SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)<F1>
MTR Gaming Group, Inc.
(Name of Issuer)
Common Stock, $0.00001 par value per share
(Title of Class of Securities)
300 64J 10 8
(CUSIP Number)
Richard C. Breeden, Trustee
The Bennett Funding Group, Inc. and
Bennett Management & Development Corp.
Two Clinton Square
Syracuse, New York 13202
(315) 422-9000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 19, 1998
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-
1(g), check the following box / /.
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See Rule 13d-7(b) for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 Pages)
[FN]
<F1> The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the
remainder of this cover page shall not be deemed to be "filed" for the
purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the Notes).
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CUSIP No. 300 64J 10 8 13D Page 2 of 7 Pages
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Richard C. Breeden, as Trustee
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3 SECURITIES USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) /x/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 522,700
OWNED 8 SHARED VOTING POWER
BY
EACH 780,000
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 1,302,700
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,302,700
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.2%
14 TYPE OF REPORTING PERSON*
00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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The cover page and Items 1 through 7 of the Statement filed
pursuant to Rule 13d-1 under Section 13(d) of the Securities Exchange Act
of 1934, as amended, on behalf of The Bennett Funding Group, Inc. ("BFG")
and Bennett Management & Development Corp. ("BMDC"), with respect to a
reportable event occurring on October 22, 1996, are amended and restated
as set forth below.
Item 1. Security and Issuer.
This statement relates to the common stock, $0.00001 par value per
share (the "Common Stock"), of MTR Gaming Group, Inc., a Delaware
corporation ("MTR"). MTR's principal executive offices are located at
State Route 2 South, Chester, West Virginia 26034. MTR was formerly
known as Winners Entertainment, Inc.
Item 2. Identity and Background.
This statement is being filed by Richard C. Breeden, as trustee in
bankruptcy (the "Trustee") for BFG, BMDC and certain other related
debtors. The Trustee's business address is Two Clinton Square, Syracuse,
New York 13202. In addition to his position as Trustee, Mr. Breeden is
the Chief Executive Officer of Equivest Finance, Inc. ("Equivest"), a
holding company which, through its wholly-owned subsidiary, Resort
Funding, Inc., finances consumer timeshare receivables and makes
acquisition and development loans to fund construction of timeshare
resorts. The address of Equivest is Two Clinton Square, Syracuse, New
York 13202.
The Trustee neither has been convicted in a criminal proceeding,
nor was a party to a civil proceeding as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, Federal or State
securities laws or finding any violation with respect to such laws. The
Trustee is a citizen of the United States.
BFG is a New York corporation whose principal business activity is
equipment leasing. BMDC is a New York corporation whose principal
business activity is the provision of various financial services. The
address of the principal business and offices of each company is
Two Clinton Square, Syracuse, New York 13202.
On March 29, 1996, BFG and BMDC filed voluntary petitions (the
"Petitions") for reorganization (Case Nos. 96-61376 and 96-61379,
respectively) under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the Northern District of New York
(the "Bankruptcy Court"). On April 18, 1996, the Court appointed Mr.
Breeden as Trustee for BFG and BMDC, as well as for certain other related
debtors. On July 25, 1997, the Bankruptcy Court consolidated the estates
of all such debtors (such consolidated estate, the "Estate").
The Petitions were filed after (i) the Securities and Exchange
Commission filed a civil complaint (the "Civil Complaint") in the
United States District Court for the Southern District of New York (the
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"District Court") against BFG, BMDC, certain of their affiliates and
Patrick R. Bennett, the former Chief Financial Officer of BFG (Case No.
96 Civ. 2237 (JES)) and (ii) the United States Attorney for the Southern
District of New York filed a criminal complaint (the "Criminal
Complaint") in the District Court against Patrick Bennett alleging
perjury and criminal violations of the anti-fraud provisions of the
federal securities laws. The Civil Complaint alleges numerous violations
of the anti-fraud provisions of the federal securities laws, based in
part on allegations of sales of fictitious equipment leases, fraudulent
misrepresentations to investors in private placements of debt securities
and misappropriation of corporate assets. In June 1996 the Trustee filed
an adversary proceeding seeking more than $1 billion in damages from,
among others, prior controlling stockholders of BFG and its affiliates
and certain of their business associates, the previous auditing firm and
others. On June 26, 1997, a federal grand jury issued a 43-count
indictment against Patrick Bennett, his brother Michael, and two
associates on charges ranging from conspiracy to obstruction of justice.
The defendants were arraigned on July 3, 1997, and were released after
posting personal recognizance bonds.
The two indicted associates of Patrick Bennett, Charles Genovese
and Gary Peiffer, pled guilty to charges of obstruction of justice on
December 3, 1998. Michael Bennett also pled guilty to obstruction of
justice and certain other related crimes in late November 1998. Patrick
Bennett's criminal trial began in the United States Court for the
Southern District of New York on December 7, 1998.
Item 3. Source and Amount of Funds or Other Consideration.
MTR, its wholly-owned subsidiary Mountaineer Park, Inc. ("MPI") and
BMDC, as lender, entered into a Construction Loan Agreement (the
"Construction Loan Agreement") dated as of June 27, 1994, which was
subsequently amended on September 27, 1994; December 7, 1994; February
10, 1995; April 10, 1995; July 7, 1995; and September 19, 1996, and
certain repayment terms of which were extended on October 31, 1995;
November 9, 1995; November 28, 1995; and January 12, 1996. Pursuant to
the Construction Loan Agreement, MPI borrowed $10.2 million (the
"Construction Loan") from BMDC primarily for renovations at the
Mountaineer Racetrack and Gaming Resort located in Chester, Hancock
County, West Virginia. As part of the consideration for the loan and in
connection with one of the amendments to the loan, MTR was obligated to
issue to BMDC in the aggregate 1,530,000 shares of Common Stock and did
in fact issue and deliver such shares to BMDC and BFG beginning in June
1994. The Trustee believes that BMDC obtained the $10.2 million loaned
to MPI from its working capital. On December 26, 1996, MPI prepaid in
full the outstanding balance of the Construction Loan.
Item 4. Purpose of Transaction.
The Common Stock was acquired by BMDC and BFG for their own account
for investment purposes as partial consideration for the granting of the
Construction Loan described in Item 3 above and one of the amendments
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thereto. The Trustee expects from time to time to sell shares, which may
be in registered and unregistered transactions.
Item 5. Interest in Securities of the Issuer.
(a) According to MTR's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, there were 20,855,775 shares of Common
Stock issued and outstanding as of November 9, 1998. The total number of
shares beneficially owned by the Estate and by the Trustee, after the
transactions described in Item 5(c) below, is 1,302,700 shares,
representing approximately 6.2% of the total issued and outstanding
shares of Common Stock.
(b) Prior to the filing of the Petitions, BFG assigned the voting
rights for an aggregate of 780,000 shares to the board of directors of
MTR pursuant to an amendment to the Construction Loan Agreement described
in Item 6 below. After the closing of the transaction described in Item
5(c) below, the Trustee has sole power to vote or direct the vote as to
522,700 shares and sole power to dispose or direct the disposition of
1,302,700 shares.
(c) The Trustee disposed of a total of 227,300 shares of Common
Stock as follows:
Number of Price Per
Shares Date Sold Share Manner
--------- --------- --------- ------
9,000 November 17, 1998 $2.3958 open market sale
10,000 November 18, 1998 $2.3750 open market sale
10,600 November 20, 1998 $2.5059 open market sale
12,500 November 25, 1998 $2.5060 open market sale
6,000 November 27, 1998 $2.5885 open market sale
10,000 November 30, 1998 $2.5625 open market sale
5,000 December 1, 1998 $2.4375 open market sale
9,000 December 1, 1998 $2.3958 open market sale
1,700 December 2, 1998 $2.4375 open market sale
9,000 December 3, 1998 $2.3750 open market sale
10,000 December 9, 1998 $2.3400 open market sale
2,000 December 10, 1998 $2.3438 open market sale
16,000 December 11, 1988 $2.3750 open market sale
12,500 December 16, 1998 $2.1250 open market sale
13,000 December 17, 1998 $2.1538 open market sale
20,000 December 21, 1998 $2.3547 open market sale
15,000 December 22, 1998 $2.2940 open market sale
8,500 December 23, 1998 $2.3879 open market sale
22,500 January 15, 1999 $2.3125 open market sale
15,000 January 19, 1999 $2.2658 open market sale
10,000 January 20, 1999 $2.3156 open market sale
(d) Not applicable.
(e) Not applicable.
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Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
Pursuant to Construction Loan Agreement Amendment V, dated July 7,
1995, among BMDC, MPI and MTR, BMDC granted full voting authority with
respect to 780,000 shares to the board of directors of MTR to satisfy
licensing requirements of the West Virginia Lottery Commission. The
board of directors of MTR will retain this authority for so long as the
Estate owns at least 5% of the shares of Common Stock.
The Amendment of Construction Loan Agreement, dated September 19,
1996, among the Trustee, MPI and MTR, grants the Trustee certain
registration rights relating to the shares of MTR issued pursuant to the
Construction Loan Agreement, to the extent the public sale of such shares
is restricted.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Construction Loan Agreement, dated as of June 27,
1994, among BMDC, MPI and Winners Entertainment,
Inc. ("Winners").
Exhibit 2: Construction Loan Agreement Amendment, dated as of
September 27, 1994, among BMDC, MPI and Winners.
Exhibit 3: Construction Loan Agreement Amendment, dated
December 7, 1994, among BMDC, MPI and Winners.
Exhibit 4: Construction Loan Agreement Amendment, dated
February 10, 1995, among BMDC, MPI and Winners.
Exhibit 5: Amendment to Construction Loan Agreement, dated
April 10, 1995, among BMDC, MPI and Winners.
Exhibit 6: Construction Loan Agreement Amendment V, dated July
7, 1995, among BMDC, MPI and Winners.
Exhibit 7: Letter from Stewart Weisman, Acting Secretary and
General Counsel of BMDC, to MPI, dated October 31,
1995.
Exhibit 8: Letter Agreement, dated November 9, 1995, among
Winners, MPI and BMDC.
Exhibit 9: Letter Agreement, dated November 28, 1995, among
BMDC, Winners and MPI.
Exhibit 10: Letter Agreement, dated January 12, 1996, among
Winners, MPI and BMDC.
Exhibit 11: Amendment of Construction Loan Agreement, dated
September 19, 1996, among the Trustee, Winners and
MPI.
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
DATED: January 20, 1999
/s/ Richard C. Breeden
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Name: Richard C. Breeden, as Trustee
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EXHIBIT 1
CONSTRUCTION LOAN AGREEMENT
Construction Loan Agreement, dated as of June 27, 1994 among
BENNETT MANAGEMENT & DEVELOPMENT CORP., a New York corporation ("Lender"),
MOUNTAINEER PARK, INC., a West Virginia corporation ("Borrower"), and WINNERS
ENTERTAINMENT, INC., a Delaware corporation and parent of Borrower
("Winners").
WHEREAS, Borrower desires to obtain a loan of $10,200,000 in order
to finance the refurbishment of Mountaineer Racetrack and Resort, located in
Chester, West Virginia, which is owned by Borrower and to finance certain
other expenditures; and
WHEREAS, Gamma International, Ltd. ("Gamma") has been designated as
the manager of non pari-mutuel gaming activities at Mountaineer Racetrack and
Resort pursuant to the Management Agreement dated June 2, 1994 (as it may be
amended from time to time, the "Management Agreement"); and
WHEREAS, the Management Agreement provides that Borrower may
terminate the Management Agreement on June 30, 1994, if Gamma has not
obtained a commitment for a $10,000,000 secured financing for Borrower; and
WHEREAS, Lender is willing to provide Borrower with a $10,200,000
line of credit to be used to finance the refurbishment of Mountaineer
Racetrack and Resort and to pay certain other expenses; and
WHEREAS, Lender is also willing to permit Borrower to make a short
term loan of up to $500,000 to Winners with a portion of the proceeds from
the Loans (as defined below); and
WHEREAS, to induce the Lender to make the Loans contemplated
hereby, Winners has agreed to issue shares of its common stock to the Lender
in accordance herewith; and
WHEREAS, Borrower has agreed to secure such line of credit with a
first priority mortgage and security interest in Mountaineer Racetrack and
Resort pursuant to a credit line deed of trust dated as of June 27, 1994
between Borrower and Louis S. Southworth, II and Ellen S. Cappellanti, as
Trustees (the "Deed of Trust").
NOW, THEREFORE, in consideration of the premises and agreements
herein contained, the parties hereto, hereby agree as follows:
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ARTICLE I.
Amount and Terms of the Loans
1.1 Commitment. Subject to the terms and conditions hereof,
Lender agrees to make loans (each, a "Loan" and collectively the "Loans") to
Borrower from time to time in accordance with the funding schedule set forth
on Exhibit A (the "Funding Schedule") in an aggregate principal amount not to
exceed $10,200,000; provided, however, that Lender shall not relend any
amount which has been prepaid by Borrower.
1.2 Note; Payment of Interest. The Loans made by Lender shall be
evidenced by a promissory note of Borrower, substantially in the form of
Exhibit B hereto with appropriate insertions as to the date and principal
amount of each Loan (the "Note"), payable to the order of Lender. The
principal amount of the Loan shall bear interest at the rate of 12.5% per
annum; provided, however, that (x) in the event that Borrower fails to make
any payment of principal of, or interest on, the Loans when due (whether at
the stated maturity, by acceleration or otherwise), any such overdue
principal or interest amount shall bear interest at a rate of 14.5% per annum
from the date of such non-payment until paid in full and (y) the interest
rate shall be subject to increase in accordance with Section 2.4(a) and
2.4(b). Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. Interest shall be payable monthly in arrears
on the last business day of each month commencing July 1994.
1.3 Procedure for Borrowing. Borrower may borrow on any business
day in accordance with the Funding Schedule; provided that Borrower shall
give Lender written notice (the "Borrowing Notice") at least five business
days prior to the requested borrowing date specifying the amount to be
borrowed, the requested borrowing date, and the name of the bank and account
number to which funds shall be transferred. Each Borrowing Notice shall be
accompanied by a certificate of either of the Co-Chairmen of the Board of
Directors of Borrower stating that (i) each of the representations and
warranties made by Borrower in or pursuant to this Agreement and the Deed of
Trust are true and correct on and as of such date as if made on and as of
such date, (ii) as of such date, Borrower is in compliance with all the
covenants contained in Article V of this Agreement, (iii) no Default or Event
of Default (as such terms are defined in Section 7.1 hereof) shall have
occurred and be continuing on such date, and (iv) the proceeds of the Loan
requested pursuant to such Borrowing Notice will be used in accordance with
Section 3.10 hereof. Such borrowing will then be made available to Borrower
by Lender by wire transfer in immediately available funds to the bank account
specified in the Borrowing Notice.
1.4 Optional Prepayments of Loans. Borrower may at any time and
from time to time, prepay the Loans, in whole or in part, without premium or
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penalty upon one business day's notice to Lender, specifying the date and
amount of prepayment.
1.5 Repayment of Loans. To the extent the Loans are not prepaid
in full on or prior to July 1, 1995 in accordance with Section 1.4 hereof,
Borrower shall repay the outstanding principal amount of the Loans as of such
date in 36 equal monthly installments on the last business day of each month
commencing in July 1995.
1.6 Special Repayment Terms. In the event that Gamma's management
services under the Management Agreement are not approved by the West Virginia
Lottery Commission by October 1, 1994, then notwithstanding any other
provision of this Agreement, Lender shall have no further obligations to make
additional Loans under this Agreement and Borrower shall repay the principal
amount of the Loans outstanding as of such date in 18 equal monthly
installments on the last business day of each month commencing October 1994.
1.7 Security for Loans. The Loans shall be secured by the
Collateral (as defined in the Deed of Trust) pursuant to the Deed of Trust.
ARTICLE II.
Issuance of Common Stock, Registration Rights, Call and Put
2.1 Grant of Common Stock to Lender. In order to induce Lender to
enter into this Agreement and to make the Loans, Winners hereby agrees to
issue to Lender, from time to time, shares of its common stock, par value
$.00001 per share ("Winners Common Stock"), as follows. For each $1.00 of
Loans made hereunder, Lender shall be entitled to receive .05 of a share of
Winners Common Stock subject to adjustment by Winners in an equitable manner
in the event of a stock split, combination, reclassification or similar event
with respect to Winners Common Stock. Such shares to be issued substantially
contemporaneously with the making of any such Loan and will be held by Lender
in accordance with the terms of this Agreement.
2.2 Issuance of Additional Shares.
(a) In addition to any issuance of shares of Winners Common
Stock pursuant to Sections 2.1 or 2.2(b), in the event that the Loans have
not been prepaid in full by October 1, 1995, Winners shall issue to Lender on
October 2, 1995, a number of shares of Winners Common Stock equal to (x) .175
multiplied by the outstanding principal amount of the Loans as of October 1,
1995, divided by (y) the Average Market Price (as defined below) on October
1, 1995. For purposes of this Agreement (i) the "Average Market Price" at
any date shall be deemed to be the average of the Current Market Prices for
the 20 consecutive trading days prior to such date and (ii) the "Current
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Market Price" on any given day shall be (w) if the Winners Common Stock is
listed or admitted to unlisted trading privileges on a National Securities
Exchange (defined as any exchange registered with the Securities and Exchange
Commission as a "national securities exchange" under the Securities Exchange
Act of 1934), the last sales price of Winners Common Stock on the National
Securities Exchange in or nearest the City of New York on which the shares of
Winners Common Stock shall be listed or admitted to unlisted trading
privileges (or the quoted closing bid price if there are no sales on such
Exchange) on such day, (y) if the Winners Common Stock is included in the
Nasdaq National Market ("NM") or on Nasdaq, the last sales price of Winners
Common Stock in the NM or on Nasdaq, as the case may be (or the quoted
closing bid price if there are no sales on the NM or on Nasdaq) on such day,
or (z) if the Winners Common Stock is not so listed, admitted or included,
the mean between the high and low bid prices of Winners Common Stock in the
over-the-counter market on such day as reported by the National Quotation
Bureau Incorporated, or any similar organization designated by Winners, or if
not so available in any such manner, as shall be determined by Winners, which
determination shall be conclusive.
(b) In addition to any issuance of shares of Winners Common
Stock pursuant to Sections 2.1 or 2.2(a), in the event that the Loans have
not been prepaid in full by January 1, 1997, Winners shall issue to Lender on
January 2, 1997, a number of shares of Winners Common Stock equal to (x) .175
multiplied by the outstanding principal amount of the Loans as of January 1,
1997, divided by (y) the Average Market Price on January 1, 1997.
2.3 Reservation of Winners Common Stock. Winners hereby agrees to
reserve and keep available out of authorized but unissued shares of Winners
Common Stock, a sufficient number of shares of Winners Common Stock for the
purpose of enabling it to satisfy any obligation to issue shares of Winners
Common Stock in accordance with Sections 2.1 and 2.2.
2.4 Registration Rights.
(a) Winners shall file a registration statement on the
appropriate form to register the sale from time to time in the open market by
Lender of all of the shares of Winners Common Stock acquired by the Lender in
accordance with Section 2.1. Winners shall cause such registration statement
to be declared effective no later than October 1, 1995. Winners shall use
its reasonable best efforts to keep such registration statement effective
until the earlier of (i) the date Lender has disposed of all of the shares of
Winners Common Stock that it acquired pursuant to Section 2.1, (ii) the date
that Lender is able to sell all such shares in accordance with Rule 144
within a 90-day period or (iii) July 1, 1998. If such registration statement
is not declared effective by October 1, 1995, then during the period from
October 1, 1995 until the date that such registration statement is declared
effective, the interest rate on the outstanding principal amount of the Loans
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shall be increased to 22.5% per annum. Lender shall have no remedy for
Winners' breach of its obligation to cause such registration statement to be
effective by October 1, 1995 except for such increase in the interest rate on
the Loans.
(b) Winners shall cause shares of Winners Common Stock issued
to the Lender pursuant to Sections 2.2(a) and (b) to be registered for sales
in the open market as soon as practicable after the issuance thereof on the
same terms and conditions as relate to the shares of Winners Common Stock to
be registered under Section 2.4(a), including the increase in the interest
rate during the default period, except that each registration statement with
respect to such shares must be declared effective no later than eight months
after the date of issuance of the shares covered thereby.
(c) It shall be a condition precedent to the obligation of
Winners to take any action under this Section 2.4, that Lender shall furnish
to Winners such information regarding Lender and the offering as Winners
shall reasonably request.
2.5 Call.
(a) For so long as any of the Loans remain outstanding, but
in no event later than July 1, 1998, Winners shall have the right (the
"Call") from time to time to repurchase any shares of Winners Common Stock
that are acquired by the Lender pursuant to this Agreement and which have not
been sold by Lender in accordance with this Agreement for a price per share
equal to the Repurchase Price, as defined below. If Winners desires to
exercise the Call, it shall give Lender written notice thereof (a "Call
Notice"), which notice shall specify the number of shares to be purchased
(the "Purchased Shares"), the total purchase price and a date and place for
closing which must be within 15 days of such notice or, if later and if
applicable, on the second business day following receipt of all required
governmental approvals. Lender may not sell any shares of Winners Common
Stock subject to a Call Notice from and after the date of receipt of the Call
Notice; provided, however, that such restriction shall terminate if Winners
shall not have consummated such purchase within 60 days after delivery of the
Call Notice. At such closing, Lender shall deliver to Winners the Purchased
Shares, free and clear of all liens, claims and other encumbrances
(collectively, "Liens"), in the form of certificates representing such
shares, accompanied by appropriate stock powers duly executed or endorsed in
blank with appropriate transfer tax stamps affixed, against payment of the
purchase price therefor in immediately available funds.
(b) From the date hereof until October 1, 1995, the
"Repurchase Price" shall equal $6.00 per share, provided, however, that such
repurchase price shall be subject to adjustment by Winners in an equitable
manner in the event of a stock split, combination, reclassification or
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similar event with respect to Winners Common Stock. From October 2, 1995
until January 2, 1997, the "Repurchase Price" shall be an amount equal to the
Average Market Price on October 1, 1995, plus $1.50. From January 3, 1997
until July 1, 1998, the "Repurchase Price" shall be an amount equal to the
Average Market Price on January 2, 1997, plus $1.50. Notwithstanding
anything contained herein to the contrary, the Repurchase Price for the
shares of Winners Common Stock acquired by Lender pursuant to Section 2.1
shall not be less than $4.50 per share, subject to adjustment by Winners in
an equitable manner in the event of a stock split, combination,
reclassification or similar event with respect to Winners Common Stock.
2.6 Price Guarantee. If, during the period from the date hereof
until the earlier of July 1, 1998 or the date that all of the Loans have been
repaid in full, Lender sells any shares of Winners Common Stock acquired by
it pursuant to this Agreement in the open market, for a price less than the
then applicable Repurchase Price, as soon as practicable following receipt by
Winners of appropriate evidence (the "Sale Notice") of such sale, including
the number of shares of Winners Common Stock that were sold, the sales dates
and the sales price or prices, Winners shall issue to Lender a number of
shares of Winners Common Stock with a value based on the Average Market Price
on the date of receipt of the Sale Notice equal to (x) the number of shares
of Winners Common Stock which were sold and referred to in the Sales Notice
multiplied by (y) the difference between (i) the then applicable Repurchase
Price and (ii) the per share sale price for such shares; provided, however,
that Winners shall not be required to issue any of such shares if the
applicable sale by Lender was not then permitted under this Agreement. If
there are multiple sales prices and/or different Repurchase Prices, a
separate computation shall be made for each such sales price and/or different
Repurchase Prices to determine the appropriate number of shares of Winners
Common Stock to be issued.
ARTICLE III.
Representations and Warranties of Winners and Borrower
Winners and Borrower hereby jointly and severally represent and
warrant to Lender that:
3.1 Organization, Existence, and Qualification. Each of Winners
and Borrower is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has all requisite
corporate power and authority to own its properties and carry on its business
as now conducted and as presently proposed to be conducted. Borrower is duly
qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires it to be so qualified (other than such
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jurisdictions where the failure to so qualify would not have a material
adverse effect on Borrower's business, operations, results of operations or
financial condition).
3.2 Authority. Each of Winners and Borrower has the corporate
power and authority to execute, deliver and perform this Agreement, the Note
(in the case of Borrower only) and the Deed of Trust (in the case of Borrower
only). The execution, delivery and performance of this Agreement, the Note
(in the case of Borrower only) and the Deed of Trust (in the case of Borrower
only) have been duly authorized by all requisite corporate action on behalf
of Winners and Borrower. This Agreement, the Note (in the case of Borrower
only) and the Deed of Trust (in the case of Borrower only) are the legal,
valid and binding obligations of Winners and Borrower, enforceable against
Winners and Borrower in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by principles governing the availability of equitable remedies.
3.3 Consents; No Violation. No approval or action of, or filing,
registration or declaration with, or notice to, any governmental or
regulatory body, authority, bureau or agency or any other person or entity is
required to be made by Winners or Borrower in connection with the execution,
delivery and performance of this Agreement, the Note (in the case of Borrower
only) and the Deed of Trust (Borrower only). The execution, delivery and
performance of this Agreement, the Note (in the case of Borrower only) and
the Deed of Trust (Borrower only) by Winners and Borrower will not (a)
conflict with or result in a breach of any provision of its Certificate of
Incorporation or By-laws, (b) result in a default (or give rise to any right
of termination, cancellation or acceleration) under any agreement, contract
or other instrument to which Winners or Borrower is a party, by which Winners
or Borrower is bound or to which any part of Winners' or Borrower's
properties or assets is subject, or (c) violate any judgment, decree or order
of any court or governmental authority or any law, statute, rule or
regulation.
3.4 Financial Statements
(a) Winners has previously furnished to Lender (i) audited
consolidated balance sheets of Winners and its subsidiaries as of December
31, 1993 and 1992, and (ii) the related audited consolidated statements of
operations and retained earnings and cash flows of Winners and its
subsidiaries for the fiscal years ended December 31, 1993 and 1992, together
with the respective reports thereon of Corbin & Wertz, Winners' independent
certified public accountants. The consolidated financial statements referred
to in this Section (including the related notes thereto) present fairly, in
all material respects, the consolidated financial position of Winners and its
subsidiaries as of their respective dates, and the consolidated results of
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their operations and their cash flows for their respective periods, in
conformity with generally accepted accounting principles consistently
applied.
(b) Winners has also previously furnished to Lender (i) the
unaudited consolidated balance sheet of Winners and its subsidiaries as of
March 31, 1994 and (ii) the related unaudited consolidated statements of
operations and retained earnings and cash flows of Winners and its
subsidiaries for the three-month period then ended. The consolidated
financial statements referred to in this Section present fairly, in all
material respects, the consolidated financial position of Winners and its
consolidated subsidiaries as of March 31, 1994, and the consolidated results
of their operations and cash flows for the three-month period then ended, in
conformity with the accounting principles historically followed by Winners in
preparing its unaudited internal financial statements.
3.5 Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of Winners' or Borrower's knowledge
and belief, any basis therefor or threat thereof, against or affecting
Winners or Borrower which challenge the validity of this Agreement, the Note
or the Deed of Trust or the right of Winners and/or Borrower to enter into
this Agreement, the Note or the Deed of Trust, or to consummate the
transactions contemplated hereby and thereby, or, except as disclosed in
Winners' Annual Report on Form 10-K for the year ended December 31, 1993,
which are reasonably expected by Winners or Borrower to result, either
individually or in the aggregate, in any material adverse change in the
business, operations, prospects, conditions, affairs or results of operations
of Winners or Borrower or in any of Winners' or Borrower's properties or
assets, or in any material impairment of the right or ability of Winners or
Borrower to carry on its business as now conducted or as proposed to be
conducted.
3.6 Winners Common Stock to Be Issued to Lender. All shares of
Winners Common Stock, when issued to Lender in accordance with this
Agreement, will be validly authorized, issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the holder thereof and
will be issued without violation of any preemptive right.
3.7 Deed of Trust; Collateral. Borrower has good and marketable
title to the Collateral free and clear of all Liens. The Deed of Trust, when
executed and delivered in accordance with this Agreement and upon the proper
filing of financing statements under the Uniform Commercial Code with respect
to the Deed of Trust and the Collateral as provided therein will vest in
Lender a valid and perfected first priority security interest in the
Collateral free and clear of all Liens and enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other
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similar laws affecting creditors' rights generally or by principles governing
the availability of equitable remedies.
3.8 Environmental Matters. Except as described on Schedule 3.8,
each parcel of real property owned or operated by Borrower and included in
the Collateral (the "Properties") and all operations and facilities at the
Properties and Facility (as defined in the Management Agreement) are in
compliance with all environmental laws (as defined in the Deed of Trust) and
there is no contamination at any of the Properties or the Facility (including
contamination with respect to hazardous materials (as defined in the Deed of
Trust)) or violation of any environmental law which could interfere with the
continued operation of any of the Properties or the Facility in the manner in
which they are currently conducted or are proposed to be conducted. Except
as described on Schedule 3.8, no hazardous materials have been generated,
treated, stored, disposed of, at, on or under any of the Properties or the
Facility in violation of environmental laws.
3.9 Compliance With Law. Borrower is in compliance with all
federal, state and local laws, rules and regulations which are applicable to
or binding upon Borrower or any of its Properties or to which Borrower or any
of its Properties is subject.
3.10 Purpose of Loans. The proceeds of the Loans will be used by
Borrower only to finance the refurbishment of Mountaineer Racetrack and
Resort in accordance with plans which have been approved by Gamma, as such
plans may be revised from time to time in accordance with the approval of
Gamma, to pay up to $200,000 of investment banking fees and to loan up to
$500,000 to Winners, which loan must be repaid to Borrower no later than
December 31, 1994.
ARTICLE IV.
Representations, Warranties and Covenants of Lender
Lender hereby represents and warrants to and covenants with
Borrower and Winners that:
4.1 Purchase for Investment.
(a) All shares of Winners 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
Winners Common Stock in any transaction which would be in violation of the
Securities Act of 1933, as amended.
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(b) Each certificate representing the shares of Winners
Common Stock acquired by Lender in accordance with this Agreement shall be
endorsed with the legends set forth below. Lender shall not make any
transfer of such shares of Winners Common Stock without first complying with
the restrictions on transfer described in all such legends.
"THE SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ANY
INTEREST THEREIN OR RIGHT WITH RESPECT THERETO MAY BE
MADE ONLY IN ACCORDANCE WITH THE TERMS OF LOAN AGREEMENT
DATED AS OF JUNE 27, 1994 AMONG BENNETT MANAGEMENT &
DEVELOPMENT CORP., MOUNTAINEER PARK, INC., AND WINNERS
ENTERTAINMENT, INC., AS IT MAY BE AMENDED FROM TIME TO
TIME, A COPY OF WHICH IS ON FILE WITH WINNERS
ENTERTAINMENT, INC. A TRANSACTION IN VIOLATION OF SUCH
LOAN AGREEMENT WILL BE INEFFECTIVE. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
PURCHASE OPTIONS DESCRIBED IN SUCH LOAN AGREEMENT."
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED
UNDER SUCH ACT OR WINNERS ENTERTAINMENT, INC. RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO WINNERS ENTERTAINMENT, INC.
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
4.2 No Sale Prior to October 1, 1995. Lender agrees that it shall
not sell, transfer, assign, hypothecate or otherwise dispose of any of the
shares of Winners Common Stock acquired under this Agreement prior to October
1, 1995; provided, however, that upon the occurrence of an Event of Default
(as defined below) and until such Event of Default has been cured there shall
be no restrictions under this Section 4.2 on the ability of Lender to sell
any shares of Winners Common Stock acquired under this Agreement.
4.3 Notice to Transfer Agent. Upon satisfaction of Winners'
obligations to issue shares of Winners Common Stock hereunder to Lender,
Lender shall join with Winners in a notice to the transfer agent for Winners
Common Stock which notice shall state that such transfer agent shall remove
any reservation of shares of Winners Common Stock for issuance to the Lender
then on its records.
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ARTICLE V.
Covenants of Borrower
Borrower hereby agrees that at all times the Loans may be made in
accordance with the Funding Schedule and thereafter for as long as the Note
remains outstanding and unpaid or any other amount is owing to Lender
hereunder or under the Deed of Trust. Borrower shall:
5.1 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it, preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary
or desirable in the normal conduct of its business and comply with all
contractual obligations and requirements of law.
5.2 Maintenance and Repair of Collateral. Keep and maintain the
Collateral in good condition and repair free and clear of all Liens (other
than the Lien of the Deed of Trust), make or cause to be made, as and when
necessary, all repairs, renewals and replacements, structural and
nonstructural, exterior and interior, ordinary and extraordinary, foreseen
and unforeseen which are necessary to so maintain the Collateral and comply
with all laws, ordinances, rules and regulations now or hereafter affecting
the Collateral or any part thereof or the use thereof or requiring any
alterations or improvements.
5.3 Insurance. Maintain with financially sound and reputable
insurance companies, insurance on the Collateral in at least such amounts and
against at least such risks as are usually insured against in the same
general area by companies engaged in the same or a similar business and
furnish to Lender, upon written request, full information as to the insurance
carried.
5.4 Environmental Laws.
(a) Comply with, and insure compliance by all tenants and
subtenants, if any, with, all environmental laws with respect to the
Properties and the Facility and comply with and obtain and maintain and
insure that all tenants and subtenants obtain and comply with and obtain and
maintain any and all licenses, approvals, registrations or permits required
with respect to the Properties and the Facility by environmental laws;
(b) Conduct and complete all investigations, studies,
sampling and testing and all remedial, remedial removal and other actions
required with respect to the Properties and the Facility under environmental
laws and promptly comply with all lawful orders and directives of all
governmental authorities respecting environmental laws; and
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(c) Defend, indemnify and hold harmless Lender from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of or noncompliance with environmental laws applicable to the
Properties and the Facility, or any orders, requirements or demands of
governmental authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory
fees, court costs and litigation expenses.
5.5 Access to Information. Permit representatives of Lender to
visit and inspect the Properties and the Facility, to examine and make
abstracts from any of its books and records at any reasonable time and as
often as may reasonably be desired and to discuss the business, operations,
Properties and financial and other condition of Borrower with officers and
employees of Borrower and with Borrower's certified public accountants.
5.6 Use of Loans. Use the proceeds of the Loans in accordance
with Section 3.10.
5.7 Notices. Promptly give notice to Lender of the occurrence of
any event that with the giving of notice or the passage of time or both would
constitute an Event of Default (a "Default") or an Event of Default.
ARTICLE VI.
Conditions Precedent to the Making of Loans
6.1 Conditions Precedent to Making Loans. Lender's obligation
pursuant to this Agreement to make the Loans available to Borrower in
accordance with the Funding Schedule is subject to the receipt on or prior to
the date hereof of the following documents by Lender in form and substance
satisfactory to Lender:
(a) the Note;
(b) a duly executed counterpart of the Deed of Trust;
(c) copies, certified by the Secretary of Winners of
resolutions of the board of Directors of Winners authorizing the
execution, delivery and performance by Winners of this Agreement
and the transactions contemplated hereby;
(d) certificates of incumbency and signatures of the officers
of Winners authorized to sign this Agreement;
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(e) copies, certified by the Secretary of Borrower, of
resolutions of the Board of Directors of Borrower authorizing the
execution, delivery and performance by Borrower of this Agreement,
the Note, the Deed of Trust, and the Management Agreement and the
transactions contemplated hereby and thereby;
(f) certificates of incumbency and signatures of the officer
of Borrower authorized to sign this Agreement, the Note, the Deed
of Trust, and the Management Agreement;
(g) evidence of the filing of financing statements under the
Uniform Commercial Code with respect to the Deed of Trust and the
Collateral duly completed and executed by Borrower;
(h) an opinion of Jackson & Kelly, counsel to Winners and
Borrower in form and substance satisfactory to Lender with respect
to such matters as are reasonably requested by Lender;
(i) all required approvals, if any, from the West Virginia
Lottery Commission to make the Loans and obtain a first priority
security interest in the Collateral;
(j) title insurance on the Properties satisfactory to it; and
(k) such other instruments and documents with respect to
Borrower as Lender may reasonably request.
ARTICLE VII.
Events of Default
7.1 Events of Default. Upon the occurrence of any of the
following events ("Events of Default");
(i) Borrower shall fail to pay any principal of or interest
on the Loan on the date that any such amount becomes due in accordance with
the terms hereof; or
(ii) The Borrower or Winners shall fail to perform or comply
with any covenant or agreement to be observed or performed by it under this
Agreement (other than those covered by clause (i) above and except the
covenant contained in Section 2.4(b) or the second sentence of Section
2.4(a)) and such failure shall continue unremedied for a period of ten days
after written notice thereof shall have been given by Lender to Borrower; or
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(iii) There shall occur an Event of Default (as defined in
the Deed of Trust) under the Deed of Trust; or
(iv) There shall occur a default by Borrower under the
Management Agreement; or
(v) Any representation or warranty made by Borrower and/or
Winners in this Agreement, the Deed of Trust, or the Management Agreement or
which is contained in any certificate, document or financial or other
statement furnished at any time by Borrower and/or Winners under this
Agreement, the Deed of Trust or the Management Agreement shall prove to have
been incorrect in any material respect on or as of the date made or deemed
made; or
(vi) one or more final judgments for the payment of money in
excess in the aggregate of $500,000 shall be rendered against Borrower or any
of its subsidiaries and the same shall remain undischarged for a period of
sixty (60) days during which execution of such judgment shall not be
effectively stayed; or
(vii) Any breach or default shall occur under any other
agreement involving the borrowing of money under which Borrower or any of its
subsidiaries may be obligated as borrower or guarantor; or
(viii) (a) Winners or Borrower or any of their subsidiaries
shall commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction relating to bankruptcy, insolvency,
reorganization or relief or debtors seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other similar relief with respect to
it or its debts or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or Winners or any of its subsidiaries shall make a general assignment
for the benefit of its creditors; or (b) there shall be commenced against
Winners or Borrower or any of their subsidiaries any case, proceeding or
other action of a nature referred to in clause (a) above which (A) results in
the entry of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of 60 days or
(c) Winners or Borrower or any of their subsidiaries shall admit in writing
its inability to pay its debts as they become due;
then, (w) upon the occurrence of any such event specified in paragraphs (i)-
(vii) above, Lender may, by notice to Borrower suspend or terminate its
commitment to make Loans hereunder and/or, declare the Loans and all other
amounts owing under this Agreement, the Note and the Deed of Trust to be
immediately due and payable, whereupon they shall immediately become due and
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payable without presentment, demand, protest or any other notice of any kind
all of which are hereby expressly waived, (x) upon the occurrence of any such
event specified in paragraph (viii) above, lender shall have no further
obligation to make Loans hereunder and the Loans and all other amounts owning
under this Agreement, the Note and the Deed of Trust shall immediately become
due and payable without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived, (y) in the case of either
clause (w) or (x), proceed, by appropriate court action either at law or in
equity to enforce performance by Winners and/or Borrower of the applicable
covenants and agreements contained in this Agreement and/or the Deed of Trust
or to recover damages for breach thereof, and (z) in the case of either
clause (w) or (x), exercise any other right, power, privilege or remedy
provided by law or in this Agreement or the Deed of Trust.
7.2 Waivers. Lender may, at its election, waive any Event of
Default and its consequences by notice to Borrower to that effect, and
thereupon the respective rights of the parties shall be as they would have
been if no such Event of Default had occurred and no such notice had been
given. Notwithstanding the provisions of this Section, it is expressly
understood and agreed by Borrower that no such waiver, rescission or
annulment shall extend to or affect any other or subsequent Event of Default
or impair any rights, powers or privileges consequent thereon.
ARTICLE VIII.
Miscellaneous
8.1 Amendments and Waivers. Neither this Agreement, the Note, nor
any terms hereof or thereof may be changed, waived, discharged or terminated
without the prior written consent of the party against whom enforcement is
sought.
8.2 Expenses. Borrower shall promptly upon the receipt of
evidence thereof pay to Lender (i) all reasonable out-of-pocket expenses of
Lender and Gamma, including reasonable fees and disbursements of counsel in
connection with this Agreement, the Note, the Deed of Trust and the
transactions contemplated hereby and thereby, including fees, and expenses
incurred in connection with any waiver or consent under such agreements or
any amendment thereof and (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by Lender and Gamma, including reasonable
fees and disbursements of counsel, in connection with such Event of Default
and collection and other enforcement proceedings resulting therefrom.
Borrower shall indemnify Lender against any taxes, assessments or charges
made by any governmental authority by reason of the execution, delivery and
performance of this Agreement, the Note or the Deed of Trust.
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8.3 Headings. The section headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
8.4 Notices. All notices or other communications required or
permitted hereunder shall be given in writing and shall be deemed sufficient
if (i) delivered by hand or mailed by registered or certified mail, postage
prepaid (return receipt requested), or (ii) delivered or sent by facsimile as
follows:
If to Borrower:
c/o Winners Entertainment, Inc.
30448 Rancho Viejo Road, Suite 110
San Juan Capistrano, California 92675
Attention: President
Telecopy No.: (714) 443-6092
If to Lender:
c/o The Bennett Funding Group
2 Clinton Square
Syracuse, New York 13202
Attention: Kevin J. Kuppel
Telecopy No.: (315) 422-9361
With a copy to:
Gamma International, Ltd.
Suite 300
Bayport One
Yacht Club Drive
West Atlantic City, New Jersey 08232
Attention: President
Telecopy No: (609) 272-7772
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been
given as of the date so delivered or three days after the date so mailed;
provided, however, that any notice or communication changing any of the
addresses set forth above shall be effective and deemed given only upon its
receipt. Any notice, demand or other communication sent by facsimile shall
be deemed given upon receipt in a legible form by the party being served,
provided that the sending party shall, immediately prior to providing such
notice by facsimile, notify the intended recipient by telephone that such
notice is being provided by facsimile.
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8.5 Assignment; No Third Party Beneficiary. This Agreement shall
be binding upon and inure to the benefit solely of the parties hereto and
their permitted assigns and no other person shall be entitled to any rights
or benefits hereunder. This Agreement may not be assigned by any party
without the prior written consent of the other parties hereto; provided,
however, that Lender may assign its rights hereunder (except insofar as it
related to Winners Common Stock) but not its obligations hereunder without
the prior written consent of Borrower. Nothing expressed or implied in this
Agreement is intended to or shall be construed to confer upon or give to any
person other than the parties hereto and their successors or permitted
assigns any rights or remedies under or by reason of this Agreement.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts and shall become effective when executed by all of the parties
hereto, notwithstanding the fact that all of them may not have executed the
same counterpart.
8.7 Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.
8.8 APPLICABLE LAW AND JURISDICTION. THE VALIDITY OF THIS
AGREEMENT AND THE NOTE, THEIR CONSTRUCTION, INTERPRETATION AND ENFORCEMENT,
AND THE RIGHTS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE DETERMINED
UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WIT THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF. EACH PARTY HERETO AGREES THAT ANY SUIT, ACTION OR OTHER PROCEEDING
ARISING OUT OF THIS AGREEMENT OR THE NOTE SHALL BE BROUGHT AND LITIGATED ONLY
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK (IF
SUCH COURT WILL ACCEPT JURISDICTION AND, IF NOT, THE COURTS OF THE STATE OF
NEW YORK LOCATED IN THE COUNTY OF ONONDAGA, STATE OF NEW YORK) AND EACH PARTY
HERETO HEREBY IRREVOCABLY CONSENTS TO PERSONAL JURISDICTION AND VENUE IN ANY
SUCH COURT AND HEREBY WAIVES ANY CLAIM IT MAY HAVE THAT SUCH COURT IS AN
INCONVENIENT FORUM FOR THE PURPOSES OF ANY SUCH SUIT, ACTION OR OTHER
PROCEEDING. EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS OF SUCH PARTY SPECIFIED IN
SECTION 8.4 OF THIS AGREEMENT.
8.9 Limitation. Anything herein or in the Note to the contrary
notwithstanding, no provision of this Agreement or the Note shall require the
payment, or permit the collection, of interest to the extent that receipt of
such payment by Lender would be contrary to the provisions of any applicable
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law limiting the maximum rate of interest or the fees that may be charged or
collected by Lender.
8.10 WAIVER OF CONSEQUENTIAL AND OTHER DAMAGES AND TRIAL BY JURY.
EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO
THE EXTENT PERMITTED BY APPLICABLE LAW) (i) ANY RIGHT TO OR CLAIM OF ANY
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AND (ii) ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT, THE NOTE OR ANY OTHER AGREEMENT OR DOCUMENT REFERRED TO HEREIN OR
THEREIN AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE
SITTING WITHOUT A JURY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BENNETT MANAGEMENT & DEVELOPMENT CORP.
By: /s/ E.T. "Bud" Bennett
--------------------------------------
Name: E.T. "Bud" Bennett
Title: CEO
MOUNTAINEER PARK, INC.
By: /s/ Michael R. Dunn
--------------------------------------
Name: Michael R. Dunn
Title: Secretary and Co-Chairman
WINNERS ENTERTAINMENT, INC.
By: /s/ Michael R. Dunn
--------------------------------------
Name: Michael R. Dunn
Title: President
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Exhibit A
The following table indicates the date on which the indicated
amounts will become available for borrowing:
Commencing on June 28, 1994 $2.2 Million
Commencing on August 1, 1994 $2.0 Million
Commencing on September 1, 1994 $1.5 Million
Commencing on October 1, 1994 $1.5 Million
Commencing on November 1, 1994 $1.5 Million
Commencing on December 1, 1994 $1.5 Million
<PAGE>
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Exhibit B
NOTE
$10,200,000 June 27, 1994
FOR VALUE RECEIVED, MOUNTAINEER PARK, INC., a West Virginia
corporation (the "Company"), hereby promises to pay, on July 1, 1998, to the
order of Bennett Development & Management Corp. (the "Lender"), at the
principal office of the Lender in Syracuse, New York, the principal sum of
the lesser of TEN MILLION, TWO HUNDRED THOUSAND DOLLARS ($10,200,000) or the
aggregate unpaid principal amount of the Loans made by the Lender to the
Company pursuant to the Loan Agreement referred to below, which amount shall
be indicated from time to time on the table attached hereto (provided, that
no failure to make such a notation shall affect the obligations of the
Company to repay its Loans outstanding from time to time made under the Loan
Agreement), in lawful money of the United States, and to pay interest on the
unpaid principal amount of the Loans from the date hereof, in like money and
funds in accordance with the terms of the Loan Agreement.
This Note is the Note referred to in the Construction Loan
Agreement, dated as of June 27, 1994, among the Lender, the Company and
Winners Entertainment, Inc. (together with all extensions, renewals,
amendments, substitutions or replacements (the "Loan Agreement")), and is
entitled to the security and benefits therein provided and provided in the
Credit Line Deed of Trust dated as of June 27, 1994 between the Company, and
Louis S. Southworth, II, and Ellen S. Cappellanti, as Trustees.
All of the terms, conditions, covenants, representations and
warranties of the Loan Agreement are incorporated herein by reference as if
the same were fully set forth herein, including, but not limited to, the
provisions thereof relating to the repayment of, prepayment of, and the
acceleration of the maturity of, the indebtedness evidenced by this Note. All
terms used herein as defined terms which are not defined herein but are
defined in the Loan Agreement shall have the respective meanings herein as
are given them in the Loan Agreement.
Upon the occurrence of an Event of Default specified in the Loan
Agreement, the principal of the Loans and accrued interest thereon may be
declared to be and shall thereupon become, or may automatically become,
forthwith due and payable, as provided in the Loan Agreement.
<PAGE>
<PAGE>
This Note shall be governed by and construed in accordance with the
laws of the State of New York without regard to the principles thereof
regarding conflicts of laws.
MOUNTAINEER PARK, INC.
By: _____________________________________
Title:
-2-
<PAGE>
<PAGE>
NOTE
Principal Principal
Date of Amount Amount Repaid Balance
Transaction Loaned or Prepaid Outstanding Entered By
- ----------- --------- ------------- ----------- ----------
-3-
EXHIBIT 2
Construction Loan Agreement Amendment
Construction Loan Agreement Amendment: dated as of September 27, 1994 among
Bennett Management & Development Corp., a New York corporation ("Lender"),
Mountaineer Park, Inc., a West Virginia Corporation ("Borrower"), and Winners
Entertainment, Inc., a Delaware corporation and parent of Borrower
("Winners").
WHEREAS, Borrower and Lender desire to amend a Construction Loan Agreement
executed by the parties on June 27, 1994 ("Agreement"); and
WHEREAS, Article VIII, Section 8.1 Amendment and Waivers provides "Neither
this Agreement, the Note, nor any terms hereof or thereof may be changed,
waived, discharged or terminated without the prior written consent of the
party against whom enforcement is sought."; and
WHEREAS, Borrower and Lender desire to amend Article I, Section 1.1,
Commitment, specifically and only Exhibit A the Funding Schedule; and
WHEREAS, Borrower and Lender desire to amend Article I, Section 1.2, Note;
Payment of Interest; and
WHEREAS, Borrower and Lender desire to amend Article I, Section 1.4, Optional
Prepayment of Loans; and
WHEREAS, Borrower and Lender desire to amend Article I, Section 1.5,
Repayment of Loans; and
WHEREAS, Borrower and Lender desire to amend Article I, Section 1.6, Special
Repayment Terms; and
WHEREAS, Borrower and Lender desire to amend Article II, Section 2. 1, Grant
of Common Stock to Lender; and
WHEREAS, all other terms and conditions as set forth in the Agreement and the
Note shall remain as originally executed.
NOW, THEREFORE, in consideration of the premises and agreements herein
contained, the parties, hereto, hereby agree as follows:
<PAGE>
<PAGE>
(1) ARTICLE I, Section 1.1 Exhibit A ("The Funding Schedule") is amended in
its entirety as follows:
Previously Funded 2,600,000
November 4, 1994<F1> 3,100,000
December 2, 1994 1,500,000
January 6, 1994 1,500,000
February 3, 1994 1,500,000
<F1> (or within seven days of the Lottery Commission's approval of
the Gamma Management Agreement, whichever is sooner)
(2) ARTICLE I, Section 1.2, Note; Payment of Interest is amended in its
entirety as follows:
1.2 Note; Payment of Interest. The Loans made by Lender shall be
evidenced by a promissory note of Borrower, substantially in the form
of Exhibit B hereto with appropriate insertions as to the date and
principal amount of each Loan (the "Note"), payable to the order of
Lender. The principal amount of the Loan shall bear interest at the
rate of 12..5% per annum; provided, however, that (x) in the event
that Borrower fail to make any payment of principal of or interest on
the Loans when due (whether at the stated maturity, by acceleration
or otherwise), any such overdue principal or interest amount shall
bear interest at a rate of 14.5% per annum from the date of such non-
payment until paid in full and (y) the interest rate shall be subject
to increase in accordance with Sections 2.4(a) and 2.4(b). Interest
shall be calculated on the basis of a 360-day year for the actual
number of days lapsed. Interest shall be payable monthly in arrears
on the last business day of each month commencing November 1994 or
within seven (7) days of the approval of the West Virginia Lottery
Commission, whichever is sooner.
(3) ARTICLE I, Section 1.4, Optional Prepayment of Loans is amended in
its entirety as follows:
1.4 Optional Prepayments of Loans. Borrower may at any time from
time to time, prepay the Loans, in whole or in part, without premium
or penalty upon one business day's notice to Lender specifying the
date and amount of prepayment. Borrower and Lender agree that any
partial prepayment shall be applied against the principal of the
Loans in the order in which such Loans were made.
-2-
<PAGE>
<PAGE>
(4) ARTICLE I, Section 1.5, Repayment of Loans is amended in its entirety
as follows:
1.5 Repayment of Loans. To the extent the Loans extended prior to
August 18, 1994 are not prepaid in full on or prior to July 1, 1995
in accordance with Section 1.4 hereof, Borrower shall repay the
outstanding principal amount of such Loans as of such date in 36
equal monthly installments on the last business day of each month
commencing in July 1995. To the extent the Loans extended after
August 18, 1994 are not prepaid in full on or prior to November 1,
1995 in accordance with Section 1.4 hereof, Borrower shall repay the
outstanding principal amount of such Loans as of such date in 36
equal monthly installments on the last business day of each month
commencing in November 1995.
(5) ARTICLE I, Section 1.6, Special Repayment Terns is amended in its
entirety as follows:
1.6 Special Repayment Terms. In the event that Gamma's management
services under the management agreement are not approved by the West
Virginia Lottery Commission by November 1, 1994, then notwithstanding
any other provision of this agreement, Lender shall have no further
obligation to make additional Loans under this agreement and Winner
shall repay the principal amount of the Loans outstanding as of such
date in 18 equal monthly installments on the last business day of
each month, commencing November 1994.
(6) ARTICLE II, Section 2. 1, Grant of Common Stock to Lender is amended
by adding the following sentence to the end of such Section:
In the event that Borrower sends Lender a valid Borrowing Notice and
Lender fails to wire transfer such funds within ten business (10)
days of receiving such, Lender shall not be entitled to any shares of
Winners Common Stock under this Section II and shall immediately
deliver to Winners any shares issued to Borrower by Winners pursuant
hereto free and clear of all liens, claims and other encumbrances, in
the form of certificates representing such shares, accompanied by
appropriate stock powers duly executed or endorsed in blank with
appropriate transfer tax stamps affixed.
This Amendment is not intended to nor shall not alter or amend any other
sections of the Construction Loan Agreement. Any terms not herein defined
shall have the terms set forth in the Construction Loan Agreement.
-3-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by the proper and duly authorized officers as of the
day and year first written above.
Bennett Management & Development Corp.
By: /s/ Kevin Kuppel
--------------------------------------
Name: Kevin Kuppel
Title: Treasurer
Mountaineer Park, Inc.
By: /s/ Edson R. Arneault
--------------------------------------
Name: Edson R. Arneault
Title: Pres.
Winners Entertainment, Inc.
By: /s/ Michael R. Dunn
--------------------------------------
Name: Michael R. Dunn
Title:
-4-
EXHIBIT 3
CONSTRUCTION LOAN AGREEMENT AMENDMENT
Construction Loan Agreement Amendment dated December 7, 1994, among
Bennett Management and Development Corp., a New York corporation ("Lender"),
Mountaineer Park, Inc., a West Virginia corporation ("Borrower"), and Winners
Entertainment, Inc., a Delaware corporation and parent of Borrower
("Winners").
WHEREAS, Borrower and Lender desire to amend a Construction Loan
Agreement executed by the parties on June 27, 1994 ("Agreement"); and
WHEREAS; Borrower and Lender desire to amend a Construction Loan
Agreement Amendment executed by the parties on September 27, 1994; and
WHEREAS, Borrower and Lender desire to amend Article I, Section 1.1,
commitment, specifically and only Exhibit A the funding schedule; and
WHEREAS, Borrower and Lender desire to amend Article III, Section 3.10 -
Purpose of the Loans; and
WHEREAS, all other terms and conditions as set forth in the Agreement
and the Amendment and the Note shall remain as originally executed.
NOW, THEREFORE, in consideration of the premises and agreements herein
contained, the parties, hereto, hereby agree as follows:
Article I, Section 1.1. Exhibit A ("the funding schedule") is amended in
its entirety as follows: Lender shall be obligated to transfer funds within
ten (10) business days of receiving a valid borrowing notice. A preliminary
draw schedule will be prepared upon completion of the budgets for the next
series of renovations with such draws being taken on an "as needed" basis
consistent with the construction schedule. That document will form the basis
of the funding schedule.
Article III, Section 3.10, Purpose of Loans is amended in its entirety
as follows: 3.10 Purpose of Loans. The proceeds of the loan will be used by
Borrower only to finance operations, the refurbishment of Mountaineer Race
Track and Resort in accordance with plans which have been approved by Gamma
International, Ltd., as such plans may be revised from time to time in
accordance with the approval of Gamma International, Ltd., to pay up to Two
Hundred Thousand Dollars ($200,000) of investment banking fees, to loan up to
Seven Hundred Thousand Dollars ($700,000) to Winners which loan must be
repaid to Borrower no later than April 15, 1995, and to fund certain
operating deficiencies as approved by Gamma International.
This amendment is not intended to nor shall not alter or amend any other
Sections of the Construction Loan Agreement. Any terms not herein defined
shall have the term set forth in the Construction Loan Agreement.
<PAGE>
<PAGE>
IN WITNESS HEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by the proper and duly authorized officers as of
the day and year first written above.
BENNETT MANAGEMENT & DEVELOPMENT CORP.
By: /s/ Patrick R. Bennett
--------------------------------------
Name:
Title:
MOUNTAINEER PARK, INC.
By: /s/ Michael R. Dunn
--------------------------------------
Name: Michael R. Dunn
Title: Chairman
WINNERS ENTERTAINMENT, INC.
By: /s/ Michael R. Dunn
--------------------------------------
Name: Michael R. Dunn
Title: Chairman
-2-
EXHIBIT 4
CONSTRUCTION LOAN AGREEMENT AMENDMENT
Construction Loan Agreement Amendment dated February 10, 1995,
among Bennett Management and Development Corp., a New York corporation
("Lender"), Mountaineer Park, Inc., a West Virginia corporation ("Borrower"),
and Winners Entertainment, Inc., a Delaware corporation and parent of
Borrower ("Winners").
WHEREAS, Borrower and Lender desire to amend a Construction Loan
Agreement executed by the parties on June 27, 1994 as amended on September
27, 1994 and December 7, 1994 ("Agreement"); and
WHEREAS, Borrower and Lender desire to amend Article III, Section
3.10 - Purpose of the Loans; and
WHEREAS, all other terms and conditions as set forth in the
Agreement and the Amendment and the Note shall remain as originally executed.
NOW, THEREFORE, in consideration of the premises and agreements
herein contained, the parties, hereto, hereby agree as follows:
1. Article III, Section 3.10, Purpose of Loans is amended in its
entirety as follows: 3.10 Purpose of Loans. The proceeds of the loan will
be used by Borrower only to (i) finance operations, (ii) refurbish
Mountaineer Race Track and Resort in accordance with plans which have been
approved by AGEL, as such plans maybe revised from time to time in accordance
with the approval of AGEL, (iii) pay up to Two Hundred Thousand Dollars
($200,000) of investment banking fees, (iv) loan up to Seven Hundred Thousand
Dollars ($700,000) to Winners to fund certain operating deficiencies as
approved by AGEL in its sole discretion which loan must be repaid to Borrower
no later than April 15, 1995, and (v) loan up to Eight Hundred Thousand
Dollars ($800,000) to Winners to fund certain operating deficiencies as
approved by AGEL in its sole discretion, which loan must be repaid to
Borrower no later then June 15, 1995.
This amendment is not intended to nor shall not alter or amend any
other Sections of the Agreement. Any terms not herein defined shall have the
term set forth in the Agreement.
<PAGE>
<PAGE>
IN WITNESS HEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by the proper and duly authorized officers as
of the day and year first written above.
BENNETT MANAGEMENT & DEVELOPMENT CORP.
By: /s/ Patrick R. Bennett
--------------------------------
Name:
Title:
MOUNTAINEER PARK, INC.
By: /s/ Michael R. Dunn
--------------------------------
Name: Michael R. Dunn
Title: Chairman of the Board
WINNERS ENTERTAINMENT, INC.
By: /s/ Michael R. Dunn
--------------------------------
Name: Michael R. Dunn
Title: Chairman of the Board
-2-
EXHIBIT 5
Bennett Management & Development Corporation
April 10, 1995
Mr. Edson R. Arneault, President Mr. Michael R. Dunn, President
Mountaineer Park, Inc. Winners Entertainment, Inc.
State Route 2 South 30448 Rancho Viejo Road, Suite 110
Chester, WV 26034 San Juan Capistrano, CA 92675
RE: AMENDMENT TO CONSTRUCTION LOAN AGREEMENT DATED JUNE 27,1994
("AGREEMENT"), AS AMENDED SEPTEMBER 27,1994, DECEMBER 7,1994 AND
FEBRUARY 10, 1995 ("AMENDMENT(S)")
Dear Messrs. Arneault and Dunn:
In response to the request of the Mountaineer Racetrack & Resort
Management Committee by letter from Thomas K Russell dated March 31, 1995,
Bennett Management & Development Corporation ("Bennett") hereby agrees to
extend certain deadlines contained in the Agreement and Amendments, as
follows:
1). The April 15, 1995 due date for repayment by Winners Entertainment,
Inc. ("Winners") of the $700,000 Loan from Mountaineer Park, Inc.
("Mountaineer") authorized pursuant to the December 7, 1994 and
February 10, 1995 Amendments shall be extended to October 1, 1995;
2). The June 15, 1995 due date for repayment of the $800,000 in working
capital expenditures by Mountaineer authorized pursuant to the
February 10, 1995 Amendment, shall be extended to October 1, 1995,
and said February 10, 1995 Amendment shall be further amended to
state that the obligor for said $800,000 is Mountaineer and that
Winners shall serve only as guarantor for said amount; and
3). As a result of the extension of the payment due for Loans under the
Agreement from July 1, 1995 to November 1, 1995 pursuant to Section
1.5 of the September 27, 1994 Amendment, the payment due date of
October 1, 1995 and the issuance date for additional shares on
October 2, 1995 contained in Section 2.2(a) of the Agreement, shall
be extended to November 1, 1995 and November 2, 1995, respectively.
Bennett acknowledges that Mountaineer and Winners will rely upon this
amendment for purposes of establishing construction and operating budgets at
Mountaineer Racetrack & Resort and for reports required by the West Virginia
<PAGE>
<PAGE>
Lottery Commission, the State agency responsible for governing such
activities. This amendment is not intended nor shall it alter or amend any
other Sections of the Agreement or Amendments. Please execute your
acceptance and acknowledgment of these Amendments by your signature below.
Very truly yours,
BENNETT MANAGEMENT & DEVELOPMENT
CORPORATION
/s/ Patrick R. Bennett
------------------------------------------
PATRICK R. BENNETT
Chief Financial Officer
PRB/ld
MOUNTAINEER PARK, INC. WINNERS ENTERTAINMENT, INC.
By: /s/ Edson R. Arneault By: /s/ Michael R. Dunn
---------------------------- -------------------------------------
Edson r. Arneault, President Michael R. Dunn, President
-2-
EXHIBIT 6
CONSTRUCTION LOAN AGREEMENT AMENDMENT V
Construction Loan Agreement Amendment, dated July 7, 1995 among Bennett
Management and Development Corp., a New York Corporation ("Lender"),
Mountaineer Park, Inc., a West Virginia Corporation ("Borrower"), and Winners
Entertainment, Inc., a Delaware Corporation and parent of Borrower
("Winners").
WHEREAS, Borrower and Lender desire to amend the construction loan agreement
executed by the parties on June 27, 1994 and further amended on September 27,
1994, December 7, 1994, February 10, 1995, and April 10, 1995 ("Agreement");
and
WHEREAS, Lender and Borrower wish to complete the construction loan draws by
loaning the final $803,333.34 to Borrower and
WHEREAS, Lender and Borrower want to clarify and modify the granting of
common stock by the Borrower to the Lender and
WHEREAS, Lender desires to change the amortization start date on the original
$2.6 Million of borrowings
NOW, THEREFORE, in consideration of the premises and agreements herein
contained, the parties hereto, hereby agree as follows:
1. ARTICLE I, Section 1.1 Commitment is amended in its entirety as follows:
Lender hereby accepts as of June 30, 1995 Borrower's offset of the
interest payment due June 30, 1995 in the amount of $96,666.66 and
agrees that such payment was timely made in full on that date. Lender
acknowledges that as of this date, there has not been a default or event
of default by either Borrower or Winners.
Lender has loaned $9.3 Million as of July 7, 1994 and agrees to loan the
remaining $803,333.34 to Borrower no later than two business days after
the signing by all parties of this construction loan agreement
amendment.
Lender and Borrower agree that Lender's obligation to loan $10.2 Million
would be satisfied in full in a satisfactory manner and Lender is
entitled to all of its rights including interest rates, common stock
grants etc. as set forth under the AGREEMENT unless amended herein.
<PAGE>
<PAGE>
2. ARTICLE I, Section 1.3 Procedure for Borrowing is amended in its
entirety as follows:
Borrower has previously furnished sufficient information to draw down
$9.3 Million from the Lender. Borrower would not be required to furnish
any additional information to borrow the remaining $803,333.34 other
than described in the amended Section 1.1 above.
3. ARTICLE I, Section 1.5 Repayment of Loans is amended in its entirety as
follows:
To the extent that loans are not prepaid in full on or prior to November
1, 1995, in accordance with Section 1.4 hereof, Borrower shall repay the
outstanding principal amount of the loans as of such date in 36 equal
monthly installments on the last business day of each month commencing
on November 1, 1995.
4. ARTICLE II, Section 2.1, Grant of Common Stock to Lender is amended in
its entirety as follows:
In order to induce Lender to enter into this agreement to make the
loans, Winner hereby agrees to issue to Lender, from time to time,
shares of its common stock, par value $.00001 per share ("Winners Common
Stock"), as follows. For each one dollar of loans made hereunder,
Lender shall be entitled to receive .05 of a share of Winners Common
Stock subject to adjustment by Winners in an equitable manner in the
event of a stock split, combination, reclassification or similar event
with respect to Winners Common Stock. Winners has previously issued
465,000 shares of Winners Common Stock to Lender which has been earned
by Lender from the funding of $9.3 Million. Winners further agrees to
issue an additional 45,000 shares of Winners Common Stock substantially
contemporaneously with a making of the remaining $803,333.34 loan from
Lender in accordance with the terms of this agreement. Provided,
however, that if Lender fails to wire transfer such funds in accordance
with Section 1 of this Amendment, then Lender shall not be entitled to
any shares of Winners common stock under this Section II and shall
immediately deliver to Winners any shares previously issued to Lender by
Winners pursuant hereto free and clear of all liens, claims and other
encumbrances, in the form of certificates representing such shares,
accompanied by appropriate stock powers duly executed or endorsed in
blank with appropriate transfer tax stamps affixed.
5. ARTICLE II, Section 2.2 Issuance of Additional Shares is amended in its
entirety as follows:
Winners agrees to issue an additional 1,020,000 shares of Winners Common
Stock to Lender in return for which Lender agrees to delete Section 2.6
-2-
<PAGE>
<PAGE>
in its entirety. This issuance will take place contemporaneously with
the signing of this agreement and Winners will provide evidence of this
issuance at the time that this agreement is ratified. Lender further
agrees that it would not be entitled to any additional shares from
Winners in any respect except for shares to be earned if Borrower has
not prepaid the loss by January 2, 1997 as set forth below.
In the event the loans have been prepaid in full by October 1, 1995,
then Winners shall be entitled to the return of 510,000 shares from
Lender.
Notwithstanding the provisions of Section 4.1(b) to the contrary, the
additional shares will be divided into certificates bearing legends as
follows:
One certificate for 240,000 shares will bear the following legends:
THE SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ANY INTEREST
THEREIN OR RIGHT WITH RESPECT THERETO MAY BE MADE ONLY IN
ACCORDANCE WITH THE TERMS OF THE LOAN AGREEMENT DATED AS OF
JUNE 27, 1994 AMONG BENNETT MANAGEMENT & DEVELOPMENT CORP.,
MOUNTAINEER PARK, INC., AND WINNERS ENTERTAINMENT, INC., AS IT
MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE
WITH WINNERS ENTERTAINMENT, INC. A TRANSACTION IN VIOLATION OF
SUCH LOAN AGREEMENT WILL BE INEFFECTIVE.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE
WITH RULE 144 PROMULGATED UNDER SUCH ACT OR WINNERS
ENTERTAINMENT, INC. RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO WINNERS
ENTERTAINMENT, INC. STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
One certificate for 780,000 shares will bear the following legends:
THE SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ANY INTEREST
THEREIN OR RIGHT WITH RESPECT THERETO MAY BE MADE ONLY IN
ACCORDANCE WITH THE TERMS OF THE LOAN AGREEMENT DATED AS OF
JUNE 27, 1994 AMONG BENNETT MANAGEMENT & DEVELOPMENT CORP.,
MOUNTAINEER PARK, INC., AND WINNERS ENTERTAINMENT, INC., AS IT
-3-
<PAGE>
<PAGE>
MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE
WITH WINNERS ENTERTAINMENT, INC. A TRANSACTION IN VIOLATION OF
SUCH LOAN AGREEMENT WILL BE INEFFECTIVE. UNDER SUCH LOAN
AGREEMENT, THE HOLDER OF THESE SECURITIES HAS GRANTED THE
BOARD OF DIRECTORS OF WINNERS ENTERTAINMENT, INC. COMPLETELY
AND EXCLUSIVELY THE VOTING RIGHTS WITH RESPECT TO THE
SECURITIES REPRESENTED BY THIS CERTIFICATE. SUCH GRANT IS
IRREVOCABLE EXCEPT IN CERTAIN CIRCUMSTANCES SET FORTH IN THE
LOAN AGREEMENT.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE
WITH RULE 144 PROMULGATED UNDER SUCH ACT OR WINNERS
ENTERTAINMENT, INC. RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO WINNERS
ENTERTAINMENT, INC. STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
In the event that the loans have not been prepaid in full by January 1, 1997,
Winners shall issue to Lender on January 2, 1997 the number of Winners shares
times the average market price which would equal $2.5 Million. For purposes
of this agreement the "average market price" shall be deemed to be the
average of the current market prices for the 20 consecutive trading days
prior to January 2, 1997. The number of shares issued would be calculated by
dividing $2.5 Million by the average market price of Winners Common Stock and
in rounding to the nearest whole share.
6. ARTICLE II, Section 2.5 Call is deleted in its entirety.
7. ARTICLE II, Section 2.6 Price Guarantee is deleted in its entirety.
8. ARTICLE II, Section 2.7 Voting Control (a new section) is added to the
agreement as follows:
As long as Lender or any affiliates shall own 5% or more of Winners
Common Stock as granted to Lender under the Agreement and amendments,
Lender hereby grants full voting authority in these common shares owned
to the Winners Board of Directors completely and exclusively. This
grant of voting rights is irrevocable for as long as Lender or an
affiliate owns the shares and Lender would be responsible for informing
Winners in writing upon any sale of shares for which voting control
would revert back to the purchasing shareholder. Lender hereby
covenants that neither it nor any of its affiliates will acquire any of
-4-
<PAGE>
<PAGE>
Winners' equity or convertible debt securities, either in the open
market or in private transactions to the extent such acquisitions would
result (or could result upon conversion of debt securities) in Lender
owning in the aggregate more than 5% of any class of Winners' securities
as to which the voting rights have not been granted to the Winners
board.
9. ARTICLE III, Section 5.5 Access to Information is amended by adding the
following sentence to the end of such section:
Borrower will supply Lender with monthly financial statements and
quarterly projections of operations completed on a timely basis.
This amendment is not intended to alter or amend any other sections of the
Agreement. Any terms not herein defined shall have the terms set forth in
the Agreement. If any provisions of the agreement or any amendments
contradict the terms herein, then the terms herein shall control.
-5-
<PAGE>
<PAGE>
IN WITNESS HEREOF, the parties hereto have caused this amendment to be duly
executed and delivered by the proper and duly authorized officers of the day
and your first written above.
BENNETT MANAGEMENT AND DEVELOPMENT CORP.
By: /s/ Patrick R. Bennett
---------------------------------
Name: Patrick R. Bennett
Title: CFO
MOUNTAINEER PARK, INC.
By: /s/ Edson R. Arneault
---------------------------------
Name: Edson R. Arneault
Title: President
WINNERS ENTERTAINMENT, INC.
By: /s/ Edson R. Arneault
---------------------------------
Name: Edson R. Arneault
Title: President
EXHIBIT 7
Bennett Management & Development Corporation
October 31, 1995
Mountaineer Park, Inc. (Borrower)
c/o Winners Entertainment, Inc.
30448 Rancho Viejo Road, Suite 110
San Juan Capistrano, CA 92675
RE: Credit in the principal amount of $10,200,000 extended by Bennett
Management & Development Corp. (the "Loan") pursuant to a certain
June 27, 1994 Construction Loan Agreement by and among Bennett
Management & Development Corp., Lender, Mountaineer Park, Inc.,
Borrower, and Winners Entertainment, Inc., Winners, as amended
Gentlemen:
For a period of thirty days from the date hereof, Bennett Management &
Development Corp. will pursuant to section 7.2 waive any Event of Default
during such period and will not in any way during such period (a) seek
repayment of the Loan from Mountaineer Park, Inc., or Winners Entertainment,
Inc.; (b) seek to enforce the promissory note made by Mountaineer Park, Inc.,
evidencing the loan (including its rights under the Credit Line Deed of Trust
securing the same); or, (c) claim that an Event of Default (as that term is
defined in the Construction Loan Agreement) has occurred.
The foregoing forbearance is provided upon Bennett Management &
Development Corp.'s understanding and upon the condition that it will receive
an interest-only payment (at the interest rate of 12.5%) for the month of
October, in the amount of $109,791.67 on or before November 10, 1995.
Very truly yours,
BENNETT MANAGEMENT
& DEVELOPMENT CORPORATION
/s/ Stewart Weisman
------------------------------------
STEWART WEISMAN
Acting Secretary and General Counsel
SW/ld
cc: Edson R. Arneault
EXHIBIT 8
November 9, 1995
Mr. Kevin J. Kuppel
Treasurer
Bennett Management & Development Corp.
Two Clinton Square
Syracuse, NY 13202
Re: Construction Loan Agreement between Bennett Management &
Development Corp., Mountaineer Park, Inc. and Winner's
Entertainment, Inc., dated June 24, 1994, as amended (the
"Loan")
Dear Mr. Kuppel:
This letter sets forth the agreement between Bennett Management &
Development Corp., Mountaineer Park, Inc. and Winner's Entertainment, Inc.
that if: (a) the Loan from Bennett Management & Development Corp. to
Mountaineer Park, Inc. in the principal amount of $10.2 million is paid in
full by December 1, 1995, and (b) Mountaineer Park, Inc. and Winner's
Entertainment, Inc. deliver to Bennett Management & Development Corp. a broad
form general release of all liability arising out of or related to the Loan,
Bennett Management & Development Corp. will transfer to Winner's
Entertainment, Inc. all of its current and future rights to any shareholder
interest in Winner's Entertainment, Inc. at no additional cost to Winner's
Entertainment, Inc., and a duly executed release of the deed of trust.
If the foregoing correctly sets forth our agreement, please sign
the enclosed copy of this letter and return the same to me.
Very truly yours,
WINNER'S ENTERTAINMENT, INC.
By /s/ Edson R. Arneault
--------------------------------------
Its President
---------------------------------
MOUNTAINEER PARK, INC.
By /s/ Edson R. Arneault
--------------------------------------
Its President
--------------------------------
<PAGE>
<PAGE>
Agreed to this ____ day of November, 1995:
BENNETT MANAGEMENT & DEVELOPMENT CORP.
By /s/ Patrick R. Bennett
--------------------------------------
Its CFO
--------------------------------
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EXHIBIT 9
November 28, 1995
Mr. Edson R. Arneault, President
Winner's Entertainment, Inc.
Route 2 South, P.O. Box 358
Chester, WV 26034
RE: CONSTRUCTION LOAN AGREEMENT BETWEEN BENNETT MANAGEMENT &
DEVELOPMENT CORP., MOUNTAINEER PARK, INC. AND WINNER'S
ENTERTAINMENT, INC., DATED JUNE 24, 1994, AS AMENDED AND
FURTHER MODIFIED ON NOVEMBER 9, 1995 (THE "LOAN")
Dear Mr. Arneault:
You have asked Bennett Management & Development Corp. ("BMDC"), to
further extend the repayment date in order to further assist you with your
contemplated financing.
This letter sets forth the agreement between BMDC, Mountaineer
Park, Inc. and Winner's Entertainment, Inc. that if (a) the Loan from BMDC to
Mountaineer Park, Inc. in the principal amount of $10.2 Million plus all
accrued and unpaid interest** is paid in full by December 10, 1995, and (b)
Mountaineer Park, Inc. and Winner's Entertainment, Inc. deliver to BMDC a
broad form general release of all liability arising out of or related to the
Loan, BMDC will transfer to Winner's Entertainment, Inc. all of its current
and future rights to any shareholder interest in Winner's Entertainment, Inc.
at no additional cost to Winner's Entertainment, Inc., and a duly executed
release of the deed of trust.
<PAGE>
<PAGE>
If the foregoing correctly sets forth our agreement, please sign
the enclosed copy of this letter and return the same to me.
Very truly yours,
BENNETT MANAGEMENT & DEVELOPMENT CORP.
By: /s/ Patrick R. Bennett
-------------------------------------
Its CFO
--------------------------------
AGREED TO:
WINNER'S ENTERTAINMENT, INC. MOUNTAINEER PARK, INC.
By: /s/ Edson R. Arneault By: /s/ Edson R. Arneault
---------------------------- ------------------------------
Title: Pres. Title: Pres.
------------------------- ---------------------------
** at an interest rate of 12.5% per annum
-2-
EXHIBIT 10
MOUNTAINEER PARK, INC.
Route 2, South
P. 0. Box 358
Chester, West Virginia 26034
January 12, 1996
Patrick R. Bennett, CFO
Bennett Management & Development Corp.
Two Clinton Square
Syracuse, NY 13202
RE: Construction Loan Agreement between Bennett
Management & Development Corp., Mountaineer
Park, Inc. and Winner's Entertainment, Inc.
dated June 24, 1994, as amended (the "Loan")
Dear Mr. Bennett:
This letter sets forth the recent agreement between Bennett
Management & Development Corp., Mountaineer Park, Inc. and Winner's
Entertainment, Inc., relative to the Loan and Mountaineer Park, Inc.'s
need for more time to commence Loan amortization payments. The
undersigned, intending to be legally bound, agree:
1. With the understanding of both parties that Bennett Management
& Development Corp. never intended to be a permanent lender
but only to act as a construction lender Mountaineer Park,
Inc. and Winner's Entertainment, Inc. will cooperate with and
assist Bennett Management & Development Corp. in its
continuing efforts to sell the Loan to some third party and
will extend such cooperation and assistance so long as such
does not unreasonably interfere with Mountaineer Park, Inc.'s
day-to-day operations or unreasonably infringe upon
Mountaineer Park, Inc.'s need to protect its proprietary
information.
2. The Loan interest payment that would have been due on November
30, 1995, but for Bennett's prior extension agreements, shall
be paid on or before January 16, 1996. The Loan interest
payment that would have been due on December 31, 1995, but for
<PAGE>
<PAGE>
Bennett's prior extension agreements, shall be paid on or
before February 15, 1996.
3. The Loan payments due on January 31, February 29, March 31,
and April 30 of 1996 shall be payments of interest only and
shall be paid on or before each of said dates.
4. In the event all amounts owing to Bennett Management &
Development Corp., or its successors or assigns (the
"Lender"), pursuant to the Loan documents have not been paid
in full on or before May 31, 1996, then in such event,
principal and interest payments based on the 36-month
amortization specified in the Loan documents shall commence on
May 31, 1996, and shall be due and paid monthly on the last
day of each month thereafter for a total of 36 months. Be
assured that Lender will not be again requested by Mountaineer
Park, Inc. to delay the commencement of payments on the
principal.
5. The interest rate applicable to the Loan shall be 12.5%,
provided, however, that in the event any payment amounts due
and owing under the Loan, as altered by this letter agreement,
are delinquent, the interest rate applicable on the entire
outstanding principal for as long as such amounts remain
delinquent shall be the rate specified in paragraph 2.4 of the
Construction Loan Agreement, if said paragraph 2.4 rate would
then apply pursuant to its own terms. It is further agreed
that the enforcement of such "default rate" shall not preclude
the Lender from exercising any other rights or remedies
available to it under the Loan documents by reason of such
default.
6. In the event amounts owing to Lender pursuant to the Loan are
not paid in full on or before April 30, 1996, Mountaineer
Park, Inc. shall, prior to May 31, 1996, extend to Lender a
security interest in all of its assets except for (i) those
assets already covered by the Loan deed of trust, and (ii)
those assets which are covered by a prior lien accompanied by
covenants precluding a junior lienholder and for which consent
for a junior lien is unobtainable after a good faith effort by
Mountaineer Park, Inc., to secure same. Such security
interest will, to the extent not precluded by law or by a
prior non-consenting lienholder, include the right upon
default for Lender to be in receipt of funds otherwise flowing
to Mountaineer Park, Inc., and the discretion in favor of
Lender to apply such funds to the payment of sums due and
owing Lender under the Loan documents.
<PAGE>
<PAGE>
7. Mountaineer Park, Inc. agrees that between the date hereof and
the date it provides the additional collateral as contemplated
by paragraph 6 above, it will not grant or create a security
interest in such additional collateral in favor of any other
person or entity (except for purchase money security
interests) unless Lender, as a part of such transaction, has
been paid in full all amounts owing to it under the Loan
documents.
8. In the event some action is required to inform or seek
approval of this letter agreement from the West Virginia
Lottery Commission or the West Virginia Racing Commission or
any other West Virginia regulatory agency, then in such event,
Mountaineer Park, Inc. shall be solely responsible to
accomplish such and shall do so in such manner and upon such
schedule as Mountaineer Park, Inc. deems appropriate.
9. Except as amended, modified or altered by this letter
agreement, the documents evidencing the Loan and all terms and
provisions thereof shall remain in full force and effect.
Additionally, it is agreed that nothing contained in the
Mutual Release Agreement described in paragraph 11 below will
preclude Lender from pursuing and enforcing its remedies under
the Loan documents upon an occurrence of an event of default
as defined in Article VII of the Construction Loan Agreement.
Additionally, it is agreed that the benefits and obligations
existing by reason of a certain November 9, 1995 letter
agreement by and among Winner's Entertainment, Inc,
Mountaineer Park, Inc. and Bennett Management & Development
Corp. (and being a letter addressed to Kevin J. Kuppel) will
be at an end and will forever cease and terminate as of the
16th day of January, 1996.
10. In the event Lender shall initiate a foreclosure under the
Loan deed of trust based upon a failure to pay amounts owing
to Lender pursuant to the Loan documents, as altered by this
letter agreement, then in such event no action will be taken
by Mountaineer Park, Inc., or Winners Entertainment, Inc. by
legal proceedings or otherwise to delay, hinder or interrupt
the Lender in its foreclosure or other efforts of enforcing
its rights under said deed of trust. It is understood that
this covenant would not preclude and is not intended to
preclude Mountaineer Park, Inc. or Winners Entertainment, Inc.
from seeking the protections and benefits existing through
federal bankruptcy laws, if it should elect to do so.
<PAGE>
<PAGE>
11. As a part of the consideration for the benefits hereof, the
Mutual Release Agreement dated January 12, 1996, a copy of
which is attached hereto marked Exhibit A, shall be agreed to,
executed and delivered by Mountaineer Park, Inc., Winners
Entertainment, Inc., Bennett Management & Development Corp.,
and The Bennett Funding Group, Inc.
<PAGE>
<PAGE>
If the foregoing correctly sets forth our agreement, please cause
Bennett Management & Development Co. to sign the enclosed copy of this
letter and return the same to me.
Very truly yours,
WINNERS ENTERTAINMENT, INC.
By: /s/ Edson R. Arneault
------------------------------------------
Its: Pres.
------------------------------------------
MOUNTAINEER PARK, INC.
By: /s/ Edson R. Arneault
------------------------------------------
Its: Pres.
------------------------------------------
AGREED to as of the 12th day of January, 1996.
BENNETT MANAGEMENT &
DEVELOPMENT CORP.
By: /s/ Patrick R. Bennett
------------------------------------------
Its: CFO
------------------------------------------
<PAGE>
<PAGE>
Letter Agreement
EXHIBIT "A"
MUTUAL RELEASE AGREEMENT
THE RELEASE EXTENDED BY MOUNTAINEER/WINNERS: The undersigned,
Mountaineer Park, Inc., and Winner's Entertainment, Inc. (herein
sometimes referred to collectively as "Mountaineer/Winners"), for and in
consideration of the execution and delivery by Bennett Management &
Development Corp. and The Bennett Funding Group, Inc. of this Mutual
Release Agreement, and for other good and valuable consideration,
including, but not limited to, $100.00 cash in hand paid by Bennett
Management & Development Corp. and The Bennett Funding Group, Inc. to
Mountaineer Park, Inc. and Winner's Entertainment, Inc., the receipt and
sufficiency of all of which are hereby acknowledged, and subject to the
limitations hereinafter set forth, hereby RELEASE and FOREVER DISCHARGE
Bennett Management & Development Corp., and The Bennett Funding Group,
Inc., and their officers, directors, shareholders, employees, agents,
servants, attorneys, successors, assigns, insurers, heirs and personal
representatives, subsidiaries, and each and every other corporate or
other type entity affiliated directly or indirectly with The Bennett
Funding Group, Inc. ("Bennett affiliated entities"), and also their
officers, directors, shareholders, employees, agents, servants,
attorneys, successors, assigns, insurers, heirs and personal
representatives, of and from any and all claims, suits and causes of
action of whatsoever kind or character Mountaineer/Winners, or either of
them, now has or may hereafter have, by reason of any damages, losses or
expenses incurred or to be incurred and of whatever kind or character by
the undersigned Mountaineer Park, Inc. or Winner's Entertainment, Inc.,
arising from or growing out of or in any way related to (i) the borrower
lender relationship between Mountaineer Park, Inc. and Bennett Management
& Development Corp., or (ii) the relationships between or among any of
the undersigned or any of the other parties released by this or the
following paragraph ("other relationships") arising by reason of or
growing out of or in any way related to said borrower-lender relationship
between Mountaineer Park, Inc. and Bennett Management & Development Corp.
THE RELEASE EXTENDED BY BENNETT/BENNETT: The undersigned,
Bennett: Management & Development Corp. and The Bennett Funding Group,
Inc. (herein sometimes referred to collectively as "Bennett/Bennett"),
for and in consideration of the execution and delivery by Mountaineer
Park, Inc. and Winner's Entertainment, Inc., of this Mutual Release
<PAGE>
<PAGE>
Agreement, and for other good and valuable consideration, including, but
not limited to, $100.00 cash in hand paid by Mountaineer Park, Inc. and
Winner's Entertainment, Inc. to Bennett Management & Development Corp.
and to The Bennett Funding Group, Inc., the receipt and sufficiency of
all of which are hereby acknowledged, and subject to the limitations
hereinafter set forth, hereby RELEASE and FOREVER DISCHARGE Mountaineer
Park, Inc. and Winner's Entertainment, Inc., and their officers,
directors, shareholders, employees, agents, servants, attorneys,
successors, assigns, insurers, heirs and personal representatives,
subsidiaries, and each and every other corporate or other type entity
affiliated directly or indirectly with Winner's Entertainment, Inc.
("Winner's affiliated entities"), and also their officers, directors,
shareholders, employees, agents, servants, attorneys, successors,
assigns, insurers, heirs and personal representatives, of and from any
and all claims, suits and causes of action of whatsoever kind or
character Bennett/Bennett, or either of them, now has or may hereafter
have, by reason of any damages, losses or expenses incurred or to be
incurred and of whatever kind or character by the undersigned Bennett
Management & Development Corp. or The Bennett Funding Group, Inc.,
arising from or growing out of or in any way related to (i) the borrower-
lender relationship between Mountaineer Park, Inc. and Bennett Management
& Development Corp., or (ii) the relationships between or among any of
the undersigned or any of the other parties released by this or the
preceding paragraph ("other relationships") arising by reason of or
growing out of or in any way related to said borrower-lender relationship
between Mountaineer Park, Inc. and Bennett Management & Development Corp.
LIMITATIONS: By way of clarification, if needed, the
undersigned declare it to be their understanding and intentions that
whether or not the said borrower-lender relationship is ended on or
before January 15, 1996, the acts and omissions of the undersigned, or
any of them, in the performance of their obligations under or related to
the loan documents evidencing said borrower-lender relationship occurring
prior to January 15, 1996, shall never be or become the basis of (or a
part of the basis of) a claim, suit or cause of action by or against any
of the undersigned. However, it is agreed that the releases hereby
extended will not preclude a claim, suit or cause of action by any of the
undersigned, nor an enforcement of remedies available to Bennett
Management & Development Corp. (or its successors or assigns) under said
loan documents, so long as such claim, suit, cause of action or
enforcement of remedies is based solely upon a breach of obligation, or
breach of duty, or failure to pay or failure to perform occurring on or
after January 15, 1996 (e.g., the failure of Mountaineer Park, Inc. to
timely tender the January 15, 1996 interest payment would be a failure
for which Bennett Management & Development Corp. could pursue a claim,
suit, cause of action or an enforcement of its remedies under said loan
documents).
<PAGE>
<PAGE>
Mountaineer/Winners understand and agree that the aforesaid
claims hereby released by them include, but are not limited to, any
claims and possible claims stated in, implied by or inferred from (i) the
content of a certain letter dated September 25, 1995, from Mountaineer
Park, Inc. to Bennett Management & Development Corp. (signed by Edson R.
Arneault and addressed to Kevin J. Kuppel) , and (ii) the content of a
certain letter dated September 6, 1995, from Mountaineer Park, Inc. to
Bennett Management & Development Corp. (also, signed by Edson R. Arneault
and addressed to Kevin J. Kuppel). Mountaineer/Winners further understand
and agree that the aforesaid Bennett affiliated entities hereby released
include, but are not limited to, American Gaming & Entertainment, Inc.,
Gamma of West Virginia, Inc., and Gamma International, Ltd., insofar as
claims, suits and causes of action by the undersigned would relate
directly or indirectly to the loan which is the basis of the aforesaid
borrower-lender relationship.
The undersigned hereby declare that the terms of this Release
have been completely read and are fully understood and voluntarily
accepted for the purpose of making a full anti final compromise,
adjustment and settlement, subject to the above-stated limitations, of
any and all claims, disputed or otherwise, known or unknown, discovered
or not discovered, on account of said borrower-lender relationship or
said other relationships and for the express purpose of precluding
forever, subject to the above-stated limitations, any further or
additional claims, demands or suits against any and all entities and
persons named or referred to herein as a released party, arising out of
the aforesaid borrower lender relationships or said other relationships.
The undersigned understand and agree that the aforesaid
payments of cash and execution and delivery of this Mutual Release
Agreement were made by way of settlement and that liability for any
claims hereby released have been and are specifically denied by the
parties released hereby.
The undersigned represent and warrant that the terms hereof
were reached by them after full and complete opportunity to consult with
counsel regarding the settlement and the effect of this release; that
they execute this release voluntarily, freely, without compulsion or
duress and mindful that it has legal consequences precluding any further
action, subject to the above stated limitations, on any claim they have
or might have as to said borrower-lender relationship or said other
relationships against the parties released; and that no person has made
any promise or given any inducement whatsoever to encourage them to make
this settlement other than the considerations above recited; and, that
(i) no limitation or restriction exists as to the power or the authority
of the undersigned to execute this release, (ii) the persons executing
same on behalf of the undersigned have been duly authorized so to do, and
(iii) this release is valid and binding and the provisions hereof are
enforceable against the undersigned in accordance with its terms.
<PAGE>
<PAGE>
This Mutual Release Agreement may be executed in any number of
counterparts, each of which shall, for all purposes, be deemed to be an
original, but all such counterparts shall together constitute one and the
same instrument.
<PAGE>
<PAGE>
WITNESS the following signatures as of the 12th day of
January, 1996.
MOUNTAINEER PARK, INC.
By:
---------------------------------
Its:
- ---------------------------- --------------------------------
Witness
WINNER'S ENTERTAINMENT, INC.
By:
---------------------------------
Its:
- ---------------------------- --------------------------------
Witness
BENNETT MANAGEMENT & DEVELOPMENT CORP.
By:
---------------------------------
Its:
- ---------------------------- --------------------------------
Witness
THE BENNETT FUNDING GROUP, INC.
By:
---------------------------------
Its:
- ---------------------------- --------------------------------
Witness
EXHIBIT 11
AMENDMENT OF CONSTRUCTION LOAN AGREEMENT
This Agreement, entered this 19th day of September, 1996, by and between
Winners Entertainment, Inc. and its wholly owned subsidiary Mountaineer Park,
Inc. ("WINS/MPI") and Richard C. Breeden, solely in his official capacity as
trustee of the estate of Bennett Management and Development Corp. and Bennett
Funding Group (the "Trustee").
WHEREAS, MPI as borrower, WINS as guarantor, and Bennett Management and
Development Corp. ("BMDC") as lender entered a Construction Loan Agreement
dated as of June 27, 1994, which was amended by agreements dated September
27, 1994, December 7, 1994, February 10, 1995, April 10, 1995, and July 7,
1995, and certain repayment terms of which were extended by agreements dated
October 31, 1995, November 28, 1995, and January 12, 1996 (the "Amended Loan
Agreement"); and
WHEREAS, MPI borrowed from BMDC in the aggregate $10.2 million
principally for renovations at the Mountaineer Racetrack and Gaming Resort
located in Chester, Hancock County, West Virginia; and
WHEREAS, the loans made pursuant to the Amended Loan Agreement are
evidenced by a Promissory Note dated June 28, 1994 and are secured by (i) the
real estate and improvements constituting the Mountaineer Racetrack and
Gaming Resort pursuant to a Credit Line Deed of Trust made June 27, 1994,
which is of record in Hancock County, West Virginia; and (ii) pursuant to the
agreement of January 12, 1996, certain personalty reflected by a UCC-1
Financing Statement dated July 2, 1996, which is of record in Charleston,
West Virginia; and
WHEREAS, pursuant to the Amended Loan Agreement MPI was obligated to
make payments of interest only through April of 1996 and since May of 1996
has been obligated to make payments of principal and interest on a thirty-six
(36) month schedule of amortization and has met all of its obligations with
respect to such payments through and including the payment that became due on
August 31, 1996; and
WHEREAS, pursuant to the Amended Loan Agreement WINS was obligated to
issue BMDC in the aggregate 1,530,000 shares of WINS common stock and did in
fact issue and deliver such shares (1,125,000 of which were mistakenly issued
in the name of Bennett Funding Group) (the "Shares"); and
WHEREAS, on July 1, 1996, MPI and WINS filed an adversary proceeding
against BMDC in the United States Bankruptcy Court for the Northern District
of New York, seeking compensatory and punitive damages, recoupment and
setoff, and other equitable relief, including declaratory and injunctive
relief for lender liability (the "Litigation"), and alleging, among other
things, that the conduct of BMDC had impaired WINS' and MPI's ability to
<PAGE>
<PAGE>
refinance the Amended Loan Agreement prior to the commencement of the
principal payments; and
WHEREAS, the Trustee desires to obtain the voluntary dismissal of the
Litigation in order to conserve the resources of the estate of BMDC; and
WHEREAS, in order to realize such cost savings, as well as to enhance
the value of the Shares, the Trustee is willing, subject to (i) the approval
of the United States Bankruptcy Court for the Northern District of New York
(the "Court") and (ii) the terms and conditions set forth below, to make the
accommodations set forth below:
NOW THEREFORE, in consideration of the mutual promises contained herein,
the adequacy and sufficiency of which are hereby acknowledged, the parties
agree as follows:
1. Bankruptcy Court Approval. The parties hereto acknowledge that
this Agreement is expressly subject to the approval of the Court, upon
application to be made by the Trustee upon proper notice to BMDC's creditors.
The Trustee shall use his best efforts to file this amendment with the Court
as soon as possible.
2. Effective Date. If this Agreement is approved by the Court, then
the Agreement shall become effective as of October 31, 1996 such that the
payment due from MPI on that date shall be subject to the terms hereof (the
"Effective Date").
3. Dismissal of the Litigation; Mutual Releases. WINS and MPI shall
dismiss the Litigation with prejudice. Each party shall bear its own legal
fees and expenses. The parties hereby agree to execute the Amended and
Restated Mutual Releases attached hereto as Exhibit A.
4. Settlement with American Gaming & Entertainment, Ltd. On the
Effective Date of this Agreement, the Trustee shall deliver to MPI the
acknowledgment of American Gaming & Entertainment, Ltd. and its wholly owned
subsidiary, Gamma of West Virginia, Inc. ("AGEL"), in the form attached
hereto as Exhibit B, that the Settlement Agreement dated as of June 30, 1995
(the "Settlement Agreement"), a copy of which is attached hereto as Exhibit
C, is in full force and effect and that WINS, MPI, and AGEL shall assume, for
purposes of such acknowledgment, that Termination, as that term is defined in
the Settlement Agreement, has occurred.
5. Modification of Principal Amortization. The Amended Loan Agreement
shall be further amended such that rather than thirty-six (36) equal payments
of principal (together with interest at the rate of 12.5% per annum) on the
last day of each month, MPI shall make payments of principal in the amount of
$75,000 per month for the months of October through March inclusive and
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<PAGE>
<PAGE>
$125,000 per month for the months of April through September inclusive as
follows:
October 31, 1996 $ 75,000
November 30, 1996 $ 75,000
December 31, 1996 $ 75,000
January 31, 1997 $ 75,000
February 28, 1997 $ 75,000
March 31, 1997 $ 75,000
April 30, 1997 $125,000
May 31, 1997 $125,000
June 30, 1997 $125,000
July 31, 1997 $125,000
August 31, 1997 $125,000
September 30, 1997 $125,000
October 31, 1997 $ 75,000
November 30, 1997 $ 75,000
December 31, 1997 $ 75,000
January 31, 1998 $ 75,000
February 28, 1998 $ 75,000
March 31, 1998 $ 75,000
April 30, 1998 $125,000
May 31, 1998 $125,000
June 30, 1998 $125,000
July 31, 1998 $125,000
August 31, 1998 $125,000
September 30, 1998 $125,000
October 31, 1998 $ 75,000
November 30, 1998 $ 75,000
December 31, 1998 $ 75,000
January 31, 1999 $ 75,000
February 28, 1999 $ 75,000
March 31, 1999 $ 75,000
April 30, 1999 Remaining Principal Balance
The interest rate shall remain the same (unless increased pursuant to
Paragraph 7 below). The term of the loans, however, shall not be changed,
and any principal balance outstanding on the termination date, together with
any accrued but unpaid interest, shall be due and payable on the date set
forth in the Amended Loan Agreement. MPI will give the Lender ten (10) days
notice of any prepayment.
6. WINS Shares: Right to Match/Option to Purchase. WINS hereby
acknowledges and confirms that BMDC is the owner of the Shares and that the
Shares are fully-paid and non-assessable. In the event the Trustee desires
to sell the Shares, in whole or in part, the Trustee shall provide WINS
written notice of a bona fide offer of a non-affiliate to purchase the
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<PAGE>
<PAGE>
Shares. Upon receipt of the Trustee's notice, WINS shall have seven (7)
business days in which to provide the Trustee written notice of its desire to
match such offer and purchase the Shares. Within three (3) business days
after providing notice, WINS shall deliver good funds representing the
purchase price to the Trustee against delivery of the certificates
representing the Shares, duly endorsed with Medallion signature guarantee.
If WINS does not desire to purchase the Shares or fails timely to deliver the
purchase price after providing notice of an intent to match a bona fide
offer, then the Trustee shall be permitted to sell the Shares to the offeror
without any further obligation to WINS. WINS shall have no liability for any
damages suffered by the Trustee or the estate of BMDC in the event WINS
provides notice of an intent to exercise its right to match, but for whatever
reason determines not to purchase the Shares. The right to match shall
terminate on December 31, 1997.
For a period commencing on the date MPI fully satisfies the loans (the
"Satisfaction Date") and terminating at the close of business (Eastern Time)
ten (10) business days thereafter (the "Option Period") -- assuming BMDC (or
the Bennett Funding Group) still owns the Shares -- WINS shall have the
option to purchase all (but not part) of the Shares for a price per share
equal to 90% of the average closing bid price of the Shares as reported by
Nasdaq for the twenty (20) consecutive trading days immediately preceding the
Satisfaction Date, but in no event less than $1.125 per share; provided that
if the exercise of the option by WINS during the Option Period would result
in liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended, because of the matching of the sale of shares upon the exercise of
the option with an acquisition of shares under the Amended Loan Agreement,
the option shall not become exercisable until the earliest date at which such
liability would not be triggered and shall extend for ten additional business
days from such date. Any delay of the date on which the option may be
exercised occasioned by compliance with Section 16(b) shall have no effect on
the price per share to be paid by WINS upon exercise of the option. Unless
the Shares have been sold prior to the Satisfaction Date in a transaction
consistent with this Agreement, the Trustee shall not sell the Shares to
anyone other than WINS or its assignee during the Option Period or any
extension thereof. The option is not applicable in the context of an
acquisition of all of the stock of WINS.
7. Additional Stock; Increased Interest Rate. (a) Article II,
Section 2.2 of the Amended Loan Agreement, "Issuance of Additional Shares,"
which was amended in its entirety on July 7, 1995 pursuant to Section 5 of
Construction Loan Agreement Amendment V, is hereby amended such that the
heading for Article II, Section 2.2 shall be "Issuance of Additional Shares;
Increased Interest Rate" and the final paragraph of such section is deleted
and replaced by the following:
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<PAGE>
<PAGE>
In the event the loans have not been prepaid in full by January 1,
1997, Winners shall at its sole option on January 2, 1997 either
(i) pay the Lender $500,000 or (ii) issue to Lender that number of
Winners shares which when multiplied by the average market price
would equal $750,000.
In the event the loans have not been prepaid in full by July 1,
1997, Winners shall at its sole option on July 2, 1997 either (i)
pay the Lender $750,000 or (ii) issue to Lender that number of
Winners shares which when multiplied by the average market price
would equal $1,000,000.
In the event the loans have not been prepaid in full by December
31, 1997, Winners shall at its sole option on January 2, 1998
either (i) pay the Lender $1,000,000 or (ii) issue to Lender that
number of Winners shares which when multiplied by the average
market price would equal $1,250,000.
(b) In the event the loans have not been prepaid in full by December
31, 1997, the interest rate on any outstanding balance shall, as of January
1, 1998, increase from 12.5% to 14.5% until paid in full; provided, however,
that (i) if the holder of the second trust on MPI's property (currently
Madeleine, LLC pursuant to a Deed of Trust and Term Loan Agreement dated as
of July 2, 1996) for any reason does not approve such interest rate increase,
then the interest rate shall not increase; and (ii) in lieu thereof, the
schedule of amortization set forth in Section 5 above shall be further
amended, beginning with the payment due January 31, 1998, as follows:
January 31, 1998 $100,000
February 28, 1998 $100,000
March 31, 1998 $100,000
April 30, 1998 $200,000
May 31, 1998 $200,000
June 30, 1998 $200,000
July 31, 1998 $200,000
August 31, 1998 $200,000
September 30, 1998 $200,000
October 31, 1998 $100,000
November 30, 1998 $100,000
December 31, 1998 $100,000
January 31, 1999 $100,000
February 28, 1999 $100,000
March 31, 1999 $100,000
April 30, 1999 Remaining Principal Balance
To the extent additional amounts are not paid or shares issued pursuant
to Section 7(a), Lender shall be paid the original additional consideration
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<PAGE>
of $2,500,000 of shares valued as of January 2, 1997 as provided in the
amendment of the Construction Loan Agreement dated July 5, 1995, less any
amounts paid or shares issued under Section 7(a).
To the extent any Shares issued pursuant to the Construction Loan
Agreement as hereby amended are restricted and are not eligible for public
sale pursuant to Court order or exemption, then such Shares shall have
piggyback registration rights with respect to any registered offering of
shares by WINS or any shareholder of WINS, except for registered offerings
undertaken in connection with the Term Loan Agreement dated as of July 2,
1996 among MPI, WINS, and Madeleine, LLC, until December 31, 1997 and demand
registration rights after December 31, 1997 or any other time at which there
is a registered offering in connection with the Term Loan Agreement.
8. No Other Changes. No amendment, change, or modification of the
Amended Loan Agreement is intended except as specifically set forth herein.
During the term of the Construction Loan Agreement as amended hereby, MPI
will not amend any other loan agreement to which it is a party or become an
obligor under any new loan agreement without the permission of the Lender,
which permission will not be unreasonably withheld.
9. Notices. Any notices permitted or required hereunder shall be
deemed effective when actually received by the parties as follows:
If to WINS and MPI:
Edson R. Arneault, President
Mountaineer Park, Inc.
State Route 2
Chester, West Virginia 26034
with a copy to:
Robert L. Ruben, Esq.
Freer & McGarry, P.C.
1000 Thomas Jefferson Street, N.W.
Sixth Floor
Washington, D.C. 20007
If to the Trustee:
Richard C. Breeden, Trustee
Bennett Management and Development Corp.
2 Clinton Square
Syracuse, New York 13202
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with a copy to:
James M. Cotter, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
10. Court Jurisdiction; Cooperation. All parties to this agreement
submit to the jurisdiction of the Court for any disputes arising out of this
agreement. The parties agree to cooperate in effecting the intentions of
this agreement and to deliver additional documentation as may be required or
deemed appropriate to implement the intentions of the parties.
11. Trustee. The Trustee is entering into this settlement as Trustee
only and shall have no personal responsibility.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have approved and executed this
Settlement Agreement as of the date first set forth above.
WINNERS ENTERTAINMENT, INC.
By: /s/ Edson R. Arneault
--------------------------------------
Edson R. Arneault, President
MOUNTAINEER PARK, INC.
By: /s/ Edson R. Arneault
--------------------------------------
Edson R. Arneault, President
By: /s/ Richard C. Breeden
--------------------------------------
Richard C. Breeden, Solely in His
Capacity as Trustee of the Estate of
Bennett Management and Development
Corp. and Bennett Funding Group
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<PAGE>
Acknowledged and Agreed as to Paragraph 4 by:
AMERICAN GAMING & ENTERTAINMENT, LTD.
By: /s/ J. Douglas Wellington
- --------------------------------------
Its: President
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<PAGE>
EXHIBIT A
AMENDED AND RESTATED MUTUAL RELEASE AGREEMENT
THE RELEASE EXTENDED BY MOUNTAINEER/WINNERS: The undersigned,
Mountaineer Park, Inc., and Winner's Entertainment, Inc. (herein sometimes
referred to collectively as "Mountaineer/Winners", for and in consideration
of the execution and delivery by Richard C. Breeden, solely in his capacity
as trustee (the "Trustee") of the estate of Bennett Management & Development
Corp. and The Bennett Funding Group, Inc. of this Mutual Release Agreement,
and subject to the limitations hereinafter set forth, hereby RELEASE and
FOREVER DISCHARGE Bennett Management & Development Corp., The Bennett Funding
Group, Inc., and their officers, directors, shareholders, employees, agents,
servants, attorneys, successors, assigns, insurers, heirs and personal
representatives, subsidiaries, and each and every other corporate or other
type entity affiliated directly or indirectly with The Bennett Funding Group,
Inc. ("Bennett affiliated entities"), and also their officers, directors,
shareholders, employees, agents, servants, attorneys, successors, assigns,
insurers, heirs and personal representatives and Richard C. Breeden, both
personally and as Trustee, of and from any and all claims, suits and causes
or action of whatsoever kind or character Mountaineer/Winners, or either of
them, now has or may hereafter have, by reason of any damages, losses or
expenses incurred or to be incurred and of whatever kind of character by the
undersigned Mountaineer Park, Inc. or Winner's Entertainment, Inc., arising
from or growing out of or in any way related to (1) the borrower-lender
relationship between Mountaineer Park, Inc. and Bennett Management &
Development Corp., or (ii) the relationships between or among any of the
undersigned or any of the other parties released by this or the following
paragraph ("other relationships") arising by reason of or growing out of or
in any way related to said borrower-lender relationship between Mountaineer
Park, Inc. and Bennett Management & Development Corp.
THE RELEASE EXTENDED BY BENNETT/BENNETT: The undersigned, Bennett
Management & Development Corp. and The Bennett Funding Group, Inc. (herein
sometimes referred to collectively as "Bennett/Bennett"), for and in
consideration of the execution and delivery by Mountaineer Park, Inc. and
Winner's Entertainment, Inc., of this Mutual Release Agreement, and subject
to the limitations hereinafter set forth, hereby RELEASE and FOREVER
DISCHARGE Mountaineer Park, Inc. and Winner's Entertainment, Inc., and their
officers, directors, shareholders, employees, agents, servants, attorneys,
successors, assigns, insurers, heirs and personal representatives,
subsidiaries, and each and every other corporate or other type entity
affiliated directly or indirectly with Winner's Entertainment, Inc.
("Winner's affiliated entities"), and also their officers, directors,
shareholders, employees, agents, servants, attorneys, successors, assigns,
insurers, heirs and personal representatives, of and from any and all claims,
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<PAGE>
suits and causes of action of whatsoever kind of character Bennett/Bennett,
or either of them, now has or may hereafter have, by reason of any damages,
losses or expenses incurred or to be incurred and of whatever kind or
character by the undersigned Bennett Management & Development Corp. or The
Bennett Funding Group, Inc., arising from or growing out of or in any way
related to (i) the borrower-lender relationship between Mountaineer Park,
Inc. and Bennett Management & Development Corp., or (ii) the relationships
between or among any of the undersigned or any of the other parties released
by this or the preceding paragraph ("other relationships") arising by reason
of or growing out of or in any way related to said borrower-lender
relationship between Mountaineer Park, Inc. and Bennett Management &
Development Corp.
LIMITATIONS: The undersigned declare it to be their understanding and
intentions that their obligations under or related to the loan documents
evidencing said borrower-lender relationship occurring prior to September 19,
1996, shall never be or become the basis of (or a part of the basis of) a
claim, suit or cause of action by or against any of the undersigned. However,
it is agreed that the releases hereby extended will not preclude a claim,
suit or cause of action by any of the undersigned, nor an enforcement of
remedies available to Bennett Management & Development Corp. (or its
successors or assigns) under said loan documents, so long as such claim,
suit, cause of action or enforcement of remedies is based solely upon a
breach of obligation, or breach of duty, or failure to pay or failure to
perform occurring on or after September 20, 1996.
Mountaineer/Winners understand and agree that the aforesaid claims
hereby released by them include, but are not limited to, any claims and
possible claims stated in, implied by or inferred from (i) the content of a
certain letter dated September 25, 1996, from Mountaineer Park, Inc. to
Bennett Management & Development Corp. (signed by Edson R. Arneault and
addressed to Kevin J. Kuppel), and (ii) the content of a certain letter dated
September 6, 1995, from Mountaineer Park, Inc. to Bennett Management &
Development Corp. (also, signed by Edson R. Arneault and addressed to Kevin
J. Kuppel). Mountaineer/Winners further understand and agree that the
aforesaid Bennett affiliated entities hereby released include, but are not
limited to, American Gaming & Entertainment, Ltd., Gamma of West Virginia,
Inc., and Gamma International, Ltd., insofar as claims, suits and causes of
action by the undersigned would related directly or indirectly to the loan
which is the basis of the aforesaid borrower-lender relationship.
The undersigned hereby declare that the terms of this Release have been
completely read and are fully understood and voluntarily accepted for the
purpose of making a full and final compromise, adjustment and settlement,
subject to the above-stated limitations, of any and all claims, disputed or
otherwise, known or unknown, discovered or not discovered, on account of said
borrower-lender relationship or said other relationships and for the express
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purpose of precluding forever, subject to the above-stated limitations, any
further or additional claims, demands or suits against any and all entities
and persons named or referred to herein as a released party, arising out of
the aforesaid borrower-lender relationship or said other relationships.
The undersigned understand and agree that the aforesaid payments of cash
and execution and delivery of this Mutual Release Agreement were made by way
of settlement and that liability for any claims hereby released have been and
are specifically denied by the parties released hereby.
The undersigned represent and warrant that the terms hereof were reached
by them after full and complete opportunity to consult with counsel regarding
the settlement and the effect of this release; that they execute this release
voluntarily, freely, without compulsion or duress and mindful that it has
legal consequences precluding any further action, subject to the above-stated
limitations, on any claim they have or might have as to said borrower-lender
relationship or said other relationships against the parties released; and
that no person has made any promise or given any inducement whatsoever to
encourage them to make this settlement other than the considerations above
recited; and, that (i) no limitation or restriction exists as to the power or
the authority of the undersigned to execute this release, (ii) the persons
executing same on behalf of the undersigned have been duly authorized so to
do, and (iii) this release is valid and binding and the provisions hereof are
enforceable against the undersigned in accordance with its terms.
This Mutual Release Agreement may be executed in any number of
counterparts, each of which shall, for all purposes, be deemed to be an
original, but all such counterparts shall together constitute one and the
same instrument.
WITNESS the following signatures as of the 19th day of September, 1996.
MOUNTAINEER PARK, INC.
/s/ Naomi J. Balt By: /s/ Edson R. Arneault
- ------------------------------ ------------------------------
Witness Its: President
WINNER'S ENTERTAINMENT, INC.
/s/ Naomi J. Balt By: /s/ Edson R. Arneault
- ------------------------------ ------------------------------
Witness Its: President
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<PAGE>
BENNETT MANAGEMENT & DEVELOPMENT
CORP.
By: /s/ Richard C. Breeden
------------------------------
Richard C. Breeden, Solely in
His Capacity as Trustee of the
Estate of the Bennett Management
and Development Corp.
- ------------------------------
Witness
THE BENNETT FUNDING GROUP, INC.
By: /s/ Richard C. Breeden
-------------------------------
Richard C. Breeden, Solely in
His Capacity as Trustee of the
Estate of the Bennett Funding
Group, Inc.
- ------------------------------
Witness
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<PAGE>
EXHIBIT B
AMERICAN GAMING & ENTERTAINMENT, LTD.
Bayport One
Yacht Club Drive, Suite 300
West Atlantic City, New Jersey 08232
September 19, 1996
Mr. Edson R. Arneault
President
Mountaineer Park, Inc.
State Route 2
Chester, West Virginia 26034
Dear Mr. Arneault:
On behalf of American Gaming & Entertainment, Ltd. and its wholly owned
subsidiary, Gamma of West Virginia, Inc., I am writing to acknowledge that
the Settlement Agreement dated as of June 30, 1995 and executed by Winners
Entertainment, Inc., Mountaineer Park, Inc., Gamma of West Virginia, Inc.,
and American Gaming & Entertainment, Inc. (the "Settlement Agreement") is in
full force and effect. Winners Entertainment, Inc. and Mountaineer Park,
Inc. may assume for purposes of this acknowledgment that Termination, as that
term is defined in the Settlement Agreement, has occurred. Accordingly, the
Management Agreement dated June 2, 1994 has automatically terminated and the
relationship among the parties to the Settlement Agreement is as set forth
therein.
ACKNOWLEDGED THIS 19th DAY OF September, 1996
BY: /s/ J. Douglas Wellington
--------------------------------
J. Douglas Wellington, President
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EXHIBIT C
SETTLEMENT AGREEMENT
This Settlement Agreement is entered as of June 30, 1995 among Winners
Entertainment, Inc., a Delaware corporation ("Winners"), Mountaineer Park,
Inc., a West Virginia corporation wholly owned by Winners ("Mountaineer"),
and Gamma of West Virginia, Inc., a West Virginia corporation wholly owned by
American Gaming & Entertainment, Ltd. ("Gamma").
WHEREAS, Mountaineer and Gamma (by assignment from American Gaming &
Entertainment, Ltd.) are parties to that certain Management Agreement made as
of June 2, 1994, as subsequently amended, concerning the management of
Permitted Activities (as that term is defined therein) at the Mountaineer
Racetrack & Resort (the "Management Agreement"); and
WHEREAS, Winners agreed to be bound by certain provisions of the
Management Agreement; and
WHEREAS, as of this date Winners, Mountaineer, and Gamma entered into a
Stay Agreement with respect to the Management Agreement (the "Stay
Agreement"); and
WHEREAS, as of July 1, 1995, Mountaineer and American Newco, Inc., a
corporation of which Alfred J. Luciani and J. Timothy Smith are sole
shareholders, are entering into a Consulting Agreement; and
WHEREAS, Gamma and/or its affiliates and Mountaineer and Winners wish to
provide for the termination of the Management Agreement subject to and in
accordance with the terms of the Stay Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants,
acknowledgments, and conditions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Termination of Agreements. The Management Agreement and, except as
otherwise specifically provided herein, all relationships established thereby
and obligations arising thereunder, shall immediately and automatically
terminate upon the termination of the Stay Agreement pursuant to Section 2(a)
thereof or the termination of the Consulting Agreement pursuant to Section
2(a), (b) or (c) thereof ("Termination"). Upon Termination, no party to this
Settlement Agreement shall have any further rights or obligations under
either the Management Agreement or any other written or oral agreement that
may have been in effect prior to the execution of this Settlement Agreement
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<PAGE>
(except for the Consulting Agreement), all of which shall be of no further
force or effect. This Settlement Agreement shall not take effect and no
party shall have any rights or obligations hereunder until Termination.
2. Settlement of Accounts; Return of Records. Upon Termination, Gamma
will immediately cause its employees to vacate any rooms they are occupying
at the Mountaineer Lodge. Upon presentation of an invoice for (i) any long
distance telephone calls placed by Gamma employees from the Mountaineer Lodge
to a number other than the offices of AGEL; and (ii) any alcoholic beverages
charged by Gamma employees in the sixty (60) days preceding the effective
date of the Stay Agreement, Gamma shall be responsible for full payment to
Mountaineer. All such charges shall be made without pre-invoice interest at
the rates Mountaineer customarily charges its patrons for the same products
and services. Promptly upon determining in the ordinary course any
management fees due Gamma under the Management Agreement through June 30,
1995, Mountaineer will pay such fees in full. Gamma expressly agrees,
however, that Mountaineer may deduct from such payment as a setoff all sums
due Mountaineer from Gamma pursuant to this Section 2.
Upon Termination, Gamma shall return to Mountaineer all software,
records, manuals, books, forms, documents, notes, letters, memoranda,
reports, data tables, devices, and apparatus owned or possessed by
Mountaineer or Winners, regardless of who prepared them.
3. Mutual Releases. Except for those obligations expressly provided
for in this Settlement Agreement, including but not limited to Section 4
below (limited indemnity) Winners and Mountaineer on the one hand, and Gamma
and AGEL on the other hand, hereby forever release and discharge the other
and each of the other's officers, directors, shareholders, employees, agents,
affiliates, attorneys, successors, and assigns of and from any and all
claims, rights, duties, obligations, debts, liabilities, damages, injuries,
actions, and causes of action of every kind and nature, foreseen and
unforeseen, contingent and actual, liquidated and unliquidated, suspected and
unsuspected, disclosed and undisclosed, whether direct or by way of
indemnity, contribution, or otherwise, including without limitation all
claims which either party has or might have arising from or related to the
Management Agreement or any prior oral or written agreement among the
parties.
Each of the parties hereby acknowledges that it has been advised and is
aware of the provisions of Section 1542 of the Civil Code of the State of
California, and does hereby expressly waive and relinquish all rights and
benefits which it has or may have under said Section 1542, which reads as
follows:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
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at the time of executing the release, which if known by
him, must have materially affected his settlement with
the debtor.
Each party also waives any similar law or rule.
4. Limited Indemnity. Notwithstanding anything herein to the
contrary, Gamma and AGEL hereby agree to indemnify and hold Mountaineer and
Winners harmless from and against any and all claims, liabilities, losses,
actions, suits, or proceedings, at law or in equity, that if may incur or
with which it may be threatened by reason of either (i) allegations by third
parties that Gamma or AGEL employees engaged in willful or intentional
tortious conduct or wrongdoing; or (ii) allegations of willful or intentional
violations of the West Virginia Racetrack Video Lottery Act (though the
parties are currently unaware of any such allegations). This indemnification
shall include but not be limited to expenses (including attorneys' fees)
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever.
5. Express Waiver of Covenant Not To Compete; Services of American
Newco, Inc.
Mountaineer and Winners each expressly waives and releases Gamma from
non-competition provisions set forth in Section 7 of the Management
Agreement.
Gamma and AGEL hereby consent to Mountaineer's or Winners' future use of
the services of American Newco, Inc., a corporation wholly owned by Alfred
Luciani, president of Gamma and AGEL, and J. Timothy Smith, on a consulting
basis on terms upon which they may agree. Gamma and AGEL acknowledge that
such employment will not give rise to claims that Mountaineer or Winners
thereby engaged in unfair competition, or any similar wrongful conduct with
Gamma or AGEL.
6. Confidentiality. Gamma acknowledges that during the term of the
Management Agreement, it has had access to non-public information, including
trade secrets, that are the property of Mountaineer or Winners. From and
after the date hereof, Gamma agrees that it will not disclose to any person
information concerning Mountaineer, Winners, or the operation of Mountaineer
Racetrack & Resort that is not in the public domain.
7. Further Action. The parties hereto agree to provide, upon
reasonable notice, any further documents and to undertake any further action
reasonably required to effectuate the purposes of this Settlement Agreement,
including, but not limited to, compliance with requests made by state
regulators.
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8. Heirs, Successors and Assigns. This Settlement Agreement shall
inure to the benefit of, and shall be binding upon, the heirs, successors,
and assigns of the parties hereto as well as each party's present and former
affiliated corporations, predecessors, parent corporations, subsidiaries,
divisions, operating companies, officers, directors, agents, employees,
administrators, representatives, shareholders, accountants, and attorneys,
individually as well as in the capacity indicated. However, except as
expressly provided herein, this Settlement Agreement is not for the benefit
of any person not a party hereto or specifically identified as a beneficiary
herein, and is not intended to constitute a third party beneficiary contract.
9. Merger and Integration. This Settlement Agreement constitutes a
single, integrated written contract expressing the entire agreement of the
parties hereto with respect to the subject matter hereof. No covenants,
agreements, representations or warranties of any kind have been made by any
party hereto, except as specifically set forth in this Settlement Agreement.
All prior claims, discussions and negotiations have been and are merged and
integrated into, and are superseded by this Settlement Agreement.
10. Governing Law; Forum Selection. This Settlement Agreement shall be
construed in accordance with, and governed by, the laws of the State of West
Virginia. The parties hereto agree that any dispute concerning this
Settlement Agreement shall be litigated in the Circuit Court of Hancock
County, West Virginia, and the parties hereto agree to submit to the
jurisdiction of such court.
IN WITNESS WHEREOF, the parties hereto have approved and executed this
Settlement Agreement as of the date first set forth above.
WINNERS ENTERTAINMENT, INC.
By: /s/ Edson R. Arneault
-------------------------------------
Edson R. Arneault, President
MOUNTAINEER PARK, INC.
By: /s/ Edson R. Arneault
-------------------------------------
Edson R. Arneault, President
GAMMA OF WEST VIRGINIA, INC.
By: /s/ Alfred Luciani
-------------------------------------
Alfred Luciani, President
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AMERICAN GAMING & ENTERTAINMENT, LTD.
By: /s/ Alfred Luciani
-------------------------------------
Alfred Luciani, President
By: /s/ J. Timothy Smith
-------------------------------------
J. Timothy Smith, Executive Vice
President & Chief Operating Officer
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