EXHIBIT 1
CONSTRUCTION LOAN AGREEMENT
Construction Loan Agreement, dated as of June 27, 1994 among
XXXXXXX MANAGEMENT & DEVELOPMENT CORP., a New York corporation ("Lender"),
MOUNTAINEER PARK, INC., a West Virginia corporation ("Borrower"), and WINNERS
ENTERTAINMENT, INC., a Delaware corporation and parent of Borrower
("Winners").
WHEREAS, Borrower desires to obtain a loan of $10,200,000 in order
to finance the refurbishment of Mountaineer Racetrack and Resort, located in
Xxxxxxx, West Xxxxxxxx, which is owned by Borrower and to finance certain
other expenditures; and
WHEREAS, Gamma International, Ltd. ("Gamma") has been designated as
the manager of non pari-mutuel gaming activities at Mountaineer Racetrack and
Resort pursuant to the Management Agreement dated June 2, 1994 (as it may be
amended from time to time, the "Management Agreement"); and
WHEREAS, the Management Agreement provides that Borrower may
terminate the Management Agreement on June 30, 1994, if Gamma has not
obtained a commitment for a $10,000,000 secured financing for Borrower; and
WHEREAS, Lender is willing to provide Borrower with a $10,200,000
line of credit to be used to finance the refurbishment of Mountaineer
Racetrack and Resort and to pay certain other expenses; and
WHEREAS, Lender is also willing to permit Borrower to make a short
term loan of up to $500,000 to Winners with a portion of the proceeds from
the Loans (as defined below); and
WHEREAS, to induce the Lender to make the Loans contemplated
hereby, Winners has agreed to issue shares of its common stock to the Lender
in accordance herewith; and
WHEREAS, Borrower has agreed to secure such line of credit with a
first priority mortgage and security interest in Mountaineer Racetrack and
Resort pursuant to a credit line deed of trust dated as of June 27, 1994
between Borrower and Xxxxx X. Xxxxxxxxxx, XX and Xxxxx X. Xxxxxxxxxxx, as
Trustees (the "Deed of Trust").
NOW, THEREFORE, in consideration of the premises and agreements
herein contained, the parties hereto, hereby agree as follows:
ARTICLE I.
Amount and Terms of the Loans
1.1 Commitment. Subject to the terms and conditions hereof,
Lender agrees to make loans (each, a "Loan" and collectively the "Loans") to
Borrower from time to time in accordance with the funding schedule set forth
on Exhibit A (the "Funding Schedule") in an aggregate principal amount not to
exceed $10,200,000; provided, however, that Lender shall not relend any
amount which has been prepaid by Borrower.
1.2 Note; Payment of Interest. The Loans made by Lender shall be
evidenced by a promissory note of Borrower, substantially in the form of
Exhibit B hereto with appropriate insertions as to the date and principal
amount of each Loan (the "Note"), payable to the order of Lender. The
principal amount of the Loan shall bear interest at the rate of 12.5% per
annum; provided, however, that (x) in the event that Borrower fails to make
any payment of principal of, or interest on, the Loans when due (whether at
the stated maturity, by acceleration or otherwise), any such overdue
principal or interest amount shall bear interest at a rate of 14.5% per annum
from the date of such non-payment until paid in full and (y) the interest
rate shall be subject to increase in accordance with Section 2.4(a) and
2.4(b). Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. Interest shall be payable monthly in arrears
on the last business day of each month commencing July 1994.
1.3 Procedure for Borrowing. Borrower may borrow on any business
day in accordance with the Funding Schedule; provided that Borrower shall
give Lender written notice (the "Borrowing Notice") at least five business
days prior to the requested borrowing date specifying the amount to be
borrowed, the requested borrowing date, and the name of the bank and account
number to which funds shall be transferred. Each Borrowing Notice shall be
accompanied by a certificate of either of the Co-Chairmen of the Board of
Directors of Borrower stating that (i) each of the representations and
warranties made by Borrower in or pursuant to this Agreement and the Deed of
Trust are true and correct on and as of such date as if made on and as of
such date, (ii) as of such date, Borrower is in compliance with all the
covenants contained in Article V of this Agreement, (iii) no Default or Event
of Default (as such terms are defined in Section 7.1 hereof) shall have
occurred and be continuing on such date, and (iv) the proceeds of the Loan
requested pursuant to such Borrowing Notice will be used in accordance with
Section 3.10 hereof. Such borrowing will then be made available to Borrower
by Lender by wire transfer in immediately available funds to the bank account
specified in the Borrowing Notice.
1.4 Optional Prepayments of Loans. Borrower may at any time and
from time to time, prepay the Loans, in whole or in part, without premium or
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penalty upon one business day's notice to Lender, specifying the date and
amount of prepayment.
1.5 Repayment of Loans. To the extent the Loans are not prepaid
in full on or prior to July 1, 1995 in accordance with Section 1.4 hereof,
Borrower shall repay the outstanding principal amount of the Loans as of such
date in 36 equal monthly installments on the last business day of each month
commencing in July 1995.
1.6 Special Repayment Terms. In the event that Gamma's management
services under the Management Agreement are not approved by the West Virginia
Lottery Commission by October 1, 1994, then notwithstanding any other
provision of this Agreement, Lender shall have no further obligations to make
additional Loans under this Agreement and Borrower shall repay the principal
amount of the Loans outstanding as of such date in 18 equal monthly
installments on the last business day of each month commencing October 1994.
1.7 Security for Loans. The Loans shall be secured by the
Collateral (as defined in the Deed of Trust) pursuant to the Deed of Trust.
ARTICLE II.
Issuance of Common Stock, Registration Rights, Call and Put
2.1 Grant of Common Stock to Lender. In order to induce Lender to
enter into this Agreement and to make the Loans, Winners hereby agrees to
issue to Lender, from time to time, shares of its common stock, par value
$.00001 per share ("Winners Common Stock"), as follows. For each $1.00 of
Loans made hereunder, Lender shall be entitled to receive .05 of a share of
Winners Common Stock subject to adjustment by Winners in an equitable manner
in the event of a stock split, combination, reclassification or similar event
with respect to Winners Common Stock. Such shares to be issued substantially
contemporaneously with the making of any such Loan and will be held by Lender
in accordance with the terms of this Agreement.
2.2 Issuance of Additional Shares.
(a) In addition to any issuance of shares of Winners Common
Stock pursuant to Sections 2.1 or 2.2(b), in the event that the Loans have
not been prepaid in full by October 1, 1995, Winners shall issue to Lender on
October 2, 1995, a number of shares of Winners Common Stock equal to (x) .175
multiplied by the outstanding principal amount of the Loans as of October 1,
1995, divided by (y) the Average Market Price (as defined below) on October
1, 1995. For purposes of this Agreement (i) the "Average Market Price" at
any date shall be deemed to be the average of the Current Market Prices for
the 20 consecutive trading days prior to such date and (ii) the "Current
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Market Price" on any given day shall be (w) if the Winners Common Stock is
listed or admitted to unlisted trading privileges on a National Securities
Exchange (defined as any exchange registered with the Securities and Exchange
Commission as a "national securities exchange" under the Securities Exchange
Act of 1934), the last sales price of Winners Common Stock on the National
Securities Exchange in or nearest the City of New York on which the shares of
Winners Common Stock shall be listed or admitted to unlisted trading
privileges (or the quoted closing bid price if there are no sales on such
Exchange) on such day, (y) if the Winners Common Stock is included in the
Nasdaq National Market ("NM") or on Nasdaq, the last sales price of Winners
Common Stock in the NM or on Nasdaq, as the case may be (or the quoted
closing bid price if there are no sales on the NM or on Nasdaq) on such day,
or (z) if the Winners Common Stock is not so listed, admitted or included,
the mean between the high and low bid prices of Winners Common Stock in the
over-the-counter market on such day as reported by the National Quotation
Bureau Incorporated, or any similar organization designated by Winners, or if
not so available in any such manner, as shall be determined by Winners, which
determination shall be conclusive.
(b) In addition to any issuance of shares of Winners Common
Stock pursuant to Sections 2.1 or 2.2(a), in the event that the Loans have
not been prepaid in full by January 1, 1997, Winners shall issue to Lender on
January 2, 1997, a number of shares of Winners Common Stock equal to (x) .175
multiplied by the outstanding principal amount of the Loans as of January 1,
1997, divided by (y) the Average Market Price on January 1, 1997.
2.3 Reservation of Winners Common Stock. Winners hereby agrees to
reserve and keep available out of authorized but unissued shares of Winners
Common Stock, a sufficient number of shares of Winners Common Stock for the
purpose of enabling it to satisfy any obligation to issue shares of Winners
Common Stock in accordance with Sections 2.1 and 2.2.
2.4 Registration Rights.
(a) Winners shall file a registration statement on the
appropriate form to register the sale from time to time in the open market by
Lender of all of the shares of Winners Common Stock acquired by the Lender in
accordance with Section 2.1. Winners shall cause such registration statement
to be declared effective no later than October 1, 1995. Winners shall use
its reasonable best efforts to keep such registration statement effective
until the earlier of (i) the date Lender has disposed of all of the shares of
Winners Common Stock that it acquired pursuant to Section 2.1, (ii) the date
that Lender is able to sell all such shares in accordance with Rule 144
within a 90-day period or (iii) July 1, 1998. If such registration statement
is not declared effective by October 1, 1995, then during the period from
October 1, 1995 until the date that such registration statement is declared
effective, the interest rate on the outstanding principal amount of the Loans
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shall be increased to 22.5% per annum. Lender shall have no remedy for
Winners' breach of its obligation to cause such registration statement to be
effective by October 1, 1995 except for such increase in the interest rate on
the Loans.
(b) Winners shall cause shares of Winners Common Stock issued
to the Lender pursuant to Sections 2.2(a) and (b) to be registered for sales
in the open market as soon as practicable after the issuance thereof on the
same terms and conditions as relate to the shares of Winners Common Stock to
be registered under Section 2.4(a), including the increase in the interest
rate during the default period, except that each registration statement with
respect to such shares must be declared effective no later than eight months
after the date of issuance of the shares covered thereby.
(c) It shall be a condition precedent to the obligation of
Winners to take any action under this Section 2.4, that Lender shall furnish
to Winners such information regarding Lender and the offering as Winners
shall reasonably request.
2.5 Call.
(a) For so long as any of the Loans remain outstanding, but
in no event later than July 1, 1998, Winners shall have the right (the
"Call") from time to time to repurchase any shares of Winners Common Stock
that are acquired by the Lender pursuant to this Agreement and which have not
been sold by Lender in accordance with this Agreement for a price per share
equal to the Repurchase Price, as defined below. If Winners desires to
exercise the Call, it shall give Lender written notice thereof (a "Call
Notice"), which notice shall specify the number of shares to be purchased
(the "Purchased Shares"), the total purchase price and a date and place for
closing which must be within 15 days of such notice or, if later and if
applicable, on the second business day following receipt of all required
governmental approvals. Lender may not sell any shares of Winners Common
Stock subject to a Call Notice from and after the date of receipt of the Call
Notice; provided, however, that such restriction shall terminate if Winners
shall not have consummated such purchase within 60 days after delivery of the
Call Notice. At such closing, Lender shall deliver to Winners the Purchased
Shares, free and clear of all liens, claims and other encumbrances
(collectively, "Liens"), in the form of certificates representing such
shares, accompanied by appropriate stock powers duly executed or endorsed in
blank with appropriate transfer tax stamps affixed, against payment of the
purchase price therefor in immediately available funds.
(b) From the date hereof until October 1, 1995, the
"Repurchase Price" shall equal $6.00 per share, provided, however, that such
repurchase price shall be subject to adjustment by Winners in an equitable
manner in the event of a stock split, combination, reclassification or
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similar event with respect to Winners Common Stock. From October 2, 1995
until January 2, 1997, the "Repurchase Price" shall be an amount equal to the
Average Market Price on October 1, 1995, plus $1.50. From January 3, 1997
until July 1, 1998, the "Repurchase Price" shall be an amount equal to the
Average Market Price on January 2, 1997, plus $1.50. Notwithstanding
anything contained herein to the contrary, the Repurchase Price for the
shares of Winners Common Stock acquired by Lender pursuant to Section 2.1
shall not be less than $4.50 per share, subject to adjustment by Winners in
an equitable manner in the event of a stock split, combination,
reclassification or similar event with respect to Winners Common Stock.
2.6 Price Guarantee. If, during the period from the date hereof
until the earlier of July 1, 1998 or the date that all of the Loans have been
repaid in full, Lender sells any shares of Winners Common Stock acquired by
it pursuant to this Agreement in the open market, for a price less than the
then applicable Repurchase Price, as soon as practicable following receipt by
Winners of appropriate evidence (the "Sale Notice") of such sale, including
the number of shares of Winners Common Stock that were sold, the sales dates
and the sales price or prices, Winners shall issue to Lender a number of
shares of Winners Common Stock with a value based on the Average Market Price
on the date of receipt of the Sale Notice equal to (x) the number of shares
of Winners Common Stock which were sold and referred to in the Sales Notice
multiplied by (y) the difference between (i) the then applicable Repurchase
Price and (ii) the per share sale price for such shares; provided, however,
that Winners shall not be required to issue any of such shares if the
applicable sale by Lender was not then permitted under this Agreement. If
there are multiple sales prices and/or different Repurchase Prices, a
separate computation shall be made for each such sales price and/or different
Repurchase Prices to determine the appropriate number of shares of Winners
Common Stock to be issued.
ARTICLE III.
Representations and Warranties of Winners and Borrower
Winners and Borrower hereby jointly and severally represent and
warrant to Lender that:
3.1 Organization, Existence, and Qualification. Each of Winners
and Borrower is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has all requisite
corporate power and authority to own its properties and carry on its business
as now conducted and as presently proposed to be conducted. Borrower is duly
qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires it to be so qualified (other than such
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jurisdictions where the failure to so qualify would not have a material
adverse effect on Borrower's business, operations, results of operations or
financial condition).
3.2 Authority. Each of Winners and Borrower has the corporate
power and authority to execute, deliver and perform this Agreement, the Note
(in the case of Borrower only) and the Deed of Trust (in the case of Borrower
only). The execution, delivery and performance of this Agreement, the Note
(in the case of Borrower only) and the Deed of Trust (in the case of Borrower
only) have been duly authorized by all requisite corporate action on behalf
of Winners and Borrower. This Agreement, the Note (in the case of Borrower
only) and the Deed of Trust (in the case of Borrower only) are the legal,
valid and binding obligations of Winners and Borrower, enforceable against
Winners and Borrower in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally or by principles governing the availability of equitable remedies.
3.3 Consents; No Violation. No approval or action of, or filing,
registration or declaration with, or notice to, any governmental or
regulatory body, authority, bureau or agency or any other person or entity is
required to be made by Winners or Borrower in connection with the execution,
delivery and performance of this Agreement, the Note (in the case of Borrower
only) and the Deed of Trust (Borrower only). The execution, delivery and
performance of this Agreement, the Note (in the case of Borrower only) and
the Deed of Trust (Borrower only) by Winners and Borrower will not (a)
conflict with or result in a breach of any provision of its Certificate of
Incorporation or By-laws, (b) result in a default (or give rise to any right
of termination, cancellation or acceleration) under any agreement, contract
or other instrument to which Winners or Borrower is a party, by which Winners
or Borrower is bound or to which any part of Winners' or Borrower's
properties or assets is subject, or (c) violate any judgment, decree or order
of any court or governmental authority or any law, statute, rule or
regulation.
3.4 Financial Statements
(a) Winners has previously furnished to Lender (i) audited
consolidated balance sheets of Winners and its subsidiaries as of December
31, 1993 and 1992, and (ii) the related audited consolidated statements of
operations and retained earnings and cash flows of Winners and its
subsidiaries for the fiscal years ended December 31, 1993 and 1992, together
with the respective reports thereon of Xxxxxx & Xxxxx, Winners' independent
certified public accountants. The consolidated financial statements referred
to in this Section (including the related notes thereto) present fairly, in
all material respects, the consolidated financial position of Winners and its
subsidiaries as of their respective dates, and the consolidated results of
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their operations and their cash flows for their respective periods, in
conformity with generally accepted accounting principles consistently
applied.
(b) Winners has also previously furnished to Lender (i) the
unaudited consolidated balance sheet of Winners and its subsidiaries as of
March 31, 1994 and (ii) the related unaudited consolidated statements of
operations and retained earnings and cash flows of Winners and its
subsidiaries for the three-month period then ended. The consolidated
financial statements referred to in this Section present fairly, in all
material respects, the consolidated financial position of Winners and its
consolidated subsidiaries as of March 31, 1994, and the consolidated results
of their operations and cash flows for the three-month period then ended, in
conformity with the accounting principles historically followed by Winners in
preparing its unaudited internal financial statements.
3.5 Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of Winners' or Borrower's knowledge
and belief, any basis therefor or threat thereof, against or affecting
Winners or Borrower which challenge the validity of this Agreement, the Note
or the Deed of Trust or the right of Winners and/or Borrower to enter into
this Agreement, the Note or the Deed of Trust, or to consummate the
transactions contemplated hereby and thereby, or, except as disclosed in
Winners' Annual Report on Form 10-K for the year ended December 31, 1993,
which are reasonably expected by Winners or Borrower to result, either
individually or in the aggregate, in any material adverse change in the
business, operations, prospects, conditions, affairs or results of operations
of Winners or Borrower or in any of Winners' or Borrower's properties or
assets, or in any material impairment of the right or ability of Winners or
Borrower to carry on its business as now conducted or as proposed to be
conducted.
3.6 Winners Common Stock to Be Issued to Lender. All shares of
Winners Common Stock, when issued to Lender in accordance with this
Agreement, will be validly authorized, issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the holder thereof and
will be issued without violation of any preemptive right.
3.7 Deed of Trust; Collateral. Borrower has good and marketable
title to the Collateral free and clear of all Liens. The Deed of Trust, when
executed and delivered in accordance with this Agreement and upon the proper
filing of financing statements under the Uniform Commercial Code with respect
to the Deed of Trust and the Collateral as provided therein will vest in
Lender a valid and perfected first priority security interest in the
Collateral free and clear of all Liens and enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other
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similar laws affecting creditors' rights generally or by principles governing
the availability of equitable remedies.
3.8 Environmental Matters. Except as described on Schedule 3.8,
each parcel of real property owned or operated by Borrower and included in
the Collateral (the "Properties") and all operations and facilities at the
Properties and Facility (as defined in the Management Agreement) are in
compliance with all environmental laws (as defined in the Deed of Trust) and
there is no contamination at any of the Properties or the Facility (including
contamination with respect to hazardous materials (as defined in the Deed of
Trust)) or violation of any environmental law which could interfere with the
continued operation of any of the Properties or the Facility in the manner in
which they are currently conducted or are proposed to be conducted. Except
as described on Schedule 3.8, no hazardous materials have been generated,
treated, stored, disposed of, at, on or under any of the Properties or the
Facility in violation of environmental laws.
3.9 Compliance With Law. Borrower is in compliance with all
federal, state and local laws, rules and regulations which are applicable to
or binding upon Borrower or any of its Properties or to which Borrower or any
of its Properties is subject.
3.10 Purpose of Loans. The proceeds of the Loans will be used by
Borrower only to finance the refurbishment of Mountaineer Racetrack and
Resort in accordance with plans which have been approved by Gamma, as such
plans may be revised from time to time in accordance with the approval of
Gamma, to pay up to $200,000 of investment banking fees and to loan up to
$500,000 to Winners, which loan must be repaid to Borrower no later than
December 31, 1994.
ARTICLE IV.
Representations, Warranties and Covenants of Lender
Lender hereby represents and warrants to and covenants with
Borrower and Winners that:
4.1 Purchase for Investment.
(a) All shares of Winners Common Stock acquired by Lender in
accordance with this Agreement are being acquired by Lender for its own
account for investment and without a view to distribute any of the shares of
Winners Common Stock in any transaction which would be in violation of the
Securities Act of 1933, as amended.
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(b) Each certificate representing the shares of Winners
Common Stock acquired by Lender in accordance with this Agreement shall be
endorsed with the legends set forth below. Lender shall not make any
transfer of such shares of Winners Common Stock without first complying with
the restrictions on transfer described in all such legends.
"THE SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE OR ANY
INTEREST THEREIN OR RIGHT WITH RESPECT THERETO MAY BE
MADE ONLY IN ACCORDANCE WITH THE TERMS OF LOAN AGREEMENT
DATED AS OF JUNE 27, 1994 AMONG XXXXXXX MANAGEMENT &
DEVELOPMENT CORP., MOUNTAINEER PARK, INC., AND WINNERS
ENTERTAINMENT, INC., AS IT MAY BE AMENDED FROM TIME TO
TIME, A COPY OF WHICH IS ON FILE WITH WINNERS
ENTERTAINMENT, INC. A TRANSACTION IN VIOLATION OF SUCH
LOAN AGREEMENT WILL BE INEFFECTIVE. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
PURCHASE OPTIONS DESCRIBED IN SUCH LOAN AGREEMENT."
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED
UNDER SUCH ACT OR WINNERS ENTERTAINMENT, INC. RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO WINNERS ENTERTAINMENT, INC.
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
4.2 No Sale Prior to October 1, 1995. Lender agrees that it shall
not sell, transfer, assign, hypothecate or otherwise dispose of any of the
shares of Winners Common Stock acquired under this Agreement prior to October
1, 1995; provided, however, that upon the occurrence of an Event of Default
(as defined below) and until such Event of Default has been cured there shall
be no restrictions under this Section 4.2 on the ability of Lender to sell
any shares of Winners Common Stock acquired under this Agreement.
4.3 Notice to Transfer Agent. Upon satisfaction of Winners'
obligations to issue shares of Winners Common Stock hereunder to Lender,
Lender shall join with Winners in a notice to the transfer agent for Winners
Common Stock which notice shall state that such transfer agent shall remove
any reservation of shares of Winners Common Stock for issuance to the Lender
then on its records.
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ARTICLE V.
Covenants of Borrower
Borrower hereby agrees that at all times the Loans may be made in
accordance with the Funding Schedule and thereafter for as long as the Note
remains outstanding and unpaid or any other amount is owing to Lender
hereunder or under the Deed of Trust. Borrower shall:
5.1 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it, preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary
or desirable in the normal conduct of its business and comply with all
contractual obligations and requirements of law.
5.2 Maintenance and Repair of Collateral. Keep and maintain the
Collateral in good condition and repair free and clear of all Liens (other
than the Lien of the Deed of Trust), make or cause to be made, as and when
necessary, all repairs, renewals and replacements, structural and
nonstructural, exterior and interior, ordinary and extraordinary, foreseen
and unforeseen which are necessary to so maintain the Collateral and comply
with all laws, ordinances, rules and regulations now or hereafter affecting
the Collateral or any part thereof or the use thereof or requiring any
alterations or improvements.
5.3 Insurance. Maintain with financially sound and reputable
insurance companies, insurance on the Collateral in at least such amounts and
against at least such risks as are usually insured against in the same
general area by companies engaged in the same or a similar business and
furnish to Lender, upon written request, full information as to the insurance
carried.
5.4 Environmental Laws.
(a) Comply with, and insure compliance by all tenants and
subtenants, if any, with, all environmental laws with respect to the
Properties and the Facility and comply with and obtain and maintain and
insure that all tenants and subtenants obtain and comply with and obtain and
maintain any and all licenses, approvals, registrations or permits required
with respect to the Properties and the Facility by environmental laws;
(b) Conduct and complete all investigations, studies,
sampling and testing and all remedial, remedial removal and other actions
required with respect to the Properties and the Facility under environmental
laws and promptly comply with all lawful orders and directives of all
governmental authorities respecting environmental laws; and
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(c) Defend, indemnify and hold harmless Lender from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of or noncompliance with environmental laws applicable to the
Properties and the Facility, or any orders, requirements or demands of
governmental authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory
fees, court costs and litigation expenses.
5.5 Access to Information. Permit representatives of Lender to
visit and inspect the Properties and the Facility, to examine and make
abstracts from any of its books and records at any reasonable time and as
often as may reasonably be desired and to discuss the business, operations,
Properties and financial and other condition of Borrower with officers and
employees of Borrower and with Borrower's certified public accountants.
5.6 Use of Loans. Use the proceeds of the Loans in accordance
with Section 3.10.
5.7 Notices. Promptly give notice to Lender of the occurrence of
any event that with the giving of notice or the passage of time or both would
constitute an Event of Default (a "Default") or an Event of Default.
ARTICLE VI.
Conditions Precedent to the Making of Loans
6.1 Conditions Precedent to Making Loans. Lender's obligation
pursuant to this Agreement to make the Loans available to Borrower in
accordance with the Funding Schedule is subject to the receipt on or prior to
the date hereof of the following documents by Lender in form and substance
satisfactory to Lender:
(a) the Note;
(b) a duly executed counterpart of the Deed of Trust;
(c) copies, certified by the Secretary of Winners of
resolutions of the board of Directors of Winners authorizing the
execution, delivery and performance by Winners of this Agreement
and the transactions contemplated hereby;
(d) certificates of incumbency and signatures of the officers
of Winners authorized to sign this Agreement;
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(e) copies, certified by the Secretary of Borrower, of
resolutions of the Board of Directors of Borrower authorizing the
execution, delivery and performance by Borrower of this Agreement,
the Note, the Deed of Trust, and the Management Agreement and the
transactions contemplated hereby and thereby;
(f) certificates of incumbency and signatures of the officer
of Borrower authorized to sign this Agreement, the Note, the Deed
of Trust, and the Management Agreement;
(g) evidence of the filing of financing statements under the
Uniform Commercial Code with respect to the Deed of Trust and the
Collateral duly completed and executed by Borrower;
(h) an opinion of Xxxxxxx & Xxxxx, counsel to Winners and
Borrower in form and substance satisfactory to Lender with respect
to such matters as are reasonably requested by Lender;
(i) all required approvals, if any, from the West Virginia
Lottery Commission to make the Loans and obtain a first priority
security interest in the Collateral;
(j) title insurance on the Properties satisfactory to it; and
(k) such other instruments and documents with respect to
Borrower as Lender may reasonably request.
ARTICLE VII.
Events of Default
7.1 Events of Default. Upon the occurrence of any of the
following events ("Events of Default");
(i) Borrower shall fail to pay any principal of or interest
on the Loan on the date that any such amount becomes due in accordance with
the terms hereof; or
(ii) The Borrower or Winners shall fail to perform or comply
with any covenant or agreement to be observed or performed by it under this
Agreement (other than those covered by clause (i) above and except the
covenant contained in Section 2.4(b) or the second sentence of Section
2.4(a)) and such failure shall continue unremedied for a period of ten days
after written notice thereof shall have been given by Lender to Borrower; or
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(iii) There shall occur an Event of Default (as defined in
the Deed of Trust) under the Deed of Trust; or
(iv) There shall occur a default by Borrower under the
Management Agreement; or
(v) Any representation or warranty made by Borrower and/or
Winners in this Agreement, the Deed of Trust, or the Management Agreement or
which is contained in any certificate, document or financial or other
statement furnished at any time by Borrower and/or Winners under this
Agreement, the Deed of Trust or the Management Agreement shall prove to have
been incorrect in any material respect on or as of the date made or deemed
made; or
(vi) one or more final judgments for the payment of money in
excess in the aggregate of $500,000 shall be rendered against Borrower or any
of its subsidiaries and the same shall remain undischarged for a period of
sixty (60) days during which execution of such judgment shall not be
effectively stayed; or
(vii) Any breach or default shall occur under any other
agreement involving the borrowing of money under which Borrower or any of its
subsidiaries may be obligated as borrower or guarantor; or
(viii) (a) Winners or Borrower or any of their subsidiaries
shall commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction relating to bankruptcy, insolvency,
reorganization or relief or debtors seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other similar relief with respect to
it or its debts or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or Winners or any of its subsidiaries shall make a general assignment
for the benefit of its creditors; or (b) there shall be commenced against
Winners or Borrower or any of their subsidiaries any case, proceeding or
other action of a nature referred to in clause (a) above which (A) results in
the entry of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of 60 days or
(c) Winners or Borrower or any of their subsidiaries shall admit in writing
its inability to pay its debts as they become due;
then, (w) upon the occurrence of any such event specified in paragraphs (i)-
(vii) above, Lender may, by notice to Borrower suspend or terminate its
commitment to make Loans hereunder and/or, declare the Loans and all other
amounts owing under this Agreement, the Note and the Deed of Trust to be
immediately due and payable, whereupon they shall immediately become due and
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payable without presentment, demand, protest or any other notice of any kind
all of which are hereby expressly waived, (x) upon the occurrence of any such
event specified in paragraph (viii) above, lender shall have no further
obligation to make Loans hereunder and the Loans and all other amounts owning
under this Agreement, the Note and the Deed of Trust shall immediately become
due and payable without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived, (y) in the case of either
clause (w) or (x), proceed, by appropriate court action either at law or in
equity to enforce performance by Winners and/or Borrower of the applicable
covenants and agreements contained in this Agreement and/or the Deed of Trust
or to recover damages for breach thereof, and (z) in the case of either
clause (w) or (x), exercise any other right, power, privilege or remedy
provided by law or in this Agreement or the Deed of Trust.
7.2 Waivers. Lender may, at its election, waive any Event of
Default and its consequences by notice to Borrower to that effect, and
thereupon the respective rights of the parties shall be as they would have
been if no such Event of Default had occurred and no such notice had been
given. Notwithstanding the provisions of this Section, it is expressly
understood and agreed by Borrower that no such waiver, rescission or
annulment shall extend to or affect any other or subsequent Event of Default
or impair any rights, powers or privileges consequent thereon.
ARTICLE VIII.
Miscellaneous
8.1 Amendments and Waivers. Neither this Agreement, the Note, nor
any terms hereof or thereof may be changed, waived, discharged or terminated
without the prior written consent of the party against whom enforcement is
sought.
8.2 Expenses. Borrower shall promptly upon the receipt of
evidence thereof pay to Lender (i) all reasonable out-of-pocket expenses of
Lender and Gamma, including reasonable fees and disbursements of counsel in
connection with this Agreement, the Note, the Deed of Trust and the
transactions contemplated hereby and thereby, including fees, and expenses
incurred in connection with any waiver or consent under such agreements or
any amendment thereof and (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by Lender and Gamma, including reasonable
fees and disbursements of counsel, in connection with such Event of Default
and collection and other enforcement proceedings resulting therefrom.
Borrower shall indemnify Lender against any taxes, assessments or charges
made by any governmental authority by reason of the execution, delivery and
performance of this Agreement, the Note or the Deed of Trust.
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8.3 Headings. The section headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
8.4 Notices. All notices or other communications required or
permitted hereunder shall be given in writing and shall be deemed sufficient
if (i) delivered by hand or mailed by registered or certified mail, postage
prepaid (return receipt requested), or (ii) delivered or sent by facsimile as
follows:
If to Borrower:
c/o Winners Entertainment, Inc.
00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxx Xxxx Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
If to Lender:
c/o The Xxxxxxx Funding Group
0 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
With a copy to:
Gamma International, Ltd.
Suite 300
Bayport One
Yacht Club Drive
West Atlantic City, New Jersey 08232
Attention: President
Telecopy No: (000) 000-0000
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been
given as of the date so delivered or three days after the date so mailed;
provided, however, that any notice or communication changing any of the
addresses set forth above shall be effective and deemed given only upon its
receipt. Any notice, demand or other communication sent by facsimile shall
be deemed given upon receipt in a legible form by the party being served,
provided that the sending party shall, immediately prior to providing such
notice by facsimile, notify the intended recipient by telephone that such
notice is being provided by facsimile.
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8.5 Assignment; No Third Party Beneficiary. This Agreement shall
be binding upon and inure to the benefit solely of the parties hereto and
their permitted assigns and no other person shall be entitled to any rights
or benefits hereunder. This Agreement may not be assigned by any party
without the prior written consent of the other parties hereto; provided,
however, that Lender may assign its rights hereunder (except insofar as it
related to Winners Common Stock) but not its obligations hereunder without
the prior written consent of Borrower. Nothing expressed or implied in this
Agreement is intended to or shall be construed to confer upon or give to any
person other than the parties hereto and their successors or permitted
assigns any rights or remedies under or by reason of this Agreement.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts and shall become effective when executed by all of the parties
hereto, notwithstanding the fact that all of them may not have executed the
same counterpart.
8.7 Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.
8.8 APPLICABLE LAW AND JURISDICTION. THE VALIDITY OF THIS
AGREEMENT AND THE NOTE, THEIR CONSTRUCTION, INTERPRETATION AND ENFORCEMENT,
AND THE RIGHTS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE DETERMINED
UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WIT THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF. EACH PARTY HERETO AGREES THAT ANY SUIT, ACTION OR OTHER PROCEEDING
ARISING OUT OF THIS AGREEMENT OR THE NOTE SHALL BE BROUGHT AND LITIGATED ONLY
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK (IF
SUCH COURT WILL ACCEPT JURISDICTION AND, IF NOT, XXX XXXXXX XX XXX XXXXX XX
XXX XXXX LOCATED IN THE COUNTY OF ONONDAGA, STATE OF NEW YORK) AND EACH PARTY
HERETO HEREBY IRREVOCABLY CONSENTS TO PERSONAL JURISDICTION AND VENUE IN ANY
SUCH COURT AND HEREBY WAIVES ANY CLAIM IT MAY HAVE THAT SUCH COURT IS AN
INCONVENIENT FORUM FOR THE PURPOSES OF ANY SUCH SUIT, ACTION OR OTHER
PROCEEDING. EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS OF SUCH PARTY SPECIFIED IN
SECTION 8.4 OF THIS AGREEMENT.
8.9 Limitation. Anything herein or in the Note to the contrary
notwithstanding, no provision of this Agreement or the Note shall require the
payment, or permit the collection, of interest to the extent that receipt of
such payment by Lender would be contrary to the provisions of any applicable
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law limiting the maximum rate of interest or the fees that may be charged or
collected by Lender.
8.10 WAIVER OF CONSEQUENTIAL AND OTHER DAMAGES AND TRIAL BY JURY.
EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO
THE EXTENT PERMITTED BY APPLICABLE LAW) (i) ANY RIGHT TO OR CLAIM OF ANY
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES AND (ii) ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT, THE NOTE OR ANY OTHER AGREEMENT OR DOCUMENT REFERRED TO HEREIN OR
THEREIN AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE
SITTING WITHOUT A JURY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
XXXXXXX MANAGEMENT & DEVELOPMENT CORP.
By: /s/ E.T. "Bud" Xxxxxxx
--------------------------------------
Name: E.T. "Bud" Xxxxxxx
Title: CEO
MOUNTAINEER PARK, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Secretary and Co-Chairman
WINNERS ENTERTAINMENT, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
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Exhibit A
The following table indicates the date on which the indicated
amounts will become available for borrowing:
Commencing on June 28, 1994 $2.2 Million
Commencing on August 1, 1994 $2.0 Million
Commencing on September 1, 1994 $1.5 Million
Commencing on October 1, 1994 $1.5 Million
Commencing on November 1, 1994 $1.5 Million
Commencing on December 1, 1994 $1.5 Million
Exhibit B
NOTE
$10,200,000 June 27, 1994
FOR VALUE RECEIVED, MOUNTAINEER PARK, INC., a West Virginia
corporation (the "Company"), hereby promises to pay, on July 1, 1998, to the
order of Xxxxxxx Development & Management Corp. (the "Lender"), at the
principal office of the Lender in Syracuse, New York, the principal sum of
the lesser of TEN MILLION, TWO HUNDRED THOUSAND DOLLARS ($10,200,000) or the
aggregate unpaid principal amount of the Loans made by the Lender to the
Company pursuant to the Loan Agreement referred to below, which amount shall
be indicated from time to time on the table attached hereto (provided, that
no failure to make such a notation shall affect the obligations of the
Company to repay its Loans outstanding from time to time made under the Loan
Agreement), in lawful money of the United States, and to pay interest on the
unpaid principal amount of the Loans from the date hereof, in like money and
funds in accordance with the terms of the Loan Agreement.
This Note is the Note referred to in the Construction Loan
Agreement, dated as of June 27, 1994, among the Lender, the Company and
Winners Entertainment, Inc. (together with all extensions, renewals,
amendments, substitutions or replacements (the "Loan Agreement")), and is
entitled to the security and benefits therein provided and provided in the
Credit Line Deed of Trust dated as of June 27, 1994 between the Company, and
Xxxxx X. Xxxxxxxxxx, XX, and Xxxxx X. Xxxxxxxxxxx, as Trustees.
All of the terms, conditions, covenants, representations and
warranties of the Loan Agreement are incorporated herein by reference as if
the same were fully set forth herein, including, but not limited to, the
provisions thereof relating to the repayment of, prepayment of, and the
acceleration of the maturity of, the indebtedness evidenced by this Note. All
terms used herein as defined terms which are not defined herein but are
defined in the Loan Agreement shall have the respective meanings herein as
are given them in the Loan Agreement.
Upon the occurrence of an Event of Default specified in the Loan
Agreement, the principal of the Loans and accrued interest thereon may be
declared to be and shall thereupon become, or may automatically become,
forthwith due and payable, as provided in the Loan Agreement.
This Note shall be governed by and construed in accordance with the
laws of the State of New York without regard to the principles thereof
regarding conflicts of laws.
MOUNTAINEER PARK, INC.
By: _____________________________________
Title:
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NOTE
Principal Principal
Date of Amount Amount Repaid Balance
Transaction Loaned or Prepaid Outstanding Entered By
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