EXHIBIT 10.12
THIRD AMENDED AND RESTATED TERM LOAN AGREEMENT
THIRD AMENDED AND RESTATED TERM LOAN AGREEMENT (the "AGREEMENT"),
dated as of July 2, 1996, as amended and restated as of December 10, 1996, as
further amended and restated as of July 2, 1997, and as further amended and
restated as of April 30, 1998, among MOUNTAINEER PARK, INC., a West Virginia
corporation ("MOUNTAINEER"), SPEAKEASY GAMING OF LAS VEGAS, INC., a Nevada
corporation ("SPEAKEASY VEGAS"), SPEAKEASY GAMING OF RENO, INC., a Nevada
corporation ("SPEAKEASY RENO", and together with Mountaineer and Speakeasy
Vegas, collectively the "BORROWERS"), MTR Gaming Group, Inc. f/k/a WINNERS
ENTERTAINMENT, INC., a Delaware corporation (the "GUARANTOR" and together with
the Borrowers, collectively, the "LOAN PARTIES" and individually each a "LOAN
PARTY"), and MADELEINE LLC, a New York limited liability company (the "LENDER").
RECITALS
WHEREAS, Mountaineer, the Guarantor and the Lender are parties to a
Term Loan Agreement, dated as of July 2, 1996, pursuant to which the Lender has
made a term loan to Mountaineer in the original principal amount of $5,000,000;
WHEREAS, Mountaineer, the Guarantor and the Lender are parties to an
Amended and Restated Term Loan Agreement, dated as of July 2, 1996, as amended
and restated as of December 10, 1996, pursuant to which the Lender has made (i)
a term loan to Mountaineer in the original principal amount of $16,100,000
(including the prior $5,000,000 term loan), and (ii) a three year line of credit
available for loans in the aggregate maximum principal amount not to exceed
$5,376,500 at any time outstanding;
WHEREAS, Mountaineer, the Guarantor and the Lender are parties to a
Second Amended and Restated Term Loan Agreement, dated as of July 2, 1996, as
amended and restated as of December 10, 1996, and as further amended and
restated as of July 2, 1997 (the "Second Amended Agreement"), pursuant to which
the Lender and Mountaineer agreed to amend the Loan Agreement to extend the
maturity date of the Loans and change the terms of payment of certain fees in
respect of the loans;
WHEREAS, Mountaineer and the Guarantor have requested that the Lender
agree to further amend and restate the Loan Agreement for the purposes of, among
other things, adding Speakeasy Reno and Speakeasy Vegas as Borrowers under the
Agreement, increasing the Term Commitment and the Line Commitment to the
Borrowers, adding a construction loan facility, and amending the terms of
payment of certain fees in respect of the Loans; and
WHEREAS, the Lender is willing, on the terms and conditions herein, to
amend and restate the Second Amended Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements
herein and in order to induce the Lender to make and maintain the Loans, the
Lender, the Borrowers and the Guarantor hereby agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
SECTION 1.01. Definitions. As used in this Agreement, the following
terms shall have the respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural forms of such terms:
"AFFILIATE" means, as to any Person, (i) any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, or (ii) any trade
or business (whether or not incorporated) which is a member of a group of which
such Person is a member and which is under common control within the meaning of
Section 414 of the Internal Revenue Code and the rules and regulations
promulgated thereunder from time to time.
"AMENDED AND RESTATED SECURITY AGREEMENT" means the Amended and
Restated General Security Agreement, dated as of July 2, 1996, as amended and
Restated on December 10, 1996, made by Mountaineer in favor of the Lender, as
amended or otherwise modified from time to time.
"AMENDED CLOSING DATE" means December 10, 1996.
"AMENDED LOAN AGREEMENT" means the Amended and Restated Term Loan
Agreement, dated July 2, 1996, as amended and restated as of December 10, 1996,
by and between Mountaineer, the Guarantor, and the Lender.
"BORROWERS" has the meaning specified therefor in the preamble hereto.
"BUSINESS DAY" means any day not a Saturday, Sunday or legal holiday
on which the Lender is open for business in New York City and banks in the
States of West Virginia and Nevada are not required or authorized to close.
"CAPITAL LEASES" means, with respect to any Person, leases or
agreements to lease by such Person and its Consolidated Subsidiaries that, in
accordance with GAAP, have been or should be capitalized on the books of such
Person.
"CAPITALIZED LEASE OBLIGATIONS" means, with respect to any Person, any
obligation of such Person and its Consolidated Subsidiaries for the payment of
rent for any real or personal property under Capital Leases and, for purposes
hereof, the amount of any such obligation shall be the capitalized amount
thereof, all computed and consolidated in accordance with generally accepted
accounting principles applied on a consistent basis.
"CHEYENNE CONSTRUCTION LOANS" means one or more construction loans to
be made by the Lender to Speakeasy Vegas pursuant to Article IV hereof in an
original principal amount not to exceed the Construction Commitment amount, to
be used by Speakeasy Vegas for the purpose of improving the Cheyenne Hotel
Property.
"CHEYENNE DEED OF TRUST" means the Deed of Trust, Assignment of Rents,
Security Agreement, and Fixture Filing, dated the date hereof, made by Speakeasy
Vegas in favor of the Lender, with respect to the Cheyenne Hotel Property.
"CHEYENNE HOTEL PROPERTY" means the property described on Exhibit C
hereto, together with the Cheyenne Hotel situated on such land.
"CHEYENNE TERM LOAN" means the term loan made by the Lender to
Speakeasy Vegas in the aggregate principal amount of $3,765,000, pursuant to
Article II hereof, to be used by Speakeasy Vegas for the purpose of acquiring
the Cheyenne Hotel Property from Banter, Inc.
"CHEYENNE PURCHASE AGREEMENT" means the Purchase Agreement, dated as
of April 30, 1998, by and among Speakeasy Vegas, Banter, Inc. and Cheyenne
Hotel, Inc. with respect to the purchase by Speakeasy Vegas of the Cheyenne
Hotel Property.
"CLOSING DATE" means as of April 30, 1998.
"COLLATERAL" means all of the property (real and personal) of the
Borrowers purported to be subject to the lien or security interest purported to
be created by any mortgage, deed of trust, security agreement, pledge agreement,
assignment or other security document heretofore or hereafter executed by the
Borrowers in favor of the Lender as security for all or any part of the
Obligations, including, without limitation, any asset purchased, in whole or in
part, with proceeds of a Line Loan, a Cheyenne Construction Loan or with a Term
Loan, subject to the limitation set forth in Section 7.01(k) hereof.
"COMMITMENT" means the Term Commitment, the Line Commitment and the
Construction Commitment.
"COMMON STOCK" means the common stock of the Guarantor, par value
$0.00001 per share.
"CONSOLIDATED EBITDA" means for each fiscal quarter of any Person, all
earnings of such Person and its Consolidated Subsidiaries for such period as
determined in accordance with GAAP, before (a) the sum, without duplication, of
(i) gross interest expense for such period minus gross interest income for such
period, in each case determined in accordance with GAAP, (ii) income tax
expense, (iii) depreciation expense, (iv) amortization expense net of negative
goodwill amortization, and (v) extraordinary or unusual non-cash losses
(provided such extraordinary or unusual losses do not at any time result in a
cash outlay by such Person), less (b) extraordinary gains of such Person and
each Consolidated Subsidiary, each determined on a consolidated basis for such
Person and its Consolidated Subsidiaries in accordance with GAAP.
"CONSOLIDATED SUBSIDIARY" of a Person at any time shall mean those
Subsidiaries of such Person whose accounts are or should in accordance with GAAP
be consolidated with those of such Person.
"CONSTRUCTION COMMITMENT" means the commitment of the Lender to make
one or more Cheyenne Construction Loans to Speakeasy Vegas pursuant to Article
IV hereof in an original aggregate principal amount outstanding not to exceed
$1,700,000.
"CONSTRUCTION NOTE" means the promissory note of the Borrowers, dated
the date hereof, in the original principal amount of not more than $1,700,000,
evidencing the Indebtedness resulting from the making of the Cheyenne
Construction Loans and delivered to the Lender pursuant to Article IV hereof, as
such promissory note may be modified or amended from time to time, and any
promissory note or notes issued in exchange or replacement therefor.
"CONSTRUCTION OBLIGATIONS" means all Obligations in respect of the
Cheyenne Construction Loans.
"DEFAULT" means any event that, with the giving of notice or the
passage of time or both, would result in an Event of Default.
"EBITDA AVERAGE" means, as of any date, the average Consolidated
EBITDA for each of the six calendar months immediately preceding such date;
PROVIDED, HOWEVER, that for the purpose of the calculation of EBITDA Average, at
the discretion of Mountaineer, the months of December and January may be
excluded from such calculation and such months shall be deemed not to have
occurred.
"EFFECTIVE DATE" means the date on which all of the conditions
precedent under Article V of the Initial Loan Agreement were met.
"EMPLOYEE PLAN" means an employee benefit plan (other than a
Multiemployer Plan) covered by Title IV of ERISA and maintained for employees of
a Borrower or any of its Affiliates.
"ENVIRONMENTAL LAW" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601, ET SEQ.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801, ET SEQ.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, ET SEQ.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), the Clean Air Act
(42 U.S.C. Section 7401 ET SEQ.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 ET SEQ.), the Occupational Safety and Health Act (29 U.S.C. Section
6451 ET SEQ.), and the Medical Waste Tracking Act of 1988, Pub. L. No. 100-582,
102 Stat. 2950 (1988), as such laws have been amended or supplemented from time
to time, and any similar present or future Federal, state or local statute,
ordinance, rule or regulation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and, unless the context otherwise requires, the rules
and regulations promulgated thereunder from time to time.
"EVENT OF DEFAULT" means any of the events set forth in Section 9.01
hereof.
"FINANCIAL STATEMENTS" means the audited financial statements of the
Guarantor and its Subsidiaries as set forth in the Guarantor's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, and, upon filing with the
Securities and Exchange Commission, the unaudited financial statements of the
Guarantor and its Subsidiaries as set forth in the Guarantor's Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 1998.
"FUNDING DATE" has the meaning assigned to such term in Section 6.01
hereof.
"FUNDING DATE LOAN AMOUNT" means the amount of (a) the Reno Loan, (b)
the Cheyenne Loan, (c) any Line Loan and (d) any Cheyenne Construction Loan,
made by Lender to any Borrower on the Funding Date.
"GAAP" means generally accepted accounting principles as in effect
from time-to-time in the United States, consistently applied.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and having jurisdiction over the Parties to the Loan Documents.
"GUARANTY" means the Guaranty made by the Guarantor in favor of the
Lender pursuant to Article X hereof, guaranteeing the Obligations under the Loan
Documents.
"GUARANTOR" has the meaning specified therefor in the preamble hereto.
"HAZARDOUS MATERIALS" means, without limit, any pollutant, waste,
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, or other materials defined in or
regulated under any Environmental Law.
"INDEBTEDNESS" means (i) all indebtedness or other obligations of any
Borrower for borrowed money or for the deferred purchase price of property or
services, (ii) Capitalized Lease Obligations of each Borrower, (iii) all
obligations of each Borrower under direct or indirect guaranties, contingent or
other obligations of a Borrower to purchase or otherwise acquire or assure a
creditor against loss in respect thereof, indebtedness or other obligations of
any other Person for borrowed money or for the deferred purchase price of
property or services or Capitalized Lease Obligations of any other Person,
(iv) all indebtedness or other obligations of each Borrower for borrowed money
or for the deferred purchase price of property or services secured by (or for
which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien, security interest or other charge or
encumbrance upon or in property owned by any Borrower, (v) all obligations of
any Borrower in respect of letters of credit and bankers' acceptances with the
exception of any such letter of credit or bankers' acceptance issued in favor
of, or required by, a Governmental Authority, (vi) liabilities incurred under
Title IV of ERISA with respect to any plan covered by Title IV of
ERISA and maintained for employees of any Borrower or any of its Affiliates,
and (vii) withdrawal liability incurred under ERISA by any Borrower or any of
its Affiliates to any Multiemployer Plan.
"INITIAL CLOSING DATE" means July 2, 1996.
"INITIAL LOAN AGREEMENT" means the Term Loan Agreement, dated July 2,
1996, by and between Mountaineer, the Guarantor, and the Lender.
"INITIAL TERM LOAN" means the term loan made by the Lender to the
Borrower in the aggregate principal amount of $16,100,000, pursuant to Article
II of the Second Amended Agreement and maintained pursuant to Article II hereof.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time.
"LENDER" has the meaning specified therefor in the preamble hereto.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"LINE COMMITMENT" means the commitment of the Lender to make one or
more Line Loans to the Borrowers pursuant to Article III hereof in the original
aggregate principal amount outstanding not to exceed $10,376,500.
"LINE LOAN" has the meaning assigned to such term in Section 3.02
hereof.
"LINE NOTE" means the promissory note of the Borrowers, dated the
Closing Date, in the original principal amount outstanding, not to exceed
$10,376,500, evidencing the Indebtedness resulting from the making of the Line
Loans and delivered to the Lender pursuant to Article III of this Agreement, as
such promissory note may be modified or amended from time to time, and any
promissory note or notes issued in exchange or replacement therefor.
"LINE OBLIGATIONS" means all Obligations in respect of the Line Loans.
"LOAN" or "LOANS" means the Term Loans, the Line Loans and the
Cheyenne Construction Loans.
"LOAN DOCUMENTS" means this Agreement, the Notes, the West Virginia
Deed of Trust, the Amended and Restated Security Agreement, the West Virginia
First Priority Deed of Trust, the Guaranty, the Stock Certificates, the
Warrants, the Registration Rights Agreement, Amendment No. 1 to Registration
Rights Agreement, Amendment No. 2 to Registration Rights Agreement, the Stock
Transfer Agreement, the Cheyenne Deed of Trust, the Reno Deed of Trust, the
Speakeasy Security Agreement, the Cheyenne Purchase Agreement, the Reno Purchase
Agreement and all other instruments, documents and agreements executed and
delivered pursuant hereto or thereto.
"LOAN FEE" shall have the meaning assigned to such term in Section
5.01 hereof.
"LOAN FEES" means all of the fees and expenses payable, whether in
cash, in kind, in Common Stock or in Warrants, by each Borrower and the
Guarantor, jointly and severally, under Section 5.01 of this Agreement.
"LOAN PARTIES" means the Borrowers and the Guarantor.
"MATURITY DATE" means July 2, 2001, or such earlier date on which the
Loans shall become due and payable, in whole or in part, in accordance with the
terms of this Agreement, whether by acceleration or otherwise.
"MOUNTAINEER" means Mountaineer Park, Inc., a West Virginia
corporation.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"NOTE" or "NOTES" means the Term Note, the Line Note and the
Construction Note, as applicable.
"OBLIGATIONS" means (i) the obligation of any Loan Party to pay,
jointly and severally, as and when due and payable (by scheduled maturity or
otherwise), all amounts from time to time owing by it in respect of any Loan
Document, whether for principal (including, without limitation, an amount equal
to the product of (a) the Prepayment Factor and (b) the aggregate outstanding
principal amount of the Loans), interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
any Borrower or the Guarantor, whether or not a claim for post-filing interest
is allowed pursuant to 11 U.S.C. Section 506 or otherwise in such cases), fees
or otherwise and (ii) the obligation of any Loan Party to perform or observe all
of its other obligations from time to time existing under any Loan Document.
"OPERATING LEASES" means leases or agreements to lease of each
Borrower, other than Capital Leases.
"OPERATING LEASE OBLIGATIONS" means all obligations of a Borrower for
the payment of rent for any real or personal property under leases or agreements
to lease, other than Capitalized Lease Obligations, all computed in accordance
with GAAP.
"PAYMENT OFFICE" means Madeleine LLC, 450 Park Avenue, New York, New
York 10022, Attn.: Mr. Kevin P. Genda.
"PERMITTED INVESTMENTS" means (i) marketable direct obligations issued
or unconditionally guaranteed by the United States Government, or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year
from the date of acquisition thereof, (ii) commercial paper, maturing not
more than 270 days after the date of issue, issued by a corporation rated P-1
by Moody's Investors Service, Inc. or A-1 by Standard & Poor's Corporation or
issued by the Lender or its Affiliates, (iii) time certificates of deposit,
issued by commercial banking institutions, each of which is a member of the
Federal Reserve System and has a combined capital and surplus of not less
than $100,000,000, (iv) money market accounts maintained with mutual funds
having assets in excess of $2,500,000,000, and (v) tax exempt securities
rated A or better by Moody's Investors Service, Inc. or A+ or better by
Standard & Poor's Corporation; PROVIDED, HOWEVER, that deposits or
certificates of deposits with commercial banking institutions which are a
member of the Federal Reserve System are Permitted Investments so long as any
such deposit does not exceed $250,000.
"PERSON" means an individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture or
governmental authority.
"PLAN OF REMEDIATION" means collectively (i) the Corrective Action
Plan, dated August 14, 1995, (ii) the Phase I Environmental Site Assessment of
the Cheyenne Hotel Property, dated March 16, 1997, and (iii) the Phase I
Environmental Site Assessment of the Reno Hotel Property, dated March, 1998.
"PLEDGE AGREEMENTS" mean the Pledge and Security Agreement made on the
date hereof by the Guarantor in favor of the Lender, whereunder the Guarantor's
interests in Speakeasy Reno and Speakeasy Vegas are pledged.
"POST-DEFAULT RATE" means a rate per annum equal to 22%.
"PREPAYMENT FACTOR" means (i) at any time during the period beginning
on the Second Amended Closing Date to and including the first anniversary
thereof, 1.05; (ii) at any time during the period beginning on the day after the
first anniversary of the Second Amended Closing Date to and including the second
anniversary of the Second Amended Closing Date, 1.03; (iii) at any time during
the period beginning on the day after the second anniversary of the Second
Amended Closing Date to and including the third anniversary of the Second
Amended Closing Date, 1.02; (iv) at any time during the period beginning on the
day after the third anniversary of the Second Amended Closing Date to and
including the fourth anniversary of the Second Amended Closing Date, 1.01; and
on the scheduled Maturity Date, 1.00.
"PROPERTY" means (i) the Reno Hotel Property, (ii) the Cheyenne Hotel
Property, and (iii) the West Virginia Property.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated July 2, 1996, between the Lender and the Guarantor, as amended
or otherwise modified from time to time.
"RENO DEED OF TRUST" means the Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing, dated the date hereof, made by Speakeasy
Reno in favor of the Lender, with respect to the Reno Hotel.
"RENO HOTEL PROPERTY" means the property described on Exhibit D
hereto, together with the Reno Hotel situated on such land.
"RENO LOAN" means the term loan made by the Lender to the Borrower in
an aggregate principal amount of $8,000,000, pursuant to Article II hereof, to
be used by Speakeasy Reno for the purpose of acquiring the Reno Hotel from Reno
Hotel LLC.
"RENO PURCHASE AGREEMENT" means the Purchase Agreement, dated as of
April 30, 1998, by and between Speakeasy Reno and Reno Hotel LLC with respect to
the purchase by Speakeasy of the Reno Hotel Property.
"SECOND AMENDED CLOSING DATE" means July 2, 1997.
"SECOND AMENDED LOAN AGREEMENT" means the Second Amended and Restated
Term Loan Agreement, dated July 2, 1996, as amended and restated as of December
10, 1996, as further amended and restated as of July 2, 1997, by and between
Mountaineer, the Guarantor, and the Lender.
"SECURITY AGREEMENTS" means the Speakeasy Security Agreements and the
Amended and Restated Security Agreement.
"SPEAKEASY RENO" means Speakeasy Gaming of Reno, Inc., a Nevada
corporation.
"SPEAKEASY VEGAS" means Speakeasy Gaming of Las Vegas Inc., a Nevada
corporation.
"SPEAKEASY SECURITY AGREEMENTS" means collectively (i) the General
Security Agreement, dated as of the date hereof, made by Speakeasy Reno in favor
of the Lender, as amended or otherwise modified from time to time and (ii) the
General Security Agreement, dated as of the date hereof, made by Speakeasy Vegas
in favor of the Lender, as amended or otherwise modified from time to time.
"STOCK CERTIFICATE" means any original stock certificate issued by the
Guarantor representing shares of Common Stock.
"STOCK TRANSFER AGREEMENT" means the Stock Transfer Agreement, dated
as of July 2, 1996, between the Lender and the Guarantor.
"SUBSIDIARY" means any corporation of which more than 50% of the
outstanding capital stock or similar rights of holders of equity having (in the
absence of contingencies) ordinary voting power to elect directors (or Persons
performing similar functions) of such corporation is, at the time of
determination, owned directly, or indirectly through one or more intermediaries,
by any Person.
"TAXES" means any tax imposed by the States of West Virginia or Nevada
or any subdivision thereof.
"TERM COMMITMENT" means the commitment of the Lender to make Term
Loans to the Borrower pursuant to Article II hereof in the principal amount not
to exceed $27,865,000.
"TERM LOANS" means (a) the Initial Term Loan, (b) the Reno Loan, and
(c) the Cheyenne Term Loan, each as described in Article II hereof.
"TERM NOTE" means the promissory note of the Borrowers, dated the
Closing Date, in the original principal amount of $27,865,000, evidencing the
Indebtedness resulting from the making of the Term Loans and delivered to the
Lender pursuant to Article II hereof, as such Term Note may be modified or
amended from time to time, and any promissory note or notes issued in exchange
or replacement therefor.
"TERM OBLIGATIONS" has the meaning assigned to such term in Section
10.13 hereof.
"TERMINATION DATE" means the earlier to occur of (a) the Maturity Date
and (b) the date on which all of the Obligations have been fully performed.
"TRANSACTION COSTS" has the meaning specified therefore in Section
10.04 hereof.
"UNFUNDED LIABILITY" has the meaning specified therefore in Subsection
7.01(j) hereof.
"WARRANTS" means validly issued warrants for the purchase of shares of
Common Stock, in substantially the form attached hereto as Exhibit A.
"WEST VIRGINIA DEED OF TRUST" means the Deed of Trust, Leasehold Deed
of Trust Security Agreement, Assignment, Fixture Filing, and Financing
Statement, dated July 2, 1996, made by Mountaineer in favor of the Lender, with
respect to the West Virginia Property.
"WEST VIRGINIA FIRST PRIORITY DEED OF TRUST" means the Credit Line
Deed of Trust, Leasehold Deed of Trust, Security Agreement, Assignment, Fixture
Filing and Financing Statement, dated as of December 10, 1996, by and among
Mountaineer, the Lender and the trustees named therein, as amended or otherwise
modified from time to time, with respect to the West Virginia Property.
"WEST VIRGINIA PROPERTY" means the property described on Exhibit E
hereto.
SECTION 1.02. Accounting and Other Terms. Unless otherwise expressly
stated herein, all accounting determinations hereunder shall be made, all
accounting terms used herein shall be interpreted, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP.
All terms used in this Agreement which are defined in Article 9 of the Uniform
Commercial Code in effect in the State of New York on the date hereof and which
are not otherwise defined herein shall have the same meanings herein as set
forth therein.
ARTICLE II
AMOUNT AND TERMS OF THE TERM LOANS
SECTION 2.01. TERM COMMITMENT. Any principal amount of any Term
Loan which is repaid or prepaid by the Borrowers may not be reborrowed.
SECTION 2.02. MAKING THE TERM LOANS. The Lender has made or will
on the Funding Date make Term Loans to the Borrowers in the form of (a) the
Initial Term Loan made under the Amended Loan Agreement in the original
principal amount of $16,100,000 disbursed to Mountaineer in the amounts of
$5,000,000 on July 3, 1996 and $11,100,000 on December 26, 1996, (b) the Reno
Loan in the original principal amount of $8,000,000 disbursed to Speakeasy Reno
on the Funding Date, and (c) the Cheyenne Term Loan in the original principal
amount of $3,765,000 disbursed to Speakeasy Vegas on the Funding Date. The Term
Loans shall continue to be outstanding until the Termination Date. The amount
of the Term Loans may be increased to provide for the funding and payment of the
Lender's fees and costs incurred in connection herewith, together with interest
due thereon, which are unpaid as of the Termination Date and which accrue
thereafter. The books and records of the Lender shall be presumptive evidence
of the amount of Obligations under the Term Loans outstanding from time to time,
whether in excess of the principal amount of the Term Note or otherwise, absent
manifest error.
SECTION 2.03. TERM LOAN INTEREST.
(a) LOAN. The Term Loans shall bear interest on the principal
amount thereof from time to time outstanding from the Effective Date until such
principal amount becomes due at an interest rate per annum of thirteen percent
(13%).
(b) INTEREST PAYMENT. Interest on the Term Loans shall be
payable monthly, in arrears, on the last day of each month, commencing April 30,
1998, and ending on the Termination Date (whether by demand, acceleration or
otherwise). Interest at the Post-Default Rate shall be payable on demand.
SECTION 2.04. REPAYMENT. The Term Loans shall be payable as to
principal in full on the Maturity Date, together with all such other amounts as
may be necessary to repay in full all unpaid Term Obligations to the Lender. In
the event that the Term Loans are prepaid due to acceleration of the Term Loans
after the occurrence of an Event of Default, the amount of the outstanding
principal of the Term Loans shall be determined by multiplying the outstanding
principal amount under the Term Note by the Prepayment Factor (excluding the
Cheyenne Construction Loans, the Cheyenne Term Loan and the Reno Term Loan).
SECTION 2.05. OPTIONAL PREPAYMENT OF THE TERM LOANS. Any
Borrower may, on the same Business Day's telephone notice no later than 11:00
A.M. (New York City time) (promptly confirmed in writing) prepay the outstanding
amount of the Term Loans in whole, but not in part, by payment of the sum of (i)
an amount equal to the product of (a) the Prepayment Factor and (b) the
outstanding principal amount of the Term Loans (excluding the Cheyenne
Construction Loans, the Cheyenne Term Loan and the Reno Term Loan), plus (ii)
accrued interest to the date of such prepayment, plus (iii) the balance of the
Loan Fees not previously paid to the Lender, plus (iv) all other Term
Obligations; PROVIDED, HOWEVER, that the Borrowers may not prepay the Term Loans
unless, simultaneously therewith, the Borrowers also prepay the Line Loan as set
forth in Section 3.05 hereof and the Cheyenne Construction Loans as set forth in
Section 4.05 hereof. Upon such payment in accordance with Section 2.05, at the
sole cost and expense of the Borrowers, the Lender will return to the Borrowers
appropriate and proper releases of the Cheyenne Deed of Trust, the Reno Deed of
Trust, the West Virginia Deed of Trust, the West Virginia First Priority Deed of
Trust, and such other documents as the Loan Parties may reasonably request to
effect a release of the Lender's security interest in the Collateral.
SECTION 2.06. USE OF PROCEEDS. (a) The proceeds of the Line
Loans will be used for general working capital purposes of Mountaineer and up to
an aggregate amount of $1,500,000 of the principal amount of the Line Loans may
be borrowed to fund general working capital of Speakeasy Reno and Speakeasy
Vegas relating to the Reno Hotel Property or the Cheyenne Hotel Property,
respectively; (b) the proceeds of the Reno Loan will be used solely to finance
the acquisition by Speakeasy Reno of the Reno Hotel Property from Reno Hotel
LLC; (c) the proceeds of the Cheyenne Loan will be used solely to finance the
acquisition by Speakeasy Vegas of the Cheyenne Hotel Property from Banter, Inc.;
and (d) the proceeds of the Cheyenne Construction Loans will be used solely by
Speakeasy Vegas to finance improvements to the Cheyenne Hotel Property.
ARTICLE III
AMOUNT AND TERMS OF THE LINE LOANS
SECTION 3.01. LINE COMMITMENT. Any principal amount of the Line
Loan which is repaid or prepaid by the Borrowers subsequent to the Funding Date
may not be reborrowed.
SECTION 3.02. MAKING THE LINE LOANS. Two (2) Business Days after
receipt by the Lender of a written request for a loan in substantially the form
of Exhibit B attached hereto, the Lender shall make available to the Borrower
requesting such loan an amount set forth in such borrowing notice not less than
$100,000 nor more than an amount (the "ADDITIONAL LINE AMOUNT") equal to the
positive difference between the outstanding principal amount of the Line Loans
on the funding date of the requested Line Loan and the Line Commitment, and the
Borrowers shall, upon satisfaction of all of the conditions relating thereto
contained herein and in the other Loan Documents, borrow such amount on the
terms and conditions set forth hereunder. The sum of (a) the outstanding
principal amount of the Line Loans as of the opening of business on the Funding
Date and (b) the Additional Line Amount shall be evidenced by the Line Note and
shall be the "LINE LOANS". The Lender may act without liability upon the basis
of written notice believed by the Lender in good faith to be from a Borrower
(or from any officer thereof designated in writing to the Lender). On the
funding date of the applicable Line Loan, and upon fulfillment of the applicable
conditions set forth in Article
VI hereof, the Lender will make available the applicable Line Loan to the
applicable Borrower by delivering the proceeds thereof, in immediately
available funds (either in the form of a certified bank check or wire
transfer) less the fees and expenses then due and payable under Sections
5.01(a) and 10.04 hereof. The applicable Line Loan will be disbursed to the
Borrower requesting the applicable Line Loan. The outstanding amount of a
Line Loan may be increased to provide for the funding and payment of the
Lender's fees and costs incurred in connection with the applicable Line Loan,
together with interest due thereon, which are unpaid as of the Termination
Date and which accrue thereafter. The records of the Lender shall be
presumptive evidence of the amount of Obligations under the Line Loans
outstanding from time to time whether in excess of the initial principal
amount of the Line Note or otherwise, absent manifest error.
SECTION 3.03. LINE LOAN INTEREST.
(a) LOANS. The Line Loans shall bear interest on the principal
amount thereof from time to time outstanding from the Effective Date until such
principal amount becomes due at an interest rate per annum of thirteen percent
(13%).
(b) INTEREST PAYMENT. Interest on the outstanding principal
amount of the Line Loans shall be payable monthly, in arrears, on the last day
of each month, commencing April 30, 1998, and on the Termination Date (whether
by demand, acceleration or otherwise). Interest at the Post-Default Rate shall
be payable on demand.
SECTION 3.04. REPAYMENT. The Line Loans shall be payable as to
principal in full on the Maturity Date, together with all such other amounts as
may be necessary to repay in full all unpaid Line Obligations to the Lender. In
the event that the Line Loans are prepaid due to acceleration of the Line Loans
after the occurrence of an Event of Default, the amount of the outstanding
principal of the Line Loans shall be determined by multiplying the outstanding
principal amount under the Line Note by the Prepayment Factor.
SECTION 3.05. PREPAYMENT OF THE LINE LOAN. The Borrowers may, on
the same Business Day's telephone notice no later than 11:00 A.M. (New York City
time) (promptly confirmed in writing) prepay the outstanding amount of the Line
Loans in whole, but not in part, by payment of the sum of (i) an amount equal to
the product of (a) the Prepayment Factor and (b) the outstanding amount of the
Line Loans, plus (ii) accrued interest to the date of such prepayment, plus
(iii) the balance of the Loan Fees not previously paid to the Lender; PROVIDED,
HOWEVER, that the Borrowers may not prepay the Line Loans unless, simultaneously
therewith, the Borrowers also prepay the Term Loans as set forth in Section 2.05
hereof and the Cheyenne Construction Loans as set forth in Section 4.05 hereof.
ARTICLE IV
AMOUNT AND TERMS OF THE CHEYENNE CONSTRUCTION LOANS
SECTION 4.01. CONSTRUCTION COMMITMENT. Any principal amount of
the Cheyenne Construction Loans which is repaid or prepaid by the Borrowers
subsequent to the Funding Date may not be reborrowed.
SECTION 4.02. MAKING THE CHEYENNE CONSTRUCTION LOANS.
(a) BORROWING PROCEDURES. Two (2) Business Days after receipt by the
Lender of a written request for a loan in substantially the form of Exhibit B
attached hereto, the Lender shall make available to Speakeasy Vegas an amount
set forth in such borrowing notice in an amount not to exceed the amount (the
"ADDITIONAL CONSTRUCTION AMOUNT") equal to the positive difference between the
outstanding principal amount of the Cheyenne Construction Loans on the funding
date of the requested Cheyenne Construction Loan and the Construction
Commitment, and the Borrowers shall, upon satisfaction of all of the conditions
relating thereto contained herein and in the other Loan Documents, borrow such
amount on the terms and conditions set forth hereunder. The sum of (i) the
outstanding principal amount of the Cheyenne Construction Loans as of the
opening of business on the Funding Date and (ii) the Additional Construction
Amount shall be evidenced by the Construction Note and shall be the
"CONSTRUCTION LOANS". The Lender may act without liability upon the basis of
written notice believed by the Lender in good faith to be from a Borrower (or
from any officer thereof designated in writing to the Lender). On the funding
date of the applicable Cheyenne Construction Loan, and upon fulfillment of the
applicable conditions set forth in Section 4.02(b) and Article VI hereof, the
Lender will make available the applicable Cheyenne Construction Loan to the
applicable Borrower by delivering the proceeds thereof, in immediately available
funds (either in the form of a certified bank check or wire transfer) less the
fees and expenses then due and payable under Sections 5.01(a) and 10.04 hereof.
The applicable Cheyenne Construction Loan will be disbursed to Speakeasy Vegas.
The outstanding amount of the applicable Cheyenne Construction Loan may be
increased to provide for the funding and payment of the Lender's fees and costs
incurred in connection with the applicable Cheyenne Construction Loan, together
with interest due thereon, which are unpaid as of the Termination Date and which
accrue thereafter. The records of the Lender shall be presumptive evidence of
the amount of Obligations under the Cheyenne Construction Loans outstanding from
time to time whether in excess of the initial principal amount of the
Construction Note or otherwise, absent manifest error.
(b) CONDITIONS PRECEDENT. Notwithstanding anything herein to the
contrary, no Cheyenne Construction Loan shall exceed an amount equal to the
out-of-pocket costs and expenses paid to unaffiliated third parties and
incurred by Speakeasy with respect to improvements constructed on the
Cheyenne Hotel Property, and the amount so advanced shall thereupon be added
to the outstanding principal balance of the Construction Note and shall
thereafter bear interest as set forth herein. Any disbursement by the Lender
hereunder shall be subject to there having occurred no Default or Event of
Default which shall then be continuing.
SECTION 4.03. CHEYENNE CONSTRUCTION LOAN INTEREST.
(a) LOANS. The Cheyenne Construction Loans shall bear interest
on the principal amount thereof from time to time outstanding from the Effective
Date until such principal amount becomes due at an interest rate per annum of
thirteen percent (13%).
(b) INTEREST PAYMENT. Interest on the outstanding principal
amount of the Cheyenne Construction Loans shall be payable monthly, in
arrears, on the last day of each month, commencing April 30, 1998, and on the
Termination Date (whether by demand, acceleration or otherwise). Interest at
the Post-Default Rate shall be payable on demand.
SECTION 4.04. REPAYMENT. The Cheyenne Construction Loans shall
be payable as to principal in full on the Maturity Date, together with all such
other amounts as may be necessary to repay in full all unpaid Construction
Obligations to the Lender.
SECTION 4.05. PREPAYMENT OF THE CHEYENNE CONSTRUCTION LOANS. The
Borrowers may, on the same Business Day's telephone notice no later than 11:00
A.M. (New York City time) (promptly confirmed in writing) prepay the outstanding
amount of the Cheyenne Construction Loans in whole, but not in part, by payment
of the sum of (i) an amount equal to the outstanding amount of the Cheyenne
Construction Loans, plus (ii) accrued interest to the date of such prepayment,
plus (iii) the balance of the Loan Fees not previously paid to the Lender;
PROVIDED, HOWEVER, that the Borrowers may not prepay the Cheyenne Construction
Loans unless, simultaneously therewith, the Borrowers also prepay the Term Loan
as set forth in Section 2.05 hereof and the Line Loans as set forth in Section
3.05 hereof.
ARTICLE V
FEES, PAYMENTS, DEFAULT INTEREST AND OTHER COMPENSATION
SECTION 5.01. FEES AND OTHER CONSIDERATION. The fees and other
consideration provided for herein are in addition to the fees and other
consideration which were due and payable on the Initial Closing Date, the
Amended Closing Date and the Second Amended Closing Date.
(a) LINE LOAN FEES. On the Closing Date, the Borrowers,
jointly and severally, shall pay to the Lender, in immediately available
funds, a non-refundable fee (the "LOAN FEE") of $150,000 in consideration of
the Lender's agreement to increase the Line Commitment from $5,376,500 to
$10,376,500. Each of the Borrowers and the Guarantor hereby acknowledges and
confirms that the Line Loan Fee has been unconditionally earned by the Lender
as of the Closing Date. The Borrowers hereby instruct the Lender to withhold
such portion of the Line Loan Fee due on the Closing Date, as elected by the
Borrowers, from the proceeds of the Funding Date Loan Amount, and the amount
so withheld shall constitute a part of the Line Loan for all purposes
hereunder.
(b) AUDIT AND COLLATERAL MONITORING FEES. The Borrowers shall
pay to the Lender, jointly and severally, on each anniversary of the Effective
Date, the costs and expenses incurred by the Lender in connection with the
periodic collateral appraisals and audit reviews performed by or on behalf of
the Lender in such year; PROVIDED, HOWEVER, that so long as no Event of Default
has occurred and is continuing, the Borrowers' obligation under this Subsection
5.01(c) shall be limited to $25,000 for each 365 (or 366, as applicable) day
period following the Effective Date.
(c) COMMON STOCK AND WARRANTS. The Lender hereby acknowledges
and agrees that the Guarantor has delivered to the Lender all Stock Certificates
and Warrants required to be delivered pursuant to Section 4.01(c) and (d) of the
Second Amended Loan Agreement (except for such Stock Certificates and Warrants
that may be required to be delivered to the Lender in connection with a complete
or partial exercise of such Warrants by the Lender).
SECTION 5.02. PAYMENTS AND COMPUTATIONS. The Borrowers, jointly
and severally, will make each payment under the Loan Documents to which they are
a party not later than 2:30 P.M. (New York City time) on the day when due, in
lawful money of the United States of America and in immediately available funds,
to the Lender at the Payment Office, or at such other place or to such account
as the Lender may designate by notice to the Borrowers. All payments shall be
made by the Borrowers without defense, set-off or counterclaim to the Lender.
Subject to Section 9.01 below, all interest, fees, costs and expenses for which
the Borrowers are obligated under any Loan Document shall, if not timely paid by
the Borrowers, be added to the principal amount of the Line Loan, Term Loan or
Cheyenne Construction Loan, and the Borrowers hereby authorize the Lender to,
and the Lender may, from time to time, increase the principal amount of the Line
Loan, the Term Loan or Cheyenne Construction Loan by any such amounts due under
any Loan Document to which the Borrowers are a party. The Borrowers confirm
that any addition to principal which the Lender so makes to a Loan as herein
provided will be made as an accommodation to the Borrowers and solely at the
Lender's discretion. Whenever any payment to be made under any such Loan
Document shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall in such case be included in the computation of interest and fees.
All computations of interest under this Agreement and any other Loan Document
and all fees shall be made by the Lender on the basis of a year of 360 days for
the actual number of days occurring in the period for which such interest is
payable; PROVIDED, HOWEVER, that with respect to any date on which any Borrower
makes a repayment or prepayment of principal, interest in respect of such
principal repayment or prepayment amount shall be calculated on the basis of a
year of 360 days for the actual number of days occurring in the period for which
such interest is payable but excluding the day on which such repayment or
prepayment of principal is made. In no event shall prior recourse to any
Collateral be a prerequisite to the Lender's right to demand payment of any
Obligation. The Lender's records kept in the ordinary course of its business
shall be presumed to be correct and shall constitute PRIMA FACIE evidence of the
amount owing or paid with respect to any Obligation, absent manifest error.
SECTION 5.03. TAXES. (a) If any Borrower shall be required by
any applicable law, rule or regulation to deduct or withhold any Taxes from or
in respect of any
amount payable hereunder, then (i) the amount so payable shall be increased
to the extent necessary so that after making all required deductions and
withholdings (including Taxes on amounts payable to the Lender pursuant to
this sentence) the Lender shall receive an amount equal to the sum it would
have received had no such deductions or withholdings been made, (ii) the
Borrowers shall make such deductions or withholdings and (iii) the Borrowers,
jointly and severally, shall pay to the relevant taxation authority the full
amount required to be so deducted or withheld. Whenever any Taxes are
payable by any Borrower, as promptly as possible thereafter such Borrower
shall send the Lender an official receipt or other documentation satisfactory
to the Lender evidencing such payment to such authority. If, due to the
imposition of any Taxes, the Lender's tax liability with respect to any
amounts payable hereunder to any other taxing authority is reduced, the
amount of such reduction shall be paid by the Lender to the Borrowers upon
Borrowers' demand therefor; PROVIDED, HOWEVER, that in no event shall the
Lender be required to pay to any Borrower an amount in excess of the amount
withheld by such Borrower in respect of Taxes due from or in respect of any
amount payable hereunder.
(b) If the Lender shall be required to pay any West Virginia
Taxes in respect of any amount payable by any Borrower hereunder, then the
Borrowers shall, upon demand by the Lender, jointly and severally, pay to the
Lender an amount equal to the difference between (i) the Taxes required to be
paid by the Lender, and (ii) the amount, if any, of the reduction of the
Lender's tax liability to any other taxing authority resulting from the payment
of such Taxes; PROVIDED, HOWEVER, that in no event shall the Lender be required
to pay to the Borrowers an amount in excess of the amount paid by such Borrower
to the Lender pursuant to this paragraph 5.03(b).
SECTION 5.04. DEFAULT INTEREST. Any Obligation hereunder with
respect to the Loans, including the principal of the Loans, fees and (to the
extent permitted by law) interest which is not paid when due (after any
applicable grace period therefor set forth in Section 9 hereof), whether upon
demand, by acceleration or otherwise, and all amounts payable after the
occurrence and during the continuance of an Event of Default, shall bear
interest from the day when due until such amount is paid in full at a rate per
annum equal to the Post-Default Rate. In the event that any amount of principal
of, or interest on, any Loan is not paid within 10 days of the due date thereof
(whether by demand, acceleration or otherwise) when due, the Borrowers shall,
upon demand, pay an additional fee equal to 5% of the amount of such principal
and/or interest not timely paid and such fee shall be owed, jointly and
severally, by each Borrower.
ARTICLE VI
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 6.01. CONDITIONS TO FUNDING OF THE FUNDING DATE LOAN
AMOUNT. The Lender shall have no obligation to fund the Funding Date Loan
Amount until the date (the "FUNDING DATE") on which each of the following
conditions precedent shall have been satisfied:
(a) PAYMENT OF FEES, ETC. The Borrowers shall have paid on or
before the Funding Date all fees, costs, expenses and Taxes then payable by the
Borrowers pursuant to Sections 5.01, 5.03 and 10.04 hereof.
(b) REPRESENTATIONS AND WARRANTIES; NO EVENT OF DEFAULT. The
representations and warranties contained in Section 7.01 of this Agreement and
in each other Loan Document and certificate or other writing delivered to the
Lender pursuant hereto on or prior to the Funding Date, shall be correct on and
as of the Funding Date as though made on and as of such date; and no Event of
Default, or event which with the giving of notice or the lapse of time or both
would constitute an Event of Default, shall have occurred and be continuing on
the Funding Date or would result from the increase in the Line Loans, the
Cheyenne Construction Loans and the Term Loan by the Funding Date Loan Amount.
(c) LEGALITY. The making of the Loans shall not contravene any
law, rule or regulation applicable to the Lender, the Borrowers or the
Guarantor.
(d) DELIVERY OF DOCUMENTS. The Lender shall have received on or
before the Funding Date the following, each in form and substance satisfactory
to the Lender and, unless indicated otherwise, dated the Funding Date (except
for items 6.01(d)(vi) and (vii), which shall be dated December 10, 1996) in each
case duly executed by the parties thereto:
(i) this Agreement;
(ii) the Reno Purchase Agreement;
(iii) the Cheyenne Purchase Agreement;
(iv) the Reno Deed of Trust;
(v) the Cheyenne Deed of Trust;
(vi) the Term Note made by the Borrowers to the order of
the Lender in the amount of $27,865,000, dated the Closing Date, pursuant
to Article II hereof.;
(vii) the Line Note made by the Borrowers to the order of
the Lender in the amount of $10,376,500, dated the Closing Date, pursuant
to Article III hereof;
(viii) the Construction Note made by the Borrowers to the
order of the Lender in the amount of $1,700,000, dated the Closing Date,
pursuant to Article IV hereof;
(ix) the Speakeasy Security Agreements;
(x) the Pledge Agreements;
(xi) financing statements on Form UCC-1, duly executed
by Speakeasy Reno, Speakeasy Vegas and the Guarantor and duly filed in such
office or
offices as may be necessary or, in the opinion of the Lender,
desired to perfect the security interests purported to be created by the
Speakeasy Security Agreements;
(xii) certified copies of the requests for information on
Form UCC-11, listing all effective financing statements which name
Speakeasy Reno, Speakeasy Vegas and the Guarantor as debtors, together with
copies of such financing statements;
(xiii) notice of borrowing from the Borrowers and the
Guarantor in favor of the Lender, as required pursuant to Section 3.02 of
this Agreement;
(xiv) evidence of the recording of the Cheyenne Deed of
Trust in such other office or offices as may be necessary or, in the
opinion of the Lender, desirable to perfect each Lien purported to be
created thereby or to otherwise protect the rights of the Lender
thereunder;
(xv) evidence of the recording of the Reno Deed of Trust
in such other office or offices as may be necessary or, in the opinion of
the Lender, desirable to perfect each Lien purported to be created thereby
or to otherwise protect the rights of the Lender thereunder;
(xvi) the Title Insurance Policy for the Cheyenne Hotel
Property;
(xvii) the Title Insurance Policy for the Reno Hotel
Property;
(xviii) a Survey of the Cheyenne Hotel Property;
(xix) a Survey of the Reno Hotel Property;
(xx) a title report with respect to the Cheyenne Hotel
Property showing only those exceptions as are acceptable to the Lender, in
its sole and absolute discretion;
(xxi) a title report with respect to the Reno Hotel
Property showing only those exceptions as are acceptable to the Lender, in
its sole and absolute discretion;
(xxii) a certificate of insurance evidencing insurance on
all Property of the Borrowers as is required by Section 8.01(g) hereof,
naming the Lender as additional insured as its interests may appear for all
insurance maintained by the Borrowers;
(xxiii) all of the Property Documents in the possession of
any Loan Party as described in Section 2(b) of the Cheyenne Purchase
Agreement;
(xxiv) all of the Property Documents in the possession of
any Loan Party as described in Section 2(b) of the Reno Purchase Agreement;
(xxv) a copy of the resolutions adopted by the Board of
Directors of each Loan Party, certified as of the Funding Date by an
authorized officer thereof, authorizing (A) the borrowings hereunder and
the transactions contemplated by the Loan Documents to which such entity is
or will be a party, and (B) the execution, delivery and performance by each
Loan Party of each Loan Document to which it is or will be a party and the
execution and delivery of the other documents to be delivered by the Loan
Parties in connection herewith;
(xxvi) a certificate of an authorized officer of each Loan
Party certifying the names and true signatures of the officers of such Loan
Party authorized to sign each Loan Document to which such entity is or will
be a party and the other documents to be executed and delivered by the Loan
Parties in connection herewith, together with evidence of the incumbency of
such authorized officers;
(xxvii) a copy of the corporate charter of each Loan Party,
certified as of the Funding Date by an authorized officer of each Loan
Party;
(xxiii) a copy of the by-laws of each Loan Party, certified
as of the Funding Date by an authorized officer of such Loan Party;
(xxix) an opinion of (i) Ruben & Aronson, LLP, and (ii)
Nevada counsel to the Borrowers and the Guarantor, in each case as to such
matters as the Lender may reasonably request;
(xxx) a copy of the Financial Statements, together with a
certificate of the chief executive officer or chief financial officer of
each of the Borrowers, setting forth all existing guarantees and other
contingent liabilities of the Borrowers;
(xxxi) a certificate, dated as of a date not more than ten
(10) Business Days prior to the Closing Date, of the appropriate official
of the jurisdiction of incorporation and each jurisdiction of foreign
qualification, both inside and outside the United States, of each Loan
Party, certifying as to the subsistence in good standing of, and the
payment of taxes by, each Loan Party in such jurisdictions and listing all
charter documents of each Loan Party on file with such official(s),
together with confirmation by telephone or telegram (where available) on
the Closing Date from such official(s) as to such matters; and
(xxxii) such other agreements, instruments, approvals,
opinions and other documents as the Lender may reasonably request.
(e) PROCEEDINGS; RECEIPT OF DOCUMENTS. All proceedings in
connection with the transactions contemplated by this Agreement, and all
documents incidental
thereto, shall be satisfactory to the Lender and its counsel, and the Lender
and such counsel shall have received all such information and such
counterpart originals or certified or other copies of such documents as the
Lender or such counsel may reasonably request.
(f) MATERIAL ADVERSE CHANGE. The Lender shall have determined,
in its sole and absolute discretion, that no material adverse change shall have
occurred in the business, operations, assets, financial condition or prospects
of any Borrower or the Guarantor after December 31, 1997.
(g) DUE DILIGENCE. The Lender shall have completed its due
diligence with respect to the Loan Parties and the results thereof shall be
acceptable to the Lender, in its sole and absolute discretion.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS AND
THE GUARANTOR. The Borrower and the Guarantor, as appropriate, each represent
and warrant, jointly and severally, as follows:
(a) ORGANIZATION, GOOD STANDING, ETC. Each Loan Party (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (ii) has all requisite power and
authority to conduct its business as now conducted and as presently contemplated
to make the borrowings hereunder and to consummate the transactions contemplated
hereby and by each of the Loan Documents to which it is a party, and (iii) is
duly qualified to do business and is in good standing in each jurisdiction and
territory, inside and outside of the United States, in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary. Each Borrower is a wholly-owned subsidiary
of the Guarantor.
(b) AUTHORIZATION, ETC. The execution, delivery and performance
by each Loan Party of each Loan Document to which it is a party (i) have been
duly authorized by all necessary corporate action, (ii) do not and will not
contravene the charter or by-laws, law or any contractual restriction binding on
or otherwise affecting it or any of its properties, (iii) do not and will not
result in or require the creation of any lien, security interest or other charge
or encumbrance (other than pursuant to any such Loan Document) upon or with
respect to any of its properties, and (iv) do not and will not result in any
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to its operations or any of its
properties.
(c) GOVERNMENTAL APPROVALS. No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority or
other regulatory body is required in connection with the due execution, delivery
and performance by each Borrower or the Guarantors of any Loan Document to which
such Persons are or will be parties.
(d) ENFORCEABILITY OF LOAN DOCUMENTS. This Agreement is, and
each other Loan Document to which each Borrower or the Guarantor is or will be a
party, when delivered hereunder, will be a legal, valid and binding obligation
of such Person, enforceable against such Person in accordance with its terms.
(e) CERTIFICATES. Each Stock Certificate issued and
delivered pursuant to subsection 5.01(c) or pursuant to the terms of any
Warrant shall, upon issuance and delivery pursuant to the terms hereof or the
terms of such Warrant, as may be the case, represent validly issued, fully
paid and non-assessable shares of Common Stock.
(f) SUBSIDIARIES. There are no Subsidiaries of Mountaineer
other than Mountaineer Magic, Inc. There are no subsidiaries of Speakeasy Reno
or Speakeasy Vegas. There are no subsidiaries of the Guarantor other than
(i) Mountaineer, (ii) Speakeasy Reno, (iii) Speakeasy Vegas, (iv) Excal Energy
Corporation, a Michigan Corporation, and (v) Golden Palace Casinos, Inc., a
Minnesota Corporation. The Guarantor owns 100% of the common stock of each of
the foregoing subsidiaries.
(g) LITIGATION. Except as set forth on Schedule I and in the
Financial Statements, there is no pending or threatened action, suit or
proceeding affecting any Borrower or the Guarantors before any court or other
Governmental Authority or any arbitrator. There is no pending or threatened
action, suit or proceeding affecting any Borrower or the Guarantor before any
court or other Governmental Authority or any arbitrator which may materially
adversely affect the operations or condition, financial or otherwise, of such
Person or the ability of such Person to perform its obligations under any Loan
Document to which such Person is or will be a party.
(h) FINANCIAL CONDITION. The Financial Statements, copies of
which have been delivered to the Lender, fairly present the financial condition
of the Loan Parties as of the respective dates thereof and the results of
operations of the Loan Parties for the fiscal periods ended on such respective
dates, all in accordance with GAAP. Since December 31, 1997, there has been no
material adverse change in such condition or operations. There has been no
change in the number of shares of Common Stock outstanding since March 20, 1998,
as reported on the Form 10-K of the Guarantor for the period ending December 31,
1997, other than as set forth on Schedule II.
(i) COMPLIANCE WITH LAW, ETC. Any Borrower nor the Guarantor is
in violation of its charter or by-laws, any law or any material term of any
agreement or instrument binding on or otherwise affecting it or any of its
properties.
(j) ERISA. Neither Loan Party maintains, or is obligated to
maintain or contribute to, any Employee Plan or Multiemployer Plan. As of the
Closing Date, neither Loan Party has any employee benefit plan with respect to
which the present value of all vested, nonforfeitable benefits under such plan
exceeds the fair market value of the assets of such plan allocable to such
benefits (any such amount constituting an "UNFUNDED LIABILITY").
(k) TAXES, ETC. After giving effect to any lawful extension,
all Federal, state and local tax returns and other reports required by
applicable law to be filed by each Borrower or the Guarantor have been filed,
and all taxes, assessments and other governmental charges imposed upon each
Borrower or the Guarantor or any property of any Borrower or the Guarantor which
have become due and payable on or prior to the date hereof have been paid,
except to the extent contested in good faith by proper proceedings which stay
the imposition of any penalty, fine or lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof.
(l) REGULATION U. Any Borrower nor the Guarantor is or will not
be engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of the Loan will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
(m) ADVERSE AGREEMENTS, ETC. Any Borrower nor the Guarantor is
a party to any agreement or instrument, or subject to any charter or other
corporate restriction or any judgment, order, regulation, ruling or other
requirement of a court or other Governmental Authority or regulatory body, which
materially adversely affects, or, to the best knowledge of any Borrower or the
Guarantor, in the future is reasonably likely to materially adversely affect,
the condition or operations, financial or otherwise, of any Borrower or the
Guarantor or the ability of any Borrower or the Guarantor to perform its
obligations under any Loan Document to which any Loan Party is or will be a
party.
(n) HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Any Borrower
nor the Guarantor is (i) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, or (ii)
an "investment company" or an "affiliated person" or "promoter" of, or
"principal underwriter" of or for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
(o) PERMITS, ETC. Each of the Borrowers and the Guarantor has
all permits, licenses, authorizations and approvals required for it to lawfully
own and operate its respective businesses other than those that, if not obtained
or in effect, would not in the aggregate have a material adverse effect on the
business of the Borrowers and the Guarantor, respectively; PROVIDED, HOWEVER,
that the permits, licenses, authorizations and approvals of Speakeasy Vegas and
Speakeasy Reno with respect to gaming and hotel operation in Nevada, set forth
on Schedule X hereto, have not been obtained and Speakeasy Reno and Speakeasy
Vegas hereby agree to use their best efforts to obtain all such licenses,
permits, authorizations and approvals as soon as practicable. Schedule III sets
forth all licenses, permits, authorizations and approvals required by any
Governmental Authority for the lawful conduct of each Borrowers' business, and,
except for those listed on Schedule X, each of the foregoing has been obtained
by the Borrowers and is in full force and effect as of the Closing Date. On the
last Business Day of each month, until all such permits have been obtained,
Borrowers will supplement Schedules III and X.
(p) TITLE TO PROPERTIES. Each Borrower has good and marketable
title to all of its properties and assets, free and clear of all liens, security
interests and other charges and encumbrances and other types of preferential
arrangements, except such as are permitted by Section 8.02(a) hereof. All of
the properties of any Borrower are titled in such Borrower's legal name. Any
Borrower has used, or filed a financing statement (or other evidence of a lien,
charge or Security Interest) under, any other name in any United States
jurisdiction or territory outside the United States for at least the last five
(5) years.
(q) FULL DISCLOSURE. Except for any misstatements or omissions
which may be contained in any Property Document (other than any and all Property
Documents prepared by or on behalf of any Borrower), no Loan Document or
schedule or exhibit thereto and no certificate, report, statement or other
document or information furnished to the Lender in connection herewith or with
the consummation of the transactions contemplated hereby, contains any
misstatement of material fact or omits to state a material fact or any fact
necessary to make the statements contained herein or therein not misleading.
There is no contingent liability or other material fact of which any Borrower or
the Guarantor is aware after reasonable inquiry that may adversely affect the
condition or operations, financial or otherwise, or the business or prospects of
any Borrower or the Guarantor which has not been set forth in a footnote
included in the Financial Statements or a Schedule thereto or hereto.
(r) OPERATING LEASE OBLIGATIONS. No Borrower has any obligation
as lessee for the payment of rent for any real or personal property other than
as set forth in Schedule IV.
(s) INDEBTEDNESS. The Borrowers have no Indebtedness other than
Indebtedness set forth on Schedule V.
(t) ENVIRONMENTAL MATTERS. Except as set forth in the Plan of
Remediation, (i) each Borrower is in compliance with all applicable
Environmental Laws, and (ii) none of the operations of any Borrower is the
subject of any Federal, state or local investigation to determine whether any
remedial action is needed to address the presence, disposal, release or
threatened release of any Hazardous Material into the environment which may have
a material adverse effect on the business, operations, property, assets or
financial or other condition of any Borrower, and no Borrower has any contingent
liability in connection with any release of any Hazardous Material into the
environment which may have a material adverse effect on its business,
operations, property, assets or financial or other condition.
(u) SCHEDULES. All of the information which is scheduled to
this Agreement is correct and accurate in all material respects, and all of the
information that would be required to accurately revise each such schedule to
bring it current as of the Closing Date has been disclosed to the Lender by the
Borrowers or the Guarantor in writing delivered to the Lender. No subsequent
event except for operating losses incurred by Speakeasy Vegas with respect to
the Cheyenne Hotel Property and by Speakeasy Reno with respect to the Reno Hotel
Property, could reasonably be expected to have a material adverse effect on any
of (a) the business, assets, properties or condition of a Loan Party, (b) the
ability of either Loan Party to
perform any of the obligations of such Loan Party under any Loan Document,
(c) the legality, validity or enforceability of this Agreement or any of the
other Loan Documents, (d) the rights and remedies of the Lender under this
Agreement or any of the other Loan Documents, or (e) the creation, perfection
or priority of the Lender's lien on, or security interest in, any of the
Collateral, securing the payment of any of the Obligations.
(v) INSURANCE. Each Borrower and the Guarantor keeps its
insurable properties adequately insured and maintains (i) insurance to such
extent and against such risks, including fire, as is customary with companies in
the same or similar businesses, (ii) workmen's compensation insurance in the
amount required by applicable law, (iii) personal liability insurance and public
liability insurance, in the amount customary with companies in the same or
similar business against claims for personal injury or death or properties
owned, occupied or controlled by it, and (iv) such other insurance as may be
required by law or as may be reasonably required in writing by the Lender.
(w) SOLVENCY OF MOUNTAINEER. As of the date first written
above, and after giving effect to the Loans and to liens created by Mountaineer
in connection therewith, (i) the sum of the assets, at a fair valuation, of
Mountaineer will exceed its debts ("debt" means any liability on a claim, and
"claim" means (A) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (B) right to an
equitable remedy for breach of performance if such breach gives rise to payment,
whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured);
(ii) Mountaineer has not incurred and does not intend to incur, and does not
believe that it will incur, debts beyond its ability to pay such debts as such
debts mature; and (iii) Mountaineer has, and will have, sufficient capital with
which to conduct its business.
(x) SOLVENCY OF THE GUARANTOR. As of the date first written
above, and after giving effect to the Loans and to liens created by each
Borrower in connection therewith, (i) the sum of the consolidated assets, at a
fair valuation, of the Guarantor will exceed its consolidated debts ("debt"
means any liability on a claim, and "claim" means (A) right to payment, whether
or not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured or (B) right to an equitable remedy for breach of performance if
such breach gives rise to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured); (ii) the Guarantor has not incurred and does
not intend to incur, and does not believe that it will incur, debts beyond its
ability to pay such debts as such debts mature; and (iii) the Guarantor will
have sufficient capital with which to conduct its business.
(y) BUSINESS OF SPEAKEASY. Other than the transactions
contemplated hereby, Speakeasy Reno and Speakeasy Vegas have conducted no
business, have no assets or liabilities and have incurred no Indebtedness.
SECTION 7.02. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
LENDER. Lender hereby represents and warrants to and covenants with the
Borrowers and the Guarantor that:
All shares of Common Stock acquired by Lender in accordance with
this Agreement are being acquired by Lender without a view to distribute any of
the shares of Common Stock in any transaction which would be in violation of the
Securities Act of 1933, as amended.
ARTICLE VIII
COVENANTS OF THE BORROWER AND THE GUARANTOR
SECTION 8.01. AFFIRMATIVE COVENANTS. So long as any principal of
or interest on any Loan shall remain unpaid or the Lender shall have any
commitment to make a Loan hereunder, each Borrower, jointly and severally, and,
where appropriate, the Guarantor will, unless the Lender shall otherwise consent
in writing:
(a) REPORTING REQUIREMENTS. Furnish to the Lender:
(i) as soon as available and in any event within 45
days after the end of each month, an interim (A) consolidated and
consolidating balance sheets of each Borrower as at the end of such month
and for the period commencing at the end of the immediately preceding
fiscal year and ending with the end of such month, (B) consolidated and
consolidating statement of income of each Borrower as at the end of such
month and for the period commencing at the end of the immediately preceding
fiscal year and ending with the end of such month, and (C) consolidated and
consolidating statement of cash flow of each Borrower for such month and
for the period commencing at the end of the immediately preceding fiscal
year and ending with the end of such month, setting forth in comparative
form the corresponding figures for the corresponding date or period of the
immediately preceding fiscal year and setting forth the budget for such
period all in reasonable detail and prepared in accordance with generally
accepted accounting principles consistently applied, each duly certified by
the chief financial officer of such Borrower as (1) fairly presenting the
financial condition of such Borrower at the end of such month, and the
results of the operations of such Borrower for such month (subject to
normal year-end audit adjustments), and (2) having been prepared in
accordance with generally accepted accounting principles consistently
applied;
(ii) as soon as available and in any event within 45
days after the end of each fiscal quarter of each Borrower, an interim (A)
consolidated and consolidating balance sheet of each Borrower as at the end
of such quarter and for the period commencing at the end of the immediately
preceding fiscal year and ending with the end of such quarter, (B)
consolidated and consolidating statement of income of each Borrower as at
the end of such quarter and for the period commencing at the end of the
immediately preceding fiscal year and ending with the end of such quarter,
and (C)
consolidated and consolidating statement of cash flow of each Borrower
for such quarter and for the period commencing at the end of the
immediately preceding fiscal year and ending with the end of such
quarter setting forth in comparative form the corresponding figures for
the corresponding date or period of the immediately preceding fiscal
year and setting forth the budget for such period, all in reasonable
detail and prepared in accordance with generally accepted accounting
principles consistently applied, each duly certified by the chief
financial officer of such Borrower as (1) fairly presenting the
financial condition of such Borrower at the end of such quarter, and the
results of the operations of such Borrower for such quarter (subject to
normal year-end audit adjustments), and (2) having been prepared in
accordance with generally accepted accounting principles consistently
applied;
(iii) as soon as available and in any event within 90
days after the end of each fiscal year of each Borrower or such time that
the information required to be delivered pursuant to subparagraph
7.01(a)(v) is delivered to the Securities and Exchange Commission without
violation of any rule, regulation or order thereof, a (A) consolidated and
consolidating balance sheet of each Borrower as at the end of such fiscal
year, (B) consolidated and consolidating statement of income of each
Borrower as at the end of such fiscal year, and (C) consolidated and
consolidating statement of cash flow of each Borrower for such fiscal year
setting forth in comparative form the corresponding figures for the
immediately preceding fiscal year and setting forth the budget for such
fiscal year, all in reasonable detail and prepared in accordance with
generally accepted accounting principles consistently applied and, in the
case of balance sheets and statement of income, accompanied by a report and
an unqualified opinion, prepared in accordance with generally accepted
auditing standards, of an independent certified public accountant of
recognized standing selected by each Borrower and satisfactory to the
Lender, together with any management letter prepared by such accountant and
a written statement of such accountant (1) to the effect that in making the
examination necessary for its certification of such financial statements,
it has not obtained any knowledge of the existence of an Event of Default,
or an event which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default, or (2) if such accountant shall have
obtained any knowledge of the existence of an Event of Default, or an event
which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default, describing the nature thereof;
(iv) within 45 days after the end of any fiscal quarter
of the Guarantor or such time that the information required to be delivered
pursuant to this subparagraph 7.01(a)(iv) is delivered to the Securities
and Exchange Commission without violation of any rule, regulation or order
thereof, balance sheets of the Guarantor and its subsidiaries as of the end
of such fiscal quarter and statements of income and retained earnings of
the Guarantor and its subsidiaries for the period commencing at the
beginning of the fiscal year in which such fiscal quarter falls through the
end of such fiscal quarter, certified as accurate and correct by the chief
financial officer of the Guarantor;
(v) within 120 days after the end of each fiscal year
of the Guarantor or such time that the information required to be delivered
pursuant to this subparagraph 7.01(a)(v) is delivered to the Securities and
Exchange Commission without violation of any rule, regulation or order
thereof, a copy of the annual report for such fiscal year for the Guarantor
and its subsidiaries containing financial statements for such year
certified in a manner acceptable to Lender by independent public
accountants of recognized standing;
(vi) promptly after the sending or filing thereof,
copies of all reports that the Guarantor sends to any of its security
holders, reports and copies of all reports and registration statements that
the Guarantor or any subsidiary files with the Securities and Exchange
Commission or any national securities exchange;
(vii) promptly upon delivery thereof, all reports and
filings made by each Borrower and/or the Guarantor to the West Virginia
Racing Commission or the West Virginia Lottery Commission;
(viii) simultaneously with the delivery of the financial
statements required by clauses (i), (ii), (iii), (iv) and (v) of this
Section 8.01(a), (A) a certificate of the chief financial officer of the
appropriate Loan Party, stating that such officer has reviewed the
provisions of this Agreement and the other Loan Documents to which such
Loan Party is a party and has made or caused to be made under his
supervision a review of the condition and operations of such Loan Party
during the period covered by such financial statements with a view to
determining whether each Borrower was in compliance with all of the
provisions of such Loan Documents, and that such review has not disclosed,
and such officer has no knowledge of, the existence during such period of
an Event of Default, or an event which, with the giving of notice or the
lapse of time or both, would constitute an Event of Default;
(ix) as soon as available, and in any event no later
than 90 days after the end of each year, annual financial projections
(including forecasted income statements, cash flow statements, schedules of
cash receipts and disbursements and borrowings hereunder) of each Borrower
and the Guarantor for the next succeeding three-year period, all in
reasonable detail, together with all such supporting information as the
Lender shall reasonably request;
(x) promptly after submission to any Governmental
Authority not otherwise referred to in this subsection 8.01(a), all
documents and information furnished to such Governmental Authority, unless
such documents and information are furnished in the ordinary course of
business and will not result in any adverse action to be taken by such
Governmental Authority;
(xi) promptly after obtaining knowledge thereof but in
any event not later than five (5) days after the occurrence of an Event of
Default, or an event which, with the giving of notice or the lapse of time
or both, would constitute an Event of Default, or a material adverse change
in the condition or operations, financial or
otherwise, of each Borrower, the written statement of the chief
executive officer or the chief financial officer of such Borrower,
setting forth the details of such Event of Default, event or material
adverse change and the action which such Borrower proposes to take with
respect thereto;
(xii) as soon as possible and in any event within 10 days
after any Borrower, the Guarantor or any of their Affiliates knows or has
reason to know of the existence of any Unfunded Liability, a notice setting
forth the amount of such Unfunded Liability, certified by the chief
financial officer of the applicable Loan Party.
(xiii) promptly after the commencement thereof but in any
event not later than ten (10) days after service of process with respect
thereto on, or the obtaining of knowledge thereof by, any Borrower or the
Guarantor, notice of each action, suit or proceeding before any court or
other Governmental Authority or other regulatory body or any arbitrator
which may materially adversely affect the condition or operations,
financial or otherwise, of any Borrower or the Guarantor; and
(xiv) promptly upon request, such other information
concerning the condition or operations, financial or otherwise, of each
Borrower or the Guarantor as the Lender from time to time may reasonably
request.
(b) COMPLIANCE WITH LAWS, ETC. Comply in all material
respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, (i) paying before the same become
delinquent all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or upon any of their properties, and
(ii) paying all lawful claims which if unpaid might become a lien or charge
upon any of their properties, except to the extent contested in good faith by
proper proceedings which stay the imposition of any penalty, fine or lien
resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof.
(c) PRESERVATION OF EXISTENCE, ETC. Maintain and preserve its
existence, rights and privileges, and become or remain duly qualified and in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary. Maintain all licenses and accreditations necessary to
conduct the business of each Borrower and the Guarantor.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep adequate
records and books of account, with complete entries made in accordance with
GAAP.
(e) INSPECTION RIGHTS. Permit the Lender or any agent or
representative thereof at any reasonable time and from time to time to examine
and make copies of and abstracts from its records and books of account, to visit
and inspect its properties, to conduct audits or examinations, and to discuss
its affairs, finances and accounts with any of the directors, officers,
employees, independent accountants or other representatives thereof. The
Borrowers, jointly and severally, agree to pay the cost of each such audit or
examination as provided in subsection 5.01(c).
(f) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve all
of its properties which are necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the provisions of all leases to which a Borrower or
the Guarantor is a party as lessee or under which a Borrower or the Guarantor
occupies property, so as to prevent any loss or forfeiture thereof or
thereunder.
(g) MAINTENANCE OF INSURANCE. Maintain insurance with
responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, personal liability and
hazard insurance) with respect to its properties and business, in such amounts
and covering such risks, as is required by (i) any Governmental Authority or
other regulatory body having jurisdiction with respect thereto (ii) any Loan
Document or (iii) as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated. The Borrowers
shall pay over to the Lender any amount of insurance proceeds received by any
Borrower or the Guarantor payable in respect of a casualty loss in excess of
$250,000.00 (as a mandatory prepayment (without application of the Prepayment
Factor) of the then outstanding Loans, to be applied by the Lender to such Loans
in its discretion).
(h) ENVIRONMENTAL INDEMNITY. Comply with the requirements of
all applicable Environmental Laws, provide to the Lender all documentation in
connection with such compliance that the Lender may reasonably request, and
defend, indemnify, and hold harmless the Lender, its employees, agents,
officers, and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs, or expenses (including, without
limitation, attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses) arising out of (i) the presence, disposal,
release, or threatened release of any Hazardous Materials on any property at any
time owned or occupied by any Borrower (or its predecessors in interest or
title); (ii) any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous Materials; (iii)
any investigation, lawsuit brought or threatened, settlement reached, or
government order relating to such Hazardous Materials; and/or (iv) any violation
of any Environmental Law; PROVIDED, HOWEVER, that with respect to the Reno Hotel
Property and the Cheyenne Hotel Property, the foregoing environmental indemnity
shall not apply to or relate to any condition to the extent such condition
existed on the Reno Hotel Property or the Cheyenne Hotel Property during the
period of time prior to the acquisition by Speakeasy Reno of the Reno Hotel
Property or Speakeasy Vegas of the Cheyenne Hotel Property.
(i) NOTIFICATION OF EVENT OF DEFAULT. Immediately notify Lender
in writing of any default of nonpayment or any other default or event of default
or notice thereof under any agreements or instruments representing material
Indebtedness of a Borrower or the Guarantor or any Lien on their respective
assets.
(j) FURTHER ASSURANCES. Each Loan Party shall do, execute,
acknowledge and deliver, at the sole cost and expense of such Loan Party, all
such further acts, deeds, conveyances, mortgages, assignments, estoppel
certificates, financing statements, notices of assignment, transfers and
assurances as the Lender may reasonably require from time to time
in order to better assure, convey, grant, assign, transfer and confirm unto
the Lender the rights now or hereafter intended to be granted to the Lender
under this Agreement, any Loan Document or any other instrument under which
such Loan Party may be or may hereafter become bound to convey, mortgage or
assign to the Lender to effect the intention or facilitate the performance of
the terms of the Agreement.
(k) ADDITIONAL SECURITY. The Borrowers shall, within 14 days of
the acquisition of any asset by any Borrower with the proceeds of a Line Loan or
a Cheyenne Construction Loan (whether such acquisition is funded in whole or in
part by such proceeds), execute and deliver all documents necessary or
desirable, in the opinion of counsel to the Lender, to perfect a first priority
security interest in such asset in favor of the Lender; PROVIDED, HOWEVER, that
with respect to any asset that is partially funded by a purchase money mortgage
or purchase money security interest in accordance with subsection 8.02(a)(vii)
hereof, the Lender's security interest may be subject to such purchase money
mortgage or security interest; and PROVIDED, FURTHER, HOWEVER, that the Lender
shall not have additional security in the event such purchase money mortgage or
security agreement precludes junior financing. Each Borrower and the Guarantor
hereby acknowledge and agree that (i) any asset other than an equity interest in
a Person acquired by it after the date hereof shall be automatically subject to
a Lien in favor of the Lender pursuant to the Security Agreements and be subject
to the terms thereof, and (ii) any asset that is an equity interest in another
Person shall be subject to the terms and conditions of a pledge agreement in
form and substance reasonably satisfactory to the Lender.
(l) ENVIRONMENTAL ACTIONS The Borrowers shall take all remedial
and other actions as set forth in the Plan of Remediation in a timely manner.
(m) SPEAKEASY RENO FRANCHISE AGREEMENTS. Speakeasy Reno is
currently in negotiations with Ramada Franchise Systems, Inc. or an affiliate
thereof ("Ramada") regarding the Reno Hotel Property. Speakeasy Reno will use
its best efforts to finalize with Ramada or another franchise company reasonably
satisfactory to Lender, a new license agreement for the Reno Hotel Property
which shall include (or be coupled with) a termination of the pre-existing
franchise agreement dated April 10, 1997 (the "Pre-Existing Ramada Franchise
Agreement") between Reno Hotel, LLC and Ramada Franchising Systems, Inc. without
requiring Lender or Reno Hotel LLC to pay Ramada liquidated damages pursuant to
the existing franchise agreement. Concurrently with the execution of any new
franchise agreement, Speakeasy Reno shall require the franchise company to
execute, for the benefit of Lender, either a comfort letter, tri-party agreement
or conditional assignment of the new franchise agreement, in each case in a form
reasonably satisfactory to Lender. Speakeasy Reno shall immediately deliver
such instrument to Lender along with a copy of the executed franchise agreement.
(n) SPEAKEASY VEGAS FRANCHISE AGREEMENTS. Speakeasy Vegas has
determined not to pursue a franchise agreement with Days Inn of America Inc.
with respect to the Cheyenne Hotel Property and is currently in negotiations
with Ramada regarding the Cheyenne Hotel Property. Speakeasy Vegas will use its
best efforts to finalize with Ramada or another reputable franchise company
(including a new agreement with Days Inn of America Inc.) as soon as practicable
(it being understood that (i) Speakeasy Vegas intends to close the Cheyenne
Hotel Property for a period of time during construction of improvements and
renovation of hotel rooms; and (ii) no franchise agreement will be in place
during such "dark" time) a new license agreement for the Cheyenne Hotel
Property. In the event Speakeasy Vegas cannot, despite its best efforts,
conclude a franchise agreement for the Cheyenne Hotel Property on terms
acceptable to it, then Speakeasy Vegas shall operate the Cheyenne Hotel Property
as an "independent" hotel without any affiliation with a hotel franchise company
and shall do so in a prudent manner, in accordance with the customary business
practices of the hotel and/or casino industry.
(o) MANAGEMENT AGREEMENT, FRANCHISE AGREEMENTS. Any
management agreement which shall be entered into by any Borrower, pursuant to
which the Reno Hotel Property or the Cheyenne Hotel Property are managed, or
any subsequent modification thereto or replacement thereof, shall be in a
form satisfactory to the Lender and shall be approved by the Lender in
writing (an "Approved Management Agreement"). Concurrently with the
execution of any Approved Management Agreement, the Borrowers shall require
the management company to execute, for the benefit of Lender, either a
comfort letter, tri-party agreement or conditional assignment of the Approved
Management Agreement, in each case in a form reasonably satisfactory to
Lender. With respect to (i) an Approved Management and/or (ii) the license
agreement or agreements entered into pursuant to Section 8.01 (m) or (n)
above, or any modifications or replacements thereof approved in writing by
Lender, or any substitute hotel franchise or license agreement approved in
writing by Lender (collectively, an "Approved Franchise Agreement"), each of
Speakeasy Reno and Speakeasy Vegas hereby covenants and agrees with Lender
that it shall:
(i) promptly notify Lender of any default under the
Approved Franchise Agreement or the Approved Management Agreement of which
it is aware; and
(ii) promptly deliver to Lender a copy of each financial
statement, business plan, capital expenditures plan, default notice and
other material report received by it under the Approved Franchise Agreement
or the Approved Management Agreement.
(p) MANAGEMENT AGREEMENT, FRANCHISE AGREEMENTS. Each of
Speakeasy Reno and Speakeasy Vegas further covenants to Lender that it shall
not, without Lender's prior consent:
(i) surrender, terminate or cancel any Approved
Franchise Agreement or Approved Management Agreement; or
(ii) otherwise modify, change, supplement, alter or
amend, or waive or release any of its rights and remedies under the
Approved Franchise Agreement or the Approved Management Agreement in any
materially adverse respect.
Notwithstanding the foregoing provisions of this subsection (p), with respect to
an Approved Franchise Agreement, so long as no Event of Default or event which
with the giving of notice or the passage of time or both would constitute an
Event of Default exists, Speakeasy Reno and/or
Speakeasy Vegas shall have the right, upon written notice to but without the
prior consent of Lender, to effect a termination or cancellation of an
Approved Franchise Agreement if it is coupled with the execution of a new
Franchise Agreement which is (i) on business terms at least as favorable as
the Approved Franchise Agreement and (ii) with a reputable franchise company
which licenses properties that have a standard average daily rate equal to or
greater than the average daily rate required under the Approved Franchise
Agreement.
(q) LEASES WITH CASINO OPERATORS. Speakeasy shall have the
right to terminate the lease entered into (and consented to by Lender pursuant
to Section 2.12 of the Reno Deed of Trust and/or the Cheyenne Deed of Trust) for
the operation of a casino in a portion of the Reno Hotel Property or the
Cheyenne Hotel Property at such time as Speakeasy or an affiliate thereof shall
have obtained all governmental approvals required to operate a casino at one or
both of such properties and, in such event, Speakeasy (or its affiliate,
pursuant to an agreement reasonably acceptable to Lender) shall thereafter
operate such casino(s) in accordance with the applicable terms of this Agreement
and in accordance with law.
SECTION 8.02. NEGATIVE COVENANTS. So long as any principal of or
interest on any Loan, or any Obligation, shall remain unpaid or the Lender shall
have any commitment to make any Loan, the Borrowers will not and, where
appropriate, the Guarantor will not, without the prior written consent of the
Lender:
(a) LIENS, ETC. Create or suffer to exist any Lien upon or with
respect to any of its properties, rights or other assets, whether now owned or
hereafter acquired, or assign or otherwise transfer any right to receive income,
other than:
(i) Liens created pursuant to the Loan Documents;
(ii) With respect to Mountaineer, liens existing on the
date hereof as set forth on Schedule VI to the Amended Loan Agreement, or,
with respect to Speakeasy Reno or Speakeasy Vegas, liens existing on the
date hereof, as set forth in Schedule VI hereto, and the renewal and
replacement of such liens, provided that any such renewal or replacement
lien shall be limited to the property or assets covered by the lien renewed
or replaced and the indebtedness secured by any such renewal or replacement
lien shall be in an amount not greater than the amount of indebtedness
secured by the lien renewed or replaced;
(iii) Liens for taxes, assessments or governmental
charges or levies to the extent that the payment thereof shall not be
required by Section 8.01(b)(i) hereof;
(iv) Liens created by operation of law, such as
materialmen's liens, mechanics' liens and other similar liens, arising in
the ordinary course of business and securing claims the payment of which
shall not be required by Section 8.01(b)(ii) hereof;
(v) deposits, pledges or Liens (other than liens
arising under ERISA) securing (A) obligations incurred in respect of
workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, (B) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations, or (C) obligations on surety or appeal bonds, but only to the
extent such deposits, pledges or liens are incurred or otherwise arise in
the ordinary course of business and secure obligations which are not past
due;
(vi) restrictions on the use of real property and minor
irregularities in the title thereto which do not (A) secure obligations for
the payment of money or (B) materially impair the value of such property or
its use by any Loan Party in the normal conduct of such Loan Party's
business;
(vii) (A) purchase money liens on or purchase money
security interests in equipment acquired or held by any Borrower in the
ordinary course of its business to secure the purchase price of such
property or Indebtedness incurred solely for the purpose of financing the
acquisition of such property, or (B) liens or security interests existing
on such property at the time of its acquisition, PROVIDED, that (1) no such
lien or security interests shall extend to cover any other property of the
Borrowers, and (2) the principal amount of the Indebtedness secured by any
such lien or security interest shall not exceed 100% of the lesser of the
fair market value or the cost of the property so held or acquired; and
(viii) any other Lien in favor of the Lender.
(b) INDEBTEDNESS. Create, incur or suffer to exist any
Indebtedness, other than:
(i) Indebtedness to the Lender;
(ii) Indebtedness created hereunder or under the Notes;
(iii) Indebtedness existing on the date hereof, as set
forth in Schedule V hereto, and any extension of maturity, refinancing or
other modification of the terms thereof, PROVIDED, HOWEVER, that such
extension, refinancing or modification (A) is pursuant to terms that are
not less favorable to the Borrowers than the terms of the Indebtedness
being extended, refinanced or modified, and (B) after giving effect to the
extension, refinancing or modification of such Indebtedness, the amount of
such Indebtedness outstanding is not greater than the amount of such
Indebtedness outstanding immediately prior to such extension, refinancing
or modification;
(iv) Indebtedness represented by accounts payable
incurred in the ordinary course of business;
(v) Indebtedness secured by liens or security interests
permitted by clause (vii) of subsection (a) of this Section 8.02;
(vi) Subordinated Indebtedness of the Borrowers on terms
approved, in writing, by the Lender; and
(vii) Indebtedness under Operating Leases permitted by
Section 8.02(g) hereof.
(c) GUARANTIES, ETC. Assume, guarantee, endorse or otherwise
become directly or contingently liable (including, without limitation, liable by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss), in connection with any Indebtedness of any
other Person, other than:
(i) guaranties created hereunder or under any Loan
Document;
(ii) guaranties by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business;
(iii) guaranties existing on the date hereof, as set
forth in Schedule VII, including any renewal or other modification thereof,
PROVIDED, HOWEVER, that such renewal or modification (A) is pursuant to
terms that are not less favorable to the Borrowers than the terms of the
guaranty being renewed or modified, and (B) after giving effect to the
renewal or modification of such guaranty, the amount of the outstanding
indebtedness guaranteed by such guaranty is not greater than the amount of
the outstanding indebtedness guaranteed by such guaranty immediately prior
to such renewal or modification; and
(iv) guaranties of any other Indebtedness to the Lender
or Indebtedness permitted by subsection (b) of this Section 8.02;
PROVIDED, HOWEVER, that the Guarantor may: (i) form subsidiaries which incur
Indebtedness ("NEW SUBSIDIARY DEBT"); and (ii) in the discretion of the
Guarantor, guarantee such New Subsidiary Debt pursuant to a guarantee of
collection (but not a guarantee of payment), in each case subject to the
conditions that such guarantee of collection or other obligation of any kind of
the Guarantor in respect of such New Subsidiary Debt, or guarantee thereof,
contains provisions reasonably satisfactory to the Lender to the effect that (A)
no Person with any rights to any payment in respect of such New Subsidiary Debt
shall have the right, at any time prior to the date which is one year and one
day after the date on which all of the Obligations have been satisfied in full,
to acquiesce, petition or otherwise invoke, or cause any other Person acquiesce,
petition or otherwise to invoke, the process of any court or other Governmental
Authority for the purpose of commencing or sustaining a case against the
Guarantor under any federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Guarantor or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Guarantor, (B)
no recourse may be had against the common stock of the borrower owned by the
Guarantor, or any assets of any Borrower, in respect of such New Subsidiary Debt
or guarantee thereof, and (C) no term or covenant with respect to such New
Subsidiary Debt may, directly or indirectly, impair Lender's
Liens, security interests and claims granted or arising under this Agreement
or the other Loan Documents.
(d) MERGER, CONSOLIDATION, SALE OF ASSETS, ETC.
(i) merge or consolidate with any Person; or
(ii) sell, assign, lease, engage in sale leaseback
transactions or otherwise transfer or dispose of, whether in one
transaction or in a series of related transactions, any substantial portion
of its properties, rights or other assets (whether now owned or hereafter
acquired) to any Person.
(e) CHANGE IN NATURE OF BUSINESS. Make any material change in
the nature of its business as conducted on at the date hereof.
(f) INVESTMENTS, ETC. Make any loan, advance or contribution to
any Person or purchase or otherwise acquire any capital stock, properties,
assets or obligations of, or any interest in, any Person, other than (i)
Permitted Investments, (ii) investments existing on the date hereof, as set
forth in Schedule VIII, (iii) advances to employees or vendors made in the
ordinary course of its business as presently conducted, not to exceed at any one
time outstanding an aggregate of $500,000 for all such loans and advances,
(iv) advances, loans or contributions to Affiliates of the Guarantor with the
consent of the Lender, such consent not to be unreasonably withheld and (v) the
acquisition by Speakeasy Reno of the Reno Hotel Property and the acquisition by
Speakeasy Vegas of the Cheyenne Hotel Property.
(g) LEASE OBLIGATIONS. Create, incur or suffer to exist any
obligation as lessee (i) for the payment of rent for any real or personal
property in connection with any sale and leaseback transaction, or (ii) for the
payment of rent for any real or personal property under Operating Leases which
would cause the aggregate amount of all obligations in respect of Operating
Leases payable by any Borrower in any fiscal year of such Borrower to exceed
105% of the Operating Leases outstanding as of the end of the prior fiscal year;
PROVIDED, HOWEVER, that the Borrowers may incur such obligations with respect to
Capital Leases and capital purchases for video lottery terminals and other
gaming equipment in an aggregate amount not to exceed $5,000,000 per year; and
PROVIDED FURTHER that Speakeasy Vegas and Speakeasy Reno may enter into office
leases, the monthly lease payments for which shall not exceed, in the aggregate,
$3,000.00. Nothing herein shall be deemed to place a general limit on capital
expenditures which are not specifically limited herein.
(h) SALARIES AND WITHDRAWALS. Pay or become obligated to pay
any fees, wages, distributions, salary, bonus, commission, contributions to
deferred benefit plans or any other compensation (with the exception of options
to purchase common stock of the Guarantor for a price not less than the market
price on the date of grant) ("Compensation") to, or for the benefit of, the
Guarantor or any officers of any Borrower or the Guarantor in any calendar year
in excess of 120% of such Persons Compensation in the immediately preceding
calendar year to the extent such Persons were employed in the preceding year.
(i) DIVIDENDS, ETC. Declare or pay any dividend, purchase or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, return any capital to its stockholders as such, or make any other
payment or distribution of assets to its stockholders as such or to purchase or
otherwise acquire for value any stock of any Borrower; PROVIDED, HOWEVER, that
nothing herein shall prevent any Borrower from making distributions to the
Guarantor in the aggregate in any fiscal year equal to the lesser of (i) the
amount necessary to pay the expenses of the Guarantor, and (ii) $500,000.00 plus
expenses paid to any third parties, in each case minus the funds available to
the Guarantor from other sources other than through the issuance of securities.
(j) FEDERAL RESERVE REGULATIONS. Permit the Loan or the
proceeds of the Loan under this Agreement to be used for the purpose which
violates or is inconsistent with the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System.
(k) TRANSACTIONS WITH AFFILIATES. Permit a Borrower to enter
into or be a party to any transaction with any of its Affiliates, except in the
ordinary course of business for fair consideration and on terms no less
favorable to such Borrower as are available from unaffiliated third parties;
PROVIDED that the Guarantor may form a wholly-owned Subsidiary to enter into
management contracts with (i) its Affiliates to operate gaming and hotel
properties, and (ii) non-Affiliates for gaming and hotel property services, in
each case subject to (x) approval by the Lender of the form and substance of
such contracts and the receipt by the Lender of a collateral assignment of each
such contract pursuant to documentation reasonably satisfactory to the Lender,
(y) the pledge by the Guarantor of all of the capital stock of such wholly-owned
Subsidiary, and (z) subject to the requirements of the law the granting by such
wholly-owned Subsidiary of a first priority, perfected security interest in all
of such wholly-owned Subsidiary's assets pursuant to documentation reasonably
satisfactory to the Lender.
(l) FISCAL YEAR, ACCOUNTING POLICIES. Permit any material
change in the fiscal year or accounting policies and procedure of each Borrower
without the prior written consent of the Lender.
(m) IMPROVEMENTS. Make or commit to make any improvements on
the Property with a total cost in excess of $250,000.00 without the prior
written consent of the Lender, after Lender's review of all plans, permits and
other items necessary to ensure that any such improvement will comply with all
applicable building and safety requirements as the Lender, in its sole and
absolute discretion, may determine; PROVIDED, HOWEVER, that the foregoing
limitations shall not apply to the proceeds of the Line Loans or the Cheyenne
Construction Loans, which proceeds shall be used primarily for such
improvements.
(n) ISSUANCE OF STOCK. Permit the issuance by any Borrower of
(i) any additional shares of any class of capital stock, (ii) any securities
convertible voluntarily by the holder thereof or automatically upon the
occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such shares of capital stock or (iii) any warrants, options, contracts
or other commitments that entitle any Person to purchase or otherwise acquire
any such shares of capital stock.
SECTION 8.03. ADDITIONAL COVENANTS OF THE GUARANTOR. So long as
any of the Obligations remains outstanding, the Guarantor:
(a) shall not take any action to increase the par value of the
Common Stock (except to the extent required in the event of a reverse split of
the Common Stock);
(b) shall not issue any Common Stock, any preferred stock or any
security providing for the purchase of or convertibility into, or exchangeable
for, Common Stock or preferred stock, other than;
(i) in connection with stock rights, warrants and
options existing on the date hereof as set forth on Schedule IX;
(ii) in connection with future incentive stock options
or warrants for employees of the Guarantor not to exceed 4% of the number
of outstanding shares of Common Stock in any fiscal year, it being
understood that the re-granting (upon expiration or other cancellation
thereof) of any stock options previously granted pursuant to a plan set
forth in Schedule IX shall not be included in such 4%;
(iii) in the ordinary course of business of the Guarantor
not to exceed 2% of the number of outstanding shares of Common Stock in any
fiscal year;
(iv) in connection with any merger, acquisition or sale
of a major portion of the assets of the Guarantor approved in writing by
the Lender, such approval not to be unreasonably withheld; and
(v) to the Lender;
(c) shall not create or suffer to exist any Lien upon or with
respect to any of the common stock of any Borrower other than a Lien in favor of
the Lender; and
(d) shall, after the filing with the West Virginia Lottery
Commission by the Lender of its application for approval under the license of
any Borrower, use its best efforts to obtain the approval of each applicable
Governmental Authority to the pledge of all of the shares of the common stock of
such Borrower pursuant to a pledge agreement and, upon such approval, or the
written opinion of counsel to the Guarantor that such pledge would not result in
a revocation of any approval, license or permit required by such Borrower for
the conduct of its gaming businesses, shall execute and deliver a pledge
agreement to the Lender in form and substance reasonably satisfactory to the
Lender, together with such other documents as are customarily delivered and /or
executed and delivered in connection therewith.
SECTION 8.04. ADDITIONAL COVENANT. So long as any of the
Obligations remains outstanding, Mountaineer shall maintain an EBITDA Average of
at least $500,000.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.01. EVENTS OF DEFAULT. If any of the following Events
of Default shall occur and be continuing:
(a) any Borrower shall fail to pay any principal on any Loan
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise);
(b) any Borrower shall fail to pay any interest on any Loan or
any fee or other amount (whether by scheduled payment, acceleration, demand or
otherwise) within three (3) Business Days of the date when due; PROVIDED,
HOWEVER, that failure to make payments when due with respect to Obligations in
this Subsection 8.01(b) more than three (3) times in any twelve (12) month
period shall constitute an Event of Default hereunder;
(c) any representation or warranty made by any Loan Party or any
officer of any Loan Party under or in connection with any Loan Document shall
have been incorrect in any material respect when made;
(d) any Loan Party shall fail to perform or observe any of the
covenants contained in Sections 8.01, 8.02, or 8.03 hereof, or Article XI
hereof;
(e) any Loan Party shall fail to perform or observe any other
term, covenant or agreement contained in any Loan Document and to be performed
or observed by such Loan Party within twenty-eight (28) days of the receipt by
such Loan Party of notice of the failure to perform or observe such term,
covenant or agreement;
(f) there shall occur any breach or default under any other
agreement involving the borrowing of money under which such Loan Party or any of
its subsidiaries may be obligated as borrower or guarantor;
(g) any Loan Party (i) shall institute any proceeding or
voluntary case seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for such Person or for any substantial part
of its property, (ii) shall be generally not paying its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
(iii) shall make a general assignment for the benefit of creditors, or (iv)
shall take any action to authorize or effect any of the actions set forth above
in this subsection (g);
(h) any proceeding shall be instituted against any Loan Party
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for
such Person or for any substantial part of its property, and either such
proceeding shall remain undismissed or unstayed for a period of 60 days or
any of the actions sought in such proceeding (including, without limitation,
the entry of an order for relief against it or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial
part of its property) shall occur;
(i) any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Loan Party, or a proceeding shall be commenced
by any Loan Party, or by any Governmental Authority or other regulatory body
having jurisdiction over any Loan Party, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party shall deny that such Loan Party has
any liability or obligation purported to be created under any Loan Document;
(j) the Security Agreements, the West Virginia Deed of Trust,
the West Virginia First Priority Deed of Trust, the Reno Deed of Trust, the
Cheyenne Deed of Trust or any other security document, after delivery thereof
pursuant hereto, shall for any reason fail or cease to create a valid and
perfected and, to the extent provided for by the terms hereof or thereof, first
or second priority lien on or security interest in any Collateral purported to
be covered thereby;
(k) one or more judgments or orders (other than a judgment or
award described in subsections (g) and (h) of this Section 9.01) for the payment
of money exceeding any applicable insurance coverage shall be rendered against
any Loan Party, and either (i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment or order, or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of any such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect;
(l) any Loan Party or any Affiliate of a Loan Party shall suffer
to exist any Unfunded Liability in excess of $100,000; or
(m) Mountaineer shall fail to perform or observe the covenant
contained in Section 8.04 hereof;
then, and in any such event, the Lender may, by notice to the Borrowers, (i)
declare its Commitment to make any Loan hereunder to be terminated, whereupon
such Commitment shall forthwith terminate, (ii) declare the Loans, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Loans (including, without limitation, all of the Term
Obligations then accrued and an amount equal to the product of (a) the
Prepayment Factor and (b) the outstanding principal amount of the Loans), all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrowers; PROVIDED, HOWEVER, that
upon the occurrence of an Event of Default described in subsections (g) and (h)
of this Section 9.01, the Commitment to make any Loan hereunder shall
immediately terminate and the Loans, all such interest thereon and all other
amounts shall become payable and be forthwith due and payable, without
presentment, demand, protest or further notice of any
kind, all of which are expressly waived by the Borrowers; PROVIDED FURTHER,
that upon the occurrence of an Event of Default other than the events
described in Subsections (a), (b), (g) and (h), the Borrowers shall have
three (3) Business Days in which to cure such Event of Default and (iii)
exercise any and all of its other rights under applicable law, hereunder and
under the other Loan Documents; PROVIDED, FURTHER, that the Event of Default
described in subsection (m) of this Section 9.01 shall apply to the Line Loan
only, and shall not be deemed a default under subsection (f) of this Section
9.01 with respect to the Term Loan and, accordingly, not result in the
acceleration of amounts due under the Term Note.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed, telecopied, with
a copy sent promptly thereafter by U.S. mail, return receipt requested or
delivered, if to a Borrower or the Guarantor, at the following address:
Mountaineer Park, Inc.
Route 2 South
Chester, West Virginia 26034
Attention: Mr. Edson Arneault, President
Telephone No.: (304) 387-2400
Telecopy No.: (304) 387-1598
with copies to:
Ruben & Aronson, LLP
3299 K Street, N.W., Suite 403
Washington, D.C. 20007
Attention: Robert L. Ruben, Esq.
Telephone No.: (202) 965-3600
Telecopy No.: (202) 965-3700
and if to the Lender, to it at the following address:
Madeleine LLC
450 Park Avenue
New York, New York 10022
Attention: Mr. Kevin P. Genda
Telephone No.: (212) 891-2117
Telecopy No.: (212) 758-5305
with copies to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Paul E. Weber, Esq.
Telephone No.: (212) 756-2232
Telecopy No.: (212) 593-5955
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 10.01. All such notices and other communications shall be
effective (i) if mailed, when received or three days after mailing, whichever
first occurs, (ii) if telecopied, when transmitted, provided same is on a
Business Day and, if not, on the next Business Day, or (iii) if delivered, upon
delivery, provided same is on a Business Day and, if not, on the next Business
Day, except that notices to the Lender pursuant to Article II hereof shall not
be effective until received by the Lender.
SECTION 10.02. AMENDMENTS, ETC. No amendment of any provision of
this Agreement, any Note or any other Loan Document shall be effective unless it
is in writing and signed by each Borrower, the Guarantor and the Lender, and no
waiver of any provision of this Agreement, any Note or any other Loan Document,
nor consent to any departure by a Borrower or the Guarantor therefrom, shall be
effective unless it is in writing and signed by the Lender, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 10.03. NO WAIVER; REMEDIES, ETC. No failure on the part
of the Lender to exercise, and no delay in exercising, any right hereunder or
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right. The
rights and remedies of the Lender provided herein and in the other Loan
Documents are cumulative and are in addition to, and not exclusive of, any right
or remedy provided by law. The rights of the Lender under any Loan Document
against any party thereto are not conditional or contingent on any attempt by
the Lender to exercise any of its rights under any other Loan Document against
such party or against any other Person.
SECTION 10.04. FEES, COSTS, EXPENSES AND TAXES. The Borrowers
will pay, jointly and severally, on demand (i) all fees, costs and expenses in
connection with the preparation, execution, delivery, filing, recording,
amendment, modification and waiver of the Loan Documents and the other documents
to be delivered pursuant to the Loan Documents, including, without limitation,
the reasonable fees, out-of-pocket expenses and other client charges of Schulte
Roth & Zabel LLP, counsel to the Lender, Lionel Sawyer & Collins, Nevada counsel
to the Lender, and Bowles Rice McDavid Graff & Love, West Virginia counsel to
the Lender, and the reasonable fees, out-of-pocket expenses and other client
charges of all accountants, auditors and consultants retained by the Lender in
connection with the transactions contemplated by this Agreement, and (ii) all
costs and expenses, if any (including reasonable
counsel fees, out-of-pocket expenses and other client charges), in connection
with the enforcement of the Loan Documents and the other documents to be
delivered pursuant to the Loan Documents. In addition, the Borrowers will
pay, jointly and severally, any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution,
delivery, filing and recording of the Loan Documents and the other documents
to be delivered pursuant to the Loan Documents, and will save the Lender
harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
All of the foregoing fees, costs, expenses and taxes are herein referred to
as "Transaction Costs". Upon the occurrence of the Closing Date, the
Borrowers' obligation to pay the fees of Schulte Roth & Zabel LLP and Lionel
Sawyer & Collins relating solely to the sale to Speakeasy Vegas of the
Cheyenne Hotel Property and to Speakeasy Reno of the Reno Hotel Property
shall terminate. For the avoidance of doubt, the Borrowers shall continue to
be obligated to pay all of the fees of Schulte Roth & Zabel LLP and Lionel
Sawyer & Collins with respect to all matters other than the sale of such
properties. In no event, however, shall the Borrowers be obligated to pay
any of the fees of Schulte Roth & Zabel LLP or Lionel Sawyer & Collins with
respect to Lender's application for license by, or exemption from, the
licensing requirements of any Governmental Authority in the State of Nevada.
SECTION 10.05. RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of any Event of Default, the Lender may, and is hereby
authorized to, at any time and from time to time, without notice to the
Borrowers (any such notice being expressly waived by the Borrower) and to the
fullest extent permitted by law, set off and apply any and all indebtedness at
any time owing by the Lender to or for the credit or the account of the
Borrowers against any and all Obligations now or hereafter existing,
irrespective of whether or not the Lender shall have made any demand hereunder
or thereunder and although such Obligations may be contingent or unmatured. The
Lender agrees to notify the Borrowers promptly after any such set-off and
application made by the Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
the Lender under this Section 10.05 are in addition to the other rights and
remedies (including, without limitation, other rights of set-off) which the
Lender may have.
SECTION 10.06. SEVERABILITY. Any provision of this Agreement, or
of any other Loan Document to which each Borrower or the Guarantor is a party,
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 10.07. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of each Borrower, the Guarantor and the
Lender and their respective successors and assigns, except that any Borrower nor
any Guarantor may assign its rights hereunder or any interest herein without the
prior written consent of the Lender. The Lender may assign to one or more banks
or other entities all or any part of, or may grant participations to one or more
banks or other entities in or to all or any part of the Commitment, the Loans or
the Notes and, to the extent of any such assignment or participation (unless
otherwise stated therein), the assignee of such assignment shall have the same
rights and benefits
hereunder and under such Note(s) as it would have if it were the Lender
hereunder. In connection with any assignment by the Lender pursuant hereto,
the Borrowers shall, promptly upon request by the Lender, execute and deliver
a new Note or Notes, in replacement of the then effective Note or Notes, in
an aggregate principal amount equal to the outstanding principal amount of
the applicable Loan or Loans at such time, payable to the order of the Lender
and/or an assignee(s). The Lender may, in connection with any such
assignment or participation or as may be required by law or any Governmental
Authority or other regulatory body, disclose any public and non-public
information relating to each Borrower and the Guarantor furnished by or on
behalf of such Borrower or the Guarantor or any of their Affiliates to the
Lender.
SECTION 10.08. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 10.09. HEADINGS. Section headings herein are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
SECTION 10.10. GOVERNING LAW. This Agreement, each Note, and the
other Loan Documents shall be governed by, and construed in accordance with, the
law of the State of New York applicable to contracts made and to be performed in
such State without regard to conflicts of law principles. Any legal action or
proceeding with respect to this Agreement or any other Loan Document may be
brought in the courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
each Borrower and the Guarantor hereby irrevocably accept for themselves in
respect of their property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each Borrower and the Guarantor further irrevocably
consent to the service of process out of any of the aforementioned courts and in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such Borrower at its address for notices
contained in Section 10.01, such service to become effective thirty (30) days
after such mailing. Both Borrower and the Guarantor hereby irrevocably appoint
Mr. Robert A. Blatt, c/o CRC Group, 1890 Palmer Avenue, Suite 303, Larchmont,
New York 10538, or such other Person as shall be acceptable to the Lender, as
their agent for service of process in respect of any such action or proceeding.
Nothing herein shall affect the right of the Lender to service of process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against any Borrower and the Guarantor in any other jurisdiction.
SECTION 10.11. WAIVER OF JURY TRIAL, ETC. EACH OF THE BORROWERS,
THE GUARANTOR AND THE LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHT UNDER THIS AGREEMENT,
ANY NOTE, OR OTHER LOAN DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER, CONSENT,
INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE
DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY. EACH OF THE BORROWERS AND THE GUARANTOR HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH BORROWER AND THE
GUARANTOR CERTIFY THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE
LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN
THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE
FOREGOING WAIVERS. EACH BORROWER AND THE GUARANTOR HEREBY ACKNOWLEDGE THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS
AGREEMENT.
SECTION 10.12. REINSTATEMENT; CERTAIN PAYMENTS. If a claim is
ever made upon the Lender for repayment or recovery of any amount or amounts
received by the Lender in payment or on account of any of the Obligations under
this Agreements, the Lender shall give prompt notice of such claim to the
Borrowers, and if the Lender repays all or part of said amount by reason of (i)
any judgment, decree or order of any court or administrative body having
jurisdiction over the Lender or any of its property, or (ii) any settlement or
compromise of any such claim effected by the Lender with any such claimant, then
and in such event each of the Borrowers and the Guarantor (A) agree that any
such judgment, decree, order, settlement or compromise shall be binding upon the
Borrowers and the Guarantor notwithstanding the cancellation of any Note or
other instrument evidencing the Obligations under this Agreement or the other
Loan Documents or the termination of this Agreement or the other Loan Documents,
and (B) shall be and remain liable to the Lender hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by the Lender.
SECTION 10.13. INDEMNIFICATION. In addition to all of their other
Obligations under this Agreement, each of the Borrowers and the Guarantor,
jointly and severally, agree to defend, protect, indemnify and hold harmless the
Lender and any assignee of the Lenders rights hereunder, and all of their
respective officers, directors, employees, attorneys, consultants and agents
(including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set forth in
this Agreement) (collectively called the "INDEMNITEES") from and against any and
all losses, damages, liabilities, obligations, penalties, fees, costs and
expenses (including, without limitation, attorneys' fees, costs and expenses)
incurred by such Indemnitees, whether prior to or from and after the Effective
Date, whether direct, indirect or consequential, as a result of or arising from
or relating to any suit, investigation, action or proceeding by any Person,
whether threatened or initiated, asserting a claim for any legal or equitable
remedy against any Person under any statute or regulation, including, without
limitation, any Federal or state securities or labor laws, or under any Federal,
state or local environmental, health or safety laws, regulations or, common law
principles, arising from or in connection with the past, present or future
operations of each Borrower or its predecessors in interest, arising from or in
connection with any of the following:
(i) the negotiation, preparation, execution or performance of this Agreement
or of any document executed in connection with the transactions contemplated
by this Agreement, (ii) the Lender's furnishing of funds to the Borrowers
under this Agreement, including, without limitation, the management of the
Loans, or (iii) any matter relating to the financing transactions
contemplated by this Agreement or by any document executed in connection with
the transactions contemplated by this Agreement (collectively, the
"INDEMNIFIED MATTERS"); PROVIDED, HOWEVER, that the Borrowers and the
Guarantor shall have no obligation to any Indemnitee hereunder for any
Indemnified Matter (i) caused by or resulting from the gross negligence or
willful misconduct of such Indemnitee, as determined by a final judgment of a
court of competent jurisdiction, or (ii) relating to any environmental
condition, or impairment of title to, either the Cheyenne Hotel Property or
the Reno Hotel Property to the extent such conditions or impairment existed
prior to the acquisition by Speakeasy Reno of the Reno Hotel Property or the
acquisition by Speakeasy Vegas of the Cheyenne Hotel Property. Such
indemnification for all of the foregoing losses, damages, fees, costs and
expenses of the Lender shall be part of the Obligations in respect of the
Term Loan (the "TERM OBLIGATIONS"), secured by the Collateral and added to
the principal amount of the Term Loan; PROVIDED, FURTHER, HOWEVER, that if
the Term Loan has been paid in full, then all of the foregoing losses,
damages, fees, costs and expenses of the Lender shall be part of the Line
Obligations, secured by the Collateral and added to the principal amount of
the Line Loan. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section 10.13 may be unenforceable because it is
violative of any law or public policy, each of the Borrowers and the
Guarantor shall contribute the maximum portion which it is permitted to pay
and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees. The provisions of this
Section 10.13 shall survive termination of this Agreement.
ARTICLE XI
GUARANTY
SECTION 11.01. GUARANTY. the Guarantor, and each other Guarantor
that may become party hereto, hereby (i) irrevocably, absolutely and
unconditionally guarantees the prompt payment, as and when due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), of (A) all the Obligations, including, without limitation, all
amounts now or hereafter owing in respect of the Loan Documents, whether for
principal, interest, fees, expenses or otherwise, and (B) all indebtedness,
obligations and other liabilities, direct or indirect, absolute or contingent,
now existing or hereafter arising of each of the Borrowers to the Lender and
(ii) agrees, to pay any and all expenses (including reasonable counsel fees and
expenses) incurred by the Lender in enforcing its rights under this Agreement,
the Guarantee and each other Loan Document.
SECTION 11.02. OBLIGATIONS UNCONDITIONAL.
(i) the Guarantor and each other Guarantor that may
become party hereto, hereby guarantees that the Obligations will be paid
strictly in accordance
with the terms of the Loan Documents, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting any of
such terms or the rights of the Lender with respect thereto. the
Guarantor and each other Guarantor agrees that its guarantee constitutes
a guaranty of payment when due and not of collection, and waives any
right to require that any resort be had by the Lender to any security
held for payment of the Obligations or to any balance of any deposit
account or credit on the books of the Lender in favor of any Borrower or
for any other reason. The liability of the Guarantor and each other
Guarantor hereunder shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto; (ii) any extension or change
in the time, manner or place of payment of, or in any other term in
respect of, all or any of the Obligations (including, without
limitation, any extension for longer than the original period), or any
other amendment or waiver of or consent to any departure from any
provision of any Loan Document; (iii) any exchange or release of, or
non-perfection of any lien on or security interest in, any Collateral,
or any release or amendment or waiver of or consent to any departure
from any other guaranty, for all or any of the Obligations; or (iv) any
other circumstance which might otherwise constitute a defense available
to, or a discharge of, any Borrower or any other Guarantor in respect of
the Obligations or the Guarantor and each other Guarantor in respect
hereof.
(ii) This Guaranty (i) is a continuing guaranty and
shall remain in full force and effect until such date on which all of the
Obligations and all other expenses to be paid by the Guarantor or any other
Guarantor pursuant hereto shall have been satisfied in full after the
Commitment shall have been terminated, (ii) shall continue to be effective
or shall be reinstated, as the case may be, if at any time any payment of
any of the Obligations is rescinded or must otherwise be returned by the
Lender upon the insolvency, bankruptcy or reorganization of each of the
Borrowers or otherwise, all as though such payment had not been made, and
(iii) shall be binding upon the Guarantor, any other Guarantor or their
respective heirs, executors, successors and assigns.
SECTION 11.03. WAIVERS. The Guarantor hereby waives, to the
extent permitted by applicable law, (i) promptness and diligence, (ii) notice of
acceptance and notice of the incurrence of any Obligation, (iii) notice of any
action taken by the Lender or each of the Borrowers or any other agreement or
instrument relating thereto, (iv) all other notices, demands and protests, and
all other formalities of every kind in connection with the enforcement of the
Obligations or of the obligations of the Guarantor and each other Guarantor
hereunder, the omission of or delay in which, but for the provisions of this
Section 11.03, might constitute grounds for relieving the Guarantor or any other
Guarantor of its obligations hereunder, and (v) any requirement that the Lender
protect, secure, perfect or insure any security interest or lien or any property
subject thereto or exhaust any right or take any action against any Person or
any Collateral. All such waivers by the Guarantor shall be effective only to
the extent permitted by applicable law.
SECTION 11.04. SUBROGATION. The Guarantor hereby waives and
agrees that it will not exercise any rights which it may acquire by way of
subrogation hereunder, by any
payment made by it hereunder or otherwise. If the amount shall be paid to
the Guarantor or such other Guarantor on account of such subrogation rights
at any time when all of such Obligations and all other Obligations shall not
have been paid in full, such amount shall be held in trust for the benefit of
the Lender, shall be segregated from the other funds of the Guarantor or such
other Guarantor and shall forthwith be paid over to the Lender to be applied
in whole or in part by the Lender against the Obligations, whether matured or
unmatured, in accordance with the terms of this Agreement.
SECTION 11.05. NO WAIVER; REMEDIES. No failure on the part of the
Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedy provided by law.
SECTION 11.06. TAXES.
(a) Each payment by the Guarantor under this Loan Agreement
shall be made without withholding for or on account of any present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of the Lender, taxes imposed on its
income, and franchise taxes imposed on it by the jurisdiction (or any political
subdivision thereof) under the laws of which the Lender is organized (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "OTHER TAXES"); PROVIDED, HOWEVER,
that if such Other Taxes are required by law to be withheld from any such
payment, the Guarantor shall make such withholding for the account of the
Lender, make timely payment thereof to the appropriate governmental authority,
and forthwith pay for the account of the Lender such additional amount as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 11.06.) the Lender
receives an amount equal to the sum it would have received had no such
deductions been made. All such Other Taxes shall be paid by the Guarantor prior
to the date on which penalties attach thereto or interest accrues thereon;
PROVIDED, HOWEVER, that, if any such penalties or interest become due, the
Guarantor shall make prompt payment thereof to the appropriate governmental
authority.
(b) the Guarantor will indemnify the Lender for the full amount
of Other Taxes (including any Other Taxes on amounts payable under this Section
10.06.) paid by the Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Other
Taxes were correctly or legally asserted. This indemnification shall be made
within 30 days from the date the Lender makes written demand therefor.
(c) Within 30 days after the date of any payment of Other Taxes,
the Guarantor will furnish to the Lender the original or a certified copy of a
receipt evidencing payment thereof. If no Other Taxes are payable in respect of
any payment hereunder or under any Note, the Guarantor will furnish to the
Lender a certificate from each appropriate taxing
authority, or an opinion of counsel acceptable to the Lender, in either case
stating that such payment is exempt from or not subject to Other Taxes.
SECTION 11.07. STAY OF ACCELERATION. If acceleration of the time
for payment of any amount payable by any of the Borrowers in respect of the
Obligations is stayed upon the insolvency, bankruptcy or reorganization of any
of the Borrowers, all such amounts otherwise subject to acceleration under the
terms of this Agreement shall nonetheless be payable by the Guarantor forthwith
on demand by the Lender.
ARTICLE XII
REAFFIRMATION; AMENDMENTS
SECTION 12.01. REAFFIRMATION. Each Loan Party hereby agrees that
the amending and restating of the Second Amended Loan Agreement in no way
releases such Loan Party from any obligation under any other Loan Document, each
of which shall remain in full force and effect and is hereby ratified and
confirmed in all respects. The Guarantor, by execution hereof, confirms that
the Guaranty is in full force and effect pursuant to its terms in respect of all
of the Obligations.
SECTION 12.02. AMENDMENTS. Each party hereto agrees and confirms
that all references in any Loan Document to the Loan Agreement, the Second
Amended and Restated Term Loan Agreement, the Amended and Restated Term Loan
Agreement, the Initial Term Loan Agreement, the Term Loan Agreement or any other
similar term which refers to the agreement among the parties in respect of the
making by the Lender of the Loans and the terms and conditions thereof in effect
shall, as of any date on and after the Closing Date, be deemed to refer to this
Agreement as amended and restated hereby. By way of example, but in no way in
limitation of the foregoing, all references in the West Virginia Deed of Trust
or the West Virginia First Priority Deed of Trust to "Restated Loan Agreement"
shall be deemed to refer to this Agreement, as amended and restated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
MOUNTAINEER PARK, INC.
By: /s/ Edson R. Arneault
------------------------------------------
Name: Edson R. Arneualt
Title: President, Chief Executive Officer
SPEAKEASY GAMING OF LAS VEGAS, INC.
By: /s/ Edson R. Arneault
------------------------------------------
Name: Edson R. Arneualt
Title: President, Chief Executive Officer
SPEAKEASY GAMING OF RENO, INC.
By: /s/ Edson R. Arneault
------------------------------------------
Name: Edson R. Arneualt
Title: President, Chief Executive Officer
MTR GAMING GROUP, INC.
By: /s/ Edson R. Aneault
------------------------------------------
Name: Edson R. Arneualt
Title: President, Chief Executive Officer
MADELEINE LLC
By: /s/ Mark A. Neporent
------------------------------------------
Name: Mark A. Neporent
Title: Attorney-in-Fact