AMENDMENT TO MASTER SETTLEMENT AGREEMENT
DATED EFFECTIVE AS OF OCTOBER 15, 2003
MJQ CORPORATION
ITG VEGAS, INC.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
INTERNATIONAL THOROUGHBRED GAMING DEVELOPMENT, INC.
XXXXXXX X. XXXXXX
XXXXXXX X. XXXXXX
AND
XXXXXX X. XXXXXX
AS CHAPTER 11 TRUSTEE FOR THE
BANKRUPTCY ESTATE OF XXXXXX X. XXXXXXX
AMENDMENT TO MASTER SETTLEMENT AGREEMENT
THIS AMENDMENT TO MASTER SETTLEMENT AGREEMENT (this "Agreement") dated as
of October 15, 2003, is made and entered into by and among MJQ CORPORATION, a
Delaware corporation ("MJQ"), ITG VEGAS, INC., a Nevada corporation and
successor by merger to Palm Beach Princess, Inc. ("ITG"; and collectively,
together with MJQ, the "Debtors"), INTERNATIONAL THOROUGHBRED BREEDERS, INC., a
Delaware corporation ("ITB"), INTERNATIONAL THOROUGHBRED GAMING DEVELOPMENT,
INC., a New Jersey corporation ("ITGD"), XXXXXXX X. XXXXXX, an individual
("FWM"), XXXXXXX X. XXXXXX, an individual ("FXM"), and XXXXXX X. XXXXXX, as
Chapter 11 Trustee for the Bankruptcy Estate of Xxxxxx X. Xxxxxxx (the
"Trustee").
RECITALS
WHEREAS, the Debtors, ITG, FWM and the Trustee, together with a number
of other persons, are parties to that certain Master Settlement Agreement dated
as of February 28, 2002, and effective April 30, 2001, as supplemented by
Supplement No. 1 to Master Settlement Agreement dated September 10, 2002 and
Supplement No. 2 to Master Settlement Agreement dated October 30, 2002 (the
"Master Settlement Agreement"), pursuant to which and certain Settlement
Documents (as defined in the Master Settlement Agreement) the parties agreed to
resolve certain matters between themselves as provided therein;
WHEREAS, The Palm Beach Princess, f/k/a The Viking Princess, Patente of
Navigation No. 14348-84-84-D, Radio Call Signal 3FNQ2, is an ocean-faring casino
cruise ship, registered in Panama (the "Ship"), owned by MJQ, and operated by
ITG from Port of Palm Beach, Florida;
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WHEREAS, the Trustee is the holder of a certain Promissory Note dated
as of May 13, 1999 in the principal amount of $12,000,000 made by MJQ (the "Ship
Note") and a certain Indenture of Second Naval Mortgage also dated as of May 13,
1999, encumbering the Ship, made by MJQ to secure its obligations under the Note
(the "Ship Mortgage"; and collectively, together with the Ship Note, the "Ship
Obligations");
WHEREAS, pursuant to the Master Settlement Agreement and a certain
Purchase and Sale Agreement (as defined in the Master Settlement Agreement), as
amended, ITG agreed to purchase the Ship Obligations from the Trustee for a
total purchase price of $13,750,000, $9,750,000 of which was due and payable on
January 6, 2003 as a balloon payment (the "Balloon Payment");
WHEREAS, ITG was unable to pay the Balloon Payment to the Trustee as
and when due, and on January 3, 2003, ITG and MJQ each filed a voluntary
petition for relief under Chapter 11 (the "Chapter 11 Cases") of Title 11 of the
United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the Southern District of Florida (the "Bankruptcy Court");
WHEREAS, the Trustee is the holder of 3,746,805 shares of common stock
of ITB (the "ITB Shares");
WHEREAS, pursuant to the Master Settlement Agreement and a certain
Stock Purchase Agreement (as defined in the Master Settlement Agreement), as
amended, ITB agreed to repurchase the ITB Shares from the Trustee for the price
of $.50 per share, plus interest, and in payment for the ITB Shares, ITB
delivered to the Trustee a certain Promissory Note dated December 13, 2002 in
the original principal amount of $1,648,402.50 (the "Stock Note"), secured by a
certain Pledge and Security Agreement also dated December 13, 2002 (as amended,
the "ITB Security Agreement");
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WHEREAS, ITB has defaulted in its obligations under the Stock Note;
WHEREAS, ITGD is a wholly-owned subsidiary of ITB and the sole
stockholder of ITG,
and FWM is the sole stockholder of MJQ;
WHEREAS, the parties hereto have engaged in negotiations in good faith
with the objective of reaching an agreement with regard to the Debtors' plan of
reorganization in the Chapter 11 Cases (the "Plan") and the restructure of ITB's
obligations pursuant to the Stock Note;
WHEREAS, as a result of such negotiations, the parties hereto have
agreed to restructure the respective outstanding payment obligations of the
Debtors and ITB pursuant to the Master Settlement Agreement, the Purchase and
Sale Agreement, the Stock Purchase Agreement and the Stock Note (collectively,
the "Payment Obligations"), and to amend certain of their respective obligations
and agreements as contained in the Master Settlement Agreement and the
Settlement Documents (the Master Settlement Agreement and the Settlement
Documents, together with all instruments, agreements and documents executed
and/or delivered in connection therewith or pursuant thereto, including the
Foreclosure Documents, as identified on Schedule A annexed hereto, are referred
to herein collectively as the "Existing Agreements"), effective upon the
Effective Date (as defined below); and
WHEREAS, FXM has agreed to deliver to the Trustee, and the Trustee has
agreed to accept, pursuant to the terms of this Agreement, the guaranty of FXM,
and in consideration therefor, the Trustee has agreed to release the guaranty of
Xxxxxxx X. Xxxxxxx, a party to the Master Settlement Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are
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hereby acknowledged, the parties hereto agree as follows subject to Section 9.1
of this Agreement:
1. DEFINED TERMS; INTERPRETATION.
1.1 Definitions Incorporated by Reference. All capitalized terms
used herein and not defined herein shall have the meanings ascribed to them in
the Master Settlement Agreement.
1.2 Amended Definitions. The definition of "Related Assets" set
forth in the Master Settlement Agreement is hereby amended in the following
respects:
(i) In the penultimate line of the last paragraph of the
definitions (found on page 9 of the Master Settlement Agreement) the following
words are hereby deleted:
"all bank accounts and certificates of deposit of PBP and
MJQ;"
(ii) The period at the end of clause (j) is deleted and replaced
with a semi-colon, the word "and" is inserted after the semi-colon and there is
hereby added a new clause (k) to read as follows:
"all cash, deposit accounts, certificates of deposit and
investment accounts of ITG and MJQ,"
1.3 Definitions. The following capitalized terms used in this
Agreement shall have the meaning set forth below or in the section of the
Agreement referenced below.
"Additional Capital Expenditure Reserve" shall mean an amount funded
in accordance with Section 5.4(c) of this Agreement and maintained by ITG in the
Operating Account as a reserve for Capital Expenditures.
"Affiliate" shall mean (a) with respect to a Person, a spouse of
such Person, any relative (by blood, adoption or marriage) of such Person within
the third degree, any director, officer or employee of such Person, any other
Person of which such first Person is a partner,
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member, director, officer or employee, and any other Person directly or
indirectly controlling or controlled by or under common control with such first
Person. For purposes of this definition "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, means the possession, direct or indirect, of the
power to direct, or cause the direction of, the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise. Without limiting the generality of the foregoing, any Person who has
the direct or indirect beneficial ownership of more than twenty percent (20%) of
the voting securities or voting equity of another Person shall be deemed to be
an Affiliate of such other Person; and (b) with respect to either of the
Debtors, in addition to any Person described in clause (a) above, the other
Debtor and each of ITB, ITGD, FWM, FXM, Xxxxxxx X. Xxxxxxx, O.C. Realty, GMO
Travel and Xxx Equity, whether or not any of them otherwise fit the definition
of an Affiliate pursuant to clause (a) above.
"Agreement" has the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Allowable Capital Expenditures" shall have the meaning ascribed to
such term in Section 5.2 of this Agreement.
"Allowed Unsecured Claims" shall have the meaning ascribed to such
term in Section 6.1 of this Agreement.
"Amendment to Stock Option Agreement" shall mean the Amendment No. 1
to the Stock Option Agreement dated February 28, 2002 in form and substance
satisfactory to the Trustee, to be executed and delivered by the Trustee and ITB
concurrently with the execution of this Agreement.
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"Annual Budget" shall mean, for any ITG Accounting Year, the
annual budget in reasonable detail prepared by ITG and as may be revised as set
forth in Section 5.1 of this Agreement.
"Annual Sweep Payment" shall have the meaning ascribed to such term
in Section 3.5.2 of this Agreement.
"Applicable Law" means, with respect to any Person, all provisions
of constitutions, laws, statutes, ordinances, rules, treaties, regulations,
permits, licenses, approvals, interpretations and orders of court or
Governmental Authorities and all orders of arbitrators with appropriate
jurisdiction (by contract or otherwise), and decrees of all courts and
arbitrators in proceedings or actions to which the Person is a party or by which
it (or any of its property) is bound.
"Balloon Payment" shall have the meaning ascribed in such term in
the Recitals to this Agreement.
"Bankruptcy Code" shall have the meaning ascribed to such term in
the Recitals to this Agreement.
"Bankruptcy Court" shall have the meaning ascribed to such term in
the Recitals to this Agreement.
"Bareboat Charter" shall mean the Bareboat Charter Agreement,
effective as of April 30, 2001, between MJQ, as owner and lessor, and ITG, as
charterer and lessee.
"Bareboat Charter Fee" shall mean the fee, in the maximum aggregate
amount of $50,000 per month, payable to MJQ pursuant to the Bareboat Charter.
"Base Interest" shall have the meaning ascribed to such term in
Section 3.4 of this Agreement.
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"Business Day" shall mean any day on which commercial banks are open
for the transaction of business in the State of Florida.
"Capital Expenditures" shall mean expenditures for the purchase of
assets of long-term use which are or should be (in accordance with GAAP)
capitalized.
"Capital Plan" shall have the meaning ascribed to such term in
Section 5.1(b) to this Agreement. "Chapter 11 Cases" shall have the meaning
ascribed to such term in the Recitals to this Agreement.
"Cash on Board" shall mean cash kept on board the Ship in the
approximate amount of $700,000 in the ordinary course of ITG's gaming
operations.
"Closing Documents" shall mean all documents, instruments and
agreements to be executed and delivered in connection with or pursuant to this
Agreement by the parties hereto, including without limitation, Deed in Lieu of
Foreclosure, Leasehold Mortgage, the Security Agreement, the ITGD Pledge
Agreement, the Xxxxxx Pledge Agreement, the Stock Put Agreement, the Amended and
Restated Escrow Agreement, the Control Agreements, the FXM Guaranty, the FWM
Guaranty and the Subordination Agreement.
"Collection Costs" shall have the meaning ascribed to such term in
Section 13.11.
"Confirmation Order" shall have the meaning ascribed to such term in
Section 9.1 of this Agreement.
"Control Agreement" shall mean that certain agreement between the
Trustee, ITG and Wachovia Bank, N.A. entered into on or prior to the date of
this Agreement to secure all Accounts set forth in Schedule 5.3 annexed hereto
and that certain agreement between the
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Trustee, MJQ and Wachovia Bank, N.A. entered into on or prior to the date of
this Agreement to secure all Accounts of MJQ.
"Creditor Account" shall mean the Distribution Escrow Account as
defined in the Plan.
"Current Ratio" shall mean, for any period, the ratio of current
assets to current liabilities, as determined in accordance with GAAP and
adjusted to (a) exclude prior to any Event of Default current liabilities to the
Trustee not yet due, and after an Event of Default any accelerated liabilities
due to the Trustee, (b) exclude indebtedness and liabilities of ITG to its
Affiliates (other than liabilities in respect of Permitted Affiliate Payments)
which are subordinated in payment and priority to the Secured Obligations in the
manner provided in the Plan, as incorporated in this Agreement and the
Subordination Agreement and (c) include Creditor Account.
"Debtors" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Deed in Lieu" shall have the meaning ascribed to such term in
Section 8.1.1. of this Agreement.
"Default" shall mean any event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default.
"Default Interest" shall have the meaning ascribed to such term in
Section 13.3 of this Agreement.
"Disclosure Statement" shall mean the Debtor's Amended Disclosure
Statement in Support of Amended Joint Chapter 11 Plan of Reorganization dated
July 10, 2003 to which the Plan is Exhibit A.
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"Disputed Claims Reserve" shall have the meaning ascribed to such
term in Section 6.1 of this Agreement.
"Disputed Unsecured Claims" shall have the meaning ascribed to such
term in Section 6.1 of this Agreement.
"Effective Date" shall mean October 15, 2003.
"Environmental Laws" shall mean all Applicable Laws relating to
public health and safety or the pollution or protection of the environment,
including, without limitation, Applicable Laws relating to the release,
discharge, emission, spill, leaching, or disposal of Hazardous Substances to
air, water or land, or to the withdrawal or use of ground water, or to the use,
handling, disposal, treatment, storage or management of Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rules and regulations issued
thereunder.
"Escrow Agent" shall mean the law firm of Drinker Xxxxxx & Xxxxx
LLP, as appointed pursuant to the Escrow Agreement.
"Escrow Agreement" shall mean that certain Escrow Agreement dated as
of February 28, 2002 among the Trustee, MJQ, FWM, ITB, the other parties to the
Master Settlement Agreement and the Escrow Agent, as amended from time to time.
"Event of Default" shall mean any of the events specified in Section
12 and Section 13.7 of this Agreement, provided that any requirement for notice
or lapse of time has been satisfied.
"Excluded Assets" shall have the meaning ascribed to such term in
Section 8.1.2 of this Agreement.
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"Existing Agreements" shall have the meaning ascribed to such term
in the Recitals to this Agreement as they may have been heretofore modified or
may now be modified pursuant to the Amended and Restated Escrow Agreement or
this Agreement.
"Final Maturity Date" shall mean the third anniversary date of the
Effective Date of this Agreement.
"Forbearance Fee" shall have the meaning ascribed to such term in
Section 4.1 of this Agreement.
"Foreclosure Documents" shall mean the documents and agreements set
forth on Schedule 3(b)(i) to the Master Settlement Agreement as such documents
and agreements may be replaced or revised pursuant to the Amended and Restated
Escrow Agreement.
"Free Cash Flow" shall mean, with respect to ITG for any ITG
Accounting Year beginning with the ITG Accounting Year commencing December 29,
2003, the net income (or net loss) after State of Florida taxes of ITG for such
ITG Accounting Years as determined in accordance with GAAP, plus depreciation
and amortization expense and any other non-cash charges to net income for such
period, less each of the following items (to the extent not already deducted in
calculating net income) for such period: (a) payments of principal, interest,
Forbearance Fees, and Stay Bonus made hereunder, including Sweep Payments, if
any, applied thereto in any such ITG Accounting Year, (b) pre-petition debts
paid in accordance with the Plan after December 28, 2003 to creditors or
claimants other than the Trustee, excluding debts paid from the Creditor Account
from payments made before December 29, 2003, (c) deposits, if any, made to
replenish the Operating Reserve, (d) Allowable Capital Expenditures and
Necessary Capital Payments to the extent actually incurred, (e) deposits, if
any, made to the Additional Capital Expenditure Reserve, and (f) Tax Sharing
Payments actually made to ITB.
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"FWM" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"FWM Replacement Guaranty" shall mean the guaranty agreement in the
form mutually satisfactory to FWM and the Trustee as more particularly described
in Section 5.9 of this Agreement.
"FXM" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"FXM Guaranty" shall mean the guaranty agreement in the form
mutually satisfactory to FXM and the Trustee as more particularly described in
Section 5.9.
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other entity
as may be approved by a significant segment of the accounting profession, as in
effect on the date of this Agreement, applied on a basis consistent with the
application of the same in prior fiscal periods. In the event that any
accounting change of the Financial Accounting Standards Board shall be
promulgated resulting in a change in the method of calculation of financial
covenants, financial standards or other terms in this Agreement, then the
Debtors and the Trustee agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such accounting changes
to the effect that the criteria for evaluating the Debtors' financial condition
shall be the same after such accounting changes as if such accounting changes
had not been made. Until such time as such an amendment shall have been executed
and delivered by the Debtors and the Trustee, all
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financial covenants, financial standards and other terms in this Agreement shall
continue to be calculated or construed as if such accounting changes had not
occurred.
"General Unsecured Creditors" shall mean the holders of Allowed
Class 3A and 3B Unsecured Claims as defined in the Plan.
"GMO Travel" shall mean GMO Travel, Inc., a Florida corporation.
"Governmental Authority" shall mean any nation, province, state or
political subdivision thereof, and any government or any Person exercising
executive, legislative, regulatory or administrative functions of or pertaining
to government, including, without limitation, any agency, corporation or other
entity owned or controlled, through stock or capital ownership or otherwise, by
any of the foregoing.
"Gross Revenues" shall mean any and all gross cash proceeds and
receipts received by or on behalf of ITG from all sources whatsoever in
connection with the operation, management or other use of the Ship and the
Related Assets, computed in accordance with GAAP.
"Hazardous Substances" shall mean any and all pollutants,
contaminants, toxic or hazardous wastes or any other substances that might pose
a hazard to health or safety, the removal of which may be required, or the
generation, manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge, spillage,
seepage or filtration of which may be restricted, prohibited or penalized, by an
Environmental Law (including, without limitation, petroleum products, asbestos,
urea formaldehyde foam insulation and polychlorinated biphenyls and substances
defined as Hazardous Substances under any Environmental Law).
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"Indebtedness" shall mean, with respect to any Person (without
duplication): (a) all indebtedness for borrowed money of such Person; (b) all
obligations of such Person for the deferred purchase price of capital assets or
other property or services (excluding trade and other payables incurred in the
ordinary course of business); (c) all obligations of such Person evidenced by
notes, bonds, debentures or other instruments; (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller and lender under such agreement in the event of default are
limited to repossession or sale of such property) and all other obligations
secured by a Lien on the property or assets of such Person; (e) all capital
lease obligations of such Person; (f) all obligations, contingent or otherwise,
of such Person under acceptances, letters of credit or similar facilities; (g)
all obligations of such Person to purchase, redeem, retire or otherwise acquire
for value any capital stock of such Person or any warrants, rights or options to
acquire such capital stock, which obligations shall be valued, in the case of
redeemable preferred stock, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends and, in the case of
other such obligations, at the amount that, in light of all the facts and
circumstances existing at the time of determination, is reasonably expected to
be payable; (h) all guarantees of such Person; (i) all Synthetic Leases or
similar off- balance sheet obligations of such Person; (j) all Indebtedness
referred to in clauses (a) through (i) above secured by (or which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (k) all unfunded pension
liabilities.
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"Indemnified Claims" shall mean all personal injury claims which,
save for the payment of any applicable deductible, are expected to be ultimately
indemnified through applicable insurance policies maintained by the Debtors for
liability insurance, including, without limitation those claims of Class 3C
Creditors as defined in the Plan.
"Indemnified Persons" shall mean the Trustee, his agents, employees,
representatives, attorneys, accountants, independent consultants, other
professionals, and any successors and assigns thereof.
"ITB" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"ITB Security Agreement" shall have the meaning ascribed to such
term in the Recitals to this Agreement.
"ITB Shares" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"ITG" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"ITG Accounting Year" shall mean the annual accounting period
utilized by ITG consisting of 52 or 53 weeks starting in December of each year.
"ITGD" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Leasehold Mortgage" shall mean the mortgage and security agreement
covering all right, title and interest of ITG in and to the Port Lease, in form
appropriate for recording or registering with the appropriate Governmental
Authority, to be executed and delivered to the Trustee pursuant to this
Agreement.
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"XXX Equity" shall mean XXX Equity Group, Inc., a Florida
corporation.
"Lien" shall mean any mortgage, lien, pledge, assignment, charge,
security interest, title retention agreement, separate beneficial interest,
levy, execution, seizure, attachment or garnishment in respect of any property,
whether created by statute, contract, common law or otherwise, and whether or
not xxxxxx, vested or perfected.
"Liquidation Event" shall mean the termination of the Orderly
Liquidation Period without all Defaults or Events of Default having been cured
as provided in Section 13.6 of this Agreement or the occurrence and continuation
of an Event of Default at any time after the termination of an earlier Orderly
Liquidation Period.
"Master Settlement Agreement" shall have the meaning ascribed to
such term in the Recitals to this Agreement.
"Material Adverse Change" shall mean (a) any material adverse change
in the business, condition (financial or otherwise), assets, liabilities,
results of operations, properties, or business prospects of ITG, and (b) any
material adverse change with respect to the binding nature, validity, or
enforceability of this Agreement or any Closing Document or Settlement Document,
or with respect to the ability of the Obligated Parties to perform their
obligations under this Agreement, whether resulting from any single act,
omission, situation or event or taken together with other such acts, omissions,
situations or events.
"Material Agreements" shall have the meaning ascribed to such term
in Section 10.15 of this Agreement.
"MJQ" shall have the meaning ascribed to such term in the
introductory paragraph to this Agreement.
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"MJQ Advances" shall have the meaning ascribed to such term in
Section 5.6 of this Agreement.
"Monitoring Fee" shall have the meaning ascribed to such term in
Section 4.2 of this Agreement.
"Monthly Payment" shall have the meaning ascribed to such term in
Section 3.5.1 of this Agreement.
"Necessary Capital Payments" shall mean the payments and
expenditures described in clauses (A), (B) and (C) of Section 5.5 of this
Agreement.
"Obligated Parties" shall mean, collectively, jointly and severally,
ITG, MJQ and ITB.
"O. C. Realty" shall mean O. C. Realty LLC, a Florida limited
liability company. "Orderly Liquidation Period" shall have the meaning ascribed
to such term in Section 13.5 of this Agreement.
"Operating Account" shall mean Account No. 2000011165039, maintained
by ITG at Wachovia Bank, N.A.
"Operating Reserve" shall mean an amount not to exceed $500,000 in
the aggregate at any time, maintained by ITG in the Operating Account as a
reserve for working capital needs.
"Payment Deferral Reserve" shall have the meaning ascribed to such
term in Section 3.7 of this Agreement.
"Permitted Affiliate Payments" shall mean (a) payments to GMO Travel
in respect of goods or services provided after January 3, 2003 by GMO Travel to
ITG in the ordinary course of business and on terms no less favorable to ITG
than those generally available
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from independent third parties, (b) all salary, bonus and benefits payable to
FXM in accordance with his existing employment agreement, and increases in such
salary not to exceed 5% per year, and the bonus payable to FXM for (fiscal or
calendar year) 2002 in the amount of $88,750, and (c) the regular monthly or
bi-weekly payroll payment by ITG to MJQ.
"Permitted Liens" shall have the meaning ascribed to such term in
Section 11.2 of this Agreement.
"Payment Obligations" shall have the meaning ascribed to such term
in the Recitals to this Agreement.
"Person" shall mean an individual, corporation, limited liability
company, association, partnership, business, joint venture, trust, estate,
unincorporated organization, government or any agency or political subdivision
thereof, or any other entity.
"Plan" shall have the meaning ascribed to such term in the Recitals
to this Agreement.
"Port Lease" shall mean the Maritime Office Complex Lease and
Operating Agreement dated April 24, 2002, as amended, between the Port of Palm
Beach District, as landlord, and ITG, as tenant.
"Purchase and Sale Agreement" shall have meaning ascribed to such
term in the Recitals to this Agreement.
"Restricted Payment Period" shall have the meaning ascribed to such
term in Section 5.5 of this Agreement.
"Restricted Payments" shall mean any and all of the payments and/or
expenditures described in Section 5.4 of this Agreement excluding Necessary
Capital Payments.
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"Secured Obligations" shall mean, collectively, the Payment
Obligations, all accrued and unpaid interest thereon (both before and after an
Event of Default), and (without duplication) all fees (including without
limitation, the Forbearance Fee, Monitoring Fees and the Stay Bonuses), expense
reimbursements (including, without limitation, Collection Costs), indemnities
and all other amounts accrued and payable to the Trustee pursuant to this
Agreement.
"Security Agreement" shall mean one or more security agreements, in
form and substance satisfactory to the Trustee, to be executed and delivered by
the Debtors pursuant to the terms of this Agreement.
"Settlement Documents" shall have the meaning ascribed to such term
in the Recitals to this Agreement as they may be modified pursuant to the
Amended and Restated Escrow Agreement or this Agreement.
"Ship" shall have the meaning ascribed to such term in the Recitals
to this Agreement.
"Ship Mortgage" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Ship Note" shall have the meaning ascribed to such term in the
Recitals to this Agreement.
"Ship Obligations" shall have the meaning ascribed to such term in
the Recitals to this Agreement.
"Stay Bonuses" shall have the meaning ascribed to such term in
Section 4.3 of this Agreement.
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"Stock Note" shall have the meaning ascribed in such term in the
Recitals to this Agreement.
"Stock Pledge Agreement" shall mean, collectively, the stock pledge
agreements, in form and substance satisfactory to the Trustee, to be executed
and delivered by ITGD and FWM, respectively, pursuant to the terms of this
Agreement.
"Subordination Agreement" shall mean the subordination agreement, in
the form mutually satisfactory among the parties and, to be executed and
delivered by the Debtors, ITB, ITGD, FWM and FXM pursuant to the terms of this
Agreement, under which the debts and liabilities of ITG to its Affiliates (other
than for or in respect of Permitted Affiliate Payments) are subordinated in
payment and priority to the Secured Obligations.
"Synthetic Lease" shall mean an off-balance sheet financing of a
capital asset or project where the borrower is treated as the owner of the asset
or project for tax purposes but not for book accounting purposes.
"Tax Sharing Fee" shall mean the fee, in a maximum aggregate monthly
amount not to exceed $100,000, payable by ITG to ITB pursuant to a certain Tax
Sharing Agreement dated as of July 1, 2003, among ITB and its subsidiaries.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as
in effect in the State of New Jersey, including as amended from time to time.
1.4 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP.
1.5 Number; Gender. Unless the context otherwise requires, any words
used in the plural shall include the singular, and vice versa, and any words
used in the masculine form shall also include the feminine and neuter forms, and
vice versa.
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1.6 Recitals. The Recitals to this Agreement are incorporated herein
by reference.
2. EXISTING AGREEMENTS.
2.1 Existing Agreements Ratified. The Debtors, FWM and ITB hereby
ratify and confirm their obligations under the Existing Agreements as amended
and supplemented by this Agreement, and acknowledge and agree that except as
provided in this Agreement or replaced and revised pursuant to the Amended and
Restated Escrow Agreement, the Existing Agreements constitute their legal, valid
and binding obligations, enforceable in accordance with their respective terms,
and continue in full force and effect, unmodified; provided that in the event of
a conflict between the terms and provisions of any of the Existing Agreements
and this Agreement, the terms and provisions of this Agreement shall control and
further provided, however, that the Existing Agreements and this Agreement are
subject to the terms of the Plan as confirmed. The Plan, this Agreement and
Existing Agreements shall be construed to the greatest extent possible to be
consistent with each other.
3. PAYMENT OBLIGATIONS.
3.1 Amount. As of the date hereof, the aggregate amount of the
Payment Obligations (which amount shall be deemed to be the principal amount of
the Payment Obligations) consists of the sum of the following:
(a) $9,750,000, being the Balloon Payment;
(b) (i) $1,511,035.70, being the unpaid principal balance
of the Stock Note, plus
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(ii) $15,488.12, being interest thereo from December
13, 2002 until and including January 23, 2003 at an
annual rate of 9%, and
(iii) $121,890.21 being interest thereon from January
24, 2003 until and including the Effective Date of
this Agreement at an annual rate of 11%; and
(c) $225,000, being the consideration payable to the
Trustee for his agreement to sell to ITB an
additional 450,000 ITB Shares pursuant to Section 28
of the Stock Purchase Agreement as amended.
3.2 Joint and Several Obligations. The Obligated Parties hereby
agree to pay the Secured Obligations to the Trustee as provided in this
Agreement and each acknowledge and agree that notwithstanding anything to the
contrary contained in any of the Existing Agreements, the Secured Obligations
are the joint and several obligations and liabilities of the Obligated Parties,
and are justly due and owing to the Trustee, without any offsets, claims,
counterclaims or defenses.
3.3 Final Maturity Date. Notwithstanding any term or provision of
this Agreement to the contrary, the Secured Obligations, if or to the extent not
sooner paid, are due and payable in full on the Final Maturity Date.
3.4 Base Interest. The unpaid principal amount of the Payment
Obligations shall bear interest, from the Effective Date of this Agreement until
the earlier of (a) payment in full and (b) the commencement (if any) of the
Orderly Liquidation Period, at an annual rate of twelve percent (12%),
calculated on the basis of a 360-day year ("Base Interest").
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3.5 Payment Installments. The Payment Obligations and Base Interest
thereon are payable in the following installments:
3.5.1 On the first Business Day of each calendar month,
commencing with the first such date after the Effective Date, the sum of
$400,000 (each, a "Monthly Payment"), to be applied, first, to the payment of
accrued and unpaid Base Interest, and thereafter, to the unpaid principal
portion of the Payment Obligations; provided, however, that in the event of a
refinancing and prepayment of the Payment Obligations as described in Section
8.3, the Monthly Payment shall be reduced to a monthly amount equal to the
greater of (a) $100,000 and (b) the monthly amount necessary to amortize the
unpaid principal amount of the Payment Obligations in equal monthly installments
by the Final Maturity Date.
3.5.2 On or prior to March 31, 2005, and on each March 31
thereafter until payment in full of the Payment Obligations, an amount equal to
75% of the Free Cash Flow of ITG for the preceding ITG Accounting Year (each, an
"Annual Sweep Payment"), beginning with the ITG Accounting Year which begins
December 29, 2003, to be applied, first, to the payment of accrued and unpaid
interest on the Payment Obligations, second, to the payment of the unpaid
principal amount of the Payment Obligations, and thereafter, to the payment of
any other Secured Obligations in such order and manner as the Trustee shall
determine.
(a) Each Annual Sweep Payment shall be accompanied by a
calculation, in reasonable detail, of Free Cash Flow for the applicable ITG
Accounting Year, certified as true and correct by the President or Chief
Financial Officer of ITG. In the event of any dispute between ITG and the
Trustee with respect to the calculation of Free Cash Flow, the parties shall
engage, at ITG's expense, an independent certified public accountant mutually
acceptable to the Trustee and ITG to perform the calculation.
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(b) After payment in full to the Trustee of an Annual Sweep
Payment for any ITG Accounting Year, and assuming that (i) the calculation of
Free Cash Flow in connection with such Annual Sweep Payment is not in dispute,
(ii) no Restricted Payment Period is in effect, and (iii) no uncured Default or
Event of Default exists under this Agreement, ITG may expend, transfer or
otherwise dispose of the 25% balance of Free Cash Flow for such ITG Accounting
Year in its sole discretion.
3.6 Prepayments. At any time and from time to time, Obligated
Parties, each in their sole discretion, may prepay all or any portion of the
principal amount of the Payment Obligations upon the concurrent payment of all
accrued and unpaid interest on such portion of the Payment Obligations being
prepaid.
3.7 Payment Deferral Reserve. Notwithstanding the provision of
Section 3.5.1, in the event that the Obligated Parties fail to make any Monthly
Payment in whole or in part, such failure shall not constitute a Default
hereunder if (a) the Trustee receives at least one (1) Business Day prior
written notice advising the Trustee of a payment deferral for such month, (b) no
Restricted Payments have or will be made in any such month for which a deferral
is available and utilized, and (c) the aggregate amount of all Monthly Payments
deferred and unpaid at the time of such notice does not exceed the sum of (i)
$800,000, (ii) all prepayments of the Payment Obligations, and (iii) all Annual
Sweep Payments (such sum being referred to herein as the "Payment Deferral
Reserve"); provided; however, that the Payment Deferral Reserve shall not exceed
$800,000 in the aggregate in the 34th month after the Effective Date, and
$400,000 in the aggregate in the 35th month after the Effective Date.
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4. TRUSTEE FEES. The Obligated Parties shall pay to the Trustee the
following fees and payments, in the amounts and at the times set forth below,
none of which shall be applied to reduce the outstanding principal of or accrued
interest on the Payment Obligations:
4.1 Forbearance Fee. A forbearance fee in the aggregate amount of
$350,000 (the "Forbearance Fee") shall be due and payable as follows:
(a) $100,000 on the Effective Date; and
(b) $250,000, without interest, on the earliest of (i) the
date on which the Payment Obligations are paid in full, (ii) the Final Maturity
Date, and (iii) the date on which ITG has received in the aggregate the sum of
at least $250,000 with respect to the pre-petition loan/receivable owed to ITG
by O.C. Realty in the outstanding principal amount as of the date hereof of
$2,021,176.90, whether in full or partial payment thereof, or as the proceeds of
the sale, assignment or other disposition thereof, or as the proceeds of a
financing secured in whole or in part thereby;
4.2 Monitoring Fee. A monthly fee in the amount of $5,000 plus
reimbursement of the fees and expenses incurred after the Effective Date by the
Trustee's accounting firm of Mercadien, P.C. (f/k/a Druker, Rahl and Fein) in
connection with the Trustee's oversight of the operations of the Debtors
(collectively, the "Monitoring Fee") shall accrue during the term of this
Agreement and shall be payable monthly, in arrears, on the first Business Day of
each calendar month after the Effective Date; provided, however, that the
Monitoring Fee shall not exceed at any time the sum of $12,500 per month on a
cumulative basis since the Effective Date except as provided in Section 13.5.6
of this Agreement; and
4.3 Stay Bonuses. Stay bonuses in the respective amounts of $200,000
and $100,000 (the "Stay Bonuses") will be due and accrue to the Trustee on the
first day of the 13th
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and 25th months, respectively, after the Effective Date if any portion of the
Payment Obligations remains unpaid and outstanding on the applicable date. The
Stay Bonuses will be payable on the earlier of (i) the date on which the Payment
Obligations are paid in full and (ii) the Final Maturity Date.
5. OPERATING COVENANTS.
5.1 Annual Budget Plan. (a) On or before December 15 of each ITG
Accounting Year beginning with December 15, 2003, ITG shall deliver to the
Trustee the Annual Budget for the next ITG Accounting Year. During the month of
August in each year, ITG shall review the Annual Budget with a view toward
making reasonable and appropriate revisions thereto, and if the Annual Budget is
then revised, ITG shall deliver a copy of the revised Annual Budget to the
Trustee within ten (10) days after approval by ITG's management. Each Annual
Budget and any revised Annual Budget shall be in reasonable detail and shall be
accompanied by a certification of the President or Chief Financial Officer of
ITG that such Annual Budget (in light of the constraints of this Agreement) is
reasonable, is made in good faith, is consistent with the terms and conditions
of this Agreement, and represents ITG's best judgment as to such matters.
(b) Included in the Annual Budget (as the same may be revised
from time to time) shall be a capital budget for planned Capital Expenditures
(the "Capital Plan"). The Debtors shall utilize the funds allocated in the
Capital Plan to ensure the Ship is maintained in good working order and
consistently with standards of safety and seaworthiness dictated by the United
States Coast Guard, International Maritime Organization, the Republic of Panama
and/or Det Norske Veritas (or the classification society to which the Ship
belongs at the time).
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5.2 Allowable Capital Expenditures. So long as the Debtors are
current with all payments due to the Trustee, the Debtors shall be permitted to
spend up to $300,000 per year (pro-rated for the ITG Accounting Year ending
December 28, 2003) plus the reasonable and necessary costs of Drydock (not to
exceed $350,000 in each of 2003 and 2005) and Wetdock (not to exceed $100,000 in
each of 2004 and 2006) consistent with the Capital Plan and Capital Expenditures
paid for out of the Additional Capital Expenditure Reserve. In addition and so
long as the Debtors are current with all payments due to the Trustee, the
Debtors may make the Capital Expenditures in the amounts and for the purposes
described in Schedule 5.2 annexed hereto and as may be approved in writing by
the Trustee in the future. Notwithstanding the foregoing, the Debtors with the
prior consent of the Trustee (or ISP, its agent), which consent will not be
unreasonably withheld or delayed, may make necessary Capital Expenditures
required to correct any mechanical deficiency which may negatively impact the
Ship's service schedule or to maintain acceptable standards of safety and
seaworthiness as dictated by the United States Coast Guard, International
Maritime Organization, the Republic of Panama and/or Det Norske Veritas (or the
classification society to which the Ship belongs at the time) that may result in
exceeding the Capital Plan. Capital expenditures made under this Section 5.2 are
collectively referred to as "Allowable Capital Expenditures".
5.3 Receipts; Funds; Payments. From the date of this Agreement until
payment in full of the Secured Obligations: (a) ITG shall deposit and/or cause
to be deposited all Gross Revenues of ITG (excluding Gross Revenues kept on
board the Ship in the ordinary course of business to maintain the Cash on Board
and excluding such xxxxx cash not to exceed $30,000 as may be kept on board the
Ship or in ITG's offices in the ordinary course of business) into the Operating
Account, or such other Accounts which are set forth in Schedule 5.3 hereto or
26
shall have been identified to the Trustee by at least thirty (30) days prior
written notice and in which the Trustee has a perfected security interest; (b)
no funds shall be transferred to any other accounts of the Debtors except upon
at least thirty (30) days prior written notice to the Trustee identifying such
new account(s) and after execution and delivery to the Trustee of all documents
as the Trustee may reasonably require to create and perfect a security interest
in such new account(s); and (c) no monies shall be paid out of any accounts of
ITG except in the ordinary course of business except as otherwise expressly
permitted or required by this Agreement or the Plan.
5.4 Restricted Payments. As long as no Default or Event of Default
exists under this Agreement, after payment in full of all amounts due and
payable pursuant to Sections 3 and 4 of this Agreement, including all amounts
previously deferred in accordance with Section 3.7, ITG may make the following
payments and/or deposits:
(a) to MJQ, the Bareboat Charter Fee for such month and any
accrued and unpaid Bareboat Charter Fees, less the aggregate amount of all MJQ
Advances made pursuant to the provisions of Section 5.6 hereof and not repaid to
ITG by MJQ;
(b) to ITB, the Tax Sharing Fee for such month and any accrued
and unpaid Tax Sharing Fees; and
(c) before March 31 of each ITG Accounting Year, beginning with
ITG Accounting Year commencing December 29, 2003, a deposit into the Additional
Capital Expenditure Reserve in an amount not to exceed the lesser of (i) Free
Cash Flow (calculated before deduction for deposits into the Additional Capital
Expenditure Reserve for such year) of ITG for the preceding ITG Accounting Year
and (ii) $400,000 for the ITG Accounting Year which begins December 29, 2003 and
$150,000 in each of the next two ITG Accounting Years;
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amounts already on deposit in the Additional Capital Expenditure Reserve may not
be spent by ITG during a Restricted Payment Period without the prior written
consent of the Trustee, except Necessary Capital Payments.
5.5 Restricted Payment Period. In the event that the Obligated
Parties have failed to make in full any payment required pursuant to Sections 3
or 4 of this Agreement as and when any such payment was due and payable, and as
long as such non-payment continues, in whole or in part, or in the event that
the Obligated Parties have given notice of a payment deferral pursuant to
Section 3.7 of this Agreement, during any such period of payment deferral (each
such period being hereinafter referred to as a "Restricted Payment Period"), the
Obligated Parties shall not make or permit to be made any Restricted Payments or
Allowable Capital Expenditures, in whole or in part, except (A) for Capital
Expenditures in case of emergency as necessary for the safety, seaworthiness or
classification of the Ship, (B) for such Allowable Capital Expenditures as were
previously ordered under a non-cancelable commitment during a period that was
not a Restricted Payment Period, or (C) such Capital Expenditures approved in
advance by the Trustee, which approval will not be unreasonably withheld or
delayed (Capital Expenditures described in clauses (A), (B) and (C) of this
Section 5.5 are hereinafter referred to collectively as "Necessary Capital
Payments"). Any Restricted Payment received by any party hereto (other than the
Trustee) during a Restricted Payment Period shall be held in trust for the
Trustee and shall be paid over to the Trustee immediately upon demand therefor.
5.6 MJQ Advances. During any Restricted Payment Period, ITG may
advance monies to MJQ, which advances shall be treated as loans (the "MJQ
Advances") and shall be repaid to ITG from subsequent payments of the Bareboat
Charter Fee made to MJQ by
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ITG. The MJQ Advances shall be made only for the following purposes and in the
following maximum amounts:
(a) To pay the reasonable and necessary costs of defending the
Indemnified Claims in the event (and only to the extent) that the defense costs
thereof are not covered by insurance, in a maximum aggregate amount of $100,000
during the term of this Agreement; and
(b) To reimburse and/or advance for the reasonable and necessary
documented out-of-pocket business expenses of FWM, in an amount not to exceed
$25,000 in the aggregate as of the Effective Date and $5,000 per month
thereafter, which amounts, if unused, shall not cumulate.
5.7 Subordinated Payments. From the date of this Agreement until
payment in full of the Secured Obligations, all indebtedness, obligations and
liabilities of ITG to any of its Affiliates excluding, however, Permitted
Affiliate Payments, shall be subordinated in payment and priority to the Secured
Obligations pursuant to the terms and conditions of the Subordination Agreement,
except as otherwise expressly permitted by the terms of this Agreement.
Permitted Affiliate Payments are permitted to be made in the ordinary course of
business.
5.8 Other Permitted Payments. Notwithstanding anything to the
contrary contained in this Agreement, the Debtors may make payments in
accordance with the Plan.
5.9 Current Ratio. During the term of this Agreement, ITG shall
maintain a Current Ratio of at least 1:1, measured as of the end of each quarter
of each ITG Accounting Year, provided, however, that no Default shall be deemed
to exist with respect to this provision unless ITG shall fail to comply with
this Section 5.9 for two consecutive quarters. FXM and FWM shall jointly,
severally and unconditionally guaranty and act as surety for obligation of the
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Debtors under this Section 5.9 to maintain a Current Ratio of at least 1:1,
measured as of the first day of the Orderly Liquidation Period.
5.10 Title to Ship. From the date of this Agreement until payment in
full of the Secured Obligation, neither of the Debtors shall transfer or
otherwise encumber ownership of the Ship or grant any security interest or other
interest in or rights to the Ship without the express written consent of the
Trustee (subject to Section 8.3 of this Agreement).
5.11 Conduct of Ship Business. From the date of this Agreement until
payment in full of the Secured Obligation, except as otherwise consented to by
Trustee in writing or as specifically provided in this Agreement, ITG shall: (a)
carry on the Ship's business operations in, and only in, the usual, regular and
ordinary course, in substantially the same manner as conducted heretofore and,
to the extent consistent with such business operations, use reasonable efforts
to keep available the services of its present employees and preserve the
goodwill of the Ship and relationships with insurance companies, suppliers,
customers, and others having business dealings with the Ship; (b) maintain the
Ship and all material equipment and other property used in connection with the
operation of the Ship in good working order and repair, except for depletion,
depreciation, ordinary wear and tear and damage by casualty, and in compliance
with all Applicable Laws and standards of safety and seaworthiness, including
without limitation, as established by the United States Coast Guard,
International Maritime Organization (IMO), the Republic of Panama and Det Norske
Veritas (or any other classification society to which the Ship belongs at such
time), provided, however, that ITG shall not be deemed to have failed to comply
with this clause (b) in respect of any repair or replacement delayed or not made
as a result of the Trustee's delaying or withholding consent to any Capital
Expenditure pursuant to Section 5.2 hereof or any other provision of this
Agreement; (c) keep in
30
full force and effect insurance coverages no less than those now carried by it
(although deductibles may be reasonably increased and coverages may be
reasonably limited to avoid increases in insurance premiums substantially above
current levels); (d) perform in all material respects all of its obligations
under agreements, contracts and instruments relating to or affecting its
properties, assets and the Ship's business operations; (e) comply in all
material respects with all Applicable Laws relating to the conduct of the Ship's
business operations, and keep in full force and effect all licenses, permits and
approvals necessary for the conduct of the Ship's business operations; and (f)
promptly advise the Trustee in writing of any Material Adverse Change.
5.12 Bareboat Charter. From the date of this Agreement until payment
in full of the Secured Obligations, and notwithstanding the failure to pay the
Bareboat Charter Fee at any time or from time to time, MJQ and ITG shall
maintain the Bareboat Charter in full force and effect at all times and shall
not terminate, cancel or modify, or permit the expiration or non- renewal of,
the Bareboat Charter without the prior written consent of the Trustee.
5.13 Port Lease. From the date of this Agreement until payment in
full of the Secured Obligations, without the prior written consent of the
Trustee, ITG shall not cancel, terminate or surrender the Port Lease, assign or
sublease all or any portion of the premises demised thereby, or modify or amend
any of the terms thereof, and ITG shall perform and observe all of its
obligations under the Port Lease and shall maintain the Port Lease within
applicable grace periods in full force and effect.
5.14 Prohibited Payments. From the date of this Agreement until
payment in full of the Secured Obligations, ITG shall not make or pay any
dividends, distributions, bonuses, salary increases, directors' fees, expense
reimbursements, advances, loans, or other additional
31
forms of or increases in compensation, benefits or perquisites to or for the
benefit of FWM or FXM or any of their respective Affiliates, except for
Permitted Affiliate Payments. ITG and FWM agree that until the Secured
Obligations are paid in full, FWM shall not receive any salary or other
compensation from ITG.
5.15 ITB Employees. On the Effective Date, all employees of ITB as
of December 15, 2002 and currently employed by ITG, including without
limitation, Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxxxxx Xxxx Xxxx and Xxxxxxx Xxxxxx, shall be transferred to the
employ of ITB and shall not be re-employed by ITG during the term of this
Agreement.
5.16 Books and Records. During the term of this Agreement, each of
the Debtors shall maintain at all times books of record and account in which
complete, true and correct entries shall be made of all dealings and
transactions in relation to its business and affairs. All books and records
relating to the operation of the Ship are maintained either at the offices of
the Debtors located at Xxx Xxxx 00xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx, or at
off-site commercial storage facilities previously identified in writing
(including name and address of actual location of books and records) provided
the Trustee has equivalent access (for purposes of Section 5.17) to the off-site
facilities, and shall remain there during the term of this Agreement except as
otherwise provided in this Section 5.16. The Debtors shall provide the Trustee
with at least ten (10) Business Days written notice prior to the relocation of
the offices where books and records are maintained, and such notice shall
identify the address of the relocated offices in which such books and records
shall be maintained, including offsite storage facilities with unaffiliated
third parties in the ordinary course of business.
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5.17 Access. During normal business hours, no more frequently than
monthly, and upon reasonable notice (and for this purpose no more than two (2)
Business Days notice shall be required under any circumstances) if no Default or
Event of Default exists under this Agreement, or at any time and from time to
time, with or without notice, during the continuance of a Default or Event of
Default under this Agreement, the Debtors shall allow the Trustee and any agents
and representatives of the Trustee to visit and inspect the Ship and any of the
other properties of the Debtors, to examine the books of account and other
records and files of the Debtors, to make copies thereof, and to discuss the
affairs, business, finances and accounts of the Debtors with their respective
officers, employees, agents and accountants; and the Debtors will provide the
Trustee and his agents and representatives with reasonable access to all
information regarding the Ship, and its operations and financial condition. Any
such inspections are solely for the benefit of the Trustee and no action or
inaction by the Trustee shall constitute any representation that the Debtors are
in compliance with the terms of this Agreement.
5.18 Second Vessel. From the date of this Agreement until payment in
full of the Secured Obligations, the Debtors shall not, and shall not permit an
Affiliate to, acquire, operate, control, manage or otherwise be involved in the
ownership, operation or management of a casino cruise ship other than the Ship
operating from the Port of Palm Beach, Florida (a "Second Vessel") unless such
Affiliate first agrees to do the following:
(a) guarantee that all net income, less principal payments on bona fide
third party institutional debt, commercially reasonable capital expenditure
reserves, and such commercially reasonable contingency reserves as may be
approved in advance by the Trustee such approval not to be unreasonably withheld
or delayed, from the Second Vessel shall be transferred to ITG and added to Free
Cash Flow for any ITG Accounting Year for which the Annual Sweep
33
Payment payable to the Trustee is less than the amount budgeted for the Annual
Sweep Payment for such ITG Accounting Year, as provided in the budgets attached
as Schedule 5.18 hereto, but only to the extent of the shortfall in the budgeted
amount;
(b) guarantee that in the event the Debtors are in a Restricted Payment
Period, all net income, less principal payments on bona fide third party
institutional debt, commercially reasonable capital expenditure reserves, and
such commercially reasonable contingency reserves as may be approved in advance
by the Trustee such approval not to be unreasonably withheld or delayed, from
the Second Vessel shall be transferred to ITG, to the extent necessary to cover
any shortfall that otherwise exists in payment of Monthly Payments and
Monitoring Fees, until such time as the Debtors are no longer in a Restricted
Payment Period; and
(c) provide access to the Second Vessel in accordance with Section 5.17
of this Agreement.
Such Affiliate shall execute and deliver a guaranty agreement covering
the provisions of subsections (a), (b) and (c) in a form reasonably satisfactory
to the Trustee.
6. GENERAL UNSECURED CREDITORS.
6.1 Initial Payment; Reserve. On the Effective Date, the Debtors
shall (i) make payment to General Unsecured Creditors in cash in an amount equal
to 50% of the total claims of General Unsecured Creditors (the "Allowed
Unsecured Claims"), and (ii) shall establish a reserve (the "Disputed Claims
Reserve") in cash in an amount sufficient to satisfy 50% of the disputed Class
3A and 3B Claims (as defined in the Plan) (the "Disputed Unsecured Claims").
6.2 Creditor Account. Beginning 30 days after the Effective Date,
during each of the next six calendar months and by the 25th day of each such
calendar month, the
34
Debtors shall pay into the Creditor Account the aggregate sum of $70,000 to be
held and applied to the final payment in respect of claims of General Unsecured
Creditors.
6.3 Balance of Payments. Six months after the Effective Date, the
Debtors shall pay (a) in full all Allowed Unsecured Claims, together with
interest at the rate of 8% per annum for the period from the Effective Date
until such payment, and (b) additional monies into the Disputed Claims Reserve
in an amount sufficient to satisfy the Disputed Unsecured Claims in full in the
event that such claims become Allowed Unsecured Claims.
6.4 Collateral Security. The obligations of the Debtors to make
payments to General Unsecured Creditors as described in this Section 6 shall be
secured by the following:
(a) a perfected first priority security interest in the Creditor
Account and all monies therein; and
(b) a perfected security interest in (i) the Cash on Board (to
the extent the same can be perfected), and (ii) all shoreside office furniture,
fixtures and equipment which assets described in this Section 6.4 shall also be
subject to the subordinate security interest of the Trustee until the General
Unsecured Creditors have been paid in full, at which time the Trustee shall have
a first priority security interest in all such assets.
6.5 Conflict with Plan. In the event of a conflict between any of
the terms and provisions of this Agreement with respect to the General Unsecured
Creditors and the Plan, the Plan shall control.
7. REPORTING REQUIREMENTS. During the term of this Agreement, the
Obligated Parties shall provide to the Trustee, at the following times, the
following reports and financial statements, each in form reasonably satisfactory
to the Trustee, and each certified by the
35
President or Chief Financial Officer of such Person as true, complete and
correct and reflecting fairly the financial information contained therein:
7.1 Annually. Upon request of the Trustee, within 120 days after the
close of any fiscal year, audited financial statements for ITG for such fiscal
year, including balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules, certified by an independent certified public
accountant reasonably satisfactory to the Trustee;
7.2 Monthly. As soon as available, but in any event no later than
the 15th day of each calendar month, a monthly revenue/expense statement for ITG
for the prior month (or four or five week period in an ITG Accounting Year),
including year-to-date information and a comparison to the same period in the
prior fiscal year and to the Annual Budget for such period;
7.3 Weekly. By Wednesday of each week, a cash receipts and
disbursements report for ITG for the prior week;
7.4 ITB. Within 120 days after the close of each fiscal year,
audited [consolidated] financial statements for ITB for such fiscal year,
including balance sheet, profit and loss statement and statement of cash flows,
with supporting schedules, certified by an independent certified public
accountant reasonably satisfactory to the Trustee; and
7.5 Current Ratio Calculation. Within 45 days after the end of each
quarter of an applicable ITG Accounting Year, a detailed calculation of the
Current Ratio of ITG as of the end of such fiscal quarter.
8. COLLATERAL SECURITY.
8.1 Description of Collateral. The Secured Obligations shall be
secured by the following collateral:
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8.1.1 Deed in Lieu. A duly executed deed in lieu of foreclosure,
in recordable form, to the Ship, legally sufficient to convey and transfer to
the Trustee or its designee all right, title and interest of the Debtors in and
to the Ship (the "Deed in Lieu"), absolutely and free and clear of any Liens,
rights of redemption or other rights or interests whatsoever of the Debtors and
any other Persons, together with such other instruments, assignments, bills of
sale, affidavits and other documents as may be necessary or advisable to assign,
transfer and convey to the Trustee or its designee all property (real and
personal, tangible and intangible), rights, permits and approvals related to the
operation of the Ship as a going concern, all of which shall be reasonably
mutually satisfactory in form and substance to the Trustee and the Debtors, and
all of which shall be held and delivered to the Trustee pursuant to the Escrow
Agreement and shall be subject to Section 13 of this Agreement;
8.1.2 Security Interest. Pursuant to the terms of the Security
Agreement and such other agreements (including the Control Agreement with
respect to deposit accounts) as the Trustee may reasonably deem necessary or
advisable to create and perfect a security interest (to the extent the same be
perfected and subject to Section 6.4 above) in any such collateral, subject to
Permitted Liens, a perfected continuing first priority security interest in all
cash, other assets and property, now owned or hereafter acquired, of the Debtors
except (collectively, "Excluded Assets"): (a) the Creditor Account, (b) any
accounts receivable or notes due to MJQ from FWM and/or Xxxxxxx X. Xxxxxxx, and
(c) after payment in full of the Forbearance Fee pursuant to Section 4.1(b) of
this Agreement, any accounts receivable or notes due to the Debtors from O.C.
Realty or MJQ Development LLC;
8.1.3 Stock Pledge. Pursuant to the ITGD Pledge Agreement and
Xxxxxx Pledge Agreement, a perfected first priority security interest in and
pledge of all of the
37
issued and outstanding capital stock of each of the Debtors, subject to no other
Liens (except restrictions or transfer without compliance with applicable
securities laws), options or other rights of any third parties;
8.1.4 Leasehold Mortgage. Pursuant to the Leasehold Mortgage, a
valid first priority leasehold mortgage Lien on the Port Lease and all rights,
title and interest of ITG thereunder, subject to no other Liens; and
8.1.5 Existing Collateral. All collateral security granted or
provided pursuant to the Master Settlement Agreement, any of the Settlement
Documents and the Foreclosure Documents, all of which the Debtors ratify,
confirm and agree is in full force and effect subject to Section 13 hereof, will
also serve as collateral security for the Secured Obligations.
8.2 GSP Note. In the event that ITB sells, assigns, transfers,
conveys, borrows against, pledges, collects, accelerates the payment of, or
otherwise disposes of or monetizes (in whole or in part) the GSP Note, or any of
its rights or interests therein, prior to the Effective Date, and no uncured
Default or Event of Default then exists under this Agreement, the Trustee agrees
to release its security interest in the GSP Note on the condition that ITB
deposits into an interest-bearing escrow account under the control of the
Trustee, as additional collateral security for the Secured Obligations, from the
net proceeds of the GSP Note, an amount equal to $900,000 provided, however
that, if the Effective Date occurs on or before December 31, 2003, promptly
thereafter, the Trustee shall release such escrowed funds to ITB, free and clear
of any security interest of the Trustee; and provided, further that if the
Effective Date does not occur on or before December 31, 2003, on January 2,
2004, the Trustee shall be entitled to apply all such escrowed funds and all
interest earnings thereon to the payment and reduction of the outstanding
38
Payment Obligations. In the event that ITB sells, assigns, transfers, conveys,
borrows against, pledges, collects, accelerates the payment of, or otherwise
disposes of or monetizes the GSP Note after the Effective Date, the Trustee
agrees to release its security interest therein and in any proceeds thereof,
provided no uncured Default or Event of Default then exists under this
Agreement.
8.3 Conditions to Subordination. In the event that the Obligated
Parties are able to refinance a portion of the Secured Obligations with a bona
fide third party institutional lender or investor, in an arm's length
transaction, the Trustee shall consent to such transaction and shall subordinate
its liens and security interests in the collateral being held for the Secured
Obligations to such lender or investor on the following terms and conditions:
(a) No uncured Default or Event of Default then exists under this
Agreement;
(b) No payments have been deferred pursuant to Section 5.7 of
this Agreement and remain unpaid;
(c) Such transaction results in net proceeds to the Trustee
sufficient to prepay at least $9,750,000 of the principal portion of the Payment
Obligations and all accrued and unpaid interest thereon to the date of payment;
(d) Trustee and such lender or investor enter into an
intercreditor agreement, on terms and conditions that are commercially
reasonable and approved by the Trustee, which approval shall not unreasonably be
withheld; and
(e) Any remaining Secured Obligation will be amortized by monthly
payments in an amount equal to the greater of $100,000 or such amount as will
amortize the remaining Secured Obligations over the number of months to (and
including) the Final Maturity Date.
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9. EFFECTIVENESS; CONDITIONS PRECEDENT.
9.1 Effectiveness. The effectiveness of this Agreement is contingent
upon (a) the entry of a final order by the Bankruptcy Court confirming the Plan
and approving the general terms of this Agreement (the "Confirmation Order"),
and (b) the time for obtaining a stay of such Confirmation Order shall have
passed without any stay of such Order having been granted or, if such stay shall
have been granted, the Order shall have become final and non-appealable on or
prior to October 15, 2003, (c) the Plan shall have become effective. The Trustee
agrees that he shall not file a competing Plan of Reorganization and shall
support the Plan consistent with the terms and provisions of this Agreement. The
Trustee shall have the right to terminate this Agreement, at his election, prior
to the Effective Date, if the Debtors or either of them shall withdraw or revoke
the Plan or publicly announce its intention not to pursue the Plan, or if the
Chapter 11 Case of either Debtor shall have been converted to a case under
Chapter 7, or if the Debtors shall have breached their obligations to make
adequate protection payments to the Trustee. In the event of such termination by
the Trustee, this Agreement shall be null and void and of no force or effect.
9.2 Closing Documents. Simultaneously with the execution of this
Agreement, the parties to this Agreement shall execute and deposit with Kozyak
Tropin & Xxxxxxxxxxxx, P.A. the following Closing Documents all in form and
substance reasonably satisfactory to the parties hereto, to be delivered
promptly after the Effective Date to the parties hereto, except for the Closing
Documents specified in Section 9.2 (a), (f), (g) and (n) which shall be
delivered to the Escrow Agent. The Closing Documents specified in Section 9.2
(a), (f), (g) and (n) shall be held by the Escrow Agent (and if this Agreement
terminates before the
40
Effective Date, to be returned to the parties) in accordance with the terms of
the Amended and Restated Escrow Agreement:
(a) the documents described in Section 8.1.1 of this Agreement,
duly executed by the Debtors, as applicable;
(b) the Amended and Restated Escrow Agreement, duly executed (or
consented to) by all parties thereto and hereto;
(c) the Security Agreement as described in Section 8.1.2 of this
Agreement, duly executed by the Debtors;
(d) The Leasehold Mortgage described in Section 8.1.4 of this
Agreement, duly executed by ITG, together with any and all reports,
certifications, consents and estoppels as may be reasonably required by the
Trustee, and obtainable by the Debtors;
(e) the Pledge Agreements described in Section 8.1.3 of this
Agreement, duly executed by ITGD and FWM, as the case may be;
(f) stock certificates evidencing all of the issued and
outstanding shares of capital stock of each of the Debtors, duly endorsed in
blank (or with blank executed stock powers attached) and undated;
(g) written executed and undated resignations from all officers
and directors of each of the Debtors;
(h) the Control Agreements, duly executed by the Debtors and
Wachovia Bank, N.A. and any other financial institutions maintaining Accounts
listed in Schedule 5.3 and all other Accounts held by them;
(i) the Stock Put Agreement, duly executed by ITB and the
Trustee;
(j) the FXM Guaranty duly executed by FXM;
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(k) the FWM Replacement Guaranty duly executed by FWM;
(l) the Subordination Agreement described in Section 5.7 of this
Agreement, duly executed by the Obligated Parties, FXM and FWM;
(m) Certificates of insurance for the Debtors' Hull, Machinery
and General Liability policies of insurance, identifying the Trustee as
mortgagee, additional insured, and loss payee, "as its interests may appear," on
such casualty policies and as additional insured on such liability policies;
(n) a Verified Claim Of Owner And In Rem Appearance;
(o) a Certificate of Ownership and Encumbrance disclosing that
the Ship is free and clear of all encumbrances except the Ship Obligations and
Permitted Liens;
(p) For each of the Obligated Parties and ITGD, (i) a copy of its
certificate of incorporation, as amended, certified as true, complete and
correct as of a recent date by the Secretary of State or other appropriate
official of its jurisdiction of incorporation or in lieu of such certification
by the Secretary of State, a long-form good standing certificate as of a recent
date from such Secretary of State, itemizing all charter documents on file with
such Secretary of State; (ii) a copy of its By-laws, certified by its corporate
secretary as of the date of this Agreement as true, complete and correct; (iii)
a certificate of good standing issued as a recent date by the Secretary of State
or other appropriate official by its jurisdiction of incorporation and, if
applicable, of the State of Florida; (iv) a copy of the resolutions adopted by
its Board of Directors authorizing the execution, delivery and performance of
this Agreement and the Closing Documents, certified, as of the date of this
Agreement; and (v) a certification of its corporate secretary as of the date of
this Agreement with respect to the incumbency and specimen signatures of all
officers executing this Agreement and any of the Closing Documents;
42
(q) An opinion of counsel to the Obligated Parties in the form
attached hereto as Exhibit A; and
(r) such other agreements, instruments, certifications,
affidavits and other documents as may be reasonably requested by the Trustee or
his counsel to implement or effect the provisions of this Agreement, all in form
and substance mutually satisfactory to the Debtors and the Trustee.
9.3 Xxxxxxx Guaranty. Upon the later of (a) the Effective Date and
(b) delivery of the FXM Guaranty to the Escrow Agent, the Guaranty Agreement of
Xxxxxxx X. Xxxxxxx, III, in favor of the Trustee dated February 22, 2002,
automatically shall terminate and shall be of no further force or effect.
Notwithstanding any provision in this Agreement to the contrary, this Section
9.3 is for the express benefit of Xxxxxxx X. Xxxxxxx, III and shall be
enforceable by him, his heirs and personal representatives.
9.4 Xxxxxx Guaranty. Upon the later of (a) the Effective Date and
(b) the delivery of the FWM Replacement Guaranty described in Section 9.2 to the
Escrow Agent, the Guaranty Agreement of Xxxxxxx X. Xxxxxx in favor of the
Trustee dated February 22, 2002, automatically shall terminate and be replaced
with and superceded by the FWM Replacement Guaranty.
10. REPRESENTATIONS AND WARRANTIES.
10.1 MJQ. MJQ and FWM represent and warrant that (a) MJQ is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
enter into this Agreement and the Closing Documents to which it is a party and
to perform its obligations hereunder and thereunder; (b) the execution, delivery
and performance of this Agreement and the Closing Documents to which it is
43
a party, and the consummation by it of the transactions contemplated hereby and
thereby, have been duly authorized by the Board of Directors and the sole
shareholder of MJQ, and no other corporate proceedings on the part of MJQ are
necessary to authorize this Agreement and the Closing Documents and the
transactions contemplated hereby and thereby; (c) this Agreement has been duly
executed and delivered by MJQ and constitutes, and the Closing Documents to be
executed and delivered by MJQ pursuant hereto, when executed and delivered by
MJQ, will have been duly executed and delivered by MJQ and will constitute, the
legal, valid and binding obligations of MJQ, enforceable against MJQ in
accordance with their respective terms, except as the enforcement of remedies
may be limited by bankruptcy, insolvency, fraudulent conveyance and other laws
affecting creditors' rights generally and by general principles of equity; (d)
to the best of MJQ and FWM's knowledge, no recording, filing, registration,
notice, consent (governmental or otherwise) or other similar action including,
without limitation, any action involving any federal, state or local regulatory
body, is required in order to insure the legality, validity, binding effect or
enforceability as against MJQ of this Agreement or the Closing Documents to
which MJQ is a party, except the filing of UCC-1 financing statements under the
Uniform Commercial Code, the Confirmation Order, the consent to and execution of
the Control Agreement by Wachovia Bank, N.A., and such consents as have been
duly obtained and are in full force and effect; and (e) MJQ charters the Ship to
ITG pursuant to the terms of the Bareboat Charter, as amended, which is in full
force and effect.
10.2 ITG and ITGD. ITG and ITGD each represent and warrant that (a)
it is a corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada (as to ITG) and New Jersey (as to ITGD) and has
all requisite corporate power and authority to enter into this Agreement and the
Closing Documents to which it is a party and to
44
perform its obligations hereunder and thereunder; (b) the execution, delivery
and performance of this Agreement, and the Closing Documents to which it is a
party and the consummation by it of the transactions contemplated hereby and
thereby, have been duly authorized by its Board of Directors, and no other
corporate proceedings on its part are necessary to authorize this Agreement and
the Closing Documents which it is a party and the transactions contemplated
hereby and thereby; (c) this Agreement has been duly executed and delivered by
it and constitutes, and the Closing Documents to be executed and delivered by it
pursuant hereto, when executed and delivered, will have been duly executed and
delivered by it and will constitute, its legal, valid and binding obligations
enforceable in accordance with their respective terms, except as the enforcement
of remedies may be limited by bankruptcy, insolvency, fraudulent conveyance and
other laws affecting creditors' rights generally and by general principles of
equity; (d) to the best of ITG and ITGD's knowledge, no recording, filing,
registration, notice, consent (governmental or otherwise) or other similar
action including, without limitation, any action involving any federal, state or
local regulatory body, is required in order to insure the legality, validity,
binding effect on enforceability as against ITG or ITGD of this Agreement or the
Closing Documents to which ITG or ITGD is a party, except the filing of UCC-1
financing statements under the Uniform Commercial Code, the Confirmation Order,
the consent to and execution of the Control Agreement by Wachovia Bank, N.A.,
and such consents as have been duly obtained and are in full force and effect;
and (e) ITG charters the Ship pursuant to the Bareboat Charter as amended, which
is in full force and effect.
10.3 ITB. ITB represents and warrants that (a) ITB is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to enter
into this Agreement and the Closing
45
Documents to which it is a party and to perform its obligations hereunder and
thereunder; (b) the execution, delivery and performance of this Agreement, and
the Closing Documents to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by the
Board of Directors of ITB, and no other corporate proceedings on the part of ITB
are necessary to authorize this Agreement and the Closing Documents to which it
is party and the transactions contemplated hereby and thereby; (c) this
Agreement has been duly executed and delivered by it and constitutes, and the
Closing Documents to be executed and delivered by it pursuant hereto, when
executed and delivered, will have been duly executed and delivered by it and
will constitute, its legal, valid and binding obligations enforceable in
accordance with their respective terms, except as the enforcement of remedies
may be limited by bankruptcy, insolvency, fraudulent conveyance and other laws
affecting creditors' rights generally and by general principles of equity; (d)
to the best of ITB's knowledge no recording, filing, registration, notice,
consent (governmental or otherwise) or other similar action including, without
limitation, any action involving any federal, state or local regulatory body, is
required in order to insure the legality, validity, binding effect on
enforceability as against ITB of this Agreement or the Closing Documents to
which ITB is a party, except the filing of UCC-1 financing statements under the
Uniform Commercial Code and the Confirmation Order and such consents as have
been duly obtained and are in full force and effect; and (e) this Agreement has
been duly executed and delivered by ITB and constitutes, and the Closing
Documents to be executed and delivered by ITB pursuant hereto, when executed and
delivered by ITB, will have been duly executed and delivered by ITB and will
constitute, the legal, valid and binding obligations of ITB, enforceable against
ITB in accordance with their respective terms, except as
46
the enforcement of remedies may be limited by bankruptcy, insolvency, fraudulent
conveyance and other laws affecting creditors' rights generally and by general
principles of equity.
10.4 FWM and FXM. Each of FWM and FXM represents and warrants that
(a) he is an individual over the age of eighteen and has full legal capacity to
enter into and perform his obligations under this Agreement and the Closing
Documents to which he is a party; and (b) this Agreement has been duly executed
and delivered by him and constitutes, and the Closing Documents to be executed
by him pursuant hereto, when executed and delivered by him, will constitute, his
legal, valid and binding obligations, enforceable against him in accordance with
their respective terms, except as the enforcement of remedies may be limited by
bankruptcy, insolvency, fraudulent conveyance and other laws affecting
creditors' rights generally and by general principles of equity.
10.5 Trustee. The Trustee represents and warrants that (a) the
Trustee has the power and authority to enter into this Agreement and perform his
obligations hereunder; (b) this Agreement has been duly executed and delivered
by the Trustee and constitutes the legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms; (c) the
execution, delivery and performance by the Trustee of this Agreement does not
and will not (with or without the passage of time or giving of notice) violate
or conflict with any law or regulation, judgment or order of any court or
arbitrator binding upon the Trustee; (d) no consent, approval of or
registration, notification, filing and or declaration with any court,
governmental agency or instrumentality or any other person is required to be
given or made by the Trustee in connection with the execution, delivery and
performance of this Agreement, except the approval of the U.S. Bankruptcy Court
for the District of New Jersey which approval has been obtained; and (e) there
are no judicial, administrative, governmental or other actions,
47
proceedings or investigations pending, or to the knowledge of the Trustee,
threatened against or involving the Trustee that question any of the
transactions contemplated by, or the validity of, this Agreement.
10.6 Representations and Warranties Regarding Ship. Each of the
Debtors represents and warrants that (a) the Ship is registered in the Republic
of Panama and flies the Panamanian flag; (b) it is owned by MJQ, free and clear
of all Liens, taxes, and claims of every kind, nature and description whatsoever
except Permitted Liens and except as listed in Schedule 10.6(b) annexed hereto;
(c) except for equipment leased or financed with a purchase money security
interest, each as identified in Schedule 10.6(c) annexed hereto, all personal
property contained in and on the Ship is owned by MJQ and ITG, free and clear of
any Liens whatsoever except Permitted Liens and except for liens which will be
discharged pursuant to the Confirmation Order; (d) the Ship is not currently
under contract for charter or otherwise leased or hired out to any third
parties, including, but not limited to, contracts for future use or charter of
the Ship, except (i) the Bareboat Charter; and (ii) the contracts and agreements
disclosed on Schedule 10.6(d) annexed hereto; (e) it has not transferred nor
contracted to transfer, by sale, assignment or otherwise, to any Person, any
right, title or interest which it may have to the Ship, except pursuant to this
Agreement, and no Person holds a right of first refusal over, or option to
acquire, the Ship; (f) all shoreside office furniture, fixtures and equipment is
located at the Port of Palm Beach, Florida; and (g) no judgment or decree has
been entered in any court of any state, country, territory or province against
either of the Debtors or the Ship which remains unsatisfied except as described
in the Plan. The Obligated Parties further acknowledge that Trustee is relying
on these representations and warranties in entering into this Agreement;
accordingly, each of the Obligated Parties, their respective successors and
assigns, jointly and severally,
48
hereby agree to indemnify and hold harmless the Trustee against and from any
claim, Lien, penalty, loss or expense the Trustee might suffer, including, but
not limited to, court costs and legal fees, arising by reason of the Debtors'
material breach of any of their representations and warranties.
10.7 Capitalization and Ownership of ITG. ITGD and ITG each
represent and warrant that: (a) the authorized capital stock of ITG and the
number of issued and outstanding shares are set forth on Schedule 10.7 annexed
hereto; and all such outstanding shares are duly authorized, validly issued,
fully paid and nonassessable and are owned free and clear by ITGD, except as
pledged pursuant to the Stock Pledge Agreement; (b) there are no options,
warrants or other rights outstanding to purchase any stock of ITG; (c) ITGD has
the unrestricted right to vote the issued and outstanding shares of ITG; and (d)
ITG's ownership interest in ITG represents a direct controlling interest for
purposes of directing or causing the direction of the management and policies of
ITG.
10.8 Capitalization and Ownership of MJQ. FWM and MJQ each represent
and warrant that: (a) the authorized capital stock of MJQ and the number of
issued and outstanding shares are set forth on Schedule 10.8 annexed hereto; and
all such outstanding shares are duly authorized, validly issued, fully paid and
nonassessable and are owned free and clear by FWM, except as pledged pursuant to
the Stock Pledge Agreement; (b) there are no options, warrants or other rights
outstanding to purchase any stock of MJQ except as indicated on said Schedule
10.8; (c) FWM has the unrestricted right to vote the issued and outstanding
shares of MJQ; and (d) FWM's ownership interest in MJQ represents a direct
controlling interest for purposes of directing or causing the direction of the
management and policies of MJQ.
49
10.9 Ship Mortgage. MJQ represents and warrants that the Mortgage
continues as a perfected mortgage lien and/or security interest on the property
described therein, subject to no prior Liens except Permitted Liens, and no
further action, including, without limitation, the filing or recording of any
document, is necessary to maintain such first priority perfected lien and
security interest.
10.10 Absence of Conflict with Other Agreements, Etc. Each of the
Obligated Parties represents and warrants that its execution, delivery and
performance of this Agreement and the Closing Documents to which it is, or will
be, a party do not (i) to the best of its knowledge violate any applicable law,
or (ii) conflict with, result in a breach of, or constitute a default under its
charter documents or bylaws, or under any indenture, agreement, license,
instrument or other document to which it is a party or by which it or any of its
properties may be bound.
10.11 No Violation of Applicable Law. Each of the Debtors represents
and warrants that to the best of its knowledge, all of its operations and
material properties, including the Ship, are in material compliance with all
standards or rules imposed by any Governmental Authority or otherwise under
Applicable Law, and no notice of violation of any Applicable Law or any
covenant, condition or restriction affecting the Ship or its operations has been
given to the Debtors by any Governmental Authority or by any other Person
entitled to enforce same.
10.12 Projections. ITG represents and warrants that the Annual
Budget and any revision thereto delivered to the Trustee pursuant to Section 5.1
were made, as of the date when made, in good faith and were based on reasonable
assumptions made by the Debtors.
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10.13 Fiscal Year. MJQ represents and warrants that its fiscal year
ends on December 31 and each of ITB and ITG represents and warrants that its
fiscal year ends on June 30.
10.14 Patents, Trademarks, Licenses, Franchises, Etc.. Each of the
Debtors represents and warrants that Schedule 10.14 annexed hereto correctly
lists all material governmental licenses, authorizations and similar rights for
use of all patents, trademarks, service marks, trade names, copyrights,
franchises, licenses and authorizations used in the conduct of its business as
now conducted.
10.15 Material Agreements. Each of the Debtors represents and
warrants that (i) Schedule 10.15 annexed hereto lists of its all material
agreements and not terminable at will (the "Material Agreements"); (ii) it has
not received any written notice that it is in material default of any of the
Material Agreements; and (iii) except where it has allowed a Material Agreement
to terminate because such termination was in its best interests, each of its
Material Agreements remains in full force and effect subject to no modification
or amendment.
10.16 Recitals. Each of the parties hereto represents and warrants
that the Recitals are true and correct as they relate to such party.
11. GENERAL COVENANTS. From the date of this Agreement and so long as
any portion of the Secured Obligations remains unpaid, the Debtors shall comply
with the following covenants:
11.1 Indebtedness. After the date of this Agreement, the Debtors
shall not, directly or indirectly, create, assume, incur or otherwise become
obligated in respect of any Indebtedness, except:
(a) Indebtedness in favor of the Trustee;
51
(b) Obligations in the form of capital lease or conditional sale
obligations or purchase money obligations in respect of Allowable Capital
Expenditures pursuant to Section 5.2 of this Agreement;
(c) Obligations secured by a Permitted Lien; (d) Payment
obligations provided under the Plan; and (e) Necessary Capital Payments.
11.2 Liens. After the date of this Agreement, the Debtors shall not,
directly or indirectly, create, assume or incur, any Lien on any of their
respective properties or assets, whether now owned or hereafter acquired (other
than Excluded Assets), except the following (collectively, "Permitted Liens"):
(a) Liens in favor of the Trustee arising out of the Closing
Documents and the Settlement Documents;
(b) Liens in favor of General Unsecured Creditors as described in
Section 6.4 of this Agreement;
(c) With respect to the Ship, the Ship Mortgage; (d) Liens for
taxes, assessments, or other governmental charges the payment of which is not
due at the time or, if due, being contested by appropriate proceedings;
(e) Maritime Liens, and statutory Liens of carriers, landlords,
warehousemen, mechanics, laborers and materialmen incurred in the ordinary
course of business for sums not yet due;
(f) Capital leases, conditional sales agreements and purchase
money security interests incurred in compliance with Section 11.1 above,
provided, that no such Liens
52
shall extend to or cover any property other than the leased property or capital
assets (including proceeds thereof) purchased with the proceeds of such
permitted purchase money Indebtedness;
(g) Liens expressly continuing pursuant to the Plan and
Confirmation Order;
(h) Liens permitted by Section 8.3; and
(i) Liens on insurance policies securing the payment of premiums
due for such policies.
11.3 Sale-Leasebacks. The Debtors shall not, directly or indirectly,
sell or otherwise transfer, in one or more related transactions, any property
(whether real, personal or mixed) and thereafter rent or lease such transferred
property or substantially identical property.
11.4 Affiliate Transactions. The Debtors shall not, directly or
indirectly, engage in any transaction with an Affiliate, or make an assignment
or other transfer of any of its properties or assets to any Affiliate on terms
that are less favorable to such Debtor than those which generally might be
obtained at the time from unaffiliated third parties, except:
(a) as expressly permitted by this Agreement;
(b) the Bareboat Charter and the Tax Sharing Agreement;
(c) as described on Schedule 11.4 annexed hereto; and
(d) that MJQ is expressly permitted to use its cash for any
purpose including, but not limited to, payment of dividends and loans to its
Affiliates.
11.5 Disposition of Assets. The Debtors shall not, directly or
indirectly, sell, assign, lease, abandon, or otherwise transfer or dispose of
any of their respective assets (including, without limitation, shares of stock
and indebtedness of Affiliates, receivables, and leasehold interests), except:
53
(a) inventory disposed of in the ordinary course of its business
as presently conducted;
(b) the sale or other disposition of assets no longer used or
useful in the conduct of its business;
(c) Excluded Assets;
(d) expiration of leases or other contracts at the end of their
respective terms;
(e) cash used in or used to pay liabilities arising in the
ordinary course of its business or permitted by the Plan or this Agreement; and
(f) that MJQ is expressly permitted to use its cash for any
purpose including, but not limited to, payment of dividends and loans to its
Affiliates.
11.6 Liquidation or Merger. The Debtors shall not liquidate or
dissolve (or suffer any liquidation or dissolution) or otherwise wind up, or
enter into any merger or consolidation or division or similar transaction.
11.7 Dividends and Other Payments. ITG shall not make any:
(a) direct or indirect distribution, dividend or other payment
(other than stock dividends and stock splits) to any Person on account of (i)
any of its shares of capital stock or other securities other than Tax Sharing
Fees subject to Section 5.4 or (ii) any warrants or other rights or options to
acquire shares of its capital stock;
(b) redemption, retirement, purchase or other acquisition or any
other payment on account of any securities described above, except to the extent
that the consideration therefor consists solely of shares of its stock;
54
(c) sinking fund, other prepayment or installment payment on
account of the foregoing;
(d) other payment, loan or advance to a shareholder or Affiliate
except payments expressly permitted by this Agreement; and
(e) forgiveness or release without adequate consideration of any
Indebtedness or other obligation to it of a shareholder or Affiliate, except the
Excluded Assets.
11.8 Change in Organizational Documents. The Debtors shall not amend
or otherwise modify their respective articles or certificates of incorporation,
bylaws or other organizational documents.
11.9 Issuance of Equity. The Debtors shall not issue, authorize the
issuance of, or obligate themselves to issue any shares of capital stock or
other equity (including, without limitation, any options, warrants or other
rights in respect thereof) to any Person that (a) would contravene any other
provision of this Agreement or (b) would result in there being equity of a
Debtor that is not pledged to the Trustee pursuant to the Stock Pledge
Agreement.
11.10 Management Agreements. ITG shall not (a) enter into any
management agreement with any Person that gives such Person the right to manage
its business except for usual and customary employment agreements and consulting
agreements consistent with past practice, or (b) directly or indirectly pay or
accrue to any Person any sum or property for fees for management or similar
services rendered in connection with the operation of a its business except as
set forth in clause (a) above.
11.11 Other Contracts. The Debtors shall not enter into any material
contracts or agreements with respect to the Ship except in the ordinary course
of business or as permitted
55
by this Agreement or the Plan, without the prior written consent of the Trustee,
and shall not modify or terminate any of the Material Agreements.
11.12 Preservation of Existence, Etc. ITG shall at all times
preserve and keep in full force and effect (a) its corporate existence and (b)
its good standing in all states in which it is formed or required to qualify to
do business, except, as to qualification only, where the failure to keep in full
force and effect any such good standing would not result in a Material Adverse
Change.
11.13 Compliance with Law. ITG shall comply with the requirements of
all Applicable Laws and will obtain or maintain all franchises, permits,
licenses and other governmental authorizations and approvals necessary to the
ownership, acquisition or disposition of its properties or to the conduct of its
business, except where the failure to do so will not result in a Material
Adverse Change.
11.14 Payment of Taxes and Claims. Each of the Debtors shall timely
file all tax and information returns required by all foreign, federal, state or
local tax authorities and shall pay all taxes (including, without limitation,
withholding taxes), assessments and governmental charges or levies required to
be paid by it or imposed on it or on its income or profits or upon any of its
properties or assets, prior to the date on which penalties attach thereto or
interest accrues, and all claims for such sums which have become due and
payable, as to any of which, if unpaid, might become a Lien upon its properties
or assets and which Lien has priority ahead of any Liens held by the Trustee;
provided that it shall not be deemed to be a violation of this covenant if any
such charge or claim not paid is being diligently contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and for
which adequate reserves shall have been set aside on the appropriate books, but
only so long as such tax,
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assessment, charge, levy or claim does not become a Lien prior to any Liens held
by the Trustee and no foreclosure, distraint, sale or similar proceeding shall
have been commenced.
11.15 Maintenance of Properties. Subject to the restrictions of
Allowable Capital Expenditures and Necessary Capital Payments contained in this
Agreement, each of the Debtors shall maintain or cause to be maintained in good
repair, working order and condition in all material respects (ordinary wear and
tear excepted) all of its properties (whether owned or leased) used or useful in
its business of operating the Ship as a casino cruise ship, such maintenance to
include, without limitation, repair, renewal, replacement or improvement
thereto; and keep all systems and equipment which may now or in the future be
subject to compliance with any standard or rules imposed by any Governmental
Authority in compliance in all material respects with such standards or rules.
Each of the Debtors shall reasonably maintain, preserve and protect, and, when
necessary, renew or replace, in all material respects all franchises, licenses,
patents, patent applications, copyrights, permits, service marks, trademarks and
trade names and other general intangibles held by it and all agreements to which
it is a party which are necessary or useful to conduct its business.
11.16 Insurance. Each of the Debtors shall maintain or cause to be
maintained with financially sound and reputable insurers, insurance with respect
to its properties and business as required by Section 5.11 above. The proceeds
of casualty insurance shall be applied to repair or replace damaged property of
the Debtors unless an Event of Default exists, in which case such proceeds may
at the option of the Trustee, be applied to reduce the Secured Obligations or be
reinvested in the business of the applicable Debtor. Notwithstanding the
foregoing, payments received by the Trustee in excess of all Secured Obligations
shall be paid over by the Trustee to the applicable Debtor(s). If such insurance
be proposed to be cancelled
57
for any reason whatsoever, such Debtor will promptly notify the Trustee of any
such proposed cancellation. Copies of such policies or the related certificates,
in each case, naming the Trustee as additional insured and lender loss payee or
mortgagee, as appropriate, shall be delivered to the Trustee annually upon
request of the Trustee.
11.17 Environmental Indemnity. The Debtors hereby agree, jointly and
severally, to indemnify, reimburse, defend and hold harmless the Indemnified
Persons for, from and against all demands, liabilities, damages, costs, claims,
suits, actions, legal or administrative proceedings, interest, losses, expenses
and reasonable attorneys' fees (including any such fees and expenses incurred in
enforcing this indemnity) asserted against, imposed on or incurred by any of the
Indemnified Persons, directly or indirectly, pursuant to, or in connection with,
the application of any Environmental Law to acts or omissions first occurring at
any time prior to the date (if any) when the Trustee takes possession of the
Ship, on, or in connection with any property owned or leased by a Debtor or any
business conducted thereon.
11.18 Deposit Accounts. The Debtors shall maintain their primary
demand, time and other deposit accounts with Wachovia Bank, N.A. in order to
provide collateral security to the Trustee for payment of the Secured
Obligations. All such accounts shall at all times be subject to the perfected
first priority security interest of the Trustee; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, any
Existing Agreement or Closing Documents, in the event the Trustee exercises
control over any such account in which funds are maintained for the payment of
taxes or payroll, the Trustee shall cause balances in such accounts to be
applied first towards the payment of all such obligations of the Debtors before
the Trustee shall be entitled to apply any sums towards Secured Obligations.
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11.19 Collateral. Without limiting the generality of any provisions
of this Agreement, at any time that either of the Debtors shall (a) change its
jurisdiction of incorporation, (b) transfer or otherwise issue shares of capital
stock, (c) change its name, (d) transfer any of its deposit accounts from the
institution identified in Section 11.18 of this Agreement, or (e) take any
action that would cause the Trustee to fail to have a valid, perfected first
priority security interest (except for Permitted Liens) in all property of the
Debtors (to the extent it can be perfected and other than Excluded Assets) and
in all the capital stock of the Debtors, subject only to the exceptions
explicitly permitted under the terms of this Agreement, or at any time any
condition (other than maintaining Cash on Board or xxxxx cash up to the
permitted amount set forth in Section 5.3 herein) shall exist which results in
such failure of the Trustee to be so secured, then the Debtors shall take all
such action as is necessary to provide such security to the Lender, all at the
expense of the Obligated Parties.
11.20 Further Assurances. It is the intention of the parties to this
Agreement that the Trustee shall have a legal, valid and binding Lien on all
assets of the Debtors (to the extent it can be perfected and other than Excluded
Assets) now owned or hereinafter acquired. The Obligated Parties, ITGD and FWM
at their own expense, shall promptly execute and deliver or cause to be executed
and delivered to the Trustee all such other and further documents, agreements
and instruments, and shall provide or cause to be provided to the Trustee such
additional information, and shall do or cause to be done such further acts, as
may be reasonably necessary or proper, to carry out more effectively the
provisions and purposes of this Agreement, the Existing Agreements and the
Closing Documents. Upon the indefeasible payment in full of all Secured
Obligations, the Trustee shall promptly execute and deliver or cause to be
executed and delivered to the Obligated Parties all such other and further
documents, agreements and
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instruments, and shall provide or cause to be provided to the Obligated Parties
such additional information, and shall do or cause to be done such further acts,
as may be reasonably necessary or proper, to carry out more effectively the
provisions and purposes of this Agreement, the Existing Agreements and the
Closing Documents.
11.21 Cash On Board. The Debtor shall at all times maintain Cash on
Board of approximately $700,000, and should the Cash on Board fall below
$700,000 (whether as a result of payment of General Unsecured Creditors' claims
or otherwise), Debtors shall restore Cash on Board to $700,000 on the next
Business Day when banks are open. During an Orderly Liquidation Period, the
Debtors obligation to maintain Cash on Board of at least $700,000 shall be
limited to ITG's Gross Revenues and Debtors shall have no right or obligation to
replenish same from ITG's Accounts.
12. EVENT OF DEFAULTS. The occurrence of any one or more of the
following shall constitute an "Event of Default" under this Agreement and the
Closing Documents:
12.1 Non-Payment. Failure by the Obligated Parties to make any
payment in full as and when due and payable hereunder or under any of the
Closing Documents (except for any such failure as shall not constitute a Default
pursuant to Section 3.7 of this Agreement), which failure shall not be cured
within thirty (30) days after the date such payment became due; provided,
however, that the thirty-day grace period provided herein shall not apply to
extend the final maturity of all Secured Obligations beyond the Final Maturity
Date;
12.2 Misrepresentation by Obligated Parties or ITGD. Any
representation or warranty made by any of the Obligated Parties or ITGD in this
Agreement, the Closing Documents or any financial information furnished to the
Trustee or its agents pursuant to
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Sections 5.1 and Section 7 of this Agreement shall be untrue or misleading in
any material respect as of the date when made;
12.3 Misrepresentation by FWM or FXM. Any representation or warranty
made by FWM or FXM in this Agreement or the FXM Guaranty with respect to FXM and
the FWM Replacement Guaranty with respect to FWM shall be untrue or misleading
in any material respect as of the date of this Agreement;
12.4 Current Ratio Default. A Default by ITG under Section 5.9
hereof;
12.5 Non-Performance. A Default by any of the Obligated Parties or
ITGD in the due observance or performance of any of their other respective
covenants and agreements contained in this Agreement, the Settlement Documents,
or the Closing Documents, which is not cured within fifteen (15) days after
receipt of written notice of such Default from the Trustee;
12.6 Bankruptcy, Insolvency, Etc. (a) Either of the Debtors shall
commence any voluntary case, proceeding or other action (i) under the Bankruptcy
Code, or under any other law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or relief of debtors, seeking to
adjudicate it a bankrupt or insolvent or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or relief with
respect to its debts, or (ii) seeking appointment of a receiver, custodian or
other similar official for all or substantially all of its assets, or either of
the Debtors shall make a general assignment for the benefit of creditors; or (b)
there shall be commenced against either of the Debtors any case, proceeding or
other action of a nature referred to in clause (a) of this paragraph which (X)
results in the entry of an order for relief or any adjudication or appointment
or (Y) remains unstayed and undismissed for a period of thirty (30) days; or (c)
there shall be issued against either of the Debtors a warrant of attachment,
execution, distraint or similar process against a substantial part
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of its assets or any assets material to the operation of the Ship, which results
in the entry of an order for any such relief; or (d) ITG shall generally not, or
shall admit in writing its inability to, pay its debts as they become due;
12.7 Cross-Default With Other Indebtedness. The happening of any
default under any financial instrument of any kind or nature, including but not
limited to, financing leases, security agreements, mortgages or loan agreements,
by which there is secured or evidenced any Indebtedness for money borrowed or
guaranteed by either of the Debtors, whether such Indebtedness presently exists
or is hereafter created, which default shall result in such Indebtedness
becoming or being deemed due and payable prior to the date on which it would
otherwise have become due and payable;
12.8 Unenforceability. This Agreement or any of the Closing
Documents described in Section 9.2(a)-(l), the Settlement Documents or the
Foreclosure Documents shall cease to be a legal, valid and binding agreement
each party signatory thereto, or shall be declared ineffective or inoperative or
shall, at any time or for any reason cease to be in force and effect or shall be
declared ineffective or inoperative or shall in any way be challenged or
contested by any of the Obligated Parties, FWM or FXM, or any of the Obligated
Parties, FWM or FXM shall deny their liability or obligations hereunder or
thereunder, provided, however, that it shall not be an Event of Default if any
party to this Agreement (a) defends an action brought by the Trustee or (b)
brings an action to enforce any specific provision of this Agreement, the
Settlement Documents or Closing Documents described in Section 9.2(a)-(l), for
their benefit; and
12.9 Suspension of Operations. ITG shall suspend or discontinue the
operation of the Ship as a casino cruise ship for any reason, other than an act
of God, casualty, war or civil unrest, riot, act of terrorism, strike, labor
dispute, severe weather, dry dock/wet dock
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maintenance or any other repair (provided same is proceeding diligently and
subject to the Trustee approving in connection therewith any necessary Capital
Expenditures in addition to Allowable Capital Expenditures), or any other reason
reasonably beyond Debtors' control.
13. REMEDIES.
13.1 Acceleration. At any time an Event of Default specified in
Section 12 above (other than an Event of Default under Section 12.6 thereof)
shall have occurred and shall be continuing, the Trustee may, by written notice
to the Obligated Parties, declare all of the Secured Obligations (excluding
unaccrued Stay Bonus) to be forthwith due and payable, without presentment,
demand, protest or notice of protest, notice of dishonor or other notice of any
kind, all of which are hereby expressly waived, anything in this Agreement or
any Closing Document to the contrary notwithstanding.
13.2 Automatic Acceleration in Connection with Bankruptcy or
Insolvency Proceeding. Upon the occurrence of an Event of Default specified in
Section 12.6 above, all of the Secured Obligations (excluding unaccrued Stay
Bonus) shall be immediately due and payable, all without any action by the
Trustee and without presentment, demand, protest or other notice of protest or
other notice of dishonor of any kind, all of which are expressly waived,
anything in this Agreement or the Closing Documents to the contrary
notwithstanding.
13.3 Default Interest. Upon acceleration of the Secured Obligations
pursuant to Section 13.1 or 13.2 of this Agreement, the entire unpaid aggregate
amount of the Secured Obligations (excluding any unaccrued Stay Bonus),
including accrued and unpaid interest to the date of acceleration, shall
thereafter bear interest at an annual rate of fifteen percent (15%), compounded
monthly ("Default Interest"), provided, however, that the Secured Obligations in
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the nature of expense reimbursements including Collection Costs and indemnities
shall bear Default Interest from the date the Trustee pays them until the
Trustee is reimbursed.
13.4 Oversight of Operations. After acceleration of the Secured
Obligations, the Trustee, and his designated agents and representatives, at the
Trustee's option, shall be entitled to oversee all of the Debtors' operations,
and shall have unconditional rights to inspect and access the Ship and the
Related Assets, and the Debtors' business and operations, properties and assets,
books and records, deposit accounts, and employees and agents; provided,
however, that the Trustee, his agents and representatives shall not unreasonably
interfere with the continued operation of the Ship as a casino cruise ship.
13.5 Orderly Liquidation Period. Notwithstanding anything to the
contrary herein or in any Existing Agreement or Closing Document upon
acceleration of the Secured Obligations pursuant to Section 13.1 or 13.2 above
or on the Final Maturity Date (if the Secured Obligations have not been paid in
full prior thereto), an "Orderly Liquidation Period" shall commence and shall
continue for a period not to exceed six months. During the Orderly Liquidation
Period, the Trustee shall forebear in the exercise of his remedies (including
but not limited to foreclosure of the Ship Mortgage, the recordation of the deed
in lieu to the Ship and exercise of other remedies with respect to the Ship and
other collateral, including stock of the Debtors), but only if and as long as:
13.5.1 ITG shall continue to operate the Ship and its casino
cruise business in the ordinary course and consistent with prior practices
subject to the provision of this Section 13.5;
13.5.2 All amounts on deposit in the Operating Account and in all
other accounts of ITG shall immediately be transferred to, and all Gross
Revenues of ITG thereafter
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received (excluding such Gross Revenues necessary to maintain Cash on Board)
shall be delivered directly and immediately upon return to shore to an armored
car service for delivery on the first Business Day, to a lock box account (the
"Lock Box") under the sole and exclusive control of the Trustee, at an
institution selected by the Trustee, maintained at ITG's expense; provided,
however, that any cash in slot machines shall remain in such slot machines and
shall be delivered to an armored car service and deposited in the Lock Box at
least weekly on Monday of each week.
13.5.3 No monies shall be withdrawn from the Lock Box except upon
the joint signature of an officer of ITG and the Trustee or a designated agent
of the Trustee provided, however, that neither the Trustee nor any Debtor shall
delay the making of normal payments therefrom necessary for the payment on a
current basis of excise, sales and other taxes, payroll and payroll taxes;
13.5.4 No payments of any kind shall be made by ITG to MJQ
(including with respect to the Bareboat Charter Fee), ITB or any other Affiliate
of ITG except to MJQ for normal payroll and except for payments to Affiliates of
Permitted Affiliate Payments;
13.5.5 No Capital Expenditures of any kind other than Necessary
Capital Payments shall be made by ITG without the prior written consent of the
Trustee;
13.5.6 After payment of ordinary and necessary operating expenses
and liabilities of ITG incurred in the ordinary course of business the payment
of which is necessary to the continued operation of the Ship in the ordinary
course, including Necessary Capital Payments permitted pursuant to Section
13.5.5, for each month during the Orderly Liquidation Period, all other monies
in the Lock Box on the last Business Day of such calendar month shall be
distributed to the Trustee to be applied, first, to the payment of all accrued
and unpaid Default
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Interest; second, to reimburse the reasonable costs and expenses (including
attorneys' accountant's, consultants' and other professionals' fees and
expenses) arising out of or related to the exercise by the Trustee of his rights
and remedies as a result of the Event of Default, acceleration of the Secured
Obligations and the Orderly Liquidation Period; third, to the payment of any
accrued and unpaid Monitoring Fees; fourth, to the payment of any accrued unpaid
and Stay Bonuses; fifth, to the payment of any unpaid portion of the Forbearance
Fee; sixth, to the payment of accrued and unpaid interest on the Payment
Obligations; seventh, to the reduction of the unpaid principal balance of the
Payment Obligations; and thereafter, to any remaining accrued and unpaid Secured
Obligations in such order and manner as may be determined by the Trustee;
13.5.7 Within thirty (30) days of the commencement of the Orderly
Liquidation Period, the Debtors shall (a) deliver to the Trustee, for his
approval, a plan of liquidation for the Ship and the Related Assets and the
business operations of ITG, and (b) retain a broker, reasonably satisfactory to
the Trustee, for the sale of the Ship, the Related Assets and the business
operations of ITG;
13.5.8 Immediately upon commencement of the Orderly Liquidation
Period, the Obligated Parties shall actively market and solicit purchasers for
the Ship and the Related Assets and cooperate with the prospective purchasers,
and negotiate in good faith with all prospective purchasers that have the
apparent financial resources to purchase the Ship; and
13.5.9 The Debtors shall accept any reasonable offer to purchase
the Ship, the Related Assets and/or ITG's business operations which will result
in net cash proceeds at closing sufficient to pay in full the outstanding
Secured Obligations (including Default Interest thereon). The Debtors shall not,
without the prior written consent of the Trustee in his sole
66
discretion, accept any offer of purchase for the Ship, the Related Assets and/or
ITG's business operations which will not result in net cash proceeds at closing
sufficient to pay in full the outstanding Secured Obligation (including Default
Interest thereon).
13.5.10. Notwithstanding anything herein to the contrary, the
Debtors may (subject to the Trustee's prior written consent) incur reasonable
professional fees in connection with the marketing and negotiation of terms of a
sale of the Ship, the Related Assets and the business. In the event any such
professionals are retained, the Debtors and said professionals shall cooperate
with the Trustee and keep the Trustee reasonably informed as to potential
purchasers, sales and marketing efforts. The Trustee shall have the right to
examine each statement of services rendered by any such professional to assure
that it covers work solely in connection with the marketing and potential sale
of the Ship, Related Assets and business.
13.6 Cure Right. Notwithstanding anything in this Agreement to the
contrary, after acceleration of the Secured Obligations pursuant to Section 13.1
of this Agreement and prior to the earlier of (a) the expiration or termination
(pursuant to Section 13.7 of this Agreement) of the Orderly Liquidation Period
and (b) the Final Maturity Date, the Obligated Parties shall have a one-time,
non-recurring right during the term of this Agreement to cure all existing
defaults under this Agreement (including payment of all amounts due and payable
prior to acceleration, without having to pay Secured Obligations which become
due as a result of acceleration); provided, however, that such cure is completed
prior to the Final Maturity Date. Upon the cure of all such existing defaults to
the reasonable satisfaction of the Trustee, the Trustee shall rescind the
acceleration of the Secured Obligations, including the accrual of Default
Interest, and shall reinstate the obligations and liabilities of the Obligated
Parties as in effect prior to such acceleration and the Orderly Liquidation
Period shall terminate.
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13.7 Breach of Liquidation Covenants. In the event that any of the
Obligated Parties defaults in or breaches any of its obligations under Section
13.5 of this Agreement prior to the expiration of the Orderly Liquidation
Period, upon written notice to the Obligated Parties, the Trustee may
immediately terminate the Orderly Liquidation Period. Upon a Liquidation Event,
the Trustee shall thereafter be entitled to exercise, immediately and without
any further notice, any and all remedies available to the Trustee under this
Agreement, the Closing Documents, the Master Settlement Agreement (as amended
hereby and in particular, as amended by Section 13.14 below), the Settlement
Documents, the Foreclosure Documents and at law or in equity including but not
limited to recording the Deed in Lieu. Possession of the Ship, the Port Lease
and the Related Assets shall be surrendered to the Trustee or his designees
immediately upon the termination of the Orderly Liquidation Period.
13.8 Appointment of Receiver. Upon a Liquidation Event, the Trustee
(or his designee) shall have the right to seek to be appointed the receiver for
the properties and assets of the Debtors. Each of the Debtors hereby consents to
such appointment and hereby waives any objection it may have thereto.
13.9 Sale of Collateral. Upon a Liquidation Event, the Trustee shall
use commercially reasonable efforts to sell the property and assets (including
the Ship and the Related Assets) that serve as collateral security for the
Secured Obligations. All net sales proceeds thereof shall be applied, first, to
all costs and expenses (including reasonable attorneys' and accountants' fees)
incurred by the Trustee after expiration of any applicable cure periods to
enforce its rights and remedies hereunder and all costs of any such sale, and,
thereafter, to the payment of the accrued but unpaid Secured Obligations,
including Default Interest, in such manner and order as the Trustee, in his
discretion, shall determine; thereafter to General
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Unsecured Creditors; and any balance of such net sales proceeds remaining shall
be paid over to the Obligated Parties or to such other Person legally entitled
to receive same. The immediately preceding sentence is intended to be for the
benefit of General Unsecured Creditors as well as the Obligated Parties and
shall be enforceable by them against the Trustee.
13.10 Section 363 Sale. In the event that any property or assets
that serve as collateral security for the Secured Obligations are sold in a sale
conducted pursuant to Section 363 of the Bankruptcy Code, the Trustee will not
object to any of the Obligated Parties or their Affiliates as a bidder at such
sale, provided that they meet all of the qualifications applicable to bidders at
such sale.
13.11 Relief from Automatic Stay. If any of the Obligated Parties or
ITGD shall institute a proceeding under any of the provisions of the Bankruptcy
Code, or if any of the Obligated Parties or ITGD shall have an involuntary
proceeding instituted against all or any of them under any of the provisions of
the Bankruptcy Code, then the Trustee shall have the right to apply to the court
before which the bankruptcy proceeding shall then be pending, without notice to
the Obligated Parties or ITGD for an order (or orders) seeking to immediately
lift the automatic stay imposed by 11 U.S.C. ss.362, to allow the Trustee to
bring or assert such actions or claims available to the Trustee against any or
all of the Obligated Parties and ITGD and none of the parties will object to any
application by the Trustee for such an Order.
13.12 Collection Costs. The Obligated Parties shall, jointly and
severally, unconditionally, upon demand, pay or reimburse the Trustee for, and
indemnify and save the Trustee harmless against, any and all third party
liabilities, losses, costs, expenses, claims, and/or charges (including without
limitation reasonable fees and disbursements of legal counsel, accountants,
investigators and other experts, whether or not they are employees of the
Trustee)
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arising out of, relating to or connected with collecting the Secured Obligations
and/or protecting, preserving, exercising or enforcing any of the rights of the
Trustee in, under or related to this Agreement, the Closing Documents, the
Master Settlement Agreement, the Settlement Documents and/or the Foreclosure
Documents after an Event of Default (collectively, "Collection Costs");
provided, however, that, Collection Costs shall not include any expense covered
by Monitoring Fees; provided further that in the event that the Trustee declares
an Event of Default and it is ultimately determined by a court of competent
jurisdiction in a final, unappealable judgment, that the Trustee had no right to
declare an Event of Default, the Trustee shall not be entitled to recover
Collection Costs arising from such Event of Default, and after payment in full
of all Secured Obligations except such Collections Costs and Default Interest
arising from such Event of Default, the Obligated Parties shall be entitled to
be reimbursed by the Trustee for their reasonable attorneys' fees and expenses
("Defense Costs") incurred in defending against such wrongful declaration of an
Event of Default; and in any event the Obligated Parties may offset the amount
of such Defense Costs against the Secured Obligations due and payable to the
Trustee; and provided, further that, in the event that the Trustee declares an
Event of Default under Section 12.2, 12.3, 12.5, 12.7, 12.9, 12.10 or 12.l1 and
it is ultimately determined by a court of competent jurisdiction in a final,
unappealable judgment that the event(s) or circumstance(s) which constituted the
basis for such Event of Default did constitute a Default but not a material
Default, then the Trustee shall not be entitled to recover Collection Costs
arising from such Event of Default, and the Obligated Parties shall not be
entitled to recover their attorneys' fees and expenses arising from such Event
of Default.
13.13 Indemnity. Subject to Section 13.12 above (with respect to
indemnification of Collection Costs) and subject to the limitation on Monitoring
Fees in Section
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4.2 and without limiting the generality of any other indemnities provided under
this Agreement, the Obligated Parties hereto agree, jointly and severally to
indemnify, reimburse, defend and hold harmless the Indemnified Persons for, from
and against all third party demands, limitations, damages, costs, claims, suits,
actions, legal or administrative proceedings, interest, losses, expenses and
reasonable attorneys' fees (including any such reasonable fees and expenses
incurred in enforcing this indemnity) asserted against, enforced on or incurred
by any of the Indemnified Persons, directly or indirectly, in connection with,
arising out of or in any way related to the exercise of the Trustee's exercise
of his rights and remedies under this Section 13.4 and under Section 5.17 of
this Agreement, except as otherwise expressly provided in this Agreement and
except to the extent that any of the matters covered by this indemnity arise
solely from acts of bad faith or willful misconduct on the part of the
Indemnified Persons.
13.14 MSA Defaults and Remedies. The provisions of (a) Sections 9,
10 and 11 of the Master Settlement Agreement, (b) the last two sentences of
Section 3(a)(i) of the Master Settlement Agreement, (c) the third and fourth
sentences of Section 3(b)(i) of the Master Settlement Agreement, (d) Section
6(e) of the Master Settlement Agreement, (e) Section 10(b) of the Purchase and
Sale Agreement, and (f) the last sentence of Section 3(b) of the Purchase and
Sale Agreement are hereby eliminated and superseded by this Agreement. All
Existing Agreements are hereby amended to the effect that all remedies
thereunder exercisable by the Trustee upon an Event of Default or a Ship
Obligation Event of Default shall be exercisable only upon a Liquidation Event.
13.15 Additional Remedies. In addition to the remedies set forth
above and subject to the provisions of this Section 13 and in particular Section
13.14, the Trustee shall have all of the post-default rights and remedies
granted to it under any of the Closing Documents, the
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Master Settlement Agreement, the Settlement Documents, the Foreclosure Documents
and available at law or in equity.
13.16 Certain Obligations of Trustee. In the event the Trustee
operates the Ship following expiration or termination of the Orderly Liquidation
Period, the Trustee shall, after payment of operating expenses and liabilities,
the payment of which is necessary in the Trustee's sole judgement to the
continued operation of the Ship, and Capital Expenditures to the extent the
Trustee in his sole judgement deems appropriate, apply the net revenues to
Secured Obligations that remain unpaid, as follows: first, to reimburse the
costs and expenses (including Trustee's, attorneys', accountant's, consultants'
and other professionals' fees and expenses) arising out of or related to the
exercise by the Trustee of his rights and remedies as a result of the expiration
or termination of the Orderly Liquidation Period; second, to the payment of all
accrued and unpaid Default interest; third, to the payment of any accrued and
unpaid Monitoring Fees; fourth, to the payment of any accrued and unpaid Stay
Bonuses; fifth, to the payment of any unpaid portion of the Forbearance Fee;
sixth, to the payment of accrued and unpaid interest on the Payment Obligations;
seventh, to the reduction of the unpaid principal balance of the Payment
Obligations, and thereafter, to any remaining accrued and unpaid Secured
Obligations in such order and manner as may be determined by the Trustee
(collectively, the "Interim Payments"). In the event that the Secured
Obligations are paid in full from Interim Payments and the Trustee has not
entered into a binding contract to sell the Ship and/or Related Assets, the
Trustee shall reconvey the Ship and Related Assets to the Debtors (to the extent
that such assets have not been previously sold) (the "Reconveyance"). Any net
revenues received from operating the Ship which are not applied to Interim
Payments shall be remitted to ITG or as otherwise required by applicable law.
Within ninety (90) days of the Trustee's sale of the Ship or the Reconveyance,
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the Trustee shall make an accounting of the proceeds of the Collateral to the
Debtors. Notwithstanding this Section 13.16, the Trustee shall be under no
obligation to operate the Ship, and nothing herein shall impair any and all
rights and remedies available to the Trustee under this Agreement, the Existing
Agreement, the Closing Documents, or any other document or agreement, at law and
in equity.
14. GENERAL PROVISIONS.
14.1 Duration; Survival. All representations and warranties
contained in this Agreement and the Closing Documents shall survive the
Effective Date and shall not be waived by the execution and delivery of any
Closing Document or any investigation by the Trustee.
14.2 No Implied Waiver; Rights Cumulative. No failure or delay on
the part of the Trustee in exercising any right, power or privilege hereunder or
under any Closing Document or any Existing Agreement and no course of dealing
among the parties hereto shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or under any
other Closing Document or any Existing Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. Except
as provided herein, the rights and remedies herein expressly provided are
cumulative and not exclusive of any other rights or remedies which the Trustee
would otherwise have.
14.3 Waivers and Amendments. Neither this Agreement nor any
provisions hereof may be changed, waived, discharged or terminated orally, but
such may be accomplished only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.
14.4 Successors and Assigns. Whenever in this Agreement or in any
Closing Document any of the parties hereto is referred to, such reference shall
be deemed to include the heirs, legal representatives, successors and assigns of
such party; and all covenants, promises
73
and agreements by or on behalf of the Obligated Parties, ITGD, FWM, FXM or the
Trustee that are contained herein shall bind and inure to the benefit of their
respective heirs, legal representatives, successors and assigns; provided,
however, that without the prior written consent of the Trustee, the other
parties to this Agreement may not assign or permit or suffer the assignment,
whether by operation of law or otherwise, of any of their respective rights or
delegate any of their respective duties or obligations hereunder, provided,
however, that in the event of the death of either FXM or FWM, their respective
rights and obligations hereunder will be transferable by operation of law to
their respective estates and/or legal representatives.
14.5 Descriptive Headings. The descriptive headings of the sections
and paragraphs of this Agreement are inserted for convenience of reference only
and shall not affect the meaning or construction of any of the provisions
hereof.
14.6 Maximum Lawful Interest Rate. Notwithstanding any provision
contained herein or in any of the Closing Document, the total liability of the
Obligated Parties for payment of interest pursuant hereto, shall not exceed the
maximum amount of such interest permitted by law to be charged, collected, or
received, and if any payments by the Obligated Parties include interest in
excess of such a maximum amount, the Trustee shall apply such excess to the
reduction of the unpaid principal amount due pursuant hereto, or if none is due,
such excess shall be refunded to the payor thereof.
14.7 No Third Party Beneficiaries. The parties hereto do not intend
the benefits of this Agreement to inure to any third party except Xxxxxxx X.
Xxxxxxx III pursuant to Section 9.3 hereof and General Unsecured Creditors
pursuant to Section 13.9 hereof. Notwithstanding anything herein or in any other
document executed in connection with the transactions described in this
Agreement, or any course of conduct by any of the parties hereto, or their
respective
74
Affiliates, agents, or employees, either before or after the execution of this
Agreement, this Agreement shall not be construed as creating any rights, claims,
interests or causes of action against any party hereto in favor of any party not
a party to this Agreement. To the extent that this Agreement shall be disclosed
to any third party, it shall be disclosed for informational purposes only and no
such third party may rely on any of the matters set forth herein or the terms
hereof.
14.8 Counterparts. This Agreement and the Closing Documents may be
executed in one or more counterparts, each of which shall constitute an
original, but all of which together shall constitute one and the same
instrument. Delivery of a photocopy or telecopy of an executed counterpart of a
signature page to this Agreement or any Closing Document shall be as effective
as delivery of a manually executed counterpart of such document.
14.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey without giving
effect to principles of conflicts of laws, and any and all disputes under and/or
related to this Agreement shall be resolved by the Bankruptcy Court.
14.10 Notices. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if delivered by hand or national overnight courier
service, transmitted by telecopy or mailed by registered or certified mail,
postage prepaid, as follows:
To ITB or ITGD:
c/o International Thoroughbred Breeders, Inc.
000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
75
With copy to:
Cozen X'Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
To ITG or ITGD:
ITG Vegas, Inc.
Xxx Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
With copy to:
Cozen X'Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Kozyak Tropin & Throckmarton, P.A.
000 X. Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
(000) 000-0000
To MJQ:
MJQ Corporation
Xxx Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
76
With copy to:
Cozen X'Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Kozyak Tropin &Throckmarton, P.A.
000 X. Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
(000 000-0000
To FXM or FWM:
Xx. Xxxxxxx X. Xxxxxx
Xx. Xxxxxxx X. Xxxxxx
c/o MJQ Corporation
Xxx Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Tel: (000) 000-0000
(000) 000-0000
With a copy to:
Cozen X'Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Pethun, Esq.
Tel: (000) 000-0000
(000) 000-0000
To the Trustee:
Mercadien, P.C.
0000 Xxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Trustee
Tel: (000) 000-0000
Fax: (000) 000-0000
77
With copy to:
Drinker Xxxxxx & Xxxxx LLP
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto. A notice shall be deemed to have
been given (a) upon personal delivery, if delivered by hand or courier, (b)
three (3) Business Days after the date of deposit in the mails, postage prepaid,
if mailed by certified or registered mail, or (c) the next Business Day, if sent
by facsimile transmission (if receipt is electronically confirmed).
14.11 Payments. The Obligated Parties agree to make all payments on
account of the Secured Obligations due hereunder, without set off or
counterclaim, to the Trustee at the Trustee's address specified in Section 14.10
hereof, on the date due, in lawful money of the United States of America and in
good funds.
14.12 Waivers. Trustee, on the one hand, and the Obligated Parties,
on the other hand, may, each by written notice to the other, (a) extend the time
for the performance of any of the obligations or other actions of the other
under this Agreement; (b) waive any inaccuracies in the representations or
warranties of the other contained in this Agreement or in any document delivered
pursuant to this Agreement; or (c) waive compliance with any of the covenants
and agreements of the other contained in this Agreement. Except as provided in
the preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements
78
contained in this Agreement. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
14.13 Entire Agreement. This Agreement, including the Closing
Documents, constitutes the entire agreement of the parties concerning the
subject matter hereof, and supercedes all prior written and oral agreements
among the parties expressly concerning the subject matter hereof, but shall not
be deemed to modify or replace the Master Settlement Agreement or the other
Existing Documents except as expressly provided herein.
14.14 Date of Execution. The parties hereto authorize the Trustee to
date this Agreement and any of the Closing Documents upon the date of receipt of
the complete fully executed counterparts hereof, or any other date determined to
be appropriate by the Trustee in his sole reasonable discretion.
14.15 Termination. After the Effective Date, this Agreement shall
remain in full force and effect until all of the Secured Obligations shall have
been indefeasibly paid in full.
[Signature Pages Follow]
79
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the day and year first above written.
ATTEST: INTERNATIONAL THOROUGHBRED
BREEDERS, INC.
________________________________ By:/S/Xxxxxxx X. Xxxxxx
_____________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
ATTEST: INTERNATIONAL THOROUGHBRED
GAMING DEVELOPMENT
CORPORATION
________________________________ By:/S/Xxxxxxx X. Xxxxxx
_____________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
ATTEST: ITG VEGAS, INC.
________________________________ By:/S/Xxxxxxx X. Xxxxxx
_____________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
ATTEST: MJQ CORPORATION
________________________________ By:/S/Xxxxxxx X. Xxxxxx
______________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
WITNESS:
/S/Xxxxxxx X. Xxxxxx
-------------------------------- -----------------------------------
XXXXXXX X. XXXXXX
WITNESS:
/S/Xxxxxxx X. Xxxxxx
-------------------------------- -----------------------------------
XXXXXXX X. XXXXXX
80
WITNESS: XXXXXX X. XXXXXX, CHAPTER 11
TRUSTEE FOR THE BANKRUPTCY
ESTATE OF XXXXXX X. XXXXXXX
By:/S/Xxxxxx X. Xxxxxx
-------------------------------- -----------------------------------
By: Xxxxxx X. Xxxxxx, Trustee
81
TABLE OF CONTENTS
Page
RECITALS................................................................... 1
1. DEFINED TERMS; INTERPRETATION...........................................4
1.1 Definitions Incorporated by Reference.........................4
1.2 Amended Definitions...........................................4
1.3 Definitions...................................................4
1.4 Accounting Terms.............................................19
1.5 Number; Gender...............................................19
1.6 Recitals.....................................................20
2. EXISTING AGREEMENTS....................................................20
2.1 Existing Agreements Ratified.................................20
3. PAYMENT OBLIGATIONS....................................................20
3.1 Amount.......................................................20
3.2 Joint and Several Obligations................................21
3.3 Final Maturity Date..........................................21
3.4 Base Interest................................................21
3.5 Payment Installments.........................................22
3.6 Prepayments..................................................23
3.7 Payment Deferral Reserve.....................................23
4. TRUSTEE FEES...........................................................24
4.1 Forbearance Fee.............................................24
4.2 Monitoring Fee..............................................24
4.3 Stay Bonuses................................................24
5. OPERATING COVENANTS....................................................25
5.1 Annual Budget Plan..........................................25
5.2 Allowable Capital Expenditures..............................26
5.3 Receipts; Funds; Payments...................................26
5.4 Restricted Payments.........................................27
5.5 Restricted Payment Period...................................28
5.6 MJQ Advances................................................28
5.7 Subordinated Payments.......................................29
5.8 Other Permitted Payments....................................29
5.9 Current Ratio...............................................29
5.10 Title to Ship..............................................30
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(continued)
Page
5.11 Conduct of Ship Business...................................30
5.12 Bareboat Charter...........................................31
5.13 Port Lease.................................................31
5.14 Prohibited Payments........................................31
5.15 ITB Employees..............................................32
5.16 Books and Records..........................................32
5.17 Access.....................................................33
6. GENERAL UNSECURED CREDITORS............................................34
6.1 Initial Payment; Reserve....................................34
6.2 Creditor Account............................................34
6.3 Balance of Payments.........................................35
6.4 Collateral Security.........................................35
7. REPORTING REQUIREMENTS.................................................35
7.1 Annually....................................................36
7.2 Monthly.....................................................36
7.3 Weekly......................................................36
7.4 ITB.........................................................36
7.5 Current Ratio Calculation...................................36
8. COLLATERAL SECURITY....................................................36
8.1 Description of Collateral...................................36
8.2 GSP Note....................................................38
8.3 Conditions to Subordination.................................39
9. EFFECTIVENESS; CONDITIONS PRECEDENT....................................40
9.1 Effectiveness...............................................40
9.2 Closing Documents...........................................40
9.3 Xxxxxxx Guaranty............................................43
10. REPRESENTATIONS AND WARRANTIES........................................43
10.1 MJQ........................................................43
10.2 ITG and ITGD...............................................44
10.3 ITB........................................................45
10.4 FWM and FXM................................................47
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TABLE OF CONTENTS
(continued)
Page
10.5 Trustee....................................................47
10.6 Representations and Warranties Regarding Ship..............48
10.7 Capitalization and Ownership of ITG........................49
10.8 Capitalization and Ownership of MJQ........................49
10.9 Ship Mortgage..............................................50
10.10 Absence of Conflict with Other Agreements, Etc............50
10.11 No Violation of Applicable Law............................50
10.12 Projections...............................................50
10.13 Fiscal Year...............................................51
10.14 Patents, Trademarks, Licenses, Franchises, Etc............51
10.15 Material Agreements.......................................51
11. GENERAL COVENANTS.....................................................51
11.1 Indebtedness...............................................51
11.2 Liens......................................................52
11.3 Sale-Leasebacks............................................53
11.4 Affiliate Transactions.....................................53
11.5 Disposition of Assets......................................53
11.6 Liquidation or Merger......................................54
11.7 Dividends and Other Payments...............................54
11.8 Change in Organizational Documents.........................55
11.9 Issuance of Equity.........................................55
11.10 Management Agreements.....................................55
11.11 Other Contracts...........................................55
11.12 Preservation of Existence, Etc............................56
11.13 Compliance with Law.......................................56
11.14 Payment of Taxes and Claims...............................56
11.15 Maintenance of Properties.................................57
11.16 Insurance.................................................57
11.17 Environmental Indemnity...................................58
11.18 Deposit Accounts..........................................58
11.19 Collateral................................................59
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TABLE OF CONTENTS
(continued)
Page
11.20 Further Assurances........................................59
12. EVENT OF DEFAULTS.....................................................60
12.1 Non-Payment................................................60
12.2 Misrepresentation by Obligated Parties or ITGD.............60
12.3 Misrepresentation by FWM or FXM............................61
12.4 Current Ratio Default......................................61
12.5 Non-Performance............................................61
12.6 Bankruptcy, Insolvency, Etc................................61
12.7 Cross-Default With Other Indebtedness......................62
12.8 Unenforceability...........................................62
12.9 Suspension of Operations...................................62
13. REMEDIES..............................................................63
13.1 Acceleration...............................................63
13.2 Automatic Acceleration in Connection with Bankruptcy
or Insolvency Proceeding...................................63
13.3 Default Interest...........................................63
13.4 Oversight of Operations....................................64
13.5 Orderly Liquidation Period.................................64
13.6 Cure Right.................................................67
13.7 Breach of Liquidation Covenants............................68
13.8 Appointment of Receiver....................................68
13.9 Sale of Collateral.........................................68
13.10 Section 363 Sale..........................................69
13.11 Relief from Automatic Stay................................69
13.12 Collection Costs..........................................69
13.13 Indemnity.................................................70
13.14 MSA Defaults and Remedies.................................71
13.15 Additional Remedies.......................................71
14. GENERAL PROVISIONS....................................................73
14.1 Duration; Survival.........................................73
14.2 No Implied Waiver; Rights Cumulative.......................73
14.3 Waivers and Amendments.....................................73
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TABLE OF CONTENTS
(continued)
Page
14.4 Successors and Assigns.....................................73
14.5 Descriptive Headings.......................................74
14.6 Maximum Lawful Interest Rate...............................74
14.7 No Third Party Beneficiaries...............................74
14.8 Counterparts...............................................75
14.9 Governing Law..............................................75
14.10 Notices...................................................75
14.11 Payments..................................................78
14.12 Waivers...................................................78
14.13 Entire Agreement..........................................79
14.14 Date of Execution.........................................79
14.15 Termination...............................................79
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TABLE OF SCHEDULES
Schedule Description
Schedule A Existing Agreements
Schedule 5.2 Allowable Capital Expenditures
Schedule 5.3 Accounts
Schedule 10.6(b) Liens
Schedule 10.6(c) Property Not Owned by Debtor
Schedule 10.6(d) Contracts
Schedule 10.7 Capitalization of ITG
Schedule 10.8 Capitalization of MJQ
Schedule 10.14 Intellectual Property
Schedule 10.15 Material Agreements
Schedule 11.4 Agreements with Affiliates
