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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 0-24206
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PENN NATIONAL GAMING, INC.
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(Exact name of registrant as specified in its charter)
EXHIBIT 1
Penn National Gaming, Inc.
$80,000,000
10 5/8% Senior Notes due 2004g
PURCHASE AGREEMENT
December 12, 1997
BT ALEX. BROWN INCORPORATED
JEFFERIES & COMPANY, INC.
c/o BT Alex. Brown Incorporated
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Penn National Gaming, Inc., a Pennsylvania corporation (the
"Company"), and the subsidiary guarantors listed on Schedule A hereto (the
"Subsidiary Guarantors"), each hereby confirms its agreement with you (the
"Initial Purchasers"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
$80,000,000 aggregate principal amount of its 10 5/8% Senior Notes due 2004
(with the Guarantees defined below, the "Notes"). The Notes will be guaranteed
(the "Guarantees") by the Subsidiary Guarantors on a senior basis. The Notes are
to be issued under an indenture (the "Indenture") to be dated as of December 17,
1997 by and between the Company, the Subsidiary Guarantors and State Street Bank
and Trust Company, as Trustee (the "Trustee").
It is contemplated, but not required, that concurrently with
the issuance of the Notes, the Company and its subsidiaries will enter into a
senior secured credit agreement (together with all documents executed in
connection therewith, the "New Credit Agreement") dated December 17, 1997, among
the Company, the Subsidiary Guarantors, the lenders party thereto in their
capacities as lenders thereunder and Bankers Trust Company, as agent, in the
form of a revolving credit facility in the amount of $12.0 million, for working
capital, letters
of credit and other general corporate purposes, to replace the $61.0 million
existing credit facility (the "Existing Credit Agreement" and together with the
New Credit Agreement, the "Credit Agreement").
The Notes will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum dated November 24, 1997 (the
"Preliminary Memorandum") and a final offering memorandum dated December 12,
1997 (the "Final Memorandum"; the Preliminary Memorandum and the Final
Memorandum each herein being referred to as a "Memorandum") each setting forth
or including a description of the terms of the Notes, the terms of the offering
of the Notes, a description of the Company and any material developments
relating to the Company occurring after the date of the most recent historical
financial statements included therein.
The Company understands that the Initial Purchasers propose to
make an offering of the Notes only on the terms and in the manner set forth in
the Final Memorandum and Section 8 hereof as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered, to qualified
institutional buyers ("Qualified Institutional Buyers" or "QIBs") as defined in
Rule 144A under the Act, as such rule may be amended from time to time ("Rule
144A"), in transactions under Rule 144A, and outside the United States to
certain persons in reliance on Regulation S under the Act.
The Initial Purchasers and their direct and indirect
transferees of the Notes will be entitled to the benefits of the Registration
Rights Agreement, substantially in the form attached hereto as Schedule A (the
"Registration Rights Agreement"), to be dated the Closing Date (as defined in
Section 3 below), pursuant to which the Company and the Subsidiary Guarantors
have agreed, among other things, to file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") registering the Notes or the Exchange Notes (as defined in the
Registration Rights Agreement) under the Act.
2. Representations and Warranties. The Company and the
Subsidiary Guarantors, jointly and severally, represent and warrant to and agree
with the Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of the date
thereof nor the Final Memorandum nor any amendment or supplement thereto as of
the date thereof and at all times subsequent thereto up to the Closing Date
contained or contains any untrue state-
2
ment of a material fact or omitted or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this Section 2(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use in the Preliminary Memorandum, the Final Memorandum or any
amendment or supplement thereto specified in Section 12 hereof.
(b) As of the Closing Date, the Company will have the
authorized, issued and outstanding capitalization set forth in the Final
Memorandum; all of the subsidiaries of the Company, including the Subsidiary
Guarantors and PNGI Charles Town Gaming LLC, an 89% owned joint venture, are
listed in Schedule B attached hereto (each, a "Subsidiary" and collectively, the
"Subsidiaries"); all of the outstanding shares of capital stock of the Company
and the Subsidiaries have been, and as of the Closing Date will be, duly
authorized and validly issued, are fully paid and nonassessable and were not
issued in violation of any preemptive or similar rights; except as contemplated
by the Credit Agreement all of the outstanding shares of capital stock of the
Company and the Subsidiaries will be free and clear of all liens, encumbrances,
equities and claims or restrictions on transferability (other than those imposed
by the Act and the securities or "Blue Sky" laws of certain jurisdictions) or
voting; except as issued pursuant to the Company's stock option plans and except
for the warrants described in the notes to the Consolidated Financial Statements
included in the Final Memorandum, there are no (i) options, warrants or other
rights to purchase from the Company or the Subsidiaries, (ii) agreements or
other obligations of the Company or the Subsidiaries to issue or (iii) other
rights to convert any obligation into, or exchange any securities for, shares of
capital stock of or ownership interests in the Company or any of the
Subsidiaries outstanding. Except for the Subsidiaries or as disclosed in the
Final Memorandum, the Company does not own, directly or indirectly, any shares
of capital stock or any other equity or long-term debt securities or have any
equity interest in any firm, partnership, joint venture or other entity.
(c) Each of the Company and the Subsidiaries has been duly
incorporated or duly formed (as applicable), is validly existing and is in good
standing as a corporation or as a limited liability company, as the case may be,
under the laws of its respective jurisdiction of incorporation or organization,
with all requisite corporate power and authority to own its properties and
conduct its business as now conducted and as described in the Final Memorandum;
each of the Company and the Subsidiaries is duly qualified to do business as a
foreign corporation or as a limited liability company, as the case may be, in
good standing in all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the business, condition
3
(financial or otherwise), prospects or results of operations of the Company and
the Subsidiaries, taken as a whole (any such event, a "Material Adverse
Effect").
(d) Each of the Company and the Subsidiary Guarantors has
all requisite corporate power and authority to execute, deliver and perform each
of its obligations under the Notes, the Exchange Notes and the Private Exchange
Notes (as defined in the Registration Rights Agreement). The Notes, the Exchange
Notes and the Private Exchange Notes have each been duly and validly authorized
by the Company and the Subsidiary Guarantors and, when executed by the Company
and authenticated by the Trustee in accordance with the provisions of the
Indenture and, in the case of the Notes, when delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, will have
been duly executed, issued and delivered and will constitute valid and legally
binding obligations of the Company and the Subsidiary Guarantors, entitled to
the benefits of the Indenture and enforceable against the Company and the
Subsidiary Guarantors in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(e) The Guarantees to be endorsed on the Notes by each
Subsidiary Guarantor have been duly authorized by such Subsidiary Guarantor and,
on the Closing Date, will have been duly executed and delivered by each such
Subsidiary Guarantor. When the Notes have been issued, executed and
authenticated in accordance with the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this Agreement, the
Guarantee of each Subsidiary Guarantor endorsed thereon will be entitled to the
benefits of the Indenture and will be the valid and binding obligation of such
Subsidiary Guarantor, enforceable against such Subsidiary Guarantor in
accordance with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(f) Each of the Company and the Subsidiary Guarantors has
all requisite corporate power and authority to execute, deliver and perform its
obligations under the Indenture. The Indenture meets the requirements for
qualification under the Trust Indenture Act of 1939, as amended (the "TIA"). The
Indenture has been duly and validly authorized by the Company and the Subsidiary
Guarantors and, when executed and delivered by the Company and the Subsidiary
Guarantors (assuming the due authorization, execution and delivery by the
Trustee), will constitute a valid and legally binding agreement of the Company
and the Subsidiary Guarantors, enforceable against the Company and the
Subsidiary Guarantors in accordance with its terms, except that the enforcement
thereof may be subject to
4
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(g) Each of the Company and the Subsidiary Guarantors has
all requisite corporate power and authority to execute, deliver and perform its
obligations under the Registration Rights Agreement. The Registration Rights
Agreement has been duly and validly authorized by the Company and the Subsidiary
Guarantors and, when executed and delivered by the Company and the Subsidiary
Guarantors, will constitute a valid and legally binding agreement of the Company
and the Subsidiary Guarantors enforceable against the Company and the Subsidiary
Guarantors in accordance with its terms, except that (i) the enforcement thereof
may be subject to (A) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought and (ii) any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(h) Each of the Company and the Subsidiary Guarantors has
all requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the transactions contemplated hereby have been duly
and validly authorized, executed and delivered by the Company and the Subsidiary
Guarantors.
(i) No consent, approval, authorization or order of any
court, governmental agency or body or third party, including without limitation,
the Pennsylvania State Horse Racing Commission (the "Horse Racing Commission"),
the Pennsylvania State Harness Racing Commission (the "Harness Commission"), the
West Virginia State Racing Commission (the "West Virginia Racing Commission")
and the West Virginia Lottery Commission (the "Lottery Commission")
(collectively, the "Gaming Authorities"), is required for the performance of
this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except such as have been obtained and such as
may be required under state securities or "Blue Sky" laws in connection with the
purchase and resale of the Notes by the Initial Purchasers. None of the Company
or the Subsidiaries is (i) in violation of its certificate of incorporation or
bylaws (or similar organizational document), (ii) in breach or violation of any
statute, judgment, decree, order, rule or regulation applicable to it or any of
its respective properties or assets, except for any such breach or violation
that would not, individually or in the aggregate, have a Material Adverse
Effect, or (iii) in breach of or default under (nor has any event occurred that,
with notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which it is a party or
to which it or its
5
respective properties or assets is subject (collectively, "Contracts"), except
for any such breach, default, violation or event that would not, individually or
in the aggregate, have a Material Adverse Effect.
(j) The execution, delivery and performance by the Company
and the Subsidiary Guarantors of this Agreement, the Indenture, the Registration
Rights Agreement and the Credit Agreement and the consummation by each of the
Company and the Subsidiary Guarantors of the transactions contemplated hereby
and thereby (including, without limitation, the issuance and sale of the Notes
to the Initial Purchasers) and the fulfillment of the terms hereof and thereof
will not conflict with or constitute or result in a breach of or a default under
(or an event that with notice or passage of time or both would constitute a
default under) or violation of any of (i) the terms or provisions of any
Contract, except for any such conflict, breach, violation, default or event that
would not, individually or in the aggregate, have a Material Adverse Effect,
(ii) the certificate of incorporation or bylaws (or similar organizational
document) of the Company or any of the Subsidiaries or (iii) (assuming
compliance with all applicable state securities or "Blue Sky" laws and assuming
the accuracy of the representations and warranties of the Initial Purchasers in
Section 8 hereof) any statute, judgment, decree, order, rule or regulation
applicable to the Company or any of the Subsidiaries or any of their respective
properties or assets, except for any such conflict, breach or violation that
would not, individually or in the aggregate, have a Material Adverse Effect.
(k) The audited consolidated financial statements of the
Company included in the Final Memorandum, taken as a whole, present fairly in
all material respects the financial position, results of operations and changes
in shareholders' equity and cash flows of the Company at the dates and for the
periods to which they relate and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except as
otherwise stated therein. The summary and selected financial and statistical
data in the Final Memorandum, taken as a whole, present fairly, in all material
respects, the information shown therein and have been prepared and compiled on a
basis consistent with the audited financial statements included therein, except
as otherwise stated therein. BDO Seidman, LLP (the "Independent Accountant") is
an independent public accounting firm within the meaning of the Act and the
rules and regulations promulgated thereunder.
(l) There is not pending or, to the best knowledge of the
Company and the Subsidiary Guarantors, threatened any action, suit, proceeding,
inquiry or investigation to which the Company or any of the Subsidiaries is a
party, or to which the property or assets of the Company or any of the
Subsidiaries are subject, before or brought by any court, arbitrator or
governmental agency or body that, if determined adversely to the Company or the
Subsidiaries, would, individually or in the aggregate, have a Material Adverse
Effect or that seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or
6
sale of the Notes to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(m) Each of the Company and the Subsidiaries owns or
possesses adequate licenses or other rights to use all patents, trademarks,
service marks, trade names, copyrights and know-how necessary to conduct the
businesses now or proposed to be operated, as described in the Final Memorandum,
and, except as described in the Final Memorandum, none of the Company or the
Subsidiaries has received any notice of infringement of or conflict with (or
knows of any such infringement of or conflict with) asserted rights of others
with respect to any patents, trademarks, service marks, trade names, copyrights
or know-how that, if such assertion of infringement or conflict were sustained,
would, individually or in the aggregate, have a Material Adverse Effect.
(n) Each of the Company and the Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities (including, without
limitation, all permits, licenses, certificates and franchises necessary to
conduct thoroughbred racing, harness racing, wagering on live and simulcast
racing and telephone account wagering activities, to operate off-track wagering
facilities and video gaming machines and to broadcast live racing), all
self-regulatory organizations and all courts and other tribunals, presently
required or necessary to own or lease, as the case may be, and to operate its
respective properties and to carry on its respective businesses as now or
proposed to be conducted as set forth in the Final Memorandum ("Permits"),
except where the failure to obtain such Permits would not, individually or in
the aggregate, have a Material Adverse Effect; each of the Company and the
Subsidiaries has fulfilled and performed all of its obligations with respect to
such Permits and no event has occurred that allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit; and none of
the Company or the Subsidiaries has received any notice of any proceeding
relating to revocation or modification of any such Permit, except as described
in the Final Memorandum and except where such revocation or modification would
not, individually or in the aggregate, have a Material Adverse Effect.
(o) Since the date of the most recent financial statements
appearing in the Final Memorandum, except as described therein, (i) none of the
Company or the Subsidiaries has incurred any liabilities or obligations, direct
or contingent, or entered into or agreed to enter into any transactions or
contracts (written or oral) not in the ordinary course of business, which
liabilities, obligations, transactions or contracts would, individually or in
the aggregate, be material to the business, condition (financial or otherwise),
prospects or results of operations of the Company and its Subsidiaries, taken as
a whole (a "Material Change"), (ii) none of the Company or the Subsidiaries has
purchased any of its outstanding capital
7
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock and (iii) there shall not have been any change in the
capital stock or long-term indebtedness of the Company or the Subsidiaries that
would, individually or in the aggregate, be a Material Change.
(p) Each of the Company and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns, except
where the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as due
thereon; and other than tax deficiencies that the Company or any Subsidiary is
contesting in good faith and for which the Company or such Subsidiary has
provided adequate reserves, there is no tax deficiency that has been asserted
against the Company or any of the Subsidiaries that would have, individually or
in the aggregate, a Material Adverse Effect.
(q) The statistical and market-related data included in
the Final Memorandum are based on or derived from sources that the Company
believe to be reliable and accurate in all material respects.
(r) None of the Company, the Subsidiaries or any agent
acting on their behalf has taken or will take any action that might cause this
Agreement or the sale of the Notes to violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System, in each case as in effect, or
as the same may hereafter be in effect, on the Closing Date.
(s) Each of the Company and the Subsidiaries has good and
marketable title to all real property and good title to all personal property
described in the Final Memorandum as being owned by it and a valid leasehold
interest in the real and personal property described in the Final Memorandum as
being leased by it free and clear of all liens, charges, encumbrances or
restrictions, except as described in the Final Memorandum or to the extent the
failure to have such title or the existence of such liens, charges, encumbrances
or restrictions would not, individually or in the aggregate, have a Material
Adverse Effect. All material leases, contracts and agreements to which any of
the Company or the Subsidiaries is a party or by which any of them is bound are
valid and enforceable against the Company or such Subsidiary, are, to the
Company's knowledge, valid and enforceable against the other party or parties
thereto and are in full force and effect with only such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect.
(t) There are no legal or governmental proceedings
involving or affecting the Company or the Subsidiaries or any of their
respective properties or assets that would be required to be described in a
prospectus pursuant to the Act that are not described in the Final Memorandum,
nor are there any material contracts or other documents that would be
8
required to be described in a prospectus pursuant to the Act that are not
described in the Final Memorandum.
(u) The Company has no reason to believe that any of the
Gaming Authorities is considering modifying, suspending, revoking or not
granting renewal of any of the Permits, and, to its knowledge, neither the
Gaming Authorities nor any other governmental agency is investigating the
Company or any of the Subsidiaries or related parties or any director or
executive officer of the Company or any of the Subsidiaries, other than ordinary
course administrative reviews. Except as disclosed in the Final Memorandum, to
the best knowledge of the Company, no change in any laws or regulations is
pending which could reasonably be expected to be adopted and if adopted, could
reasonably be expected to have, individually or in the aggregate with all such
changes, a Material Adverse Effect.
(v) Except as would not, individually or in the aggregate,
have a Material Adverse Effect (i) each of the Company and the Subsidiaries is
in compliance with and not subject to liability under applicable Environmental
Laws, (ii) each of the Company and the Subsidiaries has made all filings and
provided all notices required under any applicable Environmental Law, has and is
in compliance with all Permits required under any applicable Environmental Laws
and each of them is in full force and effect, (iii) there is no civil, criminal
or administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter or request for information
pending or, to the knowledge of the Company or any of the Subsidiaries,
threatened against the Company or any of the Subsidiaries under any
Environmental Law, (iv) no lien, charge, encumbrance or restriction has been
recorded under any Environmental Law with respect to any assets, facility or
property owned, operated, leased or controlled by the Company or the
Subsidiaries, (v) none of the Company or the Subsidiaries has received notice
that it has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), or any comparable state law, (vi) (A) no property or
facility of the Company or the Subsidiaries is listed or proposed for listing on
the National Priorities List under CERCLA OR (B) to the knowledge of the Company
and the Subsidiary Guarantors is listed in the Comprehensive Environmental
Response, Compensation, Liability Information System List promulgated pursuant
to CERCLA or any comparable list maintained by any state or local governmental
authority.
For purposes of this Agreement, "Environmental Laws" means
the common law and all applicable federal, state and local laws or regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials, into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(ii) the manufacture, proc-
9
essing, distribution, use, generation, treatment, storage, disposal, transport
or handling of hazardous materials and (iii) underground and above ground
storage tanks, and related piping, and emissions, discharges, releases or
threatened releases therefrom.
(w) Except as described in the Final Memorandum, there is
no strike, labor dispute, slowdown or work stoppage with the employees of the
Company or the Subsidiaries that is pending or, to the knowledge of the Company
or the Subsidiaries, threatened.
(x) Each of the Company and the Subsidiaries carries
insurance in such amounts and covering such risks as in its reasonable
determination are adequate for the conduct of its business and the value of its
properties.
(y) None of the Company or the Subsidiaries has any
liability for any prohibited transaction or funding deficiency or any complete
or partial withdrawal liability with respect to any pension, profit sharing or
other plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any of the Subsidiaries
makes or ever has made a contribution and in which any employee of the Company
or the Subsidiaries is or has ever been a participant. With respect to such
plans, the Company and the Subsidiaries are in compliance in all material
respects with all applicable provisions of ERISA.
(z) Each of the Company and the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting controls
that provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) trans-actions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable intervals.
(aa) None of the Company or the Subsidiaries will be an
"investment company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(bb) The Notes, the Guarantees, the Exchange Notes, the
Indenture, the Credit Agreement and the Registration Rights Agreement will
conform in all material respects to the descriptions thereof in the Final
Memorandum.
(cc) No holder of securities of the Company or any
Subsidiary will be entitled to have such securities registered under the
registration statements required to be
10
filed by the Company pursuant to the Registration Rights Agreement other than as
expressly permitted thereby.
(dd) Immediately after the consummation of the
transactions contemplated by this Agreement, the fair value and present fair
saleable value of the assets of each of the Subsidiary Guarantors (each on a
consolidated basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; none of the Company or the Subsidiary Guarantors (each
on a consolidated basis) is, nor will any of the Company or the Subsidiary
Guarantors (each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, (i) left with unreasonably small capital
with which to carry on its business as it is proposed to be conducted, (ii)
unable to pay its debts (contingent or otherwise) as they mature or (iii)
otherwise insolvent.
(ee) None of the Company, the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the Act)
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any "security" (as defined in the
Act) that is or could be integrated with the sale of the Notes in a manner that
would require the registration under the Act of the Notes or (ii) engaged in any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Notes or in
any manner involving a public offering within the meaning of Section 4(2) of the
Act. Assuming the accuracy of the representations and warranties of the Initial
Purchasers in Section 8 hereof, it is not necessary in connection with the
offer, sale and delivery of the Notes to the Initial Purchasers in the manner
contemplated by this Agreement to register any of the Notes under the Act or to
qualify the Indenture under the TIA.
(ff) No securities of the Company or any Subsidiary are of
the same class (within the meaning of Rule 144A under the Act) as the Notes and
listed on a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.
(gg) None of the Company or the Subsidiaries has taken,
nor will any of them 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 the Notes.
Any certificate signed by any officer of the Company or
the Subsidiaries and delivered to the Initial Purchasers or to counsel for the
Initial Purchasers shall be deemed a joint and several representation and
warranty by the Company and each of the Subsidiaries to the Initial Purchasers
as to the matters covered thereby.
11
3. Purchase, Sale and Delivery of the Notes. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers and the Initial Purchasers, acting
severally and not jointly, agree to purchase the Notes, in the respective
amounts set forth on Schedule I hereto, from the Company at 97.0% of their
principal amount. One or more certificates in definitive form for the Notes that
the Initial Purchasers have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Company at least 36 hours prior to
the Closing Date, shall be delivered by or on behalf of the Company to the
Initial Purchasers, against payment by or on behalf of the Initial Purchasers of
the purchase price therefor by wire transfer (same day funds), to such account
or accounts as the Company shall specify prior to the Closing Date, or by such
means as the parties hereto shall agree prior to the Closing Date. Such delivery
of and payment for the Notes shall be made at the offices of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York at 9:00 A.M., New York time, on
December 17, 1997, or at such other place, time or date as the Initial
Purchasers, on the one hand, and the Company, on the other hand, may agree upon,
such time and date of delivery against payment being herein referred to as the
"Closing Date." The Company will make such certificate or certificates for the
Notes available for checking and packaging by the Initial Purchasers at the
offices of BT Alex. Brown Incorporated in New York, New York, or at such other
place as BT Alex. Brown Incorporated may designate, at least 24 hours prior to
the Closing Date.
4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Notes at the price and upon the terms set
forth in the Final Memorandum, as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Company and the Subsidiary Guarantors.
Each of the Company and the Subsidiary Guarantors, jointly and severally,
covenants and agrees with the Initial Purchasers that:
(a) The Company and the Subsidiary Guarantors will not
amend or supplement the Final Memorandum or any amendment or
supplement thereto of which the Initial Purchasers shall not
previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers shall not
have given its consent. The Company and the Subsidiary
Guarantors will promptly, upon the reasonable request of the
Initial Purchasers or counsel for the Initial Purchasers, make
any amendments or supplements to the Final Memorandum that may
12
be necessary or advisable in connection with the resale of the
Notes by the Initial Purchasers.
(b) The Company and the Subsidiary Guarantors will
cooperate with the Initial Purchasers in arranging for the
qualification of the Notes for offering and sale under the
securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such
qualifications in effect for as long as may be necessary to
complete the resale of the Notes; provided, however, that in
connection therewith, the Company shall not be required to
qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject
itself to taxation in excess of a nominal dollar amount in any
such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchasers of the Notes or the
Private Exchange Notes, any event occurs or information
becomes known as a result of which the Final Memorandum as
then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or
if for any other reason it is necessary at any time to amend
or supplement the Final Memorandum to comply with applicable
law, the Company and the Subsidiary Guarantors will promptly
notify the Initial Purchasers thereof and will prepare, at the
expense of the Company and the Subsidiary Guarantors, an
amendment or supplement to the Final Memorandum that corrects
such statement or omission or effects such compliance.
(d) The Company and the Subsidiary Guarantors will, without
charge, provide to the Initial Purchasers and to counsel for
the Initial Purchasers as many copies of the Final Memorandum
or any amendment or supplement thereto as the Initial
Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale
of the Notes as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For so long as the Notes remain outstanding, the
Company and the Subsidiary Guarantors will furnish to the
Initial Purchasers copies of all reports and other
communications (financial or otherwise) furnished by the
Company to the Trustee or the holders of the Notes and, as
soon as available, copies of any reports or financial
statements furnished to or filed by the Com-
13
pany with the Commission or any national securities exchange
on which any class of securities of the Company may be listed.
(g) None of the Company, the Subsidiaries or any of their
Affiliates will sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any "security" (as
defined in the Act) that could be integrated with the sale of
the Notes in a manner that would require the registration
under the Act of the Notes.
(h) The Company and the Subsidiary Guarantors will not, and
will not permit any of the Subsidiaries to, engage in any form
of general solicitation or general advertising (as those terms
are used in Regulation D under the Act) in connection with the
offering of the Notes or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(i) For so long as any of the Notes remain outstanding, the
Company and the Subsidiary Guarantors will make available,
upon request, to any seller of such Notes the information
specified in Rule 144A(d)(4) under the Act, unless the Company
is then subject to Section 13 or 15(d) of the Exchange Act.
(j) The Company will use their best efforts to (i) permit
the Notes to be designated PORTAL securities in accordance
with the rules and regulations adopted by the NASD relating to
trading in the Private Offerings, Resales and Trading through
Automated Linkages market (the "Portal Market") and (ii)
permit the Notes to be eligible for clearance and settlement
through The Depository Trust Company.
6. Expenses. The Company and the Subsidiary Guarantors,
jointly and severally, agree to pay all of their costs and expenses incident to
the performance of their obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to (i)
the printing, word processing or other production of documents with respect to
the transactions contemplated hereby, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto and any "Blue Sky" memoranda, (ii) all arrangements relating to the
delivery to the Initial Purchasers of copies of the foregoing documents, (iii)
the fees and disbursements of counsel, accountants and any other experts or
advisors retained by the Company, (iv) preparation (including printing),
issuance and delivery to the Initial Purchasers of the Notes, (v) the
qualification of the Notes under state securities and "Blue Sky" laws, including
filing fees and fees and disbursements of counsel for the Initial Purchasers
relating thereto,
14
(vi) expenses in connection with any meetings with prospective investors in the
Notes, (vii) fees and expenses of the Trustee including fees and expenses of
counsel, (viii) all expenses and listing fees incurred in connection with the
application for quotation of the Notes on the Portal Market and (ix) any fees
charged by investment rating agencies for the rating of the Notes. In addition,
if the sale of the Notes provided for herein is not consummated because any
condition to the obligations of the Initial Purchasers set forth in Section 7
(other than subsection (b)) hereof is not satisfied, because this Agreement is
terminated or because of any failure, refusal or inability on the part of the
Company or any Subsidiary Guarantor to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder (other than
solely by reason of a default by the Initial Purchasers of their obligations
hereunder after all conditions hereunder have been satisfied in accordance
herewith), the Company and the Subsidiary Guarantors, jointly and severally,
agree to promptly reimburse the Initial Purchasers upon demand for all
out-of-pocket expenses (including fees, disbursements and charges of Cahill
Gordon & Reindel, counsel for the Initial Purchasers) that shall have been
incurred by the Initial Purchasers in connection with the proposed purchase and
sale of the Notes.
7. Conditions of the Initial Purchasers' Obligations. The
obligation of the Initial Purchasers to purchase and pay for the Notes shall, in
their sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and
addressed to the Initial Purchasers, from Morgan, Lewis &
Bockius LLP, counsel for the Company and the Subsidiary
Guarantors, in form and substance satisfactory to counsel for
the Initial Purchasers, to the effect that:
(i) The Company and each of the Subsidiaries is
validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or formation and
has all requisite corporate power and authority to own,
lease and operate its properties and to conduct its
business as described in the Final Memorandum. Neither the
Company nor any Subsidiary is registered or qualified to do
business in any jurisdiction other than its jurisdiction of
organization, the Company and the Subsidiaries having
informed such counsel that the nature of the properties and
the conduct of the business of each such entity do not
require registration or qualification to do business in any
jurisdiction other than each such entity's jurisdiction of
organization.
(ii) The Company has authorized, under its articles of
incorporation, (a) one million shares of preferred stock,
$.01 par value per
15
share and (b) 20 million shares of common stock, $.01 par
value per share; all of the outstanding shares of capital
stock of the Company and the Subsidiaries have been duly
authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any
preemptive or similar rights; to the knowledge of such
counsel, except as set forth in the Final Memorandum and
the Credit Agreement, all of the outstanding shares of
capital stock of the Subsidiaries are owned, directly or
indirectly, by the Company, free and clear of all perfected
security interests and, free and clear of all other liens,
encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Act and
the securities or "Blue Sky" laws of certain
jurisdictions).
(iii) To the knowledge of such counsel, except as set
forth in the Final Memorandum and except as issued pursuant
to the Company's stock option plans and the warrants
described in the Notes to Consolidated Financial Statements
included in the Final Memorandum, (A) no options, warrants
or other rights to purchase from the Company or the
Subsidiaries shares of capital stock or ownership interests
in the Company or the Subsidiaries are outstanding, (B) no
agreements or other obligations of the Company or the
Subsidiaries to issue, or other rights to cause the Company
or the Subsidiaries to convert, any obligation into, or
exchange any securities for, shares of capital stock or
ownership interests in the Company or the Subsidiaries are
outstanding and (C) no holder of securities of the Company
or the Subsidiaries is entitled to have such securities
registered under a registration statement filed by the
Company pursuant to the Registration Rights Agreement.
(iv) The Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver
and perform its obligations under the Indenture, the Notes,
the Exchange Notes and the Private Exchange Notes; the
Indenture is in sufficient form for qualification under the
TIA; the Indenture has been duly and validly authorized by
the Company and the Subsidiary Guarantors and, when duly
executed and delivered by the Company and the Subsidiary
Guarantors (assuming the due authorization, execution and
delivery thereof by the Trustee), will constitute the valid
and legally binding agreement of the Company and the
Subsidiary Guarantors, enforceable against the Company and
the Subsidiary Guarantors in accordance with its terms,
except that the enforcement thereof may be subject to (A)
bankruptcy,
16
insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors'
rights generally and (B) general principles of equity and
the discretion of the court before which any proceeding
therefor may be brought.
(v) The Notes are in the form contemplated by the
Indenture. The Notes have each been duly and validly
authorized by the Company and when duly executed and
delivered by the Company and paid for by the Initial
Purchasers in accordance with the terms of this Agreement
(assuming the due authorization, execution and delivery of
the Indenture by the Trustee and due authentication and
delivery of the Notes by the Trustee in accordance with the
Indenture), will constitute the valid and legally binding
obligations of the Company, entitled to the benefits of the
Indenture, and enforceable against the Company in
accordance with their terms, except that the enforcement
thereof may be subject to (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally
and (B) general principles of equity and the discretion of
the court before which any proceeding therefor may be
brought.
(vi) The Exchange Notes and the Private Exchange Notes
have been duly and validly authorized by the Company, and
when the Exchange Notes and the Private Exchange Notes have
been duly executed and delivered by the Company in
accordance with the terms of the Registration Rights
Agreement and the Indenture (assuming the due
authorization, execution and delivery of the Indenture by
the Trustee and due authentication and delivery of the
Exchange Notes and the Private Exchange Notes by the
Trustee in accordance with the Indenture), will constitute
the valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture, and enforceable
against the Company in accordance with their terms, except
that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any
proceeding therefor may be brought.
(vii) The Company and the Subsidiary Guarantors have
all requisite corporate power and authority to execute,
deliver and perform their respective obligations under the
Registration Rights Agreement; the Registration Rights
Agreement has been duly and validly author-
17
ized by the Company and the Subsidiary Guarantors and, when
duly executed and delivered by the Company and the
Subsidiary Guarantors (assuming due authorization,
execution and delivery thereof by the Initial Purchasers),
will constitute the valid and legally binding agreement of
the Company and the Subsidiary Guarantors, enforceable
against the Company and the Subsidiary Guarantors in
accordance with its terms, except that (A) the enforcement
thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be
brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal and state securities
laws and public policy considerations.
(viii) The Company and the Subsidiary Guarantors have
all requisite corporate power and authority to execute,
deliver and perform their respective obligations under this
Agreement and to consummate the transactions contemplated
hereby; this Agreement and the consummation by the Company
and the Subsidiary Guarantors of the transactions
contemplated hereby have been duly and validly authorized
by the Company and the Subsidiary Guarantors. This
Agreement has been duly executed and delivered by the
Company and the Subsidiary Guarantors.
(ix) The Indenture, the Notes, the Guarantees, the
Exchange Notes, the Registration Rights Agreement and the
Credit Agreement conform in all material respects to the
descriptions thereof contained in the Final Memorandum.
(x) To the knowledge of such counsel, no legal or
governmental proceedings are pending or threatened to which
any of the Company or the Subsidiaries is a party or to
which the property or assets of the Company or the
Subsidiaries are subject that, if determined adversely to
the Company or the Subsidiaries, would result, individually
or in the aggregate, in a Material Adverse Effect, or that
seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Notes to be
sold hereunder or except as described in the Final
Memorandum the consummation of the other transactions
described in the Final Memorandum under the caption "Use of
Proceeds."
18
(xi) None of the Company or the Subsidiaries is (i) in
violation of its certificate of incorporation or bylaws (or
similar organizational document), (ii) to the knowledge of
such counsel, in breach or violation of any statute,
judgment, decree, order, rule or regulation applicable to
it or its respective properties or assets, except for any
such breach or violation that would not, individually or in
the aggregate, have a Material Adverse Effect, or (iii) to
the knowledge of such counsel in breach or default under or
in violation of any of the terms or provisions of any
Contract known to such counsel, except for any such breach,
default, violation or event that would not, individually or
in the aggregate, have a Material Adverse Effect.
(xii) The execution and delivery of this Agreement,
the Indenture, the Registration Rights Agreement and the
Credit Agreement and the consummation of the transactions
contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Notes to the
Initial Purchasers) will not conflict with or constitute or
result in a breach or a default under (or an event that
with notice or passage of time or both would constitute a
default under) or violation of any of (i) the terms or
provisions of any contract described in the Final
Memorandum known to such counsel, except for any such
conflict, breach, violation, default or event that would
not, individually or in the aggregate, have a Material
Adverse Effect, (ii) the certificate of incorporation or
bylaws (or similar organizational document) of the Company
or any of the Subsidiaries or (iii) (assuming compliance
with all applicable state securities or "Blue Sky" laws and
assuming the accuracy of the representations and warranties
of the Initial Purchasers in Section 8 hereof) any statute,
judgment, decree, order, rule or regulation known to such
counsel to be applicable to the Company or the Subsidiaries
or any of their respective properties or assets, except for
any such conflict, breach or violation that would not,
individually or in the aggregate, have a Material Adverse
Effect.
(xiii) To the knowledge of such counsel, no consent,
approval, authorization or order of any governmental
authority is required for the issuance and sale by the
Company of the Notes to the Initial Purchasers or the other
transactions contemplated hereby, except such as may be
required under Blue Sky laws or such as may be required
under the gaming, racing, wagering and/or lottery laws of
Pennsylvania or West
19
Virginia, as to which such counsel need express no opinion,
and those that have previously been obtained.
(xiv) None of the Company or the Subsidiaries is, or
immediately after the sale of the Notes to be sold
hereunder and the application of the proceeds from such
sale (as described in the Final Memorandum under the
caption "Use of Proceeds") will be, an "investment company"
as such term is defined in the Investment Company Act of
1940, as amended.
(xv) No registration under the Act of the Notes is
required in connection with the sale of the Notes to the
Initial Purchasers as contemplated by this Agreement and
the Final Memorandum or in connection with the initial
resale of the Notes by the Initial Purchasers in accordance
with Section 8 of this Agreement, and prior to the
commencement of the Exchange Offer (as defined in the
Registration Rights Agreement) or the effectiveness of the
Shelf Registration Statement (as defined in the
Registration Rights Agreement), the Indenture is not
required to be qualified under the TIA, in each case
assuming (i) that the purchasers who buy such Notes in the
initial resale thereof are qualified institutional buyers
as defined in Rule 144A promulgated under the Act ("QIBs")
or are purchasing the Notes in offshore transactions in
reliance on Regulation S, (ii) the accuracy of the Initial
Purchasers' representations in Section 8 and those of the
Company, the Subsidiaries and their respective Affiliates
contained in this Agreement regarding the absence of a
general solicitation in connection with the sale of such
Notes to the Initial Purchasers and the initial resale
thereof and (iii) the due performance by the Initial
Purchasers of the agreements set forth in Section 8 hereof.
(xvi) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance,
execution or delivery of the Notes will violate Regulation
G, T, U or X of the Board of Governors of the Federal
Reserve System.
(xvii) The Credit Agreement has been duly authorized,
executed and delivered by the Company and the guarantors
thereunder.
In rendering such opinion, such counsel may
(A) rely as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company
and public officials and (B) state that they express no
opinion
20
with respect to the laws of any jurisdiction other than the
laws of the Commonwealth of Pennsylvania, the State of New
York, the General Corporation Law of the State of Delaware and
the federal laws of the United States.
At the time the foregoing opinion is
delivered, Morgan, Lewis & Bockius LLP shall additionally
state that it has participated in conferences with officers
and other representatives of the Company and the Subsidiary
Guarantors, representatives of the independent public
accountants for the Company, representatives of the Initial
Purchasers and counsel for the Initial Purchasers, at which
conferences the contents of the Final Memorandum and related
matters were discussed, and, although it has not independently
verified and is not passing upon and assumes no responsibility
for the accuracy, completeness or fairness of the statements
contained in the Final Memorandum (except to the extent
specified in subsection 7(a)(ix)), no facts have come to its
attention that lead it to believe that the Final Memorandum
excluding Gaming, on the date thereof or at the Closing Date,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not
misleading (it being understood that such firm need express no
opinion with respect to the financial statements and related
notes thereto and the other financial, statistical and
accounting data included in the Final Memorandum). The opinion
of Morgan, Lewis & Bockius LLP described in this Section shall
be rendered to the Initial Purchasers at the request of the
Company and shall so state therein.
References to the Final Memorandum in this subsection
(a) shall include any amendment or supplement thereto prepared
in accordance with the provisions of this Agreement at the
Closing Date.
(b) On the Closing Date, the Initial Purchasers shall
have received the opinion, in form and substance satisfactory
to the Initial Purchasers, dated as of the Closing Date and
addressed to the Initial Purchasers, of Cahill Gordon &
Reindel, counsel for the Initial Purchasers, with respect to
certain legal matters relating to this Agreement and such
other related matters as the Initial Purchasers may reasonably
require. In rendering such opinion, Cahill Gordon & Reindel
shall have received and may rely upon such certificates and
other documents and information as it may reasonably request
to pass upon such matters.
(c) On the Closing Date, the Initial Purchasers shall
have received the favorable opinion, dated as of the Closing
Date and addressed to the Initial
21
Purchasers, in form and substance satisfactory to the Initial
Purchasers and counsel for the Initial Purchasers, of Mesirov
Gelman Jaffe Cramer & Jamieson, special counsel for the
Company to the effect that:
(i) Mountainview Thoroughbred Racing Association
("Mountainview") and Pennsylvania National Turf
Club ("PNTC") each holds a valid and existing
license (the "Thoroughbred Licenses") under the
Pennsylvania Industry Race Horse Reform Act (the
"Race Horse Act") to conduct thoroughbred horse
racing with pari-mutuel wagering in the manner
described in the Offering Memorandum; Pocono
Downs, Inc. holds a valid and existing license
(the "Harness License" and, together with the
Thoroughbred Licenses, the "Licenses") under the
Race Horse Act to conduct harness racing with
pari-mutuel wagering in the manner described in
the Offering Memorandum; the Horse Racing
Commission and the Harness Commission approved,
respectively, five and two non-primary locations
in the Commonwealth of Pennsylvania at which the
Company (or a Subsidiary thereof) is authorized
to conduct pari-mutuel wagering in the manner
described in the Offering Memorandum, and to
such counsel's knowledge the approvals are in
full force and effect; the direct and indirect
ownership by the Company, as currently owned, of
the capital stock of the entities holding the
Licenses does not violate the Race Horse Act or
other applicable Pennsylvania law; to such
counsel's knowledge, none of the gaming
authorities in Pennsylvania is considering
modifying, suspending, revoking or not granting
renewal of any of the Licenses, and, to such
counsel's knowledge, neither of such gaming
authorities nor any other governmental agency is
investigating the Company or any of its
Subsidiaries or related parties or any director
or executive officer of the Company or any of
its Subsidiaries other than in ordinary course
administrative reviews; to the knowledge of such
counsel, no change in any laws or regulations is
pending which could reasonably be expected to be
adopted and if adopted, could reasonably be
expected to materially limit the operations
currently conducted by the Company or which,
individually or in the aggregate with all such
changes, would have a Material Adverse Effect;
22
(ii) the Initial Purchasers are not required to be
licensed or approved by the Harness Commission
or the Horse Racing Commission as a result of
the execution of this Agreement or the
consummation of the transactions contemplated
hereby;
(iii) to the knowledge of such counsel, there are no
legal or governmental proceedings pending or
threatened against the Company or any of the
Subsidiaries or to which the Company or any of
the Subsidiaries, or any of their respective
properties, is subject;
(iv) The statements in the Offering Memorandum under
the headings, "Offering Memorandum Summary,"
"Risk Factors - Regulation and Taxation,"
"Business - Racing and Pari-Mutuel Operations,"
"Business - Purses; Agreements with Horsemen,"
and "Business - Regulation and Taxation" which
purport to summarize certain provisions of the
requirements under the Race Horse Act and any
other laws or regulations of the Commonwealth of
Pennsylvania, or certain agreements or legal
proceedings to which the Company or any of the
Subsidiaries is a party, fairly summarize in all
material respects the matters therein described;
and the conduct of the business of the Company
and the Subsidiaries is not subject to any
material racing, wagering or gaming law or
regulation that is not described in the Offering
Memorandum under "Business - Regulation and
Taxation";
(v) such counsel has no knowledge that on the date
hereof or on the Closing Date the Final
Memorandum contained an untrue statement of a
material fact regarding Pennsylvania gaming or
other laws or regulations or omitted to state
any material fact concerning such laws necessary
to make the statements therein not misleading or
in the light of the circumstances under which
they were made, not misleading;
(vi) no consent, approval, authorization or order of,
or registration or filing with, any court,
regulatory body, administrative agency or other
governmental body, agency or official under the
gaming, racing, wagering and/or lottery laws of
Pennsylvania is required for the issuance,
offer, sale or delivery of the Notes, the
execution, delivery or performance of this
Agreement by the Com-
23
pany and the Subsidiary Guarantors or the
consummation of the transactions contemplated
hereby; and
(vii) neither the issue and sale of the Notes nor the
consummation of any of the other transactions
contemplated hereby will result in a breach of
or constitute a default under (A) the
certificate of incorporation or by laws (or
similar organizational document) of the Company
of any of the Subsidiaries or (B) the terms or
provisions of any Contract known to such
counsel, except for any such conflict, breach,
violation, default or event that would not,
individually or in the aggregate, have a
Material Adverse Effect, to which the Company or
any of the Subsidiaries is a party or by which
any of them or any of their respective
properties is bound or (C) any judgment, order
or decree of any court, governmental, regulatory
or administrative body or agency or arbitrator
having jurisdiction over the Company or any
Subsidiary, which judgment, order or decree is
known to such counsel to be applicable to the
Company or any Subsidiary.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any
jurisdiction other than the laws of the Commonwealth of
Pennsylvania, the General Corporation Law of the State of
Delaware or the federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon
the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel
for the Initial Purchasers and (B) as to matters of fact,
to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
References to the Offering Memorandum in this paragraph (c)
include any supplements thereto at the Closing Date.
(d) On the Closing Date, the Initial Purchasers shall
have received the favorable opinion, dated as of the Closing Date and addressed
to the Initial Purchasers, in form and substance satisfactory to the Initial
Purchasers and counsel for the Initial Purchasers, of Hamb & Pollenbarger,
special counsel for the Company to the effect that:
(i) each of Penn National Gaming of West Virginia,
Inc. ("PNGWV") and PNGI Charles Town (together,
the "West Virginia Subsidiaries") is a
corporation duly organized, validly existing
and in good standing in the jurisdiction of its
incorporation, with full corporate power and
authority to own, lease and operate its
properties and to conduct its business as
described in
24
the Offering Memorandum, and is duly registered
and qualified to conduct its business and is in
good standing in each jurisdiction or place
where the nature of its properties or the
conduct of its business requires such
registration or qualification, except where the
failure so to register or qualify or be in good
standing does not have a Material Adverse
Effect; (ii) all the outstanding shares of
capital stock of each of the West Virginia
Subsidiaries have been duly authorized and
validly issued, fully paid and nonassessable,
and are wholly owned by the Company directly or
indirectly through one of the other
Subsidiaries, free and clear of any perfected
security interest and, to the knowledge of such
counsel, after due inquiry, free and clear of
any other lien, adverse claim, security
interest, equity or other encumbrance, except
in each case as described in the Offering
Memorandum; and there are no (A) existing
preemptive rights under any West Virginia
Subsidiary's articles of incorporation or code
of regulations, or other organizational
documents, or applicable law or (B) similar
rights that entitle or will entitle any person
to acquire any shares of any West Virginia
Subsidiary;
(iii) PNGI Charles Town holds a valid and existing
license (the "West Virginia License") under the
West Virginia Racing Act to conduct
thoroughbred horse racing with pari-mutuel
wagering in the manner described in the
Offering Memorandum; PNGI Charles Town also
holds a license (the "Lottery License") under
the West Virginia Racetrack Video Lottery Act
to operate video gaming machines in the manner
described in the Offering Memorandum; such
counsel has no reason to believe that any of
the gaming authorities in West Virginia is
considering modifying, suspending, revoking or
not granting renewal of the West Virginia
License or revoking the Lottery License to such
counsel's knowledge, neither of such gaming
authorities nor any other governmental agency
is investigating the Company or any of its
Subsidiaries or related parties or any director
or executive officer of the Company or any of
its Subsidiaries other than in the normal
course of determining whether or not to issue
the Lottery License; and, except as disclosed
in the Offering Memorandum, to the best
knowledge of such counsel, no change in
25
any laws or regulations is pending which could
reasonably be expected to be adopted and, if
adopted, could reasonably be expected to have,
individually or in the aggregate with all such
changes, a Material Adverse Effect;
(iv) PNGWV has all requisite corporate power and
authority to execute, deliver and perform its
obligations under this Agreement, the
Registration Rights Agreement, the Indenture
and the Guarantees;
(v) the Initial Purchasers are not required to be
licensed or approved by the West Virginia
Racing Commission or the Lottery Commission as
a result of the execution of this Agreement or
the consummation of the transactions
contemplated hereby;
(vi) to the knowledge of such counsel, there are no
legal or governmental proceedings pending or
threatened against the Company or any of the
West Virginia Subsidiaries or to which the
Company or any of the West Virginia
Subsidiaries, or any of their respective
properties, is subject, that are required to be
described in the Offering Memorandum but are
not described as required; there are no
statutes or regulations of the State of West
Virginia or agreements, contracts, indentures,
leases or other instruments to which any of the
West Virginia Subsidiaries is a party that are
required to be described in the Offering
Memorandum that are not described or filed as
required by the Act; the statements in the
Offering Memorandum under the headings,
"Offering Memorandum Summary," "Risk Factors -
Regulation and Taxation," "Business - Gaming
Machine Operating at Charles Town Entertainment
Complex," "Business - Charles Town Joint
Venture; Operating Terms," "Business - Racing
and Wagering Operations" and "Business -
Regulation and Taxation", insofar as such
statements purport to summarize certain
provisions of the requirements under the West
Virginia Racing Act, the West Virginia
Racetrack Video Lottery Act and any other laws
or regulation of the State of West Virginia, or
certain agreements or legal proceedings to
which the Company or any of the West Virginia
Subsidiaries is a party, fairly summarize the
matters therein described; and the conduct of
the business of the Company and the
Subsidiaries is not subject to any material
racing, wagering or gaming law or regulator of
the
26
State of West Virginia that is not described in
the Offering Memorandum under "Business
Regulation and Taxation";
(vii) no consent, approval, authorization or order
of, or registration or filing with, any court,
regulatory body, administrative agency or other
governmental body, agency or official of the
State of West Virginia under the gaming,
racing, wagering and/or lottery laws of the
State of West Virginia (including the West
Virginia Racing Act or the West Virginia
Racetrack Video Lottery Act) is required for
the issuance, offer, sale or delivery of the
Notes, the execution, delivery or performance
of this Agreement by the Company and Penn
National Gaming of West Virginia, Inc. or the
consummation of the transactions contemplated
hereby, except such approvals (specified in
such opinion) as have been obtained; and
(viii) none of this issuance, offer, sale or delivery
of the Notes, the execution, delivery or
performance of this Agreement by the Company or
the consummation of the other transactions
contemplated hereby (A) conflicts or will
conflict with or constitutes or will constitute
a breach of, or a default under, the articles
of incorporation or code of regulations, or
other organizational documents, of the West
Virginia Subsidiaries or (B) violates or will
violate any existing statute, law, regulation,
Permit or filing or judgment, injunction, order
or decree in each case (1) known to such
counsel, (2) applicable to the Company or any
of the West Virginia Subsidiaries or any of
their respective properties and (3) pertaining
to the conduct of racing, wagering, gaming or
video lottery operations in the State of West
Virginia or (C) will conflict with or
constitute or result in a breach or a default
under (or an event that with notice or passage
of time or both would constitute a default
under) or violation of any of the terms or
provisions of any Contract known to such
counsel, except for any such conflict, breach,
violation, default or event that would not,
individually or in the aggregate, have a
Material Adverse Effect.
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws of any
jurisdiction other than the State of West Virginia or the
United States, to the extent they deem proper and specified in
such opinion, upon the opinion of other counsel of good
standing whom they
27
believe to be reliable and who are satisfactory to counsel for
the Underwriters and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of
the Company and public officials. References to the Offering
Memorandum in this paragraph (d) include any supplements
thereto at the Closing Date.
(e) The Initial Purchasers shall have received from
the Independent Accountant a "comfort letter" dated the date
hereof and the Closing Date, in form and substance
satisfactory to counsel for the Initial Purchasers.
(f) The representations and warranties of the Company
and the Subsidiary Guarantors contained in this Agreement
shall be true and correct on and as of the date hereof and on
and as of the Closing Date as if made on and as of the Closing
Date; the statements of the Company's and each Subsidiary
Guarantor's officers made pursuant to any certificate
delivered in accordance with the provisions hereof shall be
true and correct on and as of the date made and on and as of
the Closing Date; the Company and each Subsidiary Guarantor
shall have performed all covenants and agreements and
satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date; and,
except as described in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof),
subsequent to the date of the most recent financial statements
in such Final Memorandum, there shall have been no event or
development that, individually or in the aggregate, has or
would be reasonably likely to have a Material Adverse Effect.
(g) The sale of the Notes hereunder shall not be
enjoined (temporarily or permanently) on the Closing Date.
(h) The Initial Purchasers shall have received a
certificate of the Company and the Subsidiary Guarantors,
dated the Closing Date, signed on behalf of the Company and
each Subsidiary Guarantor by its Chairman of the Board,
President or any Senior Vice President and the Chief Financial
Officer, to the effect that:
(i) The representations and warranties of the
Company and the Subsidiary Guarantors contained in
this Agreement are true and correct in all material
respects as of the date hereof and as of the Closing
Date, and the Company and the Subsidiary Guarantors
have performed all covenants and agreements and
satisfied all conditions on their re-
28
spective parts to be performed or satisfied hereunder
at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof
or since the date of the most recent financial
statements in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date
hereof), no event or events have occurred, no
information has become known nor does any condition
exist that, individually or in the aggregate, would
have a Material Adverse Effect; and
(iii) The sale of the Notes hereunder has not
been enjoined (temporarily or permanently).
(i) The Credit Agreement shall have been executed and
delivered by the parties thereto, shall be in full force and
effect and in form and substance satisfactory to the Initial
Purchasers.
(j) On the Closing Date, the Initial Purchasers shall
have received the Registration Rights Agreement executed by
the Company and the Subsidiary Guarantors and such agreement
shall be in full force and effect at all times from and after
the Closing Date.
On or before the Closing Date, the Initial Purchasers
and counsel for the Initial Purchasers shall have received such further
documents, opinions, certificates, letters and schedules or instruments relating
to the business, corporate, legal and financial affairs of the Company and the
Subsidiaries as they shall have heretofore reasonably requested from the
Company.
All such documents, opinions, certificates, letters,
schedules or instruments delivered pursuant to this Agreement will comply with
the provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchasers and counsel for the Initial Purchasers. The
Company shall furnish to the Initial Purchasers such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchasers shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. Each of the
Initial Purchasers represents and warrants that it is a QIB. Each of the Initial
Purchasers agrees that (i) it has not and will not solicit offers for, or offer
or sell, the Notes by any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Act; and
(ii) it has and will solicit offers for the Notes only from, and will offer the
Notes only to, in the case
29
of offers inside the United States, persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a QIB to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A; and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (B), in purchasing such Notes such
persons are deemed to have represented and agreed as provided under the caption
"Transfer Restrictions" contained in the Final Memorandum.
9. Indemnification and Contribution. (a) Each of the Company
and the Subsidiary Guarantors agrees to indemnify and hold harmless the Initial
Purchasers, and each person, if any, who controls any Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
any losses, claims, damages or liabilities to which any Initial Purchaser or
such controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as any such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of
any material fact contained in any Memorandum or any amendment
or supplement thereto or any application or other document; or
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto, a material
fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses incurred by the Initial
Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company and the Subsidiary Guarantors will not be liable (i) in any such case to
the extent that any such loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any Memorandum or any amendment or supplement thereto
in reliance upon and in conformity with written information concerning the
Initial Purchasers furnished to the Company by the Initial Purchasers
specifically for use therein or (ii) with respect to the Preliminary Memorandum,
to the extent that any such loss, claim, damage or liability arises solely from
the fact that the Initial Purchasers sold Notes to a person to whom there was
not sent or given a copy of the Final Memorandum (as amended or supplemented) at
or prior to the written confirmation of such
30
sale if the Company shall have previously furnished copies thereof to the
Initial Purchasers in accordance with Section 5(d) hereof and the Final
Memorandum (as amended or supplemented) would have corrected any such untrue
statement or omission. This indemnity agreement will be in addition to any
liability that the Company and the Subsidiary Guarantors may otherwise have to
the indemnified parties. The Company and the Subsidiary Guarantors shall not be
liable under this Section 9 for any settlement of any claim or action effected
without its prior written consent, which shall not be unreasonably withheld.
(b) The Initial Purchasers agree to indemnify and hold
harmless the Company and the Subsidiary Guarantors, their directors, officers
and each person, if any, who controls the Company and the Subsidiary Guarantors
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which the Company, the
Subsidiary Guarantors or any such director, officer or controlling person may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in any Memorandum or any amendment or
supplement thereto, 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 reliance
upon and in conformity with written information concerning such Initial
Purchaser, furnished to the Company by the Initial Purchasers specifically for
use therein; and subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses incurred by the
Company, the Subsidiary Guarantors or any such director, officer or controlling
person in connection with investigating or defending against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action in respect thereof. This indemnity agreement will be in addition to
any liability that the Initial Purchasers may otherwise have to the indemnified
parties. The Initial Purchasers shall not be liable under this Section 9 for any
settlement of any claim or action effected without their consent, which shall
not be unreasonably withheld. The Company shall not, without the prior written
consent of the Initial Purchasers, effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Initial Purchaser is or
could have been a party, or indemnity could have been sought hereunder by any
Initial Purchaser, unless such settlement (A) includes an unconditional written
release of the Initial Purchasers, in form and substance reasonably satisfactory
to the Initial Purchasers, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of any Initial
Purchaser.
31
(c) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action for which such
indemnified party is entitled to indemnification under this Section 9, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party of the
commencement thereof in writing; but the omission to so notify the indemnifying
party (i) will not relieve the indemnifying party from any liability under
paragraph (a) or (b) above unless and to the extent such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party other than the indemnification obligation provided in
paragraphs (a) and (b) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that if (i) the use of counsel chosen
by the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, or
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses, other than reasonable costs of
investigation, 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 immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Initial Purchasers
in the case of paragraph (a) of this Section 9 or the Company in the case of
paragraph (b) of this Section 9, representing the indemnified parties under such
paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After
32
such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect such
a settlement without such consent.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Notes or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company and
the Subsidiary Guarantors on the one hand and any Initial Purchaser on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (before deducting expenses) received by the Company bear to the total
discounts and commissions received by such Initial Purchaser. The relative fault
of the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company and the Subsidiary Guarantors on the one hand, or such Initial Purchaser
on the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission or alleged
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company, the Subsidiary Guarantors and the Initial Purchasers
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under this
Agreement, less the aggregate amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled
33
to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchasers, and each director of the Company and the Subsidiary
Guarantors, each officer of the Company and the Subsidiary Guarantors and each
person, if any, who controls the Company and the Subsidiary Guarantors within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Company and the Subsidiary
Guarantors.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company and the Subsidiary Guarantors, their officers and the Initial Purchasers
set forth in this Agreement or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company and the Subsidiary Guarantors,
any of their officers or directors, the Initial Purchasers or any controlling
person referred to in Section 9 hereof and (ii) delivery of and payment for the
Notes. The respective agreements, covenants, indemnities and other statements
set forth in Sections 6, 9 and 15 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchasers by notice to the Company given prior
to the Closing Date in the event that the Company or any Subsidiary Guarantor
shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on their part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have
sustained any loss or interference with respect to its
businesses or properties from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or
from any strike, labor dispute, slow down or work stoppage or
any legal or governmental proceeding, which loss or
interference, in the sole judgment of the Initial Purchasers,
has had or has a Material Adverse Effect, or there shall have
been, in the sole judgment of the Initial Purchasers, any
event or development that, individually or in the aggregate,
has or could be reasonably likely to have a Material Adverse
Effect (including without limitation a change in control of
the Company or the Subsidiaries), except in each case as
described in the Final Memorandum (exclusive of any amendment
or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock
Exchange or the Nasdaq
34
National Market shall have been suspended or minimum or
maximum prices shall have been established on any such
exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign
power, or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or
any other national or international calamity or emergency or
(C) any material change in the financial markets of the United
States which, in the case of (A),(B) or (C) above and in the
sole judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the offering or
the delivery of the Notes as contemplated by the Final
Memorandum; or
(v) any securities of the Company shall have been
downgraded or placed on any "watch list" for possible
downgrading by any nationally recognized statistical rating
organization.
(b) Termination of this Agreement pursuant to this Section
11 shall be without liability of any party to any other party except as provided
in Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The
statements set forth in the last paragraph on the front cover page, and the
second and third sentences of the third paragraph and paragraph seven under the
heading "Private Placement" in the Final Memorandum (to the extent such
statements relate to the Initial Purchasers) constitute the only information
furnished by the Initial Purchasers to the Company for the purposes of Sections
2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchasers, shall be mailed or delivered to BT Alex.
Brown Incorporated, 130 Liberty Street, New York, New York 10006, Attention:
Corporate Finance Department; if sent to the Company or any Subsidiary
Guarantors, shall be mailed or delivered to the Company at Penn National Gaming,
Inc., 825 Berkshire Boulevard, Suite 200, Wyomissing, PA 19610, Attention:
Chairman; with a copy to Morgan, Lewis & Bockius LLP, 2000 One Logan Square,
Philadelphia, PA 19103 Attention: Brian Lynch.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in
35
the mail, postage prepaid, if mailed; and one business day after being timely
delivered to a next-day courier.
14. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers, the Company, the Subsidiary
Guarantors and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company and the
Subsidiary Guarantors contained in Section 9 of this Agreement shall also be for
the benefit of any person or persons who control the Initial Purchasers within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii)
the indemnities of the Initial Purchasers contained in Section 9 of this
Agreement shall also be for the benefit of the directors of the Company and the
Subsidiary Guarantors, their officers and any person or persons who control the
Company and the Subsidiary Guarantors within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act. No purchaser of Notes from the Initial
Purchasers will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
36
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement by and among
the Company, the Subsidiary Guarantors and the Initial Purchasers.
Very truly yours,
PENN NATIONAL GAMING, INC.
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Chief Financial Officer
THE PLAINS COMPANY, as
Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Assistant Secretary
MOUNTAINVIEW THOROUGHBRED
RACING ASSOCIATION,
as Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Chief Financial Officer
PENNSYLVANIA NATIONAL TURF
CLUB, INC., as Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
PENN NATIONAL SPEEDWAY, INC., as
Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
37
PENN NATIONAL HOLDING COMPANY,
as Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
PENN NATIONAL GAMING OF WEST
VIRGINIA, INC., as Subsidiary
Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
STERLING AVIATION INC., as
Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
POCONO DOWNS, INC., as
Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Assistant Secretary
NORTHEAST CONCESSIONS, INC.,
as Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Assistant Secretary
38
THE DOWNS OFF-TRACK WAGERING, INC., as
Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
THE DOWNS RACING, INC., as
Subsidiary Guarantor
By: \s\ Joseph A. Lashinger, Jr.
-------------------------------
Name: Joseph A. Lashinger, Jr.
Title: President and Treasurer
PENN NATIONAL GAMING OF INDIANA, INC., as
Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
39
PNGI POCONO, INC., as
Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
TENNESSEE DOWNS, INC., as
Subsidiary Guarantor
By: /s/ Robert S. Ippolito
-------------------------------
Name: Robert S. Ippolito
Title: Treasurer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BT ALEX. BROWN INCORPORATED
JEFFERIES & COMPANY, INC.
By: BT ALEX. BROWN INCORPORATED
By: \s\ Robert Lipps
---------------------------
Name: Robert Lipps
Title: Vice President
40
SCHEDULE A
Subsidiary Guarantors
The Plains Company
Mountainview Thoroughbred Racing Association
Pennsylvania National Turf Club, Inc.
Penn National Speedway, Inc.
Penn National Holding Company
Penn National Gaming of West Virginia, Inc.
Sterling Aviation Inc.
Pocono Downs, Inc.
Northeast Concessions, Inc.
The Downs Off-Track Wagering, Inc.
The Downs Racing, Inc.
Penn National Gaming of Indiana, Inc.
PNGI Pocono, Inc.
Tennessee Downs, Inc.
41
SCHEDULE B
Subsidiaries
Jurisdiction of Incorporation/
Name Formation
- ---- ---------
The Plains Company Pennsylvania
Mountainview Thoroughbred Racing
Association Pennsylvania
Pennsylvania National Turf
Club, Inc. Pennsylvania
Penn National Speedway, Inc. Pennsyvlania
Penn National Holding Company Delaware
Penn National Gaming of
West Virginia, Inc. West Virginia
Sterling Aviation Inc. Delaware
PNGI Charles Town Gaming LLC West Virginia
Pocono Downs, Inc. Pennsylvania
Northeast Concessions, Inc. Pennsylvania
The Downs Off-Track Wagering, Inc. Pennsylvania
The Downs Racing, Inc. Pennsylvania
Penn National Gaming of Indiana, Inc. Delaware
PNGI Pocono, Inc. Delaware
Tennessee Downs, Inc. Tennessee
Backside, Inc. Pennsylvania
Audio Video Concepts Pennsylvania
Mill Creek Land, Inc. Pennsylvania
42
SCHEDULE 1
Principal
Initial Purchaser Amount of Notes
- ----------------- ---------------
BT Alex. Brown Incorporated............................. $56,000,000
Jeffries & Company, Inc................................. 24,000,000
-----------
Total................................... $80,000,000
EXHIBIT 10.67
AGREEMENT
between
PENNSYLVANIA NATIONAL TURF CLUB, INC.
and
MOUNTAINVIEW RACING ASSOCIATION
and
SPORTS ARENA EMPLOYEES' UNION LOCAL NO. 137
October 3, 1996
to
October 3, 1999
THIS AGREEMENT made this 3rd day of October, 1996 by and between
PENNSYLVANIA NATIONAL TURF CLUB, INC., and MOUNTAINVIEW RACING ASSOCIATION,
hereinafter referred to as the "Employer" and SPORTS ARENA EMPLOYEES' UNION
LOCAL NO. 137, affiliated with the Laborers' International Union of North
America, AFL-CIO, hereinafter referred to as the "Union",
WITNESSETH:
WHEREAS, it is the intent and purpose of the parties hereto to improve
efficiency and promote continued harmony between the Employer and its employees,
to establish a basic understanding concerning hours of work, rates of pay, and
conditions of employment for said employees, and to establish a peaceful and
cooperative method for settling disputes which may arise concerning the
application of their understanding.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound, the parties do hereby agree as follows:
ARTICLE I
Union Recognition
1. The Employer recognizes the Union as the sole and exclusive bargaining
agent for all of the Mutuel Department, TeleBet Department and Admissions
Department employees at the Employer's racetrack in Grantville, Pennsylvania,
excluding the following:
1
TeleBet Department - TeleBet Supervisors and Assistant Supervisors.
Mutual Department - Director of Mutuels, Assistant Director, Mutuel
Department Auditor and Head Cashier.
Admissions Department - Director of Admission, Assistant Director,
Auditor-Cashier, Department Secretary, and Turf Club Attendant.
2. In the event the Employer operates establishments for the purposes of
betting off the premises of its racetrack in Grantville, Pennsylvania, the Union
shall be recognized as the collective bargaining agent for the employees
employed in the same classifications as in this Agreement. Upon such
recognition, the parties shall then negotiate the applicable wages and benefits.
In addition, the Employer agrees to give first consideration to any employee
with more than three (3) years seniority who wishes to transfer to an OTB
facility operated by the Employer.
ARTICLE II
Union Security
1. It shall be a condition of employment that all employees of the
Employer covered by this Agreement, who are members of the Union in good
standing and those who are not members of the Union as of the effective date of
this Agreement, shall within thirty-one (31) days from the date hereof become
and remain members in good standing in the Union. It shall also be a condition
of employment that all employees covered by this Agreement and hired on or after
its effective date shall on the thirty-first (31st) day following the beginning
of such employment become and remain members in good standing in the Union.
2
2. Commencement of employment shall mean the first day on which an
employee begins working for the Employer, whether as a regular or an extra.
Employees who have been employed in a previous racing meeting with the Employer
shall not be considered new employees when returning to work in a subsequent
racing meeting, provided such employee has worked in the preceding racing
meeting of the Employer.
ARTICLE III
Check-Off
1. During each racing meet, the Employer shall deduct from the pay of the
employees represented by the Union any established Union dues or assessments
and/or payments to the Local 137 Credit Union and turn such over to the
authorized agent of the Union, by check, after first having received a copy of a
separate signed check-off authorization from executed by an employee from the
union as to dues or the Credit Union as the case may be.
2. The amount to be deducted shall be shown on a list to be furnished by
the Employer to the Secretary-Treasurer of the Union promptly after deducting
any Union dues, assessments and initiation fees deducted from the earnings of
the employees.
3. The check-off authorization shall be irrevocable for a period of one
(1) year of the termination date of the contract then in effect, whichever
occurs sooner. In the event the contract is automatically renewed, it shall be
for a further period of one (1) year or the termination date of the contract
then in effect, whichever occurs sooner, provided the employee shall have the
right to revoke the check-off authorization within fifteen (15) days of any
irrevocable period by giving written notice to the Employer and the Union within
such fifteen (15) day period. The form of the authorization shall be in
accordance with the existing state labor laws.
3
4. The Union hereby agrees to indemnify and save the Employer harmless
against any and all suits or other forms of liability which shall arise upon or
by reason of action taken by the Employer for the purpose of complying with this
Article.
ARTICLE IV
Grievances
1. If a dispute shall arise between the Employer and the Union or between
the Employer and any employee with respect to the interpretation, application or
claim to violation of any of the terms of this Agreement, an earnest effort
shall be made to settle such difference immediately in the following manner.
STEP 1. Any employee having a grievance shall present it, in the first
instance, in writing within five (5) calendar days of its occurrence to his
steward, who shall refer the grievance to the Business Manager of the Union and
Employer within the next following two days. Grievances may be initiated by the
Union, if it so desires. The Business Manager shall take up the grievance with
the Department Manager.
STEP 2. If a satisfactory settlement cannot be reached in Step 1 above,
within two days after it first comes to the attention of the Department Manager,
who shall submit a written report to the Business Manger within the same two-day
period, the Business Manager shall take up the unsettled grievance with the
designated representative of management who has final authority to dispose of
grievances and who shall, within five (5) days after presentation to him of the
grievance, submit an answer to the Union's representative. In the event that the
designated representative of management fails to give his answer within the
aforesaid five (5) day period or if the Union is not satisfied with the answer
that is given, the Union shall have the right to submit said grievance to
arbitration in accordance with the procedure set forth herein.
4
2. The Union may, after expiration of the five (5) day period or after the
receipt of the Employer's answer, whichever is later, but not later than five
(5) days thereafter, give the Employer notice of its desire to have the
grievance submitted to impartial arbitration. The Union and the Employer shall
attempt to agree upon the appointment of an impartial arbitrator. If the parties
are unable to agree within five (5) days after the notification from the Union
or Employer of its desire to arbitrate, the parties shall request that the
American Arbitration Association submit to each of them a list of arbitrators
from its panel of impartial arbitrators.
3. The decision of the arbitrator shall be final and binding on all
parties and he shall have no authority to add to, detract from, or in any way
alter the terms of this Agreement, or change their terms or conditions of this
contract or the wage rates therein established, or to decide issues not subject
to arbitration under the terms of this Agreement or disputes which have not
arisen during the life of this contract, of matters not presented by the Union
as a party; nor shall any dispute concerning contracting out of work be subject
to arbitration. This arbitration article shall not deprive the Employer or the
Union of any remedy or action by either of them for violation of Article XII of
this Agreement by appropriate action in a court of law. In the event such action
is instituted, the arbitrator shall have no jurisdiction. The expenses incident
to the services of any arbitrator shall be paid equally by the Employer and the
Union.
4. A decision reached at any stage of the proceedings above shall be
binding upon both parties hereto and shall not be subject to reopening by either
party except by mutual agreement.
5
ARTICLE V
Seniority
1. The Employer and the Union accept the principle of seniority. The
seniority referred to in this Agreement is departmental seniority except where
otherwise stated and employees shall accrue seniority only in the department in
which they are employed. Seniority shall be defined as an employee's length of
continuous service from the year of hire with the Employer in the Mutuel
Department or Admissions Department. Continuous service shall be calculated from
the date of the first employment with the Employer, or re-employment following a
break in continuous service, without deduction of any time lost which does not
constitute a break in continuous service. Effective with this Agreement, no more
than 90% of the total racing days may be accrued for seniority purposes in any
year. Seniority shall govern layoffs, recalls and promotions when, in the
opinion of the Employer, the employee is qualified to perform the job. For
purposes of seniority only, all racing associations conducting racing meetings
at the Grantville, Pennsylvania track, shall be treated as a single employer.
2. Two seniority lists shall be maintained for each department, one for
all Regular employees, and a separate one for all part-time and Extra employees.
Employees who have not worked at least 75% of the maximum days (90%) that may be
accrued for seniority in the previous calendar year shall be listed on the
part-time or extra employees' seniority list for the next calendar year,
provided, however, that any regular employee who is absent more than 25% of said
days due to bona fide illness or accident which makes him unavailable for work
or who has been granted an official leave of absence by the Employer in
accordance with this Agreement shall retain the years and days of seniority
service credits that he had accrued prior to his leave.
6
Employees losing their status as regular employees shall be placed on the
extra and part-time employees' seniority list, provided they have worked for
each employer at least 15% of the days raced in the last previous calendar year
unless such absence is due to illness, accident, official leave of absence or
other good cause. Such employee shall, if he is assigned to regular employment
and works in such regular assignment for at least 75% of the maximum days (90%)
that may be accrued for seniority in the calendar year following his loss of
regular employment seniority status, have his name placed on the bottom of the
regular employees' seniority list at the beginning of the calendar year
following the year in which said employee worked the aforesaid 75% or more.
Mutuel, TeleBet and Admissions employees who are on the regular or extra
seniority lists and who report and are available for work and are not assigned
because of lack of work, shall be given credit for such day or days only for the
purpose of retaining seniority.
3. In cases where employees have the same year of hire, the employee who
has worked the greatest number of days shall be placed higher on the list. In
cases where the year of hire and the number of days worked since the date of
hire are the same, employees shall be arranged in alphabetical order, based on
the first initial of their last name.
4. Seniority shall be lost for the following reasons:
a) Voluntary quit.
b) Discharge for just cause.
7
c) Failure to report for work within three (3) days after being
notified by the Employer or the Union by telegram, or three (3) days after
tender of delivery of letter in the United States mail addressed to the
employee's last known address appearing on the Employer's records.
Written notice directed by either the Employer or the Union to the
employee's last address on either the Employer's or Union's records shall
constitute notice within the meaning of this provision.
d) Unexcused absence. An unexcused absence shall consist of any absence
without justifiable cause provided, however, that for purposes of Sunday premium
pay, eight (8) absences will be permitted on Saturday nights only in each
contract year.
e) Failure to work at least 15% of the days raced in the previous
calendar year unless such failure was due to an absence for good cause, or as a
result of an approved leave of absence of the Employer.
f) It shall be the sole responsibility of the employee to provide the
Employer with his current address.
5. The seniority lists shall be established from the information appearing
on the records of the Employer. The seniority lists shall be posted in each
department. Anyone having any question concerning his seniority standing shall
present his complaint to the Employer and the Union within thirty (30) days
after the list have been posted. Failure to object by anyone whose name appears
on the seniority list within the aforementioned period will preclude him from
raising any objection concerning his seniority standing.
8
6. All assignments which are available at check-in time shall go to the
qualified employees who have filed request cards in order of seniority.
Assignments which become available after that time shall be given to the most
senior qualified employee not yet assigned. Request cards will be valid for six
months. Employees desiring these assignments will remain in the check-in area 15
minutes after check-in time. Any employee who is called twice for such an
assignment and is not available shall not then be eligible until new request
cards are filed. Request cards will be filed every six months starting with
October 3rd and every six months thereafter.
7. In the event of layoffs or demotions due to layoffs, the employees with
the least seniority shall be laid off or demoted first. In recalling after
layoffs, employees with the most seniority who are on layoff shall be first
recalled and shall be assigned by the Employer to jobs that are open, provided
they have the skill, ability and qualifications to perform the work.
8. No layoff of regular employees shall become effective until at least
one (1) calendar day has elapsed following notification to the Union of the
Employer's desire to make such layoff.
9. If, prior to the opening of any racing meetings, vacancies occur in
either the Mutuel or Admissions Department, notice of this vacancy will be
posted in either department; employees in the department with the vacancy shall
be given consideration for such vacancies if they are qualified to perform the
work and said vacancies shall be filled within ten (10) working days of posting.
Employees may be transferred from on department to another only with the consent
of the Employer and the Union. In the event of such a transfer, employees shall
not carry any seniority already accrued to the new department but shall be
considered as a new employee for the purposes of seniority.
9
10. Any employee on any Extra List who works a simulcast shift shall
receive a one-half (1/2) day of seniority credit for such a shift but only for
the purpose of "attaining" regular status.
11. All money room counter/skimmer jobs shall be assigned by seniority.
12. Any employee who would not otherwise maintain their "Regular" or
"Extra" status due to a Pennsylvania Racing Commission Ruling, suspension or
disciplinary action shall retain their year of seniority on the appropriate
seniority list. Nothing in this paragraph is intended or shall interfere with or
reduce the rights which the Employer otherwise may have to terminate such
employee for just cause.
13. Any employee who begins a period of absence from work by reason of a
bona fide illness or accident, either work-related or non-work related,
subsequent to the date of this contract shall accrue seniority for up to the
first 180 days of the absence, after which time no additional seniority shall
accrue until the employee returns to work.
ARTICLE VI
Hiring and Promotion
1. Employees shall be recalled as needed for each meeting on the basis of
seniority as defined and established in Article V hereof. Any person on said
list, who has seniority as herein defined, may be rejected by the Employer only
for just cause, and such determination shall be subject to the grievance and
arbitration procedure herein set forth. In recalling or hiring prior to the
commencement of the racing meeting, the Employer shall give notice to the union
of any employee who has seniority as herein defined, but who is rejected and the
reasons for rejection.
10
2. During the course of the racing meeting, if additional employees are
required, they shall be recalled or hired from the part-time or extra seniority
list described in Article V hereof. Employees on the part-time or extra
seniority list who have seniority standing with the Employer shall be called for
extra assignment in order of seniority. If the persons with seniority on the
part-time or extra list who are available for work have been exhausted, then the
Employer may hire additional employees form other sources, but shall give the
Union equal opportunity with such sources to provide suitable applicants, and
such additional employees shall be hired on the basis of their qualifications,
competence, ability and honesty. In the event that all employees on the regular
employees' seniority list have been recalled, any vacancy in a regular position,
which exists after the provisions of this Article have been followed, shall be
filled from the part-time or extra seniority list. If there are insufficient
regular assignments to give employment to those with regular employee seniority,
those regular employees not given a regular assignment shall be placed at the
top of the part-time or extra employees' seniority list and shall be called for
work in accordance therewith.
3. There shall be no discrimination against any person with respect to
referral for work or placement on the hiring lists because of Union membership
or lack of Union membership.
4. All employees shall have the right to be placed in the classification
they held during the last previous meeting when returning to work if such jobs
are available, and they shall remain in such jobs or positions until they lose
the same by the operation of the seniority provisions of this contract, or there
are not enough places to be filled in such jobs.
11
5. The Employer shall have the right to hire, rehire, discharge for just
cause, lay off, transfer and promote all employees subject, however, to the
terms, procedures and provisions of this entire Agreement.
6. Whenever a vacancy occurs in any position in any department, it shall
be filled by the most senior qualified employee in that department, except that,
any employee who has bid for and been assigned to a money room position, shall
be ineligible to bid on any other position outside of the money room for a
period of two (2) years.
All temporary vacancies, vacancies to which permanent replacements have
not as yet been assigned and all temporary or additional posts, windows, or
assignments shall be offered to qualified regular employees according to
seniority before such positions are filled by extra employees. It is the
intention of the parties to offer all higher paying jobs, even if temporary, to
regular employees and to utilize extra employees in the lowest paying
classifications.
7. The Employer shall submit copies of the payroll of each department to
the Union on a weekly basis and copies of the auditor's report on overages and
shortages on a daily basis. In addition, the Employer shall continue to furnish
such other records which it has in the past furnished to the Union.
8. All regularly assigned employees shall, prior to their required
check-in time, provide notice for excused absence, unless the absence is a
justifiable emergency.
ARTICLE VII
Reporting Time and Scheduling
12
A. Reporting Time
1. Reporting time for the Mutuel and Department shall not be less than
fifteen (15) minutes prior to the start of actual work. Reporting time for
TeleBet Department shall not be less than five (5) minutes prior to the start of
actual work. These 15 and 5 minute periods shall be considered part of the shift
for all purposes including pay. Management reserves the right to start shifts at
the times it deems necessary for proper staffing. The shift starting time for
Sunday in TeleBet shall not be more than one (1) hour and fifteen (15) minutes
before the first scheduled post.
It is agreed that during each racing meeting of the Employer, reporting
time for all Admissions Department employees shall not be more than two and
one-quarter (2-1/4) hours before the advertised post time.
2. Any employee reporting for work who begins to perform any duties of his
job shall be entitled to one shift's pay at straight-time rates, unless he
leaves work for a reason other than by the direction of the Employer. However,
in case of the cancellation of a racing program, employees who have not been
notified at least three (3) hours before their regular reporting time of such
cancellation shall, if they do report, receive no less than one-half (1/2) shift
pay for so reporting. Notification of the cancellation of the racing program
shall be made by the Employer by broadcasting such notice over radio stations to
be selected by mutual agreement of the parties. However, in the event that the
cancellation is caused by an Act of God, weather conditions or other causes
beyond the Employer's control and no notification is given to the employees in
accordance with the above provisions, those employees who have reported and have
begun their work shall be paid a minimum of one-half (1/2) shift's pay.
13
3. If a racing program is cancelled at any time after five (5) minutes
prior to the midpoint of any shift length as described in Schedule "A", then
employees in the mutuel and TeleBet Departments and the money room who have
reported and worked shall receive their full shift pay. Admissions Department
employees shall receive a full day's pay after the first two races of a racing
program have been completed.
4. Those employees who have reported but have not begun their day's work
due to a cancellation without notification, shall be paid the sum of Seven
Dollars and Fifty Cents ($7.50) to compensate them for expenses. The sum of
Seven Dollars and Fifty Cents ($7.50) shall also be paid to employees who cannot
continue working, after having reported, because of personal illness or injury,
after the injury or illness has been verified or approved by the Employer's
medical department.
5. The five (5) most senior employees signing in shall be paid Seven
Dollars and Fifty Cents ($7.50) for that day unless they are assigned. For
example, if two of the four most senior employees do receive assignments, then
the remaining three employees shall be entitled to this pay for signing in.
B. Scheduling
1. a. All Mutuel Teller regulars with guaranteed regular assignments are
to report for all live events.
b. The Mutuel Manager or his designee shall post a blank
schedule/calendar no less than two weeks prior to the commencement of the four
(4) week scheduling period reflected on that calendar. The weeks shall commence
with any shifts on Monday and go through Sunday. Each of the shifts (i.e.
starting times) shall be reflected for each day on the scheduling calendar at
the time it is posted.
14
c. Each employee shall, by the Wednesday prior to the commencement of
the term, select each of the specific days and shifts during any of the
twenty-eight days posted which they desire to work during that scheduling
period.
2. Assignments for specific shifts among employees signing-up shall be
awarded according to seniority among those requesting a specific shift, subject
to a required preference for live shifts noted above for mutuel tellers.
3. Employees shall be permitted to work up to eight (8) shifts in a
regular work week or as many shifts as do not require that the employer pay
overtime.
4. All other aspects of the scheduling and assignments shall remain as had
been the current practice, except Telebet Tellers shall be scheduled every two
weeks.
ARTICLE VIII
Management Rights
1. The Employer alone shall have the right to determine the number of
employees to be employed, work assignments subject to seniority and other
provisions of this Agreement, equipment to be used, methods of operations, lease
or subcontract its operations and, in general, the Employer shall have the sole
right to exercise all managerial functions not in conflict with the terms of
this Agreement.
2. The Employer shall have the right to discharge or discipline for just
cause or violation of any term of this Agreement.
15
ARTICLE IX
Validity of Contract
The parties hereto agree that should any Article, part or paragraph of
this Agreement be declared by a federal or state court of competent and final
jurisdiction in the premises, to be unlawful, invalid, ineffective or
unenforceable, said Article, part or paragraph shall not affect the validity and
enforceability of any other Article, part or paragraph hereof and the remainder
of this Agreement shall continue in full force and effect. Moreover, anything
herein to the contrary notwithstanding, this entire contract is subject to the
provisions of the Pennsylvania State Racing Law, the provisions whereof take
precedence over and supplant any provision of this contract which may be in
conflict therewith.
ARTICLE X
Conduct of Union Business
1. Union Visitation. A Union representative shall be permitted entry for
Union business upon the Employer's premises where the Union's members are
employed. It is agreed that such Union representative will not interfere in any
way with the Employer's business and will give notice to the Employer of his
presence.
2. Union Bulletin Board. The Union shall have the privilege of installing
a bulletin board in the Employer's facilities at a suitable location, but use of
such bulletin board shall be restricted to the following purposes: notice of
recreational and social activities; notice of election and results; notice of
appointment of Union representatives; notice of meetings.
16
Use of the bulletin board for any other purpose shall be subject to
approval by the Employer. Under no circumstances will the Union or its
representatives post any matter of a libelous, obscene, or scandalous character.
The Union shall assume full responsibility for the items there posted and all
such notices posted shall first be approved by the Union.
ARTICLE XI
No Strikes or Lockouts
1. During the term of this Agreement neither the Union nor any employees
shall authorize, cause, engage in, sanction or assist in any work stoppage,
strike, picketing, slowdown or curtailment of the Employer's business.
2. In addition to any other remedies available to the Employer any
employee or employees, either individually or collectively, who violate Section
1 above are subject to discharge by the Employer.
3. The Employer agrees that during the term of this Agreement, it shall
not cause, permit or engage in any lockout of its employees, provided, however,
that neither this provision nor any other provision of this Agreement shall be
interpreted as requiring the Employer to stay in continuous operation. The
Employer shall have the right at all times to reduce or close the number of
shifts, departments or jobs and any such action by the Employer shall not be
considered a lockout.
17
ARTICLE XII
Wages
1. The wage schedule and job classifications applicable to the employees
covered by this Agreement is attached hereto and made a part hereof as Schedule
"A".
The wages paid under this contract are premised on a shift concept for
each department. Any extra time worked over the set shift hours shall be
compensated in increments of fifteen (15) minutes by paying an amount per hour
based upon the shift rate divided by the number of hours in the shift, one
minute into the next fifteen minutes is paid at 1/4 hour overtime. Any employee
who actually worked over forty (40) hours in a week shall receive premium pay of
one and one-half (1 1/2) times his/her hourly shift rate for all hours of work
(as opposed to pay) over forth (40).
2. It is the intent that every employee within the bargaining unit shall
be covered by the terms of this Agreement; any omissions or new non-supervisory
classifications shall be subject to the terms, procedures and provisions of this
Agreement.
3. In the event that the content of any job, classification or title
covered by this Agreement is changed either with respect to the duties performed
therein or the responsibilities thereof, the matter of appropriate conditions
and rates of pay therefor shall be negotiated with the Union and be subject to
the grievance procedure of Article IV if no agreement is reached by the parties.
4. Any dealer who is required to sell or cash tickets during any portion
of a dealer's shift shall be compensated by an additional $3.00 per day.
5. Assistant head cashier shifts shall be eight (8) hours. Assistant head
cashier shall receive an additional $8.00 per shift if he/she performs the
duties of the first floor dealer.
18
6. The extra duty of Stationary Room shall be paid an additional $15.00
per shift.
7. Counters shall receive appropriate extra duty pay in fifteen (15)
minute increments based on a prorated daily shift rate when required to stay on
a window past a five (5) hour shift.
8. SSTman extra duty shall be paid in the appropriate fifteen (15) minute
increments based on a prorated daily shift rate of five (5) hours.
9. The Employer shall cease late sales as of November 1, 1996 and shall if
resurrected pay any additional time at the appropriate pay rate in fifteen (15)
minute increments;
10. Black light job shall be bid out separately and shall not be in a
rotation with any other jobs in the department;
11. Non-racing events shall be paid at the appropriate hourly rate in
fifteen (15) minute increments. Current practice had been $10.00/hour;
12. The employees shall be permitted to raise the cost of pencils to $.25
without any additional cost of such supplies by the Employer effective 01/01/97.
13. New Hire Rates: Schedule "A" notwithstanding:
A. Any Mutuel Department Teller initially hired
after 10/03/96 shall be paid $48.00 per shift; and
after 10/03/97 shall be paid $49.20 per shift; and
after 10/03/98 shall be paid $50.43 per shift.
19
B. Telebet Operators initially hired
after 10/03/96 shall be paid $45.00 per shift; and
after 10/03/97 shall be paid $46.13 per shift; and
after 10/03/98 shall be paid $47.28 per shift.
C. Any Admissions employees initially hired
after 10/03/96 shall be paid $35.00 per shift; and
after 10/03/97 shall be paid $36.05 per shift; and
after 10/03/98 shall be paid $37.13 per shift.
D. In addition, anything to the contrary herein notwithstanding, every
employee hired under the New Hire Rate shall be paid in accordance with the
"catch-up" formula which shall be applied according to the position they are
filling:
1) Beginning with the anniversary date of hire commencing the first day
of their 25th month of employment they shall be paid at 90% of the then current
applicable shift rate detailed herein for the job being performed;
2) Beginning with the anniversary date of hire commencing the first day
of their 37th month of employment they shall be paid at 95% of the then current
applicable shift rate detailed herein for the job being performed;
3) Beginning with the anniversary date of hire commencing the first day
of their 49th month of employment they shall be paid at 100% of the then current
applicable shift rate detailed herein for the job being performed;
20
14. In addition to all other compensation, Tellers, Counter/Skimmers and
TeleBet Operators, shall be eligible to be paid a production premium of any
additional $1/hour for each hour worked in those positions in accordance with
the terms set forth in Schedule "B" for Mutuel Department, and Schedule "C" to
be mutually arrived at between the parties regarding the TeleBet Department.
ARTICLE XIII
Life Insurance
The Employer shall provide each employee on the regular seniority list,
who has worked at least 75% of the 90% of the preceding racing meeting and who
is at work during the current meeting, with group life insurance in the sum of
Three Thousand Dollars ($3,000) on a year-round basis, so long as he remains on
the regular seniority list.
Each employee on the extra seniority list and who is at work during the
current meeting, shall be provided with One Thousand Dollars ($1,000) of group
life insurance on a year-round basis, so long as he remains on the extra
seniority list and works 110 days per calendar year.
ARTICLE XIV
Pension Plan
A pension plan (Sports Arena Employees' Local 137 Retirement Fund) costing
$3.40 per employee per day shall begin the first day of the calendar year
following the calendar year when the track has had an average daily handle for
the total number of days raced by all thoroughbred licenses at Penn National
Race Course for such year of $605,000; a double-header shall be treated as two
racing days for the purpose of this Article.
21
ARTICLE XV
Vacation Plan
After an employee has worked the number of Live or Seniority shifts in a
calendar year as set forth below, that employee shall be entitled to the
following paid vacation:
Employees With Employees With
Live or Less than 10 10 or More Years
Seniority Years Seniority Seniority
Shifts Worked Vacation Days Vacation Days
*90% 5 10
*70% 4 7
*60% 2 4
*Percent of live days run at Penn National Racetrack in the prior calendar year.
An employee must work a minimum number of days in each category to be
eligible for the prescribed vacation days. No fractional vacation days shall be
granted.
ARTICLE XVI
Notice of Discharge or Suspension
The Business Manager of the Union shall be notified in writing immediately
after discharge or suspension takes place, which notice shall contain the name
of the employee involved and the reason for such discharge or suspension.
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ARTICLE XVII
Ticket Errors, Overages and Shortages
1. The Employer agrees to have posted as quickly as possible listings of
shortages and overages at locations where they are readily accessible to
employees.
2. The Employer agrees that a shortage and overage report will be made
available to employees and a copy submitted to the Union daily. Shortages shall
be settled on a current basis in accordance with the provision detailed herein
after at Schedule "D".
3. It is the intention of the parties that overages shall be used to set
off shortages. The Employer and the Union shall mutually agree as to the amount
in each specific case. Overages not so applied shall be paid to the employee at
the conclusion of each racing meeting.
4. Those employees handling money or tickets shall be fully accountable to
the Employer for any loss or shortage therein, except when such loss or shortage
is caused by:
a. Force or threat of bodily harm;
b. Acceptance of counterfeit money which is not clearly detectible;
c. Theft - The burden of proving a loss as a result of theft is place
on the employee and such proof must be more than a surmise or suspicion. It must
clearly establish that the employee's shortage is due to theft and not his own
negligence.
23
ARTICLE XVIII
Rules and Regulations
The Employer shall have the right, from time to time, to make such
reasonable rules and regulations for the conduct of its business, not
inconsistent with the provisions hereof, as it may deem necessary and advisable,
and all employees shall be obligated to comply with such rules and regulations.
Before such rules and regulations become effective, they shall be in writing and
a copy shall be given to the Business Manager of the Union and sufficient copies
shall be posted throughout each department in order to apprise the employees of
their obligation thereunder.
ARTICLE XIX
Technological Improvements and Job Security
1. Should new machines be introduced in the operations of the Mutuel
Department, such machines, insofar as they require human operation or servicing,
shall be operated or serviced by employees covered by this Agreement unless such
machines are leased to the Employer and the Employer is unable to negotiate with
the lessor that such machines be operated by the Employer's employees.
2. Vacancies in new classification created by the instruction of new
machines shall be filled in accordance with the procedure set forth in Articles
V and VI herein.
3. Should a technological displacement of employees occur by reason of
technological improvements, the Employer will endeavor to relocate employees in
new classifications on the basis of their seniority, ability and qualifications,
and will meet with the Union to negotiate mutually satisfactory rates of pay new
classifications created.
24
4. Should the Employer lease its property to a lessee for the purpose of
conducting racing, provisions shall be made in said lease for the observance by
the lessee of the terms of this Agreement.
5. Should any new form of gambling or gaming be introduced, all current
employees shall be permitted the opportunity to apply for any new positions
created thereby with the Employer and management shall have sole discretion as
to allowing any such transfers.
ARTICLE XX
Leaves of Absence
No employee shall be granted a leave of absence without the prior written
approval of the Employer and the Union. At the end of such leave of absence,
such employee shall be reemployed in the same classification in which he was
employed at the commencement of his leave, without prejudice to his previous
status and without loss of seniority accrued at the commencement of the leave of
absence. In the event that an employee exceeds the time specified in the leave
of absence granted, the employee shall go to the bottom of the seniority list
and shall be offered employment based on seniority as set forth in Article V of
this Agreement. No seniority shall accrue during the period of the employee's
leave of absence as provided in this article but the employee shall retain only
the years and days of seniority service credits that he had accrued prior to the
leave.
25
ARTICLE XXI
Death in Family
Any regular employee who, during the racing meeting, suffers a death in
his family as hereinafter defined, shall be entitled to three (3) consecutive
working days off and shall be compensated for all pay lost during that absence.
A member of the family is defined as: wife or husband, child (natural, adopted
or foster), stepchild, sister, brother, parent, parent-in-law or grandparent.
Extras shall be entitled to miss work for a death in the family (as
described herein) with no compensation for lost pay but with no loss of
seniority status.
ARTICLE XXII
Premium Pay
1. With respect to the following listed holidays, triple crown days,
Breeders Cup, and with respect to all meetings held on Sundays, the Employer
agrees to pay all employees covered by this Agreement who perform work on any
such days one and one-half (1-1/2) times their then prevailing shift rates of
pay, and extra race compensation (if applicable), provided the handle exceeds
$570,000 on the day in question. This $570,000 handle figure includes TeleBet,
on-track and simulcast wagering for the entire day and up until the end of the
last shift of the day. The premium pay shall go to those individuals working any
shift during the premium "day" or in the case of special events, i.e. Breeders'
Cup, those working during that event.
New Year's Day Labor Day
Washington's Birthday Veterans' Day
Easter Sunday Thanksgiving Day
Memorial Day Christmas Day
Independence Day New Year's Eve
26
2. In the event that one of the above listed holidays falls on a Sunday,
the premium shall be paid on the Monday following such holiday if it is mandated
by federal law to be so celebrated on such a Monday, and a meeting day is
scheduled on such a Monday.
3. In the event the pari-mutuel handle on any Sunday when racing is
conducted is $1,000,000 or more, then the Employer shall pay all employees
covered by this Agreement who perform work on that Sunday two (2) times their
shift rate of pay and extra race compensation. If the pari-mutuel handle is less
than $1,000,000 the provisions of Section 1 above shall apply. In order to be
eligible for Sunday premium pay employees must work the preceding Saturday,
where so scheduled, unless excused because of illness or other compelling
personal reasons.
4. A premium of $3.00 shall be paid to all regular employees for each
Saturday worked when such Saturdays fall within a week in which six (6) days of
racing is conducted.
ARTICLE XXIII
General Conditions
1. This Agreement when accepted by the parties hereto and signed by the
respective agents thereunto duly authorized shall constitute the sole Agreement
between them involving the employees in this bargaining unit. Any alteration or
modification to this Agreement must be made by and between the parties hereto
and must be in writing.
2. Either party hereto shall be entitled to require specific performance
of the provisions of this Agreement.
27
3. The waiver of any breach or condition of this Agreement by either party
shall not constitute a precedent for any future waiver of such breach or
condition.
4. In addition to any other remedies available to the Employer, any
employee or employees, either individually or collectively, who violate Article
XII of this Agreement shall be subject to discharge by the Employer.
5. Whenever an employee is unable to perform his duties because of illness
or accident, he shall, if requested by the Employer, submit a doctor's
certificate certifying to his illness, or at the option of the Employer, he
shall submit to an examination by a doctor selected by the Employer.
6. Any notice in writing required to be given to the Employer under this
Agreement shall be directed in writing to the General Manager of Pennsylvania
National Turf Club, Inc., Grantville, Pennsylvania, and any notice required to
be given to the Union shall be addressed in writing to it at 1012 Haddonfield
Road, Suite 106, Cherry Hill, New Jersey 08002.
7 The Employer shall make Blue Cross and Blue Shield coverage available to
those employees who desire it at group rates but at the employee's expense.
Premiums shall be deducted from the employee's wages in advance.
8. All working areas shall be cleaned daily and all rest rooms shall be
cleaned at least daily and a sanitary napkin dispenser shall be installed in all
rest rooms used by female employees.
9. The floors of the sheds in the parking lot and oil heaters in these
sheds shall be maintained in good repair.
28
10. Four jackets will be kept available in the Admissions Department for
Parkers and rain suits shall be provided for Collectors only. Parkers will be
given programs on request.
11. Additional help will be provided to Turnstile Collectors during
promotions for busy windows or busy periods.
12. Where there is an early gate opening, Admissions Department employees
who report early shall be paid $5.00 per hour for each hour, in half hour
increments, prior to normal reporting time. If such employees report three (3)
hours or more prior to normal reporting, they shall receive a hot meal.
13. Heaters shall be provided in Admissions Booth where needed.
14. Mutuel Department employees may have their own coffee makers and
refrigerators behind the lines.
ARTICLE XXIV
Uniforms
1. Employees are required to wear the following items of clothing:
a. Solid white shirt with collar. If the shirt extends below the red vest,
then the shirt must be tucked into the pants/skirt. Shirts may be long or short
sleeves.
b. Dark colored pants/skirt, culottes or split skirts optional for female
employees only.
29
c. Red vest. 1
2. Optional items of clothing permitted are as follows:
a. Dark blue blazer is permitted to be worn over the required uniform as
stated in Section 1 of this Dress Code.
b. A dark blue jacket/windbreaker is permitted to be worn only if the
temperature is 65 degrees or below. If this article is completely zipped or
buttoned up so as not to expose items of clothing underneath then the employee
is free to deviate from the white shirt and red vest.
c. A white sweater may be worn in addition to the required uniform as
stated in Section 1 of this Dress Code. If a white sweater is worn, the red vest
is to be worn on top of the sweater in keeping with the uniform theme.
d. During warm weather (Memorial Day through Labor Day inclusive)
light-colored lightweight pants may be worn.
ARTICLE XXV
Term of Agreement
This Agreement shall be made effective the 3rd day of October, 1996, and
shall continue in full force and effect without any further reopening or
renegotiation until October 3, 1999 and shall continue in full force and effect
from year to year thereafter unless either party hereto shall give written
notice at least sixty (60) days prior to the expiration of this Agreement, of
the intention of the party to amend, modify, or to terminate, whereupon the
Agreement shall terminate on the date set forth.
- --------
1 Upon determination of excessive heat (in excess of 85 degrees at one
hour before first post) according to the thermometers placed on each line, vests
may be taken off. If during periods of excessive heat vests are taken off on any
division, all employees of those divisions will not wear vests during this
period. The Employer shall provide cotton vests for summer racing days.
30
Complete Agreement
The foregoing represents the complete agreement of the parties. In all
other respects the terms and conditions of employment and past practices shall
remain in full force and effect and shall be renewed for the term of the
upcoming three (3) years. All other proposals by either party made in the course
of this bargaining shall be deemed withdrawn and without effect.
IN WITNESS WHEREOF, and intending to be legally bound hereby the parties
have caused their properly authorized officers to sign this Agreement.
FOR FOR
PENNSYLVANIA NATIONAL SPORTS ARENA EMPLOYEES' UNION
TURF CLUB, INC. LOCAL NO. 137
BY: \s\ Philip T. O'Hara Jr. BY: \s\ Robert LiGouri
------------------------ ------------------
FOR WITNESS:
MOUNTAINVIEW RACING ASSOCIATION
BY: \s\ Philip T. O'Hara Jr. BY: \s\ Ray Garganes
------------------------ ----------------
- -------------------------------------------------------------------------------
31
Exhibit 10.68
LEASE AGREEMENT
ARTICLE I
TERM
SECTION 1.01. Commencement of the Term.
(a) Notwithstanding anything herein contained to the contrary, the term of
this Lease and Tenant's obligation to pay rent and occupy the Demised Premises
in accordance with the terms hereof shall commence on the following date (such
date being hereinafter called the "Commencement Date"): the later of: (i) the
date on which Landlord delivers possession of the Premises to Tenant with
Landlord's work substantially complete (unless otherwise agreed to by Tenant) or
(ii) the earlier of: (a) date Tenant receives Approvals (as defined in Rider
11), or (b) sixty (60) days following the execution of this Lease. (See Rider #1
and #11.) For the purpose of this Lease, the words, "the term of this Lease" and
"term hereof" shall be deemed to mean both the original term of this Lease and
all extensions or renewals thereof.
(b) At any time after the Commencement Date of the term of the Lease, the
parties shall execute and deliver to each other, at the option of Landlord,
either an instrument in recordable form or a letter agreement prepared by
Landlord wherein Tenant shall: (1) certify that the Lease is in full force and
effect, and (2) certify the commencement and termination dates of the original
term of this Lease. Tenant shall have ten (10) days from date of Tenant's
receipt of said instrument or said letter agreement to execute and return same
to Landlord. In the event Tenant fails to execute and return said instrument or
said letter agreement within the aforestated specified period of time, Landlord
and Tenant shall consider the terms therein written to be binding upon Tenant.
(c) Deleted.
(d) This Lease and the tenancy hereby created shall cease and determine at
the end of the term hereof without the necessity of any notice from either
Landlord or Tenant to terminate the same, and Tenant hereby waives notice to
vacate the premises and agrees that Landlord shall be entitled to the benefit of
all provisions of law respecting the summary recovery of possession of premises
from a tenant holding over to the same extent as if statutory notice had been
given.
SECTION 1.02. Failure of Tenant to Open; Failure to Operate. If Tenant fails to
open for business within one hundred twenty (120) days after the Commencement
Date and/or thereafter (subject to Force Majeure pursuant to Section 20.22 and
national holidays), if Tenant fails to continuously operate its business in
accordance with the terms of this Lease or vacates the premises prior to the
expiration of the term hereof, Landlord will suffer damages in an amount which
are not readily ascertainable and thus in any such event, Landlord shall have
the right, at its option, to collect as liquidated damages, and not as a
penalty, in addition to all other charges which are due hereunder, one-thirtieth
(1/3Oth) of an amount equal so the monthly installment of Fixed Minimum Rent for
each day which Tenant fails to so operate.
ARTICLE II
RENT
SECTION 2.01. Percentage Rent. Deleted.
SECTION 2.02. Gross Receipts Defined. Deleted.
SECTION 2.03. Taxes.
(a) For the purposes of this Section 2.03, the word "taxes" shall include
all taxes attributable to improvements now or hereafter made to the "Shopping
Center" or any part thereof or attributable to the present or future
installation in the Shopping Center or any part thereof of fixtures, machinery
or equipment, all real estate taxes, assessments, water and sewer fees, rents or
charges, and other governmental impositions and charges of every kind and nature
whatsoever, nonrecurring as well as recurring, special or extraordinary as well
as ordinary, foreseen and unforeseen, and each and every installment thereof,
which shall or may during the term of this Lease be levied, assessed or imposed,
or become due and payable or become liens upon or arise in connection with the
use, occupancy or possession of, or any interest in the Shopping Center or any
part thereof, or any land, buildings or other improvements therein, excluding,
however, any of the foregoing relating to any "Separately Assessed Premises" (as
defined in Section 2.03(d) hereof). The word "taxes" shall not include any
charge, such as water meter charge and sewer rent based thereon, which is
measured by the consumption by the actual user or the item or service for which
the charge is made.
(b) For each "Tax Year" (as defined in Section 2.03(e) hereof) during the
term of this Lease, Tenant shall pay to Landlord as additional rent (hereinafter
called "Tax Rent"), the amount obtained by multiplying the total of all taxes
payable during such Tax Year by a fraction, the numerator of which shall be the
square feet of floor area of the Demised Premises and the denominator of which
shall be the square feet of all "leasable floor area" (as defined in Section
2.03(d) hereof) in the Shopping Center computed as of each date Landlord has a
right under Section 2.03(c) to bill Tenant for an installment of Tax Rent. On
account of Tax Rent, Tenant shall pay monthly, in advance, as additional rent,
together with each monthly installment of Fixed Minimum Rent, without demand or
setoff, an amount equal to one-twelfth of the sum obtained by multiplying the
square feet of floor area of the Demised Premises by ONE DOLLAR FORTY CENTS
($1.40). Such amount may be adjusted by Landlord at any time during the term
hereof to an amount equal to one-twelfth (1/l2th) of the Tax Rent payable by
Tenant for the current Tax Year. If Tenant's payment on account of Tax Rent for
any Tax Year exceeds the actual amount payable by Tenant as Tax Rent for such
Tax Year and Tenant is not in default hereunder or otherwise indebted to
Landlord, Landlord shall refund such excess to Tenant within thirty (30) days;
provided, if such overpayment is for the last Tax Year, Landlord shall not be
obligated to refund to Tenant the amount of such overpayment until Tenant has
fully performed all of its obligations under this Lease, is not indebted to
Landlord and has vacated the Demised Premises in accordance with the provisions
hereof. In the event Tenant is indebted to Landlord for any reason whatsoever,
Landlord may deduct such amount owed from such overpayment.
2
(c) Landlord shall have the right to bill Tenant for an installment on
account of Tax Rent during each Tax Year after each receipt by Landlord of a
bill, assessment, levy, notice of imposition or other evidence of taxes due or
payable, all of which are hereinafter collectively referred to as a "tax bill"
(whether such bill is a final bill, an estimate of annual taxes or represents a
tax bill based upon a final or partial assessment or determination). Tenant
shall pay each installment of Tax Rent within twenty (20) days of receipt from
Landlord of a written statement setting forth the taxes for which Landlord has
received a tax bill and on account of which Tenant has never been billed and the
amount of the installment of Tenant's Tax Rent based upon such tax bill. In
making the computations as aforesaid, a tax bill or photocopy thereof submitted
by Landlord to Tenant shall be conclusive evidence of the amount of the taxes
included in the computation of the installment of a Tax Rent in question;
provided, however, Landlord shall have the right to bill Tenant for the last
installment of Tax Rent for the last lease year in the term hereof whether or
not Landlord shall theretofore have received a tax bill covering the period from
the date of the tax bill which formed the basis of the most recent installment
on account of Tax Rent billed to Tenant to the expiration of the term hereof. If
Landlord has not received a tax bill for such period, Landlord shall estimate
the amount of such last installments of Tax Rent on the basis of information
contained in the tax bill most currently received by Landlord, subject to
adjustment when Landlord receives a tax bill which includes the period for the
date of such tax bill to the expiration of the term hereof. Tenant shall pay
such adjusted amount upon billing by Landlord.
(d) For the purposes of this Lease, the words "Separately Assessed
Premises" shall mean only each of the following portions of the Shopping Center
which are in fact separately assessed or for which the amount of taxes actually
assessed is readily ascertainable: (i) portions of the Shopping Center
designated as Auxiliary in Exhibit "A". For the purposes of this Section 2.03
the words "leasable floor area" shall mean the square feet of floor area in the
Shopping Center other than Separately Assessed Premises on the date of
Landlord's tax computation.
(e) For the purposes of this Lease the words "Tax Year" shall mean the
twelve (12) full calendar months of the term commencing with the January 1
immediately following the Commencement Date and ending December 31 of such
calendar year and each succeeding twelve (12) month period thereafter commencing
in the term of this Lease; provided, however, the first Tax Year shall commence
on the date that the Tenant shall open for business with the public and
terminate on the immediately succeeding December 31.
(f) If the Commencement Date shall occur after the date the Shopping Center
shall first open to the public or (for reasons other than Tenant's default) the
term of this Lease terminates on a day other than the last day of a Tax Year,
Tenant's Tax Rent shall be equitably prorated for such Tax Year.
(g) If, after Tenant shall have made the required payment of any
installment of Tax Rent, Landlord shall receive a refund of any portion of the
taxes included in the computation of such installment of Tax Rent, provided
Tenant is not in default hereunder, within forty-five (45) days after receipt of
the refund, Landlord shall pay to Tenant that percentage of the net refund after
deducting all costs and expenses (including, but not limited to, attorneys' and
appraisers' fees) expended or incurred in obtaining such refund, which the
portion of the taxes in question paid by Tenant bears to the entire amount of
such taxes immediately prior to the refund. Tenant
3
shall not institute any proceedings with respect to the assessed valuation of
the Shopping Center or any part thereof for the purpose of securing a tax
reduction.
(h) If at any time during the term of this Lease, under the laws of any one
or more jurisdictions in which the Shopping Center is located, a tax,
imposition, charge, assessment, levy, excise or license fee is levied on,
imposed against, or measured, computed or determined, in whole or in part, by:
(1) rents payable hereunder (Fixed Minimum, tax and/or additional) or (2) the
value of any lien placed against the Shopping Center or any obligations secured
thereby, or if any other tax (except income tax), imposition, charge,
assessment, levy, excise or license fee which is not referred to in Section
2.03(a) however described or denoted, shall be levied or imposed by any such
jurisdiction, to the extent that the cost of any of the foregoing shall be
imposed, either directly or indirectly on Landlord, such tax, imposition,
charge, assessment, levy, excise or license fee, shall be deemed to constitute
"taxes" for the purposes of this Section 2.03.
(i) Tenant's obligation under this Section 2.03 shall survive the
expiration or earlier termination of the term of this Lease.
(j) In the event of any dispute as to the floor area in the Shopping
Center, or any portion thereof (other than the Leased Premises which shall be
determined by the provisions of the Indenture of Lease) the determination of
Landlord's Architect shall be binding upon the parties. In the event Tenant
challenges the determination of Landlord's architect, unless Landlord and Tenant
reach agreement within thirty (30) days, the dispute shall be resolved by
Landlord's architect and Tenant's architect, who, after making such surveys or
measurements as either consider to be appropriate, shall submit their joint
determination and resolution of the gross leasable area of the Demised Premises;
provided that if such architects reach different conclusions and for that reason
do not agree on the amount of the gross leasable area of the Demised Premises
within thirty (30) days of their first meeting on the issue (which shall be
scheduled, if possible, within 10 days after the parties have determined that
they cannot reach agreement and that the issue should be decided by the
architects), the two architects shall select a third and independent architect
to resolve the lack of agreement either by agreeing with the conclusions of
Tenant's architect or with those of Landlord's architect, or by such third
architect's own determination. If the two architects cannot agree on the
selection of a third architect, each shall designate two independent architects,
and the third architect then shall be selected by lot from the four names. Each
party shall be responsible for the fees and charges of its architect, and shall
equally share in and be responsible for those of the third architect, if one is
appointed. The resultant square footage figure and changes, if any, in the rent
and in Tenant's proportionate share, shall be confirmed by a written supplement
to this Lease.
SECTION 2.04. Additional Rent. All sums of money or charges required to be paid
by Tenant under this Lease, whether or not the same are designated "additional
rent", shall for all purposes hereunder be deemed and shall be paid by Tenant as
rent. If such amounts or charges are not paid at the time provided in this
Lease, they shall nevertheless, bear interest from the due date thereof to the
date of payment at the highest rate allowed by law, but not more than twelve
percent (12%) per annum.
4
ARTICLE III
BOOKS OF ACCOUNT AND AUDIT
SECTION 3.01. Tenant's Records. Deleted.
SECTION 3.02. Audit. Deleted.
ARTICLE IV
CONSTRUCTION OF LEASED PREMISES
SECTION 4.01. Tenant's Improvements and Fixtures. Within ten (10) days after the
written notice referred to in Section 1.01(b) hereof, Tenant shall, at its sole
cost and expense, commence and thereafter promptly complete all of the work
required of Tenant in Exhibit "B" (all such items being herein referred to as
"Tenant's work"). All work completed by Landlord and Tenant except for those
items enumerated in Section 8.02, shall remain as part of the premises and
become the property of Landlord upon installation, and shall not be removed by
Tenant. For the purpose of commencing and completing such work and installing
its fixtures and other equipment Tenant, may enter the Demised Premises prior to
the commencement of the term hereof subject to the following conditions: (1) all
such work shall be conducted in such a manner as will not interfere with
Landlord's construction activities; (2) Tenant at its own expense, shall keep
the common areas (as described in Section 4.02 hereof), free of building
material and equipment used in connection with Tenant's work, and Landlord shall
designate space, at Landlord's sole discretion, for Tenant's and Tenant's
contractors' trailers temporarily during Tenant's initial build-out of the
Premises and (3) Tenant shall perform duties and obligations imposed by this
Lease, including, but not limited to, those provisions relating to utilities,
insurance and indemnification, and the provisions of Exhibit "B", saving and
excepting only the obligations to make periodic payment of Fixed Minimum Rent
and other rent which commence on or after the Commencement Date. In the event
Landlord, on Tenant's behalf and with Tenant's consent, shall perform any work
or install any equipment included in Tenant's work, Tenant, within fifteen (15)
days after receipt of a bill therefore, shall pay to Landlord, as additional
rent, a sum equal to all sums paid and cost incurred by Landlord in performing
such work and/or installing such equipment plus administrative costs of Landlord
in a sum equal to twenty percent (20%) of such sums and/or costs.
Notwithstanding anything contained in this Section 4.01 to the contrary,
Landlord shall not be responsible or liable to Tenant, its agents, servants,
employees, licensees, or contractors, or their respective agents, servants,
employees, licensees, or contractors, for any loss or damage to the property of
such party occurring prior to or subsequent to the commencement of the term
unless caused by Landlord's negligence or willful misconduct.
SECTION 4.02. Parking Areas and Facilities. All parking areas and facilities
furnished by Landlord in or near the Center, including employee parking areas,
truck ways, loading docks, package pick-up stations, pedestrian sidewalks,
malls, courts, corridors, ramps, landscaped areas, exterior stairways, first-aid
stations, comfort stations and other areas and improvements provided by Landlord
for the general use, in common, of tenants, their officers, agents, employees
and customers, (sometimes referred to herein as "common areas") shall at all
times be subject to the exclusive control and management of Landlord, and the
malls, courts, and corridor areas may contain landscaping, decorative items,
structures designed and leased for retail sales and areas for promotional
activities, provided, however, that all sales structures in such areas shall be
at least
5
six feet (6') from the front of the Demised Premises. Landlord shall
have the right from time to time to establish, modify and enforce reasonable
rules and regulations with respect to all facilities and areas mentioned in this
Section; to construct, maintain and operate lighting facilities on all said
areas and improvements; to police the same; from time to time to change the
area, level location and arrangement of parking areas and other facilities
hereinabove referred to, provided same does not adversely and materially affect
parking for visibility of and access to the Premises; to restrict parking by
tenants, their officers, agents and employees to employee parking areas; to
close all or any portion of said areas or facilities to such extent as may, in
the opinion of Landlord's counsel, be legally sufficient to prevent a dedication
thereof or the accrual of any rights to any person or the public therein; to
close temporarily all or any portion of the parking areas or facilities; to
discourage non-customer parking; and to do and perform such other acts in and to
said areas and improvements as, in the use of good business judgment, Landlord
shall determine to be advisable with a view to the improvement of the
convenience and use thereof by tenants, their officers, agents, employees and
customers. Landlord will operate and maintain the common facilities referred to
above in such manner as Landlord, in its sole discretion, shall determine from
time to time. Without limiting the scope of such discretion, Landlord shall have
the full right and authority to employ all personnel and to make all rules and
regulations pertaining to and necessary for the proper operation and maintenance
of the common facilities. Tenant and Tenant's employees shall park their cars
only in those portions of the parking area designated for that purpose by
Landlord. Tenant shall furnish Landlord with State automobile license numbers
assigned Tenant's car or cars, and cars of Tenant's employees, within five (5)
days after taking possession of the premises and shall thereafter notify
Landlord of any changes within ten (10) days after written request, no more
often than two (2) times in any one calendar year. In the event that Tenant or
its employees fail to park their cars in designated parking areas as aforesaid,
then Landlord, at its option, shall charge Tenant Ten Dollars ($10.00) per day
per car parked in any area other than those designated, as and for liquidated
damages.
SECTION 4.03. Right to Relocate; License. The purpose of the site plan attached
hereto as Exhibit "A" is to show the location of the leased premises. Landlord
reserves the unrestricted right to change and relocate building (other than
Tenant's building) and mall perimeters, driveways, automobile parking areas and
other common areas shown on the site plan, store sizes, and the identity type
and number of other buildings or tenants, provided only that the size of the
leased premises, access to Tenant's premises, visibility of the Premises and
parking facilities as herein provided shall not be substantially or materially
impaired. Landlord agrees that ingress and egress to Shopping Center and
Tenant's premises shall not be materially changed or re-directed. Landlord has
made no representations to identity, type, size or number of other stores or
tenants, other than as indicated in Section 4.02.
SECTION 4.04. Changes and Additions to Building. Landlord hereby reserves the
right at any time to make alterations or additions to the building in which the
premises are contained and to build adjoining the same. Landlord also reserves
the right to construct other buildings or improvements in the Shopping Center
from time to time and to make alterations thereof or additions thereto on any
such building or buildings and to build adjoining same, and to construct
double-deck or elevated or subterranean parking facilities, and to substitute
from time to time for any parking areas or part thereof, provided Landlord does
not materially and adversely affect parking for, visibility of, or access to the
Premises.
6
SECTION 4.05. Financing. Deleted.
ARTICLE V
CONDUCT OF BUSINESS
SECTION 5.01. Use of Premises. In addition to any authorization of and
restrictions on the use of the Demised Premises elsewhere set forth herein,
Tenant shall not conduct any other business in or from the Leased Premises
except that which Tenant is permitted pursuant to the provisions of the
Indenture of Lease. Tenant shall occupy the Leased Premises promptly upon the
Commencement Date and thereafter shall continuously conduct in the Leased
Premises the business herein permitted. Tenant will not use or permit or suffer
the use of the Leased Premises for any other business or other purpose.
Furthermore, Tenant agrees to restrict the use and occupancy of the Demised
Premises against any use thereof, in violation of any of the uses or purposes
set forth in Exhibit "C" attached hereto and made part hereof notwithstanding
that such use might otherwise be permitted herein. The authorization of the use
of the premises for the business purpose set forth herein shall not constitute a
representation by Landlord that any particular use of the premises is now or
will continue to be permitted under applicable laws or regulations.
SECTION 5.02. Operations of Business. Throughout the term of this Lease, Tenant
shall cause its store to remain open from 11:30 A.M. through at least 10:00 P.M.
Mondays through Saturdays and Sundays from 11:30 A.M. through 5:00 P.M. Tenant
agrees the hours which Tenant is obligated to operate may be changed by Landlord
from time to time, provided that Landlord will not act in a discriminatory
manner. Tenant shall keep the signs, if any, in the Leased Premises well lit
during the hours from opening until one hour after the close of the Center as
provided for above for each and every day of the week.
SECTION 5.03. No Injurious Acts. Tenant shall not perform any acts or carry on
any practice which may injure the building or be a nuisance or menace to other
tenants and business invitees of Tenant and the general public in the Shopping
Center.
SECTION 5.04. Storage, Office Space. Tenant shall store and/or stock in the
Leased Premises only such items as Tenant is permitted to offer for sale at, in,
from or upon the Leased Premises. Tenant shall use for office, clerical or other
non-selling purposes only such space in the Leased Premises as is from time to
time reasonably required for Tenant's business in the Leased Premises.
ARTICLE VI
GRANT OF CONCESSIONS
SECTION 6.01. Condition to Grant. The provision against subletting elsewhere
contained in this Lease shall be applicable so as to prohibit Tenant from
granting concessions without the consent of Landlord for the operation of one or
more departments of the business of Tenant; and any grant of concessions
consented to by Landlord shall be subject to the conditions that (a) each such
concession which may be granted by Tenant shall be subject to all the terms and
provisions of this Lease; (b) all of the provisions hereunder applying to the
business of Tenant shall apply to each such concession; (c) unless otherwise
approved in writing by Landlord, such department
7
or departments shall be operated only as part of the business operation
generally conducted by Tenant on the Demised Premises and under the advertised
name of Tenant; and (d) at least seventy-five percent (75%) of the floor area of
the Leased Premises shall at all times be operated directly by Tenant.
ARTICLE VII
COMMON COSTS OF OPERATION AND MAINTENANCE
SECTION 7.01. Expenses. Landlord (subject to reimbursement as set forth in
Section 7.02) will at its expense operate and maintain or cause to be operated
and maintained the Common Areas and the Shopping Center consistent with
first-class shopping centers of similar size and nature in Luzerne County. For
the purposes of this Lease, "Operating Costs" shall be those costs of operating
and maintaining, or of causing the operation and maintenance of, the Common
Areas and the Shopping Center of which the Demised Premises forms a part in a
manner deemed by Landlord to be reasonable and appropriate including, but not
limited to, all costs and expenses, whether expended or incurred of repairing,
lighting, cleaning, painting, and maintaining (including, but not limited to,
preventive maintenance) and insuring the same with such policies and companies
and in such limits as selected by Landlord (including, but not limited to, fire
insurance with extended coverage, liability insurance covering personal injury,
deaths and property damage with a personal injury endorsement covering false
arrest, detention or imprisonment, malicious prosecution, libel and slander, and
wrongful entry or eviction, workmen's compensation insurance, plate glass
insurance, contractual liability insurance and fidelity bonds; removing snow,
ice, rubbish and debris; inspecting, policing, providing security and regulating
traffic; rental and depreciation (over a period not exceeding sixty (60) months)
of machinery and equipment and other non-real estate assets used in the
operation and maintenance of the Shopping Center; repairing and/or replacing of
paving, curbs, walkways, landscaping, drainage, on-site water lines, sanitary
sewer lines, storm water lines, electrical lines and other equipment serving the
property on which the Shopping Center or any part thereof is constructed or is
to be constructed; the rental of music programs, services and loudspeaker
systems including the furnishing of electricity therefor; all parking surcharges
that may result from any environmental or other laws, rules, regulations,
guidelines or orders; the gross compensation of all personnel required to
supervise and accomplish the foregoing and an administrative charge equal to
fifteen percent (15%) of the total of all Operating Costs (exclusive of such
administrative charge), which administrative charge shall be first applied to
the expenses of the organization employed as Landlord's Agent for furnishing to
Landlord the services of executive supervisors, personnel to collect rent and
personnel to negotiate renewal and/or replacement leases, and shall then be
applied to other administrative charges. Operating Costs shall not include
depreciation other than as specifically referred to above. In the event of any
dispute as to whether an item represents an expense or a capital item,
Landlord's accounting practices shall be determinative and binding on the
parties.
SECTION 7.02. Reimbursement of Landlord. (See Rider #3.)
(a) For each "Accounting Period" (as defined in Section 7.02(f) during the
term of this Lease, Tenant shall pay to Landlord, as additional rent, as
Tenant's proportionate share of the Operating Costs, a sum equal to the product
obtained by multiplying (i) the total Operating Costs for such Accounting Period
less all contributions thereto actually made to Landlord by occupants
8
of any Separately Assessed Premises by (ii) a fraction, the numerator of which
shall be the square feet of floor area of the Demised Premises, and the
denominator of which shall be the square feet of leasable floor area in the
Shopping Center. For the purposes of this Section, leasable floor area shall
mean the square feet of floor area in buildings which are erected in the
Shopping Center other than Separately Assessed Premises, which are designed
exclusively for use and occupancy by Tenants other than occupants of Separately
Assessed Premises.
(b) On the first day of each calendar month during that portion of the term
hereof falling within the first Accounting Period, Tenant shall pay to Landlord,
in advance, without demand and without any setoff or deduction, as an estimated
payment on account of Tenant's proportionate share of the Operating Costs an
amount equal to one-twelfth (1/l2th) of the sum obtained by multiplying the
square feet of floor area of the Demised Premises by the sum of ONE DOLLAR FORTY
CENTS ($1.40). If the Commencement Date hereof shall not be the first day of a
calendar month, Tenant's payment of its proportionate share of Operating Costs
for the fractional month between the Commencement Date and the first day of the
first full calendar month in the term shall be prorated on a per diem basis
(calculated on a thirty (30) day month) and shall be paid together with the
first payment of Fixed Minimum Rent.
(c) After the first Accounting Period, Tenant shall continue to pay such
estimated amount of Tenant's proportionate share of Operating Costs on the first
day of each month in advance without demand and without any setoff or deduction,
but the aforesaid estimated amount of Tenant's proportionate share of Operating
Costs may be adjusted and revised by Landlord after the end of each Accounting
Period during the term hereof on the basis of the actual Operating Costs for the
immediately preceding Accounting Period. Upon Landlord furnishing to Tenant a
statement setting forth such revised estimated Operating Costs, Tenant shall pay
to Landlord such revised estimated share in equal monthly installments, each
such installment to be a sum of one-twelfth (1/l2th) of such revised estimated
Operating Costs, in advance on the first day of each calendar month thereafter
until the next succeeding revision in such estimate.
(d) Following the end of each Accounting Period, Landlord shall furnish to
Tenant a written statement in reasonable detail covering the Accounting Period
just expired showing the total Operating Costs for such Accounting Period, the
amount of Tenant's proportionate share thereof and payments made by Tenant with
respect thereto. In making the computations as aforesaid, Landlord's statement
shall be persuasive evidence of Operating Costs.
Notwithstanding Tenant's obligation to continue to make payments pursuant
to Section 7.01 on a timely basis, within three (3) months of Tenant's receipt
of such a statement from Landlord, Tenant may, upon thirty (30) days' written
notice to Landlord, and at Tenants sole cost and expense, conduct an audit of
Landlord's books and records with respect to Operating Costs. Officers or agents
of Tenant shall conduct such audit during regular business hours at Landlord's
offices. If such audit shall disclose an error in Landlord's calculation of
Operating Costs for such Accounting Period, proper adjustment shall forthwith be
made between Landlord and Tenant to correct any overpayment or underpayment of
Operating Costs by Tenant (with any adjustment by Landlord in favor of Tenant to
be in the form of a credit against future rent). In the event such audit
discloses an overstatement of Operating Costs by Landlord of more than seven
percent (7%), Landlord shall pay the cost of such audit.
9
(e) If Tenant's proportionate share of Operating Costs exceeds Tenant's
payments with respect to any Accounting Period, Tenant shall pay to Landlord the
deficiency within thirty (30) days after the date of the furnishing of the
statement from Landlord; if Tenant's payments exceed Tenant's share of the
Operating Costs and Tenant is not in default hereunder or otherwise indebted to
Landlord, Landlord shall refund such excess to Tenant within thirty (30) days;
provided, however, if such overpayment is for the last lease year, Landlord
shall not be obligated to refund to Tenant the amount of such overpayment until
Tenant has fully performed all of its obligations under this Lease, is not
indebted to Landlord and has vacated in accordance with the provisions of this
Lease. In the event Tenant is indebted to Landlord for any reason whatsoever,
Landlord may deduct such amount owed from such overpayment.
(f) For the purpose of this Lease, the words "Accounting Period" shall mean
the period consisting of twelve (12) consecutive calendar months commencing on a
date determined by Landlord and each succeeding twelve (12) calendar month
period commencing during the term of this Lease; provided, however, the first
Accounting Period shall commence on the date the Tenant shall open for business
with the public and shall terminate on the date immediately preceding the date
so determined by Landlord.
(g) If the term of this Lease commences after the date the Shopping Center
first opens for business with the public or terminates (other than by reason of
Tenant's default) during an Accounting Period, Tenant's obligation for Tenant's
proportionate share of Operating Costs for such Accounting Period shall be
equitably prorated.
(h) Tenant's obligations under this Section 7.02 shall survive the
expiration or earlier termination of the term of this Lease.
ARTICLE VIII
SIGNS, AWNINGS, CANOPIES, FIXTURES, ALTERATIONS
SECTION 8.01. Sign, Awnings and Canopies. Tenant will not place, alter or suffer
to be placed, altered or maintained on the exterior of the Leased Premises any
sign, awning or canopy of advertising matter or other thing of any kind and will
not place or maintain any decoration, lettering or advertising matter on the
glass of any window or door of the Leased Premises nor within three (3) feet of
any such glass (other than neatly lettered signs of reasonable size placed on
the floor of the display window identifying articles offered for sale and the
price thereof) without first obtaining Landlord's written approval and consent.
Tenant further agrees to maintain such sign, awning, canopy, decoration,
lettering, advertising matter or other things as may be approved in good
condition and repair at all times. Any permitted sign shall at all times comply
with the requirements of the sign specification, attached hereto as Exhibit "D".
In accordance with the provisions of Section 8.01, Tenant shall remove such
sign, awning or canopy at the expiration or earlier termination of the term of
this Lease, or Tenant, upon taking possession of the premises shall replace an
existing sign, awning, or canopy. Tenant shall, at Tenant's sole cost and
expense, as a result of such removal, provide and install material necessary to
correct to Landlord's satisfaction any damage or penetration on the facade, sign
band or wall utilized to identify the premises. None of the foregoing work shall
be commenced or performed by Tenant unless Tenant has submitted plans for
approval by Landlord in accordance with the provisions of Exhibit "D" attached
hereto and made a part hereof and Tenant has received such
10
prior written approval from Landlord. Notwithstanding anything herein or
elsewhere to the contrary, but subject to all applicable codes, Tenant shall
submit Tenant's signage for Landlord's approval, which shall not be unreasonably
withheld, and Landlord shall attach such signage as Exhibit D-1.
SECTION 8.02. Trade Fixtures. All trade fixtures utilized and installed by
Tenant in the Leased Premises shall be new or completely reconditioned, shall
not become the property of Landlord and shall be removable at the expiration or
sooner termination of the term of this Lease or any renewal or extension hereof,
provided Tenant shall not at such time be in default under any covenant or
agreement contained in this Lease, and provided further that in the event of
such removal, Tenant shall promptly restore the premises to the same good order
and condition they were in prior to the installation thereof, reasonable wear
and tear excepted, but not excepting any damage caused by the installation,
maintenance or removal of same. If Tenant fails to remove such fixtures as
aforesaid, then upon Tenant's removal from the premises all such fixtures shall
become the property of Landlord. Tenant shall give notice to Landlord of its
intent to leave said fixtures on the premises. Nevertheless, If Landlord
requires removal of same, Tenant shall remove as aforesaid.
SECTION 8.03. Alterations. Excluding wall and floor finishes, Tenant shall not
make or cause to be made any non-structural alterations, additions or
improvements in the Demised Premises costing in excess of Twenty-Five Thousand
Dollars ($25,000.00) or any structural alterations whatsoever or install or
cause to be installed any changes to the store front without first obtaining
Landlord's written approval and consent which consent shall not be unreasonably
withheld or delayed. Tenant shall present to Landlord plans and specifications
for such alterations, additions, improvements or changes at the time approval is
sought. Tenant agrees that any alterations, additions, improvements or changes
made by it shall immediately become the property of Landlord and shall remain
upon the premises in the absence of an agreement to the contrary.
SECTION 8.04. Tenant Shall Discharge All Liens. Tenant shall promptly pay all
contractors and materialmen so as to minimize the possibility of a mechanic's or
materialmen's lien attaching to the Leased Premises. Should any such lien be
made or filed, Tenant shall bond against or discharge the same within ten (10)
days after written request by Landlord, and in the event that Tenant shall fail
to do so, Landlord may discharge the lien by payment of the amount secured
thereby, or otherwise as provided by law, and any amount so paid by Landlord,
along with any attorney's fees or other costs relating to the discharge of such
lien, shall be deemed additional rent and shall be immediately payable by Tenant
to Landlord.
SECTION 8.05. Contractors and Labor. To the end that there shall be no labor
dispute which would interfere with the construction, completion or operation of
the Shopping Center or with any other work being carried on therein, in
connection with any construction, alteration, fixturing or other work done upon
the Demised Premises, Tenant shall engage the services of only such contractors
and subcontractors as will work in harmony with each other, with those of
Landlord and with any others then working in the Shopping Center, and Tenant
shall employ and shall require its contractors and subcontractors to employ only
such labor as will work in harmony with all other labor then working in the
Shopping Center.
11
ARTICLE IX
MAINTENANCE, REPAIR AND SURRENDER OF LEASED PREMISES
SECTION 9.01. Maintenance by Tenant.
(a) Tenant shall at all times maintain the interior of the Leased Premises
(including all entrances and the inside and outside of all glass in the doors
and windows and show window moldings) and all partitions, doors, fixtures,
signs, equipment and appurtenances thereof (including, but not limited to all
electrical and plumbing fixtures and other mechanical installations therein
including reasonable periodic painting as determined by Landlord) in good order,
condition, replacement and repair at its own expense, damage by unavoidable
casualty excepted to the extent that the same is covered by Landlord's fire
insurance policy with extended coverage endorsement, except for structural
portions of the premises, which shall be maintained by Landlord and except
damage caused by Landlord's negligence or willful misconduct; but if Landlord is
required to make repairs to structural portions by reason of Tenant's negligent
acts or omissions to act, or by reason of any unusual use of the Demised
Premises by Tenant, Landlord may add the cost of such repairs to the rent which
shall thereafter become due as additional rent. The materials, equipment and
workmanship utilized by Tenant in any repairs or replacements shall be equal in
quality to those originally supplied by Landlord.
(b) In addition to the foregoing, Tenant will maintain the premises at its
own expense in a clean, orderly and sanitary condition free of insects, rodents,
vermin and other pests and will not permit accumulation of garbage, trash,
rubbish and other refuse, but will remove the same at its own expense, and will
keep such refuse in proper containers as specified by Landlord on the interior
of the premises until called for to be removed, and the same shall be prepared
for collection and deposited in the manner and at the times and places specified
by Landlord. If Landlord shall provide or designate a place and manner for
picking up refuse and garbage, Tenant shall use same at Tenant's cost.
(c) Tenant further covenants that Tenant:
(1) will promptly replace at its own expense with glass of like kind
and quality any plate glass, door or window glass of the Leased Premises which
may become cracked or broken;
(2) will not use or permit the use of any apparatus, or sound
reproduction or transmission, or any musical instrument in such manner that the
sound so reproduced, transmitted or produced shall be audible beyond the
confines of the premises;
(3) will keep all mechanical apparatus free of vibrations and noise
which may be transmitted beyond the confines of the premises;
(4) will not cause or permit objectionable odors to emanate or be
dispelled from the premises;
(5) Deleted.
12
(6) will keep the premises at a temperature sufficiently high to
prevent the freezing of water and pipes and fixtures;
(7) will not use the plumbing facilities for any other purpose than
that for which they are constructed and will not permit any foreign substance of
any kind to be thrown therein and the expense of repairing any breakage,
stoppage, seepage or damage whether occurring on or off the premises resulting
from a violation of this provision by Tenant or Tenant's employees, agents or
invitees shall be borne by Tenant. All grease traps and other plumbing traps
should be kept clean and operable by Tenant at Tenant's own cost and expense;
(8) will, notwithstanding anything in this Lease to the contrary, be
responsible for all repairs and replacements to the Leased Premises necessitated
by a burglary or attempted burglary, or any illegal or forcible entry into the
Demised Premises;
(9) will not burn any trash or garbage of any kind in or about the
Leased Premises, the Shopping Center or within one mile of the outside property
lines of the Shopping Center;
(10) will not receive or ship truck deliveries of any kind except
through the rear door;
(11) will comply at its own expense with all laws and ordinances and all
rules and regulations of governmental authorities and all recommendations of the
Association of Fire Underwriters, Factory Mutual Insurance Companies, The
Insurance Services Organization of Pennsylvania, or other similar body
establishing standards for fire insurance ratings with respect to the use or
occupancy of the premises by Tenant; and Tenant further agrees to participate in
periodic fire brigade instruction and drills at the request of Landlord and to
supply, maintain, repair and replace for the Demised Premises at Tenant's own
cost and expense, any fire extinguisher or other fire prevention equipment and
safety equipment (including installation of approved hoods and ducts if cooking
activity is conducted on the premises) required by the aforementioned rules,
regulations and Association or other body in order to obtain insurance at the
lowest available premium rate throughout the term of this Lease or any renewal
thereof;
(12) will cause the heating and air conditioning unit to be serviced no
less than two (2) times annually;
(13) agrees that Landlord may amend, modify, delete or add new and
additional reasonable rules and regulations for the use and care of the Leased
Premises, the buildings of which the Leased Premises are a part and the common
facilities as defined herein before;
(14) agrees to comply with all such further rules and regulations upon
notice to Tenant from Landlord;
(15) will conduct its business in the premises in all respects in a
dignified manner in accordance with high standards of business operation.
13
SECTION 9.02. Maintenance by Landlord. If Tenant refuses or neglects to repair,
replace and maintain property as required hereunder and to the reasonable
satisfaction of Landlord as soon as reasonably possible after written notice
from Landlord to do so, Landlord may make such repairs and replacements without
liability to Tenant for any loss or damage that may accrue to Tenant's
merchandise, fixtures or other property or to Tenant's business by reason
thereof, and upon completion thereof, Tenant shall pay Landlord's cost for
making such repairs and/or replacements upon presentation of a bill therefor
plus twenty percent (20%) for overhead and supervision as additional rent. Said
bill shall include interest on said cost in accordance with Section 2.04 hereof
from the date of completion by Landlord.
SECTION 9.03. Roof. Landlord will make all needed repairs to the roof and make
the roof water tight as soon as reasonably possible after receiving Tenant's
notice and shall make all needed repairs to the exterior of the premises,
excepting any glass, provided that Tenant shall give Landlord written notice of
the necessity of such repairs. Anything herein contained to the contrary
notwithstanding, any work done or alterations made by Tenant to the roof with
Landlord's roofing contractor and with Landlord's written approval, exterior
walls or affecting the structural integrity of the building of which the Leased
Premises are a part shall release and discharge Landlord of and from its duty of
repairing that portion of the same in good order and repair. Tenant agrees to be
solely responsible for and thereafter maintain that portion of the roof,
exterior walls and structural integrity of the building to or on which Tenant
has caused any work to be done or alterations made.
In the event an emergency roof repair is required in Tenant's reasonable
opinion, Tenant, at its sole cost and expense, and after providing Landlord,
Agent and the Laurel Mall manager notice of the existence of need to make
immediate roof repairs and the failure of Landlord, Agent and the Laurel Mall
manager to respond to such notice within two (2) hours of such notice, shall
have the right to make such roof repair using Landlord's approved roofing
contractor.
In the event the roof requires repair (yet emergency roof repair is not
required) and should Landlord refuse or neglect to commence to repair the roof
in good faith and utilizing reasonable methods, as soon as reasonably possible
after receiving notice from Tenant to do so and proceed diligently thereafter to
fully remedy same, Tenant may, after the expiration of an additional ten (10)
day notice period, make such repairs using Landlord's approved roofing
contractor, and upon completion thereof, Landlord shall pay Tenant's reasonable
costs for making such repairs within thirty (30) days of presentation of a bill
thereof.
Landlord shall have the exclusive right to use all or any part of the roof
of the premises for any purpose not inconsistent with Tenant's use of Leased
Premises; to erect additional stores or other structures over all or any part of
the Leased Premises; and to erect in connection with, the construction thereof
temporary scaffolds and other aids to construction on the exterior of the
premises, provided that access to the premises shall not be denied. Tenant
further agrees that Landlord may make any use it desires, excepting advertising,
other than the advertising of the Center, of the side or rear walls of the
premises, provided that there shall be no encroachment upon the interior of the
Leased Premises.
SECTION 9.04. Surrender of Premises. At the expiration of or sooner termination
of the tenancy hereby created, Tenant shall peaceably surrender the Leased
Premises in the same
14
condition of cleanliness, repair and order as the Leased Premises were in upon
the commencement of business under this Lease, reasonable wear and tear and
damage by unavoidable casualty excepted to the extent that the same is covered
by Landlord's fire insurance policy with extended coverage endorsement, and
Tenant shall surrender all keys for the Leased Premises to Landlord at the place
then fixed for the payment of rent and shall inform Landlord of all combinations
on locks, safes and vaults, if any, in the Leased Premises. Tenant shall comply
with Section 8.02 hereof respecting the removal of its trade fixtures before
surrendering the premises as aforesaid. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other termination of the
term of this Lease.
ARTICLE X
INSURANCE AND INDEMNITY
SECTION 10.01. Insurance Coverage.
(a) At all times during the term of this Lease and such other times as
Tenant occupies the Demised Premises or any part thereof, Tenant shall pay all
premiums for and maintain in effect, with a responsible insurance company or
companies acceptable to Landlord and authorized to do business in the
Commonwealth of Pennsylvania, policies of insurance in form acceptable to
Landlord for the benefit of Landlord and any mortgagee and Tenant, as their
interests may appear, as follows:
(1) Comprehensive public liability insurance in the amount of at least
$500,000 for any occurrence resulting in bodily harm and personal injury to or
the death of one person and consequential damages arising therefrom, and in the
amount of at least $1 million for any occurrence resulting in bodily harm and
personal injury to or death of more than one person and consequential damages
arising therefrom.
(2) Comprehensive property damage insurance covering liability for
damages to all property in the amount of at least $100,000 for each occurrence,
which shall not contain the "care, custody and control" exclusion.
(3) Insurance covering Tenant's trade fixtures, furniture, furnishings,
equipment, betterments and improvements and other installations of Tenant,
providing protection to the extent of the full insurable value thereof against
all casualties included under standard insurance industry practices within the
classification "Fire and Extended Coverage, Vandalism and Malicious Mischief"
and insurance covering sprinkler leakage unless Tenant's insurance otherwise
includes sprinkler leakage coverage.
(4) Plate glass insurance covering the plate glass in the Demised
Premises in the event plate glass exists in, upon or on the Premises.
(5) Such Workmen's Compensation Insurance as shall comply with the
applicable laws of the Commonwealth of Pennsylvania.
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(6) Business interruption insurance in such amount as Landlord may
reasonably require or approve but in no event less than one full year's minimum
rent and all additional rent payable hereunder.
(7) Deleted.
(b) Such insurance and certificates shall name Landlord, Landlord's
Mortgagee, Landlord's Agent and owners of all interests in the Center as
additional insureds for the full amount of insurance herein required with
respect to the operations and activities of Tenant on or in connection with the
Shopping Center. With respect to each and every policy of such insurance and
each renewal thereof, Tenant, at the beginning of the term of this Lease and
thereafter not less than thirty (30) days prior to the expiration of each such
policy, shall furnish Landlord with a certificate of insurance executed by the
insurer which shall contain, in addition to matters customarily set forth in
such certificate under standard industry practices, an undertaking by the
insurer to give Landlord ten (10) days prior written notice of any cancellation,
non-renewal or change in scope or amount of coverage of such policy. In
addition, all such policies shall contain a provision substantially as follows:
"The insurance afforded by this policy for more than one named insured shall not
operate to increase the limits of the company's liability, but otherwise, shall
not operate to limit or void the coverage of any one named insured as respects
claims against the same named insured by any other named insured or the
employees of such other named insured".
(c) Landlord (subject to reimbursement) shall at all times maintain in
effect a policy or policies of commercial liability insurance in such limits as
reasonably selected by Landlord and commonly found in comparable retail shopping
centers and all risk insurance covering the Shopping Center and the building in
which the Premises are located in an amount equal to 100% of the full
replacement cost.
SECTION 10.02. Increase of Insurance Rates.
(a) Tenant will not do, omit to do, or suffer to be done or keep or suffer
to be kept anything in, upon or about the Leased Premises which will violate the
provisions of Landlord's policies insuring against loss or damage by fire or
other hazards (including, but not limited to, public liability), which will
adversely affect Landlord's fire or liability insurance premium rating or which
will prevent Landlord from procuring such policies in companies acceptable to
Landlord, provided Tenant is first given adequate notice of the requirements of
such policies. If anything done, omitted to be done or suffered to be done by
Tenant, or kept or suffered by Tenant to be kept in, or upon or about the
premises shall by itself or in combination with other circumstances existing at
the Shopping Center cause the premium rate of fire or other insurance on the
Leased Premises or other property of the Shopping Center in companies acceptable
to Landlord to be increased beyond the established rate fixed by the appropriate
underwriters from time to time applicable to the premises for use for the
purposes permitted under this Lease or to such other property in the Shopping
Center for the use or uses made thereof, Tenant will pay the amount of such
increase or, in the event that other circumstances existing at the Shopping
Center shall have contributed to such increase, an equitable portion of such
increase as reasonably determined by Landlord, promptly upon Landlord's demand
and will thereafter pay the amount of such increase, as the same may vary from
time to time, with respect to every premium relating
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to coverage of the Demised Premises during a period falling within the term of
this Lease until such increase is eliminated. In addition if applicable,
Landlord may at its option rectify the condition existing on the Demised
Premises which caused or was a contributing cause of the increased premium rate
in the event that Tenant should fail to do so and may charge the cost of such
action to Tenant as additional rent, payable on demand. In determining whether
increased premiums are the result of Tenant's use of the Leased Premises, a
schedule, issued by the organization making the insurance rate on the Leased
Premises, showing the various components of such rate, shall be conclusive
evidence of the several items and charges which make up the fire insurance rate
on the Leased Premises.
(b) Any flammable or combustible material kept by Tenant in or upon the
Demised Premises must be kept in special containers and at such locations as may
be specified by the insurance carrier, fire insurance underwriter and any and
all state, local or other governmental authorities, and no explosive material,
high pressure steam generating equipment or similarly hazardous material or
equipment, shall be kept on the Demised Premises.
SECTION 10.03. Plate Glass. Tenant shall obtain insurance at Tenant's expense on
all plate and other glass in the Leased Premises in the event plate glass exists
in, upon or on the Premises.
SECTION 10.04. Mutual Indemnification. Nothing in this Lease to the contrary
withstanding, and except with respect to the negligence or willful misconduct of
Landlord or Landlord's agents or employees, Tenant will indemnify Landlord and
Agent and save them harmless from and against any and all claims, actions,
damages, liability and expenses in connection with loss of life, personal injury
and/or damage to property arising from or out of any occurrence including, but
not limited to, burglary, robbery or attempted burglary or robbery in, upon or
at the Leased Premises or the occupancy or use by Tenant of the Leased Premises
or any part thereof, or occasioned wholly or in part by an act or omission of
Tenant, its agents, contractors, employees, servants, lessees, licensees,
franchisees or concessionaires. In case Landlord and/or Agent shall be made a
party to any litigation commenced by or against Tenant, then Tenant shall
protect and hold Landlord and/or Agent harmless and shall pay all costs,
expenses and reasonable attorney's fees incurred or paid by Landlord and/or
Agent in connection with such litigation.
Nothing in this Lease to the contrary withstanding, and except with respect
to the negligence or willful misconduct of Tenant or Tenant's agents or
employees, Landlord will indemnify Tenant and save Tenant harmless from and
against any and all claims, actions, damages, liability and expenses in
connection with loss of life, personal injury and/or damage to property arising
from or out of any occurrence at the Shopping Center (excluding Tenant's
Premises) including, but not limited to the occupancy or use of the Common Areas
by Landlord, or occasioned wholly or in part by an act or omission of Landlord,
its agents, contractors, employees, servants, lessees, licensees, franchisees or
concessionaires. In case Tenant shall be made a party to any litigation
commenced by or against Landlord, then Landlord shall protect and hold Tenant
harmless and shall pay all costs, expenses and reasonable attorney's fees
incurred or paid by Tenant in connection with such litigation.
SECTION 10.05. General Provisions of Insurance. Tenant agrees that all insurance
Tenant is required to maintain under this Lease shall be in insurance companies
of good credit, satisfactory to Landlord and that the original policies or true
copies or abstracts evidencing all of the
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aforementioned insurance coverage shall be delivered to Landlord within twenty
(20) days prior to the Commencement Date and shall contain a clause that the
insurer will not cancel or change the insurance without first giving Landlord
twenty (20) days prior written notice thereof and, further, that new or renewal
policies shall be delivered by Tenant to Landlord at least twenty (20) days
before the expiration date or sooner termination of each policy. If Tenant shall
not comply with its covenants made in this Section, Landlord may, at its option,
either consider Tenant's failure to comply a default under this entire Lease
Agreement or may cause such insurance as aforesaid to be issued and, in such
event, Tenant agrees to pay the premium for such insurance promptly upon
Landlord's demand as additional rent.
ARTICLE XI
UTILITIES
SECTION 11.01. Utilities.
(a) Tenant shall be solely responsible for and promptly pay all charges for
heat, water, gas, electricity, sewer rents or charges and any other utility used
or consumed in the Leased Premises or in providing heating and air-conditioning
to the Leased Premises, without limitation, said responsibility commencing on
the date Landlord notifies Tenant that the Leased Premises are ready for
Tenant's work. Should Landlord elect to supply said utilities, Tenant agrees to
purchase and pay for same, as additional rent every month, at rates equal to the
rates that Tenant would be obligated to pay to the local utility companies
supplying such utility services.
(b) In the event that Tenant does not have a water meter installed in the
Leased Premises, Tenant will pay to Landlord, as additional rent every month,
the minimum charge for the size of the line installed in the Leased Premises in
accordance with the rates established from time to time by the utility company
or authority supplying water to the premises.
(c) In the event the local authority, municipality or other body collects
for the water and/or sewerage or sanitary consumption, as aforesaid, Tenant
covenants and agrees to pay the sewer rent charge and any other tax, rent, levy
or charge which now or hereafter is assessed, imposed or becomes a lien upon the
Demised Premises, or the realty of which they are a part, pursuant to law, order
or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewerage connection system.
(d) In no event shall Landlord be liable to Tenant in damages or otherwise
for any interruption, curtailment or suspension of any of the foregoing utility
services in the event of a default by Tenant under this Lease or due to repairs,
action of public authority, strikes, acts of God or public enemy, unless caused
by Landlord's negligence or willful misconduct.
SECTION 11.02. Application for Utilities. Tenant shall make all appropriate
applications to the local utility companies and pay all required deposits for
meters and service for all utilities serving the Demised Premises within five
(5) days after the Commencement Date. In the event any public utility or public
or municipal authority supplying any utility or service to Tenant, as a
condition to Tenant's receiving such utility or service, shall require Landlord
to guarantee Tenant's payment to such public utility or public or municipal
authority, Landlord shall do so;
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and in consideration of the foregoing, Tenant hereby covenants and agrees to
indemnify Landlord and hold it harmless from and against any and all expenses,
claims, charges and sums incurred by Landlord as a result of such guarantee.
SECTION 11.03. Operation of Heating and Air-Conditioning. Tenant must operate
heating and cooling equipment within the range of normal operating temperatures.
ARTICLE XII
OFFSET STATEMENT, ATTORNMENT, SUBORDINATION
SECTION 12.01. Offset Statement. Within fifteen (15) days after request therefor
by Landlord or in the event that upon any sale, assignment or hypothecation of
the Leased Premises and/or the land thereunder by Landlord, a statement shall be
required from Tenant. Tenant agrees to execute and deliver to any proposed
mortgagee or purchaser, or to Landlord, a certificate in recordable form
satisfactory to the requesting party, signed by a duly authorized officer of
Tenant, certifying (if such be the case) that this Lease is in full force and
effect and that there are no defenses or offsets thereto or modifications
thereof, or stating those claimed by Tenant, and providing also such additional
information concerning the status or conditions of this Lease and the rental
payments hereunder as may reasonably be requested by Landlord or such mortgagee
or purchaser. Any failure of Tenant to comply within such ten (10) day period
shall be deemed a material breach of this Lease, and it is intended that any
statement delivered hereunder may be relied upon by any prospective purchaser of
the Leased Premises, or any holder or prospective holder of a mortgage on the
fee title of the premises or premises of which they are a part, or any assignee
of any such mortgage or any landlord in any sale-leaseback of the Shopping
Center or part thereof.
SECTION 12.02. Subordination and Attornment. Tenant agrees: (a) that, except as
hereinafter provided, this Lease is, and all of Tenant's rights hereunder are
and shall always be, subject and subordinate to any mortgage, leases of
Landlord's property (in sale-leaseback) pursuant to which Landlord has or shall
retain the right of possession of the Demised Premises or security instruments
(collectively called "Mortgage") that now exist, or may hereinafter be placed
upon the Demised Premises or the Shopping Center or any part thereof and to all
advances made or to be made thereunder and to the interest thereon, and all
renewals, replacements, modifications, consolidations, or extensions thereof;
and (b) that if the holder of any such Mortgage ("Mortgagee") or if the
purchaser at any foreclosure sale or at any sale under a power of sale contained
in any Mortgage shall at its sole option so request, Tenant will attorn to, and
recognize such Mortgagee or purchaser, as the case may be, as Landlord under
this Lease for the balance then remaining of the term of this Lease, subject to
all terms of this Lease; and (c) that the aforesaid provisions shall be
self-operative and no further instrument or document shall be necessary unless
required by any such Mortgagee or purchaser. Notwithstanding anything to the
contrary set forth above, any Mortgagee may at any time subordinate its Mortgage
to this Lease, without Tenant's consent, by execution of a written document
subordinating such Mortgage to this Lease to the extent set forth therein, and
thereupon this Lease shall be deemed prior to such Mortgage to the extent set
forth in such written document without regard to their respective dates of
execution, delivery and/or recording and in that event, to the extent set forth
in such written document such Mortgagee shall have the same rights with respect
to this Lease as though this Lease had been executed and a memorandum thereof
recorded prior to the execution, delivery
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and recording of the Mortgage and as though this Lease had been assigned to such
Mortgagee. Should Landlord or any Mortgagee or purchaser desire confirmation of
either such subordination or such attornment, as the case may be, Tenant upon
written request, and from time to time, will execute and deliver without charge
and in form satisfactory to Landlord, the Mortgagee or the purchaser all
instruments and/or documents that may be requested to acknowledge such
subordination and/or agreement to attorn, in recordable form.
With respect to the current mortgagee, Landlord shall use reasonable
efforts to procure within sixty (60) days after the Commencement Date, a
subordination, non-disturbance and attornment agreement, providing in substance
that Tenant shall subordinate this Lease to the mortgage and that as long as
Tenant shall faithfully discharge the obligations on its part to be kept and
performed under the terms of this Lease and is not in default under the terms
hereof, its tenancy will not be disturbed nor this Lease affected by any default
under the mortgage. Provided Tenant is not in default under the terms and
conditions of the Lease, with respect to future mortgagees who require a
subordination agreement from Tenant, Landlord shall use reasonable efforts to
ensure that such subordination agreement also contains a non-disturbance and
attornment agreement for the benefit of Tenant.
SECTION 12.03. Failure to Execute Instruments and Documents. In the event Tenant
fails to execute and deliver the instruments and documents as provided for in
Section 12.02 within the time period set forth in Section 12.01, Landlord may
treat such failure as an Event of Default.
ARTICLE XIII
ASSIGNMENT AND SUBLETTING
SECTION 13.01. Assignment and Subletting. (See Rider #12.)
(a) Tenant shall not voluntarily, involuntarily, or by operation of law,
assign, transfer, mortgage or otherwise encumber (herein collectively referred
to as an "assignment") this Lease or any interest of Tenant herein, in whole or
in part, nor sublet the whole or any part of the Demised Premises, nor permit
the Demised Premises or any part thereof to be used or occupied by others,
without first obtaining in each and every instance the prior written consent of
Landlord. Any consent by Landlord to an assignment or subletting or use or
occupancy by others shall be held to apply only to the specific transaction
thereby authorized and shall not constitute a waiver of the necessity for such
consent to any subsequent assignment or subletting or use or occupancy by
others, including, but not limited to a subsequent assignment or subletting by
any trustee, receiver, liquidator, or personal representative of Tenant, nor
shall the references anywhere in this Lease to subtenants, licensees and
concessionaires be construed as a consent by Landlord to an assignment. If this
Lease or any interest herein be assigned or if the Demised Premises or any part
thereof be sublet or used or occupied by anyone other than Tenant without
Landlord's prior written consent having been obtained thereto, Landlord may
nevertheless collect rent (including, but not limited to, Fixed Minimum Rent,
Tax Rent, Tenant's proportionate share of Landlord's Operating Costs, and
additional rent) from the assignee, sublessee, user or occupant and apply the
net amount collected to the rents herein reserved and furthermore in any such
event, Tenant shall pay to Landlord monthly, as additional rent, the excess of
the consideration received or to be received during such month for such
assignment, sublease, or occupancy (whether or not denoted as rent) over the
rental reserved for such month in this Lease applicable
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to such portion of the Demised Premises so assigned, sublet or occupied. No such
assignment, subletting, use, occupancy or collection shall be deemed a waiver of
the covenant herein against assignment, subletting or use or occupancy by
others, or the acceptance of the assignee, subtenant, user or occupant as Tenant
hereunder, or constitute a release of Tenant from the further performance by
Tenant of the terms and provisions of this Lease. If this Lease or any interest
of Tenant herein be assigned or if the whole or any part of the Demised Premises
be sublet or used or occupied by others, after having obtained Landlord's prior
written consent thereto, Tenant shall nevertheless remain fully liable for the
full performance of all obligations under this Lease to be performed by Tenant
and Tenant shall not be released therefrom in any manner.
(b) If at any time during the term of this Lease any part or all of the
corporate shares of Tenant, or of a parent corporation of which the Tenant is a
direct or indirect subsidiary, shall be transferred by sale, assignment,
bequest, inheritance, operation of law or other disposition so as to result in a
change in the present effective voting control of Tenant or of such parent
corporation by the person or persons owning or controlling a majority of the
shares of Tenant or of such parent corporation on the date of this Lease, Tenant
shall promptly notify Landlord in writing of such change, and such change in
voting control shall constitute an assignment of this Lease for all purposes of
this Section; provided, however, that this provision shall not apply in the
event that over fifty percent (50%) of the voting power of the Tenant
corporation or of such parent corporation is held by fifty (50) or more
unrelated shareholders or distributed to such number of unrelated shareholders
in a public distribution of securities.
(c) If Tenant is a partnership and if at any time during the term of this
Lease any person who at the time of the execution of this Lease owns a general
partner's interest ceases to own such general partner's interest, such cessation
of ownership shall constitute an assignment of this Lease for all purposes of
this Section.
(d) Upon the occurrence of any of such events as described in Section
13.O1(a), 13.O1(b), or 13.O1(c) hereof whether voluntary, involuntary, by
operation of law, or otherwise, without the prior written consent of Landlord
(whether or not Tenant shall have given notice thereof to Landlord), Landlord
may treat any such occurrence as a Deliberate Event of Default.
(e) Tenant agrees that if the services of a real estate representative are
used by Tenant in connection with any such assignment or subletting, Agent (or
such other agent as may be designated by Landlord) shall be the sole and
exclusive real estate representative of Tenant, and Tenant agrees to pay Agent
(or such other agent designated by Landlord) on the date of consummation of such
assignment or subletting, a commission at the rate then being generally charged
by Agent (or such other agent designated by Landlord) for similar
representation. Notwithstanding the provisions of the immediately preceding
sentence, Tenant shall have the option of designating a real estate
representative to act jointly with Landlord or Landlord's Agent, in which event,
all commissions payable in connection with any such assignment or sublease shall
be equitably shared between Tenant's real estate representative and Landlord's
Agent, provided, however, that the aggregate of such commissions shall not
exceed the commissions customarily payable to a single real estate
representative for similar services.
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ARTICLE XIV
WASTE, GOVERNMENTAL REGULATIONS
SECTION 14.01. Waste or Nuisance. Except as specifically permitted under this
Lease, Tenant shall not commit or suffer to be committed any waste upon the
Leased Premises or any nuisance or other act or thing which may disturb the
quiet enjoyment of any other tenant in the building in which the Leased Premises
are located or in the Shopping Center.
SECTION 14.02. Governmental Regulations. Tenant shall, at Tenant's sole cost and
expense, without notice or demand from Landlord, comply with and faithfully
observe all requirements of all municipal, county, state, federal and other
governmental authorities having jurisdiction now in force or which may hereafter
be in force pertaining to the Leased Premises or the repair, maintenance,
equipping, design or use thereof.
ARTICLE XV
DESTRUCTION OF LEASED PREMISES
SECTION 15.01. Total or Partial Destruction. If the Leased Premises shall be
damaged by fire or other casualty covered by Landlord's policies of fire and
broad form extended coverage insurance but are not thereby rendered untenantable
in whole or in part, and provided sufficient funds are made available by
Landlord's Mortgagee, Landlord shall at its own expense cause such damage to be
repaired, and the rent shall not be abated. If by reason of such occurrence, the
premises shall be rendered untenantable in whole or in part, Landlord shall at
its own expense cause the damage to be repaired and the Fixed Minimum Rent and
additional rent meanwhile shall be abated proportionately until Landlord has
restored the premises as to the portion of the premises rendered untenantable.
If the Leased Premises shall be damaged or destroyed by a fire or casualty not
covered by Landlord's policies of fire and broad form extended coverage
insurance, which casualty renders the Premises untenantable in whole or in part,
and Landlord decides not to repair and restore the premises, Landlord shall have
the right to be exercised by notice in writing delivered to Tenant within sixty
(60) days from and after the occurrence of such damage or destruction, to elect
to cancel and terminate this Lease. Either party shall have the right, to be
exercised by notice in writing, delivered to the other within thirty (30) days
from and after any occurrence which renders the premises wholly untenantable to
cancel this Lease if said destruction of the premises occurs within the last
three (3) years of the term hereof, said cancellation to take effect thirty (30)
days from and after the receipt of such notice by the other party, and in such
event this Lease and the tenancy hereby created shall cease as of the aforesaid
cancellation date, the rent to be adjusted as of such date; provided, however,
that if Landlord shall commence repairs or reconstruction of the destroyed
premises during the period prior to the cancellation date, the tenancy shall
remain in effect and said notice of cancellation shall be considered void. In no
event shall Landlord be obligated to expend for any repair or reconstruction
pursuant to this Section 15.01 an amount in excess of the insurance proceeds
recovered by it and allocable to the damage to the Leased Premises after
deduction therefrom of any amounts required to be paid to Landlord's Mortgagee.
If Landlord is required to repair or reconstruct the Leased Premises
pursuant to the provision of this Section 15.01, its obligation shall be limited
to the building shell and other construction performed by Landlord pursuant to
Exhibit "B" hereof. Landlord shall not be liable
22
for delays occasioned by adjustment of losses with insurance carriers or by any
other cause so long as Landlord shall proceed in good faith.
SECTION 15.02. Partial Destruction of Shopping Center. In the event that fifty
percent (50%) or more of the gross leasable area of the building in the Shopping
Center of which Tenant's Premises forms a part, shall be damaged or destroyed by
fire or other causes notwithstanding that the Leased Premises may be unaffected
by such fire or other cause, Landlord shall have the right, to be exercised by
notice in writing delivered to Tenant within sixty (60) days from and after said
occurrence, to cancel and terminate this Lease. Upon the giving of such notice
to Tenant, the term of this Lease shall expire by lapse of time upon the
fifteenth (15th) day after such notice is given and Tenant shall vacate the
Leased Premises and surrender the same to Landlord.
ARTICLE XVI
EMINENT DOMAIN
SECTION 16.01. Total Condemnation. If the whole of the Leased Premises shall be
acquired or condemned by eminent domain for any public or quasi-public use or
purpose, then the term of this Lease shall cease and terminate as of the date on
which possession of the Demised Premises is required to be surrendered to the
condemning authority, and all rentals shall be paid up to that date and Tenant
shall have no claim against Landlord nor the condemning authority for the value
of any unexpired term of this Lease.
SECTION 16.02. Total Parking Area. If the whole of the common parking areas in
the Shopping Center shall be acquired or condemned by eminent domain for any
public or quasi-public use or purpose, then the term of this Lease shall cease
and terminate as of the date on which possession of the parking area is required
to be surrendered to the condemning authority, unless Landlord shall prior to
such date notify Tenant of its intention to provide other parking facilities
which shall not violate the requirements of the applicable zoning or similar law
(or any permitted variance thereof or exception thereto) regulating the size,
layout and location of parking facilities at the Shopping Center, and shall
thereafter provide such substantially similar alternate parking facilities
within thirty (30) days of the date of such taking, with a Minimum Rent
abatement in proportion to the loss of Tenant's sales as a result of the loss of
parking during the period until Landlord provides such substantially similar
alternate parking. In the event that Landlord shall provide such other parking
facilities, then this Lease shall continue in full force and effect without any
reduction or abatement of rent. In any event, Tenant shall have no claim against
the Landlord nor the condemning authority for the value of any unexpired term of
this Lease.
SECTION 16.03. Partial Condemnation. If any part of the Leased Premises shall be
acquired or condemned by eminent domain for any public or quasi-public use or
purpose, and in the event that such partial taking or condemnation shall render
the Leased Premises unsuitable for the business of Tenant, then the term of this
Lease shall cease and terminate as of the date on which possession of the
Demised Premises is required to be surrendered to the condemning authority and
Tenant shall have no claim against Landlord nor the condemning authority for the
value of any unexpired term of this Lease. In the event of a partial taking or
condemnation which is not extensive enough to render the premises unsuitable for
the business of Tenant, then Landlord
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shall promptly restore the Leased Premises to the extent of condemnation
proceeds available for such purpose to a condition comparable to their condition
at the time of such condemnation less the portion lost in the taking, this Lease
shall continue in full force and effect and the Fixed Minimum Rent and all
additional rent shall abate proportionately. For purposes of determining the
amount of funds available for restoration of the Leased Premises from the
condemnation award said amount will be deemed to be that part of the award which
remains after payment of Landlord's reasonable expenses incurred in recovering
same and of any amounts due to any mortgagee of Landlord, and which represents a
portion of the total sum so available (excluding any award or other compensation
for land) which is equitably allocable to the Leased Premises.
SECTION 16.04. Partial Condemnation of Parking Area. If any part of the parking
area in the Shopping Center shall be acquired or condemned by eminent domain for
any public or quasi-public use or purpose and if, as the result of such partial
taking, the size, layout or location of the remaining parking facilities will
violate the requirements of the applicable zoning or similar law or any
permitted variance thereof or exception thereto regulating same, then Landlord
shall have the right and power to declare the term of this Lease at an end as of
the date on which possession of the condemned property is required to be
surrendered to the condemning authority, unless Landlord shall take immediate
steps toward eliminating such violation, in which event this Lease shall be
unaffected and remain in full force and effect as between the parties. In any
event, Tenant shall have no claim against Landlord nor the condemning authority
for the value of any unexpired term of this Lease.
SECTION 16.05. Landlord's Damages. In the event of any condemnation or taking as
hereinbefore provided, whether whole or partial, Tenant shall not be entitled to
any part of the award, as damages or otherwise, for such condemnation and
Landlord and any mortgagee of Landlord are to receive the full amount of such
award as their respective interests may appear, Tenant hereby expressly waiving
any right or claim to any part thereof and assigning to Landlord any such right
or claim to which it might become entitled.
SECTION 16.06. Tenant's Damages. Although all damages in the event of any
condemnation are to belong to Landlord and any mortgagee of Landlord as
aforesaid, whether such damages are awarded as full compensation for diminution
in value of the leasehold or to the fee of the Leased Premises, Tenant shall
have the right to the extent that same shall not diminish Landlord's or such
mortgagee's award to claim and recover from the condemning authority, but not
from Landlord or such mortgagee, such compensation as may be separately awarded
or recoverable by Tenant in Tenant's own right for or on account of any cost to
which Tenant might be put in removing Tenant's goods, wares, furniture,
fixtures, leasehold improvements and equipment.
Notwithstanding anything in the Lease to the contrary, Tenant, in a
separate action, and provided such action does not reduce Landlord's award,
shall be entitled to claim against the condemning authority an award for the
unamortized cost to Tenant of any leasehold improvements made at Tenant's own
expense, loss of business, damage to merchandise and fixtures, removal and
reinstallation costs, and moving expenses.
SECTION 16.07. Condemnation of Less Than a Fee. In the event of a condemnation
which results in the condemning authority having secured only a leasehold
interest in all or a portion of the Leased Premises without the condemnation of
the fee simple title also, this Lease shall not
24
terminate and such condemnation shall not excuse Tenant from full performance of
all of its covenants hereunder, but Tenant in such event shall be entitled to
present or pursue against the condemning authority its claim for and to receive
all compensation of damages sustained by it by reason of such condemnation and
Landlord's right to recover compensation or damages shall be limited to
compensation for damages, if any, to its reversionary interest.
ARTICLE XVII
BANKRUPTCY; LANDLORD'S REMEDIES AND DAMAGES
SECTION 17.01. Bankruptcy. Subject at all times to the U.S. Bankruptcy Code, if
there shall be filed against Tenant or any guarantor or surety of this Lease or
any of Tenant's obligations under this Lease, in any court, pursuant to any
statute either of the United States or of any state, a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver or trustee
of all or any portion of Tenant's or such guarantor's or surety's property, and
if, within thirty (30) days thereof, Tenant or such guarantor or surety fails to
secure a discharge thereof, or if Tenant or such guarantor or surety shall
voluntarily file any such petition or make an assignment for the benefit of
creditors or petition for or enter into such an arrangement, this Lease, at the
option of Landlord, may be canceled or terminated, in which event neither Tenant
nor any person claiming through or under Tenant by virtue of any statute or of
an order of any court shall be entitled to acquire or remain in possession of
the Demised Premises, as the case may be, and Landlord shall have no further
liability hereunder to Tenant or such person, and Tenant or any such person
shall forthwith quit and surrender the Demised Premises. If this Lease shall be
so canceled or terminated, Landlord, in addition to the other rights and
remedies of Landlord under Article XVII hereof, or contained elsewhere in this
Lease, or by virtue of any statute or rule of law, may retain as liquidated
damages any rent, security deposit and any other money received by Landlord from
Tenant or others on behalf of Tenant.
SECTION 17.02. Damages.
(a) It is stipulated and agreed that in the event of the cancellation or
termination of this Lease pursuant to Section 17.01 hereof, Landlord shall
forthwith, notwithstanding any other provision of this Lease to the contrary, be
entitled to recover from Tenant as and for liquidated damages, in addition to
the liquidated damages set forth in Section 17.01 hereof, an amount equal to the
difference between: the sum of the annual Fixed Minimum Rent, the Tax Rent
payable in the Tax Year immediately preceding such termination, Tenant's
proportionate share of the Operating Costs payable in the last preceding
Accounting Period, all multiplied by the number of years and fraction of a year
then constituting the unexpired term or portion thereof, discounted at the rate
of four percent (4%) per annum to present worth, minus the fair and reasonable
annual rental value of the Demised Premises for such period, also discounted at
the rate of four percent (4%) per annum to present worth. If the Demised
Premises or any part thereof be relet by Landlord for the balance of the term
hereof, or any part thereof, prior to presentation of proof of such liquidated
damages to any court, commission or tribunal, the amount of rent reserved upon
such reletting shall be deemed prima facie to be the fair and reasonable rental
value for the part or the whole of the premises so relet during the term of the
reletting. Nothing herein contained, however, shall limit or prejudice the right
of Landlord to prove for and obtain as liquidated damages by reason of such
termination an amount equal to the maximum allowed by any statute or rule of law
in effect at the time when, and governing the
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proceedings in which, such damages are to be proved, whether or not such amount
be greater than, equal to or less than the amount of the liquidated damages
referred to above.
(b) In addition to the liquidated damages provided in this Section,
Landlord shall also be entitled to recover as damages from Tenant all
nonrecurring sums and charges remaining unpaid and which are due or becoming due
from Tenant pursuant to this Lease including, but not limited to, those under
Exhibit "B" hereto and interest thereon as provided in Section 2.04 hereof.
ARTICLE XVIII
EVENTS OF DEFAULT: LANDLORD'S REMEDIES
SECTION 18.01. Events of Default.
The following shall constitute Events of Default:
(a) If Tenant defaults in the payment of any sum of money (whether Fixed
Minimum Rent, Tax Rent, Tenant's proportionate share of Operating Costs,
additional rent or otherwise) when due and such default shall continue for ten
(10) days after the date of written notice from Landlord to Tenant.
(b) Except as to acts, defaults, omissions and/or occurrences
characterized, defined, denoted, or identified in this Lease as Deliberate
Events of Default, if Tenant defaults in fulfilling any of the other covenants
of this Lease on Tenant's part to be performed hereunder and such default shall
continue for twenty (20) days after the date of written notice from Landlord to
Tenant specifying the nature of said default, or, if the default so specified
shall be of such a nature that the same cannot be reasonably cured or remedied
within said twenty (20) day period, if Tenant shall not in good faith have
commenced the curing or remedying of such default within such twenty (20) day
period and shall not thereafter diligently proceed therewith to completion.
(c) If any execution or attachment shall be issued against Tenant or any of
Tenant's property and shall not be discharged or vacated within thirty (30) days
after the issuance thereof.
(d) Any event described in Section 17.01.
(e) If Tenant shall abandon the Demised Premises or if the Demised Premises
shall be permitted to become vacant.
SECTION 18.02. Deliberate Events of Default.
(a) Notwithstanding anything to the contrary set forth in this Lease, if
Tenant shall default (1) in the timely payment of Fixed Minimum Rent, Tax Rent,
Tenant's proportionate share of Operating Costs and any such default shall be
repeated two (2) times in any period of twelve (12) months; or (2) in the
performance of any other covenant of this Lease more than three (3) times in any
period of twelve (12) months, then, notwithstanding that such defaults shall
have been cured within the period after notice as above provided, any further
similar default within such twelve (12) month period shall be deemed to be a
Deliberate Event of Default.
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(b) Any default, act, omission or occurrence characterized, defined,
denoted, or identified elsewhere in this Lease as a Deliberate Event of Default
shall also be a Deliberate Event of Default.
(c) In the event of a Deliberate Event of Default, Landlord, without giving
Tenant any notice and without affording Tenant an opportunity to cure the
default (Tenant hereby specifically waiving any right of tender), may exercise
any or all of its rights under this Lease in addition to those it may have at
law or in equity.
SECTION 18.03. Termination. Upon or after the occurrence of any one or more of
such Events of Default or Deliberate Events of Default, if the term shall not
have commenced Landlord may immediately cancel this Lease by written notice, or
if the term shall have commenced Landlord may serve upon Tenant a written notice
that this Lease and the term will terminate on a date to be specified therein,
which shall not be less than ten (10) days after the date of such notice and in
either event, Tenant shall have no right to avoid the cancellation or
termination by payment of any sum due or by other performance of any condition,
term or covenant broken. Upon the date specified in the aforesaid notice of
termination, this Lease and the term hereof shall terminate and come to an end
as fully and completely as if such date were the day herein definitely fixed for
the end and expiration of this Lease and such term, and Tenant shall then quit
and surrender the Demised Premises to Landlord, but notwithstanding any statute,
rule of law, or decision of any court to the contrary, Tenant shall remain
liable as set forth hereinafter. Notwithstanding Landlord's election to
terminate this Lease, Landlord may, at its option, reinstate this Lease at any
time thereafter, and a letter from Landlord, Agent or the attorney for Landlord
or Agent setting forth Landlord's exercise of its option to reinstate the Lease
shall be sufficient to reinstate this Lease upon all of its terms and
conditions, without any other notice to or from either party to the other.
SECTION 18.04. Right of Possession. Upon or after any one or more Events of
Default or Deliberate Events of Default; or if the notice provided for above in
Section 18.03 hereof shall have been given and this Lease shall be terminated;
or if the Demised Premises became vacant or deserted; then, in all or any of
such events, in addition to, and not in lieu of, all other remedies of Landlord,
Landlord may without notice terminate all services (including, but not limited
to, the furnishing of utilities) and/or re-enter the Demised Premises by summary
proceeding or otherwise dispossess Tenant and the legal representative of Tenant
or other occupant of the Demised Premises, and remove their effects and
repossess and enjoy the Demised Premises, together with all alterations,
additions and improvements, all without being liable to prosecution or damages
therefor.
SECTION 18.05. Additional Remedies of Landlord.
(a) In the event of any Event of Default, Deliberate Event of Default,
re-entry, termination and/or dispossession by summary proceedings or otherwise,
in addition to, and not in lieu of, all other remedies which Landlord has under
this Lease, at law or in equity: (1) the Fixed Minimum Rent shall become due
thereupon and be paid up to the time of such re-entry, dispossession and/or
expiration; and (2) Landlord may relet the Demised Premises or any part or parts
thereof, either in the name of Landlord or otherwise, for a term which may at
Landlord's option be less than or exceed the period which would otherwise have
constituted the balance of
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the term of this Lease, and may grant concessions or free rent and (3) Tenant or
the legal representative of Tenant shall also pay Landlord at Landlord's option
and whether or not Landlord has terminated or canceled this Lease, either
liquidated damages calculated by the formula set forth in Section 17.02 hereof
and the other damages referred to in Section 17.02(b), or as liquidated damages
for the failure of Tenant to observe and perform said Tenant's covenants herein
contained, for each month of the period which would otherwise have constituted
the balance of the term, the excess, if any, of the sum of one monthly
installment of Fixed Minimum Rent, the monthly portion of the payment of Tax
Rent that would have been payable for the period in question but for such
re-entry or termination, the monthly payment of Tenant's current proportionate
share of Operating Costs over the net amount, if any, of the rents actually
collected on account of the lease or leases of the Demised Premises for such
month. The refusal or failure of Landlord to relet the Demised Premises or any
part or parts thereof shall not release or affect Tenant's liability for
damages. In computing such liquidated damages there shall be added to the said
deficiency the damages set forth in Section 17.02(a) hereof and such expenses as
Landlord may incur in connection with reletting, such as court costs, attorney's
fees and disbursements, brokerage, and management fees and commissions, cost of
putting and keeping the Demised Premises in good order and costs of preparing
the Demised Premises for reletting as hereinafter provided. Any such liquidated
damages shall be paid in monthly installments by Tenant on the day specified in
this Lease for the payment of Fixed Minimum Rent and any action brought to
collect the amount of deficiency for any month shall not prejudice in any way
either the rights of Landlord to collect the deficiency for any subsequent month
by a similar proceeding, or the rights of Landlord to elect to collect
liquidated damages calculated by the formula set forth in Section 17.02 hereof,
provided only that such liquidated damages shall be reduced by the amount, if
any, of monthly liquidated damages collected by Landlord minus the actual cost
(including attorney's fees and costs) of collecting such monthly liquidated
damages. Landlord, at Landlord's option, may make such alterations, repairs,
replacements and/or decorations in the Demised Premises as Landlord in
Landlord's sole judgment considers advisable and necessary for the purpose of
reletting the Demised Premises; and the making of such alterations and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Landlord shall in no event be liable in any way
whatsoever for failure to relet the Demised Premises, or in the event that the
Demised Premises are relet, for failure to collect the rent thereof under such
reletting.
(b) In lieu of the damages provided in Section 18.05(a), Landlord shall be
entitled to: any and all rental arrearages, all such expenses as Landlord may
incur in connection with the collection of such liquidated damages, such as
court costs and reasonable attorney's fees, and disbursements (if any) necessary
to return the Premises to the same condition of cleanliness, repair and order as
the Premises were in upon the commencement of business under this Lease
(excluding Tenant's personal property), reasonable wear and tear excepted, plus
the lesser of: (i) two (2) times the sum of the then current annual Fixed
Minimum Rent and all additional rent or (ii) a sum equal to the Fixed Minimum
Rent and all additional rent multiplied by the number of months and/or
fractional months which would have constituted the balance of the term.
(c) In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Landlord shall have the right or injunction and
the right to invoke any remedy allowed at law or in equity as if re-entry,
summary proceedings and other remedies were not
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herein provided for. Mention in this Lease of any particular remedy shall not
preclude Landlord from any other remedies under this Lease, or now or hereafter
existing at law or in equity or by statute.
(d) Tenant hereby expressly waives the service of notice of intention to
re-enter or to institute legal proceedings to that end and any and all rights of
redemption granted by or under any present or future laws in the event of Tenant
being evicted or dispossessed for any cause, or in the event of Landlord
obtaining possession of the Demised Premises by reason of the violation by
Tenant of any of the covenants and conditions of this Lease or otherwise. The
words "re-enter" and "re-entry" as used in this Lease are not restricted to
their technical legal meaning.
Notwithstanding anything herein to the contrary, Landlord shall use
commercially reasonable efforts to mitigate its damages.
SECTION 18.06. Confession of Judgment. When this Lease shall be terminated or
canceled by reason of the breach of any provision hereof, either during the
original term of this Lease or any renewal thereof and after the expiration of
the applicable notice period, and also as soon as the term hereby created or any
renewal thereof shall have expired, it shall be lawful for any attorney as
attorney for Tenant to file an agreement for entering in any court of competent
jurisdiction, confession of judgment in ejectment against Tenant and all persons
claiming under Tenant for the recovery by Landlord of possession of the Demised
Premises, for which this Lease or a true and correct copy thereof shall be his
sufficient warrant; whereupon, if Landlord so desires, a writ of possession may
issue forthwith, without any prior writ or proceedings whatsoever, and provided
that if for any reason after such action shall have been commenced, the same
shall be terminated and possession remain in or be restored to Tenant, Landlord
shall have the right upon any subsequent default or defaults, or upon the
termination or cancellation of this Lease as hereinbefore set forth, to bring
one or more actions as hereinbefore set forth to recover possession as
aforesaid.
SECTION 18.07. Waivers.
Tenant expressly waives:
(a) The benefit of all laws, now or hereafter in force, exempting any goods
on the Demised Premises, or elsewhere, from distraint, levy or sale in any legal
proceedings taken by Landlord to enforce any rights under this Lease.
(b) The benefit of all laws now made or which may hereafter be made
regarding any limitation as to the goods upon which, or the time within which,
distress is to be made after the removal of goods, and further relieves Landlord
of the obligation of proving or identifying such goods, it being the purpose and
intent of this provision that all goods of Tenant, whether upon the Demised
Premises or not, shall be liable to distress for rent.
(c) The right to issue a writ of replevin for the recovery of any goods
seized under a distress for rent or levy upon an execution for rent, damages or
otherwise.
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(d) The right to delay execution on any real estate that may be levied upon
to collect any amount which may become due under the terms and conditions of
this Lease and any right to have the same appraised, and Tenant authorizes any
Prothonotary or clerk to enter a writ of execution or other process upon
Tenant's voluntary waiver and further agrees that said real estate may be sold
on a writ of execution or other process.
(e) All rights under any law, ordinance or statute relating to Landlord and
Tenant rights to the extent of hereby authorizing the sale of any goods
distrained for rent at anytime after seven (7) days from said distraint without
appraisement and condemnation thereof.
(f) The right to three (3) months notice and/or fifteen (15) or thirty (30)
days notice required under certain circumstances by the Landlord and Tenant Act
of 1951, hereby agreeing that seven (7) days notice shall be sufficient in
either or any such case.
ARTICLE XIX
TENANT'S PROPERTY
SECTION 19.01. Taxes on Leasehold. Tenant shall be responsible for and shall pay
before delinquency all municipal, county or state taxes assessed during the term
of this Lease against any leasehold interest or personal property of any kind
owned by Tenant or placed in, upon or about the Leased Premises by Tenant,
whether such taxes shall be assessed against and billed to Tenant or shall be
incorporated in the tax base upon which taxes of Landlord shall be calculated.
SECTION 19.02. Waiver as to Loss and Damage. Unless caused by the negligence or
willful misconduct of Landlord, neither Landlord nor Agent shall be liable for
any damage to property of Tenant or of others located on the Leased Premises,
nor for the loss of or damage to any property of Tenant or of others by theft or
otherwise. Unless caused by the negligence or willful misconduct of Landlord,
neither Landlord nor Agent shall be liable for any injury or damage to persons
or property resulting from fire, explosion, collapse, falling plaster, steam,
gas, electricity, water, rain or snow or leaks from any part of the Leased
Premises or of the Shopping Center or from the pipes, sprinklers, appliances or
plumbing works or from the roof, street or subsurface or from any other place or
by dampness or from any other cause of whatsoever nature. Unless caused by the
negligence or willful misconduct of Landlord, neither Landlord nor Agent shall
be liable for any such damage caused by other tenants or persons in the Leased
Premises, occupants of adjacent property, of the Shopping Center, or the public,
or caused by operations in construction of any private, public or quasi-public
work. Neither Landlord nor Agent shall be liable for any latent defect in the
Leased Premises or in the building of which they form a part except for a period
of one (1) year from the date the first tenant takes possession of the Leased
Premises. All property of Tenant kept or stored on the Leased Premises shall be
so kept or stored at the risk of Tenant only and Tenant shall hold Landlord and
Agent harmless from any claims arising out of damage to the same, including
subrogation claims by Tenant's insurance carriers, unless such damage shall be
caused by the willful act or negligence of Landlord or Agent occurring after the
Commencement Date. Except as specifically provided herein to the contrary, this
Section and the waiver herein contained shall pertain to matters existing before
as well as after the execution of this Lease and the Commencement Date.
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In addition to the foregoing waivers, Landlord and Tenant agree that in the
event the Demised Premises, or the building or Shopping Center of which the
Demised Premises are a part, or the contents of the Demised Premises, are
damaged or destroyed by fire or other insured casualty, the rights, claims, and
causes of action, if any, of either party against the other with respect to
recovery for such damage or destruction are hereby waived to the extent that
such damage or destruction is covered by such insurance, and Landlord and Tenant
agree that all policies of fire and extended coverage insurance carried by
Landlord and Tenant covering the Demised Premises or the building or Shopping
Center of which the Demised Premises are a part, or the contents of the Demised
Premises, shall to the extent possible without additional cost contain a clause
or endorsement in the usual form evidencing such waiver of subrogation.
SECTION 19.03. Notice by Tenant. Tenant shall give immediate notice to Landlord
in case of fire or accidents in the Leased Premises or in the building of which
the premises are a part.
ARTICLE XX
MISCELLANEOUS
SECTION 20.01. Access by Landlord. Upon reasonable notice (except in the case of
an emergency in which case no notice is required) Landlord may at all reasonable
times during the term of this Lease enter to inspect the Demised Premises and/or
may show the Demised Premises and building to others. At any time within one (1)
year immediately preceding the expiration of the term of this Lease, Landlord
shall have the right to display on the exterior of the Demised Premises (but not
so as to unreasonably obstruct the view thereof or access thereto) the customary
"For Rent" sign and during such period Landlord may show the premises and all
parts thereof to prospective tenants between the hours of 9:00 a.m. and 9:00
p.m. on any day except Sunday and any legal or religious holiday on which Tenant
shall not be open for business. Landlord also reserves the right after
reasonable (being not less than twenty-four (24) hours) notice of intention to
so enter (except that in the event of an emergency, no notice shall be required)
to enter the premises at any time and from time to time to make such repairs,
additions or alterations as it may deem necessary for the safety, improvement or
preservation thereof, or of the building in which the Demised Premises is
contained, but Landlord assumes no obligation to do so, and the performances
thereof by Landlord shall not constitute a waiver of Tenant's default in failing
to perform the same. Landlord shall in no event be liable for any inconvenience,
disturbances, loss of business or other damage to Tenant by reason of the
performance by Landlord of any work in, upon, above or under the Demised
Premises. If tenant shall have vacated or deserted the Demised Premises or, in
the event of an emergency, or if in any other instance after Landlord has given
notice of Landlord's intention to enter, Tenant or Tenant's employees shall not
be personally present to permit an entry into the Demised Premises, then in any
such event, Landlord or its agents or employees may enter the same by the use of
force or otherwise without rendering Landlord liable therefor, and without in
any manner affecting Tenant's obligations under this Lease. The exercise of any
such reserved right by Landlord shall not be deemed an eviction or disturbance
of Tenant's use and possession of the Premises and shall not render Landlord
liable in any manner to Tenant or to any other person except Landlord shall be
responsible for damage caused as a result of Landlord's entry through use of
force, nor shall the same constitute any grounds for an abatement of any rent
hereunder.
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SECTION 20.02. Holding Over. Should Tenant hold over in possession of the
Demised Premises after the expiration of the term hereof without the execution
of a new lease agreement or extension or renewal agreement, Tenant, at the
option of Landlord, shall be deemed to be occupying the Demised Premises from
month to month, subject to such occupancy being terminated by Landlord upon ten
(10) days written notice, at the rental, including, but not limited to, Fixed
Minimum Rent, Tax Rent, Tenant's proportionate share of Operating Costs, and
additional rent all calculated, from time to time, as though the term of Lease
had continued and otherwise subject to all of the other terms, covenants and
conditions of the Lease insofar as the same may be applicable to a month to
month tenancy.
SECTION 20.03. Successors. All rights, obligations and liabilities herein given
to, or imposed upon, the respective parties hereto shall extend to and bind the
several respective heirs, executors, administrators, trustees, receivers, legal
representatives, successors and assigns of the said parties; and if there shall
be more than one (1) tenant, they shall all be bound jointly and severally by
the terms, covenants, and agreements herein. No rights, however, shall inure to
the benefit of any assignee, legal representative, trustee, receiver, legatee or
other personal representative of Tenant unless the assignment to such party has
been approved by Landlord in writing as provided in Section 13.01(a) hereof.
SECTION 20.04. Quiet Enjoyment. So long as Tenant shall pay the rents herein
provided within the respective times provided therefor, and provided and so long
as Tenant observes and performs all the covenants, terms and conditions on
Tenant's part to be observed and performed, Tenant shall peaceably and quietly
hold and enjoy the Demised Premises for the term hereby demised without
hindrance or interruption by Landlord or any other person or persons lawfully
claiming by, through or under Landlord, subject, nevertheless, to the terms and
conditions of this Lease. Laurel Mall Associates' liability under this Section
shall cease upon a conveyance by Landlord of the Premises.
SECTION 20.05. Waiver. The waiver by Landlord of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver or any
subsequent breach of the same or a waiver of any other term, covenant or
condition herein contained. The subsequent acceptance by Landlord of rent due
hereunder or any or all other monetary obligations of Tenant hereunder, whether
or not denoted as rent hereunder, shall not be deemed to be a waiver of any
preceding breach by Tenant of any term, covenant or condition of this Lease,
other than the failure of Tenant to make the particular payment so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent. No covenant, term or condition of this Lease shall be
deemed to have been waived by Landlord, unless such waiver be in writing and
executed by Landlord.
SECTION 20.06. Custom and Usage. Any law, usage or custom to the contrary
notwithstanding, Landlord shall have the right at all times to enforce the
covenants and conditions of this Lease in strict accordance with the terms
hereof, notwithstanding any conduct or custom on the part of the Landlord in
refraining from so doing at any time or times with respect to the Tenant
hereunder or with respect to other tenants of the Shopping Center. The failure
of Landlord at any time or times to enforce its rights under said covenants and
provisions strictly in accordance with the same shall not be construed as having
created a custom in any way or manner contrary to the specific terms, provisions
and covenants of this Lease or as having in
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any way or manner modified the same.
SECTION 20.07. Accord and Satisfaction. No payment by Tenant or receipt by
Landlord of a lesser amount than any payment of rent or additional rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated rent or additional rent then due and payable, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy provided in this Lease, at law
or in equity.
SECTION 20.08. Performance of Tenant's Covenants. Tenant covenants and agrees
that it will perform all agreements and observe all covenants herein expressed
on its part to be performed and observed and that it will promptly, upon receipt
of written notice specifying action desired by Landlord in connection with any
such agreement or covenant, comply with such notice if the requested action is
consistent with the terms of this Lease; and further, that if Tenant shall not
comply with any such notice to the satisfaction of Landlord prior to the date on
which such noncompliance would constitute an Event of Default, in addition to,
and not in lieu of or in limitation of any other remedy which Landlord may have
pursuant to this Lease, at law or in equity, Landlord may, but shall not be
obligated to, enter upon the premises and do the things specified in said
notice. Landlord shall have no liability to Tenant for any loss or damage
resulting in any way from such action and Tenant agrees to pay upon demand, as
additional rent, any expense incurred by Landlord in taking such action.
Notwithstanding the foregoing, Landlord's performance of any or all of Tenant's
covenants shall not release Tenant from liability for nonperformance.
SECTION 20.09. Entire Agreement. The Indenture of Lease, the Lease Agreement the
Exhibits and Rider, if any, set forth all the covenants, promises, agreements,
conditions and understandings between Landlord and Tenant concerning the Demised
Premises and there are no covenants, promises, agreements, conditions or
understandings, either oral or written, between them other than as herein set
forth. All prior communications, negotiations, arrangements, representations,
agreements and understandings, whether oral, written or both, between the
parties hereto, and their representatives, are merged herein and extinguished,
this Lease superseding and canceling the same. Except as herein otherwise
provided, no subsequent alteration, amendment, change or addition to this Lease
shall be binding upon Landlord or Tenant unless reduced to writing and executed
by the party against which such subsequent alteration, amendment, change or
modification is to be enforced. If any provision contained in any Rider hereto
is inconsistent with any printed provisions of this Lease, the provisions
contained in such Rider shall supersede said printed provision. Tenant hereby
acknowledges that: (a) this Lease contains no restrictive covenants or
exclusives in favor of Tenant; (b) this Lease shall not be deemed or interpreted
to contain, by implication or otherwise, any warranty, representation or
agreement on the part of Landlord that any regional or national chain store or
any other merchant shall open for business or occupy or continue to occupy any
premises in or adjoining the Shopping Center during the term of this Lease or
any part thereof and Tenant hereby expressly waives all claim with respect
thereto and acknowledges Tenant is not relying on any such warranty,
representation or agreement by Landlord either as a matter of inducement in
entering into this Lease or as a condition of this Lease or as a covenant by
Landlord.
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SECTION 20.10. No Partnership. Landlord does not, in any way or for any purpose,
become a partner of Tenant in the conduct of its business, or otherwise, or
joint venturer or a member of a joint enterprise with Tenant.
SECTION 20.11. Notices. All payments of rent and any and all other monetary
obligations of Tenant accruing hereunder, whether or not denoted as rent, shall
be paid to Agent at Plymouth Plaza, 580 West Germantown Pike, Suite 200,
Plymouth Meeting, Pennsylvania 19462, until Tenant is notified otherwise in
writing, and all notices given to Landlord hereunder shall be in writing and
forwarded to it at such address, postage prepaid, by certified mail, return
receipt requested. All notices to Tenant shall be in writing and shall be deemed
to have been duly given (a) on the date of receipt if (i) personally delivered
or (ii) delivered by a recognized overnight courier (with receipt required) or
(b) three (3) days after mailing with adequate postage by certified mail, return
receipt requested, addressed to Tenant at the address set forth in the Indenture
of Lease, the address of the Leased Premises, or at such other address as Tenant
may hereafter designate to the Landlord in writing with a copy to Steven J.
Weingarten, Esquire; McNees, Wallace & Nurick, 100 Pine Street, Harrisburg,
Pennsylvania 17108. Notices by Landlord may be given on its behalf by Agent or
by an attorney for Landlord or Agent.
SECTION 20.12. Captions. The captions appearing in this Lease are inserted only
as a matter of convenience and in no way define, limit, construe or describe the
scope or intent of such sections or articles of this Lease nor in any way affect
this Lease.
SECTION 20.13. Tenant Defined; Use of Pronoun. The word "Tenant" shall be deemed
and taken to mean each and every person or party mentioned as a Tenant herein,
be the same one or more; and if there shall be more than one Tenant, any notice
required or permitted by the terms of this Lease may be given by or to any one
thereof, and shall have the same force and effect as if given by or to all
thereof. The use of the neuter singular pronoun to refer to Landlord or Tenant
shall be deemed a proper reference even though Landlord or Tenant may be an
individual, a partnership, a corporation, or a group of two or more individuals
or corporations. The necessary grammatical changes required to make the
provisions of this Lease apply in the plural number where there is more than one
Landlord or Tenant and to either corporations, associations, partnerships or
individuals, males or females, shall in all instances be assumed as though in
each case fully expressed.
SECTION 20.14. Negation of Personal Liability. Notwithstanding anything
contained herein to the contrary, Tenant agrees that Landlord shall have no
personal liability with respect to any of the provisions of this Lease and
Tenant shall look solely to the estate and property of Landlord in the land and
buildings comprising the Shopping Center of which the Demised Premises forms a
part for the satisfaction of Tenant's remedies, including without limitation,
the collection of any judgment or the enforcement of any other judicial process
requiring the payment or expenditure of money by Landlord in the event of any
default or breach by Landlord with respect to any of the terms and provisions of
this Lease to be observed and/or performed by Landlord, subject however, to the
prior rights of any holder of any mortgage covering all or part of the Shopping
Center, and no other assets of Landlord or any principal of Landlord shall be
subject to levy, execution or other judicial process for the satisfaction of
Tenant's claim and in the event Tenant obtains a judgment against Landlord, the
judgment docket shall be so noted. This Section shall inure to the benefit of
Landlord's successors and assigns and their respective principals.
34
SECTION 20.15. Liability of Agent. Montgomery Realty Company, in its capacity as
Agent, is acting as Agent only and in such capacity shall not in any event be
held liable to the Landlord or to Tenant for the fulfillment or nonfulfillment
of any of the terms, covenants or conditions of this Lease or for any action or
proceedings that may be taken by Landlord against Tenant, or by Tenant against
Landlord. Any waiver of Landlord's liability hereunder, including any waiver of
subrogation rights shall apply with equal force and effect to such Agent.
SECTION 20.16. Effect of Governmental Limitations on Rents and Other Charges. In
the event that any law, decision, rule or regulation of any governmental body
having jurisdiction shall have the effect of limiting for any period of time the
amount of rent or other charges payable by Tenant to any amount less than that
otherwise provided pursuant to this Lease, the following amounts shall
nevertheless be payable by Tenant: (a) throughout such period of limitation,
Tenant shall remain liable for the maximum amount of rent and other charges
which are legally payable (without regard to any limitation to the amount
thereof expressed in this Lease except that all amounts payable by reason of
this Section 20.16 shall not in the aggregate exceed the total of all amounts
which would otherwise be payable by Tenant pursuant to the terms of this Lease
for the period of limitation), (b) at the termination of such period of
limitation, Tenant shall pay to Landlord, on demand but only to the extent
legally collectible by Landlord, any amounts which would have been due from the
Tenant during the period of limitation but which were not paid because of such
limiting law, decision, rule or regulation, and (c) for the remaining term of
this Lease following the period of limitation, Tenant shall pay to Landlord all
amounts due for such portion of the term of this Lease in accordance with the
terms hereof calculated as though there had been no intervening period of
limitation.
SECTION 20.17. Partial Invalidity; Separate Covenants. If any term, covenant or
condition of this Lease or the application thereof to any person or
circumstances shall to any extent, be invalid or unenforceable, the remainder of
this Lease or the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby and each term, covenant and condition of this
Lease shall be valid and be enforced to the fullest extent permitted by law.
Furthermore, each covenant, agreement, obligation and other provision contained
in this Lease is, and shall be deemed and construed as a separate and
independent covenant of the party bound by, undertaking or making the same, and
not dependent on any other provision of this Lease unless expressly so provided.
SECTION 20.18. Recording. Tenant shall not record this Lease without the written
consent of Landlord. If either party requests, the parties shall execute and
acknowledge a short or memorandum form of lease for recording purposes which
shall be recorded at the requesting party's expense.
SECTION 20.19. Brokerage Commission. Tenant represents and warrants to Landlord
that Tenant has had no dealing, negotiations or consultations with respect to
the premises, the Shopping Center or this transaction with any broker or finder
except Agent and that with the exception of Agent no broker or finder called the
premises or any other space in the Shopping Center to Tenant's attention for
lease. In the event that any other broker or finder other than Agent claims to
have submitted the premises or any other spaces in the Shopping Center to
Tenant, to have induced Tenant to lease the premises or to have taken part in
any dealings, negotiations or consultations with respect to the premises, the
Shopping Center or this
35
transaction, Tenant will be responsible for and will defend, indemnify and save
Landlord and Agent harmless from and against all costs, fees (including without
limitation attorneys fees) expenses, liabilities and claims incurred or suffered
by Landlord and/or Agent as a result thereof.
SECTION 20.20. Construction. It is the intent of the parties hereto that if any
term, covenant, condition or agreement of this Lease is capable of two or more
constructions, one or more of which would render the provision void, and the
other or others of which would render the provision valid, then the provision
shall have the meaning or meanings which would render it valid.
SECTION 20.21. Submission of Lease to Tenant. The submission by Landlord to
Tenant of this Lease shall have no binding force or effect, shall not constitute
an option for the leasing of the Demised Premises, nor confer any rights or
impose any obligations upon either party until the execution thereof by Landlord
and the delivery of an executed original copy thereof to Tenant or its
representative.
SECTION 20.22. Force Majeure. In the event that either party hereto shall be
delayed or hindered in or prevented from the performance of any act required
hereunder by reason of strikes, lock-outs, labor troubles, inability to procure
materials resulting from reasons other than insufficient financial resources,
failure of power, restrictive governmental laws or regulations, riots,
insurrection, war or other reasons of a like nature not the fault of the party
delayed in performing work or doing acts required under the terms of this Lease,
then performance of such acts shall be excused for the period of the delay and
the period for the performance of any such acts shall be extended for a period
equivalent to the period of such delay. The provisions of this Section 20.22
shall not excuse Tenant from the prompt payment of rent, additional rent or any
other payments required by the terms of this Lease.
SECTION 20.23. Cost of Living. Deleted.
SECTION 20.24. Collection Fees. In the event Landlord engages the services of an
attorney to collect any rent or other sum when due hereunder or to enforce the
provisions of this Lease for Tenant's failure to keep and perform any other
term, covenant or condition of this Lease, then the costs associated with such
services including a reasonable attorney's fee shall be the responsibility of
Tenant, payable to Landlord upon written demand as additional rent in accordance
with the provisions of Section 2.04 hereof.
SECTION 20.25. Hazardous Material.
(a) As used herein, the term "hazardous material" means any hazardous or
toxic substance, material or waste (including, without limitation, asbestos)
which, subsequent to Tenant taking possession of the Leased Premises, is
determined by any state, federal or local governmental authority to be capable
of posing a risk of injury to health, safety or property and/or the use and/or
disposal of which is regulated by any governmental authority. If the Leased
Premises, any equipment, trade fixtures or other mechanical apparatus therein
contains any hazardous material (other than in accordance with and as permitted
by applicable law), introduced by Tenant, its agents, contractors or employees,
Landlord, at its election, shall have the right to (i) cause Tenant to remove
and properly dispose of same, all at Tenant's sole cost and
36
expense and in compliance with the provisions hereof, or (ii) perform the
removal and disposal thereof itself, in which event Tenant shall reimburse
Landlord, on demand, for the cost incurred by Landlord in doing so and securing
the certifications referred to below. Tenant shall not cause or permit any
hazardous material to be brought upon, kept or used in or about the Leased
Premises by Tenant, its agents, employees, contractors or invitees (other than
in accordance with and as permitted by applicable law).
(b) If Landlord requires Tenant to remove the hazardous material introduced
by Tenant, its agents, contractors or employees, Tenant shall retain the
services of an environmental engineer and a contractor, both of whom must be
previously approved in writing by Landlord. Tenant shall submit to Landlord for
approval the insurance certificates of Tenant's environmental engineer and
contractor, a written removal plan and detailed plans and specifications which
shall disclose, without limitation, the dates on which such work is to be
performed and the steps to be taken to protect the public, all public areas in
the Center, and the HVAC, water, sanitary and storm systems from contamination
during the removal and disposal process. No work disclosed in the removal plan
shall be commenced until Landlord has approved all aspects of such removal and
disposal process and Tenant shall only perform such work in strict accordance
with the process as approved by Landlord. Tenant shall close for business while
such work is being performed. Landlord reserves the right to monitor the
performance of such work from time to time and, if Landlord believes that such
work is being done in a manner which permits hazardous material to escape from
the Leased Premises or otherwise constitutes an unsafe condition, at Landlord's
direction, Tenant shall immediately cease such work until such problem has been
corrected to Landlord's satisfaction. Tenant shall replace any contaminated
equipment or materials removed from the Leased Premises with new equipment or
material performing the same function. If asbestos is removed from the premises,
prior to replacing the asbestos with an approved fire retardant material, Tenant
shall cause its consulting engineer to perform an air quality test in the Leased
Premises and to certify the results thereof in a letter directed from such
engineer to Landlord and Agent. Tenant shall not install such fire retardant or
reopen for business, until the results of such air quality tests are accepted by
Landlord. Tenant shall perform such further acts as may be required to make such
results acceptable to Landlord. Upon Landlord's acceptance of the air quality
test, Tenant shall install the fire retardant material and promptly reopen for
business.
(c) If Landlord elects to perform the removal of the hazardous material
from the Leased Premises, Landlord shall so notify Tenant of Landlord's
anticipated commencement date of such work and Tenant shall close for business
not later than such date and remain closed until notified by Landlord to reopen
where upon Tenant shall promptly reopen for business. If Landlord performs such
work it shall do so in compliance with all applicable codes, laws and
governmental requirements. If directed to do so by Landlord, Tenant shall remove
such of its goods, wares, personal property and trade fixtures as shall be
required by Landlord for the completion of such work of Landlord, its
contractors and subcontractors, and may relocate the same within the Demised
Premises or elsewhere in the Center during the performance of such work. Neither
Landlord, Agent nor their contractors or subcontractors shall be liable to
Tenant in any regard for any damage to or loss of such items or for any other
acts occurring in the Leased Premises during the performance of such work.
37
Landlord warrants and represents that, to the best of its knowledge, as of
the execution of this Lease, there exist no hazardous materials (as defined
herein) in the Premises.
Section 20.26. Agent Commission. It is agreed between Landlord and Agent that
the Agent is due a Real Estate Commission as a result of the execution of this
Lease, said commission to be paid to Agent by Landlord, Landlord's beneficiary
or successor in interest to this Lease, pursuant to the terms of a management
and leasing agreement. Tenant shall have no responsibility for the payment of
said commission.
ARTICLE XXI
SECURITY DEPOSIT
SECTION 21.01. Use and Return of Deposit. In the event of the failure of Tenant
to pay any rent or other sum when due hereunder or to keep and perform any other
term, covenant or condition of this Lease to be kept and performed by Tenant,
then at the option of Landlord said Landlord may, either with or without
terminating this Lease, appropriate and apply said entire deposit, or so much
thereof as may be necessary to the payment of any such overdue rent or other sum
or to the compensation of Landlord for all loss or damage sustained or suffered
by Landlord due to such breach on the part of Tenant. Should the entire deposit,
or any portion thereof, be appropriated and applied by Landlord for the payment
of overdue rent or other sums due and payable to Landlord by Tenant hereunder,
then Tenant shall, upon the written demand of Landlord, forthwith remit to
Landlord a sufficient amount in cash to restore said security to the original
sum deposited and Tenant's failure to do so within five (5) days after receipt
of such demand shall constitute a breach of this Lease. The security deposit,
which is the property of Landlord, will be returned without interest to Tenant
(or in the event Tenant's interest hereunder shall have been assigned with
Landlord's consent, to such assignee) less any depletion because of default on
the part of Tenant or such assignee, within thirty (30) days after written
request by Tenant following the end of the term of this Lease or any renewal
thereof or upon the earlier termination of this Lease.
SECTION 21.02. Transfer of Deposit. Landlord may deliver the funds deposited
hereunder by Tenant to the purchaser of Landlord's reversionary interest in the
Leased Premises in the event that such reversionary interest be sold and there
upon Landlord shall be discharged from any further liability with respect to
such deposit.
ARTICLE XXII
ADVERTISING AND MARKETING FUND
SECTION 22.01. Change of Name. Tenant agrees to operate under the trade name
referred to in the Indenture of Lease and not to change the name of the business
operated in the Leased Premises or to conduct business at the Leased Premises
under any additional advertised name without the prior written consent of
Landlord which shall not be unreasonably withheld or delayed.
SECTION 22.02. Solicitation of Business. Tenant and Tenant's employees and
agents shall not solicit business or distribute any handbills or other
advertising matter in the parking or other common areas of the Shopping Center.
38
SECTION 22.03. Marketing Fund. Deleted.
39
LAUREL MALL
THIS INDENTURE OF LEASE, made on the 9th day of July, 1997, by ROYCE
REALTY, INC., T/A MONTGOMERY GROUP AFFILIATES, a Pennsylvania corporation, with
an address c/o Plymouth Plaza, 580 West Germantown Pike, Suite 200, Plymouth
Meeting, Pennsylvania 19462 (hereinafter called "Agent") and LAUREL MALL
ASSOCIATES, a Pennsylvania limited partnership, with an address at c/o PREIT,
455 Pennsylvania Avenue, Suite 135, Fort Washington, Pennsylvania 19034
(hereinafter called "Landlord"), and THE DOWNS OFF-TRACK WAGERING, INC., a
Pennsylvania corporation, trading as "THE DOWNS AT HAZLETON", with an address at
P. O. Box 32, Exit 28 off Route I-81 Grantville, Pennsylvania 17028 (hereinafter
called "Tenant").
W I T N E S S E T H:
Leased Premises:
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord, the
store premises (hereinafter called the "Premises," "Leased Premises" or "Demised
Premises") designated on the attached plan (Exhibit "A") as STORE NUMBER A-2 AND
B erected in THE LAUREL MALL (hereinafter called "Center" or "Shopping Center"),
located at Route 93 and Airport Road, Hazle and Sugarloaf Townships, Luzerne
County, Pennsylvania, the said Leased Premises being measured and described
approximately by the outside building walls and middle of shared walls as
follows:
FRONT: ONE HUNDRED FORTY FEET ZERO INCHES (140'0")
DEPTH: ONE HUNDRED FIFTY FEET ZERO INCHES--IRREGULAR (150'0")
TOTAL AREA: THIRTEEN THOUSAND SQUARE FEET--IRREGULAR (13,000 SQ.FT.)
together with the right to the nonexclusive use, in common with others
entitled to use same, of all such automobile parking areas, driveways, courts,
corridors and footways, loading facilities and other facilities as may be
designated by Landlord on Exhibit "A" attached hereto, subject however to the
terms and conditions of this Indenture of Lease and the Lease Agreement attached
hereto and made part hereof (hereinafter collectively referred to as "Lease"),
and the reasonable rules and regulations, uniformly enforced, for the use
thereof as described from time to time by Landlord. In the event that the actual
total area of the Demised Premises when fully constructed, as determined by
Landlord's architect or engineer, shall be different from the total area set
forth above, the actual total area shall be substituted for the area above
stated for all purposes under this Lease, and the Fixed Minimum Rent, percentage
rent gross receipts base, Taxes, Common Area Maintenance and Marketing Fund
stated herein shall each be proportionately adjusted. The methodology the
architect shall use in determining the square footage shall be center-line to
center-line for side dimensions and the front and rear dimensions shall include
the thickness of the store front depth and the rear wall, respectively.
40
Length of Term.
The term of this Lease shall be for TEN (10) YEARS, plus the period if any
between the commencement date established pursuant to Section 1.01 of the
attached Lease Agreement, if it falls on a day other than the first day of a
month, and the first day of the first full calendar month in the term.
Notwithstanding the foregoing, Tenant shall be bound by all of the provisions of
this Lease, from the date of the first occupancy of the Leased Premises by
Tenant or its agents for any purpose prior to the Commencement Date.
Minimum Rent.
The Fixed Minimum Rent for each Lease Year of the term of this Lease shall
be as follows:
YEAR ANNUAL REPORT MONTHLY RENTAL
---- ------------- --------------
1-5 $ 97,500.00 $ 8,125.00
6-10 $107,250.00 $8,937.50
Prepared By: Carol S. DeLeon
Date: June 5, 1997
Revised: July 1, 1997
Agent: Michael Palladino
Fixed Minimum Rent shall be payable on or before the first day of each
month, in advance, at the office of agent or at such other place as may be
designated by Landlord from time to time, without any prior demand therefor and
without any deduction or setoff whatsoever. In the event that the term of this
Lease shall commence on a day other than the first day of a month, Tenant shall
pay Fixed Minimum Rent in advance for the fractional month on a per diem basis
calculated on the basis of a Thirty (30) day month.
Percentage Rent. Deleted.
Use of Premises.
Tenant shall use the leased premises, subject to the provisions of Article
V of the Lease Agreement attached hereto, solely for the purpose of conducting
the business of: the operation of an off-track wagering facility with a
restaurant serving food and alcoholic beverages for on-premises consumption
only, and for no other purposes whatsoever. To the best of Landlord's knowledge,
Tenant's use is not prohibited by any current tenant use restriction.
Renewal Option.
Provided that Tenant at the time of the exercise of this Renewal Option
herein granted is not then in default in the performance of any term, covenant,
condition or agreement provided for in this Lease Agreement, Tenant shall have
the right, option and privilege of extending the term of this Lease Agreement
for TWO (2) additional FIVE (5) YEAR terms. The said Renewal Options to extend
this Lease shall be exercised by Tenant serving written notice to Landlord seven
(7) months
41
prior to the expiration date of the then current term.
a) The Fixed Minimum rental during each year of the first Renewal Option
period shall be:
YEAR ANNUAL REPORT MONTHLY RENTAL
----- ------------- --------------
11-15 $118,300.08 $ 9,858.34
b) The Fixed Minimum rental during each year of the second Renewal Option
period shall be:
YEAR ANNUAL REPORT MONTHLY RENTAL
----- ------------- --------------
16-20 $130,000.08 $10,833.34
Except as herein provided, all of the terms, covenants and conditions of
this Lease Agreement pertaining to the initial term hereof shall equally pertain
in all respects to any and all renewals and extensions of this Lease Agreement
except that Tenant shall have no further renewal options following the
expiration of the second Renewal Option.
Security Deposit.
Tenant, contemporaneously with the execution of this Indenture of Lease by
Tenant, has deposited with Landlord the sum of THIRTEEN THOUSAND DOLLARS
($13,000.00) receipt of which is hereby acknowledged by Landlord. This deposit
of funds by Landlord shall have no binding force or effect on Landlord nor
constitute in any way a reservation for space by Tenant unless and until
Landlord executes and delivers this Lease Agreement to Tenant. Upon Landlord's
execution and delivery, then the aforestated deposited funds shall become the
property of Landlord and shall be held as security for the faithful performance
by Tenant of all the terms, covenants, and conditions of this Lease by said
Tenant to be kept and performed during the term hereof, subject to Article XXI
of the Lease Agreement.
Lease Documents.
In addition to the Indenture of Lease and the Lease Agreement consisting of
30 pages, the following are attached to the Lease and are hereby incorporated in
and made part of the Lease as fully as though set forth at length in the Lease:
Rider, Exhibit A, Exhibit B, Exhibit C, Exhibit D, Exhibit D-1, Exhibit E and
Guaranty.
42
(Signature Page Follows)
IN WITNESS WHEREOF, the parties hereto have caused this Indenture of Lease
to be duly executed the day and year first above written.
(Corporate Seal) ROYCE REALTY, INC.
T/A MONTGOMERY GROUP AFFILIATES
(Agent)
Attest: \s\ By:\s\
----------------------------- -----------------------------
Louis P. Meshon, Secretary Louis P. Meshon, President
(Corporate Seal) LAUREL MALL ASSOCIATES
By: LARMES, INC.
A CORPORATE GENERAL PARTNER
(Landlord)
Attest: \s\ By:\s\
----------------------------- -----------------------------
Secretary President
LAUREL MALL ASSOCIATES
By: MONTGOMERY DEVELOPMENT
COMPANY, INC., A CORPORATE
GENERAL PARTNER (Landlord)
Attest: \s\ By:\s\
----------------------------- -----------------------------
Louis P. Meshon, Secretary Louis P. Meshon, President
(Corporate Seal)
THE DOWNS OFF-TRACK WAGERING,
INC., a Pennsylvania
corporation T/A "THE DOWNS AT
HAZLETON" (Tenant)
Attest: By:
----------------------------- -----------------------------
Secretary WILLIAM J. BORK
President
43
R I D E R
IN THE EVENT OF ANY CONFLICT BETWEEN THE LEASE AGREEMENT
AND THE RIDER, THE RIDER SHALL PREVAIL
RIDER to be annexed to and made part of the Lease Agreement by and between
ROYCE REALTY INC., trading as MONTGOMERY GROUP AFFILIATES (hereinafter called
"Agent"), Agent for LAUREL MALL ASSOCIATES, a Pennsylvania general partnership,
(hereinafter called "Landlord"), and THE DOWNS OFF-TRACK WAGERING, INC., a
Pennsylvania corporation, trading as "THE DOWNS AT HAZLETON", (hereinafter
called "Tenant") for certain premises known and designated as STORE NUMBER A-2
and B located in THE LAUREL MALL.
1. RECAPTURE CONTINGENCY.
This Lease Agreement is specifically contingent upon Landlord's legal recapture
of the Demised Premises from the current occupant within Ninety (90) days of the
date of this Agreement. Should Landlord be unable to recapture said Premises
within Ninety (90) days, this Lease Agreement shall become null and void and of
no further force or effect.
2. RIDER TO MINIMUM RENT - INDENTURE OF LEASE.
Notwithstanding anything in the Lease to the contrary, and provided Tenant is
not in default in its performance of any covenants and conditions of the Lease
Agreement beyond any applicable cure period, it is agreed and understood between
the parties that Tenant shall be granted a Ninety (90) Day Fixed Minimum Rent
and additional rent abatement commencing on the Commencement Date and
terminating Ninety (90) Days thereafter. Tenant's obligation to begin paying
Fixed Minimum Rent and additional rent, as set forth in the Lease Agreement
shall commence on the Ninety-First (91st) Day following the Commencement Date.
Other than as stated in this Section, Tenant shall have no other right of rental
offset or deduction. The entire amount of Fixed Minimum Rent and additional rent
otherwise due and payable during the abatement period shall become immediately
due and payable upon the occurrence of an event of default by Tenant under this
Lease.
3. COMMON AREA MAINTENANCE CAP.
Notwithstanding anything herein or elsewhere to the contrary and excluding
insurance and snow removal costs, after the first Lease Year, during which
Tenant's contribution to Common Area Maintenance shall be fixed at One Dollar
Forty Cents ($1.40), and then throughout the remaining term, Tenant's
contribution to Common Costs of Operation and Maintenance shall not increase by
more than FIVE PERCENT (5%) annually, over the sum due and payable by Tenant for
the preceding year for Common Costs of Operation and Maintenance.
4. CONSIDERATION OF EARLY ACQUISITION OF THE DEMISED PREMISES.
Tenant, contemporaneously with the execution of this Lease, in consideration of
the early acquisition of the Demised Premises, shall pay to Landlord the sum of
Thirty Thousand Dollars
44
($30,000.00). Such contribution sum shall be held without interest and shall be
returned to Tenant only in the event Landlord is unable to deliver possession of
the Premises to Tenant in accordance with Rider #1. In all circumstances except
the event that Landlord is unable to deliver possession of the Premises, said
contribution shall remain the property of Landlord.
5. RESTAURANT REQUIREMENTS.
Tenant shall provide at its own cost and expense automatic sprinkler protection
and CO5 fire extinguishers in all hoods and ducts in cooking areas of the Leased
Premises, all approved by Underwriters Laboratories, Inc., and Landlord's fire
insurance carrier. If any separate ventilation shall be required, Tenant shall
furnish same at its own cost and expense. Landlord shall determine if any such
ventilation equipment is required.
Tenant, at its sole cost and expense, shall install a rooftop mounted Grease
Guard System around exhaust fan curbs to prevent grease and oil from covering
and/or infiltrating rooftop systems. Said device is to be a minimum of four
inches (4") deep and shall be cleaned by Tenant a minimum of two (2) times per
year. Failure by Tenant to install and maintain such a device will result in
Landlord installing and maintaining such device and invoicing Tenant for all
costs involved.
Trash removal shall be on a daily basis in containers approved by Landlord as to
placement and size of such containers. Tenant shall be required to remove all
trash that emanates from Tenant's Premises from any of the common areas of the
Center located within a fifty foot (50') radius of the Demised Premises at least
twice daily. In addition, Tenant shall install at its own cost and expense on
all sides of the Premises, trash receptacles of sufficient size to accommodate
all of the containers, straws, paper plates, etc., used or consumed by patrons
of Tenant's business.
If any special system is not installed in accordance with Landlord's approved
plans, within thirty (30) days of Landlord's notice to do so, Tenant shall make
the required changes so that the system shall be in accordance with the approved
plans. If Tenant does not make such changes, within the aforesaid thirty (30)
day period, Landlord's contractor may do so at Tenant's expense.
After installation, if any special equipment creates a nuisance (odors, leaks,
temperature changes, etc.) or hazard within the Demised Premises or in any
adjacent premises or common area, Tenant shall do whatever work is required by
Landlord to correct the nuisance and/or hazards within thirty (30) days of
Landlord's notice, otherwise, Landlord may perform such work at Tenant's
expense.
6. LIQUOR LAW LEGAL LIABILITY INSURANCE.
Throughout the period Tenant is operating its business with an alcoholic
beverage license, Tenant shall be required to maintain "liquor law legal
liability insurance" with an insurance carrier licensed to do business in the
Commonwealth of Pennsylvania and rated A- or better by Best rating, with minimum
coverage of $1,000,000, at Tenant's sole cost and expense.
45
7. SECURITY OF THE DEMISED PREMISES.
A. Tenant, at Tenant's sole cost and expense, shall provide security at and
around the Demised Premises during hours of Tenant's operation and until
one-half (2) hour after Tenant's nightly closing.
B. Should Tenant fail to provide security in conformity with Section 7A of this
Rider to Landlord's reasonable satisfaction, Landlord shall have the right to:
(i) provide security for Tenant and bill Tenant the cost of such security plus
an additional fifteen percent (15%) administrative fee as additional rent, or
(ii) , after the expiration of the twenty (20) day notice period pursuant to
Section 18.01(b), treat such failure as an event of default under the Lease.
8. SATELLITE ANTENNAE.
Provided Tenant is not in default under the terms and conditions of the Lease,
and subject to all applicable codes and regulations and Landlord's written
approval of plans (which approval shall not be unreasonably withheld) Tenant
shall have the right, at its sole cost and expense, to install roof-top or
ground-mounted satellite antennae at a location approved by Landlord, provided
Tenant supplies Landlord with certified and sealed engineering plans and
specifications for Landlord's review for any work affecting the Premises' or
Shopping Center's structure, and in the event any roof work is done, Tenant
shall use only Landlord's approved roofing contractor. Tenant, at its sole cost
and expense, shall be responsible for maintaining said satellite antennae and
all appurtenances thereto in a good state of repair, shall be responsible for
and indemnify Landlord for any and all damage whatsoever caused as a result of
the satellite antennae (unless caused by Landlord's negligence or wilful
misconduct), and upon expiration or earlier termination of the Lease, Tenant
shall be responsible for removal of the satellite antennae, and the repair of
any damage occasioned by such removal.
9. PARKING LIGHTING.
In the event Tenant requests Landlord to extend the period of time during which
Landlord causes the parking lot adjacent to Tenant's building to be illuminated,
Landlord shall extend the period of such illumination until 1:00 a.m., provided
Tenant reimburses Landlord monthly for that portion of the parking lot lighting
charge which corresponds to Tenant's requested extension. Landlord's
determination of Tenant's portion of the parking lot lighting charge
corresponding to the extended period of Tenant extended illumination shall be
persuasive evidence of same. Tenant shall pay such charge within ten (10) days
of receipt of Landlord's bill therefore, and such sum shall be deemed additional
rent.
10. SIGNAGE.
A. PYLON.
Provided Tenant is not then in default under the terms and conditions of the
Lease Agreement, should Landlord erect a pylon sign with respect to the strip
portion of Laurel Mall, Tenant, at its sole cost and expense, and subject to all
applicable codes and Landlord's approval, shall have the right to install its
sign face on the main pylon sign, provided there are at lease three (3)
positions
46
available on such pylon sign. In the event Tenant is allowed a pylon
sign slot position, Tenant shall pay Landlord a fee to be determined by Landlord
as well as Tenant's proportionate share of the installation cost, within fifteen
(15) days of Tenant's receipt of an invoice therefor. Tenant shall be
responsible for the maintenance, repair and removal upon expiration of earlier
termination, of its pylon sign face.
B. ELECTRONIC MESSAGE BOARD ON MAIN PYLON.
Provided Tenant is not then in default under the terms and conditions of the
Lease Agreement, Tenant shall have the right to run a message, subject to
Landlord's reasonable approval, once every cycle to be determined by Landlord.
11. APPROVAL CONTINGENCY.
Provided Tenant is not then in default under the terms and conditions of the
Lease Agreement beyond any applicable notice period pursuant to Section 18.01,
should Tenant not receive approval from Pennsylvania Harness Racing Commission
as well as other permits necessary for Tenant's use of and construction on the
Premises contemplated by this Lease (collectively "Approvals") with sixty (60)
days after the date hereof, Tenant shall have a one (1) time right to terminate
this Lease, provided Tenant gives Landlord written notice of the exercise of
such right on or before five (5) days following the expiration of such sixty
(60) day period. Tenant shall use its reasonable best efforts in securing the
Approvals. Tenant agrees to copy Landlord on all material correspondence for the
Approvals.
12. ASSIGNMENT AND SUBLETTING.
A. Notwithstanding the provisions of Article XIII, provided that Tenant at the
time of its request for assignment is not then in default in the performance of
any term, covenant, condition or agreement provided for in this Lease Agreement,
Tenant may, with Landlord's approval and written consent, which approval and
consent shall not be unreasonably withheld, assign this Lease to another tenant,
provided proposed assignee has met the following requirements:
(1) Proposed assignee must have business experience sufficient in Landlord's
reasonable opinion to successfully operate an off-track wagering facility;
(2) Proposed assignee shall demonstrate to Landlord a net worth equal to or
greater than Tenant at the time of the request for Assignment;
(3) At the time of Tenant's request of assignment, the Demised Premises shall
be in substantially the same condition as when this Lease commenced. Proposed
assignee agrees that Landlord may require remodeling of the Premises at
proposed assignee's expense, however, such remodeling shall not occur before
the end of the fifth (5th) year of the original term of this Lease;
(4) Tenant and its Guarantor shall remain liable for the full remaining term
for Fixed Minimum Rent and additional rent; and
47
(5) Tenant shall pay to Agent, at the time of requesting such assignment, a
non-refundable fee in the amount of ONE THOUSAND DOLLARS ($1.000.00).
B. Notwithstanding the foregoing and Article XIII, Landlord's consent to any
assignment or sublease to an affiliate of Tenant or to the sale of all or
substantially all of Tenant's outstanding stock, partnership interests or assets
to an affiliate of Tenant shall not be required. The term "affiliate" shall mean
any entity now or hereafter directly or indirectly in control of, controlled by
or under common control with Tenant or its principals; or into which or with
which Tenant intends to merge or consolidate. The terms "control", "controlled
by", and "under common control with" shall mean, with respect to any entity, the
possession of the power to direct or cause the direction of the management and
policy of such entity, whether through the ownership of voting securities or
contracts. Tenant agrees to provide to Landlord notice of any such assignment or
sublease to an affiliate of Tenant.
13. TENANT BROCHURES.
Provided Tenant is not in default under the terms and conditions of the Lease
Agreement, Tenant shall be permitted to display its professionally prepared and
tasteful brochures in the enclosed mall's customer service center, in a manner
and number to be reasonably determined by Landlord. Notwithstanding the
foregoing, in the event Landlord no longer maintains an area for tenant
promotional brochures in the customer service center, Tenant shall no longer be
permitted to so display its brochures.
14. ROOF HATCH.
Provided Tenant is not in default under the terms and conditions of the Lease,
and subject to all applicable codes and regulations and Landlord's written
approval of plans (which approval shall not be unreasonably withheld) Tenant
shall have the right, at its sole cost and expense, to install roof-top hatch at
a location to be approved by Landlord, provided Tenant supplies Landlord with
certified and sealed engineering plans and specifications for Landlord's review
for any work affecting the Premises' or Shopping Center's roof, and all roof
work shall be done by Landlord's approved roofing contractor. Tenant, at its
sole cost and expense, shall be responsible for maintaining said roof hatch and
all appurtenances thereto in a good state of repair, shall be responsible for
and indemnify Landlord for any and all damage whatsoever caused by the roof
hatch, and upon expiration or earlier termination of the Lease, Tenant shall be
responsible for removal of the hatch is Landlord requires, and Tenant shall
repair any damage occasioned by such removal.
48
GUARANTY
THIS GUARANTY ("Guaranty"), made this 9th day of July, 1997, by PENN
NATIONAL GAMING, INC., a Pennsylvania corporation, with an address of Exit 28 of
Route I-81, Grantville, Pennsylvania 17028 (the "Guarantor") to and in favor of
LAUREL MALL ASSOCIATES, a Pennsylvania limited partnership, with a principal
office located at c/o Montgomery Group Affiliates, Plymouth Plaza, 580 West
Germantown Pike, Suite 200, Plymouth Meeting, Pennsylvania 19462 (the
"Landlord").
W I T N E S S E T H:
WHEREAS, Landlord and THE DOWNS OFF-TRACK WAGERING, INC., a Pennsylvania
corporation, trading as "THE DOWNS AT HAZLETON", with an address at P. O. Box
32, Exit 28 off Route I-81 Grantville, Pennsylvania 17028 (the "Tenant"),
simultaneous with the execution of this Guaranty, are executing and entering
into a certain Lease Agreement of even date herewith (the "Lease"), for the
lease of approximately THIRTEEN THOUSAND SQUARE FEET (13,000 SQ. FT.) (the
"Premises") within a building which is part of the buildings and other
improvements located on certain real property known as LAUREL MALL (the
"Center").
NOW, THEREFORE, for the purpose of inducing Landlord to execute and enter
into the Lease, and intending to be legally bound hereby, the Guarantor, hereby
agree as follows:
1. Lease. The terms, conditions, and provisions of the Lease are
incorporated herein by reference as if fully set forth herein. A copy of the
Lease is attached hereto, made a part hereof, and labelled Exhibit "A". The
capitalized terms used herein are not otherwise defined shall have the same
meanings ascribed to them in the Lease.
2. Representations and Warranties of the Guarantor. The Guarantor hereby
warrant, certify and represent to Landlord the following:
2.1 That the Lease has been duly authorized and constitutes the legal,
valid and binding obligations of Tenant, enforceable against Tenant in
accordance with its terms.
2.2 That the representations made by Tenant within or in connection with
the Lease are true and correct as of the date hereof.
2.3 That any financial statements heretofore delivered by Guarantor to
Landlord are true and correct in all respects and fairly present Guarantors'
respective financial conditions as of the respective dates thereof, and that no
material adverse changes have occurred in Guarantors' respective financial
conditions reflected therein since the respective dates thereof.
2.4 That Guarantor assumes full responsibility for keeping fully
informed of the financial condition of Tenant and of all other circumstances
affecting Tenant's ability to perform its obligations under the Lease, and
Landlord will have no duty to report to Guarantor any information which Landlord
receives about Tenant's financial condition or any such other circumstances.
2.5 That Guarantor has received and will receive substantial benefit
from the
49
execution and delivery of the lease and this Guaranty, and that such execution
and delivery are in the interests of Guarantor.
3. Unconditional Guaranty. The Guarantor, for valuable consideration, the
receipt and adequacy of which are hereby acknowledged, hereby unconditionally
and irrevocably guaranty to Landlord the following:
(a) The full, faithful and punctual payment, and not merely collection,
when due, whether by acceleration or otherwise, of Fixed Minimum Rent, Taxes,
Operating Costs, additional rent, and of all other sums (including all interest,
attorneys' fees, costs and expenses) due from tenant to Landlord under and
pursuant to the lease and under and pursuant to all modifications, renewals and
extensions thereof and thereto.
(b) The full, faithful and punctual performance by Tenant of all of
Tenant's obligations under the Lease and all modifications, renewals and
extensions thereof and thereto.
(c) The payment of all sums due for, and all claims made with respect
to, labor or materials, or both, performed or furnished in connection with the
construction of Tenant's Work.
(d) The prompt release of record of any mechanic's lien or liens
recorded against the Premises or any portion thereof.
(e) The payment of all legal and other costs and expenses paid or
incurred by Landlord in enforcing this Guaranty and in enforcing its rights
under the Lease. Until paid, all such fees, costs and expenses shall bear
interest at the rates provided in the event of a default under the Lease.
4. No Defenses. The Guarantor will cause Tenant to maintain and preserve
the Lease and will not permit any action (other than the actual performance in
accordance with the provisions of the Lease) or inaction of any kind or
whatsoever which may constitute the basis for an assertion that any of the
Guarantor has any defense to its obligations under this Guaranty.
4.1 Deleted.
5. Independent Obligations. Guarantor's obligations under this Guaranty are
independent of those of Tenant. Landlord may bring a separate action against any
one or more Guarantor without first proceeding against Tenant or any other
person or any security held by Landlord and without pursuing any other remedy.
Landlord's rights under this Guaranty will not be exhausted by any other action
by Landlord until full and complete payment and performance by Tenant or the
Guarantor as referred to in paragraph 3 hereof. Each Guarantor expressly agrees
that the validity of this Guaranty shall in no way be terminated, affected or
impaired by reason of the institution or the failure to institute by Landlord of
any such action or proceeding or the exercise or failure to exercise by Landlord
of any such other right or remedy.
6. Suretyship. This Guaranty shall constitute an agreement of suretyship
and guaranty and shall constitute an absolute and unconditional undertaking by
the Guarantor, as
50
surety, with respect to the payments and performance by Tenant and referred to
in paragraph 3 hereof.
7. Waivers. Each Guarantor hereby waives:
(i) any right or claim of right to cause a marshalling of Tenant's
assets or to cause Landlord to proceed against any of the security held by
Landlord before proceeding against any Guarantor;
(ii) any and all legal requirements that Landlord shall institute any
action or proceeding at law or in equity against Tenant or anyone else, with
respect to the Lease or with respect to any other security held by Landlord, as
a condition precedent to bringing any action against the Guarantor upon this
Guaranty;
(iii) notice of acceptance of this Guaranty;
(iv) deleted;
(v) any defense based upon any legal disability of Tenant or any
discharge or limitation of the liability of Tenant to Landlord, whether
consensual or arising by operation of law or any bankruptcy, insolvency, or
debtor-relief proceeding, or from any other cause;
(vi) deleted;
(vii) all rights of subrogation, all rights to enforce any remedy that
Landlord may have against Tenant and all rights to participate in any security
held by Landlord for the payment and performance required by Tenant and/or under
the Lease; and
(viii) presentment and demand for payment, notice of dishonor, protest,
notice of protest or non-compliance with the terms and provisions of the Lease
and any other notice of any kind.
8. Impairment of Subrogation Rights and Default. Upon a default of Tenant
under the Lease or upon a default by the Guarantor hereunder, Landlord may elect
to exercise its remedies against any real or personal property which it holds as
security for the indebtedness of Tenant to Landlord under the Lease, or to
exercise any other remedy against Tenant or any security. No such action by
Landlord will release or limit the liability of Guarantor, even if the effect of
that action is to deprive such Guarantor of the right to collect reimbursement
from Tenant for any sums paid to Landlord or otherwise expended by such
Guarantor pursuant to this Guaranty.
9. Absolute Liability of Guarantor. The Guarantor liability hereunder shall
be unaffected by:
(i) any amendment or modification of the provisions of the Lease;
(ii) any extensions of time for performance by or required of Tenant
under the Lease;
51
(iii) the release of Tenant from performance or observance of any of the
agreements, covenants, terms or conditions contained in the Lease by operation
of law or otherwise, whether made with or without notice to the Guarantor;
(iv) any exercise or non-exercise by Landlord of any right, power,
remedy or privilege under or in respect of the Lease, this Guaranty, any such
other instrument, or at law or in equity;
(v) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings relating to
Tenant; or;
(vi) any transfer by Tenant of its interest in the Premises, or any
portion thereof, except as permitted under the Lease.
10. Bankruptcy Preference. In the event any payment or performance by Tenant
under the Lease is held to constitute a preference under bankruptcy laws, or if,
for any other reason, Landlord is required to refund such payment or pay the
amount thereof to any other party, such payment by Tenant to Landlord shall not
constitute a release of the Guarantor from any liability hereunder, and this
Guaranty shall continue to be effective or shall be reinstated, as the case may
be, to the extend of any such payment or payments.
11. No Waiver. No delay on the part of Landlord in exercising, or failure on
the part of Landlord to exercise, any right, power or privilege under the Lease
or this Guaranty shall operate as a waiver of any such right, power or privilege
or of any other of its rights, powers or privileges.
12. Remedies Cumulative. All remedies afforded to landlord hereunder, under
the Lease, at law or in equity, shall be cumulative and concurrent and may be
pursued singly, successively or together, and no one of such remedies, whether
or not exercised by Landlord, shall be deemed to exclude any of the other
remedies available to Landlord nor prejudice the availability of any other legal
or equitable remedy which Landlord may have in or against the Premises or
against Tenant.
13. Default. Landlord may declare the Guarantor in default under this
Guaranty if the Guarantor fails to perform any of its obligations under this
Guaranty or becomes the subject of any bankruptcy, insolvency, arrangement,
reorganization, or other debtor-relief proceeding under any federal or state
law, whether now existing or hereafter enacted. A default by the Guarantor under
this Guaranty shall be a default by Tenant under the Lease.
14. Confession of Judgment.
THE FOLLOWING SECTION SETS FORTH WARRANTS OF ATTORNEY FOR ANY ATTORNEY
TO CONFESS JUDGMENTS AGAINST THE GUARANTOR. IN GRANTING THESE WARRANTS OF
ATTORNEY TO CONFESS JUDGMENTS AGAINST THE GUARANTOR, GUARANTOR HEREBY KNOWINGLY,
INTENTIONALLY, VOLUNTARILY, AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE
GUARANTOR MAY HAVE TO PRIOR NOTICE AND AN
52
OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA AND THE UNITED STATES OF AMERICA.
UPON THE OCCURRENCE OF A DEFAULT HEREUNDER OR UNDER THE LEASE, EACH OF THE
UNDERSIGNED HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD
OF THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, TO APPEAR FOR, AND WITH OR
WITHOUT ONE OR MORE COMPLAINTS FILED, ENTER AND CONFESS JUDGMENTS AGAINST EACH
OR BOTH OF THE UNDERSIGNED IN ANY SUCH COURT IN AN APPROPRIATE ACTION BROUGHT
AGAINST HIM, HER, OR THEM FOR SUCH SUMS AS SHALL HAVE BECOME DUE HEREUNDER,
WITHOUT NOTICE, WITH OR WITHOUT DECLARATIONS OF DEFAULTS, WITH COSTS OF SUIT,
RELEASE OF ERROR, WITHOUT STAY OF EXECUTION AND WITH REASONABLE ATTORNEYS' FEES
OF AT LEAST FOUR THOUSAND ($4,000.00) DOLLARS; AND EACH OF THE UNDERSIGNED ALSO
WAIVES THE RIGHT OF INQUISITION ON ANY REAL OR PERSONAL PROPERTY THAT MAY BE
LEVIED UPON, VOLUNTARILY CONDEMNS THE SAME, AUTHORIZES THE PROTHONOTARY OR CLERK
TO ENTER UPON THE WRIT SAID VOLUNTARY CONDEMNATION, AGREES THAT SAID PROPERTY
MAY BE SOLD ON A WRIT; AND ALSO WAIVES AND RELEASES ALL RELIEF FROM ANY AND ALL
APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR HEREAFTER
ENACTED. IF A COPY OF THIS GUARANTY, VERIFIED BY AFFIDAVIT OF LANDLORD OR
SOMEONE ON LANDLORD'S BEHALF, SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT
BE NECESSARY TO FILE THE ORIGINAL AS A WARRANT OF ATTORNEY. THE AUTHORITY AND
POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST EITHER OR BOTH OF THE UNDERSIGNED
SHALL NOT BE EXHAUSTED BY ANY ONE OR MORE EXERCISE THEREOF OR BY ANY DEFECTIVE
EXERCISE THEREOF, BUT SHALL CONTINUE AND BE EXERCISABLE FROM TIME TO TIME AS
OFTEN AS LANDLORD SHALL DEEM NECESSARY OR DESIRABLE UNTIL THE FULL PAYMENT OF
ALL SUMS DUE HEREUNDER AND UNDER THE LEASE IS MADE; AND THIS INSTRUMENT SHALL BE
A SUFFICIENT WARRANT THEREFOR.
THE GUARANTOR ACKNOWLEDGES THAT HE OR SHE HAS HAD THE ASSISTANCE OF LEGAL
COUNSEL IN THE REVIEW AND EXECUTION OF THIS GUARANTY AND FURTHER ACKNOWLEDGES
THAT THE MEANING AND EFFECT OF THE FOREGOING PROVISIONS CONCERNING CONFESSION OF
JUDGEMENTS HAVE BEEN FULLY EXPLAINED TO HIM OR HER BY SUCH COUNSEL.
15. Captions. The headings and captions herein are inserted for convenience
of reference only and shall not control or affect the meaning or construction of
any of the provisions of this Guaranty.
16. Binding Effect. This Guaranty shall bind the Guarantor and his, her, and
their heirs, executors, administrators and assigns and shall inure to the
benefit of Landlord, and its
53
successors and assigns.
17. No Amendment. This Guaranty shall not be modified or amended except by a
writing signed by the party against whom the enforcement of such amendment or
modification is sought.
18. Severability. If any term, covenant or condition of this Guaranty or the
application thereof to any party or circumstance shall, to any extent be
invalid, or unenforceable, the remainder of this Guaranty, or the application of
such term, covenant or condition to parties or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby and
each term, covenant or condition of this Guaranty shall be valid and be
enforceable to the fullest extent permitted by law.
19. Governing Law. This Guaranty shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
the day and year first above written.
(Corporate Seal) PENN NATIONAL GAMING, INC.,
a Pennsylvania corporation
Attest: \s\ SUSAN M. MONTGOMERY By: \s\ WILLIAM J. BORK
------------------------- ---------------------------
Secretary President
54
EXHIBIT "B"
EXHIBIT "B" attached to and made part of Indenture of Lease by and among
ROYCE REALTY, INC., trading as MONTGOMERY GROUP AFFILIATES ("Agent"), Agent for
LAUREL MALL ASSOCIATES ("Landlord") and THE DOWNS OFF-TRACK WAGERING, INC., a
Pennsylvania corporation, trading as "THE DOWNS AT HAZLETON" ("Tenant") for
STORE NUMBER A-2 and B in LAUREL MALL.
I. BASIC BUILDING DETAILS
The buildings in which the Demised Premises are situated shall be
constructed by Landlord, except as herein set forth to the contrary.
A. Structural Frame, including columns, beams, floors, roofs, canopies and
exterior walls will be provided "As Is".
B. Floor will be provided "As Is."
C. Roof shall be provided "As Is".
D. Egress Doors will be provided "As Is".
E. Clear Ceiling Height between floor slab and finished ceilings will be a
maximum of 11 feet 0 inches.
F. Deleted.
II. UTILITY SERVICES
Utilities to serve the Demised Premises will be available to Tenant at
locations designated by Landlord as follows:
A. Electric service will be "As Is", with the exception of Section V(C)(1).
B. Water Service will be "As Is". Tenant shall have their water usage
metered. No hot water service will be provided by Landlord.
C. Gas Service is available.
D. Sanitary Sewer will be "As Is".
E. Sprinkler System will be "As Is".
F. Telephones - Landlord will provide public telephones in the Mall.
III. STORE FRONTS, EXPOSED WALLS AND SIGNS
A. Store front will be "As Is".
55
B. Signs
1. Tenant will design, subject to Landlord's written approval, a
suitable facade and sign (or signs) to properly identify Tenant's
store in accordance with all applicable codes, as shown on Exhibit
"D-1".
2. Tenant will furnish and install the sign(s) prior to Tenant opening
for business with the public. If Tenant installs any sign not
approved in writing, Landlord may remove said sign and restore the
premises, all at Tenant's expense.
3. Tenant may not install any other signs on the exterior of the
building or in the common area.
C. Exposed Walls
1. Deleted.
IV. INTERIOR WORK
A. Floors will be "As Is".
B. Partitions, Walls and Doors will be "As Is", with the exception of Item
#1:
1. Landlord shall, at Landlord's sole cost and expense, construct one
(1) demising wall in the Demised Premises, which shall be in
accordance with approved plans.
2. All proposed interior partitions or curtain walls will be constructed
and finished by Tenant. Only metal studs will be permitted. Only fire
resistant materials approved by Landlord in writing shall be
permitted above the ceiling level.
3. Any alteration or modification of Landlord's standard grid sprinkler
plan or system due to Tenant's lighting, partitioning, shelving or
heating, ventilating, air-conditioning, or any Tenant improvement or
operating procedure, shall be done by Landlord at Tenant's expense
and in such manner that the classification of protection remains
unchanged. In the event that Tenant's lighting, partitioning,
shelving or heating, ventilating or air conditioning plans require
more than one (1) sprinkler head per one hundred twenty (120) square
feet of floor area of Demised Premises or otherwise causes a
deviation from Landlord's standard sprinkler grid, which increases
the cost of the sprinkler installation, Tenant shall pay such
increased cost.
4. When required by Landlord and/or governing building fire code
regulations and/or applicable fire insurance rating standards, Tenant
will provide and install within the Demised Premises, trash storage
and
56
handling equipment and a trash storage room of such capacity and
fire rating as shall be approved by Landlord in writing.
C. Ceilings will be "As Is".
D. Painting, Decorating and Wall Coverings will be "As Is".
V. EQUIPMENT AND FACILITIES
A. Heating, Ventilating and Air-Conditioning will be "As Is".
1. Landlord reserves the right to install in Tenant's ceiling space
equipment to be used in connection with the heating, ventilating, and
air-conditioning of the Demised Premises (provided Landlord uses best
efforts not to interfere with Tenant's systems), the Shopping Center
and/or other tenant spaces.
2. Any holes cut in the roof in connection with any work to be done by
Tenant must be done by Landlord's contractor at Tenant's expense.
Flashings, pitch pockets, air conditioning equipment supports and
roof closure and sealing work for any roof openings in connection
with any Tenant's work shall also be done by Landlord's contractor at
Tenant's expense.
3. If Tenant requires special heating, air-conditioning, ventilating,
make-up or exhaust systems, Tenant will design same subject to
Landlord's approval, which shall not be unreasonably withheld. in
accordance with Landlord's Design Criteria.
4. If the equipment is not installed in accordance with Landlord's
approved plans, within thirty (30) days of Landlord's notice to do
so, Tenant shall make the required changes so that the system shall
be in accordance with the approved plans. If Tenant does not make
such changes, within the aforementioned thirty (30) day period,
Landlord's contractor may do so at Tenant's expense.
5. After installation, if any special equipment creates any nuisance
(odors, leaks, temperature changes, etc.) or hazard within the
Demised Premises or in any adjacent premises or common area, Tenant
shall do whatever work is required by Landlord to correct the
nuisance and/or hazards within thirty (30) days of Landlord's notice;
otherwise, Landlord may perform such work at Tenant's expense.
B. Plumbing will be "As Is".
1. Special code requirements peculiar to Tenant's business, such as (but
not limited to) hair traps, grease traps, etc., shall be provided,
installed and maintained by Tenant.
57
C. Electrical will be "As Is", with the exception of the following:
1. Landlord shall, at Landlord's sole cost and expense, split the
existing electrical service and tie-in to the Demised Premises using
existing panel and meter.
2. Installation of any new electrical equipment and/or modification to
existing equipment, performed by Tenant shall be at Tenant's sole
cost and expense and the entire installation shall be in accordance
with all applicable federal, state and local ordinances and all
utility company rules and regulations. All materials shall be new,
and both manufacture and installation shall conform to applicable
Underwriters Label standards.
VI. MISCELLANEOUS WORK
A. Landlord's work shall be limited to that designated as Landlord's work
in Exhibit "B".
B. In addition to the items designated as Tenant's work in this Exhibit
"B", Tenant shall be solely responsible for furnishing and maintaining
the following items, inter alia:
1. All furnishings, trade fixtures and signs.
2. All mechanical equipment, escalators, elevators, conveyors, etc. , in
the Demised Premises not set forth as Landlord's work in this Exhibit
"B".
3. All approved fire extinguishers in the Demised Premises shall be of
the size, type and quantity required by governmental authorities and
as specified by applicable Underwriters' requirements.
4. All emergency lighting units in the Demised Premises in the number
and type required by all governmental authorities.
VII. PREPARATION OF PLANS AND SPECIFICATIONS
A. Within thirty (30) days after execution of this Lease, Landlord will
prepare and forward to Tenant a preliminary plan of the Demised Premises
and Landlord's Design Criteria.
B. Tenant shall, within thirty (30) days after the receipt by Tenant of the
aforesaid preliminary plan or the Lease execution date, submit to
Landlord for approval complete architectural and engineering plans and
specifications of the Demised Premises conforming to Landlord's Design
Criteria, prepared by licensed architects and engineers approved in
writing by Landlord, describing all work which under this Lease is to be
performed by Tenant and showing in sufficient detail the location of all
utilities, partitions, store fronts and any other matters
58
which may affect the construction work to be performed by Landlord in
the Demised Premises and in the Shopping Center.
C. The plans and specifications submitted by Tenant for Landlord's approval
shall without limitation:
1. Include detailed drawings and specifications of all mechanical,
plumbing, fire protection and electrical installations which shall be
connected by Tenant to the utilities and systems installed by
Landlord.
2. Show in complete detail all items which will affect the appearance of
the building and its architectural, structural, mechanical and
electrical components.
3. Comply with all applicable laws, codes, rules and regulations and
with Landlord's Design Criteria, a copy of which is incorporated
herein by reference and made part hereof.
4. Comply with the applicable standards of the American Insurance
Association, the National Electrical Code, the American Gas
Association, the American Society of Heating and Air-Conditioning
Engineers, the National or State Board of Fire Underwriters,
Insurance Service Office and Factory Mutual Insurance Association,
and the governing building, plumbing, fire and electrical underwriter
requirements.
5. Include suitable instructions and provisions so as to comply with all
of the requirements of this Exhibit "B". 6. Specify materials and
equipment to avoid, wherever possible, any exclusive manufacturer's
designation and to permit a maximum range of selection.
7. Tenant shall be responsible for the preparation of all plans and
drawings and shall submit such plans, drawings and specifications to
the appropriate governing authority for approval. Tenant shall be
responsible for all permits, fees, and inspections and shall apply
for and obtain a Certificate of Occupancy and deliver same to
Landlord prior to occupancy by Tenant of the Demised Premises.
D. Within ten (10) days after Landlord receives Tenant's initial set of
plans, Landlord will review and return to Tenant, Tenant's plans and
specifications either marked approved or marked to show the corrections
required (in which event such marked-up plans shall be deemed approved,
as marked up), or Landlord will give Tenant written notice of
disapproval of Tenant's plans together with the reasons therefor. In the
event Landlord gives Tenant notice of disapproval together with the
reasons therefor, Tenant shall have ten (10) days from the date of such
notice
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of disapproval by Landlord to submit revised Tenant's plans subject to
subsequent mark-ups and/or disapprovals and corrections in the manner
set forth above.
E. Upon completion and written approval by Landlord of final plans and
specifications, Tenant shall employ reputable and licensed contractor
and subcontractors, to complete the Demised Premises in accordance with
said approved plans and specifications, and such contractor and
subcontractors shall commence work as hereinafter provided.
F. If Tenant fails or omits to make timely submission to Landlord of any
plans or specifications or delays in submitting or supplying information
or in giving authorizations or in performing or completing Tenant's
work, Landlord, after twenty (20) days' written notice to Tenant, in
addition to any right or remedy may have at law or in equity, may pursue
any one or more of the following remedies:
1. Landlord may give written notice to Tenant (notwithstanding that such
notice is not otherwise required hereunder) that the Lease term will
be deemed to have commenced, on the date, to be therein specified,
when the same would have commenced if Tenant had made timely
submission or supply of plans, specification, estimates or other
information or approval of any thereof and on and after the date so
specified Landlord shall be entitled to be paid the rent and any
other charges which are payable hereunder by Tenant during the Lease
term, including, but not limited to, the sums set forth in Section
1.02 hereof; and
2. Landlord may require Tenant to pay to Landlord as additional rent
hereunder the cost to Landlord of completing the Demised Premises in
accordance with the terms of this Lease over and above what would
have been such cost had there been no such failure, omission or
delay; and
3. In exercising any of the foregoing remedies set forth in Section
VII.F.I. and VII.F.2. above, Landlord shall be entitled to retain and
have recourse to any bond or security deposit provided by Tenant.
VIII. PERFORMANCE OF WORK
All work by Tenant shall be subject to and governed in all respects by the
following:
A. Construction Procedure
1. Tenant's work shall be performed in a thoroughly first class and
workmanlike manner, shall incorporate only new materials, and shall
be in good and usable condition at the date of completion thereof.
Any approval or consent by Landlord shall in no way obligate Landlord
in any manner whatsoever in respect to the finished work designed
and/or constructed by Tenant. Any deficiency in design or in
construction which is Tenant's
60
responsibility hereunder, although same had the prior approval of
Landlord, shall be solely the responsibility of Tenant.
2. Tenant's contractor shall obtain and pay for all necessary permits or
licenses required by public authorities or utility companies with
respect to Tenant's work, except that Landlord may elect to obtain
the building permit for Tenant's work, in which event Tenant shall
pay the cost thereof upon demand.
3. Each contractor and subcontractor participating in Tenant's work
shall obtain approval from Landlord for any space within the project
which such contractor or subcontractor desires to use for storage,
handling and moving of his materials and equipment, as for the
location of any field office or facilities for its personnel.
4. Each contractor and subcontractor participating in Tenant's work
shall make appropriate arrangements with Landlord for temporary
utility connections as available within the project and shall pay the
cost of said connections and of proper maintenance and removal of
same, and shall pay all utility charges incurred by such contractor
or subcontractors.
5. It shall be Tenant's responsibility to cause each of Tenant's
contractors and subcontractors participating in Tenant's work to
remove and dispose of, at least once a week and more frequently as
Landlord may direct, all debris and rubbish of whatever kind
remaining in the building or within the project, which has been
brought in or created by the contractors or the subcontractors in the
performance of Tenant's work. On demand, Tenant shall pay Landlord
for the removal from the Shopping Center by Landlord of trash and
debris generated by Tenant or Tenant's contractors and
subcontractors.
6. Each contractor and subcontractor participating in the construction
of Tenant's work shall be duly licensed by requisite authorities and
approved of in writing by Landlord.
7. It shall be Tenant's responsibility to cause each of Tenant's
contractors and subcontractors to maintain continuous protection of
adjacent premises in such manner as to prevent any damage to Tenant's
work or adjacent property and improvements by reason of the
performance of Tenant's work. Each contractor and subcontractor shall
properly protect Tenant's work with lights, guardrails, and
barricades and shall secure all parts of Tenant's work against
accident, storm and any other hazard.
8. The contractor or subcontractors shall not at any time damage,
injure, interfere with or delay the completion of the building, any
other construction within the project or the operation of the
Shopping Center, and they and each of them shall comply with all
procedures and
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regulations prescribed by Landlord or its agents for integration of
Tenant's work with the work to be performed in connection with the
construction of the building and all other construction within the
project.
9. Prior to the commencement of any work to be performed by Tenant,
Tenant shall obtain and record at Tenant's expense, Waivers of
Mechanics Liens executed by Tenant's general contractor, and submit
to Landlord a copy thereof receipted by the prothonotary along with
photographs certified as to time establishing that Tenant's work has
not begun prior to such recording.
10. Prior to the commencement of any work to be performed by Tenant, and
if required by Landlord, Tenant shall furnish a bond or other
security, satisfactory to Landlord, for the prompt and faithful
performance and completion of all work to be performed by Tenant as
well as labor and material payments in connection therewith. Said
bond shall be with a surety company and in a form acceptable to
Landlord, and a copy thereof shall be delivered to Landlord prior to
commencement of Tenant's work.
11. All work performed by Tenant shall be in accordance with the approved
plans and with the requirements of all applicable laws, ordinances,
regulations, codes and other requirements of governmental authorities
and with Landlord's Design Criteria. At any time during the
performance by Tenant of its work hereunder, Landlord or Landlord's
architect or Landlord's general contractor may enter upon the Demised
Premises and inspect the work being performed by Tenant and take such
steps as they may deem necessary or desirable to assure the proper
performance by Tenant of its work or for the protection of the
building in which the Demised Premises are situate or the premises
adjacent to the Demised Premises.
B. Insurance Requirements
1. At all times during the period between the commencement of
construction of Tenant's work and the acceptance by Landlord of
Tenant's work as being complete, Tenant shall maintain in effect with
a responsible insurance company approved by Landlord, a policy of
"All Risk" Builder's Insurance in the standard Pennsylvania form.
Said insurance shall cover the full replacement value of all work
done or to be done and all fixtures and equipment installed or to be
installed at the Demised Premises by Tenant, and shall contain no
coinsurance provisions or deductible clauses.
2. Any loss occurring during such period shall be adjusted with Landlord
and the proceeds shall be payable to Landlord in trust for the
purposes of repair or reconstruction. Repair or reconstruction of all
or any portion of Tenant's work damaged or destroyed by any casualty
occurring after the commencement of construction of Tenant's work as
being complete shall
62
be commenced by Tenant as soon as possible after such casualty and,
if Landlord's work performed pursuant hereto is also damaged or
destroyed by such casualty, within fifteen (15) days after Landlord
shall notify Tenant that repairs or reconstruction of Landlord's work
is substantially completed, and Tenant shall thereafter diligently
pursue such work to completion.
3. At all times during the period of construction of Tenant's work,
Tenant's contractors and subcontractors shall maintain in effect
statutory Workmen's Compensation Insurance as required by the
Commonwealth of Pennsylvania.
4. At all times during the period between the commencement of
construction of Tenant's work and the opening for business of
Tenant's store premises, Tenant shall maintain in effect a
comprehensive general liability policy with bodily injury and
personal liability injury coverage of not less than Five Hundred
Thousand Dollars ($500,000.00) for injury or death of any one person
and One Million Dollars ($1,000,000.00) if more than one person, in
any one occurrence, and property damage liability coverage of not
less than Five Hundred Thousand Dollars ($500,000.00) for any one
occurrence. Such liability policy shall include but not be limited to
coverage for all operations of Tenant, its contractor or
subcontractors, including automobile, contractual liability,
completed operations liability and contingent liability for the
operations of subcontractors.
5. All policies of insurance except Workmen's Compensation required to
be carried by the provision of this section shall contain the
following endorsements in the following form: "Notwithstanding
anything herein contained to the contrary, it is agreed that LAUREL
MALL ASSOCIATES, as Landlord, and MONTGOMERY GROUP AFFILIATES, as
Agent, and Landlord's general contractor are hereby added as
additional insureds. The inclusion of more than one corporation,
person, firm, organization or entity under this policy shall not in
any way affect the rights of such person, firm, organization or
entity with respect to any claim, demand, suit or judgment made or
brought by itself or by or in favor of any employee of such insured."
"It is the intent of this policy to protect such corporation, person,
firm, organization or entity with respect to any claim, demand, suit
or judgment specified in the preceding paragraph in the same manner
as though a separate policy has been issued to each; however, nothing
herein contained shall operate to increase the company's limits of
liability. It is further understood that the coverage of this policy
shall not be canceled or reduced by the company until the company has
mailed written notice, by registered mail, to Landlord stating when,
but in no event less than twenty (20) days thereafter, such
cancellation or reduction in coverage shall be effective."
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6. True copies of each such policy or certificates of insurance
evidencing the same and containing such endorsements shall be
delivered to Landlord prior to the commencement of Tenant's work and
shall thereafter be replaced in the event of the expiration, lapse or
cancellation of any such policy.
7. Tenant shall indemnify Landlord and save Landlord harmless from and
against any and all claims, demands, judgments, costs and expenses
including reasonable attorney's fees and subrogation claims by
Tenant's insurance carriers, resulting from or arising out of
personal injury or property damage occurring at or about the Demised
Premises or the Shopping Center during the performance of Tenant's
work hereunder or caused by Tenant's contractor or any of its agents,
servants, employees or subcontractors.
C. Completion
1. Each contractor and subcontractor participating in Tenant's work
shall, prior to the commencement of the portion thereof for which he
is responsible, guarantee that such portion will be free from any and
all defects in workmanship and materials for the period of time which
customarily applies in good contracting practice in LUZERNE COUNTY,
PENNSYLVANIA, but in no event for less than one (1) year after the
opening for business of the Demised Premises. The aforesaid
guarantees of each such subcontractor and contractor shall include
the obligation to repair or replace in a thoroughly first class and
workmanlike manner, and without any additional charge, any and all of
Tenant's work done or furnished thereby or by any of his
subcontractors, employees or agents, which shall be or become
defective within one (1) year, or such longer period as customarily
applies in good contracting practice in LUZERNE COUNTY, PENNSYLVANIA,
after the opening for business of Tenant's Demised Premises,
including without additional charge therefor all expenses and damages
in connection with the removal, replacement or repair in a thoroughly
first-class and workmanlike manner of any other part of Tenant's work
which may be damaged or disturbed thereby. All warranties or
guarantees as to materials or workmanship on or with respect to
Tenant's work shall be contained in the contracts and subcontracts
for performance of Tenant's work and shall be written so that they
shall insure to the benefit of Landlord and Tenant as their
respective interests shall appear. Such warranties and guarantees
shall be written so that they may be directly enforced by either, and
Tenant shall give to Landlord any assignments or other assurances
necessary to effectuate the same.
64
EXHIBIT "C"
LAUREL MALL USE RESTRICTIONS
1. Lease Agreement between Landlord and Luzerne County Toy Works, Inc., trading
as "Toy Works", dated January 30, 1989, provides that:
During the term of this Lease, Landlord covenants, represents and warrants
that, within the Shopping Center, no premises (other than the Store) shall be
leased, rented, used or occupied for the operation of a store which is commonly
considered to be a Toy Store or any combination thereof without Tenant's prior
written consent, however, this prohibition shall not apply to a department or
variety store which sells toys as an incidental part of its business nor shall
it apply to a hobby store.
2. Lease Agreement between Landlord and Five Star Restaurant Corporation,
trading as "Five Star Restaurant" dated July 2, 1991, provides that:
Providing that Tenant is not in default and has not been in default under
the terms and conditions of this Lease, Landlord shall not directly lease any
other space in the Shopping Center to a tenant whose sole principal use of the
premises is a restaurant specializing in the preparation and sale of oriental
food for on- and off-premise consumption.
Nothing herein contained shall prohibit any other Tenant in the Shopping
Center from offering services which are the same or similar to those sold by
Tenant herein, so long as such sale by such other Tenant shall be incidental to
its principal business.
3. Lease Agreement between Landlord and Taco Bell Corp., trading as "Taco Bell"
dated November 30, 1992, provides that:
Landlord agrees that for the term of the Lease and any extensions thereof,
that Landlord will hold any land now or hereafter owned or controlled by
Landlord within a radius of one (1) mile of the Premises subject to the
following restrictions for the benefit of Tenant: (i) that except for currently
existing tenants within the Laurel Mall Shopping Center, or tenants within the
enclosed portion of the main mall itself, that no part of such land shall be
leased or used for the sale of Mexican food provided however that the sale of
such Mexican food shall not be prohibited so long as the same is offered as an
incidental part of the offeror's business. For the purpose of this section
"incidental" shall be defined as an amount not to exceed ten percent (10%) of
the offeror's items offered; and (ii) no improvements shall be erected on that
portion of the Laurel Mall Shopping Center which is outlined in green on page 6
of Exhibit "A" attached hereto, which improvements will materially interfere
with access to the premises, or the visibility of Tenant's restaurant or signage
to approaching automobile traffic.
Landlord and Tenant agree that the Mexican food exclusive granted above
shall be null and void should Tenant cease operating the Premises for the sale
of Mexican food for a period of one hundred and twenty (120) consecutive days,
excluding periods of time for remodeling or due to damage or destruction.
65
The restrictions contained within this paragraph shall be deemed to be null
and void on the date the Lease terminates for whatever reason.
4. Lease Agreement between Landlord and The Ground Round, Inc., trading as "The
Ground Round" dated April 14, 1994 provides that:
Providing that Tenant is not in default under the terms and conditions of
this Lease, and for so long as Tenant is open and operating a full service
restaurant in the Shopping Center:
(a) Landlord shall not directly lease or sell any other space in the
Shopping Center to a tenant or buyer whose sole principal business is a
full service restaurant with Liquor license with floor area of greater than
Four Thousand (4,000) Square Feet during the original lease term and any
option terms exercised by the Tenant. This exclusive use clause includes
outparcels but excludes any present or future tenants occupying space in
the enclosed mall portion of the Shopping Center.
(b) Landlord shall not permit a full service restaurant with liquor license
over 4,000 square feet in the existing enclosed mall that would have
outside entrance and signage in the area as delineated on the attached plan
commencing on the date Ground Round opens for business and terminating on
the date that is three (3) years thereafter. This restriction shall not
apply to the addition currently being built onto the Center (the J.C.
Penney concourse).
(c) Landlord shall not lease or sell any space within the Shopping Center
to any current or future full service restaurant concept operated by
Morrison's Inc. (i.e., Ruby Tuesday, Silver Spoon, Sweet Pea, L & N
Seafood, etc.). Said restriction applies throughout the full term of this
lease.
(d) Notwithstanding anything in this Section 6 to the contrary, this
Section shall not apply to the following tenants or tenant's premises or
successor tenants in the Shopping Center: (i) J.C. Penney, (ii) Boscov's,
(iii) Kmart, (iv) Mc Donalds and (v) any tenant of a size of 75,000 square
feet or greater, or to any mortgagee of the Shopping Center, its successors
or assigns.
The provisions of this Section are covenants running with the land of
landlord and shall be binding upon the heirs, administrators, successors
and assigns of Landlord.
5. Lease Agreement between Landlord and Olympia Sport Center, Inc., a Maine
corporation trading as "Olympia Sports", dated June 7, 1994, provides that:
"Providing that Tenant is not in material default and has not been in material
default under the terms and conditions of this Lease beyond applicable cure
period, and for so long as Tenant is open and operating in the Shopping Center,
Landlord shall not lease, any other space in the Shopping Center or allow the
space (to the extent Landlord has control) to be leased to a Prohibited
Operation (hereinafter defined) other than those tenants and tenant's uses and
exclusivity described in Exhibit "C" which operates during any portion of the
term of this Lease, and which meets any of the following criteria (a), (b), (c)
or (d), (hereinafter called "Prohibited
66
Operation"):
(a) The operation of a full-line sporting goods store selling athletic
footwear, athletic apparel and athletic equipment as its principal business
use, such as Sports Authority, CHAMPS, Herman's, etc; or
(b) The operation of more than one (1) store (such as Footlocker) the
principal business being the retail sale of athletic footwear; or
(c) The operation of a store whose total square footage contains at least
One Thousand (1,000) Square Feet of floor space for the sale of athletic
equipment, apparel and/or footwear for the following sports: baseball,
basketball, football, hockey, soccer and tennis; or
(d) The operation of a store whose principal business of which is the
retail sale of apparel containing logos or of references to professional
and college athletic teams.
Notwithstanding anything to the contrary contained herein, Landlord shall, to
the best of Landlord's ability, enforce this exclusive as described herein.
In the event Tenant contends that the Landlord has breached this provision and a
Prohibited Operation is operating, Tenant shall notify Landlord of such
contention within Thirty (30) days after the first day on which Tenant contends
the Prohibition Operation first opened for business, and Landlord shall have
Sixty (60) days in which to notify Tenant that Landlord disagrees with Tenant's
said contention. If Landlord does not serve such notice, the Minimum Rent shall
decease fifty percent (50%) of the then current rental and the Percentage Rent
base shall be amended to a sum equivalent to the natural breakpoint at three
percent (3%), effective as of the date of Tenant's notice to Landlord. If
Landlord does notify Tenant that it disagrees with such contention, Landlord
shall submit such matter(s) to arbitration and in its said notice to Tenant
shall set forth the name of one impartial person to serve as arbitrator. Tenant
shall, within then (10) days after such notice, notify Landlord of the name of
another impartial person to serve as arbitrator. The two persons so chosen shall
reach a decision or decisions as soon as practicable. In reaching their
decision(s) the arbitrators shall be entitled to uphold the position of Landlord
or Tenant, but shall not be permitted to select any other result. The
decision(s) of a majority of the arbitrators shall be binding upon Landlord and
Tenant and shall become effective on the date Tenant gave notice to Landlord
that the Prohibited Operation first opened for business. If at any time Landlord
believes the Prohibited Operation no longer exists Landlord shall so notify
Tenant, and Tenant shall have thirty (30) days in which to notify Landlord that
Tenant disagrees with Landlord's belief. If Tenant does not serve such notice
timely, then the Rent Reduction Period shall be deemed not to exist, and the
Minimum Rent shall increase to that which it would otherwise be in the absence
of this section. If Tenant does notify Landlord that it does disagree with
Landlord's said contention, Tenant shall submit such matter(s) to arbitration
and in its said notice to Landlord shall set forth the name of one impartial
person to serve as arbitrator. Landlord shall, within ten (10) days after such
notice, notify Tenant of the name of another impartial person to serve as
arbitrator. The two persons so selected shall select a third impartial
arbitrator and the three persons so chosen shall reach a decision or decisions
as soon as practicable. In reaching their decision(s) the arbitrators shall be
entitled to uphold the position of
67
Tenant or Landlord, but shall not be entitled to select any other result. The
decision(s) of a majority of the arbitrators shall be binding upon Landlord and
Tenant and shall become effective on the date that Landlord gave notice to the
Tenant that the Prohibited Operation ceased to exist.
Anything herein to the contrary contained notwithstanding, Tenant's sole remedy
in the event one or more Prohibited Operation(s) should open for business shall
be the decrease in Minimum Rent above in this Section and that there shall be
only one decrease in Rent if there is more than one Prohibited Operation in the
Shopping Center.
If a court of competent jurisdiction shall hold the provisions of this Section
to be unenforceable or unlawful, this Section shall be deemed deleted from this
Lease, but this Lease shall otherwise remain in full force and effect.
6. Lease Agreement between Hazleton Family Vision Center, Inc., trading as
"Hazleton Family Vision Center" dated July 11, 1994 provides that:
Providing that Tenant is not in default and has not been in default under
the terms and conditions of this Lease, and for so long as Tenant is open and
operating in the Shopping Center, Landlord shall not directly lease any other
space in the Shopping Center to a tenant whose sole principal business is the
retail sale of optical supplies, preparation of lenses and the furnishing of eye
examinations and other services and products represented in a typical vision
store.
Nothing herein contained shall prohibit any other tenant in the Shopping
Center from dealing or displaying merchandise or services which are the same or
similar to those sold or displayed by Tenant herein, so long as such sale or
display by such other tenant shall be incidental to its primary business.
A. Lease Agreement between Landlord and Bak of Rockland, Inc. trading as
"Just-A-Buck" dated January 12, 1995 provides that:
(a) Provided Tenant is not in default under the terms of this Lease and for
so long as Tenant is open and operating in the Shopping Center, Landlord shall
not hereafter lease, or suffer or permit the use of, in any other space in or
proximate to the Shopping Center, any tenant or occupant operating as a general
merchandise unit priced store, (hereinafter referred to as a "Competing
Operation"), with the following exceptions; any unit priced clothing and/or shoe
operation, Boscov's, J C Penney's, Kmart, Aldi Foods and McCrory.
(b) Anything to the contrary contained in this Lease notwithstanding, other
than exceptions listed in Section 17(a), in the event that a Competing Operation
shall commence during the term hereof, then, provided Tenant gives Landlord
written notice of the Competing Operation and if the Competing Operation is in
violation of the provisions of the Tenant's Lease (or other occupancy agreement)
and continues such violation for a period of thirty (30) days from the date of
Tenant's notice, (said period of thirty (30) days is hereinafter referred to as
the "Remedy Period"), from the expiration of the Remedy Period until the
Competing Operation identified by Tenant in its notice to Landlord ceases, upon
notice of violation, Tenant shall pay four percent (4%) of gross monthly sales,
(hereinafter "Percentage of Sales"), in lieu of Fixed Minimum Rent in effect
and/or Percentage Rent pursuant to Section 2.01 and Additional Rent
68
until said violation is cured. Should said violation not be cured within twelve
(12) months and Tenant's gross receipts for any six (6) month period fall below
gross receipts for the same period prior to notice of violation, Tenant may
terminate said Lease Agreement upon sixty (60) days written notice.
(c) The rights and remedies afforded to Tenant pursuant to this article are
cumulative and shall be in addition to any and every other right and remedy
otherwise available to Tenant at law or in equity.
(d) Landlord shall indemnify Tenant, should tenancy be interrupted by
actions of third parties relating to any alleged violation of any restrictive
covenant listed in Exhibit "C" of this Lease Agreement.
8. Lease Agreement between Gamezoner, Inc. trading as "The Game Zone" dated May
23, 1995 provides that:
Provided that Tenant is not in default and has not been in default under
the terms and conditions of this Lease, and for as long as Tenant is open and
operating in the Shopping Center, Landlord shall not directly lease any other
space in the Shopping Center to a tenant whose sole principal business is the
sale of new and used video games and computer software.
Nothing herein contained shall prohibit any other Tenant in the Shopping
Center from dealing or displaying merchandise or services which are the same or
similar to those sold or displayed by Tenant herein, so long as such sale or
display by such other Tenant shall be incidental to its primary line of
business.
Notwithstanding the foregoing, in addition, this prohibition shall not
apply to the following tenants or tenant's premises or successor tenants in the
Shopping Center as of the date hereof: (a) Boscov's, (b) Kmart, (c) J.C. Penney
and (d) McCrory's.
9. Lease Agreement between M.R. Dawgs, Inc. trading as "M.R. Dawgs" dated August
14, 1995 provides that:
Providing that Tenant is not in default and has not been in default under
the terms and conditions of this Lease, and for as long as Tenant is open and
operating in the Shopping Center, Landlord shall not directly lease any other
space in the Shopping Center to a tenant whose sole principal business is the
sale of hot dogs and cookies.
Nothing herein contained shall prohibit any other tenant in the Shopping
Center from dealing or displaying merchandise or services which are the same or
similar to those sold or displayed by Tenant herein, so long as such sale or
display by such other Tenant shall be incidental to its primary line of
business.
Notwithstanding the foregoing, in addition, this prohibition shall not
apply to the following tenants or tenant's premises or successor tenants in the
Shopping Center as of the date hereof: (a) Boscov's, (b) J.C. Penney, (c)
Kmart, and (d) McCrory's.
10. Lease Agreement between Gertrude Hawk Candy Shops, Inc., trading as
"Gertrude Hawk
69
Candy" dated August 15, 1995 provides that:
Providing that Tenant is not in default and has not been in default under
the terms and conditions of this Lease, and for as long as Tenant is open and
operating in the Shopping Center, Landlord shall not directly lease any other
space in the east wing of the enclosed mall to a tenant with more than Ninety
(90) linear feet of counter space devoted to the retail sale of candy.
Nothing herein contained shall prohibit any other Tenant in the Shopping
Center from dealing or displaying merchandise or services which are the same or
similar to those sold or displayed by Tenant herein, so long as such sale or
display by such other Tenant shall be incidental to its primary line of
business.
Notwithstanding the foregoing, in addition, this prohibition shall not
apply to the following tenants or tenant's premises or successor tenants in the
Shopping Center as of the date hereof: (a) J.C. Penny, (b) Kmart, (c) Boscov's,
(d) any free standing tenants, (e) any tenants occupying more than ten thousand
(10,000) square feet, and (f) any tenant in the adjacent strip center.
11. Lease Agreement between Jack Mundie, an individual, trading as "Jack Mundie
Tax Accounting" dated September 11, 1995 provides that:
Providing that Tenant is not in default and has not been in default under the
terms and conditions of this Lease, and for as long as Tenant is open and
operating in the Shopping Center, Landlord shall not directly lease any other
space in the Shopping Center to a tenant whose sole principal business is the
operation of a tax preparation, accounting, insurance, financial, and investment
service office.
Nothing herein contained shall prohibit any other tenant in the Shopping Center
from operating a tax preparation service, so long as such service provided by
such other tenant shall be incidental to its primary line of business.
Notwithstanding the foregoing, in addition, this prohibition shall not apply to
the following tenants or tenant's premises or successor tenants in the Shopping
Center as of the date hereof: (a) Boscov's, (b) J.C. Penney, (c) Kmart, and (d)
McCrory's.
12. Lease Agreement between Evenson Card Shops, Inc., trading as "Heritage
Hallmark Shop" dated October 31, 1995 provides that:
Providing that Tenant is not in default and has not been in default under
the terms and conditions of this Lease beyond any applicable cure period, and
for as long as Tenant is open and operating in the Shopping Center, Landlord
warrants that (1) no tenant or occupant of the Shopping Center Restricted Area
(as depicted as "Restricted Lease Area" on Exhibit "A-1") shall be permitted to
offer the sale of any Restricted Item (as hereinafter defined); and (2) the
Shopping Center shall not contain a Temporary Store (as hereinafter defined)
that offers the sale of any Restricted Item (such Landlord warranty is referred
to as the "Use Restriction"). In the event the Use Restriction is violated,
Tenant's Fixed Minimum Rent shall be reduced by fifty percent (50%) (the
"Reduced Rent"). Reduced Rent shall commence upon Tenant's notification
70
to Landlord that a violation of the Use Restriction has occurred, and shall
continue until the violation of the Use Restriction no longer exists. The term
"Restricted Items" shall mean any of the following products: Christmas
ornaments, greeting cards, gift wrap and/or party supplies. The term "Temporary
Store" shall mean any store or business in the Restricted Lease Area operated by
a tenant, licensee or occupant under a lease, license, or agreement (oral or
written) having a term of less than one (1) year or any store or business which
is not expected or required to remain open to the public for business for twelve
(12) or more consecutive months. Notwithstanding the foregoing, the Use
Restriction shall not apply to: (a) any tenant or tenant's premises existing as
of the date of this Lease whose lease specifically permits the sale of a
Restricted item; (b) any tenant that carries, in the aggregate, less than twenty
(20) linear feet of Restricted Items (a spinner rack containing any Restricted
Item shall be equal to six (6) linear feet); or (c) Boscov's, J.C.Penney or
K-Mart, their successor and assigns.
13. Lease Agreement between Landlord and David V. Yvette Nguyen, an individual,
trading as "Style Nails" dated November 27, 1995 provides that:
Providing that Tenant is not in default and has not been in default under
the terms and conditions of this Lease, and for as long as Tenant is open and
operating in the Shopping Center, Landlord shall not directly lease any other
space in the Shopping Center to a tenant whose sole principal business is the
operation of a nail salon.
Nothing herein contained shall prohibit any other tenant in the Shopping
Center from dealing or displaying merchandise or services which are the same or
similar to those sold or displayed by Tenant herein, so long as such sale or
display by such other tenant shall be incidental to its primary line of
business.
Notwithstanding the foregoing, in addition, this prohibition shall not
apply to the following tenants or tenant's premises or successor tenants in the
Shopping Center as of the date hereof: (a) Boscov's, (b) K-Mart, (c) J.C.
Penney, and (d) McCrory's.
14. Lease Agreement between Landlord and Thomas Trella and Allyson Trella,
(h/w), individuals, jointly and severally, and Robert M. Veet, Jr. and Laurie
Veet, (h/w), individuals, jointly and severally, trading as "Quik Piks & Pacs"
dated April 11, 1996 provides that:
Providing that Tenant is not in default and has not been in default under
the terms and conditions of this Lease, and for as long as Tenant is open and
operating in the Shopping Center, Landlord shall not directly lease any other
space in the Shopping Center to a tenant who sells Pennsylvania Lottery tickets.
Notwithstanding the foregoing, this prohibition shall not apply to existing
tenants in the Shopping Center who currently have the right to operate
Pennsylvania Lottery machines, their successors or assigns, or new tenants whose
square footage comprises in excess of 10,000 square feet, or any tenants over
whom Landlord cannot exercise such control.
15. Lease Agreement between Landlord and W.A.D. II, Inc., a Pennsylvania
corporation, trading as "The Pet Shop" dated April 30, 1996 provides that:
71
Nothing herein contained shall prohibit any other Tenant in the enclosed
mall, strip center or pad sites from dealing or displaying merchandise or
services which are the same or similar to those sold or displayed by Tenant
herein, so long as such sale or display by such other Tenant shall be incidental
to its primary line of business.
Notwithstanding the foregoing, in addition, this prohibition shall not
apply to the following tenants or tenants' premises or successor tenants in the
Shopping Center as of the date hereof: (a) Boscov's, (b) Kmart, (c) J.C.
Penney, (d) McCrory's, (e) tenants with floor area over Thirty Thousand (30,000)
Square Feet and (f) tenants located in the strip center with floor area less
than Six Thousand (6,000) Square Feet selling non-livestock merchandise.
16. Lease Agreement between Landlord and Townville, Inc., a Pennsylvania
corporation, trading as "Laurel Crafts" dated October 3, 1996 provides that:
Providing that Tenant is not in default under the terms and conditions of
this Lease, and provided Tenant is open for business with the public and
operating in the Shopping Center within one of the uses set forth in Section
4.1, Landlord shall not directly or indirectly lease any other space in the
enclosed portion of the Shopping Center to a tenant who operates a business in
substantial competition of Tenant's (as defined below) or to a tenant whose sole
principal business is the operation of a retail store carrying and/or selling
soft crafts, hard crafts and finished craft products, excluding temporary
seasonal and promotional kiosks.
Notwithstanding the foregoing, this prohibition shall not apply to the
following tenants or tenants' premises or successor tenants in the Shopping
Center as the date hereof (a) Boscov's, (b) J.C. Penney, and (c) K-Mart.
Definition of Business In Substantial Competition. Businesses in
Substantial Competition shall be any business operating a retail store which
devotes at least thirty percent (30%) of its display area toward the sale and/or
display of merchandise in one or more of the following merchandise categories:
craftable sewing notions, artificial floral, artist supplies, soft crafts, hard
crafts or finished craft products.
17. Lease Agreement between Landlord and We "R" Sports, Inc., a Pennsylvania
corporation, trading as "We "R" Sports" dated March 10, 1997, provides that:
Providing that Tenant is not in default and has not been in default under
the terms and conditions of this Lease, and for as long as Tenant is open and
operating in the Shopping Center, and provided in Landlord's sole discretion
Tenant's primary business is the sale of NASCAR merchandise, Landlord shall not
directly lease any other space in the Shopping Center to a tenant whose sole
principal business is the sale of NASCAR merchandise or a travel agency.
Nothing herein contained shall prohibit any other tenant in the Shopping
Center from dealing or displaying merchandise or services which are the same or
similar to those sold or displayed by Tenant as set forth in the above
paragraph, so long as such sale or display by such other tenant shall be
incidental to its primary line of business.
Notwithstanding the foregoing, in addition, this prohibition shall not
apply to any
72
existing lease in the Shopping Center or the following tenants' premises in the
Shopping Center as of the date hereof: (a) Boscov's, (b) J.C. Penney and (c)
Kmart.
In the event of a breach of this covenant by Landlord, Tenant's sole and
exclusive remedy shall be to terminate this Lease.
73
LAUREL MALL
ENCLOSED MALL
STORE SIGN SPECIFICATIONS
1. The purpose of this specification is to encourage and develop creative and
diversified signing for Tenant stores consistent with the following criteria
which shall in any event be limited by the provisions of Section 8.01 and
Exhibit "B" of the Lease Agreement.
a. The design and location of all signs shall be approved in writing by
Landlord and no sign shall be installed until Landlord's written approval
has been obtained by Tenant. Tenant shall submit working drawings for
proposed sign to Landlord for review and approval.
b. Wording of signs shall be limited to Tenant's store or trade name only.
Tenant's customary signature or logo, hallmark, insignia, or other trade
identification will be respected.
c. Fascia signs shall consist of individual channel return letters (no box
type) and shall be installed in accordance with Landlord's sign criteria.
Exposed lights flashing, blinking or animated type are not permitted.
d. The allowable size of Tenant's fascia sign for Store A-2 and B shall be a
rectangular area enclosing all elements of said sign and no larger than
Seventy-Five (75) Square Feet. The fascia sign shall be located within the
limits of Tenant's store front and shall not project more than six (6")
inches beyond the fascia and shall conform to the following maximum height
criteria:
24" capitals - 18" body
In addition to complying with the above criteria, fascia signs shall be
limited in length to 70% of the store frontage as defined by Landlord and
shall in no case exceed a length of thirty feet (30'0").
e. Printed signs on storefronts or show windows are prohibited with the
exception of small-scale signs which are neatly lettered on the glass of
the storefront and subject to Landlord's approval.
f. Public safety decals or artwork on glass in minimum sizes to comply with
Code, subject to the approval of Landlord may be used.
g. Paper signs, stickers, banners, or flags are prohibited.
h. No exposed raceways, ballast boxes or electrical transformers will be
permitted.
i. Sign company names or stamps should be concealed (Code permitting).
j. Exterior signs (those not within the enclosed mall areas) shall be
permitted only if approved by Landlord, and such permission and the
design, size and location of any
74
permitted sign shall be subject to Landlord's sole discretion.
2. a. Except as otherwise approved in writing by the Landlord, only one fascia
sign for each Tenant will be permitted.
b. Unless specifically approved in writing by Landlord, sign letters shall be
back-lighted with lamps or tubes entirely concealed within the depth of
the letter. Maximum brightness allowed for fascia signs will be 100 foot
lamberts taken at the letter face.
b. Exposed sign illumination or illuminated sign cabinets or modules are not
permitted.
3. Signs and identifying marks on the fascia shall be placed entirely within the
boundaries of the Demised Premises with no part closer than 6" from either
top or bottom of fascia edge.
4. a. Signs for kiosks, promotional displays or for shows will in every instance
require the written approval of Landlord.
b. In addition to Landlord's approval, Tenant shall obtain local government
approval when required by code.
c. All signs and installations thereof must be "Underwriters Approved".
d. No woodblocking or flammable construction material is to be used in the
attachment of any sign material above the storefront.
5. All electrified signs shall be installed with an automatic, seven (7) day
timer. Timer and sign circuit shall be installed in accordance with all
applicable codes and requirements. Tenant shall be responsible for setting
and maintaining sign timers so that all signage is illuminated during all
mall operating hours even if store operating hours are different. Landlord
shall reserve the right to install and/or maintain Tenant's sign timer at
Tenant's expense if Tenant fails to comply with this requirement.
75
RULES AND REGULATIONS
Tenant covenants and agrees:
1. To keep the inside and outside of all glass in the doors and windows of the
demised premises clean.
2. To keep all exterior storefront surfaces clean.
3. To replace promptly at its own expense with glass of like kind and quality
any plate glass or window glass of the demised premises which may become cracked
or broken unless by fire.
4. To keep clean and free from snow, ice, dirt and rubbish the outside areas
immediately adjoining the demised premises, including but not limited to
sidewalk and loading docks.
5. It will not, without the consent in writing of Landlord, place or maintain
any merchandise or other articles in any vestibule or entry of the premises, on
the footwalks adjacent thereto or elsewhere on the exterior thereof.
6. To maintain the premises at its own expense in a clean, orderly and a
sanitary condition free of insects, rodents, vermin and other pests, except to
the extent caused by Landlord's negligence or willful misconduct. Maintain
housekeeping of Tenant's store on a level at least equal to that of the mall
itself.
7. It will not permit undue accumulations of garbage, trash, rubbish and other
refuse, but will remove the same at its expense, and will keep such refuse in
rat-proof containers within the interior of the premises until removed. All such
garbage, trash or rubbish removal shall be removed between the hours of 10:00
p.m. and 10:00 a.m. If the Landlord provides such service directly to the
shopping center, Tenant agrees to pay such charges fixed therefor by the
Landlord.
8. It will not use or permit the use of any objectionable advertising medium,
such as loud-speakers, phonographs, public address systems, sound amplifiers,
radio or broadcasts within the shopping center and in any manner audible or
visible outside the demised premises.
9. To keep all mechanical apparatus free of vibration and noise which may be
transmitted beyond the confines of the premises.
10. It will not cause or permit objectionable odors to emanate or be dispelled
from the premises.
11. It will not solicit business in the parking or other common areas nor
distribute any hand bills or other advertising matter to, in, or upon any
automobiles parked in the parking area or in any other common area.
12. To comply with all laws and ordinances and all valid rules and regulations
of governmental authorities and all recommendations of the Fire Underwriters
Rating Bureau, now or thereafter enacted, promulgated or adopted, with respect
to the use or occupancy of the premises by Tenant.
76
13. It will not receive or ship articles of any kind except through the service
facilities provided for that purpose by Landlord; will not permit the parking or
occupancy of space by delivery vehicles under Tenant's control to interfere with
the use of accessway, any driveway, walk, parking area, mall or other common
area in the shopping area, unless such delivery is made between the hours of
10:00 p.m. and 10:00 a.m., and that no delivery vehicle under Tenant's control
shall be permitted to park for longer than one-half hour under any conditions.
14. It shall use the insignia or logo of the shopping center designated by the
Landlord in substantially all Tenant's advertising. Tenant shall refer to the
name of the shopping center in substantially all audio advertising.
15. It shall not place any weight on the floors in excess of 100 lbs. per square
foot, except for Tenant's floor safe and electronic equipment.
16. It will not permit any shopping carts in the mall area if taken by
customers.
17. To operate its heating, ventilating and air conditioning systems in its
demised premises at normal room temperature not to exceed 75 degrees in the
summer and no lower than 70 degrees in the winter during the hours that Tenant's
demised premises is open for business and the enclosed mall heating and air
conditioning systems are in operation. When the enclosed mall heating and air
conditioning systems are not in operation and Tenant's premises are not open for
business, Tenant shall keep the premises at a temperature sufficiently high to
prevent freezing of water in the pipes and fixtures.
18. It and its employees shall park their cars in those portions of the parking
area designated for that purpose by Landlord. Tenant shall furnish Landlord with
State automobile license numbers assigned to Tenant's car or cars and cars of
its employees within five (5) days after taking possession of the leased
premises and shall thereafter notify Landlord of any changes within five (5)
days after such changes occur. In the event that Tenant or its employees fail to
park their cars in designated parking areas as aforesaid, then Landlord shall
have the right to charge Tenant Ten Dollars ($10.00) per day per car parking in
any other areas than those designated.
19. To give prompt written notice of any accident, fire or damage occurring on
or to the demised premises.
77
FIRST AMENDMENT OF LEASE
THIS FIRST AMENDMENT OF LEASE made this day of, 19 , by and
among ROYCE REALTY, INC. a Pennsylvania corporation, with an address at Plymouth
Plaza, 580 West Germantown Pike, Suite 200, Plymouth Meeting, Pennsylvania 19462
(hereinafter called "Agent"), LAUREL MALL ASSOCIATES, a Pennsylvania limited
partnership, with an address at c/o PREIT-RUBIN, Inc., 200 South Broad Street,
Philadelphia, Pennsylvania 19102 (hereinafter called "Landlord") and THE DOWNS
OFF-TRACK WAGERING, INC., a Pennsylvania corporation, trading as "THE DOWNS AT
HAZLETON", with an address at P.O. Box 32, Exit 28 off Route I-81 Grantville,
Pennsylvania 17028 (hereinafter called "Tenant").
WHEREAS, by Lease Agreement dated July 9, 1997 (hereinafter called "Lease
Agreement"), Landlord leased to Tenant all those certain premises owned by
Landlord know as STORE NUMBER A-2 AND B (hereinafter called the "Premises")
erected in THE LAUREL MALL (hereinafter called "Center" or "Shopping Center"),
located at Route 93 and Airport Road, Hazle and Sugarloaf Townships, Luzerne
County, Pennsylvania, upon certain terms and conditions more fully set forth in
said Lease Agreement; and
WHEREAS, the parties hereto desire to amend said Lease;
NOW THEREFORE, in consideration of the mutual promises hereinafter
contained, and of the sum of ONE DOLLAR ($1.00) by each to the other in hand
paid, the receipt of which is acknowledged hereby, the parties hereto intending
to be legally bound hereby, now covenant and agree with each other as follows:
1. EFFECTIVE DATE.
This First Amendment of Lease shall be effective as of the date first above
written (hereinafter the "Effective Date").
2. COMMENCEMENT AND RENT COMMENCEMENT DATES.
Notwithstanding anything herein or elsewhere to the contrary, the
Commencement Date of the Lease, as set forth in Section 1.01(a) shall be amended
to October 15, 1997. Tenant's obligation to begin paying Fixed Minimum Rent and
additional rent, as set forth in Paragraph 2 of Rider to Lease Agreement, shall
commence on January 14, 1998.
3. LEASED PREMISES' SQUARE FOOTAGE.
As of the Commencement Date, the Premises shall be increased in size in
accordance with Section 5 herein, and shall be measured and described as
follows:
FRONT: ONE HUNDRED FORTY-THREE FEET SIX INCHES (143'6")
DEPTH: ONE HUNDRED FIFTY FEET ZERO INCHES (150'0")
TOTAL AREA: THIRTEEN THOUSAND ONE HUNDRED TWENTY SQUARE FEET
(13,120 SQ. FT. -- IRREGULAR)
78
4. LANDLORD'S WORK.
It is agreed and understood between the parties that Landlord has completed
all of its construction obligations pursuant to Exhibit "B" of the Lease
Agreement.
5. TENANT'S DEMISING WALL WORK.
It is agreed and understood between the parties that Tenant, at its sole
cost and expense, has demolished the demising wall recently erected by Landlord
and has erected at its sole cost and expense, a replacement demising wall.
Tenant shall indemnify, hold harmless and agree to defend Landlord from and
against all claims, damages, liabilities and judgments on account of injury to
persons, loss of life or damage to property arising in connection with the
demolition and erection of said demising wall unless resulting from the
negligence or intentional act of Landlord. Tenant is responsible for all
governmental approvals and/or permits necessary for the demolition and erection
of said demising wall.
Prepared By: Basil S. Donnelly
Date: February 4, 1998, Revised February 13, 1998 CSD
Agent: John Comp
6. MINIMUM RENT.
A. Original Term.
The Fixed Minimum Rent for each year during the term of this Lease, as set
forth in the Indenture of Lease, shall be replaced with:
YEAR ANNUAL RENTAL MONTHLY RENTAL
- ---- ------------- --------------
10/15/97 - 10/33/02 $ 98,400.00 $8,200.00
11/01/02 - 10/31/07 $108,240.00 $9,020.00
Fixed Minimum Rent shall be payable on or before the first day of each month, in
advance, at the office of agent or at such other place as may be designated by
Landlord from time to time, without any prior demand therefor and without any
deduction or setoff whatsoever. In the event that the term of this Lease shall
commence on a day other than the first day of a month, Tenant shall pay Fixed
Minimum Rent in advance for the fractional month on a per diem basis calculated
on the basis of a Thirty (30) day month.
B. Renewal Options.
The Fixed Minimum Rent for each year during the Renewal Options of this
Lease, as set forth in the Indenture of Lease, shall be replaced with:
The Fixed Minimum rental during each year of the first Renewal Option
period shall be:
79
YEAR ANNUAL RENTAL MONTHLY RENTAL
- ---- ------------- --------------
11/01/07 - 10/31/12 $119,391.96 $9,949.33
The Fixed Minimum rental during each year of the second Renewal Option
period shall be:
YEAR ANNUAL RENTAL MONTHLY RENTAL
- ---- ------------- --------------
11/01/12 - 10/31/17 $131,199.96 $10,983.33
Except as herein provided, all of the terms, covenants and conditions of
this Lease Agreement pertaining to the initial term hereof shall equally pertain
in all respects to any and all renewals and extensions of this Lease Agreement
except that Tenant shall have no further renewal options following the
expiration of the second Renewal Option.
7. ADDITIONAL RENT.
As of the Commencement Date, all calculations for Real Estate Taxes,
Operating Costs and any other additional rent shall be based on the square
footage of Thirteen Thousand One Hundred Twenty (13,120) Square Feet.
8. CONFESSION OF JUDGMENT.
When the Lease shall be terminated or canceled by reason of the breach of
any provision, either during the original term of the Lease or any renewal
thereof and after the expiration of the applicable notice period, and also as
soon as the term hereby created or any renewal thereof shall have expired, it
shall be lawful for any attorney as attorney for Tenant to file an agreement for
entering in any court of competent jurisdiction, confession of judgment in
ejectment against Tenant and all persons claiming under Tenant for the recovery
by Landlord of possession of the Demised Premises, for which the Lease or a true
and correct copy thereof shall be his sufficient warrant; whereupon, if Landlord
so desires, a writ of possession may issue forthwith, without any prior writ or
proceedings whatsoever, and provided that if for any reason after such action
shall have been commenced, the same shall be terminated and possession remain in
or be restored to Tenant, Landlord shall have the right upon any subsequent
default or defaults, or upon the termination or cancellation of the Lease as
hereinbefore set forth, to bring one or more actions as hereinbefore set forth
to recover possession as aforesaid.
9. Except as herein provided, all of the terms, covenants, conditions and
stipulations contained in said Lease Agreement shall continue with like force
and effect and to all legal intents and purposes as if included in a new and
formal Indenture of Lease containing identical terms, covenants, conditions and
stipulations as in the aforesaid Lease Agreement except as herein modified,
until the time of the expiration of the term, and the same is hereby ratified
and confirmed.
80
10. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture of Lease
to be duly executed the day and year first above written.
(Corporate Seal) ROYCE REALTY, INC.
(Agent)
Attest: \s\ Louis P. Meshon By: \s\ Louis P. Meshon
-------------------------- --------------------------
Louis P. Meshon, Secretary Louis P. Meshon, President
LAUREL MALL ASSOCIATES
By: PR Laurel Mall, L.P., a
general partner
By: PR Laurel Mall Trust (Landlord)
Witness: \s\ By: \s\ Robert Roger
------------------------- -----------------------
Name:
Authorized Signatory
LAUREL MALL ASSOCIATES
By: MONTGOMERY DEVELOPMENT
COMPANY, INC.
A CORPORATE GENERAL PARTNER
(Landlord)
Attest: \s\ Louis P. Meshon By: \s\ Louis P. Meshon
-------------------------- --------------------------
Louis P. Meshon, Ass't. Secretary Louis P. Meshon, President
(Corporate Seal)
THE DOWNS OFF-TRACK WAGERING,
INC., a Pennsylvania
corporation
T/A "THE DOWNS AT HAZLETON"
(Tenant)
Attest: \s\ Susan M. Montgomery By: \s\ William J. Bork
-------------------------- --------------------------
Secretary President
81
Exhibit 10.69
Standard Form of Agreement Between Owner and Contractor
where the basis of payment is a
STIPULATED SUM
1977 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
Use only with the 1976 Edition of AIA Document A201, General Conditions
of the Contract for Construction.
This document has been approved and endorsed by The Associated
General Contractors of America.
- --------------------------------------------------------------------------------
AGREEMENT
made as of the fifteenth day of August in the year of Nineteen Hundred and
Ninety Seven
BETWEEN the Owner:
(Name and address)
Pocono Downs, Inc.
1280 Highway 315
Wilkes-Barre, PA 18702
and the Construction Manager:
(Name and address)
S.G. Mastriani C/M
702 N. Blakely Street
Dunmore, PA 18512
The Project is:
(Name, address and brief description)
Carbondale O.T.W.
Pike Street, Carbondale, PA
The Architect is:
(Name and address)
Architectural Concepts
Suite 200
967 East Swedesford Road
Exton, PA 19341
The Owner and Contractor agree as set forth below.
(1)
ARTICLE 1
THE CONTRACT DOCUMENT
The Contract Documents consist of this Agreement, the Conditions of the Contract
(General, Supplementary and other Conditions), the Drawings, the Specifications,
all Addenda issued prior to and all Modifications issued after execution of this
Agreement. These form the Contract, and all are as fully a part of the Contract
as if attached to this Agreement or repeated herein. An enumeration of the
Contract Document appears in Article 7.
ARTICLE 2
THE WORK
The Contractor shall perform all the Work required by the Contract Documents for
(Here insert the caption descriptive of the Work as used on other Contract
Documents.)
Building shell per proposal dated 6/24/97
Site work per revised proposal dated 7/17/97
(Copies Attached)
ARTICLE 3
TIME OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
The Work to be performed under this Contract shall be commenced
and, subject to authorized adjustments, Substantial Completion shall be
achieved not later than
(Here insert any special provisions for liquidated damages relating to failure
to complete on time.)
ARTICLE 4
CONTRACT SUM
The Owner shall pay the Contractor in current funds for the performance
of the Work, subject to additions and deductions by Change Order as
provided in the Contract Documents, the Contract Sum of
Six Hundred Twenty-Two Thousand Six Hundred ($622,600.00) Dollars
The Contract Sum is determined as follows:
(State here the base bid or other lump sum amount, accepted alternatives, and
unit prices, as applicable.)
Base Bid Performance Bond
Bldg. Shell $283,000.00 Add $3,250.00
Revised Site 339,600.00 Add $4,000.00
-----------
$622,600.00
Unit Prices:
Add for concrete encasement of sprinkler line if required $6,000.00
Add for any hidden walls below slab $13.00/LF
Add for 30' aluminum flagpole, etc. $2,500.00 ea.
(2)
ARTICLE 5
PROGRESS PAYMENTS
Based upon Applications for Payment submitted to the Architect by the Contractor
and Certificates for Payment issued by the Architect, the Owner shall make
progress payments on account of the Contract Sum to the Contractor as provided
in the Contract Documents for the period ending the 30th day of the month as
follows:
Not later than 10 days following the end of the period covered by the
Application for Payment 100 percent (100%) of the portion of the Contract Sum
properly allocable to materials and equipment suitably stored at the site or at
some other location agreed upon in writing, for the period covered by the
Application for Payment, less the aggregate of previous payments made by the
Owner; and upon Substantial Completion of the entire Work, a sum sufficient to
increase the total payments to percent ( %) of the Contract Sum,
less such amounts as the Architect shall determine for all incomplete Work and
unsettled claims as provided in the Contract Documents.
(If not covered elsewhere in the Contract Documents, here insert any provision
for limiting or reducing the amount retained after the Work reaches a certain
stage of completion.)
Payments due and unpaid under the Contract Documents shall bear interest
from the date payment is due at the rate entered below, or in the
absence thereof, at the legal rate prevailing at the place of the
Project.
(Here insert any rate agreed upon.)
ARTICLE 6
FINAL PAYMENT
Final payment, constituting the entire unpaid balance of the Contract Sum, shall
be paid by the Owner to the Contractor when the Work has been completed, the
Contract fully performed, and a final Certificate for Payment has been issued by
the Architect.
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Documents, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
7.2 Payments due and unpaid under the Contract shall bear interest from the date
payment is due at the rate stated below, or in the absence thereof, at the legal
rate prevailing from the time at the place where the Project is located.
(Insert rate if interest agreed upon, if any)
(List below the Agreement, the Conditions of the Contract (General,
Supplementary, and other Conditions), the Drawings, the Specifications, and any
Addenda and accepted alternatives, showing page or sheet numbers in all cases
and dates where applicable.)
Dwgs. S1, S2, S3 prepared by John Gamble date 6-19-97 as they relate to building
shell only. No canopy footings, steel, etc.
Dwgs. TB-1 dated 6/9/97
U-1 dated 6/25/97 - Revised 6/27/97
RW-1 " " " "
D-1 " " " "
C-1 " " " "
C-2 " " " "
C-3 " " " "
C-4 " " " "
(3)
AS PREPARED BY JOHN GAMBLE, P.E.
This Agreement entered into as of day and year first written above.
OWNER - Pocono Downs, Inc. CONTRACTOR - S.G. Mastriani C/M
\s\ Arthur Manuel \s\ Joseph F. Salerno, Jr.
- -------------------------------- ----------------------------------
Arthur Manuel Joseph F. Salerno, Jr.
Vice President
Witness: \s\ Michael Cestone Witness: \s\ Michael Cestone
- -------------------------------- ----------------------------------
(4)
Exhibit 10.70
Standard Form of Agreement Between Owner and Contractor
where the basis of payment is a
STIPULATED SUM
1977 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
Use only with the 1976 Edition of AIA Document A201, General Conditions
of the Contract for Construction.
This document has been approved and endorsed by The Associated
General Contractors of America.
- --------------------------------------------------------------------------------
AGREEMENT
made as of the fifteenth day of October in the year of Nineteen Hundred and
Ninety Seven
BETWEEN the Owner:
(Name and address)
Pocono Downs, Inc.
1280 Highway 315
Wilkes-Barre, PA 18702
and the Construction Manager:
(Name and address)
S.G. Mastriani C/M
702 N. Blakely Street
Dunmore, PA 18512
The Project is:
(Name, address and brief description)
Carbondale O.T.W.
Interior Fit Out and Canopy
The Architect is:
(Name and address)
Architectural Concepts
Suite 200
967 East Swedesford Road
Exton, PA 19341
The Owner and Contractor agree as set forth below.
(1)
ARTICLE 1
THE CONTRACT DOCUMENT
The Contract Documents consist of this Agreement, the Conditions of the Contract
(General, Supplementary and other Conditions), the Drawings, the Specifications,
all Addenda issued prior to and all Modifications issued after execution of this
Agreement. These form the Contract, and all are as fully a part of the Contract
as if attached to this Agreement or repeated herein. An enumeration of the
Contract Document appears in Article 7.
ARTICLE 2
THE WORK
The Contractor shall perform all the Work required by the Contract Documents for
(Here insert the caption descriptive of the Work as used on other Contract
Documents.)
Interior Fit Out per proposal dated 10/9/97 - Exhibit "D"
Canopy per proposal date 10/3/97 - Exhibit "E"
(See copies attached)
ARTICLE 3
TIME OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
The Work to be performed under this Contract shall be commenced and, subject to
authorized adjustments, Substantial Completion shall be achieved not later than
(Here insert any special provisions for liquidated damages relating to failure
to complete on time.)
Work to be substantially completed in 120 days from date of executed contract by
Owner.
ARTICLE 4
CONTRACT SUM
The Owner shall pay the Contractor in current funds for the performance
of the Work, subject to additions and deductions by Change Order as
provided in the Contract Documents, the Contract Sum of
One Million Ninety-Six Thousand Five Hundred ($1,096,500.00) Dollars
The Contract Sum is determined as follows:
(State here the base bid or other lump sum amount, accepted alternatives, and
unit prices, as applicable.)
See Exhibits A & B
(2)
ARTICLE 5
PROGRESS PAYMENTS
Based upon Applications for Payment submitted to the Architect by the Contractor
and Certificates for Payment issued by the Architect, the Owner shall make
progress payments on account of the Contract Sum to the Contractor as provided
in the Contract Documents for the period ending the 30th day of the month as
follows:
Not later than 10 days following the end of the period covered by the
Application for Payment 100 percent (100%) of the portion of the Contract Sum
properly allocable to materials and equipment suitably stored at the site or at
some other location agreed upon in writing, for the period covered by the
Application for Payment, less the aggregate of previous payments made by the
Owner; and upon Substantial Completion of the entire Work, a sum sufficient to
increase the total payments to percent ( %) of the Contract Sum, less
such amounts as the Architect shall determine for all incomplete Work and
unsettled claims as provided in the Contract Documents.
(If not covered elsewhere in the Contract Documents, here insert any provision
for limiting or reducing the amount retained after the Work reaches a certain
stage of completion.)
Payments due and unpaid under the Contract Documents shall bear interest
from the date payment is due at the rate entered below, or in the
absence thereof, at the legal rate prevailing at the place of the
Project.
(Here insert any rate agreed upon.)
ARTICLE 6
FINAL PAYMENT
Final payment, constituting the entire unpaid balance of the Contract Sum, shall
be paid by the Owner to the Contractor when the Work has been completed, the
Contract fully performed, and a final Certificate for Payment has been issued by
the Architect.
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Documents, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
7.2 Payments due and unpaid under the Contract shall bear interest from the date
payment is due at the rate stated below, or in the absence thereof, at the legal
rate prevailing from the time at the place where the Project is located.
(Insert rate if interest agreed upon, if any)
(List below the Agreement, the Conditions of the Contract (General,
Supplementary, and other Conditions), the Drawings, the Specifications, and any
Addenda and accepted alternatives, showing page or sheet numbers in all cases
and dates where applicable.)
Dwgs. Exhibit "C"
Specs dated 8/11/97
Addendum 1-6
(3)
This Agreement entered into as of day and year first written above.
OWNER - Pocono Downs, Inc. CONTRACTOR - S.G. Mastriani C/M
\s\ Arthur Manuel \s\ Joseph F. Salerno, Jr.
- --------------------------------- -----------------------------------
Arthur Manuel Joseph F. Salerno, Jr.
General Manager Vice President
Witness: \s\ Lisa Symeon Witness: \s\ Claire Dolodzuski
------------------------- ---------------------------
(4)
Exhibit 10.71
THE AMERICAN INSTITUTE OF ARCHITECTS
- --------------------------------------------------------------------------------
AIA Document A10
Standard Form of Agreement Between Owner and Contractor
where the basis of payment is a
STIPULATED SUM
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
The 1987 Edition of AIA Document A201, General Conditions of the
Contract for Construction, is adopted in this document by reference. Do
not use with other general conditions unless this document is modified.
This document has been approved and endorsed by The Associated
General Contractors of America.
- --------------------------------------------------------------------------------
AGREEMENT
made as of the twelfth day of November in the year of Nineteen Hundred and
Ninety Seven
BETWEEN the Owner:
(Name and address)
Pocono Downs, Inc.
P.O. Box 32
Grantville, PA 17028
and the Construction Manager:
(Name and address)
Warfel Construction Company
812 North Prince Street
P.O. Box 4488
Lancaster, PA 17604
The Project is:
(Name, address and brief description)
The Downs
Off-Track Wagering Facility
Hazelton, PA
The Architect is:
(Name and address)
Architectural Concepts
Suite 200
967 East Swedesford Road
Exton, PA 19341
The Owner and Contractor agree as set forth below.
(1)
ARTICLE 1
THE CONTRACT DOCUMENT
The Contract Documents consist of this Agreement, Conditions of the
Contract (General, Supplementary and other Conditions), Drawings,
Specifications, Addenda issued prior to execution of this Agreement, other
documents listed in this Agreement and Modifications issued after execution of
this Agreement: these form the Contract, and are as fully a part of the Contract
as if attached to this Agreement or repeated herein. The Contract represents the
entire and integrated agreement between the parties hereto and supersedes prior
negotiations, representations or agreements, either written or oral. An
enumeration of the Contract Documents, other than Modifications, appears in
Article 9.
ARTICLE 2
THE WORK OF THIS CONTRACT
The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract Documents
to be the responsibility of others, or as follows:
ARTICLE 3
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
3.1 The date of commencement is the date from which the Contract Time of
Paragraph 3.2 is measured, and shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement, if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed.)
Date of commencement shall be 10 days after receipt of Notice to Proceed
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner in writing not less than five
days before commencing the Work to permit the timely filing of mortgages,
mechanic's liens and other security interest.
3.2 The Contractor shall achieve Substantial Completion of the entire Work not
later than
(Insert the calendar date or number of calendar days after the date of
commencement. Also insert any requirements for earlier Substantial Completion of
certain portions of the Work, if not stated elsewhere in the Contract
Documents.)
120 calendar days after receipt of Notice to Proceed, subject to adjustments of
this Contract Time as provided in the Contract Documents.
(2)
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time.)
ARTICLE 4
Contract Sum
4.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum of One Million Three Hundred Forty
Seven Thousand Dollars ($1,347,000.00), subject to additions and deductions as
provided in the Contract Documents.
4.2 The Contract Sum is based upon the following alternates, if any, which are
described in the Contract Documents and are hereby accepted by the Owner:
(State the number or other identification of accepted alternates. If decisions
on other alternates are to be made by the Owner subsequent to the execution of
this Agreement, attach a schedule of such other alternates showing the amount
for each and the date until which that amount is valid.)
Alternate #1: Cost to add Performance and Payment Bond to base bid:
Increase $11,000.00
4.3 Unit price, if any, are as follows:
None
ARTICLE 5
PROGRESS PAYMENTS
5.1 Based upon Applications for Payment submitted to the Owner by the Contractor
the Owner shall make progress payments on account of the Contract Sum to the
Contractor as provided below and elsewhere in the Contract Documents.
5.2 The period covered by each Application for Payment shall be one calendar
month ending on the last day of the month.
5.3 Provided an Application for Payment is received by the Owner not later than
the 31st day of a month, the Owner shall make payments to the Contractor not
later than the 25th day of the following month. If an Application for Payment is
received by the Owner after the application dated fixed above, payment shall be
made by the Owner not later than days after the Owner receives the Application
for Payment.
5.4 Each Application for Payment shall be based upon the Schedule of Values
submitted by the Contractor in accordance with the Contract Documents. The
Schedule of Values shall allocate the entire Contract Sum among the various
portions of the Work and be prepared in such form and support by such data to
substantiate its accuracy as the Architect may require. The Schedule, unless
(3)
objected to by the Architect, shall be used as a basis for reviewing the
Contractor's Applications form Payment.
5.5 Applications for Payment shall indicate the percentage of completion of
each portion of the Work as of the end of the period covered by the Application
for Payment.
5.6 Subject to the provisions of the Contract Documents, the amount of each
progress payment shall be computed as follows:
5.6.1 Take that portion of the Contract Sum properly allocable to completed Work
as determined by multiplying the percentage completion of each portion of the
Work by the share of the total Contract Sum allocated to that portion of the
Work in the Schedule of Values less retainage of Ten (10%). Pending final
determination of cost to the Owner of changes in the Work, amounts not in
dispute may be included as provided in Subparagraph 7.3.7 of the General
Contract even though the Contract Sum has not yet been adjusted by Change Order.
5.6.2 Add that portion of the Contract Sum properly allocable to materials and
equipment delivered and suitably stored at the site for subsequent incorporation
in the completed construction (or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing), less retainage of Ten
Percent (10%);
5.6.3 Subtract the aggregate of previous payment made by the Owner: and
5.6.4 Subtract amounts, if any, for which the Architect has withheld or
nullified a Certificate for Payment as provided in paragraph 9.5 of the General
Conditions.
5.7 The progress payment amount determined in accordance with Paragraph 5.6
shall be further modified under the following circumstances:
5.7.1 Add, upon Substantial Completion of the Work, a sum sufficient to increase
the total payments to Ninety-nine Percent (99%) of the Contract Sum, less such
amounts as the Architect shall determine for incomplete Work and unsettled
claims; and
5.7.2 Add, if final completion of Work is thereafter materially delayed through
no fault of the Contractor, any additional amounts payable in accordance with
Subparagraph 9.10.3 of the General Conditions.
5.8 Reduction or limitation of retainage, if any, shall be as follows:
(If it is intended, prior to Substantial Completion of the entire Work, to
reduce or limit the retain age resulting from the percentages inserted in
Subparagraphs 5.6.1 and 5.6.2 above, and this is not explained elsewhere in the
Contract Documents, insert here provisions for such reduction or limitation.)
Reduce to 5% when 50% complete with work
Reduce to 0% when contract work complete
(4)
ARTICLE 6
FINAL PAYMENT
Final Payment, constituting the entire unpaid balance of the Contract Sum, shall
be made by the Owner to the Contractor when (1) the Contract has been fully
performed by the Contractor except for the Contractor's responsibility to
correct nonconforming Work as provided in Subparagraph 12.2.2 of the General
Conditions and to satisfy other requirements, if any, which necessarily survive
final payment; and (2) a final Certificate for Payment has been issued by the
Architect; such final payments shall be made by the Owner not more than 30 days
after the issuance of the Architect's final Certificate for Payment, or as
follows:
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Documents, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
7.2 Payments due and unpaid under the Contract shall bear interest from the date
payment is due at the rate stated below, or in the absence thereof, at the legal
rate prevailing from the time at the place where the Project is located.
(Insert rate if interest agreed upon, if any)
12% per annum
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may effect the validity of this provision. Legal advise should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
7.3 Other provisions:
See attached clarifications
ARTICLE 8
TERMINATION OR SUSPENSION
8.1 The contract may be terminated by the Owner or the Contractor as provided in
Article 14 of the General Conditions.
8.2 The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions.
(5)
ARTICLE 9
ENUMERATION OF CONTRACT DOCUMENTS
9.1 The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
9.1.1 The Agreement is this executed Standard form of Agreement Between Owner
and Contractor, AIA Document A101, 1987 Edition.
9.1.2 The General Conditions are the General Conditions of the Contract of
Construction, AIA Document A201, 1987 Edition.
9.1.3 The Supplementary and other Conditions of the Contract are those contained
in the Project Manual dated Not applicable and are as follows:
Document Title Pages
00800 Supplementary Conditions 2
9.1.4 The Specifications are those contained in the Project Manual dated as in
Subparagraph 9.1.3, and are as follows:
(Either list the Specifications here or refer to an exhibit attached to this
Agreement.)
Section Title Pages
See attached Table of Contents
9.1.5 The Drawings are as follows, and are dated unless a different date is
shown below:
(Either list the Drawings or refer to an exhibit attached to this Agreement.)
Number Title Date
See attached listing
9.1.6 The Addenda, if any, are as follows:
Number Date Pages
1 9/11/97 12
2 9/29/97 10
3 9/30/97 1
(6)
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also numerated in this
Article 9.
9.1.7 Other documents, if any, forming part of the Contract Documents are as
follows;
(List here any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only if intended to be
part of the Contract Documents.)
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
OWNER Pocono Downs, Inc. CONTRACTOR Warfel Construction Company
/s/ Arthur E. Manuel /s/ T. W. Peters
------------------------------ --------------------------------
(Signature) (Signature)
Arthur E. Manuel, General Manager T. W. Peters, President
- --------------------------------- -----------------------------------
(Printed Name and Title) (Printed Name and Title)
Exhibit 10.72
SERVICES AGREEMENT
Agreement dated November 19, 1997, by and between Autotote Systems, Inc., a
Delaware corporation ("Autotote") and Penn National Gaming, Inc., a Pennsylvania
corporation ("Owner").
WHEREAS, Owner operates facilities known as Penn National Race Course,
Pocono Downs, Charlestown Races, and affiliated OTBs, (the "Facility") for the
conduct on its premises of the activity specified in Exhibit A and requires
certain services of Autotote in connection with the establishment and operation
of services ("Services") at the Facility; and
WHEREAS, Autotote desires to furnish certain equipment ("Equipment") and
the software ("Software") required to perform the Services called for by this
Agreement (collectively the "System"), all as described in Exhibit B.
NOW, THEREFORE, in consideration of the premises and the mutual convenants
hereinafter set forth, the parties hereto agree as follows:
Section 1 FURNISHING OF SYSTEM(S) AND SERVICES(S).
(a) Subject to the terms and conditions of this Agreement, Autotote agrees
to install the System at the Facility and operate and maintain the System at the
Facility on all days on which licensed racing is being conducted at the Facility
during the term of this Agreement. Owner agrees to exclusively employ Autotote
to perform the Services during the term of this Agreement. The parties may agree
to install portions of the System at off-track locations and such locations
shall be deemed included within "Facility".
(b) In connection with such Services, Autotote agrees to maintain the
System at the Facility, including furnishing the items described in Exhibit C.
(c) All rights, title and ownership interest in and to the System shall at
all times remain with Autotote and the System shall remain in the possession and
under the direct control of Autotote. Owner grants Autotote unimpeded access to
any System at any time and shall permit the removal by Autotote of the portable
parts of the System when not required to provide Services at the Facility.
Section 2 OWNER RESPONSIBILITIES. Owner shall be responsible for the items
described in Exhibit D.
Section 3 INSTALLATION. Owner agrees to perform in a good and workmanlike
manner all of the acts required to be performed by Owner as set forth in the
applicable "Installation Requirements" furnished to Owner by Autotote. Exhibit E
specifies the scheduled commencement date.
Section 4 PRICE(S) AND PAYMENT.
(a) Owner agrees to pay Autotote as provided in Exhibit F.
(b) Any charges for work done by Autotote under any section of this
Agreement, or for additional material or equipment supplied by Autotote in
accordance with order(s) of Owner or his agent, shall be considered as amounts
due to Autotote from Owner in accordance with Exhibit F.
(c) If it becomes necessary for Autotote to undertake work or activities,
or purchase or install equipment or materials, which herein are made the
obligations of Owner, in order to insure Autotote's proper performance of the
Agreement, then any costs incurred by Autotote as a result of such work,
activities, purchases, or installations shall be considered as amounts due to
Autotote from Owner in accordance with Exhibit F.
(1)
(d) Autotote may refuse to provide Services hereunder for so long as any
failure of Owner to pay continues, and Autotote may terminate this Agreement and
be relieved and discharged from any and all further responsibility, liability or
obligation hereunder.
Section 5 TERM. This Agreement shall be in full force and effect as of the
date hereof and for a period of Five (5) years commencing on the day the System
begins operations and accepts wagers from the public at the Facility, unless
sooner terminated as provided herein. It is expected that the period of
operations will commence on April 1, 1998 and terminate on March 31, 2003. The
contract term for Charlestown Races shall commence January 1, 1998 and terminate
on March 31, 2003.
Section 6 SPECIAL TERMINATION. In the event that wagering at the facility
shall be prohibited or become illegal by statute or court decision or by action
of cognizant governmental agency, the period of this Agreement shall be deemed
to have terminated as of the date of such prohibition or cessation of such legal
wagering, but without prejudice to the rights of either party up to the date of
termination; provided, however, that in the event the prohibition or cessation
of legal wagering is removed and racing on the above mentioned premises becomes
legal, this Agreement shall be returned to force intact, subject to availability
of personnel and equipment, for the unused balance of the term of the Agreement.
Upon termination Autotote shall have the right to remove its personnel,
materials and equipment from the Facility.
Section 7 WARRANTY
(a) Autotote warrants that each System delivered and installed
hereunder shall be suitable for betting and that it will operate efficiently and
without interruption on all wagering days for the term of this Agreement;
provided, however, that there shall not be deemed to be a breach of the
foregoing guarantee and warranty if wagering is interrupted for less than thirty
(30) minutes on any racing day, or if any interruption in the function of any
component part or unit of the System takes place which does not prevent the
efficient operation of wagering on any wagering day, or if not more than ten
percent (10%) of the ticket issuing machines fail to operate at any time on any
wagering day, or if the failure of the System to operate efficiently or without
interruption shall be due to or result from one or more of the causes enumerated
in Section 9 hereof, or acts or neglect of Owner its agents or employees, or of
any third party, or for any other cause not within the control of Autotote
and/or its employees.
(b) THE WARRANTIES AND REMEDIES SET FORTH IN THIS AGREEMENT SHALL
EXTEND ONLY TO OWNER, ARE THE SOLE AND EXCLUSIVE WARRANTIES AND REMEDIES
AVAILABLE TO OWNER, APPLY TO ALL EQUIPMENT AND SOFTWARE FURNISHED THEREUNDER AND
ARE EXPRESSLY MADE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE
(c) Liquidated damage obligations of Autotote constitute the sole and
exclusive remedy of Owner concerning performance by Autotote or the System or
any part thereof relating to the Services, and are specified in Exhibit G.
Section 8 PATENT INFRINGEMENT
(a) Autotote agrees to defend at its own cost and expense all patent
claims or patent litigation (including any claim for damages or royalties which
may be made or instituted against Owner, or to which Owner may be a party),
based upon or by reason of the installation and operation of the System,
uncombined with any equipment or device not furnished by Autotote, and to
indemnify and save Owner harmless against any damages or liability incurred or
sustained by Owner by reason of any such patent claim or litigation Owner shall
notify Autotote promptly in writing of any claim of infringement for which
Autotote is responsible, shall cooperate with Autotote in every reasonable way
to facilitate the defense of any such claim and shall allow Autotote to have
sole control of the defense of any such claim, suit or cause of action and all
negotiations
(2)
for the settlement or compromise thereof. Should any System part thereof become
or in Autotote's opinion be likely to become the subject of a claim for
infringement, Autotote shall at its own expense and option, either procure for
Owner the right to continue using such System or replace the same with a
non-infringing system or modify the System so that it becomes non-infringing or
require the System's return; provided, however, if Equipment is replaced or
modified such replacements or modifications shall result in equally suitable
substitute equipment. This Section shall survive cancellation or termination of
this Agreement.
(b) THE FOREGOING STATES THE SOLE AND EXCLUSIVE LIABILITY OF THE
PARTIES HERETO FOR INFRINGEMENT OR THE LIKE OF PATENTS, TRADEMARKS AND
COPYRIGHTS, WHETHER DIRECT OR CONTRIBUTORY, AND IS IN LIEU OF ALL WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY IN REGARD THERETO, INCLUDING WITHOUT LIMITATION,
THE WARRANTY AGAINST INFRINGEMENT SPECIFIED IN THE UNIFORM COMMERCIAL CODE.
Section 9 FORCE MAJEURE. Non-performance of any of the obligations of
Autotote or Owner (other than payment obligations) hereunder due to delays from
any cause beyond their respective control which could not by reasonable
diligence have been avoided, including any act of governmental authority, act of
God, accident such as fire, or explosion, strike or other labor difficulties,
riot, failure of transportation facilities, shortage of fuel or other material
shortage, shall be excusable delay and shall not be a breach of this Agreement.
Neither Owner nor Autotote shall be liable to the other for any additional cost
as a result of any such delay.
Section 10 OWNERSHIP RIGHTS AND CONFIDENTIAL INFORMATION. All information,
know-how, equipment, programming, software, trademarks, trade secrets, plans,
drawings, specifications and documentation of Autotote, and all other property
of Autotote, real or personal, tangible or intangible, of any nature whatsoever,
used or developed in the course of the performance of this Agreement, including,
without limitation, the Equipment and Software furnished with the System, shall
be and remain the sole property of Autotote and neither Owner not any other
party shall have any interest therein. Owner and Autotote shall in all respects
honor and maintain the confidentiality of such confidential or proprietary
information as may be disclosed by one party of the other, and shall not use or
disclose to others any such information, except for purposes of performing this
Agreement. For purposes of this section, Autotote shall include its respective
subsidiaries and affiliates. Confidential Information shall not include
information in the public domain, rightfully acquired from a third party,
already known or independently developed without breach of this Agreement.
Section 11 LIMITATION OF LIABILITY. EXCEPT AS SPECIFICALLY PROVIDED FOR
HEREIN, IN NO EVENT SHALL AUTOTOTE BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL
DAMAGES. IN NO EVENT SHALL AUTOTOTE'S LIABILITY HEREUNDER FOR BREACH OF ANY
PROVISION OF THIS AGREEMENT (OTHER THAN WARRANTY AGAINST PATENT INFRINGEMENT),
EXCEED THE SPECIFIC LIQUIDATED DAMAGE AMOUNT PROVIDED IN THIS AGREEMENT.
Section 12 INDEMNITY.
(a) Autotote shall defend, indemnify and hold Owner harmless against
any loss, liability, costs or expenses (including reasonable attorney's fees)
arising out of or related to claims and suits for damages to person or property
which may be instituted against Owner, or to which Owner may be made a party,
arising out of or by reason of the Services provided herein by Autotote,
provided written notice of such claim is given to Autotote within ten (10) days
after receipt of same by Owner. Autotote shall have the right to exercise full
control of all negotiations and litigation in connection therewith, including
selection of counsel, and shall not be liable for any costs or expenses incurred
by Owner without Autotote's prior written approval, nor shall Autotote be
responsible for any claim or litigation based on equipment not furnished by
Autotote as part of its Services hereunder.
(b) Owner will defend, indemnify and hold Autotote harmless against
any loss, liability, costs or expenses (including reasonable attorney's fees)
arising out of or related to claims or suits for damages to persons or property
resulting from the operation of the wagering by agents and employees of Owner
provided
(3)
written notice of such claim is given to Owner within ten (10) days
after receipt of same by Autotote. Owner shall have the right to exercise full
control of all negotiations and litigation in connection therewith, including
selection of counsel and shall not be liable for any costs or expenses incurred
by Autotote without Owner's prior written approval.
Section 13 DEFAULT.
(a) In the event that Autotote shall default in the performance of any
provision of this Agreement on its part to be performed (except a breach by
Autotote of the provisions of Section 7 and Section 2 of Exhibit G hereof as to
which the provisions of said paragraphs shall apply) and such default shall not
be cured within a period of thirty (30) days after written notice shall have
been received by Autotote specifying such default, then Owner may terminate this
Agreement by delivering to Autotote written notice of such termination prior to
the expiration of ten (10) days after the expiration of said thirty (30) day
period; and in the event of any such termination Autotote, at its expense, shall
remove its personnel, materials and equipment from the Facility.
(b) In the event that Owner shall default in the performance of any
provisions of this Agreement on its part to be performed (except a breach by
Owner of the provisions of Section 4 of Exhibit F and Section 3 of Exhibit G
hereof as to which the provisions of said paragraphs shall apply) and such
default shall not be cured within a period of thirty (30) days after notice
shall have been given by Autotote to Owner specifying such default, then
Autotote may terminate this Agreement by delivering to Owner written notice of
such termination prior to the expiration of ten (10) days after the expiration
of said thirty (30) day period; and in the event of any such termination
Autotote shall remove its personnel, materials and equipment from the Facility,
and the cost of such removal shall be paid for by Owner.
(c) If any of the said sums of money due Autotote under this Agreement
are not promptly and fully paid when the same individually or severally become
due and payable, or if Owner becomes insolvent, ceases to do business as a going
concern, a petition in bankruptcy or for arrangement or reorganization be filed
by or against Owner, the materials or equipment provided by Autotote be attached
at no fault of Autotote, or a receiver be appointed for Owner, and as a result
thereof Autotote elects to terminate this Agreement pursuant to Section 13 (b)
then the aggregate sum of the minimum annual amount specified in Section 4 of
Exhibit F remaining to be paid for the balance of the term of this Agreement up
to a maximum of One Million Four Hundred Seventy-Five Thousand dollars
($1,475,000) as liquidated damages, shall become due and payable forthwith, or
thereafter at the option of Autotote, as fully and completely as if the said
amounts were originally stipulated as due prior to such time, anything in this
Agreement herein to the contrary notwithstanding. In any of said events Autotote
is authorized and empowered to enter the premises of Owner or other place where
Autotote's materials and equipment may be and resume possession of the same
without notice or demand or without legal process, such notice and demand being
expressly waived, and Autotote may at its option, by suit or otherwise, enforce
payment of all due obligations, plus interest and reasonable attorney's fees,
and no suit or legal proceedings with respect thereto shall be deemed any waiver
of said rights of Autotote to resume possession of said property as herein
provided.
Section 14 ARBITRATION AND REMEDIES.
(a) Any controversy or claim not settled by the parties arising out of
or relating to this contract, or the breach thereof, shall be settled by
arbitration in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitration(s) may be
entered in any Court having jurisdiction there.
(b) The remedies expressly provided in this Agreement for breach
thereof by Autotote or Owner shall constitute the sole and exclusive remedies to
the aggrieved party, and all other remedies which might be otherwise available
under the law of any jurisdiction are hereby waived by both Autotote and Owner.
(4)
Section 15 RESPONSIBILITIES. All persons employed by each party and
assigned to perform work specified by this Agreement shall be employees or
representatives of each party at all times and not of the other party, and shall
be under the supervision and control of their respective company. Each party
shall obey and abide by all social security, workman's compensation, and
unemployment laws which shall be applicable to the persons performing the work
hereunder.
Section 16 ENTIRE AGREEMENT. This Agreement, including the Exhibits annexed
hereto, contains the entire agreement between Autotote and Owner, and no prior
written or oral representations, inducements, agreements, promises or
understandings altering, modifying, taking from or adding to its terms and
conditions shall have any force or effect; and no waiver or modification hereof
shall be effective unless the same is in writing and validly executed by the
party to be charged; it is, however, understood that the prevailing Autotote
agreement with Pocono Downs, Inc. and its succeeding amendment(s) shall remain
in full force and in effect until the commencement referenced to in section 5 in
this Agreement. Each of the parties hereby confirms that it is not placing any
reliance on any covenant, representation or warranty of the other party, whether
oral or in writing, express or implied, except those herein set forth.
Section 17 WAIVER. The Waiver by either party of any right hereunder shall
not be deemed a waiver of any other right hereunder.
Section 18 ASSIGNMENT. Neither party shall, without the prior written
consent of the other party (which consent shall not be unreasonably withheld)
assign this Agreement or delegate its duties hereunder in whole or part;
provided, however, Owner agrees to any assignment Autotote may make for the
purpose of obtaining financing with a prime institution on the strength of this
Agreement. All of the terms and conditions of this Agreement shall be binding
upon and inure to the benefit of any transferee, successor or permitted assign
of either party hereto.
Section 19 NOTICE. All notices or communication hereunder shall be given to
the respective parties hereto in writing and shall be sent through the United
Postal Service by Registered or Certified mail, return receipt requested, or its
international equivalent (if appropriate), to the address stated above or to
such other address as either party hereto shall designate by written notice to
the other party hereto.
Section 20 REMOVAL OF EQUIPMENT. Upon termination of this Agreement as
hereinbefore provided, or upon expiration hereof, Autotote, at its own expense,
may remove from the premises of Owner, the System and appurtenant portable and
permanent equipment and materials furnished by Autotote.
Section 21 GOVERNING LAW. This Agreement shall be governed by the internal
laws of the State of System installation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PENN NATIONAL GAMING, INC. AUTOTOTE SYSTEMS, INC.
("OWNER") ("AUTOTOTE")
By: \s\ Phillip T. O'Hara By: \s\ Jerry Lawrence
---------------------------- ----------------------------
(Name) (Name)
Vice President & General Manager Pari-Mutuel Group Executive
- -------------------------------- --------------------------------
(Title) (Title)
(5)
EXHIBIT 10.73
================================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
among
PENN NATIONAL GAMING, INC.,
VARIOUS BANKS,
CORESTATES BANK, N.A.,
as CO-AGENT,
and
BANKERS TRUST COMPANY,
as AGENT
----------------------------------
Dated as of November 27 , 1996
and
amended and restated
as of
December 17, 1997
----------------------------------
================================================================================
CREDIT AGREEMENT, dated as of November 27, 1996 and amended and
restated as of December 17, 1997, among PENN NATIONAL GAMING, INC., a
Pennsylvania corporation (the "Borrower"), the Banks party hereto from time to
time, CORESTATES BANK, N.A., as Co-Agent, and BANKERS TRUST COMPANY, as Agent
(all capitalized terms used herein and defined in Section 10 are used herein as
therein defined).
W I T N E S S E T H :
WHEREAS, the Borrower, the Original Banks, the Co-Agent and the Agent
are parties to a Credit Agreement, dated as of November 27, 1996 (as amended and
modified to, but not including, the Restatement Effective Date, the "Original
Credit Agreement"); and
WHEREAS, the Borrower has requested that the Original Credit Agreement
be amended and restated in its entirety, and the Banks, the Co-Agent and the
Agent are willing to amend and restate the same, upon the terms and conditions
set forth herein;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and is hereby amended and restated in its entirety as
follows:
Section 1. Amount and Terms of Credit.
1.01 The Commitments. Subject to and upon the terms and conditions set
forth herein, each Bank severally agrees to make, at any time and from time to
time after the Restatement Effective Date and prior to the Final Maturity Date,
a revolving loan or revolving loans (each a "Loan" and, collectively, the
"Loans") to the Borrower, which Loans (i) shall, at the option of the Borrower,
be incurred and maintained as, and/or converted into, Base Rate Loans or
Eurodollar Loans, provided that, except as otherwise specifically provided in
Section 1.10(b), all Loans comprising the same Borrowing shall at all times be
of the same Type, (ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed for any Bank at any time outstanding
that aggregate principal amount which, when added to the product of such Bank's
Percentage and the aggregate amount of all Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of Loans) at
such time, equals the Commitment of such Bank at such time and (iv) shall not
exceed for all Banks at any time outstanding that aggregate principal amount
which, when added to the amount of all Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Loans) at such time, equals
the Total Commitment at such time.
1.02 Minimum Amount of Each Borrowing. The aggregate principal amount
of each Borrowing of Loans shall not be less than the Minimum Borrowing Amount
applicable thereto. More than one Borrowing may occur on the same date, but at
no time shall there be outstanding more than eight Borrowings of Eurodollar
Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to incur
(x) Eurodollar Loans hereunder, the Borrower shall give the Agent at the Notice
Office at least three
Business Days' prior notice of each Eurodollar Loan to be incurred hereunder and
(y) Base Rate Loans hereunder, the Borrower shall give the Agent at the Notice
Office notice thereof no later than the date on which each Base Rate Loan is to
be incurred hereunder, provided that (in each case) any such notice shall be
deemed to have been given on a certain day only if given before 11:00 A.M. (New
York time) on such day. Each such notice (each a "Notice of Borrowing"), except
as otherwise expressly provided in Section 1.10, shall be irrevocable and shall
be given by the Borrower in writing, or by telephone promptly confirmed in
writing, in the form of Exhibit A, appropriately completed to specify the
aggregate principal amount of the Loans to be incurred pursuant to such
Borrowing, the date of such Borrowing (which shall be a Business Day), and
whether the Loans being incurred pursuant to such Borrowing are to be initially
maintained as Base Rate Loans or, to the extent permitted hereunder, Eurodollar
Loans and, if Eurodollar Loans, the initial Interest Period to be applicable
thereto. The Agent shall promptly give each Bank notice of such proposed
Borrowing, of such Bank's proportionate share thereof and of the other matters
required by the immediately preceding sentence to be specified in the Notice of
Borrowing.
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing or prepayment of
Loans, the Agent may act without liability upon the basis of telephonic notice
of such Borrowing or prepayment, believed by the Agent in good faith to be from
the Chairman of the Board, the President, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer or the Controller of the Borrower, or from
any other authorized officer of the Borrower designated in writing by the
Borrower to the Agent as being authorized to give such notices, prior to receipt
of written confirmation. In each such case, the Borrower hereby waives the right
to dispute the Agent's record of the terms of such telephonic notice of such
Borrowing or prepayment of Loans, absent manifest error.
1.04 Disbursement of Funds. No later than 12:00 Noon (New York time)
(or 2:00 P.M. (New York time) in the case of Base Rate Loans made on same day
notice) on the date specified in each Notice of Borrowing, each Bank will make
available its pro rata portion (determined in accordance with Section 1.07) of
each such Borrowing requested to be made on such date. All such amounts will be
made available in Dollars and in immediately available funds at the Payment
Office, and the Agent will make available to the Borrower at the Payment Office
the aggregate of the amounts so made available by the Banks. Unless the Agent
shall have been notified by any Bank prior to the date of Borrowing that such
Bank does not intend to make available to the Agent such Bank's portion of any
Borrowing to be made on such date, the Agent may assume that such Bank has made
such amount available to the Agent on such date of Borrowing and the Agent may
(but shall not be obligated to), in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Bank, the Agent shall be
entitled to recover such corresponding amount on demand from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower and the Borrower shall
immediately pay such corresponding amount to the Agent. The Agent shall also be
entitled to recover on demand from such Bank or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Agent to the Borrower until
the date
-2-
such corresponding amount is recovered by the Agent, at a rate per annum equal
to (i) if recovered from such Bank, at the overnight Federal Funds Rate and (ii)
if recovered from the Borrower, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Bank from its obligation to make
Loans hereunder or to prejudice any rights which the Borrower may have against
any Bank as a result of any failure by such Bank to make Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loans made by each Bank shall be evidenced by a promissory note
duly executed and delivered by the Borrower substantially in the form of Exhibit
B, with blanks appropriately completed in conformity herewith (each a "Note"
and, collectively, the "Notes"). The Note issued to each Bank that has a
Commitment or outstanding Loans shall (i) be executed by the Borrower, (ii) be
payable to such Bank or its registered assigns and be dated the Restatement
Effective Date (or, if issued after the Restatement Effective Date, be dated the
date of the issuance thereof), (iii) be in a stated principal amount equal to
the Commitment of such Bank (or, if issued after the termination thereof, be in
a stated principal amount equal to the outstanding Loans of such Bank at such
time) and be payable in the outstanding principal amount of the Loans evidenced
thereby, (iv) mature on the Final Maturity Date, (v) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(b) Each Bank will note on its internal records the amount of each Loan
made by it and each payment in respect thereof and will prior to any transfer of
any of its Note endorse on the reverse side thereof the outstanding principal
amount of Loans evidenced thereby. Failure to make any such notation or any
error in such notation shall not affect the Borrower's obligations in respect of
such Loans.
1.06 Conversions. The Borrower shall have the option to convert, on any
Business Day, all or a portion equal to at least the Minimum Borrowing Amount of
the outstanding principal amount of Loans made pursuant to one or more
Borrowings of one or more Types of Loans into a Borrowing of another Type of
Loan, provided that, (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
an Interest Period applicable to the Loans being converted and no such partial
conversion of Eurodollar Loans shall reduce the outstanding principal amount of
such Eurodollar Loans made pursuant to a single Borrowing to less than the
Minimum Borrowing Amount applicable thereto, (ii) Base Rate Loans may only be
converted into Eurodollar Loans if no Default or Event of Default is in
existence on the date of the conversion and (iii) no conversion pursuant to this
Section 1.06 shall result in a greater number of Borrowings of Eurodollar Loans
than is permitted under Section 1.02. Each such conversion shall be effected by
the Borrower by giving the Agent at the Notice Office prior to 11:00 A.M. (New
York time) at least three Business Days' prior notice (each a "Notice of
Conversion") specifying the Loans to be so
-3-
converted, the Borrowing or Borrowings pursuant to which such Loans were made
and, if to be converted into Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Agent shall give each Bank prompt notice of
any such proposed conversion affecting any of its Loans. Upon any such
conversion the proceeds thereof will be deemed to be applied directly on the day
of such conversion to prepay the outstanding principal amount of the Loans being
converted.
1.07 Pro Rata Borrowings. All Borrowings under this Agreement shall be
incurred from the Banks pro rata on the basis of their Commitments. It is
understood that no Bank shall be responsible for any default by any other Bank
of its obligation to make Loans hereunder and that each Bank shall be obligated
to make the Loans provided to be made by it hereunder, regardless of the failure
of any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Base Rate Loan from the date of Borrowing
thereof until the earlier of (i) the maturity thereof (whether by acceleration
or otherwise) and (ii) the conversion of such Base Rate Loan to a Eurodollar
Loan pursuant to Section 1.06 or 1.09, as applicable, at a rate per annum which
shall be equal to the sum of the Applicable Margin plus the Base Rate in effect
from time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date of Borrowing
thereof until the earlier of (i) the maturity thereof (whether by acceleration
or otherwise) and (ii) the conversion of such Eurodollar Loan to a Base Rate
Loan pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum
which shall, during each Interest Period applicable thereto, be equal to the sum
of the Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the rate which
is 2% per annum in excess of the rate then borne by such Borrowings, in each
case, with such interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each Loan, on any repayment
or prepayment (on the amount repaid or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Agent shall determine
the Eurodollar Rate for each Interest Period applicable to Eurodollar Loans and
shall promptly notify the Borrower and the Banks thereof. Each such
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto.
-4-
1.09 Interest Periods. At the time the Borrower gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third Business Day prior to the expiration of an Interest
Period applicable to such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrower shall have the right to elect, by giving the
Agent notice thereof, the interest period (each an "Interest Period") applicable
to such Eurodollar Loan, which Interest Period shall, at the option of the
Borrower, be a one, two, three or six-month period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times have
the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall commence
on the date of Borrowing of such Eurodollar Loan (including the date of any
conversion thereto from a Base Rate Loan) and each Interest Period occurring
thereafter in respect of such Eurodollar Loan shall commence on the day on
which the next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period for a Eurodollar Loan begins on a day for
which there is no numerically corresponding day in the calendar month at the
end of such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iv) if any Interest Period for a Eurodollar Loan would otherwise
expire on a day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day; provided, however, that if any
Interest Period for a Eurodollar Loan would otherwise expire on a day which
is not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the
next preceding Business Day;
(v) no Interest Period may be selected at any time when a Default or an
Event of Default is then in existence; and
(vi) no Interest Period in respect of any Borrowing of any Eurodollar
Loan shall be selected which extends beyond the Final Maturity Date.
If upon the expiration of any Interest Period applicable to a Borrowing
of Eurodollar Loans, the Borrower has failed to elect, or is not permitted to
elect, a new Interest Period to be applicable to such Eurodollar Loans as
provided above, the Borrower shall be deemed to have elected to convert such
Eurodollar Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any Bank
shall have determined (which determination shall, absent manifest error, be
final and conclusive and
-5-
binding upon all parties hereto but, with respect to clause (i) below, may be
made only by the Agent):
(i) on any Interest Determination Date that, by reason of any changes
arising after the date of this Agreement affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of Eurodollar
Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental (including any NAIC) rule,
regulation, order, guideline or request (whether or not having the force of
law) or in the interpretation or administration thereof and including the
introduction of any new law or governmental (including any NAIC) rule,
regulation, order, guideline or request, such as, for example, but not
limited to: (A) a change in the basis of taxation of payment to any Bank of
the principal of or interest on the Notes or any other amounts payable
hereunder (except for changes in the rate of tax on, or determined by
reference to, the net income or profits of such Bank pursuant to the laws of
the jurisdiction in which it is organized or in which its principal office
or applicable lending office is located or any subdivision thereof or
therein) or (B) a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate and/or (y) other
circumstances since the date of this Agreement affecting the interbank
Eurodollar market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental (including any
NAIC) rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental (including any NAIC) request (whether or
not having force of law) or (z) impracticable as a result of a contingency
occurring after the date of this Agreement which materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent, in the case of clause (i)
above) shall promptly give notice (by telephone promptly confirmed in writing)
to the Borrower and, except in the case of clause (i) above, to the Agent of
such determination (which notice the Agent shall promptly transmit to each of
the other Banks). Thereafter (x) in the case of clause (i) above, Eurodollar
Loans shall no longer be available until such time as the Agent notifies the
Borrower and the Banks that the circumstances giving rise to such notice by the
Agent no longer exist, and any Notice of Borrowing or Notice of Conversion given
by the Borrower with respect to Eurodollar Loans which have not yet been
incurred (including by way of conversion) shall be deemed rescinded by the
Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such
Bank, upon such Bank's written request therefor, such additional amounts (in the
form of an increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased
-6-
costs or reductions in amounts received or receivable hereunder (a written
notice as to the additional amounts owed to such Bank, showing in reasonable
detail the basis for the calculation thereof, submitted to the Borrower by such
Bank shall, absent manifest error, be final and conclusive and binding on all
the parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, by giving the Agent telephonic
notice (confirmed in writing) on the same date that the Borrower was notified by
the affected Bank or the Agent pursuant to Section 1.10(a)(ii) or (iii) or (y)
if the affected Eurodollar Loan is then outstanding, upon at least three
Business Days' written notice to the Agent, require the affected Bank to convert
such Eurodollar Loan into a Base Rate Loan, provided that, if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If any Bank determines that after the date of this Agreement the
introduction of or any change in any applicable law or governmental (including
any NAIC) rule, regulation, order, guideline, directive or request (whether or
not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority
(including any NAIC), central bank or comparable agency, will have the effect of
increasing the amount of capital required or expected to be maintained by such
Bank or any corporation controlling such Bank based on the existence of such
Bank's Commitment hereunder or its obligations hereunder, then the Borrower
shall pay to such Bank, upon its written demand therefor, such additional
amounts as shall be required to compensate such Bank or such other corporation
for the increased cost to such Bank or such other corporation or the reduction
in the rate of return to such Bank or such other corporation as a result of such
increase of capital. In determining such additional amounts, each Bank will act
reasonably and in good faith and will use averaging and attribution methods
which are reasonable, provided that such Bank's determination of compensation
owing under this Section 1.10(c) shall, absent manifest error, be final and
conclusive and binding on all the parties hereto. Each Bank, upon determining
that any additional amounts will be payable pursuant to this Section 1.10(c),
will give prompt written notice thereof to the Borrower, which notice shall show
in reasonable detail the basis for calculation of such additional amounts.
1.11 Compensation. The Borrower shall compensate each Bank, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Bank to fund its Eurodollar Loans but excluding loss of
anticipated profits) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Agent) a Borrowing of, or conversion from or
into, Eurodollar Loans does not
-7-
occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repayment
made pursuant to Section 4.01, 4.02 or as a result of an acceleration of the
Loans pursuant to Section 9) or conversion of any of its Eurodollar Loans occurs
on a date which is not the last day of an Interest Period with respect thereto;
(iii) if any prepayment of any of its Eurodollar Loans is not made on any date
specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Loans when
required by the terms of this Agreement or the Note held by such Bank or (y) any
election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the occurrence
of any event giving rise to the operation of Section 1.10(a)(ii) or (iii),
Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank, it
will, if requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Bank) to designate another lending office for any
Loans or Letters of Credit affected by such event, provided that such
designation is made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 1.12 shall affect or postpone any of the obligations of the
Borrower or the right of any Bank provided in Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting Bank or
otherwise defaults in its obligations to make Loans or fund Unpaid Drawings, (y)
upon the occurrence of an event giving rise to the operation of Section
1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect
to any Bank which results in such Bank charging to the Borrower increased costs
in excess of those being generally charged by the other Banks or (z) in the case
of a refusal by a Bank to consent to certain proposed changes, waivers,
discharges or terminations with respect to this Agreement which have been
approved by the Required Banks as (and to the extent) provided in Section
12.12(b), the Borrower shall have the right, if no Default or Event of Default
then exists (or, in the case of preceding clause (z), no Default or Event of
Default will exist immediately after giving effect to such replacement), to
replace such Bank (the "Replaced Bank") with one or more other Eligible
Transferees, none of whom shall constitute a Defaulting Bank at the time of such
replacement (collectively, the "Replacement Bank") and each of whom shall be
required to be reasonably acceptable to the Agent, provided that (i) at the time
of any replacement pursuant to this Section 1.13, the Replacement Bank shall
enter into one or more Assignment and Assumption Agreements pursuant to Section
12.04(b) (and with all fees payable pursuant to said Section 12.04(b) to be paid
by the Replacement Bank) pursuant to which the Replacement Bank shall acquire
the entire Commitment and all outstanding Loans of, and, in each case,
participations in Letters of Credit by, the Replaced Bank and, in connection
therewith, shall pay to (x) the Replaced Bank in respect thereof an amount equal
to the sum of (I) an amount equal to the principal of, and all accrued interest
on, all outstanding Loans of the Replaced Bank, (II) an amount equal to all
Unpaid Drawings that have been funded by (and not reimbursed to) such Replaced
Bank, together with all then unpaid interest with respect thereto at such time
and (III) an amount equal to all accrued, but theretofore unpaid, Fees owing to
the Replaced Bank pursuant to Section 3.01 and (y) each Issuing Bank an amount
equal to such
-8-
Replaced Bank's Percentage of any Unpaid Drawing (which at such time remains an
Unpaid Drawing) to the extent such amount was not theretofore funded by such
Replaced Bank to such Issuing Bank and (ii) all obligations of the Borrower due
and owing to the Replaced Bank at such time (other than those specifically
described in clause (i) above in respect of which the assignment purchase price
has been, or is concurrently being, paid) shall be paid in full to such Replaced
Bank concurrently with such replacement. Upon the execution of the respective
Assignment and Assumption Agreement, the payment of amounts referred to in
clauses (i) and (ii) above and, if so requested by the Replacement Bank,
delivery to the Replacement Bank of the appropriate Note executed by the
Borrower, the Replacement Bank shall become a Bank hereunder and the Replaced
Bank shall cease to constitute a Bank hereunder, except with respect to
indemnification provisions under this Agreement (including, without limitation,
Sections 1.10, 1.11, 2.06, 4.04, 11.06 and 12.01), which shall survive as to
such Replaced Bank. It is understood and agreed that replacements pursuant to
this Section 1.13 shall be effected by means of assignments which otherwise meet
the applicable requirements of Section 12.04(b).
Section 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that the Issuing Bank
issue, at any time and from time to time on and after the Restatement Effective
Date and prior to the Final Maturity Date, for the account of the Borrower and
for the benefit of any holder (or any trustee, agent or other similar
representative for any such holders) of L/C Supportable Obligations of the
Borrower or any of its Subsidiaries, an irrevocable standby letter of credit, in
a form customarily used by the Issuing Bank or in the other form as has been
approved by the Issuing Bank (each such standby letter of credit, a "Letter of
Credit") in support of such L/C Supportable Obligations. It is hereby
acknowledged and agreed that each of the letters of credit described in Schedule
III (the "Existing Letters of Credit") which were issued under the Original
Credit Agreement for the account of the Borrower prior to the Restatement
Effective Date and which remain outstanding on the Restatement Effective Date
shall constitute a "Letter of Credit" for all purposes of this Agreement and
shall be deemed issued for purposes of Sections 2.04(a), 3.01(b) and 3.01(c) on
the Restatement Effective Date. All Letters of Credit shall be denominated in
Dollars and shall be issued on a sight basis only.
(b) Subject to and upon the terms and conditions set forth herein, the
Issuing Bank hereby agrees that it will, at any time and from time to time on
and after the Restatement Effective Date and prior to the Final Maturity Date,
following its receipt of the respective Letter of Credit Request, issue for the
account of the Borrower, one or more Letters of Credit in support of such L/C
Supportable Obligations of the Borrower or any of its Subsidiaries as are
permitted to remain outstanding without giving rise to a Default or an Event of
Default, provided that the Issuing Bank shall be under no obligation to issue
any Letter of Credit of the types described above if at the time of such
issuance:
(i) any order, judgment or decree of any governmental authority
(including the NAIC) or arbitrator shall purport by its terms to enjoin or
restrain the Issuing Bank
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from issuing the Letter of Credit or any requirement of law applicable to
the Issuing Bank or any request or directive (whether or not having the
force of law) from any governmental authority (including the NAIC) with
jurisdiction over the Issuing Bank shall prohibit, or request that the
Issuing Bank refrain from, the issuance of letters of credit generally or
the Letter of Credit in particular or shall impose upon the Issuing Bank
with respect to the Letter of Credit any restriction or reserve or capital
requirement (for which the Issuing Bank is not otherwise compensated) not in
effect on the date hereof, or any unreimbursed loss, cost or expense which
was not applicable or in effect with respect to the Issuing Bank as of the
date hereof and which the Issuing Bank reasonably and in good faith deems
material to it; or
(ii) the Issuing Bank shall have received notice from the Required
Banks prior to the issuance of such Letter of Credit of the type described
in the second sentence of Section 2.03(b).
2.02 Maximum Letter of Credit Outstandings; Final Maturities.
Notwithstanding anything to the contrary contained in this Agreement, (i) no
Letter of Credit shall be issued the Stated Amount of which, when added to the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on
the date of, and prior to the issuance of, the respective Letter of Credit) at
such time would exceed either (x) $3,000,000 or (y) when added to the aggregate
principal amount of all Loans then outstanding, an amount equal to the Total
Commitment at such time and (ii) each Letter of Credit shall by its terms
terminate on or before the earlier of (x) the date which occurs 12 months after
the date of the issuance thereof (although any such Letter of Credit may be
extendible for successive periods of up to 12 months, but not beyond the third
Business Day prior to the Final Maturity Date, on terms acceptable to the
Issuing Bank) and (y) three Business Days prior to the Final Maturity Date.
2.03 Letter of Credit Requests; Minimum Stated Amount. (a) Whenever the
Borrower desires that a Letter of Credit be issued for its account, the Borrower
shall give the Agent and the Issuing Bank at least five Business Days' (or such
shorter period as is acceptable to the Issuing Bank) written notice thereof.
Each notice shall be in the form of Exhibit C (each a "Letter of Credit
Request"). The Agent shall promptly transmit copies of each Letter of Credit
Request to each Bank.
(b) The making of each Letter of Credit Request shall be deemed to be a
representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.02. Unless the Issuing Bank has received notice from the Required Banks before
it issues a Letter of Credit that one or more of the conditions specified in
Section 5 are not then satisfied, or that the issuance of such Letter of Credit
would violate Section 2.02, then the Issuing Bank shall, subject to the terms
and conditions of this Agreement, issue the requested Letter of Credit for the
account of the Borrower in accordance with the Issuing Bank's usual and
customary practices. Upon its issuance of or amendment or modification to any
Letter of Credit, the Issuing Bank shall promptly notify the Borrower, each
Participant and the Agent of such issuance, amendment or modification and such
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notification shall be accompanied by a copy of the issued Letter of Credit or
amendment or modification. Notwithstanding anything to the contrary contained in
this Agreement, in the event that a Bank Default exists, the Issuing Bank shall
not be required to issue any Letter of Credit unless the Issuing Bank has
entered into an arrangement satisfactory to it and the Borrower to eliminate the
Issuing Bank's risk with respect the participation in Letters of Credit by the
Defaulting Bank or Banks, including by cash collateralizing such Defaulting
Bank's or Banks' Percentage of the Letter of Credit Outstandings.
(c) The initial Stated Amount of each Letter of Credit shall
not be less than $50,000 or such lesser amount as is acceptable to the Issuing
Bank.
2.04 Letter of Credit Participations. (a) Immediately upon the issuance
by the Issuing Bank of any Letter of Credit, the Issuing Bank shall be deemed to
have sold and transferred to each Bank, other than the Issuing Bank (each such
Bank, in its capacity under this Section 2.04, a "Participant"), and each such
Participant shall be deemed irrevocably and unconditionally to have purchased
and received from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Participant's Percentage, in
such Letter of Credit, each drawing or payment made thereunder and the
obligations of the Borrower under this Agreement with respect thereto, and any
security therefor or guaranty pertaining thereto. Upon any change in the
Commitments or Percentages of the Banks pursuant to Section 1.13 or 12.04, it is
hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings, there shall be an automatic adjustment to the participations pursuant
to this Section 2.04 to reflect the new Percentages of the assignor and assignee
Bank, as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall not have an obligation relative to the other Banks other than
to confirm that any documents required to be delivered under such Letter of
Credit appear to have been delivered and that they appear to substantially
comply on their face with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by the Issuing Bank under or in connection with any
Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for the Issuing Bank any resulting
liability to the Borrower, any other Credit Party, any Bank or any other Person.
(c) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to the Issuing Bank pursuant to Section 2.05(a), the Issuing Bank shall promptly
notify the Agent, which shall promptly notify each Participant of such failure,
and each Participant shall promptly and unconditionally pay to the Issuing Bank
the amount of such Participant's Percentage of such unreimbursed payment in
Dollars and in same day funds. If the Agent so notifies, prior to 11:00 A.M.
(New York time) on any Business Day, any Participant required to fund a payment
under a Letter of Credit, such Participant shall make available to the Issuing
Bank in Dollars such Participant's Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Participant shall
not have so made its Percentage of the amount of such
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payment available to the Issuing Bank, such Participant agrees to pay to the
Issuing Bank, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the Issuing
Bank at the overnight Federal Funds Rate for the first three days and at the
interest rate applicable Base Rate Loans for each day thereafter. The failure of
any Participant to make available to the Issuing Bank its Percentage of any
payment under any Letter of Credit shall not relieve any other Participant of
its obligation hereunder to make available to the Issuing Bank its Percentage of
any Letter of Credit on the date required, as specified above, but no
Participant shall be responsible for the failure of any other Participant to
make available to the Issuing Bank such other Participant's Percentage of any
such payment.
(d) Whenever the Issuing Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, the Issuing Bank shall pay to each Participant
which has paid its Percentage thereof, in Dollars and in same day funds, an
amount equal to such Participant's share (based upon the proportionate aggregate
amount originally funded by such Participant to the aggregate amount funded by
all Participants) of the principal amount of such reimbursement obligation and
interest thereon accruing after the purchase of the respective participations.
(e) Upon the request of any Participant, the Issuing Bank shall furnish
to such Participant copies of any Letter of Credit issued by it and such other
documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to the Issuing
Bank with respect to Letters of Credit issued by it shall be irrevocable and not
subject to any qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any of
the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower or any of its Subsidiaries may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, any Participant, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transaction between the
Borrower or any Subsidiary of the Borrower and the beneficiary named in any
such Letter of Credit);
(iii) any draft, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
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(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the Issuing Bank, by making payment to the Agent in
immediately available funds at the Payment Office, for any payment or
disbursement made by the Issuing Bank under any Letter of Credit issued by it
(each such amount, so paid until reimbursed, an "Unpaid Drawing"), not later
than two Business Days following receipt by the Borrower of notice of such
payment or disbursement (provided that no such notice shall be required to be
given if a Default or an Event of Default under Section 9.05 shall have occurred
and be continuing, in which case the Unpaid Drawing shall be due and payable
immediately without presentment, demand, protest or notice of any kind (all of
which are hereby waived by the Borrower)), with interest on the amount so paid
or disbursed by the Issuing Bank, to the extent not reimbursed prior to 12:00
Noon (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but excluding the date the Issuing Bank
was reimbursed by the Borrower therefor at a rate per annum which shall be the
Base Rate in effect from time to time plus the Applicable Margin for Base Rate
Loans; provided, however, to the extent such amounts are not reimbursed prior to
12:00 Noon (New York time) on the third Business Day following the receipt by
the Borrower of notice of such payment or disbursement or following the
occurrence of a Default or an Event of Default under Section 9.05, interest
shall thereafter accrue on the amounts so paid or disbursed by such Issuing Bank
(and until reimbursed by the Borrower) at a rate per annum which shall be the
Base Rate in effect from time to time plus the Applicable Margin for Base Rate
Loans plus 2%, in each such case, with interest to be payable on demand. The
Issuing Bank shall give the Borrower prompt written notice of each Drawing under
any Letter of Credit, provided that the failure to give any such notice shall in
no way affect, impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the Issuing Bank with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against any Bank (including in its
capacity as issuer of the Letter of Credit or as Participant), including,
without limitation, any defense based upon the failure of any drawing under a
Letter of Credit (each a "Drawing") to conform to the terms of the Letter of
Credit or any nonapplication or misapplication by the beneficiary of the
proceeds of such Drawing; provided, however, that the Borrower shall not be
obligated to reimburse the Issuing Bank for any wrongful payment made by the
Issuing Bank under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of the Issuing
Bank.
2.06 Increased Costs. If at any time after the date of this Agreement,
the introduction of or any change in any applicable law, rule, regulation,
order, guideline or request or in the interpretation or administration thereof
by any governmental authority (including the
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NAIC) charged with the interpretation or administration thereof, or compliance
by the Issuing Bank or any Participant with any request or directive by any such
authority (whether or not having the force of law), shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against letters of credit issued by the Issuing Bank or participated
in by any Participant, or (ii) impose on the Issuing Bank or any Participant any
other conditions relating, directly or indirectly, to this Agreement; and the
result of any of the foregoing is to increase the cost to the Issuing Bank or
any Participant of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by the Issuing
Bank or any Participant hereunder or reduce the rate of return on its capital
with respect to Letters of Credit (except for changes in the rate of tax on, or
determined by reference to, the net income or profits of the Issuing Bank or
such Participant pursuant to the laws of the jurisdiction in which it is
organized or in which its principal office or applicable lending office is
located or any subdivision thereof or therein), then, upon the delivery of the
certificate referred to below to the Borrower by the Issuing Bank or any
Participant (a copy of which certificate shall be sent by the Issuing Bank or
such Participant to the Agent), the Borrower shall pay to the Issuing Bank or
such Participant such additional amount or amounts as will compensate such Bank
for such increased cost or reduction in the amount receivable or reduction on
the rate of return on its capital. The Issuing Bank or any Participant, upon
determining that any additional amounts will be payable pursuant to this Section
2.06, will give prompt written notice thereof to the Borrower, which notice
shall include a certificate submitted to the Borrower by the Issuing Bank or
such Participant (a copy of which certificate shall be sent by the Issuing Bank
or such Participant to the Agent), setting forth in reasonable detail the basis
for the calculation of such additional amount or amounts necessary to compensate
the Issuing Bank or such Participant. The certificate required to be delivered
pursuant to this Section 2.06 shall, absent manifest error, be final and
conclusive and binding on the Borrower.
Section 3. Commitment Commission; Fees; Reductions of Commitment.
3.01 Fees. (a) The Borrower agrees to pay to the Agent for distribution
to each Non-Defaulting Bank a commitment commission (the "Commitment
Commission") for the period from and including the Restatement Effective Date to
but excluding the Final Maturity Date (or such earlier date as the Total
Commitment shall have been terminated), computed at a rate for each day equal to
the Applicable Commitment Commission Percentage of the daily average Unutilized
Commitment of such Non-Defaulting Bank. Accrued Commitment Commission shall be
due and payable quarterly in arrears on each Quarterly Payment Date and on the
Final Maturity Date or such earlier date upon which the Total Commitment is
terminated.
(b) The Borrower agrees to pay to the Agent for distribution to each
Bank (based on each such Bank's respective Percentage) a fee in respect of each
Letter of Credit issued hereunder (the "Letter of Credit Fee") for the period
from and including the date of issuance of such Letter of Credit to and
including the date of termination or expiration of such Letter of Credit,
computed at a rate per annum equal to the Eurodollar Spread on the daily Stated
Amount of such Letter of Credit. Accrued Letter of Credit Fees shall be due and
payable quarterly in
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arrears on each Quarterly Payment Date and on the first day after the
termination of the Total Commitment upon which no Letters of Credit remain
outstanding.
(c) The Borrower agrees to pay to the Issuing Bank, for its own
account, a facing fee in respect of each Letter of Credit issued by it (the
"Facing Fee"), for the period from and including the date of issuance of such
Letter of Credit to and including the date of the termination of such Letter of
Credit, computed at a rate equal to 1/8 of 1% per annum of the daily Stated
Amount of such Letter of Credit, provided that in any event the minimum amount
of the Facing Fee payable in any 12 month period for each Letter of Credit shall
be $500; it being agreed that, on the date of issuance of any Letter of Credit
and on each anniversary thereof prior to the termination of such Letter of
Credit, if $500 will exceed the amount of Facing Fees that will accrue with
respect to such Letter of Credit for the immediately succeeding 12 month period,
the full $500 shall be payable on the date of issuance of such Letter of Credit
and on each such anniversary thereof. Except as otherwise provided in the
proviso to the immediately preceding sentence, accrued Facing Fees shall be due
and payable quarterly in arrears on each Quarterly Payment Date and upon the
first day after the termination of the Total Commitment upon which no Letters of
Credit remain outstanding.
(d) The Borrower agrees to pay to the Issuing Bank, upon each payment
under, issuance of, or amendment to, any Letter of Credit, such amount as shall
at the time of such event be the administrative charge and the reasonable
expenses which the Issuing Bank is generally imposing in connection with such
occurrence with respect to letters of credit.
(e) The Borrower agrees to pay to the Agent, for its own
account, such other fees as have been agreed to in writing by the Borrower and
the Agent.
3.02 Voluntary Termination of Unutilized Commitments. (a) Upon at least
one Business Day's prior written notice to the Agent at the Notice Office (which
notice the Agent shall promptly transmit to each of the Banks), the Borrower
shall have the right, at any time or from time to time, without premium or
penalty, (i) to terminate the Total Unutilized Commitment, in whole or in part,
pursuant to this Section 3.02(a), in an integral multiple of $250,000, in the
case of partial reductions to the Total Unutilized Commitment, provided that
each such reduction shall apply proportionately to permanently reduce the
Commitment of each Bank.
(b) In the event of a refusal by a Bank to consent to certain proposed
changes, waivers, discharges or terminations with respect to this Agreement
which have been approved by the Required Banks as (and to the extent) provided
in Section 12.12(b), the Borrower may, subject to its compliance with the
requirements of Section 12.12(b), upon five Business Days' prior written notice
to the Agent at the Notice Office (which notice the Agent shall promptly
transmit to each of the Banks) terminate the entire Commitment of such Bank, so
long as all Loans, together with accrued and unpaid interest, Fees and all other
amounts, owing to such Bank are repaid concurrently with the effectiveness of
such termination pursuant to Section 4.01(b) (at which time Schedule I shall be
deemed modified to reflect such changed amounts),
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and at such time, such Bank shall no longer constitute a "Bank" for purposes of
this Agreement, except with respect to indemnifications under this Agreement
(including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 11.06 and
12.01), which shall survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total Commitment (and
the Commitment of each Bank) shall terminate in its entirety on December 31,
1997 unless the Restatement Effective Date has occurred on or before such date.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Commitment (and the Commitment of each Bank)
shall terminate in its entirety on the earlier of (i) the date on which a Change
of Control occurs and (ii) the Final Maturity Date.
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date on or after the Restatement Effective Date
upon which the Borrower or any of its Subsidiaries receives any cash proceeds
from any incurrence by the Borrower or any of its Subsidiaries of Indebtedness
for borrowed money (other than Indebtedness for borrowed money permitted to be
incurred pursuant to Section 8.04 as such Section is in effect on the
Restatement Effective Date), the Total Commitment shall be permanently reduced
on such date by an amount equal to 100% of the Net Debt Proceeds of the
respective incurrence of Indebtedness.
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date on or after the Restatement Effective Date
upon which the Borrower or any of its Subsidiaries receives cash proceeds from
any Asset Sale, the Total Commitment shall be permanently reduced on such date
by an amount equal to 100% of the Net Sale Proceeds of such Asset Sale; provided
that no reduction to the Total Commitment shall be required pursuant to this
Section 3.03(d) so long as no Default or Event of Default then exists and the
Borrower delivers a certificate to the Agent on or prior to such date stating
that such Net Sale Proceeds shall be used to purchase replacement assets within
270 days following the date of such Asset Sale (which certificate shall set
forth the estimates of the proceeds to be so expended), and provided further,
that if all or any portion of such Net Sale Proceeds not giving rise to a
reduction to the Total Commitment are not so reinvested in replacement assets
within such 270 day period, such remaining portion shall give rise to a
reduction to the Total Commitment on the last day of such period as set forth
above in this Section 3.03(d).
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, within 10 days following each date on or after
the Restatement Effective Date upon which the Borrower or any of its
Subsidiaries receives any cash proceeds from any Recovery Event, the Total
Commitment shall be permanently reduced on such 10th day by an amount equal to
100% of the Net Insurance Proceeds of such Recovery Event, provided that so long
as no Default or Event of Default then exists and such proceeds do not exceed
$10,000,000, no reduction to the Total Commitment shall be required pursuant to
this Section 3.03(d) to the extent that the Borrower has delivered a certificate
to the Agent on or prior to such date stating
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that such proceeds shall be used to replace or restore any properties or assets
in respect of which such proceeds were paid within 270 days following the date
of the receipt of such proceeds (which certificate shall set forth the estimates
of the proceeds to be so expended), and provided further, that (i) if the amount
of such proceeds exceeds $10,000,000, then the Total Commitment shall be reduced
by the entire amount and not just the portion in excess of $10,000,000 and (ii)
if all or any portion of such proceeds not giving rise to a reduction to the
Total Commitment pursuant to the preceding proviso are not so used within 270
days after the date of the receipt of such proceeds, such remaining portion
shall give rise to a reduction in the Total Commitment on the last day of such
period as set forth above in this Section 3.03(e).
(f) Each reduction to the Total Commitment pursuant to this Section
3.03 shall be applied proportionately to permanently reduce the Commitment of
each Bank.
Section 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. (a) The Borrower shall have the
right to prepay the Loans, without premium or penalty, in whole or in part at
any time and from time to time on the following terms and conditions: (i) the
Borrower shall give the Agent prior to 12:00 Noon (New York time) at the Notice
Office (x) at least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) of its intent to prepay Base Rate Loans
and (y) at least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay Eurodollar Loans, the
amount of such prepayment and the Types of Loans to be prepaid and, in the case
of Eurodollar Loans, the specific Borrowing or Borrowings pursuant to which
made, which notice the Agent shall promptly transmit to each of the Banks; (ii)
each prepayment shall be in an aggregate principal amount of at least $250,000
and, if greater, in an integral multiple of $100,000, provided that if any
partial prepayment of Eurodollar Loans made pursuant to any Borrowing shall
reduce the outstanding principal amount of Eurodollar Loans made pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto, then such Borrowing may not be continued as a Borrowing of Eurodollar
Loans and any election of an Interest Period with respect thereto given by the
Borrower shall have no force or effect; (iii) prepayments of Eurodollar Loans
made pursuant to this Section 4.01(a) may only be made on the last day of an
Interest Period applicable thereto; and (iv) each prepayment in respect of any
Loans made pursuant to a Borrowing shall be applied pro rata among such Loans,
provided that, at the Borrower's election, such prepayment shall not be applied
to any Loan of a Defaulting Bank.
(b) In the event of a refusal by a Bank to consent to certain proposed
changes, waivers, discharges or terminations with respect to this Agreement
which have been approved by the Required Banks as (and to the extent) provided
in Section 12.12(b), the Borrower may, upon five Business Days' prior written
notice to the Agent at the Notice Office (which notice the Agent shall promptly
transmit to each of the Banks) repay all Loans, together with accrued and unpaid
interest, Fees, and other amounts owing to such Bank in accordance with, and
subject to the requirements of, said Section 12.12(b) so long as (A) the entire
Commitment of such Bank is terminated concurrently with such repayment pursuant
to Section 3.02(b) (at which time
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Schedule I shall be deemed modified to reflect the changed Commitments) and (B)
the consents, if any, required by Section 12.12(b) in connection with the
repayment pursuant to this clause (b) have been obtained.
4.02 Mandatory Repayments. (a) On any day on which the sum of the
aggregate outstanding principal amount of the Loans plus the Letter of Credit
Outstandings exceeds the Total Commitment as then in effect, the Borrower shall
prepay on such day the principal of Loans in an amount equal to such excess. If,
after giving effect to the prepayment of all outstanding Loans, the aggregate
amount of the Letter of Credit Outstandings exceeds the Total Commitment as then
in effect, the Borrower shall pay to the Agent at the Payment Office on such day
an amount of cash or Cash Equivalents equal to the amount of such excess (up to
a maximum amount equal to the Letter of Credit Outstandings at such time), such
cash or Cash Equivalents to be held as security for all obligations of the
Borrower to the Issuing Banks and the Banks hereunder in a cash collateral
account to be established by the Agent.
(b) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans which are to be repaid and,
in the case of Eurodollar Loans, the specific Borrowing or Borrowings pursuant
to which made, provided that: (i) repayments of Eurodollar Loans pursuant to
this Section 4.02 may only be made on the last day of an Interest Period
applicable thereto unless all Eurodollar Loans with Interest Periods ending on
such date of required repayment and all Base Rate Loans have been paid in full;
(ii) if any repayment of Eurodollar Loans made pursuant to a single Borrowing
shall reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to
an amount less than the Minimum Borrowing Amount applicable thereto, such
Borrowing shall be converted at the end of the then current Interest Period into
a Borrowing of Base Rate Loans; and (iii) each repayment of any Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans. In the
absence of a designation by the Borrower as described in the preceding sentence,
the Agent shall, subject to the above, make such designation in its sole
discretion.
(c) Notwithstanding anything to the contrary contained in this
Agreement or in any other Credit Document, all then outstanding Loans shall be
repaid in full on the earlier of (i) the date on which a Change of Control
occurs and (ii) the Final Maturity Date.
4.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or under any Note shall be
made to the Agent for the account of the Bank or Banks entitled thereto not
later than 12:00 Noon (New York time) on the date when due and shall be made in
Dollars in immediately available funds at the Payment Office. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the Borrower hereunder or
under any Note will be made without setoff, counterclaim or other defense.
Except as provided in
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Section 4.04(b), all such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax imposed on or measured by
the net income or profits of a Bank pursuant to the laws of the jurisdiction in
which it is organized or the jurisdiction in which the principal office or
applicable lending office of such Bank is located or any subdivision thereof or
therein) and all interest, penalties or similar liabilities with respect to such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
(all such non-excluded taxes, levies, imposts, duties, fees, assessments or
other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Note, after withholding or deduction for
or on account of any Taxes, will not be less than the amount provided for herein
or in such Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Bank, upon the written
request of such Bank, for taxes imposed on or measured by the net income or
profits of such Bank pursuant to the laws of the jurisdiction in which such Bank
is organized or in which the principal office or applicable lending office of
such Bank is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which such Bank is organized or in which
the principal office or applicable lending office of such Bank is located and
for any withholding of taxes as such Bank shall determine are payable by, or
withheld from, such Bank, in respect of such amounts so paid to or on behalf of
such Bank pursuant to the preceding sentence and in respect of any amounts paid
to or on behalf of such Bank pursuant to this sentence. The Borrower will
furnish to the Agent within 45 days after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Bank, and reimburse such Bank upon its written request, for the amount of any
Taxes so levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the Borrower and the Agent on or prior to the Restatement
Effective Date, or in the case of a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.13 or 12.04 (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Bank, (i) two accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor forms) certifying to such Bank's
entitlement to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any Note, or (ii)
if the Bank is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224 (or
successor forms) pursuant to clause (i) above, (x) a certificate substantially
in the form of Exhibit D (any such certificate, a "Section 4.04(b)(ii)
Certificate") and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8 (or successor form) certifying to such Bank's
entitlement to a complete exemption from United States withholding tax with
respect to
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payments of interest to be made under this Agreement and under any Note. In
addition, each Bank agrees that from time to time after the Restatement
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, such Bank
will deliver to the Borrower and the Agent two new accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001 (or
successor form), or Form W-8 (or successor form) and a Section 4.04(b)(ii)
Certificate, as the case may be, and such other forms as may be required in
order to confirm or establish the entitlement of such Bank to a continued
exemption from or reduction in United States withholding tax with respect to
payments under this Agreement and any Note, or such Bank shall immediately
notify the Borrower and the Agent of its inability to deliver any such Form or
Certificate, in which case such Bank shall not be required to deliver any such
Form or Certificate pursuant to this Section 4.04(b). Notwithstanding anything
to the contrary contained in Section 4.04(a), but subject to Section 12.04(b)
and the immediately succeeding sentence, (x) the Borrower shall be entitled, to
the extent it is required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, Fees or other amounts
payable hereunder for the account of any Bank which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code) for U.S.
Federal income tax purposes to the extent that such Bank has not provided to the
Borrower U.S. Internal Revenue Service Forms that establish a complete exemption
from such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to Section 4.04(a) hereof to gross-up payments to be made to a Bank in
respect of income or similar taxes imposed by the United States if (I) such Bank
has not provided to the Borrower the Internal Revenue Service Forms required to
be provided to the Borrower pursuant to this Section 4.04(b) or (II) in the case
of a payment, other than interest, to a Bank described in clause (ii) above, to
the extent that such Forms do not establish a complete exemption from
withholding of such taxes. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 4.04 and except as set forth
in Section 12.04(b), the Borrower agrees to pay any additional amounts and to
indemnify each Bank in the manner set forth in Section 4.04(a) (without regard
to the identity of the jurisdiction requiring the deduction or withholding) in
respect of any Taxes deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Restatement Effective
Date in any applicable law, treaty, governmental rule, regulation, guideline or
order, or in the interpretation thereof, relating to the deducting or
withholding of such Taxes.
Section 5. Conditions Precedent. The occurrence of the Restatement
Effective Date and the obligation of each Bank to make Loans on and after the
Restatement Effective Date, and the obligation of the Issuing Bank to issue
Letters of Credit on and after the Restatement Effective Date, are subject at
the time of any such Credit Event to the satisfaction of any the following
conditions (to the extent applicable to such Credit Event):
5.01 Execution of the Agreement. On or prior to the Restatement
Effective Date, this Agreement shall have been executed and delivered in
accordance with Section 12.10.
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5.02 Notes. On or prior to the Restatement Effective Date, there shall
have been delivered to the Agent for the account of each of the Banks the
appropriate Note executed by the Borrower, in the amount, maturity and as
otherwise provided herein.
5.03 Officer's Certificate. On the Restatement Effective Date, the
Agent shall have received a certificate, dated the Restatement Effective Date
and signed on behalf of the Borrower by the Chairman of the Board, the President
or any Vice President of the Borrower, stating that all of the conditions in
Sections 5.07, 5.08, 5.09 and 5.10 have been satisfied on such date.
5.04 Opinions of Counsel. On the Restatement Effective Date, the Agent
shall have received from (i) Morgan, Lewis & Bockius, counsel to the Credit
Parties, an opinion addressed to the Agent, the Co-Agent, the Collateral Agent
and each of the Banks and dated the Restatement Effective Date, covering the
matters set forth in Exhibit E-1 and such other matters incident to the
transactions contemplated herein as the Agent or the Co-Agent may reasonably
request and (ii) Mesirov Gelman Jaffe Cramer & Jamieson, counsel to the Credit
Parties, an opinion addressed to the Agent, the Co-Agent, the Collateral Agent
and the Banks, and dated the Restatement Effective Date, covering the matters
set forth in Exhibit E-2 and such other matters incident to the transactions
contemplated herein as the Agent or the Co-Agent may reasonably request.
5.05 Corporate Documents; Proceedings; etc. (a) On the Restatement
Effective Date, the Agent shall have received a certificate from each Credit
Party, dated the Restatement Effective Date, signed by the Chairman of the
Board, the President or any Vice President of such Credit Party, and attested to
by the Secretary or any Assistant Secretary of such Credit Party, in the form of
Exhibit F with appropriate insertions, together with copies of the certificate
of incorporation (or equivalent organizational document) and by-laws of such
Credit Party (but only to the extent that any such certificate of incorporation
and/or by-laws have been modified since November 27, 1996 or such Credit Party
is a new Credit Party) and the resolutions of such Credit Party referred to in
such certificate, and the foregoing resolutions shall be in form and substance
reasonably acceptable to the Agent and the Co-Agent.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Documents shall be satisfactory in form and substance to the
Agent, the Co-Agent and the Required Banks, and the Agent shall have received
all information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams or facsimiles, if any, which the Agent or the Co-Agent
reasonably may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.
(c) On the Restatement Effective Date, the corporate, ownership and
capital structure (including, without limitation, the terms of any capital
stock, options, warrants or other securities issued by the Borrower or any of
its Subsidiaries) of the Borrower and its Subsidiaries
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shall be in form and substance reasonably satisfactory to the Agent, the
Co-Agent and the Required Banks.
5.06 Shareholders' Agreements; Tax Sharing Agreements; Existing
Indebtedness Agreements. On or prior to the Restatement Effective Date, there
shall have been delivered to (or there shall have been made available for review
by) the Agent true and correct copies of the following documents:
(i) all agreements entered into by the Borrower or any of its
Subsidiaries governing the terms and relative rights of its capital stock
and any agreements entered into by shareholders relating to any such entity
with respect to its capital stock, including, without limitation, the
Charles Town Joint Venture Agreement (collectively, the "Shareholders'
Agreements");
(ii) all tax sharing, tax allocation and other similar agreements
entered into by the Borrower or any of its Subsidiaries (collectively, the
"Tax Sharing Agreements"); and
(iii) all agreements evidencing or relating to Indebtedness of the
Borrower or any of its Subsidiaries which is to remain outstanding after the
Restatement Effective Date (collectively, the "Existing Indebtedness
Agreements");
all of which Shareholders' Agreements, Existing Indebtedness Agreements and Tax
Sharing Agreements shall be in form and substance satisfactory to the Agent, the
Co-Agent and the Required Banks and shall be in full force and effect on the
Restatement Effective Date.
5.07 Senior Notes. (a) On the Restatement Effective Date, (i) the
Borrower shall have received gross cash proceeds of $80,000,000 from the
issuance by it of a like principal amount of the Senior Notes and (ii) the
Borrower shall have utilized a portion of the net cash proceeds received
therefrom to repay all outstanding obligations under the Original Credit
Agreement or required by Section 5.08.
(b) On or prior to the Restatement Effective Date, there shall
have been delivered to the Agent true and correct copies of the Senior Note
Documents, and all of the terms and conditions of the Senior Note Documents
(including, without limitation, amortization, maturities, interest rates,
covenants, defaults, remedies and sinking fund provisions) shall be reasonably
satisfactory in form and substance to the Agent, the Co-Agent and the Required
Banks.
5.08 Original Credit Agreement, etc. (a) On the Restatement Effective
Date and concurrently with the issuance of the Senior Notes (i) all loans under
the Original Credit Agreement shall have been repaid in cash in full, (ii) there
shall have been paid in cash in full all accrued but unpaid interest on the
loans outstanding under the Original Credit Agreement and (iii) there shall have
been paid in cash in full all accrued but unpaid fees (including, without
limitation, commitment fees, letter of credit fees and facing fees) and other
amounts, costs and expenses (including, without limitation, breakage costs, if
any, with respect to Eurodollar rate loans) owing under the Original Credit
Agreement, in each case regardless of whether or not any
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of the foregoing amounts would otherwise be due and payable at such time
pursuant to the terms of the Original Credit Agreement.
(b) On the Restatement Effective Date, (i) all Interest Rate Protection
Agreements entered into by the Borrower prior to the Restatement Effective Date
shall have been terminated and (ii) all amounts, costs and expenses owing by the
Borrower pursuant to such Interest Rate Protection Agreements as a result of the
termination thereof shall have been paid in full.
(c) On the Restatement Effective Date, the Agent, the Continuing Banks
and the Non-Continuing Banks shall have executed and delivered an
acknowledgement letter in the form of Exhibit G.
5.09 Adverse Change, etc. (a) Since September 30, 1997, nothing shall
have occurred (and neither the Agent, the Co-Agent nor the Banks shall have
become aware of any facts or conditions not previously known) which the Agent,
the Co-Agent or the Required Banks shall determine (a) has had, or could
reasonably be expected to have, a material adverse effect on the rights or
remedies of the Banks or the Agent, or on the ability of any Credit Party to
perform its obligations to them hereunder or under any other Credit Document or
(b) has had, or could reasonably be expected to have, a material adverse effect
on the business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of the Borrower or any of its Subsidiaries.
(b) All necessary governmental (domestic and foreign) and third party
approvals and/or consents (including, without limitation, any approvals and/or
consents of any Commission necessary, or in the reasonable opinion of the Agent
or the Co-Agent desirable, to operate the businesses of the Borrower or any of
its Subsidiaries permitted under Section 8.15) in connection with the
Transaction and the other transactions contemplated by the Documents and
otherwise referred to herein or therein shall have been obtained and remain in
effect, and all applicable waiting periods with respect thereto shall have
expired without any action being taken by any competent authority which
restrains, prevents or imposes materially adverse conditions upon, the
Transaction or the other transactions contemplated by the Documents or otherwise
referred to herein or therein. Additionally, there shall not exist any judgment,
order, injunction or other restraint issued or filed or a hearing seeking
injunctive relief or other restraint pending or notified prohibiting or imposing
materially adverse conditions upon the Transaction or the other transactions
contemplated by the Documents or otherwise required to herein or therein.
(c) The Borrower and its Subsidiaries shall have all licenses,
including, without limitation, gaming, racing and alcohol licenses, necessary
for the operation of its businesses.
5.10 Litigation. On the Restatement Effective Date, there shall be no
actions, suits or proceedings pending or threatened (i) with respect to the
Transaction, this Agreement or any other Document or (ii) which the Agent, the
Co-Agent or the Required Banks shall determine could reasonably be expected to
have a material adverse effect on (a) the Transaction
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or on the business, operations, property, assets, condition (financial or
otherwise) or the prospects of the Borrower or any of its Subsidiaries, (b) the
rights or remedies of the Banks or the Agent hereunder or under any other Credit
Document or (c) the ability of any Credit Party to perform its respective
obligations to the Banks or the Agent hereunder or under any other Credit
Document.
5.11 Assumption and Acknowledgment. On the Restatement Effective Date,
each Credit Party shall have duly authorized, executed and delivered an
assumption and acknowledgment agreement in the form of Exhibit H (the
"Assumption and Acknowledgment Agreement").
5.12 Mortgage Amendments. On the Restatement Effective Date, the
Collateral Agent shall have received fully executed counterparts of amendments
(the "Mortgage Amendments"), in form and substance satisfactory to the
Collateral Agent, to each of the Existing Mortgages, together with evidence that
counterparts of each of the Mortgage Amendments have been delivered to the title
company insuring the Lien on the Existing Mortgages for recording in all places
to the extent necessary or desirable, in the judgment of the Collateral Agent,
effectively to maintain a valid and enforceable first priority mortgage lien on
the Existing Mortgaged Properties in favor of the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall have received
either endorsements to the existing Mortgage Policies or new Mortgage Policies,
in either case assuring the Collateral Agent that each Existing Mortgage is a
valid and enforceable first priority mortgage lien on the respective Existing
Mortgaged Properties, free and clear of all defects and encumbrances except
Permitted Encumbrances.
5.13 Projections; Pro Forma Balance Sheet; Financial Review. On or
prior to the Restatement Effective Date, the Agent shall have received copies of
historical financial statements, the pro forma financial statements and the
Projections referred to in Sections 6.05(a) and (d), and the foregoing financial
statements and Projections shall be in form and substance satisfactory to the
Agent, the Co-Agent and the Required Banks.
5.14 Solvency Certificate; Insurance Certificates. On the Restatement
Effective Date, the Borrower shall have delivered to the Agent:
(i) a certificate in the form of Exhibit I executed by the Chief
Financial Officer of the Borrower; and
(ii) certificates of insurance complying with the requirements of
Section 7.03 for the business and properties of the Borrower and its
Subsidiaries, in form and substance, satisfactory to the Agent, the Co-Agent
and the Required Banks and naming the Collateral Agent as an additional
insured and as loss payee, and stating that such insurance shall not be
canceled without at least 30 days prior written notice by the insurer to the
Collateral Agent (or such shorter period of time as a particular insurance
company generally provides).
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5.15 Fees, etc. On the Restatement Effective Date, the Borrower shall
have paid to the Agent, the Co-Agent and each Bank all costs, fees and expenses
(including, without limitation, legal fees and expenses) payable to the Agent,
the Co-Agent and such Bank to the extent then due.
5.16 No Default; Representations and Warranties. At the time of each
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of such Credit Event (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).
5.17 Notice of Borrowing; Letter of Credit Request. (a) Prior to the
making of each Loan, the Agent shall have received a Notice of Borrowing meeting
the requirements of Section 1.03(a).
(b) Prior to the issuance of each Letter of Credit, the Agent and the
Issuing Bank shall have received a Letter of Credit Request meeting the
requirements of Section 2.03.
The occurrence of the Restatement Effective Date and the acceptance of
the proceeds of each Loan and the making of each Letter of Credit Request shall
constitute a representation and warranty by the Borrower to the Agent and each
of the Banks that all the applicable conditions specified in this Section 5
exist as of the date of each such Credit Event. All of the Notes, certificates,
legal opinions and other documents and papers referred to in this Section 5,
unless otherwise specified, shall be delivered to the Agent at the Notice Office
for the account of each of the Banks and, except for the Notes, in sufficient
counterparts or copies for each of the Banks and shall be in form and substance
satisfactory to the Agent and the Required Banks.
Section 6. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Loans, and issue
(or participate in) the Letters of Credit as provided herein, the Borrower makes
the following representations, warranties and agreements, in each case after
giving effect to the Transaction, all of which shall survive the execution and
delivery of this Agreement and the Notes and the making of the Loans and
issuance of the Letters of Credit, with the occurrence of the Restatement
Effective Date and each other Credit Event on or after the Restatement Effective
Date being deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct on and as of the Restatement
Effective Date and on the date of each such other Credit Event (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct only as of
such specified date).
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6.01 Corporate and Other Status. Each Credit Party and each of its
Subsidiaries (i) is a duly organized and validly existing corporation, limited
liability company or partnership, as the case may be, in good standing under the
laws of the jurisdiction of its organization, (ii) has the corporate, limited
liability company or partnership power and authority, as the case may be, to own
its property and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized to do
business and is in good standing in each jurisdiction where the ownership,
leasing or operation of its property or the conduct of its business requires
such qualifications except for failures to be so qualified which, individually
or in the aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
6.02 Corporate and Other Power and Authority. Each Credit Party has the
corporate, limited liability company or partnership power and authority, as the
case may be, to execute, deliver and perform the terms and provisions of each of
the Documents to which it is party and has taken all necessary corporate,
limited liability company or partnership action, as the case may be, to
authorize the execution, delivery and performance by it of each of such
Documents. Each Credit Party has duly executed and delivered each of the
Documents to which it is party, and each of such Documents constitutes its
legal, valid and binding obligation enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
6.03 No Violation. Neither the execution, delivery or performance by
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
law, statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents) upon any of the property or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or any other material agreement, contract or
instrument, to which the Borrower or any of its Subsidiaries is a party or by
which it or any of its property or assets is bound or to which it may be subject
or (iii) will violate any provision of the certificate of incorporation,
by-laws, limited liability company agreement or partnership agreement (or
equivalent organizational documents) of the Borrower or any of its Subsidiaries.
6.04 Approvals. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except for those that
have otherwise been obtained or made on or prior to the Restatement Effective
Date and which remain in full force and effect on the Restatement Effective
Date), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the
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execution, delivery and performance of any Document or (ii) the legality,
validity, binding effect or enforceability of any such Document.
6.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. (a) The consolidated balance sheet of the
Borrower and its Subsidiaries at December 31, 1996 and September 30, 1997 and
the related consolidated statements of income, cash flows and shareholders'
equity of the Borrower and its Subsidiaries for the fiscal year and nine-month
period ended on such dates, as the case may be, copies of which have been
furnished to the Banks prior to the Restatement Effective Date, present fairly
the financial position of the Borrower and its Subsidiaries at the date of such
balance sheets and the results of the operations of the Borrower and its
Subsidiaries for the periods covered thereby. The pro forma consolidated balance
sheet of the Borrower and its Subsidiaries as of September 30, 1997, a copy of
which has been furnished to the Banks prior to the Restatement Effective Date,
presents fairly the pro forma financial position of the Borrower and its
Subsidiaries as of September 30, 1997 and after giving effect to the
Transaction. All of the foregoing financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied,
subject to normal year-end audit adjustments in the case of the nine-month and
other interim financial statements referred to above. Since September 30, 1997,
there has been no material adverse change in the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole.
(b) On and as of the Restatement Effective Date and after giving effect
to the Transaction and to all Indebtedness (including the Loans and the Senior
Notes) being incurred or assumed and Liens created by the Credit Parties in
connection therewith, (a) the sum of the assets, at a fair valuation, of each of
the Borrower on a stand-alone basis and of the Borrower and its Subsidiaries
taken as a whole will exceed its debts; (b) each of the Borrower on a
stand-alone basis and the Borrower and its Subsidiaries taken as a whole has not
incurred and does not intend to incur, and does not believe that they will
incur, debts beyond their ability to pay such debts as such debts mature; and
(c) each of the Borrower on a stand alone basis and the Borrower and its
Subsidiaries taken as a whole will have sufficient capital with which to conduct
its business. For purposes of this Section 6.05(b), "debt" means any liability
on a claim, and "claim" means (i) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 6.05(a), there were as of the Restatement Effective Date no
liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in
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aggregate, could reasonably be expected to be material to the Borrower and its
Subsidiaries taken as a whole. As of the Restatement Effective Date, the
Borrower does not know of any basis for the assertion against it or any of its
Subsidiaries of any liability or obligation of any nature whatsoever that is not
fully disclosed in the financial statements delivered pursuant to Section
6.05(a) which, either individually or in the aggregate, could reasonably be
expected to be material to the Borrower and its Subsidiaries taken as a whole.
(d) On and as of the Restatement Effective Date, the Projections
delivered to the Agent and the Banks prior to the Restatement Effective Date
have been prepared in good faith and are based on reasonable assumptions, and
there are no statements or conclusions in the Projections which are based upon
or include information known to the Borrower to be misleading in any material
respect or which fail to take into account material information known to the
Borrower regarding the matters reported therein. On the Restatement Effective
Date, the Borrower believes that the Projections are reasonable and attainable.
6.06 Litigation. There are no actions, suits or proceedings pending or,
to the best knowledge of the Borrower, threatened (i) with respect to any
Document, (ii) with respect to any material Indebtedness of the Borrower or any
of its Subsidiaries or (iii) that are reasonably likely to materially and
adversely affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
6.07 True and Complete Disclosure. All factual information (taken as a
whole) furnished by any Credit Party in writing to the Agent or any Bank
(including, without limitation, all information contained in the Documents) for
purposes of or in connection with this Agreement, the other Credit Documents or
any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of any Credit
Party in writing to the Agent or any Bank will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such
time in light of the circumstances under which such information was provided.
6.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the Loans
shall be used for the working capital and general corporate purposes of the
Borrower and its Subsidiaries.
(b) No part of any Credit Event (or the proceeds thereof) will be used
to purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor the
use of the proceeds thereof nor the occurrence of any other Credit Event will
violate or be inconsistent with the provisions of Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
6.09 Tax Returns and Payments. Each of the Borrower and each of its
Subsidiaries has filed all federal and state income tax returns and all other
material tax returns, domestic and foreign, required to be filed by it and has
paid all taxes and assessments payable by
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it which have become due, except for those contested in good faith and
adequately disclosed and fully provided for on the financial statements of the
Borrower and its Subsidiaries in accordance with generally accepted accounting
principles. The Borrower and each of its Subsidiaries have at all times paid, or
have provided adequate reserves (in the good faith judgment of the management of
the Borrower) for the payment of, all federal, state, local and foreign income
taxes applicable for all prior fiscal years and for the current fiscal year to
date. There is no material action, suit, proceeding, investigation, audit, or
claim now pending or, to the knowledge of the Borrower threatened, by any
authority regarding any taxes relating to the Borrower or any of its
Subsidiaries. As of the Restatement Effective Date, neither the Borrower nor any
of its Subsidiaries has entered into an agreement or waiver or been requested to
enter into an agreement or waiver extending any statute of limitations relating
to the payment or collection of taxes of the Borrower or any of its
Subsidiaries, or is aware of any circumstances that would cause the taxable
years or other taxable periods of the Borrower or any of its Subsidiaries not to
be subject to the normally applicable statute of limitations.
6.10 Compliance with ERISA. (i) Each Plan (and each related trust,
insurance contract or fund) is in substantial compliance with its terms and with
all applicable laws, including, without limitation, ERISA and the Code; each
Plan (and each related trust, if any) which is intended to be qualified under
Section 401(a) of the Code has received a determination letter from the Internal
Revenue Service to the effect that it meets the requirements of Sections 401(a)
and 501(a) of the Code; no Reportable Event has occurred; no Plan which is a
multiemployer plan (as defined in Section 4001(a)(3) of ERISA) is insolvent or
in reorganization; no Plan has an Unfunded Current Liability; no Plan which is
subject to Section 412 of the Code or Section 302 of ERISA has an accumulated
funding deficiency, within the meaning of such sections of the Code or ERISA, or
has applied for or received a waiver of an accumulated funding deficiency or an
extension of any amortization period, within the meaning of Section 412 of the
Code or Section 303 or 304 of ERISA; all contributions required to be made with
respect to a Plan have been timely made; neither the Borrower nor any Subsidiary
of the Borrower nor any ERISA Affiliate has incurred any material liability
(including any indirect, contingent or secondary liability) to or on account of
a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or
expects to incur any such material liability under any of the foregoing sections
with respect to any Plan; no condition exists which presents a material risk to
the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate of
incurring a material liability to or on account of a Plan pursuant to the
foregoing provisions of ERISA and the Code; no proceedings have been instituted
to terminate or appoint a trustee to administer any Plan which is subject to
Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation
with respect to the administration, operation or the investment of assets of any
Plan (other than routine claims for benefits) is pending, expected or
threatened; using actuarial assumptions and computation methods consistent with
Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the
Borrower and its Subsidiaries and its ERISA Affiliates to all Plans which are
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event of
a complete withdrawal therefrom, as of the close of the most recent fiscal year
of each such Plan ended prior to the date of the most recent Credit Event, would
not exceed $500,000; each group health plan (
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as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which
covers or has covered employees or former employees of the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate has at all times been operated
in compliance with the provisions of Part 6 of subtitle B of Title I of ERISA
and Section 4980B of the Code; no lien imposed under the Code or ERISA on the
assets of the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate
exists or is likely to arise on account of any Plan; and the Borrower and its
Subsidiaries may cease contributions to or terminate any employee benefit plan
maintained by any of them without incurring any material liability.
(ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all
applicable laws, statutes, rules, regulations and orders and has been
maintained, where required, in good standing with applicable regulatory
authorities. All contributions required to be made with respect to a Foreign
Pension Plan have been timely made. Neither the Borrower nor any of its
Subsidiaries has incurred any obligation in connection with the termination
of or withdrawal from any Foreign Pension Plan. The present value of the
accrued benefit liabilities (whether or not vested) under each Foreign
Pension Plan, determined as of the end of the Borrower's most recently ended
fiscal year on the basis of actuarial assumptions, each of which is
reasonable, did not exceed the current value of the assets of such Foreign
Pension Plan allocable to such benefit liabilities.
6.11 The Security Documents. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the Credit Parties party thereto in
the Security Agreement Collateral described therein, and the Collateral Agent,
for the benefit of the Secured Creditors, has a fully perfected first lien on,
and security interest in, all right, title and interest in all of the Security
Agreement Collateral described therein, subject to no other Liens other than
Permitted Liens. The recordation of the Assignment of Security Interest in U.S.
Patents and Trademarks in the form attached to the Security Agreement in the
United States Patent and Trademark Office together with filings on Form UCC-1
made pursuant to the Security Agreement will create, as may be perfected by such
filing and recordation, a perfected security interest granted to the Collateral
Agent in the United States trademarks and patents covered by the Security
Agreement and the recordation of the Assignment of Security Interest in U.S.
Copyrights in the form attached to the Security Agreement with the United States
Copyright Office together with filings on Form UCC-1 made pursuant to the
Security Agreement will create, as may be perfected by such filing and
recordation, a perfected security interest granted to the Collateral Agent in
the United States copyrights covered by the Security Agreement.
(b) The security interests created in favor of the Collateral Agent, as
Pledgee, for the benefit of the Secured Creditors, under the Pledge Agreement
constitute first priority perfected security interests in the Pledged Securities
described in the Pledge Agreement, subject to no security interests of any other
Person. No filings or recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests created in the Pledged
Securities under the Pledge Agreement.
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(c) The Mortgages (as amended by the Mortgage Amendments in the case of
the Existing Mortgages) create, for the obligations purported to be secured
thereby, a valid and enforceable perfected security interest in and mortgage
lien on all of the Mortgaged Properties in favor of the Collateral Agent (or
such other trustee as may be required or desired under local law) for the
benefit of the Secured Creditors, superior to and prior to the rights of all
third persons (except that the security interest and mortgage lien created in
the Mortgaged Properties may be subject to the Permitted Encumbrances related
thereto) and subject to no other Liens (other than Liens permitted under Section
8.01). Schedule IV contains a true and complete list of each parcel of Real
Property owned or leased by the Borrower and its Subsidiaries on the Restatement
Effective Date, and the type of interest therein held by the Borrower or such
Subsidiary. The Borrower and each of its Subsidiaries have good and marketable
title to all fee-owned Real Property and valid leasehold title to all
Leaseholds, in each case free and clear of all Liens except those described in
the first sentence of this subsection (c).
6.12 Representations and Warranties in the Documents. All
representations and warranties set forth in the other Documents were true and
correct in all material respects at the time as of which such representations
and warranties were (or are) made (or deemed made).
6.13 Properties. The Borrower and each of its Subsidiaries have good
and marketable title to all material properties owned by them, including all
property reflected in the balance sheets referred to in Section 6.05(a) (except
as sold or otherwise disposed of since the date of such balance sheet in the
ordinary course of business or a permitted by the terms of this Agreement), free
and clear of all Liens, other than Permitted Liens.
6.14 Capitalization. On the Restatement Effective Date, the
authorized capital stock of the Borrower shall consist of (i) 20,000,000 shares
of common stock, $.01 par value per share and (ii) 1,000,000 shares of preferred
stock, $.01 par value per value, of which no shares of such preferred stock are
issued or outstanding. All outstanding shares of capital stock of the Borrower
have been duly and validly issued, are fully paid and nonassessable. The
Borrower does not have outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreement providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock, except for options or warrants
to purchase shares of its common stock.
6.15 Subsidiaries. As of the Restatement Effective Date, the Borrower
has no Subsidiaries other than those Subsidiaries listed on Schedule V. Schedule
V correctly sets forth, as of the Restatement Effective Date, the percentage
ownership (direct or indirect) of the Borrower in each class of capital stock or
other equity of each of its Subsidiaries and also identifies the direct owner
thereof.
6.16 Compliance with Statutes, etc. Each of the Borrower and each of
its Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the
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conduct of its business and the ownership of its property (including applicable
statutes, regulations, orders and restrictions relating to environmental
standards and controls), except such noncompliances as could not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
6.17 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.18 Public Utility Holding Company Act. Neither the Borrower nor any
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
6.19 Environmental Matters. (a) The Borrower and each of its
Subsidiaries have complied with, and on the date of each Credit Event are in
compliance with, all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. There are no pending or threatened
Environmental Claims against the Borrower or any of its Subsidiaries (including
any such claim arising out of the ownership or operation by the Borrower or any
of its Subsidiaries of any Real Property no longer owned or operated by the
Borrower or any of its Subsidiaries) or any Real Property owned or operated by
the Borrower or any of its Subsidiaries. There are no facts, circumstances,
conditions or occurrences with respect to any Real Property owned or operated by
the Borrower or any of its Subsidiaries (including any Real Property formerly
owned or operated by the Borrower or any of its Subsidiaries but no longer owned
or operated by the Borrower or any of its Subsidiaries) or any property
adjoining or adjacent to any such Real Property that could be expected (i) to
form the basis of an Environmental Claim against the Borrower or any of its
Subsidiaries or any Real Property owned or operated by the Borrower or any of
its Subsidiaries or (ii) to cause any Real Property owned or operated by the
Borrower or any of its Subsidiaries to be subject to any restrictions on the
ownership, occupancy or transferability of such Real Property by the Borrower or
any of its Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by the Borrower or any of its Subsidiaries where such generation, use,
treatment or storage has violated or could be expected to violate any
Environmental Law. Hazardous Materials have not at any time been Released on or
from any Real Property owned or operated by the Borrower or any of its
Subsidiaries where such Release has violated or could be expected to violate any
applicable Environmental Law.
(c) Notwithstanding anything to the contrary in this Section 6.19, the
representations made in this Section 6.19 shall not be untrue unless the
aggregate effect of all violations, claims, restrictions, failures and
noncompliances of the types described above could
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reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
6.20 Labor Relations. Neither the Borrower nor any of its Subsidiaries
is engaged in any unfair labor practice that could reasonably be expected to
have a material adverse effect on the Borrower or on the Borrower and its
Subsidiaries taken as a whole. There is (i) no unfair labor practice complaint
pending against the Borrower or any of its Subsidiaries or threatened against
any of them before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Borrower or any of its Subsidiaries or
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against the Borrower or any of its Subsidiaries or threatened
against the Borrower or any of its Subsidiaries and (iii) no union
representation question exists with respect to the employees of the Borrower or
any of its Subsidiaries, except (with respect to any matter specified in clause
(i), (ii) or (iii) above, either individually or in the aggregate) such as could
not reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
6.21 Patents, Licenses, Franchises and Formulas. Each of the Borrower
and each of its Subsidiaries owns all the patents, trademarks, permits, service
marks, trade names, copyrights, licenses (including, but not limited to, gaming
and alcohol licenses), franchises, proprietary information (including but not
limited to rights in computer programs and databases) and formulas, or rights
with respect to the foregoing, and has obtained assignments of all leases and
other rights of whatever nature, necessary for the present conduct of its
business, without any known conflict with the rights of others which, or the
failure to obtain which, as the case may be, could reasonably be expected to
result in a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole.
6.22 Licenses. (a) The Penn National Licenses and the Plains Company
Licenses are in full force and effect, have not been subject to any suspension
at any time within the last five years and there are no grounds to suspend or
revoke any of such Licenses, nor has any notice been received with respect to
such Licenses at any time within the last five years from the Pennsylvania Horse
Racing Commission or the Pennsylvania Harness Racing Commission that the
Pennsylvania Horse Racing Commission or the Pennsylvania Harness Racing
Commission believes there are grounds for suspending or revoking any of such
Licenses or indicating that any inquiry is or may be conducted with respect to
any such suspension or revocation or the fitness of any shareholder of the
Borrower or any of its Subsidiaries to hold any capital stock therein.
(b) The Charles Town Licenses are in full force and effect, have not
been subject to any suspension at any time and there are no grounds to suspend
or revoke any of such Licenses, nor has any notice been received with respect to
such Licenses from the West Virginia
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Racing Commission or the West Virginia Lottery Commission that the West Virginia
Racing Commission or the West Virginia Lottery Commission believes there are
grounds for suspending or revoking any of such Licenses or indicating that any
inquiry is or may be conducted with respect to any such suspension or revocation
or the fitness of any shareholder of the Borrower or any of its Subsidiaries to
hold any capital stock or other equity interest therein.
6.23 Indebtedness. Schedule VI sets forth a true and complete list of
all Indebtedness (including Contingent Obligations) of the Borrower and its
Subsidiaries as of the Restatement Effective Date and which is to remain
outstanding after giving effect to the Transaction (excluding the Senior Notes,
the Loans and the Letters of Credit, the "Existing Indebtedness"), in each case
showing the aggregate principal amount thereof and the name of the respective
borrower and any Credit Party or any of its Subsidiaries which directly or
indirectly guarantees such debt.
6.24 Issuance of the Senior Notes. At the time of the issuance thereof,
the Senior Notes shall have been issued in accordance with the terms of the
Senior Note Documents and all applicable laws. At the time of the issuance
thereof, all consents and approvals of, and filings and registrations with, and
all other actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to issue the Senior Notes have been (or
will, within the time frame required, be) obtained, given, filed or taken and
are or will be in full force and effect (or effective judicial relief with
respect thereto has been obtained). Additionally, there does not exist any
judgment, order or injunction prohibiting or imposing material adverse
conditions upon the issuance of the Senior Notes or the performance by the
Borrower or any of its Subsidiaries of their obligations under the Senior Note
Documents. All actions taken by the Borrower or any of its Subsidiaries pursuant
to or in furtherance of the issuance of Senior Notes have been taken in
compliance with the Senior Note Documents and all applicable laws.
Section 7. Affirmative Covenants. The Borrower hereby covenants and
agrees that on and after the Restatement Effective Date and until the Total
Commitment and all Letters of Credit have terminated and the Loans, Notes and
Unpaid Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
7.01 Information Covenants. The Borrower will furnish to each Bank:
(a) Monthly Reports. Within 30 days after the end of each fiscal month
of the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal month and the related consolidated
statements of income and retained earnings and statement of cash flows for such
fiscal month and for the elapsed portion of the fiscal year ended with the last
day of such fiscal month, in each case setting forth comparative figures for the
corresponding fiscal month in the prior fiscal year and comparable budgeted
figures for such fiscal month.
(b) Quarterly Financial Statements. Within 45 days after the close of
the first three quarterly accounting periods in each fiscal year of the
Borrower, (i) the consolidated and
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consolidating balance sheets of the Borrower and its Subsidiaries as at the end
of such quarterly accounting period and the related consolidated and
consolidating statements of income and retained earnings and statement of cash
flows for such quarterly accounting period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly accounting period, in each
case setting forth comparative figures for the related periods in the prior
fiscal year, all of which shall be certified by the Chief Financial Officer of
the Borrower, subject to normal year-end audit adjustments and (ii) management's
discussion and analysis of the important operational and financial developments
during the quarterly and year-to-date periods.
(c) Annual Financial Statements. Within 90 days after the close of each
fiscal year of the Borrower, (i) the consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as at the end of such fiscal year
and the related consolidated and consolidating statements of income and retained
earnings and of cash flows for such fiscal year setting forth comparative
figures for the preceding fiscal year and certified (x) in the case of the
consolidated financial statements, by BDO Seidman, LLP or such other independent
certified public accountants of recognized national standing reasonably
acceptable to the Agent, together with a report of such accounting firm stating
that in the course of its regular audit of the financial statements of the
Borrower and its Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm obtained no
knowledge of any Default or an Event of Default which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default or Event
of Default has occurred and is continuing, a statement as to the nature thereof
and (y) in the case of the consolidating financial statements, by the Chief
Financial Officer of the Borrower and (ii) management's discussion and analysis
of the important operational and financial developments during the respective
fiscal year.
(d) Management Letters. Promptly after the Borrower's or any of its
Subsidiaries' receipt thereof, a copy of any "management letter" received from
its certified public accountants and management's response thereto.
(e) Budgets and Projections. No later than thirty days following the
first day of each fiscal year of the Borrower, a budget in form satisfactory to
the Agent (including budgeted statements of income and sources and uses of cash
and balance sheets) prepared by the Borrower for each of the months of such
fiscal year prepared in detail.
(f) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 7.01(b) and (c), a certificate of
the Chief Financial Officer of the Borrower to the effect that, to the best of
such officer's knowledge, no Default or Event of Default has occurred and is
continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which certificate shall
(x) set forth in reasonable detail the calculations required to establish
whether the Borrower and its Subsidiaries were in compliance with the provisions
of Sections 3.03(d), 3.03(e), 8.04, 8.05 and 8.07 through 8.11, inclusive, at
the end of such fiscal quarter or year, as the case may be.
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(g) Notice of Default or Litigation. Promptly upon, and in any event
within three Business Days after, an officer of any Credit Party obtains
knowledge thereof, notice of (i) the occurrence of any event which constitutes a
Default or an Event of Default and (ii) any litigation or governmental
investigation or proceeding pending (x) against the Borrower or any of its
Subsidiaries which could reasonably be expected to materially and adversely
affect the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole, (y) with respect to any material Indebtedness of the Borrower or any
of its Subsidiaries or (z) with respect to the Transaction or any Document.
(h) Other Reports and Filings. Promptly after the filing or delivery
thereof, copies of all financial information, proxy materials and reports, if
any, which the Borrower or any of its Subsidiaries shall publicly file with the
Securities and Exchange Commission or any successor thereto (the "SEC") or
deliver to holders of its Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other
representative therefor).
(i) Environmental Matters. Promptly after an officer of any Credit
Party obtains knowledge thereof, notice of one or more of the following
environmental matters, unless such environmental matters could not, individually
or when aggregated with all other such environmental matters, be reasonably
expected to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim against the Borrower
or any of its Subsidiaries or any Real Property owned or operated by the
Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real Property
owned or operated by the Borrower or any of its Subsidiaries that (a)
results in noncompliance by the Borrower or any of its Subsidiaries with any
applicable Environmental Law or (b) could be expected to form the basis of
an Environmental Claim against the Borrower or any of its Subsidiaries or
any such Real Property;
(iii) any condition or occurrence on any Real Property owned or
operated by the Borrower or any of its Subsidiaries that could be expected
to cause such Real Property to be subject to any restrictions on the
ownership, occupancy, use or transferability by the Borrower or any of its
Subsidiaries of such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to the
actual or alleged presence of any Hazardous Material on any Real Property
owned or operated by the Borrower or any of its Subsidiaries as required by
any Environmental Law or any governmental or other administrative agency;
provided, that in any event the Borrower shall deliver to each Bank all
notices received by the Borrower or any of its Subsidiaries
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from any government or governmental agency under, or pursuant to, CERCLA
which identify the Borrower or any of its Subsidiaries as potentially
responsible parties for remediation costs or which otherwise notify the
Borrower or any of its Subsidiaries of potential liability under CERCLA.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower's or such Subsidiary's response thereto.
(j) Regulatory Matters. Promptly after (i) the Borrower or any of its
Subsidiaries receives any correspondence or other written communication from any
Commission (other than correspondence relating to routine operating matters of
the Borrower or any of its Subsidiaries in the ordinary course of business) or
(ii) the Borrower or any of its Subsidiaries delivers any correspondence or
other written communication to any Commission (other than correspondence
relating to routine operating matters of the Borrower or any of its
Subsidiaries), the Borrower shall deliver copies of any such correspondence or
other written communication to each of the Banks.
(k) Other Information. From time to time, such other information or
documents (financial or otherwise) with respect to the Borrower or any of its
Subsidiaries as the Agent or any Bank may reasonably request.
7.02 Books, Records and Inspections; Annual Meeting with Banks. (a) The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and accounts in which full, true and correct entries in conformity with
generally accepted accounting principles and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Agent or any Bank to visit
and inspect, under guidance of officers of the Borrower or such Subsidiary, any
of the properties of the Borrower or such Subsidiary, and to examine the books
of account of the Borrower or such Subsidiary and discuss the affairs, finances
and accounts of the Borrower or such Subsidiary with, and be advised as to the
same by, its and their officers and independent accountants, all at such
reasonable times and intervals and to such reasonable extent as the Agent or
such Bank may reasonably request.
(b) At a date to be mutually agreed upon between the Agent and the
Borrower occurring on or prior to the 120th day after the close of each fiscal
year of the Borrower, the Borrower will hold a meeting with all of the Banks at
which meeting shall be reviewed the financial results of the previous fiscal
year and the financial condition of the Borrower and its Subsidiaries and the
budgets presented for the current fiscal year of the Borrower.
7.03 Maintenance of Property; Insurance. (a) Schedule VII sets forth a
true and complete listing of all insurance maintained by the Borrower and its
Subsidiaries as of the Restatement Effective Date. The Borrower will, and will
cause each of its Subsidiaries to, (i)
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keep all property necessary to the business of the Borrower and its Subsidiaries
in reasonably good working order and condition, ordinary wear and tear excepted,
(ii) maintain insurance on all such property in at least such amounts and
against at least such risks as is consistent and in accordance with industry
practice for companies similarly situated owning similar properties in the same
general areas in which the Borrower or any of its Subsidiaries operates, and
(iii) furnish to the Agent or any Bank, upon written request, full information
as to the insurance carried. At any time that insurance at levels described on
Schedule VII is not being maintained by the Borrower or any Subsidiary of the
Borrower, the Borrower will, or will cause one of its Subsidiaries to, promptly
notify the Agent in writing and, if thereafter notified by the Agent or the
Required Banks to do so, the Borrower or any such Subsidiary, as the case may
be, shall obtain such insurance at such levels and coverage which are at least
as great as to the extent such insurance is reasonably available.
(b) The Borrower will, and will cause each of the other Credit Parties
to, at all times keep its property insured in favor of the Collateral Agent, and
all policies (including Mortgage Policies) or certificates (or certified copies
thereof) with respect to such insurance (and any other insurance maintained by
the Borrower and/or such other Credit Parties) (i) shall be endorsed to the
Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee
and/or additional insured), (ii) shall state that such insurance policies shall
not be cancelled without at least 30 days' prior written notice thereof by the
respective insurer to the Collateral Agent (or such shorter period of time as a
particular insurance company policy generally provides), (iii) shall provide
that the respective insurers irrevocably waive any and all rights of subrogation
with respect to the Collateral Agent and the Secured Creditors, (iv) shall
contain the standard non-contributing mortgage clause endorsement in favor of
the Collateral Agent with respect to hazard liability insurance, (v) shall,
except in the case of public liability insurance, provide that any losses shall
be payable notwithstanding (A) any act or neglect of the Borrower or any such
other Credit Party, (B) the occupation or use of the properties for purposes
more hazardous than those permitted by the terms of the respective policy if
such coverage is obtainable at commercially reasonable rates and is of the kind
from time to time customarily insured against by Persons owning or using similar
property and in such amounts as are customary, (C) any foreclosure or other
proceeding relating to the insured properties or (D) any change in the title to
or ownership or possession of the insured properties and (vi) shall be deposited
with the Collateral Agent.
(c) If the Borrower or any of its Subsidiaries shall fail to insure its
property in accordance with this Section 7.03, or if the Borrower or any of its
Subsidiaries shall fail to so endorse and deposit all policies or certificates
with respect thereto, the Collateral Agent shall have the right (but shall be
under no obligation) to procure such insurance and the Borrower agrees to
reimburse the Collateral Agent for all costs and expenses of procuring such
insurance.
7.04 Corporate Franchises. The Borrower will, and will cause each of
its Subsidiaries to, do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights,
franchises, licenses and patents; provided, however, that nothing in this
Section 7.04 shall prevent (i) sales of assets and other transactions by the
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Borrower or any of its Subsidiaries in accordance with Section 8.02 or (ii) the
withdrawal by the Borrower or any of its Subsidiaries of its qualification as a
foreign corporation in any jurisdiction where such withdrawal could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
7.05 Compliance with Statutes, etc. The Borrower will, and will cause
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls), except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole.
7.06 Compliance with Environmental Laws. (a) The Borrower will comply,
and will cause each of its Subsidiaries to comply, in all material respects with
all Environmental Laws applicable to the ownership or use of its Real Property
now or hereafter owned or operated by the Borrower or any of its Subsidiaries,
will promptly pay or cause to be paid all costs and expenses incurred in
connection with such compliance, and will keep or cause to be kept all such Real
Property free and clear of any Liens imposed pursuant to such Environmental
Laws. Neither the Borrower nor any of its Subsidiaries will generate, use,
treat, store, release or dispose of, or permit the generation, use, treatment,
storage, release or disposal of Hazardous Materials on any Real Property now or
hereafter owned or operated by the Borrower or any of its Subsidiaries, or
transport or permit the transportation of Hazardous Materials to or from any
such Real Property, except for Hazardous Materials generated, used, treated,
stored, released or disposed of at any such Real Properties in compliance in all
material respects with all applicable Environmental Laws and reasonably required
in connection with the operation, use and maintenance of the business or
operations of the Borrower or any of its Subsidiaries.
(b) At the written request of the Agent or the Required Banks and based
upon a reasonable concern as to the continued veracity and completeness of any
of the representations and warranties set forth in Section 6.19, compliance with
Section 7.06(a) or upon receipt of any notice given under Section 7.01(i), which
request shall specify in reasonable detail the basis therefor, at any time and
from time to time, the Borrower will provide, at the sole expense of the
Borrower, an environmental site assessment report concerning any Real Property
owned or operated by the Borrower or any of its Subsidiaries, prepared by an
environmental consulting firm reasonably approved by the Agent, indicating the
presence or absence of Hazardous Materials and the potential cost of any removal
or remedial action in connection with such Hazardous Materials on such Real
Property. If the Borrower fails to provide the same within ninety days after
such request was made, the Agent may order the same, the cost of which shall be
borne by the Borrower, and the Borrower shall grant and hereby grants to the
Agent and the Banks and their agents access to such Real Property and
specifically grants the Agent and the Banks an irrevocable non-exclusive
license, subject to the rights of tenants, to undertake such an
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assessment at any reasonable time upon reasonable notice to the Borrower, all
at the sole and reasonable expense of the Borrower.
7.07 ERISA. As soon as possible and, in any event, within ten (10) days
after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate knows
or has reason to know of the occurrence of any of the following, the Borrower
will deliver to each of the Banks a certificate of the Chief Financial Officer
of the Borrower setting forth the full details as to such occurrence and the
action, if any, that the Borrower, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by the Borrower, the Subsidiary, the ERISA
Affiliate, the PBGC, a Plan participant or the Plan administrator with respect
thereto: that a Reportable Event has occurred; that an accumulated funding
deficiency, within the meaning of Section 412 of the Code or Section 302 of
ERISA, has been incurred or an application may be or has been made for a waiver
or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code or Section 303 or 304 of ERISA with respect to a Plan; that any
contribution required to be made with respect to a Plan or Foreign Pension Plan
has not been timely made; that a Plan has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability; that proceedings may be or have been
instituted to terminate or appoint a trustee to administer a Plan which is
subject to Title IV of ERISA; that a proceeding has been instituted pursuant to
Section 515 of ERISA to collect a delinquent contribution to a Plan; that the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate will or may
incur any liability (including any indirect, contingent, or secondary liability)
to or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan
under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or
502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B
of the Code; or that the Borrower or any Subsidiary of the Borrower may incur
any material liability pursuant to any employee welfare benefit plan (as defined
in Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any Plan
[or any Foreign Pension Plan]. The Borrower will deliver to each of the Banks a
complete copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service. In addition to any certificates or notices delivered
to the Banks pursuant to the first sentence hereof, copies of annual reports and
any material notices received by the Borrower, any Subsidiary of the Borrower or
any ERISA Affiliate with respect to any Plan or Foreign Pension Plan shall be
delivered to the Banks no later than ten (10) days after the date such report
has been filed with the Internal Revenue Service or such notice has been
received by the Borrower, the Subsidiary or the ERISA Affiliate, as applicable.
7.08 End of Fiscal Years; Fiscal Quarters. The Borrower will cause (i)
each of its, and each of its Subsidiaries', fiscal years to end on December 31,
and (ii) each of its, and each
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of its Subsidiaries', fiscal quarters to end on March 31, June 30, September 30
and December 31, provided that with respect to any Subsidiary acquired after the
Restatement Effective Date in accordance with (and to the extent permitted by)
this Agreement which has a different fiscal year end or fiscal quarter end from
those set forth above, the Borrower shall change such Subsidiary's fiscal year
end and/or fiscal quarter end to the dates set forth above within 60 days after
the date of such acquisition..
7.09 Performance of Obligations. The Borrower will, and will cause each
of its Subsidiaries to, perform all of its obligations under the terms of each
mortgage, indenture, security agreement, loan agreement or credit agreement and
each other material agreement, contract or instrument by which it is bound,
except such non-performances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
7.10 Payment of Taxes. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for sums that have become
due and payable which, if unpaid, might become a Lien not otherwise permitted
under Section 8.01(i); provided, that neither the Borrower nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with generally
accepted accounting principles.
7.11 Additional Security; Further Assurances. (a) The Borrower will,
and will cause each of the Subsidiary Guarantors to, grant to the Collateral
Agent security interests and mortgages in such assets and properties of the
Borrower and such Subsidiary Guarantors as are not covered by the original
Security Documents, and as may be requested from time to time by the Agent or
the Required Banks (collectively, the "Additional Security Documents"). All such
security interests and mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the Agent and shall constitute
valid and enforceable perfected security interests and mortgages superior to and
prior to the rights of all third Persons and subject to no other Liens except
for Permitted Liens. The Additional Security Documents or instruments related
thereto shall have been duly recorded or filed in such manner and in such places
as are required by law to establish, perfect, preserve and protect the Liens in
favor of the Collateral Agent required to be granted pursuant to the Additional
Security Documents and all taxes, fees and other charges payable in connection
therewith shall have been paid in full.
(b) The Borrower will, and will cause each of the Subsidiary Guarantors
to, at the expense of the Borrower, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
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further steps relating to the collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, the
Borrower will cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance and other related documents as may be reasonably
requested by the Agent to assure itself that this Section 7.11 has been complied
with.
(c) The Borrower agrees that each action required above by
this Section 7.11 shall be completed as soon as possible, but in no event later
than 90 days after such action is either requested to be taken by the Agent or
the Required Banks or required to be taken by the Borrower and the Subsidiary
Guarantors pursuant to the terms of this Section 7.11; provided that in no event
will the Borrower be required to take any action, other than using its best
efforts, to obtain consents from third parties with respect to its compliance
with this Section 7.11.
Section 8. Negative Covenants. The Borrower hereby covenants and agrees
that on and after the Restatement Effective Date and until the Total Commitment
and all Letters of Credit have terminated and the Loans, Notes and Unpaid
Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
8.01 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real or personal, tangible or intangible) of
the Borrower or any of its Subsidiaries, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to the Borrower or any of
its Subsidiaries), or assign any right to receive income or permit the filing of
any financing statement under the UCC or any other similar notice of Lien under
any similar recording or notice statute; provided that the provisions of this
Section 8.01 shall not prevent the creation, incurrence, assumption or existence
of the following (Liens described below are herein referred to as "Permitted
Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes, assessments or governmental charges
or levies being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of the Borrower's or
such Subsidiary's property or assets or materially impair the use thereof in
the operation of the business of the Borrower or such Subsidiary or (y)
which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien;
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(iii) Liens in existence on the Restatement Effective Date which are
listed, and the property subject thereto described, in Schedule VIII, but
only to the respective date, if any, set forth in such Schedule VIII for the
removal, replacement and termination of any such Liens, plus renewals,
replacements and extensions of such Liens to the extent set forth on
Schedule VIII, provided that (x) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens does not increase from that
amount outstanding at the time of any such renewal, replacement or extension
and (y) any such renewal, replacement or extension does not encumber any
additional assets or properties of the Borrower or any of its Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of the Borrower or any of its
Subsidiaries;
(vii) Liens upon assets of the Borrower or any of its Subsidiaries
subject to Capitalized Lease Obligations to the extent such Capitalized
Lease Obligations are permitted by Section 8.04(iv), provided that (x) such
Liens only serve to secure the payment of Indebtedness arising under such
Capitalized Lease Obligation and (y) the Lien encumbering the asset giving
rise to the Capitalized Lease Obligation does not encumber any other asset
of the Borrower or any Subsidiary of the Borrower;
(viii) Liens placed upon equipment or machinery used in the ordinary
course of business of the Borrower or any of its Subsidiaries at the time of
the acquisition thereof by the Borrower or any such Subsidiary or within 90
days thereafter to secure Indebtedness incurred to pay all or a portion of
the purchase price thereof or to secure Indebtedness incurred solely for the
purpose of financing the acquisition of any such equipment or machinery or
extensions, renewals or replacements of any of the foregoing for the same or
a lesser amount, provided that (x) the aggregate outstanding principal
amount of all Indebtedness secured by Liens permitted by this clause (viii)
shall not at any time exceed $250,000 and (y) in all events, the Lien
encumbering the equipment or machinery so acquired does not encumber any
other asset of the Borrower or such Subsidiary;
(ix) Liens placed upon video lottery terminals used at the Charles Town
Race Track (the "Charles Town Video Lottery Terminals") at the time of the
acquisition of such video lottery terminals by the Charles Town Joint
Venture or within 90 days thereafter to secure Indebtedness incurred to pay
all or at least 85% of the purchase price thereof or to secure Indebtedness
incurred solely for the purpose of financing the acquisition of any such
video lottery terminals or extensions, renewals or replacements of any such
video lottery terminals for the same or a lesser amount, provided that (v)
the Liens contemplated by this clause (ix) shall only be permitted after the
termination of the
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GTECH Contract, (w) the aggregate outstanding principal amount of all
Indebtedness secured by Liens permitted by this clause (ix) shall not at any
time exceed $11,000,000, (x) the only recourse in respect of such
Indebtedness shall be against the Charles Town Video Lottery Terminals so
financed and not against the Charles Town Joint Venture, the Borrower or any
other Subsidiary of the Borrower, (y) in all events, the Lien encumbering
the Charles Town Video Lottery Terminals so acquired does not encumber any
other asset of the Charles Town Joint Venture or any assets of the Borrower
or any other Subsidiary of the Borrower and (z) prior to the entering into
of any such financing arrangements, the documentation with respect thereto
shall have been delivered to the Banks and shall be in form and substance
reasonably satisfactory to the Required Banks;
(x) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances, and minor title deficiencies, in each case
not securing Indebtedness and not materially interfering with the conduct of
the business of the Borrower or any of its Subsidiaries;
(xi) Liens arising from precautionary UCC financing statement filings
regarding operating leases permitted under Section 8.07;
(xii) Liens arising out of the existence of judgments or awards in
respect of which the Borrower or any of its Subsidiaries shall in good faith
be prosecuting an appeal or proceedings for review in respect of which there
shall have been secured a subsisting stay of execution pending such appeal
or proceedings, provided that the aggregate amount of any cash and the fair
market value of any property subject to such Liens do not exceed $100,000 at
any time outstanding;
(xiii) statutory and common law landlords' liens under leases to which
the Borrower or any of its Subsidiaries is a party; and
(xiv) Liens (other than Liens imposed under ERISA) incurred in the
ordinary course of business in connection with workers compensation claims,
unemployment insurance and social security benefits and Liens securing the
performance of bids, tenders, leases and contracts in the ordinary course of
business, statutory obligations, surety bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed money),
provided that the aggregate outstanding amount of obligations secured by
Liens permitted by this clause (xiv) (and the value of all cash and property
encumbered by Liens permitted pursuant to this clause (xiv)) shall not at
any time exceed $250,000.
In connection with the granting of Liens of the type described in clauses (vii),
(viii) and (ix) of this Section 8.01 by the Borrower or any of its Subsidiaries,
the Agent and the Collateral Agent shall be authorized to take any actions
deemed appropriate by it in connection therewith (including, without limitation,
by executing appropriate lien releases or lien subordination
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agreements in favor of the holder or holders of such Liens, in each case solely
with respect to the item or items of equipment or other assets subject to
such Liens.
8.02 Consolidation, Merger, Purchase or Sale of Assets, etc. The
Borrower will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of all or any part of
its property or assets, or enter into any sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of business) of any
Person (or agree to do any of the foregoing at any future time), except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries shall be
permitted to the extent not in violation of Section 8.08;
(ii) each of the Borrower and its Subsidiaries may sell assets (other
than the capital stock of any Subsidiary Guarantor, the equity interest in
the Charles Town Joint Venture, any Mortgaged Property or the Charles Town
Race Track), so long as (x) no Default or Event of Default then exists or
would result therefrom, (y) each such sale is in an arm's-length transaction
and the Borrower or the respective Subsidiary receives at least fair market
value (as determined in good faith by the Borrower or such Subsidiary, as
the case may be), (iii) at least 85% of the total consideration received by
the Borrower or such Subsidiary is cash and is paid at the time of the
closing of such sale, (iv) the Total Commitment is reduced in an amount
equal to the Net Sale Proceeds therefrom as (and to the extent) required by
Section 3.03(d) and (v) the aggregate amount of the proceeds received from
all assets sold pursuant to this clause (ii) shall not exceed $3,000,000 in
any fiscal year of the Borrower;
(iii) Investments may be made to the extent permitted by Section 8.05;
(iv) each of the Borrower and its Subsidiaries may lease (as lessee)
real or personal property (so long as any such lease does not create a
Capitalized Lease Obligation except to the extent permitted by Section
8.04(iv));
(v) each of the Borrower and its Subsidiaries may make sales of
inventory in the ordinary course of business;
(vi) each of the Borrower and its Subsidiaries may sell obsolete or
worn-out equipment or materials in the ordinary course of business;
(vii) each of the Borrower and its Subsidiaries may grant leases or
subleases to other Persons not materially interfering with the conduct of
the business of the Borrower or any of its Subsidiaries;
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(viii) each of the Borrower and its Subsidiaries may, in the ordinary
course of business, license, as licensor or licensee, patents, trademarks,
copyrights and know-how to and/or from third Persons and to and/or from one
another so long as any such license by the Borrower or any other Credit
Party in its capacity as licensor is permitted to be assigned pursuant to
the Security Agreement (to the extent that the security interest in such
patents, trademarks, copyrights and know-how is granted thereunder) and does
not otherwise prohibit the granting of a Lien by the Borrower or any other
Credit Party pursuant to the Security Agreement in the intellectual property
covered by such license; and
(ix) so long as no Default or Event of Default then exists, any
Wholly-Owned Subsidiary of the Borrower may merge with and into any other
Wholly-Owned Subsidiary of the Borrower, so long as in the case of any
merger involving a Subsidiary Guarantor, the Subsidiary Guarantor shall be
the surviving corporation of such merger.
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Section 8.02 (other than to the Borrower or a Subsidiary thereof), such
Collateral shall be sold free and clear of the Liens created by the Security
Documents, and the Agent and the Collateral Agent shall be authorized to take
any actions deemed appropriate in order to effect the foregoing.
8.03 Dividends. The Borrower will not, and will not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to the
Borrower or any of its Subsidiaries, except that:
(i) any Subsidiary of the Borrower may pay cash Dividends to the
Borrower or any Wholly-Owned Subsidiary of the Borrower;
(ii) so long as no Default or Event of Default then exists or would
result therefrom, any non-Wholly-Owned Subsidiary of the Borrower may pay
cash Dividends to its shareholders or partners generally so long as the
Borrower or its respective Subsidiary which owns the equity interest or
interests in the Subsidiary paying such Dividends receives at least its
proportionate share thereof (based upon its relative holdings of equity
interests in the Subsidiary paying such Dividends and taking into account
the relative preferences, if any, of the various classes of equity interests
in such Subsidiary, including the preferences in favor of the Borrower in
respect of Dividends paid by the Charles Town Joint Venture); and
(iii) so long as there shall exist no Default or Event of Default (both
before and after giving effect to the payment thereof), the Borrower may
repurchase outstanding shares of its common stock (or options to purchase
such common stock) following the death, disability or termination of
employment of employees of the Borrower or any of its Subsidiaries, provided
that the aggregate amount of Dividends paid by the Borrower pursuant to this
clause (iii) shall not exceed $50,000 in any fiscal year of the Borrower.
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8.04 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Existing Indebtedness outstanding on the Restatement Effective
Date and listed on Schedule VI, without giving effect to any subsequent
extension, renewal or refinancing thereof except to the extent set forth on
Schedule VI, provided that the aggregate principal amount of the
Indebtedness to be extended, renewed or refinanced does not increase from
that amount outstanding at the time of any such extension, renewal or
refinancing;
(iii) Indebtedness under Interest Rate Protection Agreements entered
into with respect to other Indebtedness permitted under this Section 8.04 so
long as all of the terms and conditions of such Interest Rate Protection
Agreements are satisfactory to the Agent;
(iv) Indebtedness of the Borrower and its Subsidiaries evidenced by
Capitalized Lease Obligations to the extent permitted pursuant to Section
8.08, provided that in no event shall the aggregate principal amount of
Capitalized Lease Obligations permitted by this clause (iv) exceed $100,000
at any time outstanding;
(v) Indebtedness subject to Liens permitted under Sections 8.01(viii)
and (ix);
(vi) intercompany Indebtedness among the Borrower and its Subsidiaries
to the extent permitted by Section 8.05(vii) and (ix);
(vii) Indebtedness of the Borrower and the Subsidiary Guarantors under
the Senior Note Documents in an aggregate principal amount not to exceed
$80,000,000 (as reduced by any repayments of principal thereof); and
(viii) additional unsecured Indebtedness of the Borrower and its
Subsidiaries not to exceed $100,000 in aggregate principal amount at any
time outstanding.
Notwithstanding anything to the contrary contained in this Section 8.04
or in Section 8.01, until such time as the Charles Town Joint Venture is a
Wholly-Owned Subsidiary of the Borrower, the only Indebtedness that the Charles
Town Joint Venture shall be permitted to incur is under clause (i) above, clause
(ii) above (but no refinancings thereof), clause (iv) above, clause (v) above
(but only in respect of Liens permitted under Section 8.01(ix)) and clause (vi)
above.
8.05 Advances, Investments and Loans. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
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otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents (each of the foregoing an "Investment" and,
collectively, "Investments"), except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms of the Borrower or such Subsidiary;
(ii) the Borrower and its Subsidiaries may acquire and hold cash and
Cash Equivalents;
(iii) the Borrower and its Subsidiaries may hold the Investments held
by them on the Restatement Effective Date and described on Schedule IX
(excluding any Investments previously made in the Charles Town Joint
Venture), provided that any additional Investments made with respect thereto
shall be permitted only if independently justified under the other
provisions of this Section 8.05;
(iv) the Borrower and its Subsidiaries may receive non-cash
consideration in connection with any asset sale permitted by Section
8.02(ii) but only to the extent set forth in Section 8.02(ii);
(v) the Borrower and its Subsidiaries may make loans and advances in
the ordinary course of business to their respective employees so long as the
aggregate principal amount thereof at any time outstanding (determined
without regard to any write-downs or write-offs of such loans and advances)
shall not exceed $100,000;
(vi) the Borrower may enter into Interest Protection Agreements to the
extent permitted by Section 8.04(iii);
(vii) the Borrower and the Subsidiary Guarantors may make intercompany
loans and advances between or among one another (collectively, "Intercompany
Loans"), so long as each Intercompany Loan shall be evidenced by an
Intercompany Note that is pledged to the Collateral Agent pursuant to the
Pledge Agreement;
(viii) the Borrower and its Subsidiaries may make cash capital
contributions to Subsidiaries of the Borrower which are Subsidiary
Guarantors; and
(ix) the Borrower and its Subsidiaries may make cash equity
contributions and/or Intercompany Loans to the Charles Town Joint Venture in
an aggregate amount not to exceed $47,100,000 (which amount includes any
such cash equity contributions and/or Intercompany Loans made prior to
Restatement Effective Date, including $18,100,000 of Intercompany Loans
originally made to finance the Charles Town acquisition and to pay related
fees and expenses) to fund the Capital Expenditures
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permitted by Section 8.08(d) so long as, in the case of any such
Intercompany Loans, same are evidenced by an Intercompany Note that is
pledged to the Collateral Agent pursuant to the Pledge Agreement.
8.06 Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of the Borrower or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would reasonably be obtained by
the Borrower or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that the following in
any event shall be permitted:
(i) Dividends may be paid to the extent provided in Section 8.03;
(ii) loans may be made and other transactions may be entered into by
the Borrower and its Subsidiaries to the extent permitted by Sections 8.02,
8.04 and 8.05;
(iii) customary fees may be paid to non-officer directors of the
Borrower and its Subsidiaries; and
(iv) Subsidiaries of the Borrower may pay management fees to the
Borrower.
8.07 Leases. The Borrower will not permit the aggregate payments
(including, without limitation, any property taxes paid as additional rent or
lease payments) made by the Borrower and its Subsidiaries on a consolidated
basis under any agreement to rent or lease any real or personal property (or any
extension or renewal thereof) (excluding Capitalized Lease Obligations) to
exceed for any fiscal year set forth below the amount set forth opposite such
fiscal year below:
Fiscal Year Ending Amount
------------------ ----------
December 31, 1997 $1,300,000
December 31, 1998 $1,400,000
December 31, 1999 $1,400,000
December 31, 2000 $1,400,000
December 31, 2001 $1,400,000
December 31, 2002 $1,400,000
8.08 Capital Expenditures. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except that
(x) during the period from the Restatement Effective Date through and including
December 31, 1998 the Borrower and its Subsidiaries may make Capital
Expenditures in an aggregate amount not to exceed $10,300,000 (it being
understood and agreed that no part of such $10,300,000 may be used to make
Capital Expenditures to refurbish the Charles Town Race Track or purchase and/or
develop the Tennessee Downs race track or related facilities although up to
$1,000,000 of such $10,300,000 may be used to refurbish the Charles Town
Racetrack) and (y) during any fiscal year of the
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Borrower set forth below (taken as one accounting period), the Borrower and its
Subsidiaries may make Capital Expenditures so long as the aggregate amount of
all such Capital Expenditures does not exceed in any fiscal year of the Borrower
set forth below the amount set forth opposite such fiscal year below:
Fiscal Year Ending Amount
------------------ ----------
December 31, 1999 $2,000,000
December 31, 2000 $2,000,000
December 31, 2001 $2,000,000
December 31, 2002 $2,000,000
(b) In addition to the foregoing, the Borrower and its Subsidiaries may
make Capital Expenditures with the amount of Net Insurance Proceeds received by
the Borrower or any of its Subsidiaries from any Recovery Event so long as such
Net Insurance Proceeds are used to replace or restore any properties or assets
in respect of which such Net Insurance Proceeds were paid within 270 days
following the date of receipt of such Net Insurance Proceeds from such Recovery
Event to the extent such Net Insurance Proceeds do not give rise to a reduction
in the Total Commitment pursuant to Section 3.03(e).
(c) In addition to the foregoing, the Charles Town Joint Venture may
make up to $29,000,000 of Capital Expenditures (including, for this purpose, any
such Capital Expenditures made prior to the Restatement Effective Date) to
refurbish the Charles Town Race Track.
(d) In addition to the foregoing, after the termination of the GTECH
Agreement and to the extent that the Charles Town Video Lottery Terminals are
not leased by the Charles Town Joint Venture, the Charles Town Joint Venture may
make Capital Expenditures to purchase the Charles Town Video Lottery Terminals
so long as at least 85% of the purchase price for such Charles Town Video
Lottery Terminals are financed under Section 8.01(ix).
(e) From and after such time as Tennessee Downs obtains all necessary
licenses, permits and approvals to conduct harness racing in the State of
Tennessee, Tennessee Downs may make up to $15,500,000 of Capital Expenditures to
purchase and/or develop a harness race track and related facilities in the State
of Tennessee.
8.09 Minimum Consolidated Net Worth. The Borrower will not permit
Consolidated Net Worth at any time to be less than the Minimum Consolidated Net
Worth at such time.
8.10 Consolidated Cash Interest Coverage Ratio. The Borrower will not
permit the Consolidated Cash Interest Coverage Ratio of the Borrower for any
Test Period ending on the last day of a fiscal quarter set forth below to be
less than the ratio set forth opposite such fiscal quarter below:
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Fiscal Quarter Ending Ratio
--------------------- ---------
December 31, 1997 4.00:1.00
March 31, 1998 3.00:1.00
June 30, 1998 2.50:1.00
September 30, 1998 2.50:1.00
December 31, 1998 2.50:1.00
March 31, 1999 2.50:1.00
June 30, 1999 2.50:1.00
September 30, 1999 2.50:1.00
December 31, 1999
and the last day of each
fiscal quarter thereafter 3.00:1.00
8.11 Maximum Leverage Ratio. The Borrower will not permit the Leverage
Ratio of the Borrower at any time during a period set forth below to be greater
than the ratio set forth opposite such period below:
Period Ratio
------ ---------
Restatement Effective Date through and including
December 30, 1998 4.80:1.00
December 31, 1998 through and including
December 30, 1999 3.75:1.00
December 31, 1999 and thereafter 3.00:1.00
8.12 Limitation on Modifications of Certificate of Incorporation,
By-Laws and Certain Other Agreements; etc. The Borrower will not, and will not
permit any of its Subsidiaries to, (i) amend, modify or change its certificate
of incorporation (including, without limitation, by the filing or modification
of any certificate of designation) or by-laws (or the equivalent organizational
documents) or any agreement entered into by it with respect to its capital stock
(including any Shareholders' Agreement), or enter into any new agreement with
respect to its capital stock, other than any such amendment, modification,
change or other action contemplated by this clause (i) which could not
reasonably be expected to be adverse to the interests of the Banks in any
material respect, (ii) amend, modify or change the Charles Town Joint Venture
Agreement, other than any such amendment, modification or change which could not
reasonably be expected to be adverse to the interests of the Banks in any
material respect (it being understood and agreed, however, that in any event the
Borrower or a Wholly-Owned Subsidiary thereof shall at all times be the managing
member of the Charles Town Joint Venture and shall own at least 89% of the
equity interest therein), (iii) amend, modify or change the GTECH Contract,
other than any such amendment, modification or change which could not reasonably
be expected to be adverse to the interests of the Banks in any material respect
or (iv) amend, modify or change any provision of any Tax Sharing Agreement or
enter into any new tax sharing agreement, tax allocation agreement or similar
agreements, other than any such
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amendment, modification, change or other action contemplated by this clause
(iii) which could not reasonably be expected to adversely effect the interests
of the Banks in any material respect.
8.13 Limitation on Certain Restrictions on Subsidiaries. The Borrower
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or any Subsidiary
of the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (c) transfer any of its properties or assets to the Borrower or
any Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) applicable law, (ii) this Agreement and the
other Credit Documents, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Borrower or any
Subsidiary of the Borrower, (iv) customary provisions restricting assignment of
any licensing agreement entered into by the Borrower or any Subsidiary of the
Borrower in the ordinary course of business and (v) restrictions on the transfer
of any asset subject to a Lien permitted by this Agreement.
8.14 Limitation on Issuance of Capital Stock. (a) The Borrower will
not, and will not permit any of its Subsidiaries to, issue (i) any preferred
stock or (ii) any redeemable common stock (other than common stock that is
redeemable at the sole option of the Borrower).
(b) The Borrower will not permit any of its Subsidiaries to
issue any capital stock (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into, capital stock,
except (i) for transfers and replacements of then outstanding shares of capital
stock, (ii) for stock splits, stock dividends and issuances which do not
decrease the percentage ownership of the Borrower or any of its Subsidiaries in
any class of the capital stock of such Subsidiary, (iii) to qualify directors to
the extent required by applicable law or (iv) for issuances by newly created or
acquired Subsidiaries in accordance with the terms of this Agreement.
8.15 Business. The Borrower will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than the
businesses in which the Borrower and its Subsidiaries are engaged on the
Restatement Effective Date and reasonable extensions thereof, it being
understood and agreed that, except as provided below, in no event shall the
Borrower or any of its Subsidiaries engage in any business or enter into any
agreement which requires the Borrower or any of its Subsidiaries to make any
payments under Section 4 of the Plains Company Acquisition Agreement; provided,
however, the Borrower and its Subsidiaries may operate slot machines at the Penn
National Race Track, the Pocono Downs Race Track and at any Non-Primary Location
operated by the Borrower and its Subsidiaries and may make the required payments
pursuant to Section 4 of the Plains Company Acquisition Agreement in connection
therewith.
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8.16 Limitation on Creation of Subsidiaries. Notwithstanding anything
to the contrary contained in this Agreement, the Borrower will not, and will not
permit any of its Subsidiaries to, establish, create or acquire after the
Restatement Effective Date any Subsidiary, provided that the Borrower and its
Wholly-Owned Subsidiaries shall be permitted to establish or create Wholly-Owned
Subsidiaries so long as (i) the capital stock of such new Wholly-Owned
Subsidiary is pledged pursuant to, and to the extent required by, the Pledge
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent for the
benefit of the Secured Creditors, (ii) the partnership interests or limited
liability company interests, as the case may be, of such new Wholly-Owned
Subsidiary (to the extent that same is a partnership or a limited liability
company, as the case may be) are pledged and assigned pursuant to, and to the
extent required by, the Pledge Agreement, (iii) such new Wholly-Owned Subsidiary
executes a counterpart of the Subsidiaries Guaranty, the Pledge Agreement and
the Security Agreement, and (iv) such new Wholly-Owned Subsidiary, to the extent
requested by the Agent or the Required Banks, takes all actions required
pursuant to Section 7.11. In addition, (x) each new Wholly-Owned Subsidiary
shall execute and deliver, or cause to be executed and delivered, all other
relevant documentation of the type described in Section 5 as such new
Wholly-Owned Subsidiary would have had to deliver if such new Wholly-Owned
Subsidiary were a Credit Party on the Restatement Effective Date and (y) at such
time as the Charles Town Joint Venture becomes a Wholly-Owned Subsidiary of the
Borrower, or at such time as the Charles Town Joint Venture Agreement permits
the Charles Town Joint Venture to become a Subsidiary Guarantor hereunder (or
Bryant Development otherwise consents thereto), the Borrower shall cause the
Charles Town Joint Venture (A) to execute a counterpart of the Subsidiaries
Guaranty, the Pledge Agreement and the Security Agreement, (B) to the extent
requested by the Agent or the Required Banks, to take all actions required
pursuant to Section 7.11 and (C) to deliver all of the relevant documentation
described in preceding clause (x) of this sentence.
Section 9. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when due
of any principal of any Loan or any Note or (ii) default, and such default shall
continue unremedied for three or more Business Days, in the payment when due of
any interest on any Loan or Note, any Unpaid Drawing or any Fees or any other
amounts owing hereunder or thereunder; or
9.02 Representations, etc. Any representation, warranty or statement
made (or deemed made) by any Credit Party herein or in any other Credit Document
or in any certificate delivered to the Agent or any Bank pursuant hereto or
thereto shall prove to be untrue in any material respect on the date as of which
made or deemed made; or
9.03 Covenants. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 7.01(g)(i) or 7.08 or Section 8 or (ii) default in the due performance
or observance by it of any other term, covenant or agreement contained in this
Agreement or any other Credit Document (other than those set forth
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in Sections 9.01 and 9.02) and such default shall continue unremedied for a
period of 30 days after written notice thereof to the defaulting party by the
Agent or the Required Banks; or
9.04 Default Under Other Agreements. (i) The Borrower or any of its
Subsidiaries shall (x) default in any payment of any Indebtedness (other than
the Notes) beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created or (y) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Notes) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause (determined without regard
to whether any notice is required), any such Indebtedness to become due prior to
its stated maturity, or (ii) any Indebtedness (other than the Notes) of the
Borrower or any of its Subsidiaries shall be declared to be (or shall become)
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, provided that it
shall not be a Default or an Event of Default under this Section 9.04 unless the
aggregate principal amount of all Indebtedness as described in preceding clauses
(i) and (ii) is at least $500,000; or
9.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Borrower or any of its Subsidiaries, and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case; or
a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the Borrower or any of
its Subsidiaries, or the Borrower or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Subsidiaries, or there is commenced against the Borrower or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days, or the Borrower or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Borrower or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or the
Borrower or any of its Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by the Borrower or any of its
Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, any Plan
which is subject to Title IV of ERISA shall have had or is likely to have a
trustee appointed to administer such Plan, any Plan which is subject to Title IV
of ERISA is,
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shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made with respect to a Plan or a
Foreign Pension Plan has not been timely made, the Borrower or any Subsidiary of
the Borrower or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971
or 4975 of the Code or on account of a group health plan (as defined in Section
607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code, or the Borrower or any Subsidiary of the Borrower has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) that provide benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or Plans [or Foreign Pension Plans]; (b) there shall result from any such
event or events the imposition of a lien, the granting of a security interest,
or a liability or a material risk of incurring a liability; and (c) such lien,
security interest or liability, individually, and/or in the aggregate, in the
opinion of the Required Banks, has had, or could reasonably be expected to have,
a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole; or
9.07 Security Documents. At any time after the execution and delivery
thereof, any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral, in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons (except Permitted
Liens), and subject to no other Liens (except Permitted Liens); or
9.08 Subsidiaries Guaranty. At any time after the execution and
delivery thereof, the Subsidiaries Guaranty or any provision thereof shall cease
to be in full force or effect as to any Subsidiary Guarantor, or any Subsidiary
Guarantor or any Person acting by or on behalf of such Subsidiary Guarantor
shall deny or disaffirm such Subsidiary Guarantor's obligations under the
Subsidiaries Guaranty or any Subsidiary Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Subsidiaries Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be entered
against the Borrower or any Subsidiary of the Borrower involving in the
aggregate for the Borrower and its Subsidiaries a liability (not paid or fully
covered by a reputable and solvent insurance company) and such judgments and
decrees either shall be final and non-appealable or shall not be vacated,
discharged or stayed or bonded pending appeal for any period of 30 consecutive
days, and the aggregate amount of all such judgments exceeds $500,000; or
9.10 Change of Control. A Change of Control shall occur; or
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9.11 Licenses. The termination, suspension or revocation of any
License, or the existence of any circumstance, event, matter or condition which
under any Act would permit any Commission to terminate, revoke or suspend any
such License, or any Commission shall require the Borrower or any of its
Subsidiaries to divest any License or its equity interest in any Subsidiary
owning or holding any License; or
9.12 Applications. If in any year the Borrower does not, or does not
cause one of its Subsidiaries to, submit all appropriate applications to the
Pennsylvania Horse Racing Commission and the Pennsylvania Harness Racing
Commission to conduct live horse racing at the Penn National Race Track and the
Pocono Downs Race Track, or to conduct full card simulcasting at any such Track,
in each case in the immediately following calendar year; or if in any year the
Borrower does not, or does not cause one of its Subsidiaries to, submit all
appropriate applications to the West Virginia Racing Commission to conduct live
horse racing at the Charles Town Race Track in the immediately following
calendar year; or if in any year the Borrower does not, or does not cause one of
its Subsidiaries to, submit all appropriate applications to the West Virginia
Lottery Commission for a license to operate at least 1000 video lottery
terminals in the immediately following fiscal year of the license (or such
higher number of video lottery terminals as the Borrower or such Subsidiary may
have previously been granted a license to operate);
9.13 Legality. At any time the conduct of live thoroughbred racing,
live harness racing or full card simulcasting in Pennsylvania cannot legally be
conducted at the Pocono Downs Race Track or the Penn National Race Track or
off-track wagering cannot legally be conducted at the Non-Primary Locations
operated by the holders of the Penn National Licenses or the Plains Company
Licenses, in each case under applicable Pennsylvania or federal law; or the
conduct of live horse racing, televised racing or operation of video lottery
terminals in West Virginia cannot legally be conducted at the Charles Town Race
Track under applicable West Virginia or federal law;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent, upon the written request of the Required
Banks, shall by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of the Agent, any Bank or the holder of
any Note to enforce its claims against any Credit Party (provided, that, if an
Event of Default specified in Section 9.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Agent as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Total Commitment
terminated, whereupon the Commitment of each Bank shall forthwith terminate
immediately and any Commitment Commission shall forthwith become due and payable
without any other notice of any kind; (ii) declare the principal of and any
accrued interest in respect of all Loans and the Notes and all Obligations owing
hereunder and thereunder to be, whereupon the same shall become, forthwith due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Credit Party; (iii) terminate any Letter
of Credit which may be terminated in accordance with its terms; (iv) direct the
Borrower to pay (and the Borrower agrees that upon receipt of such notice,
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or upon the occurrence of an Event of Default specified in Section 9.05 with
respect to the Borrower, it will pay) to the Collateral Agent at the Payment
Office such additional amount of cash or Cash Equivalents, to be held as
security by the Collateral Agent, as is equal to the aggregate Stated Amount of
all Letters of Credit issued for the account of the Borrower and then
outstanding; (v) enforce, as Collateral Agent, all of the Liens and security
interests created pursuant to the Security Documents and (vi) apply any cash
collateral held by the Borrower pursuant to Section 4.02(a) to the repayment of
the Obligations.
Section 10. Definitions and Accounting Terms.
10.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Act" shall mean (i) the Pennsylvania Horse Race Industry Reform Act,
as amended, (ii) the West Virginia Racetrack Video Lottery Act, as amended, or
(iii) the West Virginia Code ss.19-23-1 et. seq., as amended, as applicable and
including, in each case, any successor thereto.
"Additional Security Documents" shall have the meaning provided in
Section 7.11.
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing (x)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by the Agent on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in New
York of recognized standing or, if such quotations are unavailable, then on the
basis of other sources reasonably selected by the Agent, by (y) a percentage
equal to 100% minus the stated maximum rate of all reserve requirements as
specified in Regulation D applicable on such day to a three-month certificate of
deposit of a member bank of the Federal Reserve System in excess of $100,000
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves), plus (2) the then daily net annual assessment rate as
estimated by the Agent for determining the current annual assessment payable by
the Agent to the Federal Deposit Insurance Corporation for insuring three-month
certificates of deposit.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power (i) to vote
5% or more of the securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause the direction of the
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management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" shall mean Bankers Trust Company, in its capacity as Agent for
the Banks hereunder, and shall include any successor to the Agent appointed
pursuant to Section 11.09.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
hereof), extended, renewed, refinanced or replaced from time to time.
"Applicable Commitment Commission Percentage" shall mean, at any time,
a percentage per annum equal to 1/2 of 1%, provided that so long as no Default
or Event of Default shall exist, from and after any Start Date to and including
the corresponding End Date, the Applicable Commitment Commission Percentage
shall be 3/8 of 1% if, but only if, as of the Test Date for such Start Date the
Leverage Ratio for the Test Period ended on such Test Date shall be less than
2.00:1.00.
"Applicable Margin" shall mean a percentage per annum equal to (i) in
the case of Base Rate Loans, 2% less the then applicable Interest Reduction
Discount, if any, and (ii) in the case of Eurodollar Loans, 3% less the then
applicable Interest Reduction Discount, if any.
"Asset Sale" shall mean any sale, transfer or other disposition by the
Borrower or any of its Subsidiaries to any Person (including by-way-of
redemption by such Person) other than to the Borrower or a Wholly-Owned
Subsidiary of the Borrower of any asset (including, without limitation, any
capital stock or other securities of, or equity interests in, another Person)
other than sales of assets pursuant to Sections 8.02 (v), (vi), (vii) and
(viii).
"Assignment and Assumption Agreement" shall mean an Assignment and
Assumption Agreement substantially in the form of Exhibit J (appropriately
completed).
"Assumption and Acknowledgment Agreement" shall have the meaning
provided in Section 5.11.
"Bank" shall mean each financial institution listed on Schedule I, as
well as any Person which becomes a "Bank" hereunder pursuant to Section 1.13 or
12.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) or the failure of a Bank to make available its portion of any
Borrowing or to fund its portion of any unreimbursed payment under Section
2.04(c) or (ii) a Bank having notified in writing the Borrower and/or the Agent
that such Bank does not intend to comply with its obligations under Section 1.01
or 2, in the case of either clause (i) or (ii) as a result of any takeover or
control (including, without limitation, as a result of the occurrence of any
event of the type described in Section 9.05 with respect to such Bank) of such
Bank by any regulatory authority or agency.
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"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" shall mean, at any time, the highest of (i) 1/2 of 1% in
excess of the Adjusted Certificate of Deposit Rate, (ii) the Prime Lending Rate
and (iii) 1/2 of 1% in excess of the Federal Funds Rate.
"Base Rate Loan" shall mean each Loan designated or deemed designated
as such by the Borrower at the time of the incurrence thereof or conversion
thereto.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan on a
given date (or resulting from a conversion or conversions on such date) having
in the case of Eurodollar Loans the same Interest Period, provided that Base
Rate Loans incurred pursuant to Section 1.10(b) shall be considered part of the
related Borrowing of Eurodollar Loans.
"Bryant Development" shall mean Bryant Development Company, a Virginia
corporation which holds an 11% equity interest in the Charles Town Joint Venture
as of the Restatement Effective Date.
"BTCo" shall mean Bankers Trust Company, in its individual
capacity, and any successor corporation thereto by merger, consolidation or
otherwise.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day except Saturday, Sunday and any day which shall be in
New York City, New York, a legal holiday or a day on which banking institutions
are authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and payments
of principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" shall mean, with respect to any Person,
all rental obligations of such Person which, under generally accepted accounting
principles, are or will be required to be capitalized on the books of such
Person, in each case taken at the amount thereof accounted for as indebtedness
in accordance with such principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having
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maturities of not more than six months from the date of acquisition, (ii) Dollar
denominated time deposits and certificates of deposit of any commercial bank
having, or which is the principal banking subsidiary of a bank holding company
having, a long-term unsecured debt rating of at least "A" or the equivalent
thereof from Standard & Poor's Ratings Services or "A2" or the equivalent
thereof from Moody's Investors Service, Inc. with maturities of not more than
six months from the date of acquisition by such Person, (iii) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
any Person incorporated in the United States rated at least A-1 or the
equivalent thereof by Standard & Poor's Ratings Services or at least P-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
not more than six months after the date of acquisition by such Person and (v)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv)
above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss.9601 et seq.
"Change of Control" shall mean (i) any Person or "group"
(within the meaning of Rules 13d-3 or 13d-5 under the Securities Exchange Act
(as in effect on the Restatement Effective Date)), other than the Permitted
Holders, shall (A) have acquired beneficial ownership of 25% or more on a fully
diluted basis of the voting and/or economic interest in the Borrower's capital
stock or (B) have obtained the power (whether or not exercised) to elect a
majority of the Borrowers' directors, (ii) the Board of Directors of the
Borrower shall cease to consist of a majority of Continuing Directors, (iii) the
Permitted Holders shall cease to collectively own at least 25% on a fully
diluted basis of the voting and/or economic interest in the Borrower's capital
stock or (iv) a "change of control" or similar event shall occur under, and as
defined in, the Senior Note Documents.
"Charles Town Joint Venture" shall mean PNGI Charles Town Gaming
Limited Liability Company, a West Virginia limited liability company.
"Charles Town Joint Venture Agreement" shall mean the Operating
Agreement of the Charles Town Joint Venture dated February 27, 1996.
"Charles Town Licenses" shall mean the licenses to conduct horse racing
issued to the Borrower or one of its Subsidiaries by the West Virginia Racing
Commission and to conduct video lottery issued to the Borrower or one of its
Subsidiaries by the West Virginia Lottery Commission.
"Charles Town Races" shall mean Charles Town Races, Inc., a West
Virginia corporation.
"Charles Town Race Track" shall mean Charles Town Race Track located in
Jefferson County, West Virginia.
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"Charles Town Video Lottery Terminals" shall have the meaning provided
in Section 8.01(ix).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, the Mortgaged
Properties and all cash and Cash Equivalents delivered as collateral pursuant to
Section 4.02(a) or 9.
"Collateral Agent" shall mean the Agent acting as collateral agent for
the Secured Creditors pursuant to the Security Documents.
"Commission" shall mean each of the Pennsylvania Horse Racing
Commission, the Pennsylvania Harness Racing Commission, the West Virginia Racing
Commission and the West Virginia Lottery Commission.
"Commitment" shall mean, for each Bank, the amount set forth opposite
such Bank's name in Schedule I directly below the column entitled "Commitment,"
as same may be (x) reduced from time to time pursuant to Sections 3.02, 3.03
and/or 9 or (y) adjusted from time to time as a result of assignments to or from
such Bank pursuant to Section 1.13 or 12.04(b).
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Consolidated Cash Interest Coverage Ratio" shall mean, for
any period, the ratio of Consolidated EBITDA to Consolidated Cash Interest
Expense for such period (other than any Consolidated Cash Interest Expense for
such period associated with the financing of the Charles Town Video Lottery
Terminals as permitted under Section 8.01(ix)).
"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense for such period including net costs under any
Interest Rate Protection Agreements, provided that there shall be excluded any
non-cash interest expense for such period (other than any interest that has been
capitalized) to the extent that same would otherwise have been included therein.
"Consolidated EBIT" shall mean, for any period, Consolidated Net Income
before Consolidated Interest Expense and provision for taxes for such period and
without giving effect (x) to any extraordinary gains or losses and (y) to any
gains or losses from sales of assets other than from sales of inventory sold in
the ordinary course of business.
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"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT for
such period, adjusted by (x) adding thereto the amount of all amortization of
intangibles and depreciation that were deducted in arriving at Consolidated EBIT
for such period, and (y) subtracting therefrom the amount of any payments made
by the Borrower or any of its Subsidiaries pursuant to Section 4 of the Plains
Company Acquisition Agreement for such period (but only to the extent that such
payments have not already reduced Consolidated Net Income for such period), it
being understood and agreed, however, that for purposes of this clause (y), such
payment will be treated as being paid in four equal consecutive quarterly
installments, with the first such installment being treated as being paid in the
fiscal quarter of the Borrower in which such payment is made.
"Consolidated Indebtedness" shall mean, at any time, the principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such time
(other than (x) Indebtedness in respect of Letters of Credit, (y) Indebtedness
under Interest Rate Protection Agreements except to the extent of a payment
default thereunder and (z) any Indebtedness incurred to finance the Charles Town
Video Lottery Terminals as permitted under Section 8.01(ix)).
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of the Borrower and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
plus, without duplication, that portion of Capitalized Lease Obligations of the
Borrower and its Subsidiaries representing the interest factor for such period;
provided that the amortization of deferred financing costs with respect to this
Agreement or the Indebtedness incurred hereunder shall be excluded from
Consolidated Interest Expense to the extent same would otherwise have been
included therein.
"Consolidated Net Income" shall mean, for any Person and period, the
net income (or loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis (after any deduction for minority interests),
provided that (i) in determining Consolidated Net Income of the Borrower, the
net income of any other Person which is not a Subsidiary of the Borrower or is
accounted for by the Borrower by the equity method of accounting shall be
included only to the extent of the payment of dividends or distributions by such
other Person to the Borrower or a Subsidiary thereof during such period and (ii)
the net income (or loss) of any other Person acquired by such specified Person
or a Subsidiary of such Person in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded.
"Consolidated Net Worth" shall mean, on any date of determination
thereof, the consolidated net worth of the Borrower and its Subsidiaries
determined as of such date of determination.
"Contingent Obligation" shall mean, as to any Person, any obligation of
such Person as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner, and any obligation of such Person guaranteeing or intended
to guarantee any Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary
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obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (x) for the purchase
or payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided, however, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Bank" shall mean each Original Bank with a Commitment under
this Agreement on the Restatement Effective Date.
"Continuing Directors" shall mean the directors of the Borrower on the
Restatement Effective Date and each other director, if such other director's
nomination for election to the Board of Directors of the Borrower is recommended
by a majority of the then Continuing Directors or is recommended by a committee
of the Board of Directors a majority of which is composed of the then Continuing
Directors.
"CoreStates" shall mean CoreStates Bank, N.A., in its individual
capacity, and any successor corporation thereto by merger, consolidation or
otherwise.
"Credit Documents" shall mean this Agreement, each Note, the
Subsidiaries Guaranty, the Assumption and Acknowledgment Agreement and each
Security Document.
"Credit Event" shall mean (i) the occurrence of the Restatement
Effective Date and (ii) the making of any Loan or the issuance of any Letter of
Credit, it being understood that any conversion of a Loan pursuant to Section
1.06 shall not constitute a Credit Event.
"Credit Party" shall mean the Borrower and each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividend" shall mean, with respect to any Person, that such Person has
declared or paid a dividend or returned any equity capital to its stockholders,
partners or members or
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authorized or made any other distribution, payment or delivery of property
(other than common stock of such Person) or cash to its stockholders, partners
or members as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any shares of any class of its
capital stock or any partnership or membership interests outstanding on or after
the Restatement Effective Date (or any options or warrants issued by such Person
with respect to its capital stock), or set aside any funds for any of the
foregoing purposes, or shall have permitted any of its Subsidiaries to purchase
or otherwise acquire for a consideration any shares of any class of the capital
stock or any partnership or membership interests of such Person outstanding on
or after the Restatement Effective Date (or any options or warrants issued by
such Person with respect to its capital stock). Without limiting the foregoing,
"Dividends" with respect to any Person shall also include all payments made or
required to be made by such Person with respect to any stock appreciation
rights, plans, equity incentive or achievement plans or any similar plans or
setting aside of any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents and the Senior Note
Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act).
"End Date" shall mean, for any Margin Reduction Period, the last day of
such Margin Reduction Period.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
employee health and safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C.
ss.1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss.2601 et seq.;
the Clean Air Act, 42 U.S.C. ss.7401 et seq.;
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the Safe Drinking Water Act, 42 U.S.C. ss.3803 et seq.; the Oil Pollution Act
of 1990, 33 U.S.C. ss.2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. ss.11001 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. ss.1801 et seq. and the Occupational Safety and
Health Act, 29 U.S.C. ss.651 et seq.; and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would be
deemed to be a "single employer" (i) within the meaning of Section 414(b), (c),
(m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of
the Borrower being or having been a general partner of such person.
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to first-class
banks in the New York interbank Eurodollar market by BTCo for Dollar deposits of
amounts in immediately available funds comparable to the outstanding principal
amount of the Eurodollar Loan of BTCo with maturities comparable to the Interest
Period applicable to such Eurodollar Loan commencing two Business Days
thereafter as of 11:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period, divided (and rounded
upward to the nearest 1/16 of 1%) by (b) a percentage equal to 100% minus the
then stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves
required by applicable law) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Eurodollar Spread" shall mean a percentage per annum equal to
1/2 of the Applicable Margin as in effect from time to time for Eurodollar
Loans, provided that in no event shall the Eurodollar Spread be less than 1%.
"Event of Default" shall have the meaning provided in Section 9.
"Existing Indebtedness" shall have the meaning provided in Section
6.23.
"Existing Indebtedness Agreements" shall have the meaning provided in
Section 5.06.
"Existing Letters of Credit" shall have the meaning provided in Section
2.01.
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"Existing Mortgaged Properties" shall mean all Real Property of the
Credit Parties listed on Schedule IV and designated as Existing Mortgaged
Properties therein.
"Existing Mortgages" shall mean all Mortgages granted by the Credit
Parties pursuant to the Original Credit Agreement and which have not been
released prior to the Restatement Effective Date.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final Maturity Date" shall mean December 15, 2002.
"Foreign Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuating fund) or other similar program
established or maintained outside the United States of America by the Borrower
or any one or more of its Subsidiaries primarily for the benefit of employees of
the Borrower or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA or
the Code.
"GTECH Contract" shall mean that certain agreement relating to the
lease, installation and service of the Charles Town Video Lottery Terminals,
dated as of June 25, 1997, between the Charles Town Joint Venture and GTECH
Corporation.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the Release of which is prohibited, limited or
regulated by any governmental authority.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money
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or for the deferred purchase price of property or services, (ii) the maximum
amount available to be drawn under all letters of credit issued for the account
of such Person and all unpaid drawings in respect of such letters of credit,
(iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v),
(vi) or (vii) of this definition secured by any Lien on any property owned by
such Person, whether or not such Indebtedness has been assumed by such Person
(provided, that, if the Person has not assumed or otherwise become liable in
respect of such Indebtedness, such Indebtedness shall be deemed to be in an
amount equal to the fair market value of the property to which such Lien relates
as determined in good faith by such Person), (iv) the aggregate amount required
to be capitalized under leases under which such Person is the lessee, (v) all
obligations of such person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vi) all Contingent Obligations of such Person and (vii) all
obligations under any Interest Rate Protection Agreement, any Other Hedging
Agreement or under any similar type of agreement. Notwithstanding the foregoing,
Indebtedness shall not include trade payables and accrued expenses incurred by
any Person in accordance with customary practices and in the ordinary course of
business of such Person.
"Intercompany Loan" shall have the meaning provided in Section
8.05(vii).
"Intercompany Note" shall mean a promissory note, in the form of
Exhibit K, evidencing Intercompany Loans.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest collar agreement,
interest rate hedging agreement or other similar agreement or arrangement.
"Interest Reduction Discount" shall mean, initially zero, and from and
after any Start Date to and including the corresponding End Date:
(A) 1/4 of 1% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be less
than or equal to 4.00:1.00 and none of the conditions set forth in clauses
(B), (C), (D) and (E) below are satisfied;
(B) 1/2 of 1% if, but only if, as of the Test Date for such Start Date
the Leverage Ratio for the Test Period ended on such Test Date shall be less
than or equal to 3.00:1.00 and none of the conditions set forth in clauses
(C), (D), and (E) below are satisfied;
(C) 1% if, but only if, as of the Test Date for such Start Date the
Leverage Ratio for the Test Period ended on such Test Date shall be less
than or equal to 2.50:1.00 and none of the conditions set forth in clauses
(D), (E) and (F) below are satisfied;
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(D) 1-1/4% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date
shall be less than or equal to 2.00:1.00 and the condition set forth in
clause (E) below is not satisfied; or
(E) 1-1/2% if, but only if, as of the Test Date for such Start Date the
Leverage Ratio for the Test Period ended on such Test Date shall be less
than or equal to 1.50:1.00.
Notwithstanding anything to the contrary above in this definition, the Interest
Reduction Discount shall be reduced to zero at all times when a Default or an
Event of Default shall exist.
"Investments" shall have the meaning provided in Section 8.05.
"Issuing Bank" shall mean BTCo.
"L/C Supportable Obligations" shall mean (i) obligations of the
Borrower and its Subsidiaries incurred in the ordinary course of business to
horsemen for racing purposes, (ii) obligations of the Borrower and its
Subsidiaries for pari-mutual taxes and (iii) such other obligations of the
Borrower as are reasonably acceptable to the Issuing Bank and otherwise
permitted to exist pursuant to the terms of this Agreement.
"Leaseholds" of any Person shall mean all the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate Stated Amount of all outstanding Letters of Credit and (ii) the
amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Leverage Ratio" shall mean, at any time, the ratio of (i) Consolidated
Indebtedness at such time to (ii) Consolidated EBITDA for the Test Period then
most recently ended (in each case taken as one accounting period), provided that
for purposes of determining the Applicable Margin, the Interest Reduction
Discount and the Applicable Commitment Commission Percentage as of any Test
Date, the term "Consolidated Indebtedness" as used in the foregoing clause (i)
of this definition shall be the sum of (I) Consolidated Indebtedness (other than
Revolving Outstandings) on such Test Date plus (II) the average Revolving
Outstandings for the quarterly period ending on such Test Date.
"Licenses" shall mean each of the Penn National Licenses, the Plains
Company Licenses and the Charles Town Licenses, as the case may be.
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"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall have the meaning provided in Section 1.01.
"Margin Reduction Period" shall mean each period which shall commence
on a date on which the financial statements are delivered pursuant to Section
7.01(b) or (c), as the case may be, and which shall end on the earlier of (i)
the date of actual delivery of the next financial statements pursuant to Section
7.01(b) or (c), as the case may be, and (ii) the latest date on which the next
financial statements are required to be delivered to Section 7.01(b) or (c), as
the case may be, provided that the first Margin Reduction Period shall commence
no earlier than the date of delivery of the first set of financial statements
pursuant to Section 7.01(c) after the Restatement Effective Date.
"Margin Stock" shall have the meaning provided in Regulation U.
"Minimum Borrowing Amount" shall mean $250,000.
"Minimum Consolidated Net Worth" shall mean, at any time, the sum of
(i) $55,500,000 plus (ii) 50% of Consolidated Net Income of the Borrower, if
positive, for each fiscal quarter of the Borrower ended prior to the date of
determination plus (iii) 75% of the Net Equity Proceeds received by the Borrower
after the Restatement Effective Date, it being understood that any increase to
the Minimum Consolidated Net Worth shall be effective as of the last day of each
fiscal quarter of the Borrower.
"Mortgage" shall mean each mortgage, deed to secure debt or deed of
trust pursuant to which any Credit Party shall have granted to the Collateral
Agent a mortgage lien on such Credit Party's Mortgaged Property.
"Mortgage Amendments" shall have the meaning provided in Section 5.12.
"Mortgage Policies" shall mean the mortgage title insurance policies
issued in respect of each of the Mortgaged Properties.
"NAIC" shall mean the National Association of Insurance Commissioners.
"Net Debt Proceeds" shall mean, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith)
received by the respective Person from the respective incurrence of such
Indebtedness for borrowed money.
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"Net Equity Proceeds" shall mean, with respect to each issuance or sale
of any equity by any Person or any capital contribution to such Person, the cash
proceeds (net of underwriting discounts and commissions and other reasonable
costs associated therewith) received by such Person from the respective sale of
issuance of its equity or from the respective capital contribution.
"Net Insurance Proceeds" shall mean, with respect to any Recovery
Event, the cash proceeds (net of reasonable costs and taxes incurred in
connection with such Recovery Event) received by the respective Person in
connection with the respective Recovery Event.
"Net Sale Proceeds" shall mean, for any Asset Sale, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale of assets, net of the reasonable costs of such sale
(including fees and commissions, payments of unassumed liabilities relating to
the assets sold and required payments of any Indebtedness (other than
Indebtedness secured pursuant to the Security Documents) which is secured by the
respective assets which were sold), and the incremental taxes paid or payable as
a result of such Asset Sale.
"Non-Continuing Bank" shall mean each Original Bank which does not have
a commitment under this Agreement on the Restatement Effective Date.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Non-Primary Location" shall have the meaning provided in the Act
referred to in clause (i) of the definition of "Act".
"Note" shall have the meaning provided in Section 1.05(a).
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section 1.06.
"Notice Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006, Attention:
Joseph Regan, or such other office as the Agent may hereafter designate in
writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Agent, the Co-Agent,
the Collateral Agent, the Issuing Bank or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Bank" shall mean each Person which was a Bank under, and as
defined in, the Original Credit Agreement immediately prior to the Restatement
Effective Date.
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"Original Credit Agreement" shall have the meaning provided in the
first "Whereas" clause of this Agreement.
"Other Hedging Agreement" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006, or such other
office as the Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Penn National Licenses" shall mean the licenses to conduct
thoroughbred racing issued to the Borrower or one of its Subsidiaries by the
Pennsylvania Horse Racing Commission.
"Penn National Race Track" shall mean Penn National Race Track located
in Dauphin County, Pennsylvania.
"Pennsylvania Harness Racing Commission" shall mean the Pennsylvania
State Harness Racing Commission (and any successor thereto).
"Pennsylvania Horse Racing Commission" shall mean the Pennsylvania
State Horse Racing Commission (and any successor thereto).
"Percentage" of any Bank at any time shall mean a fraction (expressed
as a percentage) the numerator of which is the Commitment of such Bank at such
time and the denominator of which is the Total Commitment at such time, provided
that if the Percentage of any Bank is to be determined after the Total
Commitment has been terminated, then the Percentages of the Banks shall be
determined immediately prior (and without giving effect) to such termination.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Agent in their reasonable
discretion.
"Permitted Holders" shall mean Peter D. Carlino, his progeny and his or
their spouses and any trusts over which any such Person has sole control (voting
or otherwise) and which name as beneficiaries only such Person or such Person's
spouse or children.
"Permitted Liens" shall have the meaning provided in Section 8.01.
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"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Plains Company Acquisition Agreement" shall mean the Purchase
Agreement dated as of September 13, 1996, by and between the Estate of Joseph B.
Banks and the Borrower.
"Plains Company Licenses" shall mean the licenses to conduct harness
racing issued to the Borrower or one of its Subsidiaries by the Pennsylvania
Harness Racing Commission.
"Plan" shall mean any pension plan as defined in Section 3(2) of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute of) the Borrower or a Subsidiary of the Borrower or an ERISA
Affiliate, and each such plan for the five year period immediately following the
latest date on which the Borrower, or a Subsidiary of the Borrower or an ERISA
Affiliate maintained, contributed to or had an obligation to contribute to such
plan.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of
November 27, 1996, made by the Borrower and each Subsidiary Guarantor in favor
of the Collateral Agent, as Pledgee, as such agreement may be modified, amended
or supplemented from time to time, including, without limitation, as modified by
the Assumption and Acknowledgment Agreement.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined in
the Pledge Agreement.
"Pledgee" shall have the meaning provided in the Pledge Agreement.
"Pledged Securities" shall mean all "Pledged Securities" as defined in
the Pledge Agreement.
"Pocono Downs Race Track" shall mean Pocono Downs Race Track located in
Luzerne County, Pennsylvania.
"Prime Lending Rate" shall mean the rate which BTCo announces from time
to time as its prime lending rate, the Prime Lending Rate to change when and as
such prime lending rate changes. The Prime Lending Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. BTCo may make commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.
"Projections" shall mean the projections which were prepared by the
Borrower for the five-year period after the Restatement Effective Date and
delivered to the Banks on or about December 12, 1997.
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"Quarterly Payment Date" shall mean each March 31, June 30, September
30 and December 31 occurring after the Restatement Effective Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C.ss.6901 et seq.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation awards payable (i)
by reason of theft, loss, physical destruction, damage, taking or any other
similar event with respect to any property or assets of the Borrower or any of
its Subsidiaries and (ii) under any policy of insurance required to be
maintained under Section 7.03.
"Register" shall have the meaning provided in Section 12.15.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Release" shall mean the disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring or
migrating, into or upon any land or water or air, or otherwise entering into the
environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 4043.
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"Restatement Effective Date" shall have the meaning provided in Section
12.10.
"Required Banks" shall mean Non-Defaulting Banks the sum of whose
outstanding Commitments (or after the termination thereof, outstanding Loans and
Percentage of Letter of Credit Outstandings) represent an amount greater than
50% of the Total Commitment less the Commitments of all Defaulting Banks (or
after the termination thereof, the sum of the then total outstanding Loans of
Non-Defaulting Banks and the aggregate Percentages of all Non-Defaulting Banks
of the total outstanding Letter of Credit Outstandings at such time).
"Revolving Outstandings" shall mean, at any time, the sum of (I) the
aggregate principal amount of Loans then outstanding plus (II) the aggregate
amount of Letter of Credit Outstandings at such time.
"SEC" shall have the meaning provided in Section 7.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning assigned that term in the
respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement, dated as of
November 27, 1996, made by the Borrowers and each Subsidiary Guarantor in favor
of the Collateral Agent, as such agreement may be modified, amended or
supplemented from time to time, including, without limitation, as modified by
the Assumption and Acknowledgment Agreement.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Document" shall mean and include each of the Security
Agreement, the Pledge Agreement and each Mortgage and, after the execution and
delivery thereof, each Additional Security Document.
"Senior Note Documents" shall mean the Senior Note Indenture, the
Senior Notes and each other document or agreement relating to the issuance of
the Senior Notes.
"Senior Note Indenture" shall mean the Indenture dated as of December
17, 1997 among the Borrower, the Subsidiary Guarantors and State Street Bank and
Trust Company, as Trustee.
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"Senior Notes" shall mean the Borrower's 10-5/8% Senior Note due 2004.
"Shareholders' Agreements" shall have the meaning provided in Section
5.06.
"Start Date" shall mean, with respect to any Margin Reduction Period,
the first day of such Margin Reduction Period.
"Stated Amount" of each Letter of Credit shall, at any time, mean the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any conditions to drawing could then be met).
"Subsidiaries Guaranty" shall mean the Subsidiaries Guaranty, dated as
of November 27, 1996, made by each of the Subsidiary Guarantors, as such
guaranty may be modified, amended or supplemented from time to time, including,
without limitation, the meaning provided in Section 5.12.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each direct and indirect Subsidiary
of the Borrower (other than the Charles Town Joint Venture so long as the
Charles Town Joint Venture is a non-Wholly-Owned Subsidiary of the Borrower).
"Tax Sharing Agreements" shall have the meaning provided in Section
5.06.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Tennessee Downs" shall mean Tennessee Downs, Inc., a Tennessee
corporation.
"Test Date" shall mean, with respect to any Start Date, the last day of
the most recent fiscal quarter or year, as the case may be, of the Borrower
ended immediately prior to such Start Date.
"Test Period" shall mean the four consecutive fiscal quarters of the
Borrower then last ended (in each case taken as one accounting period).
"Total Commitment" shall mean, at any time, the sum of the Commitments
of the Banks.
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"Total Unutilized Commitment" shall mean, at any time, an amount equal
to the remainder of (x) the Total Commitment then in effect less (y) the sum of
the aggregate principal amount of Loans then outstanding plus the then aggregate
amount of Letter of Credit Outstandings.
"Transaction" shall mean, collectively (i) the issuance of the Senior
Notes and (ii) the occurrence of the Restatement Effective Date.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unutilized Commitment" shall mean, with respect to any Bank at any
time, such Bank's Commitment at such time less the sum of (i) the aggregate
outstanding principal amount of Loans made by such Bank and (ii) such Bank's
Percentage of the Letter of Credit Outstandings.
"West Virginia Lottery Commission" shall mean the West Virginia Lottery
Commission (and any successor thereto).
"West Virginia Racing Commission" shall mean the West Virginia Racing
Commission (and any successor thereto).
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
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Section 11. The Agent.
11.01 Appointment. The Banks hereby irrevocably designate BTCo as Agent
(for purposes of this Section 11, the term "Agent" also shall include BTCo in
its capacity as Collateral Agent pursuant to the Security Documents) to act as
specified herein and in the other Credit Documents. The Banks hereby irrevocably
designate CoreStates as Co-Agent to act as specified herein and in the other
Credit Documents. Each Bank hereby irrevocably authorizes, and each holder of
any Note by the acceptance of such Note shall be deemed irrevocably to
authorize, the Agent and the Co-Agent to take such action on their behalf under
the provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent and the Co-Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
and the Co-Agent may perform any of their respective duties hereunder by or
through their respective officers, directors, agents, employees or affiliates.
11.02 Nature of Duties. Neither the Agent nor the Co-Agent shall have
any duties or responsibilities except those expressly set forth in this
Agreement and in the other Credit Documents. Neither the Agent, the Co-Agent,
nor any of their respective officers, directors, agents, employees or affiliates
shall be liable for any action taken or omitted by them hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct. The duties of the Agent and
the Co-Agent shall be mechanical and administrative in nature; neither the Agent
nor the Co-Agent shall have by reason of this Agreement or any other Credit
Document a fiduciary relationship in respect of any Bank or the holder of any
Note; and nothing in this Agreement or any other Credit Document, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent or
the Co-Agent any obligations in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein.
11.03 Lack of Reliance on the Agent and the Co-Agent. Independently and
without reliance upon the Agent or the Co-Agent, each Bank and the holder of
each Note, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of the Borrower and its Subsidiaries in connection with the making and
the continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of the
Borrower and its Subsidiaries and, except as expressly provided in this
Agreement, neither the Agent nor the Co-Agent shall have any duty or
responsibility, either initially or on a continuing basis, to provide any Bank
or the holder of any Note with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter. Neither the Agent nor the Co-Agent shall be
responsible to any Bank or the holder of any Note for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the
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Borrower or any of its Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of the Borrower or any of its Subsidiaries or the existence or
possible existence of any Default or Event of Default.
11.04 Certain Rights of the Agent and the Co-Agent. If either the Agent
or the Co-Agent shall request instructions from the Required Banks with respect
to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Agent or the Co-Agent, as the case
may be, shall be entitled to refrain from such act or taking such action unless
and until the Agent or the Co-Agent, as the case may be, shall have received
instructions from the Required Banks; and neither the Agent nor the Co-Agent, as
the case may be, shall incur liability to any Person by reason of so refraining.
Without limiting the foregoing, no Bank or the holder of any Note shall have any
right of action whatsoever against the Agent or the Co-Agent as a result of the
Agent or the Co-Agent acting or refraining from acting hereunder or under any
other Credit Document in accordance with the instructions of the Required Banks.
11.05 Reliance. The Agent and the Co-Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Agent or the Co-Agent, as the case may be,
believed to be the proper Person, and, with respect to all legal matters
pertaining to this Agreement and any other Credit Document and its duties
hereunder and thereunder, upon advice of counsel selected by the Agent or the
Co-Agent, as the case may be.
11.06 Indemnification. To the extent the Agent or the Co-Agent is not
reimbursed and indemnified by the Borrower or any of its Subsidiaries, the Banks
will reimburse and indemnify the Agent or the Co-Agent, as the case may be, in
proportion to their respective "percentage" as used in determining the Required
Banks, for and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, costs, expenses or disbursements of
whatsoever kind or nature which may be imposed on, asserted against or incurred
by the Agent or the Co-Agent as the case may be, in performing its respective
duties hereunder or under any other Credit Document, in any way relating to or
arising out of this Agreement or any other Credit Document; provided that no
Bank shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's or the Co-Agent's gross negligence or willful
misconduct.
11.07 The Agent and the Co-Agent in their Individual Capacities. With
respect to its obligation to make Loans, or issue or participate in Letters of
Credit, under this Agreement, the Agent and the Co-Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent and the
Co-Agent in their respective individual capacities. The Agent and the Co-Agent
and their affiliates may accept
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deposits from, lend money to, and generally engage in any kind of banking,
investment banking, trust or other business with, or provide debt financing,
equity capital or other services (including financial advisory services) to, any
Credit Party or any Affiliate of any Credit Party (or any Person engaged in a
similar business with any Credit Party or any Affiliate thereof) as if they were
not performing the duties specified herein, and may accept fees and other
consideration from any Credit Party or any Affiliate of any Credit Party for
services in connection with this Agreement and otherwise without having to
account for the same to the Banks.
11.08 Holders. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with the Agent. Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or endorsee, as the case may be, of such
Note or of any Note or Notes issued in exchange therefor.
11.09 Resignation by the Agent or the Co-Agent. (a) The Agent may
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Banks. Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c) below or as
otherwise provided below. The Co-Agent may resign from the performance of its
functions and duties hereunder at any time by giving the Agent notice thereof.
Such resignation shall take effect upon the giving of such notice.
(b) Upon any such notice of resignation by the Agent, the Required
Banks shall appoint a successor Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower (it being
understood and agreed that the Co-Agent is deemed to be acceptable to the
Borrower).
(c) If a successor Agent shall not have been so appointed within such
15 Business Day period, the Agent with the consent of the Borrower (which
consent shall not be unreasonably withheld or delayed), shall then appoint a
successor Agent who shall serve as Agent hereunder or thereunder until such
time, if any, as the Required Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b) or
(c) above by the 20th Business Day after the date such notice of resignation was
given by the Agent, the Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of the Agent hereunder
and/or under any other Credit Document until such time, if any, as the Required
Banks appoint a successor Agent as provided above.
Section 12. Miscellaneous.
12.01 Payment of Expenses, etc. The Borrower shall: (i) whether or not
the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and
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expenses of the Agent and the Co-Agent (including, without limitation, the
reasonable fees and disbursements of White & Case and of the Agent's and the
Co-Agent's local racing and other counsel and consultants) in connection with
the preparation, execution and delivery of this Agreement and the other Credit
Documents and the documents and instruments referred to herein and therein and
any amendment, waiver or consent relating hereto or thereto, of the Agent and
the Co-Agent in connection with their syndication efforts with respect to this
Agreement and of the Agent and the Co-Agent and, after the occurrence of an
Event of Default, each of the Banks in connection with the enforcement of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein (including, without limitation, the reasonable
fees and disbursements of counsel for the Agent and the Co-Agent and, after the
occurrence of an Event of Default, for each of the Banks); (ii) pay and hold
each of the Banks harmless from and against any and all present and future
stamp, excise and other similar documentary taxes with respect to the foregoing
matters and save each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Bank) to pay such taxes; and (iii) indemnify
the Agent, the Co-Agent and each Bank, and each of their respective officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all liabilities, obligations (including removal or
remedial actions), losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses and disbursements (including reasonable attorneys' and
consultants' fees and disbursements) incurred by, imposed on or assessed against
any of them as a result of, or arising out of, or in any way related to, or by
reason of, (a) any investigation, litigation or other proceeding (whether or not
the Agent, the Co-Agent or any Bank is a party thereto and whether or not such
investigation, litigation or other proceeding is brought by or on behalf of any
Credit Party) related to the entering into and/or performance of this Agreement
or any other Credit Document or the use of any Letter of Credit or the proceeds
of any Loans hereunder or the consummation of any Transaction or any other
transactions contemplated herein or in any other Credit Document or the exercise
of any of their rights or remedies provided herein or in the other Credit
Documents, or (b) the actual or alleged presence of Hazardous Materials in the
air, surface water or groundwater or on the surface or subsurface of any Real
Property owned or at any time operated by the Borrower or any of its
Subsidiaries, the generation, storage, transportation, handling or disposal of
Hazardous Materials at any location, whether or not owned or operated by the
Borrower or any of its Subsidiaries, the non-compliance of any Real Property
with foreign, federal, state and local laws, regulations, and ordinances
(including applicable permits thereunder) applicable to any Real Property, or
any Environmental Claim asserted against the Borrower, any of its Subsidiaries
or any Real Property owned or at any time operated by the Borrower or any of its
Subsidiaries, including, in each case, without limitation, the reasonable fees
and disbursements of counsel and other consultants incurred in connection with
any such investigation, litigation or other proceeding (but excluding any
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless the Agent, the Co-Agent or any Bank set forth in the preceding sentence
may be unenforceable because it is violative of any law or public policy, the
Borrower shall
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make the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities which is permissible under applicable law.
12.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Bank is hereby
authorized (to the extent not prohibited by applicable law) at any time or from
time to time, without presentment, demand, protest or other notice of any kind
to the Borrower or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of the Credit Parties to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased by such Bank pursuant
to Section 12.06(b), and all other claims of any nature or description arising
out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Bank shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
12.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to any Credit Party,
at the address specified opposite its signature below or in the other relevant
Credit Documents; if to the Co-Agent or any Bank, at its address specified on
Schedule II; and if to the Agent, at the Notice Office; or, as to any Credit
Party, the Co-Agent or the Agent, at such other address as shall be designated
by such party in a written notice to the other parties hereto and, as to each
Bank, at such other address as shall be designated by such Bank in a written
notice to the Borrower and the Agent. All such notices and communications shall,
when mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier, except that notices and communications to the Agent shall
not be effective until received by the Agent.
12.04 Benefit of Agreement; Assignments; Participations. (a)
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto;
provided, however, the Borrower may not assign or transfer any of its rights,
obligations or interest hereunder without the prior written consent of the Banks
and, provided further, that, although any Bank may transfer, assign or grant
participations in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of its
Commitment hereunder except as provided in Sections 1.13 and 12.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would
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(i) extend the final scheduled maturity of any Loan, Note or Letter of Credit
(unless such Letter of Credit is not extended beyond the Final Maturity Date) in
which such participant is participating, or reduce the rate or extend the time
of payment of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment, shall not constitute a change in the terms of such
participation, and that an increase in Commitment or any Loan shall be permitted
without the consent of any participant if the participant's participation is not
increased as a result thereof), (ii) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement or (iii)
release all or substantially all of the Collateral under all of the Security
Documents (except as expressly provided in the Credit Documents). In the case of
any such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be determined as if such
Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together with
one or more other Banks) may (x) assign all or a portion of its Commitment and
related outstanding Obligations hereunder to its parent company and/or any
affiliate of such Bank which is at least 50% owned by such Bank or its parent
company or to one or more Banks or (y) assign all, or if less than all, a
portion equal to at least $2,500,000 in the aggregate for the assigning Bank or
assigning Banks, of such Commitments hereunder to one or more Eligible
Transferees, each of which assignees shall become a party to this Agreement as a
Bank by execution of an Assignment and Assumption Agreement, provided that, (i)
at such time Schedule I shall be deemed modified to reflect the Commitments of
such new Bank and of the existing Banks, (ii) upon the surrender of the old
Notes by the assigning Bank (or, upon such assigning Bank's indemnifying the
Borrower for any lost Note pursuant to a customary indemnification agreement)
new Notes will be issued, at the Borrower's expense, to such new Bank and to the
assigning Bank upon the request of such new Bank or assigning Bank, such new
Notes to be in conformity with the requirements of Section 1.05 (with
appropriate modifications) to the extent needed to reflect the revised
Commitments, (iii) the consent of the Agent shall be required in connection with
any assignment to an Eligible Transferee pursuant to clause (y) above, (iv) the
Agent shall receive at the time of each such assignment, from the assigning or
assignee Bank, the payment of a non-refundable assignment fee of $3,500 and (v)
no such transfer or assignment will be effective until recorded by the Agent on
the Register pursuant to Section 12.15. To the extent of any assignment pursuant
to this Section 12.04(b), the assigning Bank shall be relieved of its
obligations hereunder with respect to its assigned Commitment. At the time of
each assignment pursuant to this Section 12.04(b) to a Person which is not
already a Bank hereunder and which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes,
the respective assignee Bank shall, to the extent legally entitled to do so,
provide to the Borrower the appropriate Internal Revenue Service Forms (and, if
applicable, a Section 4.04(b)(ii) Certificate) described in Section 4.04(b). To
the extent that an
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assignment of all or any portion of a Bank's Commitment pursuant to Section 1.13
or this Section 12.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 2.06 or 4.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall not
be obligated to pay such increased costs (although the Borrower, in accordance
with and pursuant to the other provisions of this Agreement, shall be obligated
to pay any other increased costs of the type described above resulting from
changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the part
of the Agent the Co-Agent, the Collateral Agent or any Bank in exercising any
right, power or privilege hereunder or under any other Credit Document and no
course of dealing between the Borrower or any other Credit Party and the Agent,
the Collateral Agent or any Bank shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
under any other Credit Document preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder or thereunder.
The rights, powers and remedies herein or in any other Credit Document expressly
provided are cumulative and not exclusive of any rights, powers or remedies
which the Agent, the Co-Agent, the Collateral Agent or any Bank would otherwise
have. No notice to or demand on any Credit Party in any case shall entitle any
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent, the Co-Agent,
the Collateral Agent or any Bank to any other or further action in any
circumstances without notice or demand.
12.06 Payments Pro Rata. (a) Except as otherwise provided in this
Agreement, the Agent agrees that promptly after its receipt of each payment from
or on behalf of the Borrower in respect of any Obligations hereunder, it shall
distribute such payment to the Banks (other than any Bank that has consented in
writing to waive its pro rata share of any such payment) pro rata based upon
their respective shares, if any, of the Obligations with respect to which such
payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; provided
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that if all or any portion of such excess amount is thereafter recovered from
such Bank, such purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
12.07 Calculations; Computations; Accounting Terms. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Banks); provided that, except as otherwise specifically provided
herein, all computations of Applicable Commitment Commission Percentage and
Interest Reduction Discount, and all computations and all definitions used in
determining compliance with Sections 8.08 through 8.11, inclusive, shall utilize
accounting principles and policies in conformity with those used to prepare the
historical financial statements of the Borrower delivered to the Banks referred
to in Section 6.05(a).
(b) All computations of interest, Commitment Commission and other Fees
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first day but excluding the last day; except that in the
case of Letter of Credit Fees, the last day shall be included) occurring in the
period for which such interest, Loan Commitment Commission or Fees are payable.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE
PROVIDED IN THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT,
THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH
COURTS
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LACK PERSONAL JURISDICTION OVER THE BORROWER, AND AGREES NOT TO PLEAD OR CLAIM,
IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENTS BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT SUCH COURTS
LACK PERSONAL JURISDICTION OVER THE BORROWER. THE BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE AGENT, ANY BANK OR THE HOLDER OF ANY
REVOLVING NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY
OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
12.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower, the Agent
and the Co-Agent.
12.10 Effectiveness. This Agreement shall become effective on the date
(the "Restatement Effective Date") on which (i) the Borrower, the Agent and each
Continuing Bank shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Agent at the
Notice Office, or, in the case of the Continuing Banks, shall have given to the
Agent telephonic (confirmed in writing), written, telex or telecopy notice
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(actually received) at such office that the same has been signed and mailed to
it and (ii) the conditions contained in Section 5 are met to the satisfaction of
the Agent, the Co-Agent and the Required Banks (determined immediately after the
occurrence of the Restatement Effective Date). Unless the Agent has received
actual notice from any Bank that the conditions contained in Section 5 have not
been met to its satisfaction, upon the satisfaction of the condition described
in clause (i) of the immediately preceding sentence and upon the Agent's good
faith determination that the conditions described in clause (ii) of the
immediately preceding sentence have been met, then the Restatement Effective
Date shall have been deemed to have occurred, regardless of any subsequent
determination that one or more of the conditions thereto had not been met
(although the occurrence of the Restatement Effective Date shall not release the
Borrower from any liability for failure to satisfy one or more of the applicable
conditions contained in Section 5). The Agent will give the Borrower and each
Bank prompt written notice of the occurrence of the Restatement Effective Date.
12.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
shall, without the consent of each Bank (other than a Defaulting Bank), (i)
extend the final scheduled maturity of any Loan or Note or extend the stated
expiration date of any Letter of Credit beyond the Final Maturity Date, or
reduce the rate or extend the time of payment of interest or Fees thereon, or
reduce the principal amount thereof (except to the extent repaid in cash) (it
being understood that any amendment or modification to the financial definitions
in this Agreement or to Section 12.07(a) shall not constitute a reduction in the
rate of interest or any Fees for purposes of this clause (i)), (ii) release all
or substantially all of the Collateral (except as expressly provided in the
Credit Documents) under all the Security Documents, (iii) amend, modify or waive
any provision of this Section 12.12, (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of the
Required Banks, additional extensions of credit pursuant to this Agreement may
be included in the determination of the Required Banks on substantially the same
basis as the Commitments are included on the Restatement Effective Date) or (v)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement; provided further, that no such change, waiver,
discharge or termination shall (w) increase the Commitment of any Bank over the
amount thereof then in effect without the consent of such Bank (it being
understood that waivers or modifications of conditions precedent, covenants,
Defaults or Events of Default or of a mandatory reduction in the Total
Commitment shall not constitute an increase of the Commitment of any Bank, and
that an increase in the available portion of the Commitment of any Bank shall
not constitute an increase of the Commitment of such Bank), (x) without the
consent of the Issuing Bank, amend, modify or waive any provision of Section 2
or alter its rights or obligations with respect to Letters of Credit, (y)
without the consent of the Agent and the Co-
-86-
Agent, amend, modify or waive any provision of Section 11 or any other provision
as same relates to the rights or obligations of the Agent or the Co-Agent or (z)
without the consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 12.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Banks whose individual
consent is required are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Bank or Banks with one or more
Replacement Banks pursuant to Section 1.13 so long as at the time of such
replacement, each such Replacement Bank consents to the proposed change, waiver,
discharge or termination or (B) terminate such non-consenting Bank's Commitment
of such Bank in accordance with Sections 3.02(b) and/or 4.01(b), provided that,
unless the Commitment that is terminated pursuant to preceding clause (B) is
immediately replaced in full at such time through the addition of new Banks or
the increase of the Commitments of existing Banks (who in each case must
specifically consent thereto), then in the case of any action pursuant to
preceding clause (B) the Required Banks (determined after giving effect to the
proposed action) shall specifically consent thereto, provided further, that in
any event the Borrower shall not have the right to replace a Bank, terminate its
Commitment as a result of the exercise of such Bank's rights (and the
withholding of any required consent by such Bank) pursuant to the second proviso
to Section 12.12(a)).
12.13 Survival. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 2.06, 4.04, 11.06 and 12.01 shall survive
the execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Obligations.
12.14 Domicile of Loans. Each Bank may transfer and carry its Loans at,
to or for the account of any office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 12.14 would, at the time of such
transfer, result in increased costs under Section 1.10, 1.11, 2.06 or 4.04 from
those being charged by the respective Bank prior to such transfer, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
12.15 Register. The Borrower hereby designates the Agent to serve as
the Borrower's agent, solely for purposes of this Section 12.15, to maintain a
register (the "Register") on which it will record the Commitments from time to
time of each of the Banks, the Loans made by each of the Banks and each
repayment in respect of the principal amount of the Loans of each Bank. Failure
to make any such recordation, or any error in such recordation shall not affect
the Borrower's obligations in respect of such Loans. With respect to any Bank,
the transfer of the Commitment of such Bank and the rights to the principal of,
and interest on, any Loan
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made pursuant to such Commitment shall not be effective until such transfer is
recorded on the Register maintained by the Agent with respect to ownership of
such Commitment and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitment and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Agent on the Register only upon
the acceptance by the Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 12.04(b). Coincident with the delivery
of such an Assignment and Assumption Agreement to the Agent for acceptance and
registration of assignment or transfer of all or part of a Loan, or as soon
thereafter as practicable, the assigning or transferor Bank shall surrender the
Note evidencing such Loan, and thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the assigning or transferor Bank
and/or the new Bank. The Borrower agrees to indemnify the Agent from and against
any and all losses, claims, damages and liabilities of whatsoever nature which
may be imposed on, asserted against or incurred by the Agent in performing its
duties under this Section 12.15.
12.16 Confidentiality. (a) Subject to the provisions of clause (b) of
this Section 12.16, each Bank agrees that it will use its reasonable efforts not
to disclose without the prior consent of the Borrower (other than to its
employees, auditors, advisors or counsel or to another Bank if the Bank or such
Bank's holding or parent company in its sole discretion determines that any such
party should have access to such information, provided such Persons shall be
subject to the provisions of this Section 12.16 to the same extent as such Bank)
any information with respect to the Borrower or any of its Subsidiaries which is
now or in the future furnished pursuant to this Agreement or any other Credit
Document and which is designated by the Borrower to the Banks in writing as
confidential, provided that any Bank may disclose any such information (a) as
has become generally available to the public other than by virtue of a breach of
this Section 12.16(a) by the respective Bank, (b) as may be required or
reasonably appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or reasonably
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Bank, (e) to the Agent, the Co-Agent or the Collateral Agent
and (f) to any prospective or actual transferee or participant in connection
with any contemplated transfer or participation of any of the Notes or
Commitments or any interest therein by such Bank, provided that such prospective
transferee agrees to be bound by the confidentiality provisions contained in
this Section 12.16.
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(b) The Borrower hereby acknowledges and agrees that each Bank may
share with any of its affiliates any information related to the Borrower or any
of its Subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of the Borrower and its Subsidiaries,
provided such Persons shall be subject to the provisions of this Section 12.16
to the same extent as such Bank).
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address: PENN NATIONAL GAMING, INC.
- --------
Wyomissing Professional Center
825 Berkshire Boulevard, Suite 203
Wyomissing, Pennsylvania 19610
Attention: Chief Financial Officer By \s\
Telephone: (610) 376-2400 ----------------------------------
Facsimile: (610) 376-2842 Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By \s\
----------------------------------
Title:
CORESTATES BANK, N.A.,
Individually and as Co-Agent
By \s\
----------------------------------
Title:
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Schedule I
COMMITMENTS
Bank Commitment
---- ----------
Bankers Trust Company $ 6,000,000.00
CoreStates Bank, N.A. $ 6,000,000.00
TOTAL: $12,000,000.00
==============
Schedule II
BANK ADDRESSES
--------------
Bank Address
---- -------
Bankers Trust Company 130 Liberty Street
New York, New York
Attn: David Bell
Tel: (212) 250-9048
Fax: (212) 250-7218
CoreStates Bank, N.A. 600 Penn Street
Reading, Pennsylvania 19603
Attn: Jeff Wasmuth
Tel: 610-655-2884
Fax: 610-655-3300
Exhibit 10.74
WAIVER
WAIVER (this "Waiver"), dated as of March 25, 1998, among PENN
NATIONAL GAMING, INC. (the "Borrower"), the lenders party to the Credit
Agreement referred to below (the "Banks"), CORESTATES BANK, N.A., as Co-Agent
(the "Co-Agent"), and BANKERS TRUST COMPANY, as Agent (the "Agent"). All
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H
WHEREAS, the Borrower, the Banks, the Co-Agent, and the Agent
are parties to a Credit Agreement, dated as of November 27, 1996 and amended and
restated as of December 17, 1997 (as amended, modified or supplemented to, but
not including, the date hereof, the "Credit Agreement");
WHEREAS, the parties hereto wish to further modify the Credit Agreement
as herein provided; and
WHEREAS, subject to the terms and conditions of this Waiver, the
parties hereto agree as follows;
NOW THEREFORE, it is agreed:
1. The Banks hereby waive any Default or Event of Default that may have
arisen under the Credit Agreement solely as a result of the Borrower failing to
comply with Section 8.09, 8.10 or 8.11 of the Credit Agreement, in each case for
the Test Period ending on December 31, 1997.
2. The Banks hereby waive any requirement that the Borrower comply with
Sections 8.09 and 8.11 during the period from January 1, 1998 through March 30,
1998. It is hereby understood and agreed that the Borrower shall be in
compliance with such Sections on and after March 31, 1998.
3. This Waiver shall become effective on the date (the "Waiver
Effective Date") when the Borrower, the Agent and the Required Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile transmission) the same to
the Agent at the Notice Office.
4. In order to induce the Banks to enter into this Waiver, the Borrower
hereby represents and warrants that:
(a) no Default or Event of Default exists on the Waiver Effective Date,
after giving effect to this Waiver; and
(b) on the Waiver Effective Date, and after giving effect to this
Waiver, all representations and warranties contained in the Credit Agreement and
in the other Credit Documents are true and correct in all material respects as
though such representations and warranties were made on the Waiver Effective
Date.
5. This Waiver may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be delivered to the Borrower and the Agent.
6. THIS WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
7. From and after the Waiver Effective Date, all references in the
Credit Agreement and each of the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement as modified hereby.
8. This Waiver is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
* * *
2
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Waiver to be duly executed and delivered as of the date first above
written.
PENN NATIONAL GAMING, INC.
By: /s/ ROBERT S. IPPOLITO
----------------------------------
Title: Chief Financial Officer
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ DAVID J. BELL
----------------------------------
Title: Vice President
CORESTATES BANK, N.A.
By: /s/ DONALD W. HOUNL
----------------------------------
Title: Senior Vice President
3
EXHIBIT 21
Subsidiaries
The Plains Company
Mountainview Thoroughbred Racing
Association
Pennsylvania National Turf
Club, Inc.
Penn National Speedway, Inc.
Penn National Holding Company
Penn National Gaming of
West Virginia, Inc.
Sterling Aviation Inc.
PNGI Charles Town Gaming LLC
Northeast Concessions, Inc.
The Downs Off-Track Wagering, Inc.
The Downs Racing, Inc.
PNGI Pocono, Inc.
Tennessee Downs, Inc.
Backside, Inc.
Audio Video Concepts
Mill Creek Land, Inc.
Wilkes Barre Downs, Inc.