Exhibit 10.16
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LOAN AND SECURITY AGREEMENT
by and among
THE OLD ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, L.L.C. ("OED")
and
THE OLD ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL CORP. ("OED CAPITAL")
as Borrowers,
and
▇▇▇▇▇ FARGO FOOTHILL, INC.
as Lender
Dated as of June 24, 2003
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LOAN AND SECURITY AGREEMENT
TABLE OF CONTENTS
Page
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1. DEFINITIONS AND CONSTRUCTION 1
1.1 Definitions 1
1.2 Accounting Terms 20
1.3 Code 20
1.4 Construction 20
1.5 Schedules and Exhibits 20
2. LOAN AND TERMS OF PAYMENT 20
2.1 Revolver Advances 20
2.2 [Intentionally Omitted] 21
2.3 Borrowing Procedures and Settlements 21
2.4 Payments 22
2.5 Overadvances 23
2.6 Interest Rates and Letter of Credit Fee:
Rates, Payments, and Calculations 23
2.7 [Intentionally Omitted] 24
2.8 Crediting Payments 24
2.9 Designated Account 25
2.10 Maintenance of Loan Account; Statements of Obligations 25
2.11 Fees 25
2.12 Letters of Credit 26
2.13 Cash Collateralization of Letters of Credit 28
2.14 Capital Requirements 28
2.15 Joint and Several Liability of Borrowers 29
3. CONDITIONS; TERM OF AGREEMENT 31
3.1 Conditions Precedent to Initial Extension of Credit 31
3.2 Conditions Subsequent to Initial Extension of Credit 34
3.3 Conditions Precedent to all Extensions of Credit 34
3.4 Term 34
3.5 Effect of Termination 34
3.6 Early Termination by Borrowers 35
4. CREATION OF SECURITY INTEREST 35
TABLE OF CONTENTS
(continued)
Page
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4.1 Grant of Security Interest 36
4.2 Negotiable Collateral 36
4.3 Collection of Accounts, General Intangibles,
and Negotiable Collateral 36
4.4 Delivery of Additional Documentation Required 36
4.5 Power of Attorney 37
4.6 Right to Inspect 37
4.7 Control Agreements 37
5. REPRESENTATIONS AND WARRANTIES 37
5.1 No Encumbrances 38
5.2 [Intentionally Omitted] 38
5.3 [Intentionally Omitted] 38
5.4 Equipment 38
5.5 Location of Inventory and Equipment 38
5.6 Inventory Records 38
5.7 Location of Chief Executive Office; FEIN 38
5.8 Due Organization and Qualification; Subsidiaries 38
5.9 Due Authorization; No Conflict 39
5.10 Litigation 40
5.11 No Material Adverse Change 40
5.12 Fraudulent Transfer 40
5.13 Employee Benefits 40
5.14 Environmental Condition 40
5.15 Brokerage Fees 40
5.16 Intellectual Property 40
5.17 Leases 41
5.18 DDAs 41
5.19 Complete Disclosure 41
5.20 Indebtedness 41
5.21 Licenses and Permits 41
6. AFFIRMATIVE COVENANTS 42
ii
TABLE OF CONTENTS
(continued)
Page
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6.1 Accounting System 42
6.2 Collateral Reporting 42
6.3 Financial Statements, Reports, Certificates 43
6.4 [Intentionally Omitted]. 46
6.5 [Intentionally Omitted]. 46
6.6 Maintenance of Properties 46
6.7 Taxes 46
6.8 Insurance 46
6.9 Location of Inventory and Equipment 48
6.10 Compliance with Laws 48
6.11 Leases 48
6.12 Brokerage Commissions 48
6.13 Existence 48
6.14 Environmental 48
6.15 Disclosure Updates 49
6.16 Government Authorization 49
6.17 License Renewals 49
6.18 Licenses and Permits 49
6.19 Subsidiary Guarantees 49
7. NEGATIVE COVENANTS 50
7.1 Indebtedness 50
7.2 Liens 51
7.3 Restrictions on Fundamental Changes 51
7.4 Disposal of Assets 51
7.5 Change Name 51
7.6 Guarantee 51
7.7 Nature of Business 51
7.8 Prepayments and Amendments 51
7.9 Change of Control 52
7.10 [Intentionally Omitted] 52
iii
TABLE OF CONTENTS
(continued)
Page
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7.11 Distributions; Management Fees 52
7.12 Accounting Methods 52
7.13 Investments 52
7.14 Transactions with Affiliates 53
7.15 Suspension 53
7.16 Compensation 53
7.17 Use of Proceeds 53
7.18 Change in Location of Chief Executive
Office; Inventory and Equipment with Bailees 53
7.19 Securities Accounts 53
7.20 Financial Covenants 53
8. EVENTS OF DEFAULT 55
9. THE LENDER'S RIGHTS AND REMEDIES 57
9.1 Rights and Remedies 57
9.2 Remedies Cumulative 60
10. TAXES AND EXPENSES 60
11. WAIVERS; INDEMNIFICATION 60
11.1 Demand; Protest 60
11.2 Lender's Liability for Collateral 60
11.3 Indemnification 60
12. NOTICES 61
13.CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 63
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS 63
14.1 Assignments and Participations 63
14.2 Successors 66
15. AMENDMENTS; WAIVERS 66
15.1 Amendments and Waivers 66
15.2 No Waivers; Cumulative Remedies 66
16. GENERAL PROVISIONS 66
16.1 Effectiveness 66
iv
TABLE OF CONTENTS
(continued)
Page
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16.2 Section Headings 66
16.3 Interpretation 66
16.4 Severability of Provisions 66
16.5 Withholding Taxes 66
16.6 Amendments in Writing 67
16.7 Counterparts; Telefacsimile Execution 67
16.8 Revival and Reinstatement of Obligations 67
16.9 Integration 68
16.10 Parent as Agent for Borrowers 68
v
TABLE OF CONTENTS
EXHIBITS AND SCHEDULES
Page
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Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Schedule D-1 Designated Account
Schedule L-1 Lender's Account
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.21 Licenses and Permits
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
June 24, 2003 by and among ▇▇▇▇▇ FARGO FOOTHILL, INC., a California corporation
("Lender"), THE OLD ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, L.L.C., a Louisiana limited liability
company ("Parent"), THE OLD ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL CORP., a Delaware
corporation ("OED Capital"), and each of Parent's other wholly-owned
Subsidiaries identified on the signature pages hereof (such Subsidiaries,
together with Parent and OED Capital, are referred to hereinafter each
individually as a "Borrower," and individually and collectively, jointly and
severally, as the "Borrowers").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have
the following definitions:
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"Accounts" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to "accounts" (as that term is defined
in the Code), and any and all supporting obligations in respect thereof.
"Additional Documents" has the meaning set forth in Section 4.4.
"Administrative Borrower" has the meaning set forth in Section
16.10.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) 0.10%, times (b) the Maximum Revolver
Amount, times (c) the number of months (full or partial) remaining from such
date of determination until the Maturity Date.
"Architect" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Associates, AIA, Ltd., d/b/a
KGA Architecture, and its successors identified by notice by Parent to Lender.
"Assignee" has the meaning set forth in Section 14.1(a).
"Authorized Person" means any officer or other employee of
Administrative Borrower.
"Bankruptcy Code" means the United States Bankruptcy Code, as in
effect from time to time.
"Base Rate" means, the rate of interest announced within ▇▇▇▇▇ Fargo
at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of ▇▇▇▇▇ Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as ▇▇▇▇▇ Fargo may designate.
"Base Rate Margin" means two and one-half percentage points (2.50%).
"Beneficial Owner" or "beneficial owner" has the meaning attributed
to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the
Closing Date) whether or not otherwise applicable.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA Affiliate of
any Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.
"Books" means all of Administrative Borrower's and its Subsidiaries'
now owned or hereafter acquired books and records (including all of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of Administrative Borrower's or its Subsidiaries' Records
relating to its or their business operations or financial condition, and all of
its or their goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth in
the preamble to this Agreement.
"Borrowing" means a borrowing hereunder of an Advance.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
2
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Collateral and Disbursement Agreement" means that certain Cash
Collateral and Disbursement Agreement, dated as of February 25, 2003, among the
Indenture Trustee, U.S. Bank National Association, as Disbursement Agent, the
Construction Consultant and Borrowers.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or ▇▇▇▇▇'▇,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or ▇▇▇▇▇'▇, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
▇▇▇▇▇'▇, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Change of Control" means the occurrence of any of the following:
(1) during any period of two consecutive calendar years, individuals who at the
beginning of such period constituted the Managers of Parent (together with any
new Managers whose election as a Manager or whose nominations for election by
Parent's members or stockholders, was approved by a majority of Managers then
still in office who were either Managers at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of such Managers then in office; provided,
however, that there shall be no Change of Control pursuant to this clause (1) if
during such two-year period any of the Excluded Persons continue to (i) own,
directly or indirectly, a majority of the Voting Stock of Parent or (ii) control
or manage, directly or indirectly, the day-to-day operations of Parent; (2) any
Person (other than an Excluded Person) is or becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the aggregate voting power of the
Voting Stock of Parent, or conversely, any Person that beneficially owns,
directly or indirectly, a majority of the aggregate voting power of the Voting
Stock of Parent on the Closing Date becomes the Beneficial Owner, directly or
indirectly, of less than a majority of the voting power of the Voting Stock of
Parent; (3) Borrowers adopt a plan of liquidation; (4) the direct or indirect
sale, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the properties or assets of Parent and the Subsidiaries, in
each case, taken as a whole, to any Person other than Parent, a Subsidiary or
the Excluded Persons, or (5) the first day on which Parent fails to own 100% of
the issued and outstanding Stock of OED Capital. As used in this definition,
"Person" (including any group that is deemed to be a "Person") has the meaning
given by Section 13(d) of the Exchange Act, whether or not applicable.
3
"Closing Date" means June 24, 2003.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the 3 year period following the Closing Date (on a year by year
basis, and for the 1 year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Lender.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of Lender, and
(j) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
Notwithstanding the foregoing, "Collateral" shall not include any of
the Excluded Assets.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to Lender.
4
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrowers.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to
Lender.
"Construction Completion Date" means the date that all work shall be
completed to construct the Racino Project in accordance with the plans and
specifications presented to Lender on or prior to the Closing Date and in
compliance with any and all applicable laws and requirements of all government
authorities having jurisdiction over the Racino Project, free and clear of all
Liens (other than Permitted Liens).
"Construction Consultant" means ABACUS Project Management, Inc., an
Arizona corporation.
"Construction Security Documents" means, collectively, (a) that
certain Lender's Dual Obligation Rider to Payment Bond with respect to Payment
Bond PRF 8685188 issued by Fidelity and Deposit Company of Maryland and Zurich
American Insurance Company, dated as of February 27, 2003, naming Contractor, as
principal, and Lender as "Named Obligee," (b) that certain Lender's Dual
Obligation Rider to Performance Bond with respect to Performance Bond PRF
8685188 issued by Fidelity and Deposit Company of Maryland and Zurich American
Insurance Company, dated as of February 27, 2003, naming Contractor, as
principal, and Lender as "Named Obligee," and (c) that certain consent to the
assignment of the Fixed Price Contract by Borrowers in favor of Lender and
acknowledged by Contractor and the Indenture Trustee, in each case, in form and
substance satisfactory to Lender.
"Contractor" means ▇.▇. ▇▇▇▇▇ & Sons Construction Company.
"Control Agreements" means a control agreement, in form and
substance satisfactory to Lender, executed and delivered by the applicable
Borrower, Lender, and the applicable securities intermediary with respect to a
Securities Account or a bank with respect to a DDA.
"Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account maintained
by any Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Designated Account" means that certain DDA of Administrative
Borrower identified on Schedule D-1.
"Designated Account Bank" means American Trust and Savings Bank,
whose office is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇, and whose ABA number
is ▇▇▇▇▇▇▇▇▇.
5
"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Lender regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Lender.
"Dollars" or "$" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries consolidated net earnings (or loss), minus extraordinary gains and
interest income, plus interest expense, income taxes, and depreciation and
amortization for such period, as determined in accordance with GAAP.
"Enterprise Valuation" means, as of any date of determination, the
most recently approved distressed-sale valuation of the operations and assets of
Borrowers and their respective Subsidiaries in form acceptable to Lender, and as
determined from time to time at the direction or request of Lender by a third
party appraiser acceptable to Lender.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrowers, relating
to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC Section
1251 et seq.; the Toxic Substances Control Act, 15 USC, Section 2601 et seq.;
the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42
USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. Section 2701
et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
USC. Section 11001 et seq.; the Hazardous Material Transportation Act, 49 USC
Section 1801 et seq.; and the Occupational Safety and Health Act, 29 USC.
Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
6
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, vehicles (including motor vehicles),
tools, parts, goods (other than consumer goods, farm products, or Inventory),
wherever located, including all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Excluded Assets" means (a) the lease for the off track betting
parlor operated by Parent in New Iberia, Louisiana, (b) any agreements, permits,
licenses (including Gaming Licenses), or the like solely in the event and to the
extent that: (i) such agreements, permits, licenses, or the like cannot be
subjected to a consensual security interest in favor of Lender without the
consent of the licensor or other party to such agreement, permit, license, or
the like, (ii) any such restriction is effective and enforceable under
applicable law; and (iii) such consent is not obtainable by any Borrower;
provided, however, that Excluded Assets shall not include (and, accordingly, the
Collateral shall include) any and all proceeds of any of the assets described in
clause (b) above; provided, further, that, any agreement, permit, license, or
the like qualifying as an Excluded Asset under clause (b) above no longer shall
constitute an Excluded Asset (and instead shall constitute Collateral) from and
after such time as the licensor or other party to such agreement, permit,
license, or the like consents to the grant of a security interest in favor of
Lender in such agreement, permit, license, or the like or the prohibition
against granting a security interest therein in favor of Lender shall cease to
be effective, (c) Collateral Accounts (as defined in the Indenture) and (d) the
Excess Cash Flow Account (as defined in the Indenture).
"Excluded Person" means (a) PGC; (b) PGP; (c) PGP Investors; (d) OED
Acquisition, (e) M. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and any Affiliate or
Manager of PGP, PGC, PGP Investors, M. ▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(collectively, the "Existing
7
Holders"), (f) any trust, corporation, partnership or other entity (i)
controlled by the Existing Holders and members of the immediate family of the
Existing Holders or (ii) 80% of the beneficiaries, stockholders, partners or
owners of which consist solely of the Existing Holders and members of the
immediate family of the Existing Holders or (g) any partnership, the sole
general partners of which consist solely of the Existing Holders and members of
the immediate facility of the Existing Holders.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrowers and Lender, in form and substance satisfactory to
Lender.
"FEIN" means Federal Employer Identification Number.
"Fixed Construction Costs" means, in connection with the Racino
Project to the extent actually incurred by or on behalf of Parent, the sum of
all: (a) costs incurred in connection with the purchase of real property
(including the land on which the Racino Project is to be located, all adjacent
tracts and any other real property purchased by Borrowers related to the Racino
Project) and off-site improvements such as easements, access roads, drainage
systems, as evidenced by invoices, sales contracts and the like with respect to
same, plus (b) construction costs incurred in connection with the completion of
Phase I of the Racino Project as detailed in the Fixed Price Contract, as
evidenced by certificates of completion duly certified by the relevant builder,
contractor, architect and Parent as to the accuracy of same, plus (c)
construction costs incurred in connection with the continuing construction of
Phase II of the Racino Project as detailed in the Fixed Price Contract as
evidenced by invoices with respect to same, plus (d) costs incurred in
connection with architectural plans, drawings and specifications with respect to
any of the foregoing clauses (a), (b) and (c), plus (e) costs of acquiring
furniture, fixtures and Equipment, to the extent such furniture, fixtures and
Equipment constitute Collateral hereunder, in connection with the construction
of the Racino Project.
"Fixed Price Contract" means that certain Agreement, dated as of
February 25, 2003, between Parent and Contractor, as amended, restated,
supplemented or otherwise modified from time to time.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States of America or foreign government (including Native American
governments), any state, province or city or other political subdivision
thereof, whether now or hereafter existing, or any officer or official thereof,
including the Louisiana Regulatory Authorities, and any other agency with
authority to regulate any gaming or racing operation (or proposed gaming or
racing operation) owned, managed or operated by Parent or any of its
Subsidiaries.
"Gaming Equipment" means slot machines, video poker machines, and
all other gaming equipment and related signage, accessories and peripheral
equipment.
8
"Gaming License" means any material license, franchise,
registration, qualification, findings of suitability or other approval or
authorization required to own, lease, operate or otherwise conduct or manage
riverboat, dockside or land-based gaming activities, including racing facilities
and activities, in any state or jurisdiction in which Parent or any of its
Subsidiaries conduct business or propose to conduct business (including, without
limitation, all such licenses granted by the Louisiana Regulatory Authorities),
and all applicable liquor licenses.
"General Intangibles" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights (including rights under any
construction documents, management agreements and other agreements entered into
or in connection with the design, development, construction, ownership and
operation of the Racino Project, in each case to the extent permitted by
applicable law), rights to payment, rights to, gaming permits, rights arising
under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor" means any Subsidiary of any Borrower that executes a
guaranty in favor of Lender in accordance with the provisions of Section 6.19.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
9
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Borrower or its Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), and (f) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture" means that certain Indenture dated as of February 25,
2003, among the Borrowers and the Indenture Trustee.
"Indenture Trustee" means (a) U.S. Bank National Association, a
National Association, in its capacity as trustee under the Indenture, or (b) any
successor trustee under the Indenture from time to time.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrowers and Lender, the form and substance
of which is satisfactory to Lender.
"Intercreditor Agreement" means that certain Intercreditor Agreement
between Lender and the Indenture Trustee, dated as of even date herewith, as may
be amended, restated, supplemented or otherwise supplemented from time to time.
"Inventory" means all Borrowers' now owned or hereafter acquired
right, title, and interest with respect to inventory, including goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by a Borrower as lessor, goods that are furnished by a Borrower under a
contract of service, and raw materials, work in process, or materials used or
consumed in a Borrower's business.
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees
10
of such Person made in the ordinary course of business, and (b) bona fide
Accounts arising in the ordinary course of business consistent with past
practices), purchases or other acquisitions for consideration of Indebtedness or
Stock, and any other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.
"Investment Property" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by Lender pursuant to a
Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender Expenses" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid or incurred by Lender, (b) the actual fees or charges
paid or incurred by Lender in connection with Lender's transactions with
Borrowers, including, fees or charges for photocopying, notarization, couriers
and messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including periodic Collateral
appraisals or business valuations to the extent of the fees and charges (and up
to the amount of any limitation) contained in this Agreement), real estate
surveys, real estate title policies and endorsements, and environmental audits,
(c) costs and expenses incurred by Lender in the disbursement of funds to
Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by
Lender resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by Lender to correct any default or enforce any provision of
the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to
sell the Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Lender related to audit examinations
of the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by Lender in enforcing or
defending the Loan Documents or in connection with the transactions contemplated
by the Loan Documents or Lender's relationship with any Borrower or any
guarantor of the Obligations, (h) Lender's reasonable fees and expenses
(including attorneys fees) incurred by Lender in advising, structuring,
drafting, reviewing, administering, or amending the Loan Documents, and (i)
Lender's reasonable fees and expenses (including attorneys fees) incurred by
Lender in terminating, enforcing (including attorneys fees and expenses incurred
in connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents,
11
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.
"Lender-Related Person" means Lender, Lender's Affiliates, and the
officers, directors, employees, and agents of Lender.
"Lender's Account" means the account identified on Schedule L-1.
"Lender's Liens" means the Liens granted by Borrowers to Lender
under this Agreement or the other Loan Documents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Control Agreements, the
Construction Security Documents, the Disbursement Letter, the Due Diligence
Letter, the Fee Letter, the Letters of Credit, the Mortgages, the Pledge
Agreement, the Officers' Certificate, the Management Fees Subordination
Agreement, the Intercompany Subordination Agreement, the Intercreditor
Agreement, the Subordination of Mortgage, any note or notes executed by a
Borrower in connection with this Agreement and payable to Lender, and any other
agreement entered into, now or in the future, by any Borrower or Guarantor and
Lender in connection with this Agreement.
"Louisiana Regulatory Authorities" means, collectively, the
Louisiana Gaming Control Board and the Louisiana State Racing Commission, or any
successor Gaming Authority.
"Management Agreement" means that certain Amended and Restated
Management Services Agreement dated as of February 25, 2003 among PGC, OED
Acquisition and Parent.
"Management Fees Subordination Agreement" means that certain
Management Fees Subordination Agreement, dated as of the Closing Date, among
Borrowers, Lender, OED Acquisition and PGC, the form and substance of which is
satisfactory to Lender.
12
"Manager" means, with respect to any Person (a) if such Person is a
limited liability company, the members of the board of managers, or members of
such other body performing similar functions for such Person, manager or
managers, as appointed pursuant to the operating agreement of such Person as
then in effect, or in the event that there are no managers or board of managers
or similar governing body, the sole member or (b) otherwise, the members of the
board of directors (if such Person is a corporation) or other governing body of
such Person.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers taken as a whole, (b) a material
impairment of a Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of Lender's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Lender's Liens with respect to the Collateral
as a result of an action or failure to act on the part of a Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means at any time (such time, the "Time of
Determination") (a) prior to the Phase I Completion Date, $3,000,000, (b) from
and after the Phase I Completion Date but prior to the Second Anniversary Date,
$15,000,000 and (c) from and after the Second Anniversary Date, the greater of
(i) $10,000,000 or (ii) the aggregate principal amount of all Advances and
Letter of Credit Usage outstanding hereunder on the Second Anniversary Date less
any repayments, refinancings or retirings of such borrowings made on or after
the Second Anniversary Date through the Time of Determination.
"Miscellaneous Indebtedness" means Indebtedness (other than the
Obligations and Permitted Gaming Equipment Purchase Money Indebtedness, but
including Capitalized Lease Obligations), in an aggregate amount outstanding at
any one time not in excess of $7,500,000.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., a Delaware
corporation, and its successors.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower in favor of Lender, in form and substance satisfactory to Lender, that
encumber the Real Property Collateral and the related improvements thereto.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Note" and "Notes" shall have the meanings ascribed thereto in the
Indenture.
"Obligations" means all loans, Advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent
13
reimbursement obligations with respect to outstanding Letters of Credit,
premiums (including, the Applicable Prepayment Premium), liabilities (including
all amounts charged to Borrowers' Loan Account pursuant hereto), obligations,
fees (including the fees provided for in the Fee Letter), charges, costs, Lender
Expenses (including any fees or expenses that, but for the provisions of the
Bankruptcy Code, would have accrued), lease payments, guaranties, covenants, and
duties of any kind and description owing by Borrowers to Lender pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Expenses that Borrowers are required to pay or reimburse by the
Loan Documents, by law. Any reference in this Agreement or in the Loan Documents
to the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
"OED Acquisition" means OED Acquisition, LLC, a Delaware limited
liability company.
"OED Capital" has the meaning set forth in the preamble to this
Agreement.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Lender to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Lender.
"Originating Lender" has the meaning set forth in Section 14.1(d).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(d).
"Permitted Discretion" means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
Administrative Borrower or its Subsidiaries of Equipment that is substantially
worn, damaged, or obsolete in the ordinary course of business, (b) sales by
Administrative Borrower or its Subsidiaries of Inventory to buyers in the
ordinary course of business, (c) the use or transfer of money or Cash
Equivalents by Administrative Borrower or its Subsidiaries in a manner that is
not prohibited by the terms of this Agreement or the other Loan Documents, and
(d) the licensing by Administrative Borrower or its Subsidiaries, on a
non-exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business.
"Permitted Gaming Equipment Purchase Money Indebtedness" means,
Purchase Money Indebtedness incurred with respect to Gaming Equipment as of the
Closing Date in an aggregate amount outstanding not in excess of $17,500,000 and
at all times thereafter in an aggregate amount outstanding not in excess of
$25,000,000.
14
"Permitted Investments" means (a) investments in Cash Equivalents,
(b) investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) investments by any Borrower in any other Borrower provided that if
any such investment is in the form of Indebtedness, such Indebtedness investment
shall be subject to the terms and conditions of the Intercompany Subordination
Agreement, and (e) Permitted Investments as that term is defined in the
Indenture or Restricted Payments permitted by Section 1.1 of the Indenture.
"Permitted Lien" means:
(a) Liens set forth on Schedule P-1;
(b) Liens imposed by governmental authorities for taxes, assessments
or other charges not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently pursued, if adequate
reserves with respect thereto are maintained on the books of Borrowers in
accordance with GAAP;
(c) statutory Liens of carriers, warehousemen, mechanics, material
men, suppliers, landlords, repairmen or other like Liens arising by operation of
law in the ordinary course of business; provided, that (1) the underlying
obligations are not yet delinquent, or (2) such Liens are being contested in
good faith by appropriate proceedings promptly instituted and diligently pursued
and adequate reserves with respect thereto are maintained on the books of
Borrowers in accordance with GAAP;
(d) Liens securing the performance of statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or title defects incurred in the ordinary course of
business consistent with industry practices which, singly or in the aggregate,
do not in any case materially detract from the value of the property subject
thereto (as such property is used by Borrowers) or materially interfere with the
ordinary conduct of the businesses of Borrowers;
(f) Liens incurred or deposits made in the ordinary course of
business to secure the obligations of Borrowers under workers' compensation,
unemployment insurance and other types of social security legislation or
otherwise to secure statutory or regulatory obligations of Borrowers in the
ordinary course of business consistent with past practice, including to secure
the performance of tenders, surety and appeal bonds, bids, leases, governmental
contracts, performance and return-of-money bonds and other similar obligations
(exclusive in each case of obligations for the payment of borrowed money);
provided, that the obligations in connection with which such Liens were incurred
or deposits made shall have been incurred in the ordinary course of business and
shall otherwise be permitted by this Agreement;
(g) Liens securing the Obligations;
(h) Liens arising from Miscellaneous Indebtedness; provided that
such Liens relate solely to the property which is subject to such Miscellaneous
Indebtedness;
15
(i) leases or subleases granted to other Persons in the ordinary
course of business not materially interfering with the conduct of the businesses
of Borrowers or materially detracting from the value of the relative assets of
Borrowers;
(j) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into by Borrowers
in the ordinary course of business;
(k) Liens securing permitted refinancing Indebtedness incurred in
compliance with this Agreement to refinance any Indebtedness that was secured by
Liens prior to such refinancing;
(l) Liens in favor of the Indenture Trustee relative to the Senior
Note Documents, so long as and to the extent such Liens remain subject to the
Intercreditor Agreement;
(m) Liens securing Permitted Gaming Equipment Purchase Money
Indebtedness and so long as such Lien attaches only to the asset purchased or
acquired and the proceeds thereof; and
(n) Liens upon specific items of Inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods.
"Permitted Protest" means the right of Administrative Borrower or
any of its Subsidiaries, as applicable, to protest any Lien (other than any such
Lien that secures the Obligations), taxes (other than payroll taxes or taxes
that are the subject of a United States federal tax lien), or rental payment,
provided that (a) a reserve with respect to such obligation is established on
the Books in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Administrative Borrower or any
of its Subsidiaries, as applicable, in good faith, and (c) Lender is satisfied
that, while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Lender's Liens.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
Property.
"PGC" means Peninsula Gaming Company, LLC, a Delaware limited
liability company and the direct and sole manager of OED Acquisition.
"PGP Investors" means PGP Investors, LLC, a Delaware limited
liability company.
16
"PGP" means Peninsula Gaming Partners, LLC, a Delaware limited
liability company, the direct parent and sole manager of PGC.
"Phase I" means Phase I of the Racino Project casino, as detailed in
the Fixed Price Contract.
"Phase I Completion Date" means the date, determined by Lender,
Borrowers shall have delivered to Lender, in each case in form and substance
satisfactory to Lender, the following:
(a) evidence that all Gaming Licenses, approvals or evidence of
actions required by any Governmental Authority, including the Louisiana
Regulatory Authorities, in connection with the casino operations of the Racino
Project have been received by Borrowers;
(b) an officer's certificate of the Parent (reviewed and certified
by the Construction Consultant) that all Liens (other than Permitted Liens)
related to the development, construction and equipping of, and beginning
operations at, the Racino Project casino have been discharged by payment,
bonding (if reasonably acceptable to Lender) or otherwise, or, if payment is not
yet due or if such payment is contested in good faith by Borrowers, sufficient
funds remain in the Construction Disbursement Account (as defined in the Cash
Collateral and Disbursement Agreement) to discharge such Liens and Borrowers
have taken any action (including the institution of legal proceedings) necessary
to prevent the sale of any or all of the Racino Project casino or the Real
Property Collateral on which the Racino Project shall be constructed;
(c) an officer's certificate of the Construction Consultant
certifying that the Racino Project casino is substantially complete in all
material respects in accordance with the Final Plans (as defined in the Cash
Collateral and Disbursement Agreement) and all applicable building laws,
ordinances and regulations and that all subcontractors, suppliers, and mechanics
and materialmen in connection with such construction have been paid in full;
(d) evidence that the Racino Project casino is in a condition
(including installation of furniture, fixtures and equipment) to receive
customers in the ordinary course of business;
(e) evidence that the Racino Project casino is open to the general
public, including as initially evidenced by the operation of not less than 1,485
gaming machines and operating in accordance with applicable legal requirements;
(f) updated title continuations through such date showing that the
Real Property Collateral covering the Racino Project casino is free and clear of
all Liens, other than Permitted Liens;
(g) a duly executed Borrowing Base Certificate dated as of such
date;
(h) updated Projections prepared not more than thirty (30) days
prior to such date;
(i) an updated Enterprise Valuation dated not more than thirty (30)
days prior to such date; and
17
(j) a certificate of occupancy for the Racino Project casino which
certificate shall be in full force and effect.
"Pledge Agreement" means a stock pledge agreement of even date
herewith executed and delivered by OED Acquisition and Parent in respect of the
Stock of Parent and OED Capital, respectively, in form and substance
satisfactory to Lender.
"Projections" means Parent's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Purchase Money Indebtedness" means Indebtedness incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Racino Project" means the project to design, develop, construct,
equip and operate that certain casino and race track to be located on the Real
Property Collateral located in Opelousas, St. Landry Parish, Louisiana.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1, and any Real Property hereafter acquired by
a Borrower.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Report" has the meaning set forth in Section 16.17.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"S&P" means Standard & Poor's Rating Service, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., a New York corporation, and its successors.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
18
"Second Anniversary Date" means the earlier of (a) the second
anniversary of the Phase I Completion Date and (b) the Second Anniversary Date
(as defined in the Indenture).
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Senior Note Documents" means, collectively, the Indenture, the
Notes, and the Collateral Agreements (as such term is defined in the Indenture)
in each case, as such document may be amended, restated, supplemented or
modified from time to time with the consent of Lender.
"Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subordination of Mortgage" means that certain Subordination of
Mortgage dated as of even date herewith executed by Indenture Trustee in favor
of Lender.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Taxes" has the meaning set forth in Section 16.5.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of
Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 16.8.
"Voting Stock" means Stock of any Person which at the time are
entitled to vote in the election of, as applicable, directors, Managers, members
or partners generally of such Person.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association.
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1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, Lender agrees to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed an amount
equal to (i) prior to the Phase I Completion Date, the Maximum Revolver Amount,
less the Letter of Credit Usage and (ii) from and after the Phase I Completion
Date, the lesser of (1) the Maximum Revolver Amount, less the Letter of Credit
Usage or (2) the Borrowing Base less the Letter of Credit Usage. For purposes of
this Agreement, "Borrowing Base," as of any date of determination, shall mean
the result of the lesser of:
(x) 30% of the amount of Fixed Construction Costs actually
incurred by Parent with respect to the Racino Project, or
(y) 20% of the amount of Borrowers' Enterprise Valuation.
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(b) Anything to the contrary in this Section 2.1 notwithstanding,
Lender shall have the right to establish reserves in such amounts, and with
respect to such matters, as Lender in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that Borrowers are required to pay (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay under any Section
of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral (other than any existing Permitted Lien set forth on Schedule
P-1 which is specifically identified thereon as entitled to have priority over
the Lender's Liens), which Lien or trust, in the Permitted Discretion of Lender
likely would have a priority superior to the Lender's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics (including,
without limitation, any Liens in favor of mechanics or subcontractors arising in
connection with the Racino Project), materialmen, laborers, or suppliers, or
Liens or trusts for ad valorem, excise, sales, or other taxes where given
priority under applicable law) in and to such item of the Collateral. In
addition to the foregoing, Lender shall have the right to have the Real Property
Collateral and the operations and assets of Borrowers reappraised by a qualified
appraisal company selected by Lender from time to time after the Closing Date
for the purpose of redetermining the Enterprise Valuation and, as a result,
redetermining the Borrowing Base; provided, however, that as long as no Default
or Event of Default exists, Lender shall conduct or obtain not more than three
(3) Enterprise Valuations from the Closing Date up to and including the third
anniversary thereof.
(c) Lender shall have no obligation to make additional Advances
hereunder to the extent such additional Advances would cause the Revolver Usage
to exceed the Maximum Revolver Amount (plus the Letter of Credit Usage). On or
after the Second Anniversary Date, Lender shall have no obligation to make
additional Advances hereunder to the extent that such additional Advances would
cause the Revolver Usage plus the Letter of Credit Usage to exceed
$10,000,000.00.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
(e) Each Advance shall be in the minimum amount of Five Hundred
Thousand Dollars ($500,000) or integral multiples thereof.
2.2 [Intentionally Omitted]
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by a
written request by an Authorized Person delivered to Lender (which notice must
be received by Lender no later than 10:00 a.m. (California time) on the Business
Day that is the requested Funding Date specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day.
At Lender's election, in lieu of delivering the above-described request in
writing, any Authorized Person may give Lender telephonic notice of such request
by the
21
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice.
(b) Making of Advances. If Lender has received a timely request for
a Borrowing in accordance with the provisions hereof, and subject to the
satisfaction of the applicable terms and conditions set forth herein, Lender
shall make the proceeds of such Advance available to Borrowers on the applicable
Funding Date by transferring available funds equal to such proceeds to
Administrative Borrower's Designated Account.
2.4 Payments.
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Lender's Account and shall be
made in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment received
by Lender later than 11:00 a.m. (California time), shall be deemed
to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such
following Business Day.
(b) Application, and Reversal of Payments.
(i) All payments shall be remitted to Lender and all such
payments (other than payments received while no Default or Event of
Default has occurred and is continuing and which relate to the
payment of principal or interest of specific Obligations or which
relate to the payment of specific fees), and all proceeds of
Accounts or other Collateral received by Lender, shall be applied as
follows:
(A) first, to pay any Lender Expenses then due to Lender
under the Loan Documents, until paid in full,
(B) second, to pay any fees then due to Lender under the
Loan Documents until paid in full,
(C) third, ratably to pay interest due in respect of
Advances until paid in full,
(D) fourth, to pay all principal of all Advances until
paid in full,
(E) fifth, if an Event of Default has occurred and is
continuing, to be held by Lender as cash collateral in an
amount up to 105% of the then extant Letter of Credit Usage
until paid in full,
(F) sixth, to pay any other Obligations until paid in
full, and
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(G) seventh, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under
applicable law.
(ii) In each instance, so long as no Default or Event of
Default has occurred and is continuing, Section 2.4(b) shall not be
deemed to apply to any payment by Borrowers specified by Borrowers
to be for the payment of specific Obligations then due and payable
(or prepayable) under any provision of this Agreement.
(iii) For purposes of the foregoing, "paid in full" means
payment of all amounts owing under the Loan Documents according to
the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after
the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not the
same would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
(iv) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together
and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to Lender pursuant to Sections 2.1 and 2.12 is
greater than either the Dollar or percentage limitations set forth in Sections
2.1 or 2.12, (an "Overadvance"), Borrowers immediately shall pay to Lender, in
cash, the amount of such excess, which amount shall be used by Lender to reduce
the Obligations in accordance with the priorities set forth in Section 2.4(b).
In addition, Borrowers hereby promise to pay the Obligations (including
principal, interest, fees, costs, and expenses) in Dollars in full to Lender as
and when due and payable under the terms of this Agreement and the other Loan
Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to the Base Rate plus the Base Rate
Margin.
(b) Letter of Credit Fee. Borrowers shall pay Lender a Letter of
Credit fee (in addition to the charges, commissions, fees, and costs set forth
in Section 2.12(e)) which shall accrue at a rate equal to 2% per annum times the
Daily Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default,
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(i) all Obligations (except for undrawn Letters of Credit)
that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof at a per
annum rate equal to 2 percentage points above the per annum rate
otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to 4 percentage points above the per annum rate otherwise
applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or obligation to extend credit hereunder are
outstanding. Borrowers hereby authorize Lender, from time to time, without prior
notice to Borrowers, to charge such interest and fees, all Lender Expenses (as
and when incurred), the charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), the fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document to Borrowers' Loan Account,
which amounts thereafter shall constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances hereunder. Any interest not
paid when due shall be compounded by being charged to Borrowers' Loan Account
and shall thereafter constitute Advances hereunder and shall accrue interest at
the rate then applicable to Advances.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and Lender, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.
2.7 [Intentionally Omitted].
2.8 Crediting Payments. The receipt of any payment item by Lender shall
not be considered a payment on account unless such payment item is a wire
transfer of immediately available federal funds made to the Lender's Account or
unless and until such payment item is honored when presented for payment. Should
any payment item not be honored when presented for payment, then Borrowers shall
be deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
24
payment item shall be deemed received by Lender only if it is received into the
Lender's Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into the Lender's Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been received by Lender as of the opening of business on the immediately
following Business Day.
2.9 Designated Account. Lender is authorized to make the Advances and
Lender is authorized to issue the Letters of Credit, under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Person, or without instructions if pursuant to Section 2.6(d).
Administrative Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrowers and made by Lender hereunder. Administrative
Borrower may add or replace, the Designated Account Bank or the Designated
Account on 30 days prior written notice to Lender; provided, however, that (i)
such prospective Designated Account Bank shall be satisfactory to Lender and
Lender shall have consented in writing in advance to the opening of such
Designated Account with the prospective Designated Account Bank, and (ii) prior
to the time of the opening of such Designated Account, Borrowers and such
prospective Designated Account Bank shall have executed and delivered to Lender
a Control Agreement. Unless otherwise agreed by Lender and Borrowers, any
Advance requested by Borrowers and made by Lender hereunder shall be made to the
Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Lender shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with all Advances made by Lender to Borrowers
or for Borrowers' account, the Letters of Credit issued by Lender for Borrowers'
account, and with all other payment Obligations hereunder or under the other
Loan Documents, including, accrued interest, fees and expenses, and Lender
Expenses. In accordance with Section 2.8, the Loan Account will be credited with
all payments received by Lender from Borrowers or for Borrowers' account. Lender
shall render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and Lender unless, within 30 days after receipt thereof
by Administrative Borrower, Administrative Borrower shall deliver to Lender
written objection thereto describing the error or errors contained in any such
statements.
2.11 Fees. Borrowers shall pay to Lender the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter):
(a) [Intentionally Omitted].
(b) Fee Letter Fees. As and when due and payable under the terms of
the Fee Letter, Borrowers shall pay to Lender the fees set forth in the Fee
Letter, and
(c) Audit, Appraisal, and Valuation Charges. Audit, appraisal, and
valuation fees and charges as follows, (i) a fee of $850 per day, per auditor,
plus out-of-pocket expenses
25
for each financial audit of a Borrower performed by personnel employed by
Lender, (ii) a fee of $1,500 per day per appraiser, plus out-of-pocket expenses,
for each appraisal of the Collateral performed by personnel employed by Lender,
and (iii) the actual charges paid or incurred by Lender if it elects to employ
the services of one or more third Persons to perform financial audits of
Borrowers or to audit the Fixed Construction Costs, to appraise the Collateral,
or any portion thereof, or to assess a Borrower's business valuation or for the
purposes of any Enterprise Valuation.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, Lender
agrees to issue letters of credit for the account of Borrowers (each, an "L/C")
or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by
Lender) to Lender and Lender (reasonably in advance of the requested date of
issuance, amendment, renewal, or extension) a notice requesting the issuance of
an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or of the Underlying Letter of Credit, as applicable), and such other
information as shall be necessary to prepare, amend, renew, or extend such L/C
or L/C Undertaking. If requested by Lender, Borrowers also shall be an applicant
under the application with respect to any Underlying Letter of Credit that is to
be the subject of an L/C Undertaking. Lender shall have no obligation to issue a
Letter of Credit if any of the following would result after giving effect to the
requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing Base
less the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $2,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances.
(b) Borrowers and Lender acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to Lender (in the exercise of its Permitted Discretion), including
the requirement that the amounts payable thereunder must be payable in Dollars.
If Lender is obligated to advance funds under a Letter of Credit, Borrowers
shall immediately reimburse such L/C Disbursement to Lender by paying to Lender
an amount equal to such L/C Disbursement not later than 11:00 a.m., California
time, on the date that such L/C Disbursement is made, if Administrative Borrower
shall have received written or telephonic notice of such L/C
26
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Administrative Borrower prior to such time on
such date, then not later than 11:00 a.m., California time, on the (i) Business
Day that Administrative Borrower receives such notice, if such notice is
received prior to 10:00 a.m., California time, on the date of receipt, and, in
the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances under Section 2.6. To the
extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance.
(c) Each Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by Lender arising out of or in connection with any
Letter of Credit; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of Lender. Each Borrower agrees to
be bound by the Underlying Issuer's regulations and interpretations of any
Underlying Letter of Credit or by Lender's interpretations of any L/C issued by
Lender to or for such Borrower's account, even though this interpretation may be
different from such Borrower's own, and each Borrower understands and agrees
that Lender shall not be liable for any error, negligence, or mistake, whether
of omission or commission, in following Borrowers' instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Each Borrower understands that the L/C Undertakings may
require Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer.
Each Borrower hereby agrees to indemnify, save, defend, and hold Lender harmless
with respect to any loss, cost, expense (including reasonable attorneys fees),
or liability incurred by Lender under any L/C Undertaking as a result of
Lender's indemnification of any Underlying Issuer; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense,
or liability that is caused by the gross negligence or willful misconduct of
Lender.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon Lender's instructions with respect to all
matters arising in connection with such Underlying Letter of Credit and the
related application.
(e) Any and all charges, commissions, fees, and costs incurred by
Lender relating to Underlying Letters of Credit shall be Lender Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrowers to
Lender for the account of Lender; it being acknowledged and agreed by each
Borrower that, as of the Closing Date, the issuance charge imposed by the
prospective Underlying Issuer is .850% per annum times the face amount of each
Underlying Letter of Credit, that such issuance charge may be changed from time
to time, and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii)
27
compliance by the Underlying Issuer or Lender with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority:
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or Lender
any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify
Administrative Borrower, and Borrowers shall pay on demand such amounts as
Lender may specify to be necessary to compensate Lender for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Advances
hereunder. The determination by Lender of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.13 Cash Collateralization of Letters of Credit. If on the date five (5)
Business Days prior to the Second Anniversary Date, the aggregate amount of all
Advances and Letters of Credit exceeds $10,000,000, Borrowers agree and hereby
authorize Lender to make an Advance in a principal amount equal to the face
amount of all Letters of Credit then outstanding in order to cash collateralize
all such Letters of Credit, unless on or before such date Borrowers deliver to
Lender a written acknowledgement, in form and substance satisfactory to Lender,
duly executed by the Indenture Trustee acknowledging and agreeing that the face
amount of all Letters of Credit outstanding as of the Second Anniversary Date
shall be included in calculating Maximum Credit Facility Amount (as defined in
the Indenture).
2.14 Capital Requirements. If, after the date hereof, Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any guideline, request, or directive of
any such entity regarding capital adequacy (whether or not having the force of
law), will have the effect of reducing the return on Lender's or such holding
company's capital as a consequence of Lender's obligations hereunder to a level
below that which Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
Lender to be material, then Lender may notify Administrative Borrower thereof.
Following receipt of such notice, Borrowers agree to pay Lender on demand the
amount of such reduction of return of capital as and when such reduction is
determined, payable within 90 days after presentation by Lender of a
28
statement in the amount and setting forth in reasonable detail Lender's
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error). In
determining such amount, Lender may use any reasonable averaging and attribution
methods.
2.15 Joint and Several Liability of Borrowers.
(a) Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the financial
accommodations to be provided by Lender under this Agreement, for the mutual
benefit, directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Persons composing Borrowers will make such payment with respect
to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Lender under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Person composing Borrowers hereby assents to,
and waives notice of, any extension or postponement of the time for the payment
of any of the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by Lender at any time or times in respect of any
default by any Person composing Borrowers in the performance or satisfaction of
any term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Lender in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in
29
whole or in part, of any Person composing Borrowers. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of Lender with respect to the failure by
any Person composing Borrowers to comply with any of its respective Obligations,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder, which might, but for the provisions of this Section 2.15
afford grounds for terminating, discharging or relieving any Person composing
Borrowers, in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Person composing Borrowers that, so long as
any of the Obligations hereunder remain unsatisfied, the Obligations of such
Person composing Borrowers under this Section 2.15 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Person composing Borrowers under this Section 2.15 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Person composing Borrowers or Lender. The joint and several liability of the
Persons composing Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or Lender.
(f) Each Person composing Borrowers represents and warrants to
Lender that such Borrower is currently informed of the financial condition of
Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Person
composing Borrowers further represents and warrants to Lender that such Borrower
has read and understands the terms and conditions of the Loan Documents. Each
Person composing Borrowers hereby covenants that such Borrower will continue to
keep informed of Borrowers' financial condition, the financial condition of
other guarantors, if any, and of all other circumstances which bear upon the
risk of nonpayment or nonperformance of the Obligations.
(g) The provisions of this Section 2.15 are made for the benefit of
Lender and its respective successors and assigns, and may be enforced by it or
them from time to time against any or all of the Persons composing Borrowers as
often as occasion therefor may arise and without requirement on the part of
Lender, successor, or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any of the other Persons composing
Borrowers or to exhaust any remedies available to it or them against any of the
other Persons composing Borrowers or to resort to any other source or means of
obtaining payment of any of the Obligations hereunder or to elect any other
remedy. The provisions of this Section 2.15 shall remain in effect until all of
the Obligations shall have been paid in full or otherwise fully satisfied. If at
any time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by Lender
upon the insolvency, bankruptcy or reorganization of any of the Persons
composing Borrowers, or otherwise, the provisions of this Section 2.15 will
forthwith be reinstated in effect, as though such payment had not been made.
(h) Each of the Persons composing Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
Lender with respect to any of the Obligations or any
30
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to Lender hereunder or under any other
Loan Documents are hereby expressly made subordinate and junior in right of
payment, without limitation as to any increases in the Obligations arising
hereunder or thereunder, to the prior payment in full in cash of the Obligations
and, in the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding under the laws of any jurisdiction
relating to any Borrower, its debts or its assets, whether voluntary or
involuntary, all such Obligations shall be paid in full in cash before any
payment or distribution of any character, whether in cash, securities or other
property, shall be made to any other Borrower therefor.
(i) Each of the Persons composing Borrowers hereby agrees that,
after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, ▇▇▇ for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Lender, and such Borrower shall
deliver any such amounts to Lender for application to the Obligations in
accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to Initial Extension of Credit. In addition to
satisfying each of the conditions precedent set forth in Section 3.3, the
obligation of Lender to make the initial Advances (or otherwise extend any
credit hereunder) is subject to the prior fulfillment, to the satisfaction of
Lender, of each of the conditions set forth below:
(a) the Closing Date shall occur on or before June 24, 2003;
(b) Lender shall have received all financing statements required by
Lender, and Lender shall have received searches reflecting the filing of all
such financing statements;
(c) Lender shall have received each of the following documents, in
form and substance satisfactory to Lender, duly executed, and each such document
shall be in full force and effect:
(i) the Control Agreements,
(ii) the Disbursement Letter,
(iii) the Fee Letter,
(iv) the Mortgages, together with any consents required for
such Mortgages,
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(v) the Officers' Certificate,
(vi) the Intercreditor Agreement and the Subordination of
Mortgage,
(vii) the Pledge Agreement, together with all certificates
representing the shares of Stock pledged thereunder, as well as
Stock powers with respect thereto endorsed in blank,
(viii) the Intercompany Subordination Agreement,
(ix) the Management Fees Subordination Agreement,
(x) the Construction Security Agreements,
(xi) the Fixed Price Contract, and
(xii) the Management Agreement, together with any
subordination agreements with respect to management fees under such
agreements;
(d) Lender shall have received a certificate from the Secretary of
each Borrower attesting to the resolutions of such Borrower's board of directors
(or comparable manager) authorizing its execution, delivery, and performance of
this Agreement and the other Loan Documents to which such Borrower is a party
and authorizing specific officers of such Borrower to execute the same;
(e) Lender shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
(f) Lender shall have received a certificate of status with respect
to each Borrower, dated within 10 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;
(g) Lender shall have received certificates of status with respect
to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(h) Lender shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Lender;
(i) Lender shall have received Collateral Access Agreements with
respect to the following locations: Parent's off-track betting location in New
Iberia, Louisiana and Parent's location in Lafayette, Louisiana;
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(j) Lender shall have received opinions of Borrowers' counsel in
form and substance satisfactory to Lender, such opinions to include regulatory
opinions as to the due issuance and valid existence of Borrowers' Gaming
License;
(k) Lender shall have received satisfactory evidence (including a
certificate of the chief financial officer of Parent) that all tax returns
required to be filed by Borrowers have been timely filed and all taxes upon
Borrowers or their properties, assets, income, and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of Permitted Protests;
(l) Lender shall have completed its business, legal, and collateral
due diligence, including a collateral audit and review of Borrowers' books and
records and verification of Borrowers' representations and warranties to Lender,
the results of which shall be satisfactory to Lender;
(m) Lender shall have received completed reference checks with
respect to Borrowers' senior management, the results of which are satisfactory
to Lender in its sole discretion;
(n) Lender shall have received the Closing Date Business Plan;
(o) Borrowers shall pay all Lender Expenses incurred in connection
with the transactions evidenced by this Agreement;
(p) Lender shall have received (i) appraisals of the Real Property
Collateral satisfactory to Lender, and (ii) mortgagee title insurance policies
(or marked commitments to issue the same) for the Real Property Collateral
issued by a title insurance company satisfactory to Lender (each a "Mortgage
Policy" and, collectively, the "Mortgage Policies") in amounts satisfactory to
Lender assuring Lender that the Mortgages on such Real Property Collateral are
valid and enforceable first priority mortgage Liens on such Real Property
Collateral free and clear of all defects and encumbrances except Permitted
Liens, and the Mortgage Policies otherwise shall be in form and substance
satisfactory to Lender;
(q) Lender shall have received copies of the Senior Note Documents;
(r) Borrowers shall have received all licenses (including the Gaming
Licenses), approvals or evidence of other actions required by any Governmental
Authority, including the Louisiana Regulatory Authorities, in connection with
the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby; and
(s) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender.
Notwithstanding the foregoing, Lender is under no obligation to make the
initial Advance (or otherwise to extend any credit provided for hereunder)
unless and until all of the conditions set forth in Section 3.3 below are
satisfied to the satisfaction of Lender.
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3.2 Conditions Subsequent to Initial Extension of Credit. The obligation
of Lender to continue to make Advances (or otherwise extend credit hereunder) is
subject to the fulfillment, on or before the date applicable thereto, of each of
the conditions subsequent set forth below (the failure by Borrowers to so
perform or cause to be performed constituting an Event of Default):
(a) within 180 days of the Closing Date, deliver to Lender certified
copies of the policies of insurance, together with the endorsements thereto, as
are required by Section 6.8, the form and substance of which shall be
satisfactory to Lender and its counsel; and
(b) within 120 days of the Closing Date, deliver to Lender a duly
executed Collateral Access Agreement with respect to the temporary operations
office at 1305 Diesi Street, Opelousas, Louisiana; provided, however, that the
failure of Borrowers to deliver such agreement shall not constitute an Event of
Default hereunder so long as Borrowers have used commercially reasonable efforts
to obtain such agreement by the date required.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of
Lender to make any Advances (or to extend any other credit hereunder) shall be
subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Borrower, Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers and Lender and shall continue in full force and
effect for a term ending on June 24, 2006 (the "Maturity Date"). The foregoing
notwithstanding, Lender shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit) immediately shall become due
and payable without notice or demand (including either (a) providing cash
collateral to be held by Lender in an amount equal to 105% of the then extant
Letter of Credit Usage, or (b) causing the original Letters of Credit to be
returned to Lender). No termination of this Agreement, however, shall relieve or
discharge Borrowers of their duties, Obligations, or covenants hereunder and the
Lender's Liens in the Collateral shall remain in effect until all Obligations
have been fully and finally discharged and
34
Lender's obligations to provide additional credit hereunder have been
terminated. When this Agreement has been terminated and all of the Obligations
have been fully and finally discharged and Lender's obligations to provide
additional credit under the Loan Documents have been terminated irrevocably,
Lender will, at Borrowers' sole expense, execute and deliver any UCC termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Lender's Liens and all notices of security
interests and liens previously filed by Lender with respect to the Obligations.
3.6 Early Termination by Borrowers. Borrowers have the option, at any time
upon 90 days prior written notice by Administrative Borrower to Lender, to
terminate this Agreement by paying to Lender, in cash, the Obligations
(including either (a) providing cash collateral to be held by Lender in an
amount equal to 105% of the then extant Letter of Credit Usage, or (b) causing
the original Letters of Credit to be returned to Lender), in full, together with
the Applicable Prepayment Premium. If Administrative Borrower has sent a notice
of termination pursuant to the provisions of this Section, then Lender's
obligations to extend credit hereunder shall terminate and Borrowers shall be
obligated to repay the Obligations (including either (a) providing cash
collateral to be held by Lender in an amount equal to 105% of the then extant
Letter of Credit Usage, or (b) causing the original Letters of Credit to be
returned to Lender), in full, together with the Applicable Prepayment Premium,
on the date set forth as the date of termination of this Agreement in such
notice. In the event of the termination of this Agreement and repayment of the
Obligations at any time prior to the Maturity Date, for any other reason,
including (A) termination upon the election of Lender to terminate after the
occurrence of an Event of Default, (B) foreclosure and sale of Collateral, (C)
sale of the Collateral in any Insolvency Proceeding, or (D) restructure,
reorganization or compromise of the Obligations by the confirmation of a plan of
reorganization, or any other plan of compromise, restructure, or arrangement in
any Insolvency Proceeding, then, in view of the impracticability and extreme
difficulty of ascertaining the actual amount of damages to Lender or profits
lost by Lender as a result of such early termination, and by mutual agreement of
the parties as to a reasonable estimation and calculation of the lost profits or
damages of Lender, Borrowers shall pay the Applicable Prepayment Premium to
Lender, measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
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4.1 Grant of Security Interest. Each Borrower hereby grants to Lender a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Personal Property
Collateral in order to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and in order
to secure prompt performance by Borrowers of each of their covenants and duties
under the Loan Documents. The Lender's Liens in and to the Personal Property
Collateral shall attach to all Personal Property Collateral without further act
on the part of Lender or Borrowers. Anything contained in this Agreement or any
other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrowers have no authority, express or implied, to dispose of any
item or portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection of priority of Lender's security interest is
dependent on or enhanced by possession, the applicable Borrower, immediately
upon the request of Lender, shall endorse and deliver physical possession of
such Negotiable Collateral to Lender.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Lender or Lender's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Lender or that Lender has a security interest therein, or (b)
collect the Accounts, chattel paper, or General Intangibles directly and charge
the collection costs and expenses to the Loan Account. Each Borrower agrees that
it will hold in trust for Lender, as Lender's trustee, any Collections that it
receives and immediately will deliver said Collections to Lender in their
original form as received by the applicable Borrower.
4.4 Delivery of Additional Documentation Required. At any time upon the
request of Lender, Borrowers shall execute and deliver to Lender, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Lender may request in its Permitted Discretion, in form and
substance satisfactory to Lender, to perfect and continue perfected or better
perfect the Lender's Liens in the Collateral (whether now owned or hereafter
arising or acquired), to create and perfect Liens in favor of Lender in any Real
Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, each Borrower authorizes Lender
to execute any such Additional Documents in the applicable Borrower's name and
authorize Lender to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Lender shall require,
Borrowers shall (a) provide Lender with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by Borrowers
during the prior period, (b) cause all patents, copyrights, and trademarks
acquired or generated by Borrowers that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrowers' ownership thereof,
and (c) cause to be prepared, executed, and delivered to Lender supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
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4.5 Power of Attorney. Each Borrower hereby irrevocably makes,
constitutes, and appoints Lender (and any of Lender's officers, employees, or
agents designated by Lender) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or ▇▇▇▇ of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) at any time that an Event of Default has
occurred and is continuing send requests for verification of Accounts, (d) at
any time that an Event of Default has occurred and is continuing endorse such
Borrower's name on any Collection item that may come into Lender's possession,
(e) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under such Borrower's policies of insurance and
make all determinations and decisions with respect to such policies of
insurance, and (f) at any time that an Event of Default has occurred and is
continuing, settle and adjust disputes and claims respecting the Accounts,
chattel paper, or General Intangibles directly with Account Debtors, for amounts
and upon terms that Lender determines to be reasonable, and Lender may cause to
be executed and delivered any documents and releases that Lender determines to
be necessary. The appointment of Lender as each Borrower's attorney, and each
and every one of its rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and Lender's obligations to extend credit hereunder are terminated.
4.6 Right to Inspect. Lender (through any of its respective officers,
employees, or agents) shall have the right, from time to time and during normal
business hours hereafter to inspect the Books and to check, test, and appraise
the Collateral, operations and assets of Borrowers in order to verify Borrowers'
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral or to conduct an Enterprise Valuation.
4.7 Control Agreements. Except with respect to any Securities Account
constituting an Excluded Asset, each Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under Section 7.19
and, if to another securities intermediary, unless each of the applicable
Borrower, Lender, and the substitute securities intermediary have entered into a
Control Agreement. Except with respect to any Securities Account constituting an
Excluded Asset, no arrangement contemplated hereby or by any Control Agreement
in respect of any Securities Accounts or other Investment Property shall be
modified by Borrowers without the prior written consent of Lender. Upon the
occurrence and during the continuance of a Default or Event of Default, Lender
may notify any securities intermediary to liquidate the applicable Securities
Account or any related Investment Property maintained or held thereby and remit
the proceeds thereof to the Lender's Account, except with respect to any
Securities Account constituting an Excluded Asset.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement, each Borrower
makes the following representations and warranties to Lender which shall be
true, correct, and complete, in all material respects, as of the date hereof,
and shall be true, correct, and complete, in all material respects, as of the
Closing Date, and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance
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(or other extension of credit) (except to the extent that such representations
and warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
5.1 No Encumbrances. Each Borrower has good and indefeasible title to its
Collateral and its owned Real Property, free and clear of Liens except for
Permitted Liens.
5.2 [Intentionally Omitted].
5.3 [Intentionally Omitted].
5.4 Equipment. All of the Equipment is used or held for use in Borrowers'
business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Inventory and Equipment are
not stored with a bailee, warehouseman, or similar party and are located only at
the locations identified on Schedule 5.5.
5.6 Inventory Records. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 Location of Chief Executive Office; FEIN. The chief executive office
of each Borrower is located at the address indicated in Schedule 5.7 and each
Borrower's FEIN is identified in Schedule 5.7.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
each Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction
of their organization; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the applicable Borrower. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and (if
applicable) non-assessable.
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(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
5.9 Due Authorization; No Conflict.
(a) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the Loan Documents to which it is a party
have been duly authorized by all necessary action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the Loan Documents to which it is a party do
not and will not (i) violate any provision of federal, state, or local law or
regulation applicable to any Borrower, the Governing Documents of any Borrower,
or any order, judgment, or decree of any court or other Governmental Authority
binding on any Borrower, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of any Borrower, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of any Borrower, other than Permitted Liens, or (iv) require any
approval of any Borrower's members or shareholders or any approval or consent of
any Person under any material contractual obligation of any Borrower.
(c) Other than the filing of financing statements, fixture filings,
and Mortgages, the execution, delivery, and performance by each Borrower of this
Agreement and the Loan Documents to which such Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person.
(d) As to each Borrower, this Agreement and the other Loan Documents
to which such Borrower is a party, and all other documents contemplated hereby
and thereby, when executed and delivered by such Borrower will be the legally
valid and binding obligations of such Borrower, enforceable against such
Borrower in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
(e) The Lender's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens.
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5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrowers, or any of their Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to
Borrowers that have been delivered by Borrowers to Lender have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for
the lack of footnotes and being subject to year-end audit adjustments) and
present fairly in all material respects, Borrowers' financial condition as of
the date thereof and results of operations for the period then ended. There has
not been a Material Adverse Change with respect to Borrowers since the date of
the latest financial statements submitted to Lender on or before the Closing
Date.
5.12 Fraudulent Transfer.
(a) The Borrowers on a consolidated basis are Solvent.
(b) No transfer of property is being made by any Borrower and no
obligation is being incurred by any Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrowers.
5.13 Employee Benefits. None of Borrowers, any of its Subsidiaries, or any
of its ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been used
by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) none of Borrowers have
received notice that a Lien arising under any Environmental Law has attached to
any revenues or to any Real Property owned or operated by Borrowers, and (d)
none of Borrowers have received a summons, citation, notice, or directive from
the Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by any Borrower resulting in the
releasing or disposing of Hazardous Materials into the environment.
5.15 Brokerage Fees. Borrowers have not utilized the services of any
broker or finder in connection with Borrowers' obtaining financing from Lender
under this Agreement and no brokerage commission or finders fee is payable by
Borrowers in connection herewith.
5.16 Intellectual Property. Each Borrower owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as Schedule 5.16 is a true, correct, and
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complete listing of all material patents, patent applications, trademarks,
trademark applications, copyrights, and copyright registrations as to which each
Borrower is the owner or is an exclusive licensee.
5.17 Leases. Borrowers enjoy peaceful and undisturbed possession under all
leases material to the business of Borrowers and to which Borrowers are a party
or under which Borrowers are operating. All of such leases are valid and
subsisting and no material default (after giving effect to any applicable notice
and cure periods) by Borrowers exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each
Borrower, including, with respect to each depository (i) the name and address of
such depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrowers in writing to Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents,
or any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Borrowers
in writing to the Lender will be, true and accurate, in all material respects,
on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. On the Closing
Date, the Closing Date Projections represent, and as of the date on which any
other Projections are delivered to Lender, such additional Projections represent
Borrowers' good faith best estimate of its future performance for the periods
covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 Licenses and Permits. (a) (i) All material licenses (including all
necessary Gaming Licenses), permits, and consents and similar rights required
from any federal, state, or local governmental body (including the Gaming
Authorities), for the ownership, use, or operation of the businesses or
properties now owned or operated by each Borrower, have been validly issued and
are in full force and effect; (ii) each Borrower is in compliance, in all
material respects, with all of the provisions thereof applicable to it; and
(iii) none of such licenses, permits, or consents is the subject of any pending
or, to any Borrower's knowledge, threatened proceeding for the revocation,
cancellation, suspension, or non-renewal thereof. As of the Closing Date (and as
of each subsequent date on which Borrower delivers to Lender an updated schedule
pursuant to Section 6.18 below), set forth on Schedule 5.21 is a complete and
accurate list of all such licenses, permits, and consents that are necessary and
appropriate for the operation of Borrower's businesses and such schedule
identifies the date by which an application for the renewal of such license,
permit, or consent must be filed and describes the status of each such pending
application.
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(b) Each Borrower has obtained (i) all material licenses, permits,
and consents necessary or appropriate to conduct its business and operations and
(ii) as of the Closing Date, all required approvals from the Gaming Authorities
of the transactions contemplated hereby and by the other Loan Documents.
(c) Each Borrower owns or possesses all patents, trademarks, trade
names, copyrights, and other similar rights necessary for the conduct of
business as now carried on or proposed to be conducted, without any known
conflict of the rights of others.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrowers shall and shall cause each of their respective Subsidiaries to do all
of the following:
6.1 Accounting System. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Lender.
6.2 Collateral Reporting. Provide Lender with the following documents at
the following times in form satisfactory to Lender:
Monthly (not later than the (a) a detailed itemized report
15th day of each month) reflecting the prior months and
year-to-date revenues from the
racetrack, off-track betting parlors
(including video poker revenues) and
out-of-state satellite operations,
(b) a detailed itemized report
reflecting tax payments made during the
prior month,
(c) a detailed itemized report showing
actual and estimated construction costs,
a statement (in the form provided by the
Indenture Trustee) reflecting the
current balances of the Construction
Disbursement Account and Completion
Reserve Account (each as defined in the
Cash Collateral and Disbursement
Agreement) and construction related
costs incurred or reasonably expected to
be incurred by Borrowers in connection
with the Racino Project prior to or
through the Construction Completion Date
and any variances thereof,
Monthly (not later than the (d) a detailed itemized report the
15th day of showing each following items: (i) the average daily
month), commencing with the dollar amount of winnings for all Gaming
month following the month in Equipment for such month, (ii) the
which the Racino Project average daily number of customers
casino opens to the general admitted into the Racino Project casino
public for such month, and (iii) the average
daily dollar amount of winnings per
customer admitted for such month, and
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Monthly (or if more (e) copies of all disbursement requests,
frequently, upon delivery to together with copies of updated title
the Disbursement Agent under continuations, if any, with respect to
the Cash Collateral and the Mortgage Policies, and
Disbursement Agreement)
Upon request by Lender (f) such other reports as to the
Collateral, or the financial condition
of Borrowers, as Lender may request.
In addition, each Borrower agrees to cooperate fully with Lender to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Lender:
(a) as soon as available, but in any event within 30 days (45 days
in the case of a month that is the end of one of the first 3 fiscal quarters in
a fiscal year or 90 days in the case of a month that is the end of the fiscal
year) after the end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
(A) the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in all material respects the financial
condition of Parent and its Subsidiaries,
(B) the representations and warranties of Borrowers
contained in this Agreement and the other Loan Documents are
true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such
date (except to the extent that such representations and
warranties relate solely to an earlier date), and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrowers
have taken, are taking, or propose to take with respect
thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
7.20,
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(b) as soon as available, but in any event within 90 days after the
end of each of Parent's fiscal years,
(i) financial statements of Parent and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Lender and certified, without
any qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Lender
stating that such accountants do not have knowledge of the existence
of any Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event no later than thirty (30)
days after the end of each of the Parent's fiscal years,
(i) copies of Borrowers' Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to
Lender, in its sole discretion, for the forthcoming fiscal year,
month by month, certified by the chief financial officer of Parent
as being such officer's good faith best estimate of the financial
performance of Parent and its Subsidiaries during the period covered
thereby,
(d) if and when filed by any Borrower,
(i) any filings or monthly reports submitted by any Borrower
to the Louisiana Regulatory Authorities or any other Gaming
Authority other than such filings or monthly reports submitted in
the ordinary course of business,
(ii) any filings made by any Borrower with the SEC,
(iii) copies of Borrowers' federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Parent to its
shareholders in their capacities as shareholders generally,
(e) if and when filed by any Borrower and as requested by Lender,
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) any Borrower conducts business or is required to pay
any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as a Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrowers propose to take with respect
thereto,
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(g) as soon as any Borrower has knowledge that the construction of
the Racino Project cannot be completed by Contractor, or has knowledge that such
Borrower cannot meet its obligations under any construction documents
(including, without limitation, the Fixed Price Contract), notice thereof and a
statement of the curative action that Borrowers propose to take with respect
thereto,
(h) as soon as any Borrower has knowledge thereof, notice of any
proposed legislation or administrative action specifically affecting any
Borrower's gaming activities or the Racino Project submitted to the floor for
business before any Governmental Authority in the state of Louisiana (including
the state legislature or any committee thereof),
(i) upon the delivery of any updated Enterprise Valuation and on
each date monthly financial statements required pursuant to clause (a) above are
delivered, a detailed calculation of the Borrowing Base; and
(j) upon the request of Lender, any other report reasonably
requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above, Borrowers agree
to deliver financial statements prepared on both a consolidated and
consolidating basis and agree that no Borrower, or any Subsidiary of a Borrower,
will have a fiscal year different from that of Parent. Borrowers agree that
their independent certified public accountants are authorized to communicate
with Lender and to release to Lender whatever financial information concerning
Borrowers that Lender reasonably may request. Each Borrower waives the right to
assert a confidential relationship, if any, it may have with any accounting firm
or service bureau in connection with any information requested by Lender
pursuant to or in accordance with this Agreement, and agree that Lender may
contact directly any such accounting firm or service bureau in order to obtain
such information.
6.4 [Intentionally Omitted].
6.5 After-Acquired Real Property. At the consummation of the
acquisition(s) of the Real Property from ▇▇▇▇ ▇. ▇▇▇▇▇▇ as described in item 2
of Schedule 5.20, Borrowers shall use their best efforts to deliver a Mortgage
with respect to such property, subject to Liens in favor of ▇▇▇▇ ▇. ▇▇▇▇▇▇ or
such other seller with respect thereto and other Permitted Liens.
6.6 Maintenance of Properties. Borrowers shall cause all material
properties which are owned or leased by Borrowers used in the conduct of their
business and the business of each of the Subsidiaries to be maintained and kept
in good condition, repair and working order (reasonable wear and tear excepted)
and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in their reasonable judgment may be necessary, so that the business
carried on in connection therewith may be properly conducted at all times;
provided, however, that nothing in this Section 6.6 shall prevent Borrowers from
discontinuing any operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is (a) (i) in the
judgment of the Managers of Borrowers, desirable in the conduct of the business
of such entity and (ii) would not have a material adverse effect on the ability
of Borrowers to satisfy their
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obligations under the this Agreement and other Loan Documents, and, to the
extent applicable, (b) as otherwise permitted under Section 7.4 hereof.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers
or any of their assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrowers
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Lender with proof satisfactory to Lender indicating
that the applicable Borrower has made such payments or deposits. Borrowers shall
deliver satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which any Borrower is required to pay any such excise tax.
6.8 Insurance.
(a) At Borrowers' expense, maintain insurance respecting its assets
wherever located, covering loss or damage by fire, theft, explosion, and all
other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. Borrowers also shall maintain
business interruption and comprehensive general liability insurance, as well as
insurance against larceny, embezzlement, and criminal misappropriation. All such
policies of insurance shall be in such amounts and with such insurance companies
as are reasonably satisfactory to Lender. Borrowers shall deliver copies of all
such policies to Lender with a satisfactory lender's loss payable endorsement
naming Lender as sole loss payee or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 10 days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever.
(b) Borrowers shall give Lender prompt notice of the occurrence of
any loss covered by such insurance.
(i) In the absence of a Default or Event of Default, Lender
shall have the exclusive right to adjust any losses payable with
respect to the Collateral under any such insurance policies in
excess of $2,000,000, without any liability to Borrowers whatsoever
in respect of such adjustments, and any monies received as payment
for any loss under any insurance policy mentioned above with respect
to the Collateral (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by
eminent domain with respect to the Collateral, may be retained by
the applicable Borrower for application to the cost of repairs,
replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall
be of a value at least equal to the value of the items of property
destroyed prior to such damage or destruction.
(ii) During the existence of a Default or Event of Default,
Lender shall have the exclusive right to adjust any losses payable
with respect to the Collateral under any such insurance policies in
excess of $150,000, without any liability to
46
Borrower whatsoever in respect of such adjustments, and any monies
in excess of $150,000 received as payment for any loss under any
insurance policy mentioned above with respect to the Collateral
(other than liability insurance policies) or as payment of any award
or compensation for condemnation or taking by eminent domain with
respect to the Collateral, shall be paid over to Lender to be
applied at the option of Lender either to the prepayment of the
Obligations or shall be disbursed to Borrowers under staged payment
terms reasonably satisfactory to Lender for application to the cost
of repairs, replacements, or restorations.
(c) No Borrower will take out separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained under
this Section 6.8, unless Lender is included thereon as named insured with the
loss payable to Lender under a lender's loss payable endorsement or its
equivalent. Borrowers immediately shall notify Lender whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Lender.
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6.9 Location of Inventory and Equipment. Keep the Inventory and Equipment
only at the locations identified on Schedule 5.5; provided, however, that
Administrative Borrower may amend Schedule 5.5 so long as such amendment occurs
by written notice to Lender not less than 30 days prior to the date on which the
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, the applicable Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Lender's Liens on such assets and also provides to Lender a Collateral Access
Agreement.
6.10 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any
leases to which any Borrower is a party or by which any Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
6.12 Brokerage Commissions. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from Lender under this Agreement. Borrowers agree and acknowledge that
payment of all such brokerage commissions or finders fees shall be the sole
responsibility of Borrowers, and each Borrower agrees to indemnify, defend, and
hold Lender harmless from and against any claim of any broker or finder arising
out of Borrowers' obtaining financing from Lender under this Agreement.
6.13 Existence. At all times preserve and keep in full force and effect
each Borrower's valid existence and good standing and any rights and franchises
material to Borrowers' businesses.
6.14 Environmental.
(a) Keep any property either owned or operated by any Borrower free
of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Lender documentation of such compliance which Lender
reasonably requests, (c) promptly notify Lender of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
any Borrower and take any Remedial Actions required to ▇▇▇▇▇ said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Lender with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of any Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against any Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
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6.15 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Lender if any written
information, exhibit, or report furnished to Lender contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 Government Authorization. Deliver to Lender, as soon as practicable,
and in any event within ten (10) days after the receipt by such Borrower from
any Gaming Authority or other Governmental Authority having jurisdiction over
the operations of such Borrower or filing or receipt thereof by such Borrower
(a) copies of any order or notice of such Gaming Authority or such other
Governmental Authority or court of competent jurisdiction which designates any
Gaming License or other material franchise, permit, or other governmental
operating authorization of such Borrower or any application therefor, for a
hearing or which refuses renewal or extension of, or revokes or suspends the
authority of such Borrower to construct, own, manage, or operate its businesses,
and (b) a copy of any competing application filed with respect to any such
Gaming License or other authorization, or application therefor, of such
Borrower, or any citation, notice of violation, or order to show cause issued by
any Gaming Authority or other governmental authority or any complaint filed by
any Gaming Authority or other governmental authority which is available to such
Borrower.
6.17 License Renewals. Commencing on the date six months following the
Closing Date and continuing every six months thereafter, deliver to Lender an
updated Schedule 5.21 reflecting thereon, as of the date of such delivery, the
information described in Section 5.21.
6.18 Licenses and Permits. (a) Ensure that all material licenses
(including all necessary Gaming Licenses), permits, and consents and similar
rights required from any federal, state, or local governmental body (including
the Gaming Authorities) for the ownership, use, or operation of the businesses
or properties now owned or operated by each Borrower have been validly issued
and are in full force and effect, and (b) comply, in all material respects, with
all of the provisions thereof applicable to it.
6.19 Subsidiary Guarantees. Borrowers shall cause (a) each Subsidiary of
Borrowers that is formed or acquired after the date hereof, concurrently
therewith, to (i) become a Guarantor hereunder and execute and deliver to Lender
a guaranty pursuant to which such Subsidiary shall unconditionally guarantee all
of the Obligations in form and substance acceptable to Lender; and (ii) execute
a security agreement in form and substance acceptable to Lender and such other
agreements or documents necessary or requested by Lender to grant Lender a
valid, enforceable, perfected Lien on the collateral described therein, subject
only to Permitted Liens; and (b) cause such Subsidiary to deliver to Lender an
opinion of counsel, in form reasonably satisfactory to Lender, that (i) such
guaranty, security, agreement, and other agreements and documents have been duly
authorized, executed and delivered by such Subsidiary and (ii) such guaranty,
security agreement, and such other agreements and documents constitute a legal,
valid, binding and enforceable obligation of such Subsidiary, subject to
customary assumptions and exceptions, including for bankruptcy, fraudulent
transfer and equitable principles.
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7. NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrowers will not and will not permit any of their respective Subsidiaries to
do any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Gaming Equipment Purchase Money Indebtedness;
(d) Miscellaneous Indebtedness;
(e) Indebtedness under the Notes in an aggregate principal amount
not to exceed $123,200,000 at any one time outstanding and any Subsidiary
guaranties thereof; provided, however, that such Indebtedness under the Notes
(and any Subsidiary guaranties thereof) shall at all times be subordinate to the
Obligations;
(f) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b), (c), (d) and (e) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Lender's
reasonable judgment, materially impair the prospects of repayment of the
Obligations by Borrowers or materially impair Borrowers' creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
principal amount of the Indebtedness so refinanced, renewed, or extended or add
one or more of the Borrowers as liable with respect thereto if such additional
Borrowers were not liable with respect to the original Indebtedness, (iii) such
refinancings, renewals, or extensions do not result in a shortening of the
average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions, that, taken as a whole, are
materially more burdensome or restrictive to the applicable Borrower, and (iv)
if the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination terms
and conditions that are at least as favorable to Lender as those that were
applicable to the refinanced, renewed, or extended Indebtedness;
(g) Indebtedness in an aggregate amount not to exceed $6,000,000 in
favor of OED Acquisition provided that such Indebtedness is at all times subject
to the Intercompany Subordination Agreement;
(h) Indebtedness with respect to the obligations of Borrowers
pursuant to the Management Agreement so long as such obligations are subject to
the Management Fees Subordination Agreement; and
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(i) Indebtedness composing Permitted Investments.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(f) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
any Borrower.
7.5 Change Name. Change any Borrower's name, FEIN, corporate structure, or
identity, or add any new fictitious name; provided, however, that a Borrower may
change its name upon at least 30 days prior written notice by Administrative
Borrower to Lender of such change and so long as, at the time of such written
notification, such Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected Lender's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except (a) by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Lender, (b) guarantees by Subsidiaries of
Borrowers of the obligations of Borrowers under the Indenture provided that (i)
any such Subsidiary shall have guaranteed the Obligations in accordance with
Section 6.19 and (ii) such guarantee of the obligations under the Indenture
shall be subordinate in right of payment to such guarantee of the Obligations on
terms and conditions satisfactory to Lender, (c) guarantees constituting
Investments permitted under Section 7.13, and (d) guarantees constituting
Indebtedness permitted under Section 7.1.
7.7 Nature of Business. Make any change in the principal nature of
Borrowers' business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section
7.1(f), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of any Borrower, other than the Obligations or Miscellaneous Indebtedness in
accordance with this Agreement, and
(b) Except in connection with a refinancing permitted by Section
7.1(f), (i) directly or indirectly, amend, modify, alter, increase, or change
any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning
51
Indebtedness permitted under Sections 7.1(b) or (e), or (ii) directly or
indirectly, amend, modify, alter, increase or change any of the terms or
conditions of the Fixed Price Contract, the Management Agreement and except as
permitted in clause (b) hereof, any of the Senior Note Documents, in each case
unless approved by Lender in its Permitted Discretion; provided, however, upon
enactment of SB 634 (▇▇▇▇) of the 2003 Regular Legislative Session into law,
Borrowers may amend the Fixed Price Contract to add additional emergency
evacuation space as allowed by SB 634, at an additional cost of approximately
$2,500,000; provided, further, however, that so long as no Event of Default
exists, Borrowers may enter into "change-orders" with respect to the Fixed Price
Contract or the Senior Note Documents without the prior consent of Lender to the
extent such amendment (1) will not result in a material reduction of the scope
or quality of the work constituting the design or construction of the Racino
Project and (2) is executed in compliance with the Cash Collateral and
Disbursement Agreement.
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 [Intentionally Omitted].
7.11 Distributions; Management Fees. Other than distributions or
declaration and payment of dividends by a Borrower to another Borrower or to a
Subsidiary of a Borrower, make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of any Borrower's Stock, of any class, whether now or
hereafter outstanding, or make any payment of management fees to any Person.
Notwithstanding anything in this Section 7.11 to the contrary, so long as no
Event of Default exists hereunder, (a) Parent may make cash distributions in
respect of, and in an amount equal to, the amount of state and federal income
tax paid or to be paid by the holders of Parent's Stock on taxable income earned
by Parent and attributable to such holders as a result of Parent's earnings for
federal and state (for the state or states in which any holder is liable for
income taxes with respect to such income) income tax purposes, after taking into
account any deduction for state income taxes in calculating the federal income
tax liability and all other deductions, credits, deferrals and other reductions
available to the holders from or through Parent, (b) Borrowers may make
distributions to their respective shareholders in an aggregate amount not to
exceed $1,250,000 during the term of this Agreement, so long as no Default or
Event of Default shall exist on the date of such distribution, and (c) except as
prohibited under the Management Fees Subordination Agreement, Borrowers may make
payments required pursuant to the Management Agreement.
7.12 Accounting Methods. Modify or change its method of accounting (other
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrowers' accounting records without said accounting firm or service bureau
agreeing to provide Lender information regarding the Collateral or Borrowers'
financial condition.
7.13 Investments. Except for Permitted Investments or for Securities
Accounts or DDAs constituting Excluded Assets, directly or indirectly, make or
acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment;
52
provided, however, that Administrative Borrower and its Subsidiaries shall not
have Permitted Investments in deposit accounts or Securities Accounts (other
than DDAs or Securities Accounts constituting Excluded Assets) in excess of
$250,000 outstanding at any one time unless Administrative Borrower or its
Subsidiary, as applicable, and the applicable securities intermediary or bank
have entered into Control Agreements or similar arrangements governing such
Permitted Investments, as Lender shall determine in its Permitted Discretion, to
perfect (and further establish) the Lender's Liens in such Permitted
Investments.
7.14 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower except (a)
for transactions that are in the ordinary course of Borrowers' business, upon
fair and reasonable terms, that are fully disclosed to Lender, and that are no
less favorable to Borrowers than would be obtained in an arm's length
transaction with a non-Affiliate, (b) that Borrowers may incur indebtedness to
Affiliates pursuant to, and within, the limitations set forth in Section 7.1(g),
(c) for payments pursuant to the Management Agreement, except as prohibited
under the Management Fees Subordination Agreement, and (d) transactions between
or among Borrowers and any Borrower's Subsidiary.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 Compensation. Increase the annual fee or per-meeting fees paid to the
members of its Board of Directors during any year by more than 15% over the
prior year.
7.17 Use of Proceeds. Use the proceeds of the Advances for any purpose
other than (a) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, for working capital needs
and capital expenditures of the Borrowers consistent with the terms and
conditions hereof, for its lawful and permitted purposes.
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees. Relocate its chief executive office to a new location without
Administrative Borrower providing 30 days prior written notification thereof to
Lender and so long as, at the time of such written notification, the applicable
Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected the Lender's Liens and also provides to Lender a
Collateral Access Agreement with respect to such new location. The Inventory and
Equipment shall not at any time now or hereafter be stored with a bailee,
warehouseman, or similar party without Lender's prior written consent.
7.19 Securities Accounts. Except with respect to any Securities Account
constituting Excluded Assets, establish or maintain any Securities Account
unless Lender shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account (other than Securities Accounts constituting Excluded Assets); provided,
however, that, so long as no Event of Default has occurred and is continuing or
would result therefrom, Borrowers may use such assets (and the proceeds thereof)
to the extent not prohibited by this Agreement.
7.20 Financial Covenants.
53
(i) Minimum EBITDA. Fail to maintain EBITDA, measured on a
fiscal quarter-end basis, of at least the required amount set forth
in the following table for the period set forth opposite thereto;
Applicable Amount Period
------------- ------
$3,167,680 For the Four (4) Fiscal Month Period Ending
June 30, 2004
$7,294,000 For the Seven (7) Fiscal Month Period Ending
September 30, 2004
$12,504,000 For the Ten (10) Fiscal Month Period Ending
December 31, 2004
$20,006,400 For the Twelve (12) Fiscal Month Period Ending
March 31, 2005
$20,044,800 For the Twelve (12) Fiscal Month Period ending
June 30, 2005
$20,083,200 For the Twelve (12) Fiscal Month Period Ending
September 30, 2005
$20,121,600 For the Twelve (12) Month Period Ending
December 31, 2005
$20,160,000 For the Twelve (12) Fiscal Month Period Ending
▇▇▇▇▇ ▇▇, ▇▇▇▇
(▇▇) Capital Expenditures. Make capital expenditures (except
(1) those required under the Construction Disbursement Budget (as
defined in the Cash Collateral and Disbursement Agreement and as the
same may be amended, modified or supplemented from time to time in
accordance with the Cash Collateral and Disbursement Agreement), (2)
those required with respect to the acquisition of Real Property from
▇▇▇▇ ▇. ▇▇▇▇▇▇ as described in item 2 of Schedule 5.20 and (3) those
required to be made to O.M. Operating in connection with the video
gaming purchase described in item 10 of Schedule 5.20) in any fiscal
year in excess of the amount set forth in the following table for
the applicable period:
July 1, 2003
through the end of
the Fiscal Year 2003 Fiscal Year 2004 Fiscal Year 2005
-------------- ----------- -----------
$250,000 $1,500,000 $2,000,000
54
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1. If Borrowers fail to pay (a) Obligations constituting principal when
due and payable, or when declared due and payable, or (b) any other portion of
the Obligations (including interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts), fees and
charges due Lender, reimbursement of Lender Expenses, or other amounts
constituting Obligations) within three (3) days of the date such Obligation
described in this clause (b) is due and payable, or when declared due and
payable;
8.2. If Borrowers fail or neglect to perform, keep, or observe (a) any
term, provision, condition, covenant, or agreement: (i) contained in Sections
6.2 (Collateral Reporting), 6.3 (Financial Statements, Reports, Certificates),
6.7 (Tax Returns), 6.10 (Compliance with Laws), 6.11 (Leases), 6.12 (Brokerage
Commissions), or 6.13 (Existence) of this Agreement and such failure continues
for a period of 5 Business Days from the earlier of (A) notice by Lender to
Borrowers or (B) the date Borrowers knew or should have known of its occurrence;
or (ii) contained in Sections 6.1 (Accounting System), 6.6 (Maintenance of
Properties), or 6.9 (Location of Inventory and Equipment), or 6.14 (exclusive of
clause (d) thereof) (Environmental) of this Agreement and such failure continues
for a period of 15 Business Days from the earlier of (A) notice by Lender to
Borrowers or (B) the date Borrowers knew or should have known of its occurrence;
or (b) any other term, provision, condition, covenant, or agreement contained in
this Agreement or any material term, provision, condition, covenant or agreement
contained in any of the other Loan Documents (giving effect to any grace
periods, cure periods, or required notices, if any, expressly provided for in
such other Loan Documents); in each case, other than any term, provision,
condition, covenant, or agreement that is the subject of another provision of
this Section 8, in which event such other provision of this Section 8 shall
govern;
8.3. If any material portion of any Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person;
8.4. If an Insolvency Proceeding is commenced by any Borrower or any of
its Subsidiaries;
8.5. If an Insolvency Proceeding is commenced against any Borrower, or any
of its Subsidiaries, and any of the following events occur: (a) the applicable
Borrower or the Subsidiary consents to the institution of the Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, Lender shall be
relieved of its obligation to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
any Borrower or any of its Subsidiaries, or (e) an order for relief shall have
been entered therein;
55
8.6. If any Borrower or any of its Subsidiaries is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs for a period of 5 consecutive Business
Days;
8.7. If notices of Lien, levy, or assessment in an aggregate amount in
excess of $750,000 are filed of record with respect to any Borrower's or any of
its Subsidiaries' properties or assets by the United States, or any department,
agency, or instrumentality thereof, or by any state, county, municipal, or
governmental agency, or if any taxes or debts owing at any time hereafter to any
one or more of such entities becomes a Lien exceeding the foregoing aggregate
limitation, whether ▇▇▇▇▇▇ or otherwise, upon any Borrower's or any of its
Subsidiaries' properties or assets and the same is not paid before the earlier
of 30 days after the date it first arises or 5 days prior to the date on which
such asset is subject to being forfeited;
8.8. If a judgment or judgments for the payment of money (other than
judgments as to which a reputable insurance company has accepted full liability)
is or are entered by a court of competent jurisdiction against any Borrower or
any of its Subsidiaries and such judgment or judgments remain undischarged,
unbonded, or unstayed for a period of 60 days after entry; provided, that the
aggregate amount of all such judgments exceeds $1,000,000;
8.9. If there is a default under any Indebtedness of any Borrower or any
of its Subsidiaries in excess of $1,000,000 and such default (a) occurs at the
final maturity of the obligations thereunder, or (b) results in a right by the
other party thereto, irrespective of whether exercised, to accelerate the
maturity of the applicable Borrower's or its Subsidiaries' obligations
thereunder, to terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein;
8.10. If any Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11. If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to Lender by any
Borrower, its Subsidiaries, or any officer, employee, agent, or director of any
Borrower or any of its Subsidiaries;
8.12. [Intentionally Omitted]
8.13. If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby;
8.14. 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 Borrower, or a proceeding shall be commenced by any
Borrower, or by any Governmental Authority having jurisdiction over any
Borrower, seeking to establish the invalidity or unenforceability thereof, or
any Borrower shall deny that any Borrower has any liability or obligation
purported to be created under any Loan Document;
56
8.15. If there is an "Event of Default" under, and as defined in the
Indenture; or if there is an event of default under any of the other Senior Note
Documents, the Fixed Price Contract or the Management Agreement;
8.16. If any Governmental Authority (including the Louisiana state
legislature) restricts the ability of any Borrower to operate, or restricts,
limits or prohibits any Borrower from operating, its gaming business as
conducted on the Closing Date or operating the Racino Project in the manner
contemplated on the Closing Date and such restriction results in a Material
Adverse Change;
8.17. If Lender fails to receive evidence of (a) on or prior to November
30, 2004, the completion of the construction required and satisfaction of the
other requirements specified by the Louisiana Regulatory Authorities pursuant to
any Gaming License of any Borrower with respect to the Racino Project casino;
and (b) on or prior to November 30, 2004, the opening to the general public of
the Racino Project racetrack.
8.18. If at any time the aggregate amount actually paid by the Borrowers
pursuant to the Fixed Price Contract, together with the aggregate amount
estimated to be payable by the Borrowers pursuant to the Fixed Price Contract,
shall exceed $61,500,000 (or, in the event that the Fixed Price Contract is
amended as provided in clause (b) of Section 7.8 shall exceed $64,000,000).
9. THE LENDER'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default, Lender (at its election but without notice of its
election and without demand) may do any one or more of the following, all of
which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and Lender;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of Lender, but without affecting any of
the Lender's Liens in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Lender considers advisable, and in such
cases, Lender will credit the Loan Account with only the net amounts received by
Lender in payment of such disputed Accounts after deducting all Lender Expenses
incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in trust for
Lender, segregate all returned Inventory from all other assets of Borrowers or
in Borrowers' possession and conspicuously label said returned Inventory as the
property of Lender;
57
(f) Without notice to or demand upon any Borrower, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interests in the Collateral. Each Borrower agrees to assemble the
Personal Property Collateral if Lender so requires, and to make the Personal
Property Collateral available to Lender at a place that Lender may designate
which is reasonably convenient to both parties. Each Borrower authorizes Lender
to enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Lender's
determination appears to conflict with the Lender's Liens and to pay all
expenses incurred in connection therewith and to charge Borrowers' Loan Account
therefor. With respect to any of Borrowers' owned or leased premises, each
Borrower hereby grants Lender a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of
Lender's rights or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held by
Lender, or (ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by Lender;
(h) Hold, as cash collateral, any and all balances and deposits of
any Borrower held by Lender to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral. Each Borrower hereby grants to Lender a license or
other right to use, without charge, such Borrower's labels, patents, copyrights,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Personal Property
Collateral, in completing production of, advertising for sale, and selling any
Personal Property Collateral and such Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including Borrowers' premises)
as Lender determines is commercially reasonable. It is not necessary that the
Personal Property Collateral be present at any such sale;
(k) Lender shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Lender shall give Administrative Borrower (for the benefit
of the applicable Borrower) a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Personal Property Collateral, then the time on or after which the
private sale or other disposition is to be made; and
58
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in Section
12, at least 10 days before the earliest time of disposition set
forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Personal Property Collateral that
is perishable or threatens to decline speedily in value or that is
of a type customarily sold on a recognized market;
(l) Lender may credit bid and purchase at any public sale;
(m) Lender may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing;
(n) Lender shall have all other rights and remedies available to it
at law or in equity or pursuant to any other Loan Documents;
(o) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrowers. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Lender to Administrative Borrower (for the benefit of the applicable
Borrower); and
(p) In the event Lender elects to commence foreclosure proceeding
under Louisiana law, Lender may cause such Personal Property Collateral, or any
part or parts thereof, to be immediately seized and sold, whether in term of
court or in vacation, under ordinary or executory process, in accordance with
applicable Louisiana law, to the highest bidder for cash, with or without
appraisement, and without the necessity of making additional demand upon or
notifying the Borrowers or any Person or placing the Borrowers or any Person in
default, all of which are expressly waived. For purposes of foreclosure under
Louisiana executory process procedures, each Borrower confesses judgment and
acknowledges to be indebted unto and in favor of Lender up to the full amount of
the Obligations, in principal, interest, costs, expenses, attorneys' fees and
other fees and charges. To the extent permitted under applicable Louisiana law,
each Borrower additionally waives: (a) the benefit of appraisal as provided in
Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure, and
all other laws with regard to appraisal upon judicial sale; (b) the demand and
three (3) days' delay as provided under Articles 2639 and 2721 of the Louisiana
Code of Civil Procedure; (c) the notice of seizure as provided under Articles
2293 and 2721 of the Louisiana Code of Civil Procedure; (d) the three (3) days'
delay provided under Articles 2331 and 2722 of the Louisiana Code of Civil
Procedure; and (e) all other benefits provided under Articles 2331, 2722 and
2723 of the Louisiana Code of Civil Procedure and all other articles not
specifically mentioned above. Should it become necessary for Lender to foreclose
under this Agreement, all declarations of fact, which are made under an
authentic act before a Notary Public in the presence of two witnesses, by a
Person declaring such facts to lie within his or her knowledge, shall constitute
authentic evidence for purposes of executory process and also for purposes of
La. R.S. 9:3509.1, La. R.S. 9:3504(D)(6) and La. R.S. 10:9-629, as applicable.
In addition to the foregoing rights and remedies, Lender may elect to effect the
seizure and disposition of the Personal Property Collateral pursuant to any
procedures as may be authorized by Louisiana law from time to time.
59
9.2 Remedies Cumulative. The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Lender, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Lender deems necessary to protect Lender from the
exposure created by such failure, or (c) in the case of the failure to comply
with Section 6.8 hereof, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Lender deems prudent. Any such amounts paid by Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by Lender to
make similar payments in the future or a waiver by Lender of any Event of
Default under this Agreement. Lender need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by
Lender on which any such Borrower may in any way be liable.
11.2 Lender's Liability for Collateral. Each Borrower hereby agrees that:
(a) so long as Lender complies with its obligations, if any, under the Code,
Lender shall not in any way or manner be liable or responsible for: (i) the
safekeeping of the Collateral, (ii) any loss or damage thereto occurring or
arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold
the Lender-Related Persons, each Participant, and each of their respective
officers, directors, employees, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are
60
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby, and (b) with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the
contrary notwithstanding, Borrowers shall have no obligation to any Indemnified
Person under this Section 11.3 with respect to any Indemnified Liability that a
court of competent jurisdiction finally determines to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE
OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER
PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Lender to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as the Administrative Borrower or Lender, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Lender, as the case may be, at its
address set forth below:
If to Administrative Borrower: THE OLD ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, L.L.C.
c/o Peninsula Gaming Partners, LLC
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
61
and
THE OLD ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, L.L.C.
c/o Peninsula Gaming Partners, LLC
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: M. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No. (▇▇▇)▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
and
MAYER, BROWN, ▇▇▇▇ & MAW
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: ▇▇▇▇▇ FARGO FOOTHILL, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Structured Finance Group Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
Lender and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12,
other than notices by Lender in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
Lender in connection with the exercise of enforcement rights against Collateral
under the provisions of the Code shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND LENDER WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
(c) BORROWERS AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Lender may assign and delegate to one or more assignees (each an
"Assignee") all, or any ratable part of all, of the Obligations and the other
rights and obligations of Lender hereunder and under the other Loan Documents;
provided, however, that Borrowers
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may continue to deal solely and directly with Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Administrative Borrower by Lender
and the Assignee an appropriate assignment and acceptance agreement. Anything
contained herein to the contrary notwithstanding, Lender agrees for the benefit
of Borrowers that, so long as no Event of Default has occurred and is
continuing, Lender shall (x) retain more than fifty percent (50%) of the
Obligations and commitment to make Advances under Section 2.1 of this Agreement,
and (y) not assign any ratable part of the Obligations and commitment to make
Advances under Section 2.1 of this Agreement to more than three Assignees at any
given time, provided, however, that, the minimum retention of Obligations and
commitment to make Advances and the restriction on the number of Assignees shall
not be applicable if such assignment is in connection with any merger,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of Lender.
(b) From and after the date that Lender provides Administrative Borrower
with such written notice and executed assignment and acceptance agreement, (i)
the Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such assignment
and acceptance agreement, shall have the assigned and delegated rights and
obligations of Lender under the Loan Documents, and (ii) Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned and delegated by it pursuant to such assignment and
acceptance agreement, relinquish its rights (except with respect to Section 11.3
hereof) and be released from its obligations under this Agreement (and in the
case of an assignment and acceptance agreement covering all or the remaining
portion of Lender's rights and obligations under this Agreement and the other
Loan Documents, Lender shall cease to be a party hereto and thereto), and such
assignment shall affect a novation between Borrowers and the Assignee.
(c) Immediately upon Borrower's receipt of such fully executed assignment
and acceptance agreement, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the rights and duties of Lender arising
therefrom.
(d) Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons not Affiliates of Lender (a "Participant")
participating interests in Obligations and the other rights and interests of
Lender hereunder and under the other Loan Documents; provided, however, that (i)
Lender shall remain the "Lender" for all purposes of this Agreement and the
other Loan Documents and the Participant receiving the participating interest in
the Obligations and the other rights and interests of Lender hereunder shall not
constitute a "Lender" hereunder or under the other Loan Documents and Lender's
obligations under this Agreement shall remain unchanged, (ii) Lender shall
remain solely responsible for the performance of such obligations, (iii)
Borrowers and Lender shall continue to deal solely and directly with each other
in connection with Lender's rights and obligations under this Agreement and the
other Loan Documents, (iv) Lender shall not transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan
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Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through Lender, or (E) change the
amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as
Lender under this Agreement. The rights of any Participant only shall be
derivative through Lender and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by Lender.
(e) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may disclose all documents and information
which it now or hereafter may have relating to Borrowers or Borrowers' business.
(f) Any other provision in this Agreement notwithstanding, Lender may at
any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
65
14.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without Lender's prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by Lender shall release any
Borrower from its Obligations. Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 14.1 hereof and, except as expressly required pursuant to Section 14.1
hereof, no consent or approval by any Borrower is required in connection with
any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by Lender and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which was given.
15.2 No Waivers; Cumulative Remedies. No failure by Lender to exercise any
right, remedy, or option under this Agreement or any other Loan Document, or
delay by Lender in exercising the same, will operate as a waiver thereof. No
waiver by Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by Lender on any occasion shall affect or
diminish Lender's rights thereafter to require strict performance by Borrowers
of any provision of this Agreement. Lender's rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Borrowers and Lender.
16.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
16.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Lender or Borrowers, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
16.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
16.5 Withholding Taxes. All payments made by Borrowers hereunder or under
any note will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and
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clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction (other than the United States) or
by any political subdivision or taxing authority thereof or therein (other than
of the United States) with respect to such payments (but excluding, any tax
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein (i) measured by or based on the net income or net profits of
Lender, or (ii) to the extent that such tax results from a change in the
circumstances of Lender, including a change in the residence, place of
organization, or principal place of business of Lender, or a change in the
branch or lending office of Lender participating in the transactions set forth
herein) and all interest, penalties or similar liabilities with respect thereto
(all such non-excluded taxes, levies, imposts, duties, fees, assessments or
other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, each Borrower agrees to pay the full amount of such Taxes,
and such additional amounts as may be necessary so that every payment of all
amounts due under this Agreement or under any note, including any amount paid
pursuant to this Section 16.5 after withholding or deduction for or on account
of any Taxes, will not be less than the amount provided for herein; provided,
however, that Borrowers shall not be required to increase any such amounts
payable to Lender if the increase in such amount payable results from Lender's
own willful misconduct or gross negligence. Borrowers will furnish to Lender as
promptly as possible after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Borrowers.
16.6 Amendments in Writing. This Agreement only can be amended by a
writing signed by Lender and each of Borrowers.
16.7 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
16.8 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Borrower or the transfer to Lender of any
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of Borrowers automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
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16.9 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
16.10 Parent as Agent for Borrowers.
Each Borrower hereby irrevocably appoints Parent as the borrowing agent
and attorney-in-fact for all Borrowers (the "Administrative Borrower") which
appointment shall remain in full force and effect unless and until Lender shall
have received prior written notice signed by each Borrower that such appointment
has been revoked and that another Borrower has been appointed Administrative
Borrower. Each Borrower hereby irrevocably appoints and authorizes the
Administrative Borrower (i) to provide Lender with all notices with respect to
Advances and Letters of Credit obtained for the benefit of any Borrower and all
other notices and instructions under this Agreement and (ii) to take such action
as the Administrative Borrower deems appropriate on its behalf to obtain
Advances and Letters of Credit and to exercise such other powers as are
reasonably incidental thereto to carry out the purposes of this Agreement. It is
understood that the handling of the Loan Account and Collateral of Borrowers in
a combined fashion, as more fully set forth herein, is done solely as an
accommodation to Borrowers in order to utilize the collective borrowing powers
of Borrowers in the most efficient and economical manner and at their request,
and that Lender shall not incur liability to any Borrower as a result hereof.
Each Borrower expects to derive benefit, directly or indirectly, from the
handling of the Loan Account and the Collateral in a combined fashion since the
successful operation of each Borrower is dependent on the continued successful
performance of the integrated group. To induce Lender to do so, and in
consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify Lender harmless against any and all liability, expense, loss or claim
of damage or injury, made against Lender by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrowers as herein provided, (b) Lender's relying on
any instructions of the Administrative Borrower, or (c) any other action taken
by Lender hereunder or under the other Loan Documents, except that Borrowers
will have no liability to any Lender-Related Person under this Section 16.10
with respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Lender-Related Person.
[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
THE OLD ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, L.L.C.,
a Louisiana limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: CFO
THE OLD ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL
CORP., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: CFO
▇▇▇▇▇ FARGO FOOTHILL, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: S.V.P.
69