Exhibit 4.19
ESCROW AGREEMENT
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THIS ESCROW AGREEMENT (this "Agreement"), is entered into as of this 22nd
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day of February, 2002, between GAMECO, INC., a Delaware corporation ("Gameco")
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and WELLS FARGO BANK MINNESOTA, a national banking association (the "Trustee").
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RECITALS
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A. In connection with the execution and delivery of the Indenture, Gameco,
certain subsidiaries of Gameco party thereto and the Trustee entered into that
certain Security Agreement dated as of February 8, 2002 (the "Original Security
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Agreement"), pursuant to which Gameco has, among other things, granted to
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Trustee a security interest in the Pledged Collateral (as defined in the
Original Security Agreement).
B. Contemporaneously with the execution and delivery of this Agreement,
(i) there have occurred the closings under those certain Acquisition Documents
(as defined in the Original Security Agreement) including that certain Agreement
and Plan of Merger dated June 11, 2001, as amended on November 16, 2001, among
Colonial Holdings, Inc., a Virginia corporation (previously known as Colonial
Downs Holdings, Inc.; herein, "Colonial Holdings" refers to both Colonial
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Holdings, Inc. and its predecessor, Colonial Downs Holdings, Inc.), Gameco
Acquisition, Inc., a Virginia corporation and Gameco, pursuant to which Gameco
Acquisition, Inc. has merged with and into Colonial Holdings, Inc. and Gameco
has acquired, by operation of law, all of the assets of Colonial Holdings, Inc.
and (ii) Gameco, certain subsidiaries of Gameco party thereto and the Trustee
are entering into that certain Amendment No. 1 to Security Agreement (the
"First Amendment"; the Original Security Agreement, as amended by the First
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Amendment, and as further amended, amended and restated, supplemented or
otherwise modified from time to time, the "Security Agreement"; capitalized
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terms used but not otherwise defined herein shall have the meanings assigned
thereto in the Security Agreement), pursuant to which Gameco, among other things
has confirmed the attachment of the Lien created by the Security Agreement on
and in respect of the assets acquired by Gameco pursuant to the Acquisition
Documents including, without limitation, all intercompany notes and Supporting
Obligations with respect thereto.
C. In connection with the Merger, the Assignor has become the holder or
beneficiary of (i) an Amended and Restated Term Note dated February 22, 2002, in
the principal amount of $10,000,000 made by Colonial Downs, L.P., a Virginia
limited partnership ("Colonial Downs"), (ii) an Amended and Restated Credit Line
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Note dated February 22, 2002, in the principal amount of $5,700,000 made by
Colonial Holdings (the notes described in clauses (i) and (ii) of this Recital
C, as each may be amended and rested, supplemented or otherwise modified from
time to time, the "Intercompany Notes"), (iii) a Deed of Trust and Security
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Agreement dated as of June 26, 1997 by Colonial Downs and Colonial Holdings in
favor of Lawyers Title Realty Services, Inc., trustee for the benefit of PNC
Bank, National Association, recorded in the Office of the Clerk of the Circuit
Court of the County of New Kent, Virginia (the "Clerk's Office") on July 31,
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1997 in Deed Book 247, page 25, and
assigned to CD Entertainment Ltd. by Certificate of Transfer dated August 30,
2000 and recorded in the Clerk's Office on September 1, 2000, in Deed Book 301,
page 436, as amended by an Amendment to Deed of Trust dated as of February 22,
2002, by and among Colonial Holdings and Colonial Downs in favor of Lawyers
Title Realty Services, Inc., trustee for the benefit of Gameco, Inc., and
further assigned to Assignor by Certificate of Transfer dated February 22, 2002
(the "First Deed of Trust"), and (iv) a Second Deed of Trust dated March 21,
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1997, by Colonial Holdings in favor of David F. Belkowitz and James W. Theobald,
Trustees, for the benefit of CD Entertainment Ltd., recorded in the Clerk's
Office on April 7, 1997 in Deed Book 242, page 277, as amended by an Amendment
to Second Deed of Trust dated as of February 22, 2002, by and among Colonial
Holdings in favor of David F. Belkowitz and James W. Theobald, Trustees, for the
benefit of Gameco, Inc., and further assigned to Assignor by Certificate of
Transfer dated February 22, 2002 (the "Second Deed of Trust"; together with the
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First Deed of Trust, as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Intercompany Deeds of Trust") encumbering
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certain real property commonly known as Colonial Downs Racetrack and more
particularly described on Schedule A annexed hereto; the above-referenced
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Amendments to the First and Second Deeds of Trust and Certificates of Transfer
being recorded as of the date hereof.
D. As additional collateral for the obligations evidenced by the
Intercompany Notes, Gameco has received: (i) an Amended and Restated Loan
Agreement, dated August 30, 2000, among Colonial Downs, Colonial Holdings, and
CD Entertainment Ltd., an Ohio limited liability company ("CD Entertainment"),
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as amended as of February 22, 2002 and transferred to Gameco by CD
Entertainment; (ii) Guaranty Agreement, dated June 26, 1997, from Colonial
Holdings in favor of PNC Bank, National Association, transferred to CD
Entertainment by Assignment dated August 30, 2000, and transferred to Gameco;
(iii) Guaranty Agreement, dated June 26, 1997, from Stansley Racing Corp. in
favor of PNC Bank, National Association, transferred to CD Entertainment by
Assignment dated August 30, 2000, and transferred to Gameco; (iv) Pledge
Agreement, dated as of June 27, 1997, by Colonial Holdings with respect to,
among other things, the limited partnership interest in Colonial Downs and the
stock of Stansley Racing Corp. in favor of PNC Bank, National Association,
transferred to CD Entertainment by Assignment dated August 30, 2000, and
transferred to Gameco; (v) Pledge Agreement, dated as of June 27, 1997, by
Stansley Racing Corp. with respect to, among other things, the general
partnership interest in Colonial Downs in favor of PNC Bank, National
Association, transferred to CD Entertainment by Assignment dated August 30,
2000, and transferred to Gameco; (vi) Hazardous Materials Certificate and
Indemnity Agreement, dated June 27, 1997, by Colonial Holdings and Colonial
Downs in favor of PNC Bank, National Association, transferred to CD
Entertainment by Assignment dated August 30, 2000, and transferred to Gameco;
and (vii) filed UCC-1 financing statements numbered 0000916-0000918 in favor of
PNC Bank, National Association, transferred to CD Entertainment and transferred
to Gameco (collectively, the "Intercompany ------------ Loan Documents," and
together with the Intercompany Notes and the Intercompany -------------- Deeds
of Trust, the "Intercompany Collateral Documents").
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E. Contemporaneously with the execution and delivery of this Agreement,
there is occurring the execution and delivery of a Collateral Assignment of
Deeds of Trust, Assignments of Rents and Leases, Security Agreements, Fixture
Filings and other Loan Documents, dated as of the date hereof, between Gameco
and Trustee (the "Collateral Assignment") pursuant to which the Intercompany
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collateral Documents have been assigned to the Trustee to be held in escrow
pursuant to the terms of this Agreement.
F. In furtherance of the provisions set forth in the Indenture and the
Security Agreement, Gameco and Trustee are entering into this Agreement to
provide for the terms and conditions upon which the Intercompany Collateral
Documents assigned to the Trustee pursuant to the Collateral Assignment are to
be released from escrow.
NOW, THEREFORE, in consideration of the agreements set forth in the
Indenture, the Security Agreement, and the Collateral Assignment and the mutual
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Trustee acknowledges receipt of the Intercompany Collateral Documents.
Trustee agrees to hold the Intercompany Collateral Documents in escrow pursuant
to this Agreement.
2. Gameco hereby irrevocably instructs the Trustee: (i) to hold the
Intercompany Collateral Documents in escrow for the benefit of the Secured
Parties and (ii) to deliver the Intercompany Collateral Documents out of escrow,
record and/or file the Intercompany Collateral Documents and take all other
actions necessary or appropriate to perfect, protect and maintain a first
priority security interest in the Intercompany Collateral Documents and to
enforce and all rights and remedies available under the Intercompany Collateral
Documents, the Security Agreement and/or the Indenture with respect thereto at
such time as an Event of Default has occurred under the Indenture.
3. Trustee acknowledges that:
(a) Notwithstanding Trustee's receipt of the assigned Intercompany
Notes, applicable gaming law restricts Trustee's entitlement to enjoy the
benefits, or exercise any of the rights and remedies, inuring to it as the
holder of the Intercompany Notes unless the assignment pursuant to the
Collateral Assignment is approved by the Virginia Racing Commission (the "VRC");
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and
(b) Notwithstanding the Trustee's receipt of the Intercompany
Mortgages and the Intercompany Loan Documents, applicable gaming law restricts
Trustee's entitlement to (i) perfect, protect or maintain a security interest in
the Intercompany Collateral Documents or to enjoy the benefits inuring to it as
the secured party unless the assignment pursuant to the Collateral Assignment is
approved by the VRC and
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(ii) exercise the remedy of foreclosure or any other remedies unless the
VRC approves the exercise of such remedies.
4. This Agreement shall remain in full force and effect until indefeasible
payment or satisfaction in full of the Secured Obligations.
5. Upon satisfaction of the conditions of Section 11.6 of the Security
Agreement, this Agreement shall terminate and the Trustee shall, upon the
request and at the sole cost and expense of Gameco, return the Collateral
Documents to Gameco and shall execute and deliver to Gameco such instruments or
documents as may be necessary or appropriate to evidence such termination.
6. The Trustee's responsibility and liability under this Agreement shall
be limited as follows:
(a) The Trustee shall have no responsibility or liability under this
Agreement to Gameco or to the Holders of the Notes as a consequence of
performance or non-performance by the Trustee hereunder, except for any
negligence, bad faith or willful misconduct of the Trustee.
(b) In no event shall the Trustee be liable (i) for acting in
accordance with or relying upon any instruction, deemed notice, notice,
demand, certificate or document from Gameco or any entity acting on behalf
of Gameco, or (ii) for any consequential, indirect, punitive or special
damages, except for its own negligence or willful misconduct.
(c) No implied covenants or obligations shall be inferred from this
Agreement against the Trustee, nor shall the Trustee be bound by the
provisions of any agreement beyond the specific terms hereof. Gameco shall
indemnify, hold harmless and defend the Trustee and the Trustee and their
directors, officers, agents, employees and controlling persons, from and
against any and all claims, actions, obligations, liabilities and expenses,
including defense costs, investigative fees and costs, legal fees and
expenses, and claims for damages, arising from the Trustee's performance,
acceptance or administration of its duties under this Agreement, except to
the extent that such liability, expense or claim is directly attributable
to the negligence, bad faith or willful misconduct of any of the foregoing
persons or the Secured Parties.
(d) Upon demand and subject to applicable gaming law, Gameco will
execute and deliver to the Trustee such instruments and documents as are
necessary or advisable to confirm or perfect the rights of the Trustee
under this Agreement and the Trustee's interest in the Collateral. The
Trustee shall be entitled but not obligated to take all necessary action to
preserve and protect the security interest created hereby as a Lien and
encumbrance upon the Collateral. Gameco will pay all costs and expenses
incurred in connection with any of the foregoing.
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(e) Upon an Event of Default and for so long as such Event of Default
continues and subject to applicable gaming law, Gameco hereby appoints the
Trustee as its attorney-in-fact with full power of substitution to do any
act which Gameco is obligated hereunder to do, and the Trustee may, but
shall not be required to, exercise such rights as Gameco might exercise
with respect to the Intercompany Collateral Documents and take any action
in Gameco's name to protect the Trustee's security interest and Lien
granted thereunder. In addition to the rights provided under Section 6(b)
hereof, upon an Event of Default and for so long as such Event of Default
continues and subject to applicable gaming law, the Trustee may, but shall
not be required to exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party under the UCC or other
applicable law, and the Trustee may also upon obtaining possession of the
collateral as set forth in the Intercompany Collateral Documents, without
notice to Gameco except as specified below, sell such collateral or any
part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of the Trustee's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as
the Trustee may deem commercially reasonable. Gameco agrees that, to the
extent notice of sale shall be required by law, at least ten days' notice
to Gameco of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.
The Trustee shall not be obligated to make any sale regardless of notice of
sale having been given. The Trustee may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
The provisions of this Section shall survive any termination, satisfaction
or discharge of this Agreement as well as the resignation or removal of the
Trustee.
7. All notices and other communications required or permitted to be given
or made under this Agreement shall be in writing and shall be deemed
conclusively to have been duly given: (a) on the day of the hand delivery; (b)
when transmitted by telecopy with verbal confirmation of receipt by the telecopy
operator to the telecopy number set forth below; and (c) one Business Day
following the day timely delivered to a next-day air courier addresses as set
forth below:
Gameco: Gameco, Inc.
240 Main Street
Black Hawk, CO 80422
Attn: President
Telephone No.: (303)582-1117
Telecopier No.: (303)582-0239
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With a copy to: Baker & Hostetler LLP
1900 East 9th Street
3200 National City Center
Cleveland, OH 44114
Attn: Robert Weible, Esq.
Telephone No.: (216) 861-7553
Telecopier No.: (216) 696-0740
Trustee: Wells Fargo Bank Minnesota, National Association
213 Court Street, Suite 902
Middletown, CT 06457
Attn: Corporate Trust Administration
Telephone No.: (860) 704-6216
Telecopier No.: (860) 704-6219
With a copy to: Cahill Gorden & Reindel
80 Pine Street
New York, NY 10005
Attn: Athy A. Mobilia, Esq.
Telephone No.: (212) 701-3000
Telecopier No.: (212) 269-5420
Any notice or other communication given as hereinabove provided shall be
deemed effectively given or received on the date of delivery, if delivered by
hand or by overnight courier, or otherwise on the third (3rd) business day
following the postmark date of such notice or other communication.
8. This Agreement, the Indenture, and the Collateral Assignment contain
the entire agreement among the parties with respect to the subject matter hereof
and supersede any and all prior agreements, understandings and commitments,
whether oral or written. This Agreement may be amended only in accordance with
Article Nine of the Indenture and further by a writing signed by a duly
authorized representative of each party hereto. This Agreement is governed by
and is to be construed under the laws of the State of New York, and may be
executed in several counterparts, each of which shall be deemed an original, and
all such counterparts together shall constitute one and the same instrument.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
GAMECO: GAMECO, INC.,
a Delaware corporation
By: /s/ Jeffrey P. Jacobs
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Name: Jeffrey P. Jacobs
Title: President
TRUSTEE: WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:
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Name:
Title:
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
GAMECO: GAMECO, INC.,
a Delaware corporation
By:
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Name: Jeffrey P. Jacobs
Title: President
TRUSTEE: WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: /s/ Joseph P. O'Donnell
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Name: JOSEPH P. O'DONNELL
Title: Corporate Trust Officer