THE TRANSFER OF THIS NOTE IS RESTRICTED - SEE SECTION 9 HEREOF
SENIOR SECURED PROMISSORY NOTE
$2,625,000 October 27, 1997
New York, New York
1. AGREEMENT TO PAY. FOR VALUE RECEIVED, the receipt of which is hereby
acknowledged, the undersigned, TRANS WORLD GAMING CORP., a Nevada Corporation
(hereinafter referred to as the "Maker"), promises to pay to the order of VALUE
PARTNERS, LTD., a Texas limited partnership (hereinafter referred to as the
"Payee", and Xxxxx and each successive owner and holder of this Note being
hereinafter generally referred to as the "Holder") in the manner provided for
herein of the principal sum of
TWO MILLION SIX HUNDRED TWENTY-FIVE THOUSAND AND NO/100 DOLLARS
($2,625,000.00)
together with interest on the outstanding principal balance hereof remaining
from time to time unpaid at the rate provided in Section 2 hereof.
2. INTEREST RATE.
(a) The outstanding principal balance hereof shall bear simple interest at
the rate of the lesser of twelve percent per annum (12%) or the
highest lawful rate permitted by law (the "Regular Rate"), computed
daily on the basis of a 360 day year consisting of twelve 30-day
months for each day all or any part of the principal balance hereof
shall remain outstanding.
(b) All agreements between Maker and Payee, whether now existing or
hereafter arising and whether written or oral, are hereby limited so
that in no contingency, whether by reason of demand or acceleration of
the Final Maturity Date (as defined in Section 4) or otherwise, shall
the interest contracted for, charged, received, paid or agreed to be
paid to Payee exceed the maximum amount permissible under the laws of
the State of New York (hereinafter the "Applicable Law"). If from any
circumstance whatsoever, interest would otherwise be payable to Payee
in excess of the maximum amount permissible under the Applicable Law,
the interest payable to Payee shall be reduced to the maximum amount
permissible under the Applicable Law, and if from any circumstance
Payee shall ever receive anything of value deemed interest by the
Applicable Law in excess of the maximum amount permissible under the
Applicable Law, an amount equal to the excessive interest shall be
applied to the reduction of the principal hereof and not to the
payment of interest, or if such excessive amount of
SENIOR SECURED PROMISSORY NOTE, PAGE 1
interest exceeds the unpaid balance of principal hereof, such excess
shall be refunded to Maker. All interest paid or agreed to be paid to
Payee shall, to the extent permitted by Applicable Law, be amortized,
prorated, allocated and spread throughout the full period (including
any renewal or extension) until payment in full of the principal so
that the interest hereon for such full period shall not exceed the
maximum amount permissible under the Applicable Law. Payee expressly
disavows any intent to contract for, charge or receive interest in an
amount which exceeds the maximum amount permissible under the
Applicable Law. This paragraph shall control all agreements between
Maker and Payee.
3. DOCUMENTS. Maker shall, upon execution of this Note, execute and cause to
be delivered to Xxxxxxx, Xxxxx, Xxxxx & Bird, to the benefit of Payee, that
certain Loan Agreement, and that certain Certificate of No Oral Agreements, that
certain Warrant to Purchase Common Stock and thereafter such other documents as
may be required from time to time pursuant to such documents.
4. INCORPORATION BY REFERENCE. The Loan Agreement, including Conversion Rights
as set forth in Section 4 thereto and Events of Default as set forth in Section
17 thereto, is attached thereto as Exhibit "A" and incorporated herein by
reference.
5. PAYMENTS. Maker shall, until all obligations under the terms of this Note
are satisfied, on or before the 10th calendar day following each three (3)
calendar month period, with the first three month period to commence as of
October 1, 1997 pay or cause to be paid the sum equal to forty percent (40%) of
all cash received during that prior three (3) month period, if any, by it or its
wholly owned subsidiary, Tottenham & Co., d/b/a ART Marketing Ltd. (the
"Subsidiary") for services rendered by Maker or the Subsidiary as to the Boxer
Casino located in the city of Gyandja (Azerbaijon Republic), including pursuant
to that Joint Activity Agreement dated March 31, 1997 by and between Subsidiary
and Xxxxxx Xxxxxxx, provided that in no event shall such sum exceed the
principal balance of the Note, together with accrued unpaid interest and other
sums due Payee as of the date of such payment. The payment shall be applied
first to unpaid fees and expenses of Payee arising in relation to this Note,
next to unpaid interest and then to unpaid principal. The entire unpaid
principal balance of this Note and all accrued unpaid interest herein is due and
payable November 1, 1998 ("Final Maturity Date"). The obligation to pay this
Note is a general obligation of the Maker and is not limited to proceeds
received from the operation of the Boxer Casino. All payments to be made by
Maker to the Payee hereunder shall be made to the Payee at 0000 Xxxx Xxxxxx,
Xxxxx 0000 Xxxx, Xxxxxx, Xxxxx 00000, (or to such other address as another
Holder may notify the Maker pursuant to Section 10 hereof), not later than 4:00
p.m. Central Time on the date when due in lawful money of the United States of
America and immediately available funds. The Maker will promptly and punctually
pay when due (whether on a scheduled payment date or at maturity or upon the
prepayment of such Note) the principal of and interest on the Note, without any
presentment thereof, directly to Holder of the Note at the address of such
Holder shown in the register maintained by the Maker for such purposes or at
such other addresses the Holder may from time to time designate in writing to
the
SENIOR SECURED PROMISSORY NOTE, PAGE 2
Maker or, if a bank account is designated in any written notice to Maker from
the Holder, the Maker will make such payments by wire transfer or other
immediately available funds to such bank account, marked for attention as
indicated, or in such other manner or to such other account of the Holder in any
bank in the United States of America as such Holder may from time to direct in
writing. The Holder of the Note agrees that in the event it shall sell or
transfer the Note it will, prior to the delivery of the Note make a notation
thereon of all principal, if any, prepaid on such Note and will also note
thereon the date to which interest has been paid on such Note. Upon repayment
in full of the Note, the Holder of the Note shall deliver such Note to the Maker
for cancellation. Maker shall not be charged a penalty in the event of
prepayment of the Note, to the extent such prepayment is consented to in writing
by the Holder. In the event of conflict of any term of this Note with any term
of the Loan Agreement, the terms of the Loan Agreement shall control.
6. NEGOTIABILITY; OFFSETS, DEFENSES OR COUNTERCLAIMS. Subject to applicable
law and regulation, including but not limited to Federal and State securities
laws and regulations, this Note is freely negotiable. As of the date hereof,
Maker knows of no defenses, setoffs, or counterclaims existing as of the date
hereof which could be asserted or brought by the Maker or any other party in any
suit or action for the collection of any sum due hereunder.
7. CONSENTS. WAIVERS AND MODIFICATIONS. No term, covenant, agreement or
condition of this Note may be amended, supplemented or modified, or compliance
therewith waived (either generally or in a particular instance and either
retroactively or prospectively), except pursuant to a written instrument signed
by the Maker and the Holder. No course of dealing between the Maker and the
Holder of the Note or any delay or failure on the part of the Holder of this
Note in exercising any rights hereunder shall operate as a waiver of any rights
of such Holder.
8. GOVERNING LAW. THIS NOTE SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF
NEW YORK. WHENEVER POSSIBLE EACH PROVISION OF THIS NOTE SHALL BE INTERPRETED IN
SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW,
SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS NOTE. WHENEVER IN THIS NOTE REFERENCE IS MADE TO
THE PAYEE OR THE MAKER, SUCH REFERENCE SHALL BE DEEMED TO INCLUDE, AS
APPLICABLE, A REFERENCE TO THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. THE
PROVISIONS OF THIS NOTE SHALL BE BINDING UPON AND SHALL INURE TO THE BENEFIT OF
SUCH SUCCESSORS AND ASSIGNS. THE MAKER'S SUCCESSORS AND ASSIGNS SHALL INCLUDE,
WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR IN POSSESSION FOR THE MAKER.
SENIOR SECURED PROMISSORY NOTE, PAGE 3
9. SECURITIES LAWS. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS NOTE
THEREFORE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR OTHERWISE
DISTRIBUTED FOR VALUE IN THE ABSENCE OF (i) AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE MAKER THAT SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE OR OTHER
DISTRIBUTION IS EXEMPT FROM (OR NOT OTHERWISE SUBJECT TO) THE REGISTRATION (OR
QUALIFICATION) AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT OR LAWS, OR (ii)
SUCH REGISTRATION OR QUALIFICATION.
10. ATTORNEYS FEES. In the case of a default, the Maker shall pay to the
Holder, to the extent permitted by law, such further amount as shall be
sufficient to cover the cost and expense of collection, including (without
limitation) reasonable attorneys' fees, costs and expenses.
11. WAIVER OF PROTEST. The Maker expressly waives demand, grace, notice of
intent to accelerate, notice of acceleration, presentment for payment, and
protest, and further agrees that this Note and the Loan Agreement may be
renewed, and the time for payment extended without notice.
12. SUCCESSORS AND ASSIGNS. All the covenants, stipulations, promises and
agreements in this Note contained by or on behalf of the Maker shall bind its
successors and assigns, whether so expressed or not.
13. HEADINGS. The headings of the Sections of this Note are inserted for
convenience only and shall not be deemed to constitute a part of this Note.
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed and
delivered as of the date first above written.
TRANS WORLD GAMING CORP.,
A NEVADA CORPORATION
By:
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Its:
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SENIOR SECURED PROMISSORY NOTE, PAGE 4