<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
--------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
Commission File Number: 0-1590
---------------------------------------------------------
THE WESTWOOD GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-1983910
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
190 V.F.W. Parkway, Revere, Massachusetts 02151
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
781-284-2600
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (l) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
As of August 14, 1998 351,210 shares of the Registrant's common stock, par value
$.01 per share and 912,015 shares of the Registrant's Class B common stock, par
value $.01 per share, were outstanding.
Page 1 of 22
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
1998 1997
----------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 940,442 $ 374,292
Restricted cash 787,640 612,037
Accounts receivable 312,791 629,204
Prepaid expenses and other current assets 473,693 161,502
----------- -----------
Total current assets 2,514,566 1,777,035
PROPERTY, PLANT AND EQUIPMENT:
Land 348,066 348,066
Building and building improvements 18,203,983 17,830,342
Machinery and equipment 4,486,287 4,441,026
----------- -----------
23,038,336 22,619,434
Less accumulated depreciation and amortization 17,144,850 16,913,769
----------- -----------
Net property, plant and equipment 5,893,486 5,705,665
----------- -----------
OTHER ASSETS:
Goodwill, less accumulated
amortization of $600,000 and $528,000 120,000 192,000
Investments 5,540,022 5,324,522
Notes receivable from officer 390,055 369,375
Other assets 40,000 212,875
----------- -----------
Total other assets 6,090,077 6,098,772
----------- -----------
Total assets $14,498,129 $13,581,472
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
Page 2 of 22
<PAGE> 3
<TABLE>
<CAPTION>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
June 30, December 31,
1998 1997
----------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities $ 3,870,618 $ 3,986,852
Outstanding pari-mutuel tickets 1,156,318 1,089,658
Net liabilities of discontinued operations 704,420 1,280,620
Current maturities of long-term debt 282,280 139,022
Short-term borrowings 92,388 355,539
Debt obligations in default -- 4,234,286
----------- -----------
Total current liabilities 6,106,024 11,085,977
----------- -----------
LONG-TERM DEBT, less current maturities 5,736,930 996,671
OTHER LONG-TERM LIABILITIES 2,774,747 3,049,452
----------- -----------
Total liabilities 14,617,701 15,132,100
----------- -----------
COMMITMENTS AND CONTINGENCIES:
STOCKHOLDERS' DEFICIT:
Common stock, $.01 par value; authorized
3,000,000 shares, 1,944,409 and 1,936,409 shares
issued and outstanding 19,444 19,364
Class B Common stock, $.01 par value; authorized
1,000,000 shares; 912,615 shares issued and outstanding 9,126 9,126
Additional paid-in capital 13,379,275 13,355,355
Accumulated deficit (5,199,516) (6,538,493)
Note receivable from related party (363,119) (345,119)
Minimum pension liability adjustment -- (86,079)
Less cost of 1,593,199 common and 600 Class B
common shares in treasury (7,964,782) (7,964,782)
----------- -----------
Total stockholders' deficit (119,572) (1,550,628)
----------- -----------
Total liabilities and stockholders' deficit $14,498,129 $13,581,472
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
Page 3 of 22
<PAGE> 4
<TABLE>
<CAPTION>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For The
Three Months Ended
June 30,
1998 1997
---------- ----------
<S> <C> <C>
OPERATING REVENUE:
Pari-mutuel commissions $3,981,574 $4,494,521
Concessions and other 913,657 1,021,832
---------- ----------
Total operating revenue 4,895,231 5,516,353
---------- ----------
OPERATING EXPENSES:
Wages, taxes and benefits 1,782,737 1,696,204
Purses 1,267,270 1,372,989
Cost of food and beverage 150,347 164,617
Administrative and general 1,400,134 1,460,388
Depreciation and amortization 156,791 127,223
---------- ----------
Total operating expenses 4,757,279 4,821,421
---------- ----------
Income from operations 137,952 694,932
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense, net (116,671) (159,860)
Equity income in investments 147,900 115,104
---------- ----------
Total other income (expense) 31,299 (44,756)
---------- ----------
INCOME FROM CONTINUING OPERATIONS BEFORE
PROVISION FOR INCOME TAXES 169,181 650,176
PROVISION FOR INCOME TAX -- --
---------- ----------
INCOME FROM CONTINUING OPERATIONS 169,181 650,176
GAIN (LOSS) FROM OPERATIONS OF DISCONTINUED HARNESS
RACING SUBSIDIARY 576,200 (954,719)
---------- ----------
NET INCOME (LOSS) $ 745,381 $ (304,543)
========== ==========
BASIC AND DILUTED PER SHARE DATA:
Income from continuing operations per share $ .13 $ .52
========== ==========
Income (loss) from discontinued operations per share $ .46 $ (.76)
========== ==========
Net income (loss) per share $ .59 $ (.24)
========== ==========
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 1,263,225 1,255,225
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
Page 4 of 22
<PAGE> 5
<TABLE>
<CAPTION>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For The
Six Months Ended
June 30,
1998 1997
---------- -----------
<S> <C> <C>
OPERATING REVENUE:
Pari-mutuel commissions $8,083,657 $ 8,709,463
Concessions and other 1,683,129 1,798,354
---------- -----------
Total operating revenue 9,766,786 10,507,817
---------- -----------
OPERATING EXPENSES:
Wages, taxes and benefits 3,405,952 3,311,521
Purses 2,485,770 2,663,165
Cost of food and beverage 265,117 270,668
Administrative and general 2,614,968 2,776,922
Depreciation and amortization 303,081 260,446
---------- -----------
Total operating expenses 9,074,888 9,282,722
---------- -----------
Income from operations 691,898 1,225,095
---------- -----------
OTHER INCOME (EXPENSE):
Interest expense, net (218,059) (291,506)
Equity income in investments 215,500 97,660
Other income, net 99,438 293,333
---------- -----------
Total other income 96,879 99,487
---------- -----------
INCOME FROM CONTINUING OPERATIONS BEFORE
PROVISION FOR INCOME TAXES 788,777 1,324,582
PROVISION FOR INCOME TAX 26,000 10,000
---------- -----------
INCOME FROM CONTINUING OPERATIONS 762,777 1,314,582
GAIN (LOSS) FROM OPERATIONS OF DISCONTINUED HARNESS
RACING SUBSIDIARY 576,200 (1,607,046)
---------- -----------
NET INCOME (LOSS) $1,338,977 $ (292,464)
========== ===========
BASIC AND DILUTED PER SHARE DATA:
Income from continuing operations per share $ .60 $ 1.05
========== ===========
Gain (loss) from discontinued operations per share $ .46 $ (1.28)
========== ===========
Net income (loss) per share $ 1.06 $ (.23)
========== ===========
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 1,263,225 1,255,225
========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
Page 5 of 22
<PAGE> 6
<TABLE>
<CAPTION>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For The
Six Months Ended
June 30,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,338,977 $ (292,464)
----------- ----------
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 303,081 609,958
Equity in income from investments (215,500) (97,660)
Deferred revenue -- (176,666)
Gain from discontinued operations (576,200) --
Changes in operating assets and liabilities:
Restricted cash (175,603) 663,085
Accounts receivables 316,413 346,639
Prepaid expenses and other current assets (312,191) (26,439)
Other assets (78,680) (9,092)
Accounts payable
and other accrued liabilities (49,574) (442,861)
Other long-term liabilities 24,249 (33,909)
----------- ----------
Total adjustments (764,005) 833,055
----------- ----------
Net cash provided by operating activities 574,972 540,591
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (418,902) (113,194)
----------- ----------
Net cash used in investing activities (418,902) (113,194)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 5,006,109 2,811
Principal payments of debt (4,620,029) (623,577)
Issuance of common stock 24,000 --
----------- ----------
Net cash provided by (used in) in financing activities 410,080 (620,766)
----------- ----------
NET INCREASE (DECREASE) AND CASH EQUIVALENTS 566,150 (193,369)
CASH AND CASH EQUIVALENTS, beginning of period 374,292 1,033,911
----------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 940,442 $ 840,542
=========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 200,274 $ 241,079
Income taxes $ 26,993 $ 13,280
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
Page 6 of 22
<PAGE> 7
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTERIM RESULTS
The accompanying unaudited condensed consolidated financial statements have
been prepared by The Westwood Group, Inc. (the "Company") pursuant to the rules
and regulations of the Securities and Exchange Commission regarding interim
financial reporting. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1997 included in
the Company's Form 10-K. The accompanying condensed consolidated financial
statements reflect all adjustments (consisting of normal, recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
results for the interim periods presented.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated condensed financial statements as of June 30,
1998 and December 31, 1997 and for the three and six month periods ended June
30, 1998 and 1997 include the accounts of the Company and its wholly-owned
subsidiaries. All material intercompany accounts and transactions have been
eliminated in consolidation.
RECLASSIFICATIONS
Certain reclassifications were made to the 1997 financial statement amounts
to conform with the 1998 presentation.
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1997
The consolidated balance sheet at December 31, 1997 is presented for
comparative purposes and was taken from the audited consolidated financial
statements for the year ended December 31, 1997.
DEBT
Long-term obligations which were in default at December 31, 1997 were
classified as current liabilities at December 31, 1997.
Page 7 of 22
<PAGE> 8
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME (LOSS) PER COMMON SHARE
The Company follows Statement of Financial Accounting Standards (SFAS) No.
128, Earnings per Share, issued by the Financial Accounting Standards Board.
Under SFAS No. 128, the basic and diluted net income (loss) per share of common
stock is computed by dividing the net income (loss) by the weighted average
number of common shares outstanding during the period, including potentially
dilutive stock options.
The Company's stock options did not have a dilutive effect in
1998 and 1997 since the option prices per share were deemed to be equal to or
higher than the estimated average per share market price of the company's common
stock.
The amount of potentially dilutive common shares issuable under
the Company's stock options, if any, are determined based on the treasury stock
method.
2. DISCONTINUED OPERATIONS
The accompanying condensed statements of operations for the three and six
month periods ended June 30, 1997 have been restated to present the Foxboro
Harness racing business as a discontinued operation. During July 1997, the
Company's harness racing subsidiary, Foxboro Park, Inc. (including wholly owned
subsidiaries), was evicted from Foxboro Raceway (see Legal Proceedings at
Part II Item 1).
Page 8 of 22
<PAGE> 9
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
2. DISCONTINUED OPERATIONS (CONTINUED)
The loss from operations of the Company's harness racing business for the
three and six month periods ended June 30, 1997 is summarized as follows:
<TABLE>
<CAPTION>
3 Months 6 Months
-------- --------
<S> <C> <C>
Operating revenues $ 2,962,451 $ 5,530,886
Operating expenses (3,917,170) (7,137,932)
----------- -----------
$ (954,719) $(1,607,046)
=========== ===========
</TABLE>
In February 1998 the Company executed an Assignment for the Benefit of
Creditors ("AFBC") for Foxboro Park, Inc., Foxboro Harness, Inc. and Foxboro
Thoroughbred, Inc. (collectively, the "Foxboro Entities"). The AFBC was executed
to provide a mechanism for the liquidation of its assets and the distribution of
proceeds to its creditors. Provided that 70% in amount and 50% in number of the
Foxboro Entities creditors become Assenting Creditors, the Company shall
partially subordinate its claims. The assets of the Foxboro Entities have been
distributed to the trustee in connection with the execution of the AFBC.
Net liabilities of discontinued operations consist of assets distributed to
the trustee of approximately $475,000 net of amounts due creditors. During the
second quarter of 1998 creditors with amounts due of approximately $820,000
assented to the AFBC. The Company has reduced its Net liability of discontinued
operations to reflect these assents and has recorded a gain from discontinued
operations of $576,200 for the three and six month periods ended June 30, 1998.
3. DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- -------------
<S> <C> <C>
9.5% Term Loan requiring monthly payments of principal and interest of
approximately $58,300 until maturity in June 2003, collateralized by
a mortgage and security interest in all real estate and personal
property located at Wonderland Park and is guaranteed by the Company
and Wonderland
Park. $5,000,000 --
8-3/4% MSCGAF Trust term loan requiring monthly payments of principal
and interest of $42,298 until maturity in January 1998,
collateralized by a mortgage and security interest in all real estate
and personal property located at Wonderland Park, by all of the stock
of
</TABLE>
Page 9 of 22
<PAGE> 10
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
3. DEBT (continued)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------- ------------
<S> <C> <C>
Wonderland Park, and guaranteed by three subsidiaries of the
Company, including Wonderland Park - $2,381,286
Line of credit, interest at 10% requiring monthly payments of interest
plus $16,000 principal until maturity at February 1, 1998
collateralized by a second mortgage and security interest in all real
estate and personal property located at Wonderland Park and by
approximately 401,000 shares of BBRG common stock held by
the Company. - 1,568,000
6%BBRG Term Note, payable in equal quarterly payments of principal and
interest of approximately $36,000 beginning April 1, 1999,
collateralized by certain tangible personal property and licenses. 970,000 970,000
14.25% Subordinated Notes due August, 1997. 10,000 285,000
Margin agreement due on demand collateralized by 88,000 shares of
BBRG stock held by the Company. - 117,855
7.5% Promissory Note, payable in 60 monthly payments of principal
and interest of $2,003, commencing April, 1995. 39,210 47,838
---------- ----------
Total 6,019,210 5,369,979
Less:
Current maturities 272,280 139,022
Debt obligations in default 10,000 4,234,286
---------- ----------
Long-term debt $5,736,930 $ 996,671
========== ==========
</TABLE>
On June 30, 1998 Wonderland Greyhound Park, Inc. completed a refinancing
with a bank. The bank provided a $5 million Term Loan ("Term Loan") bearing
interest at 9.5 % per annum and requiring monthly principal and interest
payments of approximately $58,300 commencing August 1, 1998 until maturity on
June 30, 2003. The Term Loan is secured by a mortgage and security interest in
all real estate and personal property located at Wonderland Park and is
guaranteed by the Company.
Page 10 of 22
<PAGE> 11
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
3. DEBT (continued)
The proceeds of the Term Loan were used to retire approximately $4 million
of existing debt obligations including the MSCGAF Trust Term Loan, $1.5 million
Line of Credit and margin agreement.
In connection with the refinancing Wonderland established a $500,000.00
cash collateral account to be used to satisfy simulcast-out-ticket obligations
(see Legal Proceedings at Part II Item 1). Additionally, the Company pledged a
collateral interest in 125,000 shares of Back Bay Restaurant Group, Inc.
("BBRG") stock.
In May 1994, holders of approximately $19,300,000 of the Company's 14.25%
Subordinated Notes (the "Notes") exchanged them for approximately 887,000 shares
of BBRG common stock. The shares were exchanged in full settlement of principal,
accumulated interest and default premiums due in respect of such Notes. Holders
of approximately $285,000 of the Notes elected not to participate in the
exchange. During the second quarter of 1998, the Company retired in full
settlement of principal, accumulated interest and default premiums due in
respect to $275,000 of these Notes with payments totalling $425,000. The
remaining $10,000 Note continues to be in default.
In May 1994, the Company entered into an agreement with BBRG to transfer
the operations under the Concessions Agreement and the Management Agreement to
the Company in return for a six year term note in the amount of $970,000. On
January 5, 1998 the Note was amended requiring equal quarterly payments of
principal and interest beginning April 1, 1999 of approximately $36,000 with
interest at 6%.
4. SHORT-TERM BORROWINGS
The Company had $92,388 and $355,539 outstanding at June 30, 1998 and
December 31, 1997, respectively, under a short-term borrowing arrangement. The
note bears interest at 12% per annum and requires weekly principal and interest
payments of $12,000 with a maturity date of August 7, 1998. The Company retired
this obligation in July 1998 in connection with the refinancing discussed in
Note 3 above.
5. INVESTMENTS
During 1994, the Company and BBRG jointly pursued a series of transactions,
the effect of which resulted in the control of BBRG no longer resting with the
Company. Accordingly, the Company's investment in BBRG has been accounted for
under the equity method.
Page 11 of 22
<PAGE> 12
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
5. INVESTMENTS (CONTINUED)
The following unaudited financial information summarizes the financial
position and results of operations of BBRG:
<TABLE>
<CAPTION>
June 28, December 28,
1998 1997
------- ------------
<S> <C> <C>
(In thousands) Balance sheet data:
Current assets $ 3,506 $ 4,050
Noncurrent assets 39,586 39,022
Current liabilities 10,561 11,786
Noncurrent liabilities 4,289 4,274
Net equity 28,242 27,012
<CAPTION>
Twenty-six Weeks Ended
June 28, June 30,
1998 1997
-------- --------
<S> <C> <C>
(In thousands) Earnings data:
Net sales $47,712 $46,018
Income from restaurant operations 6,177 5,587
Net income (loss) 1,146 514
Company's equity in net income (loss) 216 98
</TABLE>
Page 12 of 22
<PAGE> 13
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30 1997.
The table below illustrates certain key statistics for Wonderland Park, the
Company's greyhound racing operation, for the three months ended June 30, 1998
and 1997.
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Performances 106 114
Simulcast days 91 90
Pari-mutuel handle (thousands)
Live-on track $ 8,598 $ 10,960
Live-simulcast 8,911 7,323
Guest-simulcast 12,866 13,354
-------- --------
Total $ 30,375 $ 31,637
======== ========
Total attendance 110,819 136,267
======== ========
Average per capita on site wagering $ 194 $ 178
======== ========
</TABLE>
OPERATING REVENUE
The Company is still experiencing a decline in total attendance caused by a
variety of factors. These include a general decline in the pari-mutuel racing
industry, a strong competition for the wagered dollar from the Massachusetts
State Lottery, and from casino gambling and slot machines in neighboring states.
Total operating revenue decreased to approximately $4.895 million in the
quarter ended June 30, 1998 as compared to approximately $5.516 million in the
same period of 1997. Pari-mutuel commissions decreased by approximately $513,000
or 11% to approximately $3.982 million for the three months ended June 30, 1998
from approximately $4.495 million in 1997. Total handle in second quarter of
1998 was approximately $30.4 million as compared to $31.6 million in 1997.
Guest-simulcast handle decreased by approximately $488,000 or 4% from
approximately $13.4 million in the second quarter of 1997 to approximately $12.7
million in the corresponding period in 1998. Live-on track handle decreased by
approximately $2.4 million or 22% in 1998 as compared to 1997, while
Live-simulcast handle increased by approximately $1.6 million or 22%.
The decrease in pari-mutuel commission revenue is attributable to the
decrease in Live-on track and Guest-simulcast handle which was partially offset
by an increase in Live-simulcast handle as well as an increase in the commission
rate earned on certain wagers. Wonderland had eight fewer live racing
performances in the second quarter of 1998 as compared to the corresponding
period in 1997, with an average attendance of approximately 1,045 persons and
1,195 persons in 1998 and 1997 respectively.
Page 13 of 22
<PAGE> 14
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
OPERATING REVENUE (continued)
Concessions and other operating revenue decreased by approximately $108,000
or 11% to approximately $914,000 during the three months ended June 30, 1998 as
compared to approximately $1.02 million during the corresponding period in 1997.
Other operating revenue consists of program sales, admissions, parking and gift
shop sales.
The Company experienced declines in concession sales, program sales,
admissions and lottery commissions that were partially offset by increased
parking lot revenues. The revenue declines are attributable to lower attendance
during the three months ended June 30, 1998 as compared to the corresponding
period in 1997. Parking lot revenues have increased due to a change in pricing.
Pari-mutuel commission for the three months ended June 30, 1998 included
approximately $68,960 deposited into both the Greyhound Promotional Trust Fund
and the Greyhound Capital Improvements Trust Fund.
OPERATING EXPENSES
Operating expenses of approximately $4.76 million for the three months
ended June 30 1998 decreased slightly by approximately $64,000 or less than 1%
as compared to the three months ended June 30, 1997.
The Company realized savings in general operating expenses due to lower
audio-visual, utility and occupancy costs. The Company also incurred lower purse
expense due to the decrease in on-track handle. These cost savings were
partially offset by increased expenses associated with wages.
INTEREST EXPENSE
Interest expense decreased by approximately $43,000 for the three months
ended June 30, 1998, from approximately $160,000 in the three months ended June
30, 1997 to approximately $117,000 in the three months ended June 30, 1998. The
decrease is due to the reduction of outstanding debt. (See Liquidity and Capital
Resources).
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased approximately $30,000 to $157,000
in the three months ended June 30, 1998, from $127,000 in the comparable period
in 1997. Depreciation and amortization are expensed on a straight-line basis
over the estimated life of the asset. Depreciation has increased as additions
have been made to fixed assets.
Page 14 of 22
<PAGE> 15
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
The table below illustrates certain key statistics for Wonderland Park, the
Company's greyhound racing operation, for the six months ended June 30, 1998 and
1997.
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Performances 209 227
Simulcast days 181 180
Pari-mutuel handle (thousands)
Live-on track $ 16,881 $ 20,913
Live-simulcast 18,707 15,926
Guest-simulcast 26,366 26,101
-------- --------
Total $ 61,954 $ 62,940
======== ========
Total Attendance 213,640 253,311
======== ========
Average per capita on site
wagering $ 202 $ 186
======== ========
</TABLE>
OPERATING REVENUE
Total operating revenue decreased to approximately $9.8 million in the six
months ended June 30, 1998 as compared to approximately $10.5 million in the
same period of 1997. Pari-mutuel commissions decreased by approximately $626,000
or 7% to approximately $8.1 million for the six months ended June 30, 1998 from
approximately $8.7 million in 1997. Total handle in the first six months of 1998
was approximately $61.95 million as compared to approximately $62.94 million in
1997. Guest-simulcast handle increased by approximately $265,000 or 1% from
$26.1 million in 1997 to approximately $26.4 million in the corresponding period
in 1998. Live-on track handle decreased by approximately $4 million or 19% in
1998 as compared to 1997, while Live-simulcast handle increased by approximately
$2.8 million or 17%
The decrease in pari-mutuel commission revenue is attributable to the
decrease in Live-on track handle which was partially offset by increased in
Live-simulcast handle and Guest-simulcast handle as well as an increase in the
commission rate earned on certain wagers. Wonderland had eighteen fewer live
racing performances in 1998 as compared to 1997, with an average attendance of
approximately 1,022 persons, while average attendance was approximately 1,116
persons in 1997.
Pari-mutuel commissions for the six months ended June 30, 1998 included
approximately $142,600 deposited into both the Greyhound Promotional Trust Fund
and the Greyhound Capital Improvements Trust Fund.
Page 15 of 22
<PAGE> 16
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
OPERATING REVENUE (CONTINUED)
Concessions and other operating revenue decreased by approximately $115,000
or 6% to approximately $1.683 million in the six month period ended June 30,
1998 from approximately $1.798 million in the corresponding period in 1997.
Other operating revenue consists of program sales, admissions, parking and gift
shop sales.
The Company experienced declines in concession sales, program sales,
admissions and lottery commissions that were partially offset by increased
parking lot revenues. The revenue declines are attributable to lower attendance
during the six months ended June 30, 1998 as compared to the corresponding
period in 1997. Parking lot revenues have increased due to a change in pricing.
OPERATING EXPENSES
Operating expenses of approximately $9.07 million for the six months ended
June 30, 1998 decreased by approximately $208,000 from approximately $9.28
million for the six months ended June 30, 1997.
The Company realized savings in general operating expenses due to lower
audio-visual, utility and occupancy costs. The Company also incurred lower purse
expense due to the decrease in on-track handle. These cost savings were
partially offset by increased expenses associated with wages.
INTEREST EXPENSE
Interest expense decreased by approximately $73,000 for the six months
ended June 30, 1998, from $292,000 in the six months ended June 30, 1997 to
approximately $218,000 in the six months ended June 30, 1998. The decrease is
due to the reduction of outstanding debt. (See Liquidity and Capital
Resources).
OTHER INCOME, NET
Other income, net decreased by approximately $194,000 to approximately
$100,000 during the six months ended June 30, 1998 as compared to approximately
$293,000 for the corresponding period in 1997. The decrease is attributable to
the realization of asset recovery proceeds in the first quarter of 1997.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased approximately $43,000 to
approximately $303,000 in the six months ended June 30, 1998 from approximately
$260,000 in the comparable period in 1997. Depreciation and amortization are
expensed on a straight-line basis over the estimated life of the asset.
Depreciation has increased as additions have been made to fixed assets.
Page 16 of 22
<PAGE> 17
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
EQUITY INCOME (LOSS) IN INVESTMENTS
The Company owns approximately 673,000 or 19% of the outstanding shares of
the Back Bay Restaurant Group, Inc. ("BBRG"). During 1994, the Company and BBRG
jointly pursued a series of transactions, the effect of which resulted in the
control of BBRG no longer resting with the Company. Accordingly, the Company's
investment in BBRG for the three and six month periods ended June 30, 1998 and
1997 has been accounted for under the equity method. The equity income (loss) in
investments represents the Company's proportionate share of BBRG's net earnings
or loss.
INCOME TAX PROVISION
The Company's provision for income taxes is less than the statutory federal
tax rate of 34% during the first six months of 1998 and 1997 primarily due to
the utilization of available net operating loss carryforwards. The provision for
taxes of $26,000 and $10,000 in 1998 and 1997 respectively, represents estimated
state taxes and federal alternative minimum tax.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997 the Company had a working capital deficit of
approximately $9.3 million and a stockholders' deficit of approximately $1.6
million. As a result, the Report of Independent Accountants for the year ended
December 31, 1997 contained an explanatory paragraph regarding the Company's
ability to continue as a going concern. On June 30, 1998 the Company retired
substantially all of its long-term debt obligations which were previously in
default (see Note 3). During the six months ended June 30, 1998 the Company
reduced shareholders' deficit by approximately $1.4 million and improved its
working capital position by approximately $5.7 million. At June 30, 1998, the
Company has a working capital deficit of approximately $3.6 million and a
stockholders' deficit of approximately $120,000.
Historically, the Company's primary sources of capital to finance its
businesses have been its cash flow from operations and credit facilities. The
Company's capital needs are primarily for maintenance and enhancement of the
racing facility at Wonderland and for debt service requirements. Based upon
current operations, the Company believes its cash flow from operations will be
adequate to meet its anticipated requirements for working capital, capital
expenditures and scheduled principal and interest payments for fiscal 1998.
The Company's cash and cash equivalents totaled approximately $940,000 at
June 30, 1998, compared with approximately $374,000 at December 31, 1997. The
Company generated cash flows from operations of approximately $575,000 during
the first six months of 1998, as compared to $541,000 during the corresponding
period in 1997. Non cash items included in the Company's net income in 1998
consist of depreciation and amortization expense of approximately $303,000,
equity in income from investments of $215,500 and gain from discontinued
operations of $576,200. Changes in working capital accounts including restricted
cash, accounts payable and other accrued liabilities used approximately $275,000
of cash in the first six months of 1998. Net cash used in investing activities
in the first six months of 1998 of $419,000 represents investments and additions
to the property, plant and equipment. Financing activities in the first six
months of 1998 include the receipt of $5 million of proceeds in connection with
a bank refinancing and the use of approximately $4.6 million of funds to reduce
outstanding balances on long term debt.
Page 17 of 22
<PAGE> 18
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
GENERAL
In June 1998 the Company, through its wholly owned subsidiary Wonderland
Greyhound Park, Inc., completed a refinancing with a bank which provided a $5
million Term Loan bearing interest at 9.5% per annum and requiring monthly
principal and interest payments at approximately $58,300 commencing August 1998
until maturity on June 30, 2003.
RACING OPERATIONS
In order that the Massachusetts State Racing Commission grant a racing
license for 1999, the Company's racing subsidiary must satisfy seven statutory
requirements which include that the applicant demonstrate its financial
ability to operate. Wonderland has continuously satisfied these statutory
requirements each year since 1935. Although management is confident that it will
be able to satisfy all statutory requirements in its application for the 1999
racing license, there can be no assurance that the Racing Commission will
continue to grant a license to conduct racing on the schedule presently
maintained at Wonderland.
YEAR 2000 DISCLOSURE
Certain of the Company's internal computer systems are not Year 2000
compliant (i.e., such systems used only two digits to represent the year in date
data fields and, consequently, may not accurately distinguish between the 20th
and 21st centuries or may not function properly at the turn of the century). The
Company has been taking actions intended to either correct such systems or
replace them with Year 2000 compliant systems. The Company expects to implement
successfully the systems and programming changes necessary to address Year 2000
issues and does not believe that the cost of such actions will be a material
effect on the Company's results of operations or financial condition.
CAUTIONARY STATEMENT
The foregoing Form 10Q contains various "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements represent the Company's expectations or belief
concerning future events, including the following: any statements regarding
future revenues and profits, any statements regarding the continuation of
historical trends, and any statements regarding the sufficiency of the
Company's cash balances and cash generated from operating and financing
activities for the Company's future liquidity and capital resource needs.
Without limiting the foregoing, the words "believes," anticipates," "plans,"
"expects," and similar expressions are intended to identify forward-looking
statements. The Company cautions that these statements are further qualified
by important economic and competitive factors that could cause actual results
to differ materially from those in the forward-looking statements. These
include, without limitation, risks of the pari-mutual racing industry, a highly
competitive environment for the wagering dollar, and the impact of changes in
consumer tastes, local, regional and national economic conditions, demographic
trends, employee availability and cost increases. In addition, the Company's
ability to expand is dependent upon various factors, such as the enactment of
legislation allowing the Company to offer expanded gaming opportunities.
Accordingly, such forward-looking statements do not purport to be predictions
of future events or circumstances and may not be realized.
Page 18 of 22
<PAGE> 19
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In 1996 litigation ensured between Foxboro Realty Associates, LLC, ET
AL. ("FRA") and the Company, its subsidiary Foxboro Park, Inc., ET
AL., over Foxboro's right to occupy Foxboro Raceway. The parties also
made various claims and counterclaims for money damages. Judgments
were entered in favor of FRA on the occupancy issues, and in favor of
Foxboro for money damages in the amount of $74,843. The Court issued
an execution pursuant to which Foxboro was evicted from the racetrack
on July 31, 1997. Foxboro has not occupied the Raceway since that
date. The parties appealed. The Company expects the appeals to be
decided sometime during calendar year 1999.
On July 8, 1998, Foxboro Route 1 Limited Partnership, ET Al., filed a
civil action against The Westwood Group, Inc., Wonderland Greyhound
Park, Inc., ET AL., seeking payment for use and occupancy of Foxboro
Raceway, and other damages, from 1992 through July 1997. An answer is
due from Defendants on August 17, 1998.
The Company can not estimate the effect that these matters will have
on the financial statements, if any, at this time.
On June 6, 1995, Wonderland Greyhound Park, Inc., Foxboro Harness,
Inc. and Foxboro Thoroughbred, Inc. ("Plaintiffs") filed a complaint
against the Massachusetts State Racing Commission ("MSRC") seeking a
declaratory judgment as to the meaning of G.L. c. 128C as it pertains
to unclaimed simulcast winnings. The lower Court allowed MSFC's motion
for partial summary judgment. Plaintiffs appealed. On July 23, 1998,
the Appeals Court affirmed the decision of the lower Court and
Plaintiffs filed an Application for Further Appellate Review to the
Supreme Judicial Court.
The Company has previously included all amounts due for unclaimed
simulcast winnings in its financial statements.
Page 19 of 22
<PAGE> 20
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10. Term Loan Agreement between Wonderland Greyhound Park,
Inc. and Century Bank and Trust Company Dated as of
June 30, 1998.
27. Financial data schedule
(b) Reports on Form 8-K
None
Page 20 of 22
<PAGE> 21
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE WESTWOOD GROUP, INC.
Date August 14, 1998 /s/ Richard P. Dalton
---------------------
Richard P. Dalton
President
Date August 14, 1998 /s/ Richard G. Egan, Jr..
-------------------------
Richard G. Egan, Jr.
Chief Financial Officer,
Treasurer
Page 21 of 22
<PAGE> 22
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
JUNE 30, 1998
(UNAUDITED)
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10. Term Loan Agreement between Wonderland Greyhound Park,
Inc. and Century Bank and Trust Company Dated as of
June 30, 1998.
27 Financial Data Schedule
Page 22 of 22
<PAGE> 1
TERM LOAN AGREEMENT
Dated: As of June 30, 1998
Between
WONDERLAND GREYHOUND PARK, INC.
("Borrower")
and
CENTURY BANK AND TRUST COMPANY
("Lender ")
$5,000,000.00 TERM LOAN
SECURED BY PROPERTY
LOCATED AT 190 V.F.W. PARKWAY, REVERE, MASSACHUSETTS
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. BACKGROUND.................................................................1
1.1 DEFINED TERMS.........................................................1
1.2 BORROWER..............................................................1
1.3 LAND AND IMPROVEMENTS; PROPERTY.......................................1
1.4 USE OF LOAN PROCEEDS..................................................1
1.5 GUARANTIES AND INDEMNITIES............................................1
1.6 LOAN..................................................................1
2. LOAN PROVISIONS............................................................1
2.1 AMOUNT OF LOAN........................................................1
2.2 TERM OF LOAN; NO EXTENSION RIGHT......................................1
2.3 INTEREST RATE AND PAYMENT TERMS.......................................2
2.4 LOAN FEES.............................................................2
2.5 ACCELERATION..............................................................2
3. SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS.........................2
3.1 SECURITY..............................................................2
3.1.1 Mortgage Deed and Security Agreement.............................2
3.1.2 Assignment of Leases and Rents...................................2
3.1.3 Collateral Assignment of Contracts, Licenses and Permits.........2
3.1.4 Guaranty.........................................................2
3.1.5 Environmental Compliance and Indemnification Agreement...........3
3.1.6 Other............................................................3
3.2 LOAN DOCUMENTS AND SECURITY DOCUMENTS.................................3
4. CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES.........................3
5. LENDER'S CONSULTANTS.......................................................3
5.1 RIGHT TO EMPLOY.......................................................4
5.2 FUNCTIONS.............................................................4
5.3 PAYMENT...............................................................4
5.4 ACCESS................................................................4
5.5 NO LIABILITY..........................................................4
6. LOAN DISBURSEMENT..........................................................4
6.1 ADVANCE OF LOAN PROCEEDS..............................................4
7. CONDITIONS PRECEDENT.......................................................4
7.1 SATISFACTORY LOAN DOCUMENTS...........................................4
7.2 NO MATERIAL CHANGE....................................................4
7.3 WARRANTIES AND REPRESENTATIONS ACCURATE...............................5
7.4 FINANCIALS AND APPRAISALS.............................................5
7.5 VALIDITY AND SUFFICIENCY OF SECURITY DOCUMENTS........................5
7.6 NO OTHER LIENS; TAXES AND MUNICIPAL CHARGES CURRENT...................5
7.7 PROPERTY MATTERS......................................................5
7.8 COMPLIANCE WITH LAW...................................................5
7.9 TITLE INSURANCE; OTHER EVIDENCE OF PERFECTION.........................6
7.10 SURVEY...............................................................6
i
<PAGE> 3
7.11 CONDITION OF PROPERTY................................................6
7.12 NO TAKINGS...........................................................6
7.13 INSURANCE............................................................6
7.14 UTILITIES; WATER; DRAINAGE...........................................6
7.15 HAZARDOUS WASTE, HAZARDOUS MATERIALS AND TOXIC SUBSTANCES............6
7.16 ORGANIZATIONAL DOCUMENTS AND ENTITY AGREEMENTS.......................6
7.17 VOTES, CONSENTS AND AUTHORIZATIONS...................................6
7.18 LEGAL AND OTHER OPINIONS.............................................6
7.19 LEASING MATTERS......................................................7
7.19.1 Lease Approval..................................................7
7.20 NO DEFAULT...........................................................7
8. WARRANTIES AND REPRESENTATIONS.............................................7
8.1 FINANCIAL INFORMATION.................................................7
8.2 NO VIOLATIONS.........................................................7
8.3 NO LITIGATION.........................................................7
8.4 LEASES................................................................7
8.5 COMPLIANCE WITH LEGAL REQUIREMENTS....................................8
8.6 REQUIRED LICENSES AND PERMITS.........................................8
8.7 CURB CUTS AND UTILITY CONNECTIONS.....................................8
8.8 GOOD TITLE AND NO LIENS...............................................8
8.9 USE OF PROCEEDS.......................................................8
8.10 ENTITY MATTERS.......................................................8
8.10.1 Organization....................................................8
8.10.2 Ownership and Taxpayer Identification Numbers...................9
8.10.3 Authorization...................................................9
8.11 VALID AND BINDING....................................................9
8.12 DEFERRED COMPENSATION AND ERISA......................................9
8.13 CONDITIONS SATISFIED.................................................9
8.14 NO MATERIAL CHANGE; NO DEFAULT.......................................9
8.15 NO BROKER OR FINDER..................................................9
8.16 BACKGROUND INFORMATION AND CERTIFICATES.............................10
8.17 GUARANTOR'S WARRANTIES AND REPRESENTATIONS..........................10
8.18 FOXBORO.............................................................10
9. COVENANTS.................................................................10
9.1 NOTICES..............................................................10
9.2 FINANCIAL STATEMENTS AND REPORTS.....................................10
9.2.1 Annual Statements...............................................10
9.2.2 Periodic Statements.............................................10
9.2.3 Data Requested..................................................11
9.2.4 Tax Returns.....................................................11
9.2.5 Lease Notices...................................................11
9.2.6 Pro Forma and Business Plan.....................................11
9.2.7 Guarantor's Statements..........................................11
9.2.8 Entity Notices..................................................11
9.3 PAYMENT OF TAXES AND OTHER OBLIGATIONS...............................11
9.4 CONDUCT OF BUSINESS; COMPLIANCE WITH LAW.............................11
9.5 INSURANCE............................................................12
9.6 RESTRICTIONS ON LIENS, TRANSFERS AND ADDITIONAL DEBT.................12
9.6.1 Prohibited Transactions.........................................12
9.6.2 Permitted Transactions..........................................12
9.6.3 Permitted Transfers.............................................12
9.6.4 Permitted Additional Debt.......................................13
ii
<PAGE> 4
9.6.5 Additional Funds................................................13
9.6.6 Right To Accelerate Loan........................................13
9.6.7 Lender's Options................................................13
9.7 LIMITS ON GUARANTIES AND DISTRIBUTIONS...............................13
9.7.1 Limits..........................................................13
9.7.2 Permitted Distributions.........................................13
9.8 RESTRICTIONS ON INVESTMENTS..........................................14
9.9 INDEMNIFICATION AGAINST PAYMENT OF BROKERS' FEES.....................14
9.10 LIMITATIONS ON CERTAIN TRANSACTIONS.................................14
9.10.1 No Merger or Acquisition.......................................14
9.10.2 Contracts of a Material or Significant Nature..................14
9.11 APPROVAL OF MANAGEMENT AND MANAGEMENT CONTRACT......................14
9.12 DEPOSIT OF PROCEEDS; OTHER BANK ACCOUNTS............................14
9.13 PLACE FOR RECORDS; INSPECTION.......................................14
9.14 COSTS AND EXPENSES..................................................15
9.15 COMPLIANCE WITH LEGAL REQUIREMENTS..................................15
9.16 INDEMNIFICATION.....................................................15
9.17 LEASING MATTERS.....................................................16
9.17.1 Leasing Pro-Forma..............................................16
9.17.2 Lender's Approval Required.....................................16
9.17.3 Borrower's Requests............................................16
9.17.4 Lender Response................................................16
9.17.5 SNDAs and Estoppels............................................16
9.18 LOAN TO VALUE RATIO COVENANT........................................16
9.19 DEBT SERVICE COVERAGE RATIO.........................................16
9.19.1 Certain Definitions............................................16
9.19.2 DSC Covenant...................................................17
9.20 COVENANT REGARDING GUARANTOR........................................18
9.21 SPECIAL ENVIRONMENTAL COVENANTS.....................................18
10. SPECIAL PROVISIONS.......................................................18
10.1 RIGHT TO CONTEST....................................................18
10.1.1 Taxes and Claims by Third Parties..............................18
10.1.2 Legal Requirements.............................................18
11. EVENTS OF DEFAULT........................................................19
11.1 DEFAULT AND EVENTS OF DEFAULT.......................................19
11.1.1 Generally......................................................19
11.1.2 Note, Mortgage and Other Loan Documents........................19
11.1.3 Financial Status and Insolvency................................19
11.1.4 Liens..........................................................20
11.1.5 Breach of Representation or Warranty...........................20
11.1.6 Default Under Assigned Contract or Lease.......................20
11.1.7 Guarantor Default..............................................20
11.2 GRACE PERIODS AND NOTICE............................................20
11.2.1 No Notice or Grace Period......................................20
11.2.2 Nonpayment of Interest and Principal...........................21
11.2.3 Other Monetary Defaults........................................21
11.2.4 Nonmonetary Defaults Capable of Cure...........................21
11.3 CERTAIN LENDER REMEDIES.............................................21
11.3.1 Accelerate Debt................................................21
11.3.2 Pursue Remedies................................................21
11.4 WRITTEN WAIVERS.....................................................21
12. ADDITIONAL REMEDIES OF LENDER............................................22
iii
<PAGE> 5
12.1 REMEDIES............................................................22
12.1.1 Enter and Perform..............................................22
12.1.2 Discontinue Work...............................................22
12.1.3 Exercise Rights................................................22
12.1.4 Other Actions..................................................22
12.2 REIMBURSEMENT.......................................................22
12.3 POWER OF ATTORNEY...................................................23
13. SECURITY INTEREST AND SET-OFF............................................23
13.1 SECURITY INTEREST...................................................23
13.2 SET-OFF AND DEBIT...................................................23
13.3 RIGHT TO FREEZE.....................................................23
13.4 ADDITIONAL RIGHTS...................................................23
14. CASUALTY AND TAKING......................................................23
14.1 CASUALTY AND OBLIGATION TO REPAIR...................................23
14.2 ADJUSTMENT OF CLAIMS................................................24
14.3 PAYMENT AND APPLICATION OF INSURANCE PROCEEDS.......................24
14.4 CONDITIONS TO RELEASE OF INSURANCE PROCEEDS.........................24
14.5 TAKING..............................................................25
15. GENERAL PROVISIONS.......................................................25
15.1 NOTICES.............................................................25
15.2 LIMITATIONS ON ASSIGNMENT...........................................26
15.3 FURTHER ASSURANCES..................................................27
15.4 PARTIES BOUND.......................................................27
15.5 WAIVERS, EXTENSIONS AND RELEASES....................................27
15.6 GOVERNING LAW; CONSENT TO JURISDICTION; MUTUAL WAIVER OF JURY TRIAL.27
15.6.1 Substantial Relationship.......................................27
15.6.2 Place of Delivery..............................................27
15.6.3 Governing Law..................................................27
15.6.4 Consent to Jurisdiction........................................27
15.6.5 Jury Trial Waiver..............................................27
15.7 SURVIVAL............................................................28
15.8 CUMULATIVE RIGHTS...................................................28
15.9 CLAIMS AGAINST LENDER...............................................28
15.9.1 Borrower Must Notify...........................................28
15.9.2 Remedies.......................................................28
15.9.3 Limitations....................................................29
15.10 OBLIGATIONS ABSOLUTE...............................................29
15.11 TABLE OF CONTENTS, TITLE AND HEADINGS..............................29
15.12 COUNTERPARTS.......................................................29
15.13 SATISFACTION OF COMMITMENT.........................................29
15.14 RIGHT TO PARTICIPATE...............................................29
15.15 TIME OF THE ESSENCE................................................29
15.16 NO ORAL CHANGE.....................................................29
15.17 MONTHLY STATEMENTS.................................................30
EXHIBITS.....................................................................31
iv
<PAGE> 6
LOAN AGREEMENT
This is an agreement ("Loan Agreement" or "Agreement") made and entered
into as of the 30th day of June, 1998, by and between WONDERLAND GREYHOUND PARK,
INC., having an address at 190 V.F.W. Parkway, Revere, Massachusetts 02151
("Borrower") and CENTURY BANK AND TRUST COMPANY, a bank having an address at 400
Mystic Avenue, Medford, Massachusetts 02155 ("Lender").
WITNESSETH:
1. BACKGROUND.
1.1 DEFINED TERMS. Capitalized terms used in this Agreement are defined either
in EXHIBIT A, or in specific sections of this Agreement, or in another Loan
Document, as referenced in EXHIBIT A.
1.2 BORROWER. Borrower is a corporation organized under the laws of
Massachusetts.
1.3 LAND AND IMPROVEMENTS; PROPERTY. Borrower is the owner of approximately
33.9 acres of land ("Land") located at North Shore Road, V.F.W. Parkway, Revere,
Massachusetts and more particularly described in the Mortgage and also shown on
the plan entitled "Land Title Plan of Land, Wonderland Park, V.F.W. Highway
(Route 1A) North Shore Road, in Revere, Massachusetts (Suffolk County)", dated
March 27, 1991 and revised June 26, 1998 ("Survey Plan") prepared by The BSC
Group, Inc. ("Surveyor"). The Land is presently improved by, without limitation,
a pari-mutuel greyhound racing facility with a one-quarter mile oval sand track,
a physical plant consisting of a climate- controlled grandstand and clubhouse, a
two-story administrative center, two full-service restaurants, a sports bar and
other concession facilities and parking facilities ("Improvements"). The Land
and Improvements are collectively called the "Property".
1.4 USE OF LOAN PROCEEDS. Borrower has applied to Lender for a loan of
$5,000,000.00 ("Loan") the proceeds of which are to be used to refinance all
material existing secured and unsecured loan facilities (as set forth on
SCHEDULE 1 attached hereto, except as set forth on SCHEDULE 2), for general
working capital purposes and to pay costs and expenses incident to closing the
Loan.
1.5 GUARANTIES AND INDEMNITIES. As an inducement to Lender to make the Loan,
The Westwood Group, Inc. ("Guarantor") has agreed to furnish certain guaranties
and indemnities.
1.6 LOAN. Subject to all of the terms, conditions and provisions of this
Agreement, and of the agreements and instruments referred to herein, Lender
agrees to make the Loan and Borrower agrees to accept and repay the Loan.
2. LOAN PROVISIONS.
2.1 AMOUNT OF LOAN. The Loan shall be in the amount of $5,000,000.00.
2.2 TERM OF LOAN; NO EXTENSION RIGHT. The Loan shall be for a term ("Term")
commencing on the date hereof and ending on June 30, 2003 ("Maturity Date").
There shall be no extension right.
<PAGE> 7
2.3 INTEREST RATE AND PAYMENT TERMS. The Loan shall be payable as to interest
and principal in accordance with the provisions of the Note. The Note also
provides for interest at a Default Rate, Late Charges and prepayment rights and
fees.
2.4 LOAN FEES. Borrower shall pay a loan fee in the amount of Fifty Thousand
Dollars ($50,000.00), representing one percent (1%) of the amount of the Loan,
of which Twenty-Five Thousand Dollars ($25,000.00) has been paid previously, and
the balance of Twenty-Five Thousand Dollars ($25,000.00) shall be paid at the
closing of the Loan.
2.5 ACCELERATION. The Loan may be accelerated, at the option of Lender,
following an Event of Default. Upon such an acceleration, all principal, accrued
interest and costs and expenses shall be due and payable together with interest
on such principal at the Default Rate and such prepayment premium as may be
applicable under the Note.
3. SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS.
3.1 SECURITY. The Loan together with interest thereon and all other charges and
amounts payable by, and all other obligations of, Borrower and Guarantor to
Lender, with respect to the Property, whenever incurred, direct or indirect,
absolute or contingent ("Obligations") shall be secured by the following
"Security" which Borrower, and Guarantor where applicable, agree to provide and
maintain:
3.1.1 MORTGAGE DEED AND SECURITY AGREEMENT. A first priority mortgage deed
and security agreement ("Mortgage") on (i) the Property, (ii) all land,
improvements, furniture, fixtures, goods, equipment, and other assets
(including, without limitation, accounts, contracts, contract rights,
Licenses and Permits (to the extent the same are assignable, and
specifically excluding the assignment of racing licenses ), general
intangibles, documents and instruments, including all after-acquired
property, owned, or in which Borrower has or obtains any interest, in
connection with the Property; (iii) all insurance proceeds and other
proceeds therefrom, and (iv) all other assets of Borrower whether now owned
or hereafter acquired and whether or not related to the Property.
3.1.2 ASSIGNMENT OF LEASES AND RENTS. A first priority assignment of leases
and rents ("Assignment of Leases and Rents") with respect to all leases,
subleases and occupancy rights of the Property and all income and profits
to be derived from the operation and leasing of the Property.
3.1.3 COLLATERAL ASSIGNMENT OF CONTRACTS, LICENSES AND PERMITS. A first
priority collateral assignment and security agreement ("Assignment of
Contracts") with respect to all Licenses and Permits and all contracts,
agreements and warranties now owned or hereafter acquired by Borrower and
related in any manner to the Property (to the extent the same are
assignable, and specifically excluding the assignment of racing licenses).
3.1.4 GUARANTY. The unconditional, continuing guaranty ("Guaranty") from
Guarantor guaranteeing payment of the Loan, and performance of all
Borrower's Obligations under the Loan Documents.
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3.1.5 ENVIRONMENTAL COMPLIANCE AND INDEMNIFICATION AGREEMENT. A compliance
and indemnification agreement with respect to environmental matters
("Environmental Indemnity") from Borrower and Guarantor (collectively,
"Indemnitors").
3.1.6 OTHER. Lender shall also require Borrower to:
3.1.6.1. pledge to Lender 125,000 shares of common stock of Back Bay
Restaurant Group, Inc. ("BBRG Stock") as more particularly set forth
in the Pledge Agreement and Collateral Assignment of even date by
Guarantor, as Pledgor, in favor of Lender (the "Stock Pledge"); and
3.1.6.2. deposit with and pledge to Lender $500,000 of Loan proceeds
in the form of a Lender-issued certificate of deposit (rolling
six-month maturities) as more particularly set forth in the Cash
Collateral and Pledge and Security Agreement of even date by Borrower,
as Pledgor, in favor of Lender (the "CD Pledge").
3.2 LOAN DOCUMENTS AND SECURITY DOCUMENTS. The Loan shall be made, evidenced,
administered, secured and governed by all of the terms, conditions and
provisions of the "Loan Documents", each as the same may be hereafter modified
or amended, consisting of: (i) this Loan Agreement; (ii) the $5,000,000.00
promissory note ("Note"); (iii) the Mortgage and related UCC financing
statements; (iv) the Assignment of Leases and Rents; (v) the Assignment of
Contracts, Licenses and Permits and related UCC financing statements; (vi) the
Guaranty from Guarantor; (vii) the Environmental Indemnity from Borrower and
Guarantor; and (viii) any other documents, instruments, pledges, depository
agreements or other agreements executed to further evidence or secure the Loan.
Each of the Loan Documents listed in items (i) through (vi), inclusive is dated
of even date herewith. The Mortgage, Assignment of Leases and Rents, Assignment
of Contracts, Licenses and Permits, Environmental Indemnity, various pledge
and/or depository agreements and Guaranty are sometimes collectively referred to
as the "Security Documents".
4. CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES. Lender is authorized to
rely upon the continuing authority of the persons, officers, signatories or
agents hereafter designated ("Authorized Representatives") to bind Borrower with
respect to all matters pertaining to the Loan and the Loan Documents including,
but not limited to, the selection of interest rates. Such authorization may be
changed only upon written notice to Lender accompanied by evidence, reasonably
satisfactory to Lender, of the authority of the person giving such notice and
such notice shall be effective not sooner than five (5) Business Days following
receipt thereof by Lender. The present Authorized Representatives are listed on
EXHIBIT C. Lender shall have a right of approval, not to be unreasonably
withheld or delayed, over the identity of the Authorized Representatives so as
to assure Lender that each Authorized Representative is a responsible and senior
official of Borrower.
5. LENDER'S CONSULTANTS.
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5.1 RIGHT TO EMPLOY. Lender shall have the right to employ after an Event of
Default its own personnel, or one or more engineers, architects, builders or
other construction specialists, environmental advisors, scientists and
accountants, and at any time during the term of the Loan, attorneys, to act as
an advisor to Lender in connection with the Loan (each of which shall be a
Lender's "Consultant").
5.2 FUNCTIONS. The functions of a Lender's Consultant shall include, without
limitation: (i) inspection and physical review of the Property; (ii) review and
analysis of any work to be done in connection with the Property; (iii) review
and analysis of environmental matters; and (iv) review and analysis of financial
and legal matters.
5.3 PAYMENT. The reasonable costs and fees of Lender's Consultants shall be
paid by Borrower upon billing therefor.
5.4 ACCESS. Borrower shall provide Lender's Consultants with continuing access
to all aspects of the Property and books and records related thereto at
reasonable times during the day and upon at least two (2) Business Days' prior
written notice to Borrower.
5.5 NO LIABILITY. Except as the same are caused by gross negligence or willful
misconduct, neither Lender nor any of its Consultants shall have liability to
Borrower, Guarantor, or any third party, on account of: (i) services performed
by Lender's Consultant; (ii) any failure or neglect by Lender's Consultant to
properly perform services; or (iii) any approval or disapproval of work, plans
or other matters. Neither Lender nor Lender's Consultant shall have any
obligation regarding proper performance of work related to the Property.
Borrower shall have no rights under or relating to any agreement, report, or
similar document prepared by any Lender's Consultant for Lender.
6. LOAN DISBURSEMENT.
6.1 ADVANCE OF LOAN PROCEEDS. Lender shall, subject to compliance with all of
the other terms, conditions and provisions of this Agreement, make disbursement
of the Loan proceeds entirely at closing subject, HOWEVER, to the requirement
that Borrower, contemporaneously with the closing, shall pledge to and deposit
with Lender the sum of $500,000.00 as more particularly provided in Section
3.1.6.2 hereof. Lender shall invest such sum in Lender-issued certificates of
deposit with rolling six-month maturities.
7. CONDITIONS PRECEDENT. It shall be a condition precedent of Lender's
obligation to close and fund the Loan that each of the following conditions
precedent be satisfied in full (as determined by Lender in its discretion which
discretion shall be exercised in good faith having due regard for the advice of
Lender's Consultants), unless specifically waived in writing by Lender at or
prior to closing and funding the Loan:
7.1 SATISFACTORY LOAN DOCUMENTS. Each of the Loan Documents and Security
Documents shall be satisfactory in form, content and manner of execution and
delivery to Lender and its counsel.
7.2 NO MATERIAL CHANGE. No material adverse change shall have occurred in the
financial condition, business, affairs, operations or control of Borrower , or
Guarantor, since the date of their respective financial statements most recently
delivered to Lender.
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7.3 WARRANTIES AND REPRESENTATIONS ACCURATE. All warranties and representations
made by or on behalf of any of Borrower or Guarantor to Lender shall be true,
accurate and complete in all material respects and shall not omit any material
fact necessary to make the same not misleading.
7.4 FINANCIALS AND APPRAISALS. Lender shall have received and approved: (i)
financial statements from Borrower and Guarantor complying with the standards
set forth in Section 9.2.; (ii) an appraisal of the Property from an appraiser
acceptable to Lender setting forth an appraised value of the Property which
results in a Loan to Value Ratio acceptable to Lender (it being understood that
the statements and appraisals previously submitted by Borrower to Lender to
satisfy these requirements).
7.5 VALIDITY AND SUFFICIENCY OF SECURITY DOCUMENTS. The Mortgage and the other
Security Documents shall create a valid and perfected lien on the property
described therein ("Collateral") and each of the Security Documents and related
UCC filings shall have been duly recorded and filed to the satisfaction of
Lender and its counsel.
7.6 NO OTHER LIENS; TAXES AND MUNICIPAL CHARGES CURRENT. The Collateral shall
not be subject to any liens or encumbrances, whether inferior or superior to the
Loan Documents or the Security Documents, except in respect of: (i) real estate
taxes and personal property taxes not yet due and payable; and (ii) Permitted
Title Exceptions, if any. All real estate taxes, personal property taxes and
other municipal charges relating to any of the Collateral shall be current.
7.7 PROPERTY MATTERS. Lender shall have received and independently approved
each of the following: (i) evidence of Licenses and Permits for the Property
sufficient to allow the Property to be operated in the ordinary course of
business; and (ii) a report satisfactory to Lender, to the effect that the
Property is in good repair and safe condition with no structural deficiencies
and no material need for repairs or replacements except in the ordinary course
of business.
7.8 COMPLIANCE WITH LAW. Lender shall have received and independently approved
evidence that:
(i) PRESENT COMPLIANCE. All real estate and tangible personal property
constituting or intended to constitute Collateral for the Loan complies
with all applicable Legal Requirements and the provisions of all applicable
Licenses and Permits.
(ii) NO PROHIBITIONS OR VIOLATIONS. There are no applicable Legal
Requirements which prohibit or adversely limit the use of the Property for
the purposes the same are intended for, nor is there any outstanding and
uncured violation of any applicable Legal Requirements.
(iii) LICENSES AND PERMITS. All Licenses and Permits and private
approvals of every nature whatsoever, if any, which are reasonably
necessary in order to allow the operation of the Property as contemplated
by this Agreement and as needed under applicable Legal Requirements have
been duly and finally received with all appeal periods therefrom having
elapsed, with no appeal having been taken therefrom, and with no violations
existing under the terms thereof.
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7.9 TITLE INSURANCE; OTHER EVIDENCE OF PERFECTION. Lender shall have received:
(i) a mortgagee's title insurance policy which meets Lender's title insurance
requirements previously furnished to Borrower to the reasonable satisfaction of
Lender and its counsel; and (ii) such other evidence of the perfection of its
security interests as Lender and its counsel may reasonably require.
7.10 SURVEY. Lender shall have received and approved an on-site instrument
survey of the Land (updated to 1997) containing a current (updated to present)
certification thereon, or on a separate surveyor's certificate, of a Registered
Land Surveyor acceptable to Lender which meets Lender's survey requirements
previously furnished to Borrower.
7.11 CONDITION OF PROPERTY. There shall have been no material unrepaired or
unrestored damage or destruction by fire or otherwise to any of the real or
tangible personal property comprising or intended to comprise the Collateral.
7.12 NO TAKINGS. Neither the Property nor any material portion thereof shall
have been taken by eminent domain nor shall there be any threat of such a
taking.
7.13 INSURANCE. Borrower shall have provided to Lender with respect to the
Property and the Collateral evidence of: (i) insurance coverages which meet the
property, hazard and other insurance requirements set forth on EXHIBIT D of this
Loan Agreement to the satisfaction of Lender; and (ii) downpayment on April 1,
1998 for 25% of the annual premiums for such insurance and payments on May 1,
1998 and June 1, 1998, each for 1/9th of the remaining annual premiums.
7.14 UTILITIES; WATER; DRAINAGE. Lender shall have received reports or a survey
showing that sanitary drinking water, sanitary sewer disposal systems, utility
and power connections and storm drainage are available as a matter of right and
that all Licenses and Permits and contracts therefor have been duly obtained.
7.15 HAZARDOUS WASTE, HAZARDOUS MATERIALS AND TOXIC SUBSTANCES. Lender shall
have received, and in its sole discretion approved, satisfactory reports
addressed to Lender from acceptable, qualified professionals prepared in
accordance with Lender's protocols indicating the acceptability of the
environmental risk associated with the Property, addressing the existence of any
Hazardous Materials at, or which may affect, the Property and the Property's
compliance with Environmental Legal Requirements.
7.16 ORGANIZATIONAL DOCUMENTS AND ENTITY AGREEMENTS. Lender shall have received
and approved the charter documents and by-laws of Borrower and Guarantor.
7.17 VOTES, CONSENTS AND AUTHORIZATIONS. Lender shall have received and approved
certified copies of all partnership, entity and corporate votes, consents and
authorizations as may be reasonably required to evidence authority for: (i)
closing the Loan and the transactions contemplated hereby; (ii) providing
continuing authorization to designated persons to deal in all respects on behalf
of Borrower; and (iii) the execution of all Loan Documents.
7.18 LEGAL AND OTHER OPINIONS. Lender shall have received and approved legal
opinion letters from counsel representing Borrower and Guarantor which meet
Lender's legal opinion requirements previously furnished to Borrower.
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Lender shall also have received from qualified attorneys, engineers, surveyors
and architects, such other certificates, opinions, surveys, and other evidence
of compliance with each of the conditions herein set forth as Lender may
reasonably require.
7.19 LEASING MATTERS.
7.19.1 LEASE APPROVAL. Lender shall have approved all tenants and leases in
effect at the time of closing, and shall have received a satisfactory
estoppel certificate and, for recording and filing contemporaneously with
the recording and filing of the Mortgage, a subordinated attornment
agreement from the tenant in respect of the commuter parking lot on a
portion of the Property.
7.20 NO DEFAULT. There shall not be any Default under any of the Loan Documents.
8. WARRANTIES AND REPRESENTATIONS. Borrower warrants and represents to Lender
for the express purpose of inducing Lender to enter into this Agreement, to make
the Loan, and to otherwise complete all of the transactions contemplated hereby,
that as of the date of this Agreement, upon the date the Loan is funded and at
all times thereafter until the Loan has been repaid and all Obligations to
Lender have been satisfied as follows:
8.1 FINANCIAL INFORMATION. Copies of financial statements, which to the best of
Borrower's knowledge are true, accurate and complete in all material respects
and have been prepared in accordance with generally accepted accounting
principles, have been delivered to Lender and, to the best of Borrower's
knowledge, the same fairly present the financial condition of Borrower and
Guarantor in all material respects as of the dates thereof and no material and
adverse change has occurred in such financial condition since the dates thereof.
All financial statements of Borrower and Guarantor hereafter furnished to Lender
shall be true, accurate and complete and shall fairly present the financial
condition of Borrower and Guarantor as of the dates thereof.
8.2 NO VIOLATIONS. The consummation of the Loan and the subsequent payment and
performance of the Obligations evidenced and secured by the Loan Documents shall
not constitute a violation of, or conflict with, any law, order, regulation,
material contract or agreement or organizational document to which Borrower or
Guarantor is a party or by which Borrower or Guarantor, or the property thereof,
may be bound.
8.3 NO LITIGATION. There is no material litigation now pending, or to the best
of Borrower's knowledge threatened, against Borrower or Guarantor which if
adversely decided could materially impair the ability of Borrower or Guarantor
to pay and perform its obligations hereunder or under the other Loan Documents.
There is no litigation, whether or not material, pending, or to the best of
Borrower's knowledge threatened, against Borrower in which the amount in
controversy exceeds $25,000.00 which either: (i) is not covered by insurance, or
(ii) has not been previously disclosed to Lender, or is not disclosed to Lender
within thirty (30) days of Borrower first having knowledge thereof, together
with a written explanation of why such litigation is not material.
8.4 LEASES. True and complete copies of all leases of the Property which are
now in effect (and all guaranties thereof) have been delivered to Lender. Such
leases have not been further amended
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or changed in any respect and are in full force and effect, enforceable in
accordance with the terms thereof, subject, however, to the terms of the Loan
Documents.
8.5 COMPLIANCE WITH LEGAL REQUIREMENTS. Subject to the limitations set forth in
the Environmental Indemnity, the Property complies with, and shall continue to
comply with, all material Legal Requirements and any and all covenants,
conditions, restrictions or other matters which materially affect the Property.
All existing floor drains on the Property are connected to the municipal sewer
system in compliance with applicable law. There are no underground storage tanks
located on the Property.
8.6 REQUIRED LICENSES AND PERMITS. All Licenses and Permits which are
reasonably required in order to operate the Property in the usual course of
business have been duly and properly obtained, and will remain in full force and
effect, and have been, and shall be complied with, in all material respects.
8.7 CURB CUTS AND UTILITY CONNECTIONS. All required curb cuts, utility
connections and Licenses and Permits therefor have been duly obtained and are in
full force and effect and all utility services as reasonably required for water,
gas, electric, telephone, sewer and storm drainage and sanitary waste disposal
are and shall be available as a matter of right and to an extent adequate to
serve the Property for their intended uses.
8.8 GOOD TITLE AND NO LIENS. Borrower is the lawful owner of the Property and
of areas over, under or on which utility or passage easements are required to
make use of the Property and parking as contemplated by the Loan Documents, and
is and will be the lawful owner of the Property, free and clear of all liens and
encumbrances of any nature whatsoever, except for the matters, if any, which are
listed as Permitted Title Exceptions in the Mortgage.
8.9 USE OF PROCEEDS. The proceeds of the Loan shall be used solely and
exclusively for refinancing all material existing secured and unsecured loan
facilities (as set forth in SCHEDULE 1 hereto, except as set forth on SCHEDULE 2
hereto), for general working capital purposes and payment of costs and expenses
incurred in connection with the financing provided by the Loan. No portion of
the proceeds of the Loan shall be used directly or indirectly, and whether
immediately, incidentally or ultimately (i) to purchase or carry any margin
stock, or to extend credit to others for the purpose thereof, or to repay or
refund indebtedness previously incurred for such purpose, or (ii) for any
purpose which would violate or is inconsistent with the provisions of
regulations of the Board of Governors of the Federal Reserve System including,
without limitation, Regulations G, T, U and X thereof. All material existing
secured and secured loan facilities of Borrower and Guarantor are set forth on
said SCHEDULE 1.
8.10 ENTITY MATTERS.
8.10.1 ORGANIZATION. Borrower is a duly organized validly existing
corporation in good standing under the laws of Massachusetts and Guarantor
is a duly organized validly existing corporation in good standing under the
laws of Delaware, and each is duly qualified in the jurisdiction where the
Property is situated and in each jurisdiction where the nature of its
business is such that qualification is required and has all requisite power
and
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authority to conduct its business and to own its property, as now conducted
or owned, and as contemplated by this Loan Agreement.
8.10.2 OWNERSHIP AND TAXPAYER IDENTIFICATION NUMBERS. All of the
stockholders of Borrower, and a description of the ownership interests of
Borrower held by the same, are listed in EXHIBIT B and no additional
ownership interests, or rights or instruments convertible into such
ownership interests, shall be issued, nor shall any ownership change,
except for Permitted Transfers. The identity and ownership of any Guarantor
which is not a natural person is accurately stated on EXHIBIT B. The
taxpayer identification number(s) of Borrower and the Guarantor are
accurately stated in EXHIBIT B.
8.10.3 AUTHORIZATION. All required corporate actions and proceedings have
been duly taken so as to authorize the execution and delivery by Borrower
and Guarantor of the Loan Documents.
8.11 VALID AND BINDING. Each of the Loan Documents constitute legal, valid and
binding obligations of Borrower and, where applicable, Guarantor and Indemnitors
each constitute legal, valid and binding obligations of the parties thereto, in
accordance with the respective terms thereof, subject to bankruptcy, insolvency
and similar laws of general application affecting the rights and remedies of
creditors and, with respect to the availability of the remedies of specific
enforcement, subject to the discretion of the court before which any proceeding
therefor may be brought.
8.12 DEFERRED COMPENSATION AND ERISA. Borrower does not have any pension, profit
sharing, stock option, insurance or other arrangement or plan for employees
covered by Title IV of the Employment Retirement Security Act of 1974, as now or
hereafter amended ("ERISA") except as may be designated to Lender in writing by
Borrower from time to time ("ERISA Plan") and no "Reportable Event" as defined
in ERISA has occurred and is now continuing with respect to any such ERISA Plan.
The granting of the Loan, the performance by Borrower of its obligations under
the Loan Documents and Borrower's conducting of its operations do not and will
not violate any provisions of ERISA.
8.13 CONDITIONS SATISFIED. Assuming that Lender has approved all matters
requiring their approval, all of the conditions precedent to closing and funding
the Loan set forth in Section 7 have been satisfied.
8.14 NO MATERIAL CHANGE; NO DEFAULT. There has been no material adverse change
in the financial condition, business, affairs or control of Borrower or
Guarantor since the date of their respective last financial statements most
recently delivered to the Lender in accordance with the requirements of Section
9.2. hereof. No Default exists under any of the Loan Documents. There is no
Default on the part of Borrower or Guarantor under this Agreement or any of the
other Loan Documents and no event has occurred and is continuing which could
constitute a Default under any Loan Document. Borrower has filed all required
federal, state and local tax returns and has paid all taxes due pursuant to such
returns or any assessments against Borrower or the Property.
8.15 NO BROKER OR FINDER. Neither Borrower, nor Guarantor, nor anyone on behalf
thereof, has dealt with any broker, finder or other person or entity who or
which may be entitled to a broker's or finder's fee, or other compensation,
payable by Lender in connection with this Loan.
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8.16 BACKGROUND INFORMATION AND CERTIFICATES. All of the factual information
contained or referred to in Section 1 of this Agreement and in the EXHIBITS to
this Agreement or the other Loan Documents, and in the certificates and opinions
furnished to Lender by or on behalf of Borrower in connection with the Property
or the Loan, is true, accurate and complete in all material respects, and omits
no material fact necessary to make the same not misleading.
8.17 GUARANTOR'S WARRANTIES AND REPRESENTATIONS. Borrower has no reason to
believe that any warranties or representations made in writing by Guarantor to
Lender are untrue, incomplete or misleading in any respect.
8.18 FOXBORO. Borrower has no knowledge of any actual or threatened challenge to
the $1.2 million creditors' trust agreement in respect of Guarantor and of
Foxboro Park, Inc., Foxboro Harness, Inc., and Foxboro Thoroughbred, Inc., each
a wholly-owned subsidiary of Guarantor and, accordingly, an affiliate of
Borrower.
9. COVENANTS. Borrower covenants and agrees that from the date hereof and so
long as any indebtedness remains unpaid hereunder, or any of the Loan or other
Obligations remains outstanding, as follows:
9.1 NOTICES. Borrower shall, with reasonable promptness, but in all events
within ten (10) days after it has actual knowledge thereof, notify Lender in
writing of the occurrence of any act, event or condition which constitutes a
Default under any of the Loan Documents. Such notification shall include a
written statement of any remedial or curative actions which Borrower proposes to
undertake to cure or remedy such Default.
9.2 FINANCIAL STATEMENTS AND REPORTS. Borrower shall furnish or cause to be
furnished to Lender from time to time, the following financial statements and
reports and other information, all in form, manner of presentation and substance
reasonably acceptable to Lender:
9.2.1 ANNUAL STATEMENTS. By April 1 in each calendar year, audited
financial statements of Borrower prepared in accordance with generally
accepted accounting principles, or other recognized method of accounting
acceptable to Lender, consistent with the financial statements previously
delivered to Lender by an independent, certified public accountant
acceptable to Lender, such financial statements to include and to be
supplemented by such detail and supporting data and schedules as Lender may
from time to time reasonably determine (it being understood that prior to a
Default and absent any adverse change in respect of Borrower and/or
Guarantor, the provision to Lender of 10-Ks, annual audit reports and other
reports prepared by Borrower or Guarantor in the ordinary course for its
own convenience shall satisfy requirements for delivery of financial
statements);
9.2.2 PERIODIC STATEMENTS. Within forty-five (45) days following the end of
each calendar quarter the following, internally prepared by Borrower and
certified by Borrower to be true, accurate and complete: (i) an operating
statement showing the results of operation for the prior quarter month and
on a year-to-date basis for the period just ended and, within ninety (90)
days following the end of each calendar year, an operating statement for
the year just ended; and (ii) cash flows for the quarter just ended (it
being understood that prior to a Default, the provision to Lender of 10-Qs
and other reports prepared by Borrower or
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Guarantor in the ordinary course for its own convenience shall satisfy
requirements for delivery of financial statements so long as all revenues
received on account of commuter parking are clearly identified);
9.2.3 DATA REQUESTED. Within a reasonable period of time and from time to
time such other financial data or information as Lender may reasonably
request with respect to the Property or Borrower, including, but not
limited to, rent rolls, aged receivables, aged payables, leases, budgets,
forecasts, reserves, cash flow projections, physical condition of the
Property and pending lease proposals;
9.2.4 TAX RETURNS. Upon Lender's request, complete copies of all federal
and state tax returns and supporting schedules of Borrower and Guarantor;
9.2.5 LEASE NOTICES. Concurrently with the giving thereof, and within five
(5) Business Days of receipt thereof, copies of all notices, other than
routine correspondence, given or received with respect to the leases to any
tenant; and
9.2.6 PRO FORMA AND BUSINESS PLAN. No later than November 30, 1998 (and
November 30 of each successive calendar year), a copy of Borrower's
operating, maintenance and capital budgets in respect of the Property and
the operating businesses thereon for the next calendar year.
9.2.7 GUARANTOR'S STATEMENTS. By April 1 in each year, the financial
statements and reports required to be furnished by Guarantor as set forth
in the Guaranty.
9.2.8 ENTITY NOTICES. Concurrently with the issuance thereof, copies of all
written notices (excluding routine correspondence) given to the
stockholders of Borrower.
9.3 PAYMENT OF TAXES AND OTHER OBLIGATIONS. Subject to the right to contest set
forth in Section 10.1, Borrower shall duly pay and discharge, or cause to be
paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges payable by it, or with respect to the
Property, as well as all claims or obligations for labor, materials, supplies or
services (involving an amount in excess of $10,000.00 in any instance or
$25,000.00 in the aggregate) or for borrowed funds in any amount. Borrower shall
provide Lender on a quarterly basis with receipted tax bills prior to the date
on which real estate tax late penalties would apply. At its option from and
after the occurrence of an Event of Default at any time after the Loan Closing,
Lender may require monthly escrow deposits for the payment of taxes in an amount
equal to 1/12th of the real estate taxes due for each parcel of Land and
assessments with respect to the Property in addition to principal and interest
payments. Such deposits shall be applied by Bank for the payment of such taxes
and assessments. At the Loan Closing, Borrower shall pay Bank a one-time real
estate tax service fee of $125.00 per parcel of Land for its five largest
parcels.
9.4 CONDUCT OF BUSINESS; COMPLIANCE WITH LAW. Borrower shall engage solely in
the ownership and operation of the Property, and will not enter into any new
ventures, or undertake any Investments, except as permitted in Section 9.8, or
any new business dealings, without Lender's express prior written consent in
each instance. Borrower shall operate the Property and conduct its
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affairs in a lawful manner and in compliance with all Legal Requirements
applicable thereto and all provisions of ERISA.
9.5 INSURANCE. Borrower shall at all times maintain in full force and effect
the insurance coverages set forth in EXHIBIT D of this Loan Agreement and shall
cause Lender to be designated as mortgagee/loss payee/additional insured in
accordance with the requirements of EXHIBIT D. All insurance premiums shall be
paid in advance pursuant to a payment schedule reasonably satisfactory to
Lender.
9.6 RESTRICTIONS ON LIENS, TRANSFERS AND ADDITIONAL DEBT.
9.6.1 PROHIBITED TRANSACTIONS. Except for Permitted Transactions, Borrower
shall not:
(i) create or incur, or suffer to be created or incurred, or to exist,
any encumbrance, mortgage, pledge, lien, charge or other security interest
of any kind upon any of its assets of any character whether or not related
to the Property, or any portion thereof, whether now owned or hereafter
acquired or upon the proceeds or products thereof;
(ii) create or incur any indebtedness secured by any assets of
Borrower for borrowed funds either directly or as a guarantor without the
prior written approval of Lender in each instance, which approval may be
granted or withheld in Lender's sole and unfettered discretion, except for
the Loan and those loan facilities set forth on SCHEDULE 2, PROVIDED,
HOWEVER, the promissory note by Borrower in favor of Back Bay Restaurant
Group, Inc. in the principal amount of $945,000 shall in all events be
recourse only to concessions and liquor licenses;
(iii) directly or indirectly permit any sale, transfer, exchange,
assignment or pledge of or grant of any security interest in any ownership
interests in Borrower; or
(iv) sell, convey, transfer or exchange any of its material assets of
any character whether or not related to the Property, or any material
portion thereof, whether now owned or hereafter acquired.
9.6.2 PERMITTED TRANSACTIONS. The term "Permitted Transactions" shall mean
Permitted Transfers, Permitted Additional Debt, Permitted Title Exceptions
and Approved Leases.
9.6.3 PERMITTED TRANSFERS. The term "Permitted Transfers" shall mean:
(i) the Security Documents and other agreements in favor of Lender;
(ii) transactions, whether outright or as security, for which Lender's
prior written consent has been obtained, which consent may be withheld,
granted or granted conditionally, subject to such protective and other
conditions as Lender may require in its sole and absolute discretion;
(iii) sales or dispositions in the ordinary course of business of
worn, obsolete or damaged items of personal property or fixtures which are
suitably replaced; and
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(iv) Sales or transfers to Guarantor of ownership interests in
Borrower or dividends to Guarantor so long as Lender is provided with at
least ten days' prior written notice.
9.6.4 PERMITTED ADDITIONAL DEBT. The term "Permitted Additional Debt" shall
mean:
(i) transactions, whether secured or unsecured, for which Lender's
prior written consent has been obtained, which consent may be withheld,
granted or granted conditionally subject to such protective and other
conditions as Lender may require in its sole and absolute discretion;
(ii) indebtedness incurred in the ordinary course of business for the
purchase of goods or services which are payable, without interest, within
thirty (30) days of billing; and
(iii) fully subordinated unsecured loans to or from Guarantor, so long
as Borrower provides to Lender contemporaneous written notice thereof.
9.6.5 ADDITIONAL FUNDS. All funds required for the operation of the
Property in excess of those available from ordinary cash flow of the
Property shall be provided by Borrower, or its owners, or Guarantor, as
additional equity contributions or by Permitted Additional Debt.
9.6.6 RIGHT TO ACCELERATE LOAN. The Loan shall become due and payable in
full, and the Lender shall have the right to accelerate the Loan and
declare an Event of Default, at the option of Lender, upon any breach or
violation of the provisions of Section 9.6., PROVIDED, HOWEVER, except for
a voluntary conveyance (as to which no notice or grace periods shall be
applicable), a Default under Section 9.6 shall be subject to the grace or
notice period provided in Section 11.2.4.
9.6.7 LENDER'S OPTIONS. Lender may, at its option, in lieu of accelerating
the Loan, and in its sole and absolute discretion, agree to waive
compliance with the provisions of this Section 9.6. in any instance upon
compliance with such terms and conditions as Lender may impose, including,
without limitation, the payment of a material fee and a change in the
interest rate and other terms. Except for Permitted Transfers, Lender may
grant or withhold, or conditionally grant, its consent to any proposed
transfer in its sole and absolute discretion. In the case of a sale or
transfer with Lender's prior written consent, or any such Permitted
Transfer, the seller or transferor shall remain jointly and severally
liable with the purchaser or transferee for all liabilities of Borrower or
its owners hereunder.
9.7 LIMITS ON GUARANTIES AND DISTRIBUTIONS.
9.7.1 LIMITS. Borrower shall not guarantee to anyone other than Lender the
obligations of any person or entity. Borrower shall not pay any money or
distribute any property (in any form) or to any affiliated entity or
related party, except for Permitted Distributions.
9.7.1 PERMITTED DISTRIBUTIONS. Notwithstanding any contrary provision of
this Loan Agreement Borrower shall be permitted in any calendar quarter to
distribute to
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Guarantor or other affiliate of Borrower (a) reasonable operating expenses
of Guarantor and, (b) prior to an Event of Default, additional amounts
without limitation, subject to Borrower having reasonably provided for its
own expenses anticipated to be due during said quarter.
9.8 RESTRICTIONS ON INVESTMENTS. Intentionally omitted.
9.9 INDEMNIFICATION AGAINST PAYMENT OF BROKERS' FEES. Borrower agrees to
defend, indemnify and save harmless Lender from and against any and all
liabilities, damages, penalties, costs, and expenses, relating in any
manner to any brokerage or finder's fees in respect of the Loan.
9.10 LIMITATIONS ON CERTAIN TRANSACTIONS. Borrower agrees to the following
limitations:
9.10.1 NO MERGER OR ACQUISITION. Borrower shall not dissolve or liquidate,
nor merge or consolidate with or otherwise acquire all or substantially all
of the assets of any other entity.
9.10.2 CONTRACTS OF A MATERIAL OR SIGNIFICANT NATURE. Borrower shall not
enter into any merger or consolidation agreements. Except for contracts
otherwise complying with this Agreement and contracts incident to the
routine operation of the Property such as utilities, insurance and
maintenance, Borrower shall not enter into any other contracts, agreements
or purchase orders except in the ordinary course of business.
9.11 APPROVAL OF MANAGEMENT AND MANAGEMENT CONTRACT. Intentionally omitted.
9.12 DEPOSIT OF PROCEEDS; OTHER BANK ACCOUNTS. Borrower shall maintain a demand
(checking) account with Lender. The following account has been opened for the
purpose of creating a depository account for the Property as follows Wonderland
Greyhound Park, Inc. Simulcast Outs Account Cash Collateral Account #309489.
Lender is hereby authorized, on or after the due date, to charge such account,
or any other deposit account of Borrower at Lender, with the amount of all
payments due under this Agreement, the Note or the other Loan Documents.
Borrower agrees to have sufficient collected funds in its account at Lender to
enable Lender to charge such account for each payment due under the Loan
Documents on the due date thereof. The failure of Lender to so charge such
account shall not affect or limit Borrower's obligation to make any required
payment.
All cash proceeds resulting from the operations of Borrower and of the Property
shall be deposited in one or more segregated accounts at Lender..
9.13 PLACE FOR RECORDS; INSPECTION. Borrower shall maintain all of its business
records at the address specified at the beginning of this Agreement. Upon
reasonable prior notice and at reasonable times during normal business hours
Lender shall have the right (through such agents or Consultants as Lender may
designate) to examine Borrower's property and make copies of and abstracts from
Borrower's books of account, correspondence and other records and to discuss its
financial and other affairs with any of its owners and any accountants hired by
Borrower, it being agreed that Lender shall use reasonable efforts to not
divulge information obtained from such examination to others except in
connection with Legal Requirements and in connection with
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administering the Loan, enforcing its rights and remedies under the Loan
Documents and in the conduct, operation and regulation of its banking and
lending business (which may include, without limitation, the transfer of the
Loan or of participation interests therein). Any transferee of the Loan or any
holder of a participation interest in the Loan shall be entitled to deal with
such information in the same manner and in connection with any subsequent
transfer of its interest in the Loan or of further participation interests
therein.
9.14 COSTS AND EXPENSES. Borrower shall pay all reasonable costs and expenses
(excluding salaries or wages of full time employees of Lender) reasonably
incurred by Lender after a Default in connection with the implementation of the
Loan, the administration of the Loan, the enforcement of Lender's rights under
the Loan Documents, including, without limitation, reasonable legal fees and
disbursements, appraisal fees for up to two updated appraisals of the Property
at any time during the term of the Loan (whether or not a Default has occurred),
inspection fees, plan review fees, travel costs, fees and out-of-pocket costs of
independent engineers and consultants and, after an Event of Default, such
additional updated appraisals as Lender deems reasonably necessary. Borrower's
obligations to pay such costs and expenses shall include, without limitation,
all reasonable attorneys' fees and other costs and expenses reasonably incurred
for preparing and conducting litigation or dispute resolution arising from any
breach by Borrower or any Guarantor or Indemnitor of any covenant, warranty,
representation or agreement under any one or more of the Loan Documents.
9.15 COMPLIANCE WITH LEGAL REQUIREMENTS. Borrower shall comply with all Legal
Requirements applicable to the Property, Borrower, or both.
9.16 INDEMNIFICATION. Borrower shall at all times, both before and after
repayment of the Loan, at its sole cost and expense defend, indemnify, exonerate
and save harmless Lender and all those claiming by, through or under Lender
("Indemnified Party") against and from all damages, losses, liabilities,
obligations, penalties, claims, litigation, demands, defenses, judgments, suits,
proceedings, costs, disbursements or expenses of any kind whatsoever, including,
without limitation, reasonable attorneys' fees and experts' fees and
disbursements, which may at any time (including, without limitation, before or
after discharge or foreclosure of the Mortgage) be imposed upon, incurred by or
asserted or awarded against the Indemnified Party and arising from or out of:
(i) any Hazardous Materials or any violation of, or failure to comply
with, any Environmental Legal Requirements all as more particularly
provided for in the Environmental Indemnity with respect to the
Property or any other Collateral;
(ii) any liability for damage to person or property arising out of any
violation of any Legal Requirement applicable to the Property,
Borrower, or both, or
(iii) any act, omission, negligence or conduct at the Property, or arising
or claimed to have arisen, out of any act, omission, negligence or
conduct of Borrower or any contractor, sub-contractor, tenant,
occupant or invitee thereof, which is in any way related to the
Property.
Notwithstanding the foregoing, an Indemnified Party shall not be
entitled to indemnification in respect of claims arising from acts of
its own gross negligence or
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willful misconduct to the extent that such gross negligence or willful
misconduct is determined by the final judgment of a court of competent
jurisdiction, not subject to further appeal, in proceedings to which
such Indemnified Party is a proper party.
9.17 LEASING MATTERS.
9.17.1 LEASING PRO-FORMA. Intentionally omitted
9.17.2 LENDER'S APPROVAL REQUIRED. Borrower shall not modify, amend or
terminate existing leases, or enter into new leases, of premises within the
Property, except with Lender's prior written consent in each instance, not to be
unreasonably withheld. Any lease, or modification or amendment of lease, which
has been so approved by Lender, and, if so requested by Lender as to which the
tenant has executed an SNDA Agreement, estoppel certificate, or both, acceptable
to Lender shall be an "Approved Lease".
9.17.3 BORROWER'S REQUESTS. Any request by Borrower for an approval from
Lender with respect to leasing matters shall be accompanied, at a minimum, by
the following: (i) the proposed lease or amendment or modification thereof
complete with all applicable schedules and exhibits; (ii) a complete copy of any
proposed guaranty; (iii) comprehensive financial information with respect to the
proposed tenant, sub-tenant or assignee and, if applicable, the proposed
guarantor (as to new leases or amendments or modifications to existing leases
involving material economic changes, and as to proposed sub-lets or
assignments); (iv) a brief written summary of the proposed permitted uses and a
discussion of how such uses relate to other tenancies then existing at the
Property; (v) an executive summary of the terms and conditions of the proposed
lease, sub-lease or assignment, and, if applicable, the proposed guaranty; and
(vi) an executive summary of the facts and conditions relating to any proposed
termination of lease.
9.17.4 LENDER RESPONSE. Lender shall act on requests from Borrower for any
approval under Section 9.17 in a commercially reasonable manner and shall use
commercially reasonable efforts to respond to any such request within
twenty-five (25) days following Lender's receipt thereof. Lender's response may
consist of an approval or disapproval of the request, or a conditional approval
thereof subject to specified conditions, or a request for further data or
information, or any combination thereof. In order to expedite the processing of
requests for such approvals, Borrower agrees to provide Lender with as much
advance information as is possible in a commercially reasonable manner in
advance of Borrower's formal request for an approval.
9.17.5 SNDAS AND ESTOPPELS. Lender shall have the right to require each
tenant to execute and deliver to Lender a subordination, non-disturbance of
possession and attornment agreement ("SNDA Agreement") in form, content and
manner of execution acceptable to Lender and, from time to time, an estoppel
certificate in form and manner of execution acceptable to Lender.
9.18 LOAN TO VALUE RATIO COVENANT. Intentionally omitted
9.19 DEBT SERVICE COVERAGE RATIO.
9.19.1 CERTAIN DEFINITIONS.
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(i) "Calculation Date" shall mean the last day of each calendar
quarter commencing with September 30, 1998.
(ii) "Calculation Period" shall mean each successive twelve-(12)
month period ending on a Calculation Date.
(iii) "Debt Service Coverage" shall mean the ratio for the Calculation
Period of: (A) the aggregate of Net Operating Income plus
depreciation and amortization to (B) Debt Service on the Loan,
I.E., NOI + D + A divided by DSL.
(iv) "Net Operating Income" shall mean all income of Borrower,
including without limitation all revenues derived from the
ownership, leasing and operation of the Property and the interim
investment of accumulated funds before income taxes minus all
Operating Expenses.
(v) "Operating Expenses" shall mean expenditures of all kinds made
with respect to the operation of the Property in the normal
course of business including, but not limited to, expenditures
for taxes, insurance, repairs, replacements, maintenance,
management fees, salaries, advertising expenses, professional
fees, wages and utility costs, amounts payable with respect to
the Property under or with respect to any Permitted Title
Exceptions and reasonable additions to, or creations of, reserves
for repairs and replacements and for capital expenditures
required to comply with Legal Requirements, but expressly
excluding: (a) any debt service on the Loan, and (b) expenditures
made out of reserves previously created. Any expenditures which
in accordance with the accrual basis income tax accounting are
depreciated or amortized over a period which exceeds one (1) year
shall be treated as an expenditure, for the purposes of the
foregoing calculations, ratably over the period of depreciation
or amortization.
(vi) "Debt Service on the Loan" shall mean the actual principal and
interest paid or payable under the Loan during the Calculation
Period.
9.19.2 DSC COVENANT. The Debt Service Coverage for each Calculation Period
determined on each Calculation Date shall be not less than 1.5:1 (measured
quarterly on a rolling four-quarter basis). If such Debt Service Coverage
covenant shall not be satisfied on any Calculation Date, Borrower shall prepay a
sufficient amount of principal outstanding on the Loan such that if such
principal reduction had been made on the first day of the Calculation Period the
Debt Service Coverage covenant would have been satisfied. It shall be an Event
of Default if Borrower fails to make such a prepayment not later than the first
to occur of: (i) thirty (30) days after notice from Lender to Borrower properly
requesting the payment, or (ii) if Borrower has failed to give Lender sufficient
reports to enable Lender to make the necessary calculations, forty-five (45)
days following the applicable Calculation Date.
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9.20 COVENANT REGARDING GUARANTOR. Borrower shall use diligent efforts to cause
Guarantor to comply with Guarantor covenants as set forth in the Guaranty and
the Environmental Indemnity.
9.21 SPECIAL ENVIRONMENTAL COVENANTS. Borrower covenants to perform, and provide
Lender with a certification and reasonable evidence of completion of, all of the
following on or before September 1, 1998:
9.21.1. Borrower will ascertain whether the Property is subject to federal
and/or state non-contact cooling water discharge permit regulations, and
will apply for any permit coverage required.
9.21.2. Borrower will remediate the area of stained soil near the
aboveground storage tank fill port and will implement measures to eliminate
future petroleum spills to soil.
9.21.3. Borrower will berm or close, in compliance with all applicable law,
the floor drain in the main transformer vault in order to prevent any
release from a transformer from entering the drain.
9.21.4. Borrower will remove and properly dispose of drums and building
waste materials (not including fire-damaged machinery awaiting fire
insurance inspection) located outside of building structures.
10. SPECIAL PROVISIONS.
10.1 RIGHT TO CONTEST.
10.1.1 TAXES AND CLAIMS BY THIRD PARTIES. Notwithstanding the provisions of
Section 9.3 which obligate Borrower to pay taxes and other obligations to
third parties when due, it is agreed that any tax, assessment, charge,
levy, claim or obligation to a third party (expressly excluding an
obligation created under the Loan Documents) need not be paid while the
validity or amount thereof shall be contested currently, diligently and in
good faith by appropriate proceedings and if Borrower shall have adequate
unencumbered (except in favor of Lender) cash reserves with respect
thereto, and PROVIDED that such contest does not create a default by
landlord under any lease assigned to Lender; and PROVIDED, FURTHER, that
Borrower shall pay all taxes, assessments, charges, levies or obligations:
(i) immediately upon the commencement of proceedings to enforce any lien
which may have attached as security therefor, unless such proceeding is
stayed by proper court order pending the outcome of such contest; and (ii)
as to claims for labor, materials or supplies, prior to the imposition of
any lien on the Property unless the lien is discharged or bonded as set
forth in Section 11.1.4.
10.1.2 LEGAL REQUIREMENTS. Borrower may contest any claim, demand, levy or
assessment under any Legal Requirements by any person or entity if: (i) the
contest is based upon a material question of law or fact raised by Borrower
in good faith; (ii) Borrower properly commences and thereafter diligently
pursues the contest; (iii) the contest will not materially impair the
ability to ultimately comply with the contested Legal Requirement should
the
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contest not be successful and the conduct of the contest will not
materially interfere with the ability to obligate all tenants under
Approved Leases to pay rent without offset; (iv) Borrower demonstrates to
Lender's reasonable satisfaction that Borrower has the financial capability
to undertake and pay for such contest and any corrective or remedial action
then or thereafter reasonably likely to be necessary; (v) if the likely
cost of complying with the Legal Requirement in the event the contest is
not successfully resolved, as determined in good faith by Lender, is more
than $25,000.00, there is no reason to believe that the contest will not be
resolved prior to the Maturity Date; (vi) no Event of Default exists; and
(vii) if the contest relates to an Environmental Legal Requirement, the
conditions set forth in the Environmental Indemnity relating to such
contests shall be satisfied.
11. EVENTS OF DEFAULT. The following provisions deal with Default, Events of
Default, notice, grace and cure periods, and certain rights of Lender following
an Event of Default.
11.1 DEFAULT AND EVENTS OF DEFAULT. The term "Default" as used herein or in any
of the other Loan Documents shall mean an Event of Default, or any fact or
circumstance which constitutes, or upon the lapse of time, or giving of notice,
or both, could constitute, an Event of Default. Each of the following events,
unless cured within any applicable grace period set forth or referred to below
in this Section 11.1., or in Section 11.2., shall constitute an "Event of
Default":
11.1.1 GENERALLY. A default by Borrower in the performance of any term,
provision or condition of this Agreement to be performed by Borrower, or a
breach, or other failure to satisfy, any other term, provision, condition,
covenant or warranty under this Agreement and such default remains uncured
beyond any applicable specific grace period provided for in this Agreement,
or as set forth in Section 11.2. below;
11.1.2 NOTE, MORTGAGE AND OTHER LOAN DOCUMENTS. A default by Borrower in
the performance of any term or provision of the Note, or of the Mortgage,
or of any of the other Loan Documents, or a breach, or other failure to
satisfy, any other term, provision, condition or warranty under the Note,
the Mortgage or any other Loan Document, and the specific grace period, if
any, allowed for the default in question shall have expired without such
default having been cured;
11.1.3 FINANCIAL STATUS AND INSOLVENCY.
A. Borrower shall: (i) admit in writing its inability to pay its debts
generally as they become due; (ii) file a petition in bankruptcy or a
petition to take advantage of any insolvency act; (iii) make an assignment
for the benefit of creditors; (iv) consent to, or acquiesce in, the
appointment of a receiver, liquidator or trustee of itself or of the whole
or any substantial part of its properties or assets; (v) file a petition or
answer seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the
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Federal Bankruptcy laws or any other applicable law; (vi) have a court of
competent jurisdiction enter an order, judgment or decree appointing a
receiver, liquidator or trustee of Borrower, or of the whole or any
substantial part of the property or assets of Borrower, and such order,
judgment or decree shall remain unvacated or not set aside or unstayed for
sixty (60) days; (vii) have a petition filed against it seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the Federal Bankruptcy laws or any
other applicable law and such petition shall remain undismissed for sixty
(60) days; (viii) have, under the provisions of any other law for the
relief or aid of debtors, any court of competent jurisdiction assume
custody or control of Borrower or of the whole or any substantial part of
its property or assets and such custody or control shall remain
unterminated or unstayed for sixty (60) days; (ix) have an attachment or
execution levied against any substantial portion of the property of
Borrower or against any portion of the Collateral which is not discharged
or dissolved by a bond within thirty (30) days; or (x) have any materially
adverse change in its financial condition since the date of this Agreement;
or
B. any such event shall occur with respect to any Guarantor,
Wonderland Racing Holdings, Inc. or Major Tenant (as hereinafter defined);
or
C. any such event occurs with respect to the tenant occupying the
commuter parking lot pursuant to the lease (the "Parking Lot Lease") dated
as of June 30, 1998 by and between Borrower, as landlord and Wonderland
Parking, Inc. (Major Tenant"), or if there occurs an event of default under
the Parking Lot Lease or if the Parking Lot Lease is terminated, or if the
Parking Lot Lease is rejected or terminated in any bankruptcy or
reorganization proceedings.
11.1.4 LIENS. A lien for the performance of work, or the supply of
materials, or a notice of contract, or an attachment, judgment, execution
or levy is filed against the Land or the Improvements and remains
unsatisfied or is not discharged or dissolved by a bond (or by cash
collateral acceptable to Lender) for a period of thirty (30) days after the
filing thereof;
11.1.5 BREACH OF REPRESENTATION OR WARRANTY. Any material representation or
warranty made by Borrower or Guarantor herein or in any other instrument or
document relating to the Loan or the Property shall at any time be
materially false or misleading, or any warranty shall be materially
breached;
11.1.6 DEFAULT UNDER ASSIGNED CONTRACT OR LEASE. Borrower defaults under
any lease of the Property or under any contract assigned to Lender and such
default is not cured within the grace period applicable thereto such that
the tenant or contracting party obtains the right to terminate the contract
or lease or to claim material damages.
11.1.7 GUARANTOR DEFAULT. A default by Guarantor in the performance of any
term or provision of this Agreement or any other Loan Document to which
Guarantor is a party, or the breach, or any other failure to satisfy any
other term, provision, condition or warranty imposed upon the Guarantor in
this Agreement or in any other Loan Document to which Guarantor is a party
or by which Guarantor is bound.
11.2 GRACE PERIODS AND NOTICE. As to each of the foregoing events the following
provisions relating to grace periods and notice shall apply:
11.2.1 NO NOTICE OR GRACE PERIOD. There shall be no grace period and no
notice provision with respect to the payment of principal at maturity and
no grace period and no notice provision with respect to defaults related to
the voluntary filing of bankruptcy or
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reorganization proceedings or an assignment for the benefit of creditors,
or with respect to nonmonetary defaults which are not reasonably capable of
being cured, or with respect to a breach of warranty or representation
under Sections 8.1. (regarding Financial Information), or with respect to
breaches under Sections 9.6 (Restrictions on Liens, Transfers and
Additional Debt), and 9.7 (Limits on Guaranties and Distributions).
11.2.2 NONPAYMENT OF INTEREST AND PRINCIPAL. As to the nonpayment of
interest, and installments of principal prior to maturity, or as to any
payment which is made by an overdraft to Borrower's account which overdraft
is not repaid within one (1) day, there shall be a ten (10) day grace
period without any requirement of notice from Lender, except that as to a
required principal reduction to comply with the Debt Service Coverage Ratio
Covenant in Section 9.19, there shall be no grace period except as stated
therein.
11.2.3 OTHER MONETARY DEFAULTS. All other monetary defaults shall have a
five (5) day grace period following notice from Lender, or, if shorter, a
grace period without notice until five (5) Business Days before the last
day on which payment is required to be made in order to avoid: (i) the
cancellation or lapse of required insurance, or (ii) a tax sale or the
imposition of late charges or penalties in respect of taxes or other
municipal charges.
11.2.4 NONMONETARY DEFAULTS CAPABLE OF CURE. As to nonmonetary defaults
which are reasonably capable of being cured or remedied, unless there is a
specific shorter or longer grace period provided for in this Loan Agreement
or in another Loan Document, there shall be a thirty (30) day grace period
following notice from Lender or, if such default would reasonably require
more than thirty (30) days to cure or remedy, such longer period of time
not to exceed a total of ninety (90) days from Lender's notice as may be
reasonably required so long as Borrower shall commence reasonable actions
to remedy or cure the default within thirty (30) days following such notice
and shall diligently prosecute such curative action to completion within
such ninety (90) day period. However, where there is an emergency situation
in which there is danger to person or property such curative action shall
be commenced as promptly as possible. As to breaches of warranties and
representations (other than those related to financial information or
construction documents) there shall be a thirty (30) day grace period
following notice from Lender.
11.3 CERTAIN LENDER REMEDIES. If an Event of Default shall occur, Lender:
11.3.1 ACCELERATE DEBT. May declare the indebtedness evidenced by the Note
and secured by the Mortgage immediately due and payable (provided that in
the case of a voluntary petition in bankruptcy filed by Borrower or (after
the expiration of the grace period if any set forth in Section 11.1.3
above) an involuntary petition in bankruptcy filed against Borrower], such
acceleration shall be automatic); and
11.3.2 PURSUE REMEDIES. May pursue any and all remedies provided for
hereunder, or under any one or more of the other Loan Documents.
11.4 WRITTEN WAIVERS. If a Default or an Event of Default is waived by Lender,
in its sole discretion, pursuant to a specific written instrument executed by an
authorized officer of Lender, the Default or Event of Default so waived shall be
deemed to have never occurred.
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12. ADDITIONAL REMEDIES OF LENDER.
12.1 REMEDIES. Upon the occurrence of an Event of Default, whether or not the
indebtedness evidenced by the Note and secured by the Mortgage shall be due and
payable or Lender shall have instituted any foreclosure or other action for the
enforcement of the Mortgage or the Note, Lender may, in addition to any other
remedies which Lender may have hereunder or under the other Loan Documents, and
not in limitation thereof, and in Lender's sole and absolute discretion:
12.1.1 ENTER AND PERFORM. Enter upon the Property to perform obligations
under leases, or to operate, maintain, repair and improve the Property and
employ watchmen to protect the Property, all at the risk, cost and expense
of Borrower (except to the extent of Lender's gross negligence or willful
misconduct),consent to such entry being hereby given by Borrower;
12.1.2 DISCONTINUE WORK. At any time discontinue any work commenced in
respect of the Property or change any course of action undertaken by it and
not be bound by any limitations or requirements of time whether set forth
herein or otherwise;
12.1.3 EXERCISE RIGHTS. Exercise the rights of Borrower under any contract
or other agreement in any way relating to the Property and take over and
use all or any part of the labor, materials, supplies and equipment
contracted for by Borrower, whether or not previously incorporated into the
realty; and
12.1.4 OTHER ACTIONS. In connection with any work or action undertaken by
Lender pursuant to the provisions of the Loan Documents,
(i) engage builders, contractors, architects, engineers and others for
the purpose of furnishing labor, materials and equipment,
(ii) pay, settle or compromise all bills or claims which may become
liens against the property constituting the Collateral, or which have been
or may be incurred in any manner in connection with the Property or for the
discharge of liens, encumbrances or defects in the title of the Property or
the Collateral,
(iii) take or refrain from taking such action hereunder as Lender may
from time to time determine, and
(iv) engage marketing and leasing agents and real estate brokers to
advertise, lease or sell portions or all of the Property or other
Collateral upon such terms and conditions as Lender may in good faith
determine.
12.2 REIMBURSEMENT. Borrower shall be liable to Lender for all reasonable sums
paid or incurred pursuant to any of the Loan Documents whether the same shall be
paid or incurred pursuant to this section or otherwise, and all payments made or
liabilities incurred by Lender hereunder of any kind whatsoever shall be paid by
Borrower to Lender upon demand with interest at the Default Rate as provided in
this Agreement or the Note from the date of payment by Lender to the date of
payment
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to Lender and repayment of such sums with such interest shall be secured by the
applicable Security Documents.
12.3 POWER OF ATTORNEY. For the purpose of exercising the rights granted by this
Section 12., as well as any and all other rights and remedies of Lender,
Borrower hereby irrevocably constitutes and appoints Lender (or any agent
designated by Lender) its true and lawful attorney-in-fact, upon and following
any Event of Default, to execute, acknowledge and deliver any instruments and to
do and perform any acts permitted hereunder or by law in the name and on behalf
of Borrower.
13. SECURITY INTEREST AND SET-OFF.
13.1 SECURITY INTEREST. Borrower grants to Lender a direct and continuing lien
and security interest, as security for all of Borrower's Obligations in and upon
all deposits, balances and other sums credited by or due from Lender, or from
any affiliate of Lender, to Borrower including, but not limited to, any Cash
Collateral pledged to Lender pursuant to any provision of the Loan Documents.
13.2 SET-OFF AND DEBIT. (i) If any payment is not made when due under any of the
Loan Documents, after giving regard to applicable grace periods, if any, or (ii)
if any Event of Default occurs, or (iii) at any time, whether or not any Default
or Event of Default exists in the event any attachment, trustee process,
garnishment, or other levy or lien is, or is sought to be, imposed on any
property of Borrower; then, in any such event, any such deposits, balances or
other sums credited by or due from Lender, or from any such affiliate of Lender,
to Borrower may to the fullest extent not prohibited by applicable law at any
time or from time to time, without regard to the existence, sufficiency or
adequacy of any other collateral, and without notice or compliance with any
other condition precedent now or hereafter imposed by statute, rule of law or
otherwise, all of which are hereby waived, be set off, debited and appropriated,
and applied by Lender against any or all of Borrower's Obligations irrespective
of whether demand shall have been made and although such Obligations may be
unmatured, in such manner as Lender in its sole and absolute discretion may
determine. Within five (5) Business Days of making any such set off, debit or
appropriation and application, Lender agrees to notify Borrower thereof,
provided the failure to give such notice shall not affect the validity of such
set off, debit or appropriation and application.
13.3 RIGHT TO FREEZE. Lender shall also have the right, at its option, upon the
occurrence of any event which would entitle Lender to set off or debit as set
forth in Section 13.2, to freeze, block or segregate any such deposits, balances
and other sums so that Borrower may not access, control or draw upon the same.
13.4 ADDITIONAL RIGHTS. The rights of Lender and each affiliate of Lender under
this Section 13. are in addition to, and not in limitation of, other rights and
remedies, including other rights of set off, which Lender may have.
14. CASUALTY AND TAKING.
14.1 CASUALTY AND OBLIGATION TO REPAIR. In the event of any damage or
destruction to the Property or the other Collateral by reason of fire or other
hazard or casualty (collectively, a "Casualty"), Borrower shall give immediate
written notice thereof to Lender and proceed with
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<PAGE> 29
reasonable diligence, in full compliance with all Legal Requirements and the
other requirements of the Loan Documents, to repair, restore, rebuild or replace
the affected property (collectively, the "Repair Work").
14.2 ADJUSTMENT OF CLAIMS. All insurance claims shall be adjusted by Borrower,
at Borrower's sole cost and expense, but subject to Lender's prior written
approval which approval shall not be unreasonably withheld; PROVIDED that if any
Event of Default exists under any of the Loan Documents, Lender shall have the
right to adjust and compromise such claims without the approval of Borrower.
14.3 PAYMENT AND APPLICATION OF INSURANCE PROCEEDS. All proceeds of insurance
shall be paid to Lender and, at Lender's option, be applied to Borrower's
Obligations or released, in whole or in part, to pay for the actual cost of
repair, restoration, rebuilding or replacement (collectively, "Cost To Repair").
If the Cost To Repair does not exceed $25,000.00, Lender shall release so much
of the insurance proceeds as may be required to pay for the actual Cost to
Repair in accordance with the provisions of Section 14.4. Notwithstanding the
foregoing, Lender shall also release so much of the insurance proceeds as may be
required to pay for the actual Cost To Repair if:
(i) in Lender's good faith judgment such proceeds together with any
additional funds as may be deposited with and pledged to Lender are
sufficient to pay for the Cost To Repair;
(ii) in Lender's good faith judgment the Repair Work is likely to be
completed prior to the Maturity Date; and
(iii) no Default exists under the Loan Documents.
14.4 CONDITIONS TO RELEASE OF INSURANCE PROCEEDS. If Lender elects or, in
accordance with the foregoing, is required to release insurance proceeds, Lender
may impose reasonable conditions on such release which shall include, but not be
limited to, the following:
(i) Prior written approval by Lender, which approval shall not be
unreasonably withheld or delayed of plans, specifications, cost estimates,
contracts and bonds for the restoration or repair of the loss or damage;
(ii) Waivers of lien, architect's certificates, contractor's sworn
statements and other evidence of costs, payments and completion as Lender
may reasonably require;
(iii) If the Cost To Repair does not exceed $25,000.00, the funds to
pay therefor shall be released to Borrower. Otherwise, funds shall be
released upon final completion of the Repair Work, unless Borrower requests
earlier funding, in which event partial monthly disbursements equal to 90%
of the value of the work completed or, if the applicable contract is on a
cost plus basis, then 90% of the costs of the work completed if such cost
is less than the value thereof shall be made prior to final completion of
the repair, restoration or replacement and the balance of the
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<PAGE> 30
disbursements shall be made upon full completion and the receipt by Lender
of satisfactory evidence of payment and release of all liens;
(iv) Determination by Lender that the undisbursed balance of such proceeds
on deposit with Lender, together with additional funds deposited for the
purpose, shall be at least sufficient to pay for the remaining Cost To
Repair, free and clear of all liens and claims for lien;
(v) All work to comply with the standards, quality of construction and
Legal Requirements applicable to the original construction of the Property;
and
(vi) the absence of any Default under any Loan Documents.
14.5 TAKING. If there is any condemnation for public use of the Property or of
any Collateral, the awards on account thereof shall be paid to Lender and shall
be applied to Borrower's Obligations, or at Lender's discretion released to
Borrower. If, in the case of a partial taking or a temporary taking, in the sole
judgment of Lender the effect of such taking is such that there has not been a
material and adverse impairment of the viability of the Property or the value of
the Collateral, so long as no Default exists Lender shall release awards on
account of such taking to Borrower if such awards are sufficient (or amounts
sufficient are otherwise made available) to repair or restore the Property to a
condition reasonably satisfactory to Lender and such partial or temporary taking
shall not be deemed to violate the provisions of Section 9.6.
15. GENERAL PROVISIONS.
15.1 NOTICES. Any notice or other communication in connection with this Loan
Agreement, the Note, the Mortgage, or any of the other Loan Documents, shall be
in writing, and (i) deposited in the United States Mail, postage prepaid, by
registered or certified mail, or (ii) hand delivered by any commercially
recognized courier service or overnight delivery service such as Federal
Express, or (iii) sent by facsimile transmission, if a FAX Number is designated
below, provided a copy is also sent by first-class mail addressed:
If to Borrower:
BORROWER: Wonderland Greyhound Park, Inc.
190 V.F.W. Parkway
Revere, Massachusetts 02151
Attn: Mr. Richard Dalton, President
FAX No.: 781/284-7895
with copies by regular mail or such hand delivery or facsimile transmission to:
COUNSEL FOR Hutchins, Wheeler & Ditmar, A Professional Corporation
BORROWER 101 Federal Street
Boston, MA 02110
Attn: Francis J. Feeney, Jr., Esquire
Fax No.: 617/951-1295
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<PAGE> 31
If to Lender:
LENDER: Century Bank and Trust Company
400 Mystic Avenue
Medford, Massachusetts 02155
Attn: Commercial Real Estate Loan Administration Manager
FAX No.: 781/393-4073
with copies by regular mail or such hand delivery or facsimile transmission to:
LENDER'S COUNSEL: Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: David A. Gilbert, Esquire
Fax No.: 617/542-2241
If to Guarantor:
GUARANTOR: The Westwood Group, Inc.
190 V.F.W. Parkway
Revere, Massachusetts 02151
Attn: Mr. Richard Dalton, President
FAX No.: 781/284-7895
with copies by regular mail or such hand delivery or facsimile transmission to:
COUNSEL FOR Hutchins, Wheeler & Ditmar, A Professional Corporation
GUARANTOR: 101 Federal Street
Boston, MA 02110
Attn: Francis J. Feeney, Jr., Esquire
Fax No.: 617/951-1295
Any such addressee may change its address for such notices to such other address
in the United States as such addressee shall have specified by written notice
given as set forth above. All periods of notice shall be measured from the
deemed date of delivery.
A notice shall be deemed to have been given, delivered and received for the
purposes of all Loan Documents upon the earliest of: (i) if sent by such
certified or registered mail, on the third Business Day following the date of
postmark, or (ii) if hand delivered at the specified address by such courier or
overnight delivery service, when so delivered or tendered for delivery during
customary business hours on a Business Day, or (iii) if so mailed, on the date
of actual receipt as evidenced by the return receipt, or (iv) if so delivered,
upon actual receipt, or (v) if facsimile transmission is a permitted means of
giving notice, upon receipt as evidenced by confirmation.
15.2 LIMITATIONS ON ASSIGNMENT. Borrower may not assign this Agreement or the
monies due thereunder or convey or, except for a Permitted Transaction, encumber
the Property or other Collateral or any interest therein without the prior
written consent of Lender in each instance.
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15.3 FURTHER ASSURANCES. So long as neither Borrower's obligations nor
liabilities are thereby expanded or increased, Borrower shall upon request from
Lender from time to time execute, seal, acknowledge and deliver such further
instruments or documents which Lender may reasonably require to better perfect
and confirm its rights and remedies hereunder, under the Note, under the
Mortgage and under each of the other Loan Documents.
15.4 PARTIES BOUND. The provisions of this Agreement and of each of the other
Loan Documents shall be binding upon and inure to the benefit of Borrower and
Lender and their respective successors and assigns, except as otherwise
prohibited by this Agreement or any of the other Loan Documents.
This Agreement is a contract by and between Borrower and Lender for their mutual
benefit, and no third person shall have any right, claim or interest against
either Lender or Borrower by virtue of any provision hereof.
15.5 WAIVERS, EXTENSIONS AND RELEASES. Lender may at any time and from time to
time waive any one or more of the conditions contained herein or in any of the
other Loan Documents, or extend the time of payment of the Loan, or release
portions of the Collateral from the provisions of this Agreement and from the
Mortgage or any other Security Document, but any such waiver, extension or
release shall be deemed to be made in pursuance and not in modification hereof,
and any such waiver in any instance, or under any particular circumstance, shall
not be considered a waiver of such condition in any other instance or any other
circumstance.
15.6 GOVERNING LAW; CONSENT TO JURISDICTION; MUTUAL WAIVER OF JURY TRIAL.
15.6.1 SUBSTANTIAL RELATIONSHIP. It is understood and agreed that all of
the Loan Documents were negotiated, executed and delivered in the
Commonwealth of Massachusetts, which Commonwealth the parties agree has a
substantial relationship to the parties and to the underlying transactions
embodied by the Loan Documents.
15.6.2 PLACE OF DELIVERY. Borrower agrees to furnish to Lender at the
Lender's office in Medford, Massachusetts all further instruments,
certifications and documents to be furnished hereunder.
15.6.3 GOVERNING LAW. This Agreement and each of the other Loan Documents
shall in all respects be governed, construed, applied and enforced in
accordance with the internal laws of the Commonwealth of Massachusetts
without regard to principles of conflicts of law.
15.6.4 CONSENT TO JURISDICTION. Borrower hereby consents to personal
jurisdiction in any state or Federal court located within the Commonwealth
of Massachusetts.
15.6.5 JURY TRIAL WAIVER. BORROWER AND LENDER MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED ON THIS LOAN AGREEMENT, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF
CONDUCT,
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<PAGE> 33
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BORROWER AND
LENDER TO ENTER INTO THE TRANSACTIONS CONTEMPLATED HEREBY.
15.7 SURVIVAL. All representations, warranties, covenants and agreements of
Borrower, or Guarantor, herein or in any other Loan Document, or in any notice,
certificate, or other paper delivered by or on behalf of Borrower or Guarantor
pursuant hereto are significant and shall be deemed to have been relied upon by
Lender notwithstanding any investigation made by Lender or on its behalf and
shall survive the delivery of the Loan Documents and the making of the Loan and
each advance pursuant thereto. No review or approval by Lender, or by its
Consultants or representatives, of any plans and specifications, opinion
letters, certificates by professionals or other item of any nature shall relieve
Borrower or anyone else of any of the obligations, warranties or representations
made by or on behalf of Borrower or Guarantor, or any one or more of them, under
any one or more of the Loan Documents.
15.8 CUMULATIVE RIGHTS. All of the rights of Lender hereunder and under each of
the other Loan Documents and any other agreement now or hereafter executed in
connection herewith or therewith, shall be cumulative and may be exercised
singly, together, or in such combination as Lender may determine in its sole
good faith judgment.
15.9 CLAIMS AGAINST LENDER.
15.9.1 BORROWER MUST NOTIFY. Lender shall not be in default under this
Agreement, or under any other Loan Document, unless a written notice
specifically setting forth the claim of Borrower shall have been given to
Lender within thirty (30) days after Borrower first had actual knowledge or
actual notice of the occurrence of the event which Borrower alleges gave
rise to such claim and Lender does not remedy or cure the default, if any
there be, with reasonable promptness thereafter. Such actual knowledge or
actual notice shall refer to what was actually known by, or expressed in a
written notification furnished to, any of the persons or officials referred
to in SCHEDULE D as Authorized Representatives or of the Property manager.
15.9.2 REMEDIES. If it is determined by the final order of a court of
competent jurisdiction, which is not subject to further appeal, that Lender
has breached any of its obligations under the Loan Documents and has not
remedied or cured the same with reasonable promptness following notice
thereof, Lender's responsibilities shall be limited to: (i) where the
breach consists of the failure to grant consent or give approval in
violation of the terms and requirements of a Loan Document, the obligation
to grant such consent or give such approval and to pay Borrower's
reasonable costs and expenses including, without limitation, reasonable
attorneys' fees and disbursements in connection with such court
proceedings; and (ii) the case of any such failure to grant such consent or
give such approval, or in the case of any other such default by Lender,
where it is also so determined that Lender acted in bad faith, or that
Lender's default constituted gross negligence or willful misconduct, the
payment of any actual, direct, compensatory damages sustained by Borrower
as a result thereof plus Borrower's reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees and disbursements
in connection with such court proceedings.
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15.9.3 LIMITATIONS. In no event, however, shall Lender be liable to
Borrower or to Guarantor or anyone else for other damages such as, but not
limited to, indirect, speculative or punitive damages whatever the nature
of the breach by Lender of its obligations under this Loan Agreement or
under any of the other Loan Documents. In no event shall Lender be liable
to Borrower or to Guarantor or anyone else unless a written notice
specifically setting forth the claim of Borrower shall have been given to
Lender within the time period specified above.
15.10 OBLIGATIONS ABSOLUTE. Except to the extent prohibited by applicable law
which cannot be waived, the Obligations of Borrower and the obligations of the
Guarantor under the Loan Documents shall be joint and several (except, without
limiting any provision of the Guaranty, for covenants specifically applicable to
the respective parties), absolute, unconditional and irrevocable and shall be
paid strictly in accordance with the terms of the Loan Documents under all
circumstances whatsoever, including, without limitation, the existence of any
claim, set off, defense or other right which Borrower or any Guarantor may have
at any time against Lender whether in connection with the Loan or any unrelated
transaction.
15.11 TABLE OF CONTENTS, TITLE AND HEADINGS. Any Table of Contents, the titles
and the headings of sections are not parts of this Loan Agreement or any other
Loan Document and shall not be deemed to affect the meaning or construction of
any of their provisions.
15.12 COUNTERPARTS. This Loan Agreement may be executed in several counterparts,
each of which when executed and delivered is an original, but all of which
together shall constitute one instrument. In making proof of this agreement, it
shall not be necessary to produce or account for more than one such counterpart
which is executed by the party against whom enforcement of such loan agreement
is sought.
15.13 SATISFACTION OF COMMITMENT. The Loan being made pursuant to the terms
hereof and of the other Loan Documents is being made in satisfaction of Lender's
obligations under the Commitment dated June 12, 1998. The terms, provisions and
conditions of this Agreement and the other Loan Documents supersede the
provisions of the Commitment.
15.14 RIGHT TO PARTICIPATE. Lender reserves the right to transfer and assign the
Loan, or portion thereof, or participation interests therein, but no such
transfer or sale of participation interests shall affect or limit the rights and
obligations of Lender, Borrower and the Guarantor as set forth in the Loan
Agreement. Lender may disclose to, or share with, any actual or prospective
transferee or participant all information, including, but not limited to,
financial information, in Lender's possession regarding the Loan, Borrower, the
Guarantor, or the Property.
15.15 TIME OF THE ESSENCE. Time is of the essence of each provision of this
Agreement and each other Loan Document.
15.16 NO ORAL CHANGE. This Loan Agreement and each of the other Loan Documents
may only be amended, terminated, extended or otherwise modified by a writing
signed by the party against which enforcement is sought (except no such writing
shall be required for any party which, pursuant to a specific provision of any
Loan Document, is required to be bound by changes without such party's assent).
In no event shall any oral agreements, promises, actions, inactions,
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<PAGE> 35
knowledge, course of conduct, course of dealings or the like be effective to
amend, terminate, extend or otherwise modify this Loan Agreement or any of the
other Loan Documents.
15.17 MONTHLY STATEMENTS. While Lender may issue invoices or other statements on
a monthly or periodic basis (a "Statement"), it is expressly acknowledged and
agreed that: (i) the failure of Lender to issue any Statement on one or more
occasions shall not affect Borrower's obligations to make payments under the
Loan Documents as and when due; (ii) the inaccuracy of any Statement shall not
be binding upon Lender and so Borrower shall always remain obligated to pay the
full amount(s) required under the Loan Documents as and when due notwithstanding
any provision to the contrary contained in any Statement; (iii) all Statements
are issued for information purposes only and shall never constitute any type of
offer, acceptance, modification, or waiver of the Loan Documents or any of
Lender's rights or remedies thereunder; and (iv) in no event shall any Statement
serve as the basis for, or a component of, any course of dealing, course of
conduct, or trade practice which would modify, alter, or otherwise affect the
express written terms of the Loan Documents.
IN WITNESS WHEREOF this Agreement has been duly executed and delivered as a
sealed instrument at Boston, Massachusetts as of this 30th day of June, 1998.
BORROWER: WONDERLAND GREYHOUND PARK, INC.
By: /s/ Richard P. Dalton
-------------------------
Name: Richard P. Dalton
Title: President
LENDER: CENTURY BANK AND TRUST COMPANY
By: /s/ John A. Malloy
-------------------------
Name: John A. Malloy, III
Title: Senior Vice-President
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EXHIBITS:
---------
SECTION
-------
REFERENCE
---------
NUMBER
------
EXHIBIT A - Definitions 1.1
- ---------
EXHIBIT B - Ownership Interests and Taxpayer Identification Numbers 8.10.2
- ---------
EXHIBIT C - Authorized Representatives 4
- ---------
EXHIBIT D - Required Hazard Property 7.13
- --------- and Other Insurance
SCHEDULE 1 - All Borrower's Secured and Unsecured Loan Facilities 8.9
- ----------
SCHEDULE 2 - All Borrower's Secured and Unsecured Loan Facilities 8.9
- ---------- to Remain Outstanding after Loan Closing
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EXHIBIT A TO LOAN AGREEMENT
DEFINITIONS
AGREEMENT as defined in the Preamble.
APPROVED LEASE as defined in Section 9.17.2.
AUTHORIZED REPRESENTATIVES as defined in Section 4. and listed on Schedule D.
BORROWER as defined in the Preamble.
BUSINESS DAY shall mean: any day of the year on which offices of Lender are not
required or authorized by law to be closed for business in Boston,
Massachusetts. If any day on which a payment is due is not a Business Day, then
the payment shall be due on the next day following which is a Business Day.
Further, if there is no corresponding day for a payment in the given calendar
month (i.e., there is no "February 30th"), the payment shall be due on the last
Business Day of the calendar month.
CALCULATION DATE as defined in Section 9.19.1(i).
CALCULATION PERIOD as defined in Section 9.19.1(ii).
CASH COLLATERAL as defined in Section 6.3.3(i).
CASUALTY as defined in Section 14.1.
COLLATERAL as defined in Section 7.5.
CONSULTANT as defined in Section 5.1.
COST TO REPAIR as defined in Section 14.3.
DEBT SERVICE COVERAGE as defined in Section 9.19.1.(iii).
DEBT SERVICE ON THE LOAN as defined in Section 9.19.1.(vi).
DEFAULT as defined in Section 11.1.
DOLLARS shall mean lawful money of the United States.
ENVIRONMENTAL INDEMNITY as defined in Section 3.1.5.
ENVIRONMENTAL LEGAL REQUIREMENTS as defined in the Environmental Indemnity.
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ERISA AND ERISA PLAN each as defined in Section 8.12.
EVENT OF DEFAULT as defined in Section 11.1.
GUARANTY as defined in Section 3.1.4.
GUARANTOR as defined in Section 1.5.
HAZARDOUS MATERIALS shall mean and include asbestos, flammable materials,
explosives, radioactive substances, polychlorinated biphenyls, radioactive
substances, other carcinogens, oil and other petroleum products, pollutants or
contaminants that could be a detriment to the environment, and any other
hazardous or toxic materials, wastes, or substances which are defined,
determined or identified as such in any past, present or future federal, state
or local laws, rules, codes or regulations, or any judicial or administrative
interpretation of such laws, rules, codes or regulations.
IMPROVEMENTS as defined in Section 1.3.
INDEMNIFIED PARTY as defined in Section 9.16.
INDEMNITORS as defined in Section 3.1.5.
INVESTMENT shall mean the acquisition of any real or tangible personal property
or of any stock or other security, any loan, advance, bank deposit, money market
fund, contribution to capital, extension of credit (except for accounts
receivable arising in the ordinary course of business and payable in accordance
with customary terms), or purchase or commitment or option to purchase or
otherwise acquire real estate or tangible personal property or stock or other
securities of any party or any part of the business or assets comprising such
business, or any part thereof.
LAND as defined in Section 1.3.
LEGAL REQUIREMENTS shall mean all applicable federal, state, county and local
laws, by-laws, rules, regulations, codes and ordinances, and the requirements of
any governmental agency or authority having or claiming jurisdiction with
respect thereto, including, but not limited to, those applicable to zoning,
subdivision, building, health, fire, safety, sanitation, the protection of the
handicapped, and environmental matters and shall also include all orders and
directives of any court, governmental agency or authority having or claiming
jurisdiction with respect thereto. LENDER as defined in the Preamble.
LICENSES AND PERMITS shall mean all licenses (but specifically excluding racing
licenses relating to the Property), permits, authorizations and agreements
issued by or agreed to by any governmental authority, or by a private party
pursuant to a Permitted Title Exception, and including, but not limited to,
building permits, occupancy permits and such special permits, variances and
other relief as may be required pursuant to Legal Requirements which may be
applicable to the Property or the Property.
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LOAN as defined in Section 1.4.
LOAN AGREEMENT as defined in the Preamble.
LOAN DOCUMENTS as defined in Section 3.2.
MAI shall mean Member of the Appraisers Institute.
MAJOR TENANT as defined in Section 11.1.3.C.
MATURITY shall mean the Maturity Date, or in any instance, upon acceleration of
the Loan, if the Loan has been accelerated by Lender upon an Event of Default.
MATURITY DATE as defined in Section 2.2.
MORTGAGE as defined in Section 3.1.1.
NOTE as defined in Section 3.2.
OBLIGATIONS as defined in Section 3.1
PERMITTED ADDITIONAL DEBT as defined in Section 9.6.4.
PERMITTED DISTRIBUTIONS as defined in Section 9.7.2.
PERMITTED TITLE EXCEPTIONS as defined in Exhibit B to the Mortgage.
PERMITTED TRANSACTIONS as defined in Section 9.6.2.
PERMITTED TRANSFERS as defined in Section 9.6.3.
PLEDGE AND SECURITY AGREEMENT as defined in Section 6.3.3.(ii).
PREPAYMENT PREMIUM OR "PREPAYMENT PREMIUM" as defined in the Note.
PRIME RATE as defined in the Note.
PROPERTY as defined in Section 1.3.
REPAIR WORK as defined in Section 14.1.
REPORTABLE EVENT as defined in Section 8.12.
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<PAGE> 40
REGISTERED LAND SURVEYOR shall mean a land surveyor or engineer licensed as such
in the jurisdiction where the Property is situated.
SECURITY as defined in Section 3.1.
SECURITY DOCUMENTS as defined in Section 3.2.
STATEMENT as defined in Section 15.17.
SNDA AGREEMENT as defined in Section 9.17.5.
SURVEYOR AND SURVEY PLAN each as defined in Section 1.3.
TERM as defined in Section 2.2.
UCC means the Uniform Commercial Code in effect in the Commonwealth of
Massachusetts.
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EXHIBIT B TO LOAN AGREEMENT
OWNERSHIP INTERESTS AND TAXPAYER IDENTIFICATION NUMBERS
WONDERLAND GREYHOUND PARK, INC. - 04-2812729
A Massachusetts corporation 100% wholly owned by Westwood Racing Holdings Corp.
WESTWOOD RACING HOLDINGS CORP. - 04-3071627
A Massachusetts corporation 100% wholly owned by The Westwood Group, Inc., a
Delaware corporation
THE WESTWOOD GROUP, INC. - 04-1983910
36
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EXHIBIT C TO LOAN AGREEMENT
AUTHORIZED REPRESENTATIVES
Richard P. Dalton and A. Paul Sarkis
- -------------------------------END OF PAGE------------------------------------
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EXHIBIT D TO LOAN AGREEMENT
REQUIRED PROPERTY, HAZARD AND OTHER INSURANCE
(a) Borrower shall procure and maintain, or cause to be procured and
maintained, functional replacement cost coverage insurance policies
(non-reporting type), including extended coverage, collapse and demolition, in
an amount not less than the amount of the Loan, and such other hazard insurance
as Lender may require with respect to the Property, as well as comprehensive
general liability and workmen's compensation insurance in amounts satisfactory
to Lender, and business interruption insurance in the amount of $1,000,000.00,
such business interruption insurance to be renewable on an annual basis. All
policies shall contain acceptable standard mortgagee clauses in favor of Lender,
shall be in an amount sufficient to satisfy any applicable co-insurance
provisions and shall provide that the interest of Lender shall not be affected
by any breach or violation thereof by Borrower. As provided by the Loan
Agreement, the certification by the surveyor shall also include a determination
as to whether the Land lies within a federally designated flood hazard area, and
if so indicated, Borrower shall be required to have flood insurance in the
amount of $500,000.00 and naming Lender as loss payee.
(b) All insurance referred to in this Loan Agreement and/or exhibit
shall be in such amounts and form, shall include such coverages, endorsements
and deductibles, and shall be issued by such insurers as shall be approved by
Lender, and shall contain the written agreement of the insurer to give Lender
thirty (30) days prior written notice of cancellation, nonrenewal, modification
or expiration. Duplicate originals or certified copies of the insurance required
by this paragraph 6 (together with proof of payment of premiums) shall be
delivered to Lender at least eight (8) days prior to the Loan Closing.
Thereafter, Borrower is to provide Lender with proof of payment of annual
premiums prior to the original due date thereof.
In furtherance of the foregoing, the following shall apply to the extent
not inconsistent:
An actual insurance policy or certified copy thereof, or a binder,
certificate of insurance, or other evidence of property coverage in the form of
Acord 27 (Evidence of Property Coverage), Acord 25 (Certificate of Insurance),
or a 30-day binder in form acceptable to Lender with an unconditional
undertaking to deliver the policy or a certified copy within thirty (30) days,
shall be delivered at closing of the Loan.
Flood insurance shall be provided if the property or the collateral is
located in a flood prone, flood risk or flood hazard area as designated pursuant
to the Federal Flood Disaster Protection Act of 1973, as amended, and the
Regulations thereunder, or if otherwise reasonably required by Lender.
Lender shall be named as first mortgagee on policies of all- risk-type
insurance on the Property, as loss payee on the Collateral and its contents, and
as first mortgagee on rent-loss or business interruption coverages related
thereto.
38
<PAGE> 44
Except with respect to public liability insurance, as to which Lender shall
be named as an additional insured with respect to the Property or the
Collateral, all other required insurance coverages shall have a so-called
"Mortgagee's endorsement" or "Lender's loss-payable endorsement" which shall
provide in substance as follows:
A. Loss or damage, if any, under the policy shall be paid to Lender and its
successors and assigns ("Lender") in whatever form or capacity its interest may
appear and whether said interest be vested in said Lender in its individual or
in its disclosed or undisclosed fiduciary or representative capacity, or
otherwise, or vested in a nominee or trustee of said Lender.
B. The insurance under the policy, or under any rider or endorsement
attached thereto, as to the interest only of Lender, its successors and assigns,
shall not be invalidated nor suspended:
(a) by any error, omission or change respecting the ownership,
description, possession or location of the subject of the insurance or the
interests therein or the title thereto; or
(b) by the commencement of foreclosure or similar proceedings or the
giving of notice of sale of any of the property covered by the policy by virtue
of any mortgage, deed of trust, or security interest; or
(c) by any breach of warranty, act, omission, neglect, or
noncompliance with any provisions of the policy by the named insured, or any one
else, whether before or after a loss, which under the provisions of the policy
of insurance, would invalidate or suspend the insurance as to the named insured,
excluding, however, any acts or omissions of Lender while exercising active
control and management of the insured property.
C. Insurer shall provide Lender with not less than thirty (30) days' prior
written notice of cancellation of the policy (for non-payment or any other
reason) or of the non-renewal thereof.
D. The insurer reserves the right to cancel the policy at any time, but
only as provided by its terms. However, in such case this policy shall continue
in force for the benefit of Lender for thirty (30) days after written notice of
such cancellation is received by Lender and shall then cease.
E. Should legal title to and beneficial ownership of any of the property
covered under the policy become vested in Lender or its agents, successors or
assigns, insurance under the policy shall continue for the term thereof for the
benefit of Lender.
F. All notices herein provided to be given by the insurer to Lender in
connection with this policy and Lender's loss payable endorsement shall be
mailed to or delivered to Lender by certified or registered mail, return receipt
requested, c/o the address for Lender set forth in Section 15.1 of the Loan
Agreement to which this exhibit is attached.
39
<PAGE> 45
SCHEDULE 1 TO LOAN AGREEMENT
BORROWER'S MATERIAL EXISTING SECURED
AND UNSECURED LOAN FACILITIES
1. BBRG Promissory Note - Total outstanding at 6/30/98: $970,000;
2. Autotote obligation- Total outstanding at 6/30/98: $1,000,000;
3. Hutchins, Wheeler & Ditmar obligation - Total outstanding at 6/30/98:
$1,539,624.64; and
4. First Trade Union Bank in respect of obligations of The Westwood Group,
Inc. and Wonderland Racing Holdings, Inc - Total outstanding at 6/30/98:
$3,720,365.24 ($1,464,495.26 and $2,255,869.98, respectively).
5. Other loan facilities shown in Borrower's most recent financial statements
previously delivered to Lender or disclosed in previous written
communications from Borrower to Lender.
40
<PAGE> 46
SCHEDULE 2 TO LOAN AGREEMENT
BORROWER'S MATERIAL EXISTING SECURED AND UNSECURED
LOAN FACILITIES TO REMAIN OUTSTANDING AFTER LOAN CLOSING
1. BBRG Promissory Note as set forth in Schedule 1;
2. Autotote obligation as set forth in Schedule 1; and
3. Hutchins, Wheeler & Ditmar obligation as set forth in Schedule 1.
41
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<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1998 APR-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
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<CASH> 1,728,082 1,728,082
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<PP&E> 23,038,336 23,038,336
<DEPRECIATION> 17,144,850 17,144,850
<TOTAL-ASSETS> 14,498,129 14,498,129
<CURRENT-LIABILITIES> 6,106,024 6,106,024
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0 0
0 0
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<INTEREST-EXPENSE> 218,059 116,671
<INCOME-PRETAX> 788,777 169,181
<INCOME-TAX> 26,000 0
<INCOME-CONTINUING> 762,777 169,181
<DISCONTINUED> 576,200 576,200
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,388,977 745,381
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