AMENDMENT NO. 3 TO AND CONSENT AND WAIVER UNDER
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO AND CONSENT AND WAIVER UNDER SECOND
AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment No. 3") is made this 13th
day of December, 1999 by and among PENN NATIONAL GAMING, INC., a Pennsylvania
corporation ("Borrower"); FIRST UNION NATIONAL BANK, a national banking
association (for itself and in its capacity as agent hereunder, "Agent"); and
the banks signatory to this Amendment No. 3 (together with the Agent, each
individually a "Bank" and individually and collectively, the "Banks").
BACKGROUND
Borrower and Banks entered into a Second Amended and Restated
Credit Agreement dated January 28, 1999, as amended by Amendment No. 1 to Second
Amended and Restated Credit Agreement and Joinder of Subsidiary Guarantor dated
July 22, 1999 and Amendment No. 2 to and Consent under Second Amended and
Restated Credit Agreement dated July 29, 1999 (as amended hereby and as may be
further amended from time to time, the "Credit Agreement") for the purposes of
providing a revolving credit facility, for the financing of a loan from Borrower
to FR Park Racing L.P., the refinancing of certain existing indebtedness of
Borrower, the issuance of letters of credit for the benefit of Borrower, and for
the working capital needs and general corporate purposes of the Borrower.
Borrower has informed Agent and Banks of the intent
of Penn National Gaming of West Virginia, Inc.
("PNGWV"), a subsidiary of Borrower, to enter into a three year senior secured
multiple draw term credit facility (the "Bank of America Facility") in the
original principal amount of $20,000,000 with Bank of America, N.A., as
Administrative Agent ("BA"), and lenders to be determined. The Bank of America
Facility will be used solely to finance or refinance the purchase by Borrower
and/or PNGWV of gaming equipment through: (i) the refinancing of the Term Loan
under the Credit Agreement and (ii) the payment of the purchase price for
additional gaming equipment and gaming-related fixtures and furniture for use at
the Charles Town Race Track, together with related construction and
improvements. The obligations of PNGWV under the Bank of America Facility will
be: (i) guaranteed by the Borrower, under a guaranty of payment in favor of BA,
for the benefit of lenders under the Bank of America Facility (the "Bank of
America Guaranty") and (ii) secured by a grant to BA, for the benefit of all
lenders under the Bank of America Facility of: (A) a first priority security
interest in all gaming equipment and gaming-related fixtures and furniture
located at the Charles Town Race Track, including without limitation the Charles
Town Video Lottery Terminals (the "West Virginia Assets"), and (B) a pledge of
PNGWV's lessor interest under the operating lease (the "West Virginia Lease") of
such gaming equipment to the Charles Town Joint Venture,
For approximately $200,000,000 Borrower, through a Mississippi
subsidiary, will acquire the operating assets and operations of Casino Magic Bay
St. Louis and Boomtown Casino in Biloxi. The price is subject to adjustment. The
assets include approximately 590 acres of land in Bay St. Louis, Mississippi.
Contained thereon is a casino, 200 room hotel, 18 hole golf course, river park
and marina. Boomtown is a leasehold interest improved with approximately 33,000
square feet of casino space, a theatre, restaurants and other amenities. These
facilities are currently licensed and operated by Hollywood Park, Inc. Borrower
will pay a $5,000,000 deposit for such transaction (collectively the "Hollywood
Park Transaction").
Borrower and Banks have agreed to make certain amendments to
the Credit Agreement, and Banks have agreed to permit Borrower to enter into the
Bank of America Facility, all as set forth herein and subject to the terms and
conditions hereof.
In consideration of the foregoing and the premises and the
agreements hereinafter set forth, and intending to be legally bound hereby, the
parties hereto agree as follows:
Definitions
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General Rule. Unless otherwise defined herein, terms used herein which are
defined in the Credit ------------ Agreement shall have the meanings assigned to
them in the Credit Agreement.
Additional Definitions. The following definitions are hereby added to
Section 10 of the Credit ---------------------- Agreement to read in their
entirety as follows:
"Amendment No. 3" means the Amendment No. 3 to and Consent and Waiver under
Second Amended and --------------- Restated Credit Agreement by and among
Borrowers and Banks dated December 13, 1999.
"Amendment No. 3 Effective Date" means the date on which the conditions set
forth in Paragraph 5 ------------------------------ of Amendment No. 3 have been
satisfied.
"Bank of America Security Agreement" means the
Security Agreement dated the date hereof by Penn National
Gaming of West Virginia, Inc. in favor of Bank of America,
N.A, as administrative agent for the benefit of the lenders
under the Bank of America Term Loan Agreement.
"Bank of America Term Loan Agreement" means the
Senior Secured Multiple Draw Term Loan Agreement dated the
date hereof by and among Penn National Gaming of West
Virginia, Inc., as borrower; Borrower, as guarantor; the
lenders referred to therein and Bank of America, N.A, as
administrative agent.
"Hollywood Park Transaction" shall have the meaning set forth
- -------------------------- in the recitals of Amendment No. 3.
Amended Definition. The following definition found in Section 10 of the
Credit Agreement is hereby amended ------------------ and restated in its
entirety
"Asset Sale" shall mean any sale, transfer or other
disposition by the Borrower or any Credit Party to any Person
(including by-way-of redemption of such Person) other than to
the Borrower or a Wholly-Owned Subsidiary of the Borrower of
any asset (including, without limitation, any capital stock or
other securities of, or equity interests in, another Person)
if: (i) such asset constitutes Collateral under (and as
defined in) the Security Agreement or Collateral under (and as
defined in) the Pledge Agreement and (ii) such asset does not
constitute Collateral under the Bank of America Security
Agreement. The term "Asset Sale" shall not include sales of
assets permitted pursuant to Sections 8.02(v) (sales of
inventory in the ordinary course), (vi) (sales of obsolete
items), (vii) (certain leases) or (viii) (certain licenses)
hereof.
. Acknowledgment by Banks. On the Amendment No. 3 Effective Date, Banks
acknowledge:
-----------------------
That the $5,000,000 deposit required under the Hollywood Park Transaction
to be paid on or before December 15, 1999 may be borrowed under the Revolving
Loans Commitment.
That the Borrowers may sell the Premises (as defined in the Agreement of
Sale for Real Estate dated September 20, 1999 by and between The Downs Racing,
Inc. and Chester M. Burns, Trustee for Chester E. Burns Trust, the "Burns
Agreement") as provided in the Burns Agreement for $154,000, and further that no
mandatory prepayment under the Credit Agreement shall be required in connection
with such Transaction.
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Consents, Waivers and Amendments.
--------------------------------
The security PNGWV will grant to BA to
secure the Bank of America Facility on the West Virginia
Assets will include a Lien on assets with a value exceeding $250,000, and
because such security extends beyond a Lien on the West Virginia Assets to
include an assignment of PNGWV's rights under the West Virginia Lease, BA's Lien
on the West Virginia Assets is not permitted by the exception set forth in
Section 8.01(viii) of the Credit Agreement and is not otherwise permitted by the
Credit Agreement. Banks hereby consent to PNGWV's grant of a security interest
to BA in the West Virginia Assets.
BA's Lien on the West Virginia Assets is not permitted by the exception set
forth in Section 8.01(viii) of the Credit Agreement, and therefore, by
cross-reference, the West Virginia Indebtedness is not purchase money
indebtedness permitted by Section 8.04(iv) of the Credit Agreement. Banks hereby
consent to the Borrower's incurrence of the West Virginia Indebtedness.
The security PNGWV will grant to BA for the
West Virginia Assets (including without limitation the
Charles Town Video Lottery Terminals) is broader than a Lien on the West
Virginia Assets and includes, inter alia, an assignment of PNGWV's rights under
the West Virginia Lease, BA's Lien on the Charles Town Video Lottery Terminals
is not permitted by the exceptions set forth in Section 8.01(xiv) of the Credit
Agreement and is not otherwise permitted by the Credit Agreement. Banks hereby
consent to Borrower's grant of a Lien and negative pledge to BA on the Charles
Town Video Lottery Terminals to the extent set forth in the documents evidencing
the Bank of America Facility as in effect on the date of this Amendment No. 3.
PNGWV's pledge to BA of its lessor interest under the West Virginia Lease
is not permitted due to Section 8.01 of the Credit Agreement. Banks hereby
consent to PNGWV's pledge of its rights under the West Virginia Lease to BA.
The sale of the Charles Town Video Lottery
Terminals must be in compliance with Sections 8.02 and
8.06 of the Credit Agreement. Banks hereby consent to the Borrower's sale of the
Charles Town Video Lottery Terminals to PNGWV free and clear of any liens;
provided, however, that Borrower complies with the provisions of Sections
8.02(x) and (y) of the Credit Agreement and Section 8.06 of the Credit
Agreement.
. Sections 8.04 and 8.16 of the Credit Agreement prohibit the Borrower from
entering into the Bank of America Guaranty. Banks hereby consent to Borrower's
entering into the Bank of America Guaranty.
Banks hereby waive any mandatory prepayment which may be due to Banks under
Sections 3.03(b) or (c) of the Credit Agreement in connection with Borrower's
entering into the Bank of America Facility or the West Virginia Lease or the
Borrower's sale of the Charles Town Video Lottery Terminals to PNGWV,
respectively.
Section 8.07 of the Credit Agreement (Leases) is hereby amended so that the
final word in the section is "$1,600,000" instead of "$1,400,000."
Section 8.08 of the Credit Agreement (Capital Expenditures) is hereby
amended so that the penultimate word in clause (a)(x) is "$10,000,000" and not
"$9,000,000"; and pursuant to clause (a)(y) of Section 8.08 of the Credit
Agreement, the Required Banks hereby approve $17,000,000 as permitted Capital
Expenditures for the fiscal year 2000.
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a. The Banks hereby acknowledge that borrowings under the Revolving Credit
Commitment may be used by the Borrowers to finance deposits for acquisitions of
assets.
1. Representations and Warranties. Borrowers hereby represent and warrant
to Banks as follows: ------------------------------
a. Representations. The representations and warranties set forth in Section
6 of the Credit --------------- Agreement are true and correct in all material
respects as of the date hereof; there is no Event of Default or Default under
the Credit Agreement, as amended hereby; and there has been no material adverse
change in the financial condition or business of Borrower or any Subsidiary from
the date on which Borrower last delivered financial statements to Banks.
b. Power and Authority. Borrower and each Subsidiary has the power and
authority under the laws of
-------------------
each of their states of incorporation or formation and under their articles or
certificates of incorporation and bylaws or other formation documents or other
formation documents to enter into and perform this Amendment No. 3 and the other
documents and agreements required hereunder (collectively, the "Amendment
Documents"); all actions (corporate or otherwise) necessary or appropriate for
the execution and performance by Borrower and each Subsidiary of the Amendment
Documents have been taken; and the Amendment Documents and the Credit Agreement,
as amended, each constitute the valid and binding obligations of Borrower and
each Subsidiary, enforceable in accordance with their respective terms.
c. No Violations of Law or Agreements. The making and performance of the
Amendment Documents by ---------------------------------- Borrower and each
Subsidiary will not (i) violate any provisions of any law or regulation,
federal, state or local, or the articles or certificates of incorporation or
bylaws or other formation documents of any Borrower or Subsidiary or (ii) result
in any breach or violation of, or constitute a default or require the obtaining
of any consent under, any agreement or instrument by which any Borrower or
Subsidiary or its property may be bound.
2. Conditions to Effectiveness of Amendment. This
Amendment No. 3 shall be effective upon Agent's receipt of
----------------------------------------
the following, each in form and substance satisfactory to Agent:
a. Amendment No. 3. This Amendment No. 3
duly executed by Borrower, Agent, Banks and Subsidiary
---------------
Guarantors.
b. Bank of America Facility; Security Documents.
(i) An executed copy of the Bank of America
--------------------------------------------
Facility; (ii) an executed copy of the security agreement to be entered into by
PNGWV in favor of BA (the "BA Security Agreement"); and (iii) copies of all
UCC-1 financing statements to be filed by BA to perfect the security interest
granted to it under the BA Security Agreement.
c. Opinion Letter. An opinion letter from
counsel to Borrower, which may be addressed to BA, but on
--------------
which Agent and Banks may rely, which includes an opinion, in form and substance
satisfactory to Agent, that the terms of the Bank of America Facility do not
conflict with, or constitute a default under, the Senior Note Indenture, the
Senior Notes, or any document in connection therewith.
d. Payoff of Term Loan. Payment in full of
the Obligations outstanding under the Term Loan pursuant
-------------------
to the payoff letter dated December 10, 1999 from the Agent to the Borrower (the
"Payoff Letter").
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e. Waiver Fee. Payment of a waiver fee for
the benefit of Banks of one-eighth of one percent (1/8%)
----------
of each Bank's Commitment, to be shared between the Banks on a pro rata basis.
f. Other Documents. Such additional documents
as Agent may reasonably request.
---------------
3. Limited Release of Banks' and First Union's Security
Interest. Upon the effectiveness of this Amendment and the receipt by the Agent
of all amounts due pursuant to the Payoff Letter: (i) First Union will release,
relinquish and no longer claim to hold a security interest in or a lien on the
Charles Town Video Lottery Terminals and all of the Security Agreement Term Loan
Collateral; (ii) Agent and Banks will release, relinquish and not claim to hold
a security interest in or a lien on any of the West Virginia Assets and (iii)
Agent and First Union will deliver all documents reasonably requested by BA to
evidence the payoff of the Term Loan and the release of First Union's security
interest in the Charles Town Video Lottery Terminals, the other Security
Agreement Term Loan Collateral, and the West Virginia Assets, which includes
without limitation the equipment listed on Schedules 1.1 and 1.2 attached
hereto.
4. Affirmations. Borrower hereby: (i) affirms all the
provisions of the Credit Agreement, Security Agreement,
------------
Pledge Agreement and Contribution and Indemnification Agreement, as amended
or modified by this Amendment No. 3 (including without limitation Paragraph 6
hereof), and (ii) agrees that the terms and conditions of the Credit Agreement,
Security Agreement, Pledge Agreement and Contribution and Indemnification
Agreement shall continue in full force and effect as modified, supplemented or
amended by this Amendment No. 3 (including without limitation Paragraph 6
hereof).
5. Miscellaneous.
-------------
a. Borrower agrees to pay or reimburse Agent for all reasonable fees and
expenses (including without limitation reasonable fees and expenses of counsel)
incurred by Agent in connection with the preparation, execution and delivery of
this Amendment No. 3.
b. This Amendment No. 3 shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
c. All terms and provisions of this Amendment No. 3 shall be for the
benefit of and be binding upon and enforceable by the respective successors and
assigns of the parties hereto.
d. This Amendment No. 3 may be executed in any number of counterparts with
the same effect as if all the signatures on such counterparts appeared on one
document and each such counterpart shall be deemed an original.
e. Except as expressly set forth herein, neither the execution, delivery
and performance of this Amendment No. 3, any of the Banks' consents or waivers
set forth herein, nor anything contained herein shall be construed as or shall
operate as a consent to or waiver of any further provision of, or any right,
power or remedy of Banks under the Credit
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Agreement and the agreements and documents executed in connection therewith. The
consents and waivers granted hereby are limited to the matters set forth herein.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment No. 3 the day and year first above written.
PENN NATIONAL GAMING, INC.
By: _/s/Robert S. Ippolito______________________
Name: Robert S. Ippolito
Title: Chief Financial Officer
FIRST UNION NATIONAL BANK, as Agent
By: _/s/Lynn b. Eagleson__________________________
Name: Lynn B. Eagleson
Title: Vice President
SUMMIT BANK
By: _/s/Scott A. Wickel_________________________
Name: Scott A. Wickel
Title: Regional Vice President
Accepted and Agreed:
- -------------------
MOUNTAINVIEW THOROUGHBRED
RACING ASSOCIATION, as a Subsidiary
Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary/Treasurer
[EXECUTIONS CONTINUED]
194
PENNSYLVANIA NATIONAL TURF
CLUB, INC., as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
PENN NATIONAL SPEEDWAY,
INC., as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
STERLING AVIATION, INC.,
as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
PENN NATIONAL HOLDING
COMPANY, as a Subsidiary
Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
PENN NATIONAL GAMING OF WEST
VIRGINIA, INC., as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
[EXECUTIONS CONTINUED]
195
PNGI POCONO, INC.,
as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary/Treasurer
TENNESSEE DOWNS, INC.,
as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
THE DOWNS RACING, INC.,
as a Subsidiary Guarantor
By: /s/Joseph A. Lashinger_______________________
Name: Joseph A. Lashinger
Title:
NORTHEAST CONCESSIONS, INC.,
as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
BACKSIDE, INC.,
as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
[EXECUTIONS CONTINUED]
196
MILL CREEK LAND, INC.,
as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Assistant Secretary
WILKES BARRE DOWNS, INC.,
as a Subsidiary Guarantor
By: /s/ Robert E. Abraham_______________________
Name: Robert E. Abraham
Title: President
PENN NATIONAL GSFR, INC.,
as a Subsidiary Guarantor
By: _/s/Robert S. Ippolito__________________________
Name: Robert S. Ippolito
Title: Secretary
197