condition"). This
Note shall automatically become null and void three years after the date hereof
if the Condition has not been satisfied, and Lender shall execute and deliver to
Borrower, upon Borrower's demand, documents acceptable to Borrower confirming
the non-occurrence of the Condition and the null and void status of this Note.
2. Terms of Payment; Interest Rate. From the date the Condition first
exists, through and including the date that the entire principal balance of this
Note is paid in full, interest shall accrue on the outstanding principal balance
hereunder at the rate of twelve percent (12%) per annum (the "Contract Rate").
Subject to the terms of the intercreditor agreement between Lender and
Borrower's Senior Lender (as defined in the Agreement), The principal is payable
quarterly beginning on the first day of the month following the later of [the
month after third anniversary of Closing] and the month in which the Condition
has been met, and on each [September 1], [December 1], [March 1] and [June 1]
thereafter in the amount of $50,000.00, with unpaid principal payable in full on
[August 28, 2005, (the seventh anniversary of the Closing Date)]. Interest shall
be payable quarterly in arrears beginning on [September 1, 1998] and on each
[December 1], [March 1], [June 1] and [September 1]. Interest shall be computed
on the basis
<PAGE>
of a 365-day year and charged on the basis of the actual number of days elapsed
in the applicable payment period.
3. Acceleration and Prepayment. Subject to Borrower's Senior Lender
approval, Borrower shall make a prepayment of 50% of the then outstanding
principal balance of this Note upon the earlier of: (A) the installation and
commencement of full-time operation, open to the public, with all approvals
obtained, of not less than 500 slot machines on the premises of Philadelphia
Park when operated by Greenwood Racing, Inc., a Pennsylvania corporation
("Greenwood") or its affiliates, or (B) the successful conclusion of an IPO or
major capital transaction pursuant to which Greenwood receives a net cash
infusion of not less than an additional $50 Million (not including the financing
of this transaction). In addition, Borrower may make optional prepayments of all
or part of the outstanding principal balance hereof without penalty at any time,
provided that when making such prepayment Borrower pays all interest then
accrued hereunder. Any partial prepayment shall be applied first to the payment
of accrued but unpaid interest, and then to unpaid principal in the inverse
order of maturity.
4. Security. This Note is secured by a mortgage and security agreement
given by Borrower to Lender, of even date herewith (the "Mortgage and Security
Agreement"). The Borrower has also promised to further secure this Note,
pursuant to Paragraph 11(g) of the Agreement, with a security agreement and
mortgage in favor of Lender on any other real estate assets, including the 10
Acre Parcel contemplated in the Agreement, acquired by Borrower for an off track
betting facility, meaning simulcast only pari-mutuel facilities that do not have
to conduct live racing, developed in New Jersey by Borrower. Borrower hereby
represents, warrants and covenants that its obligations under this Note are and
will continue to be pari passu in right of repayment and otherwise with its
other promissory notes it executed in favor of Lender in connection with the
Agreement. Borrower hereby covenants that it will keep all of its assets that
are encumbered by the Mortgage and Security Agreement or otherwise pledged to
the Lender as security for this Note free and clear of all liens, security
interests and other interests and encumbrances, except as necessary to finance
the Purchase Price (as defined in the Agreement), or as otherwise agreed to by
Lender in the Mortgage and Security Agreement or otherwise.
5. Location and Medium of Payments. All sums payable under this Note
shall be paid to Holder in legal tender of the United States of America, without
demand, defalcation, set-off or deduction at its address hereinabove set forth,
or at such other place as Holder may from time to time hereafter designate to
Borrower in writing, provided however, Borrower shall, after written notice to
the Note Owners and ITB, given in the manner prescribed in Paragraph 21 of the
Agreement , be entitled to offset against any and all amounts payable under the
Agreement by Borrower to the Note Owners, including amounts due hereunder, (a)
the amount of any Loss (as defined in the Agreement) for which indemnification
under Section 17 of the Agreement is available, (b) the amount of any
multi-employer pension plan withdrawal liability incurred by Borrower, as
described in Section 4(b) of the Agreement, and (c) any amounts paid by Borrower
as Tenant pursuant to Section 4.01(b) of the Lease Agreement of even date
herewith between Borrower as Tenant and Garden State Race Track, Inc. as
Landlord for certain property located at at 2200-2290 Marlton Pike West, Cherry
Hill Township, Camden County, New Jersey.
<PAGE>
6. Default. Each of the following events shall be deemed an "Event of
Default" hereunder: (a) the failure by Borrower to make any payment of principal
or interest or any other sum when due under this Note and such failure continues
for ten (10) days after Lender has given written notice of such failure to
Borrower; or (b) the failure by Borrower in the due performance and observance
of any other provision of this Note and such failure is not cured within thirty
(30) days after Lender has given written notice of such failure to Borrower; or
(c) any Event of Default under the Mortgage and Security Agreement; or (d) any
Event of Default of any note executed by Borrower in favor of Lender in
connection with the Agreement; or (e) any default (after expiration of any
applicable grace period) by Borrower in the payment of any indebtedness owed to
Borrower's Senior Lender in connection with the transaction contemplated in the
Agreement in the aggregate principal amount of US$50,000.00 or more, which
results in the acceleration of such indebtedness; or (f) the filing of any
bankruptcy petition by Borrower or the making by Borrower of any general
assignment for the benefit of creditors or the appointment of any receiver for
the assets or property of Borrower which is not stayed or discharged within 90
days after the commencement thereof; or (g) the commencement of any bankruptcy
proceeding against Borrower and/or the guarantor of this Note which shall not
have been stayed or dismissed within ninety (90) days after the commencement
thereof.
7. Remedies. At any time after the occurrence of an Event of Default,
Holder, at its option upon notice to Borrower, may declare the whole of the
principal indebtedness evidenced hereby, together with all interest and other
charges due hereunder, immediately due and payable, without any further action
on the part of Holder; provided however, that, upon the occurrence of any of the
events specified in clauses (f) and (g) of Section 6 above, all amounts in
respect of principal and interest and all other amounts due and payable under
this Note shall automatically become due and payable without notice,
presentment, demand or protest. In addition, Holder shall have the right
immediately and without notice or other action, to set-off against Borrower's
liabilities to Holder (i) any money owed by Holder in any capacity to Borrower,
whether or not then due, and/or (ii) any money or other property of Borrower in
possession of Holder, and Holder shall be deemed to have exercised such right of
set-off and to have made a charge against any such money and/or property
immediately upon the occurrence of an Event of Default under this Note, even
though the actual book entries may be made at some time subsequent thereto.
Notwithstanding the foregoing, no acceleration right or any other right to
collect payment hereunder shall exist in favor of Lender unless the Condition
shall have been satisfied within three years after the date of this Note and
prior to the date Lender seeks to exercise such right.
The remedies of Holder, as provided herein or available at law
or in equity, shall be cumulative and concurrent and may be pursued singly,
successively or together, at the sole discretion of Holder and may be exercised
as often as occasion therefore shall occur.
8. Interest Following Event of Default. If any payment due under this
Note is not paid within ten (10) days of when due, Borrower shall pay interest
on all sums due hereunder at a rate ("Default Rate") equal to the lesser of (i)
the interest rate then in effect hereunder plus one percent (1%) per annum, or
(ii) the maximum rate permitted by law, from and after the occurrence of an
Event of Default hereunder until such Event of Default is cured.
<PAGE>
9. Collection and Enforcement Costs. Borrower shall pay to Lender, upon
demand, all expenses incurred by Lender (i) in connection with the collection of
the Loan and/or the enforcement of Borrower's obligations under this Note, and
(ii) in curing any Event of Default under this Note including in any case,
without limitation, reasonable attorneys' fees, with interest thereon at the
Default Rate, from the date incurred by Lender to the date of repayment to
Lender. Any reference to "attorney's fees" shall include, but not be limited to,
those attorneys' or legal fees, costs and charges incurred by Lender in the
defense of actions arising hereunder and following an Event of Default the
collection, protection or set-off of any claim the Lender may have in a
proceeding under Title 11, United States Code. Attorneys' fees provided for
hereunder shall accrue whether or not Lender has provided notice of default or
of an intention to exercise its remedies for a default. By acceptance of this
Note, Lender agrees to pay Borrower, upon demand, all expenses, including
attorneys' fees, incurred by Borrower in the successful defense of a claim by
Lender that an Event of Default has occurred.
10. Agent. Notwithstanding that the party acting as agent for the Note
Owners may be replaced from time to time by the Note Owners, at any time, there
shall be only one agent acting on behalf of the Note Owners.
11. Continuing Liability. The obligation of Borrower to pay the
principal, interest and all other sums due hereunder shall continue in full
force and effect and shall not be impaired, until the actual payment thereof to
Holder, and in case of any agreement given to secure the payment of this Note,
or in case of any agreement or stipulation extending the time or modifying the
terms of payment above recited, Borrower shall nevertheless continue to be
liable on this Note, as extended or modified by any such agreement or
stipulation, unless released and discharged in writing by Holder.
12. No Oral Changes; Waivers. This Note may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
a change is sought. Borrower hereby waives and releases Lender and its attorneys
from all errors, defects and imperfections in any proceedings instituted by
Lender with respect to this Note. Borrower and any future endorsers, sureties
and guarantors hereof, jointly and severally, waive presentment for payment,
demand, notice of nonpayment, notice of dishonor, protest of any dishonor,
notice of protest, and protest of this Note (except as otherwise expressly set
forth herein), and all other notices in connection with the delivery,
acceptance, performance, default, or enforcement of the payment of this Note,
and they agree that the liability of each of them shall be unconditional without
regard to the liability of any other party and shall not be in any manner
affected by an indulgence, extension of time, renewal, waiver or modification
granted or consented to by the Holder; and Borrower and all future endorsers,
sureties and guarantors hereof consent to any and all extensions of time,
renewals, waivers or modifications (if evidenced by such party's execution
thereof) that may be granted by the Holder hereof with respect to the payment or
other provisions of this Note, and to the release of collateral (if any), or any
part thereof, with or without substitution, and agree that additional makers,
endorsers, guarantors, or sureties may become parties hereto without notice to
them or affecting their liability hereunder.
Holder shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in writing
and signed by Holder, and then only to the extent specifically set forth
therein; a waiver on one event shall not be construed as continuing or as a bar
to or waiver of such right or remedy on a subsequent event. The acceptance by
Holder of payment hereunder that is less than payment in full of all amounts due
at the time of such payment shall not without the express written consent of
Holder: (i) constitute a waiver of the right to exercise any of Holder's
remedies at that time or at any
<PAGE>
subsequent time, (ii) constitute an accord and satisfaction, or (iii) nullify
any prior exercise of any remedy, except as provided by law.
No failure to cause an acceleration of Borrower's obligations due
hereunder by reason of an Event of Default, acceptance of a past due installment
or indulgences granted from time to time shall be construed (i) as a novation of
this Note or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of such right of acceleration or of the right of Holder thereafter to
insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by the laws of the State of New Jersey; and, to the maximum extent permitted
by law, Borrower hereby expressly waives the benefit of any statute or rule of
law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing.
To the maximum extent permitted by law, Borrower hereby waives and
renounces for itself, its successors and assigns, all rights to the benefits of
any moratorium, reinstatement, marshaling, forbearance, valuation, stay,
extension, redemption, appraisement and exemption now provided, or which may
hereafter be provided, by the Constitution and laws of the United States of
America and of any state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Note.
13. Taxes. Borrower shall pay the cost of all revenue, tax or other
stamps now or hereafter required by law at any time to be affixed to this Note.
14. Bind and Inure. This Note shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns.
15. Applicable Law. The provisions of this Note shall be construed and
enforceable in accordance with the laws of the State of New Jersey, without
regard to principles of conflict of laws.
16. Consent to Jurisdiction. Holder, by acceptance of this Note, and
Borrower irrevocably consent and agree that any action or proceeding arising
under this Note may be brought in any court of the State of New Jersey or a
federal court sitting in the State of New Jersey (each, a "New Jersey Court"),
and Borrower and Holder hereby submit to and accept with regard to any such
action or proceeding, for themselves and in respect of Borrower's property,
generally and unconditionally, the jurisdiction of any such New Jersey Court.
Borrower and Holder hereby irrevocably waive any objection that they may now or
hereafter have to (i) the exercise by any New Jersey Court of personal
jurisdiction over Borrower or Holder, and (ii) the laying of the venue of any
suit, action or proceeding arising out of or relating to this Note in the State
of New Jersey, and Borrower and Holder hereby irrevocably waive any claim that
the State of New Jersey is not a convenient forum for any suit, action or
proceeding. Borrower and Holder further agree that a final judgment obtained
against it in any such action or proceeding will be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America.
<PAGE>
17. Invalidity. If any provision of this Note or the application hereof
to any person or circumstance shall, for any reason and to any extent, be
invalid or unenforceable, neither the remainder of this Note nor the application
of such provision to any other person or circumstance shall be affected thereby,
but rather the same shall be enforced to the greatest extent permitted by law.
18. Waiver of Jury Trial. Both Lender and Borrower hereby agree to
waive and do hereby waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto under or in connection with
this Note.
19. Usury. It is hereby expressly agreed that if from any circumstances
whatsoever fulfillment of any provision of this Note, at the time performance of
such provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under this Note that is in
excess of the limit of such validity. In no event shall Borrower be bound to pay
for the use, forbearance or detention of the money loaned pursuant hereto,
interest of more than the current legal limit; the right to demand any such
excess being hereby expressly waived by Holder.
20. Notice. Any notice, demand, or request made hereunder shall be in
writing, signed by the party giving such notice, demand or request, and shall be
delivered personally, or delivered to a reputable overnight delivery service
providing a receipt or mailed by United States certified mail, postage prepaid
and return receipt requested, addressed as set forth below or to such other
address as theretofore may have been designated in writing by such party in
accordance with the terms of this provision. The effective date of any notice
given as provided in this Section shall be the date of delivery or, if delivery
in refused or otherwise not accepted, the date of such refusal or
non-acceptance.
If to Lender:
[name and address of agent]
with a copy to:
Kevin G. Abrams, Esquire
Richards, Layton & Finger, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Telecopier: 302/658/6548
<PAGE>
If to Borrower:
Robert W. Green, President
Greenwood New Jersey, Inc.
3001 Street Road
Bensalem, PA 19020-8512
with a copy to:
Theodore A. Young, Esquire
Fox, Rothschild, O'Brien & Frankel, LLP
2000 Market Street, 10th Floor
Philadelphia, PA 19103-3291
Telecopier: 215/299/2150
21. Time of the Essence. Time is of the essence in this Note.
IN WITNESS WHEREOF, Borrower has duly executed this Note as a sealed
instrument as of the day and year first above written.
BORROWER:
Sealed and delivered in GREENWOOD NEW JERSEY, INC.
the presence of:
___________________________ By: ___________________________(Seal)
Witness Name:
Title:
<PAGE>
Exhibit 6(a)(vii)
to Asset Purchase
Agreement
Prepared By and Return To:
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT ("Mortgage") is made as
of the _____ day of ________________, 1998, by Greenwood New Jersey, Inc., a New
Jersey corporation with offices at 3001 Street Road, Bensalem, Pennsylvania
19020, Attn: Robert W. Green ("Borrower") in favor of _____________________, a
__________________________ with offices at c/o International Thoroughbred
Breeders, Inc., Haddonfield Road and Route 70, Cherry Hill, New Jersey 08034,
Attn:________________ ("Lender"), as agent for Garden State Race Track, Inc., a
New Jersey corporation, Freehold Raceway Association, a New Jersey corporation,
Atlantic City Harness, Inc., a New Jersey corporation, and Circa 1850, Inc., a
New Jersey corporation.
W I T N E S S E T H:
THAT, to secure (i) payment to Lender of the principal
indebtedness of up to Twenty- two Million and No/100 Dollars ($22,000,000.00),
together with interest thereon, as evidenced by (i) that certain Promissory Note
of even date herewith in the principal amount of $12,000,000.00; (ii) that
certain Contingent Promissory Note of even date herewith in the principal sum of
$5,000,000.00; (iii) that certain Contingent Promissory Note of even date
herewith in the principal sum of $3,000,000.00; and (iv) that Contingent
Promissory Note of even date herewith in the principal sum of $2,000,000.00, for
a total principal amount of up to $22,000,000.00, and any renewals, extensions
or modifications thereof (collectively, the "Notes"), given by Borrower and made
payable to the order of Agent, (ii) the performance of the covenants herein
contained and the payment of any monies expended by Lender in connection
therewith or under the Notes, (iii) the payment of all obligations and the
observance and performance of all covenants, agreements and obligations of
Borrower under any agreements or instruments executed by Borrower in favor of
Lender and given in connection with or related to this Mortgage or the Notes and
(iv) any and all additional advances made by Lender necessary to protect or
preserve the Mortgaged Property (defined below) or the security interest created
hereby on the Mortgaged Property, or for taxes, assessments or insurance
premiums as hereinafter provided or for performance of any of Borrower's
obligations hereunder or for any other purpose provided herein (whether or not
the original Borrower remains the owner of the Mortgaged Property at the time of
such advances) (all of the aforesaid indebtedness and obligations of Borrower
being herein called the "Indebtedness"), Borrower hereby grants, bargains,
sells, conveys, aliens, enfeoffs, confirms, releases, assigns, transfers,
pledges, leases and grants a security interest to Lender and to Lender's
successors and assigns, all of the following described land, improvements, real
and personal property and all of its estate, right, title and interest therein
(hereinafter collectively called the "Mortgaged Property"):
<PAGE>
The land described in Exhibit "A" attached hereto, situate,
lying and being in _____________ Township, ______________ County and State of
New Jersey ("Land");
TOGETHER with all buildings, structures, fixtures and other
improvements now or hereafter located on said Land or any part thereof,
including, but not limited to, all extensions, betterments, renewals,
renovations, substitutes and replacements of, and all additions and
appurtenances thereto and thereon ("Improvements");
TOGETHER with all of the right, title and interest of Borrower
if any there be in and to the land lying in the bed of any street, road, highway
or avenue in front of or adjoining the Land to the center lines thereof;
TOGETHER with the right to use, in perpetuity, in connection
with the operation of the Mortgaged Property the name "Freehold Raceway" and any
other name similar thereto used in connection with the Mortgaged Property;
TOGETHER with all easements now or hereafter located on or
appurtenant to the Land and/or Improvements or under or above the same or any
part thereof, rights-of-way, licenses, permits, approvals and privileges (but
not including New Jersey racing licenses), belonging or in any way appertaining
to the Land and/or Improvements including, without limitation, (i) any drainage
ponds or other like drainage areas not located on the Land which may be required
for water run-off, (ii) any easements necessary to obtain access from the Land
to such drainage areas, or to any other location to which Borrower has a right
to drain water or sewage, (iii) any land required to be maintained as
undeveloped land by the zoning rules and regulations applicable to the Land, and
(iv) any easements and agreements which are or may be established to allow
satisfactory ingress to, egress from and operation of the Land and/or the
Improvements;
TOGETHER with any and all awards heretofore made and hereafter
to be made by any governmental, municipal or State authorities to the present
and all subsequent owners of the Mortgaged Property for the taking of all or any
portion of the Mortgaged Property by power of eminent domain, including, without
limitation, awards for damage to the remainder of the Mortgaged Property and any
awards for any change or changes of grade of streets affecting the Mortgaged
Property (all of the foregoing Land, Improvements, rights, easements,
rights-of-way, licenses, privileges, and awards are herein collectively referred
to as the "Real Property");
TOGETHER with all proceeds of insurance or otherwise, paid for
the damage done to any of the Mortgaged Property and all proceeds of the
conversion, voluntarily or involuntarily, of any of the Mortgaged Property into
cash or liquidated claims;
TOGETHER with all machinery, equipment, goods and every other
article of personal property, tangible and intangible, now or hereafter acquired
(including any leased property thereafter purchased), attached to or used in
connection with the Real Property, or placed on any part thereof and whether or
not attached thereto, appertaining or adapted to the use, management, operation
or improvement of the Real Property, insofar as the same and any reversionary
right thereto may now or hereafter be owned or acquired by Borrower ("Personal
Property");
<PAGE>
TOGETHER with all books of account and records relating to the
Mortgaged Property, including all computers and software relating thereto;
TOGETHER with all leases, occupancy agreements and contracts
of sale for the Real Property, or any portion thereof, now and hereafter entered
into and all right, title and interest of Borrower thereunder, including,
without limitation, cash or securities deposited thereunder to secure
performance by the lessees or contract purchasers; all rents arising from or out
of the Real Property or any part thereof; any refunds and rebate of taxes and
assessments of every kind and nature imposed upon the Mortgaged Property; and
all sanitary sewer, drainage, water and utility service agreements benefiting
the Real Property or any part thereof;
TOGETHER with all rights of Borrower under any leases,
covenants, agreements, easements, restrictions or declarations recorded with
respect to, or as an appurtenance to, the Real Property or any part thereof,
including, without limitation, all rights of Borrower pursuant to any equipment
lease or conditional sales contract;
TOGETHER with all of the right, title and interest of Borrower
in and to all and singular the tenements, hereditaments and appurtenances
belonging to or in any way pertaining to the Mortgaged Property; all the estate,
right, title and claim whatsoever of Borrower, either in law or in equity, in
and to the Mortgaged Property;
UNDER AND SUBJECT to the following:
(a) the lien of that certain [MORTGAGE], dated _____________,
1998 ("Superior Mortgage"), in favor of ______________________________ ("Initial
Superior Lender") and intended to be recorded immediately prior hereto, in the
maximum principal amount of $___________________, and any substitutions,
refinancings, extensions, replacements, amendments or modifications thereto
(whether made by Initial Superior Lender or by a substitute lender) which will
not increase the original principal amount secured thereby, unless, and only to
the extent of, funds advanced to Borrower (and demonstrated to the reasonable
satisfaction of Lender) to finance (i) construction, acquisition and/or
operation of one or more OTB Facilities (as defined in the Notes) and/or (ii)
installation, acquisition and/or operation of Telephone Wagering (as defined in
the Notes); and
(b) the lien of any purchase money financing (including,
without limitation, capital leases) for fixtures, equipment, machinery,
furnishings, goods or other articles or personal property hereafter acquired by
Borrower in connection with the operation of Borrower's business on the Real
Property.
Lender shall execute and acknowledge subordination agreements
from time to time as requested by Borrower to confirm the subordination of this
Mortgage as set forth above.
TO HAVE AND TO HOLD the Mortgaged Property, and each and every
part thereof, unto Lender and its successors and assigns, for the purposes and
uses herein set forth.
<PAGE>
AND, Borrower hereby further covenants, agrees and warrants as
follows:
1. Payment of Indebtedness. Borrower will pay the principal
indebtedness and interest thereon in accordance with the provisions of the Notes
and late charges and fees required thereunder, and all extensions, renewals,
modifications, amendments and replacements thereof, and will keep and perform
all the covenants, promises and agreements, and pay all sums provided in (i) the
Notes; (ii) this Mortgage and (iii) any and all other agreements or instruments
given to evidence or secure the Indebtedness (collectively, "Loan Documents"),
all in the manner herein or therein set forth. Any amounts not paid when due
shall bear interest at the Default Rate specified in the Note ("Default Rate")
from the due date until paid in full.
2. Usury. It is hereby expressly agreed that if from any
circumstances whatsoever fulfillment of any provision of the Notes, this
Mortgage or any of the other Loan Documents, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under the Loan Documents that is
in excess of the limit of such validity.
3. Impositions. Borrower will pay, not later than five (5)
days before the last day on which the same may be paid without penalty or
interest, all real estate taxes, sewer rents, water charges and all other
municipal and governmental assessments, rates, charges, impositions and liens
(hereinafter collectively referred to as "Impositions") which now or hereafter
are imposed by law upon the parcel of land of which the Mortgaged Property is a
part ("Tax Parcel"). If any of the Impositions are not paid within the time
hereinabove specified, Lender shall have the right to pay the same, together
with any penalty and interest thereon, and the amount or amounts so paid or
advanced shall forthwith be payable by Borrower to Lender and shall be secured
by the lien of this Mortgage; but Borrower may in good faith contest, at
Borrower's own cost and expense, by proper legal proceedings, the validity or
amount of any of the Impositions, on the condition that no amount so contested
may remain unpaid for such length of time as shall permit the Tax Parcel or the
lien thereon created by the item being contested, to be sold for the nonpayment
thereof, or as shall permit an action, either of foreclosure or otherwise, to be
commenced by the holder of any such lien. Borrower will, within thirty (30) days
after written request by Lender (which request shall not be made until the final
date that any Imposition can be paid without penalty), furnish Lender with
evidence reasonably acceptable to Lender that all Impositions have been paid in
full. Borrower will not claim any credit on, or make any deduction from the
Indebtedness by reason of the payment of any of the Impositions.
4. [omitted]
5. Payment of Claims. Borrower shall pay at or prior to
maturity thereof, and in strict accordance with the terms thereof, any and all
claims, charges, liens, encumbrances and sums (collectively, "Claims") which are
or shall hereafter become or appear to be a lien or encumbrance, whether senior
or subordinate hereto (except for the loan secured by the Superior Mortgage,
which Borrower shall pay in accordance with the terms thereof), upon the
Mortgaged Property or any part thereof or interest therein, including but
without limiting the generality of the foregoing, any and all Claims for work or
labor performed, or materials or services supplied in
<PAGE>
connection with any work upon the Mortgaged Property. Borrower shall promptly,
if and to the extent requested by Lender, furnish to Lender, from time to time
receipts evidencing all of the aforementioned payments. Borrower, at its
expense, may contest, by appropriate proceedings conducted in good faith and
with due diligence, the amount or validity, in whole or in part, of any Claim,
provided (i) Borrower shall have notified Lender prior to the commencement of
such proceedings, (ii) in the case of any unpaid Claim, such proceedings shall
suspend the collection thereof from Borrower, Lender and the Mortgaged Property
and shall not constitute a lien against the Mortgaged Property during the
pendency of such contest, (iii) neither the Mortgaged Property nor any part
thereof nor any interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost, (iv) such proceedings shall not have an adverse
effect on the lien or security interest created hereby or upon the enforcement
of any provisions of the Notes or this Mortgage, and (v) if Lender shall so
require, Borrower shall have deposited with Lender such security for payment of
the contested Claim, with interest and penalties and Lender's expenses, as may
be required by Lender.
6. Performance of Superior Mortgage. Borrower shall perform
when due all its agreements and obligations under the Superior Mortgage.
Borrower shall immediately provide Lender with copies of all default notices
issued by the holder of the Superior Mortgage.
7. Insurance. (A) Subject to the prior rights of the mortgagee
under the Superior Mortgage, Borrower shall at all times maintain or cause to be
maintained insurance on the Mortgaged Property in such amounts, against such
hazards and liabilities, and with such companies as is consistent with sound
business practices, as reasonably determined in good faith by Borrower,
including without limitation:
(i) Insurance against loss to the Mortgaged Property
on an "all risk" policy form, covering insurance risks no less broad than those
covered under a Standard Multi Peril (SMP) policy form which, during the course
of construction of the Improvements, shall be on a "Builder's Risk Completed
Value Non-Reporting Form", and which contains a Commercial ISO "Causes of
Loss-Special Form," in the then current form, and such other risks as Lender may
reasonably require, in amount equal to the full replacement costs of the
Mortgaged Property, including fixtures and equipment, Borrower's interest in
tenant improvements, and the cost of debris removal, with an agreed amount
endorsement and with deductibles of not more than $50,000;
(ii) Broad form boiler and machinery insurance
including business interruption/extra expense and rent and rental value
insurance, on all equipment and objects customarily covered by such insurance
and/or involved in the heating, cooling, electrical and mechanical systems of
the Mortgaged Property providing for full repair and replacement cost coverage,
but in no event less than that customarily carried by persons owning or
operating like properties;
(iii) During the making of any alterations or
improvements to the Mortgaged Property, (x) insurance covering claims based on
the owner's or employer's contingent liability not covered by the insurance
provided in subsection (v) below and (y) workers' compensation insurance
covering all persons engaged in such alterations or improvements, and (z)
<PAGE>
builder's completed value risk insurance of $1,000,000 or more against "all
risks of physical loss" for construction projects;
(iv) Insurance against loss or damage by flood or mud
slide in compliance with the Flood Disaster Protection Act of 1973, as amended
from time to time, if the Improvements are now, or at any time while the
Indebtedness or any portion thereof remains unpaid shall be, situated in any
area which an appropriate governmental authority designates as a special flood
hazard area, in amounts equal to the full replacement value of the Improvements;
(v) Commercial general public liability insurance,
with the location of the Mortgaged Property designated thereon, against death,
bodily injury and property damage arising on, about or in connection with the
Mortgaged Property, with Borrower listed as the named insured, with such limits
as Borrower may reasonably require (but in no event less than $3,000,000) and
written on a then-current Standard "ISO" occurrence basis form or equivalent
form, and excess umbrella liability coverage with such limits as Borrower may
reasonably require but in no event less than $10,000,000.
(B) Each policy maintained by Borrower pursuant to this
Section shall:
(i) be issued by one or more companies licenced to do
business in New Jersey as shall be acceptable to the mortgagee under the
Superior Mortgage;
(ii) except in the case of public liability insurance
and worker's compensation insurance, provide that any losses incurred by Lender
shall be payable notwithstanding (a) any defense that may be available to the
insurer based upon the acts of Borrower, (b) any foreclosure or other proceeding
or notice of sale relating to the insured properties or (c) any change in the
title to or ownership or possession of the insured properties after the date of
such loss;
(iii) provide that in the event of a loss all
proceeds shall be payable to Lender (subject however to the terms of the
Superior Mortgage and the other terms hereof);
(iv) provide that the same may not be canceled or
modified except upon thirty (30) days' prior written notice to Lender;
(v) provide that no act or thing done by Borrower
shall invalidate the policy as against Lender.
(C) If Borrower shall fail to obtain any such policy or
policies required by Lender, then Lender may obtain such insurance and pay the
premium or premiums therefor, in which event Borrower shall, on demand of
Lender, repay such premium or premiums to Lender and such repayment shall be
secured by the lien of this Mortgage.
(D) Borrower shall promptly provide to Lender copies of any
and all notices (including notice of non-renewal), claims and demands which
Borrower receives from insurers of the Mortgaged Property.
<PAGE>
(E) Borrower hereby assigns to Lender all proceeds of any
insurance which Borrower may be entitled to receive for loss or damage to the
Mortgaged Property. In the event of loss or damage to the Mortgaged Property,
the proceeds of said insurance shall be payable to Lender alone and Borrower
hereby authorizes and directs any affected insurance company to make payments of
the insurance proceeds directly to Lender. In the event that any such insurance
proceeds are paid directly to Borrower, Borrower shall make such proceeds
available to Lender within five (5) days of Borrower's receipt thereof. No such
loss or damage shall itself reduce the Indebtedness. Lender is authorized to
adjust and compromise such loss or damage, with the consent of Borrower (unless
an Event of Default shall have occurred hereunder, if which case Borrower's
consent shall not be required), such consent not to be unreasonably withheld by
Borrower, to collect and receive such proceeds in the name of Lender and
Borrower and to endorse Borrower's name upon any check in payment thereof.
(F) Provided that no uncured Event of Default shall exist, all
proceeds of insurance for loss or damage to the Mortgaged Property shall be paid
over to Borrower for repair or restoration of the Mortgaged Property to the
extent necessitated by such casualty. The disbursement of insurance proceeds to
Borrower shall not constitute a waiver of any default hereunder or under the
Notes or any of the other Loan Documents then existing, or impair the equity or
lien created by this Mortgage. Notwithstanding the foregoing, if the casualty
damage occurs to portions of the Mortgaged Property that are not necessary for
the conduct of Borrower's business and Borrower determines not to repair all or
any portion of such damage, then such insurance proceeds shall be paid to Lender
and applied to the Indebtedness.
(G) If the Real Property, or any part thereof, is destroyed or
damaged by any cause, Borrower shall give immediate notice thereof to Lender
and, unless otherwise consented to by Lender, shall promptly, at Borrower's sole
cost and expense but only to the extent of insurance proceeds made available for
such purpose, restore, repair, replace and rebuild the Improvements as nearly as
possible to its value, condition and character immediately prior to such damage,
loss or destruction and in accordance with a restoration program previously
approved by Lender, such approval not to be unreasonably withheld.
8. Condemnation. (A) All awards of damages or other
compensation heretofore or hereafter made by any condemnor with respect to the
Mortgaged Property by virtue of an exercise of the right of eminent domain,
including, without limitation, any award for a taking of title, possession or
right of access to a public way, or for any change of grade of any street
affecting the Mortgaged Property shall be paid over to Borrower and used for the
repair and restoration of the remaining Mortgaged Property, to the extent
necessitated by such condemnation, without thereby waiving any default hereunder
or under any of the other Loan Documents then existing, or impairing the equity
or lien created by this Mortgage. Notwithstanding the foregoing, if the portions
of the Mortgaged Property damaged by such condemnation are not necessary for the
conduct of Borrower's business and Borrower determines not to repair all or any
portion of such damage, then such award shall be paid to Lender and applied to
the Indebtedness.
(B) Borrower, immediately upon obtaining knowledge of the
institution or the threat of institution of any proceedings with respect to the
condemnation of the Mortgaged Property, or any
<PAGE>
portion thereof, shall notify Lender of the pendency of such proceedings. Unless
and until Lender shall notify Borrower of Lender's intent to institute, appear
in and prosecute such proceedings, Borrower may institute, appear in and
prosecute such proceedings in any lawful manner, provided, however, that
Borrower shall have no right or authority to execute any instrument of
conveyance or confirmation in favor of the condemnor, or to accept any payment
or to settle or compromise any claim of Borrower arising out of such
condemnation proceedings, without the consent of Lender in each instance.
Lender's election not to institute, appear in, or prosecute such proceedings
shall not affect or diminish Lender's right to receive any amount paid in
connection with such condemnation and to apply such funds as hereinabove
provided.
9. Repair; Alterations; Waste. Borrower shall keep all of the
Mortgaged Property in good condition and repair (or, if the same is not in good
condition and repair on the date hereof, then in the same condition and repair
as the same is in on the date hereof), reasonable wear and tear excepted.
Borrower expressly agrees that it will neither permit nor commit any waste upon
the Mortgaged Property, nor do any act or suffer or permit any act to be done,
whereby the lien hereof may be impaired and shall comply in all material
respects with all zoning laws, building codes, subdivision laws, and other laws,
ordinances, rules and regulations made or promulgated by any government or
municipality, or by any agency thereof or by any other lawful authority, which
are now or may hereafter impose any duty on Borrower with respect to the use,
occupancy or alteration of the Mortgaged Property or which may otherwise become
applicable to the Mortgaged Property; provided, however, that any violation
existing on the date hereof or arising solely out of a condition at the
Mortgaged Property existing on the date hereof shall not by itself constitute an
Event of Default hereunder. Borrower agrees not to initiate or acquiesce in any
zoning variance or reclassification which prohibits or adversely affects the use
of the Mortgaged Property for any of the purposes for which the Mortgaged
Property was constructed, without Lender's prior written consent, which consent
shall not be unreasonably withheld. Borrower shall not, without the prior
written consent of Lender, which consent shall not be unreasonably withheld,
construct any additional building or buildings or make or install any other
improvements on the Land at a cost exceeding $50,000, nor alter, remove or
demolish any building or other structures on the Land.
If an Event of Default exists hereunder, Lender or any
receiver of the Mortgaged Property at its option, from time to time, may
perform, or cause to be performed, any and all repairs and such other work as it
deems necessary to bring the Mortgaged Property into compliance with the
provisions of this Section and may enter upon the Mortgaged Property for any of
the foregoing purposes, and Borrower hereby waives any claim against Lender
and/or such receiver other than for gross negligence of Lender and/or such
receiver, arising out of such entry or out of any other act carried out pursuant
to this Section. Borrower shall upon demand repay to Lender and such receiver,
all amounts reasonably expended or incurred by them, respectively, in connection
with any action taken pursuant to this Section, and such repayment shall be
secured by the lien of this Mortgage.
10. No Other Liens. Except with respect to the Superior
Mortgage and as otherwise set forth herein, Borrower shall not consent, agree to
or permit any mortgage, lien or security interest upon or affecting the
Mortgaged Property or any part thereof which is superior to this Mortgage except
as granted or permitted in this Mortgage and any other lien or security interest
<PAGE>
granted to Lender. Borrower will promptly pay and discharge any and all amounts
which are now or hereafter become liens against the Mortgaged Property, whether
or not superior to the lien hereof.
11. No Transfers. Borrower shall not at any time (a) sell,
assign, transfer, convey, or dispose of all or any part of or interest in the
Mortgaged Property, except for personal property in the ordinary course of
business, or (b) suffer or permit transfer by operation of law of the Mortgaged
Property, except as a result of condemnation.
12. Environmental Matters. (A) As used in this Mortgage, the
following terms shall have the following meanings:
(i) The term "Environmental Laws" means all federal,
state, local or common laws, regulations or orders now existing or hereafter
adopted with respect to Hazardous Substances or relating to pollution or
protection of human health and the environment, including without limitation,
any common law of nuisance or trespass, and any law or regulation relating to
emissions, discharges, releases or threatened release of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes. Any reference in this Section to any
legislative act or regulation shall be deemed to include all amendments,
modifications and supplements thereto and all substitutions therefor, and all
regulations thereunder. The term "Environmental Laws" also includes all
regulations, codes, plans, orders, decrees, judgments, injunctions, notices and
demand letters issued, entered, promulgated or approved by any court, agency,
bureau or other governmental body or authority with relevant jurisdiction.
(ii) The term "Hazardous Substance" means any
substance which (a) constitutes a hazardous waste or substance under any
applicable federal, state or local law, rule, order or regulation now or
hereafter adopted, (b) constitutes a "hazardous substance" under CERCLA and the
regulations promulgated thereunder, (c) constitutes a "hazardous waste" under
RCRA and the regulations promulgated thereunder, (d) constitutes a pollutant,
contaminant, chemical or industrial, toxic or hazardous substance or waste, (e)
exhibits any of the characteristics enumerated in 40 C.F.R. Sections
261.20-261.24, inclusive, (f) those extremely hazardous substances listed under
ss.302 of SARA which are present in threshold planning or reportable quantities
as defined under SARA, (g) toxic or hazardous chemical substances which are
present in quantities which exceed exposure standards as those terms are defined
under ss.ss.6 and 8 of OSHA and 29 C.F.R. Part 1910 subpart 2 or (h) consists,
in whole or in part, of asbestos, urea formaldehyde or polychlorinated
byphenyls.
(B) Borrower covenants and agrees that (i) Borrower shall not,
and shall not permit any other person to, locate, store, generate, manufacture,
process, distribute, use, treat, transport, handle, dispose of, emit, discharge
or release any Hazardous Substance on, from or with respect to the Mortgaged
Property in violation of any Environmental Law; (ii) Borrower shall immediately
notify Lender of the receipt of any notice of violation of any Environmental
Law; (iii) Borrower shall promptly make all governmental reports and notices
which it is required to make
<PAGE>
under any Environmental Law; (iv) Borrower shall immediately comply with any
order, action or demand of any governmental agency or legal or administrative
agency having jurisdiction over the Mortgaged Property to clean and remove any
Hazardous Substance from the Mortgaged Property and to pay for such clean up,
removal and associated costs, fines and penalties; and (v) Borrower shall
otherwise comply with all Environmental Laws. Without limitation to any other
provision of this Mortgage, Borrower's obligation to indemnify Lender (as below
set forth) shall apply to all losses, damages, costs and expenses incurred by
Lender with respect to the matters referred to in this Section. Notwithstanding
the foregoing, any violation of any Environmental Law existing on the date
hereof or arising after the date hereof solely as a result of a condition on the
Mortgaged Property existing on the date hereof shall not by itself constitute an
Event of Default hereunder.
13. Entry. Lender, and its agents, employees, contractors and
representatives, shall have the right to enter upon and to inspect the Mortgaged
Property upon reasonable advance notice during normal business hours. Any such
inspections shall be performed in a manner that is reasonably intended to
minimize adverse effects on the conduct of Borrower's business operations at the
Mortgage Property. In addition, Borrower hereby grants Lender, its agents,
employees and independent contractors an irrevocable license coupled with an
interest to enter upon the Mortgaged Property in order to exercise any of the
rights and remedies granted to Lender in this Mortgage.
14. Events of Default. Each of the following shall constitute
an "Event of Default" hereunder and shall entitle the Lender to exercise its
remedies hereunder, under the Notes and under any of the other Loan Documents or
as otherwise provided by law or in equity:
(a) The failure of Borrower to pay any sum of money
when due under this Mortgage and the continuation of such failure for ten (10)
days after Borrower has received written notice from Lender;
(b) If all or any portion of the Real Property shall
be mortgaged (other than the Superior Mortgage), encumbered, conveyed, assigned
or otherwise transferred, including, without limitation, a taking under
condemnation or other like proceeding of a material portion of the Real
Property;
(d) The failure of Borrower in the observance or
performance of any other covenant, promise or agreement provided in this
Mortgage relating to the condition of the Mortgaged Property (a "failure to
perform") for thirty (30) days after notice by Lender to Borrower specifying the
nature of the failure to perform; provided, however, that if the nature of such
failure to perform is such that the same cannot be cured within such thirty (30)
day period, such thirty (30) day period shall be deemed to have been extended
for a period not to exceed ninety (90) days, so long as Borrower shall within
such thirty (30) day period commence to cure the failure to perform and
thereafter diligently and in good faith prosecute the cure to completion
throughout such thirty (30) day period and thereafter throughout the extended
period. Notwithstanding anything contained herein to the contrary, the notice
and cure period provided under this clause (d) shall not be applicable to and
shall not be in addition to any specific notice and cure or performance period
provided under any other provision of this Mortgage and the specific notice and
cure or performance
<PAGE>
period provided for in such provision shall control, and a failure by Borrower
to cure a default under such provision within the applicable cure period shall
be an Event of Default under this Mortgage;
(e) The occurrence of an Event of Default under the
Notes or any of the other Loan Documents.
15. Remedies Upon Default. Upon the occurrence of an Event of
Default, Lender may, at its option and in its sole discretion, (i) declare
immediately due and payable all monies advanced under the Notes and/or pursuant
to this Mortgage or any other Loan Document, with all arrearages of interest
(subject to the understanding than no monies shall be due and payable under any
Contingent Note unless and until the Condition (as defined therein) has been
satisfied within the time period provided therein), (ii) commence foreclosure
proceedings, (iii) pursue any and all remedies provided to Lender in this
Mortgage and any other Loan Document and/or (iv) pursue any other remedy
available to Lender at law or in equity.
16. Lender's Right to Perform Obligations. Upon the occurrence
of an Event of Default hereunder or under any other Loan Document, Lender shall
have the right, but not the obligation, to perform on Borrower's behalf the
unperformed agreements, covenants or obligations underlying such Event of
Default, and to make all advances of funds in connection therewith as Lender
deems appropriate, in which case all costs and expenses so incurred by Lender
(including, without limitation, reasonable attorneys' fees) shall be deemed
advances under the Notes and shall be paid by Borrower on demand, together with
interest at the Default Rate from the date of incurrence until the date of
payment. If Lender shall elect to perform any such agreement, covenant or
obligation, then Lender shall be subrogated to all the rights and remedies of
all other persons intended to be or in fact benefitted by the performance of
such agreement, covenant or obligation. No such performance by Lender shall be
deemed to relieve Borrower from any default hereunder or impair any right or
remedy consequent thereon, and the exercise of the right of performance granted
in this Section shall be optional with Lender and not obligatory, and Lender
shall not in any case be liable to Borrower for a failure or refusal (i) to
exercise any such right, or (ii) to continue to exercise such right after having
commenced such exercise.
17. Marshaling. All rights to marshaling of assets of
Borrower, including, without limitation, any such right with respect to the
Mortgaged Property or any part thereof, are hereby waived by Borrower. Without
limitation to the foregoing, upon foreclosure of the Mortgage, Borrower, and any
person claiming any part of the Mortgaged Property by, through or under
Borrower, shall not be entitled to a marshaling of Borrower's assets, including,
without limitation, the Property, or any part thereof, or to a sale in inverse
order of alienation.
18. Appointment of Receiver. Upon the occurrence of any Event
of Default, Lender shall have the right to apply to any court having
jurisdiction to appoint a receiver or sequestrator of the Mortgaged Property.
19. Secured Creditor. Upon the occurrence of any Event of
Default, Lender may proceed against the Personal Property in accordance with
Lender's rights and remedies with respect to the Personal Property or sell the
Personal Property separately and without regard to the remainder
<PAGE>
of the Mortgaged Property in accordance with Lender's rights and remedies
provided by the New Jersey Uniform Commercial Code as well as other rights and
remedies available at law or in equity.
20. Sale. Upon any foreclosure sale, Lender may bid for and
purchase the Mortgaged Property and shall be entitled to apply all or any part
of the Indebtedness as a credit to the purchase price. In the event of any sale
of the Mortgaged Property by foreclosure, through judicial proceedings, by
advertisement or otherwise, the proceeds of any such sale which are applied in
accordance with this Mortgage shall be applied in the order following to: (i)
all expenses incurred for the collection of the Indebtedness and the foreclosure
of this Mortgage, including attorneys' fees; (ii) all sums expended or incurred
by Lender directly or indirectly in carrying out the terms, covenants and
agreements of the Notes or this Mortgage and any other Loan Documents, together
with interest thereon at the Default Rate; (iii) all accrued and unpaid interest
upon the Indebtedness; and (iv) the unpaid principal amount of the Indebtedness;
and (v) the surplus, if any, to the person or persons legally entitled thereto.
Notwithstanding the foregoing, no monies shall be applied to Indebtedness under
any Contingent Note unless the Condition (as defined therein) has been satisfied
within the time period provided therein.
21. WAIVER OF JURY TRIAL. BOTH BORROWER AND LENDER AGREE
HEREBY TO WAIVE AND DO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO UNDER OR IN CONNECTION WITH
THIS MORTGAGE.
22. [omitted]
23. Waiver of Statutory Rights. Borrower agrees, to the
fullest extent permitted by law, that upon an Event of Default on the part of
Borrower hereunder, neither Borrower nor anyone claiming through or under
Borrower will set up, claim, or seek to take advantage of any moratorium,
reinstatement, forbearance, appraisement, valuation, stay, homestead, extension,
exemption or redemption laws now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Mortgage, or the sale of the
Mortgaged Property or the delivery of possession thereof immediately after such
sale to the purchaser at such sale, and Borrower, for itself and all who may at
any time claim through or under it, hereby waives to the full extent that it may
lawfully do so, the benefit of all such laws, and any and all rights to have the
assets subject to the security interest of this Mortgage marshaled upon any
foreclosure or sale under the power granted herein.
24. Security Agreement. (A) Without limiting any of the
provisions of this Mortgage, and as further security for the Indebtedness,
Borrower, as a debtor, expressly grants to Lender, as secured party, a security
interest under the Uniform Commercial Code of the state in which the Mortgaged
Property is located ("UCC") in all and singular the Personal Property and in any
portion of the balance of the Mortgaged Property which does not constitute real
estate or real property under the UCC (collectively, "Collateral").
(B) In addition to and cumulative of other remedies granted in
this Mortgage, Lender may, upon the occurrence of any Event of Default
hereunder, proceed under the UCC as to
<PAGE>
all or any part (as Lender may elect) of the Collateral, and shall have and may
exercise with respect to the Collateral all the rights, remedies and powers of a
secured party under the UCC, including, without limitation, the right and power
to sell at public or private sale or sales, or otherwise dispose of, lease or
utilize the Collateral and any and all part or parts thereof in any manner
permitted under the UCC after default by a debtor, and to apply the proceeds
thereof toward payment of any costs and expenses thereby incurred by Lender, and
toward payment of the Indebtedness in such order and manner as Lender may elect.
(C) Among the rights of Lender following an Event of Default
hereunder, and without limitation, Lender shall have the right to take
possession of the Collateral and to enter upon any premises where same may be
situated for such purpose without being deemed guilty of trespass and without
liability for damages thereby occasioned, and to take any action deemed
necessary, appropriate or desirable by Lender, to repair, refurbish or otherwise
prepare the Collateral for sale, lease or other use or disposition as herein
authorized. To the extent permitted by law, Borrower expressly waives any notice
of sale or other disposition of the Collateral and any other rights and remedies
of a debtor and all procedures and formalities prescribed by law relative to the
sale or disposition of the Collateral and the exercise of any other right or
remedy of Lender existing after a default by Borrower hereunder.
(D) Lender, upon an Event of Default hereunder, is expressly
granted the right, at its option, to transfer at any time to itself or to its
nominee the Collateral, or any part or parts thereof as Lender may elect, and to
receive the monies, income, proceeds and benefits attributable or accruing
thereto, and to hold the same as security for the Indebtedness or, as Lender may
elect, to apply it in payment of the Indebtedness, in such order or manner as
Lender may elect.
(E) Should Lender elect to exercise its rights under the
provisions of this Section as to part of the Collateral, such election shall not
preclude Lender from exercising the rights and remedies granted by the other
provisions of this Mortgage or by law as to the remaining Collateral.
(F) Upon recordation, this Mortgage shall constitute a
financing statement under the UCC.
(G) All rights and remedies of Lender with respect to the
Collateral under this Mortgage, or available by law or in equity, including
without limitation remedies available under the UCC, are cumulative and without
limitation to each other. Lender's right to proceed against any of the
Collateral under the UCC shall not limit or affect Lender's right to proceed
against the Collateral under another provision of this Mortgage, under the other
Loan Documents, or otherwise at law or in equity.
25. Rights Cumulative. Each right and remedy of Lender under
this Mortgage, the Notes and any other Loan Documents, shall be in addition to
every other right and remedy of Lender and such rights and remedies may be
enforced separately or in any combination. Failure to exercise any option to
accelerate upon the occurrence of an Event of Default shall not constitute a
waiver of the default or of the right to exercise such option at a later time,
or a waiver of the right to exercise such option upon the occurrence of any
other Event of Default.
<PAGE>
26. No Waiver. Any failure by Lender to insist upon the strict
performance by Borrower of any of the terms and provisions hereof shall not be
deemed to be a waiver of any of the terms and provisions hereof, and Lender,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by Borrower of any and all of the terms and provisions
hereof to be performed by Borrower.
27. Further Assurances. Borrower shall, promptly following the
request of Lender, execute, acknowledge, deliver and record or file such further
documents and do such further acts as Lender may deem necessary, desirable or
proper to carry out more effectively the purposes of this Mortgage or to protect
the lien or the security interest granted herein against the rights or interests
of third persons, and Borrower shall pay on demand all costs connected with any
of the foregoing.
28. Mortgage Extension. The lien hereof shall remain in full
force and effect during any postponement or extension of the time of payment of
the Indebtedness, or of any part thereof, and any number of extensions or
modifications hereof, or any additional notes taken by Lender, shall not affect
the lien hereof or the liability of Borrower or of any subsequent obligor to pay
the Indebtedness unless and until such lien or liability be expressly released
in writing by Lender.
29. Attorney Fees. Any reference to "attorney's fees" shall
include, but not be limited to, those attorneys' or legal fees, costs and
charges incurred by Lender in the collection of any Indebtedness, the
enforcement of any obligations hereunder, the protection of the Mortgaged
Property, the foreclosure of this Mortgage, the sale of the Mortgaged Property,
the defense of actions arising hereunder and the collection, protection or
setoff of any claim the Lender may have in a proceeding under Title 11, United
States Code. Attorneys' fees provided for hereunder shall accrue and be paid by
Borrower whether or not Lender has provided notice of default or of an intention
to exercise its remedies for such default. Lender agrees to pay Borrower, upon
demand, all expenses, including attorneys' fees, incurred by Borrower in the
successful defense of a claim by Lender that an Event of Default has occurred.
30. Partial Payments. Acceptance by Lender of any payment in
an amount less than the amount then due on the Indebtedness shall be deemed an
acceptance on account only, and the failure to pay the entire amount then due
shall constitute a separate default.
31. Notices. Any notice, demand, or request made hereunder
shall be in writing, signed by the party giving such notice, demand or request,
and shall be delivered personally, or by a reputable overnight delivery service
providing for receipted delivery or mailed by United States certified mail,
postage prepaid and return receipt requested, addressed as set forth below or to
such other address as theretofore may have been designated in writing by such
party in accordance with the terms of this provision. The effective date of any
notice given as provided in this Section shall be the date of delivery or, if
delivery in refused or otherwise not accepted, the date of such refusal or
non-acceptance.
<PAGE>
If to Lender:
--------------------
--------------------
--------------------
--------------------
If to Borrower:
--------------------
--------------------
--------------------
--------------------
32. Defeasance. This Mortgage is made upon the express
condition that if Borrower pays to Lender the principal sum due under the Notes,
the interest thereon and all other sums payable by Borrower to Lender as are
secured hereby, in accordance with the provisions of the Notes and this
Mortgage, at the times and in the manner specified, and Borrower performs and
complies with all agreements, conditions, covenants, provisions and stipulations
contained herein and in the Notes, then this Mortgage and the estate hereby
granted shall cease and become void, whereupon Lender shall promptly deliver to
Borrower a document releasing this Mortgage.
33. Business Purpose. Borrower represents and warrants to
Lender that the Indebtedness is incurred solely for a business purpose and not a
personal, family, household or agricultural purpose. This Mortgage is a purchase
money mortgage.
34. Indemnification. Borrower shall defend, with counsel
satisfactory to Lender, protect, indemnify and save harmless Lender from and
against any and all liabilities, obligations, claims, investigations, inquiries,
judgments, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) imposed upon or
incurred by or asserted against Lender by reason of (a) Lender's interest in the
Mortgaged Property (other than as owner of the Mortgaged Property), (b) any
accident, injury to or death of a person or persons or loss of or damage to
property occurring, on or after the date hereof, on or about or with respect to
the Mortgaged Property or any part thereof or the adjoining sidewalks, curbs,
vaults and vault space (if any), streets or ways, (c) any use, non-use or
condition (including, without limitation, the location of any Hazardous
Substance thereon, except to the extent such Hazardous Substance was located on
the Mortgaged Property prior to the date hereof) of the Mortgaged Property or
any part thereof, or of the adjoining sidewalks, curbs, streets, ways, vaults
and vault space (if any), except with respect to liabilities, obligations,
claims, investigations, inquiries, judgments, damages, penalties, causes of
action, costs and expenses existing on the date hereof, (d) any
misrepresentation by Borrower hereunder or otherwise in connection with the
Indebtedness, (e) any failure on the part of Borrower to perform or observe any
of its agreements or obligations under this Mortgage or the Notes, and (f) the
performance of any labor or service or the furnishing of any material or other
property on or after the date hereof in respect of the Mortgaged Property or any
part thereof. All amounts payable to Lender under this Section which are not
paid within ten days after written demand therefor by
<PAGE>
Lender shall bear interest at the Default Rate from the date of such demand. In
case any action, suit or proceeding is brought against Lender by reason of any
of the foregoing, Borrower, upon Lender's request, shall at Borrower's expense,
resist and defend such action, suit or proceeding by counsel satisfactory to
Lender. All obligations of Borrower under this section shall survive the payment
of the Indebtedness and the satisfaction of record of this Mortgage, and shall
apply to and be enforceable by Lender, and each of its successors and assigns.
35. Invalidity. If any provision of this Mortgage shall be
held invalid or unenforceable, the same shall not affect in any respect
whatsoever the validity of the remainder of this Mortgage, except that if such
provision relates to the payment of a monetary sum, then the Lender may, at its
option, declare the Indebtedness due and payable upon thirty (30) days prior
written notice to Borrower.
36. Captions. The captions in this instrument are inserted
only as a matter of convenience and for reference, and are not and shall not be
deemed to be any part hereof.
37. Modification. This Mortgage may not be amended or modified
except in writing signed by both parties. The provisions of this Mortgage shall
extend and be applicable to all renewals, amendments, extensions,
consolidations, and modifications of the other Loan Documents, and any and all
references herein to the Loan Documents shall be deemed to include any such
renewals, amendments, extensions, consolidations or modifications thereof.
38. Bind and Inure. The provisions of this Mortgage shall be
binding on the Borrower and its successors and assigns, and any subsequent
owners of the Mortgaged Property. The covenants of Borrower herein shall run
with the land, and this Mortgage and all of the covenants herein contained shall
inure to the benefit of the Lender, its successors and assigns.
39. Time of the Essence. Time is of the essence with respect
to each and every covenant, agreement and obligation of Borrower under this
Mortgage, the Notes and any and all other instruments now or hereafter
evidencing, securing or otherwise relating to the Indebtedness.
40. Applicable Law. The provisions hereof shall be construed
in accordance with the laws of the State of New Jersey.
41. Set Off. The set-off provisions contained in Section 4(b)
and Section 18 of that certain Asset Purchase Agreement, dated June _____, 1998,
among Greenwood New Jersey, Inc., Garden State Race Track, Inc., Freehold
Raceway Association, Atlantic City Harness, Inc. Circa 1850, Inc. and
International Thoroughbred Breeders, Inc., and the set-off provisions contained
in Section 4.01(b) of the Lease Agreement of even date herewith between
Greenwood New Jersey, Inc. and Garden State Race Track, Inc., shall apply to any
amounts due from Lender to Borrower that are not paid within ten (10) days of
when due.
<PAGE>
IN WITNESS WHEREOF, Borrower has duly executed this Mortgage
with the intent that this document be executed and delivered as a sealed
instrument as of the date first above written.
Sealed and delivered in __________________________________
in the presence of:
___________________________ By: ___________________________(Seal)
Witness Name:
Title:
STATE OF :
: SS.
COUNTY OF :
This Mortgage and Security Agreement has been acknowledged before me on
the ______ day of ___________, 1998, by ____________________________, the
___________________ of _____________________________________, a
__________________________, on behalf of the __________________________.
------------------------------------
Notary Public
Name:
Notary for State of Delaware
My Commission Expires:
[NOTARIAL SEAL]
<PAGE>
Exhibit 7 to
Asset Purchase Agreement
LEASE AGREEMENT
BETWEEN
GARDEN STATE RACE TRACK, INC.,
a New Jersey corporation, Landlord
AND
GREENWOOD NEW JERSEY, INC.,
a New Jersey corporation, Tenant
Copy No.
Dated:
<PAGE>
LEASE SUMMARY
THIS LEASE SUMMARY is made on the _____ day of _________, 1998, by and
between:
GARDEN STATE RACE TRACK, INC., a New Jersey corporation, with an address at c/o
International Thoroughbred Breeders, Inc., Haddonfield Road and Route 70, Cherry
Hill, NJ 08034, Attention: ________________ (hereinafter called "Landlord"), and
GREENWOOD NEW JERSEY, INC., a New Jersey corporation, with an address at 3001
Street Road, Bensalem, PA 19020-8512, Attention: Robert W. Green, President
(hereinafter called "Tenant").
WITNESSETH:
LEASED PREMISES Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord, the following: (i) the real property located at
2200-2290 Marlton Pike West, Cherry Hill Township, Camden County, New Jersey,
containing 222 acres, more or less, with the buildings and facilities thereon
containing approximately 1,280,000 square feet of space, and all other
improvements thereto, generally known as Garden State Park, all as more
particularly described on Exhibit A attached hereto (collectively, the "Real
Property"), and (ii) all machinery, equipment, furniture, furnishings and
fixtures located at and used in the operation of the Real Property as a horse
racing and gaming facility, including, without limitation, the property
described on Exhibit B attached hereto ("Personal Property", and collectively
with the Real Property, the "Leased Property"), subject however to the terms and
conditions of this Lease Summary and the Lease Agreement attached hereto and
made a part hereof (collectively referred to as the "Lease").
LENGTH OF TERM The initial term of this Lease ("Initial Term") shall be for
seven (7) years commencing on the date hereof ("Commencement
Date").
FIXED RENT The Fixed Rent for each Lease Year (as defined in Section 1.02
of the Lease Agreement) of the Initial Term of this Lease shall
be One Hundred Thousand Dollars ($100,000.00) per annum. All Fixed Rent shall be
payable in accordance with the terms and conditions of this Lease, including,
without limitation, Article III of the Lease Agreement.
TAXES In accordance with Article VI of the Lease Agreement, Tenant
shall pay all Taxes, as defined in Article VI.
USE OF LEASED Tenant shall use the Leased Property, subject to the
PROPERTY provisions of this Lease, for the purpose of operating a horse
racing track and associated uses, including, without limitation,
racing, simulcasting, off-track betting, and other gaming-related businesses, or
for any other lawful use.
<PAGE>
LEASE DOCUMENTS In addition to this Lease Summary and the Lease Agreement, the
following are attached to this Lease and are incorporated in and
made part of this Lease:
Exhibit A: Legal Description of Real Property
Exhibit B: Inventory of Personal Property
Exhibit C: Covenant
Exhibit D: License Agreement
SPECIAL PROVISIONS
1, RENEWAL TERM. Provided that no Event of Default has occurred
hereunder which has not been remedied, Tenant shall have the option to renew the
term of this Lease for one (1) additional term of three (3) years ("Renewal
Term") by notice to Landlord at least one hundred twenty (120) days prior to the
expiration of the Initial Term. All terms and conditions of this Lease shall
apply to the Renewal Term. The Initial Term and the Renewal Term are hereafter
collectively called the "Term".
2. LEASE TERMINATION. This Lease shall automatically terminate, with
both parties being relieved of any further obligations hereunder, upon Tenant or
Tenant's assignee or affiliate opening for business a simulcast only,
pari-mutuel wagering facility that does not have to conduct live racing ("OTB
Facility") on the 10 Acre Parcel (as defined below). In addition, this Lease
shall terminate one hundred eighty (180) days after the date of closing for the
sale by Landlord of all of the Leased Property in compliance with the
requirements set forth in Exhibit C attached hereto, provided that Tenant elects
not to exercise its Purchase Option (as defined in Exhibit C).
3. COVENANT. On the date hereof, Landlord and Tenant have executed and
recorded a covenant in the form attached hereto as Exhibit C ("Covenant"),
encumbering the Real Property. The terms of the Covenant are specifically
incorporated herein, and the obligations of Landlord under the Covenant shall be
specifically enforceable by Tenant without regard to whether this Lease is then
in effect.
4. 10 ACRE PARCEL
(a) Prior to the date hereof, Landlord and Tenant have identified a
portion of the Leased Property, containing at least ten (10) acres, as more
fully described on Exhibit C attached hereto ("10 Acre Parcel"). At Tenant's
option, Landlord shall be responsible, at Landlord's expense (such costs to be
advanced by Tenant and credited against the purchase price set forth below), for
promptly obtaining all subdivision and other approvals required by applicable
laws and ordinances to permit the subdivision of the Real Property and the
transfer of the 10 Acre Parcel to Tenant. Tenant shall fully cooperate with
Landlord in obtaining such approvals. Tenant shall be responsible, at Tenant's
expense, to obtain all zoning, land planning and other approvals (collectively,
"Approvals") necessary or appropriate, in Tenant's judgment,
<PAGE>
for the development and operation by Tenant of an OTB Facility thereon. At
Tenant's request, Landlord shall amend the boundaries of the 10 Acre Parcel
(without materially increasing the acreage thereof) if necessary to obtain any
required subdivision or land development approval. Landlord shall, at Tenant's
option which may be exercised at any time during the Term of this Lease by
thirty (30) days notice to Landlord, sell to Tenant the 10 Acre Parcel on the
terms set forth below.
(b) Tenant shall be obligated to purchase the 10 Acre Parcel within
thirty (30) days after the effective date ("Enactment Date") of any legislation
within the State of New Jersey that would permit the owner of the Leased
Property and/or any other Gaming facility in New Jersey to own and operate an
OTB Facility, if the 10 Acre Parcel has then received all required Approvals.
The purchase price for the 10 Acre Parcel shall be $____________. Title to the
10 Acre Parcel shall be good and marketable, free and clear of any encumbrances,
monetary liens or obligations, easements, covenants, agreements or restrictions
except such as may be reasonably acceptable to Tenant. New Jersey transfer taxes
shall be paid by Landlord, and the sale shall otherwise be completed in
accordance with New Jersey practice. In the event that Tenant has not received
all of the Approvals as of the Enactment Date, then Landlord and Tenant shall
execute a ground lease in essentially the same form as this Lease but at a fixed
annual rent of $______ per annum and with a term expiring upon receipt of all of
the Approvals, pursuant to which Tenant may erect and operate an OTB Facility on
the 10 Acre Parcel. Such lease shall incorporate a permanent purchase option on
the same terms set forth above, to be effective upon receipt by Tenant of all
Approvals.
5. SUBLEASE OF OFFICE SPACE. Tenant shall sublease to Landlord, at a
location in the Real Property selected by Tenant and reasonably acceptable to
Landlord, approximately ____ square feet of office space, for the same period as
the Term hereof, at a fixed rent of $1.00 per annum but with Landlord
responsible for all utilities and other costs associated with the use and
occupancy of the subleased space. Landlord and its affiliate may use such office
space solely as general offices.
6. LICENSE. Tenant and Landlord shall execute a License Agreement in
the form attached hereto as Exhibit D.
7. CHILLER PAYMENT. Tenant shall be responsible for making all
installment payments coming due after the Commencement Date during the Term of
this Lease on the Note dated May 1, 1996 to GE Capital Corporation for the
purchase of two chiller units, provided that if the Leased Property is sold to a
third party during the Term hereof and Tenant elects not to exercise its
Purchase Option, Landlord shall reimburse Tenant on the date of closing for such
sale for the aggregate of all such payments made by Tenant, with accrued
interest thereon from the date of each payment calculated at the Wall Street
Journal prime rate in effect on the date the sale of the Leased Property is
closed.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have hereunto set their hands and seals the day and year first above
written.
<PAGE>
GARDEN STATE RACE TRACK, INC.
(Landlord)
By:________________________
Attest:____________________
GREENWOOD NEW JERSEY, INC.
(Tenant)
By:___________________________
Attest: ________________________
<PAGE>
LEASE AGREEMENT
ARTICLE I
TERM
SECTION 1.01 Confirmation of the Term. The Initial Term of this Lease shall
commence on the Commencement Date, as defined in the Lease Summary, and shall
terminate at the end of the Initial Term (unless renewed by Tenant as set forth
above) without the necessity of any notice from either Landlord or Tenant.
SECTION 1.02 Lease Year. The term "Lease Year" as used in this Lease shall mean
the twelve (12) month period beginning with the Commencement Date and ending on
the next anniversary of the Commencement Date and each successive twelve (12)
month period thereafter during the term of this Lease.
ARTICLE II
CONDUCT OF BUSINESS BY TENANT
SECTION 2.01 Use of Leased Property.
(a) Subject only to the express restrictions set forth in this
Lease and compliance with applicable laws, regulations and ordinances, Tenant
may use the Leased Property for such purposes and in such manner as Tenant may
choose in Tenant's sole discretion, including, without limitation, the nature,
scope and duration of Tenant's activities, Tenant's marketing activities, and
Tenant's personnel policies. Landlord shall, upon Tenant's request, execute any
applications or authorizations required for Tenant's use of the Leased Property
in accordance with this Lease.
(b) Tenant shall not use the Leased Property for the
generation, manufacture, refining, transportation, treatment, storage or
disposal of any hazardous substance or waste or for any purpose which poses a
substantial risk of damage to the environment and shall not engage in any
activity which would subject Tenant to the provisions of the Federal
Comprehensive Environmental Response, Liability and Cleanup Act (42 U.S.C.
Section 9601 et seq.), the Federal Water Pollution Control Act (33 U.S.C.A.
Section 1151 et seq.), the Clean Water Act of 1977 (33 U.S.C.A. Section 1251 et
seq.), or any other federal, state or local environmental law, regulation or
ordinance (collectively, "Environmental Laws"), provided that (i) Tenant may
continue to operate the Leased Property (including, without limitation, dealing
with hazardous substances) in the same manner as the Leased Property has
previously been operated, and (ii) Tenant may, in accordance with all applicable
law, temporarily accumulate for up to 90 days those hazardous materials and
wastes used or generated on the Leased Property by Tenant and which are
necessary and incidental to the use and operation of the Leased Property as
permitted under this Lease.
<PAGE>
(c) Tenant shall be responsible for the immediate cleanup and
removal, to the extent required under EPA and New Jersey Department of
Environmental Protection standards and the standards of any other Federal or
state or local agency having jurisdiction, and to the extent required to return
the Leased Property to its previous condition, of any and all spills,
discharges, emissions, disposals or other releases of hazardous materials or
wastes occurring after the Commencement Date in violation of subsection (b)
above and not expressly permitted or allowed in accordance with applicable law
(hereinafter, collectively referred to as "Unpermitted Releases"), and Tenant
shall be responsible for all costs, expenses, liabilities and damages associated
therewith. Landlord shall be responsible for the immediate cleanup and removal,
to the extent required under EPA and New Jersey Department of Environmental
Protection standards and the standards of any other Federal or state or local
agency having jurisdiction, of any and all Unpermitted Releases occurring prior
to the Commencement Date and not expressly permitted or allowed in accordance
with applicable law, and Landlord shall be responsible for all costs, expenses,
liabilities and damages associated therewith.
(d) Upon request, Tenant shall permit Landlord to inspect
copies of (i) all applications or other documents submitted to any governmental
agency by Tenant with respect to all Environmental Laws, (ii) any notification
or correspondence submitted to any person pursuant to Environmental Laws, (iii)
any permit, license, approval, identification number, or amendment or
modification thereto, granted pursuant to Environmental Laws; and (iv) any
record or manifest required to be maintained pursuant to Environmental Laws.
(e) Upon receipt, Tenant or its agent shall submit to Landlord
copies of any and all documents received from governmental agencies pertaining
to non-compliance with Environmental Laws, such as notices of violation,
summons, orders, complaints, penalty assessments, judgments, injunctions and
warnings.
(f) Upon request by Landlord, Tenant shall permit Landlord to
inspect such affidavits, reports or responses to questions and certifications of
compliance or non-applicability from the appropriate governmental authorities as
have been delivered by Tenant to such authorities or received by Tenant from
such authorities. Tenant shall provide access to the Leased Property, upon
request of Landlord, for inspections and/or testing for compliance with the
requirements set forth in this Section.
SECTION 2.02 Licenses, Permits and Certificates of Occupancy. Tenant, at
Tenant's sole expense, shall use Tenant's best efforts to obtain and maintain at
all times during the term of this Lease all licenses, permits and certificates
of occupancy which may be required by any governmental agency or authority to
operate the Leased Property as currently operated.
SECTION 2.03 Tenant's Licensing Covenant. Tenant shall use its best efforts to
maintain its New Jersey Racing Commission ("Commission") licenses required for
the operation of the Leased Property as a horse racing facility by conducting
its racing dates at the Leased Property or at any other racing facility in New
Jersey as may be permitted by the Commission; provided, however, that racing
dates for the Leased Property may be allocated to another racing facility if
such allocation permits Tenant to operate an OTB Facility (as defined below) at
the Leased
-7-
<PAGE>
Property, and provided further, however, Tenant's obligation to maintain
licenses is based on no adverse changes in applicable legislation or regulation,
nor changes in circumstances outside Tenant's control, for example damage to the
Leased Property.
ARTICLE III
FIXED RENT; NET LEASE
SECTION 3.01 Fixed Rent. Tenant shall pay to Landlord the Fixed Rent set forth
in the Lease Summary, payable in advance in equal monthly installments of
$8,333.33 without any prior demand therefor, on the first day of each calendar
month during the Term hereof, commencing upon the Commencement Date (provided
that if the Commencement Date occurs on any day other than the first day of a
calendar month, Tenant's first payment of Fixed Rent shall be payable on the
first day of the following calendar month).
SECTION 3.02 Time and Place of Payment; Late Charges. Tenant shall promptly pay
all Fixed Rent and other charges and render all statements herein prescribed at
the office of Landlord set forth in the first paragraph of this Lease or at such
other office as Landlord shall notify Tenant.
ARTICLE IV
LANDLORD'S REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.01 Representations, Warranties and Covenants of Landlord.
(a) Landlord represents and warrants to Tenant that, to the
best of Landlord's knowledge, the use of the Leased Property contemplated by
this Lease is permitted and lawful under applicable laws or regulations and that
the Leased Premises complies with all applicable laws and regulations
(including, without limitation, the Americans with Disabilities Act and any
similar laws or ordinances). Landlord shall be responsible, at Landlord's
expense, to cure any violations of any such laws or regulations (whether or not
known to Landlord on the date hereof) to the extent that they arise from
conditions present on the Commencement Date, and if Landlord fails to do so,
Tenant may do so and offset the cost thereof against the Fixed Rent.
(b) Landlord represents and warrants to Tenant that (i) to the
best of Landlord's knowledge after diligent investigation, no Toxic Substance
(as defined below) has been stored, used or installed or is otherwise present on
the land on which the Leased Property will be erected, and (ii) no Toxic
Substances have been used in the construction of the Leased Property. Landlord
shall be solely liable for the removal or remediation in compliance with all
applicable laws of any hazardous or toxic substances, or any asbestos, PCBs or
other contaminants present in, on or under the Leased Property as of the date
hereof, whether now known or discovered hereafter, including, without
limitation, all costs and expenses related to the remediation of any problems
relating to the backstretch, the disposal of equine manure
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and other waste products, and the contamination of any surface or underground
waters or streams. If Landlord fails to do so, Tenant may do so and offset the
cost thereof again the Fixed Rent and against Tenant's obligations under any or
all of those four (4) Notes, in the respective original principal amounts of
$12,000,000, $5,000,000, $3,000,000 and $2,000,000, each of even date herewith,
from Tenant, as Borrower, to _____________________, a ________________________
___________________________, as agent for Garden State Race Track, Inc., a New
Jersey corporation, Freehold Raceway Association, a New Jersey corporation,
Atlantic City Harness, Inc., a New Jersey corporation, and Circa 1850, Inc., a
New Jersey corporation.
ARTICLE V
OPERATING COSTS
SECTION 5.01 Operating Costs. Except as set forth hereafter, Tenant shall be
responsible for all costs incurred by Tenant associated with operating the
Leased Property as contemplated by this Lease. Tenant shall have no
responsibility or liability for, replacements of capital items or capital
improvements.
ARTICLE VI
TAXES
SECTION 6.01 Definition of Taxes. The word "Taxes" shall include all normal real
estate taxes and assessments, and a pro rata portion of any special assessments
based the estimated useful life of the improvements for which the assessment is
made ("Pro Rated Assessment") (but excluding taxes for any period prior to the
date hereof) attributable to the Real Property. In the event that Tenant
acquires the Leased Property, whether pursuant to the Purchase Option or
otherwise, Tenant shall reimburse Landlord at closing for any portion of special
assessments paid by Landlord during the Term hereof. The word "Taxes" shall not
include any special or extraordinary assessments, or for any increase in Taxes
resulting from any sale or transfer of any portion of the Leased Property, or
for any special use district assessments imposed after the Commencement Date or
any charge, such as a water meter charge and sewer rent based thereon, which is
measured by the consumption by the actual user of the item or service for which
the charge is made.
SECTION 6.02 Payments of Taxes. For each Lease Year, Tenant shall pay to the
taxing authority at least five (5) days prior to the due date hereof, the amount
of all Taxes payable during such Lease Year. Landlord shall forward all bills
for Taxes directly to Tenant, and Tenant shall send Landlord confirmation of
each payment of Taxes promptly after payment thereof. Tenant shall have the
right to contest any Taxes or any increase in any Taxes so long as such contest
postpones any enforcement right by any taxing authority.
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ARTICLE VII
UTILITIES
SECTION 7.01 Utilities. Commencing on the Commencement Date, Tenant shall pay
all charges for electricity (including air conditioning), gas, heat, water,
sewer and all other utilities used or consumed by Tenant in or upon the Leased
Property, as and when the charges therefor shall become due and payable. Tenant
shall have the right to contest any utility charges.
SECTION 7.02 Application for Utilities. Tenant shall promptly make all
appropriate arrangements with the local utility companies for the hookup and
supply of such utilities to the Leased Property as Tenant may require, and
Tenant shall notify all utilities to transfer billing to Tenant, such transfers
to be at Tenant's expense.
ARTICLE VIII
REPLACEMENTS, REPAIRS AND ALTERATIONS
SECTION 8.01 Landlord's Replacements and Repairs. Landlord shall be solely
responsible for all structural repairs to and any and all replacements of any
part of any building (including, without limitation, roofs, walls, foundations,
and building structures) or any system in any building (including, without
limitation, electrical, plumbing, mechanical and HVAC systems) forming part of
the Leased Property. In addition, Landlord shall be responsible for any
alterations, additions or modifications to the Leased Property required by any
applicable law, rule or regulation, now or hereafter in effect for the use of
the Leased Property for horse racing, simulcasting, offtrack betting or
associated uses, including, without limitation, laws affecting access,
environmental maters, smoking restrictions, sprinklers or other life safety
systems, etc.
SECTION 8.02 Tenant's Repairs. Tenant, at Tenant's sole expense, shall perform
routine maintenance and routine repairs of all portions of the Leased Property
not required to be maintained by Landlord pursuant to Section 8.01 hereof, and
shall keep the Leased Property in good order and repair, ordinary wear and tear
excepted, but shall not be obligated to maintain any portion of the Leased
Property in better condition or repair than its condition on the Commencement
Date. Tenant shall repair promptly at Tenant's sole expense any damage to the
Leased Property caused by any construction or alterations performed by Tenant,
or by the delivery, installation or removal of Tenant's property, or by Tenant's
negligence.
SECTION 8.03 Tenant's Right to Make Alterations. Tenant shall not make any
structural alterations, structural improvements or structural additions to the
Leased Property without Landlord's consent, which consent will not be
unreasonably withheld, delayed or conditioned if such alterations, improvements
or additions would not change the fundamental character of the use of the Leased
Property as a racing facility. Tenant shall supply Landlord with plans and
specifications for all such structural alterations, improvements and additions
prior to requesting such consent. All alterations, improvements and additions
made by Tenant shall remain upon the Leased Property at the expiration or
earlier termination of this Lease and shall become the property of Landlord
unless Tenant shall, prior to or after the termination of this Lease, have given
written notice to Landlord of Tenant's intention to remove same, in which event
Tenant shall remove such alterations, improvements and additions at Tenant's
expense and repair any damage caused by such removal. All of such alterations,
improvements or additions shall be
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made solely at Tenant's expense; and Tenant agrees to indemnify and save
harmless Landlord (a) on account of any injury to third persons or property by
reason of any such changes, additions or alterations and (b) from the payment of
any claim on account of bills for labor or materials furnished or claimed to
have been furnished in connection therewith. Tenant agrees to procure all
necessary permits before undertaking such work and to do all such work in a good
and workmanlike manner, employing materials of first quality and complying with
all applicable governmental requirements.
ARTICLE IX
MECHANICS' LIENS
SECTION 9.01 Tenant Shall Discharge All Liens. Tenant shall promptly pay all
contractors and materialmen retained by Tenant (subject to Tenant's right to
dispute any invoice) so as to minimize the possibility of a mechanic's or
materialman's lien attaching to the Leased Property. Should any such lien be
made or filed, Tenant shall bond against or discharge the same within thirty
(30) days after written request by Landlord and, in the event that Tenant shall
fail to do so, Landlord, in addition to its other remedies, may discharge the
lien by payment of the amount secured thereby, or otherwise as provided by law,
and any amount so paid by Landlord, together with any attorney's fees or other
costs relating to the discharge of such lien, shall be immediately payable by
Tenant to Landlord.
ARTICLE X
SIGNS
SECTION 10.01 Permits. Tenant, at Tenant's sole expense, shall obtain all
permits required in connection with any new Signs, and shall comply with all
laws, orders, rules and regulations of governmental authorities relative to the
erection, maintenance and repair of any new signs.
ARTICLE XI
INSPECTION OF LEASED PROPERTY AND ACCESS THERETO
SECTION 11.01 Inspection of Leased Property. Landlord reserves the right at all
reasonable times, by itself or its duly authorized agents, to go upon and
inspect the Leased Property and, at Landlord's option, to make replacements to
the Leased Property, provided, however, that nothing herein contained shall be
deemed or construed as an obligation of Landlord to undertake or effect any such
repairs, alterations or additions other than as herein specifically set forth,
and any performance thereof by Landlord shall not constitute a waiver of
Tenant's default in failing to perform the same.
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ARTICLE XII
INDEMNIFICATION
SECTION 12.01 Tenant's Indemnification. Tenant shall indemnify and save harmless
Landlord from suits, actions, damages, liabilities and expenses (including court
costs and reasonable attorney's fees) arising out of any occurrence in or at the
Leased Property or the occupancy or use by Tenant of the Leased Property, or to
the extent occasioned by any act or omission of Tenant, its agents, contractors,
employees, servants, invitees, licensees or concessionaires.
SECTION 12.02 Landlord's Indemnification. Landlord shall indemnify and defend
Tenant from suits, actions, damages, liabilities and expenses (including court
costs and reasonable attorneys' fees) arising out of, or alleged to arise out
of, any failure by Landlord to perform any obligation of Landlord hereunder, any
condition present on the Leased Property as of the Commencement Date, any
representation or warranty of Landlord proving false or untrue in any material
way, and the negligent or willful act or omission of Landlord, its agents,
contractors, employees, servants, invitees, licensees or concessionaires.
Landlord's indemnification obligations shall include, without limitation, any
suits, actions, damages, liabilities and expenses (including court costs and
reasonable attorneys' fees) arising out of, or alleged to arise out of any
obligations of Landlord to Landlord's employees, agents or contractors, to any
racing associations or to any licensees, concessionaires or other independent
contractors involved or associated in any way with the operation of the Leased
Property prior to the Commencement Date.
ARTICLE XIII
INSURANCE
SECTION 13.01 Tenant's Required Coverages. Tenant, at Tenant's sole expense,
shall obtain and maintain in full force and effect during the term of this
Lease, the following policies of insurance:
(a) Fire and extended coverage insurance covering the Leased
Property and each of the buildings erected thereon, to the extent of 100% of
their full insurable value and replacement cost without deduction for
depreciation;
(b) Comprehensive general public liability insurance on an
occurrence basis with minimum limits of liability in an amount of not less than
$1,000,000.00 for bodily, personal injury or death to any one person, not less
than $1,000,000.00 for bodily, personal injury or death to more than one person
and not less than $500,000.00 with respect to damage to property including water
damage and sprinkler leakage legal liability.
SECTION 13.02 Designated Insureds; Endorsements; Evidence of Insurance. All
insurance policies to be obtained by Tenant hereunder shall be in the names of
both Landlord and Tenant,
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as their respective interests may appear, together with such other party or
parties as may be designated by Landlord, including, without limitation,
Landlord's mortgagees, as their interests may appear. All such policies of
insurance shall be issued by financially responsible companies licensed to do
business in New Jersey, and shall contain endorsements providing that any such
insurance shall not be subject to cancellation, termination or change except
after ten (10) days' prior written notice by registered or certified mail to
Landlord and Landlord's mortgagee by the insurance company. All public liability
and property damage policies shall contain an endorsement that Landlord and
Landlord's mortgagee, although named as insureds, shall nevertheless be entitled
to recover under said policies for any loss or damage occasioned to them, their
servants, agents and employees by reason of the negligence of Tenant. All
policies of fire and/or extended coverage or other insurance covering the Leased
Property or its contents shall contain a clause or endorsement providing in
substance that the insurance shall not be prejudiced if the insureds have waived
right of recovery from any person or persons prior to the date and time of loss
or damage, if any.
SECTION 13.03 Failure to Maintain Required Coverage. In the event that Tenant
shall fail to obtain or maintain in full force and effect the insurance policies
and coverages required of it hereunder, Landlord may obtain such insurance or
coverage, pay the premiums thereon, and take such other steps as may be
necessary to meet the requirements of this Article and upon demand, obtain
reimbursement of the costs so expended from Tenant.
ARTICLE XIV
TRADE FIXTURES
SECTION 14.01 Title to Property and Removal. All trade fixtures installed by
Tenant in the Leased Property shall remain the property of Tenant and shall be
removable at the expiration or earlier termination of this Lease, provided that
in the event of such removal, Tenant shall repair any damage caused by such
removal. Any such trade fixture not removed at or prior to such termination
shall be and become the property of Landlord.
SECTION 14.02 Failure to Remove. In the event, at the expiration or earlier
termination of this Lease, Tenant fails to remove any trade fixtures installed
by Tenant, then Landlord may remove such fixtures and may dispose of such
fixtures in any manner Landlord deems fit without the necessity of accounting to
Tenant for the proceeds of same.
ARTICLE XV
ASSIGNMENT AND SUBLETTING
SECTION 15.01 Assignment and Subletting. So long as Tenant remains fully liable
hereunder, Tenant may assign this Lease, in whole or in part, or sublet the
whole or any part of the Leased Property, or permit the use or occupancy of the
whole or any part of the Leased
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Property by others, including, without limitation, the operation of all or any
part of the Leased Property by a licensee or concessionaire. If this Lease or
any interest of Tenant herein be assigned or if the whole or any part of the
Leased Property be sublet or used or occupied by others (including, without
limitation, an affiliate or subsidiary of Tenant), Tenant shall nevertheless
remain fully liable for the full performance of all obligations under this Lease
to be performed by Tenant and Tenant shall not be released therefrom in any
manner.
ARTICLE XVI
SUBORDINATION AND ATTORNMENT
SECTION 16.01 Mortgages. This Lease and the Tenant's interest hereunder shall be
subject and subordinate at all times to any and all mortgages, deeds of trust,
and other security instruments, including all renewals, extensions,
consolidations, assignments and refinancings of the same (collectively
"Mortgage") as well as all advances made upon the security thereof, which now or
hereafter become liens upon the Landlord's interest in the Leased Property,
provided that, as a condition of such subordination, each mortgagee shall
execute and deliver to Tenant a nondisturbance agreement reasonably acceptable
to Tenant. Landlord shall deliver to Tenant within ten (10) days after Tenant's
execution hereof a nondisturbance agreement, in form reasonably satisfactory to
Tenant, from each lender holding a mortgage or lien on the Leased Property. If
Tenant fails to receive such a nondisturbance agreement within such 10-day
period, Tenant may terminate this Lease without liability. Upon receipt of such
nondisturbance agreement, Tenant shall upon request attorn to any mortgagee or
other party acquiring the Leased Property. In case Landlord's interest under the
Mortgage shall terminate for any reason and if the holder of any such Mortgage
("Mortgagee") or if the grantee of a deed in lieu of foreclosure, or if the
purchaser at any foreclosure sale or at any sale under a power of sale contained
in any such Mortgage shall at its sole option so request, Tenant shall attorn
to, and recognize such Mortgagee, grantee or purchaser, as the case may be, as
Landlord under this Lease for the balance then remaining of the term of this
Lease, subject to all terms of this Lease. Notwithstanding anything to the
contrary set forth above, any Mortgagee may at any time subordinate its Mortgage
to this Lease, without Tenant's consent, by execution of a written document
subordinating such Mortgage to this Lease, and thereupon this Lease shall be
deemed prior to such Mortgage. Notwithstanding the foregoing, the Covenant set
forth in Exhibit C shall not be subordinate to any mortgage or monetary lien and
Landlord shall upon recordation of such Covenant concurrently procure and record
a subordination from each existing mortgagee or monetary lienholder (other than
the lien of future real property taxes) subordinating such mortgage or lien to
the Covenant.
SECTION 16.02 Execution of Documents. Tenant agrees to execute such documents as
may be reasonably required by Landlord or any such Mortgagee, grantee or
purchaser for the purpose of confirming such subordination or attornment.
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ARTICLE XVII
SURRENDER AND HOLDOVER
SECTION 17.01 Tenant's Obligation to Surrender Leased Property. Tenant, upon
expiration or earlier termination of this Lease, shall peaceably surrender to
Landlord the Leased Property in good repair as required by the terms of this
Lease subject to reasonable wear and tear. Tenant shall surrender all keys for
the Leased Property to Landlord.
SECTION 17.02 Consensual Holdover. In the event Tenant shall remain in
possession of the Leased Property with Landlord's consent but without having
executed a new lease or an extension or renewal of this Lease, then Tenant shall
be deemed to be in occupancy and possession of the Leased Property as a tenant
from month to month, subject to all the other terms and conditions of this Lease
insofar as the same are applicable to a month-to-month tenancy but the monthly
Fixed Rent payable during such holding over shall equal 150% of the Fixed Rent
payable during the last month of the Term. In the event that there occurs such a
consensual holdover, either party may terminate said occupancy at the end of any
one month period following the expiration date of the term of this Lease upon at
least thirty (30) days' written notice to the other party.
SECTION 17.03 Tenant's Liability for Failure to Surrender. If Tenant fails to so
surrender the Leased Property upon the expiration or earlier termination of this
Lease, Tenant shall pay, for the period Tenant retains possession of the Leased
Property, an amount equal to 150% of the Fixed Rent and other charges payable
immediately prior to the expiration or earlier termination of this Lease, and
Tenant shall indemnify and hold harmless Landlord from loss or liability
resulting from such failure including, without limitation, any claims made by
any succeeding tenant founded on such failure. Nothing contained in this section
shall be deemed or construed as conferring upon Tenant a right to remain in
possession of the Leased Property beyond the expiration or termination of this
Lease or any extension or renewal hereof.
ARTICLE XVIII
DAMAGE OR DESTRUCTION OF LEASED PROPERTY
SECTION 18.01 Total or Partial Destruction. If the Leased Property shall be
damaged by fire or other casualty covered by applicable policies of fire and
broad form extended coverage insurance but are not thereby rendered untenantable
in whole or in part, Landlord shall at its own expense cause such damage to be
repaired, and the rent shall not be abated. If by reason of such occurrence, the
Leased Property shall be rendered untenantable in whole or in part and such
damage can, in Landlord's reasonable judgment, be repaired within 180 days,
Landlord shall at its own expense cause the damage to be repaired and the Fixed
Rent meanwhile shall be abated proportionately as to the portion of the Leased
Property rendered untenantable until Landlord has restored the Leased Property.
If the Leased Property shall be damaged or destroyed by a fire or casualty not
covered by applicable policies of fire and broad form extended coverage
insurance,
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or if such damage cannot, in Landlord's reasonable judgment, be repaired within
180 days, Tenant shall have the right, to be exercised by notice in writing
delivered to the other within thirty (30) days from and after the occurrence of
such damage or destruction, to elect to terminate this Lease. In no event shall
Landlord be obligated to expend for any repairs or reconstruction an amount in
excess of the insurance proceeds recovered by it and allocable to the damage of
the Leased Property after deduction therefrom of any amounts required to be paid
to any Mortgagee. In addition, Landlord shall not be required to rebuild any
structure destroyed by fire or other casualty if such structure has not been
used by Tenant at any time during the Term hereof.
SECTION 18.02 Notice by Tenant. Tenant shall immediately notify Landlord of any
damage by fire or other casualty to the Leased Property.
ARTICLE XIX
EMINENT DOMAIN
SECTION 19.01 Total Condemnation. If the whole of the Leased Property shall be
taken by any public or quasi-public authority under the power of eminent domain,
condemnation or expropriation or in the event of a conveyance in lieu thereof,
then the term of this Lease shall terminate as of the date on which possession
of the Leased Property is required to be surrendered to the condemning
authority, all rent and other charges shall be paid up to that date, and Tenant
shall have no claim against Landlord for the value of any unexpired term of this
Lease.
SECTION 19.02 Partial Condemnation. If any part of the Leased Property shall be
so taken or conveyed, and in the event that such partial taking or conveyance
shall render the Leased Property unsuitable for the business of Tenant, then the
term of this Lease shall terminate as of the date on which possession of the
Leased Property is required to be surrendered to the condemning authority, all
rent and other charges shall be paid up to that date, and Tenant shall have no
claim against Landlord for the value of any unexpired term of this Lease. In the
event of a partial taking or conveyance which is not extensive enough to render
the Leased Property unsuitable for the business of Tenant, then Landlord shall
promptly restore the Leased Property to the extent of condemnation proceeds
available for such purpose to a condition comparable to their condition at the
time of such condemnation less the portion lost in the taking, Tenant shall
promptly make all necessary repairs, restoration and alterations of Tenant's
fixtures, equipment and furnishings and shall promptly reenter the Leased
Property and commence doing business in accordance with the provisions of this
Lease and this Lease shall continue in full force and effect. In such event, the
Fixed Rent shall be reduced in the same proportion that the floor area of the
Leased Property so taken or conveyed bears to the floor area of the Leased
Property immediately prior to such taking or conveyance, such reduction
commencing as of the date Tenant is required to surrender possession of such
portion. For purposes of determining the amount of funds available for
restoration of the Leased Property from the condemnation award, said amount
shall be deemed to be that part of the award which remains after payment of
Landlord's reasonable expenses incurred in recovering same and any amounts due
to any Mortgagee, and which represents a portion of the total sum so available
(excluding any award or other compensation for
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land) which is equitably allocable to the Leased Property. Notwithstanding the
foregoing, Landlord shall not be required to restore any structure condemned as
set forth above if such structure has not been used by Tenant at any time during
the Term hereof.
SECTION 19.03 Landlord's Damages. In the event of any taking or conveyance as
herein provided, Tenant shall not be entitled to any part of the award for such
taking or conveyance, and Landlord and any Mortgagee shall receive the full
amount of such award as their respective interests may appear. Tenant expressly
waives any right or claim to any part thereof and assigns to Landlord any such
right or claim to which Tenant might become entitled.
SECTION 19.04 Tenant's Damages. Although all damages in the event of any
condemnation shall belong to Landlord and any Mortgagee, Tenant shall have the
right, to the extent that same shall not diminish Landlord's or such Mortgagee's
award, to claim and recover from the condemning authority, but not from Landlord
or such Mortgagee, such compensation as may be separately awarded or recoverable
by Tenant in Tenant's own right for or on account of, and limited solely to, any
cost to which Tenant might be put in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment.
ARTICLE XX
DEFAULT
SECTION 20.01 Events of Default. Each of the following shall constitute an Event
of Default ("Event of Default"):
(a) Tenant defaults in the payment of any installment of Fixed
Rent for a period of ten (10) days after such payment is due; or
(b) Tenant defaults in the payment of any Taxes or insurance
reimbursement payable by Tenant under this Lease on any day upon which the same
shall be due and payable and such default continues for ten (10) days after the
date on which the same was due and payable; or
(c) Tenant defaults in the performance of any obligation,
covenant or agreement of Tenant to be performed or observed under this Lease,
other than those specifically set forth elsewhere in this Section 20.01, and
such default continues and is not cured by Tenant within thirty (30) days after
Landlord has given to Tenant a notice specifying the same, or, in the case of a
default which cannot with due diligence be cured within a period of thirty (30)
days, if Tenant does not in good faith duly institute within such thirty (30)
day period steps necessary to cure the same and promptly and diligently
prosecute to completion such cure; or
(d) Tenant makes an assignment for the benefit of creditors or
becomes a party or subject to any liquidation or dissolution action or
proceeding, or the institution of any bankruptcy, reorganization, insolvency or
other proceeding for the relief of financially distressed
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debtors with respect to Tenant, or the appointment of a receiver, liquidator,
custodian or trustee for Tenant or a substantial part of Tenant's assets and, if
any of the same shall occur involuntarily, the same is not dismissed or
discharged within 30 days; or the entry of an order for relief against Tenant
under Title II of the United States Code entitled "Bankruptcy".
SECTION 20.02 Events of Landlord Default. Each of the following shall constitute
an Event of Landlord Default ("Event of Landlord Default"):
(a) Landlord defaults in the performance of any obligation,
covenant or agreement of Landlord to be performed or observed under this Lease,
and such default continues and is not cured by Landlord within thirty (30) days
after Tenant has given to Landlord a notice specifying the same, or, in the case
of a default which cannot with due diligence be cured within a period of thirty
(30) days, if Landlord does not in good faith duly institute within such thirty
(30) day period steps necessary to cure the same and promptly and diligently
prosecute to completion such cure; or
(b) Landlord makes an assignment for the benefit of creditors
or becomes a party or subject to any liquidation or dissolution action or
proceeding, or the institution of any bankruptcy, reorganization, insolvency or
other proceeding for the relief of financially distressed debtors with respect
to Landlord, or the appointment of a receiver, liquidator, custodian or trustee
for Landlord or a substantial part of Landlord's assets and, if any of the same
shall occur involuntarily, the same is not dismissed or discharged within 30
days; or the entry of an order for relief against Landlord under Title II of the
United States Code entitled "Bankruptcy".
ARTICLE XXI
REMEDIES UPON DEFAULT
SECTION 21.01 Tenant's Default. Upon the occurrence of an Event of Default,
Landlord may, as Landlord's exclusive remedy, either:
(a) Demand payment of any sums owed by Tenant to Landlord hereunder up
to the date of the Event of Default, and proceed to collect or bring action for
such sums, as being in arrears, or file a proof of claim in any bankruptcy or
insolvency proceedings for such sums, or institute any other proceedings to
enforce payment thereof; or
(b) Seek to terminate this Lease by notice to Tenant, and recover
damages in the amount of Fixed Rent and other charges accrued and unpaid as of
the date of the Event of Default, and subject to Tenant's arbitration rights as
set forth below, this Lease shall thereupon terminate and neither party shall
have any rights or obligations hereunder. If Tenant disputes the occurrence of
an Event of Default alleged by Landlord and Landlord seeks to terminate this
Lease under this subsection (b), Landlord and Tenant shall jointly select an
impartial AAA arbitrator whose determination of the occurrence of the Event of
Default shall be final and binding. If the arbitrator finds that an Event of
Default has occurred, Tenant shall have an additional fifteen (15) days after
receipt of the arbitrator's decision to cure the Event of Default,
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and if Tenant fails to cure within such fifteen (15) day period, Landlord may,
at its election, terminate this Lease, or exercise any other remedies (other
than acceleration of rent) available at law or in equity.
SECTION 21.02 Landlord's Default. Upon the occurrence of an Event of Landlord
Default, Tenant, in addition to such other remedies as Tenant may have at law or
in equity, shall have the right to complete any obligation, covenant or
agreement of Landlord to be performed or observed under this Lease, and to
offset the cost thereof against the next payment(s) of Fixed Rent and/or against
any other sums then owed to Landlord or any affiliate of Landlord.
SECTION 21.03 Recovery of Legal Expenses. In the event of litigation between the
parties, the prevailing party shall be entitled to receive its reasonable
attorneys' fees from the losing party.
ARTICLE XXII
ESTOPPEL STATEMENT
SECTION 22.01 Duty of Tenant to Furnish. At any time and from time to time,
within ten (10) days after request therefor by Landlord, Landlord's Mortgagee or
purchaser ("Requesting Party"), Tenant shall execute and deliver to Requesting
Party, without charge and in a form satisfactory to Requesting Party, a written
statement in recordable form, certifying that this Lease is in full force and
effect and has not been amended except by such writings as shall be stated;
certifying that Landlord is not in default under this Lease and there are no
defenses or offsets thereto or else stating those claimed by Tenant; certifying
the commencement and expiration dates of the term of this Lease; certifying that
Tenant is in occupancy of the Leased Property; certifying the advance rent and
security paid to or deposited with Landlord and the date to which rent and other
charges have been paid.
ARTICLE XXIII
NOTICES
SECTION 23.01 Manner and Place of Service. Wherever in this Lease it shall be
required or permitted that notice, demand or consent be given or served by
either party to this Lease to or on the other, such notice, demand or consent
shall not be deemed to have been duly given or served unless in writing and
either personally delivered, sent by certified mail, return receipt requested,
postage prepaid, or by private delivery service guaranteeing overnight delivery
(such as Federal Express), addressed to Landlord at Landlord's address set forth
in the Lease Summary, and addressed to Tenant at Tenant's address set forth in
the Lease Summary. Each party hereto may change its address for receipt of
notices upon notification to the other parties in conformance herewith. All
notices shall be deemed given on the date personally delivered, five
(5) days after deposited in the United States mail, or one (1) business day
after deposited with said private delivery service.
-19-
<PAGE>
ARTICLE XXIV
BROKERS
SECTION 24.01 Warranty. Tenant and Landlord each represent and warrant to the
other that neither party has had no dealing, negotiations or consultations with
respect to the Leased Property or this transaction with any broker or finder and
that no broker or finder called the Leased Property to Tenant's attention. In
the event that any broker or finder claims a commission through contact with
either party, that party shall defend, indemnify and save the other party
harmless from and against all costs, fees (including, without limitation,
reasonable attorney's fees), expenses, liabilities and claims incurred or
suffered by Landlord as a result thereof.
ARTICLE XXV
MISCELLANEOUS
SECTION 25.01 Binding Effect. All rights, obligations and liabilities herein
given to or imposed upon the respective parties hereto shall extend to and bind
the several respective heirs, personal representatives, successors and assigns
of the such parties.
SECTION 25.02 Quiet Enjoyment. So long as Tenant shall pay the rents and other
charges herein provided within the respective times provided therefor, and
provided and so long as Tenant observes and performs all the covenants, terms
and conditions on Tenant's part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the Leased Property for the term of this
Lease without hindrance or interruption by Landlord or any other person or
persons lawfully claiming by, through or under Landlord, subject, nevertheless,
to the terms and conditions of this Lease.
SECTION 25.03 Waiver. The waiver by either party of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of any
subsequent breach of the same or a waiver of any other term, covenant or
condition herein contained. No covenant, term or condition of this Lease shall
be deemed to have been waived by either party, unless such waiver be in writing
and executed by such party.
SECTION 25.04 Custom and Usage. Landlord and Tenant shall have the right at all
times to enforce the covenants and conditions of this Lease in strict accordance
with the terms hereof, notwithstanding any conduct or custom on the part of
Landlord or Tenant in refraining from so doing at any time or times with respect
to Tenant hereunder. The failure of Landlord or Tenant at any time or times to
enforce its rights under such covenants and provisions strictly in accordance
with the same shall not be construed as having created a custom in any way or
manner contrary to the specific terms, provisions and covenants of this Lease or
as having in any way or manner modified the same.
-20-
<PAGE>
SECTION 25.05 Accord and Satisfaction. No payment by either or receipt by either
party of a lesser amount than any payment of rent or other charges herein
stipulated shall be deemed to be other than on account of the earliest
stipulated rent or other charges then due and payable. Neither party shall be
bound by any endorsement or statement on any check or any letter accompanying
any check or payment and no such endorsement, statement or letter shall be
deemed an accord and satisfaction. Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such rent or
other charges or pursue any other remedy.
SECTION 25.06 Entire Agreement. The Lease Summary, this Lease Agreement and the
Exhibits set forth all the agreements and understandings between Landlord and
Tenant concerning the Leased Property and there are no agreements or
understandings, either oral or written, regarding the subject matter hereof
between them, other than as herein set forth. All prior arrangements and
understandings, whether oral or written, between the parties hereto are merged
herein and extinguished, this Lease superseding and canceling the same. No
amendment to this Lease shall be binding upon Landlord or Tenant unless reduced
to writing and executed by the party against which such amendment is to be
enforced.
SECTION 25.07 Captions and Index. The captions and index appearing in this Lease
are inserted only as a matter of convenience and in no way define, limit,
construe or describe the scope or intent of this Lease nor in any way affect
this Lease.
SECTION 25.08 Partial Invalidity; Separate Covenants. If any portion of this
Lease or the application thereof to any person or circumstances shall be invalid
or unenforceable, the remainder of this Lease and the application of such
portion to persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby, and each term, covenant
and condition of this Lease shall be valid and be enforced to the fullest extent
permitted by law. Furthermore, each covenant, agreement, obligation and other
provision contained in this Lease is, and shall be deemed and construed as, a
separate and independent covenant of the party bound by, undertaking or making
the same, and not dependent on any other provision of this Lease.
SECTION 25.09 Recording. If Landlord or Tenant requests, the parties shall
execute and acknowledge a short form of lease for recording purposes which shall
be recorded at the requesting party's expense.
SECTION 25.10 Controlling Law. This Lease shall be interpreted and construed in
accordance with the laws of the State of New Jersey.
SECTION 25.11 Time of the Essence. Time shall be of the essence of all
obligations hereunder.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have hereunto set their hands and seals the day and year set forth in
the Lease Summary.
-21-
<PAGE>
GARDEN STATE RACE TRACK, INC.
(Landlord)
By:________________________
Attest:____________________
GREENWOOD NEW JERSEY, INC.
(Tenant)
By:___________________________
Attest: ______________________
-22-
<PAGE>
DECLARATION OF RESTRICTIVE COVENANTS AND
MEMORANDUM OF PURCHASE OPTION
This Declaration of Restrictive Covenants and Memorandum of Purchase
Option is made this __ day of _________, 1998 by GARDEN STATE RACE TRACK, INC.,
a New Jersey corporation, with an address at c/o International Thoroughbred
Breeders, Inc., Haddonfield Road and Route 70, Cherry Hill, NJ 08034
(hereinafter called "Declarant").
BACKGROUND
Declarant, together with certain affiliates of Declarant, and GREENWOOD
NEW JERSEY, INC., a New Jersey corporation, with an address at 3001 Street Road,
Bensalem, PA 19020-8512, Attention: Robert W. Green, President (hereinafter
called "Greenwood") are parties to an Asset Purchase Agreement dated _______,
1998 ("Asset Purchase Agreement") pursuant to which Greenwood has acquired from
Declarant and certain affiliates of Declarant certain real property known as
Freehold Raceway in Freehold, New Jersey. In addition, Declarant and Greenwood
are parties to a Lease Agreement dated ____________, 1998 ("Lease") pursuant to
which Greenwood has leased from Declarant certain real property known as Garden
State Park in Cherry Hill, New Jersey ("GSP Facility"), together with certain
personal property used in the operation of the GSP Facility. The real property
that forms part of the GSP Facility is more particularly described in Exhibit A
attached hereto ("GSP Property").
Pursuant to the requirements of the Asset Purchase Agreement and the
Lease, and as an express inducement for Greenwood to execute the Asset Purchase
Agreement and Lease and to consummate the transactions contemplated therein,
Declarant has agreed to impose certain restrictive covenants on the GSP
Property.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Declarant, and intending to be
legally bound hereby, Declarant declares as follows:
1. Covenant.
(a) Except as expressly set forth hereafter, horse racing,
simulcasting, off-track betting, wagering activities and gambling and gaming of
any sort (collectively, "Gaming") anywhere on the GSP Property at any time by
any party other than Greenwood and its successors and assignees is hereby
prohibited ("Covenant").
(b) The foregoing Covenant shall remain in effect forever and
permanently prohibit Gaming of any kind on the GSP Property unless and until the
following conditions are fulfilled:
(i) The GSP Property is sold, transferred or conveyed
by Declarant (but not Declarant's successors or assigns) during the period
beginning on the fourth (4th) anniversary of the recordation hereof and ending
on the seventh (7th) anniversary of the recordation hereof, the provisions of
Section 2(c) below (regarding a Transferee refusing to
<PAGE>
accept a permanent prohibition on Gaming) become operative, Greenwood receives a
Purchase Notice and Declarant otherwise fully complies with the requirements of
Section 2(b) below, and Greenwood elects not to exercise its Purchase Option (as
defined below) at the 10% discount price set forth below; or
(ii) The GSP Property is sold, transferred or
conveyed by Declarant (but not Declarant's successors or assigns) during the
period beginning on the day after the seventh (7th) anniversary of the
recordation hereof and ending on the tenth (10th) anniversary of the recordation
hereof, the provisions of Section 2(c) below (regarding a Transferee refusing to
accept a permanent prohibition on Gaming) become operative, Greenwood receives a
Purchase Notice and Declarant otherwise fully complies with the requirements of
Section 2(b) below, and Greenwood elects not to exercise its Purchase Option at
the 5% discount price set forth below.
(c) Upon fulfillment of all of the requirements set forth in
subsections (b)(i) or (ii) above, Greenwood shall record an extinguishment of
this Declaration of Covenants.
2. Sale Restriction: Right of First Refusal
(a) Declarant shall not sell, transfer or otherwise convey in
any manner, whether directly, indirectly or by operation of law (collectively,
"Sell") all or any part of the GSP Facility during the first twelve (12) months
after the recordation hereof. During the period beginning on the first (1st)
anniversary of the recordation hereof and ending on the tenth (10th) anniversary
of the recordation hereof ("Sale Restriction Period"), Declarant may only Sell
any of the GSP Facility to a bona fide purchaser not affiliated with Declarant
or with Freehold Raceway Association, a New Jersey corporation, Atlantic City
Harness, Inc., a New Jersey corporation, Circa 1850, Inc., a New Jersey
corporation, or International Thoroughbred Breeders, Inc., a Delaware
corporation, and for a purchase price consisting only of cash and/or an
obligation to pay cash at a later date. During the Sale Restriction Period,
Declarant may not sell less than all of the GSP Facility unless Greenwood
confirms in writing in advance that the sale of the portion of the GSP Facility
being offered for sale would not interfere with Greenwood's operations under the
Lease, such confirmation not to be unreasonably withheld or delayed. The
restrictions set forth in this Section 2(a) shall expire and be of no further
force and effect upon the expiration of the Sale Restriction Period, but such
expiration shall not affect the Covenant set forth in Section 1(a) above.
(b) In the event that, at any time during the Sale Restriction
Period, Declarant receives an offer ("Offer") to purchase the GSP Facility or
any material portion thereof, or to otherwise dispose of or transfer ownership
of the GSP Facility or any material portion thereof (by merger or otherwise)
which Declarant intends to accept, Declarant shall serve upon Greenwood notice
("Purchase Notice") of the Offer, together with a copy of the Offer which shall
set forth the name of the proposed purchaser or transferee ("Transferor"), the
purchase price and the other terms and conditions of the Offer (including,
without limitation, any agreements that are proposed as part of the Offer). Upon
receipt by Greenwood of the Purchase Notice, Greenwood shall have the option
("Purchase Option"), by giving written notice to Declarant of the exercise of
Greenwood's Purchase Option within thirty (30) days after Greenwood's receipt of
the Purchase Notice, to execute an Agreement of Sale for the GSP Facility at the
same purchase
<PAGE>
price and upon the same terms and conditions as those contained in the Offer,
except as set forth below. In the event that Greenwood does not exercise its
Purchase Option, or fails to respond to the Purchase Notice, within the 30-day
period set forth above, Declarant may sell the GSP Facility to the Transferor
upon the same terms and conditions contained in the Offer. In the event that the
Offer is materially amended in any fashion, or a closing does not occur on the
terms set forth in the Offer within one hundred twenty (120) days after such
Offer is received by Declarant, Greenwood's Purchase Option shall be reinstated
with respect to any amendments to the Offer or any future Offers.
(c) Notwithstanding the foregoing, if the Transferee does not
expressly agree, as part of the Offer, to execute a recordable instrument in
form satisfactory to Greenwood permanently prohibiting and discontinuing all
forms of Gaming at the GSP Property, then (i) if the Offer is received prior to
the seventh (7th) anniversary of the recordation hereof, the purchase price
payable by Greenwood, if Greenwood exercises the Purchase Option, shall equal
the purchase price set forth in the Offer reduced by ten percent (10%), and (ii)
if the Offer is received after the seventh (7th) anniversary of the recordation
hereof and before the tenth (10th) anniversary of the recordation hereof, the
purchase price payable by Greenwood, if Greenwood exercises the Purchase Option,
shall equal the purchase price set forth in the Offer reduced by five percent
(5%). If Greenwood exercises the Purchase Option and the Offer contemplates
payment of a portion of the purchase price by delivery of one or more promissory
notes, the foregoing purchase price reductions shall be applied pro rata to the
cash and any such notes executed by Greenwood.
(d) If Greenwood does not exercise the Purchase Option,
Greenwood shall have the option to terminate the Lease by notice to Declarant,
effective on the first (1st) anniversary of the date that the Transferee
acquires fee title to the GSP Property.
3. Running With Land. The Covenant and the other provisions of this
Agreement shall run with the land and shall be binding upon Declarant and its
successors and assigns.
4. Enforcement.
(a) This Declaration shall inure to the benefit of, and be
specifically enforceable by Greenwood and by Greenwood Racing, Inc. and its
subsidiaries (collectively, "Greenwood Group"), without regard to whether the
Lease is then in effect. Declarant expressly acknowledges that Greenwood and the
other members of the Greenwood Group will suffer irreparable harm and injury
from any violation of the Covenant or of any other provision of this Agreement
by Declarant, that such harm and injury will not be compensable by monetary
damages and that Greenwood and the other members of the Greenwood Group shall
therefore be entitled to specifically enforce each and every provision hereof
and shall be entitled to injunctive relief to prevent any violation of or
noncompliance with this Agreement.
(b) This Declaration shall not inure to the benefit of or be
appurtenant to any other property or any other party except as expressly set
forth above, and there shall be no third-party beneficiaries hereof.
<PAGE>
(c) Greenwood and the members of the Greenwood Group shall be
entitled to collect their reasonable legal fees and court costs incurred in any
action to enforce this Agreement.
5. General. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey. All notices hereunder shall
be in writing and shall be sent by certified mail, return receipt requested, or
by overnight delivery service, or by hand delivery. Such notices shall be deemed
to have been given three days after mailing if sent certified mail, or on the
date after being deposited with an overnight delivery service, or on the date
received if hand delivered. This agreement contains the entire agreement between
the parties, superseding any prior written or verbal agreements, and no
modification shall be effective unless in writing and signed by Declarant and by
Greenwood. The rights, obligations and liabilities herein given to or imposed
upon Declarant and Greenwood shall extend to and bind the several respective
successors and assigns of the such parties.
IN WITNESS WHEREOF, Declarant has executed this Declaration on the date
set forth above..
GARDEN STATE RACE TRACK, INC.
By:________________________
Attest:____________________
<PAGE>
LICENSE AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of _______,
1998, by and between GREENWOOD NEW JERSEY, INC. ("Licensor") and GARDEN STATE
RACE TRACK, INC. ("Licensee").
BACKGROUND
Licensor, as tenant, and Licensee, as landlord, are parties to a Lease
Agreement ("Lease") covering certain real property located at 2200-2290 Marlton
Pike West, Cherry Hill Township, Camden County, New Jersey, containing 222
acres, more or less, with the buildings and facilities thereon containing
approximately 1,280,000 square feet of space, and all other improvements
thereto, generally known as Garden State Park, all as more particularly
described on Exhibit A attached hereto ("Property"). Licensee has requested
Licensor's permission to utilize portions of the Property from time to time to
operate a flea market, and Licensor has agreed to grant such permission on the
terms and conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. License. Licensor hereby grants Licensee a revocable license to
operate an open- air flea market ("Licensed Use") on portions of the parking lot
located on the Property to be designated from time to time by Licensor, but
generally in the same areas as Licensee has previously operated flea market
("License Area"). The foregoing license includes the right of ingress, egress
and access to the License Area for purposes of the Licensed Use. The Licensed
Use shall be of essentially the same scope, nature and scale as the flea market
operations previously operated by Licensee, shall be scheduled only at times
that do not coincide with Licensor's racing schedule, and shall not interfere in
any way with Licensor's use of the property as a horse racing and gaming
facility.
2. License Fee; Other Charges.
(a) Licensee shall pay to Licensor a license fee ("License
Fee") in the amount of One Hundred Thousand Dollars ($100,000.00) per annum,
payable in advance in equal monthly installments of $10,000.00 without any prior
demand therefor, on the first day of each calendar month between March and
December (inclusive) during the term hereof, commencing upon the Commencement
Date of the Lease.
(b) Licensor shall be entitled to charge attendees of the
Licensed Use for parking and to retain all such parking charges.
3. Services. Licensor shall be responsible, at Licensor's expense, for
the cost of trash removal and for the labor required to clean up after each flea
market. All other charges of any kind associated with the Licensed Use or this
License shall be paid by Licensee.
<PAGE>
4. Indemnity. Licensee shall indemnify, defend and hold harmless
Licensor for any claim or damage of any kind arising from or in connection with
this License Agreement. Licensee shall provide Licensor, prior to the first
Licensed Use, with an insurance certificate listing Seller as an additional
insured and showing liability coverage in the amount of at least $1,000,000.
5. Non-Exclusivity. This License is non-exclusive and Licensor may
operate indoor flea markets at any time and from time to time, and all proceeds
thereof shall belong to Licensor.
6. Term. This License Agreement shall expire on December 31, 1999, or
if the Lease is terminated prior to that date, then on the effective date of the
termination of the Lease, renewable by Licensee for additional one (1) year
increments at Licensee's sole discretion (but subject to Licensor's right to
revoke this License).
7. Notices. All notices, requests and other communications under this
Agreement shall be in writing and shall be addressed as set forth in the Lease.
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have executed this Agreement as of the date first above written.
GARDEN STATE RACE TRACK, INC.
(Licensee)
By:________________________
Attest:____________________
GREENWOOD NEW JERSEY, INC.
(Licensor)
By:________________________
Attest: ___________________
<PAGE>
Exhibit 11A to
Asset Purchase Agreement
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of the ___ day of August
1998, by Greenwood Racing, Inc., a Delaware corporation (the "Guarantor"), in
favor of and for the benefit of _____________________ ("Lender"), as agent for
Garden State Race Track, Inc., a New Jersey corporation ("GSRT"), Freehold
Raceway Association, a New Jersey corporation ("FRA"), Atlantic City Harness,
Inc., a New Jersey corporation ("ACH") and Circa 1850, Inc., a New Jersey
corporation ("Circa") (collectively, the "Sellers").
RECITALS:
WHEREAS, the Sellers have entered into an Asset Purchase Agreement,
dated June ___, 1998 (the "Asset Purchase Agreement"), with Greenwood New
Jersey, Inc., a New Jersey corporation ("Greenwood-NJ"), and affiliate of
Guarantor.
WHEREAS, to induce the Sellers to enter into and consummate the
transactions contemplated by the Asset Purchase Agreement, the Guarantor has
agreed to execute and deliver to Lender, as agent for Sellers, this Guaranty.
WHEREAS, the Sellers have advised the Guarantor that it would not enter
into the Asset Purchase Agreement and consummate the transactions contemplated
thereby in the absence of the Guarantor's guaranty as set forth herein, and that
in so doing, the Sellers are relying on and will rely on the absolute and
unconditional nature of this Guaranty.
NOW, THEREFORE, in consideration of the premises herein set forth and
certain other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to induce the Sellers to enter into
the Asset Purchase Agreement and consummate the transactions contemplated
thereby, the Guarantor does hereby agree as follows.
1. a. The Guarantor does hereby represent and warrant that neither the
execution nor delivery of this Guaranty, nor the performance of the agreements
herein contained, are prohibited by or in conflict with any law or the terms of
any agreement or other instrument to which the Guarantor is a party or by which
the Guarantor is bound for which Guarantor has not obtained consent.
b. The Guarantor further represents and warrants that this Guaranty
is a legal, valid and binding obligation of the Guarantor, enforceable against
it in accordance with its terms.
2. The Guarantor hereby unconditionally, absolutely and irrevocably
guarantees to Lender (a) the due and punctual performance of all of the terms,
covenants and conditions contained in the $12 Million Note, the $5 Million
Contingent Note, the $3 Million Contingent Note and the $2 Million Contingent
Note (each as described in the Asset Purchase Agreement, collectively, the
"Notes") on the part of Greenwood-NJ to be performed and (b) the due and
punctual performance of the obligations of Greenwood-NJ, subject to offset
rights of Greenwood-NJ set forth in paragraph 18 of the Asset Purchase
Agreement, contained in (i) paragraphs 6(a)(v); (6)(a)(vi) and 17 of the
<PAGE>
Asset Purchase Agreement, and (ii) paragraph 4(b) of the Asset Purchase
Agreement, and (iii) in paragraph 4(b) of the Summary of Lease and paragraph
4.01(b) in the Lease Agreement, each of which is part of the Lease to be entered
into by GSRT and Greenwood-NJ in connection with the Asset Purchase Agreement.
3. The Guarantor expressly agrees that Lender, in its sole and absolute
discretion, without notice to or further assent of the Guarantor and without in
any way releasing, affecting or impairing the obligations and liabilities of the
Guarantor hereunder: (i) waives compliance with, or any defaults under, or
grants any other indulgences or forgivenesses with respect to, the Notes, (ii)
modifies, amends or changes any provisions of the Notes, (iii) grants extensions
or renewals of or with respect to the Notes, (iv) effects any release,
compromise or settlement in connection with the Notes, (v) makes advances for
the purpose of performing any term or covenant contained in the Notes with
respect to which Greenwood-NJ may be in default as authorized therein, (vi)
assigns or otherwise transfers the Notes, and (vii) deals in all respects with
Greenwood-NJ as if this Guaranty were not in effect. The obligations of the
Guarantor under this Guaranty shall be unconditional and absolute, irrespective
of the genuineness, validity, regularity or enforceability of the Notes or any
security given therefor or in connection therewith or any other circumstances
which might otherwise constitute a legal or equitable discharge of a surety or
guarantor, except the defense of payment and performance by Greenwood-NJ or the
Guarantor. In furtherance of the foregoing, this Guaranty shall in all respects
be valid and binding on the Guarantor if the assets of Greenwood-NJ are
transferred to any other person or entity.
4. This is a guaranty of payment and not of collection, and the
liability of the Guarantor under this Guaranty shall be primary, direct and
immediate, and not conditional or contingent upon pursuit by Lender of any
remedies it may have against Greenwood-NJ with respect to the Notes, whether
pursuant to the terms thereof or by law, or against any other person or entity
or against any other collateral. Without limiting the generality of the
foregoing, Lender shall not be required to make any demand on Greenwood-NJ, or
otherwise pursue or exhaust its remedies against Greenwood-NJ, or against any
other person or entity before, simultaneously with or after enforcing its rights
and remedies hereunder against the Guarantor. Any one or more successive and/or
concurrent actions may be brought hereon against the Guarantor either in the
same action, if any, brought against Greenwood-NJ, or in separate actions, as
often as Lender may deem advisable.
5. The Guarantor hereby acknowledges receipt of a copy of the Notes and
hereby expressly waives: (i) presentment and demand for payment on or with
respect to the Notes, (ii) notice of acceptance of this Guaranty, extension of
credit to Greenwood-NJ, and of presentment, demand and protest, (iii) notice of
any default hereunder or under the Notes, and of all indulgences with respect
thereto except as required by the Notes, (iv) demand for observance or
performance of, or enforcement of, any terms or provisions of the Notes except
as required by the Notes and (v) the benefit of all laws now or hereafter in
effect in any way limiting or restricting the liability of the Guarantor under
this Guaranty, including all right to stay of execution and exemption of
property in any action to enforce the liability of the Guarantor hereunder. In
the event this Guaranty shall be enforced by suit or otherwise, the Guarantor
shall reimburse Lender, upon demand, for all fees and expenses incurred by it in
connection therewith, including, without limitation, reasonable attorneys' fees
and expenses.
<PAGE>
6. The insolvency of Greenwood-NJ, and any bankruptcy or reorganization
proceeding with respect thereto, shall not affect in any way the Guarantor's
unconditional and absolute liability hereunder.
7. The Lender's and Sellers' books and records concerning
Greenwood-NJ's obligations under the Notes and Guarantor's obligations and
liabilities for payment of the Notes shall be prima facie proof against the
Guarantor of the amount of the obligations and liabilities of Greenwood-NJ and
the Guarantor under and in connection with this Guaranty and the payment of the
Notes guaranteed hereby.
8. The Guarantor agrees to furnish on a semi-annual basis written
updates of the information concerning the financial condition and
creditworthiness of Guarantor as disclosed to Sellers on or before the date
hereof, with such updates indicating any material and adverse changes in
Guarantor's financial condition and creditworthiness from on or before the date
hereof (provided that a change in Guarantor's financial condition shall not be a
default hereunder or under any of the Notes).
9. Any notice, demand, request or other communication which Lender may
desire to give to the Guarantor with respect to this Guaranty shall be deemed
sufficient if in writing and hand delivered, with a receipt being obtained
therefor, or mailed to the Guarantor by certified or registered mail, return
receipt requested, postage prepaid, addressed to the Guarantor at the address
noted below or at any other address that the Guarantor may hereafter designate
by written notice to Lender:
Greenwood Racing, Inc.
3001 Street Road
Bensalem, PA 19020-8512
Attention: Robert W. Green, President
All such notices, demands, et al., shall be deemed to have been given when
received (if hand delivered) or two (2) days after deposit in the mails (if
mailed).
10. All rights and remedies afforded to Lender by reason of this
Guaranty and the Notes are separate and cumulative, and the exercise of any one
shall not in any way limit or prejudice the exercise of any other such rights
and remedies. No delay or omission by Lender in exercising any such right or
remedy shall operate as a waiver thereof. No waiver of any rights and remedies
hereunder, and no modification or amendment hereof (including this paragraph),
shall be deemed made unless in writing and duly signed by Lender. Any such
written waiver shall apply only to the particular instances specified therein
and shall not impair the further exercise of any other right or remedy of
Lender, and no single or partial exercise of any right or remedy hereunder shall
preclude any other or further exercise thereof or any other right or remedy.
11. If any part of this Guaranty shall be contrary to law, then such
part that is contrary to law shall be deemed separable from the remaining
portions of this Guaranty and shall in no way affect the validity of the other
portions and provisions of this Guaranty. Any provisions of
<PAGE>
this Guaranty held invalid or unenforceable only in part or degree shall remain
in full force and effect to the extent not held invalid or unenforceable.
12. This Guaranty shall inure to the benefit of, and be enforceable by,
Lender, and its successors and assigns, and shall be binding upon, and
enforceable against, the Guarantor and its successors and assigns. In no event
shall this Guaranty be assigned by Guarantor without the Lender's consent,
exercisable in the Lender's sole and absolute discretion, provided that
assignment by operation of law shall not be affected by this restriction.
13. This Guaranty shall be governed by and construed under the laws of
the State of New Jersey, all rights and remedies being governed by such laws.
14. Notwithstanding anything to the contrary in this Guaranty, the
Guarantor hereby irrevocably waives all rights they may have at law or in equity
(including, without limitation, any law subrogating the Guarantor to the rights
of Greenwood-NJ) to seek contribution, indemnification or any other form of
reimbursement from Greenwood-NJ, and other guarantor, or any other person now or
hereafter primarily or secondarily liable for any obligations of Greenwood-NJ to
the Sellers, for any disbursement made by the Guarantor under or in connection
with this Guaranty or otherwise.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Guarantor, intending to be legally bound
hereby, has duly and validly executed this Guaranty under seal as of the day and
year first written above.
GREENWOOD RACING, INC.
By:__________________________(SEAL)
Witness Name:
Title:
