THE TRANSFER OF THIS NOTE IS RESTRICTED - SEE SECTION 12 HEREOF
SENIOR PROMISSORY NOTE
$350,000.00 JUNE 11, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
1. AGREEMENT TO PAY. FOR VALUE RECEIVED, the receipt of which is hereby
acknowledged, the undersigned, TRANS WORLD GAMING CORP., a Nevada Corporation
(hereinafter referred to as the "Maker"), promises to pay to the order of VALUE
PARTNERS, LTD., a Texas limited partnership, (hereinafter referred to as the
"Payee", and Payee and each successive owner and holder of this Note being
hereinafter generally referred to as the "Holder") in the manner provided for
herein of the principal sum of
THREE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($350,000.00)
together with interest on the outstanding principal balance hereof remaining
from time to time unpaid at the rate provided in Section 2 hereof.
2. INTEREST RATE.
(a) The outstanding principal balance hereof shall bear simple interest at
the rate of the lesser of seventeen percent per annum ( 17%) or the Highest
Lawful Rate, as defined herein (the "Regular Rate"), computed daily on the
basis of a 360 day year consisting of twelve 30-day months for each day all or
any part of the principal balance hereof shall remain outstanding, but to the
extent such computation of interest might cause the rate of interest which this
Note bears to exceed the Highest Lawful Rate, such interest shall be computed on
the basis of a three hundred sixty-five (365) day or a three hundred sixty-six
(366) day year, as the case may be.
(b) "HIGHEST LAWFUL RATE" shall mean at the particular time in question
the maximum rate of interest which, under Applicable Law, Payee is then
permitted to charge Maker on this Note. "Applicable Law" shall mean (i) the
laws of the United States of America applicable to contracts made or performed
in the State of Texas, now or at any time hereafter prescribing maximum rates of
interest or eliminating maximum rates of interest on loans and extensions of
credit, (ii) the laws of the State of Texas including, without limitation,
Article 5069-1.04 of the Texas Revised Civil Statutes Annotated, as the same may
be amended from time to time ("Article 1.04"), now or at any time hereafter
prescribing or eliminating maximum rates of interest on loans and extensions of
credit and (iii) any other laws at any time applicable to contracts made or
performed in the State of Texas which permit a higher interest rate ceiling
hereunder. If the maximum rate of interest which, under Applicable Law, Payee
is permitted to charge Maker on this Note shall change after the date hereof,
the Highest
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SENIOR PROMISSORY NOTE, PAGE 1
Lawful Rate shall be automatically increased or decreased, as the case may be,
from time to time as the effective date of each change in the Highest Lawful
Rate without notice to Maker. For purposes of determining the Highest Lawful
Rate under the Applicable Law of the State of Texas, the applicable rate ceiling
shall be the indicated rate ceiling described in and computed in accordance with
the provisions of section (a)(1) of Article 1.04; provided, however, that in
determining the Highest Lawful Rate, all fees and other charges contracted for,
charged or received by Payee in connection with the loan evidenced by this Note
which are either deemed interest under Applicable Law or required under
Applicable Law to be deducted from the principal balance hereof to determine the
rate of interest charged by this Note shall be taken into account. To the
extent permitted by Applicable Law, Payee may from time to time substitute for
the "indicated rate ceiling" referred to above any ceiling under Article 1.04 or
any other statute and revise the rate, index, formula or provision of law used
to compute the rate hereunder as provided therein.
(c) All agreements between Maker and Payee, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the Final Maturity
Date or otherwise, shall the interest contracted for, charged, received, paid or
agreed to be paid to Payee exceed the maximum amount permissible under
Applicable Law. If, from any circumstance whatsoever, interest would otherwise
be payable to Payee in excess of the maximum amount permissible under the
Applicable Law, the interest payable to Payee shall be reduced to the maximum
amount permissible under the Applicable Law, and if from any circumstance Payee
shall ever receive anything of value deemed interest by the Applicable Law in
excess of the maximum amount permissible under the Applicable Law, an amount
equal to the excessive interest shall be applied to the reduction of the
principal hereof and not to the payment of interest, or if such excessive amount
of interest exceeds the unpaid balance of principal hereof, such excess shall be
refunded to Maker. All interest paid or agreed to be paid to Payee shall, to
the extent permitted by the Applicable Law, be amortized, prorated, allocated
and spread throughout the full period (including any renewal or extension) until
payment in full of the principal, so that the interest hereon for such full
period shall not exceed the maximum amount permissible under the Applicable Law.
Payee expressly disavows any intent to contract for, charge or receive interest
in an amount which exceeds the maximum amount permissible under the Applicable
Law. This paragraph shall control all agreements between Maker and Payee.
3. LOAN AGREEMENT. Maker shall, upon execution of this Note, execute and cause
to be delivered to Bergman, Yonks, ▇▇▇▇▇ & Bird, L.L.P., to the benefit of
Payee, that certain Loan Agreement.
4. PAYMENTS.
(a) PAYMENT SCHEDULE. Maker shall, until all obligations under the terms of
this Note are satisfied, on or before the 10th calendar day following each three
(3) calendar month period, pay or cause to be paid the lesser of (i) the unpaid
accrued interest, unpaid principal and other sums due Holder under the terms
hereof, or (ii) the sum equal to forty percent (40%) of all
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SENIOR PROMISSORY NOTE, PAGE 2
cash received during that prior three (3) month period, if any, by it or its
wholly owned subsidiary, Tottenham & Co., dba ART Marketing Ltd. (the
"Subsidiary") for services rendered by Maker or the Subsidiary as to the Boxer
Casino located in the city of Gyandja (Azerbaijon Republic), including pursuant
to that Joint Activity Agreement dated March 31, 1997 by and between Subsidiary
and Mahmud Audiyev. The payment shall be applied first to unpaid fees and
expenses of Payee arising in relation to this Note, next to unpaid interest, and
then to unpaid principal. All accrued unpaid interest and unpaid principal
together with any unpaid fees and expenses owing Holder under the terms hereof
shall be due and payable June 11, 1998 ("Final Maturity Date"). The obligation
to pay this Note is a general unsecured obligation of the Maker and is not
limited to proceeds received from the operation of the Boxer Casino. However,
if the sum described in Section 4(a)(ii) is zero or a negative number, no
payment to the Payee will be due for such quarterly period. This does not waive
the obligation of Maker as to any other payment due hereunder, specifically
including that due on the Final Maturity Date as set forth herein.
(b) DEBT OFFERING. The Borrower has represented that it is considering the
issuance of debt and equity instruments in the approximate total sum of
$12,000,000, the proceeds of which are to be used in part to acquire an interest
in casinos located in the Czech Republic (the"New Issue"). Should the New Issue
occur, the Final Maturity Date shall become the earlier of June 11, 1998 or ten
(10) days following the receipt by Borrower of $1,000,000 in cash from the New
Issue.
(c) PLACE OF PAYMENT. All payments to be made by Maker to the Payee
hereunder shall be made to the Payee at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, not later than 4:00 p.m. Central Time on the date when due
in lawful money of the United States, and immediately available funds. The
Maker will promptly and punctually pay when due (whether on a scheduled payment
date or at maturity or upon the prepayment of such Note) the principal of and
interest on the Note, without any presentment thereof, directly to Holder of
the Note at the address of such Holder shown in the register maintained by the
Maker for such purposes or at such other address as the Holder may from time to
time designate in writing to the Maker or, if a bank account is designated in
any written notice to Maker from the Holder, the Maker will make such payments
by wire transfer or other immediately available funds to such bank account,
marked for attention as indicated, or in such other manner or to such other
account of the Holder in any bank in the United States as such holder may from
time to time direct in writing.
(d) TRANSFER; PREPAYMENT. The Holder of the Note agrees that in the event it
shall sell or transfer the Note it will, prior to the delivery of the Note, make
a notation thereon of all principal, if any, prepaid on such Note and will also
note thereon the date to which interest has been paid on such Note. Upon
repayment in full of the Note, the Holder of the Note shall deliver such Note to
the Maker for cancellation. Maker shall not be charged a penalty in the event
of prepayment of the Note, to the extent such prepayment is consented to in
writing by the Holder.
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SENIOR PROMISSORY NOTE, PAGE 3
5. AFFIRMATIVE COVENANTS. Maker covenants and agrees that so long as the Note
shall be outstanding:
(a) PRINCIPAL AND INTEREST. Maker will pay or cause to be paid punctually
the principal of and interest on the Note at the times and places and
in the manner specified in the Note.
(b) MAINTENANCE OF EXISTENCE. Maker will at all times do or cause to be
done all things necessary to maintain, preserve and renew its
existence and its rights, patents and franchises.
(c) COMPLIANCE WITH LAWS. Maker will comply in all material respects with
all applicable laws, rules, regulations, and orders of the United
States of America and of all foreign countries and of any state or
municipality, and of any instrumentality or agency of any thereof
(including applicable statutes, regulations, orders and restrictions
relating to equal employment opportunities and environmental standards
or controls) in respect of the conduct of business and the ownership
of property by Maker.
(d) INSURANCE. Maker will maintain adequate insurance with financially
sound and reputable insurance companies in such amounts and covering
such risks as is customarily carried by companies engaged in similar
businesses and similarly situated as Maker. Maker shall notify Holder
of any cancellations or material changes within five (5) business days
of notice of such cancellation or change to the Maker.
(e) TAXES, ASSESSMENTS AND OTHER CHARGES. Maker will pay punctually and
discharge when due and payable: (i) all taxes, assessments and other
governmental charges levied or imposed upon it or upon its income,
profits or properties and (ii) all claims (including, without
limitation, claims for labor, materials, supplies or services) which
might, if unpaid, become a lien upon any property of Maker, except
those which the Maker is disputing in good faith and which dispute is
being prosecuted in good faith, so long as such process does not
endanger the ability of Maker to perform its obligations herein.
(f) INDEBTEDNESS. Maker will pay punctually and discharge when due and
payable any indebtedness heretofore or hereafter incurred or assumed
by it and discharge, perform and observe the covenants, provisions and
conditions to be discharged, performed and observed on the part of
Maker in connection therewith, or in connection with any agreement or
other instrument relating thereto.
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SENIOR PROMISSORY NOTE, PAGE 4
(g) BOOKS. Maker will keep at all times proper books of record and
account in which full, true and correct entries will be made of its
transactions in accordance with Generally Accepted Accounting
Principles.
(h) STATEMENTS, REPORTS AND CERTIFICATES TO BE DELIVERED BY THE MAKER.
From the date hereof and so long as the Holder shall hold the Note,
Maker will deliver to Holder at the address shown in the register
maintained by Maker the following:
(i) QUARTERLY FINANCIAL STATEMENTS. As soon as reasonably possible,
and in any event within 45 days after the close of each of the
first three fiscal quarters of Maker in each fiscal year, (1) the
unaudited balance sheet of the Maker as of the end of such
period, setting forth in comparative form the corresponding
figures for the corresponding quarter of the preceding fiscal
year, and (2) the unaudited statements of income and retained
earnings and cash flows of the Maker for such quarter and for the
portion of the fiscal year ended with such quarter, and setting
forth in comparative form the corresponding figures for the
corresponding periods of the preceding fiscal year, all in
reasonable detail and certified by a principal financial officer
of Maker subject to year-end audit adjustments.
(ii) BOXER CASINO. Not later than the fifteenth (15) day of each
month, an unaudited statement of income and expenses for the
prior month of the Boxer Casino shall be provided to the Holder.
(iii)OTHER REPORTS AND STATEMENTS. Promptly upon the mailing to its
equity holders of each annual report or other report or
communication, a copy of each such report or communication; and
promptly upon any filing by Maker with the Securities and
Exchange Commission, or any governmental agency or agencies
substituted therefor, or with any national securities exchange,
of any annual or periodic or special report or registration
statement, a copy of such report or statement.
(iv) CERTIFICATE OF DEFAULT. Deliver to the Payee, forthwith upon
becoming aware of any default or defaults in the performance of
any covenant, agreement or condition contained in the Note or
Loan Agreement (including notice of any event which with the
giving of notice, lapse of time or both would become an Event of
Default), an Officer's Certificate specifying such default or
event of default.
(v) ADDITIONAL INFORMATION. Such other data and information as from
time to time may be reasonably requested by the Holder.
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SENIOR PROMISSORY NOTE, PAGE 5
(i) OTHER DOCUMENTS. Maker will comply with all other convents,
representations, warranties, terms and obligations of that
certain Loan Agreement.
6. NEGATIVE COVENANTS. Maker covenants and agrees that so long as the Note
shall be outstanding:
(a) GUARANTEES. Maker will not guarantee, directly or indirectly, any
obligation or indebtedness of any other Person, other than any
guarantee made with respect to the contemplated Czech Republic
transaction. "Person" shall include any individual, a corporation, a
partnership, a business entity, or a government, foreign or domestic,
or any agency or political subdivision thereof.
(b) DISTRIBUTIONS. Maker will not declare, pay, or set apart any funds
for the payment of any distribution to any shareholder, make any
distribution in respect of equity interests, or redeem, repurchase, or
effect any other sale or exchange upon any equity interest in Maker.
(c) MERGER AND CONSOLIDATION. Maker will not consolidate with or merge
into any other entity.
(d) DISPOSITION OF ASSETS. Maker will not sell, assign, lease, transfer
or otherwise dispose of all or any portion of its properties or
assets to any third party, in any transaction or series of
transactions.
(e) SENIOR DEBT. Subsequent to the date hereof, Maker will not incur,
create, assume or at any time become liable, contingently or otherwise
for any borrowed or other indebtedness that is senior in right of
payment to the obligations created herein.
7. NEGOTIABILITY; OFFSETS, DEFENSES OR COUNTERCLAIMS. Subject to applicable
law and regulation, including but not limited to Federal and State securities
laws and regulations, this Note is freely negotiable. As of the date hereof,
Maker knows of no defenses, setoffs, or counterclaims existing as of the date
hereof which could be asserted or brought by the Maker or any other party in any
suit or action for the collection of any sum due hereunder.
8. EVENT OF DEFAULT. An Event of Default shall mean the occurrence or
existence of any one or more of the following events: The Maker
a. should fail to pay the principal of, or interest on, this Note as and
when due and payable at the Final Maturity Date, which failure shall
continue for a period of ten (10) days;
b. shall fail to perform or observe any term, covenant, or agreement
contained herein or in the Loan Agreement or any document related
hereto, which failure
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SENIOR PROMISSORY NOTE, PAGE 6
shall continue for a period of ten (10) days after Holder gives Maker
notice of such failure;
c. commences any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect;
d. generally, does not pay, or shall be unable to pay, or shall admit in
writing its inability to pay its debts as such debts become due, which
inability applies only to a cash flow test for insolvency, as opposed
to the balance sheet test for insolvency;
e. makes an assignment for the benefit of creditors, or petitions or
applies to any tribunal for the appointment of a custodian, receiver,
or trustee for it or a substantial part of its assets; or,
f. takes any action indicating its consent to, approval of, or
acquiescence in any such petition, application, proceeding or order
for relief of the appointment of a custodian, receiver, or trustee for
all or any substantial part of its properties.
It is understood and agreed that time is of the essence in the performance
of this Note. If an Event of Default exists, then this Note at the time
outstanding shall immediately become due and payable together with interest
accrued thereon without presentment, demand, protest or notice of any kind,
including notice of intent to accelerate the payment of the unpaid balance of
this Note or of notice of acceleration, all of which are hereby waived by the
Maker. The Holder of this Note may also proceed to protect and enforce its
rights either by suit in equity and/or by action at law, or by other appropriate
proceedings, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Note, or in aid of the
exercise of any power granted in this Note, or may proceed to enforce the
payment of this Note or to enforce any other legal or equitable right of the
holder of this Note.
9. NOTICES. Any request, demand, authorization, direction, notice, consent,
waiver, or other document provided or permitted by this Note to be made upon,
given or furnished to, or filed with the Maker shall be sufficient for every
purpose hereunder if in writing and mailed, registered or certified mail,
postage prepaid, or delivered by facsimile or telecopy to the Maker, addressed
to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telecopier number
▇▇▇-▇▇▇-▇▇▇▇, (or such other address, or telecopier number, as Maker may from
time to time direct). Any notice to Payee shall be sufficiently given if in
writing and mailed, registered or certified mail, postage prepaid, to the
address set forth herein (or such other address as Payee may from time to time
direct). Any notice to a Holder (other than Payee) shall be sufficiently given
if in writing and mailed, registered or certified mail, postage prepaid, to such
address as Holder shall from time to time direct in writing.
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SENIOR PROMISSORY NOTE, PAGE 7
10. CONSENTS, WAIVERS AND MODIFICATIONS. No term, covenant, agreement or
condition of the Note may be amended, supplemented or modified, or compliance
therewith waived (either generally or in a particular instance and either
retroactively or prospectively), except pursuant to a written instrument signed
by the Maker and the Holder. No course of dealing between the Maker and the
Holder of the Note or any delay or failure on the part of the Holder of the Note
in exercising any rights hereunder shall operate as a waiver of any rights of
such holder.
11. GOVERNING LAW. THIS NOTE SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF
TEXAS. WHENEVER POSSIBLE EACH PROVISION OF THIS NOTE SHALL BE INTERPRETED IN
SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW,
SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS NOTE. WHENEVER IN THIS NOTE REFERENCE IS MADE TO
THE PAYEE OR THE MAKER, SUCH REFERENCE SHALL BE DEEMED TO INCLUDE, AS
APPLICABLE, A REFERENCE TO THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. THE
PROVISIONS OF THIS NOTE SHALL BE BINDING UPON AND SHALL INURE TO THE BENEFIT OF
SUCH SUCCESSOR AND ASSIGNS. THE MAKER'S SUCCESSORS AND ASSIGNS SHALL INCLUDE,
WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR IN POSSESSION FOR THE MAKER.
12. SECURITIES LAWS. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS NOTE
THEREFORE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR OTHERWISE
DISTRIBUTED FOR VALUE IN THE ABSENCE OF (i) AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE MAKER THAT SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE OR OTHER
DISTRIBUTION IS EXEMPT FROM (OR NOT OTHERWISE SUBJECT TO) THE REGISTRATION (OR
QUALIFICATION) AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT OR LAWS, OR (ii)
SUCH REGISTRATION OR QUALIFICATION.
13. ATTORNEYS FEES. In the case of a default, the Maker shall pay to the
Holder, to the extent permitted by law, such further amount as shall be
sufficient to cover the cost and expense of collection, including (without
limitation) reasonable attorneys' fees, costs and expenses.
14. WAIVER OF PROTEST. The Maker expressly waives demand, grace, notice of
intent to accelerate, notice of acceleration, presentment for payment, and
protest, and further agrees
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that this Note and the Loan Agreement may be renewed, and the time for payment
extended without notice.
15. SUCCESSORS AND ASSIGNS. All the covenants, stipulations, promises and
agreements in this Note contained by or on behalf of the Maker shall bind its
successors and assigns, whether so expressed or not.
16. HEADINGS. The headings of the Sections of this Note are inserted for
convenience only and shall not be deemed to constitute a part of this Note.
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SENIOR PROMISSORY NOTE, PAGE 9
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed and
delivered as of the date first above written.
TRANS WORLD GAMING CORP.,
A NEVADA CORPORATION
By:
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Its:
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SENIOR PROMISSORY NOTE, PAGE 10
