EXHIBIT 10.5
================================================================================
CREDIT AGREEMENT
among
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
and
WILMINGTON TRUST COMPANY
DATED AS OF JANUARY__, 2002
$55,000,000
================================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS........................................................................................... 1
1.1 Defined Terms.................................................................................. 1
1.2 Other Definitional Provisions.................................................................. 13
SECTION 2. THE CREDITS........................................................................................... 14
2.1 Revolving Credit Loans......................................................................... 14
2.2 Revolving Credit Loan Procedures............................................................... 14
2.3 [Intentionally Left Blank]..................................................................... ..
2.4 General Provisions Regarding Loans............................................................. 15
2.5 Letters of Credit.............................................................................. 15
2.6 Fees........................................................................................... 18
2.7 Note; Repayment of Revolving Credit Loans...................................................... 18
2.8 Interest on Revolving Credit Loans............................................................. 18
2.9 Default Rate; Inability to Determine Interest Rate............................................. 19
2.10 Termination, Reduction and Extension of Commitment............................................. 20
2.11 Optional and Mandatory Prepayments of Revolving Credit Loans................................... 20
2.12 Illegality..................................................................................... 21
2.13 Requirements of Law............................................................................ 21
2.14 Taxes.......................................................................................... 22
2.15 Indemnity...................................................................................... 23
2.16 [Intentionally Left Blank]..................................................................... ..
2.17 Payments....................................................................................... 23
2.18 Conversion and Continuation Options............................................................ 24
2.19 Use of Proceeds................................................................................ 24
SECTION 3. REPRESENTATIONS AND WARRANTIES........................................................................ 24
3.1 Financial Condition............................................................................ 25
3.2 No Adverse Change.............................................................................. 25
3.3 Corporate Existence; Compliance with Law....................................................... 25
3.4 Corporate Power; Authorization; Enforceable Obligations........................................ 25
3.5 No Legal Bar................................................................................... 26
3.6 No Material Litigation......................................................................... 26
3.7 No Default..................................................................................... 26
3.8 Taxes.......................................................................................... 26
3.9 Federal Regulations............................................................................ 26
3.10 ERISA.......................................................................................... 27
3.11 Investment Company Act; Public Utility Holding Company Act..................................... 28
3.12 Purpose of Loans; Letters of Credit............................................................ 28
3.13 Environmental Matters.......................................................................... 28
3.14 No Burdensome Restrictions..................................................................... 29
3.15 Ownership of Borrower and Subsidiaries......................................................... 29
3.16 Patents, Trademarks, etc....................................................................... 29
3.17 Ownership of Property.......................................................................... 29
3.18 Licenses, etc.................................................................................. 29
3.19 Labor Matters.................................................................................. 29
3.20 Material Contracts............................................................................. 29
3.21 Insurance...................................................................................... 30
3.22 Senior Debt Status............................................................................. 30
3.23 No Material Misstatements...................................................................... 30
SECTION 4. CONDITIONS PRECEDENT.................................................................................. 30
4.1 Conditions to Effectiveness.................................................................... 30
4.2 Conditions to Each Extension of Credit......................................................... 32
SECTION 5. AFFIRMATIVE COVENANTS................................................................................. 33
5.1 Financial Statements........................................................................... 33
5.2 Certificates; Other Information................................................................ 33
5.3 Payment of Obligations......................................................................... 34
5.4 Conduct of Business and Maintenance of Existence............................................... 34
5.5 Maintenance of Property; Insurance............................................................. 34
5.6 Inspection of Property; Books and Records; Discussions......................................... 35
5.7 Notices........................................................................................ 35
5.8 Environmental Laws............................................................................. 36
5.9 Management Changes............................................................................. 36
SECTION 6. NEGATIVE COVENANTS.................................................................................... 36
6.1 Financial Condition Covenants.................................................................. 36
6.2 Limitation on Debt............................................................................. 37
6.3 Limitation on Liens............................................................................ 37
6.4 Limitations on Fundamental Changes............................................................. 37
6.5 Limitation on Sale of Assets................................................................... 38
6.6 Limitations on Acquisitions, Investments, Loans and Advances................................... 38
6.7 Limitation on Distributions.................................................................... 39
6.8 Transactions with Affiliates................................................................... 39
6.9 Fiscal Year.................................................................................... 39
6.10 Change in Business............................................................................. 39
6.11 Sale and Leaseback............................................................................. 39
6.12 Limitation on Negative Pledge Clauses.......................................................... 39
6.13 Interest Hedge Agreements...................................................................... 39
SECTION 7. EVENTS OF DEFAULT..................................................................................... 40
7.1 Events of Default.............................................................................. 40
SECTION 8. MISCELLANEOUS......................................................................................... 42
8.1 Amendments and Waivers......................................................................... 42
8.2 Notices........................................................................................ 43
8.3 No Waiver; Cumulative Remedies................................................................. 43
8.4 Survival of Representations and Warranties..................................................... 44
8.5 Payment of Expenses and Taxes.................................................................. 44
ii
8.6 Successors and Assigns......................................................................... 44
8.7 Disclosure of Information...................................................................... 45
8.8 Adjustments; Set-off........................................................................... 46
8.9 Counterparts................................................................................... 46
8.10 Severability................................................................................... 46
8.11 Integration.................................................................................... 46
8.12 Governing Law.................................................................................. 46
8.13 Submission To Jurisdiction; Waivers............................................................ 46
8.14 Acknowledgements............................................................................... 47
8.15 WAIVERS OF JURY TRIAL.......................................................................... 47
iii
SCHEDULES
SCHEDULE I Bank and Commitment Information
SCHEDULE II Letter of Credit Fees
EXHIBITS
EXHIBIT A Form of Revolving Credit Borrowing Request
EXHIBIT B Form of Note
EXHIBIT C Form of Guaranty Agreement
EXHIBIT D Form of Opinion of Counsel to Borrower and Guarantor
EXHIBIT E Form of Compliance Certificate
iv
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of January __, 2002, between DOVER DOWNS
GAMING & ENTERTAINMENT, INC. (the "Borrower"), and WILMINGTON TRUST COMPANY, a
--------
Delaware banking corporation (the "Bank").
----
BACKGROUND
----------
In consideration of the mutual covenants and agreements herein set
forth and for other consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby covenant and agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings:
"Affiliate": as to any Person, any other Person which, directly or
---------
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person and any member, director, officer
or employee of any such Person. For purposes of this definition, "control"
shall mean the power, directly or indirectly, either to (a) vote 10% or more of
the ordinary voting power for the election of directors of such Person or (b)
direct or in effect cause the direction of the management and policies of such
Person whether by contract or otherwise.
"Agreement": this Credit Agreement, as amended, supplemented or
---------
otherwise modified from time to time.
"Application": an application in such form as the Bank may specify
-----------
from time to time, requesting the Bank to issue a Letter of Credit.
"Base Rate": for any day, a rate per annum (rounded upwards, if
---------
necessary, to the next 1/100th of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2%. If for any reason the Bank shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability of the Bank to obtain sufficient quotations in accordance with the
terms thereof, the Base Rate shall be determined without regard to clause (b) of
the first sentence of this definition until the circumstances giving rise to
such inability no longer exist. Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.
"Base Rate Borrowing": a Borrowing comprised of a Base Rate Loan.
-------------------
"Base Rate Loans": Revolving Credit Loans bearing interest at any time
---------------
under the Base Rate Option.
-1-
"Base Rate Option": as defined in Section 2.8(a).
----------------
"Borrowing": a Loan made by the Bank on a particular date and, in the
---------
case of Eurodollar Loans, as to which a single Interest Period is in effect.
"Business Day": a day other than a Saturday, Sunday or other day on
------------
which commercial banks in Wilmington, Delaware are authorized or required by law
to close; provided, however, that, when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in the London interbank market.
"Capital Lease": at any time, a lease with respect to which the
-------------
lessee is required to recognize the acquisition of an asset and the incurrence
of a liability in accordance with GAAP.
"Capital Lease Obligations": at any time, the amount of the
-------------------------
obligations of the Borrower and its Subsidiaries under Capital Leases which
would be shown at such time as a liability on a consolidated balance sheet of
the Borrower and its consolidated Subsidiaries prepared in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Commitment": the obligation of the Bank to make Loans to and to
----------
issue Letters of Credit on behalf of the Borrower hereunder in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
on Schedule I under the caption "Commitment", as the same may be permanently
terminated, reduced and extended from time to time pursuant to the provisions of
Section 2.10.
"Commitment Fee": as defined in Section 2.6(a).
--------------
"Commitment Period": the period from and including the Effective Date
-----------------
to but not including the Termination Date, or such earlier date on which the
Commitment shall terminate as provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"Consolidated EBIT": for any period of four consecutive fiscal
-----------------
quarters, Consolidated Net Income for such period, plus the amount of income
taxes (if any) and interest expense deducted from earnings in determining such
Consolidated Net Income, in each case determined on a consolidated basis for the
Borrower and its Subsidiaries in accordance with
-2-
GAAP; provided, that there shall be excluded therefrom (a) any addition for non-
operating gains (including, without limitation, extraordinary or unusual gains,
gains from discontinuance of operations or gains arising from the sale of
capital assets) and (b) any subtraction for non-operating losses during such
period (including, without limitation, extraordinary or unusual losses, losses
from the discontinuance of operations or losses arising from the sale of capital
assets).
"Consolidated EBITDA": for any period of four consecutive fiscal
-------------------
quarters, Consolidated EBIT for such period, plus the amount of depreciation and
amortization expense deducted from earnings in determining such Consolidated
EBIT, in each case determined on a consolidated basis for the Borrower and its
Subsidiaries in accordance with GAAP.
"Consolidated Funded Debt": at any time, without duplication, the
------------------------
aggregate of all indebtedness of the Borrower and its Subsidiaries for borrowed
money, determined on a consolidated basis in accordance with GAAP as of such
date.
"Consolidated Interest Expense": for any period of four consecutive
-----------------------------
fiscal quarters, the amount of cash interest expense deducted from earnings of
the Borrower and its Subsidiaries in determining Consolidated Net Income for
such period in accordance with GAAP.
"Consolidated Net Income": for any fiscal period of four consecutive
-----------------------
fiscal quarters, net earnings (or loss) after income taxes (if any) for such
period determined on a consolidated basis in accordance with GAAP.
"Consolidated Tangible Net Worth": as of any date of determination,
-------------------------------
(a) the aggregate amount of all assets of the Borrower and its Subsidiaries on a
consolidated basis at such date as may be properly classified as such in
accordance with GAAP, excluding such other assets as are properly classified as
intangible assets under GAAP, minus (b) the aggregate amount of all liabilities
of the Borrower and its Subsidiaries on a consolidated basis at such date,
determined in accordance with GAAP.
"Contingent Obligation": as to any Person, any guarantee of payment
---------------------
or performance by such Person of any Debt or other obligation of any other
Person, or any agreement to provide financial assurance with respect to the
financial condition, or the payment of the obligations of, such other Person
(including, without limitation, purchase or repurchase agreements, reimbursement
agreements with respect to letters of credit or acceptances, indemnity
arrangements, grants of security interests to support the obligations of another
Person, keepwell agreements and take-or-pay or through-put arrangements) which
has the effect of assuring or holding harmless any third Person against loss
with respect to one or more obligations of such third Person; provided, however,
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation of any Person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made and (b) the maximum amount
for which such contingently liable Person may be liable pursuant to the terms of
the instrument embodying such Contingent Obligation, unless such primary
obligation and the maximum amount for which such contingently liable Person
-3-
may be liable are not stated or determinable, in which case the amount of such
Contingent Obligation shall be such contingently liable Person's maximum
reasonably anticipated liability in respect thereof as determined by such Person
in good faith.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Cross-Default Indebtedness": as defined in Section 7.1(f).
--------------------------
"Debt": of any Person at any date means (without duplication):
----
(a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices);
(b) any other indebtedness which is evidenced by a note, bond,
debenture or similar instrument;
(c) all Capital Lease Obligations of such Person;
(d) all liabilities secured by any Lien on any property owned by
such Person whether or not such Person has assumed or otherwise become liable
for the payment thereof;
(e) all obligations of such Person with respect to Interest Hedge
Agreements (calculated on a basis satisfactory to the Bank and in accordance
with accepted practice);
(f) all Contingent Obligations of such Person, including all
obligations of such Person in respect of outstanding letters of credit,
acceptances and similar obligations created for the account of such Person;
(g) all obligations of such Person under "synthetic" or similar
leases; and
(h) withdrawal liabilities of such Person or any Commonly
Controlled Entity under a Plan.
The Debt of any Person shall include any Debt of any partnership in which such
person is a general partner, unless such Debt is nonrecourse to such Person.
"Default": any of the events specified in Section 7, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, or any
other condition precedent therein set forth, has been satisfied.
-4-
"Distribution": in respect of any corporation, (a) dividends or other
------------
distributions on Capital Stock of the corporation (except distributions in
common stock of such corporation); (b) the redemption or acquisition of Capital
Stock of the corporation or of warrants, rights or other options to purchase
such stock (except when solely in exchange for common stock of such
corporation); and (c) any payment on account of, or the setting apart of any
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of any share of any class of Capital
Stock of such corporation or any warrants or options to purchase any such stock.
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Effective Date": the date that all of the conditions of Section 4.1
--------------
have been met to the satisfaction of the Bank.
"Environmental Laws": any and all applicable foreign, Federal, state,
------------------
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or binding requirements of any Governmental Authority, or binding
Requirement of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of the environment, as
now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Euro-Rate Reserve Percentage": the maximum effective percentage in
----------------------------
effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including, without limitation, supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities"). The Eurodollar Rate shall be adjusted with respect
-------------------------
to any Eurodollar Loan that is outstanding on the effective date of any change
in the Euro-Rate Reserve Percentage as of such effective date. The Bank shall
give prompt notice to the Borrower of the Eurodollar Rate as determined or
adjusted in accordance herewith, which determination shall be conclusive absent
manifest error.
"Eurodollar Borrowing": a Borrowing comprised of a Eurodollar Loan.
--------------------
"Eurodollar Loan": any Revolving Credit Loan bearing interest at any
---------------
time under a Eurodollar Rate Option.
"Eurodollar Rate": with respect to any Eurodollar Loan for any
---------------
Interest Period, the interest rate per annum determined by the Bank by dividing
(the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of
1% per annum) (i) the rate of interest determined by the Bank in accordance with
its usual procedures (which determination shall be conclusive absent manifest
error) to be the average of the London interbank offered rates for U.S. Dollars
quoted by the British Bankers' Association as set forth on Dow Xxxxx Markets
Service (formerly known as Telerate) (or appropriate successor or, if British
Bankers' Association or its successor ceases to provide such quotes, a
comparable replacement determined by the Bank) display page 3750 (or such other
display page on the Dow Xxxxx Markets Service system as may replace
-5-
display page 3750) two (2) Business Days prior to the first day of such Interest
Period for an amount comparable to the principal amount of such Eurodollar Loan
and having a borrowing date and a maturity comparable to such Interest Period by
(ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The
Eurodollar Rate may also be expressed by the following formula:
Average of London interbank offered rates quoted by BBA as shown
Eurodollar Rate = on Dow Xxxxx Markets Service display page 3750 or
-------------------------------------------------
appropriate successor
---------------------
1.00- Euro-Rate Reserve Percentage
"Eurodollar Rate Option": as defined in Section 2.8(b).
----------------------
"Event of Default": any of the events specified in Section 7,
----------------
provided, that any requirement for the giving of notice, the lapse of time, or
--------
both, or any other condition, has been satisfied.
"Exposure": at any time, an amount equal to the sum of (a) the
--------
aggregate principal amount of all Loans then outstanding, and (b) the L/C
Obligations then outstanding.
"Extensions of Credit": the collective reference to Loans made and
--------------------
Letters of Credit issued under this Agreement.
"Federal Funds Effective Rate": for any day, the weighted average of
----------------------------
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Bank from three
Federal funds brokers of recognized standing selected by it.
"GAAP": at any time with respect to the determination of the
----
character or amount of any asset or liability or item of income or expense, or
any consolidation or other accounting computation, generally accepted accounting
principles as in effect on the date of, or at the end of the period covered by,
the financial statements from which such asset, liability, item of income, or
item of expense, is derived, or, in the case of any such computation, as in
effect on the date when such computation is required to be determined; provided,
--------
however, that in the event of any change in GAAP which would affect the
-------
calculation of the Borrower's compliance with any of the covenants contained in
Section 6.1, either favorably or unfavorably, the Bank and the Borrower will
make appropriate adjustments to such covenants.
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantor": Dover Downs, Inc., a Delaware corporation.
---------
-6-
"Guaranty Agreement": the Guaranty and Suretyship Agreement
------------------
substantially in the form of Exhibit C hereto, executed by the Guarantor in
---------
favor of the Bank.
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Interest Coverage Ratio": at any date of determination, the ratio of
-----------------------
Consolidated EBITDA to Consolidated Interest Expense.
"Interest Hedge Agreement": any interest rate swap agreement,
------------------------
interest rate cap agreement, interest rate collar agreement, interest rate
insurance or any other agreement with all extensions, renewals, amendments,
substitutions and replacements to and any of the foregoing, documentation of all
of which shall conform to International Swap Dealers Association, Inc.
standards.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
---------------------
of each March, June, September and December, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such Interest
Period, and (c) as to any Eurodollar Loan having an Interest Period longer than
three months, each day which is three months, or a whole multiple thereof, after
the first day of such Interest Period and the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
---------------
(a) initially the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar Loan and
ending one, two, three, six or nine months thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion, given with respect
thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three, six, nine or twelve months thereafter, as selected by the
Borrower by irrevocable notice to the Bank not less than three Business Days
prior to the last day of the then current Interest Period with respect thereto;
provided that, the foregoing provisions relating to Interest Periods are subject
-------- ----
to the following:
(i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, with respect to Eurodollar Loans only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day;
(ii) with respect to Eurodollar Loans, any Interest Period
that begins on the last Business Day of a calendar month (or on a day for which
there is no
-7-
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(iii) an Interest Period that otherwise would extend beyond
the Termination Date shall end on the Termination Date; and
(iv) the Borrower shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Loan.
"ISP98": the International Standby Practices 1998 (ISP98) published
-----
by the Institute of International Banking Law & Practice, Inc., as the same may
be amended, supplemented or otherwise modified from time to time.
"L/C Commitment": the lower of (a) $1,000,000 and (b) the Commitment
--------------
at such time.
"L/C Coverage Requirement": with respect to each Letter of Credit at
------------------------
any time, 100% of the maximum amount available to be drawn thereunder at such
time (determined without regard to whether any conditions to drawing could be
met at such time).
"L/C Obligations": at any time, an amount equal to the sum of (a)
---------------
100% of the maximum amount available to be drawn under all Letters of Credit
outstanding at such time (determined without regard to whether any conditions to
drawing could be met at such time) and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant to Section
2.5(e).
"L/C Payment Date": the last day of each March, June, September and
----------------
December.
"Letters of Credit": as defined in Section 2.5(a).
-----------------
"Leverage Ratio": at any date of determination, the ratio of
--------------
Consolidated Funded Debt on such date to Consolidated EBITDA for the four
consecutive fiscal quarters of the Borrower most recently ended prior to such
date.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).
"Loans": the collective reference to the Revolving Credit Loans.
-----
"Loan Documents": this Agreement, the Applications, the Note and the
--------------
Guaranty Agreement.
-8-
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
validity or enforceability of this Agreement or any other Loan Document or the
rights or remedies of the Bank hereunder or thereunder, (b) the business,
property, assets, financial condition, credit position, results of operations or
prospects of the Borrower and its Subsidiaries taken as a whole or (c) the
ability of the Borrower to duly and punctually pay its Debts and perform its
obligations under the Loan Documents.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls, and ureaformaldehyde insulation.
"Moody's": Xxxxx'x Investors Services, Inc.
-------
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Note": a promissory note of the Borrower in the form of Exhibit B,
---- ---------
as the same may be amended, supplemented or otherwise modified from time to
time.
"Participant" as defined in Section 8.6(b).
-----------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA.
"Permitted Acquisition": an acquisition by the Borrower of the
---------------------
Capital Stock or assets of a Person (or of any segment or division of a Person)
(a) that is in the gaming industry, if the gross purchase price for such
acquisition is less than $35,000,000, (b) that is in an industry other than
gaming, if the gross purchase price for such acquisition is less than
$10,000,000 or (c) which is otherwise approved by the Bank; provided, that at
--------
the time that any definitive agreement is entered into in respect of any such
acquisition, no Default or Event of Default shall exist or would exist if such
acquisition were consummated on such date (assuming for purposes of the
covenants contained in Section 6.1 that pro forma adjustments are made to the
--- -----
financial statements of the Borrower giving effect to such acquisition as if it
had occurred on the last day of the Borrower's most recently completed fiscal
quarter); provided further, that the prior approval of the Bank shall be
-------- -------
required for any acquisition proposed to be made by the Borrower during a
fiscal year in which (i) the aggregate gross purchase price of Permitted
Acquisitions previously made by the Borrower during such fiscal year equals or
exceeds $35,000,000 or (ii) the portion of the aggregate gross purchase price of
Permitted Acquisition previously made by Borrower during such fiscal year
financed with Loans exceeds $25,000,000.
"Permitted Investments":
---------------------
(a) direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or any
agency thereof, provided that such obligations mature within one (1) year from
the date of acquisition thereof;
-9-
(b) certificates of deposit, time deposits or banker's
acceptances, maturing within one (1) year from the date of acquisition, with (i)
the Bank or (ii) any other bank or trust company organized under the laws of the
United States, the unsecured long-term debt obligations of which are rated "A3"
or higher by Moody's or "A-" or higher by S&P, and issued, or in the case of
banker's acceptance, accepted, by a bank or trust company having capital,
surplus and undivided profits aggregating at least Two Hundred Fifty Million
Dollars ($250,000,000);
(c) commercial paper given the highest rating by either S&P or
Moody's maturing not more than two hundred seventy (270) days from the date of
creation thereof;
(d) mutual funds registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 that hold themselves out as
"money market funds;"
(e) marketable general obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition, having one of the two highest ratings generally obtainable from
either S&P or Moody's;
(f) commercial paper maturing no more than six months from the
date of acquisition thereof and issued by the holding company of (i) the Bank or
(ii) any other bank that has (A) combined capital, surplus and undivided profits
(less any undivided losses) of not less than $250 million, (B) a Xxxxx Bank
Watch Rating of C or better and (C) commercial paper having a rating of A-2 (or
the equivalent) or higher from S&P or P-2 (or the equivalent) or higher from
Moody's; and
(g) fully collateralized repurchase agreements with a term of
not more than ninety days for underlying securities of the type described in
paragraphs (a) and (e) of this definition.
"Permitted Liens" shall mean:
---------------
(a) Liens for taxes, assessments, or similar charges, incurred
in the ordinary course of business and which are not yet due and payable;
(b) Pledges or deposits made in the ordinary course of business
to secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs;
(c) Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and payable or in
default;
-10-
(d) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of the aggregate amount
due thereunder, or to secure statutory obligations, or surety, appeal,
indemnity, performance or other similar bonds required in the ordinary course of
business;
(e) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially impairs
the use of such property or the value thereof, and none of which is violated in
any material respect by existing or proposed structures or land use;
(f) Purchase Money Security Interests or Liens created pursuant to
Capital Leases; provided, that (x) such Liens shall be created simultaneously
--------
with the acquisition of the property which is subject to such Lien, (y) such
Liens do not at any time encumber any property other than such property and (z)
the Liens are not modified to secure any Debt other than that used to acquire
such property;
(g) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings diligently
conducted so long as levy and execution thereon have been stayed and continue to
be stayed:
(i) claims or Liens for taxes, assessments or charges due and
payable and subject to interest or penalty, provided that the Borrower
establishes and maintains such reserves or other appropriate provisions as shall
be required by GAAP and pays all such taxes, assessments or charges forthwith
upon the commencement of proceedings to foreclose any such Lien; and
(ii) claims or Liens of mechanics, materialmen, warehousemen,
carriers, or other statutory nonconsensual Liens; and
(h) Liens relating to judgments which do not constitute an Event of
Default under Section 7.1(e).
"Person": an individual, partnership, corporation, business trust, joint
------
stock company, limited liability company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is covered by
----
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate": the rate of interest per annum announced from time to time by
----------
the Bank as its "National Commercial Rate" in effect at its principal office in
Wilmington, Delaware, each change in the Prime Rate shall be effective on the
date such change is announced as effective. The Bank's "National Commercial
Rate" is used by the Bank as a reference rate with respect to different interest
rates charged to borrowers. The Bank's determination and
-11-
designation from time to time of the reference rate shall not in any way
preclude the Bank from making loans to other borrowers at a rate that is higher
or lower than or different from the reference rate.
"Properties": the collective reference to the facilities and
----------
properties owned, leased or operated by the Borrower or any of its Subsidiaries.
"Purchase Money Security Interest": shall mean Liens upon tangible
--------------------------------
personal property securing loans to the Borrower or any Subsidiary thereof or
deferred payments by the Borrower or any Subsidiary thereof for the purchase of
such tangible personal property.
"Register": as defined in Section 8.6(d).
--------
"Regulation U": Regulation U of the Board of Governors of the Federal
------------
Reserve System as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation X": Regulation X of the Board of Governors of the Federal
------------
Reserve System as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Reimbursement Obligation": in respect of each Letter of Credit, the
------------------------
obligation of the Borrower to reimburse the Bank for all drawings made
thereunder in accordance with Section 2.5(e) and the Application related to such
Letter of Credit for amounts drawn under such Letter of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Sections
----------------
4043(c)(1), (2), (4), (5), (6), (10) and (13) of ERISA.
"Requirement of Law": as to any Person, the certificate of
------------------
incorporation, by-laws, operating agreement or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case binding upon such Person or any of its property or to which such
Person or any of its property is subject.
"Responsible Officer": the chief executive officer, president or
-------------------
chief financial officer of the Borrower.
"Revolving Credit Borrowing": a Borrowing consisting of a Revolving
--------------------------
Credit Loan from the Bank.
"Revolving Credit Borrowing Request": a request by the Borrower for
----------------------------------
the making of a Revolving Credit Loan pursuant to Section 2.2 in the form of
Exhibit A hereto.
---------
-12-
"Revolving Credit Loans": as defined in Section 2.1. Each Revolving
----------------------
Credit Loan shall be a Eurodollar Loan or a Base Rate Loan.
"S&P": Standard & Poor's Rating Group, a division of XxXxxx-Xxxx
---
Corporation.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Subsidiary": as to any Person, (i) any corporation, company or trust
----------
of which 50% or more (by number of shares or number of votes) of the outstanding
Capital Stock, interests, shares or similar items of beneficial interest
normally entitled to vote for the election of one or more directors, members or
trustees (regardless of any contingency which does or may suspend or dilute the
voting rights) is at such time owned directly or indirectly by such person or
one or more of such Person's Subsidiaries, or any partnership of which such
Person is a general partner or of which 50% or more of the partnership interests
is at the time directly or indirectly owned by such Person or one or more of
such Person's Subsidiaries, and (ii) any corporation, company, trust,
partnership or other entity which is controlled or capable of being controlled
by such Person or one or more of such Person's subsidiaries. Unless otherwise
indicated, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary of the Borrower.
"Taxes": as defined in Section 2.14.
-----
"Termination Date": the earlier of (a) December 31, 2004, or such
----------------
later date to which the Termination Date shall have been extended pursuant to
Section 2.10(d) and (b) the date the Commitment is terminated as provided
herein.
"Tranche": the collective reference to (a) Loans, other than Base
-------
Rate Loans, of the same type whose Interest Periods begin on the same date and
end on the same later date (whether or not such Loans originally were made on
the same date) and (b) Base Rate Loans, which shall constitute one Tranche.
"Type": when used in respect of any Loan or Borrowing, shall refer to
----
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, "Rate" shall include the
Eurodollar Rate and the Base Rate.
1.2 Other Definitional Provisions
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the Note or any
certificate or other document made or delivered pursuant hereto.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
-13-
(c) As used herein and in the Note, and any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms relating
to the Borrower and its Subsidiaries not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(d) The meanings given to terms defined in this Agreement shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. THE CREDITS
2.1 Revolving Credit Loans
----------------------
(a) Subject to the terms and conditions hereof, the Bank agrees to
make revolving credit loans in Dollars (the "Revolving Credit Loans") to the
----------------------
Borrower from time to time during the Commitment Period, in an aggregate
principal amount at any time outstanding which, when added to the L/C
Obligations then outstanding, does not exceed such the Commitment; provided,
--------
that at no time shall the sum of (x) the aggregate principal amount of all Loans
made by the Bank then outstanding plus (y) the L/C Obligations then outstanding
exceed the Commitment. The Commitment may be terminated or reduced from time to
time pursuant to Section 2.10. Within the foregoing limits, the Borrower may
during the Commitment Period borrow, repay and reborrow under the Commitment,
subject to the terms, provisions and limitations set forth herein.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) Base Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Bank in accordance with Sections
2.2 and 2.18; provided, that no Loan shall be made as a Eurodollar Loan after
--------
the date that is one month prior to the Termination Date.
(c) The Loan comprising any Revolving Credit Borrowing shall be (i)
with respect to a Base Rate Borrowing, in a minimum aggregate principal amount
of $100,000 or a whole multiple thereof or (ii) with respect to a Eurodollar
Borrowing, in a minimum aggregate principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof (or, in either case, an aggregate
principal amount equal to the remaining balance of the available Commitment).
2.2 Revolving Credit Loan Procedures. In order to request a Revolving
--------------------------------
Credit Borrowing, the Borrower shall hand deliver or telecopy (or notify by
telephone and promptly confirm by hand delivery or telecopy) to the Bank the
information requested by the form of Revolving Credit Borrowing Request attached
as Exhibit A hereto (a) in the case of a Eurodollar Borrowing, not later than
---------
12:00 noon, Wilmington time, three Business Days before a proposed Borrowing and
(b) in the case of a Base Rate Borrowing, not later than 12:00 noon, Wilmington
time, on the day of a proposed Borrowing. Such notice shall be irrevocable and
shall in each case specify (i) whether the Borrowing then being requested is to
be a Eurodollar Borrowing or a Base Rate Borrowing; (ii) the date of such
Revolving Credit Borrowing (which shall be a
-14-
Business Day); (iii) the principal amount of such Borrowing; and (iv) if such
Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto. If no election as to the Type of Revolving Credit Borrowing is
specified in any such notice, then the requested Revolving Credit Borrowing
shall be a Base Rate Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration.
Notwithstanding the foregoing, in the event Borrower and Bank enter into a
separate cash management loan sweep arrangements, Base Rate Borrowings may be
made in accordance with such separate arrangements.
2.3 [Intentionally Left Blank.]
------------------------
2.4 General Provisions Regarding Loans.
----------------------------------
(a) Subject to Section 2.4(b), the Bank shall make each
Revolving Credit Loan hereunder on the proposed date by credit of the amount so
lent to the general deposit account of the Borrower with the Bank.
(b) The Borrower may refinance all or any part of any Borrowing
with any other Borrowing subject to the conditions and limitations set forth
herein and elsewhere in this Agreement. Any Borrowing or part thereof so
refinanced shall be deemed to be repaid in accordance with Section 2.7 with the
proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing, to
the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the Bank to the Borrower.
(c) The Bank may at its option fulfill its Commitment hereunder
with respect to any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of the Bank to make such Loan; provided, however, that any exercise of
-------- -------
such option shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of the Agreement and the Note.
(d) All Borrowings, conversions and continuations of Revolving
Credit Loans hereunder and all selections of Interest Periods hereunder shall be
in such amounts and be made pursuant to such elections that, after giving effect
thereto, (A) the aggregate principal amount of the Loans comprising each Tranche
of Eurodollar Loans shall be equal to $500,000 or a whole multiple of $100,000
in excess thereof and (B) the Borrower shall not have outstanding at any one
time more than in the aggregate eight (8) separate Tranches of Loans (including
the Base Rate Tranche).
(e) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Termination Date.
2.5 Letters of Credit.
-----------------
(a) L/C Commitment. (i) Subject to the terms and conditions
--------------
hereof, the Bank agrees to issue letters of credit (collectively referred to as
the "Letters of Credit") for the account of the Borrower on any Business Day
-----------------
during the Commitment Period in such form as
-15-
may be approved from time to time by the Bank; provided, that no Letter of
--------
Credit shall be issued if, after giving effect thereto (A) the amount of the
Exposure would exceed the amount of the Commitment in effect at such time or (B)
the aggregate amount of the L/C Obligations at such time would exceed the L/C
Commitment in effect at such time.
(i) Each Letter of Credit:
(A) shall be denominated in Dollars and shall be a standby
letter of credit; and
(B) shall be for the account of the Borrower and for the
benefit of the Borrower and/or the Guarantor;
(C) shall have an expiration date no later than the
Termination Date; and
(D) may during the Commitment Period be extended at the
sole discretion of the Bank for additional periods of up to one year each (but
in no event to expire later than the Termination Date) upon written request from
the Borrower to the Bank at least 20 days (or such other time period as agreed
by the Borrower and the Bank) before the date upon which notice of extension is
otherwise required by the terms thereof.
(ii) Each Letter of Credit shall be subject to ISP98 and, to
the extent not inconsistent therewith, the laws of the State of Delaware.
(b) Procedure for Issuance of Letters of Credit. The Borrower may
-------------------------------------------
from time to time request that the Bank issue a Letter of Credit by delivering
to the Bank at its office for notices specified herein an Application therefor,
completed to the satisfaction of the Bank, and such other certificates,
documents and other papers and information as the Bank may reasonably request.
Upon receipt by the Bank of any Application, the Bank will process such
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall, after determining that issuance of the Letter of Credit
requested thereby will be within the limits imposed by Section 2.5(a)(i), issue
such Letter of Credit not later than ten (10) Business Days after its receipt of
the Application therefor and all such other certificates, documents and other
papers and information relating thereto (but in no event shall the Bank be
required to issue any Letter of Credit earlier than five (5) Business Days after
its receipt of the Application therefor and all such other certificates,
documents and other papers and information relating thereto) by issuing the
original of such Letter of Credit to the beneficiary thereof or as otherwise may
be agreed by the Bank and the Borrower. The shall promptly after issuing a
Letter of Credit furnish copies thereof to the Borrower.
(c) L/C Fees, Commissions and Other Charges. (ii) The Borrower shall
---------------------------------------
pay to the Bank a letter of credit fee with respect to the aggregate face amount
of all Letters of Credit outstanding, computed at the rate of three quarters of
one percent (.75%) (computed on the basis of the actual number of days each
Letter of Credit is outstanding in a year of 360 days). The Borrower shall also
pay to the Bank, in respect of each Letter of Credit issued by the Bank, a
-16-
fronting fee in an amount equal to exceed $300. The fees described in the
preceding sentences shall be due and payable quarterly in arrears on each L/C
Payment Date and on the Termination Date or such earlier date as the Commitment
is terminated, and shall be nonrefundable.
(i) In addition to the foregoing fees, the Borrower shall pay
or reimburse the Bank for such normal and customary costs and expenses as are
incurred or charged by the Bank in issuing, effecting payment under, amending or
otherwise administering any Letter of Credit, in accordance with the schedule of
such costs attached hereto as Schedule II.
-----------
(d) [Intentionally Left Blank.]
------------------------
(e) Reimbursement Obligation of the Borrower. (iii) The Borrower
----------------------------------------
agrees to reimburse the Bank in respect of a Letter of Credit on each date on
which the Bank notifies the Borrower of the date and amount of a draft presented
under such Letter of Credit and paid or to be paid by the Bank for the amount of
(A) such draft so paid and (B) any taxes, fees, charges or other direct out of
pocket costs or expenses incurred by the Bank in connection with such payment.
Each such payment shall be made to the Bank at its office listed in Section 8.2
in Dollars and in immediately available funds.
(i) Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this subsection from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the per annum rate of the Base Rate Option
plus 2.0% and shall be payable on demand by the Bank.
(f) Obligations Absolute. (iv) The obligations of the Borrower under
--------------------
this Section 2.5 shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Bank or any
beneficiary of a Letter of Credit or any other Person.
(i) The Borrower agrees with the Bank that the Bank shall not
be responsible for, and the Borrower's Reimbursement Obligations under Section
2.5(e) shall not be affected by, among other things, (A) the validity or
genuineness of any documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, provided,
--------
that reliance upon such documents by the Bank shall not have constituted gross
negligence or willful misconduct by the Bank or (B) any dispute between or among
the Borrower and any beneficiary of any Letter of Credit or any other Person to
which such Letter of Credit may be transferred or (C) any claims whatsoever of
the Borrower against any beneficiary of such Letter of Credit or any such
transferee.
(ii) The Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Bank's gross negligence or willful misconduct.
(iii) The Borrower agrees that any action taken or omitted by
the Bank under or in connection with any Letter of Credit or the related drafts
or documents, if done in the absence of gross negligence or willful misconduct,
shall be binding on the Borrower
-17-
and shall neither result in any liability of the Bank to the Borrower nor
constitute a defense to the Borrower's obligation to reimburse the Bank.
(g) Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment to the Bank under any Letter of Credit, the Bank shall promptly notify
the Borrower of the date and amount thereof. The responsibility of the Bank to
the Borrower in connection with any draft presented for payment under any Letter
of Credit shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment are in conformity with such Letter of Credit.
(h) Application. To the extent that any provision of any Application
-----------
related to any Letter of Credit is inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall apply.
2.6 Fees.
----
(a) The Borrower agrees to pay to the Bank a commitment fee (a
"Commitment Fee") for the period from and including the first day of the
--------------
Commitment Period to the Termination Date, computed at a rate per annum equal to
1/4%, calculated on the basis of a 360 day year for the actual days elapsed, on
the average daily amount of the difference between the Commitment of the Bank
and the Exposure during the period for which payment is made, payable quarterly
in arrears on the last day of each March, June, September and December and on
the Termination Date or such earlier date as the Commitment shall be permanently
reduced or terminated as provided herein, commencing on the first of such dates
to occur after the Effective Date.
(b) The Borrower agrees to pay to the Bank a closing fee in the
amount of $137,500, payable on the Effective Date.
(c) All fees shall be paid on the dates due, in immediately available
funds, to the Bank. Once paid, none of the fees shall be refundable under any
circumstances.
2.7 Note; Repayment of Revolving Credit Loans. The Revolving Credit Loans
-----------------------------------------
made by the Bank shall be evidenced by a single Note duly executed on behalf of
the Borrower, dated the Effective Date, in substantially the form attached
hereto as Exhibit B with the blanks appropriately filled, payable to the Bank in
---------
a principal amount equal to the Commitment. The Note shall bear interest from
the date thereof on the outstanding principal balance thereof as set forth in
Section 2.8. The outstanding principal balance of each Revolving Credit Loan, as
evidenced by the Note, shall be payable on the Termination Date. The Borrower
hereby authorizes the Bank to charge any deposit account of the Borrower
maintained with the Bank for any payment when due hereunder or under the Note.
2.8 Interest on Revolving Credit Loans.
----------------------------------
(a) Subject to the provisions of Section 2.9, each Base Rate Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 365
-18-
or 366 days, as the case may be) at a rate per annum equal to the Base Rate
minus 1% (the "Base Rate Option").
----- ----------------
(b) Subject to the provisions of Section 2.9, each Eurodollar Loan
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the Eurodollar Rate for
the Interest Period in effect for such Loan plus 0.75% (the "Eurodollar Rate
---- ---------------
Option").
------
(c) Interest on each Revolving Credit Loan shall be payable on each
Interest Payment Date applicable to such Loan; provided, that interest accruing
--------
on overdue amounts pursuant to Section 2.9 shall be payable on demand. The
Bank's calculation of the Eurodollar Rate and the Base Rate shall be conclusive
absent manifest error.
2.9 Default Rate; Inability to Determine Interest Rate.
--------------------------------------------------
(a) Upon the occurrence of and during the continuance of an Event of
Default under Section 7.1(a) or (g), the outstanding principal amount of the
Loans and, to the extent permitted by law, accrued and unpaid interest thereon
and any other amount payable hereunder shall bear interest from the date of such
occurrence until paid in full (after as well as before judgment) at a rate per
annum which is equal to two percent (2%) in excess of the Base Rate Option.
Upon the occurrence of and during the continuance of an Event of Default other
than under Section 7.1(a) or (g), the outstanding principal amount of the Loans
and, to the extent permitted by law, accrued and unpaid interest thereon and any
other amount payable hereunder shall bear interest from the date that the Bank
shall send notice to the Borrower of the application of the default rate until
paid in full (after as well as before judgment) at a rate per annum which is
equal to two percent (2%) in excess of the Base Rate Option. The Borrower
acknowledges that such increased interest rate reflects, among other things, the
fact that such loans or other amounts have become a substantially greater risk
given its default status and that the Bank is entitled to additional
compensation for such risk.
(b) In the event, and on each occasion, that prior to the
commencement of any Interest Period for a Eurodollar Loan, the Bank shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that dollar deposits in the principal amount of such Eurodollar Loan
are not generally available in the London interbank market, or that the rate at
which such dollar deposits are being offered will not adequately and fairly
reflect the cost to the Bank of making or maintaining the principal amount of
such Eurodollar Loan during such Interest Period, or that reasonable means do
not exist for ascertaining the Eurodollar Rate, the Bank shall, as soon as
practicable thereafter, give written, telegraphic or telephonic notice of such
determination to the Borrower. After such notice shall have been given and until
the circumstances giving rise to such notice no longer exist, each request for a
Eurodollar Loan or for conversion to or maintenance of a Eurodollar Loan
pursuant to the terms of this Agreement shall be deemed to be a request for a
Base Rate Loan.
-19-
2.10 Termination, Reduction and Extension of Commitment.
--------------------------------------------------
(a) The Commitment shall be automatically terminated on the
Termination Date.
(b) Subject to the last sentence of this paragraph, upon at least
five Business Days' prior irrevocable written or telecopy notice to the Bank,
the Borrower may at any time in whole permanently terminate, or from time to
time permanently reduce, the Commitment. Each partial reduction of the
Commitment shall be in a minimum principal amount of $5,000,000 or in whole
multiples thereof, and no such termination or reduction shall be made which
would, after giving effect to any prepayments of Revolving Credit Loans on such
date reduce the Commitment to an amount less than the amount of the Exposure.
(c) In connection with any reduction of the Commitment, the Borrower
shall make any prepayment required under Section 2.11(b).
(d) During the period beginning ninety (90) days prior to the then
effective Termination Date and ending sixty (60) days prior to such Termination
Date, the Borrower may deliver to the Bank a notice requesting that the
Commitment be extended for an additional nine months beyond the Termination Date
then in effect. If the Bank agrees to extend the Commitment, the Bank shall so
notify the Borrower, whereupon (i) the Commitment shall without further act by
any party hereto, be extended to the date nine months after the Termination Date
then in effect and (ii) the term "Termination Date" shall thereafter mean such
date. Any such extension shall be evidenced by a written agreement between the
Bank and the Borrower, such agreement to be in form and substance acceptable to
the Bank.
2.11 Optional and Mandatory Prepayments of Revolving Credit Loans.
------------------------------------------------------------
(a) The Borrower shall have the right at any time and from time to
time to prepay any Revolving Credit Borrowing, in whole or in part, without
premium or penalty (but in any event subject to Section 2.15), upon prior
written, telecopy or telephonic notice to the Bank given no later than 10:30
a.m., Wilmington time, one Business Day before any proposed prepayment;
provided, however, that each such partial prepayment shall be in the principal
-------- -------
amount of at least (x) with respect to Base Rate Loans, $100,000 or in whole
multiples thereof and (y) with respect to Eurodollar Loans, $500,000 or in whole
multiples of $100,000 in excess thereof or, in either case, the entire amount
outstanding, whether or not divisible by $100,000.
(b) On the date of any reduction of the Commitment pursuant to
Section 2.10, the Borrower shall pay or prepay so much of the Revolving Credit
Borrowings as shall be necessary in order that, after giving effect to such
reduction and any such payments, the Exposure at such time will not exceed the
Commitment.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing of Revolving Credit Loans to be prepaid,
shall be irrevocable and shall commit the Borrower to prepay such Borrowing (or
portion thereof) by the amount stated therein. All prepayments on Eurodollar
Loans under this Section shall be
-20-
accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment.
2.12 Illegality. Notwithstanding any other provision herein, if
----------
any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for the Bank to make or maintain Eurodollar Loans
as contemplated by this Agreement, (a) the commitment of the Bank hereunder to
make or refinance Eurodollar Loans, continue Eurodollar Loans as such and
convert or refinance Base Rate Loans to Eurodollar Loans shall forthwith be
cancelled and (b) the Bank's Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Base Rate Loans on the respective last days
of the then current Interest Periods with respect to such Loans or within such
earlier period as required by law. If any such conversion of a Eurodollar Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower shall pay to the Bank such amounts, if any,
as may be required pursuant to Section 2.15.
2.13 Requirements of Law.
-------------------
(a) In the event that any change in any Requirement of Law
or in the interpretation, or application thereof or compliance by the Bank with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, the Note, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change the basis of taxation
of payments to the Bank in respect thereof (except for taxes covered by Section
2.14 and changes in the rate of tax on the overall net income, gross receipts or
revenue of the Bank);
(ii) shall impose, modify or hold applicable any
reserve, special deposit or similar requirement against assets held by, deposits
or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of the
Bank which is not otherwise included in the determination of the interest rate
on such Eurodollar Loan hereunder; or
(iii) shall impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost to the Bank, by
an amount which the Bank deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof then, in any such case, the Borrower shall as promptly as practicable
pay the Bank, upon its demand, any additional amounts necessary to compensate
the Bank for such increased cost or reduced amount receivable; provided, that
--------
the Borrower shall not be liable for any such amounts incurred by the Bank more
than 90 days prior to the date of the Bank's notification to the Borrower. If
the Bank becomes entitled to claim any additional amounts pursuant to this
subsection, it shall as promptly as practicable notify the Borrower of the event
by reason of which it has become so entitled. A certificate as to any
additional amounts payable
-21-
pursuant to this subsection submitted by the Bank to the Borrower shall be
reasonably detailed and include supporting documentation, and shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Note and all other amounts
payable hereunder.
(b) In the event that the Bank shall have determined that any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by the Bank or any corporation controlling the
Bank with any request or directive regarding capital adequacy (whether or not
having the force of law) from any Governmental Authority made subsequent to the
date hereof does or shall have the effect of reducing the rate of return on the
Bank's or such corporation's capital as a consequence of its obligations
hereunder or under any Letter of Credit to a level below that which the Bank or
such corporation could have achieved but for such change or compliance (taking
into consideration the Bank's or such corporation's policies with respect to
capital adequacy) by an amount deemed by the Bank to be material, then from time
to time, after submission by the Bank to the Borrower of a written request
therefor, which shall be reasonably detailed and include supporting
documentation, the Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such reduction; provided, that the
--------
Borrower shall not be liable for any such amounts incurred by the Bank more than
90 days prior to the date of the Bank's notification to the Borrower.
(c) The Bank agrees that it will use reasonable efforts in order to
avoid or to minimize, as the case may be, the payment by the Borrower of any
additional amount under Section 2.13(b); provided, however, that the Bank shall
-------- -------
be obligated to incur any expense, cost or other amount in connection with
utilizing such reasonable efforts.
(d) Notwithstanding the foregoing Section 2.13(a), (b) and (c), the
Borrower shall not be required to pay any additional amounts to the Bank that is
not incorporated under the laws of the United States or a state thereof as a
result of any change in any Requirement of Law or compliance by the Bank with
any request or directive from any central bank or Governmental Authority to the
extent that such additional amounts exceed the amounts that would have been
payable by the Borrower under Section 2.13(a), (b) or (c) to the Bank.
2.14 Taxes. All payments made by the Borrower under this Agreement and the
-----
Note shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority
(excluding, net income taxes and franchise or gross receipts taxes imposed in
lieu of net income taxes imposed on the Bank as a result of a present or former
connection between the jurisdiction of the government or taxing authority
imposing such tax and the Bank (excluding a connection arising solely from the
Bank having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Note)) (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter called "Taxes"). If any Taxes are required to be withheld from any
-----
amounts payable to the Bank hereunder or under the Note, the amounts so payable
to the Bank shall be increased to the extent necessary to yield to the Bank
(after payment of all Taxes) interest or any
-22-
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and the Note. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Bank for its own
account or for the account of the Bank, as the case may be, a certified copy of
an original official receipt received by the Borrower showing payment thereof.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Bank the required receipts or other required
documentary evidence, the Borrower shall indemnify the Bank for any incremental
taxes, interest or penalties that may become payable by the Bank as a result of
any such failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Note and all other amounts
payable hereunder.
2.15 Indemnity.
---------
(a) The Borrower agrees to indemnify the Bank and to hold
the Bank harmless from any loss or expense which the Bank may sustain or incur
as a consequence of (i) default by the Borrower in payment when due of the
principal amount of or interest on any Eurodollar Loan, (ii) default by the
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (iii) default by the Borrower in making
any prepayment after the Borrower has given a notice thereof in accordance with
the provisions of this Agreement or (iv) the making of a prepayment of
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto, except any such loss as may result from the partial prepayment
of Eurodollar Loans pursuant to Section 4.1(k). This covenant shall survive the
termination of this Agreement and the payment of the Note and all other amounts
payable hereunder.
(b) For the purpose of calculation of all amounts payable
to the Bank under this subsection, the Bank shall be deemed to have actually
funded its relevant Eurodollar Loan through the purchase of a deposit bearing
interest at the Eurodollar Rate in an amount equal to the amount of that
Eurodollar Loan and having a maturity comparable to the relevant Interest
Period; provided, however, that the Bank may fund each of its Eurodollar Loans
-------- -------
in any manner it sees fit, and the foregoing assumption shall be utilized only
for the calculation of amounts payable under this subsection. This covenant
shall survive the termination of this Agreement and the payment of the Note and
all other amounts payable hereunder.
2.16 [Intentionally Left Blank.]
------------------------
2.17 Payments.
--------
(a) The Borrower shall make each payment (including
principal of or interest on any Loan or any fees or other amounts) hereunder not
later than 12:00 (noon), Wilmington time, on the date when due in Dollars to the
Bank at its offices specified in Section 8.2 or at such other place as may be
designated by the Bank, in immediately available funds.
(b) Whenever any payment (including principal of or
interest on any Loan or any fees or other amounts) hereunder shall become due,
or otherwise would occur, on a
-23-
day that is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, if applicable.
2.18 Conversion and Continuation Options. The Borrower shall
-----------------------------------
have the right at any time upon prior irrevocable notice to the Bank (i) not
later than 12:00 noon, Wilmington time, on the Business Day of conversion, to
convert any Eurodollar Loan to a Base Rate Loan, (ii) not later than 12:00 noon,
Wilmington time, three Business Days prior to conversion or continuation, to (y)
convert any Base Rate Loan into a Eurodollar Loan, or (z) to continue any
Eurodollar Loan as a Eurodollar Loan for any additional Interest Period and
(iii) not later than 12:00 noon, Wilmington time, three Business Days prior to
conversion, to convert the Interest Period with respect to any Eurodollar Loan
to another permissible Interest Period, subject in each case to the following:
-------
(a) a Eurodollar Loan may not be converted at a time other
than the last day of the Interest Period applicable thereto;
(b) any portion of a Loan maturing or required to be
repaid in less than one month may not be converted into or continued as a
Eurodollar Loan;
(c) no Eurodollar Loan may be continued as such and no
Base Rate Loan may be converted to a Eurodollar Loan when any Default or Event
of Default has occurred and is continuing and the Bank has determined that such
a continuation is not appropriate;
(d) any portion of a Eurodollar Loan that cannot be
converted into or continued as a Eurodollar Loan by reason of Section 2.18(b) or
(c) automatically shall be converted at the end of the Interest Period in effect
for such Loan to a Base Rate Loan; and
(e) on the last day of any Interest Period for Eurodollar
Loans if the Borrower shall have failed to give notice of conversion or
continuation as described in this subsection or if such conversion or
continuation is not permitted pursuant to this Section 2.18, such Loans shall be
converted to Base Rate Loans on the last day of such then expiring Interest
Period.
Accrued interest on a Loan (or portion thereof) being converted shall be paid by
the Borrower at the time of conversion.
2.19 Use of Proceeds. The Letters of Credit and the proceeds of
---------------
the Loans shall be used by the Borrower for working capital and general
corporate purposes in the ordinary course of business (including, but not
limited to, refinancing existing working capital-related indebtedness and,
subject to the other provisions of this Agreement, acquisition financing).
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement, and to make the Loans
and to issue the Letters of Credit, the Borrower hereby represents and warrants
to the Bank that:
-24-
3.1 Financial Condition.
-------------------
(a) Audited Financials. The consolidated balance sheet of
------------------
the Borrower and its consolidated Subsidiaries as at December 31, 2000 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, copies of which have heretofore been furnished to the Bank,
present fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved. Neither the Borrower nor any of its consolidated Subsidiaries
had, as of December 31, 2000, any material Contingent Obligation, liability for
taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any Interest Hedge Agreement, which is not
reflected in the financial statements contained in the Borrower's Annual Report
on Form 10-K for the period ended December 31, 2000 or the notes thereto.
(b) No Sales. During the period from December 31, 2000, to
--------
and including the date of this Agreement there has been no sale, transfer or
other disposition by the Borrower or any of its consolidated Subsidiaries of any
material part of its business or property and no purchase or other acquisition
of any business or property (including any Capital Stock of any other Person)
material in relation to the financial condition of the Borrower and its
consolidated Subsidiaries at December 31, 2000.
3.2 No Adverse Change. Since December 31, 2000, there has been no
-----------------
development or event nor any prospective development or event which has had or
could reasonably be expected individually or in the aggregate to have a Material
Adverse Effect.
3.3 Corporate Existence; Compliance with Law. Each of the
----------------------------------------
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification except to the extent that the failure to be so
qualified and/or in good standing could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. The
-------------------------------------------------------
Borrower has the corporate power, authority, and legal right, to make, deliver
and perform this Agreement, the Note and the other Loan Documents to which it is
a party and to borrow hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of this Agreement and the
Note and to authorize the execution, delivery and performance of this Agreement,
the Note and the other Loan Documents to which it is a party. No consent or
authorization of, filing with or other act by or in respect of, any Governmental
Authority or any
-25-
other Person (including stockholders and creditors of the Borrower) is required
in connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement, the Note or the other
Loan Documents. This Agreement has been, and the Note and other Loan Document
will be, duly executed and delivered on behalf of the Borrower. This Agreement
constitutes, and the Note and other Loan Document when executed and delivered
will constitute, a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement, the Note and the other Loan Documents by the Borrower, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or Contractual Obligation of the Borrower or of any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien on
any of its or their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. No litigation, investigation or
----------------------
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to this Agreement, the Note or the other Loan Documents or any
of the transactions contemplated hereby, or (b) as to which there is a
reasonable likelihood of an adverse determination and which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
3.8 Taxes. Each of the Borrower and its Subsidiaries has filed or
-----
caused to be filed all tax returns which, to its knowledge, are required to be
filed and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower
or its Subsidiaries, as the case may be); no tax Lien has been filed against the
Borrower or any of its Subsidiaries, and, to the knowledge of the Borrower, no
claim is being asserted, with respect to any such tax, fee or other charges.
3.9 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U or for any purpose which
violates the provisions of Regulation U. If requested by the Bank, the Borrower
will furnish to the Bank a statement to the
-26-
foregoing effect in conformity with the requirements of FR Form U-l referred to
in said Regulation U. No part of the proceeds of the loans hereunder will be
used for any purpose which violates, or which is inconsistent with, the
provisions of Regulation X.
3.10 ERISA.
-----
(a) Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Single
Employer Plan, and each Single Employer Plan has compiled in all material
respects with the applicable provisions of ERISA and the Code. No termination of
a Single Employer Plan has occurred and no lien in favor of the PBGC or a Plan
has arisen during the five-year period prior to the date as of which this
representation is made or deemed made. No other event or condition has occurred
or exists with respect to any Plan that could reasonably be expected
individually or in the aggregate to have a Material Adverse Effect.
(b) The present value of all accrued benefits under each
Single Employer Plan in which the Borrower or any Commonly Controlled Entity is
a participant (based on those assumptions used to fund the Plans) did not, as of
the last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by an amount in excess of ten percent (10%) of
Consolidated Net Worth as of the end of the most recent fiscal year of the
Borrower for which financial statements have been delivered to the Bank pursuant
to this Agreement.
(c) Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
any liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made, in any such case which could reasonably be expected individually or
in the aggregate to have a Material Adverse Effect.
(d) To the Borrower's knowledge, no such Multiemployer
Plan is in "reorganization" or "insolvent," within the meaning of such terms as
used in ERISA.
(e) The present value (determined using actuarial and
other assumptions which are reasonable in respect of the benefits provided and
the employees participating) of the liability of the Borrower and each Commonly
Controlled Entity for post retirement benefits to be provided to their current
and former employees under Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all
such Plans allocable to such benefits by an amount in excess of ten percent
(10%) of the Borrower's consolidated net worth as of the end of the most recent
fiscal year of the Borrower for which financial statements have been delivered
to the Bank pursuant to this Agreement.
-27-
3.11 Investment Company Act; Public Utility Holding Company Act.
----------------------------------------------------------
Neither the Borrower nor any of its Subsidiaries is (a) an "investment company",
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended; (b) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (c) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
3.12 Purpose of Loans; Letters of Credit. The proceeds of the
-----------------------------------
Loans and the Letters of Credit shall only be used by the Borrower for the
purposes permitted under Section 2.19.
3.13 Environmental Matters. To the best knowledge of the
---------------------
Borrower, each of the representations and warranties set forth in paragraphs (a)
through (e) of this subsection is true and correct with respect to each parcel
of real property owned or operated by the Borrower or any of its Subsidiaries
(the "Properties"), except to the extent that the facts and circumstances giving
----------
rise to any such failure to be so true and correct could not reasonably be
expected to have a Material Adverse Effect:
(a) The Properties do not contain, and have not previously
contained, in, on, or under, including, without limitation, the soil and
groundwater thereunder, any Materials of Environmental Concern in concentrations
which violate Environmental Laws.
(b) The Properties and all operations and facilities at the
Properties are in compliance with Environmental Laws, and there is no Materials
of Environmental Concern contamination or violation of any Environmental Law
which would materially interfere with the continued operation of any of the
Properties or materially impair the fair saleable value of any thereof.
(c) Neither the Borrower nor any of its Subsidiaries has
received or is aware of any claim, notice of violation, alleged violation, non-
compliance, investigation or advisory action or potential liability regarding
environmental matters or compliance of Environmental Law with regard to the
Properties which has not been satisfactorily resolved by the Borrower or such
Subsidiary, nor is the Borrower or any of its Subsidiaries aware or have reason
to believe that any such action is being contemplated, considered or threatened.
(d) Materials of Environmental Concern have not been
generated, treated, stored, disposed of, at, on or under any of the Properties
in violation of Environmental Laws, nor have any Materials of Environmental
Concern been transferred from the Properties to any other location except in
either case in the ordinary course of business of the Borrower and its
Subsidiaries and in material compliance with all Environmental Laws.
(e) There are no governmental, administrative actions or
judicial proceedings pending or, to the best knowledge of the Borrower,
contemplated under any Environmental Laws to which the Borrower or any of its
Subsidiaries is or will be named as a
-28-
party with respect to the Properties, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to any of the Properties.
3.14 No Burdensome Restrictions. No Requirement of Law or
--------------------------
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
3.15 Ownership of Borrower and Subsidiaries. The beneficial
--------------------------------------
ownership of the Capital Stock of the Borrower by its executive officers,
directors and 5% shareholders has not changed materially from that set forth in
the Borrower's most recent registration statement as filed with the Securities
and Exchange Commission. The Borrower owns all of the issued and outstanding
capital stock of each of the Guarantor and, as of the date of this Agreement,
the Borrower owns all of the issued and outstanding Capital Stock of each of its
Subsidiaries.
3.16 Patents, Trademarks, etc. Each of the Borrower and its
-------------------------
Subsidiaries has obtained and holds in full force and effect or is licensed to
use all patents, trademarks, servicemarks, trade names, copyrights and other
such rights, free from burdensome restrictions, which are necessary for the
operation of its business as presently conducted. To the Borrower's best
knowledge, no material product, process, method, substance, part or other
material presently sold by or employed by the Borrower or any Subsidiary in
connection with such business infringes any patent, trademark, service xxxx,
trade name, copyright, license or other right owned by any other Person. There
is not pending or, to the Borrower's knowledge, overtly threatened any claim or
litigation against or affecting the Borrower or any Subsidiary contesting its
right to sell or use any such product, process, method, substance, part or other
material which could reasonably be expected to have a Material Adverse Effect.
3.17 Ownership of Property. Each of the Borrower and its
---------------------
Subsidiaries has good and marketable fee simple title to or valid leasehold
interests in all real property owned or leased by it, and good title to all of
its personal property subject to no Lien of any kind except Permitted Liens.
3.18 Licenses, etc. Each of the Borrower and its Subsidiaries
--------------
has obtained and holds in full force and effect, all franchises, licenses,
permits, certificates, authorizations, qualifications, easements, rights of way
and other rights, consents and approvals which are necessary for the operation
of its business as presently conducted.
3.19 Labor Matters. As of the Effective Date, there are no
-------------
collective bargaining agreements or Multiemployer Plans covering the employees
of the Borrower or any of its Subsidiaries, and none of the Borrower nor any of
its Subsidiaries has suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last five years and to the best knowledge
of the Borrower, there are none now threatened.
3.20 Material Contracts. All material contracts relating to the
------------------
business operations of the Borrower are valid, binding and enforceable upon the
Borrower and, to the Borrower's knowledge, each of the parties thereto in
accordance with their respective terms, and
-29-
there is no material default thereunder, to the Borrower's knowledge, with
respect to parties other than the Borrower.
3.21 Insurance. The Borrower and its Subsidiaries currently
---------
maintain insurance which meets or exceeds the requirements of Section 5.5 No
notice has been given or claim made and no grounds exist to cancel or avoid any
insurance policies or other bonds to which the Borrower or any of its
Subsidiaries is a party or to reduce the coverage provided thereby or any
replacements thereof. Such policies and bonds or any replacements thereof
provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of the Borrower and its
Subsidiaries in accordance with prudent business practice in the industry of the
Borrower and its Subsidiaries.
3.22 Senior Debt Status. The obligations of the Borrower under
------------------
this Agreement and the Note do rank and will rank at least pari passu in
---- -----
priority of payment with all other indebtedness of the Borrower except
indebtedness of the Borrower to the extent secured by Permitted Liens. There is
no Lien upon or with respect to any of the properties or income of the Borrower
which secures indebtedness or other obligations of any Person except for
Permitted Liens.
3.23 No Material Misstatements. To the best of the Borrower's
-------------------------
knowledge, no information furnished by or on behalf of the Borrower or any
Subsidiary to the Bank in this Agreement or any Schedule or Exhibit attached
hereto, or in the Borrower's financial projections delivered pursuant to Section
4.1(k) hereof, contains any misstatement of fact, or omitted or omits to state
any fact necessary to make the statements therein not misleading, where such
misstatement or omission would be material to the interests of the Bank with
respect to the Borrower's performance of its obligations hereunder. Any
projections, forecasts or budgets provided by the Borrower to the Bank (other
than the financial projections delivered pursuant to Section 5.2(b) hereof) are
expressly excluded from this Section and the Borrower makes no representation or
warranty as to their accuracy or reliability. With regard to the financial
projections delivered pursuant to Section 5.2(b), the Borrower shall be entitled
to a cross-reference therein to the forward-looking statements disclaimers
contained in its filings with the Securities and Exchange Commission and the
benefits of the safe harbor afforded under the Private Securities Litigation
Reform Act of 1995.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. The effectiveness of this
---------------------------
Agreement and the agreement of the Bank to make the initial Extension of Credit
is subject to the satisfaction of the following conditions precedent immediately
prior to or concurrently with such Extension of Credit:
(a) Loan Documents. The Bank shall have received (i) this
--------------
Agreement, executed and delivered by a duly authorized officer of the Borrower,
with a counterpart for the Bank, (ii) for the account of the Bank, a Note
conforming to the requirements hereof and executed by a duly authorized officer
of the Borrower, and (iii) the Guaranty Agreement, executed and delivered by a
duly authorized officer of the Guarantor.
-30-
(b) Corporate Proceedings of the Borrower and the Guarantor. The Bank
-------------------------------------------------------
shall have received a copy of the resolutions or other corporate proceedings or
action, in form and substance satisfactory to the Bank, (i) taken on behalf of
the Borrower authorizing (A) the execution, delivery and performance of this
Agreement, the Note and the other Loan Documents to which it is a party, and (B)
the borrowings contemplated hereunder, and (ii) taken on behalf of the Guarantor
authorizing the execution, delivery and performance of the Guaranty Agreement,
in each case certified by the secretary or assistant secretary of the Borrower
or the Guarantor as of the Effective Date, which certificates shall state that
such resolutions, or other corporate proceedings or action thereby certified
have not been amended, modified, revoked or rescinded and shall be in form and
substance satisfactory to the Bank.
(c) Representations and Warranties True; No Default. The
-----------------------------------------------
representations and warranties of the Borrower contained in Section 3 hereof
shall be true and accurate on and as of the Effective Date with the same effect
as though such representations and warranties had been made on and as of such
date (except representations and warranties which relate solely to an earlier
date or time, which representations and warranties shall be true and correct on
and as of the specific dates or times referred to therein), and the Borrower
shall have performed and complied with all covenants and conditions hereof; and
no Event of Default or Default under this Agreement shall have occurred and be
continuing or shall exist; and the Borrower shall have delivered to the Bank a
certificate to that effect signed by a Responsible Officer.
(d) Corporate Documents. The Bank shall have received true and
-------------------
complete copies of the articles or certificate of incorporation and bylaws of
the Borrower, certified as of the Effective Date as complete and correct copies
thereof by the secretary or assistant secretary of the Borrower, or a
certificate from the secretary or assistant secretary of the Borrower to the
effect that there have been no changes in the articles or certificate of
incorporation and bylaws of the Borrower from the copies most recently delivered
to the Bank, and a good standing certificate recently issued by the Secretary of
State (or the equivalent thereof) of the jurisdiction of incorporation of the
Borrower and the Guarantor and of each state in which the Borrower is required
to be qualified to transact business.
(e) Incumbency. The Bank shall have received (i) a written
----------
certificate dated the Effective Date by the secretary or assistant secretary of
the Borrower as to the names and signatures of the officers of the Borrower
authorized to sign this Agreement and the other Loan Documents and (ii) a
written certificate dated the Effective Date by the secretary or assistant
secretary of the Guarantor as to the names and signatures of the officers of the
Guarantor authorized to sign the Guaranty Agreement. The Bank may conclusively
rely on such certificates until it shall receive a further certificate by the
secretary or assistant secretary of the Borrower or the Guarantor amending such
prior certificate.
(f) Fees and Expenses. The Borrower shall pay or cause to be paid to
-----------------
the Bank the fees to be received on the Effective Date referred to herein and
the reasonable costs and expenses for which the Bank is entitled to be
reimbursed.
-31-
(g) Legal Opinion. The Bank shall have received the executed
---------
legal opinion of Xxxxx X. Xxxxxxxxxx, Esquire, General Counsel to the Borrower
and the Guarantor, substantially in the form of Exhibit D hereto. Such opinion
---------
shall be addressed to the Bank and cover such other matters incident to the
transactions contemplated by this Agreement as the Bank may reasonably require.
(h) No Material Adverse Change. Since December 31, 2000 there
--------------------------
shall have been no material adverse change in the financial condition or
prospects of the Borrower and its Subsidiaries taken as a whole (including,
without limitation, with respect to assets, net worth and credit position), and
the Borrower shall have delivered to the Bank a certificate to that effect
signed by a Responsible Officer.
(i) UCC Filing and Other Searches. The Bank shall have received
-----------------------------
the results of such additional Uniform Commercial Code searches made with
respect to the Borrower and its Subsidiaries, if any, as the Bank shall require,
together with copies of financing statements disclosed by such searches, and the
foregoing searches shall disclose no Liens, except for Permitted Liens or, if
unpermitted Liens are disclosed, the Bank shall have received satisfactory
evidence of the release of such Liens.
(j) Spin-Off. The spin-off of Dover Downs, Inc. as a wholly-
--------
owned subsidiary of the Borrower, as described in the Registration Statement on
Form 10 filed by the Borrower and bearing SEC File No. 001-16791, shall have
been consummated, and the Borrower shall have delivered to the Bank a
certificate to that effect signed by a Responsible Officer.
4.2 Conditions to Each Extension of Credit. The agreement of the
--------------------------------------
Bank to make any Extension of Credit requested to be made by it on any date
(including, without limitation, the first such Extension of Credit hereunder) is
subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations
------------------------------
and warranties (i) made by the Borrower herein or (ii) which are contained in
any certificate, document or financial or other statement furnished at any time
under or in connection herewith or therewith shall be true and correct in all
material respects on and as of such date as if made on and as of such date
(except representations and warranties which expressly relate solely to an
earlier date or time, which representations and warranties shall be true and
correct on and as of the specific dates or times referred to therein and subject
as to any representations or warranties referred to in subsection (ii) above to
the exclusions and qualifications referred to in the last two sentences of
Section 3.23).
(b) No Default. No Default or Event of Default shall have
----------
occurred and be continuing on such date or after giving effect to the Extensions
of Credit requested to be made on such date.
(c) Additional Matters. All corporate and other proceedings,
------------------
and all documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory in form and substance to
-32-
the Bank, and the Bank shall have received such other documents in respect of
any aspect or consequence of the transactions contemplated hereby or thereby as
it shall reasonably request.
Each borrowing by the Borrower hereunder or request for the issuance of a Letter
of Credit shall constitute a representation and warranty by the Borrower as of
the date of such Loan or issuance of such Letter of Credit that the conditions
contained in this Section 4.2 have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitment remains in
effect, the Note remains outstanding and unpaid, any Letter of Credit remains
outstanding or any other amount is owing to the Bank hereunder, the Borrower
shall and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:
5.1 Financial Statements. Furnish to the Bank:
--------------------
(a) as soon as available, but in any event not later than 120
days after the close of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its consolidated Subsidiaries,
including therein the consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such fiscal year, and related
consolidated statement of income, retained earnings and cash flow of the
Borrower and its consolidated Subsidiaries for such fiscal year, setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, all in reasonable detail, prepared in accordance with GAAP applied
on a basis consistently maintained throughout the period involved and with the
prior year with such changes therein as shall be approved by the Borrower's
independent certified public accountants, such consolidated financial statements
to be certified by independent certified public accountants selected by the
Borrower from among the five largest accounting firms in the United States on
the date of this Agreement or their successors, or otherwise acceptable to the
Bank, without a "going concern" or like qualification or any exception or
qualification arising out of the restricted or limited nature of the examination
made by such accountants; and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, a copy of its Report on Form 10-Q for such quarter filed
with the Securities and Exchange Commission.
5.2 Certificates; Other Information. Furnish to the Bank:
-------------------------------
(a) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and (b), a certificate of a Responsible Officer,
in the form of Exhibit E hereto, showing in detail the calculations
---------
demonstrating compliance with Section 6.1 and stating that, to the best of his
or her knowledge, the Borrower during such period has kept, observed, performed
and fulfilled each and every covenant and condition contained in this Agreement
and in the Note and the other Loan Documents applicable to it and that he or she
obtained no knowledge of any Default or Event of Default except as specifically
indicated;
-33-
(b) as soon as available, but in any event not later than 90
days after the end of each fiscal year, (i) detailed capital expenditure budgets
of the Borrower and each of its Subsidiaries by quarter and (ii) a forecasted
consolidated balance sheet, statement of income and statement of cash flows for
the Borrower and its Subsidiaries by quarter in each case for the following two
fiscal years;
(c) promptly upon their becoming available, but in any event not
later than 120 days after the end of each fiscal year, any reports including
management letters submitted to the Borrower or any Subsidiary by independent
accountants in connection with any annual, interim or special audit;
(d) financial statements, reports, notices or proxy statements
distributed by the Borrower to its stockholders on a date no later than three
Business Days after the date supplied to such stockholders; and
(e) promptly, such additional financial and other information as
the Bank may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except (a) when the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been provided on the
books of the Borrower or a Subsidiary, as the case may be, and (b) where the
failure so to pay such indebtedness could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.4 Conduct of Business and Maintenance of Existence. Continue to
------------------------------------------------
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges, trademarks, trade names,
licenses, franchises and other authorizations necessary or desirable in the
normal conduct of its business; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not reasonably be expected to have, in the aggregate, a Material Adverse Effect.
5.5 Maintenance of Property; Insurance.
----------------------------------
(a) Maintain in good repair, working order and condition
(ordinary wear and tear excepted) in accordance with the general practice of
other businesses of similar character and size, all of those properties material
or necessary to its business, and from time to time make or cause to be made all
appropriate repairs, renewals or replacements thereof.
(b) Insure its properties and assets against loss or damage by
fire and such other insurable hazards as such assets are commonly insured
(including fire, extended coverage, property damage, worker's compensation,
public liability and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties and
assets are insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers, including
self-insurance to
-34-
the extent customary. The Borrower shall deliver at the request of the Bank from
time to time a summary schedule indicating all insurance then in force with
respect to the Borrower.
5.6 Inspection of Property; Books and Records; Discussions.
------------------------------------------------------
(a) Permit any of the officers or authorized employees or
representatives of the Bank to visit and inspect during normal business hours
any of its properties and to examine and make excerpts from its books and
records and discuss its business affairs, finances and accounts (including those
of its Affiliates) with its officers, all in such detail and at such times and
as often as the Bank may reasonably request, provided, that the Bank shall
--------
provide the Borrower with reasonable notice prior to any visit or inspection.
(b) Maintain and keep proper books of record and account which
enable the Borrower and its Subsidiaries to issue financial statements in
accordance with GAAP and as otherwise required by applicable Requirements of
Law, and in which full, true and correct entries shall be made in all material
respects of all its dealings and business and financial affairs.
5.7 Notices. Promptly give notice to the Bank of:
-------
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of the Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of the Subsidiaries and any Governmental Authority, which in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) commencement of any litigation or proceeding affecting the
Borrower or any of the Subsidiaries in which the amount involved is $1,000,000
or more and not covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, any Lien in favor
of PBGC or any Plan, or any withdrawal from, or the termination, Reorganization
or Insolvency of any Multiemployer Plan or (ii) the institution of proceedings
or the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the terminating, Reorganization or Insolvency of, any Single Employer Plan in
a distress termination under Section 4041(c) of ERISA or Multiemployer Plan;
(e) an event which has had or could reasonably be expected to
have a Material Adverse Effect; and
(f) any Permitted Acquisition, prior to the consummation
thereof.
-35-
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
5.8 Environmental Laws.
------------------
(a) Comply with, and require compliance by all tenants and to
the extent possible, all subtenants, if any, with, all Environmental Laws and
obtain and comply with and maintain, and require that all tenants and to the
extent possible, all subtenants obtain and comply with and maintain, any and all
licenses, approvals, registrations or permits required by Environmental Laws
except to the extent that failure to so comply or obtain or maintain such
documents could not reasonably be expected to have a Material Adverse Effect.
(b) Comply with all lawful and binding orders and directives of
all Governmental Authorities respecting Environmental Laws except to the extent
that failure to so comply could not reasonably be expected to have a Material
Adverse Effect.
(c) Defend, indemnify and hold harmless the Bank, and its
respective employees, agents, officers, directors, successors and assigns from
and against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to any violation
of or noncompliance with or liability under any Environmental Laws, or any
orders, requirements or demands of Governmental Authorities related thereto
which in each case relate to or arise in connection with the Borrower or any
Subsidiary, any property or assets thereof or any activities relating to any
other property or business of a Borrower or any Subsidiary thereof or the
enforcement of any rights provided herein or in the other Loan Documents,
including, without limitation, attorneys' and consultants' fees, response costs,
investigation and laboratory fees, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of any of the foregoing enumerated parties. This indemnity
shall continue in full force and effect regardless of the termination of this
Agreement and the payment of the Note.
5.9 Management Changes. Notify the Bank in writing within thirty
------------------
(30) days after any change of its executive officers.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitment remains in
effect, the Note remains outstanding and unpaid, any Letter of Credit remains
outstanding or any other amount is owing to the Bank hereunder, the Borrower
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, without the prior written consent of the Bank:
6.1 Financial Condition Covenants.
-----------------------------
(a) Leverage Ratio. Permit as of the end of any fiscal quarter
--------------
the Leverage Ratio to exceed 3.5 to 1.
-36-
(b) Interest Coverage Ratio. Permit as of the end of any fiscal
-----------------------
quarter the Interest Coverage Ratio to be less than 5 to 1.
(c) Maintenance of Tangible Net Worth. Permit Consolidated
---------------------------------
Tangible Net Worth on any day to be less than (i) $70,000,000 plus (ii) an
amount equal to 25% of the consolidated net income (if positive) of the Borrower
and its Subsidiaries for each fiscal quarter ending after March 31, 2002,
calculated on a cumulative basis.
6.2 Limitation on Debt. At any time incur, create, assume, or suffer
------------------
to exist any Debt except:
(a) amounts outstanding hereunder or under the other Loan
Documents; and
(b) Debt under Capital Leases or secured by Purchase Money
Security Interests (including those in existence on the date hereof), and other
guarantees, loans or advances made in the ordinary course of business, in an
aggregate principal amount not exceeding $5,000,000 in any fiscal year.
6.3 Limitation on Liens. Create, incur, assume or suffer to exist
-------------------
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for Permitted Liens.
6.4 Limitations on Fundamental Changes. Enter into any merger,
----------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets except:
(a) any Subsidiary of the Borrower, may be merged or
consolidated with or into the Borrower (provided, that the Borrower shall be the
--------
continuing or surviving corporation) or with or into any one or more wholly-
owned Subsidiaries of the Borrower (provided, that the wholly-owned Subsidiary
--------
or Subsidiaries shall be the continuing or surviving corporation);
(b) any wholly-owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any wholly-owned Subsidiary of the Borrower; and
(c) the transactions described in the Registration Statement on
Form 10, filed by the Borrower and bearing SEC File No. 001-16791;
provided, that immediately after each such transaction and after giving effect
--------
thereto, the Borrower is in compliance with this Agreement and no Default or
Event of Default shall be in existence or result from such transaction.
-37-
6.5 Limitation on Sale of Assets. Convey, sell, lease, assign,
----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, accounts receivables and leasehold interests),
whether now owned or hereafter acquired, except:
(a) any sale, transfer or lease of assets in the ordinary course
of business which are no longer necessary or required in the conduct of the
Borrower's or any Subsidiary's business;
(b) transactions involving the sale, license or lease of assets
in the ordinary course of business;
(c) the sale or discount without recourse of accounts receivable
only in connection with the compromise thereof or the assignment of past-due
accounts receivable for collection;
(d) as permitted by Section 6.4;
(e) transfers between the Borrower and its Subsidiaries or
between one Subsidiary and another Subsidiary; and
(f) in addition to the above Sections 6.5(a) through 6.5(e)
inclusive, sales of assets of the Borrower and its Subsidiaries for fair market
value, provided, that the aggregate amount of such sales, determined in
--------
accordance with GAAP, in any fiscal year does not exceed ten percent (10%) of
the Borrower's consolidated assets as at the end of the immediately preceding
fiscal quarter.
6.6 Limitations on Acquisitions, Investments, Loans and Advances.
------------------------------------------------------------
Purchase, hold or acquire beneficially any stock, other securities or evidences
of indebtedness of, make or permit to exist any loans or advances to, or make or
permit to exist any investment or acquire any interest whatsoever in, any other
Person, except:
(a) extensions of trade credit to customers in the ordinary
course of business;
(b) Permitted Investments;
(c) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the ordinary
course of business;
(d) Capital Stock of any Subsidiary;
(e) loans and advances by the Borrower to its wholly-owned
Subsidiaries; and
(f) Permitted Acquisitions.
-38-
6.7 Limitation on Distributions. Declare or pay any Distribution
---------------------------
(whether in cash or property or obligations of the Borrower or any Subsidiary
thereof) in respect of the Borrower or any Subsidiary thereof except:
(a) Any wholly-owned Subsidiary may declare and pay dividends or
other distributions to the Borrower or any other wholly-owned Subsidiary; and
(b) So long as no Default or Event of Default exists or would be
caused thereby, the Borrower (i) may declare and pay dividends on its Capital
Stock in the ordinary course of business consistent with past practice and (ii)
may declare and pay dividends on its Capital Stock in excess of those paid
historically; provided, that the amount of any such increase in dividends paid
--------
during any fiscal year does not exceed, in the aggregate, 50% of Consolidated
Net Income for the previous fiscal year.
6.8 Transactions with Affiliates. Except as expressly permitted in
----------------------------
this Agreement, directly or indirectly enter into any transaction or arrangement
whatsoever or make any payment to or otherwise deal with any Affiliate, except,
as to all of the foregoing in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's or its Subsidiary's business and upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
than would be obtained in a comparable arm's length transaction with a Person
not an Affiliate of the Borrower.
6.9 Fiscal Year. Permit its fiscal year to end on a day other than
-----------
December 31 unless prior written notice thereof has been given to the Bank.
6.10 Change in Business. Engage in any business either directly
------------------
or through any Subsidiary except for businesses in which the Borrower or any
Subsidiary is engaged in on the date of this Agreement and any businesses
related to such existing businesses.
6.11 Sale and Leaseback. Enter into any arrangement with any
------------------
Person providing for the leasing by the Borrower or any Subsidiary thereof of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations thereof.
6.12 Limitation on Negative Pledge Clauses. Enter into any
-------------------------------------
agreement with any Person other than the Bank which prohibits or limits the
ability of the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its properties, assets or revenues, whether
now owned or hereafter acquired; provided, that the Borrower or any Subsidiary
--------
thereof may enter into such an agreement in connection with a Purchase Money
Security Interest or Capital Lease permitted hereunder, provided that such
prohibition or limitation is by its terms effective only against the assets
subject to such Lien.
6.13 Interest Hedge Agreements. Enter into any interest hedge
-------------------------
agreement other than an Interest Hedge Agreement, which in any event will be
unsecured, and with respect to which the prior approval of the Bank, which shall
not be unreasonably withheld, shall have been obtained.
-39-
SECTION 7. EVENTS OF DEFAULT
7.1 Events of Default. If any of the following events shall occur
-----------------
and be continuing:
(a) The Borrower shall fail to pay any principal of the Note or
any Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on the Note, or any other
amount payable hereunder, within five (5) days after any such interest or other
amount becomes due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty (i) made or deemed made by
the Borrower herein or (ii) which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any other Loan Document shall prove to have been incorrect in
any material respect on or as of the date made or deemed made (subject as to any
representation or warranty referred to in subsection (ii) above to the
exclusions and qualifications contained in the last two sentences of Section
3.23); or
(c) The Borrower shall default in the observance or performance
of any agreement contained in Section 6; or
(d) The Borrower shall default in the observance or performance
of any other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this Section 7.1) or any other Loan Document, and
such default shall continue unremedied for a period of 30 days; or
(e) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance, subject to any customary deductible,
and under which the applicable insurance carrier has acknowledged such full
coverage in writing) of $500,000 or more and all such judgments or decrees shall
not have been vacated, discharged, settled, satisfied or paid, or stayed or
bonded pending appeal, within 60 days from the entry thereof; or
(f) A Borrower or any Subsidiary thereof shall (i) default in
the payment of any principal of or interest on or any other amount payable on
any indebtedness for borrowed money (other than the Note), beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or agreement
under which such indebtedness was created and the aggregate amount of such
indebtedness in respect of which such default or defaults shall have occurred is
at least $100,000 (the "Cross-Default Indebtedness"); or (ii) default in the
--------------------------
observance or performance of any other agreement or condition relating to any
such Cross-Default Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, with the giving of notice if required, such Cross-Default Indebtedness to
become due and payable prior to its stated maturity; or
(g) (i) The Borrower or any Subsidiary shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or
-40-
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any Subsidiary shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any Subsidiary any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Borrower or any Subsidiary any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Borrower or any Subsidiary
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the Borrower or any Subsidiary shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Single Employer Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity in favor of the PBGC or a Plan, (iii)
a Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or institution of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Bank, likely to result in the termination of such Plan for purposes of Title IV
of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV
of ERISA, (v) the Borrower or any Commonly Controlled Entity shall incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist in regard to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect; or
(i) Any other event shall have occurred which could reasonably be
expected to have a Material Adverse Effect.
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to the Borrower,
automatically the Commitment shall immediately terminate and the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this
Agreement, the Note and the other Loan Documents (including, without limitation,
all amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall automatically and immediately become due and payable, and (B)
if such event is any other Event
-41-
of Default, either or both of the following actions may be taken: (i) the Bank
may by notice to the Borrower declare the Commitment to be terminated forthwith,
whereupon the Commitment shall immediately terminate; and (ii) the Bank may by
notice of default to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement, the Note and
the other Loan Documents (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Bank an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. The Borrower
hereby grants to the Bank a security interest in such cash collateral to secure
all obligations of the Borrower under this Agreement and the other Loan
Documents. Amounts held in such cash collateral account shall be applied by the
Bank to the payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit shall have expired or been
fully drawn upon, if any, shall be applied to repay other obligations of the
Borrower hereunder and under the Note and the other Loan Documents. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the Note and the other Loan Documents shall
have been paid in full, the balance, if any, in such cash collateral account
shall be returned to the Borrower. The Borrower shall execute and deliver to
the Bank such further documents and instruments as the Bank may request to
evidence the creation and perfection of the within security interest in such
cash collateral account.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this Agreement, the Note or any
----------------------
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. With the written consent of the Bank and the Borrower may, from
time to time, enter into written amendments, supplements or modifications hereto
and to the Note and the other Loan Documents for the purpose of adding any
provisions to this Agreement or the Note or the other Loan Documents or changing
in any manner the rights of the Bank or of the Borrower hereunder or thereunder
or waiving, on such terms and conditions as the Bank may specify in such
instrument, any of the requirements of this Agreement or the Note or the other
Loan Documents or any Default or Event of Default and its consequences. Any
such waiver and any such amendment, supplement or modification shall be binding
upon the Borrower, the Bank and all future holders of the Note. In the case of
any waiver, the Borrower and the Bank shall be restored to their former position
and rights hereunder and under the outstanding Note, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
-42-
8.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or the next Business Day if sent by
reputable overnight carrier for next day delivery, postage prepaid, or, in the
case of telecopy notice, when sent during normal business hours with electronic
confirmation or otherwise when received, addressed as follows in the case of the
Borrower and the Bank, or to such other address as may be hereafter notified by
the respective parties hereto and any future holders of the Note:
The Borrower: Dover Downs Gaming & Entertainment, Inc.
0000 X. xxXxxx Xxxxxxx
Xxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to: Dover Downs Entertainment, Inc.
15/th/ Floor
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxx, Esquire
Telecopy: (000) 000-0000
The Bank: Wilmington Trust Company
000 Xxxxx Xxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx,
Commercial Banking Department
Telecopy: (000) 000-0000
with a copy to: Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Commercial Banking Department
provided that any notice, request or demand to or upon the Bank pursuant to
--------
Sections 2.2, 2.4, 2.5, 2.6, 2.10, 2.11 or 2.18 shall not be effective until
received.
8.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
-43-
8.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement, the Note and the other Loan Documents.
8.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
-----------------------------
reimburse the Bank for all of its out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement, the Note, the other
Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Bank, (b) to pay or reimburse the Bank for all of their costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents, the Letters of Credit and
any such other documents, including, without limitation, reasonable fees and
disbursements of counsel to the Bank, and (c) to pay, indemnify, and hold the
Bank harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the Note, the other Loan Documents, and any such other documents, and
(d) to pay, indemnify, and hold the Bank harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, and the performance and
administration, of this Agreement, the Note, the other Loan Documents, the
Letters of Credit and any such other documents (all the foregoing, collectively,
the "indemnified liabilities"), provided, that the Borrower shall have no
--------
obligation hereunder to the Bank with respect to indemnified liabilities arising
from the gross negligence or willful misconduct of the Bank. The agreements in
this subsection shall survive repayment of the Note and all other amounts
payable hereunder.
8.6 Successors and Assigns.
----------------------
(a) Except as otherwise provided in Section 8.8(b), whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party, and all covenants,
promises and agreements by or on behalf of the Borrower or the Bank that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. The Borrower may not assign or transfer any
of its rights or obligations under this Agreement or the other Loan Documents
without the prior written consent of the Bank.
(b) The Bank may without the consent of the Borrower sell
participations to one or more banks or other entities (each a "Participant") in
-----------
all or a portion of its rights and obligations under this Agreement (including
all or a portion of the Commitment, the Loans and the Note); provided, however,
-------- -------
that (i) the Bank's obligations under this Agreement shall remain unchanged,
(ii) the Bank shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the Bank shall remain the holder of
the Note for all
-44-
purposes under this Agreement and the other Loan Documents, (iv) the Borrower
shall continue to deal solely and directly with the Bank in connection with the
Bank's rights and obligations under this Agreement and the other Loan Documents,
(v) in any proceeding under the Bankruptcy Code the Bank shall be, to the extent
permitted by law, the sole representative with respect to the obligations held
in the name of the Bank, whether for its own account or for the account of any
Participant and (vi) the Bank shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of any
provision of this Agreement or the Note or any other Loan Document, other than
any such amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest that forgives principal,
interest or fees or reduces the interest rate or fees payable with respect to
any such Loan or Commitment, or postpones any date fixed for any regularly
scheduled payment of principal of, or interest or fees on, any such Loan, or
releases any guarantor of such Loan or releases all or substantially all of the
collateral, if any, securing any such Loan.
(c) The Borrower agrees that each Participant shall be entitled
to the benefits of Sections 2.12, 2.13, 2.14, 2.15, 2.18 and 8.5 with respect to
its participation in the Commitment and the Loans and Letters of Credit
outstanding from time to time; provided, that no Participant shall be entitled
--------
to receive any greater amount pursuant to such Sections than the Bank would have
been entitled to receive in respect of the amount of the participation
transferred by the Bank to such Participant had no such transfer occurred.
(d) If any Participant of the Bank is organized under the laws of
any jurisdiction other than the United States or any state thereof, the Bank,
concurrently with the sale of a participating interest to such Participant,
shall cause such Participant (i) to represent to the Bank (for the benefit of
the Bank and the Borrower) that under applicable law and treaties no taxes will
be required to be withheld by the Borrower or the Bank with respect to any
payments to be made to such Participant in respect of its participation in the
Loans and (ii) to agree (for the benefit of the Bank and the Borrower) that it
will deliver (i) two duly completed copies of United States Internal Revenue
Service Form W-8ECI or W-8BEN or successor applicable form, as the case may be,
and (ii) Internal Revenue Service Form W-8 or W-9 or successor applicable form,
and comply from time to time with all applicable U.S. laws and regulations with
respect to withholding tax exemptions.
(e) The Bank may at any time assign all or any portion of its
rights under this Agreement and the Note to a Federal Reserve Bank; provided
--------
that no such assignment shall release the Bank from any of its obligations
hereunder.
8.7 Disclosure of Information. Unless otherwise consented to by the
-------------------------
Borrower in writing, the Bank agrees (on behalf of itself and each of its
affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with its customary
procedures for handling confidential information of the same nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower pursuant to this Agreement; provided, that
--------
nothing herein shall limit the disclosure of any such information (a) to the
extent required by statute, rule, regulation or judicial process, (b) to counsel
for the Bank, (c) to bank examiners, auditors or accountants,
-45-
(d) to the Bank, (e) in connection with any litigation to which the Bank is a
party involving the Borrower or any Subsidiary or its or their properties or in
any way relating to this Agreement or any other Loan Document or any Loans or
Letters of Credit or other obligations of the Borrower to the Bank and (f) to
any Participant (or prospective Participant) so long as such Participant (or
prospective Participant) agrees to comply with the requirements of this Section.
In the event of any disclosure pursuant to clauses (a) or (e) above, the Bank
shall use its reasonable best efforts to notify the Borrower prior to making
such disclosure, and shall cooperate with the Borrower, at the Borrower's
expense, in obtaining a protective order if the Borrower so chooses.
8.8 Adjustments; Set-off. In addition to any rights and remedies of
--------------------
the Bank provided by law, upon the occurrence of an Event of Default, the Bank
shall have the right, without prior notice to the Borrower, any such notice
being expressly waived by the Borrower to the extent permitted by applicable
law, upon any amount becoming due and payable by the Borrower hereunder or under
the Note (whether at the stated maturity, by acceleration or otherwise) to set-
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Bank to or for the credit or the account of the Borrower.
The Bank agrees promptly to notify the Borrower after any such set-off and
application made by the Bank, provided, that the failure to give such notice
--------
shall not affect the validity of such set-off and application.
8.9 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Bank.
8.10 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.11 Integration. This Agreement represents the agreement of the
-----------
Borrower and the Bank with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by the Bank relative to
subject matter hereof not expressly set forth or referred to herein or in the
Note or the other Loan Documents.
8.12 Governing Law. This Agreement, the Note and the other Loan
-------------
Documents and the rights and obligations of the parties under this Agreement,
the Note and the other Loan Documents shall be governed by, and construed and
interpreted in accordance with, the law of the State of Delaware.
8.13 Submission To Jurisdiction; Waivers. The Borrower hereby
-----------------------------------
irrevocably and unconditionally:
-46-
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, the Note or the other Loan Documents, or
for recognition and enforcement of any judgment in respect thereof, to the non-
exclusive general jurisdiction of the Courts of the State of Delaware, the
courts of the United States of America for the District of Delaware, and
appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at the address set forth in Section 8.2 or at such other address of
which the Bank shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary or punitive or consequential
damages.
8.14 Acknowledgements. The Borrower hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement, the Note and the other Loan Documents;
(b) the Bank has no fiduciary relationship to the Borrower, and
the relationship between the Bank and the Borrower is solely that of debtor and
creditor; and
(c) no joint venture exists between the Bank and the Borrower.
8.15 WAIVERS OF JURY TRIAL. EACH OF THE BORROWER AND THE BANK HEREBY
---------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS AND
FOR ANY COUNTERCLAIM THEREIN.
-47-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
DOVER DOWNS GAMING &
ENTERTAINMENT, INC.
By: _____________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: _____________________________
Name:
Title:
-48-
SCHEDULE I
BANK AND COMMITMENT INFORMATION
Bank and Address Commitment
---------------- ----------
Wilmington Trust Company $55,000,000 through
000 Xxxxx Xxxxx Xxxxxx December 31, 2002 and
Xxxxx, XX 00000 $50,000,000 thereafter
Attn: Commercial Banking
Department
SCHEDULE II
LETTER OF CREDIT FEES
(see attached)
EXHIBIT A
FORM OF REVOLVING CREDIT BORROWING REQUEST
Wilmington Trust Company
000 Xxxxx Xxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Commercial Banking Department
Ladies and Gentlemen:
The undersigned, Dover Downs Gaming & Entertainment, Inc. refers
to the Credit Agreement dated as of January __, 2002 (the "Credit Agreement")
(capitalized terms being used herein as therein defined), between the
undersigned and Wilmington Trust Company, and hereby gives you notice,
irrevocably, pursuant to Section 2.2 of the Credit Agreement that the
undersigned hereby requests [a Revolving Credit Loan] [the renewal of a
Eurodollar Rate Option] [the conversion of an interest rate option] as follows:
1. The proposed borrowing date is _______________, 200_.
2. The amount of the Revolving Credit Loan comprising the
Borrowing is $______________.
3. The [Eurodollar Rate Option] [Base Rate Option] shall apply
to the Revolving Credit Loan comprising the Borrowing.
4. The Interest Period for the Revolving Credit Loan comprising
the Borrowing is _________ [months].
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the borrowing date:
(a) each of the representations and warranties made by the
undersigned in the Credit Agreement or which are contained herein are true and
correct in all material respects on and as of the date hereof as if made on and
as of the date hereof (except representations and warranties which expressly
relate solely to an earlier date or time); and
(b) no Default or Event of Default has occurred and is
continuing on the date hereof or will occur after giving effect to the
Extensions of Credit requested hereby.
Very truly yours,
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
By:____________________________________
Name: _________________________________
Title: ________________________________
EXHIBIT B
FORM OF NOTE
$_______________ Dated as of ________, 2002
Dover, DE
FOR VALUE RECEIVED, DOVER DOWNS GAMING & ENTERTAINMENT, INC., a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
WILMINGTON TRUST COMPANY (the "Bank"), in accordance with the terms of the
Credit Agreement, as hereinafter defined, the lesser of the principal sum of
$55,000,000.00 or the aggregate unpaid principal amount of all Revolving Credit
Loans as defined in the Credit Agreement made by the Bank to the Borrower
pursuant to the Credit Agreement, together with all unpaid interest accrued
thereon and all other costs, fees and expenses as provided in the Credit
Agreement.
The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at such
interest rates, and payable at such times, as are specified in the Credit
Agreement.
Both principal and interest are payable in lawful money of the United
States of America at the office of the Bank (as hereinafter defined) at 000
Xxxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000, in immediately available funds.
This Note is the Note referred to in, and is entitled to the benefits
of, the Credit Agreement dated as of January __, 2002 (said Agreement, as it may
hereafter be amended or otherwise modified from time to time, being the "Credit
Agreement") between the Borrower and the Bank. The Credit Agreement, among
other things, (i) provides for the making of Revolving Credit Loans by the Bank
to the Borrower in an aggregate amount not to exceed at any time outstanding the
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such Revolving Credit Loan being evidenced by this Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
The Borrower hereby waives presentment, demand, protest and notice of
any kind, other than as set forth in the Credit Agreement. No failure to
exercise, and no delay in exercising, any rights hereunder on the part of the
holder hereof shall operate as a waiver of such rights.
This Note shall be governed by, and construed in accordance with, the
laws of the State of Delaware.
DOVER DOWNS GAMING &
ENTERTAINMENT, INC.
By:__________________________________
Name:
Title:
EXHIBIT C
GUARANTY AND SURETYSHIP AGREEMENT
THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty") is made and
entered into as of this ____ day of January, 2002, by DOVER DOWNS, INC., a
Delaware corporation, (the "Guarantor"), with an address at 0000 X. xxXxxx
Xxxxxxx, Xxxxx, XX 00000, in consideration of the extension of credit by
Wilmington Trust Company (together with its successors and assigns, the "Bank"),
with an address of 000 Xxxxx Xxxxx Xxxxxx, Xxxxx, XX 00000, pursuant to the
Credit Agreement of even date herewith between the Bank and DOVER DOWNS GAMING &
ENTERTAINMENT, INC. (the "Borrower"), and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged.
BACKGROUND
In connection with the Credit Agreement, it is a condition precedent
to the effectiveness of the Credit Agreement and to the making of loans and the
issuance of letters of credit by the Bank from time to time that the Guarantor
executes and delivers this Guaranty.
In consideration of the foregoing and in order to induce the Bank to
make loans and issue letters of credit to the Borrower under the Credit
Agreement from time to time and for other consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the Guarantor hereby agrees as follows:
1. Guaranty of Obligations. The Guarantor hereby guarantees, and
-----------------------
becomes surety for, the prompt payment and performance of all loans, advances,
debts, liabilities, obligations, covenants and duties owing by the Borrower to
the Bank of any kind or nature, present or future (including, without
limitation, any interest accruing thereon after maturity, or after the filing of
a petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding relating to the Guarantor or the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether or not evidenced by any note, guaranty or other instrument, arising
under the Credit Agreement or any Loan Document (as defined in the Credit
Agreement), whether direct or indirect (including those acquired by assignment
or participation), absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising, and any amendments, extensions, renewals
or increases and all costs and expenses of the Bank incurred in the
modification, enforcement or collection of any of the foregoing, including
reasonable attorneys' fees and expenses (collectively the "Obligations"). If
the Borrower defaults under any such Obligations, the Guarantor will pay the
amount due to the Bank.
2. Nature of Guaranty; Waivers. This is a guaranty of payment and
---------------------------
not of collection and the Bank shall not be required, as a condition of the
Guarantor's liability, to make any demand upon or to pursue any of its rights
against the Borrower, or to pursue any rights which may be available to them
with respect to any other person who may be liable for the payment of the
Obligations.
This is an absolute, unconditional, irrevocable and continuing
guaranty and will remain in full force and effect until all of the Obligations
have been indefeasibly paid in full, and the Bank has terminated this Guaranty.
This Guaranty will not be affected by any surrender, exchange, acceptance,
compromise or release by the Bank of any other party, or any other guaranty or
any security held by it for any of the Obligations, by any failure of the Bank
to take any steps to perfect or maintain its lien or security interest in or to
preserve its rights to any security or other collateral for any of the
Obligations or any guaranty, or by any irregularity, unenforceability or
invalidity of any of the Obligations or any part thereof or any security or
other guaranty thereof. The Guarantor's obligations hereunder shall not be
affected, modified or impaired by any counterclaim, set-off, deduction or
defense based upon any claim the Guarantor may have against the Borrower or the
Bank, except payment or performance of the Obligations.
Notice of acceptance of this Guaranty, notice of extensions of
credit to the Borrower from time to time, notice of default, diligence,
presentment, notice of dishonor, protest, demand for payment, are hereby waived.
The Bank at any time and from time to time, without notice to or
the consent of the Guarantor, and without impairing or releasing, discharging or
modifying the Guarantor's liabilities hereunder, may (a) change the manner,
place, time or terms of payment or performance of or interest rates on, or other
terms relating to, any of the Obligations; (b) renew, substitute, modify, amend
or alter, or grant consents or waivers relating to any of the Obligations, any
other guaranties, or any security for any Obligations or guaranties; (c) apply
any and all payments by whomever paid or however realized including any proceeds
of any collateral, to any Obligations of the Borrower in such order, manner and
amount as the Bank may determine in its sole discretion; (d) deal with any other
persons with respect to any Obligations in such manner as the Bank deems
appropriate in its sole discretion; (e) substitute, exchange or release any
security or guaranty; or (f) take such actions and exercise such remedies
hereunder as provided herein.
3. Repayments or Recovery from Bank. If any demand is made at any
--------------------------------
time upon the Bank for the repayment or recovery of any amount received by it in
payment or on account of any of the Obligations and if the Bank repays all or
any part of such amount by reason of any judgment, decree or order of any court
or administrative body or by reason of any settlement or compromise of any such
demand, the Guarantor will be and remain liable hereunder for the amount so
repaid or recovered to the same extent as if such amount had never been received
originally by the Bank. The provisions of this section will be and remain
effective notwithstanding any contrary action which may have been taken by the
Guarantor in reliance upon such payment, and any such contrary action so taken
will be without prejudice to the Bank's rights hereunder and will be deemed to
have been conditioned upon such payment having become final and irrevocable.
4. Enforceability of Obligations. No modification, limitation or
-----------------------------
discharge of the Obligations arising out of or by virtue of any bankruptcy,
reorganization or similar proceeding for relief of debtors under federal or
state law will affect, modify, limit or discharge the Guarantor's liability in
any manner whatsoever and this Guaranty will remain and continue in full force
and effect and will be enforceable against the Guarantor to the same extent and
with
the same force and effect as if any such proceeding had not been instituted. The
Guarantor waives all rights and benefits which might accrue to it by reason of
any such proceeding and will be liable to the full extent hereunder,
irrespective of any modification, limitation or discharge of the liability of
the Borrower that may result from any such proceeding.
5. Events of Default. If any of the following occur (each an "Event
-----------------
of Default"): (i) any Event of Default (as defined in the Credit Agreement)
(ii) the failure by the Guarantor to perform any of its obligations hereunder;
(iii) the falsity, inaccuracy or material breach by the Guarantor of any written
warranty, representation or statement made or furnished to the Bank by or on
behalf of the Guarantor; or (iv) the termination or attempted termination of
this Guaranty, then the Guarantor will, on the demand of the Bank, immediately
deposit with the Bank in U.S. dollars all amounts due or to become due under the
Obligations and the Bank will use such funds to repay the Obligations. Upon the
occurrence of any Event of Default, the Bank in its discretion may exercise with
respect to any collateral any one or more of the rights and remedies provided a
secured party under the applicable version of the Uniform Commercial Code.
6. Right of Setoff. In addition to all liens upon and rights of
---------------
setoff against the money, securities or other property of the Guarantor given to
the Bank by law, the Bank shall have, with respect to the Guarantor's
obligations to the Bank under the Guaranty and to the extent permitted by law, a
contractual possessory security interest in a contractual right of setoff
against, and the Guarantor hereby assigns, conveys, delivers, pledges and
transfers to the Bank all of the Guarantor's right, title and interest in and
to, all deposits, moneys, securities and other property of the Guarantor now or
hereafter in the possession of or on deposit with, or in transit to the Bank,
whether held in a general or special account or deposit, whether held jointly
with someone else, or whether held for safekeeping or otherwise, excluding,
however, all XXX, Xxxxx, and trust accounts. Every such security interest and
right of setoff may be exercised without demand upon or notice to the Guarantor.
Every such right of setoff shall be deemed to have occurred immediately upon the
occurrence of an Event of Default hereunder without any action of any of the
Bank, although the Bank may enter such setoff on its respective books and
records at a later time.
7. Costs. The Guarantor agrees to pay or reimburse the Bank for all
-----
of its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Guaranty, including, without limitation,
reasonable fees and disbursements of counsel to the Bank.
8. Postponement of Subrogation. Until the Obligations are
---------------------------
indefeasibly paid in full, the Guarantor postpones and subordinates in favor of
the Bank any and all rights which the Guarantor may have to (a) assert any claim
against the Borrower based on subrogation rights with respect to payments made
hereunder, and (b) any realization on any property of the Borrower, including
participation in any marshalling of the Borrower's assets.
9. Notices. All notices, demands, requests, consents, approvals and
-------
other communications required or permitted hereunder must be in writing and will
be effective upon receipt if delivered personally, or if sent by facsimile
transmission with confirmation of delivery,
or by nationally recognized overnight courier service, to the addresses for the
Bank and the Guarantor set forth above or to such other address as one may give
to the other in writing for such purpose.
10. Preservation of Rights. No delay or omission on the Bank's part
----------------------
to exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will the Bank's
action or inaction impair any such right or power. The Bank's rights and
remedies hereunder are cumulative and not exclusive of any other right or
remedies which the Bank may have under other agreements, at law or in equity.
The Bank may proceed in any order against the Borrower, the Guarantor or any
other obligor of, or collateral securing, the Obligations.
11. Illegality. In case any one or more of the provisions contained
----------
in this Guaranty should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
12. Changes in Writing. No modification, amendment or waiver of any
------------------
provision of this Guaranty nor consent to any departure by the Guarantor
therefrom will be effective unless made in a writing signed by the Bank, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on the Guarantor in any
case will entitle the Guarantor to any other or future notice or demand in the
same, similar or other circumstance.
13. Entire Agreement. This Guaranty (including the documents and
----------------
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the Guarantor and the Bank with respect to the subject matter hereof.
14. Successors and Assigns. This Guaranty will be binding upon and
----------------------
inure to the benefit of the Guarantor and the Bank and, other than with respect
to Section 6, their respective heirs, executors, administrators, successors and
assigns; provided, however, that the Guarantor may not assign this Guaranty in
-------- -------
whole or in part without the Bank's prior written consent and the Bank at any
time may assign this Guaranty in whole or in part.
15. Interpretation. In this Guaranty, unless the Bank and the
--------------
Guarantor otherwise agree in writing, the singular includes the plural and the
plural the singular; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute referred
to; the work "or" shall be deemed to include "and/or", the words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; and references to sections or exhibits are to those of this
Guaranty unless otherwise indicated. Section headings in this Guaranty are
included for convenience of reference only and shall not constitute a part of
this Guaranty for any other purpose. If this Guaranty is executed by more than
one party as Guarantor, the obligations of such persons or entities will be
joint and several.
16. Indemnity. The Guarantor agrees to indemnify each of the Bank
---------
and its respective directors, officers and employees and each legal entity, if
any, who controls the Bank (collectively, the "Indemnified Parties") and to hold
each Indemnified Party harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement and performance of this Guaranty (all of the
foregoing, collectively, the "Indemnified Liabilities"); provided, however, that
-------- -------
the Guarantor shall have no obligation hereunder to any Indemnified Party with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of any Indemnified Party. The indemnity agreement contained in this
Section shall survive the termination of this Guaranty.
17. Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE.
(b) The Guarantor hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of Delaware, the courts of the United
States of America for the District of Delaware, and appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Guarantor at the address set forth above or at such other address of which the
Bank shall have been notified pursuant to Section 10 hereof;
(iv) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary or punitive or
consequential damages.
18. Waiver of Jury Trail. THE GUARNATOR HEREBY IRREVOCABLY AND
--------------------
UNCONDITIONALLY WIAVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
The Guarantor acknowledges that it has read and understood all the
provisions of this Guaranty, including the waiver of jury trial, and has been
advised by counsel as necessary or appropriate.
WITNESS the due execution hereof as a document under seal, as of the
date first written above, with the intent to be legally bound hereby.
DOVER DOWNS, INC.
Attest:_____________________________ By: _________________________________
Name: Name:
Title: Title:
EXHIBIT D
FORM OF OPINION OF COUNSEL TO BORROWER AND GUARANTOR
January __, 2002
Wilmington Trust Company
000 Xxxxx Xxxxx Xxxxxx
Xxxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel to Dover Downs Gaming & Entertainment, Inc.,
a Delaware corporation (the "Borrower"), and Dover Downs, Inc., a Delaware
corporation (the "Guarantor"), in connection with the execution and delivery of
the Credit Agreement dated as of January __, 2002 (the "Credit Agreement"),
between the Borrower and the Bank, and the transactions contemplated thereby.
This opinion is delivered to you pursuant to Section 4.1(g) of the Credit
Agreement. Terms defined in the Credit Agreement and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.
In so acting, we have examined executed originals or counterparts of
the following documents, each dated the date hereof (the "Loan Documents"):
(a) the Credit Agreement;
(b) the Note; and
(c) the Guaranty Agreement.
We have also examined the articles or certificate of incorporation and
bylaws, each as amended to date, of the Borrower and the Guarantor and such
other documents and instruments and have made such further inquiries as we have
deemed appropriate for purposes of this opinion. As to certain issues of fact,
we have, where such facts were not independently known to us, relied with your
consent and without independent investigation upon the representations and
warranties made by the Borrower in the Credit Agreement and upon certificates of
representatives of the Borrower dated January __, 2002.
On the basis of the foregoing, we are of the opinion that:
1. The Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the business conducted by it requires such
qualification.
2. The Borrower has the corporate or other power and authority to
own or lease and operate its properties and assets, to conduct the business in
which it is now engaged, and to execute and deliver and perform its obligations
under the Loan Documents to which it is a party. The execution, delivery and
performance of the Loan Documents to which it is a
party by the Borrower have been duly authorized by all necessary action on the
part of the Borrower.
3. The Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own or lease and
operate its properties and assets, to conduct the business in which it is now
engaged, and to execute the Guaranty Agreement.
4. The Loan Documents to which the Borrower is a party delivered on
the Closing Date have each been duly executed and delivered by or on behalf of
the Borrower and are valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their respective terms, except as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws or equitable principles affecting
the enforcement of creditors' rights generally.
5. The Guaranty Agreement has been duly executed and delivered by or
on behalf of the Guarantor and is the valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws or equitable principles
affecting the enforcement of creditors' rights generally.
6. No authorization, approval or consent of, or filing or
registration with, any governmental or regulatory body of the United States of
America or the State of Delaware is required in connection with the execution,
delivery and performance by the Borrower or the Guarantor of the Loan Documents
to which it is a party or for any borrowings by the Borrower under the Credit
Agreement.
7. Neither the execution and delivery by the Borrower or the
Guarantor of the Loan Documents to which it is a party nor the performance and
observance by the Borrower or the Guarantor of their respective obligations
thereunder, will conflict with, or result in any violation or breach by the
Borrower or the Guarantor of or constitute a default under (or an event which,
with or without due notice or lapse of time or both, would constitute a default
under), or accelerate the performance required by, or result in the creation of
any Lien upon any of the properties or assets of the Borrower or the Guarantor
under any of the terms, conditions or provisions of or require any filing or
consent under (i) the Borrower's or the Guarantor's articles or certificate of
incorporation or bylaws, (ii) any existing law, statute or governmental
regulation applicable to the Borrower or the Guarantor, or (iii) to our
knowledge, any judgment, order, decree, writ or injunction of any court,
arbitrator or governmental department, commission, agency or instrumentality or
any indenture, contract, guaranty or other agreement or instrument to which the
Borrower or the Guarantor is a party or by which it or its properties may be
bound or affected.
8. To our knowledge, there is no action, suit, proceeding or
investigation at law or in equity, before any court, public board or body,
pending or threatened against or affecting the Borrower wherein an unfavorable
decision, ruling or finding would, individually or
collectively, have a material adverse effect on the business or financial
condition of the Borrower.
9. The borrowing on the date hereof under the Credit Agreement and
the Note and the application of the proceeds thereof as contemplated by the
Credit Agreement and the other Loan Documents do not violate any of the
provisions of Regulation U or X of the Board of Governors of the Federal Reserve
System.
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is executed and delivered by Dover Downs
Gaming & Entertainment, Inc. (the "Borrower") in connection with the Credit
Agreement dated as of January __, 2002 (together with all exhibits, schedules,
extensions, renewals, amendments, substitutions and replacements thereof and
thereto, the "Credit Agreement") entered into by and between the Borrower and
Wilmington Trust Company (the "Bank"). All capitalized terms used in this
Compliance Certificate as defined terms shall have the meanings given them in
the Credit Agreement.
The undersigned, [insert name], [insert title] of the Borrower, hereby
attests on behalf of the Borrower to the Bank, with respect to the fiscal
[quarter] [year] ended ____________, ____ (the "Fiscal Period"), as follows:
1. As of the date of this Compliance Certificate, and since the date
of the most recent Compliance Certificate submitted to the Bank by the Borrower,
(i) to the best of the undersigned's knowledge, the Borrower has kept, observed,
performed and fulfilled each and every covenant and condition contained in the
Credit Agreement, the Note and the other Loan Documents applicable to it and
(ii) the undersigned has obtained no knowledge of any Default or Event of
Default.
2. The Leverage Ratio as of the end of the Fiscal Period, for the
four fiscal quarters then ended, is ________, as detailed below:
(a) Consolidated Funded Debt $__________
(b) Consolidated EBITDA $__________
(c) Leverage Ratio (a/b) __________
3. The Interest Coverage Ratio as of the end of the Fiscal Period,
for the four fiscal quarters then ended, is __________, as detailed below:
(a) Consolidated EBITDA $__________
(b) Consolidated Interest Expense $__________
(c) Interest Coverage Ratio (a/b) __________
4. The Borrower's Consolidated Tangible Net Worth Fixed as of the
end of the Fiscal Period is $________. Required Consolidated Tangible Net Worth
as of the end of the Fiscal Period ($70,000,000 plus 25% of quarterly
----
consolidated net income (if positive) since March 31, 2002 is $__________.
IN WITNESS WHEREOF, I have signed this Certificate as of the ____ day
of __________, ____.
DOVER DOWNS GAMING &
ENTERTAINMENT, INC.
By _____________________________
Name:
Title:
