EXHIBIT 10.3
OPEN-END MORTGAGE,
SECURITY AGREEMENT AND FINANCING STATEMENT
[To Secure up to $1,000,000.00 (exclusive of interest)]
Scioto Downs, Inc., an Ohio corporation ("Mortgagor"), whose address is
0000 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxx 00000, in consideration of One Million
Dollars ($1,000,000.00 paid or to be paid to or on behalf of Mortgagor by MTR
Gaming Group, Inc., a Delaware corporation ("Mortgagee"), whose address is State
Route 2, P.O. Box 356, Chester, WV 26034, hereby grants with mortgage covenants
to Mortgagee, its successors and assigns forever, the approximately 173 acre
parcel of land in the State of Ohio, County of Franklin, and Township of
Xxxxxxxx, commonly known as 0000 Xxxxx Xxxx Xxxxxx, as more fully described on
the Exhibit A attached to this Mortgage and made a part hereof (the "Property").
Mortgagor also grants to Mortgagee all of the rents, issues, and profits
which may arise or be had from the Property and the estate, right, title, and
interest, either in law or in equity, which Mortgagor now has or may hereafter
acquire in and to all the Property; all buildings and improvements now existing
or hereafter constructed or placed on the Property; all fixtures of whatever
kind and nature including without limitation all heating, lighting, sprinkling,
plumbing, air conditioning, and ventilating machinery and equipment which is
physically affixed or annexed to the Property; all attached carpeting, wall and
floor coverings; all pipes, conduits, pumps, boilers, tanks, motors, engines and
furnaces; and all parts, accessories, attachments, additions, and other
replacements thereof, of every kind and description, located at or on the
Property.
The Property and the buildings, improvements, and other items enumerated
in the preceding paragraph are sometimes hereinafter referred to as the
"Premises".
Pursuant to the terms and conditions of a Merger Agreement entered into
as of December 23, 2002, as amended (the "Merger Agreement), by and between
Mortgagee, Mortgagor and Racing Acquisition Corp. (a wholly owned subsidiary of
the Mortgagee), Mortgagee will acquire all of the issued and outstanding stock
of the Mortgagor.
The Mortgagor has requested that the Mortgagee extend credit to the
Mortgagor, pursuant to the terms and conditions of a Loan Agreement (the "Loan
Agreement") and Promissory Note (the "Note") of even date herewith, in the
maximum principal amount of One Million Dollars ($1,000,000.00) (hereinafter
called the "Loan"), and the Mortgagor hereby mortgages the Premises to secure
the Loan.
This Mortgage secures, in such order or priority as Mortgagee may elect:
payment, performance and observance of Xxxxxxxx's indebtedness and obligations
under the Loan and under each and every instrument and document now or hereafter
evidencing or securing the Loan (hereinafter collectively called the "Loan
Documents"), including, without limitation the Loan Agreement and Note.
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In addition to any other debt or obligation secured hereby, this
Mortgage shall secure unpaid balances of advances made, with respect to the
Premises, for the payment of taxes, assessments, insurance premiums or costs
incurred for the protection of the Premises.
This Mortgage is intended to be a security agreement pursuant to the
Uniform Commercial Code as enacted in Ohio with respect to any of the above
described collateral that may be subjected to a security interest under such
code. Upon the occurrence of any event of default hereunder, Mortgagee shall
have the remedies of a secured party under the Uniform Commercial Code and, at
Mortgagee's sole option, may also invoke the remedies provided in this Mortgage.
All or part of the above described collateral that may be so subjected to a
security interest under such Code is or may become a fixture related to the
Premises. Upon filing, this Mortgage shall also be effective as a financing
statement filed as a fixture filing with respect to such collateral.
The parties hereto intend that, in addition to any other debt or
obligation secured hereby, this Mortgage shall secure unpaid balances of loan
advances made by Mortgagee to Borrower after this Mortgage is delivered to the
Recorder for record, whether made pursuant to an obligation of Mortgagee or
otherwise. Such loan advances are and will be evidenced by the Note or the Loan
Documents. The maximum amount of unpaid loan indebtedness secured by this
Mortgage (which shall consist of unpaid balances of loan advances made either
before or after, or both before and after, this Mortgage is delivered to the
Recorder for record), exclusive of interest thereon, which may be outstanding at
any time is One Million Dollars ($1,000,000.00).
Covenants of Mortgagor
Mortgagor, for itself and its successors and assigns, hereby covenants
with Mortgagee, its successors and assigns, that Xxxxxxxxx holds a valid fee
simple interest in the Premises; that it has the right to bargain and sell the
same in the manner and form as set forth in this Mortgage; that the Premises are
free from all liens and encumbrances whatsoever except real estate taxes and
assessments not presently due and payable, zoning laws, a mortgage in favor of
National City Bank securing outstanding indebtedness having a principal amount
of less than Two Million Six Hundred Thousand Dollars ($2,600,000.00), and
easements and restrictions of record; that Mortgagor will warrant and defend the
Premises and the appurtenances thereto to Mortgagee, its successors and assigns,
forever, against all claims and demands whatsoever except the above described
exceptions; and hereby covenants and agrees:
1. To pay before they become delinquent all taxes (both general and
special), assessments, water rents, fines or impositions, and governmental
charges levied or assessed against the Premises or any part thereof or interest
therein, and upon request of Mortgagee, to promptly deliver to Mortgagee
receipts showing such payments.
2. To keep all buildings and other improvements now existing or
hereafter erected on the Premises insured against loss or damage by fire and
such other hazards (i.e., all risk coverage), casualties, and contingencies as
may be reasonably required by Mortgagee and to provide comprehensive public
liability insurance in such amounts as Mortgagee may reasonably require. All
policies of insurance shall be in forms, from companies, and in amounts
satisfactory
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to Mortgagee and any other person holding a mortgage on the Premises, and shall
include standard mortgagee clauses and loss payable clauses in favor of and in
form acceptable to Mortgagee and a provision for each such insurer to give
Mortgagee 30 days prior written notice of the insurer's intention to cancel such
policy. All premiums relating to such insurance shall be paid promptly and
Mortgagee shall be furnished with evidence of the existence of such insurance
and the current status of premiums thereon. In the case of pending expiration of
any such policy, a renewal thereof with receipt for the premium on such policy
shall be delivered to Mortgagee on or before the date of expiration. In the
event of loss, Mortgagor shall give immediate notice by mail to Mortgagee. If
any portion of the Premises shall be damaged or partially or totally destroyed
while this Mortgage is in effect, the net proceeds payable from any insurance
policy as a result of such damage or destruction shall be used, at the option of
Mortgagee, either (a) to reduce the indebtedness secured by this Mortgage,
whether due or not, or (b) to repair, rebuild, or restore the Premises pursuant
to such arrangements for periodic disbursements of portions of such proceeds as
Mortgagee may require in order to assure that all such repairs, rebuilding, and
restoration is accomplished in a good, timely, and workmanlike manner, free and
clear of all mechanics' or other liens.
3. To keep and maintain all buildings, improvements, appurtenances,
fixtures, and other property now or hereafter comprising a part of the Premises
in good repair and in as good condition as the same now are or may hereafter be
put and to comply with all laws, ordinances, regulations, and requirements of
all legally constituted authorities respecting the Premises and the use of the
Premises.
4. To keep the Premises free and clear from all mechanics' liens,
statutory liens, tax liens, and liens of any other type whatsoever during the
continuance of this Mortgage and to execute and deliver inferior mortgages or
modifications of inferior mortgages only after receiving the express written
authorization from Mortgagee. If any liens or encumbrances referred to in the
preceding sentence are placed against the Premises, or foreclosure proceedings
of any junior lien or encumbrance of any kind are instituted, Mortgagee may, at
its option, declare the Note secured by this Mortgage due and payable
immediately and institute such proceedings as it may determine necessary or
advisable to protect its interest in the Premises. The foregoing prohibition
against liens and encumbrances shall not apply to the lien of real estate taxes
and assessments that are treated in paragraph 1 above.
5. Not to commit, suffer, or permit any waste on, of, or to the
Premises, nor use or permit the use of any portion thereof for any unlawful act,
or any action that might diminish or impair the value of the Premises or the
lien or security of this Mortgage.
6. Not to remove, demolish, or alter any building, improvement, or other
item described in the second paragraph on page one of this Mortgage now or
hereafter comprising a part of the Premises except when incident to the
improvement of the Premises or for the replacement of fixtures with items of
like kind and value.
7. Not to sell, assign, convey, lease, or sublease all or any part of
the Premises, or any legal or equitable interest therein, without the prior
written consent of Mortgagee. If Mortgagee consents to a change of ownership,
Mortgagee may, without notice to Mortgagor, deal with such
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successor or successors in interest of Mortgagor with reference to this Mortgage
and the debt secured by this Mortgage in the same manner as with Mortgagor, may
forbear to sue, or may extend time for payment of the debt secured by this
Mortgage without discharging or in any way affecting the liability of Mortgagor
under this Mortgage or the debt secured under this Mortgage, or may make such
other arrangements with such successor or successors in interest regarding the
payment of the obligation secured under this Mortgage as Mortgagee in its
judgment shall consider necessary or advisable without releasing or discharging
Mortgagor from any obligations or liabilities which it may have under the Note
or any other Loan Documents.
8. To execute and deliver to Mortgagee and to any subsequent holder from
time to time, upon demand, any further instrument or instruments, including, but
not limited to, mortgages, security agreements, financing statements,
assignments, and substitution notes, so as to reaffirm or to perfect the
evidence of the obligation secured by this Mortgage and the lien of Mortgagee on
all or any part of the Premises intended to be hereby mortgaged
9. That the Premises are in compliance with all "Environmental Laws" (as
defined below); that there are no conditions existing currently or likely to
exist during the term of the Note which require or are likely to require
cleanup, removal, remedial action, or other response pursuant to Environmental
Laws by the Mortgagor; that Mortgagor is not a party to any litigation or
administrative proceeding, nor so far as is known by the Mortgagor is any
litigation or administrative proceeding threatened against it, which asserts or
alleges that Xxxxxxxxx violated any Environmental Laws; that neither the
Premises nor the Mortgagor is subject to any judgment, decree, order, or
citation related to or arising out of any Environmental Laws; and that no
permits or licenses are required under any Environmental Laws relative to the
Premises. In the event that such statements later prove to be false,
irrespective of Xxxxxxxxx's knowledge, such shall be an event of default under
this Mortgage.
For purposes of this Mortgage: (a) "Environment" or "Environmental"
shall mean any water or water vapor, any land including land surface or
subsurface, air, fish, wildlife, biota and all other natural resources; and (b)
"Environmental Laws" shall mean all federal, state, and local environmental
laws, statutes, ordinances, and codes relating to the protection of public
health or the Environment and/or governing the use, storage, treatment,
generation, transportation, processing, handling, management, production, or
disposal of solid wastes, toxic substances, hazardous wastes, hazardous
substances, petroleum, petroleum based products, radio-nuclides, or other
radioactive materials and the rules, regulations, policies, guidelines,
interpretations, decisions, orders, and directives of federal, state, and local
government agencies and authorities with respect thereto, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Section 1801, et seq.), the
Solid Waste Disposal Act, as amended (42 U.S.C. Section 6901, et seq.), the
Toxic Substances Control Act, as amended (15 U.S.C. Section 2601, et seq.), the
Clean Air Act of 1970, as amended (42 U.S.C. Section 7401, et seq.), the Water
Pollution Control Act, as amended (33 U.S.C. Section 1251, et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136, et seq.), the
Atomic Energy Act (23 U.S.C. Section 2011, et seq.), and Chapter 3745 of the
Ohio Administrative Code.
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Mortgagor covenants and agrees to comply with all applicable
Environmental Laws; to provide to the Mortgagee, immediately upon receipt,
copies or any correspondence, notice, pleading, citation, indictment, complaint,
order, decree, or other document from any source asserting or alleging a
circumstance or condition which requires or may require a cleanup, removal,
remedial action, or other response by or on the part of the Mortgagor under
Environmental Laws or which seeks criminal or punitive penalties from Xxxxxxxxx
for an alleged violation of Environmental Laws; and to advise the Mortgagee in
writing as soon as Xxxxxxxxx becomes aware of any condition or circumstance
which makes the warranties contained in this mortgage incomplete or inaccurate.
Any failure of Mortgagor to comply with the Environmental Laws shall be an event
of default under this Mortgage. The covenants and obligations of Mortgagor under
this section shall survive any foreclosure of this Mortgage.
Failure to Comply with Obligations
Upon the failure of Mortgagor: (a) to perform any obligation to be
performed by Mortgagor under this Mortgage or under any other mortgage that
encumbers the Premises, or to pay any taxes, assessments, insurance premiums, or
other payments provided for under this Mortgage, (b) to pay the cost and expense
of maintaining the Premises in the state of repair and condition required by
this Mortgage, (c) to defend its title to the Premises, or (d) to discharge and
pay when due any lien or title claimed to rank equal to or have priority over
the lien of this Mortgage, Mortgagee, or its successors and assigns, may pay
such taxes, assessments, insurance premiums, or payment, perform such
obligations, and pay the cost and expense of such repair or maintenance, or the
cost and expense of defending or clearing such title or performing any such
obligation, including reasonable attorneys' fees, and any and all amounts paid
out by Mortgagee in connection therewith, with interest at the applicable rate
under the Note from time to time, payable monthly, shall be deemed to have been
paid to protect the Premises and shall be and become additional indebtedness
secured by this Mortgage and shall be paid to Mortgagee, or its successors and
assigns, by Xxxxxxxxx immediately upon demand.
Unless otherwise agreed, all payments received by Xxxxxxxxx are to be
applied in the following order: costs, expenses, reasonable attorney's fees,
interest, and then principal. In the event this Mortgage secures more than one
note or other evidence of indebtedness, then any payment may be applied in such
order as Mortgagee may determine.
Condemnation
If any portion of the Premises is condemned under any power of eminent
domain, or acquired for a public use, at any time, the net proceeds of any
condemnation award paid as a result of such condemnation or acquisition shall be
used, at the option of Mortgagee, either (a) to reduce the indebtedness secured
by this Mortgage, whether due or not, or (b) to repair, rebuild, or restore the
Premises pursuant to such arrangements for periodic disbursements of portions of
such proceeds as Mortgagee may require in order to assure that all such repairs,
rebuilding, and restoration is accomplished in a good, timely, and workmanlike
manner, free and clear of all mechanics' or other liens.
Default
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If default is made by Mortgagor : (a) in the payment of any installment
of principal or interest and principal of the Note as provided in the Note; (b)
in the payment of taxes, assessments, insurance premiums or other payments
required under this Mortgage; or (c) in the due and punctual performance of any
of the terms, agreements, covenants, conditions, and representations of the
Note, this Mortgage, or any Loan Document, or any other document relating
thereto; or if any change shall occur in the equitable or legal ownership of the
Premises; or if Mortgagor : (i) shall make an assignment for the benefit of
creditors; (ii) have a receiver or trustee appointed for the Premises, for
Mortgagor, or for all or any substantial portion of Mortgagor's property; (iii)
admits in writing its inability to pay its debts generally as they become due;
(iv) has an order for relief entered in any case commenced by or against it
under the federal bankruptcy laws, as now or hereafter in effect; (v) commences
a proceeding under any other federal or state bankruptcy, insolvency,
reorganization, or other similar law, or has such a proceeding commenced against
it or has the proceeding remain undismissed and unstayed for 60 days; (vi)
defaults under the Merger Agreement; or (vii) defaults under the Management
Agreement; and, in the case of a default in any matter described in terms (b) or
(c) of this paragraph upon 5 days' written notice from Mortgagee to Mortgagor
(during which period Mortgagor shall have the right to cure such default), the
Note and all sums or amounts payable to Mortgagee shall, at the option of
Mortgagee, be and become immediately due and payable, all such amounts shall
bear interest at the default rate set forth in the Note, payable monthly until
paid, and this Mortgage shall become subject to foreclosure. In the event of
foreclosure, the Premises may be sold in its entirety, or as two or more
parcels, at the sole discretion of Mortgagee.
Mortgagee's declaration of a default pursuant to items (i) through (vii)
of the preceding paragraph and the exercise of remedies upon any such
declaration shall be subject to any applicable limitations of federal bankruptcy
law affecting or precluding such declaration or exercise during the pendency of
or immediately following any bankruptcy, liquidation, or reorganization
proceeding.
Rights of Note Holder
The legal holder of the Note secured by this Mortgage may, at any time,
by written agreement with Mortgagor or any successor in interest, and without
notice to any other person, renew or extend the time for payment of the
indebtedness secured by this Mortgage, or any part thereof, or increase or
decrease the rate of interest thereon, without thereby affecting this Mortgage
or its priority over any junior liens or encumbrances, and without releasing any
person from liability. The rights and remedies afforded Mortgagee under this
Mortgage are cumulative and the holder of the Note secured by this Mortgage may
recover judgment thereon, issue execution therefor, and resort to every other
right or remedy available at law or in equity, without first exhausting, and
without affecting or impairing the security of any right or remedy afforded by
this Mortgage. The unenforceability or invalidity of any one or more provisions,
clauses, sentences, or paragraphs of this Mortgage shall not render any other
provision, clause, sentence, or paragraph contained in this Mortgage
unenforceable or invalid. Mortgagee is further authorized to do all things
provided to be done by a mortgagee under Section 1311.14 of the Ohio Revised
Code.
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Waiver of Rights
Mortgagee's failure to exercise any option to accelerate the maturity of
the principal debt or any other sums secured by this Mortgage under any
provision of the Note or this Mortgage shall not constitute or be deemed a
waiver of Mortgagee's right to exercise such option or accelerate such maturity
with respect to any past or any subsequent violation of any term or condition of
the Note or this Mortgage. Any person authorized by Mortgagee shall have the
right to enter upon and inspect the Premises at all reasonable times; provided
that Mortgagor shall be given reasonable advance notice of any such entry and
the right of entry shall be subject to the rights of tenants of space within the
Premises.
Transfers or Encumbrances of the Premises or Beneficial Interests in Mortgagor
Without the prior written consent of Mortgagee, Mortgagor shall not (a)
create or suffer to be created any charge, lien or encumbrance upon the
Premises, or any part thereof or interest therein, excepting the lien of this
Mortgage, any encumbrances permitted by Mortgagee in writing and any utility
easements necessary for the purposes of providing utility services to the
Premises, (b) sell, convey, lease (except for permitted tenant leases) or
transfer the Premises, or any part thereof or interest therein, legal or
equitable, or (c) permit or acquiesce in the transfer of any ownership interest
in Mortgagor.
Use of Premises
Mortgagor shall not make, suffer or permit any use of the Premises other
than in compliance with all applicable zoning ordinances and restrictions, as
the same may be amended from time.
WAIVER OF JURY TRIAL
XXXXXXXXX XXXXXX XXXXXX THE RIGHT TO TRIAL BY JURY OF ANY MATTERS
ARISING OUT OF THIS MORTGAGE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
This Mortgage and all terms, conditions, provisions and covenants hereof
shall inure to the benefit of and shall bind the successors and assigns of the
parties to this Mortgage.
PROVIDED, that if Borrower or Mortgagor, as the case may be, shall well
and truly pay the Note according to its terms, together with all interest,
taxes, assessments, and other sums, amounts or charges which may be payable to
Mortgagee and if the terms, covenants, provisions and conditions contained in
this Mortgage, the Note, and any other Loan Documents are fully and punctually
kept and performed by Borrower or Mortgagor, as the case may be, as required
under this Mortgage, then this Mortgage shall be void; otherwise it shall remain
in full force and effect forever. Notwithstanding the foregoing, this Mortgage
shall be void, and Xxxxxxxxx shall execute a release with respect thereto, upon
the acquisition by Mortgagor of Borrower pursuant to the terms and conditions of
the Merger Agreement.
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IN WITNESS WHEREOF, Xxxxxxxxx has executed this Mortgage on May 5, 2003.
MORTGAGOR:
SCIOTO DOWNS, INC.
an Ohio corporation
________________________________
By: Xxxxxx X. Xxxx
Its: President and Chief Executive Officer
STATE OF OHIO,
FRANKLIN COUNTY: ss.
The foregoing instrument was acknowledged before me on May 5, 2003, by
Xxxxxx X. Xxxx, the president and chief executive officer of Scioto Downs, Inc.,
an Ohio corporation, on behalf of said corporation.
_______________________________________
Notary Public - State of Ohio
My commission expires:___________________
This document was prepared by: Xxxx Xxxxxxx Xxxxxx, Esq., Xxxxxx Xxxxx & Xxxxx,
LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxx 00000
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EXHIBIT A
REAL PROPERTY DESCRIPTION
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