<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date earliest event reported) July 2, 1997
----------------------------
MTR GAMING GROUP, INC.
- -------------------------------------------------------------------------------
(exact name of registrant as specified in its charter)
DELAWARE
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
<TABLE>
<S> <C>
33-22521 84-1103135
- -------------------------------- ---------------------------------------------
(Commission File Number) (IRS Employer Identification Number)
</TABLE>
STATE ROUTE 2 SOUTH, CHESTER, WEST VIRGINIA
-------------------------------------------
(Address of principal executive offices)
26034
(Zip Code)
Registrant's Telephone Number, Including Area Code: (304) 387-5712
--------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT WITH MADELEINE LLC
Effective July 2, 1997, the Registrant's wholly owned subsidiary,
Mountaineer Park, Inc. ("Mountaineer"), the Registrant, and Madeleine LLC of
New York, New York amended and restated their July 2, 1996 Term Loan Agreement,
which had been previously amended and restated as of December 10, 1996. The
July 2, 1996 agreement related to a $5 million second trust loan. The December
10, 1996 amendment and restatement (the "First Amended Agreement") reflected an
increase in the amount borrowed from $5 million to $16.1 million, established a
$5,376,500 revolving line of credit, and converted the lender's position from
second to first trust holder. See Registrant's Report on Form 8-K dated
December 26, 1996, filed January 7, 1997.
The July 2, 1997 Second Amended and Restated Term Loan Agreement (the
"Second Amended Agreement") (i) extends the term of the loan to July 2, 2001
(compared to July 2, 1999); (ii) increases the total amount borrowed to
$21,476,500 (by virtue of Mountaineer drawing down the line of credit); (iii)
eliminates from the First Amended Agreement annual fees of cash in the amount
of 8% of the outstanding principal balance of the loan that would have been due
on each anniversary of the term loan and stock and warrants of the Registrant
that would have been due each November 15 while the loan is outstanding; and
(iv) calls for payments of interest only with the principal due at the end of
the four year term.
The loan continues to be evidenced by Mountaineer's Promissory Notes
and continues to be secured by a first priority Credit Line Deed of Trust with
respect to Mountaineer's real property and a perfected security interest
evidenced by a UCC-1 Financing Statement with respect to its personal property.
The lender's rights pursuant to the First Amended Agreement with respect to the
550,000 shares of the Registrant's stock and warrants to purchase 1,632,140
additional shares issued thereunder are unaffected by the Second Amended
Agreement. The Registrant continues to guarantee the loan.
As consideration for the lender's entering the Second Amended
Agreement, Mountaineer has agreed (i) to pay a one time fee of $1.8 million or
8.5% of the total amount borrowed, which may be paid over the first year of the
term; (ii) to pay interest at the rate of 13% (compared to 12% on the $16.1
million term loan and 15% on the $5.4 million line of credit under the First
Amended Agreement); and (iii) to pay a call premium equal to 5% in the event of
prepayment during the first year of the term, declining to 3% during the second
year, 2% in the third year, and 1% in the final year.
Mountaineer intends to use the additional proceeds toward the
construction of a convention facility and additional hotel rooms.
COMPROMISE OF FEE AGREEMENT
In connection with the First Amended Agreement, pursuant to a December
10, 1996 Fee Agreement, Mountaineer had agreed to pay a fee in the amount of
$277,500 to Bridge Capital,
<PAGE> 3
LLC, which arranged the transaction, in the event Mountaineer refinanced the
loan by July 2, 1997 and thus obtained a waiver of the fee of $888,000 that
would have been due Madeleine LLC pursuant to the First Amended Agreement.
Mountaineer has agreed to pay Bridge Capital, LLC $100,000 in satisfaction of
Mountaineer's obligations under the Fee Agreement.
ITEM 7. FINANCIAL STATEMENTS AND AGREEMENTS.
(c) Exhibits
1. Second Amended and Restated Term Loan Agreement,
dated as of July 2, 1996, as amended and restated as of December 10, 1996, and
as further amended and restated as of July 2, 1997 among Mountaineer Park,
Inc., MTR Gaming Group, Inc., and Madeleine LLC.
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.
MTR GAMING GROUP, INC.
By /s/ Edson R. Arneault
------------------------------
Edson R. Arneault,
President
Date: July 8, 1997
<PAGE> 1
================================================================================
SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT
Dated as of July 2, 1996
as amended and restated as of December 10, 1996, and
as further amended and restated as of July 2, 1997
among
MOUNTAINEER PARK, INC., as Borrower,
MTR GAMING GROUP, INC., as Guarantor
and
MADELEINE LLC, as Lender
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS; CERTAIN TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 Accounting and Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II. AMOUNT AND TERMS OF THE TERM LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.01 Term Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.02 Making the Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.03 Term Loan Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Interest Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.05 Optional Prepayment of the Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III. AMOUNT AND TERMS OF THE LINE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.01 Line Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02 Making the Line Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.03 Line Loan Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Interest Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.04 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.05 Prepayment of the Line Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV. FEES, PAYMENTS, DEFAULT INTEREST AND OTHER COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.01 Fees and Other Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Loan Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Audit and Collateral Monitoring Fees . . . . . . . . . . . . . . . . . . . 11
(c) Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.02 Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.03 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.04 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V. CONDITIONS TO EFFECTIVENESS AND LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.01 Conditions to Funding of the Funding Date Loan Amount . . . . . . . . . . . . . . . . 15
(a) Payment of Fees, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Representations and Warranties; No Event of Default . . . . . . . . . . . . 15
(c) Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Delivery of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Proceedings; Receipt of Documents . . . . . . . . . . . . . . . . . . . . . 16
(f) Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(g) Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
i
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TABLE OF CONTENTS (CONTINUED)
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ARTICLE VI. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.01 Representations and Warranties of the Borrower and the Guarantor . . . . . . . . . . . . 17
(a) Organization, Good Standing, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Authorization, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Enforceability of Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(h) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(i) Compliance with Law, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(j) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(k) Taxes, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(l) Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(m) Adverse Agreements, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(n) Holding Company and Investment Company Acts . . . . . . . . . . . . . . . . . . . . 19
(o) Permits, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(p) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(q) Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(r) Operating Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(s) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(t) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(u) Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(v) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(w) Solvency of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(x) Solvency of the Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.02 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII. COVENANTS OF THE BORROWER AND THE GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.01 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Preservation of Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) Keeping of Records and Books of Account . . . . . . . . . . . . . . . . . . . . . . 25
(e) Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(f) Maintenance of Properties, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(g) Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(h) Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(i) Notification of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 26
(j) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(k) Additional Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(l) Environmental Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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TABLE OF CONTENTS (CONTINUED)
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SECTION 7.02 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Liens, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Guaranties, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) Merger, Consolidation, Sale of Assets, Etc . . . . . . . . . . . . . . . . . . . . 29
(e) Change in Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(f) Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(g) Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(h) Salaries and Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(i) Dividends, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.03 Additional Covenants of the Guarantor . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.04 Additional Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.03 No Waiver; Remedies, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.04 Fees, Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.05 Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.06 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.09 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.11 WAIVER OF JURY TRIAL, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.12 Reinstatement; Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.13 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE X. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.01 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.02 Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.03 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.04 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.05 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.06 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.07 Stay of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE XI. REAFFIRMATION; AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 11.01 Reaffirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 11.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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<PAGE> 5
SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT
SECOND AMENDED AND RESTATED TERM LOAN AGREEMENT, dated as of July 2,
1996, as amended and restated as of December 10, 1996 and further amended and
restated as of July 2, 1997, among MOUNTAINEER PARK, INC., a West Virginia
corporation (the "Borrower"), MTR Gaming Group, Inc., f/k/a WINNERS
ENTERTAINMENT, INC., a Delaware corporation (the "Guarantor"), and MADELEINE
LLC, a New York limited liability company (the "Lender").
RECITALS
WHEREAS, the Borrower, the Guarantor and the Lender are parties to an
Amended and Restated Term Loan Agreement, dated as of July 2, 1996, as amended
and restated as of December 10, 1996 (the "Old Agreement"), pursuant to which
the Lender has made (i) a term loan to the Borrower in the original principal
amount of $16,100,000 (the "Term Loan"), and (ii) a three year line of credit
available for loans in the aggregate maximum principal amount not to exceed
$5,376,500 at any time outstanding (the "Line Loans" and, collectively with the
Term Loan, the "Loans");
WHEREAS, the Borrower and the Guarantor have requested that the Lender
agree to amend the Loan Agreement for the purposes of, among other things,
extending the maturity date of the Loans and amending the terms of payment of
certain fees in respect of the Loans; and
WHEREAS, the Lender is willing, on the terms and conditions herein, to
amend and restate the Old Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lender to make and maintain the Loans, the
Lender, the Borrower and the Guarantor hereby agree as follows:
ARTICLE I.
DEFINITIONS; CERTAIN TERMS
SECTION 1.01 Definitions. As used in this Agreement, the following terms
shall have the respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural forms of such terms:
"Affiliate" means, as to any Person, (i) any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person, or
(ii) any trade or business (whether or not incorporated) which is a member of a
group of which such Person is a member and which is under common control within
the meaning of Section 414 of the Internal Revenue Code and the rules and
regulations promulgated thereunder from time to time.
<PAGE> 6
"Amended and Restated Security Agreement" means the
Amended and Restated General Security Agreement, dated as of July 2, 1996, as
amended and Restated on December 10, 1996, made by the Borrower in favor of the
Lender, as amended or otherwise modified from time to time.
"Borrower" has the meaning specified therefor in the
preamble hereto.
"Business Day" means any day not a Saturday, Sunday
or legal holiday on which the Lender is open for business in New York City and
banks in the State of West Virginia are not required or authorized to close.
"Capital Leases" means, with respect to any Person,
leases or agreements to lease by such Person and its Consolidated Subsidiaries
that, in accordance with GAAP, have been or should be capitalized on the books
of such Person.
"Capitalized Lease Obligations" means, with respect
to any Person, any obligation of such Person and its Consolidated Subsidiaries
for the payment of rent for any real or personal property under Capital Leases
and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof, all computed and consolidated in accordance with
generally accepted accounting principles applied on a consistent basis.
"Closing Date" means July 2, 1997.
"Collateral" means all of the property (real and
personal) of the Borrower purported to be subject to the lien or security
interest purported to be created by any mortgage, deed of trust, security
agreement, pledge agreement, assignment or other security document heretofore
or hereafter executed by the Borrower in favor of the Lender as security for
all or any part of the Obligations, including, without limitation, any asset
purchased, in whole or in part, with proceeds of a Line Loan, subject to the
limitation set forth in Section 7.01(k) hereof.
"Commitment" means the Term Commitment and the Line
Commitment.
"Common Stock" means the common stock of the
Guarantor, par value $0.00001 per share.
"Consolidated EBITDA" means for each fiscal quarter
of any Person, all earnings of such Person and its Consolidated Subsidiaries
for such period as determined in accordance with GAAP, before (a) the sum,
without duplication, of (i) gross interest expense for such period minus gross
interest income for such period, in each case determined in accordance with
GAAP, (ii) income tax expense, (iii) depreciation expense, (iv) amortization
expense net of negative goodwill amortization, and (v) extraordinary or unusual
non-cash losses (provided such extraordinary or unusual losses do not at any
time result in a cash outlay by such Person), less (b) extraordinary gains of
such Person and each Consolidated Subsidiary, each
2
<PAGE> 7
determined on a consolidated basis for such Person and its Consolidated
Subsidiaries in accordance with GAAP.
"Consolidated Subsidiary" of a Person at any time
shall mean those Subsidiaries of such Person whose accounts are or should in
accordance with GAAP be consolidated with those of such Person.
"Deed of Trust" means the Deed of Trust, dated July
2, 1996, made by the Borrower in favor of the Lender.
"Default" means any event that, with the giving of
notice or the passage of time or both, would result in an Event of Default.
"EBITDA Average" means, as of any date, the average
Consolidated EBITDA for each of the six calendar months immediately preceding
such date; provided, however, that for the purpose of the calculation of EBITDA
Average, at the discretion of the Borrower, the months of December and January
may be excluded from such calculation and such months shall be deemed not to
have occurred.
"Effective Date" has the meaning specified therefor in
Article IV of the Old Agreement.
"Employee Plan" means an employee benefit plan (other
than a Multiemployer Plan) covered by Title IV of ERISA and maintained for
employees of the Borrower or any of its Affiliates.
"Environmental Law" means the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section
9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section
1801, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section
6901, et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251
et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Occupational
Safety and Health Act (29 U.S.C. Section 6451 et seq.), and the Medical Waste
Tracking Act of 1988, Pub. L. No. 100-582, 102 Stat. 2950 (1988), as such laws
have been amended or supplemented from time to time, and any similar present or
future Federal, state or local statute. ordinance, rule or regulation.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and, unless the context otherwise
requires, the rules and regulations promulgated thereunder from time to time.
"Event of Default" means any of the events set forth
in Section 8.01 hereof.
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"Financial Statements" means the Financial Statements
(as defined in the Old Agreement) and the unaudited financial statements of the
Borrower and the Guarantor for the fiscal quarter ended March 31, 1997.
"First Priority Deed of Trust" means the Credit Line
Deed of Trust, Leasehold Deed of Trust, Security Agreement, Assignment, Fixture
Filing and Financing Statement, dated as of December 10, 1996, by and among the
Borrower, the Lender and the trustees named therein, as amended or otherwise
modified from time to time.
"Funding Date" has the meaning assigned to such term
in Section 5.01 hereof.
"GAAP" means generally accepted accounting principles
as in effect from time to-time in the United States, consistently applied.
"Governmental Authority" means any nation or
government, any federal, state, city, town, municipality, county, local or
other political subdivision thereof or thereto and any department, commission,
board, bureau, instrumentality, agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and having jurisdiction over the Parties to the Loan Documents.
"Guaranty" means the Guaranty made by the Guarantor
in favor of the Lender pursuant to Article X hereof, guaranteeing the
Obligations under the Loan Documents.
"Guarantor" has the meaning specified therefor in
the preamble hereto.
"Hazardous Materials" means, without limit, any
pollutant, waste, flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or other materials
defined in or regulated under any Environmental Law.
"Indebtedness" means (i) all indebtedness or other
obligations of the Borrower for borrowed money or for the deferred purchase
price of property or services, (ii) Capitalized Lease Obligations of the
Borrower, (iii) all obligations of the Borrower under direct or indirect
guaranties, contingent or other obligations of the Borrower to purchase or
otherwise acquire or assure a creditor against loss in respect thereof,
indebtedness or other obligations of any other Person for borrowed money or for
the deferred purchase price of property or services or Capitalized Lease
Obligations of any other Person, (iv) all indebtedness or other obligations of
the Borrower for borrowed money or for the deferred purchase price of property
or services secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any lien, security
interest or other charge or encumbrance upon or in property owned by the
Borrower, (v) all obligations of the Borrower in respect of letters of credit
and bankers' acceptances with the exception of any such letter of credit or
bankers' acceptance issued in favor of, or required by, a Governmental
Authority, (vi) liabilities incurred under Title IV of ERISA with respect to
any plan covered by Title IV of ERISA and maintained
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<PAGE> 9
for employees of the Borrower or any of its Affiliates, and (vii) withdrawal
liability incurred under ERISA by the Borrower or any of its Affiliates to any
Multiemployer Plan.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended from time to time.
"Lender" has the meaning specified therefor in the
preamble hereto.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge against or interest in property to secure payment of a debt
or performance of an obligation or other priority or preferential arrangement
of any kind or nature whatsoever.
"Line Commitment" means the commitment of the Lender
to make the Line Loan to the Borrower pursuant to Article III hereof in the
original aggregate principal amount outstanding not to exceed $5,376,500.
"Line Loan" has the meaning assigned to such term in
Section 3.02 hereof.
"Line Note" means the promissory note of the
Borrower, dated December 10, 1996, in the original principal amount of
$5,376,500, evidencing the Indebtedness resulting from the making of the Line
Loans and delivered to the Lender pursuant to Article III of the Old Agreement,
as such promissory note may be modified or amended from time to time, and any
promissory note or notes issued in exchange or replacement therefor.
"Line Obligations" means all Obligations in respect
of the Line Loan.
"Loan" or "Loans" means the Term Loan and the Line
Loan.
"Loan Documents" means this Agreement, the Notes, the
Deed of Trust, the Amended and Restated Security Agreement, the First Priority
Deed of Trust, the Guaranty, the Stock Certificates, the Warrants, the
Registration Rights Agreement, Amendment No. 1 to Registration Rights
Agreement, the Stock Transfer Agreement and all other instruments, documents
and agreements executed and delivered pursuant hereto or thereto.
"Loan Fee" shall have the meaning assigned to such
term in Section 4.01 hereof.
"Loan Fees" means all of the fees and expenses
payable, whether in cash, in kind, in Common Stock or in Warrants, by the
Borrower and the Guarantor under Section 4.01 of this Agreement.
"Loan Parties" means the Borrower and the Guarantor.
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<PAGE> 10
"Maturity Date" means July 2, 2001, or such earlier
date on which the Loans shall become due and payable, in whole or in part, in
accordance with the terms of this Agreement, whether by acceleration or
otherwise.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001 (a)(3) of ERISA.
"Note" or "Notes" means the Term Note and the Line
Note.
"Obligations" means (i) the obligation of any Loan
Party to pay, as and when due and payable (by scheduled maturity or otherwise),
all amounts from time to time owing by it in respect of any Loan Document,
whether for principal (including, without limitation, an amount equal to the
product of (a) the Prepayment Factor and (b) the aggregate outstanding
principal amount of the Loans), interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating
to the Borrower or the Guarantor, whether or not a claim for post-filing
interest is allowed pursuant to 11 U.S.C. Section 506 or otherwise in such
cases), fees or otherwise and (ii) the obligation of any Loan Party to perform
or observe all of its other obligations from time to time existing under any
Loan Document.
"Operating Leases" means leases or agreements to
lease of the Borrower, other than Capital Leases.
"Operating Lease Obligations" means all obligations
of the Borrower for the payment of rent for any real or personal property under
leases or agreements to lease, other than Capitalized Lease Obligations, all
computed in accordance with GAAP.
"Payment Office" means Madeleine LLC, 450 Park
Avenue, New York, New York 10022, Attn.: Mr. Kevin P. Genda.
"Permitted Investments" means (i) marketable direct
obligations issued or unconditionally guaranteed by the United States
Government, or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one year from the
date of acquisition thereof, (ii) commercial paper, maturing not more than 270
days after the date of issue, issued by a corporation rated P-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Corporation or issued by
the Lender or its Affiliates, (iii) time certificates of deposit, issued by
commercial banking institutions, each of which is a member of the Federal
Reserve System and has a combined capital and surplus of not less than
$100,000,000, (iv) money market accounts maintained with mutual funds having
assets in excess of $2,500,000,000, and (v) tax exempt securities rated A or
better by Moody's Investors Service, Inc. or A+ or better by Standard & Poor's
Corporation; provided, however, that deposits or certificates of deposits with
commercial banking institutions which are a member of the Federal Reserve
System are Permitted Investments so long as any such deposit does not exceed
$250,000.
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"Person" means an individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or governmental authority.
"Plan of Remediation" means the Corrective Action
Plan, dated August 14, 1995, a copy of which is annexed to the Old Agreement as
Exhibit I.
"Post-Default Rate" means a rate per annum equal to
22%.
"Prepayment Factor" means (i) at any time during the
period beginning on the Closing Date to and including the first anniversary
thereof, 1.05; (ii) at any time during the period beginning on the day after
the first anniversary of the Closing Date to and including the second
anniversary of the Closing Date, 1.03; (iii) at any time during the period
beginning on the day after the second anniversary of the Closing Date to and
including the third anniversary of the Closing Date, 1.02; (iv) at any time
during the period beginning on the day after the third anniversary of the
Closing Date to and including the fourth anniversary of the Closing Date, 1.01;
and on the scheduled Maturity Date, 1.00.
"Property" has the meaning assigned to such term in
the Old Agreement.
"Registration Rights Agreement" means the
Registration Rights Agreement, dated July 2, 1996, between the Lender and the
Guarantor, as amended or otherwise modified from time to time.
"Stock Certificate" means any original stock
certificate issued by the Guarantor representing shares of Common Stock.
"Stock Transfer Agreement" means the Stock Transfer
Agreement, dated as of July 2, 1996, between the Lender and the Guarantor.
"Subsidiary" means any corporation of which more than
50% of the outstanding capital stock or similar rights of holders of equity
having (in the absence of contingencies) ordinary voting power to elect
directors (or Persons performing similar functions) of such corporation is, at
the time of determination, owned directly, or indirectly through one or more
intermediaries, by any Person.
"Taxes" means any tax imposed by the State of West
Virginia or any subdivision thereof.
"Term Commitment" means the commitment of the Lender
to make a Loan to the Borrower pursuant to Article II hereof in the principal
amount not to exceed $16,100,000.00.
"Term Loan" means the loans made by the Lender to the
Borrower pursuant to Article II of the Old Agreement and maintained pursuant to
Article II hereof.
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<PAGE> 12
"Term Note" means the promissory note of the
Borrower, dated December 10, 1996, in the original principal amount of
$16,100,000, evidencing the Indebtedness resulting from the making of the Term
Loan and delivered to the Lender pursuant to Article II of the Old Agreement,
as such Term Note may be modified or amended from time to time, and any
promissory note or notes issued in exchange or replacement therefor.
"Term Obligations" has the meaning assigned to such
term in Section 9.13 hereof.
"Termination Date" means the earlier to occur of (a)
the Maturity Date and (b) the date on which all of the Obligations have been
fully performed.
"Transaction Costs" has the meaning specified
therefore in Section 9.04 hereof.
"Unfunded Liability" has the meaning specified
therefore in Subsection 6.01(j) hereof.
"Warrants" means validly issued warrants for the
purchase of shares of Common Stock, in substantially the form attached to the
Old Agreement as Exhibit F.
SECTION 1.02 Accounting and Other Terms. Unless otherwise expressly stated
herein, all accounting determinations hereunder shall be made, all accounting
terms used herein shall be interpreted, and all financial statements required
to be delivered hereunder shall be prepared in accordance with GAAP. All terms
used in this Agreement which are defined in Article 9 of the Uniform Commercial
Code in effect in the State of New York on the date hereof and which are not
otherwise defined herein shall have the same meanings herein as set forth
therein.
ARTICLE II.
AMOUNT AND TERMS OF THE TERM LOAN
SECTION 2.01 Term Commitment. Any principal amount of the Term Loan which
is repaid or prepaid by the Borrower may not be reborrowed.
SECTION 2.02 Making the Term Loan. The Lender has made the Term Loan (as
defined in the Old Agreement) to the Borrowers under the Old Agreement in the
original principal amount of $16,100,000. The Term Loan shall continue to be
outstanding on and after the Closing Date until the Termination Date. The Term
Loan amount may be increased to provide for the funding and payment of the
Lender's fees and costs incurred in connection herewith, together with interest
due thereon, which are unpaid as of the Termination Date and which accrue
thereafter. The books and records of the Lender shall be presumptive evidence
of the
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<PAGE> 13
amount of Obligations under the Term Loan outstanding from time to time,
whether in excess of the principal amount of the Term Note or otherwise, absent
manifest error.
SECTION 2.03 Term Loan Interest.
(a) Loan. The Term Loan shall bear interest on
the principal amount thereof from time to time outstanding from the Effective
Date until such principal amount becomes due at an interest rate per annum of
thirteen percent (13%).
(b) Interest Payment. Interest on the Term Loan
shall be payable monthly, in arrears, on the last day of each month, commencing
December 31, 1996, and on the Termination Date (whether by demand, acceleration
or otherwise). Interest at the Post-Default Rate shall be payable on demand.
SECTION 2.04 Repayment. The Term Loan shall be payable as to principal in
full on the Maturity Date, together with all such other amounts as may be
necessary to repay in full all unpaid Term Obligations to the Lender. In the
event that the Term Loan is prepaid due to acceleration of the Term Loan after
the occurrence of an Event of Default, the amount of the outstanding principal
of the Term Loan shall be determined by multiplying the outstanding principal
amount under the Term Note by the Prepayment Factor.
SECTION 2.05 Optional Prepayment of the Term Loan. The Borrower may, on
the same Business Day's telephone notice no later than 11:00 A.M. (New York
City time) (promptly confirmed in writing) prepay the outstanding amount of the
Term Loan in whole, but not in part, by payment of the sum of (i) an amount
equal to the product of (a) the Prepayment Factor and (b) the outstanding
principal amount of the Term Loan, plus (ii) accrued interest to the date of
such prepayment, plus (iii) the balance of the Loan Fees not previously paid to
the Lender, plus (iv) all other Term Obligations; provided, however, that the
Borrower may not prepay the Term Loan unless, simultaneously therewith, the
Borrower also prepays the Line Loan as set forth in Section 3.05 hereof.
ARTICLE III.
AMOUNT AND TERMS OF THE LINE LOANS
SECTION 3.01 Line Commitment. Any principal amount of the Line Loan which
is repaid or prepaid by the Borrower subsequent to the Funding Date may not be
reborrowed.
SECTION 3.02 Making the Line Loan. On the Funding Date and after receipt
by the Lender of a written request for a loan in substantially the form of
Exhibit A attached hereto, the Lender shall make available to the Borrower an
amount (the "Funding Date Loan Amount") equal to the positive difference
between the outstanding principal amount of the Line Loans (as defined in the
Old Agreement) on the Funding Date and the Line Commitment, and the
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<PAGE> 14
Borrower shall, upon satisfaction of all of the conditions relating thereto
contained herein and in the other Loan Documents, borrow the Funding Date Loan
Amount on the terms and conditions set forth hereunder. The sum of (a) the
outstanding principal amount of the Line Loans as of the opening of business on
the Funding Date and (b) the Funding Date Loan Amount shall be evidenced by the
Line Note and shall be the "Line Loan". The Lender may act without liability
upon the basis of written notice believed by the Lender in good faith to be
from the Borrower (or from any officer thereof designated in writing to the
Lender). On the Funding Date and upon fulfillment of the applicable conditions
set forth in Article V hereof, the Lender will make available the Funding Date
Loan Amount to the Borrower by delivering the proceeds thereof, in immediately
available funds (either in the form of a certified bank check or wire transfer)
less the fees and expenses then due and payable under Sections 4.01(a) and 9.04
hereof. The outstanding amount of the Line Loan may be increased to provide
for the funding and payment of the Lender's fees and costs incurred in
connection with the Line Loan, together with interest due thereon, which are
unpaid as of the Termination Date and which accrue thereafter. The records of
the Lender shall be presumptive evidence of the amount of Obligations under the
Line Loan outstanding from time to time whether in excess of the initial
principal amount of the Line Note or otherwise, absent manifest error.
SECTION 3.03 Line Loan Interest.
(a) Loans. The Line Loan shall bear interest on
the principal amount thereof from time to time outstanding from the Closing
Date until such principal amount becomes due at an interest rate per annum of
thirteen percent (13%).
(b) Interest Payment. Interest on the
outstanding principal amount of the Line Loan shall be payable monthly, in
arrears, on the last day of each month, commencing July 31, 1997, and on the
Termination Date (whether by demand, acceleration or otherwise). Interest at
the Post-Default Rate shall be payable on demand.
SECTION 3.04 Repayment. The Line Loan shall be payable as to principal in
full on the Maturity Date, together with all such other amounts as may be
necessary to repay in full all unpaid Line Obligations to the Lender. In the
event that the Line Loan is prepaid due to acceleration of the Line Loan after
the occurrence of an Event of Default, the amount of the outstanding principal
of the Line Loan shall be determined by multiplying the outstanding principal
amount under the Line Note by the Prepayment Factor.
SECTION 3.05 Prepayment of the Line Loan. The Borrower may, on the same
Business Day's telephone notice no later than 11:00 A.M. (New York City time)
(promptly confirmed in writing) prepay the outstanding amount of the Line Loan
in whole, but not in part, by payment of the sum of (i) an amount equal to the
product of (a) the Prepayment Factor and (b) the outstanding amount of the Line
Loan, plus (ii) accrued interest to the date of such prepayment, plus (iii) the
balance of the Loan Fees not previously paid to the Lender; provided, however,
that the Borrower may not prepay the Line Loan unless, simultaneously
therewith, the Borrower also prepays the Term Loan as set forth in Section 2.05
hereof.
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ARTICLE IV.
FEES, PAYMENTS, DEFAULT INTEREST AND OTHER COMPENSATION
SECTION 4.01 Fees and Other Consideration. The fees and other
consideration provided for herein are in addition to the fees and other
consideration due and payable on the Final Term Funding Date pursuant to the
Old Agreement.
(a) Loan Fees. On July 2, 1997, the Borrower
shall pay to the Lender, in immediately available funds, a non-refundable fee
(the "Loan Fee") of $1,818,120; provided, however, that the Borrower may elect
to pay such fee in 12 monthly installments, the first installment to be in the
amount of $243,176.67, and to be due and payable on the Closing Date, and the
remaining eleven installments to be due and payable in equal monthly
installments in the amount of $143,176.67 each, in immediately available funds
on the last day of each calendar month beginning on August 31, 1997, and ending
on June 30, 1998; provided, however, that each of the Borrower and the
Guarantor hereby acknowledges and confirms that the Loan Fee has been
unconditionally earned by the Lender as of the Closing Date. The Borrower
hereby instructs the Lender to withhold such portion of the Loan Fee due on the
Closing Date, as elected by the Borrower, from the proceeds of the Funding Date
Loan Amount, and the amount so withheld shall constitute a part of the Line
Loan for all purposes hereunder.
(b) Audit and Collateral Monitoring Fees. The
Borrower shall pay to the Lender on each anniversary of the Effective Date, the
costs and expenses incurred by the Lender in connection with the periodic
collateral appraisals and audit reviews performed by or on behalf of the Lender
in such year; provided, however, that so long as no Event of Default has
occurred and is continuing, the Borrower's obligation under this Subsection
3.01(c) shall be limited to $25,000 for each 365 (or 366, as applicable) day
period following the Effective Date.
(c) Common Stock. On the Final Term Funding Date
(as defined in the Old Agreement), the Guarantor shall deliver to the Lender
Stock Certificates, in such denominations as the Lender may request, validly
issued to the Lender or its designee, representing 550,000 shares of Common
Stock; provided, however, that the Borrower and the Guarantor may elect to
issue and deliver such shares in 13 installments, the first such installment to
be delivered on the Final Term Funding Date in the amount of 42,316 shares of
Common Stock, and the remaining 12 installments of 42,307 shares of Common
Stock to be delivered on the first day of each calendar month beginning on
January 1, 1997, and ending on December 1, 1997;
provided, however, that such shares shall be issued to the Lender or its
designee only upon the payment by the Lender to the Guarantor of an amount
equal to the product of (i) the par value of the Common Stock and (ii) the
number of shares of Common Stock to be issued; provided, further, that the
number of shares of Common Stock of the Guarantor to be received by the Lender
pursuant to Section 4.01(c) after the Final Term Funding Date shall, subject to
the provisions of Section 7 of the Warrants which relate to limitations on the
Lender's right to anti-
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<PAGE> 16
dilution protection, be adjusted to the extent necessary to insure that the
Lender will receive a number of shares of Common Stock equal in percentage to
the percentage of the Common Stock (on a fully-diluted basis) that such shares
represent of the Common Stock of the Guarantor issued and outstanding (on a
fully-diluted basis) on the Final Term Funding Date.
Notwithstanding the foregoing, if (i) an Event of
Default has occurred, (ii) the Obligations relating to the Term Loan have been
repaid in full, (iii) any single Person, group of Affiliated Persons, or
Affiliate thereof controls, or acquires control of, the voting rights of 35% or
more of the Common Stock, or (iv) the Guarantor merges or becomes consolidated
with any other Person in a transaction in which the Guarantor is not the
surviving entity, or sells all or substantially all of its assets, then the
Guarantor shall deliver to the Lender all of the shares of Common Stock due to
the Lender pursuant to paragraph 4.01(d)(ii) above upon demand by the Lender.
If the issuance of shares to the Lender would result
in a put obligation (the "Put") pursuant to Section 4.01 of the Stock Transfer
Agreement, then the maximum number of shares that may be issued without
resulting in a Put shall be issued to the Lender as hereinabove set forth, and
the Borrower shall issue to the Lender warrants for the purchase of the
remaining shares due to be issued to the Lender hereunder with an Exercise
Price (as defined in the Warrant) equal to the par value of the Common Stock.
Each Stock Certificate issued hereunder shall bear the following legend:
"The Shares represented by this certificate have not
been registered or qualified under the Securities Act
of 1933, as amended, or the "blue sky" laws of any
state, and may be offered or sold only if registered
and qualified pursuant to the relevant provisions of
federal and state securities laws, or if an exemption
from such registration or qualification is
applicable, upon an opinion of counsel to the issuer
that such transfer will not violate any federal or
state securities laws applicable thereto."
The parties hereto agree that, for income tax
purposes, the purchase price to be attributed to the shares of Common Stock
issued to the Lender hereunder on the date hereof is $_______________.
(d) Warrants. On the Final Term Funding Date,
the Guarantor shall issue and deliver to the Lender or its designee validly
issued Warrants, for the purchase of 1,632,140 shares of Common Stock, with an
Expiration Date (as defined in the Warrant) of five years from the date of
issuance of such Warrant, and an Exercise Price (as defined in the Warrant)
equal to $1.06; provided, however, that the Guarantor and the Borrower may
elect to issue and deliver such Warrants in 13 equal installments (provided
that the first installment may be increased such that the remaining twelve
installments shall be for a non-fractional number of
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<PAGE> 17
Warrants), the first such installment to be delivered on the Final Term Funding
Date and the remaining 12 installments to be delivered on the first day of each
calendar month beginning on January 1, 1997, and ending on December 1, 1997.
Notwithstanding the foregoing, if (i) an Event of
Default has occurred, (ii) the Obligations relating to the Term Loan have been
repaid in full, (iii) any single Person, group of affiliated Persons or
Affiliate thereof controls, or acquires control of, the voting rights of 35% or
more of the Common Stock, or (iv) the Guarantor merges, becomes consolidated
with any other Person in a transaction in which the Guarantor is not the
surviving entity, or sells all or substantially all of its assets, then the
Guarantor shall deliver to the Lender all of the Warrants due to the Lender
pursuant to paragraph 4.01(d) above upon demand by the Lender.
Notwithstanding the foregoing, to the extent that
there shall occur at any time, prior to any such issuance of Warrants, any
event of a type that would require adjustment of the number of shares issuable
upon the exercise of the Warrants or the Exercise Price (as defined in the
Warrant) of such shares to the extent that such Warrants already had been
issued, the number of shares to be issued under such Warrant, and the Exercise
Price thereof, shall prior to issuance, be adjusted in the manner provided in
Section 7 of the Warrant. Any such adjusted number of shares issuable pursuant
to a Warrant and any such adjusted Exercise Price shall be reflected in the
Warrant at the time of the issuance thereof.
The parties hereto agree that, for income tax
purposes, the purchase price to be attributed to the Warrants issued to the
Lender hereunder on the date hereof is $_______________.
SECTION 4.02 Payments and Computations. The Borrower will make each
payment under the Loan Documents to which it is a party not later than 2:30
P.M. (New York City time) on the day when due, in lawful money of the United
States of America and in immediately available funds, to the Lender at the
Payment Office, or at such other place or to such account as the Lender may
designate by notice to the Borrower. All payments shall be made by the
Borrower without defense, set-off or counterclaim to the Lender. Subject to
Section 8.01 below, all interest, fees, costs and expenses for which the
Borrower is obligated under any Loan Document shall, if not timely paid by the
Borrower, be added to the principal amount of the Line Loan or the Term Loan,
and the Borrower hereby authorizes the Lender to, and the Lender may, from time
to time, increase the principal amount of the Line Loan and/or the Term Loan by
any such amounts due under any Loan Document to which the Borrower is a party.
The Borrower confirms that any addition to principal which the Lender so makes
to a Loan as herein provided will be made as an accommodation to the Borrower
and solely at the Lender's discretion. Whenever any payment to be made under
any such Loan Document shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in the computation of interest
and fees. All computations of interest under this Agreement and any other Loan
Document and all fees shall be made by the Lender on the basis of a year of 360
days for the actual number of days occurring in the period for which such
interest is payable; provided, however, that with
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<PAGE> 18
respect to any date on which the Borrower makes a repayment or prepayment of
principal, interest in respect of such principal repayment or prepayment amount
shall be calculated on the basis of a year of 360 days for the actual number of
days occurring in the period for which such interest is payable but excluding
the day on which such repayment or prepayment of principal is made. In no
event shall prior recourse to any Collateral be a prerequisite to the Lender's
right to demand payment of any Obligation. The Lender's records kept in the
ordinary course of its business shall be presumed to be correct and shall
constitute prima facie evidence of the amount owing or paid with respect to any
Obligation, absent manifest error.
SECTION 4.03 Taxes. (a) If the Borrower shall be required by any
applicable law, rule or regulation to deduct or withhold any Taxes from or in
respect of any amount payable hereunder, then (i) the amount so payable shall
be increased to the extent necessary so that after making all required
deductions and withholdings (including Taxes on amounts payable to the Lender
pursuant to this sentence) the Lender shall receive an amount equal to the sum
it would have received had no such deductions or withholdings been made, (ii)
the Borrower shall make such deductions or withholdings and (iii) the Borrower
shall pay to the relevant taxation authority the full amount required to be so
deducted or withheld. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send the Lender an official
receipt or other documentation satisfactory to the Lender evidencing such
payment to such authority. If, due to the imposition of any Taxes, the
Lender's tax liability with respect to any amounts payable hereunder to any
other taxing authority is reduced, the amount of such reduction shall be paid
by the Lender to the Borrower upon Borrower's demand therefor; provided,
however, that in no event shall the Lender be required to pay to the Borrower
an amount in excess of the amount withheld by the Borrower in respect of Taxes
due from or in respect of any amount payable hereunder.
(b) If the Lender shall be required to pay any Taxes
in respect of any amount payable by the Borrower hereunder, then the
Borrower shall, upon demand by the Lender, pay to the Lender an amount equal to
the difference between (i) the Taxes required to be paid by the Lender, and
(ii) the amount, if any, of the reduction of the Lender's tax liability to any
other taxing authority resulting from the payment of such Taxes; provided,
however, that in no event shall the Lender be required to pay to the Borrower
an amount in excess of the amount paid by the Borrower to the Lender pursuant
to this paragraph 4.03(b).
SECTION 4.04 Default Interest. Any Obligation hereunder, including the
principal of the Loans, fees and (to the extent permitted by law) interest
which is not paid when due (after any applicable grace period therefor set
forth in Section 8 hereof), whether upon demand, by acceleration or otherwise,
and all amounts payable after the occurrence and during the continuance of an
Event of Default, shall bear interest from the day when due until such amount
is paid in full at a rate per annum equal to the Post-Default Rate. In the
event that any amount of principal of, or interest on, any Loan is not paid
within 10 days of the due date thereof (whether by demand, acceleration or
otherwise) when due, the Borrower shall, upon demand,
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pay an additional fee equal to 5% of the amount of such principal and/or
interest not timely paid.
ARTICLE V.
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 5.01 Conditions to Funding of the Funding Date Loan Amount. The
Lender shall have no obligation to fund the Funding Date Loan Amount until the
date (the "Funding Date") on which each of the following conditions precedent
shall have been satisfied:
(a) Payment of Fees, Etc. The Borrower shall
have paid on or before the Funding Date all fees, costs, expenses and Taxes
then payable by the Borrower pursuant to Sections 4.01, 4.03 and 9.04 hereof,
and the Guarantor shall have satisfied all of its Obligations pursuant to
Section 4.01(c) and (d) hereof.
(b) Representations and Warranties; No Event of
Default. The representations and warranties contained in Section 6.01 of this
Agreement and in each other Loan Document and certificate or other writing
delivered to the Lender pursuant hereto on or prior to the Funding Date,
including, without limitation, each document, certificate or agreement
delivered pursuant to, or in connection with, the Old Agreement, shall be
correct on and as of the Funding Date as though made on and as of such date;
and no Event of Default, or event which with the giving of notice or the lapse
of time or both would constitute an Event of Default, shall have occurred and
be continuing on the Funding Date or would result from the increase in the Line
Loan by the Funding Date Loan Amount.
(c) Legality. The making of the Loans shall not
contravene any law, rule or regulation applicable to the Lender, the Borrower
or the Guarantor.
(d) Delivery of Documents. The Lender shall have
received on or before the Funding Date the following, each in form and
substance satisfactory to the Lender and, unless indicated otherwise, dated the
Funding Date (except for item 5.01(d)(vi), which may be dated either the
Closing Date or May 31, 1997):
(i) a copy of the resolutions adopted by
the Board of Directors of each Loan Party, certified as of the Funding Date by
an authorized officer thereof, authorizing (A) the borrowings hereunder and the
transactions contemplated by the Loan Documents to which such entity is or will
be a party, and (B) the execution, delivery and performance by each Loan Party
of each Loan Document to which it is or will be a party and the execution and
delivery of the other documents to be delivered by the Loan Parties in
connection herewith;
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(ii) a certificate of an authorized
officer of each Loan Party certifying the names and true signatures of the
officers of such Loan Party authorized to sign each Loan Document to which such
entity is or will be a party and the other documents to be executed and
delivered by the Loan Parties in connection herewith, together with evidence of
the incumbency of such authorized officers;
(iii) a copy of the charter of each Loan
Party, certified as of the Funding Date by an authorized officer of each Loan
Party;
(iv) a copy of the by-laws of each Loan
Party, certified as of the Funding Date by an authorized officer of such Loan
Party;
(v) an opinion of Freer, McGarry,
Bodansky & Rubin, P.C., counsel to the Borrower and the Guarantor, as to such
matters as the Lender may reasonably request;
(vi) a copy of the Financial Statements,
together with a certificate of the chief executive officer or chief financial
officer of the Borrower, setting forth all existing guarantees and other
contingent liabilities of the Borrower;
(vii) a certificate, dated as of a date
not more than ten (10) Business Days prior to the Final Term Funding Date, of
the appropriate official of the jurisdiction of incorporation and each
jurisdiction of foreign qualification, both inside and outside the United
States, of each Loan Party, certifying as to the subsistence in good standing
of, and the payment of taxes by, each Loan Party in such jurisdictions and
listing all charter documents of each Loan Party on file with such official(s),
together with confirmation by telephone or telegram (where available) on the
Final Term Funding Date from such official(s) as to such matters; and
(viii) such other agreements, instruments,
approvals, opinions and other documents as the Lender may reasonably request.
(e) Proceedings; Receipt of Documents. All
proceedings in connection with the transactions contemplated by this Agreement,
and all documents incidental thereto, shall be satisfactory to the Lender and
its counsel, and the Lender and such counsel shall have received all such
information and such counterpart originals or certified or other copies of such
documents as the Lender or such counsel may reasonably request.
(f) Material Adverse Change. The Lender shall
have determined, in its sole and absolute discretion, that no material adverse
change shall have occurred in the business, operations, assets, financial
condition or prospects of the Borrower or the Guarantor after March 31, 1997.
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(g) Due Diligence. The Lender shall have
completed its due diligence with respect to the Loan Parties and the results
thereof shall be acceptable to the Lender, in its sole and absolute discretion.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 Representations and Warranties of the Borrower and the
Guarantor. The Borrower and the Guarantor, as appropriate, each represent and
warrant as follows:
(a) Organization, Good Standing, Etc. Each Loan
Party (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has all
requisite power and authority to conduct its business as now conducted and as
presently contemplated to make the borrowings hereunder and to consummate the
transactions contemplated hereby and by each of the Loan Documents to which it
is a party, and (iii) is duly qualified to do business and is in good standing
in each jurisdiction and territory, inside and outside of the United States, in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary. The Borrower
is a wholly-owned subsidiary of the Guarantor.
(b) Authorization, Etc. The execution, delivery
and performance by each Loan Party of each Loan Document to which it is a party
(i) have been duly authorized by all necessary corporate action, (ii) do not
and will not contravene the charter or by-laws, law or any contractual
restriction binding on or otherwise affecting it or any of its properties,
(iii) do not and will not result in or require the creation of any lien,
security interest or other charge or encumbrance (other than pursuant to any
such Loan Document) upon or with respect to any of its properties, and (iv) do
not and will not result in any suspension, revocation, impairment, forfeiture
or nonrenewal of any permit, license, authorization or approval applicable to
its operations or any of its properties.
(c) Governmental Approvals. No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority or other regulatory body is required in connection with the due
execution, delivery and performance by the Borrower or the Guarantors of any
Loan Document to which such Persons are or will be parties.
(d) Enforceability of Loan Documents. This
Agreement is, and each other Loan Document to which the Borrower or the
Guarantor is or will be a party, when delivered hereunder, will be a legal,
valid and binding obligation of such Person, enforceable against such Person in
accordance with its terms.
(e) Certificates. Each Stock Certificate issued
and delivered pursuant to subsection 3.01(d) or pursuant to the terms of any
Warrant shall, upon issuance and delivery
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pursuant to the terms hereof or the terms of such Warrant, as may be the case,
represent validly issued, fully paid and non-assessable shares of Common Stock.
(f) Subsidiaries. There are no Subsidiaries of
the Borrower other than Mountaineer Magic, Inc. There are no subsidiaries of
the Guarantor other than (i) the Borrower, (ii) Speakeasy Gaming of Nevada,
Inc., a Nevada corporation, (iii) Excal Energy Corporation, a Michigan
Corporation, and (iv) Golden Palace Casinos, Inc., a Minnesota Corporation.
The (Guarantor owns 100% of the common stock of each of the foregoing
subsidiaries.
(g) Litigation. Except as set forth on Schedule
II to the Old Agreement and in the Financial Statements, there is no pending or
threatened action, suit or proceeding affecting the Borrower or the Guarantors
before any court or other Governmental Authority or any arbitrator. There is
no pending or threatened action, suit or proceeding affecting the Borrower or
any of the Guarantors before any court or other Governmental Authority or any
arbitrator which may materially adversely affect the operations or condition,
financial or otherwise, of such Person or the ability of such Person to perform
its obligations under any Loan Document to which such Person is or will be a
party.
(h) Financial Condition. The Financial
Statements, copies of which have been delivered to the Lender, fairly present
the financial condition of the Loan Parties as of the respective dates thereof
and the results of operations of the Loan Parties for the fiscal periods ended
on such respective dates, all in accordance with GAAP. Since March 31, 1997,
there has been no material adverse change in such condition or operations.
There has been no change in the number of shares of Common Stock outstanding
since May 16, 1996, as reported on the Form 10Q of the Guarantor for the period
ending March 31, 1996, other than as set forth on Schedule X to the Old
Agreement.
(i) Compliance with Law, Etc. Neither the
Borrower nor the Guarantor is in violation of its charter or by-laws, any law
or any material term of any agreement or instrument binding on or otherwise
affecting it or any of its properties.
(j) ERISA. Neither Loan Party maintains, or is
obligated to maintain or contribute to, any Employee Plan or Multiemployer
Plan. As of the Final Term Funding Date, neither Loan Party has any employee
benefit plan with respect to which the present value of all vested,
nonforfeitable benefits under such plan exceeds the fair market value of the
assets of such plan allocable to such benefits (any such amount constituting an
"Unfunded Liability").
(k) Taxes, Etc. After giving effect to any
lawful extension, all Federal,state and local tax returns and other reports
required by applicable law to be filed by the Borrower or the Guarantors have
been filed, and all taxes, assessments and other governmental charges imposed
upon the Borrower or the Guarantors or any property of the Borrower or the
Guarantors which have become due and payable on or prior to the date hereof
have been paid, except to the extent contested in good faith by proper
proceedings which stay
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the imposition of any penalty, fine or lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof.
(l) Regulation U. Neither the Borrower nor the
Guarantor is or will not be engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of the Loan will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock.
(m) Adverse Agreements, Etc. Neither the
Borrower nor the Guarantor is a party to any agreement or instrument, or
subject to any charter or other corporate restriction or any judgment, order,
regulation, ruling or other requirement of a court or other Governmental
Authority or regulatory body, which materially adversely affects, or, to the
best knowledge of the Borrower or the Guarantor, in the future is reasonably
likely to materially adversely affect, the condition or operations, financial
or otherwise, of the Borrower or the Guarantor or the ability of the Borrower
or the Guarantor to perform its obligations under any Loan Document to which
the Borrower is or will be a party.
(n) Holding Company and Investment Company Acts.
Neither the Borrower nor the Guarantor is (i) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended, or (ii) an "investment company" or an "affiliated person"
or "promoter" of, or "principal underwriter" of or for, an "investment
company", as such terms are defined in the Investment Company Act of 1940, as
amended.
(o) Permits, Etc. The Borrower and the Guarantor
have all permits, licenses, authorizations and approvals required for it to
lawfully own and operate its respective businesses. Schedule III to the Old
Agreement sets forth all licenses, permits, authorizations and approvals
required by any Governmental Authority for the lawful conduct of the Borrower's
business, and each of the foregoing has been obtained by the Borrower and is in
full force and effect as of the Final Term Funding Date.
(p) Title to Properties. The Borrower has good
and marketable title to all of its properties and assets, free and clear of all
liens, security interests and other charges and encumbrances and other types of
preferential arrangements, except such as are permitted by Section 7.02(a)
hereof. All of Borrower's properties are titled in Borrower's legal name.
Borrower has not used, or filed a financing statement (or other evidence of a
lien, charge or Security Interest) under, any other name in any United States
jurisdiction or territory outside the United States for at least the last five
(5) years.
(q) Full Disclosure. No Loan Document or
schedule or exhibit thereto and no certificate, report, statement or other
document or information furnished to the Lender in connection herewith or with
the consummation of the transactions contemplated hereby,
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contains any misstatement of material fact or omits to state a material fact or
any fact necessary to make the statements contained herein or therein not
misleading. There is no contingent liability or other material fact of which
the Borrower or the Guarantor is aware after reasonable inquiry that may
adversely affect the condition or operations, financial or otherwise, or the
business or prospects of the Borrower or the Guarantor which has not been set
forth in a footnote included in the Financial Statements or a Schedule thereto
or to the Old Agreement.
(r) Operating Lease Obligations. The Borrower
does not have any obligation as lessee for the payment of rent for any real or
personal property other than as set forth in Schedule IV to the Old Agreement.
(s) Indebtedness. The Borrower has no
Indebtedness other than Indebtedness set forth on Schedule V to the Old
Agreement.
(t) Environmental Matters. Except as set forth
in the Plan of Remediation, (i) the Borrower is in compliance with all
applicable Environmental Laws, and (ii) none of the operations of the Borrower
is the subject of any Federal, state or local investigation to determine
whether any remedial action is needed to address the presence, disposal,
release or threatened release of any Hazardous Material into the environment
which may have a material adverse effect on the business, operations, property,
assets or financial or other condition of the Borrower, and the Borrower does
not have any contingent liability in connection with any release of any
Hazardous Material into the environment which may have a material adverse
effect on its business, operations, property, assets or financial or other
condition.
(u) Schedules. All of the information which was
scheduled to the Old Agreement is correct and accurate in all material
respects, and all of the information that would be required to accurately
revise each such schedule to bring it current as of the Closing Date that
relates to any event subsequent to the Final Term Funding Date (as defined in
the Old Agreement) (a "Subsequent Event") has been disclosed to the Lender by
the Borrower or the Guarantor in writing delivered to the Lender. No
Subsequent Event could reasonably be expected to have a material adverse effect
on any of (a) the business, assets, properties or condition of a Loan Party,
(b) the ability of either Loan Party to perform any of the obligations of such
Loan Party under any Loan Document, (c) the legality, validity or
enforceability of this Agreement or any of the other Loan Documents, (d) the
rights and remedies of the Lender under this Agreement or any of the other Loan
Documents, or (e) the creation, perfection or priority of the Lender's lien on,
or security interest in, any of the Collateral, securing the payment of any of
the Obligations. References herein to any schedule to the Old Agreement shall
be deemed to mean such schedule as if brought current to the Closing Date as
set forth in this paragraph (u).
(v) Insurance. Each of Borrower and the
Guarantor keeps its insurable properties adequately insured and maintains (i)
insurance to such extent and against such risks, including fire, as is
customary with companies in the same or similar businesses, (ii) workmen's
compensation insurance in the amount required by applicable law, (iii) personal
liability
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insurance and public liability insurance, in the amount customary with
companies in the same or similar business against claims for personal injury or
death or properties owned, occupied or controlled by it, and (iv) such other
insurance as may be required by law or as may be reasonably required in writing
by the Lender.
(w) Solvency of the Borrower. As of the date
first written above, and after giving effect to the Loans and to liens created
by the Borrower in connection therewith, (i) the sum of the assets, at a fair
valuation, of the Borrower will exceed its debts ("debt" means any liability on
a claim, and "claim" means (A) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (B)
right to an equitable remedy for breach of performance if such breach gives
rise to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured); (ii) the Borrower has not incurred and does not intend to incur,
and does not believe that it will incur, debts beyond its ability to pay such
debts as such debts mature; and (iii) the Borrower has, and will have,
sufficient capital with which to conduct its business.
(x) Solvency of the Guarantor. As of the date
first written above, and after giving effect to the Loans and to liens created
by the Borrower in connection therewith, (i) the sum of the consolidated
assets, at a fair valuation, of the Guarantor will exceed its consolidated
debts ("debt" means any liability on a claim, and "claim" means (A) right to
payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured or (B) right to an equitable remedy for
breach of performance if such breach gives rise to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured); (ii) the
Guarantor has not incurred and does not intend to incur, and does not believe
that it will incur, debts beyond its ability to pay such debts as such debts
mature; and (iii) the Guarantor will have sufficient capital with which to
conduct its business.
SECTION 6.02 Representations, Warranties and Covenants of Lender. Lender
hereby represents and warrants to and covenants with Borrower and the Guarantor
that:
All shares of Common Stock acquired by Lender in
accordance with this Agreement are being acquired by lender for its own account
for investment and without a view to distribute any of the shares of Common
Stock in any transaction which would be in violation of the Securities Act of
1933, as amended.
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ARTICLE VII.
COVENANTS OF THE BORROWER AND THE GUARANTOR
SECTION 7.01 Affirmative Covenants. So long as any principal of or
interest on any Loan shall remain unpaid or the Lender shall have any
commitment to make a Loan hereunder, the Borrower and, where appropriate, the
Guarantor will, unless the Lender shall otherwise consent in writing:
(a) Reporting Requirements. Furnish to the
Lender:
(i) as soon as available and in any
event within 30 days after the end of each month, an interim (A) consolidated
and consolidating balance sheets of the Borrower as at the end of such month
and for the period commencing at the end of the immediately preceding fiscal
year and ending with the end of such month, (B) consolidated and consolidating
statement of income of the Borrower as at the end of such month and for the
period commencing at the end of the immediately preceding fiscal year and
ending with the end of such month, and (C) consolidated and consolidating
statement of cash flow of the Borrower for such month and for the period
commencing at the end of the immediately preceding fiscal year and ending with
the end of such month, setting forth in comparative form the corresponding
figures for the corresponding date or period of the immediately preceding
fiscal year and setting forth the budget for such period all in reasonable
detail and prepared in accordance with generally accepted accounting principles
consistently applied, each duly certified by the chief financial officer of the
Borrower as (1) fairly presenting the financial condition of the Borrower at
the end of such month, and the results of the operations of the Borrower for
such month (subject to normal year-end audit adjustments), and (2) having been
prepared in accordance with generally accepted accounting principles
consistently applied;
(ii) as soon as available and in any
event within 45 days after the end of each fiscal quarter of the Borrower, an
interim (A) consolidated and consolidating balance sheet of the Borrower as at
the end of such quarter and for the period commencing at the end of the
immediately preceding fiscal year and ending with the end of such quarter, (B)
consolidated and consolidating statement of income of the Borrower as at the
end of such quarter and for the period commencing at the end of the immediately
preceding fiscal year and ending with the end of such quarter, and (C)
consolidated and consolidating statement of cash flow of the Borrower for such
quarter and for the period commencing at the end of the immediately preceding
fiscal year and ending with the end of such quarter setting forth in
comparative form the corresponding figures for the corresponding date or period
of the immediately preceding fiscal year and setting forth the budget for such
period, all in reasonable detail and prepared in accordance with generally
accepted accounting principles consistently applied, each duly certified by the
chief financial officer of the Borrower as (1) fairly presenting the financial
condition of the Borrower at the end of such quarter, and the results of the
operations of the Borrower for such quarter adjustments), and (2) having been
prepared in accordance with generally accepted accounting principles
consistently applied;
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(iii) as soon as available and in any
event within 90 days after the end of each fiscal year of the Borrower or such
time that the information required to be delivered pursuant to subparagraph
6.01(a)(v) is delivered to the Securities and Exchange Commission without
violation of any rule, regulation or order thereof, a (A) consolidated and
consolidating balance sheet of the Borrower as at the end of such fiscal year,
(B) consolidated and consolidating statement of income of the Borrower as at
the end of such fiscal year, and (C) consolidated and consolidating statement
of cash flow of the Borrower for such fiscal year setting forth in comparative
form the corresponding figures for the immediately preceding fiscal year and
setting forth the budget for such fiscal year, all in reasonable detail and
prepared in accordance with generally accepted accounting principles
consistently applied and, in the case of balance sheets and statement of
income, accompanied by a report and an unqualified opinion, prepared in
accordance with generally accepted auditing standards, of an independent
certified public accountant of recognized standing selected by the Borrower and
satisfactory to the Lender, together with any management letter prepared by
such accountant and a written statement of such accountant (1) to the effect
that in making the examination necessary for its certification of such
financial statements, it has not obtained any knowledge of the existence of an
Event of Default, or an event which, with the giving of notice or the lapse of
time or both, would constitute an Event of Default, or (2) if such accountant
shall have obtained any knowledge of the existence of an Event of Default, or
an event which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default describing the nature thereof;
(iv) within 30 days after the end of any
fiscal quarter of the Guarantor or such time that the information required to
be delivered pursuant to this subparagraph 6.01(a)(iv) is delivered to the
Securities and Exchange Commission without violation of any rule, regulation or
order thereof, balance sheets of the Guarantor and its subsidiaries as of the
end of such fiscal quarter and statements of income and retained earnings of
the Guarantor and its subsidiaries for the period commencing at the beginning
of the fiscal year in which such fiscal quarter falls through the end of such
fiscal quarter, certified as accurate and correct by the chief financial
officer of the Guarantor;
(v) within 120 days after the end of
each fiscal year of the Guarantor or such time that the information required to
be delivered pursuant to this subparagraph 6.01(a)(v) is delivered to the
Securities and Exchange Commission without violation of any rule, regulation or
order thereof, a copy of the annual report for such fiscal year for the
Guarantor and its subsidiaries containing financial statements for such year
certified in a manner acceptable to Lender by independent public accountants of
recognized standing;
(vi) promptly after the sending or filing
thereof, copies of all reports that the Guarantor sends to any of its security
holders, reports and copies of all reports and registration statements that the
Guarantor or any subsidiary files with the Securities and Exchange Commission
or any national securities exchange;
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(vii) promptly upon delivery thereof, all
reports and filings made by the Borrower and/or the Guarantor to the West
Virginia Racing Commission or the West Virginia Lottery Commission;
(viii) simultaneously with the delivery of
the financial statements required by clauses (i), (ii), (iii), (iv) and (v) of
this Section 7.01(a), (A) a certificate of the chief financial officer of the
appropriate Loan Party, stating that such officer has reviewed the provisions
of this Agreement and the other Loan Documents to which such Loan Party is a
party and has made or caused to be made under his supervision a review of the
condition and operations of such Loan Party during the period covered by such
financial statements with a view to determining whether the Borrower was in
compliance with all of the provisions of such Loan Documents, and that such
review has not disclosed, and such officer has no knowledge of, the existence
during such period of an Event of Default, or an event which, with the giving
of notice or the lapse of time or both, would constitute an Event of Default:
(ix) as soon as available, and in any
event no later than 90 days after the end of each year, annual financial
projections (including forecasted income statements, cash flow statements,
schedules of cash receipts and disbursements and borrowings hereunder) of the
Borrower and the Guarantor for the next succeeding three year period, all in
reasonable detail, together with all such supporting information as the Lender
shall reasonably request;
(x) promptly after submission to any
Governmental Authority not otherwise referred to in this subsection 7.01(a),
all documents and information furnished to such Governmental Authority, unless
such documents and information are furnished in the ordinary course of business
and will not result in any adverse action to be taken by such Governmental
Authority;
(xi) promptly after obtaining knowledge
thereof but in any event not later than five (5) days after the occurrence of
an Event of Default, or an event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default, or a material adverse
change in the condition or operations, financial or otherwise, of the Borrower,
the written statement of the chief executive officer or the chief financial
officer of the Borrower, setting forth the details of such Event of Default,
event or material adverse change and the action which the Borrower proposes to
take with respect thereto;
(xii) as soon as possible and in any event
within 10 days after the Borrower, the Guarantor or any of their Affiliates
knows or has reason to know of the existence of any Unfunded Liability, a
notice setting forth the amount of such Unfunded Liability, certified by the
chief financial officer of the applicable Loan Party.
(xiii) promptly after the commencement
thereof but in any event not later than five (5) Business Days after service of
process with respect thereto on, or the obtaining of knowledge thereof by, the
Borrower or the Guarantor, notice of each action, suit or proceeding before any
court or other Governmental Authority or other regulatory body or any
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arbitrator which may materially adversely affect the condition or operations,
financial or otherwise, of the Borrower or the Guarantor; and
(xiv) promptly upon request, such other
information concerning the condition or operations, financial or otherwise, of
the Borrower or the Guarantor as the Lender from time to time may reasonably
request.
(b) Compliance with Laws, Etc. Comply in all
material respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, (i) paying before the same become
delinquent all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or upon any of their properties, and (ii)
paying all lawful claims which if unpaid might become a lien or charge upon any
of their properties, except to the extent contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or lien resulting
from the non-payment thereof and with respect to which adequate reserves have
been set aside for the payment thereof.
(c) Preservation of Existence, Etc. Maintain and
preserve its existence, rights and privileges, and become or remain duly
qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary. Maintain all licenses and
accreditations necessary to conduct the business of the Borrower and the
Guarantor.
(d) Keeping of Records and Books of Account.
Keep adequate records and books of account, with complete entries made in
accordance with GAAP.
(e) Inspection Rights. Permit the Lender or any
agent or representative thereof at any reasonable time and from time to time to
examine and make copies of and abstracts from its records and books of account,
to visit and inspect its properties, to conduct audits or examinations, and to
discuss its affairs, finances and accounts with any of the directors, officers,
employees, independent accountants or other representatives thereof. The
Borrower agrees to pay the cost of each such audit or examination as provided
in subsection 4.01(c).
(f) Maintenance of Properties, Etc. Maintain and
preserve all of its properties which are necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and comply at all times with the provisions of all leases to
which the Borrower or the Guarantor is a party as lessee or under which the
Borrower or the Guarantor occupies property, so as to prevent any loss or
forfeiture thereof or thereunder.
(g) Maintenance of Insurance. Maintain insurance
with responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, personal liability and
hazard insurance) with respect to its properties and business, in such amounts
and covering such risks, as is required by any Governmental Authority or other
regulatory body having jurisdiction with respect thereto or as is carried
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generally in accordance with sound business practice by companies in similar
businesses similarly situated.
(h) Environmental Indemnity. Comply with the
requirements of all applicable Environmental Laws, provide to the Lender all
documentation in connection with such compliance that the Lender may reasonably
request, and defend, indemnify, and hold harmless the Lender, its employees,
agents, officers, and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs, or expenses
(including, without limitation, attorney and consultant fees, investigation and
laboratory fees, court costs, and litigation expenses) arising out of (i) the
presence, disposal, release, or threatened release of any Hazardous Materials
on any property at any time owned or occupied by the Borrower (or its
predecessors in interest or title); (ii) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to such Hazardous Materials; (iii) any investigation, lawsuit brought or
threatened, settlement reached, or government order relating to such Hazardous
Materials; and/or (iv) any violation of any Environmental Law.
(i) Notification of Event of Default.
Immediately notify Lender in writing of any default of nonpayment or any other
default or event of default or notice thereof under any agreements or
instruments representing material Indebtedness of Borrower or the Guarantor or
any Lien on their respective assets.
(j) Further Assurances. Each Loan Party shall
do, execute, acknowledge and deliver, at the sole cost and expense of such Loan
Party, all such further acts, deeds, conveyances, mortgages, assignments,
estoppel certificates, financing statements, notices of assignment, transfers
and assurances as the Lender may reasonably require from time to time in order
to better assure, convey, grant, assign, transfer and confirm unto the Lender
the rights now or hereafter intended to be granted to the Lender under this
Agreement, any Loan Document or any other instrument under which such Loan
Party may be or may hereafter become bound to convey, mortgage or assign to the
Lender to effect the intention or facilitate the performance of the terms of
the Agreement.
(k) Additional Security. The Borrower shall,
within 10 days of the acquisition of any asset by the Borrower with the
proceeds of a Line Loan (whether such acquisition is funded in whole or in part
by such proceeds), execute and deliver all documents necessary or desirable, in
the opinion of counsel to the Lender, to perfect a first priority security
interest in such asset in favor of the Lender; provided, however, that with
respect to any asset that is partially funded by a purchase money mortgage or
purchase money security interest in accordance with subsection 7.02(a)(vii)
hereof, the Lender's security interest may be subject to such purchase money
mortgage or security interest; and provided, further, however, that the Lender
shall not have additional security in the event such purchase money mortgage or
security agreement precludes junior financing. Each of the Borrower and the
Guarantor hereby acknowledge and agree that (i) any asset other than an equity
interest in a Person acquired by it after the date hereof shall be
automatically subject to a Lien in favor of the Lender pursuant to the Amended
and Restated Security Agreement and be subject to the terms thereof, and (ii)
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any asset that is an equity interest in another Person shall be subject to the
terms and conditions of a pledge agreement in form and substance reasonably
satisfactory to the Lender.
(l) Environmental Actions. The Borrower shall
take all remedial and other actions as set forth in the Plan of Remediation in
a timely manner.
SECTION 7.02 Negative Covenants. So long as any principal of or interest
on any Loan, or any Obligation, shall remain unpaid or the Lender shall have
any commitment to make any Loan, the Borrower will not and, where appropriate,
the Guarantor will not, without the prior written consent of the Lender:
(a) Liens, Etc. Create or suffer to exist any
Lien upon or with respect to any of its properties, rights or other assets,
whether now owned or hereafter acquired, or assign or otherwise transfer any
right to receive income, other than:
(i) Liens created pursuant to the Loan
Documents;
(ii) Liens existing on the date hereof,
as set forth in Schedule VI to the Old Agreement, and the renewal and
replacement of such liens, provided that any such renewal or replacement lien
shall be limited to the property or assets covered by the lien renewed or
replaced and the indebtedness secured by any such renewal or replacement lien
shall be in an amount not greater than the amount of indebtedness secured by
the lien renewed or replaced;
(iii) Liens for taxes, assessments or
governmental charges or levies to the extent that the payment thereof shall not
be required by Section 7.01(b)(i) hereof;
(iv) Liens created by operation of law,
such as materialmen's liens, mechanics' liens and other similar liens, arising
in the ordinary course of business and securing claims the payment of which
shall not be required by Section 7.01(b)(ii) hereof;
(v) deposits, pledges or Liens (other
than liens arising under ERISA) securing (A) obligations incurred in respect of
workers' compensation, unemployment insurance or other forms of governmental
insurance or benefits, (B) the performance of bids, tenders, leases, contracts
(other than for the payment of money) and statutory obligations, or (C)
obligations on surety or appeal bonds, but only to the extent such deposits,
pledges or liens are incurred or otherwise arise in the ordinary course of
business and secure obligations which are not past due;
(vi) restrictions on the use of real
property and minor irregularities in the title thereto which do not (A) secure
obligations for the payment of money or (B) materially impair the value of such
property or its use by any Loan Party in the normal conduct of such Loan
Party's business;
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(vii) (A) purchase money liens on or
purchase money security interests in equipment acquired or held by the Borrower
in the ordinary course of its business to secure the purchase price of such
property or Indebtedness incurred solely for the purpose of financing the
acquisition of such property, or (B) liens or security interests existing on
such property at the time of its acquisition, provided, that (1) no such lien
or security interests shall extend to cover any other property of the Borrower,
and (2) the principal amount of the Indebtedness secured by any such lien or
security interest shall not exceed 100% of the lesser of the fair market value
or the cost of the property so held or acquired; and
(viii) any other Lien in favor of the
Lender.
(b) Indebtedness. Create, incur or suffer to
exist any Indebtedness, other than:
(i) Indebtedness to the Lender;
(ii) Indebtedness created hereunder or
under the Notes;
(iii) Indebtedness existing on the date
hereof, as set forth in Schedule V to the Old Agreement, and any extension of
maturity, refinancing or other modification of the terms thereof, provided,
however, that such extension, refinancing or modification (A) is pursuant to
terms that are not less favorable to the Borrower than the terms of the
Indebtedness being extended, refinanced or modified, and (B) after giving
effect to the extension, refinancing or modification of such Indebtedness, the
amount of such Indebtedness outstanding is not greater than the amount of such
Indebtedness outstanding immediately prior to such extension, refinancing or
modification;
(iv) Indebtedness represented by
accounts payable incurred in the ordinary course of business;
(v) Indebtedness secured by liens or
security interests permitted by clause (vii) of subsection (a) of this Section
7.02;
(vi) Subordinated Indebtedness of the
Borrower on terms approved, in writing, by the Lender; and
(vii) Indebtedness under Operating Leases
permitted by Section 7.02(g) hereof.
(c) Guaranties, Etc. Assume, guarantee, endorse
or otherwise become directly or contingently liable (including, without
limitation, liable by way of agreement, contingent or otherwise, to purchase,
to provide funds for payment, to supply funds to or otherwise invest in the
debtor or otherwise to assure the creditor against loss), in connection with
any Indebtedness of any other Person, other than:
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(i) guaranties created hereunder or
under any Loan Document;
(ii) guaranties by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business;
(iii) guaranties existing on the date
hereof, as set forth in Schedule VII to the Old Agreement, including any
renewal or other modification thereof, provided, however, that such renewal or
modification (A) is pursuant to terms that are not less favorable to the
Borrower than the terms of the guaranty being renewed or modified, and (B)
after giving effect to the renewal or modification of such guaranty, the amount
of the outstanding indebtedness guaranteed by such guaranty is not greater than
the amount of the outstanding indebtedness guaranteed by such guaranty
immediately prior to such renewal or modification; and
(iv) guaranties of any other Indebtedness
to the Lender or Indebtedness permitted by subsection (b) of this Section 7.02;
provided, however, that the Guarantor may: (i) form subsidiaries which incur
Indebtedness ("New Subsidiary Debt"); and (ii) in the discretion of the
Guarantor, guarantee such New Subsidiary Debt pursuant to a guarantee of
collection (but not a guarantee of payment), in each case subject to the
conditions that such guarantee of collection or other obligation of any kind of
the Guarantor in respect of such New Subsidiary Debt, or guarantee thereof,
contains provisions reasonably satisfactory to the Lender to the effect that
(A) no Person with any rights to any payment in respect of such New Subsidiary
Debt shall have the right, at any time prior to the date which is one year and
one day after the date on which all of the Obligations have been satisfied in
full, to acquiesce, petition or otherwise invoke, or cause any other Person
acquiesce, petition or otherwise to invoke, the process of any court or other
Governmental Authority for the purpose of commencing or sustaining a case
against the Guarantor under any federal or state bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Guarantor or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Guarantor, (B) no recourse may be had against the common
stock of the borrower owned by the Guarantor, or any assets of the Borrower, in
respect of such New Subsidiary Debt or guarantee thereof, and (C) no term or
covenant with respect to such New Subsidiary Debt may, directly or indirectly,
impair Lender's Liens, security interests and claims granted or arising under
this Agreement or the other Loan Documents.
(d) Merger, Consolidation, Sale of Assets, Etc.
(i) merge or consolidate with any
Person; or
(ii) sell, assign, lease, engage in sale
leaseback transactions or otherwise transfer or dispose of, whether in one
transaction or in a series of related transactions,
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any substantial portion of its properties, rights or other assets (whether now
owned or hereafter acquired) to any Person.
(e) Change in Nature of Business. Make any
material change in the nature of its business as conducted on at the date
hereof.
(f) Investments, Etc. Make any loan, advance or
contribution to any Person or purchase or otherwise acquire any capital stock,
properties, assets or obligations of, or any interest in, any Person, other
than (i) Permitted Investments, (ii) investments existing on the date hereof,
as set forth in Schedule VIII to the Old Agreement, (iii) advances to employees
or vendors made in the ordinary course of its business as presently conducted,
not to exceed at any one time outstanding an aggregate of $500,000 for all such
loans and advances, and (iv) in connection with the exercise, or the
assignment, of the Guarantor's right to purchase certain Common Stock pursuant
to Section 6 of Amendment to Construction Loan Agreement entered the 19th day
of September 1996 by and between the Borrower, the Guarantor and Richard C.
Breeden in his capacity as trustee of the estates of Bennett Management and
Development Corp. and Bennett Funding Group.
(g) Lease Obligations. Create, incur or suffer
to exist any obligation as lessee (i) for the payment of rent for any real or
personal property in connection with any sale and leaseback transaction, or
(ii) for the payment of rent for any real or personal property under Operating
Leases which would cause the aggregate amount of all obligations in respect of
Operating Leases payable by the Borrower in any fiscal year of the Borrower to
exceed 105% of the Operating Leases outstanding as of the end of the prior
fiscal year; provided, however, that the Borrower may incur such obligations
with respect to the leasing of video lottery terminals in an amount not
to,exceed $3,000,000.00 per year.
(h) Salaries and Withdrawals. Pay or become
obligated to pay any fees, wages, distributions, salary, bonus, commission,
contributions to deferred benefit plans or any other compensation
("Compensation") to, or for the benefit of, the Guarantor or any officers of
the Borrower or the Guarantor in any calendar year in excess of 120% of such
Persons Compensation in the immediately preceding calendar year.
(i) Dividends, Etc. Declare or pay any dividend,
purchase or otherwise acquire for value any of its capital stock now or
hereafter outstanding, return any capital to its stockholders as such, or make
any other payment or distribution of assets to its stockholders as such or to
purchase or otherwise acquire for value any stock of the Borrower; provided,
however, that nothing herein shall prevent the Borrower from making
distributions to the Guarantor in the aggregate in any fiscal year equal to the
lesser of (i) the amount necessary to pay the expenses of the Guarantor, and
(ii) $500,000.00 plus expenses paid to any third parties, in each case minus
the funds available to the Guarantor from other sources other than through the
issuance of securities.
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(j) Federal Reserve Regulations. Permit the Loan
or the proceeds of the Loan under this Agreement to be used for the purpose
which violates or is inconsistent with the provisions of Regulations G, T, U or
X of the Board of Governors of the Federal Reserve System.
(k) Transactions with Affiliates. Permit the
Borrower to enter into or be a party to any transaction with any of its
Affiliates, except in the ordinary course of business for fair consideration
and on terms no less favorable to the Borrower as are available from
unaffiliated third parties.
(l) Fiscal Year, Accounting Policies. Permit any
material change in the fiscal year or accounting policies and procedure of the
Borrower without the prior written consent of the Lender.
(m) Improvements. Make or commit to make any
improvements on the Property with a total cost in excess of $250,000.00 without
the prior written consent of the Lender, after Lender's review of all plans,
permits and other items necessary to ensure that any such improvement will
comply with all applicable building and safety requirements as the Lender, in
its sole and absolute discretion, may determine; provided, however, that the
foregoing limitations shall not apply to the proceeds of the Line Loan, which
proceeds shall be used primarily for such improvements.
(n) Issuance of Stock. Permit the issuance of
(i) any additional shares of any class of capital stock, (ii) any securities
convertible voluntarily by the holder thereof or automatically upon the
occurrence or re-occurrence of any event or condition into, or exchangeable
for, any such shares of capital stock or (iii) any warrants, options, contracts
or other commitments that entitle any Person to purchase or otherwise acquire
any such shares of capital stock.
SECTION 7.03 Additional Covenants of the Guarantor. So long as any of the
Obligations remains outstanding, the Guarantor:
(a) shall not take any action to increase the
par value of the Common Stock;
(b) shall not issue any Common Stock, any
preferred stock or any security providing for the purchase of or convertibility
into, or exchangeable for, Common Stock or preferred stock, other than;
(i) in connection with stock rights,
warrants and options existing on the date hereof as set forth on Schedule IX to
the Old Agreement;
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(ii) in connection with future incentive
stock options or warrants for employees of the Guarantor not to exceed 4% of
the number of outstanding shares of Common Stock in any fiscal year;
(iii) in the ordinary course of business
of the Guarantor not to exceed 2% of the number of outstanding shares of Common
Stock in any fiscal year;
(iv) in connection with any merger,
acquisition or sale of a major portion of the assets of the Guarantor approved
in writing by the Lender, such approval not to be unreasonably withheld;
(v) as provided under Section 4.01
hereof; and
(vi) as set forth in Schedule XI to the
Old Agreement;
(c) shall not create or suffer to exist any Lien
upon or with respect to any of the common stock of the Borrower other than a
Lien in favor of the Lender; and
(d) shall, after the filing with the West
Virginia Lottery Commission by the Lender of its application for approval under
the license of the Borrower, use its best efforts to obtain the approval of
each applicable Governmental Authority to the pledge of all of the shares of
the common stock of the Borrower pursuant to a pledge agreement and, upon such
approval, or the written opinion of counsel to the Guarantor that such pledge
would not result in a revocation of any approval, license or permit required by
the Borrower for the conduct of its gaming businesses, shall execute and
deliver a pledge agreement to the Lender in form and substance reasonably
satisfactory to the Lender, together with such, other documents as are
customarily delivered and /or executed and delivered in connection therewith.
SECTION 7.04 Additional Covenant. So long as any of the Obligations
remains outstanding, the Borrower shall maintain an EBITDA Average of at least
$500,000.
ARTICLE VIII.
EVENTS OF DEFAULT
SECTION 8.01 Events of Default. If any of the following Events of Default
shall occur and be continuing:
(a) the Borrower shall fail to pay any principal
on any Loan when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise);
(b) the Borrower shall fail to pay any interest
on any Loan or any fee or other amount (whether by scheduled payment,
acceleration, demand or otherwise) within three
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(3) Business Days of the date when due; provided, however, that failure to make
payments when due with respect to Obligations in this Subsection 7.01(b) more
than three (3) times in any twelve (12) month period shall constitute an Event
of Default hereunder;
(c) any representation or warranty made by any
Loan Party or any officer of any Loan Party under or in connection with any
Loan Document shall have been incorrect in any material respect when made;
(d) any Loan Party shall fail to perform or
observe any of the covenants contained in Sections 7.01, 7.02, or 7.03 hereof,
or Article X hereof;
(e) any Loan Party shall fail to perform or
observe any other term, covenant or agreement contained in any Loan Document
and to be performed or observed by such Loan Party;
(f) there shall occur any breach or default under
any other agreement involving the borrowing of money under which such Loan
Party or any of its subsidiaries may be obligated as borrower or guarantor;
(g) any Loan Party (i) shall institute any
proceeding or voluntary case seeking to adjudicate it a bankrupt or insolvent,
or seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for such Person or for any
substantial part of its property, (ii) shall be generally not paying its debts
as such debts become due, or shall admit in writing its inability to pay its
debts generally, (iii) shall make a general assignment for the benefit of
creditors, or (iv) shall take any action to authorize or effect any of the
actions set forth above in this subsection (g);
(h) any proceeding shall be instituted against
any Loan Party seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
such Person or for any substantial part of its property, and either such
proceeding shall remain undismissed or unstayed for a period of 60 days or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against it or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property) shall occur;
(i) any provision of any Loan Document shall at
any time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Loan Party, or a proceeding
shall be commenced by any Loan Party, or by any Governmental Authority or other
regulatory body having jurisdiction over any Loan Party, seeking to establish
the invalidity or unenforceability thereof, or any Loan Party shall deny that
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such Loan Party has any liability or obligation purported to be created under
any Loan Document;
(j) the Amended and Restated Security Agreement,
the Deed of Trust, the First Priority Deed of Trust or any other security
document, after delivery thereof pursuant hereto, shall for any reason fail or
cease to create a valid and perfected and, to the extent provided for by the
terms hereof or thereof. first or second priority lien on or security interest
in any Collateral purported to be covered thereby;
(k) one or more judgments or orders (other than a
judgment or award described in subsections (g) and (h) of this Section 8.01)
for the payment of money exceeding any applicable insurance coverage shall be
rendered against any Loan Party, and either (i) enforcement proceedings shall
have been commenced by any creditor upon any such judgment or order, or (ii)
there shall be any period of 30 consecutive days during which a stay of
enforcement of any such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(l) any Loan Party or any Affiliate of a Loan
Party shall suffer to exist any Unfunded Liability in excess of $100,000; or
(m) the Borrower shall fail to perform or
observe the covenant contained in Section 7.04 hereof;
then, and in any such event, the Lender may, by notice to the Borrower, (i)
declare its Commitment to make any Loan hereunder to be terminated, whereupon
such Commitment shall forthwith terminate, (ii) declare the Loans, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Loans (including, without limitation, all of the
Term Obligations then accrued and an amount equal to the product of (a) the
Prepayment Factor and (b) the outstanding principal amount of the Loans), all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower; provided, however,
that upon the occurrence of an Event of Default described in subsections (g)
and (h) of this Section 8.01, the Commitment to make any Loan hereunder shall
immediately terminate and the Loans, all such interest thereon and all other
amounts shall become payable and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind', all of which are
expressly waived by the Borrower; provided further, that upon the occurrence of
an Event of Default other than the events described in Subsections (a), (b),
(g) and (h), the Borrower shall have three (3) Business Days in which to cure
such Event of Default and (iii) exercise any and all of its other rights under
applicable law, hereunder and under the other Loan Documents; provided,
further, that the Event of Default described in subsection (m) of this Section
8.01 shall apply to the Line Loan only, and shall not be deemed a default under
subsection (f) of this Section 8.01 with respect to the Term Loan and,
accordingly, not result in the acceleration of amounts due under the Term Note.
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ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed, telecopied. with a copy
sent promptly thereafter by U.S. mail. return receipt requested or delivered,
if to the Borrower or the Guarantor, at the following address:
Mountaineer Park, Inc.
Route 2 South
Chester, West Virginia 26034
Attention: Mr. Edson Arneault, President
Telephone No.: (304) 387-2400
Telecopy No.: (304) 387-1598
with copies to:
Freer, McGarry, Bodansky & Rubin, P.C.
1000 Thomas Jefferson Street, N.W.
Suite 600
Washington, DC 20007
Attention: Robert Ruben, Esq.
Telephone No.: (202) 965-6565
Telecopy No.: (202) 965-4839
and if to the Lender, to it at the following address:
Madeleine, LLC
450 Park Avenue
New York, New York 10022
Attention: Mr. Kevin P. Genda
Telephone No.: (212) 891-2117
Telecopy No.: (212) 758-5305
with copies to:
Schulte Roth & Zabel, LLP
900 Third Avenue
New York, New York 10022
Attention: Mark A. Neporent, Esq.
Telephone No.: (212) 756-2238
Telecopy No.: (212) 593-5955
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or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery with the
terms of this Section 9.01. All such notices and other communications shall be
effective (i) if mailed, when received or three days after mailing, whichever
first occurs, (ii) if telecopied, when transmitted, provided same is on a
Business Day and, if not, on the next Business Day, or (iii) if delivered, upon
delivery, provided same is on a Business Day and, if not, on the next Business
Day, except that notices to the Lender pursuant to Article II hereof shall not
be effective until received by the Lender.
SECTION 9.02 Amendments, Etc. No amendment of any provision of this
Agreement, any Note or any other Loan Document shall be effective unless it is
in writing and signed by the Borrower, each of the Guarantor and the Lender,
and no waiver of any provision of this Agreement, any Note or any other Loan
Document, nor consent to any departure by the Borrower or the Guarantor
therefrom, shall be effective unless it is in writing and signed by the Lender,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 9.03 No Waiver; Remedies, Etc. No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder or
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right. The
rights and remedies of the Lender provided herein and in the other Loan
Documents are cumulative and are in addition to, and not exclusive of, any
right or remedy provided by law. The rights of the Lender under any Loan
Document against any party thereto are not conditional or contingent on any
attempt by the Lender to exercise any of its rights under any other Loan
Document against such party or against any other Person.
SECTION 9.04 Fees, Costs, Expenses and Taxes. The Borrower will pay on
demand (i) all fees, costs and expenses in connection with the preparation,
execution, delivery, filing, recording, amendment, modification and waiver of
the Loan Documents and the other documents to be delivered pursuant to the Loan
Documents, including, without limitation, the reasonable fees, out-of-pocket
expenses and other client charges of Schulte Roth & Zabel LLP, counsel to the
Lender, and Bowles Rice McDavid Graff & Love, West Virginia counsel to the
Lender and the reasonable fees, out-of-pocket expenses and other client charges
of all accountants, auditors and consultants retained by the Lender in
connection with the transactions contemplated by this Agreement, and (ii) all
costs and expenses, if any (including reasonable counsel fees, out-of-pocket
expenses and other client charges), in connection with the enforcement of the
Loan Documents and the other documents to be delivered pursuant to the Loan
Documents. In addition, the Borrower will pay any and all stamp and other taxes
and fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of the Loan Documents and the other documents to
be delivered pursuant to the Loan Documents, and will save the Lender harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees. All of the foregoing
fees, costs expenses and taxes are herein referred to as "Transaction Costs".
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SECTION 9.05 Right of Set-off. Upon the occurrence and during the
continuance of any event of Default, the Lender may, and is hereby authorized
to, at any time and from time to time, without notice to the Borrower (any such
notice being expressly waived by the Borrower) and to the fullest extent
permitted by law, set off and apply any and all indebtedness at any time owing
by the Lender to or for the credit or the account of the Borrower against any
and all Obligations now or hereafter existing, irrespective of whether or not
the Lender shall have made any demand hereunder or thereunder and although such
Obligations may be contingent or unmatured. The Lender agrees to notify the
Borrower promptly after any such set-off and application made by the Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Lender under this Section 9.05
are in addition to the other rights and remedies (including, without
limitation, other rights of set-off) which the Lender may have.
SECTION 9.06 Severability. Any provision of this Agreement, or of any
other Loan Document to which the Borrower or any of the Guarantors is a party,
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.07 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Borrower, the Guarantor and the Lender and
their respective successors and assigns, except that neither the Borrower nor
any Guarantor may assign its rights hereunder or any interest herein without
the prior written consent of the Lender. The Lender may assign to one or more
banks or other entities all or any part of, or may grant participations to one
or more banks or other entities in or to all or any part of the Commitment, the
Loans or the Notes and, to the extent of any such assignment or participation
(unless otherwise stated therein), the assignee of such assignment shall have
the same rights and benefits hereunder and under such Note(s) as it would have
if it were the Lender hereunder. In connection with any assignment by the
Lender pursuant hereto, the Borrower shall, promptly upon request by the
Lender, execute and deliver a new Note or Notes, in replacement of the then
effective Note or Notes, in an aggregate principal amount equal to the
outstanding principal amount of the applicable Loan or Loans at such time,
payable to the order of the Lender and/or an assignee(s). The Lender may, in
connection with any such assignment or participation or as may be required by
law or any Governmental Authority or other regulatory body, disclose any public
and non-public information relating to the Borrower and each of the Guarantors
furnished by or on behalf of the Borrower or any of the Guarantors or any of
their Affiliates to the Lender.
SECTION 9.08 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
SECTION 9.09 Headings. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
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SECTION 9.10 Governing Law. This Agreement, each Note, and the other Loan
Documents shall be governed by, and construed in accordance with, the law of
the State of New York applicable to contracts made and to be performed in such
State without regard to conflicts of law principles. Any legal action or
proceeding with respect to this Agreement or any other Loan Document may be
brought in the courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower and the Guarantor hereby irrevocably accept for
themselves in respect of their property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Borrower and the Guarantor further
irrevocably consent to the service of process out of any of the aforementioned
courts and in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Borrower at its address
for notices contained in Section 9.01, such service to become effective thirty
(30) days after such mailing. The Borrower and the Guarantor hereby
irrevocably appoint Mr. Robert A. Blatt, c/o CRC Group, 1890 Palmer Avenue,
Suite 303, Larchmont, New York 10538, or such other Person as shall be
acceptable to the Lender, as their agent for service of process in respect of
any such action or proceeding. Nothing herein shall affect the right of the
Lender to service of process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Borrower and the
Guarantor in any other jurisdiction.
SECTION 9.11 WAIVER OF JURY TRIAL, ETC. EACH OF THE BORROWER, THE
GUARANTOR AND THE LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHT UNDER THIS AGREEMENT,
ANY NOTE, OR OTHER LOAN DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER, CONSENT,
INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE
DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH OF THE
BORROWER AND THE GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. THE BORROWER AND THE GUARANTOR CERTIFY THAT NO OFFICER,
REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR
COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. THE BORROWER AND THE
GUARANTOR HEREBY ACKNOWLEDGE THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE LENDER ENTERING INTO THIS AGREEMENT.
SECTION 9.12 Reinstatement; Certain Payments. If a claim is ever made upon
the Lender for repayment or recovery of any amount or amounts received by the
Lender in payment or on account of any of the Obligations under this
Agreements, the Lender shall give prompt notice of such claim to the Borrower,
and if the Lender repays all or part of said amount by reason of
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(i) any judgment, decree or order of any court or administrative body having
jurisdiction over the Lender or any of its property, or (ii) any settlement or
compromise of any such claim effected by the Lender with any such claimant,
then and in such event the Borrower and the Guarantor (A) agree that any such
judgment, decree, order, settlement or compromise shall be binding upon the
Borrower and the Guarantor notwithstanding the cancellation of any Note or
other instrument evidencing the Obligations under this Agreement or the other
Loan Documents or the termination of this Agreement or the other Loan
Documents, and (B) shall be and remain liable to the Lender hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by the Lender.
SECTION 9.13 Indemnification. In addition to all of their other
Obligations under this Agreement, the Borrower and the Guarantor jointly and
severally agree to defend, protect, indemnify and hold harmless the Lender and
any assignee of the Lenders rights hereunder, and all of their respective
officers, directors, employees, attorneys, consultants and agents (including,
without limitation, those retained in connection with the satisfaction or
attempted satisfaction of any of the conditions set forth in this Agreement)
(collectively called the "Indemnitees") from and against any and all losses,
damages, liabilities, obligations, penalties, fees, costs and expenses
(including, without limitation, attorneys' fees, costs and expenses) incurred
by such Indemnitees, whether prior to or from and after the Effective Date,
whether direct, indirect or consequential, as a result of or arising from or
relating to any suit, investigation, action or proceeding by any Person,
whether threatened or initiated, asserting a claim for any legal or equitable
remedy against any Person under any statute or regulation, including, without
limitation, any Federal or state securities or labor laws, or under any
Federal, state or local environmental health or safety laws, regulations or,
common law principles, arising from or in connection with the past, present or
future operations of the Borrower or its predecessors in interest, arising from
or in connection with any of the following: (i) the negotiation, preparation,
execution or performance of this Agreement or of any document executed in
connection with the transactions contemplated by this Agreement, (ii) the
Lender's furnishing of funds to the Borrower under this Agreement, including,
without limitation, the management of the Loans, or (iii) any matter relating
to the financing transactions contemplated by this Agreement or by any document
executed in connection with the transactions contemplated by this Agreement
(collectively, the "Indemnified Matters"); provided, however. that the Borrower
and the Guarantor shall have no obligation to any Indemnitee hereunder for any
Indemnified Matter caused by or resulting from the gross negligence or willful
misconduct of such Indemnitee, as determined by a final judgment of a court of
competent jurisdiction. Such indemnification for all of the foregoing losses,
damages, fees, costs and expenses of the Lender shall be part of the
Obligations in respect of the Term Loan (the "Term Obligations"), secured by
the Collateral and added to the principal amount of the Term Loan; provided,
further, however, that if the Term Loan has been paid in full, then all of the
foregoing losses, damages, fees, costs and expenses of the Lender shall be part
of the Line Obligations, secured by the Collateral and added to the principal
amount of the Line Loan. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in this Section 9.13 may be unenforceable because
it is violative of any law or public policy, the Borrower and the Guarantor
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of
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all Indemnified Matters incurred by the Indemnitees. The provisions of this
Section 9.-13 shall survive termination of this Agreement.
ARTICLE X.
GUARANTY
SECTION 10.01 Guaranty. The Guarantor, and each other Guarantor that may
become party hereto, hereby (i) irrevocably, absolutely and unconditionally
guarantees the prompt payment, as and when due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), of
(A) all the Obligations, including, without limitation, all amounts now or
hereafter owing in respect of the Loan Documents, whether for principal,
interest, fees, expenses or otherwise, and (B) all indebtedness, obligations
and other liabilities, direct or indirect, absolute or contingent, now existing
or hereafter arising of the Borrower to the Lender and (ii) agrees, to pay any
and all expenses (including reasonable counsel fees and expenses) incurred by
the Lender in enforcing its rights under this Agreement, the Guarantee and each
other Loan Document.
SECTION 10.02 Obligations Unconditional.
(i) the Guarantor and each other Guarantor that
may become party hereto, hereby guarantees that the Obligations will be paid
strictly in accordance with the terms of the Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Lender with respect thereto.
the Guarantor and each other Guarantor agrees that its guarantee constitutes a
guaranty of payment when due and not of collection, and waives any right to
require that any resort be had by the Lender to any security held for payment
of the Obligations or to any balance of any deposit account or credit on the
books of the Lender in favor of the Borrower or for any other reason. The
liability of the Guarantor and each other Guarantor hereunder shall be absolute
and unconditional irrespective of: (i) any lack of validity or enforceability
of any Loan Document or any agreement or instrument relating thereto; (ii) any
extension or change in the time, manner or place of payment of, or in any other
term in respect of, all or any of the Obligations (including, without
limitation, any extension for longer than the original period), or any other
amendment or waiver of or consent to any departure from any provision of any
Loan Document, (iii) any exchange or release of, or non-perfection of any lien
on or security interest in, any Collateral, or any release or amendment or
waiver of or consent to any departure from any other guaranty, for all or any
of the Obligations; or (iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Borrower or any other
Guarantor in respect of the Obligations or the Guarantor and each other
Guarantor in respect hereof.
(ii) This Guaranty (i) is a continuing guaranty
and shall remain in full force and effect until such date on which all of the
Obligations and all other expenses to be paid by the Guarantor or any other
Guarantor pursuant hereto shall have been satisfied in full after
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the Commitment shall have been terminated, (ii) shall continue to be effective
or shall be reinstated, as the case may be, if at any time any payment of any
of the Obligations is rescinded or must otherwise be returned by the Lender
upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise,
all as though such payment had not been made. and (iii) shall be binding upon
the Guarantor, any other Guarantor or their respective heirs, executors,
successors and assigns.
SECTION 10.03 Waivers. The Guarantor hereby waives, to the extent permitted
by applicable law, (i) promptness and diligence, (ii) notice of acceptance and
notice of the incurrence of any Obligation, (iii) notice of any action taken by
the Lender or the Borrower or any other agreement or instrument relating
thereto, (iv) all other notices, demands and protests, and all other
formalities of every kind in connection with the enforcement of the Obligations
or of the obligations of the Guarantor and each other Guarantor hereunder, the
omission of or delay in which, but for the provisions of this Section 10.03,
might constitute grounds for relieving the Guarantor or any other Guarantor of
its obligations hereunder, and (v) any requirement that the Lender protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against any Person or any
Collateral. All such waivers by the Guarantor shall be effective only to the
extent permitted by applicable law.
SECTION 10.04 Subrogation. The Guarantor hereby waives and agrees that it
will not exercise any rights which it may acquire by way of subrogation
hereunder, by any payment made by it hereunder or otherwise. If the amount
shall be paid to the Guarantor or such other Guarantor on account of such
subrogation rights at any time when all of such Obligations and all other
Obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Lender, shall be segregated from the other funds
of the Guarantor or such other Guarantor and shall forthwith be paid over to
the Lender to be applied in whole or in part by the Lender against the
Obligations, whether matured or unmatured, in accordance with the terms of this
Agreement.
SECTION 10.05 No Waiver; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedy provided by law.
SECTION 10.06 Taxes.
(a) Each payment by the Guarantor under this Loan
Agreement shall be made without withholding for or on account of any present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of the Lender, taxes
imposed on its income, and franchise taxes imposed on it by the jurisdiction
(or any political subdivision thereof) under the laws of which the Lender is
organized (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Other Taxes");
provided, however, that if such Other Taxes are
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required by law to be withheld from any such payment, the Guarantor shall make
such withholding for the account of the Lender, make timely payment thereof to
the appropriate governmental authority, and forthwith pay for the account of
the Lender such additional amount as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 10.06.) the Lender receives an amount equal to the sum it
would have received had no such deductions been made. All such Other Taxes
shall be paid by the Guarantor prior to the date on which penalties attach
thereto or interest accrues thereon; provided, however. that, if any such
penalties or interest become due, the Guarantor shall make prompt payment
thereof to the appropriate governmental authority.
(b) the Guarantor will indemnify the Lender for
the full amount of Other Taxes (including any Other Taxes on amounts payable
under this Section 10.06.) paid by the Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Lender makes
written demand therefor.
(c) Within 30 days after the date of any payment
of Other Taxes, the Guarantor will furnish to the Lender the original or a
certified copy of a receipt evidencing payment thereof. If no. Other Taxes are
payable in respect of any payment hereunder or under any Note, the Guarantor
will furnish to the Lender a certificate from each appropriate taxing
authority, or an opinion of counsel acceptable to the Lender, in either case
stating that such payment is exempt from or not subject to Other Taxes.
SECTION 10.07 Stay of Acceleration. If acceleration of the time for payment
of any amount payable by any of the Borrower in respect of the Obligations is
stayed upon the insolvency, bankruptcy or reorganization of any of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the Guarantor forthwith on
demand by the Lender.
ARTICLE XI.
REAFFIRMATION; AMENDMENTS
SECTION 11.01 Reaffirmation. Each Loan Party hereby agrees that the
amending and resulting of the Old Agreement in no way releases such Loan Party
from any obligation under any other Loan Document, each of which shall remain
in full force and effect and is hereby ratified and confirmed in all respects.
The Guarantor, by execution hereof, confirms that the Guaranty is in full force
and effect pursuant to its terms in respect of all of the Obligations.
SECTION 11.02 Amendments. Each party hereto agrees and confirms that all
references in any Loan Document to the Loan Agreement, the Amended and Restated
Term Loan Agreement, the Term Loan Agreement or any other similar term which
refers to the agreement
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among the parties in respect of the making by the Lender of the Loans (as
defined in the Old Agreement and this Agreement) and the terms and conditions
thereof in effect shall, as of any date on and after the Funding Date, be
deemed to refer to this Agreement as amended and restated hereby. By way of
example, but in no way in limitation of the foregoing, all references in the
First Priority Deed of Trust to "Restated Loan Agreement" shall be deemed to
refer to this Agreement, as amended and restated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
MOUNTAINEER PARK, INC.
By: /s/ Edson R. Arneault, President
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MTR GAMING GROUP, INC.
By: /s/ Edson R. Arneault, President
------------------------------------
MADELEINE LLC
By: /s/ Madeleine LLC
------------------------------------
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