EXHIBIT 10.2
10/5/99
$16,300,000
CREDIT AGREEMENT
dated as of October __, 1999
between
GAMBLERS SUPPLY MANAGEMENT COMPANY
as the Borrower,
and
ISLE OF CAPRI CASINOS, INC.
as the Lender.
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS....................................2
1.1. Defined Terms...............................................2
1.2. Use of Defined Terms.......................................12
1.3. Cross-References...........................................12
1.4. Accounting and Financial Determinations....................12
ARTICLE II
COMMITMENT, BORROWING PROCEDURES AND NOTE..........................12
2.1. Commitment.................................................12
2.1.1. Commitment To Make Loan....................................12
2.1.2. Lender Not Permitted or Required To Make Loan..............12
2.2. Borrowing Procedure........................................12
2.3. Note.......................................................13
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES.........................13
3.1. Repayments and Prepayments.................................13
3.2. Interest Provisions........................................14
3.2.1. Rates......................................................14
3.2.2. Post-Maturity Rate.........................................14
3.2.3. Payment Dates..............................................14
3.3. Fees.......................................................14
3.3.1 Upfront Fee................................................15
3.3.2 Prepayment/Repayment Fee...................................15
ARTICLE IV
TAXES, PAYMENTS, CALCULATIONS, ETC.................................15
4.1. Taxes......................................................15
4.2. Payments, Computations, etc................................16
4.3. Use of Proceeds............................................16
ARTICLE V
CONDITIONS TO LOAN.................................................16
5.1. Conditions to Loan.........................................16
i
5.1.1. Resolutions, etc...........................................16
5.1.2. Delivery of Note...........................................16
5.1.3. Acquisition Consummated....................................16
5.1.4. Payment of Outstanding Indebtedness, etc...................17
5.1.5. Equity Infusion............................................17
5.1.6. Security Agreement.........................................17
5.1.7. Mortgage...................................................18
5.1.8. Ship Mortgage..............................................18
5.1.9. Opinions of Counsel........................................19
5.1.10. Closing Fees, Expenses, etc................................19
5.1.11. Compliance with Warranties, No Default, etc................19
5.1.12. Borrowing Request..........................................20
5.1.13. Financial Condition........................................20
5.1.14 Satisfactory Legal Form; Other Documents...................20
5.1.15. Payoff Letters.............................................20
5.1.16. Amendment to CIBC Credit Agreement.........................20
ARTICLE VI
REPRESENTATIONS AND WARRANTIES.....................................20
6.1. Organization, etc..........................................20
6.2. Due Authorization, Non-Contravention, etc..................21
6.3. Government Approval, Regulation, etc.......................21
6.4. Validity, etc..............................................21
6.5. Financial Information......................................21
6.6. No Material Adverse Change.................................22
6.7. Litigation, Labor Controversies, etc.......................22
6.8. Subsidiaries...............................................22
6.9. Ownership of Properties....................................22
6.10. Taxes......................................................22
6.11. Pension and Welfare Plans..................................22
6.12. Environmental Warranties...................................23
6.13. Regulations U and X.......................................24
6.14. Accuracy of Information....................................24
ARTICLE VII
COVENANTS..........................................................24
7.1. Affirmative Covenants......................................24
7.1.1. Financial Information, Reports, Notices, etc...............24
7.1.2. Compliance with Laws, etc..................................26
7.1.3. Maintenance of Properties..................................26
ii
7.1.4. Insurance..................................................26
7.1.5. Books and Records..........................................26
7.1.6. Environmental Covenant.....................................27
7.1.7. Year 2000 Compliance.......................................27
7.2. Negative Covenants.........................................28
7.2.1. Business Activities........................................28
7.2.2. Indebtedness...............................................28
7.2.3. Liens......................................................28
7.2.4. Financial Condition........................................29
7.2.5. Investments................................................29
7.2.6. Restricted Payments, etc...................................30
7.2.7. Capital Expenditures, etc..................................30
7.2.8. Rental Obligations.........................................30
7.2.9. Take or Pay Contracts......................................31
7.2.10. Consolidation, Merger, etc.................................31
7.2.11. Asset Dispositions, etc....................................31
7.2.12. Modification of Certain Agreements.........................31
7.2.13. Transactions with Affiliates...............................31
7.2.14. Negative Pledges, etc......................................31
ARTICLE VIII
EVENTS OF DEFAULT..................................................32
8.1. Listing of Events of Default...............................32
8.1.1. Non-Payment of Obligations.................................32
8.1.2. Breach of Warranty.........................................32
8.1.3. Non-Performance of Certain Covenants and Obligations.......32
8.1.4. Non-Performance of Other Covenants and Obligations.........32
8.1.5. Default on Other Indebtedness..............................32
8.1.6. Judgments..................................................32
8.1.7. Pension Plans..............................................33
8.1.8. Control of the Borrower....................................33
8.1.9. Bankruptcy, Insolvency, etc................................33
8.1.10. Impairment of Security, etc................................34
8.2. Action if Nonpayment, etc..................................34
8.3. Action if Bankruptcy.......................................34
8.4. Action if Other Event of Default...........................34
ARTICLE IX MISCELLANEOUS PROVISIONS...........................................35
9.1. Waivers, Amendments, etc...................................35
9.2. Notices....................................................35
9.3. Payment of Costs and Expenses..............................35
iii
9.4. Indemnification............................................36
9.5. Survival...................................................37
9.6. Severability...............................................37
9.7. Headings...................................................37
9.8. Execution in Counterparts, Effectiveness, etc..............37
9.9. Governing Law; Entire Agreement............................37
9.10. Successors and Assigns.....................................37
9.11. Confidentiality............................................37
9.12. Other Transactions.........................................38
9.13. Forum Selection and Consent to Jurisdiction................38
9.14. Waiver of Jury Trial.......................................39
9.15. Limitation of Liability....................................40
9.16. Interest Rates.............................................41
9.17. Iowa Gaming Licenses.......................................42
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Certificate of Authorized Officer
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October __, 1999 between GAMBLERS
SUPPLY MANAGEMENT COMPANY, a South Dakota corporation (the "Borrower"), and ISLE
OF CAPRI CASINOS, INC., a Delaware corporation (the "Lender"),
W I T N E S S E T H:
WHEREAS, Lady Luck Gaming Corporation, a Delaware corporation
("Parent"), is engaged directly and through its various Subsidiaries in the
business of operating gaming casinos; and
WHEREAS, pursuant to a Stock Purchase Agreement, dated July 30, 1999
(as so originally executed and delivered, the "Sodak Stock Purchase Agreement"),
among Parent, the Borrower and Sodak Gaming Inc., a South Dakota corporation
("Sodak"), Parent intends to acquire all of the issued and outstanding stock of
the Borrower from Sodak for $47,100,000 (including the assumption of
approximately $4,250,000 of indebtedness in connection with an existing
equipment lease and approximately $640,000 of indebtedness related to a hotel on
the premises of the Borrower's gaming facilities, and up to $485,000 of
prepayment premiums) (the "Acquisition"); and
WHEREAS, in connection with, and to fund, the Acquisition, the Borrower
desires to obtain a Commitment from the Lender pursuant to which a Loan, in a
maximum aggregate principal amount not to exceed $16,300,000, will be made to
the Borrower prior to the Commitment Termination Date;
WHEREAS, Lender, Parent and Isle Merger Corp., a Delaware corporation
("Merger Sub"), have entered into an Agreement and Plan of Merger, dated as of
October __, 1999 (as so originally executed and delivered, the "Isle Merger
Agreement"), pursuant to which Merger Sub will merge with and into Parent (the
"Isle Merger"); and
WHEREAS, the Lender is willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitment and make such Loan to the Borrower; and
WHEREAS, the proceeds of such Loan will be used to make partial payment
of the Parent's obligations under the Sodak Stock Purchase Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Acquisition" is defined in the recitals.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors,
managers or managing general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Authorized Officer" means, relative to the Borrower, those of its
officers whose signatures and incumbency shall have been certified to the Lender
pursuant to Section 5.1.1.
"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the rate of interest most recently established by CIBC as its
Base Rate. The Base Rate is not necessarily intended to be the lowest rate of
interest determined by CIBC in connection with extensions of credit. Changes in
the rate of interest will take effect simultaneously with each change in the
Base Rate. The Lender will give notice promptly to the Borrower of changes in
the Base Rate.
"Borrower" is defined in the preamble.
"Borrower Excess Cash Flow" means, for any period, EBITDA for such
period less the sum of (i) cash interest expense, (ii) cash income taxes, (iii)
the sum of (x) $150,000 monthly scheduled principal payments and (y) any
voluntary prepayments of the Borrower on the Loan, (iv) maintenance Capital
Expenditures not to exceed $100,000 per quarter, (v) Capital Expenditures in
connection with the replacement of the mooring barge not to exceed $1,000,000 in
the aggregate, and (vi) such other Capital Expenditures as shall be agreed to by
the Lender.
2
"Borrowing Request" means the loan request and certificate duly
executed by an Authorized Officer of the Borrower, substantially in the form of
Exhibit B hereto.
"Business Day" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York or Mississippi.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the Borrower for
fixed or capital assets made during such period which, in accordance
with GAAP, would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower under any leasing or similar arrangement which, in accordance with
GAAP, would be classified as capitalized leases, and, for purposes of this
Agreement and each other Loan Document, the amount of such obligations shall be
the capitalized amount thereof, determined in accordance with GAAP, and the
stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of the Borrower)
organized under the laws of any state of the United States or of
the District of Columbia and rated A-l or higher by Standard &
Poor's Corporation or P-l or higher by Xxxxx'x Investors Service,
Inc., or
(ii) CIBC;
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by either
(i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000, or
3
(ii) CIBC; or
(d) any repurchase agreement entered into with CIBC (or other
commercial banking institution of the stature referred to in clause
(c)(i)) which
(i) is secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through
(c), and
(ii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase obligation
of CIBC (or other commercial banking institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means the failure of Parent to own, free and clear
of all Liens or other encumbrances, 100% of the outstanding shares of voting
stock of the Borrower on a fully diluted basis (other than prior to the closing
under the Sodak Stock Purchase Agreement, and except for a pledge of all capital
stock of the Borrower pursuant to the Indenture).
"CIBC" means Canadian Imperial Bank of Commerce.
"CIBC Credit Agreement" means the Credit Agreement dated as of April
23, 1999 by and among the Lender, various lenders and agents and CIBC, as
administrative agent.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means the Lender's obligation to make the Loan pursuant to
Section 2.1.1.
"Commitment Amount" means $16,300,000.
"Commitment Termination Date" means the earliest of
(a) October 31, 1999, or such other date as Parent, Borrower and
Sodak agree to extend the closing date under the Sodak Stock Purchase
Agreement;
4
(b) the date on which the Commitment Amount is terminated in full
or reduced to zero pursuant to this Agreement;
(c) the date on which any Commitment Termination Event occurs; and
(d) the Maturity Date.
Upon the occurrence of any event described in clause (b), (c) or (d), the
Commitment shall terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a) through
(d) of Section 8.1.9 with respect to the Borrower; or
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of the Loan to be due and payable
pursuant to Section 8.2, or
(ii) in the absence of such declaration, the giving of notice
by the Lender to the Borrower that the Commitment has been
terminated.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
5
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Lender.
"Dollar" and the sign "$" means lawful money of the United States.
"EBITDA" means the sum for any period of (i) net income for the
Borrower (excluding extraordinary gains or losses), on a pro forma basis for
periods prior to the date of the Acquisition, such net income being the net
income of the Xxxx Xxxxxxxxx Gaming Facility, (ii) provisions for taxes deducted
in determining such net income, (iii) interest expense deducted in determining
such net income, (iv) depreciation expense deducted in determining such net
income, and (v) amortization expense deducted in determining such net income.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 9.8.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g., the "1999 Fiscal Year") refer to the Fiscal Year
ending on December 31 occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Gaming Vessel" means the vessel Xxxx Xxxxxxxxx having Official No.
950558 of approximately 99.96 gross and 67 net tons and with dimensions of
approximately 228.4 feet by 55 feet, built in 1989 at Freeport, Florida, by
Freeport Ship Builders and Marine Repair, Inc., which is duly documented in the
name of the Borrower under the laws of the United States at the National Vessel
Documentation Center at Falling Waters, West Virginia.
6
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency (or currency unit) exchange rates.
"Xxxxxx" means Xxxxxx Financial, Inc. in its capacity as lessor under
the Xxxxxx Lease.
"Xxxxxx Lease" means the Master Lease Agreement dated June 30, 1997
between the Borrower, as lessee, and Xxxxxx (as successor to PDS Financial
Corporation).
"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item
in such financial statement and which, as a condition to its removal,
would require an adjustment to such item the effect of which would be
to cause the Borrower to be in default of its obligation under Section
7.2.4.
7
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which
have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging Obligations;
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price
of property or services, and indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall
have been assumed by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any of
the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.
"Indemnified Liabilities" is defined in Section 9.4.
"Indemnified Parties" is defined in Section 9.4.
"Indenture" means the Indenture, dated as of February 17, 1994, by and
among Lady Luck Gaming Finance Corporation, the Parent, certain subsidiary
guarantors named therein and
8
First Trust National Association, as amended and supplemented, relating to the
11 7/8% First Mortgage Notes.
9
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Isle Merger" is defined in the recitals.
"Isle Merger Agreement" is defined in the recitals.
"Lender" is defined in the preamble.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" is defined in Section 2.1.1.
"Loan Document" means this Agreement, the Note, the Mortgage, the Ship
Mortgage and the Security Agreement.
"Material Adverse Effect" means, with respect to the Borrower, a
material adverse effect upon the ability of the Borrower to pay the Obligations
or upon the business, financial condition, results of operation, prospects or
properties of the Borrower.
"Maturity Date" means the earliest to occur of the following: (i) the
Isle Merger Agreement shall, in whole or in part, terminate, cease to be
effective or cease to be the legally valid, binding and enforceable obligation
of Parent and (a) such termination or cessation shall continue for two Business
Days if resulting from the Parent's acceptance of a Superior Proposal
9
(as defined in the Isle Merger Agreement) to be acquired by another Person other
than the Lender or (b) such termination or cessation shall continue for 180 days
if resulting for any other reason under the Isle Merger Agreement; (ii) the
Parent or any Affiliate of the Parent shall, directly or indirectly, contest in
any manner such effectiveness, validity, binding nature or enforceability or
(iii) consummation of the Isle Merger.
"Merger Sub" is defined in the recitals.
"Xxxx Xxxxxxxxx Gaming Facility" means the Xxxx Xxxxxxxxx gaming
property in Marquette, Iowa, including the Gaming Vessel, gaming equipment, and
dockside buildings, including a motel, an enclosed walkway, a parking lot, a
restaurant, an administrative office and other entertainment facilities.
"Monthly Payment Date" means the last day of each calendar month,
beginning with November 30, 1999, or, if any such day is not a Business Day, the
next succeeding Business Day.
"Mortgage" means the Mortgage on the Xxxx Xxxxxxxxx Gaming Facility
(excluding the Gaming Vessel).
"Note" means a promissory note of the Borrower payable to the Lender,
in the form of Exhibit A hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
indebtedness of the Borrower to the Lender resulting from the outstanding Loan,
and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower arising under or in connection with this Agreement, the Note and each
other Loan Document.
"Organic Document" means, relative to the Borrower, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock.
"Parent Excess Cash Flow" means Excess Cash Flow (as such term is
defined in the Indenture) less, without duplication, the sum of (i) the sum of
(x) scheduled principal payments and (y) any voluntary prepayments by the Parent
or the Borrower on the Loan and (ii) amounts paid by the Parent to repurchase 11
7/8% First Mortgage Notes from the holders thereof pursuant to the terms of the
Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in
10
Section 4001(a)(3) of ERISA), and to which the Borrower or any corporation,
trade or business that is, along with the Borrower, a member of a Controlled
Group, may have liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
"Person" means any natural person, corporation, limited liability
company, firm, association, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Quarterly Payment Date" means the 45th day after the end of each
calendar quarter, beginning with February 14, 2000, or, if any such day is not a
Business Day, the next succeeding Business Day.
"Release" means a "release," as such term is defined in CERCLA.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect
from time to time.
"Security Agreement" means the Security Agreement executed and
delivered pursuant to Section 5.1.6, substantially in a form acceptable to the
Lender, as amended, supplemented, restated or otherwise modified from time to
time.
"Ship Mortgage" means the First Preferred Mortgage executed and
delivered by the Borrower to the Lender pursuant to Section 5.1.8, in form and
substance acceptable to the Lender, as amended, supplemented, restated or
otherwise modified from time to time.
"Sodak" is defined in the recitals.
"Sodak Stock Purchase Agreement" is defined in the recitals.
"Subsidiary" means, with respect to any Person, any other Person of
which more than 50% of the outstanding capital stock or other equity interest
having ordinary voting power to elect a majority of the board of directors or
similar management group of such other Person (irrespective of whether at the
time equity of any other class or classes of such other Person shall or might
have voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned by such Person, by such Person and one or more
other Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person.
"Taxes" is defined in Section 4.1.
11
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Welfare Plan" means a "welfare plan," as such term is defined in
Section 3(1) of ERISA.
"Year 2000 Compliant" is defined in Section 7.1.7.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and the
Note and in each Borrowing Request, Loan Document, notice and other
communication delivered from time to time in connection with this Agreement or
any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in Section 6.5.
ARTICLE II
COMMITMENT, BORROWING PROCEDURES AND NOTE
SECTION 2.1. Commitment. On the terms and subject to the conditions of
this Agreement (including Article V), the Lender agrees to make a Loan pursuant
to the Commitment described in this Section 2.1.
SECTION 2.1.1. Commitment To Make Loan. On a Business Day occurring
prior to the Commitment Termination Date, the Lender will make a loan (the
"Loan") to the Borrower equal to the aggregate amount of the amount requested by
the Borrower to be made on such day. The commitment of the Lender described in
this Section 2.1.1 is herein referred to as its "Commitment". No amounts paid or
prepaid with respect to the Loan may be reborrowed.
SECTION 2.1.2. Lender Not Permitted or Required To Make Loan. The
Lender shall not be permitted or required to make the Loan if it would exceed
the Commitment Amount.
12
SECTION 2.2. Borrowing Procedure. By delivering a Borrowing Request to
the Lender on or before 10:00 a.m. (Central time) on a Business Day, the
Borrower may irrevocably request, on not less than one nor more than three
Business Days' notice, that the Loan be made in an amount up to the Commitment
Amount. On the terms and subject to the conditions of this Agreement, the Loan
shall be made on the Business Day specified in such Borrowing Request. On or
before 11:00 a.m. (Central time) on such Business Day, the Lender shall make
funds in an amount equal to the requested Loan available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in the Borrowing
Request.
SECTION 2.3. Note. The Lender's Loan under its Commitment shall be
evidenced by the Note payable to the order of the Lender in a maximum principal
amount equal to the original Commitment Amount. The Borrower hereby irrevocably
authorizes the Lender to make (or cause to be made) appropriate notations on the
grid attached to the Lender's Note (or on any continuation of such grid), which
notations, if made, shall evidence, inter alia, the date of and the outstanding
principal amount of the Loan evidenced thereby. Such notations shall be
conclusive and binding on the Borrower absent manifest error; provided, however,
that the failure of the Lender to make any such notations shall not limit or
otherwise affect any Obligations of the Borrower.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall cause the
Parent to make three equal monthly principal payments each in the amount of
$500,000 on the Monthly Payment Date in each of March 2000, April 2000 and May
2000. In addition, the Borrower shall make equal monthly principal payments each
in the amount of $150,000 on each Monthly Payment Date after the making of the
Loan, with any remaining principal and interest payable on the Maturity Date.
Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
the Loan; provided, however, that
(i) all such voluntary prepayments shall require at least one
but no more than three Business Days' prior written notice to the
Lender; and
(ii) all such voluntary partial prepayments shall be in an
aggregate minimum amount of $100,000 and an integral multiple of
$25,000;
(b) shall, immediately upon any acceleration of the Maturity Date
of the Loan pursuant to Section 8.2 or Section 8.3, repay the Loan,
unless, pursuant to Section 8.2, only a portion of the Loan is so
accelerated. Each prepayment of the Loan made pursuant
13
to this Section shall be without premium or penalty (except for the
fees provided in Section 3.3);
(c) shall, on each Quarterly Payment Date, pay an amount equal to
the Borrower Excess Cash Flow for the immediate prior calendar quarter;
and
(d) shall, on August 1, 2000, cause to be paid an amount equal to
the Parent Excess Cash Flow.
All prepayments of the Loan shall be applied to the installments of the Loan in
the inverse order of maturity.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of the Loan shall accrue and be payable in accordance with this Section
3.2.
SECTION 3.2.1. Rates. Prior to maturity (whether on the Maturity Date,
upon acceleration or otherwise) the Loan and the Note shall bear interest at a
rate per annum equal to the Base Rate plus a margin of 3.625%.
SECTION 3.2.2. Post-Maturity Rate. After the date any principal amount
of the Loan is due and payable (whether on the Maturity Date, upon acceleration
or otherwise), after any other monetary Obligation of the Borrower shall have
become due and payable, or pursuant to Section 8.4, the Borrower shall pay, but
only to the extent permitted by law, interest (after as well as before judgment)
on such amounts at a rate per annum equal to the Base Rate plus a margin of
10.00%.
SECTION 3.2.3. Payment Dates. Interest accrued on the Loan shall be
payable, without duplication:
(a) on the Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in part,
of principal outstanding on the Loan;
(c) on each Monthly Payment Date occurring after the making of the
Loan hereunder;
(d) on that portion of the Loan the Maturity Date of which is
accelerated pursuant to Section 8.2 or Section 8.3, immediately upon
such acceleration.
Interest accrued on the Loan or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Maturity Date, upon acceleration or otherwise) shall be
payable upon demand.
14
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1 Upfront Fee. The Borrower agrees to pay to the Lender an
upfront fee in an amount equal to 2.5% of the Commitment Amount (without regard
to any reduction thereto), payable on the date of the Loan hereunder.
SECTION 3.3.2 Prepayment/Repayment Fee. The Borrower agrees to pay to
the Lender a repayment/prepayment fee in an amount equal to 2% of any principal
amount of the Loan repaid or prepaid hereunder. Such fee shall be payable upon
the date of each such repayment or prepayment on the amount so repaid or
prepaid.
ARTICLE IV
TAXES, PAYMENTS, CALCULATIONS, ETC.
SECTION 4.1. Taxes. All payments by the Borrower of principal of, and
interest on, the Loan and all other amounts payable hereunder shall be made free
and clear of and without deduction for any present or future income, excise,
stamp or other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, other than franchise taxes and taxes
imposed on or measured by the Lender's net income or receipts (such non-excluded
items being called "Taxes"). In the event that any withholding or deduction from
any payment to be made by the Borrower hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Lender an official receipt or other
documentation satisfactory to the Lender evidencing such payment to
such authority; and
(c) pay to the Lender such additional amount or amounts as are
necessary to ensure that the net amount actually received by the Lender
will equal the full amount the Lender would have received had no such
withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Lender with respect to
any payment received by the Lender hereunder, the Lender may pay such Taxes and
the Borrower will promptly pay such additional amounts (including any penalties,
interest or expenses) as are necessary so that the net amount received by such
person after the payment of such Taxes (including any Taxes on such additional
amounts) shall equal the amount such Person would have received had not such
Taxes been asserted.
15
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Lender the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for any
incremental Taxes, interest or penalties that may become payable by the Lender
as a result of any such failure.
SECTION 4.2. Payments, Computations, etc. All payments by the Borrower
pursuant to this Agreement, the Note or any other Loan Document shall be made by
the Borrower to the Lender, without setoff, deduction or counterclaim, not later
than 11:00 a.m. (Central time) on the date due, in same day or immediately
available funds, to such account as the Lender shall specify from time to time
by notice to the Borrower. Funds received after that time shall be deemed to
have been received by the Lender on the next succeeding Business Day. All
interest and fees shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest or fee is payable over a year comprised of 365 days.
Whenever any payment to be made shall otherwise be due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in computing interest and fees, if any,
in connection with such payment.
SECTION 4.3. Use of Proceeds. The Borrower shall apply the proceeds of
the Loan to make the payment due under the Sodak Stock Purchase Agreement.
ARTICLE V
CONDITIONS TO LOAN
SECTION 5.1. Conditions to Loan. The obligation of the Lender to fund
the Loan shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 5.1.
SECTION 5.1.1. Resolutions, etc. The Lender shall have received from
the Borrower a certificate, dated on or prior to the date on which the Loan is
made, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Note and each other Loan Document to be executed by it;
and
(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Note and each
other Loan Document executed by it,
upon which certificate the Lender may conclusively rely until it shall have
received a further certificate of the Secretary of the Borrower canceling or
amending such prior certificate.
16
SECTION 5.1.2. Delivery of Note. The Lender shall have received its
Note duly executed and delivered by the Borrower.
SECTION 5.1.3. Acquisition Consummated. The conditions set forth in
Section 6.1 and Section 6.2 of the Sodak Stock Purchase Agreement regarding the
obligations of the Parent, Sodak and Borrower to consummate the Acquisition
shall have been satisfied in all material respects, and the Acquisition shall
have been consummated in accordance therewith to the satisfaction of the Lender.
SECTION 5.1.4. Payment of Outstanding Indebtedness, etc. All
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the Loan).
(b) The Borrower shall use all reasonable efforts from and after the
date hereof until the date on which the Loan is made to cause the Xxxxxx Lease
to remain in full force and effect and not to become part of the Indebtedness to
be Paid. If such efforts of the Borrower fail, then the Lender agrees to take
all reasonable efforts to cause Xxxxxx to keep the Xxxxxx Lease in full force
and effect and not to become part of the Indebtedness to be Paid. If such
efforts of the Lender fail, then the Lender shall either guaranty the
obligations of the Borrower under the Xxxxxx Lease or take an assignment from
Xxxxxx of the Xxxxxx Lease.
SECTION 5.1.5. Equity Infusion. The Borrower shall have received a cash
equity infusion from Parent in the amount of $25,367,000.
SECTION 5.1.6. Security Agreement. The Lender shall have received
executed counterparts of the Security Agreement, dated on or before the date on
which the Loan is made, duly executed by the Borrower, together with
(a) acknowledgment copies of properly filed Uniform Commercial
Code financing statements (Form UCC-1), dated a date reasonably near to
the date of the Loan, or such other evidence of filing as may be
acceptable to the Lender, naming the Borrower as the debtor and the
Lender as the secured party, or other similar instruments or documents,
filed under the Uniform Commercial Code of all jurisdictions as may be
necessary or, in the opinion of the Lender, desirable to perfect the
security interest of the Lender pursuant to the Security Agreement;
(b) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens and
other rights of any Person
(i) in any collateral described in the Security Agreement
previously granted by any Person, and
17
(ii) securing any of the Indebtedness identified in Item
7.2.2(b) ("Indebtedness to be Paid") of the Disclosure Schedule,
together with such other Uniform Commercial Code Form UCC-3 termination
statements as the Lender may reasonably request from such obligors; and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Lender, dated a date reasonably
near to the date of the Loan, listing all effective financing
statements which name the Borrower (under its present name and any
previous names including Sodak) as the debtor and which are filed in
the jurisdictions in which filings were made pursuant to clause (a)
above, together with copies of such financing statements (none of which
(other than those described in clause (a), if such Form UCC-11 or
search report, as the case may be, is current enough to list such
financing statements described in clause (a)) shall cover any
collateral described in the Security Agreement).
SECTION 5.1.7. Mortgage. The Lender shall have received counterparts of
the Mortgage, dated on or before the date on which the Loan is made, duly
executed by the Borrower, together with
(a) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of the Mortgage as may be
necessary or, in the reasonable opinion of the Lender, desirable
effectively to create a valid, perfected Lien against the properties
purported to be covered thereby, subject only to the Lien in favor of
Xxxxxxx and Xxxxxx Xxxxx described in Item 7.2.3 ("Liens") of the
Disclosure Schedule;
(b) mortgagee's title insurance policies (and survey required by
the Lender in connection therewith) in favor of the Lender in amounts
and in form and substance and issued by insurers, reasonably
satisfactory to the Lender, with respect to the property purported to
be covered by the Mortgage, insuring that title to such property is
marketable and that the interests created by the Mortgage constitute
valid first Liens thereon free and clear of all defects and
encumbrances other than as approved by the Lender, and such policies
shall also include such endorsements as the Lender shall request and
shall be accompanied by evidence of the payment in full of all premiums
thereon; and
(c) such other approvals, opinions, or documents relating to the
Mortgage as the Lender may reasonably request.
SECTION 5.1.8. Ship Mortgage.
(a) The Lender shall have received from the Borrower a duly
executed Ship Mortgage, dated on or before the date on which the Loan
is made, on the Gaming Vessel; the Ship Mortgage shall have been duly
filed and recorded in the manner prescribed by
18
the laws of the United States of America; and the Borrower shall have
complied with and shall have provided to the Lender evidence reasonably
satisfactory to the Lender that the Borrower has satisfied all
requisite formalities and provisions of such laws so that the Ship
Mortgage constitutes a valid and enforceable first "preferred mortgage"
on the Gaming Vessel as provided in such laws (including Chapter 313 of
Title 46, United States Code), having the effect and with the priority
as therein provided.
(b) The Lender shall have received the report of the Borrower's
marine insurance broker required pursuant to Section 2.15.6(a) of the
Ship Mortgage, together with such evidence of insurance as is required
by Section 2.15.6(b) of the Ship Mortgage and such other evidence of
the maintenance of the insurance required by Section 2.15 of the Ship
Mortgage as the Lender shall reasonably request.
(c) The Lender shall have received such other approvals, opinions,
and documents relating to the Ship Mortgage as the Lender may
reasonably request.
SECTION 5.1.9. Opinions of Counsel. The Lender shall have received
opinions, dated the date of the Loan and addressed to the Lender, from Xxxxxxx
Berlin Shereff Xxxxxxxx, LLP, special counsel to the Borrower and Parent, and
from Lane & Xxxxxxxx, counsel to the Borrower and Parent, each in form and
substance satisfactory to the Lender.
SECTION 5.1.10. Closing Fees, Expenses, etc. The Lender shall have
received all fees, costs and expenses due and payable pursuant to Section 3.3
and 9.3, if then invoiced.
SECTION 5.1.11. Compliance with Warranties, No Default, etc. Both
before and after giving effect to the Loan (but, if any Default of the nature
referred to in Section 8.1.5 shall have occurred with respect to any other
Indebtedness, without giving effect to the application, directly or indirectly,
of the proceeds thereof) the following statements shall be true and correct
(a) the representations and warranties set forth in Article VI
shall be true and correct in all material respects (except as to
representations and warranties which are qualified as to materiality,
which representations and warranties shall be true in all respects),
unless stated to relate solely to an early date, in which case such
representations and warranties shall be true and correct as of such
earlier date;
(b) except as disclosed by the Borrower to the Lender pursuant to
Section 6.7
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or, to
the knowledge of the Borrower, threatened against the Borrower
which could reasonably be expected to have a Material Adverse
Effect or which purports to affect the legality, validity or
enforceability of this Agreement, the Note or any other Loan
Document; and
19
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental investigation
or proceeding disclosed pursuant to Section 6.7 which could
reasonably be expected to materially adversely affect the
consolidated businesses, operations, assets, revenues, properties
or prospects of the Borrower; and
(c) no Default shall have then occurred and be continuing, and the
Borrower shall not be in material violation of any law or governmental
regulation or court order or decree.
SECTION 5.1.12. Borrowing Request. The Lender shall have received a
Borrowing Request for the Loan. Each of the delivery of such Borrowing Request
and the acceptance by the Borrower of the proceeds of the Loan shall constitute
a representation and warranty by the Borrower that on the date of the Loan (both
immediately before and after giving effect to such Loan and the application of
the proceeds thereof) the statements made in Section 5.1.11 are true and correct
in all material respects.
SECTION 5.1.13. Financial Condition. The Lender shall have received an
unaudited pro forma balance sheet of the Borrower as of September 30, 1999 after
giving effect to the Loan (if the Borrower is able to produce such balance sheet
after using all reasonable efforts).
SECTION 5.1.14. Satisfactory Legal Form; Other Documents. All documents
executed or submitted pursuant hereto by or on behalf of the Borrower shall be
satisfactory in form and substance to the Lender and its counsel; the Lender and
its counsel shall have received all information, approvals, opinions, documents
or instruments as the Lender or its counsel may reasonably request.
SECTION 5.1.15. Payoff Letters. The Lender shall have received payoff
letters with regard to Indebtedness to be paid, including without limitation any
such Indebtedness relating to the Xxxx Xxxxxxxxx Gaming Facility.
SECTION 5.1.16. Amendment to CIBC Credit Agreement. An amendment to the
CIBC Credit Agreement shall have been executed by the Requisite Lenders (as
defined in the CIBC Credit Agreement) which, among other things, contains the
consent of such Requisite Lenders to the making of the Loan by the Lender under
this Agreement, provided that the Lender shall use all reasonable efforts to
cause such amendment to be executed.
20
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make
the Loan hereunder, the Borrower represents and warrants unto the Lender as set
forth in this Article VI.
SECTION 6.1. Organization, etc. The Borrower is a corporation validly
existing and in good standing under the laws of the State of its incorporation,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business requires such
qualification, except where the failure to so qualify and be in good standing
could not reasonably be expected to have a Material Adverse Effect, and has full
corporate power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement, the Note and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business substantially
as currently conducted by it.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Note and each
other Loan Document executed or to be executed by it, and the Borrower's
participation in the consummation of the Acquisition are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not
(a) contravene the Borrower's Organic Documents;
(b) contravene any material contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower, except where such contravention could not
reasonably be expected to have a Material Adverse Effect; or
(c) result in, or require the creation or imposition of, any Lien
on any of the Borrower's or the Parent's properties.
SECTION 6.3. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower of this Agreement, the Note or any other
Loan Document or for the Borrower's and Parent's participation in the
consummation of the Acquisition, except as described in Item 6.3 ("Government
Approvals") of the Disclosure Schedule, all of which have been duly obtained or
made and are in full force and effect or will be prior to the making of the
Loan. The Borrower is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
21
SECTION 6.4. Validity, etc. This Agreement constitutes, and the Note and
each other Loan Document executed by the Borrower will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally.
SECTION 6.5. Financial Information. The pro-forma balance sheet of the
Borrower as at June 30, 1999, and the related statements of earnings and cash
flow of the Borrower (or the Xxxx Xxxxxxxxx Gaming Facility), copies of which
have been furnished to the Lender, have been prepared in accordance with GAAP
consistently applied, except as indicated on Item 6.5 ("Financial Information")
of the Disclosure Schedule, and present fairly in all material respects the
consolidated financial condition of the Borrower as at the dates thereof and the
results of the Borrower's operations for the periods then ended, subject to the
absence of complete footnotes and subject to normal year-end adjustments.
SECTION 6.6. No Material Adverse Change. Since the date of the
financial statements described in Section 6.5, there has been no material
adverse change in the financial condition, operations, assets, business,
properties or prospects of the Borrower or the Xxxx Xxxxxxxxx Gaming Facility,
other than general economic conditions in the United States and conditions
affecting the gaming business generally.
SECTION 6.7. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrower, threatened litigation, action, proceeding
or labor controversy affecting the Borrower, or any of its properties, assets or
revenues, which could reasonably be expected to have a Material Adverse Effect
or which purports to affect the legality, validity or enforceability of this
Agreement, the Note or any other Loan Document, except as disclosed in Item 6.7
("Litigation") of the Disclosure Schedule.
SECTION 6.8. Subsidiaries. The Borrower has no Subsidiaries.
SECTION 6.9. Ownership of Properties. The Borrower owns good and
marketable title to all of its properties and assets, real and personal,
tangible and intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights), free and clear of all
Liens, charges or claims (including infringement claims with respect to patents,
trademarks, copyrights and the like) except as permitted pursuant to Section
7.2.3 and as set forth in Item 7.2.3 ("Liens") of the Disclosure Schedule.
SECTION 6.10. Taxes. The Borrower has filed, or caused to be filed, all
tax returns and reports required by law to have been filed by it or on its
behalf and has paid, or has made adequate provision for the payment of, all
taxes and governmental charges shown to be owing on such tax returns and
reports, except as shown on Item 6.10 ("Taxes") of the Disclosure Schedule and
except for any such taxes or charges which are being diligently contested in
good faith by
22
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
SECTION 6.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of the Loan, no steps have been taken to
terminate any Pension Plan, and no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by the Borrower
of any material liability, fine or penalty. Except as disclosed in Item 6.11
("Employee Benefit Plans") of the Disclosure Schedule, the Borrower has no
contingent liability with respect to any post-retirement benefit under a Welfare
Plan, other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
SECTION 6.12. Environmental Warranties. Except as set forth in Item
6.12 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying groundwater)
owned or leased by the Borrower have been, and continue to be, owned or
leased by the Borrower in material compliance with all Environmental
Laws;
(b) there have been no past, and there are no pending or, to the
Borrower's knowledge, threatened
(i) claims, complaints, notices or requests for information
received by the Borrower with respect to any alleged violation of
any Environmental Law, or
(ii) complaints, notices or inquiries to the Borrower
regarding potential liability under any Environmental Law;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now or, to the Borrower's knowledge, previously
owned or leased by the Borrower that, singly or in the aggregate, have,
or could reasonably be expected to have, a Material Adverse Effect;
(d) the Borrower has been issued and is in material compliance
with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary or
desirable for its business;
(e) no property now or, to the Borrower's knowledge, previously
owned or leased by the Borrower is listed or proposed for listing (with
respect to owned property only) on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list of
sites requiring investigation or clean-up;
23
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or, to
the Borrower's knowledge, previously owned or leased by the Borrower
that, singly or in the aggregate, have, or could reasonably be expected
to have, a Material Adverse Effect;
(g) Borrower has not directly transported or directly arranged for
the transportation of any Hazardous Material to any location which is
listed or proposed for listing on the National Priorities List pursuant
to CERCLA, on the CERCLIS or on any similar state list or which is the
subject of federal, state or local enforcement actions or other
investigations which may lead to material claims against the Borrower
thereof for any remedial work, damage to natural resources or personal
injury, including claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or, to the knowledge of the Borrower,
previously owned or leased by the Borrower that, singly or in the
aggregate, have, or could reasonably be expected to have, a Material
Adverse Effect; and
(i) no conditions exist at, on or under any property now or, to
the knowledge of the Borrower, previously owned or leased by the
Borrower which, with the passage of time, or the giving of notice or
both, would give rise to material liability under any Environmental
Law, except where such conditions could not reasonably be expected to
have a Material Adverse Effect.
SECTION 6.13. Regulations U and X. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loan will be used for a purpose which violates, or
would be inconsistent with, F.R.S. Board Regulation U or X. Terms for which
meanings are provided in F.R.S. Board Regulation U or X or any regulations
substituted therefor, as from time to time in effect, are used in this Section
with such meanings.
SECTION 6.14. Accuracy of Information. No representation or warranty of
the Borrower contained in this Agreement, any Loan Document, the Sodak Stock
Purchase Agreement or any other document, certificate or written statement
furnished to the Lender or its representatives by or on behalf of the Borrower
for use in connection with this Agreement or any Loan Document contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained therein not misleading.
ARTICLE VII
COVENANTS
24
SECTION 7.1. Affirmative Covenants. The Borrower agrees with the Lender
that, until the Commitment has terminated and all Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to the Lender copies of
the following financial statements, reports, notices and information:
(a) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of
the Borrower, a balance sheet of the Borrower as of the end of such
Fiscal Quarter and statements of earnings and cash flow of the Borrower
for such Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by the chief financial officer of the Borrower;
(b) as soon as available and in any event within 90 days after the
end of each Fiscal Year of the Borrower, a copy of the annual audit
report for such Fiscal Year for the Borrower including therein a
balance sheet of the Borrower as of the end of such Fiscal Year and a
statement of earnings and cash flow of the Borrower for such Fiscal
Year, in each case certified (without any Impermissible Qualification)
in a manner acceptable to the Lender by Xxxxxx Xxxxxxxx, LLP or other
independent public accountants acceptable to the Lender, together with
a certificate from such accountants containing a computation of, and
showing compliance with, the financial ratio and restriction contained
in Section 7.2.4 and to the effect that, in making the examination
necessary for the signing of such annual report by such accountants,
they have not become aware of any Default or Event of Default that has
occurred and is continuing, or, if they have become aware of such
Default or Event of Default, describing such Default or Event of
Default and the steps, if any, being taken to cure it;
(c) as soon as available and in any event within 45 days after the
end of each Fiscal Quarter, a certificate, executed by the chief
financial officer of the Borrower, showing (in reasonable detail and
with appropriate calculations and computations in all respects
satisfactory to the Lender) compliance with the financial covenant set
forth in Section 7.2.4;
(d) as soon as possible and in any event within three days after
the occurrence of each Default, a statement of the chief financial
officer of the Borrower setting forth details of such Default and the
action which the Borrower has taken and proposes to take with respect
thereto;
(e) as soon as possible and in any event within three days after
(x) the occurrence of any adverse development with respect to any
litigation, action, proceeding or labor controversy described in
Section 6.7 or (y) the commencement of any labor
25
controversy, litigation, action or proceeding of the type
described in Section 6.7, notice thereof and copies of all
documentation relating thereto;
(f) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its securityholders, and all
reports and registration statements which the Borrower files with the
Securities and Exchange Commission or any national securities exchange;
(g) immediately upon becoming aware of the institution of any
steps by the Borrower or any other Person to terminate any Pension
Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under section
302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could result in the requirement that the Borrower furnish a
bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan which could
result in the incurrence by the Borrower of any material liability,
fine or penalty, or any material increase in the contingent liability
of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating
thereto; and
(h) such other information respecting the financial condition or
operations of the Borrower as the Lender may from time to time
reasonably request.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower will comply in
all material respects with all applicable laws, rules, regulations and orders,
such compliance to include (without limitation):
(a) the maintenance and preservation of its corporate existence
and qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION 7.1.3. Maintenance of Properties. The Borrower will, consistent
with past practice, maintain, preserve, protect and keep its properties in good
repair, working order and condition, and make necessary and proper repairs,
renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times unless the Borrower determines
in good faith that the continued maintenance of any of its properties is no
longer economically desirable.
SECTION 7.1.4. Insurance. The Borrower will use commercially reasonable
efforts to maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business (including
business interruption insurance) against such
26
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will, upon request of the
Lender, furnish to the Lender at reasonable intervals a certificate of an
Authorized Officer of the Borrower setting forth the nature and extent of all
insurance maintained by the Borrower in accordance with this Section.
SECTION 7.1.5. Books and Records. The Borrower will keep books and
records which accurately reflect all of its business affairs and transactions
and permit the Lender or any of its representatives, upon reasonable advance
written notice and at reasonable times and intervals, to visit all of its
offices, to discuss its financial matters with its officers and independent
public accountant (and the Borrower hereby authorizes such independent public
accountant to discuss the Borrower's financial matters with the Lender or its
representatives whether or not any representative of the Borrower is present)
and to examine (and, at the expense of the Borrower, photocopy extracts from)
any of its books or other corporate records. The Borrower shall pay any
reasonable fees of such independent public accountant incurred in connection
with the Lender's exercise of its rights pursuant to this Section.
SECTION 7.1.6. Environmental Covenant. The Borrower will,
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify the Lender and provide copies upon receipt
of all written claims, complaints, notices or inquiries relating to the
condition of its facilities and properties or compliance with
Environmental Laws; and
(c) provide such information and certifications which the Lender
may reasonably request from time to time to evidence compliance with
this Section 7.1.6.
SECTION 7.1.7. Year 2000 Compliance. (a) The Borrower agrees to (i)
prior to or promptly following the date on which the Loan is made, initiate a
review and assessment of all areas within its business and operations that could
be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999), (ii) develop a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) implement that
plan in accordance with that timetable.
(b) The Borrower agrees to use commercially reasonable efforts to cause
all computer applications that are material to its business and operations to,
on a timely basis, be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000 (that is, be "Year 2000 Compliant"),
except to the extent that a failure to do so could not reasonably be expected to
have a Material Adverse Effect.
27
(c) The Borrower will promptly notify Lender in the event the Borrower
discovers or determines that any computer application (including those of its
suppliers and vendors) that is material to its business and operations will not
be Year 2000 Compliant on a timely basis, except to the extent that such failure
to be Year 2000 Compliant could not reasonably be expected to have a Material
Adverse Effect.
SECTION 7.2. Negative Covenants. The Borrower agrees with the Lender
that, until the Commitment has terminated and all Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower will not engage in any
business activity, except the operation of the Xxxx Xxxxxxxxx Gaming Facility in
Marquette, Iowa and such activities as may be incidental or related thereto.
SECTION 7.2.2. Indebtedness. The Borrower will not create, incur,
assume or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:
(a) Indebtedness in respect of the Loan and other Obligations;
(b) until the date of the Loan, Indebtedness identified in Item
7.2.2(b) ("Indebtedness to be Paid") of the Disclosure Schedule;
(c) Indebtedness existing as of the Effective Date which is
identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
Schedule;
(d) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade
terms in connection with purchases of goods and services, but excluding
Indebtedness incurred through the borrowing of money or Contingent
Liabilities);
(e) Indebtedness in respect of Capital Expenditures in an
aggregate amount not to exceed $5,400,000 (without regard to the period
in which such Capital Expenditures are incurred); and
(f) any guaranty by the Borrower of the notes issued under or
pursuant to the Indenture, as supplemented, and the Borrower's
execution of a supplemental indenture to jointly and severally
guaranty, on a senior basis, the obligations under the Indenture.
provided, however, that no Indebtedness otherwise permitted by clauses
(d) or (e) shall be permitted if, after giving effect to the incurrence
thereof, any Default shall have occurred and be continuing.
28
SECTION 7.2.3. Liens. The Borrower will not create, incur, assume or
suffer to exist any Lien upon any of its property, revenues or assets, whether
now owned or hereafter acquired, except:
(a) Liens securing payment of the Obligations, granted pursuant to
any Loan Document;
(b) Liens securing payment of Indebtedness of the type permitted
and described in clauses (b) and (e) of Section 7.2.2;
(c) Liens granted prior to the Effective Date to secure payment of
Indebtedness of the type permitted and described in clause (c) of
Section 7.2.2;
(d) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty
or being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been
set aside on its books;
(e) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not
overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(f) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance
of tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(g) judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies;
(h) Liens described on Item 7.2.3 ("Liens") of the Disclosure
Schedule; and
(i) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the
Borrower.
SECTION 7.2.4. Financial Condition. The Borrower will not permit EBITDA
as of any Fiscal Quarter end to be less than $8,000,000 for the prior trailing
four Fiscal Quarters ending on such date.
29
SECTION 7.2.5. Investments. The Borrower will not make, incur, assume
or suffer to exist any Investment in any other Person, except:
(a) Investments existing on the Effective Date and identified in
Item 7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) Investments permitted as Indebtedness pursuant to Section
7.2.2;
provided, however, that
(d) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue
to be held notwithstanding that such Investment if made thereafter
would not comply with such requirements; and
(e) no Investment otherwise permitted by clause (d) shall be
permitted to be made if, immediately before or after giving effect
thereto, any Default shall have occurred and be continuing.
SECTION 7.2.6. Restricted Payments, etc. On and at all times after
the Effective Date:
(a) the Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any
class of capital stock (now or hereafter outstanding) of the Borrower
or on any warrants, options or other rights with respect to any shares
of any class of capital stock (now or hereafter outstanding) of the
Borrower (other than dividends or distributions payable in its common
stock or warrants to purchase its common stock or splitups or
reclassifications of its stock into additional or other shares of its
common stock) or apply any of its funds, property or assets to the
purchase, redemption, sinking fund or other retirement of any shares of
any class of capital stock (now or hereafter outstanding) of the
Borrower, or warrants, options or other rights with respect to any
shares of any class of capital stock (now or hereafter outstanding) of
the Borrower;
(b) the Borrower will not make any deposit for any of the
foregoing purposes.
SECTION 7.2.7. Capital Expenditures, etc. The Borrower will not make or
commit to make Capital Expenditures in any period, except (i) Capital
Expenditures related to the purchase of a new mooring barge in an aggregate
amount not to exceed $1,700,000 and (ii) other Capital Expenditures which do not
aggregate in excess of the amount set forth below opposite such period:
30
Period Amount
------ ------
4th Fiscal Quarter 1999 $975,000
Fiscal Year 2000 $2,100,000
SECTION 7.2.8. Rental Obligations. The Borrower will not enter into at
any time any arrangement which does not create a Capitalized Lease Liability and
which involves the leasing by the Borrower from any lessor of any real or
personal property (or any interest therein), except as disclosed on Item 7.2.8
("Rental Obligations") of the Disclosure Schedule and arrangements which,
together with all other such arrangements which shall then be in effect, will
not require the payment of an aggregate amount of rentals by the Borrower in
excess of (excluding escalations resulting from a rise in the consumer price or
similar index) $720,000 for any Fiscal Year or $2,160,000 during the full
remaining term of such arrangements; provided, however, that any calculation
made for purposes of this Section shall exclude any amounts required to be
expended for maintenance and repairs, insurance, taxes, assessments, and other
similar charges.
SECTION 7.2.9. Take or Pay Contracts. The Borrower will not enter into
or be a party to any arrangement for the purchase of materials, supplies, other
property or services if such arrangement by its express terms requires that
payment be made by the Borrower regardless of whether such materials, supplies,
other property or services are delivered or furnished to it.
SECTION 7.2.10. Consolidation, Merger, etc. Except as necessitated by
the Acquisition or the Isle Merger, the Borrower shall not liquidate or
dissolve, consolidate with, or merge into or with, any other corporation, or
purchase or otherwise acquire all or substantially all of the assets of any
Person (or of any division thereof).
SECTION 7.2.11. Asset Dispositions, etc. The Borrower will not sell,
transfer, lease, contribute or otherwise convey, or grant options, warrants or
other rights with respect to, all or any substantial part of its assets to any
Person other than in the ordinary course of business and other than the disposal
of damaged or obsolete property if such property is no longer necessary for the
operation of the Borrower's business.
SECTION 7.2.12. Modification of Certain Agreements. The Borrower will
not consent to any amendment, supplement or other modification of any of the
terms or provisions contained in, or applicable to, the Sodak Stock Purchase
Agreement.
SECTION 7.2.13. Transactions with Affiliates. The Borrower will not
enter into, or cause, suffer or permit to exist any arrangement or contract with
any of its other Affiliates unless such arrangement or contract is fair and
equitable to the Borrower and is an arrangement or contract of the kind which
would be entered into by a prudent Person in the position of the Borrower with a
Person which is not one of its Affiliates.
SECTION 7.2.14. Negative Pledges, etc. The Borrower will not enter into
any agreement (excluding this Agreement, any other Loan Document and any
agreement governing
31
any Indebtedness permitted either by clause (b) of Section 7.2.2 as in effect on
the Effective Date or by clause (d) of Section 7.2.2 as to the assets financed
with the proceeds of such Indebtedness) prohibiting the creation or assumption
of any Lien upon its properties, revenues or assets, whether now owned or
hereafter acquired, or the ability of the Borrower to amend or otherwise modify
this Agreement or any other Loan Document.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall default
in the payment or prepayment when due of any principal of or interest on the
Loan, or the Borrower shall default (and such default shall continue unremedied
for a period of three Business Days) in the payment when due of any fee or of
any other Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty of
the Borrower made or deemed to be made hereunder or in any other Loan Document
or any other writing or certificate furnished by or on behalf of the Borrower to
the Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article V)
is or shall be incorrect when made in any material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.
The Borrower shall default in any material respect in the due performance and
observance of any of its obligations under Section 7.2 (except Section 7.2.4),
and such default shall continue unremedied for a period of 5 Business Days after
written notice thereof shall have been given to the Borrower by the Lender.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. The
Borrower shall default in any material respect in the due performance and
observance of any other agreement contained herein or in any other Loan
Document, and such default shall continue unremedied for a period of 15 Business
Days after written notice thereof shall have been given to the Borrower by the
Lender.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur in
the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower having a principal amount,
individually or in the aggregate, in excess of $1,000,000, or a default shall
occur in the performance or observance of any obligation or condition with
respect to such Indebtedness if the effect of such default is to accelerate the
maturity of any such
32
Indebtedness or to permit the holder or holders of such Indebtedness, or any
trustee or agent for such holders, to cause such Indebtedness to become due and
payable prior to its expressed maturity in accordance with the terms of such
Indebtedness.
SECTION 8.1.6. Judgments. Any judgment or order for the payment of
money in excess of $1,000,000 shall be rendered against the Borrower and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 10 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
SECTION 8.1.7. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan:
(a) the institution of any steps by the Borrower, any member of
its Controlled Group or any other Person to terminate a Pension Plan
if, as a result of such termination, the Borrower could be required to
make a contribution to such Pension Plan, or could reasonably expect to
incur a liability or obligation to such Pension Plan, in excess of
$1,000,000; or
(b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 8.1.8. Control of the Borrower. Any Change in Control shall
occur with respect to the Borrower.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower shall
(a) become insolvent or generally fail to pay, or admit in writing
its inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or
any property of the Borrower, or make a general assignment for the
benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or for a substantial
part of the property of the Borrower, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within 60 days,
provided that the Borrower hereby expressly authorizes the Lender to
appear in any court
33
conducting any relevant proceeding during such 60-day period to
preserve, protect and defend its rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of the Borrower and, if any such
case or proceeding is not commenced by the Borrower, such case or
proceeding shall be consented to or acquiesced in by the Borrower or
shall result in the entry of an order for relief or shall remain for 60
days undismissed, provided that the Borrower hereby expressly
authorizes the Lender to appear in any court conducting any such case
or proceeding during such 60-day period to preserve, protect and defend
its rights under the Loan Documents; or
(e) take any corporate action authorizing, or in furtherance of,
any of the foregoing.
SECTION 8.1.10. Impairment of Security, etc. (a) Any Loan Document, or
any Lien granted thereunder, shall (except in accordance with its terms), in
whole or in part in any material respect, terminate, cease to be effective or
cease to be the legally valid, binding and enforceable obligation of the
Borrower; (b) the Borrower, or any other party shall, directly or indirectly,
contest in any manner such effectiveness, validity, binding nature or
enforceability; (c) or any Lien securing any Obligation shall, in any material
respect, cease to be a perfected first priority Lien, subject only to those
exceptions expressly permitted by such Loan Document.
SECTION 8.1.11. Loss of a Material License. The Borrower shall lose any
license (and shall exhaust all appeal procedures to regain such license) that
could reasonably be expected to have a Material Adverse Effect.
SECTION 8.2. Action if Nonpayment, etc. If any Event of Default
described in Sections 8.1.1, 8.1.3, 8.1.5, 8.1.6, 8.1.8, 8.1.10 or 8.1.11 shall
occur for any reason, whether voluntary or involuntary, and be continuing, the
Lender may by notice to the Borrower declare all or any portion of the
outstanding principal amount of the Loan and other monetary Obligations to be
due and payable and/or the Commitment (if not theretofore terminated) to be
terminated, whereupon the outstanding principal amount of such Loan and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitment (if not theretofore terminated) shall
terminate.
SECTION 8.3. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the Commitment (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of the Loan and all other monetary Obligations shall
automatically be and become immediately due and payable, without notice or
demand.
34
SECTION 8.4. Action if Other Event of Default. If any Event of Default
(other than any Event of Default listed in Sections 8.2 and 8.3 above) shall
occur for any reason, whether voluntary or involuntary, and be continuing, the
Obligations shall bear interest at the post-maturity rate as described in
Section 3.2.2 until such Event of Default has been cured or waived by the Lender
or is no longer continuing.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Lender. No failure or delay on the part of the Lender or
the holder of the Note in exercising any power or right under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Lender or the
holder of the Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 9.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address, or facsimile number set forth below its signature hereto or at such
other address or facsimile number as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted.
SECTION 9.3. Payment of Costs and Expenses. The Borrower agrees to pay
on demand all reasonable expenses of the Lender (including the fees and
out-of-pocket expenses of counsel to the Lender and of local counsel, if any,
who may be retained by counsel to the Lender) up to $___________ in connection
with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated, and
35
(b) the filing, recording, refiling or rerecording of the Mortgage
and the Security Agreement and/or any Uniform Commercial Code financing
statements relating thereto and all amendments, supplements and
modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or of the Mortgage or the
Security Agreement, and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Lender harmless from all
liability for, any stamp or other taxes which may be payable in connection with
the execution or delivery of this Agreement, the borrowings hereunder, or the
issuance of the Note or any other Loan Documents. The Borrower also agrees to
reimburse the Lender upon demand for all reasonable out-of-pocket expenses
(including attorneys' fees and legal expenses) incurred by the Lender in
connection with (x) the negotiation of any restructuring or "work-out", whether
or not consummated, of any Obligations and (y) the enforcement of any
Obligations.
SECTION 9.4. Indemnification. In consideration of the execution and
delivery of this Agreement by the Lender and the extension of the Commitment,
the Borrower hereby indemnifies, exonerates and holds the Lender and each of its
officers, directors, employees and agents (collectively, the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Lender pursuant to Article V not to fund the
Loan);
(c) any investigation, litigation or proceeding related to the
Acquisition;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to
the protection of the environment or the Release by the Borrower of any
Hazardous Material; or
36
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower thereof of any Hazardous
Material (including any losses, liabilities, damages, injuries, costs,
expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the
Borrower,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 9.5. Survival. The obligations of the Borrower under Sections
4.1, 9.3 and 9.4 shall in each case survive any termination of this Agreement,
the payment in full of all Obligations and the termination of all Commitments.
The representations and warranties made by the Borrower in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION 9.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 9.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 9.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of the Borrower and the Lender (or
notice thereof satisfactory to the Lender) shall have been received by the
Lender and notice thereof shall have been given by the Lender to the Borrower.
SECTION 9.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTE
AND EACH OTHER LOAN DOCUMENT (OTHER THAN THE MORTGAGE) SHALL EACH BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK. This Agreement, the Note and the other Loan Documents constitute the
entire understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.
37
SECTION 9.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither the Borrower nor the
Lender may assign or transfer its rights or obligations hereunder without the
prior written consent of the other party (other than the collateral assignment
of the Note by the Lender to CIBC as required by an existing credit agreement
between the Lender and CIBC).
SECTION 9.11. Confidentiality. The Lender shall hold all non-public
information (which has been identified as such by the Borrower) obtained
pursuant to the requirements of this Agreement in accordance with its customary
procedures for handling confidential information of this nature and in any event
may make disclosure to any of its regulators, Affiliates, outside auditors,
counsel and other professional advisors in connection with this Agreement or as
reasonably required by any bona fide transferee, participant or assignee or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process; provided, however, that
(a) unless specifically prohibited by applicable law or court
order, the Lender shall notify the Borrower of any request by any
governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
the Lender by such governmental agency) for disclosure of any such
non-public information prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this Section 9.11,
the Lender shall require any such bona fide transferee, participant and
assignee receiving a disclosure of non-public information to agree in
writing
(i) to be bound by this Section 9.11; and
(ii) to require such Person to require any other Person to
whom such Person discloses such non-public information to be
similarly bound by this Section 9.11; and
(c) except as may be required by an order of a court of competent
jurisdiction and to the extent set forth therein, the Lender shall not
be obligated or required to return any materials furnished by the
Borrower.
SECTION 9.12. Other Transactions. Nothing contained herein shall
preclude the Lender from engaging in any transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Affiliates in which the Borrower or such Affiliate is not restricted
hereby from engaging with any other Person.
SECTION 9.13. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT,
38
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE LENDER OR THE BORROWER SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT THE LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT OF
THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 9.14. Waiver of Jury Trial. THE LENDER AND THE BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE LENDER OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
39
SECTION 9.15. Limitation of Liability.
(a) Notwithstanding any provision in the Loan Documents to the
contrary, except as set forth in subsections (b) and (c), the Borrower
shall not be personally liable for payment of the Loan or performance
of the Obligations and the Loan is intended to be secured by Liens in
favor of the Lender which are purchase money security interests.
(b) The limitation of liability in Section 9.15(a) will not affect
or impair (i) the lien of the Mortgage, the Ship Mortgage or the
Security Agreement or the Lender's other rights and remedies under the
Loan Documents, including the Lender's right to commence an action to
foreclose (by judicial foreclosure, power of sale or otherwise) any
Lien or security interest the Lender has under the Loan Documents; (ii)
the validity of the Loan Documents or the Obligations or (iii) the
Lender's right to present and collect on any letter of credit or other
credit enhancement document held by the Lender in connection with the
Obligations.
(c) The following are excluded and excepted from the limitation of
liability of the Borrower in Section 9.15(a) and the Lender may recover
personally against the Borrower for the following:
(i) all losses suffered and liabilities and expenses incurred
by the Lender relating to any fraud or intentional
misrepresentation or omission by the Borrower or any of the
officers or directors of the Borrower in connection with (A) the
performance of any of the conditions to the Lender making the
Loan; (B) any inducements to the Lender to make the Loan; (C) the
execution and delivery of the Loan Documents; (D) any
certificates, representations or warranties given in connection
with the Loan; or (E) the Borrower's performance of the
Obligations;
(ii) the cost of remediation of any environmental activity
affecting the property subject to the Mortgage, any diminution in
the value of the property subject to the Mortgage arising from any
environmental activity affecting the property subject to the
Mortgage and any other losses suffered and liabilities and
expenses incurred by the Lender relating to a default under
Section 6.12 or Section 7.1.6;
(iii) the replacement cost of any fixtures or personal
property removed by the Borrower or its Affiliates from the
property subject to the Mortgage after an Event of Default occurs
and is continuing;
(iv) all losses suffered and liabilities and expenses
incurred by the Lender relating to any acts or omissions by the
Borrower that result in waste
40
(including economic and non-physical waste) on the property
subject to the Mortgage;
(v) all proceeds that are not applied in accordance with the
Mortgage or not paid to the Lender as required under the Mortgage;
and
(vi) all losses suffered and liabilities and expenses
incurred by the Lender relating to any default by the Borrower
under any of the provisions of any Loan Document relating to
ERISA.
(d) Nothing under Section 9.15(a) will be deemed to be a waiver of
any right which the Lender may have under Section 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code or under any
other applicable law relating to bankruptcy or insolvency to file a
claim for the full amount of the Obligations or to require that all
collateral will continue to secure all of the Obligations in accordance
with the Loan Documents.
SECTION 9.16. Interest Rates.
(a) It is the intention of the parties hereto that the Loan made
hereunder shall conform strictly to applicable usury laws. Accordingly,
none of the terms and provisions contained in this Agreement or any of
the other Loan Documents shall ever be construed to create a contract
to pay interest to the Lender for the use, forbearance or detention of
money at a rate in excess of the highest lawful rate applicable (the
"Maximum Lawful Rate"); for purposes of this Section 9.16, "interest"
shall include the aggregate of all charges or other consideration which
constitute interest under applicable laws (whether or not denominated
as interest) and are contracted for, taken, reserved, charged or
received under this Agreement or the other Loan Documents or otherwise
in connection with the transactions contemplated by this Agreement and
the other Loan Documents. If as a result of prepayment, acceleration of
maturity or otherwise, the effective rate of interest which would
otherwise be payable to the Lender under this Agreement or any other
Loan Document would exceed the Maximum Lawful Rate for the period
during which the principal amount of the Loan was outstanding, or if
the Lender shall receive moneys or other consideration that are deemed
to constitute interest that would increase the effective rate of
interest payable by the Borrower to the Lender under this Agreement or
any other Loan Document to a rate in excess of the Maximum Lawful Rate
for the period during which the principal amount of the Loan was
outstanding, then (i) the amount of interest that would otherwise be
payable by the Borrower to the Lender under this Agreement and the
other Loan Documents shall be reduced to the Maximum Lawful Rate, and
(ii) any interest paid by the Borrower to the Lender in excess of the
Maximum Lawful Rate shall be credited by the Lender as an optional
prepayment of the Loan and, thereafter, shall be returned to the
Borrower. All calculations of the rate or amount of interest contracted
for, taken, reserved, charged or received by the Lender under this
Agreement and the other Loan Documents that are made for the purpose of
determining whether such rate or
41
amount exceeds the Maximum Lawful Rate shall be made, to the extent
permitted by applicable law, by amortizing, prorating, allocating and
spreading during the full stated term of the Loan owed to the Lender.
(b) If at any time and from time to time (i) the amount of
interest payable to the Lender on any date would otherwise exceed the
Maximum Lawful Rate, the amount of interest payable to the Lender shall
be limited to the Maximum Lawful Rate pursuant to paragraph (a) above
and (ii) in respect of any subsequent interest computation period, the
amount of interest otherwise payable to the Lender would be less than
the amount of interest payable to the Lender computed at the Maximum
Lawful Rate, then the amount of interest payable in respect of such
subsequent computation period shall be computed at the Maximum Lawful
Rate until the earlier to occur of (x) the date upon which the total
amount of interest payable to the Lender shall equal the total amount
of interest that would have been payable to the Lender if the total
amount of interest had been computed without giving effect to paragraph
(a) above, or (y) payment in full of the Loan held by the Lender.
SECTION 9.17. Iowa Gaming Licenses. No interest of the Lender created
or arising under this Agreement or any other Loan Document shall attach to any
gaming license issued by the State of Iowa.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
GAMBLERS SUPPLY MANAGEMENT COMPANY
By:
--------------------------------------
Title:
Address:
---------------------------------
---------------------------------
Facsimile No.:
---------------------------
Attention:
-------------------------------
with copies to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
ISLE OF CAPRI CASINOS, INC.
By:
--------------------------------------
Title:
Address: 711 Xx. Xxxxxx Xxxxxx Xxxx,
Xx. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
43
with copies to:
Isle of Capri Casinos, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, X.X.
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
SCHEDULE I
Disclosure Schedule
for
U.S. $16,300,000
CREDIT AGREEMENT
dated as of October __, 1999
between
GAMBLERS SUPPLY MANAGEMENT COMPANY
as the Borrower,
and
ISLE OF CAPRI CASINOS, INC.
as the Lender
The following schedules refer to the Credit Agreement, dated as of October
__, 1999 (the "Credit Agreement"), Gamblers Supply Management Company, as the
Borrower, and Isle of Capri Casinos, Inc., as the Lender.
This Disclosure Schedule is qualified in its entirety by references to
specific provisions of the Credit Agreement and is not intended to constitute,
and shall not be construed as constituting any representations or warranties of
the Borrower, except as and to the extent provided in the Credit Agreement.
To the extent more than one representation and warranty contained in the
Credit Agreement require the same disclosure, the appearance of such disclosure
on any single item herein shall serve as disclosure for all other
representations and warranties to which such disclosure applies.
Except to the extent explicitly provided in the respective schedule,
inclusion of any item in the schedules: (1) does not represent a determination
by the Borrower that such item is material nor shall it be deemed to establish a
standard of materiality (it being the intent that Borrower shall not be
penalized for having disclosed more than may be required by the terms of the
Credit Agreement), (2) does not represent a determination by the Borrower that
such item did not arise in the ordinary course of business, and (3) shall not
constitute, or be deemed to be, an admission concerning such item by the
Borrower. The items in the schedules are descriptions of instruments or brief
summaries of certain aspects of the Borrower's business. Such descriptions and
summaries are qualified in their entirety by reference to the more detailed
information in documents previously delivered or made available to the Lender
and its representatives.
Capitalized terms used but not defined herein shall have the same meanings
ascribed to them in the Credit Agreement. The headings in the following
schedules are for reference only and shall not affect the disclosures contained
therein.
ITEM 6.3
GOVERNMENT APPROVALS
The Borrower and Sodak Gaming, Inc. ("Sodak") must notify the U.S. Coast
Guard prior to a change in ownership of the Xxxx Xxxxxxxxx Riverboat.
The Borrower and Sodak must file with the Federal Trade Commission and the
Antitrust Division of the Department of Justice a premerger notification and
report form under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
The Iowa Racing and Gaming Commission must determine that Parent is a
suitable buyer and approve the Parent's purchase of the shares of the Borrower's
stock from Sodak.
ITEM 6.5
FINANCIAL INFORMATION
The Borrower has settled a dispute relating to an Iowa sales/use tax audit
for the 1995 and 1996 tax years and has paid $150,000 in final settlement
thereof.
ITEM 6.7
LITIGATION
The Iowa Department of Natural Resources (the "DNR") has notified Sodak and
the Borrower that a treatment agreement is required to be entered into between
the City of Marquette and the owner of the Xxxx Xxxxxxxxx Riverboat, whereby the
latter shall quantify and describe its discharge to the City and the City agrees
to treat such discharge based on the disclosed volume and quantities.
It is anticipated that pursuant to the treatment agreement and a side
agreement relating to rate structure, increased treatment rates and surcharges
will be charged to the Riverboat Complex. The treatment agreement and side
agreement have not yet been concluded. No draft of the side agreement has been
prepared or exchanged between the parties as yet.
The following actions are pending:
Case: Plaintiffs Xxxxx Xxxxxxxx and Xxxx Xxxxxxxx v. Defendants Gamblers Supply
Management Company and Sodak Gaming Iowa, Inc. a/k/a Sodak Gaming, Inc.
Xxxxx Xxxxxxxx discharge: October 2, 1996
Xxxx Xxxxxxxx discharge: July 28, 1996
Date Filed: October 1, 1997
Court and File Number: Xxxxxxx County Iowa Xxxxxxxx Xxxxx, Xxxx Xx.
XXXX000000
Claim and Demand: Plaintiffs allege wrongful discharge. No specific
monetary amount of damages reported.
Insurance Company: Xxxx Xxxxxxxxx'x insurance carrier has declined
coverage.
Sodak Counsel: E. Xxxxx Xxxxxx
Dubuque, Iowa
(000) 000-0000
Status/outcome: Summary Judgment was entered in favor of
Defendants, Plaintiffs filed a Notice of Appeal as
of October 9, 1998. Briefs have been filed with
Iowa Supreme Court, the oral arguments are
scheduled for March 2000.
Case: Plaintiff Xxxxxxx Xxxxx v. Defendant Xxxx Xxxxxxxxx Riverboat Casino
Date of Occurrence: July 13, 1995
Date Filed: July 11, 1997
Court and File Number: Xxxxxxx County Iowa Xxxxxxxx Xxxxx, Xxxx Xx.
XXXX000000
Claim and Demand: Plaintiff claims she suffered serious and permanent
personal injuries. Plaintiff's initial settlement
demand is in the amount of $85,000.
Insurance Company: Reliance Insurance Company
Xxxxxx Xxxx
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Sodak Counsel: E. Xxxxx Xxxxxx
Dubuque, Iowa
(000) 000-0000
Status/outcome: Pending
Case: Plaintiff Xxxxxx Xxxxxx x. Xxxxx Gaming Iowa, Inc., Gamblers Supply
Management Company and Upper Mississippi Gaming Corporation
Date of Occurrence: September 18, 1996
Date Filed: March 5, 1998
Court and File Number: U.S. District Court Northern District of Iowa
Eastern Division, Case No. C98-1009-MIM.
Claim and Demand: Personal Injury Claim. No specific monetary amount
of damages reported.
Insurance Company: Zurich American Insurance Company
Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
(000) 000-0000
Sodak Counsel: E. Xxxxx Xxxxxx
Dubuque, Iowa
(000) 000-0000
Xxxxxxx Xxxx Xxxxxxxxx
Chicago, IL
(000) 000-0000
Status/outcome: Pending
Case: Plaintiff Xxxxxx Xxxxxxxx v. Defendant Xxxx Xxxxxxxxx
Date Filed: September 21, 1998
Court and File Number: United States District Court for the Northern
District of Iowa, Case No. C98-1033-MIM.
Claim and Demand: Xxxxx Act Claim. No specific monetary amount of
damages reported.
Insurance Company: Zurich American Insurance Company
Xxxxx Xxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
(000) 000-0000
Sodak Counsel: E. Xxxxx Xxxxxx
Dubuque, Iowa
(000) 000-0000
Status/outcome: Pending
Case: Plaintiff Xxxxxxx X. Xxxxxxxxx v. Defendant Xxxx Xxxxxxxxx
Date Filed: November 23, 1998
Court and File Number: United States District Court for the Western
District of Wisconsin, Case No. 98C-0806-S.
Claim and Demand: Xxxxx Act Claim. No specific monetary amount of
damages reported.
Insurance Company: Zurich American Insurance Company Xxxx Watering
Sodak Counsel: Insurance Company will be appointing Counsel
Status/outcome: Pending
Case: Plaintiff Xxxx Xxxx v. Defendant Xxxx Xxxxxxxxx
Date Filed: August 31, 1998
Court and File Number: United States District Court for the Northern
District of Iowa.
Claim and Demand: Xxxxx Act Claim. No specific monetary amount of
damages reported.
Insurance Company: Zurich American Insurance Company Xxxxx Xxx
Sodak Counsel: Insurance Company will be appointing Counsel
Status/outcome: Pending
In addition, the following claims have been made by customers against the
Borrower and have been referred to its insurer:
Xxxxx Dorzaner
April 10, 1999
Said broke tooth while eating fish in buffet.
Xxxxxxxx Xxxxxxx
July 5, 1999
Said burned by a cup of coffee.
Xxxx Xxxxxxxx
July 12, 1999
Said automatic doors hit him.
No formal action has been taken with respect to any of these claims and no
additional information is known; however, the Borrower does not expect any of
these claims to have a Material Adverse Effect.
ITEM 6.10
TAXES
The Borrower has settled a dispute relating to an Iowa sales/use tax audit
for the 1995 and 1996 tax years and has paid $150,000 in final settlement
thereof.
The Borrower files a consolidated federal income tax return with Sodak.
Sodak allocates the consolidated provision for income tax to its subsidiaries as
if the subsidiaries filed separate federal income tax returns. The current and
deferred income tax expense allocated to the Borrower for the year ended
December 31, 1998 represents the income tax expense realized by the consolidated
group as a result of the Borrower's 1998 earnings. See the Borrower's financial
statements and notes thereto for more information.
ITEM 6.11
EMPLOYEE BENEFIT PLANS
The employees of the Borrower participate in the Sodak Gaming Inc.
Healthcare Plan which is a self-insured plan.
ITEM 6.12
ENVIRONMENTAL MATTERS
The Iowa Department of Natural Resources (the "DNR") has notified Sodak and
the Borrower that a treatment agreement is required to be entered into between
the City of Marquette and the owner of the Xxxx Xxxxxxxxx Riverboat, whereby the
latter shall quantify and describe its discharge to the City and the City agrees
to treat such discharge based on the disclosed volume and quantities.
It is anticipated that pursuant to the treatment agreement and a side
agreement relating to rate structure, increased treatment rates and surcharges
will be charged to the Riverboat Complex. The treatment agreement and side
agreement have not yet been concluded. No draft of the side agreement has been
prepared or exchanged between the parties as yet.
ITEM 7.2.2(b)
INDEBTEDNESS TO BE PAID
None.
ITEM 7.2.2(c)
ONGOING INDEBTEDNESS
1. Xxxxxxx and Xxxxxx Xxxxx indebtedness in the amount of approximately
$642,125.
2. Xxxxxx Capital Lease indebtedness in the amount of approximately $4,250,000.
3. The Sodak Gaming Inc. Amended and Restated Credit Agreement among Seller,
Comerica Bank Midwest, as agent bank, and certain syndicate banks dated February
21, 1996 is secured by a first preferred ship mortgage on the Xxxx Xxxxxxxxx
Riverboat. Sodak has obtained the consent of Comerica Bank Midwest to the
contribution of the Xxxx Xxxxxxxxx Riverboat to the Borrower and the subsequent
sale of the Borrower. In connection with the contribution of the Xxxx Xxxxxxxxx
Riverboat to the Borrower, Comerica Bank Midwest will release its first
preferred ship mortgage on the Xxxx Xxxxxxxxx Riverboat.
ITEM 7.2.3
LIENS
1. Approximately $642,125 payable pursuant to a contract with Xxxxxxx and Xxxxxx
Xxxxx, which is secured by the Port of Marquette hotel real estate.
2. The Sodak Gaming Inc. Amended and Restated Credit Agreement among Seller,
Comerica Bank Midwest, as agent bank, and certain syndicate banks dated February
21, 1996 is secured by a first preferred ship mortgage on the Xxxx Xxxxxxxxx
Riverboat. Sodak has obtained the consent of Comerica Bank Midwest to the
contribution of the Xxxx Xxxxxxxxx Riverboat to the Borrower and the subsequent
sale of the Borrower. In connection with the contribution of the Xxxx Xxxxxxxxx
Riverboat to the Borrower, Comerica Bank Midwest will release its first
preferred ship mortgage on the Xxxx Xxxxxxxxx Riverboat.
3. The Master Lease Agreement with PDS Financial Corporation dated June 30, 1997
(subsequently assigned to Xxxxxx Financial Corporation) is secured by the gaming
equipment and office equipment on the Xxxx Xxxxxxxxx Riverboat.
4. A lien search has revealed the existence of the following two liens. Although
the management of the Borrower was not aware of such liens, it believes that
they originated in connection with debts that have now been paid off. Management
will seek to have the filings made that are necessary to remove these liens.
--------------------------------------------------------------------------------
Debtor Secured Party Filing Number Filing Date Document Type
--------------------------------------------------------------------------------
Xxxx Xxxxxxxxx Mikohn Gaming 00K659915 06/23/1995 Financing Statement
Corporation
--------------------------------------------------------------------------------
Gambler Supply Associates Capital 00K587025 10/21/1994 Financing Statement
Management Co. Services Corp.
--------------------------------------------------------------------------------
ITEM 7.2.5
INVESTMENTS
None.
ITEM 7.2.8
RENTAL OBLIGATIONS
The Borrower is party to a lease with the City of Marquette that obligates
the Borrower to make the following payments: (i) $180,000 per annum; (ii) $0.50
per customer who enters the Xxxx Xxxxxxxxx Riverboat; and (iii) a percentage of
the net gaming receipts (as defined in the lease) from the Xxxx Xxxxxxxxx
Riverboat equal to (A) 2.5% of net gaming receipts greater than $20,000,000 up
to $40,000,000, (B) 5.0% of net gaming receipts greater than $40,000,000 up to
$60,000,000, and (C) 7.5% of net gaming receipts greater than $60,000,000.
The Borrower paid $759,000 in 1998 pursuant to this lease.
EXHIBIT A
NOTE
$16,300,000 October __, 1999
FOR VALUE RECEIVED, the undersigned, GAMBLERS SUPPLY MANAGEMENT
COMPANY, a South Dakota corporation (the "Borrower"), promises to pay to the
order of ISLE OF CAPRI CASINOS, INC. (the "Lender") the principal sum of SIXTEEN
MILLION THREE HUNDRED THOUSAND DOLLARS ($16,300,000) or, if less, the aggregate
unpaid principal amount of the Loan shown on the schedule attached hereto (and
any continuation thereof) made by the Lender pursuant to that certain Credit
Agreement, dated as of October ___, 1999 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), between the Borrower and the Lender, payable as set forth in the
Credit Agreement, with a final installment (in the amount necessary to pay in
full this Note) due and payable on or before the Maturity Date.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same-day or immediately-available funds to
the account designated by the Lender pursuant to the Credit Agreement.
This Note is the Note referred to in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal of the Indebtedness evidenced by this Note and on
which such Indebtedness may be declared to be immediately due and payable.
Unless otherwise defined, terms used herein have the meanings provided in the
Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
A-1
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
GAMBLERS SUPPLY MANAGEMENT
COMPANY
By:
---------------------------------
Title:
A-2
LOAN AND PRINCIPAL PAYMENTS
Amount of Unpaid Notation
Amount of Principal Principal Made
Date Loan Made Repaid Balance By
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
A-3
EXHIBIT B
BORROWING REQUEST
Isle of Capri Casinos, Inc.
711 Xx. Xxxxxx Xxxxxx Xxxx, Xx. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
GAMBLERS SUPPLY MANAGEMENT COMPANY
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 2.2 of
the Credit Agreement, dated as of October __, 1999 (together with all
amendments, if any, from time to time made thereto, the "Credit Agreement"),
between Gamblers Supply Management Company, a South Dakota corporation (the
"Borrower"), and you. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that the Loan be made in the aggregate
principal amount of $ on , 1999.
The Borrower hereby acknowledges that, pursuant to Section 5.1.12 of
the Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loan requested hereby
constitute a representation and warranty by the Borrower that, on the date of
the Loan, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in Section 5.1.11 are true and
correct in all material respects.
The Borrower agrees that if prior to the time of the Loan requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify you. Except to the extent,
if any, that prior to the time of the Loan requested hereby you shall receive
written notice to the contrary from the Borrower, each matter certified to
herein shall be deemed once again to be certified as true and correct at the
date of such Loan as if then made.
B-1
Please wire transfer the proceeds of the Loan to the accounts of the
following persons at the financial institutions indicated respectively:
Amount to be Person to be Paid Name, Address, etc.
Transferred Name Account No. of Transferee Lender
$
--------- ------ ----------- ---------------------------
---------------------------
Attention:
-----------------
$
--------- ------ ----------- ---------------------------
---------------------------
Attention:
-----------------
Balance of The Borrower
such proceeds ---------------------------
Attention:
-----------------
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this day of , 1999.
GAMBLERS SUPPLY MANAGEMENT
COMPANY
By:
--------------------------------------
Title:
B-2
EXHIBIT C
Certificate of Authorized Officer
I, the undersigned, [Assistant] Secretary of Gamblers Supply Management
Company, a corporation (the "Borrower"), DO HEREBY CERTIFY that:
1. This Certificate is furnished pursuant to Section 5.1.1 of that
certain Credit Agreement, dated as of October , 1999 (the "Credit Agreement"),
between the Borrower and Isle of Capri Casinos, Inc. (the "Lender"). Unless
otherwise defined herein, capitalized terms used in this Certificate have the
meanings assigned to such terms in the Credit Agreement.
2. There have been no amendments to the Articles of Incorporation of
the Borrower since , 19 .
3. Attached hereto as Exhibit I is a true, correct and complete copy of
the by-laws of the Borrower as in effect on the date hereof.
4. Attached hereto as Exhibit II is a true, correct and complete copy
of resolutions duly adopted at a meeting of the Board of Directors of the
Borrower, convened and held on the day of , 1999, which resolutions
have not been revoked, modified, amended or rescinded and are still in full
force and effect, and the Credit Agreement, the Note and the other Loan
Documents to which the Borrower is a party are in substantially the forms of
those documents submitted to and approved by the Board of Directors of the
Borrower at such meeting.
5. The persons named in Exhibit III attached hereto have been duly
elected, have been duly qualified as and at all times since , 1999 (to and
including the date hereof), have been officers of the Borrower holding the
respective offices set forth therein opposite their names, and the signatures
set forth therein opposite their names are their genuine signatures.
6. I know of no proceeding for the dissolution or liquidation of the
Borrower or threatening its existence.
WITNESS my hand and seal of the Borrower this __ day of ________, 1999.
-----------------------------------------
[Assistant] Secretary
C-1
[Affix Corporate Seal]
I, the undersigned, [Vice] President of the Borrower, DO HEREBY CERTIFY
that:
1. _______ is [a] the duly elected and qualified [Assistant] Secretary
of the Borrower and the signature above is his genuine signature.
2. The representations and warranties on the part of the Borrower
contained in the Credit Agreement are as true and correct at and as of the date
hereof as though made on and as of the date hereof.
3. No Default has occurred and is continuing, or would result from the
consummation of the Loan on this date.
WITNESS my hand on this __ day of ___________, 1999.
-------------------------------------
[Vice] President
C-2
EXHIBIT I
Copy of the by-laws of Gamblers Supply Management Company
EXHIBIT II
Resolutions of the Board of Directors of Gamblers Supply Management Company
WHEREAS, there has been presented to this meeting a form of Credit
Agreement (draft of _______, 19 ) (the "Credit Agreement"), between this
Corporation and Isle of Capri Casinos, Inc. (the "Lender"), providing for the
making by the Lender of a Loan (as defined in the Credit Agreement) to this
Corporation; and
WHEREAS, it is proposed that payment of this Corporation's obligations
under and in connection with the Credit Agreement and the promissory note to be
executed by this Corporation pursuant thereto be secured by the following
collateral security documents:
(1) A certain Mortgage, substantially in the form of the draft
Mortgage, dated ________, 1999 (the "Mortgage"), presented to this
meeting,
(2) A certain Ship Mortgage, substantially in the form of the
draft Ship Mortgage, dated __________, 1999 (the "Ship Mortgage"),
presented to this meeting, and
(3) A certain Security Agreement, substantially in the form of the
draft Security Agreement, dated ___________, 1999 (the "Security
Agreement"), presented to this meeting.
NOW, THEREFORE, BE IT RESOLVED, that the President or any Vice
President of this Corporation, and each of them, be and hereby is authorized to
execute, in the name and on behalf of this Corporation, and deliver a credit
agreement between this Corporation and the Lender, substantially in the form of
the Credit Agreement presented to this meeting, except for such changes,
additions and deletions as to any or all of the terms and provisions thereof as
the officer executing the Credit Agreement on behalf of this Corporation shall
deem proper, such execution by such officer of the Credit Agreement to be
conclusive evidence that such officer deems all of the terms and provisions
thereof to be proper;
FURTHER RESOLVED, that the President or any Vice President of this
Corporation, and each of them, be and hereby is authorized to borrow from time
to time on behalf of this Corporation the amounts permitted or provided to be
borrowed by this Corporation under the Credit Agreement executed by this
Corporation pursuant to these resolutions, and to execute and deliver on behalf
of this Corporation the promissory note payable to the order of the Lender,
substantially in the form provided for as an exhibit to the Credit Agreement,
evidencing such borrowings; and
FURTHER RESOLVED, that the President or any Vice President and the
Secretary or any Assistant Secretary of this Corporation, and each of them, be
and hereby is authorized to execute, in the name and on behalf of this
Corporation and under its corporate seal, and deliver to the Lender [and
trustees for the Lender], on behalf of and in the name of this Corporation and
under its corporate seal, a mortgage, substantially in the form of the Mortgage
presented to this meeting, except for such changes, additions and deletions as
to any or all of the terms and provisions thereof as the officers executing such
instrument on behalf of this Corporation shall deem proper, such execution by
such officers of such instrument to be conclusive evidence that such officers
deem all of the terms and provisions thereof to be proper;
FURTHER RESOLVED, that the President or any Vice President of this
Corporation, and each of them, be and hereby is authorized to execute, in the
name and on behalf of this Corporation, and deliver a security agreement,
substantially in the form of the Security Agreement presented to this meeting,
except for such changes, additions and deletions as to any or all of the terms
and provisions thereof as the officer executing the Security Agreement on behalf
of this Corporation shall deem proper, such execution by such officer of the
Security Agreement to be conclusive evidence that such officer deems all of the
terms and provisions thereof to be proper; and
FURTHER RESOLVED, that the President or any Vice President of this
Corporation, and each of them, be and hereby is authorized to execute, in the
name and on behalf of this Corporation, and deliver a ship mortgage,
substantially in the form of the Ship Mortgage presented to this meeting, except
for such changes, additions and deletions as to any or all of the terms and
provisions thereof as the officer executing the Ship Mortgage on behalf of this
Corporation shall deem proper, such execution by such officer of the Ship
Mortgage to be conclusive evidence that such officer deems all of the terms and
provisions thereof to be proper; and
FURTHER RESOLVED, that each and every officer of this Corporation be
and hereby is authorized in the name and on behalf of this Corporation from time
to time to take such actions and to execute and deliver such certificates,
instruments, notices and documents as may be required or as such officer may
deem necessary, advisable or proper in order to carry out and perform the
obligations of this Corporation under the Credit Agreement, the Mortgage, the
Ship Mortgage and the Security Agreement executed by this Corporation pursuant
to these resolutions, or under any other instrument or document executed
pursuant to or in connection with the Credit Agreement, the Mortgage, the Ship
Mortgage and the Security Agreement; all such actions to be performed in such
manner, and all such certificates, instruments, notices and documents to be
executed and delivered in such form, as the officer performing or executing the
same shall approve, the performance or execution thereof by such officer to be
conclusive evidence of the approval thereof by such officer and by this Board
of Directors.
EXHIBIT III
Name of Officer Office Signature
--------------- ------ ---------
----------------------- ------------------------- ----------------------
----------------------- ------------------------- ----------------------
----------------------- ------------------------- ----------------------
