Exhibit 10.2
EXECUTION COPY
Wheeling Island Gaming, Inc.,
as Issuer,
and
WDRA Food Service, Inc.
and
Wheeling Land Development Corp.,
as Guarantors
$125,000,000
10 1/8% Senior Notes due 2009
Purchase Agreement
dated December 12, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ Securities LLC
▇▇▇▇▇ Fargo Brokerage Services, LLC
Table of Contents
PAGE
SECTION 1. Representations and Warranties.........................................................................3
(a) No Registration Required........................................................................3
(b) No Integration of Offerings or General Solicitation.............................................3
(c) Eligibility for Resale under Rule 144A..........................................................4
(d) The Offering Memorandum.........................................................................4
(e) The Purchase Agreement..........................................................................4
(f) The WHX Purchase Agreement......................................................................4
(g) The Registration Rights Agreement...............................................................4
(h) The DTC Agreement...............................................................................5
(i) Authorization of the Securities and the Exchange Securities.....................................5
(j) Authorization of the Indenture..................................................................6
(k) Description of the Securities and the Indenture.................................................6
(l) No Material Adverse Change......................................................................6
(m) Independent Accountants.........................................................................6
(n) Preparation of the Financial Statements.........................................................6
(o) Incorporation and Good Standing of the Company and its Subsidiaries.............................7
(p) Capitalization and Other Capital Stock Matters..................................................7
(q) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required........................................................................................8
(r) No Material Actions or Proceedings..............................................................9
(s) Intellectual Property Rights....................................................................9
(t) All Necessary Permits, etc.....................................................................10
(u) Title to Properties............................................................................10
(v) Tax Law Compliance.............................................................................10
(w) Company Not an "Investment Company"............................................................11
(x) Insurance......................................................................................11
(y) No Price Stabilization or Manipulation.........................................................11
(z) Solvency.......................................................................................11
(aa) No Unlawful Contributions or Other Payments....................................................12
(bb) Company's Accounting System....................................................................12
(cc) Compliance with Environmental Laws.............................................................12
(dd) Periodic Review of Costs of Environmental Compliance...........................................13
(ee) ERISA Compliance...............................................................................13
(ff) Revolving Credit Facility......................................................................14
(gg) Regulation S...................................................................................14
(hh) Temporary Global Security......................................................................14
SECTION 2. Purchase, Sale and Delivery of the Securities.........................................................14
(a) The Securities.................................................................................14
(b) The Closing Date...............................................................................14
(c) Delivery of the Securities.....................................................................15
(d) Delivery of Offering Memorandum to the Initial Purchasers......................................15
(e) Initial Purchasers as Qualified Institutional Buyers...........................................15
SECTION 3. Additional Covenants..................................................................................15
i
(a) Initial Purchasers' Review of Proposed Amendments and Supplements..............................15
(b) Amendments and Supplements to the Offering Memorandum and Other Securities Act
Matters........................................................................................16
(c) Copies of the Offering Memorandum..............................................................16
(d) Blue Sky Compliance............................................................................16
(e) Use of Proceeds................................................................................17
(f) The Depositary.................................................................................17
(g) Additional Issuer Information..................................................................17
(h) Future Reports to the Initial Purchasers.......................................................17
(i) No Integration.................................................................................18
(j) Legended Securities............................................................................18
(k) PORTAL.........................................................................................18
(l) Rating Securities..............................................................................18
SECTION 4. Payment of Expenses...................................................................................18
SECTION 5. Conditions of the Obligations of the Initial Purchasers...............................................19
(a) Accountants' Comfort Letter....................................................................19
(b) No Material Adverse Change or Ratings Agency Change............................................19
(c) Opinion of Counsel for the Company and the Guarantors..........................................20
(d) Opinion of Counsel for the Initial Purchasers..................................................20
(e) Officers' Certificate..........................................................................20
(f) Bring-down Comfort Letter......................................................................20
(g) PORTAL Listing.................................................................................20
(h) Registration Rights Agreement..................................................................21
(i) Concurrent Transactions........................................................................21
(j) Additional Documents...........................................................................21
SECTION 6. Reimbursement of Initial Purchasers' Expenses.........................................................21
SECTION 7. Offer, Sale and Resale Procedures.....................................................................22
SECTION 8. Indemnification.......................................................................................23
(a) Indemnification of the Initial Purchasers......................................................23
(b) Indemnification of the Company, its Directors and Officers.....................................24
(c) Notifications and Other Indemnification Procedures.............................................25
(d) Settlements....................................................................................25
SECTION 9. Contribution..........................................................................................26
SECTION 10. Termination of this Agreement........................................................................27
SECTION 11. Representations and Indemnities to Survive Delivery..................................................27
SECTION 12. Notices..............................................................................................28
SECTION 13. Successors...........................................................................................28
SECTION 14. Partial Unenforceability.............................................................................29
SECTION 15. Governing Law; Consent to Jurisdiction...............................................................29
(a) Governing Law Provisions.......................................................................29
ii
(b) Consent to Jurisdiction........................................................................29
SECTION 16. Default of One or More of the Several Initial Purchasers.............................................29
SECTION 17. General Provisions...................................................................................30
SCHEDULES, EXHIBITS AND ANNEX
SCHEDULE A - Initial Purchasers
SCHEDULE B - List of Subsidiaries
EXHIBIT A - Form of Opinion of Proskauer Rose LLP
EXHIBIT B - Form of Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
EXHIBIT C - Form of Opinion of In-house Counsel for the Company and the
Guarantors
EXHIBIT D - Form of Registration Rights Agreement
ANNEX I - Resale Procedures
iii
Purchase Agreement
December 12, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ SECURITIES LLC
▇▇▇▇▇ FARGO BROKERAGE SERVICES, LLC
As Initial Purchasers
c/o BANC OF AMERICA SECURITIES LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
INTRODUCTORY. Wheeling Island Gaming, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell to Banc of America
Securities LLC and ▇▇▇▇▇ Fargo Brokerage Services, LLC (the "Initial
Purchasers"), acting severally and not jointly, the respective amounts as
set forth in SCHEDULE A hereto of $125 million aggregate principal amount
of the Company's 10 1/8% Senior Notes due December 15, 2009 (the "Notes").
Banc of America Securities LLC and ▇▇▇▇▇ Fargo Brokerage Services, LLC have
agreed to act as the Initial Purchasers in connection with the offering and
sale of the Notes.
The Notes will be issued pursuant to an indenture, dated as of
December 19, 2001 (the "Indenture"), between the Company, the Guarantors (as
defined below) and U.S. Bank N.A., as trustee (the "Trustee"). Notes issued in
book-entry form will be issued in the name of Cede & Co., as nominee of The
Depository Trust Company (the "Depositary") pursuant to a DTC Agreement, to be
dated as of the Closing Date (as defined in Section 2 hereof) (the "DTC
Agreement"), among the Company, the Guarantors party thereto, the Trustee and
the Depositary.
The holders of the Notes will be entitled to the benefits of a
registration rights agreement, to be dated as of December 19, 2001 (the
"Registration Rights Agreement"), among the Company, the Guarantors party
thereto and the Initial Purchasers, substantially in the form of EXHIBIT D
attached hereto, pursuant to which the Company and the Guarantors will agree to
file, within 60 days of the Closing Date, a registration statement with the
Securities and Exchange Commission (the "Commission") registering the Exchange
Securities (as defined below) under the Securities Act of 1933, as amended (the
"Securities Act", which term, as used herein, includes the rules and regulations
of the Commission promulgated thereunder).
The payment of principal of, premium, Liquidated Damages (as
defined in the Indenture), if any, and interest on the Notes and the Exchange
Notes (as defined in Section 1(f) hereof) will be fully and unconditionally
guaranteed on a senior unsecured basis, jointly and severally by (i) each of the
Company's subsidiaries listed in SCHEDULE B attached hereto and (ii) any
subsidiary of the Company formed or acquired after the Closing Date that
executes an additional guarantee in accordance with the terms of the Indenture,
and their respective successors and assigns (collectively, the "Guarantors"),
pursuant to their guarantees (the "Guarantees"). The Notes and the Guarantees
attached thereto are herein collectively referred to as the "Securities"; and
the Exchange Notes and the Guarantees attached thereto are herein collectively
referred to as the "Exchange Securities".
The Company understands that the Initial Purchasers propose to
make an offering of the Securities on the terms and in the manner set forth
herein and in the Offering Memorandum (as defined below) and agrees that the
Initial Purchasers may resell, subject to the conditions set forth herein, all
or a portion of the Securities to purchasers (the "Subsequent Purchasers") at
any time after the date of this Agreement. The Securities are to be offered and
sold to or through the Initial Purchasers without being registered with the
Commission under the Securities Act, in reliance upon exemptions therefrom. The
terms of the Securities and the Indenture will require that investors that
acquire Securities expressly agree that Securities may only be resold or
otherwise transferred, after the date hereof, if such Securities are registered
for sale under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including the exemptions
afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation S")
thereunder).
The Company has prepared and delivered to the Initial
Purchasers copies of a Preliminary Offering Memorandum, dated November 27, 2001
(the "Preliminary Offering Memorandum"), and has prepared and will deliver to
each Initial Purchaser, copies of the Offering Memorandum, dated December 12,
2001 describing the terms of the Securities, each for use by such Initial
Purchaser in connection with its solicitation of offers to purchase the
Securities. As used herein, the "Offering Memorandum" shall mean, with respect
to any date or time referred to in this Agreement, the Company's Offering
Memorandum, dated December 12, 2001, including amendments or supplements
thereto, any exhibits thereto, in the most recent form that has been prepared
and delivered by the Company to the Initial Purchasers in connection with their
solicitation of offers to purchase Securities. Further, any reference to the
Preliminary Offering Memorandum or the Offering Memorandum shall be deemed to
refer to and include any Additional Issuer Information (as defined in Section 3)
furnished by the Company prior to the completion of the distribution of the
Securities.
Prior to November 27, 2001, the Company was a West Virginia
corporation named Wheeling Downs Racing Association, Inc. On November 27, 2001,
the Company reincorporated as a Delaware corporation by merging Wheeling Downs
Racing Association, Inc. into and with Wheeling Island Gaming, Inc., a Delaware
corporation (the "Merger"). Upon consummation of the Merger, each of the shares
of common stock of Wheeling Downs Racing Association, Inc. was converted into
one share of common stock of the Company.
As described in the Offering Memorandum, the Company has
entered into a stock redemption agreement (the "WHX
Purchase Agreement") dated
November 16, 2001 among the Company, Sportsystems Corporation and WHX
Entertainment Corp. ("WHX"), pursuant to which the Company shall purchase all of
the shares of the Company's common stock held of record by WHX for a total
consideration of $105 million. Of the $105 million total consideration, $90
million is attributable to the purchase price for the shares of the Company's
common stock and $15 million is attributable to a non-compete agreement entered
into with WHX. The Company will use a portion of the net proceeds from the
issuance of the Securities to purchase its common stock from WHX pursuant to the
WHX
Purchase Agreement.
Simultaneously with the Closing Date, the Company will repay
$12 million of the outstanding balance under its existing credit facility and
enter into a new revolving credit facility (the "Revolving Credit Facility")
dated as of the Closing Date by and among the Company, the guarantor
subsidiaries named therein, Bank of America, N.A., as administrative agent, and
various other lenders party thereto, as described in the Offering Memorandum.
The Revolving Credit Facility will provide for up to $40 million of revolving
credit borrowings.
2
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" in
the Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum.
Capitalized terms used herein not otherwise defined shall have the meanings set
forth in the Offering Memorandum.
The Company and the Guarantors hereby confirm their agreement
with the Initial Purchasers as follows:
SECTION 1. Representations and Warranties.
The Company and each of the Guarantors, jointly and severally,
hereby represents, warrants and covenants to the Initial Purchasers as follows:
(a) No Registration Required.
Subject to compliance by the Initial Purchasers with the
representations and warranties set forth in Section 2(e) hereof and
with the procedures set forth in Section 7 hereof, it is not necessary
in connection with the offer, sale and delivery of the Securities to
the Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register
the Securities under the Securities Act or, until such time as the
Exchange Securities are issued pursuant to an effective registration
statement, to qualify the Indenture under the Trust Indenture Act of
▇▇▇▇ (▇▇▇ "▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇," which term, as used herein, includes
the rules and regulations of the Commission promulgated thereunder).
(b) No Integration of Offerings or General Solicitation.
Neither the Company nor any Guarantor has directly or
indirectly, solicited any offer to buy or offered to sell, and will
not, directly or indirectly, solicit any offer to buy or offer to sell,
in the United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be
registered under the Securities Act.
None of the Company, the Guarantors, their respective
affiliates (as such term is defined in Rule 501 under the Securities
Act (each, an "Affiliate")), or any person acting on their behalf
(other than the Initial Purchasers, as to whom neither the Company nor
any Guarantor makes any representation or warranty) has engaged or will
engage, in connection with the offering of the Securities, in any form
of general solicitation or general advertising within the meaning of
Rule 502 under the Securities Act.
With respect to those Securities sold in reliance upon
Regulation S: (i) none of the Company, the Guarantors, their respective
Affiliates, or any person acting on their behalf (other than the
Initial Purchasers, as to whom neither the Company nor any Guarantor
makes any representation or warranty) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S; and (ii)
each of the Company, the Guarantors, and their respective Affiliates
and any person acting on their behalf (other than the Initial
Purchasers, as to whom neither the Company nor any Guarantor makes any
representation or warranty) has complied and will comply with the
offering restrictions set forth in Regulation S.
3
(c) Eligibility for Resale under Rule 144A.
The Securities are eligible for resale pursuant to Rule 144A
and will not be, at the Closing Date, of the same class as securities
listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated interdealer quotation
system.
(d) The Offering Memorandum.
The Offering Memorandum does not, and at the Closing Date will
not, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with information furnished to the
Company in writing by the Initial Purchasers expressly for use in the
Offering Memorandum.
Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A. Neither the Company nor any
Guarantor has distributed or will distribute, prior to the later of the
Closing Date and the completion of the Initial Purchasers' distribution
of the Securities, any offering material in connection with the
offering and sale of the Securities other than the Preliminary Offering
Memorandum or the Offering Memorandum.
(e) The
Purchase Agreement.
This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company and
each Guarantor, enforceable in accordance with its terms, except as
rights to indemnification hereunder may be limited by applicable law
and except as the enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting the rights and remedies of creditors or by general
equitable principles thereunder.
(f) The WHX
Purchase Agreement.
The WHX
Purchase Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Company,
Sportsystems Corporation and WHX, enforceable in accordance with its
terms, except as rights to indemnification thereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or
by general equitable principles thereunder.
(g) The Registration Rights Agreement.
At the Closing Date, the Registration Rights Agreement will be
duly authorized, executed and delivered by, and will be a valid and
binding agreement of, the Company and each Guarantor, enforceable in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of
creditors or by general
4
equitable principles and except as rights to indemnification
under the Registration Rights Agreement may be limited
by applicable law. Pursuant to the Registration Rights Agreement, the
Company and each Guarantor will agree to file with the Commission,
under the circumstances set forth therein: (i) a registration statement
under the Securities Act relating to another series of debt securities
of the Company with terms substantially identical to the Notes (the
"Exchange Notes") to be offered in exchange for the Notes (the
"Exchange Offer"); and (ii) to the extent required by the Registration
Rights Agreement, a shelf registration statement pursuant to Rule 415
of the Securities Act relating to the resale by certain holders of the
Notes, and in each case, to use its best efforts to cause such
registration statements to be declared effective.
(h) The DTC Agreement.
At the Closing Date, the DTC Agreement will have been duly
authorized, executed and delivered by, and (assuming the due
authorization, execution and delivery thereof by the other parties
thereto) will be a valid and binding agreement of the Company,
enforceable in accordance with its terms except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights
and remedies of creditors or by general equitable principles.
(i) Authorization of the Securities and the Exchange Securities.
(i) The Notes to be purchased by the Initial Purchasers from
the Company are in the form contemplated by the Indenture, have been
duly authorized for issuance and sale pursuant to this Agreement and
the Indenture and, at the Closing Date, will have been duly executed by
the Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor,
will constitute valid and binding agreements of the Company,
enforceable in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights
and remedies of creditors or by general equitable principles and will
be entitled to the benefits of the Indenture; (ii) the Exchange Notes
have been duly and validly authorized for issuance by the Company, and
when issued and authenticated in accordance with the terms of the
Indenture, the Registration Rights Agreement and the Exchange Offer,
will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or affecting
enforcement of the rights and remedies of creditors or by general
principles of equity and will be entitled to the benefits of the
Indenture; and (iii) the Guarantees of the Notes and the Exchange Notes
are in the respective forms contemplated by the Indenture, have been
duly authorized for issuance and sale pursuant to this Agreement and
the Indenture and, at the Closing Date, will have been duly executed by
each of the Guarantors and, when the Notes have been authenticated in
the manner provided for in the Indenture and delivered against payment
of the purchase price therefor, will constitute valid and binding
agreements of the Guarantors, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting the rights and remedies of creditors or by general
equitable principles and will be entitled to the benefits of the
Indenture.
5
(j) Authorization of the Indenture.
The Indenture has been duly authorized by the Company and the
Guarantors and, at the Closing Date, will have been duly executed and
delivered by the Company and each Guarantor and will constitute a valid
and binding agreement of the Company, and each Guarantor enforceable
against the Company and each Guarantor in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting the rights and remedies of creditors or by general
equitable principles.
(k) Description of the Securities and the Indenture.
The Notes, the Guarantees of the Notes and the Indenture
conform or will conform in all material respects to the respective
statements relating thereto contained in the Offering Memorandum. The
Exchange Notes and the Guarantees of the Exchange Notes will conform in
all material respects to the respective statements relating thereto
contained in the Offering Memorandum and the Registration Statement at
the time such Registration Statement becomes effective.
(l) No Material Adverse Change.
Except as otherwise disclosed in the Offering Memorandum,
subsequent to the respective dates as of which information is given in
the Offering Memorandum: (i) there has been no material adverse change,
or any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or
in the earnings, business, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the
Company and its subsidiaries, considered as one entity (any such change
is called a "Material Adverse Change"); (ii) the Company and its
subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction
or agreement not in the ordinary course of business; and (iii) there
has been no dividend or distribution of any kind declared, paid or made
by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of
any class of capital stock.
(m) Independent Accountants.
PricewaterhouseCoopers LLP (the "Independent Accountants"),
who have expressed their opinion with respect to the financial
statements (which term as used in this Agreement includes the related
notes thereto) and supporting schedules included in the Offering
Memorandum are independent public or certified public accountants
within the meaning of Regulation S-X under the Securities Act and the
Exchange Act.
(n) Preparation of the Financial Statements.
The financial statements of the Company, together with the
related schedules and notes, included in the Offering Memorandum
present fairly the consolidated financial position of the Company and
its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. Such
financial statements have been prepared in conformity with generally
accepted
6
accounting principles as applied in the United States applied
on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. The financial data set
forth in the Offering Memorandum under the captions "Offering
Memorandum Summary - Summary Financial Data" and "Selected Historical
Consolidated Financial Data" fairly present the information set forth
therein on a basis consistent with that of the audited financial
statements contained in the Offering Memorandum. The pro forma
financial statements of the Company and its subsidiaries, together with
the related notes, included in the Offering Memorandum and the pro
forma financial data set forth in the Offering Memorandum under the
caption "Offering Memorandum Summary - Summary Financial Data" and
elsewhere in the Offering Memorandum present fairly the information
contained therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly presented on the bases described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein. The
acquisition by the Company of all of the shares of its common stock
owned by WHX will be accounted for using purchase accounting under
Financial Accounting Standards No. 141, "Business Combinations."
(o) Incorporation and Good Standing of the Company and its
Subsidiaries.
Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum
and, in the case of the Company and the Guarantors, to enter into and
perform their respective obligations under each of this Agreement, the
Registration Rights Agreement, the DTC Agreement, the Securities, the
Exchange Securities, the Indenture, the WHX
Purchase Agreement and the
Revolving Credit Facility. Each of the Company and each subsidiary is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually
or in the aggregate, result in a Material Adverse Change. All of the
issued and outstanding capital stock of each subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and is
owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance or claim.
The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries
listed in SCHEDULE B. The Merger has been consummated in accordance
with the General Corporation Law of the State of Delaware and the West
Virginia Corporation Act of the State of West Virginia. Each share of
common stock of Wheeling Downs Association, Inc. has been converted
into one validly issued, fully paid and non-assessable share of common
stock of the Company.
(p) Capitalization and Other Capital Stock Matters.
At September 30, 2001, on a consolidated basis, after giving
pro forma effect to (i) the issuance and sale of the Securities
pursuant hereto and (ii) the application of the proceeds from the sale
of the Securities in the manner described under the caption "Use of
Proceeds" in the Offering Memorandum, the Company would have an
authorized and
7
outstanding capitalization as set forth in the Offering
Memorandum under the caption "Capitalization". All of the outstanding
shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance
with federal and state securities laws. None of the outstanding shares
of Common Stock were issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock
of the Company or any of its subsidiaries other than those accurately
described in the Offering Memorandum. The execution, delivery and
performance of, and consummation of the transactions contemplated by,
the WHX Purchase Agreement will be permitted under Section 170 of the
General Corporation Law of the State of Delaware.
(q) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required.
Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws or is in default (or, with the
giving of notice or lapse of time, would be in default) ("Default")
under any indenture, mortgage, loan or credit agreement, note,
contract, franchise, lease or other instrument to which the Company or
any of its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject, including this Agreement, the
Registration Rights Agreement, the DTC Agreement, the Indenture, the
WHX Purchase Agreement, the Revolving Credit Facility (each such
foregoing document being referred to as an "Existing Instrument"),
except for such Defaults as would not, individually or in the
aggregate, result in a Material Adverse Change.
On the Closing Date, neither the Company nor any of its
subsidiaries will be in Default under the Registration Rights
Agreement, the DTC Agreement, the Indenture, the WHX Purchase Agreement
or the Revolving Credit Facility or the Indenture.
The Company's and each Guarantor's execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the
DTC Agreement, the Indenture, the WHX Purchase Agreement, the Revolving
Credit Facility and any other agreements or documents relating to any
of the foregoing, and the issuance and delivery of the Securities or
the Exchange Securities, and the consummation of the transactions
contemplated hereby and thereby and by the Offering Memorandum: (i)
will not result in any violation of the provisions of the charter or
by-laws of the Company or any subsidiary; (ii) will not conflict with
or constitute a breach of, or Default or a Debt Repayment Triggering
Event (as defined below) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, or require the consent
of any other party to, any Existing Instrument, except for such
conflicts, breaches, Defaults, liens, charges or encumbrances as would
not, individually or in the aggregate, result in a Material Adverse
Change; and (iii) will not result in any violation of any law,
administrative regulation or administrative or court decree (including,
without limitation, any Gaming Law, as such term is defined below)
applicable to the Company or any subsidiary. No consent, approval,
authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency,
including, without limitation, any Gaming Authority (as defined in
clause 1(t) below) is required for the Company's or
8
each Guarantor's execution, delivery and performance of this Agreement,
the Registration Rights Agreement, the DTC Agreement, the Indenture,
the WHX Purchase Agreement, the Revolving Credit Facility and any other
agreements or documents relating to any of the foregoing, or the
issuance and delivery of the Securities or the Exchange Securities, or
the consummation of the transactions contemplated hereby and thereby
and by the Offering Memorandum, except such as have been obtained or
made by the Company or the Guarantors and are in full force and effect
under the Securities Act, applicable state securities, Gaming Laws, or
blue sky laws and except such as may be required by federal and state
securities laws with respect to the Company's or each Guarantor's
obligations under the Registration Rights Agreement. As used herein, a
"Debt Repayment Triggering Event" means any event or condition which
gives, or with the giving of notice or lapse of time would give, the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries, and "Gaming
Law" means the racing and gaming laws of any jurisdiction or
jurisdictions to which the Company, any of its Subsidiaries or any of
the Guarantors is, or may at any time after the date of this Agreement,
be subject.
(r) No Material Actions or Proceedings.
There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge: (i)
threatened against or affecting the Company or any of its subsidiaries;
or (ii) which have as the subject thereof any property owned or leased
by, the Company or any of its subsidiaries, where in any such case
there is a reasonable possibility that such action, suit or proceeding
might be determined adversely to the Company or such subsidiary and any
such action, suit or proceeding, if so determined adversely, would
reasonably be expected to result in a Material Adverse Change or
adversely affect the consummation of the transactions contemplated by
this Agreement and by the Offering Memorandum in the "Use of Proceeds"
section. No material labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the best of the Company's
knowledge, is threatened or imminent.
(s) Intellectual Property Rights.
The Company and its subsidiaries own or possess sufficient
trademarks, trade names, patent rights, copyrights, licenses,
approvals, trade secrets and other similar rights (collectively,
"Intellectual Property Rights") reasonably necessary to conduct their
businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse
Change. Neither the Company nor any of its subsidiaries has received
any notice of infringement or conflict with asserted Intellectual
Property Rights of others, which infringement or conflict, if the
subject of an unfavorable decision, ruling or finding would result in a
Material Adverse Change.
9
(t) All Necessary Permits, etc.
The Company and each of its subsidiaries possesses such valid
and current certificates, authorizations, permits or licenses issued by
the appropriate state, federal or foreign regulatory agencies or bodies
(including any Gaming Authority, as such term is defined below)
necessary to conduct their respective businesses, including but not
limited to all certificates, authorizations, permits and licenses
required to conduct their gaming and live and simulcast racing and
pari-mutuel wagering business in the State of West Virginia, and
neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization, permit or
license which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material
Adverse Change.
For the purposes of this Agreement, "Gaming Authority" means
any agency, authority, board, bureau, commission, department, office or
instrumentality of any nature whatsoever of the United States federal
or foreign government, any state, province or any city or other
political subdivision or otherwise, and whether now or hereafter in
existence, or any officer or official thereof, with authority to
regulate any racing or gaming operation (or proposed racing or gaming
operation) owned, managed or operated by the Company or any subsidiary
of the Company.
(u) Title to Properties.
The Company and each of its subsidiaries has good and
marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(n) above (or
elsewhere in the Offering Memorandum), in each case free and clear of
any security interests, mortgages, liens, encumbrances, equities,
claims and other defects, except such as do not materially and
adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by
the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
of its subsidiaries are held under valid and enforceable leases, with
such exceptions as are not material and do not materially interfere
with the use made or proposed to be made of such real property,
improvements, equipment or personal property by the Company or such
subsidiary.
(v) Tax Law Compliance.
The Company and its subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns and have
paid all taxes required to be paid by any of them and, if due and
payable, any related or similar assessment, fine or penalty levied
against any of them except as may be being contested in good faith and
by appropriate proceedings. The Company and its subsidiaries have made
adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(n) above in respect of all federal,
state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has
not been finally determined, other than in respect of a 10% surcharge
and other payments to the State of West Virginia imposed by House ▇▇▇▇
102 (enacted by the State of West Virginia on April 21, 2001) for the
three months ended September 30, 2001. Commencing on October 1, 2001,
the Company has made adequate accruals in its financial statements
10
in respect of the 10% surcharge and such other payments for the period
commencing on July 1, 2001.
(w) Company Not an "Investment Company".
The Company has been advised of the rules and requirements
under the Investment Company Act of 1940, as amended (the "Investment
Company Act"). The Company is not, and after receipt of payment for the
Securities will not be, an "investment company" within the meaning of
Investment Company Act and will conduct its business in a manner so
that it will not become subject to the Investment Company Act.
(x) Insurance.
Each of the Company and its subsidiaries are insured by
recognized, financially sound institutions with policies in such
amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for their businesses including,
but not limited to, policies covering real and personal property owned
or leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism, floods and earthquakes. The Company has
no reason to believe that: (i) it or any of its subsidiaries will not
be able to renew its existing insurance coverage as and when such
policies expire; or (ii) it or any of its subsidiaries will not be able
to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. Neither
of the Company nor any of its subsidiaries has been denied any
insurance coverage which it has sought or for which it has applied.
(y) No Price Stabilization or Manipulation.
Neither the Company nor any Guarantor has taken and will take,
directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Securities.
(z) Solvency.
The Company and each Guarantor is, and after giving effect to
(i) the sale of the Securities and application of the proceeds
therefrom, (ii) the repurchase of the Company's common stock pursuant
to the WHX Purchase Agreement and (iii) any borrowings under the
Revolving Credit Facility will be, Solvent. As used herein, the term
"Solvent" means, with respect to the Company and each Guarantor on a
particular date, that on such date; (i) the fair market value of its
assets is greater than the total amount of its liabilities (including
contingent liabilities); (ii) the present fair salable value of its
assets is greater than the amount that will be required to pay the
probable liabilities on its debts as they become absolute and matured;
(iii) it is able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature; and (iv)
it does not have unreasonably small capital to carry on its business as
conducted and as proposed to be conducted.
11
(aa) No Unlawful Contributions or Other Payments.
Neither the Company nor any of its subsidiaries nor, to the
best of the Company's or any Guarantor's knowledge, any employee or
agent of the Company or any subsidiary, has made any contribution or
other payment to any official of, or candidate for, any federal, state
or foreign office in violation of any law or of the character necessary
to be disclosed in the Offering Memorandum in order to make the
statements therein not misleading.
(bb) Company's Accounting System.
The Company maintains a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles as applied in the United States and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(cc) Compliance with Environmental Laws.
Except as would not, individually or in the aggregate, result
in a Material Adverse Change:
(i) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign law or regulation
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including
without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Materials of Environmental Concern (collectively, "Environmental
Laws"), which violation includes, but is not limited to, noncompliance
with any permits or other governmental authorizations required for the
operation of the business of the Company or its subsidiaries under
applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Company or any of its subsidiaries
received any written communication, whether from a governmental
authority, citizens group, employee or otherwise, that alleges that the
Company or any of its subsidiaries is in violation of any Environmental
Law;
(ii) there is no claim, action or cause of action filed
with a court or governmental authority, no investigation with respect
to which the Company or any Guarantor has received written notice, and
no written notice by any person or entity alleging potential liability
for investigatory costs, cleanup costs, governmental responses costs,
natural resources damages, property damages, personal injuries,
attorneys' fees or penalties arising out of, based on or resulting from
the presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or
12
operated by the Company or any of its subsidiaries, now or in the past
(collectively, "Environmental Claims"), pending or, to the best of the
Company's or any Guarantor's knowledge, threatened against the Company
or any of its subsidiaries or any person or entity whose liability for
any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law; and
(iii) to the best of the Company's or any Guarantor's
knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of
any Material of Environmental Concern, that reasonably could result in
a violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or
against any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed
either contractually or by operation of law.
(dd) Periodic Review of Costs of Environmental Compliance.
In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review and the amount of its
established reserves, the Company has reasonably concluded that such
associated costs and liabilities would not, individually or in the
aggregate, result in a Material Adverse Change.
(ee) ERISA Compliance.
The Company and its subsidiaries and any "employee benefit
plan" (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations
thereunder (collectively, "ERISA")) established or maintained by the
Company, its subsidiaries or their "ERISA Affiliates" (as defined
below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company or a subsidiary, any
member of any group of organizations described in Sections 414 of the
Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (the "Code") of which the Company
or such subsidiary is a member. No "reportable event" (as defined under
ERISA) has occurred or is reasonably expected to occur with respect to
any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates, if such "employee benefit plan" were
terminated, would have any "amount of unfunded benefit liabilities" (as
defined under ERISA). Neither the Company, its subsidiaries nor any of
their ERISA Affiliates has incurred or reasonably expects to incur any
liability under: (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "employee benefit plan"; or (ii) Sections 412,
4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of
their ERISA Affiliates that is intended to be qualified under Section
401 of the Code is so qualified
13
and nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
(ff) Revolving Credit Facility.
The Revolving Credit Facility has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company, will be the valid and legally binding obligation of the
Company, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(gg) Regulation S.
The Company, the Guarantors and their respective affiliates
and all persons acting on their behalf (other than the Initial
Purchasers, as to whom the Company and the Guarantors make no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the
offering of the Securities outside the United States and, in connection
therewith, the Offering Memorandum will contain the disclosure required
by Rule 902 of the Securities Act.
(hh) Temporary Global Security.
The Securities sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not
be exchanged for definitive securities until the expiration of the
40-day restricted period referred to in Rule 903 of the Securities Act
and only upon certification of beneficial ownership of such Securities
by non-U.S. persons or U.S. persons who purchased such Securities in
transactions that were exempt from the registration requirements of the
Securities Act.
Any certificate signed by an officer of the Company or any
Guarantor and delivered to the Initial Purchasers or to counsel for the
Initial Purchasers pursuant hereto shall be deemed to be a
representation and warranty by the Company or such Guarantor to the
Initial Purchasers as to the matters set forth therein.
SECTION 2. Purchase, Sale and Delivery of the Securities.
(a) The Securities.
The Company agrees to issue and sell to the Initial Purchasers
all of the Securities upon the terms herein set forth. On the basis of
the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, each of
the Initial Purchasers agrees to purchase from the Company the
aggregate principal amount of Securities shown opposite its name in
SCHEDULE A at a purchase price of 97.5% of the principal amount thereof
payable on the Closing Date.
(b) The Closing Date.
Delivery of certificates for the Securities in definitive form
to be purchased by the Initial Purchasers and payment therefor shall be
made at the offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ (or such other place as may be
14
agreed to by the Company and Initial Purchaser), at 9:00 a.m.
New York
City time, on December 19, 2001, or such other time and date as the
Initial Purchasers shall designate by notice to the Company (the time
and date of such closing are called the "Closing Date"). The Company
hereby acknowledges that circumstances under which the Initial
Purchasers may provide notice to postpone the Closing Date as
originally scheduled include, but are in no way limited to, any
determination by the Company or the Initial Purchasers to recirculate
to investors copies of an amended or supplemented Offering Memorandum
or a delay as contemplated by the provisions of Section 16 hereof.
(c) Delivery of the Securities.
The Company shall deliver, or cause to be delivered, to Banc
of America Securities LLC for its account certificates for the
Securities at the Closing Date against the irrevocable release of a
wire transfer of immediately available funds for the amount of the
purchase price therefor. The certificates for the Securities shall be
in such denominations and registered in the name of Cede & Co., as
nominee of the Depository, pursuant to the DTC Agreement, and shall be
made available for inspection on the business day preceding the Closing
Date at a location in
New York City, as the Initial Purchasers may
designate. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the
obligations of the Initial Purchasers.
(d) Delivery of Offering Memorandum to the Initial Purchasers.
Not later than 12:00 p.m. on the second business day following
the date of this Agreement, the Company shall delivery or cause to be
delivered copies of the Offering Memorandum in such quantities and at
such places as the Initial Purchasers shall reasonably request.
(e) Initial Purchasers as Qualified Institutional Buyers.
Each of the Initial Purchasers severally represents and
warrants to, and agrees with, the Company that it is a "qualified
institutional buyer" within the meaning of Rule 144A (a "Qualified
Institutional Buyer") and an "accredited investor" within the meaning
of Rule 501 under the Securities Act (an "Accredited Investor").
SECTION 3. Additional Covenants.
The Company and, as applicable, each Guarantor, jointly and
severally, further covenant and agree with the Initial Purchasers as follows:
(a) Initial Purchasers' Review of Proposed Amendments and
Supplements.
Prior to amending or supplementing the Offering Memorandum,
the Company shall furnish to the Initial Purchasers for review a copy
of each such proposed amendment or supplement, and the Company shall
not use any such proposed amendment or supplement to which the Initial
Purchasers reasonably object.
15
(b) Amendments and Supplements to the Offering Memorandum and
Other Securities Act Matters.
If, prior to the completion of the placement of the Securities
by the Initial Purchasers with the Subsequent Purchasers, any event
shall occur or condition exist as a result of which it is necessary to
amend or supplement the Offering Memorandum in order to make the
statements therein, in the light of the circumstances when the Offering
Memorandum is delivered to a purchaser, not misleading, or if in the
opinion of the Initial Purchasers or counsel for the Initial Purchasers
it is otherwise necessary to amend or supplement the Offering
Memorandum to comply with law, the Company agrees to promptly prepare
(subject to Section 3(a) hereof), and furnish at its own expense to the
Initial Purchasers, amendments or supplements to the Offering
Memorandum so that the statements in the Offering Memorandum as so
amended or supplemented will not, in the light of the circumstances
when the Offering Memorandum is delivered to a purchaser, be misleading
or so that the Offering Memorandum, as amended or supplemented, will
comply with law.
Following the consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement and for so
long as the Securities are outstanding if, in the reasonable judgment
of the Initial Purchasers, the Initial Purchasers or any of their
affiliates (as such term is defined in the rules and regulations under
the Securities Act) is required to deliver a prospectus in connection
with sales of, or market-making activities with respect to, such
securities, (A) to periodically amend the applicable registration
statement so that the information contained therein complies with the
requirements of Section 10(a) of the Securities Act, (B) to amend the
applicable registration statement or supplement the related prospectus
or the documents incorporated therein when necessary to reflect any
material changes in the information provided therein so that the
registration statement and the prospectus will not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing as of the date the prospectus is so delivered,
not misleading and (C) to provide the Initial Purchasers with copies of
each amendment or supplement filed and such other documents as the
Initial Purchasers may reasonably request.
The Company and each Guarantor hereby expressly acknowledges
that the indemnification and contribution provisions of Sections 8 and
9 hereof are specifically applicable and relate to each offering
memorandum, registration statement, prospectus, amendment or supplement
referred to in this Section 3(b).
(c) Copies of the Offering Memorandum.
The Company agrees to furnish the Initial Purchasers, without
charge, as many copies of the Offering Memorandum and any amendments
and supplements thereto as they shall have reasonably requested.
(d) Blue Sky Compliance.
The Company and each Guarantor shall cooperate with the
Initial Purchasers and counsel for the Initial Purchasers to qualify or
register the Securities for sale under (or obtain exemptions from the
application of) the Blue Sky or state securities laws of those
jurisdictions designated by the Initial Purchasers, shall comply with
such laws and
16
shall continue such qualifications, registrations and exemptions in
effect so long as required for the distribution of the Securities.
Neither the Company nor any Guarantor shall be required to qualify as a
foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise the Initial Purchasers
promptly of the suspension of the qualification or registration of (or
any such exemption relating to) the Securities for offering, sale or
trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of
any order suspending such qualification, registration or exemption,
the Company shall use its best efforts to obtain the withdrawal
thereof at the earliest possible moment.
(e) Use of Proceeds.
The Company shall apply the net proceeds from the sale of the
Securities sold by it in the manner described under the caption "Use of
Proceeds" in the Offering Memorandum.
(f) The Depositary.
The Company will cooperate with the Initial Purchasers and use
its best efforts to permit the Securities to be eligible for clearance
and settlement through the facilities of the Depositary.
(g) Additional Issuer Information.
For so long as the Company is not subject to Section 13 or 15
of the Exchange Act, for the benefit of holders and beneficial owners
from time to time of Securities, the Company shall furnish, at its
expense, upon request, to holders and beneficial owners of Securities
and prospective purchasers of Securities information ("Additional
Issuer Information") satisfying the requirements of subsection of Rule
144A. At any time when the Company is subject to the reporting
requirements of Section 13 or 15 of the Exchange Act, the Company
covenants that it will file the reports required to be filed by it
under the Securities Act and Section 13(a) and 15(d) of the Exchange
Act and the rules and regulations adopted by the Commission thereunder.
(h) Future Reports to the Initial Purchasers.
For so long as any Securities or Exchange Securities remain
outstanding, the Company will furnish to Banc of America Securities
LLC: (i) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the balance sheet
of the Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then ended and
the opinion thereon of the Company's independent public or certified
public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
report filed by the Company with the Commission, the NASD or any
securities exchange, if any; and (iii) as soon as available, copies of
any report or communication of the Company mailed generally to holders
of its capital stock or debt securities (including the holders of the
Securities).
17
(i) No Integration.
The Company agrees that it will not and will cause its
Affiliates not to make any offer or sale of securities of the Company
of any class if, as a result of the doctrine of "integration" referred
to in Rule 502 under the Securities Act, such offer or sale would
render invalid (for the purpose of (i) the sale of the Securities by
the Company to the Initial Purchasers, (ii) the resale of the
Securities by the Initial Purchasers to Subsequent Purchasers or (iii)
the resale of the Securities by such Subsequent Purchasers to others)
the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof or by Rule 144A or by Regulation S
thereunder or otherwise.
(j) Legended Securities.
Each certificate for a Note will bear the legend contained in
"Transfer Restrictions" in the Offering Memorandum for the time period
and upon the other terms stated in the Offering Memorandum.
(k) PORTAL.
The Company will use its best efforts to cause the Notes to be
eligible for the National Association of Securities Dealers, Inc.
PORTAL market (the "PORTAL market").
(l) Rating Securities.
The Company shall take all reasonable action necessary to
enable Standard & Poor's Ratings Services, a division of McGraw Hill,
Inc. ("S&P"), and ▇▇▇▇▇'▇ Investor Services, Inc. ("Moody's") to
provide their respective credit ratings to the Securities at or prior
to the time of their initial issuance
Banc of America Securities LLC, on behalf of the Initial
Purchasers may, in its sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION 4. Payment of Expenses.
The Company and the Guarantors jointly and severally agree to
pay all costs, fees and expenses incurred in connection with the performance of
their obligations hereunder and in connection with the transactions contemplated
hereby, including without limitation: (i) all expenses incident to the issuance
and delivery of the Securities (including all printing and engraving costs);
(ii) all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Securities to the Initial Purchasers; (iii) all fees
and expenses of the Company's and the Guarantors' counsel, independent public or
certified public accountants and other advisors; (iv) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and
distribution of each preliminary Offering Memorandum and the Offering Memorandum
(including financial statements and exhibits), and all amendments and
supplements thereto, this Agreement, the Registration Rights Agreement, the
Indenture, the DTC Agreement and the Notes and the Guarantees; (v) all filing
fees, attorneys' fees and expenses incurred by the Company, the Guarantors or
the Initial Purchasers in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Securities for offer and sale under the Blue Sky laws and, if requested
by the Initial Purchasers, preparing and printing a "Blue Sky Survey" or
memorandum, and any supplements
18
thereto, advising the Initial Purchasers of such qualifications,
registrations and exemptions; (vi) the fees and expenses of the Trustee,
including the fees and disbursements of counsel for the Trustee in connection
with the Indenture, the Securities and the Exchange Securities; (vii) any
fees payable in connection with the rating of the Securities or the Exchange
Securities with the ratings agencies and the listing of the Securities with
the PORTAL market; (viii) any filing fees incident to, and any reasonable
fees and disbursements of counsel to the Initial Purchasers in connection
with the review by the National Association of Securities Dealers, Inc., if
any, of the terms of the sale of the Securities or the Exchange Securities;
(ix) all fees and expenses (including reasonable fees and expenses of
counsel) of the Company and the Guarantors in connection with approval of the
Securities by the Depository for "book-entry" transfer, and (x) the
performance by the Company and the Guarantors of their respective other
obligations under this Agreement. Except as provided in this Section 4,
Section 6, Section 8 and Section 9 hereof, each of the Initial Purchasers
shall pay its own expenses, including the fees and disbursements of its
respective counsel.
SECTION 5. Conditions of the Obligations of the Initial Purchasers.
The obligations of the Initial Purchasers to purchase and pay
for the Securities as provided herein on the Closing Date shall be subject to
the accuracy of the representations and warranties on the part of the Company
and the Guarantors set forth in Section 1 hereof as of the date hereof and as of
the Closing Date as though then made and to the timely performance by the
Company and the Guarantors of their respective covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter.
On the date hereof, the Initial Purchasers shall have received
from the Independent Accountants a letter dated the date hereof
addressed to the Initial Purchasers, in form and substance satisfactory
to the Initial Purchasers, containing statements and information of the
type ordinarily included in accountant's "comfort letters" to the
Initial Purchasers, delivered according to Statement of Auditing
Standards Nos. 72 and 76 (or any successor bulletins), with respect to
the audited and unaudited financial statements and certain financial
information contained in the Offering Memorandum.
(b) No Material Adverse Change or Ratings Agency Change.
For the period from and after the date of this Agreement and
prior to the Closing Date:
(i) in the judgment of the Initial Purchasers there shall
not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded
any securities of the Company or any of its subsidiaries by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436 under the Securities Act.
19
(c) Opinion of Counsel for the Company and the Guarantors.
On the Closing Date the Initial Purchasers shall have received
(i) the favorable opinion of Proskauer Rose LLP,
New York counsel for
the Company and the Guarantors, dated as of such Closing Date, the form
of which is attached as EXHIBIT A, (ii) the favorable opinion of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, West Virginia counsel for the Company and the
Guarantors, dated as of such Closing Date, the form of which is
attached as EXHIBIT B and (iii) the favorable opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇,
in-house counsel for the Company and the Guarantors, dated as of such
Closing Date, the form of which is attached as EXHIBIT C.
(d) Opinion of Counsel for the Initial Purchasers.
On the Closing Date the Initial Purchasers shall have received
the favorable opinion of Shearman & Sterling, counsel for the Initial
Purchasers, dated as of such Closing Date, with respect to such matters
as may be reasonably requested by the Initial Purchasers.
(e) Officers' Certificate.
On the Closing Date the Initial Purchasers shall have received
a written certificate executed by the Chairman of the Board, Chief
Executive Officer or President of the Company and each of the
Guarantors and the Chief Financial Officer or Chief Accounting Officer
of the Company and each of the Guarantors, dated as of the Closing
Date, to the effect set forth in subsection (b)(ii) of this Section 5,
and further to the effect that:
(i) for the period from and after the date of this
Agreement and prior to the Closing Date there has not occurred any
Material Adverse Change;
(ii) the representations, warranties and covenants of the
Company and the Guarantors set forth in Section 1 of this Agreement are
true and correct with the same force and effect as though expressly
made on and as of the Closing Date; and
(iii) the Company and the Guarantors have complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date.
(f) Bring-down Comfort Letter.
On the Closing Date, the Initial Purchasers shall have
received from the Independent Accountants, a letter dated such date, in
form and substance satisfactory to the Initial Purchasers, to the
effect that they reaffirm the statements made in the letter furnished
by them pursuant to subsection (a) of this Section 5, except that the
specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the Closing Date.
(g) PORTAL Listing.
At the Closing Date the Notes shall have been designated for
trading on the PORTAL market.
20
(h) Registration Rights Agreement.
The Company and each of the Guarantors shall have entered into
the Registration Rights Agreement and the Initial Purchasers shall have
received executed counterparts thereof.
(i) Concurrent Transactions.
Contemporaneously with the closing of the transaction
contemplated by this Agreement, the Company will purchase all of the
shares of its common stock owned by WHX in accordance with the terms of
the WHX Purchase Agreement and execute the credit agreement for the
Revolving Credit Facility in the form previously provided to the
Initial Purchasers on December 10, 2001 and all of the closing
conditions thereunder will be satisfied in accordance with the terms
thereunder. As of the Closing Date, approximately $25.3 million will be
available for drawing under the Revolving Credit Facility, as described
in the Offering Memorandum. All of the copies of the documents
delivered in connection with the closing of the WHX Purchase Agreement
and the Revolving Credit Facility will be delivered to the Initial
Purchasers. In addition, an irrevocable letter of credit in the amount
of $5.0 million issued in favor of WHX in connection with the WHX
Purchase Agreement will be surrendered to, and terminated by, the
Company.
(j) Additional Documents.
On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such additional
information and documents as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the
Securities as contemplated herein, or in order to evidence the accuracy
of any of the representations and warranties, or the satisfaction of
any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated
by the Initial Purchasers by notice to the Company at any time on or
prior to the Closing Date, which termination shall be without liability
on the part of any party to any other party, except that Section 4,
Section 6, Section 8 and Section 9 shall at all times be effective and
shall survive such termination.
SECTION 6. Reimbursement of Initial Purchasers' Expenses.
If this Agreement is terminated by the Initial Purchasers
pursuant to Sections 5 or 10, or if the sale to the Initial Purchasers of the
Securities on the Closing Date is not consummated because of any refusal,
inability or failure on the part of the Company or any Guarantor to perform any
agreement herein or to comply with any provision hereof, the Company and the
Guarantors jointly and severally agree to reimburse the Initial Purchasers upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Initial Purchasers in connection with the proposed purchase and the
offering and sale of the Securities, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges.
21
SECTION 7. Offer, Sale and Resale Procedures.
The Initial Purchasers, on the one hand, and the Company and
each of the Guarantors, on the other hand, hereby establish and agree to observe
the following procedures in connection with the offer and sale of the
Securities:
(i) Offers and sales of the Securities will be made only
by the Initial Purchasers or their Affiliates qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer or sale
shall only be made to (A) persons whom the offeror or seller reasonably believes
to be qualified institutional buyers (as defined in Rule 144A under the
Securities Act), or (B) non-U.S. persons outside the United States to whom the
offeror or seller reasonably believes offers and sales of the Securities may be
made in reliance upon Regulation S under the Securities Act, upon the terms and
conditions set forth in ANNEX I hereto, which ANNEX I is hereby expressly made a
part hereof.
(ii) The Securities will be offered by approaching
prospective Subsequent Purchasers on an individual basis. No general
solicitation or general advertising (within the meaning of Rule 502 under the
Securities Act) will be used in the United States in connection with the
offering of the Securities.
(iii) Upon original issuance by the Company, and until such
time as the same is no longer required under the applicable requirements of the
Securities Act, the Securities (and all securities issued in exchange therefor
or in substitution thereof, other than the Exchange Securities) shall bear the
following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT'), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (i) (a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT,
(d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR")) THAT, PRIOR TO SUCH
TRANSFER, FURNISHES
22
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND BASED UPON AN OPINION OF COUNSEL IF THE
ISSUER SO REQUESTS), (ii) TO THE ISSUER, OR (iii) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
Following the sale of the Securities by the Initial Purchasers to Subsequent
Purchasers pursuant to the terms hereof, the Initial Purchasers shall not be
liable or responsible to the Company for any losses, damages or liabilities
suffered or incurred by the Company, including any losses, damages or
liabilities under the Securities Act, arising from or relating to any resale or
transfer of any Security.
SECTION 8. Indemnification.
(a) Indemnification of the Initial Purchasers.
The Company and each of the Guarantors, jointly and severally,
agree to indemnify and hold harmless the Initial Purchasers, their
respective directors, officers and employees, and each person, if any,
who controls the Initial Purchasers within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which the Initial
Purchasers or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory
law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of the Company and/or any Guarantor sought to be
bound), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is
based: (i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the
Offering Memorandum (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; or (ii) in whole or in part
upon any inaccuracy in the representations and warranties of the
Company or any Guarantor contained herein; or (iii) in whole or in part
upon any failure of the Company or any Guarantor to perform its
obligations hereunder or under law; or (iv) upon any act or failure to
act or any alleged act or failure to act by the Initial Purchasers in
connection with, or relating in any manner to, the offering
contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage,
23
liability or action arising out of or based upon any matter covered by
clause above, provided that the Company shall not be liable under this
clause (iv) to the extent that a court of competent jurisdiction shall
have determined by a final judgment that such loss, claim, damage,
liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by any Initial Purchaser through
its gross negligence or willful misconduct; and to reimburse the
Initial Purchasers and each such controlling person for any and all
expenses (including the fees and disbursements of counsel chosen by
Banc of America Securities LLC) as such expenses are reasonably
incurred by the Initial Purchasers or such controlling person in
connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action,
provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent,
but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchasers expressly for use
in any Preliminary Offering Memorandum or the Offering Memorandum (or
any amendment or supplement thereto). The indemnity agreement set forth
in this Section 8 shall be in addition to any liabilities that the
Company or the Guarantors may otherwise have.
(b) Indemnification of the Company, its Directors and Officers.
Each Initial Purchaser agrees to severally indemnify and hold
harmless the Company, the Guarantors and each of their directors and
each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any loss, claim, damage, liability or expense, as incurred, to
which the Company or the Guarantors or any such director, or
controlling person may become subject, under the Securities Act, the
Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation,
if such settlement is effected with the written consent of the Initial
Purchasers), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto), or arises out of
or is based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in any Preliminary Offering
Memorandum or the Offering Memorandum (or any amendment or supplement
thereto), in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchasers expressly for use
therein; and to reimburse the Company, the Guarantors or any such
director or controlling person for any legal and other expenses
reasonably incurred by the Company, the Guarantors or any such director
or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The Company hereby acknowledges that the
only information that the Initial Purchasers have furnished to the
Company expressly for use in any Preliminary Offering Memorandum or the
Offering Memorandum (or any amendment or supplement thereto) are the
statements set forth in the sixth paragraph under the caption "Plan of
Distribution" in the Offering Memorandum concerning stabilization by
the Initial Purchasers; and the Initial Purchasers confirm that such
statements are correct. The indemnity agreement set forth in this
Section 8 shall be in addition to any liabilities that the Initial
Purchasers may otherwise have.
24
(c) Notifications and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 8, notify the indemnifying party
in writing of the commencement thereof, but the omission so to notify
the indemnifying party will not relieve it from any liability which it
may have to any indemnified party for contribution or otherwise than
under the indemnity agreement contained in this Section 8 or to the
extent it is not prejudiced as a proximate result of such failure. In
case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in and, to the extent that it shall elect, jointly with all
other indemnifying parties similarly notified, by written notice
delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that a conflict may arise between
the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party
of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel
(together with local counsel), approved by the indemnifying party (the
Initial Purchasers in the case of Section 8(b) and Section 9),
representing the indemnified parties who are parties to such action);
or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying party.
(d) Settlements.
The indemnifying party under this Section 8 shall not be
liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
Section 8 hereof, the indemnifying party agrees that (i) it shall be
liable for any settlement of any proceeding effected without its
written consent if such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request; and
(ii)
25
such indemnifying party shall not have reimbursed the indemnified
party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise
or consent includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
action, suit or proceeding.
SECTION 9. Contribution.
If the indemnification provided for in Section 8 is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, from the offering of the Securities
pursuant to this Agreement; or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Guarantors, on the one hand, and
the Initial Purchasers, on the other hand, in connection with the statements or
omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Guarantors, on the one hand, and the Initial Purchasers, on
the other hand, in connection with the offering of the Securities pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Securities pursuant to this
Agreement (before deducting expenses) received by the Company or the Guarantors,
and the total discount received by the Initial Purchasers bear to the aggregate
initial offering price of the Securities. The relative fault of the Company and
the Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company, on
the one hand, or the Initial Purchasers, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company, the Guarantors and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
9 were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any
26
other method of allocation which does not take account of the equitable
considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, the Initial
Purchasers shall not be required to contribute any amount in excess of the
discount received by the Initial Purchasers in connection with the Securities
distributed by it. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
For the purposes of this Section 9, each director, officer and
employee of the Initial Purchasers and each person, if any, who controls the
Initial Purchasers within the meaning of the Securities Act and the Exchange Act
shall have the same rights to contribution as the Initial Purchasers, and each
director of the Company or any Guarantor, and each person, if any, who controls
the Company or any Guarantor with the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company or any
Guarantor.
SECTION 10. Termination of this Agreement.
Prior to the Closing Date, this Agreement may be terminated by
the Initial Purchasers by notice given to the Company if at any time (i) trading
in securities generally on either the Nasdaq Stock Market or the
New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal,
New York, Delaware or any other state authorities;
(iii) there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial or economic conditions, as in the judgment of
the Initial Purchasers is material and adverse and makes it impracticable to
market the Securities in the manner and on the terms described in the Offering
Memorandum or to enforce contracts for the sale of securities; (iv) in the
judgment of the Initial Purchasers there shall have occurred any Material
Adverse Change; or (v) the Company or any Guarantor shall have sustained a loss
by strike, fire, flood, earthquake, accident or other calamity of such character
as in the judgment of the Initial Purchasers may interfere materially with the
conduct of the business and operations of the Company or such Guarantor
regardless of whether or not such loss shall have been insured.
Any termination pursuant to this Section 10 shall be without
liability on the part of (a) the Company or any Guarantor to the Initial
Purchasers, except that the Company and the Guarantors shall be obligated to
reimburse the expenses of the Initial Purchasers pursuant to Sections 4 and 6
hereof, (b) the Initial Purchasers to the Company or any Guarantor, or (c) any
party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
SECTION 11. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations,
warranties and other statements of the Company and the Guarantors, of their
respective officers and of the Initial Purchasers set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of the
investigation made by or on behalf of the Initial Purchasers or the Company or
the Guarantors or any of its or their partners, officers or directors or any
controlling person, as
27
the case may be, and will survive delivery of and payment for the Securities
sold hereunder and any termination of this Agreement.
SECTION 12. Notices.
All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Initial Purchasers:
Banc of America Securities LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: High Yield Capital Markets
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
If to the Company or the Guarantors:
Wheeling Island Gaming, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or General Counsel
with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 13. Successors.
This Agreement will inure to the benefit of and be binding
upon the parties hereto and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Securities as such from the Initial Purchasers merely by reason of such
purchase.
28
SECTION 14. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph
or provision of this Agreement shall not affect the validity or enforceability
of any other Section, paragraph or provision hereof. If any Section, paragraph
or provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 15. Governing Law; Consent to Jurisdiction.
(a) Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City and County of
New York or the
courts of the State of
New York in each case located in the City and County of
New York (collectively, the "Specified Courts"), and each party irrevocably
submits to the non-exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 16. Default of One or More of the Several Initial Purchasers.
If any one of the Initial Purchasers shall fail or refuse to
purchase Securities that it has agreed to purchase hereunder on the Closing
Date, and the aggregate number of Securities which such defaulting Initial
Purchaser agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Securities to be purchased on such date, the other
Initial Purchaser shall be obligated to purchase the Securities which such
defaulting Initial Purchaser agreed but failed or refused to purchase on such
date. If any one of the Initial Purchasers shall fail or refuse to purchase
Securities and the aggregate number of Securities with respect to which such
default occurs exceeds 10% of the aggregate number of Securities to be purchased
on the Closing Date, and arrangements satisfactory to the Initial Purchasers and
the Company for the purchase of such Securities are not made within 48 hours
after such default, this Agreement shall terminate without liability of any
party to any other party except that the provisions of Section 4, Section 6,
Section 8 and Section 9 shall at all times be effective and shall survive such
termination. In any such case either the Initial Purchasers or the Company shall
have the right to postpone the Closing Date, as the case may be, but in no event
for longer than seven days in order that the required changes, if any, to the
Offering Memorandum or any other documents or arrangements may be effected.
As used in this Agreement, the term "Initial Purchaser" shall
be deemed to include any person substituted for a defaulting Initial Purchaser
under this Section 16. Any
29
action taken under this Section 16 shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of such Initial Purchaser
under this Agreement.
SECTION 17. General Provisions.
This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in two or more
counterparts, each one of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
may not be amended or modified unless in writing by all of the parties hereto,
and no condition herein (express or implied) may be waived unless waived in
writing by each party whom the condition is meant to benefit. The Table of
Contents and the section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
30
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
WHEELING ISLAND GAMING, INC.
By:__________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
WDRA FOOD SERVICE, INC.
By:__________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
WHEELING LAND DEVELOPMENT CORP.
By:_______________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
The foregoing Purchase Agreement is hereby confirmed and
accepted by the Initial Purchasers as of the date first above written.
BANC OF AMERICA SECURITIES LLC
▇▇▇▇▇ FARGO BROKERAGE SERVICES, LLC
By: BANC OF AMERICA SECURITIES LLC
By:______________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
SCHEDULE A
AGGREGATE PRINCIPAL AMOUNT OF
INITIAL PURCHASERS SECURITIES TO BE PURCHASED
Banc of America Securities LLC .................................. $ 112,500,000
▇▇▇▇▇ Fargo Brokerage Services, LLC.............................. 12,500,000
-------------
Total................................................... $ 125,000,000
SCHEDULE B
LIST OF SUBSIDIARIES
WDRA Food Service, Inc.
Wheeling Land Development Corp.
EXHIBIT A
FORM OF OPINION OF
PROSKAUER ROSE LLP
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware. The
Merger has been consummated in accordance with the General Corporation Law of
the State of Delaware and the West Virginia Corporation Act of the State of West
Virginia. Each share of common stock of Wheeling Downs Racing Association, Inc.
has been converted into one validly issued, fully paid and non-assessable share
of common stock of the Company.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Offering Memorandum and to enter into and perform its obligations under each of
the Purchase Agreement, the Registration Rights Agreement, the Indenture, the
Securities, the Exchange Securities, the DTC Agreement, the WHX Purchase
Agreement and the Revolving Credit Facility.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in the State of West Virginia.
(iv) All of the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and, to the
knowledge of such counsel, have been issued in compliance with the registration
and qualification requirements of federal and state securities laws.
(v) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to subscribe for
or purchase securities of the Company arising by operation of the charter or
by-laws of the Company or the General Corporation Law of the State of Delaware
or, to the knowledge of such counsel, otherwise.
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable
in accordance with its terms, except as rights to indemnification thereunder may
be limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(vii) Each of the Registration Rights Agreement and the DTC
Agreement has been duly authorized, executed and delivered by, and is a valid
and binding agreement of the Company, enforceable in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles and except
as rights to indemnification under the Registration Rights Agreement may be
limited by applicable law.
(viii) The Indenture has been duly authorized, executed and delivered
by the Company and (assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding agreement of the
Company, enforceable against the Company in
A-1
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(ix) Each of the Purchase Agreement, Registration Rights Agreement
and the Indenture, assuming the due authorization, execution and delivery by
each Guarantor, constitutes a legal, valid and binding obligation of such
Guarantor, enforceable in accordance with its terms against such Guarantor,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles and except
as rights to indemnification under the Purchase Agreement and the Registration
Rights Agreement may be limited by applicable law.
(x) The Notes are in the form contemplated by the Indenture, have
been duly authorized by the Company for issuance and sale pursuant to the
Purchase Agreement and the Indenture and, when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and delivered against payment of the purchase price therefor, will constitute
valid and binding obligations of the Company, enforceable in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or affecting
enforcement of the rights and remedies of creditors or by general equitable
principles, and will be entitled to the benefits of the Indenture.
(xi) The Exchange Notes have been duly and validly authorized for
issuance by the Company, and when issued and authenticated in accordance with
the terms of the Indenture, the Registration Rights Agreement and the Exchange
Offer, will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, or
similar laws relating to or affecting enforcement of the rights and remedies of
creditors or by general equitable principles, and will be entitled to the
benefits of the Indenture.
(xii) The Guarantees of the Notes and the Exchange Notes are in the
respective forms contemplated by the Indenture, and when duly authorized,
executed delivered by each of the Guarantors and, when the Notes have been
issued and authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor, will constitute valid
and binding obligations of the Guarantors, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or affecting
enforcement of the rights and remedies of creditors or by general equitable
principles, and will be entitled to the benefits of the Indenture.
(xiii) The Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Offering Memorandum.
(xiv) The statements in the Offering Memorandum under the captions
"Description of the Notes", "United States Federal Income Tax Considerations",
and "Notice to Investors", insofar as such statements constitute matters of law,
summaries of legal matters, the charter or by-law provisions of the Company,
documents or legal proceedings, or legal conclusions, have been reviewed by such
counsel and fairly present and summarize, in all material respects, the matters
referred to therein.
A-2
(xv) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency is required for the Company's execution, delivery and
performance of the Purchase Agreement, the Registration Rights Agreement, the
DTC Agreement or the Indenture or any other agreements or documents relating to
any of the foregoing, or the issuance and delivery of the Securities or the
Exchange Securities, or consummation of the transactions contemplated thereby
and by the Offering Memorandum (other than the transactions contemplated by the
WHX Purchase Agreement and the Revolving Credit Facility), except such as have
been obtained or made by the Company and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws, and except such as
may be required by federal and state securities laws with respect to the
Company's obligations under the Registration Rights Agreement.
(xvi) The execution and delivery of the Purchase Agreement, the
Registration Rights Agreement, the DTC Agreement the Securities, the Exchange
Securities and the Indenture and any other agreements or documents relating to
any of the foregoing by the Company and the performance by the Company of its
obligations thereunder, and consummation of the transactions contemplated
thereby and by the Offering Memorandum (other than the transactions contemplated
by the WHX Purchase Agreement and the Revolving Credit Facility): (i) will not
result in any violation of the provisions of the charter or by-laws of the
Company; (ii) will not conflict with or constitute a breach of, or Default or a
Debt Repayment Triggering Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, or require the
consent of any other party to, any Existing Instrument (as defined in the
Purchase Agreement), except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change; and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary. As used herein, a "Debt Repayment Triggering
Event" means any event or condition which gives, or with the giving of notice or
lapse of time would give, the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries.
(xvii) The Company is not, and after receipt of payment for the
Securities will not be, an "investment company" within the meaning of the
Investment Company Act and will conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(xviii) To the knowledge of such counsel, no holders of securities
(other than the Notes) of the Company have rights to require the registration of
such securities that would result from the filing of the Exchange Offer
Registration Statement or the Shelf Registration Statement.
(xix) To the knowledge of such counsel (but without conducting any
docket or similar search), there is no pending or threatened action, suit or
proceeding before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of the Guarantors except for actions,
suits or proceedings which are either disclosed in the Offering Memorandum or,
if not so disclosed, would not, individually or in the aggregate with all such
other actions, suits and proceedings, have, if adversely determined, a material
adverse effect on the Company and the Guarantors considered as one enterprise.
(xx) Assuming the accuracy of the representations, warranties and
covenants of the Company and the Initial Purchasers contained in the Purchase
Agreement, no registration of the Notes or the Guarantees under the Securities
Act, and no qualification of an indenture under the Trust Indenture Act with
respect thereto, is required in connection with the purchase of the
A-3
Securities by the Initial Purchasers or the initial resale of the Securities
by the Initial Purchasers to Qualified Institutional Buyers or Institutional
Accredited Investors in the manner contemplated by the Purchase Agreement and
the Offering Memorandum other than any registration or qualification that may
be required in connection with the Exchange Offer contemplated by the
Offering Memorandum or in connection with the Registration Rights Agreement.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Initial Purchasers at which the
contents of the Offering Memorandum, and any supplements or amendments thereto,
and related matters were discussed and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum (other than as
expressly specified above), and any supplements or amendments thereto, on the
basis of the foregoing, nothing has come to our attention which would lead us to
believe that either the Offering Memorandum, as of its date or at the Closing
Date, contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that we need express no belief as to the
financial statements or other financial data derived therefrom, included or
incorporated by reference (as applicable) in the Offering Memorandum or any
amendments or supplements thereto).
A-4
EXHIBIT B
FORM OF OPINION OF
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
For purposes of this exhibit, the term "Gaming Regulations" refers
collectively to any law, rule, regulation or ordinance governing racing and
gaming activities (including, without limitation, the West Virginia Racetrack
Video Lottery Act and the West Virginia Racing Act) in each case including all
amendments or modifications thereof, any administrative rules or regulations
promulgated thereunder, and any of the corresponding statutes, rules and
regulations in the State of West Virginia.
(i) Each of the Guarantors has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of West Virginia.
(ii) Each of the Guarantors has corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Offering Memorandum and to enter into and perform its obligations under
each of the Purchase Agreement, the Registration Rights Agreement, the
Indenture, the Securities, the Exchange Securities and the Revolving Credit
Facility.
(iii) Each of the Guarantors is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except for such
jurisdictions where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, result in a Material Adverse Change.
(iv) All of the issued and outstanding capital stock of each of the
Guarantors has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance or,
to the best knowledge of such counsel, any pending or threatened claim.
(v) Each of the Purchase Agreement, the Registration Rights
Agreement, the Indenture, and the Revolving Credit Facility has been duly
authorized, executed and delivered by each of the Guarantors.
(vi) The Guarantees of the Notes and the Exchange Notes have been
duly authorized by each Guarantor for issuance and sale pursuant to the Purchase
Agreement.
(vii) The statements in the Offering Memorandum under the captions
"Risk Factors--We may require you to dispose of your notes or redeem your notes
if required by applicable gaming regulations," "Risk Factors--Government
Regulation could have a negative effect on our business" and "Government
Regulation", insofar as such statements constitute a description of matters of
law, summaries of legal proceedings, or legal conclusions contained in the
Offering Memorandum, have been reviewed by such counsel and fairly present and
summarize, in all material respects, the matters referred to therein.
(viii) Each of the Company and each of its subsidiaries possesses
such valid and current certificates, authorizations, permits or licenses issued
by the appropriate state agencies or bodies (including any Gaming Authority, as
such term is defined in the Purchase Agreement)
B-1
necessary to conduct their respective businesses, including but not limited
to all certificates, authorizations, permits and licenses required to conduct
their gaming and live and simulcast racing and pari-mutuel wagering business
in the State of West Virginia, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization, permit or license which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could result in a
Material Adverse Change.
(ix) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, including without limitation, any Gaming Authority, is
required under the Gaming Regulations for the Company's or each Guarantor's
execution, delivery and performance of the Purchase Agreement, the Registration
Rights Agreement, the DTC Agreement, the WHX Purchase Agreement, the Revolving
Credit Facility or the Indenture and any other agreements or documents relating
to any of the foregoing, or the issuance and delivery of the Securities and the
Exchange Securities, or consummation of the transactions contemplated thereby
and by the Offering Memorandum, except such as have been obtained or made by the
Company or the Guarantors and are in full force and effect.
(x) The execution and delivery of each of the Purchase Agreement,
the Registration Rights Agreement, the Notes, the Exchange Notes, the Guarantees
of the Notes and the Exchange Notes, the Indenture, the WHX Purchase Agreement,
the DTC Agreement and the Revolving Credit Facility and any other agreements or
documents relating to any of the foregoing (collectively, the "Transaction
Documents") by the Company and each Guarantor and the performance by each of the
Company and Guarantors of its respective obligations under the Transaction
Documents, and consummation of the transactions contemplated thereby and by the
Offering Memorandum: (i) will not result in any violation of the provisions of
the charter or by-laws of the Guarantors and (ii) will not result in the
creation of or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or the Guarantors under, and will not result in any
violation of, any law (including the Gaming Regulations), administrative
regulation or administrative or court decree generally applicable to the Company
or the Guarantors.
(xi) Nothing contained in the Gaming Regulations would prevent the
Transaction Documents from being the valid and binding obligations of the
Company or any Guarantor party thereto, enforceable against such party in
accordance with its terms.
(xii) No taxes, fees and other charges are required under the Gaming
Regulations or other law of the State of West Virginia to be paid in
connection with the execution, delivery and performance of the Transaction
Documents.
(xiii) No authorizations, consents or approvals by, or notices of
filings with, the Gaming Authorities (including, without limitation, the West
Virginia Lottery Commission or the West Virginia Racing Commission) are required
under the Gaming Regulations for the transactions contemplated under the
Transaction Documents, except as such authorizations, consents and approvals
that have been obtained.
(xiv) Neither the Trustee nor any holder of the Securities
(collectively referred to as "Persons") is required, solely by reason of the
transactions referred to in the Transaction Documents, or the exercise of the
remedies provided for in the Transaction Documents, to be found suitable to or
be licensed under the Gaming Regulations, provided, however, that (a) such
Persons are subject to be called forward for a finding of suitability or
licensing at any time in the
B-2
discretion of the relevant Government Authority and (b) the relevant
Government Authority may require, in its discretion, the licensing or finding
of suitable of some or all of such Persons in connection with the granting of
any necessary approvals for the exercise of remedies provided for in the
Transaction Documents.
(xv) The choice of
New York law stipulated to govern is a valid and
effective choice of law under the laws of the State of West Virginia and would
be enforced to the extent the parties have provided therein by a West Virginia
court or a federal court sitting in West Virginia and applying the law of the
State of West Virginia, except to the extent that New York law contravenes the
public policy of West Virginia, and except insofar as federal laws may apply
with respect to certain issues. Moreover, although the Transaction Documents
contain choice of law provisions which state that they are to be governed by and
construed in accordance with the law of the State of New York, in the event that
the laws of the State of West Virginia were applied to govern the Transaction
Documents, the Transaction Documents will not violate any applicable usury laws
of the State of West Virginia.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Initial Purchasers at which the
contents of the Offering Memorandum, and any supplements or amendments thereto,
and related matters were discussed and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum (other than as
specified above), and any supplements or amendments thereto, on the basis of the
foregoing, nothing has come to our attention which would lead us to believe that
either the Offering Memorandum, as of its date or at the Closing Date, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that we need express no belief as to the financial statements or
other financial data derived therefrom, included or incorporated by reference
(as applicable) in the Offering Memorandum or any amendments or supplements
thereto).
B-3
EXHIBIT C
FORM OF OPINION OF
IN-HOUSE COUNSEL FOR THE COMPANY AND THE GUARANTORS
(i) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually or in
the aggregate, result in a Material Adverse Change.
(ii) The Company and each of its subsidiaries possesses such valid
and current certificates, authorizations, permits or licenses issued by the
appropriate federal or foreign regulatory agencies or bodies necessary to
conduct their respective businesses, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation
or modification of, or non-compliance with, any such certificate, authorization,
permit or license which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change.
(iii) The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than WDRA Food Service, Inc.
and Wheeling Land Development Corporation.
(iv) Sportsystems Corporation has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation.
(v) Sportsystems Corporation has corporate power and authority to
perform its obligations under the WHX Purchase Agreement.
(vi) The WHX Purchase Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Company and
Sportsystems Corporation, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable law.
(vii) The Revolving Credit Facility has been duly and validly
authorized by the Company and, when duly executed and delivered by the Company,
will be the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(viii) The Revolving Credit Facility has been duly and validly
authorized by each of the Guarantors and, when duly executed delivered by such
Guarantor, will be the legal, valid and binding obligation of such Guarantor,
enforceable in accordance with its terms against such Guarantor, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(ix) The statements in the Offering Memorandum under the captions
"Business - Intellectual Property Rights", "Business - Legal Proceedings",
"Certain Relationships and Related Transactions" and "Description of Certain
Indebtedness", insofar as such statements
C-1
constitute matters of law, summaries of legal matters, the charter or by-law
provisions of the Company or the Guarantors, documents or legal proceedings,
or legal conclusions, have been reviewed by such counsel and fairly present
and summarize, in all material respects, the matters referred to therein.
(x) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency is required for the Company's or each Guarantor's execution,
delivery and performance of the WHX Purchase Agreement or the Revolving Credit
Facility or any other agreements or documents relating thereto, or consummation
of the transactions contemplated thereby, except such as have been obtained or
made by the Company and are in full force and effect.
(xi) The execution and delivery of the WHX Purchase Agreement and
the Revolving Credit Facility and any other agreements or documents relating
thereto by the Company and the performance by the Company of its obligations
thereunder, and consummation of the transactions contemplated thereby: (i) will
not result in any violation of the provisions of the charter or by-laws of the
Company or any subsidiary; (ii) will not conflict with or constitute a breach
of, or Default or a Debt Repayment Triggering Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, or
require the consent of any other party to, any Existing Instrument (as defined
in the Purchase Agreement), except for such conflicts, breaches, Defaults,
liens, charges or encumbrances as would not, individually or in the aggregate,
result in a Material Adverse Change; and (iii) will not result in any violation
of any law, administrative regulation or administrative or court decree
applicable to the Company or any subsidiary. As used herein, a "Debt Repayment
Triggering Event" means any event or condition which gives, or with the giving
of notice or lapse of time would give, the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries.
(xii) Sportsystems Corporation's execution, delivery and performance
of the WHX Purchase Agreement (i) will not result in any violation of the
provisions of its charter or by-laws; and (ii) will not result in any violation
of any law, administrative regulation or administrative or court decree
applicable to Sportsystems Corporation.
(xiii) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory
authority or agency, is required for Sportsystems Corporation's execution,
delivery and performance of the WHX Purchase Agreement.
(xiv) There are no legal or governmental actions, suits or
proceedings pending or, to the best of such counsel's knowledge, threatened (i)
against or affecting the Company or any of the Guarantors, (ii) which has as the
subject thereof any property owned or leased by either of the Issuers or any of
the Guarantors, where in any such case (A) there is a reasonable possibility
that such action, suit or proceeding might be determined adversely to either of
the Company or any Guarantor and (B) any such action, suit or proceeding if so
determined adversely, would reasonably be expected to result in a Material
Adverse Change or adversely affect the consummation of the transactions
contemplated by the Purchase Agreement. No material labor dispute with the
employees of the Company or any of the Guarantors exists or, to the best of such
counsel's knowledge, is threatened or imminent.
C-2
In addition, such counsel shall state that she has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Initial Purchasers at which the
contents of the Offering Memorandum, and any supplements or amendments thereto,
and related matters were discussed and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Memorandum (other than as
expressly specified above), and any supplements or amendments thereto, on the
basis of the foregoing, nothing has come to her attention which would lead her
to believe that either the Offering Memorandum, as of its date or at the Closing
Date, contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that she need express no belief as to the
financial statements or other financial data derived therefrom, included or
incorporated by reference (as applicable) in the Offering Memorandum or any
amendments or supplements thereto).
C-3
EXHIBIT D
FORM OF REGISTRATION RIGHTS AGREEMENT
C-1
ANNEX I
RESALE PURSUANT TO REGULATION S OR RULE 144A. Each Initial Purchaser
understands that:
Each Initial Purchaser agrees that it has not offered or sold
and will not offer or sell the Securities (i) in the United States or to, or for
the benefit or account of, a U.S. Person (other than a distributor), in each
case, as defined in Rule 902 under the Securities Act as part of its
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities pursuant hereto and the Closing
Date, other than in accordance with Regulation S of the Securities Act or
another exemption from the registration requirements of the Securities Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not
cause any advertisement with respect to the Securities (including any
"tombstone" advertisement) to be published in any newspaper or periodical or
posted in any public place and will not issue any circular relating to the
Securities, except such advertisements as permitted by and including the
statements required by Regulation S.
Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Securities by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903 under the Securities Act, it will send
to such distributor, dealer or person receiving a selling concession, fee or
other remuneration a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons
as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the
Offering and the Closing Date, except in either case in
accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are
exempt from the registration requirements of the Securities
Act), and in connection with any subsequent sale by you of the
Notes covered hereby in reliance on Regulation S during the
period referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect.
Terms used above have the meanings assigned to them in
Regulation S."
Such Initial Purchaser agrees that the Securities offered and
sold in reliance on Regulation S will be represented upon issuance by a global
security that may not be exchanged for definitive securities until the
expiration of the 40-day restricted period referred to in Rule 903 of the
Securities Act and only upon certification of beneficial ownership of such
Securities by non-U.S. persons or U.S. persons who purchased such Securities in
transactions that were exempt from the registration requirements of the
Securities Act.