AMENDEDAND RESTATED LOAN AGREEMENT

Section 5.               PAYMENTS, ETC.

 

5.1.           Payments on Non Business Days; Calculations.  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 interest shall be payable at the applicable rate during such extension.  Interest (including interest on Loans), commitment commissions and other fees, hereunder and under the other Loan Documents, shall be calculated on the basis of a 360 day year and the actual number of days elapsed.  The Borrower hereby authorizes and directs the Agent and each Bank to charge any account (including, without limitation, the Reserve Account) of the Borrower maintained at any office of the Agent or such Bank with the amount of any principal, interest or fee when the same becomes due and payable under the terms hereof or of the Notes; provided, however, that neither the Agent nor any Bank shall be under any obligation to charge any such account.

 

5.2.           Net Payments; Application.  (a)  All payments hereunder and under the other Loan Documents (including, without limitation, prepayments pursuant to Section 2) shall be made by the relevant Loan Parties to the Agent in freely transferable U.S. dollars and in same day funds at the Closing Office by 2:00 p.m. on the date when due without setoff or counterclaim and in such amounts as may be necessary in order that the amount of all such payments actually received by the party entitled thereto (after (i) withholding for or on account of any present or future taxes, levies, imposts, duties or other similar charges of whatsoever nature imposed on the amounts described above by any Government Authority, other than any tax (other than such taxes referred to in clause (ii) below) imposed on a Bank’s net income pursuant to the income tax laws of the jurisdiction where such Bank’s principal or lending office or offices are located (collectively, the “Taxes”), and (ii) deduction of an amount equal to any taxes on or measured by the net income payable to such Bank with respect to the amount by which the payments required to be made by this Section 5.2 exceed the amount otherwise specified to be paid under this Agreement and the Notes) shall not be less than the amounts otherwise specified to be paid under this Agreement and the Notes.  With respect to each such deduction or withholding, the relevant Loan Party shall promptly (and in no event later than 30 days thereafter) furnish to the Agent such certificates, receipts and other documents as may be required to establish any tax credit, exemption or reduction in rate to which any Bank or holder of a Note may be entitled.  Each Bank, other than a Bank organized and existing under the laws of the United States of America or any political subdivision thereof, agrees to furnish the Borrower, as soon as practicable after any written request of the Borrower to such effect, any executed form reasonably requested by the Borrower such as Internal Revenue Service Form W-8ECI or W-8BEN, and any other applicable form as to such Bank’s entitlement, if any, to exemption from, or a reduced rate of, or its subjection to, United States withholding tax on amounts payable to it hereunder or under the Notes and each such Bank undertakes to use its best efforts promptly to notify the Borrower of any material change in any information, statement or form so furnished to the Borrower; provided, however, that any failure on the part of any Bank to furnish any such information, statements or forms shall in no way affect the obligations of the Borrower or the rights of any Bank under the terms of this Agreement or of the Notes.  Notwithstanding the foregoing, in the event any Bank fails to furnish any such information, statements or forms, the relevant Loan Party shall only pay to such Bank such amounts under this Agreement and the Notes as are due without those additions described in clauses (i) and (ii) above that would not have been required had such information, statements or forms been provided in a timely fashion.  As promptly as practicable after any Bank becomes aware of the existence or occurrence of an event giving rise to the imposition of United States withholding tax upon amounts payable to it hereunder or under the Notes, such Bank shall use its reasonable efforts to transfer its Loans to another office of such Bank with a view to avoiding or mitigating the consequences of such tax but only if such transfer is not disadvantageous to such Bank.  If any Bank determines that it is unable to effect such transfer on or before the thirtieth day after the date such Bank becomes aware of the existence or occurrence of an event giving rise to the imposition of United States withholding tax, such Bank shall promptly give notice of such determination to the Borrower.  Notwithstanding anything to the contrary contained herein, if the Borrower receives notice of such determination from such Bank, the Borrower may, by notice to such Bank, prepay the Loans in full without any termination fee (but with all interest accrued to the date of prepayment on the Loans and all other amounts then payable to such Bank hereunder) on the tenth Business Day after the date the Borrower provides the Bank with such notice.  On or before the tenth day after receipt of any such notice of intention, such Bank may, by notice to the Borrower, irrevocably elect to receive payments hereunder reduced by the amount of such withholding.  If such an election is so made, the relevant Loan Party (i) shall cease to be under any further obligation to pay any such additional amount in respect of such withholding and (ii) shall cease to be entitled so to prepay the Loans by virtue of being required to make such withholding.  Any Bank which is or becomes subject to such withholding tax agrees to use its reasonable efforts to provide the Borrower with an affidavit, within 30 days after such Bank files its tax return, setting forth the amount of any tax credit it received with respect thereto.

 

No Loan Party shall be required to pay any increased amounts under this Section 5.2 with respect to any Taxes to the extent that any obligation to withhold, deduct or pay amounts with respect to the Taxes existed on the Closing Date (and, in such case, the Loan Party may deduct and withhold such Taxes from payments).

 

(b)           Unless otherwise specifically provided herein, all payments under or pursuant to, or in satisfaction of, any of the Borrower’s obligations under this Agreement or under the Notes (including any received in connection with the foreclosure upon or other realization on any Collateral) will be applied in the following order of priority:  (i) to any costs, fees or expenses of or incurred by the Agent in connection with this Agreement or any other Loan Document; (ii) to any costs, fees or expenses of or incurred by any Bank in connection with this Agreement or any other Loan Document; (iii) to any fees then due and payable by Borrower pursuant to any provision of this Agreement; (iv) to any interest on the Notes (pro rata according to the aggregate amount of interest then due and payable on the Notes) then due and payable; (v) to any principal amount then due under the Notes; (vi) to reduce the unpaid principal amount of the Loans; and (vii) to any amounts not otherwise listed in this Section 5.2(b) then due and payable under this Agreement, the Notes or the Security Documents.

 

5.3.           Distribution by Agent.  All payments received by the Agent on account of principal and interest under this Agreement or the Notes or with respect to fees shall be promptly distributed by the Agent to the Banks (in the type of funds received by the Agent) as follows:  (a) if in respect of principal, then on a pro rata basis to each of the Banks; (b) if in respect of fees or interest paid on the Notes pursuant to Section 3, then on a pro rata basis to each of the Banks; and (c) if in respect of a payment under Section 3.6, 3.7 or 5.2(a) hereof, to each Bank in accordance with its entitlement thereto.

 

 

Section 6.               CONDITIONS PRECEDENT TO EFFECTIVENESS.

 

The Banks shall not be obligated to make the Loans and this Agreement shall not be effective unless the following conditions have been satisfied or waived:

 

6.1.           Original Loan Agreement.  Agent shall have received executed copies of the Original Loan Agreement and all other Loan Documents relating thereto and such other information relating to the Original Loan Agreement satisfactory to Agent.

 

6.2.           Default, etc.  On the Closing Date, there shall exist no Default or Event of Default and all representations and warranties made by the Loan Parties herein or in the other Loan Documents or otherwise made by the Loan Parties in writing in connection herewith or therewith shall be true and correct in all material respects with the same effect as though such representations and warranties have been made at and as of such time except to the extent such representations and warranties were made only as of a specific date.

 

6.3.           Notes; amendments to Loan Documents.  The Agent shall have received the Notes in the form attached hereto as Exhibit A duly executed and completed by the Borrower and such amendments or modifications to the other Loan Documents in form and substance satisfactory to the Agent.

 

6.4.           Supporting Documents of the Loan Parties.  There shall have been delivered to the Agent (with sufficient copies for each of the Banks) such information and copies of documents, approvals (if any) and records (certified where appropriate) of corporate and legal proceedings as the Agent or any Bank may have reasonably requested relating to the Loan Parties’ entering into and performance of this Agreement and the other agreements and documents related thereto to which each is a party.  Such documents shall, in any event, include:

 

(a)           Certified copies, to the extent obtainable, of the Charter Documents of each Loan Party;

 

(b)           certificates of authorized officers of each Loan Party, certifying the corporate and limited liability company resolutions of each such entity relating to the entering into and performance of the Loan Documents executed and delivered on the Closing Date to which such entity is a party, and the transactions contemplated thereby; and

 

(c)           certificates of authorized officers of each Loan Party, with respect to the incumbency and specimen signatures of its officers or representatives authorized to execute such documents and any other documents and papers, and to take any other action, in connection therewith.

 

6.5.           Participation Agreement; Prefunding of Loan Prepayment.  PAB shall have entered into a participation agreement with Grand Victoria Capital LLC in form and substance satisfactory to PAB in an amount fully funded on the Closing Date of $1,000,000, and the Borrower shall have deposited $2,000,000 with the Agent to satisfy the obligation set forth in Section 2.3(c) above to prepay the Loans.

 

 

6.6.           Legal Opinions.  The Agent shall have received a legal opinion (in sufficient counterparts for each of the Banks), in the form of Exhibit B, addressed to the Banks and dated the Closing Date, of counsel to the Loan Parties, and of special gaming counsel to the Loan Parties.

 

6.7.           Filings and Financial Statements.  Agent shall have received the public filings, Financial Statements and corporate tax returns of the Borrower from the last three (3) calendar years.

 

6.8.           Approvals and Consents.  All orders, permissions, consents, approvals, licenses, authorizations and validations of, and filings, recordings and registrations with, and exemptions by, any Government Authority, or any other Person, required to authorize or required in connection with the execution, delivery and performance of this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby by any Loan Party shall have been obtained (and, if so requested, furnished to the Agent, with sufficient copies for the Banks).

 

6.9.           Change in Law; No Opposition.  (a) On the Closing Date, no change shall have occurred in applicable law, or in applicable regulations thereunder or in interpretations thereof by any Government Authority which would make it illegal for such Bank to make the Loan required to be made on such date.

 

(b)           Except as may have been disclosed in the SEC Documents or the Offering Circular, no suit, action or proceeding shall be pending or threatened before or by any Government Authority seeking to restrain or prohibit the consummation of the transactions contemplated by this Agreement or seeking relief which could have a Material Adverse Effect.

 

6.10.                      All Proceedings to be Satisfactory.  All corporate, limited liability company, partnership and legal proceedings and all instruments in connection with the transactions contemplated by this Agreement and the other documents referred to herein shall be satisfactory in form and substance to the Agent, and the Agent shall have received information and copies of all documents which the Agent may reasonably have requested in connection herewith and therewith, such documents where appropriate to be certified by proper corporate officials or governmental authorities.   Without limiting the foregoing, the Agent shall have received all satisfactory information deemed necessary or desirable by the Agent with respect to the Borrower and the Loan Parties in order for the Agent to comply fully with their obligations under law, including without limitation, under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, also known as the USA PATRIOT Act, as amended from time to time (including all regulations promulgated thereunder).

 

6.11.                      Adverse Change.  (a)  There shall have been no Material Adverse Change with respect to the Loan Parties taken as a whole, or any member thereof, since the date of the latest audited Financial Statements of the Borrower delivered to the Agent prior to the Closing Date.

 

 

(b)           Neither the Agent nor any Loan Party shall have become aware of any previously undisclosed information with respect to the business, properties, operations, prospects or condition (financial or otherwise) of any Loan Party which could reasonably have a Material Adverse Effect.

 

6.12.        Fees and Expenses.  The Borrower shall have delivered to the Agent the Warrants due on the Closing Date pursuant to Section 4.1, together with a registration rights agreement relating thereto, in each case in form and substance satisfactory to the Agent, and the Current Arrangement Fee due on the Closing Date pursuant to Section 4.2.  The legal fees and expenses (through the Closing Date) of the Agent’s New York counsel, the counsel of the Bank’s participant, and (if any) local or special counsel, in connection with the transactions contemplated by this Agreement shall (to the extent demand for payment thereof shall have been made) have been paid in full.

 

6.13.        Property List.  The Agent shall have received a list complying with the requirements of Section 7.1(i) and dated the Closing Date.

 

6.14.        Collateral.  The Agent shall have received such assignments relating to the Collateral and the Security Documents as are satisfactory to Agent to confirm that Agent has a first lien mortgage on all real property owned by the Borrower and Guarantors located at Monticello Raceway, Sullivan County, State of New York, and first lien security interest on all accounts receivable, inventory, leases, permits, licenses (other than the lottery license issued by the Division of the Lottery of the State of New York), the Concord Agreement and any other assets owned by the Borrower and/or the Guarantors to the extent the granting of such security interest is legally permissible, including, without limitation, (a) an assignment of mortgage and related title insurance policies in favor of BoS, with title datedown confirming no intervening liens, (b) assignments of security agreements and UCC-1 financing statements on the assets of the Borrower and the Guarantors in favor of BoS, with revised UCC, tax lien, judgment and pending lawsuit searches confirming first priority status; (c) an assignment of tax refunds and/or assignment of proceeds of tax refunds, and (d) an assignment of rents and leases (if applicable).

 

6.15.        Appraisal.  The Agent shall have received an appraisal, satisfactory in form and substance to the Agent, of the value of the Monticello Land, and the ratio of the maximum Obligations to the appraised value of the Monticello Land shall be less than or equal to 40%.

 

6.16.        Insurance.  The Agent shall have received certificates of insurance from the insurance brokers of the Borrower, dated as of a date reasonably near the Closing Date, identifying insurers, types of insurance, insurance limits and policy terms, and otherwise describing the insurance obtained in accordance with the provisions of this Agreement, and including endorsements noting that the Agent has been named as additional insured or (as the case may be) loss payee on such insurance and providing that the Agent shall receive at least 30 days’ prior written notice of the cancellation of any such insurance.

 

 

6.17.        [Intentionally Omitted].  

 

6.18.        Environmental Assessment.  The Agent shall have received, at Borrower’s expense, a Phase I environmental site assessment or assessments of the Properties prepared in conformance with the scope and limitations of ASTM Standard Designation E1527-93 and approved by Agent.  Any recommended action shall have been completed by the Loan Parties.  If the Phase I assessment concludes remedial action and a Phase II report is required, Borrower, at its expense, shall perform such remedial action and provide Agent with a Phase II report.

 

6.19.        Evidence of Right to Occupancy of Properties.  The Agent shall have received a copy of the permanent certificate of occupancy issued by each applicable Governmental Authority, evidencing the right of the applicable members of the Empire Group to use and hold open for the use and occupancy of the public of the Gaming/Racing Facilities.

 

6.20.        Gaming/Racing Permits.  The applicable members of the Empire Group shall have all Gaming/Racing Permits material to or required for the conduct of its gaming businesses at the Gaming/Racing Facilities and such Gaming/Racing Permits shall not then be suspended, enjoined or prohibited (for any length of time) by any Gaming/Racing Authority or any other Governmental Authority.  The Agent shall have received copies of those Gaming/Racing Permits issued by each applicable Gaming/Racing Authority evidencing the right of the applicable members of the Empire Group to offer pari-mutuel wagering on live horseracing and simulcast horseracing and to operate video gaming machines at Monticello Raceway.

 

6.21.        Operating Accounts; Reserve Account.  Borrower and its affiliates shall have opened with PAB the Escrow Reserve Account and operating accounts designated by the Borrower as the purse escrow account and the capital improvement account.

 

All documents, agreements, certificates, financial statements, legal opinions, analyses, reports and other papers required to be delivered by this Section 6 shall be delivered (with sufficient copies for each Bank) to the Agent at its Closing Office or as the Agent may otherwise direct.

 

Section 6A.            CONDITIONS PRECEDENT TO EXTENSION PERIODS

 

The Borrower shall not be permitted to enter into any Extension Period described in Section 2.8 (except as hereinafter indicated) unless the following conditions (unless waived in writing by the Required Lenders) have been satisfied:

 

6.A.1.      Default, etc.  On the Closing Date, there shall exist no Default or Event of Default and all representations and warranties made by the Loan Parties herein or in the other Loan Documents or otherwise made by the Loan Parties in writing in connection herewith or therewith shall be true and correct in all material respects with the same effect as though such representations and warranties have been made at and as of such time except to the extent such representations and warranties were made only as of a specific date.

 

6.A.2.      Fees and Expenses.  The Borrower shall paid to the Agent the fee for such Extension Period described in Section 2.8(d).

 

 

6.A.3.      Concord Agreement.  The Concord Agreement shall be in full force and effect.

 

Section 7.               AFFIRMATIVE COVENANTS.

 

The Loan Parties party hereto severally covenant and agree hereby that, so long as this Agreement is in effect and all of the Notes, together with interest, commitment commission and all other obligations incurred hereunder, are paid in full, such Loan Parties will perform, and will cause each of their respective Subsidiaries to perform, the obligations set forth in this Section 7.

 

7.1.           Financial Statements.  Borrower will furnish to the Agent (with sufficient copies for each Bank):

 

(a)           As soon as practicable and in any event within ninety (90) days after the close of each Fiscal Year of the Borrower, as at the end of and for the Fiscal Year just closed, as the case may be, a consolidated balance sheet of the Borrower and its consolidated Subsidiaries, and a consolidated statement of income and changes in retained earnings and a cash flow statement of the Borrower and its consolidated Subsidiaries for such Fiscal Year, setting forth the corresponding figures of the previous annual audit (to the extent available) in comparative form, all in reasonable detail and certified by the Auditors, such statements to be accompanied by a certificate, in form and substance satisfactory to the Agent and the Required Lenders, setting forth the certification of the CEO and the CFO with respect to calculations showing compliance with each of Sections 8.12, 8.16, 8.19 and 8.20;

 

(b)           Promptly upon receipt thereof, copies of all detailed financial reports and management letters, if any, submitted to the Borrower by the Auditors, in connection with each annual or interim audit of its books by such Auditors;

 

(c)           As soon as practicable and in any event within 45 days after the close of each Fiscal Quarter, an unaudited consolidated statement of income and changes in retained earnings, consolidating balance sheet and statement of cash flow of the Borrower and its consolidated Subsidiaries for such Fiscal Quarter, in each case for such Fiscal Quarter and for the year-to-date, all in reasonable detail and certified by the CFO and CEO of the Borrower subject to year end audit and adjustments and setting forth in comparative consolidated form the corresponding figures for the same Fiscal Quarter and year-to-date period of the prior Fiscal Year, such statements to be accompanied by a certificate, in form and substance satisfactory to the Agent and the Required Lenders, setting forth the certification of the CEO and the CFO with respect to calculations showing compliance with each of Sections 8.12, 8.16, 8.19 and 8.20;

 

(d)           As soon as practicable and in any event within 60 days after the end of each Fiscal Year, a report in form and substance satisfactory to the Agent as to the following items or matters relating to the Loan Parties:  environmental matters, gaming matters and permits, both with respect to the Fiscal Year just ended and the current Fiscal Year, with such other information with respect thereto as the Agent or any Bank shall request;

 

(e)           As soon as practicable and in any event within 30 days after the close of each calendar month, an unaudited consolidated statement of income and changes in retained earnings, consolidating balance sheet and statement of cash flow and a statement as to Consolidated EBITDA of the Borrower, in each case for such month and for the year-to-date, all in reasonable detail and certified by the CFO and CEO of the Borrower subject to year end audit and adjustments and setting forth in comparative consolidated form the corresponding figures for the same month and year-to-date period of the current Fiscal Year’s budget delivered pursuant to Section 7.1(j) together with a comparison of each of the items referred to therein to budget (original and latest revised) and together with such operational statistics as may be requested by the Agent;

 

 

(f)           As soon as possible and in any event (A) within 30 days after any Guarantor, the Borrower or any of their respective ERISA Affiliates knows that any Termination Event described in clause (i) of the definition of Termination Event with respect to any Pension Plan has occurred or is expected to occur and (B) within 10 days after any Guarantor, the Borrower or any of their respective ERISA Affiliates knows that any other Termination Event with respect to any Pension Plan has occurred or is expected to occur, a statement of the CFO of the Borrower describing such Termination Event and the action, if any, which the Borrower or such ERISA Affiliate proposes to take with respect thereto;

 

(g)           Promptly and in any event within five Business Days after receipt thereof by any Guarantor, the Borrower or any of their respective ERISA Affiliates from the PBGC, copies of each notice received by any Guarantor, the Borrower or any such ERISA Affiliate of the PBGC’s intention to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, any notice of noncompliance issued by the PBGC with respect to a proposed standard termination of a Pension Plan, and any notice issued by the PBGC with respect to a proposed distress termination of a Pension Plan;

 

(h)           Promptly and in any event within 30 days after the filing thereof with the IRS, copies of each annual report (Form 5500 Series) with respect to each Pension Plan;

 

(i)           So long as there is no continuing Default, as soon as practicable and in any event within 45 days after request by the Agent therefor, and during the continuance of any Default, as soon as possible and in any event within three days of the Agent’s request therefor, lists with such specificity (including location, book value and, to the extent possible, the estimated market values) and categorization as the Agent may reasonably request, of:

 

(I)            all Real Property, including fixtures;

 

(II)           all vehicles (such term to include, for this purpose, airplanes and trains) of the Borrower and its consolidated Subsidiaries; provided that the Borrower need not report any such vehicles until the fair market value of all vehicles owned or leased by the Borrower exceeds $250,000 at which time it shall submit a list of all such vehicles for the first such report; provided further that the Borrower shall report the fair market value of all vehicles owned or leased by the Borrower if such fair market value is less than $250,000;

 

(III)         any contract or the like by a Loan Party with a Governmental Authority where the consent of that entity (or another procedure because the contracting party is a Government Authority) is required before a perfected security interest in receivables generated thereby can be granted to the Banks;

 

 

(IV)         any life insurance policy where a Loan Party is a beneficiary;

 

(V)           tangible chattel paper and electronic chattel paper (in each case as defined in the UCC) of any Loan Party;

 

(VI)         any right of any Loan Party represented by a judgment (other than a judgment taken on a right to payment which was collateral);

 

(VII)        any certificated or uncertificated securities, certificates of deposit or other investment property (in each case, as defined in the UCC) of any Loan Party, in each case other than those held by the Agent in its capacity as such;

 

(VIII)       any Commercial Tort Claim (as defined in the UCC) in which the aggregate amount sought by a Loan Party is equal to or more than $500,000;

 

(IX)         any promissory notes held by any Loan Party;

 

(X)          any patents held by any Loan Party;

 

(XI)         any copyrights, trademarks or trade names that are material to a Loan Party’s business or operations;

 

(XII)        any letters of credit (as defined in the UCC), commodity accounts or letter-of-credit rights of any Loan Party;

 

(XIII)      such other types of property as the Agent may from time to time reasonably request of the Borrower in writing.

 

Each such list shall be accompanied by a list of all assets (other than inventory sold in the ordinary course of business) sold by the Loan Parties during such period.  All such lists shall be accompanied by a certificate, in form and substance reasonably satisfactory to the Agent, signed by Borrower’s CEO and CFO stating that each such list is true, correct and complete.

 

Such certificate shall also state that “No Loan Party holds any interest (whether as owner, lessee or otherwise) in any Real Property as to which interest it has not granted a Lien to the Agent on behalf of the Banks, in connection with the Loan Agreement, under applicable law” (or words to like effect satisfactory in form and substance to the Agent) and, if such statement would not be accurate unless qualified, shall clearly list the exceptions to such statement at the end such statement.  The Loan Parties shall promptly take all such actions as the Agent and the Banks shall request in order to grant to the Agent and perfect any Lien in any real or personal property in which a Lien has not been previously granted to the Agent on behalf of the Banks.

 

The provisions of this Section 7.1(i) are in addition to, and not in lieu of, other provisions in the Loan Documents.  Without limiting the generality of the foregoing statement, nothing contained in this Section 7.1(i) shall excuse Borrower from delivering at the required time any other report, even if of a similar nature, that other provisions of any of the Loan Documents require Borrower to deliver.  Nor shall the inclusion of any class or item of property imply that Borrower is entitled to acquire same if such acquisition is prohibited, specifically or otherwise, in any of the Loan Documents.

 

 

(j)            No later than February 15 of each Fiscal Year, commencing with February 15, 2005, a year-by-year budget with respect to such Fiscal Year and the succeeding Fiscal Year (in form and detail reasonably satisfactory to the Agent) for the Loan Parties, setting forth with respect to such Fiscal Year, (x) the projected balance sheet at the end of such Fiscal Year, (y) the projected statement of income for such Fiscal Year, and (z) the projected statement of cash flow for such Fiscal Year, together with a copy of  any “business plan” or similar document prepared by or on behalf of such parties with respect to such Fiscal Year;

 

(k)           Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication that shall have been sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports (including, without limitation, each 10Q and 10K report) and registration statements which the Borrower shall have filed or be required to file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and not otherwise required to be delivered to the Agent pursuant to other provisions of this Section 7.1.

 

(l)            With reasonable promptness, such other information respecting the business, properties, operations, prospects or condition (financial or otherwise) of any Loan Party as the Agent may from time to time reasonably request;

 

(m)          Promptly, (i) the existence of any facts or circumstances which would reasonably be expected to have a Material Adverse Effect including, without limitation such facts or circumstances relating to environmental matters, gaming matters, permits, sale contracts, leases and operations; or (ii) any Material Adverse Change;

 

(n)           Promptly, the existence of any material intellectual property;

 

(o)           Promptly and in any event within two Business Days after receipt thereof by any Loan Party, a copy of each notice received by such Loan Party of any notices of violations, notices of non-compliance or consent orders from any Government Authority; and

 

(p)           No later than six months prior to the end of the initial Extension Period, a plan for refinancing the Loans.

 

7.2.           Notice of Litigation; Unionization.  Borrower will promptly give written notice to the Agent (who shall promptly forward same to the Banks) of (i) any action or proceeding or, to the extent any Loan Party may have any notice thereof, any claim which may reasonably be expected to be commenced or asserted against the Borrower or any of its Subsidiaries, in which the amount involved is $250,000 or more (to the extent not covered by insurance), or (ii) the receipt of any notice, claim or demand by the Borrower or any of its Subsidiaries and any Government Authority (including, without limitation, any audit by the IRS or Environmental Claim) which could reasonably be expected to have a Material Adverse Effect or (iii) the receipt of any notice, claim or demand by the Borrower or any of its Subsidiaries from any employees of the Borrower or any such Subsidiary or any union representing, claiming to represent or seeking to represent any such employees, which could reasonably be expected to have a Material Adverse Effect or (iv) notice of any unionization of, or attempt to unionize (which could reasonably be expected to succeed), the employees of any member of the Empire Group.

 

 

7.3.           Payment of Charges.  The Borrower shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon it or any of the Guarantors or its properties or any of the  Guarantors’ properties and (ii) all material lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien upon its properties or any of the Guarantors’ properties;  provided, however, that the Borrower shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being or shall be contested in good faith  by appropriate proceedings properly instituted and diligently conducted for which adequate reserves, to the extent required under GAAP, have been taken.

 

7.4.           Insurance.

 

(a)           Property Insurance.  The Borrower shall maintain a special causes of loss (“All Risk” - ISO form or equivalent), perils policy covering the buildings and improvements, and any other permanent structures of the Loan Parties for one hundred percent (100%) of the replacement cost.  The Borrower shall maintain a Ten Million Dollar ($10,000,000.00) limit of coverage for the perils of flood and earthquake covering the Collateral.  Upon the request of Agent, replacement cost for insurance purposes will be established by an independent appraiser mutually selected by the Borrower and the Agent.  The policy will include agreed amount (waiving co insurance), replacement cost valuation and building ordinance endorsements.  The policy will include a standard mortgagee clause (ISO form or equivalent, i.e. Borrower’s acts will not impair mortgagee’s right to recover, exclusive payment of loss to mortgagee and automatic notice of cancellation or non-renewal to mortgagee).  The Borrower waives any and all rights of subrogation against the Banks resulting from losses to property.

 

(b)           Personal Property (including machinery, equipment, furniture, fixtures, stock).  The Borrower shall maintain a special causes of loss (“All Risk”) perils property coverage for all personal property owned, leased or for which any Loan Party is legally liable.  The coverage will include a lenders’ loss payable endorsement in favor of Agent.

 

The policy providing real property and personal property coverages, as specified in 7.4(a) and (b) hereinabove, may include a deductible of no more than Twenty-Five Thousand Dollars ($25,000.00) for any single occurrence.  Flood and earthquake deductibles can be no more than Two Hundred Fifty Thousand Dollars ($250,000.00), if a separate deductible applies.

 

(c)           Business Interruption/Extra Expense.  The Borrower shall maintain combined business interruption/extra expense coverage for the Gaming/Racing Facilities with a limit representing no less than eighty percent (80%) of the net profit plus continuing expenses (including debt service) for the race track, hotel and casino facilities (including all video lottery/slot operations). Such coverage shall include an extensions for off premises power losses at One Million Dollars ($1,000,000.00) and extended period of indemnity of one hundred twenty (120) days endorsement coverages may have deductible of no greater than forty-eight (48) hours, or Twenty-Five Thousand ($25,000.00), if a separate deductible applies.  This coverage will be specifically endorsed to include Agent as loss payee.

 

 

(d)           Boiler and Machinery.  The Borrower shall maintain a boiler and machinery policy for the Gaming/Racing Facilities written on a comprehensive form with a combined direct and indirect limit of no less than Ten Million Dollars ($10,000,000.00).  The policy shall include extensions for agreed amount (waiving co-insurance) and replacement cost valuation.  The policy may contain deductibles of no greater than Ten Thousand Dollars ($10,000.00) direct and forty-eight (48) hours indirect.

 

(e)           Crime Insurance.  The Borrower shall obtain a comprehensive crime policy with respect to the Loan Parties, including the following coverages:

 

(i)

employee dishonesty  - One Million Dollars ($1,000,000.00);

 

(ii)

money and securities (inside) - Five Hundred Thousand Dollars ($500,000.00);

 

(iii)

money and securities (outside) - Five Hundred Thousand Dollars ($500,000.00);

 

(iv)

depositor’s forgery - One Million Dollars ($1,000,000.00);

 

(v)

computer fraud - One Million Dollars ($1,000,000.00)

 

The policy may contain deductibles of no greater than Fifty Thousand Dollars ($50,000.00) for all coverages listed above and self insurance by the Borrower for up to ten percent (10%) of any claim.

 

(f)           Commercial General Liability (1998 Form or Equivalent).  The Borrower shall maintain a commercial general liability policy with respect to the Loan Parties with a One Million Dollar ($1,000,000.00) combined single limit for bodily injury and property damage, including products liability, contractual liability, and all standard policy form extensions.  The policy must provide a Two Million Dollar ($2,000,000.00) general aggregate (per location, if multi-location risk) and be written on an “occurrence form”.  The policy will also include extensions for liquor legal liability, employee benefits legal liability and spectator liability coverages (if necessary, a separate policy can be secured for spectator liability).  If the general liability policy contains a self-insured retention, it shall be no greater than Ten Thousand Dollars ($10,000.00) per occurrence, with an aggregate retention of no more than Two Hundred Fifty Thousand Dollars ($250,000.00), including expenses.

 

The policy shall be endorsed to include Agent as an additional insured on behalf of the Banks.  The definition of additional insured shall include all officers, directors, employees, agents and representatives of the additional insured.  The coverage for additional insured shall apply on a primary basis irrespective of any other insurance whether collectible or not (ISO Form #CG20261185 Additional Insured -Designated Person or Organization, or equivalent).

 

 

(g)           Care, Custody and Control Liability.  The Borrower shall maintain a care, custody and control liability policy with a single limit of no less than Two Hundred Fifty Thousand Dollars ($250,000.00) (in the aggregate) per occurrence for any injury, damage or death to horses in the care, custody and control of any Loan Party, with a maximum aggregate annual single limit of no less than One Million Dollars ($1,000,000) for any injury, damage or death to horses in the care, custody and control of the Loan Parties.  The Agent shall be included as an additional insured under such policy.

 

(h)           Automobile.  The Borrower shall maintain a comprehensive automobile liability insurance policy written under coverage “symbol 1”, providing a One Million Dollar ($1,000,000.00) combined single limit for bodily injury and property damage covering all owned, non-owned and hired vehicles of each Loan Party.  If the policy contains a self insured retention it shall be no greater than Ten Thousand Dollars ($10,000.00) per occurrence with an aggregate retention of no more than Two Hundred Fifty Thousand Dollars ($250,000.00), including expenses, the following additional coverages must be purchased by the Borrower:

 

(i)

Garage Liability.  A One Million Dollar ($1,000,000.00) combined single limit for bodily and property damage for the garage operation.

 

(ii)

Garagekeepers Legal Liability.  Five Hundred Thousand Dollar ($500,000.00) limit for comprehensive and collision coverages for physical damage to vehicles in any Loan Party’s care, custody and control.  The policy can be subject to a deductible of no greater than Two Thousand Five Hundred Dollars ($2,500.00) for each auto and Ten Thousand Dollars ($10,000.00) for each loss.

 

(i)           Workers Compensation and Employers Liability Insurance.  The Borrower shall maintain a standard workers compensation policy covering the State of New York and any other state where a Loan Party is operating, including employers liability coverage subject to a limit of no less than One Million Dollars ($1,000,000.00) for each Loan Party employee, One Million Dollars ($1,000,000.00) for each accident, and One Million Dollars ($1,000,000.00) policy limit.  The policy shall include endorsements for voluntary compensation, stop gap liability, Long-Shoreman’s and Harbors Workman’s Compensation Act and Maritime Coverages (as applicable).  If the Borrower has elected to self-insure workers compensation coverage in the State of New York (or any other state) with respect to Loan Party employees, the Agent must be furnished with a copy of the certificate from the state(s) permitting self-insurance and evidence of a stop loss excess workers compensation policy with a specific retention of no greater than One Hundred Fifty Thousand Dollars ($150,000.00) per occurrence.

 

 

(j)           Retention. If the Borrower’s general liability and automobile policies include a self insured retention, it is agreed and fully understood that the Borrower is solely responsible for payment of all amounts due within said self-insured retentions.  Any indemnification/hold harmless provision is extended to cover all liabilities associated with said self-insured retentions.

 

(k)           Umbrella Liability.  An umbrella liability policy shall be purchased by the Borrower with a limit of not less than Thirty Million Dollars ($30,000,000.00) providing excess coverage over all limits and coverages indicated in paragraphs (f), (h) and (i) above.  The limits can be obtained by a combination of primary and excess umbrella policies, provided that all layers follow form with the underlying policies indicated in (f), (h) and (i) are written on an “occurrence” form.  This policy shall be endorsed to include the Agent as an additional insured on behalf of the Banks, in the same manner set forth in Section 7.4(f) hereinabove.

 

(l)           Ratings.  All policies indicated above shall be written with insurance companies licensed and admitted to do business in all states where the Loan Parties, or any of them, is operating and shall be rated no lower than “A XII” in the most recent addition of A.M. Best’s and “AA” in the most recent edition of Standard & Poor’s, or such other carrier reasonably acceptable to Agent.  All policies discussed above shall be endorsed to provide that in the event of a cancellation, non-renewal or material modification, Agent shall receive thirty (30) days prior written notice thereof.  The Borrower shall furnish Agent with certificates of insurance executed by an authorized agent evidencing compliance with all insurance provisions discussed above on an annual basis.  The Borrower shall also furnish actual policy endorsements evidencing appropriate status of Agent (as mortgagee, loss payee and additional insured).  Certificates of insurance executed by an authorized agent of each carrier providing insurance evidencing continuation of all coverages will be provided on the Closing Date and annually on or before ten (10) days prior to the expiration of each policy.  All certificates and other notices related to the insurance program shall be delivered to Agent concurrently with the delivery of such certificates or notices to such carrier or to the Borrower.

 

(m)           Other Coverage.  Any other insurance reasonably requested by Agent or Required Lenders in such amount and covering such risks as may be reasonably required and customary in the race track/gaming industry in the general location of the Gaming/Racing Facilities.  Approval of any insurance by Agent shall not be a representation of solvency of any insurer or sufficiency of any coverage required under this Agreement.  All requirements are considered minimum in terms of the purchase and maintenance of insurance under this Agreement.

 

7.5.           Maintenance of Records.  Each Loan Party will keep, and will cause each of its Subsidiaries to keep, at all times books of record and account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and affairs, and each such Loan Party will provide, and will cause each of its Subsidiaries to provide, adequate protection against loss or damage to such books of record and account.

 

7.6.           Preservation of Corporate Existence.  Except as otherwise permitted by Section 8.7, the Borrower shall do or cause to be done, at its own cost and expense, all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of each such Subsidiary and the material rights (charter and statutory) and franchises of the Borrower and each such Subsidiary; provided, however, that the Borrower shall  not be required to preserve, with respect to itself, any material right or franchise and, with respect to any of its Subsidiaries, any such existence, material  right or franchise, if the Board of Directors of the Borrower, shall determine in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Borrower and its Subsidiaries, taken as a whole.

 

 

7.7.           Preservation of Assets.  The Borrower shall, and shall cause each of the Guarantors to, maintain its properties in good working order and condition in all material respects (subject to ordinary wear and tear) and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto and actively conduct and carry on its business; provided, however, that nothing in this section 7.7 shall prevent the Borrower or any of the Guarantors from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the good faith judgment of the Board of Directors or other governing body of the Borrower or the Guarantor concerned, as the case may be, desirable in the conduct of its businesses and is not disadvantageous in any material respect to the Banks.

 

7.8.           Inspection of Books and Assets.  (a)  Each Loan Party will allow any authorized representative, officer or accountant of any Bank or the Agent to visit and inspect any of its property, to examine its books of record and account (including, without limitation, all financial, accounting, contractual, production, regulatory, environmental, and all other business and other records with respect to such Loan Party or its subsidiaries), and to discuss its affairs, finances, accounts and all other matters relating to its business with its officers, during normal business hours and as often as the Agent may reasonably request and, in each such case, cause each of their respective Subsidiaries so to do.

 

(b)           Each Loan Party will allow any authorized representative, officer or accountant of any Bank or the Agent to discuss the Financial Statements, the other financial information from time to time delivered hereunder and the financial condition of each Loan Party with the Auditors.  At any time prior to repayment in full of the Obligations, each Loan Party hereby irrevocably authorizes the Auditors to discuss the foregoing with all such Persons.

 

(c)           The Borrower agrees to pay the expenses of any accountant engaged by the Agent to review Financial Statements of any Loan Party.

 

7.9.           Payment of Indebtedness.  Each Loan Party will duly and punctually pay, or cause to be paid, the principal of and the interest on all Indebtedness for Borrowed Money heretofore or hereafter incurred or assumed by such Loan Party or any of its Subsidiaries, or in respect of which such Loan Party or any of its Subsidiaries shall otherwise be liable, unless such Indebtedness for Borrowed Money be renewed or extended or such Loan Party shall be entitled to set off against such Indebtedness for Borrowed Money an obligation owed to such Loan Party by the holder of such Indebtedness for Borrowed Money, and will (and cause each Subsidiary to) faithfully observe, perform and discharge all the covenants, conditions and obligations which are imposed on such Loan Party or any of its Subsidiaries by any and all indentures and other agreements securing, relating to, or evidencing such Indebtedness for Borrowed Money or pursuant to which such Indebtedness for Borrowed Money is incurred, and such Loan Party will not permit any act or omission to occur or exist which is or may be declared to be a material default thereunder.

 

 

7.10.        Further Assurances.  Each Loan Party will, and will cause each of its Subsidiaries to, make, execute or endorse, and acknowledge and deliver or file, all such vouchers, invoices, notices, and certifications and additional agreements, undertakings, conveyances, transfers, assignments, or further assurances, and take any and all such other action, as the Agent, from time to time, deems reasonably necessary or proper in connection with this Agreement, the obligations of such Loan Party hereunder or under the Notes or any of the other Loan Documents to which such Loan Party is a party, or for the better assuring and confirming unto the Agent on behalf of the Banks all or any part of the security for the Obligations, including, without limitation, entering into amendments to the Mortgages requested by the Agent from time to time.

 

7.11.        Notice of Default.  Forthwith upon any officer of any Loan Party obtaining knowledge of the existence of a material Default or an Event of Default, the Borrower will deliver to the Agent a certificate signed by an officer of the Borrower specifying the nature thereof, the period of existence thereof, and what action the affected Loan Party proposes to take with respect thereto.

 

7.12.        Arms length Transactions.  Each Loan Party will conduct, and cause each of their respective Subsidiaries to conduct, all transactions with any of its respective Affiliates on an arms length basis.

 

7.13.        Solvency.  Each Loan Party will continue to be Solvent and ensure that each of their respective Subsidiaries which are Loan Parties will continue to be Solvent.

 

7.14.        Environmental Matters.  (a)  Borrower will promptly notify the Agent (with a description in reasonable detail) of:

 

(I)            the receipt of any material Environmental Claim;

 

(II)           the material violation of, or any condition which might result in a material violation of, any Environmental Law;

 

(III)         (A) the commencement of any judicial or administrative proceeding alleging a violation of any Environmental Law or (B) the commencement of any investigation alleging a material violation of any Environmental Law; or

 

(IV)         any material change in the representations and warranties in Section 10.12;

 

and each Loan Party will, and will cause each of their respective Subsidiaries to, commence within 90 days after any such request, and diligently prosecute to completion, such Remedial Action as the Agent or the Required Lenders may reasonably request, which is required by Environmental Law, in respect of any of the matters addressed in such notice.  As used in this Section 7.14(a) in relation to any Environmental Claim or any violation of Environmental Law or any change in the representations and warranties in Section 10.12 hereof, the term “material” shall mean that such Environmental Claim, violation or change (i) involves, or might reasonably be expected to involve Environmental Costs in excess of $500,000 or (ii) gives rise, or might reasonably be expected to give rise, to a Default or Event of Default.

 

 

(b)           Each Loan Party will, and will cause each of its Subsidiaries to, adopt (to the extent not already adopted) and maintain prudent practices with respect to compliance with Environmental Laws, including prudent air and water pollution control and solid and hazardous waste management practices and including at a minimum such practices as (i) may be required or dictated by then applicable Environmental Laws, and (ii) are necessary to maintain the value of the Agent’s and the Banks’ Liens in the Collateral free from all actual or threatened Environmental Claims.

 

7.15.        Consents of and Notice to Gaming/Racing Authorities.  (a)  Loan Parties shall make all necessary applications to and procure all necessary consents and approvals of the applicable Gaming/Racing Authorities to the: (i) pledge of the stock of the Subsidiaries pursuant to the Pledge Agreement, and (ii) the terms set forth in this Agreement and each of the other Loan Documents, to the extent which may be required by the applicable Gaming/Racing Authorities.

 

(b)           The Loan Parties shall comply in all material respects with all applicable statutes, rules and regulations requiring reports and disclosures to all applicable Gaming/Racing Authorities, including, but not limited to, reporting this revolving credit transaction, within the time period required by the applicable Gaming/Racing Authorities.

 

7.16.        Compliance with Access Laws.  (a)  Each Loan Party agrees that it, its Gaming/Racing Facilities and its Properties shall at all times be in material compliance with the requirements of the Americans with Disabilities Act of 1990, the Fair Housing Amendments Act of 1988, and other federal, state or local laws or ordinances related to disabled access, or any statute, rule, regulation, ordinance, order of Governmental Authorities, or order or decree of any court adopted or enacted with respect thereto, as now existing or hereafter amended or adopted (collectively, the “Access Laws”), as may be applicable to the respective Gaming/Racing Facilities. At any time, Agent may require a certificate of material compliance with the Access Laws and indemnification agreement in a form reasonably acceptable to Agent.  Agent may also require a certificate of material compliance with the Access Laws from an architect, engineer, or other third party acceptable to Agent.

 

(b)           Notwithstanding any provisions set forth herein or in any other document, Loan Parties shall not alter or permit any tenant or other person to alter the Gaming/Racing Facilities or the Properties in any manner which would increase Loan Parties’ responsibilities for compliance with the Access Laws without the prior written approval of Agent.  In connection with such approval, Agent may require a certificate of material compliance with the Access Laws from an architect, engineer or other person acceptable to Agent.

 

(c)           Loan Parties agree to give prompt written notice to Agent of the receipt by Loan Parties of any claims of violation of any of the Access Laws and of the commencement of any proceedings or investigations which relate to compliance with any of the Access Laws.

 

(d)           Loan Parties shall indemnify, defend and hold harmless the Banks and the Agent from and against any and all claims, demands, damages, costs, expenses, losses, liabilities, penalties, fines and other proceedings including, without limitation, reasonable attorneys’ fees and expenses arising directly or indirectly from or out of or in any way connected with any failure of the Gaming/Racing Facilities or the Properties to comply with any of the Access Laws as the same may have been applicable during the term of this Agreement. The obligations and liabilities of Loan Parties under this section shall survive the termination of this Agreement, any satisfaction, assignment, judicial or nonjudicial foreclosure proceeding, or delivery of a deed in lieu of foreclosure.

 

 

7.17.        Tradenames, Trademarks and Servicemarks.  The Loan Parties shall not assign or in any other manner alienate their respective interests in any material tradenames, trademarks or servicemarks relating or pertaining to the Gaming/Racing Facilities during the term of this Agreement except to another Loan Party.  No Loan Party shall change its name without first giving at least thirty (30) days prior written notice to Agent.

 

7.18.        Acquisitions.  If a Loan Party or any of its Subsidiaries acquires or creates another Subsidiary after the Closing Date (other than any Immaterial Subsidiary) or any Immaterial Subsidiary shall cease to constitute an Immaterial Subsidiary, then such Loan Party shall cause such newly acquired or created Subsidiary, or such former Immaterial Subsidiary, as applicable, to:

 

(a)           execute and deliver to the Agent a supplemental agreement in the form attached hereto as Exhibit D pursuant to which such Subsidiary shall unconditionally guarantee on a senior unsecured basis all of the Borrower’s obligations under the Notes and this Agreement on the terms set forth in this Agreement;

 

(b)           (i) execute and deliver to the Agent such amendments to the Security Documents necessary or advisable in order to grant to the Agent, for the benefit of the Banks, a first priority perfected security interest in the Capital Stock of such new Subsidiary, subject to Permitted Liens, which are owned by such Loan Party or such Subsidiary, and (b) deliver to the Agent any certificates representing such Capital Stock together with undated stock powers or instruments of transfer, as applicable, endorsed in blank;

 

(c)           cause such new Subsidiary to take such other actions necessary or advisable to grant to the Agent, as applicable, for the benefit of the Banks, a first priority perfected security interest in the Collateral of such new Subsidiary, subject to Permitted Liens, including the filing of UCC financing statements in such jurisdictions as may be required by the Security Agreement or by law;

 

(d)           take such further action and execute and deliver such other documents specified in this Agreement to effect the foregoing; and

 

(e)           deliver to the Agent an opinion of counsel that such supplemental Agreement and any other documents required to be delivered have been duly authorized, executed and delivered by such Subsidiary and constitute a legal, valid, binding and enforceable obligations of such Subsidiary and such other opinions of counsel regarding the perfection of such Liens in the Collateral as Agent may request.

 

Thereafter, such Subsidiary shall be a Guarantor for all purposes of this Agreement.

 

 

7.19.        Conditions of the Division of the Lottery of the State of New York.  The Loan Parties agree to comply with all conditions to the approval of the Agreement by the Division of the Lottery of the State of New York (the “Lottery”) set forth in a letter dated January 6, 2005 from the Lottery to counsel for the Borrower.

 

7.20.        Operating Accounts.  Borrower and its affiliates shall maintain deposit, demand and operating accounts with PBA with an average quarterly balance of at least $2,000,000; provided, however, that all accounts with a balance in excess of $250,000 shall be maintained as demand deposit accounts and if the balance in any account that is not maintained as a demand deposit account in accordance with the terms hereof shall exceed $250,000, such account shall be automatically converted to a demand deposit account. Following the Closing Date, Agent and Borrower shall determine which such accounts of Borrower and its affiliates shall be maintained with PBA, provided that Borrower will provide to Agent copies of any agreement with any other bank where Borrower maintains such accounts prior to the Closing Date that require the Borrower to maintain certain minimum balances.  PAB will require Borrower and its affiliates to maintain in the accounts minimum account balance requirements at PAB of $2,000,000, measured on a quarterly basis, with any shortfall to be subject to a charge at a rate of the Loan interest rate plus 3% (12% floor) per annum; Exceptions for accounts other than at PAB will be specified by the Borrower based on current account agreements and requirements subject to PAB approval, which approval shall not be unreasonably withheld.

 

Section 8.               NEGATIVE COVENANTS.

 

The Loan Parties party hereto severally covenant and agree that so long as this Agreement is in effect and until all of the Notes, together with interest, commitment commission and all other obligations incurred hereunder, are paid in full, such Loan Parties will perform, and will cause each of their respective Subsidiaries to perform, the obligations set forth in this Section 8 (unless it shall first have procured the written consent of the Required Lenders to do otherwise).

 

8.1.           Engage in Same Type of Business.   No Loan Party will enter into, or permit any of their respective Subsidiaries to enter into, any business or activity other than the business or businesses in which it is presently engaged or it intends to engage in, as set forth in the Borrower’s public filings with the SEC.

 

8.2.           Liens.  Each Loan Party will not, and will not cause or permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens (other than Permitted Liens) of any kind against or upon any of the Collateral whether owned on the Closing Date or acquired after the Closing Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom.

 

8.3.           Other Indebtedness.  From and after the Closing Date, no Loan Party will, nor permit any of its Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of any Indebtedness (other than Permitted Indebtedness); provided, however, that if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, the Borrower or any Guarantor may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness the Consolidated Fixed Charge Coverage Ratio of the Borrower will be, after giving effect to the incurrence thereof, greater than 2.0 to 1.0.

 

 

8.4.           Advances from Customers.  No Loan Party will contract for, create, incur, assume or suffer to exist, or permit any of their respective Subsidiaries so to do, advances or deposits from customers other than in the ordinary course of business; provided that the aggregate amount of advances or deposits by the Loan Parties from any one customer (including Persons directly or indirectly controlling, controlled by, or under common control with such customer) shall not exceed $1,000,000 at any one time.

 

8.5.           Advances and Loans.  Except pursuant to the CLT Line of Credit, no Loan Party will lend money or credit, or make advances to any Person or permit any of their respective Subsidiaries so to do; except (i) the sale of products of the Borrower and its Subsidiaries on credit in the ordinary course of business on terms not more favorable than those used by other Persons similarly situated and engaged in the same or similar business; (ii) loans from any member of the Empire Group to the Borrower, if:  (a)  such loan is subordinated (in manner, form and scope satisfactory to the Agent) to the Obligations and unsecured; and (b) such loans are made and accepted at normal commercial rates of interest for such credits; and (c) such loans are evidenced by intercompany notes, which notes and any permitted security therefor are pledged by such Loan Party to the Agent for the benefit of the Banks; (iii) advances to employees for travel and business expenses not in excess of $50,000 at any time outstanding; and (v) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business.

 

8.6.           Purchase or Sale Agreements.  No Loan Party will enter into or be a party to, or permit any of their respective Subsidiaries to enter into or be a party to (i) any contract for the purchase or use of materials, supplies or other property or for the performance of services if such contract requires that payment for such materials, supplies or other property, or the use thereof, or for such services, shall be made by such Loan Party or Subsidiary, as the case may be, regardless of whether or not delivery is capable of being made of such material, supplies or other property, or such services are performed, or (ii) any contract for the sale or use of materials, supplies or other property if such contract provides that payment to such Loan Party or to any such Subsidiary for such materials, supplies or other property or the use thereof, shall be subordinated to or otherwise subjected to the prior payment of any indebtedness (or any instrument evidencing such indebtedness) owed or to be owed to any Person.

 

 

8.7.           Consolidation and Merger.  No Loan Party will wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation or permit any of their respective Subsidiaries so to do (or agree to do any of the foregoing at any future time) except that (i) any wholly owned Subsidiary of the Borrower may merge into the Borrower; provided that the Borrower shall at all times be the continuing corporation, and (ii) any wholly owned Subsidiary of the Borrower may merge into any other wholly-owned Subsidiary of the Borrower provided that the shares of the continuing corporation are pledged to the Agent for the benefit of the Banks; and (iii) the Borrower may consolidate or merge with another Person or dispose of all or substantially all its assets if either (a) the Borrower shall be the surviving or continuing corporation; or (b) the Person (if other than the Borrower) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Borrower (the “Surviving Entity”):  (x) shall be a corporation  organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and (y) shall  expressly assume, (i) by supplemental agreement (in form and substance satisfactory to the Agent), executed and delivered to the Agent, all of the Borrower’s obligations under the Notes, this Agreement and the other Loan Documents, including, but not limited to, the due and punctual payment of the principal of, and interest and the performance of every covenant of the Borrower under the Notes, this Agreement and the other Loan Documents and (ii) by amendment, supplement or other instrument (in form and substance satisfactory to the Agent), executed and delivered to the Agent, all obligations of the Borrower under the Security Documents, and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created thereunder on the Collateral owned by or transferred to the Surviving Entity; (2) immediately after giving effect to such transaction and the assumption contemplated by clause (iii)(b)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of such transaction), no Default or Event of Default shall have occurred or be continuing; (3) immediately after giving effect to such transaction on a pro forma basis and the assumption contemplated by clause (iii)(b)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with such transaction), the Borrower or such Surviving Entity, as the case may be, (a) shall have a Consolidated Net Worth at least equal to the Consolidated Net Worth of the Borrower immediately prior to such transaction and (b) shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 8.3; (4) the Borrower or the Surviving Entity, as the case may be, shall have delivered to the Agent an officer’s certificate and an opinion of counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied; and (5) the Banks will not recognize income, gain, or loss for federal income tax purposes as a result of such transaction and will be subject to federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such transaction had not occurred.  For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more of the Borrower’s Subsidiaries which constitutes all or substantially all of the properties and assets of the Borrower, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Borrower.  Written notice of any merger permitted by this Section 8.7, however, shall be given by the Borrower to the Agent before the effective date of such merger or within five Business Days thereafter.

 

 

8.8.           Sale of Assets. The Borrower will not, and will not permit any of its Subsidiaries to consummate any Transfer of the Monticello Land except a Transfer of the Trust Land to the United States in trust for an Indian Tribe which is developing a casino in conjunction with the Borrower.  No Loan Party will, nor permit any of its Subsidiaries to, consummate an Applicable Asset Sale unless:  (1) such Loan Party or the applicable Subsidiary, as the case may be, receives consideration at the time of such Applicable Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed; (2) at least 85% of the consideration received by such Loan Party or the Subsidiary, as the case may be, from such Applicable Asset Sale is in the form of cash or Cash Equivalents and is received at the time of such disposition; provided that the amount of any liabilities (as shown on the most recent applicable balance sheet) of such Loan Party or such Subsidiary (other than liabilities that are by their terms subordinated to the Loans) that are assumed by the transferee of any such assets shall be deemed to be cash for purposes of this provision so long as the documents governing such liabilities provide that there is no further recourse to such Loan Party or any of its Subsidiaries with respect to such liabilities; and (3) upon consummation of such Applicable Asset Sale, Borrower shall apply, or cause such Loan Party to apply, the Net Proceeds relating to such Applicable Asset Sale within eighty nine (89) days of receipt thereof to make an investment in properties and assets that replace the properties or assets that were the subject of such Applicable Asset Sale or in any other properties and assets that will be used, or Capital Stock of a Person engaged, in the business of the Borrower and the Guarantors as existing or contemplated on the Closing Date or in businesses reasonably related thereto (“Replacement Assets”).  Within ninety (90) days after an Applicable Asset Sale, the Net Proceeds from such Applicable Asset Sale that shall have not been applied on or before such date as permitted in clause (3) of the preceding paragraph shall be applied by the Borrower or such Subsidiary to repay the outstanding principal amount of the Loans, and accrued and unpaid interest thereon to the date of repayment as provided in Section 2.4(f); provided, however, that if at any time any non-cash consideration received by any Loan Party or any Subsidiary thereof, as the case may be, in connection with any Applicable Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Applicable Asset Sale hereunder on the date of such conversion or disposition, as the case may be, and the Net Proceeds thereof shall be applied in accordance with this covenant.  In the event of the transfer of substantially all (but not all) of the property and assets of the Borrower and its Subsidiaries as an entirety to a Person in a transaction permitted under Section 8.7 which transaction does not constitute a Change of Control, the successor entity shall be deemed to have sold the properties and assets of the Borrower and its Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it constituted an Applicable Asset Sale.  In addition, the Fair Market Value of such properties and assets of the Borrower or its Subsidiaries deemed to be sold shall be deemed to be Net Proceeds for purposes of this covenant.

 

8.9.           Purchase of Assets.  Except as permitted by Sections 8.7 and 8.12, no Loan Party will purchase, lease or otherwise acquire all or any substantial part of the property or assets of any Person, or permit any of their respective Subsidiaries so to do, or purchase, lease or otherwise acquire property or net assets, or permit any of their respective Subsidiaries so to do.

 

8.10.        Related Transactions.  (a)  No Loan Party will enter into any transaction with any other member of the Empire Group or any Affiliate of any member of the Empire Group (or with any relative of such Affiliate) or with which any officer or director of any member of the Empire Group has a financial interest on more favorable terms than if such Person was totally unrelated, or permit any of their respective Subsidiaries to so do.

 

(b)           No Loan Party will make, or cause or permit any of their respective Subsidiaries to make, any payments, directly or indirectly, to any Loan Party or Affiliate or any officer (other than salary and bonuses consistent with past practices), director (other than director’s fees and expense reimbursement consistent with past practices) or stockholder of any Loan Party or Affiliate, except as permitted by Sections 8.10(a) and 8.14.

 

 

8.11.        Subsidiaries.  No Loan Party will sell, assign or transfer, or in any way part with control of, any shares of capital stock of any of their respective Subsidiaries or any indebtedness or obligations of any character of any of their respective Subsidiaries, or permit any of their respective Subsidiaries so to do with respect to any shares of capital stock of any other Subsidiary or any indebtedness or obligations of any character of such Loan Party or any of its other Subsidiaries, or issue, or permit any of their respective Subsidiaries to issue, any additional shares of capital stock except (a) as permitted by Section 8.7, (b) the Borrower may convert its 5-1/2% Convertible Senior Notes Due 2014 to common stock pursuant to the terms of the Indenture, and (c) the Borrower may issue common stock.

 

8.12.        Capital Expenditures.  No Loan Party will make capital expenditures (by Capitalized Lease Obligations or otherwise) for acquisitions, construction or improvement of fixed assets, or permit any of its Subsidiaries so to do, unless, after giving effect thereto, during any Fiscal Year, the aggregate amount of all capital expenditures by all Loan Parties during such Fiscal Year would not exceed $1,000,000; provided, however, that Monticello Raceway Management may spend (a) up to $750,000 on improvements to the paddock area at Monticello Raceway, (b) any amount that Sections 319 and 527 of the New York Racing, Pari-Mutuel Wagering and Breeding Law prescribes be spent on capital improvements, and (c) any amount received as a grant from the State of New York for the purpose of making of capital expenditures, and provided, further, however, that any Loan Party may make capital expenditures in connection with the development of (i) a casino developed in conjunction with an Indian Tribe on the Trust Land and/or (ii) any Native American casino to be developed by the Seneca Cayuga Tribe of Oklahoma (or any Affiliate thereof) in conjunction with any member(s) of the Empire Group..

 

8.13.        Investments.  Except as permitted by Sections 8.7 and 8.8, no Loan Party will invest in (by capital contribution or otherwise), or acquire for investment or purchase or make any commitment to purchase the obligations or stock of, any Person or permit any of its Subsidiaries so to do, except Cash Equivalents.

 

8.14.        Dividends, Distributions and Purchases of Capital Stock.  No Loan Party will declare or pay any dividends (other than dividends payable in shares of its capital stock), or return any capital to its stockholders as such or authorize or make any other distribution, payment or delivery of property or cash to its stockholders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for a consideration (otherwise than in exchange for, or from the proceeds of the substantially concurrent sale of, other shares of capital stock of the Borrower), any shares of any class of its capital stock now or hereafter outstanding, or redeem, return, purchase or otherwise acquire, directly or indirectly, for a consideration, any subordinated debt or make any payments on account of the principal thereof, or set aside any funds for any of the foregoing purposes.

 

8.15.        Leasebacks.  No Loan Party will enter into, or permit any of its Subsidiaries to enter into, any arrangement with any bank, insurance company or other lender or investor providing for the leasing to any Loan Party or any of its Subsidiaries of real or personal property (i) which at the time has been or is to be sold or transferred by any Loan Party or any of its Subsidiaries to such lender or investor, or (ii) which has been or is being acquired from another person by such lender or investor or on which one or more buildings or facilities have been or are to be constructed by such lender or investor for the purpose of leasing such property to a Loan Party or any such Subsidiary.

 

 

8.16.        Debt Service Coverage Ratio.  The Borrower and Monticello Raceway Management shall not permit the Monticello Raceway Debt Service Coverage Ratio to be less than 1.50 to 1 as of the end of any fiscal quarter.

 

8.17.        Accounting Changes.  (a)  No Loan Party will make or permit any of its Subsidiaries to make any significant change in accounting treatment and reporting practices, except as permitted or required by GAAP.

 

(b)           No Loan Party will change its Fiscal Year or permit any of its Subsidiaries to change its Fiscal Year.

 

8.18.        Compliance with ERISA.  No Loan Party will (i) terminate, or permit any of its Subsidiaries to terminate, any Pension Plan so as to result in any material liability of the Borrower or any such Subsidiary to the PBGC, (ii) permit to exist the occurrence of any Reportable Event (as defined in Section 4043 of ERISA), or any other event or condition, which presents a material risk of such a termination by the PBGC of any Pension Plan, (iii) allow, or permit any such Subsidiary to allow, the aggregate amount of “benefit liabilities” (within the meaning of Section 4001(a)(16) of ERISA) under all Pension Plans of which the Borrower or any ERISA Affiliate is a “contributing sponsor” (within the meaning of Section 4001(a)(13) of ERISA) to exceed $100,000, (iv) allow, or permit any such Subsidiary to allow, any Plan to incur an “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not waived, (v) engage, or permit any such Subsidiary or any Plan to engage, in any “prohibited transaction” (within the meaning of Section 406 of ERISA or Section 4975 of the Code) resulting in any material liability to the Borrower or any ERISA Affiliate (considered by itself or together with all other such liabilities of the Borrower and all ERISA Affiliates), (vi) allow, or permit any such Subsidiary to allow, any Plan to fail to comply with the applicable provisions of ERISA and the Code in any material respect, (vii) fail, or permit any such Subsidiary to fail, to make any required contribution to any Multiemployer Plan, or (viii) completely or partially withdraw, or permit any such Subsidiary to completely or partially withdraw, from a Multiemployer Plan, if such complete or partial withdrawal will result in any material withdrawal liability under Title IV of ERISA.

 

8.19.        Minimum Net Worth.  Commencing with the fiscal quarter ending December 31, 2009, the Borrower shall not permit Tangible Net Worth to be less than $15 million as of the end of any fiscal quarter.

 

8.20.        Maximum Leverage Ratio.  Commencing with the fiscal quarter ending December 31, 2009, the Borrower shall not permit the Leverage Ratio to be greater than 6.00:1.0 as of the end of any fiscal quarter.

 

 

Section 9.               EVENTS OF DEFAULT.

 

Upon the occurrence of any of the following specified events (each an “Event of Default”):

 

9.1.           Principal and Interest.  The Borrower shall default in the due and punctual payment of (i) any principal due on any Loan or any Note; or (ii) any interest on any Loan or Note or in the due and punctual payment of other amounts due hereunder; provided that failure to duly and punctually make an interest payment shall not be an Event of Default under this Section 9.1 if such interest payment is paid within five days after the date it is due and Borrower has not been late in making an interest payment on any of the Notes more than once in the preceding 6 months; or

 

9.2.           Representations and Warranties.  Any representation, warranty or statement made by any Loan Party or officer thereof in any Loan Document, or in any certificate or statement furnished pursuant to or in connection with any of the foregoing, shall prove to have been untrue in any material respect on the date as of which made; or

 

9.3.           Covenants.  Any Loan Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to Section 7.4, Section 7.11 or Section 8; or

 

9.4.           Other Covenants.  Any Loan Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any of the provisions of this Agreement (other than those referred to in Sections 9.1, 9.2 or 9.3) and such default (which shall be capable of cure) shall continue unremedied for a period of 30 days after the earlier of the date on which the Agent gives the Borrower notice of such default or the date an officer of any Loan Party becomes aware thereof; or

 

9.5.           Other Obligations.  Any installment or installments of any Indebtedness for Borrowed Money of any Loan Party in an aggregate amount in excess of $250,000 shall not be paid (or set off in good faith against an obligation owed to such Loan Party by the holder of such Indebtedness for Borrowed Money) within 30 days of when the same becomes due and payable including any applicable grace period, or there shall occur and be continuing any event which constitutes an event of default under any instrument, agreement or evidence of indebtedness relating to any Indebtedness for Borrowed Money of any Loan Party in excess of $1,000,000 in aggregate principal amount, the effect of which is to permit the holder or holders of such instrument, agreement or evidence of Indebtedness, or a trustee, agent or other representative on behalf of such holder or holders, to cause the Indebtedness for Borrowed Money evidenced thereby to become due prior to its stated maturity; or

 

9.6.           Ownership.  A Change of Control shall occur; or the Borrower shall at any time own less than 50% of the outstanding capital stock of (directly or indirectly) each of its Subsidiaries or any such stock (or any other stock issued by any Subsidiary) shall be the subject of a Lien (other than Liens to the Agent and the Banks hereunder and Permitted Liens); or

 

 

9.7.           Insolvency.  Any Loan Party shall dissolve or suspend or discontinue its business, or shall make an assignment for the benefit of creditors or a composition with creditors, shall be unable or admit in writing its inability to pay its debts as they mature, shall file a petition in bankruptcy, shall become insolvent (howsoever such insolvency may be evidenced), shall be adjudicated insolvent or bankrupt, shall petition or apply to any tribunal for the appointment of any receiver, liquidator or trustee of or for it or any substantial part of its property or assets, shall commence any proceedings relating to it under any bankruptcy, reorganization, arrangement, readjustment of debt, receivership, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or there shall be commenced against any Loan Party any such proceeding which shall remain undismissed for a period of 60 days or more, or any order, judgment or decree approving the petition in any such proceeding shall be entered; or any Loan Party shall by any act or failure to act indicate its consent to, approval of or acquiescence in, any such proceeding or in the appointment of any receiver, liquidator or trustee of or for it or any substantial part of its property or assets, or shall suffer any such appointment to continue undischarged or unstayed for a period of 60 days or more; or any Loan Party shall take any action for the purpose of effecting any of the foregoing; or any court of competent jurisdiction shall assume jurisdiction with respect to any such proceeding or a receiver or trustee or other officer or representative of a court or of creditors, or any court, governmental officer or agency, shall under color of legal authority, take and hold possession of any substantial part of the property or assets of any Loan Party; or

 

9.8.           Security Documents.  The material breach by any Loan Party of any term or provision of any Security Document to which such Loan Party is a party, which, if such breach is susceptible of cure, has not been cured within 10 days after the earlier of the date on which the Agent gives the Borrower notice thereof or the date an officer of any Loan Party becomes aware thereof, or any Security Document is at any time not in full force and effect; or any of the Security Documents shall fail to grant to the Agent on behalf of the Banks the Lien and security interest (if any) purported to be created thereby; or any Guarantor shall assert that it is not liable as a guarantor hereunder; or

 

9.9.           Judgments.  Unless adequately insured, final judgment for the payment of money in excess of $1,000,000 shall be rendered against any Loan Party, and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed or contested in good faith; or

 

9.10.        Intercreditor Agreement.  The Intercreditor Agreement is at any time not in full force and effect when the obligations set forth in the Intercreditor Agreement as being subordinated are outstanding; or

 

9.11.        Permits.  Any Gaming/Racing Permit of any member of the Empire Group shall for any reason be revoked and not re-issued to such Person within 30 days of such revocation and such revocation could be reasonably expected to have a Material Adverse Effect; or

 

9.12.        ERISA.  Any ERISA Affiliate of the Borrower which is not a Subsidiary of the Borrower shall fail in the performance or observance of any term, provision or agreement with respect to a Plan or a Multiemployer Plan set forth in Section 8.18 (other than 8.18 (v) or (vi)) as if such ERISA Affiliate were a Subsidiary of the Borrower; or

 

 

9.13.        Liquidity.  The Borrower and its subsidiaries, determined on a consolidated basis in accordance with GAAP, shall have less than $2,000,000 of Liquidity on any date.

 

then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing the Agent may (and shall, if instructed in writing by the Required Lenders) by written notice to the Borrower: (i) declare the principal of and accrued interest on the Notes to be, whereupon the same shall forthwith become, due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and/or (ii) declare the commitments of the Banks to make Loans, whereupon such commitments of the Banks shall forthwith terminate immediately; provided that if any Event of Default described in Section 9.7 shall occur with respect to the Borrower, the result which would otherwise occur only upon the giving of written notice by the Agent or the Required Lenders to the Borrower as herein described shall occur automatically, without the giving of any such notice;

 

Section 9A.            GUARANTY.

 

In order to induce the Banks and the Agent to enter into this Agreement and to extend credit hereunder and in recognition of the direct benefits to be received by each of the Guarantors from the proceeds of the Loans, each Guarantor, jointly and severally, hereby agrees with the Banks and the Agent as follows.

 

               9A.1.       The Guaranty.  Each Guarantor hereby fully,  irrevocably and unconditionally, jointly and severally, guarantees (such guarantee to be referred to herein as the “Guaranty”), to each of the Banks and to the Agent and their respective successors and assigns that (i) the principal of, premium, if any and interest on the Loans shall be promptly paid in full when due, subject to any applicable grace period, whether upon redemption pursuant to the terms of the Notes, by acceleration or otherwise, and interest on the overdue principal, if any, and interest on any interest, if any, to the extent lawful, of the Notes and all other obligations of the Borrower to the Banks and the Agent hereunder, thereunder or under any other Loan Document shall be promptly paid in full or performed, all in accordance with the terms hereof, thereof and of the Loan Documents; and (ii) in case of any extension of time of payment or renewal of any of the Notes or of any such other obligations, the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise, subject, however, in the case of clauses (i) and (ii) above, to the limitations set forth in Section 9A.3.  The Guaranty of each Guarantor shall rank senior in right of payment to all subordinated Indebtedness of such Guarantor and equal in right of payment with all other senior obligations of such Guarantor.  Each Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes, this Agreement, any Security Document, the absence of any action to enforce the same, any waiver or consent by any of the Banks with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against the Borrower, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor.  Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Borrower, any right to require a proceeding first against the Borrower, protest, notice and all demands whatsoever and covenants that this Guaranty shall not be discharged except by complete performance of the obligations contained in the Notes, this Agreement and in this Guaranty.  The obligations of each Guarantor are limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guaranty or pursuant to its contribution obligations under this Agreement, shall result in the obligations of such Guarantor under the Guaranty not constituting a fraudulent conveyance or fraudulent transfer under federal or state law.  The net worth of any Guarantor for such purpose shall include any claim of such Guarantor against the Borrower for reimbursement and any claim against any other Guarantor for contribution.  Each Guarantor may consolidate with or merge into or sell its assets to the Borrower or another Guarantor without limitation in accordance with Sections 8.7 and 8.8.  If any Bank or the Agent is required by any court or otherwise to return to the Borrower, any Guarantor, or any custodian, agent, liquidator or other similar official acting in relation to the Borrower or any Guarantor, any amount paid by the Borrower or any Guarantor to the Agent or such Bank, this Guaranty, to the extent theretofore discharged, shall be reinstated in full force and effect.  Each Guarantor further agrees that, as between each Guarantor, on the one hand, and the Banks and the Agent, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 9 for the purposes of this Guaranty notwithstanding any stay, injunction or other prohibition preventing such  acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Section 9, such obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of this Guaranty.

 

               9A.2.       Release Of A Guarantor.  A Guarantor will be released from its Guaranty  (and may subsequently dissolve) without any action required on the part of the Agent or any Bank:  (1) if all of the Capital Stock issued by such Guarantor or all or substantially all of the assets of such Guarantor are sold or otherwise disposed of (including by way of merger or consolidation) to a Person other than the Borrower or any of its Subsidiaries and the Borrower otherwise complies, to the extent applicable, with the conditions set forth under Section 8.7 that are required to be satisfied thereunder either prior to or concurrent with the consummation of the applicable transaction, or (2) upon satisfaction and discharge of this Agreement or payment in full of the principal of, premium, if any, accrued and unpaid interest on the Loans and all other Obligations under the Notes, this Agreement, the Security Documents and the Guaranties that are then due and payable.  At the Borrower’s expense, the Agent shall promptly deliver an appropriate instrument evidencing such release upon receipt of a request by the Borrower accompanied by an officer’s certificate certifying as to the compliance with this Section 9A.2.  Any Guarantor not so released remains liable for the full amount of its Guaranty as provided in this Section 9A.

 

               9A.3.       Limitation Of Guarantor’s Liability.  Each Guarantor and, by its acceptance hereof, each of the Banks hereby confirms that it is the intention of all such parties that the guarantee by such Guarantor pursuant to its Guaranty not constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law.  To effectuate the foregoing intention, the Banks and such Guarantor hereby irrevocably agree that the obligations of such Guarantor under the Guaranty shall be limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guaranty or pursuant to Section 9A.5, result in the obligations of such Guarantor under the Guaranty not constituting such fraudulent transfer or conveyance.

 

 

               9A.4.        Guarantors May Consolidate, Etc., On Certain Terms.  Each Guarantor (other than any Guarantor whose Guaranty is to be released in accordance with the terms of the Guaranty and this Agreement in connection with any transaction complying with Section 8.7) will not, and the Borrower will not cause or permit any Guarantor to, consolidate with or merge with or into any Person other than the Borrower or any other Guarantor unless:  (1) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (2) such entity assumes by amendment, supplement or other instrument (in form and substance reasonably satisfactory to the Agent), executed and delivered to the Agent, all of the obligations of the Guarantor under the Guaranty and the performance of every obligation of the Guaranty, the Agreement, the other Loan Documents and, to the extent applicable, the Intercreditor Agreement, and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Security Documents on the Collateral owned by or transferred to the surviving entity; (3) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (4) immediately after giving effect to such transaction on a pro forma basis and the assumption contemplated in clause (2) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with such transaction), the Borrower could satisfy the provisions of Sections 8.7(3)(a) and 8.7(3)(b).

 

               9A.5.       Contribution.  In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree, inter se, that each Guarantor that makes a payment or distribution under a Guaranty shall be entitled to a pro rata contribution from each other Guarantor hereunder based on the net assets of each other Guarantor.  The preceding sentence shall in no way affect the rights of the Banks to the benefits of this Agreement, the Notes, the other Loan Documents or the Guaranties.

 

               9A.6.       Waiver of Subrogation.  Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Banks in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.

 

               9A.7.        Waiver of Stay, Extension or Usury Laws.  Each Guarantor covenants to the extent permitted by law that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive such Guarantor from performing its Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Guaranty; and each Guarantor hereby expressly waives to the extent permitted by law all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Agent, but shall suffer and permit the execution of every such power as though no such law had been enacted.

 

 

               9A.8.       Cumulative Remedies.  All remedies of the Agent and the Banks against the Borrower and the Guarantors are cumulative.  All powers of the Agent and the Banks to exercise any right or remedy against, or to require performance by, any Loan Party shall remain in full force and effect until specifically waived or released by an instrument in writing executed by the Agent and the Required Lenders.

 

Section 10.             REPRESENTATIONS AND WARRANTIES.

 

In order to induce the Agent and the Banks to enter into this Agreement and to make the Loans provided for herein, each of the Loan Parties party hereto makes the following representations, covenants and warranties, as of the Closing Date, which representations, covenants and warranties shall survive the execution and delivery of this Agreement and the other documents and instruments referred to herein:

 

10.1.        Status; Validity.  (a)  Each Loan Party is a duly organized and validly existing corporation or limited liability company in good standing under the laws of the jurisdiction of its incorporation or organization and has the corporate or limited liability company power and authority to own or hold under lease its property and assets, to transact the business in which it is engaged, to enter into and perform this Agreement and the other Loan Documents to which it is party, and, as to the Borrower, to borrow hereunder.  Each Loan Party is duly qualified or licensed as a foreign corporation or limited liability company in good standing in each jurisdiction where failure to so qualify would have a Material Adverse Effect.

 

(b)           The execution, delivery and performance by the Loan Parties of this Agreement and the other Loan Documents to which each is party and the other documents, agreements or instruments provided for therein to which each is party, the consummation of the transactions contemplated thereunder and the use of the proceeds of the Loans contemplated on the Closing Date have been duly authorized by all necessary corporate or limited liability company and stockholder or member action.  This Agreement and the other Loan Documents and the other documents, agreements or instruments provided for therein to which each is party are the legal, valid and binding obligations of the Loan Parties party thereto, enforceable in accordance with their respective terms subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization and similar laws affecting the enforcement of creditors’ rights generally and to general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

10.2.        Compliance with Other Instruments.  (a)  No Loan Party or Subsidiary is in material default under any material contract, indenture or other agreement to which it is a party, and (b) neither the execution, delivery or performance of this Agreement and the other Loan Documents nor the consummation of the transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or thereof, will (i) contravene any provision of any Legal Requirement or (ii) conflict or will be inconsistent with or will result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or, except as provided by the Security Documents, result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Loan Party pursuant to the terms of any indenture, mortgage, deed of trust or other agreement to which such Loan Party is a signatory or by which such Loan Party is bound or to which such Loan Party may be subject or (iii) violate any provision of the Charter Documents of such Loan Party except with respect to matters described in the foregoing clauses (a) and (b) which could not reasonably be expected to have a Material Adverse Effect.

 

 

10.3.        Litigation.  Except as disclosed in the SEC Documents or the Offering Circular (or, with respect to actions, suits and proceedings not pending or threatened prior to the Closing Date, as notified to the Agent after the Closing Date pursuant to Section 7.2), there are no actions, suits or proceedings pending or, to the knowledge of any Guarantor or the Borrower, threatened, against or affecting any Loan Party before any Government Authority, which, if adversely determined, would have a Material Adverse Effect on the Borrower or on the Empire Group, taken as a whole.

 

10.4.        Compliance with Law.  Except as disclosed on Schedule 10.4(a) to this Agreement or matters which could not result in a Material Adverse Change in respect of the Borrower or the Empire Group taken as a whole:  (a) all business and operations of each Loan Party have been and are being conducted in accordance with all applicable Legal Requirements; (b) each Loan Party has obtained all permits, licenses and authorizations, or consents which are otherwise necessary, for such Person to conduct its business as it is conducted (including, without limitation, the ownership and the operation of the Gaming/Racing Facilities) and all of which are listed on Schedule 10.4(b) to this Agreement; and (c) no Loan Party or Subsidiary is a party to or to its knowledge has been threatened with, and to its knowledge there are no facts existing as a basis for any governmental or other proceeding which might result in a suspension, limitation or revocation of any such permit, license or authorization.

 

10.5.        Capitalization.  (a)  Schedule 10.5(a) to this Agreement is a true, correct and complete list (as to each member of the Empire Group) of such Person’s authorized Capital Stock, the par value of same, and the number of such shares or membership interests issued and outstanding.  All of the shares and membership interests of Subsidiaries of the Borrower listed on said schedule as outstanding have been duly and validly issued, are fully paid and nonassessable, are now outstanding, are owned beneficially and of record as indicated on said schedule, and are owned free and clear of all Liens (except Permitted Liens).

 

(b)           Except as disclosed on Schedule 10.5(b) to this Agreement, no member of the Empire Group has outstanding any option, warrant, bonds, debentures or other right, put, call or commitment to issue, or any obligation or commitment to purchase any of its authorized Capital Stock, or any securities convertible into or exchangeable for any of its authorized Capital Stock.

 

10.6.        Governmental Approvals.  No order, permission, consent, approval, license, authorization, registration or validation of, or filing with, or exemption by, any Government Authority is required to authorize, or is required in connection with the execution, delivery and performance of this Agreement or the other Loan Documents by any Loan Party except for any of the foregoing which shall have been obtained, received or filed and except for filings necessary for perfection of Liens in favor of the Banks.

 

 

10.7.        Federal Reserve Margin Regulations; Proceeds.  (a)  No member of the Empire Group is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System).  No part of the proceeds of any Loans will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock.

 

(b)           The proceeds of the Loans shall be used solely for working capital purposes and general corporate purposes of the Borrower and its consolidated Subsidiaries.

 

10.8.        Taxes.  (a)  All tax returns of any nature whatsoever, including but not limited to, all Federal income and material, payroll, stock transfer, and excise tax returns and all appropriate and material state and local income, sales, excise, payroll, franchise and real and personal property tax returns, and corresponding returns under the laws of any jurisdiction, which are required to be filed by each Loan Party have been or will be filed by the due date or extended due date of such returns.

 

(b)           Except for amounts which in the aggregate do not exceed $50,000, (i) all tax amounts due and payable with respect to each member of the Empire Group have been paid or accrued, and (ii) there are no tax liabilities, interest or penalties payable which remain unpaid or accrued.

 

10.9.        Investment Company Act.  No any Loan Party is an investment company or a company controlled by an investment company within the meaning of the Investment Company Act of 1940, as amended.  No Loan Party is a “holding company” as defined in the Public Utility Holding Company Act of 1935, as amended, or subject to any other federal or state statute or regulation limiting its ability to incur Indebtedness for Borrowed Money other than the Gaming/Racing Law.

 

10.10.      Properties of the Borrower.  All Real Property of the Loan Parties and the locations thereof as of the Closing Date are listed on Schedule 6.4(c) to this Agreement.  There are no patents, trademarks, copyrights or trade names that are material to any Loan Party’s business or operations except as set forth on Schedule 10.10.  All material contracts, indentures and other agreements or similar commitments of the Loan Parties are in full force and effect to the knowledge of any of the Loan Parties, none of the parties thereunder are in material default thereunder and no written notice of default has been given or received.

 

10.11.      Financial Condition.  (a)  The audited consolidated Financial Statements of the Borrower and its consolidated Subsidiaries for each of its Fiscal Years ending in December 31, 2008 (inclusive), have been delivered to the Agent, have been prepared in accordance with GAAP and fairly present the financial condition and the results of operations of the Borrower and its consolidated Subsidiaries for the periods covered thereby.

 

(b)           There has been no Material Adverse Change in respect of the Empire Group since December 31, 2008 except as disclosed in the SEC Documents or the Offering Circular.

 

 

(c)           As of the Closing Date, each Loan Party possesses, in the opinion of such Loan Party, sufficient capital to conduct the business in which it is engaged.

 

(d)           Schedule 10.11 lists all Capital Leases to which any Loan Party is a party as of the Closing Date.

 

10.12.      Environmental Matters.  Except as set forth in the Environmental Report and except as would not reasonably be expected to have a Material Adverse Effect,

 

(a)           each Loan Party (and any predecessor in interest of any of them) has been and continues to be in material compliance with all applicable Environmental Laws;

 

(b)           Each Loan Party has obtained all material permits and approvals required under Environmental Laws, including all material environmental, health and safety permits, licenses, approvals, authorization, variances, agreements, and waivers of Government Authorities (“Environmental Permits”) necessary for the conduct of its business and the operation of its facility, and all such Environmental Permits are in good standing and each Loan Party is in compliance with all material terms and conditions of such Environmental Permits;

 

(c)           No Loan Party nor any of its Properties or operations is subject to any outstanding written order from or written agreement with any Government Authority or other Person or is subject to any judicial or docketed administrative proceeding respecting any (x) Environmental Law, (y) Remedial Action or (z) Environmental Claim or Environmental Costs;

 

(d)           There are no conditions or circumstances now or formerly associated with any Property or operations by any Loan Party (or any predecessor in interest of any of them) which would reasonably be expected to prevent or interfere with material compliance by any Loan Party or Subsidiary with any applicable Environmental Laws or form the basis of any Environmental Claim or give rise to Non-Routine Environmental Costs;

 

(e)           No Environmental Claim (including, without limitation, in respect of any alleged violation of any Environmental Laws) is pending or threatened against, or has been received by, any Loan Party;

 

(f)           No Environmental Lien and no unrecorded Environmental Lien has attached to any Property of any Loan Party and no action has been taken by any Person which would reasonably be expected to subject any such Property to any Environmental Lien;

 

(g)           No Loan Party (nor any predecessor in interest of any of them) has transported or arranged for the transportation of any Contaminant to any location which is (i) listed on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (ii) listed for possible inclusion on the National Priorities List by the United States Environmental Protection Agency, or (iii) listed on any similar state list;

 

 

(h)           Except as complies with all Environmental Laws, no Loan Party is required to place any notice of restriction relating to the presence of any Contaminant on, in, under or emanating from any Property in any deed to such Property; and

 

(i)            Except as complies with all Environmental Laws, no Property is located in, and no operations by any Loan Party (or any predecessor in interest of any of them) affect, any Environmentally Sensitive Area.

 

10.13.      Disclosure.  Neither this Agreement or any other Loan Document nor any statement, list, certificate or other document or information, or any Schedule to this Agreement, delivered or to be delivered to the Agent or the Banks contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make statements contained herein or therein, in light of the circumstances in which they are made, not misleading.

 

10.14.      Compliance with ERISA.  Each Loan Party and each ERISA Affiliate and each Plan and the trusts maintained pursuant to such plans are in compliance in all material respects with the presently applicable provisions of Sections 401 through and including 417 of the Code, and of ERISA and (i) no event which constitutes a Reportable Event as defined in Section 4043 of ERISA has occurred and is continuing with respect to any Plan which is or was covered by Title IV of ERISA, (ii) no Plan which is subject to Part 3 of Subtitle B of Title 1 of ERISA has incurred any “accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code) whether or not waived, and (iii) no written notice of liability has been received with respect to any Loan Party or Subsidiary for any “prohibited transaction” (within the meaning of Section 4975 of the Code or Section 406 of ERISA), nor has any such prohibited transaction resulting in liability to any Loan Party or ERISA Affiliate occurred.

 

No Loan Party or any ERISA Affiliate (i) has incurred any liability to the PBGC (or any successor thereto under ERISA), or to any trustee of a trust established under Section 4049 of ERISA, in connection with any Plan (other than liability for premiums under Section 4007 or ERISA), (ii) has incurred any withdrawal liability under Subtitle E of Title IV of ERISA in connection with any Plan which is a Multiemployer Plan, nor (iii) has contributed or has been obligated to contribute on or after September 26, 1980, to any “multiemployer plan” (within the meaning of Section 3(37) of ERISA) which is subject to Title IV of ERISA.

 

The consummation of the transactions contemplated by this Agreement (i) will not give rise to any liability on behalf of any Loan Party or its ERISA Affiliates under Title IV of ERISA to the PBGC (other than ordinary and usual PBGC premium liability), to the trustee of a trust established pursuant to Section 4049 of ERISA, or to any Multiemployer Plan, and (ii) will not constitute a “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code.

 

10.15.      The Security Documents.  (a)  Each Security Document grants a security interest or lien in the properties or rights intended to be covered thereby (the “Collateral”) which (i) constitutes a valid and enforceable security interest under (A) the Uniform Commercial Code of the State by which any Security Document is governed (as applicable, the “UCC”) or (B) with respect to the Mortgages, the real estate recording acts of New York and each other jurisdiction (if any) where real estate owned or leased by a Loan Party is located (the “Recording Act”), as the case may be, (ii) is entitled to all of the rights, benefits and priorities provided by the UCC or, with respect to the Mortgages, the Recording Act, and (iii) are superior and prior to the rights of all third Persons now existing or hereafter arising whether by way of mortgage, pledge, lien, security interest, encumbrance or otherwise, including, without limitation, the collateral agent for the Indebtedness referred to under clause (1) of the definition of the term “Permitted Indebtedness”, but excluding other Permitted Liens.  All such action as is necessary in law has been taken, or prior to the Closing Date will have been taken, to establish and perfect the security interest of the Agent and the Banks in the Collateral and to entitle the Banks or the Agent on behalf of the Banks to exercise the rights and remedies provided in each of the Security Documents and the UCC or the Recording Act, as applicable, and no filing, recording, registration or giving of notice or other action is required in connection therewith except such as has been made or given or will have been made or given prior to such date.  All filing and other fees and all mortgage recording or other tax payable with respect to the recording of any of the Security Documents and UCC financing statements have been paid or provided for.

 

 

(b)           Upon establishment of the Reserve Account and the deposit of funds therein, Sections 2.4 will create, as security for Borrower’s Obligations, valid, enforceable and perfected security interests under applicable law in the Reserve Account in favor of the Agent and the Banks superior and prior to the rights of all third parties and subject to no other Liens (other than Permitted Liens).  All such action as is necessary in law will be taken prior to the date of such deposit to establish and perfect the security interest of the Agent and the Banks in the Reserve Account and to entitle the Agent and the Banks to exercise the rights and remedies provided in this Agreement and applicable law, and no filing, recording, registration or giving of notice or other action is required or will be required in connection therewith.

 

10.16.      Gaming/Racing Permits and Approvals.  All Gaming/Racing Permits required to be held by Empire Group are current and in good standing and the Loan Parties presently hold all Gaming/Racing Permits necessary for the continued operation of the Gaming/Racing Facilities.

 

10.17.      Labor Relations.  There is no strike or work stoppage in existence, or to the best knowledge of Borrower threatened, involving any Loan Party or the Gaming/Racing Facilities that reasonably would be expected to result in a Material Adverse Change.

 

10.18.      Trademarks, Patents, Licenses, Franchises, Formulas and Copyrights.  Each of the Loan Parties owns all the patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, or has a valid license or sublicense of 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 respective businesses, 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 Change on the business, operations, property, assets or condition (financial or otherwise) of the Loan Parties.  Each of the patents, trademarks, servicemarks, tradenames and copyrights owned by the Loan Parties under the common law or which is registered with any Governmental Authority is set forth on Schedule 10.10.

 

 

10.19.      FF&E.  The Empire Group shall furnish, fixture and equip the Gaming/Racing Facilities with FF&E it reasonably deems appropriate for the operation of the Gaming/Racing Facilities.  All FF&E that is purchased and installed in the Gaming/Racing Facilities shall be purchased free and clear of any liens, encumbrances or claims, other than Permitted Liens.

 

Section 11.             AGENT.

 

11.1.        Appointment.  The Banks hereby irrevocably appoint PAB to act as Agent hereunder and as Agent or “Assignee” or “Secured Party” or “Mortgagee” or other specified designation (in each case as applicable) under the Security Documents (in such capacity, the “Agent”).  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 to take such action on its behalf under the provisions of this Agreement, the Notes, the Security Documents, the other Loan Documents and any other instruments and agreements referred to therein and to exercise such powers thereunder as are specifically delegated to or required of it by the terms thereof and such other powers as are reasonably incidental thereto; provided that the Agent shall not take any action to foreclose upon any Mortgage or realize upon any other security interest in any of the Collateral, or release any Collateral, without the consent of the Required Lenders.  The Agent may perform any of its duties under any of the Loan Documents by or through its agents or employees.

 

11.2.        Nature of Duties.  The Agent shall have no duties or responsibilities except those expressly set forth in the Loan Documents.  Neither the Agent nor any of its officers, directors, employees or agents shall be liable to any Bank for any action taken or omitted by it under any of the Loan Documents, or in connection therewith unless caused by its or their gross negligence or willful misconduct.  Nothing in the Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of the Loan Documents except as expressly set forth therein.  The duties of the Agent under the Loan Documents shall be mechanical and administrative in nature and the Agent shall not have by reason of its duties under the Loan Documents a fiduciary relationship in respect of any Bank.  The Agent agrees to deliver promptly to each Bank (i) copies of notices received by it pursuant to Sections 7.1, 7.2, 7.11 and 7.14 of this Agreement, and (ii) copies of all documents required to be delivered hereunder by the Borrower to the Banks directly but that are not so delivered to any Bank (but were delivered to the Agent) if such Bank notifies the Agent that it has not received such document or documents, specifying same.

 

11.3.        Lack of Reliance.  Independently and without reliance on the Agent, each Bank 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 Loan Parties in connection with the making and the continuance of the Loans hereunder and the taking or not taking of any action in connection herewith, (ii) its own appraisal of the credit worthiness of the Loan Parties and (iii) its own independent investigation and appraisal of the Collateral; and, except as expressly provided in the Loan Documents, the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Bank with any credit or other information with respect thereto, whether coming into its possession before the date hereof or at any time or times thereafter.  The Agent shall not be responsible to any Bank for any recitals, statements, representations or warranties herein or in any certificate or other document delivered in connection herewith or for the authorization, execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, or sufficiency of any of the Loan Documents, the financial condition of the Loan Parties or the condition of any of the Collateral, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of any of the Loan Documents, the financial condition of the Loan Parties or the existence or possible existence of any Event of Default or Default.

 

 

11.4.        Certain Rights.  If the Agent requests instructions from the Banks or Required Lenders with respect to any interpretation, act or action (including failure to act in connection with this Agreement or any of the other Loan Documents) the Agent shall be entitled to refrain from such act or taking such actions unless and until it shall have received instructions from the Banks or the Required Lenders, as the case may be; and the Agent shall not incur liability to any Person by so refraining.  Without limiting the foregoing, no Bank shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder or under any of the other Loan Documents in accordance with the instructions of the Required Lenders (as to matters requiring the consent of the Required Lenders) or all the Banks (as to matters requiring the consent of all the Banks).  The Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless, if it requests, it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking, continuing to take or not taking any such action.

 

11.5.        Reliance.  The Agent shall be entitled to rely upon any written notice or any telephone message believed by it to be genuine or correct and to have been signed, sent or made by the proper authorized Person, and, with respect to all legal matters pertaining to the Loan Documents and its duties thereunder, upon advice of counsel selected by it.

 

11.6.        Indemnification.  To the extent the Agent is not reimbursed or indemnified by the Borrower, the Banks will reimburse and/or indemnify the Agent, in proportion to the then-outstanding aggregate principal amount of their Loans, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred or sustained by or asserted against the Agent, acting pursuant hereto or any of the other Loan Documents in its capacity provided for in this Section 11, in any way relating to or arising out of this Agreement, or any of the other Loan Documents, provided, however, 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 gross negligence or willful misconduct.

 

11.7.        Agent, Individually.  With respect to its Loans under this Agreement, the Loans made by it and any Note issued to or held by it, the Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Bank or holder of a Note.  The terms “Bank” or “holders of Notes” or any similar terms shall, unless the context clearly otherwise indicates, not exclude the Agent in its individual capacity as a Bank or holder of a Note.  The Agent may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with any Loan Party or any of its Subsidiaries as if it were not acting pursuant hereto, and may accept fees and other consideration from any Loan Party or any of its Subsidiaries for services as the Agent in connection with this Agreement and the other Loan Documents and for services otherwise than as the Agent without having to account for the same to the Banks.

 

 

11.8.        Holders of Notes.  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 or transfer thereof shall have been received by the Agent.  Any request, authority or consent of any Person, who at the time of making such request or of giving such authority or consent is the payee of any Note, shall be conclusive and binding on any subsequent holder, transferee, assignee or payee of such Note or of any Note or Notes issued in exchange therefor.

 

11.9.        Resignation.  The Agent may resign at any time from the performance of all its functions and duties hereunder and under the other Loan Documents by giving 30 days prior written notice to the Borrower and each Bank.  Such resignation shall take effect upon the expiration of such 30 day period or upon the earlier appointment of a successor. In case of the resignation of the Agent, the Required Lenders may appoint a successor by a written instrument signed by the Required Lenders; however, any such successor (if not an Affiliate of Agent) shall be a commercial bank having a combined capital and surplus of at least $1,000,000,000 and be subject to the prior approval of the Borrower, such consent not to be unreasonably withheld or delayed.  Any successor shall execute and deliver to the Agent an instrument accepting such appointment, and thereupon such successor, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the Agent hereunder and with like effect as if originally named as “Agent” herein and therein, and upon request, the predecessor Agent shall take all actions and execute all documents necessary to give effect to the foregoing.  In the event the Agent’s resignation becomes effective at a time when no successor has been named, all notices, other communications and payments hereunder required to be given by or to the Agent shall be sufficiently given if given by the Required Lenders (or all Banks, if the consent of all Banks is required therefor hereunder) or to each Bank, as the case may be.  In such event, all powers specifically delegated to the Agent may be exercised by the Required Lenders and the Required Lenders shall be entitled to all rights of the Agent hereunder.

 

11.10.      Reimbursement.  Without limiting the provisions of Section 11.6, the Banks and the Agent hereby agree that the Agent shall not be obligated to make available to any Person any sum which the Agent is expecting to receive for the account of that Person until the Agent has determined that it has received that sum.  The Agent may, however, disburse funds prior to determining that the sums which the Agent expects to receive have been finally and unconditionally paid to the Agent, if the Agent wishes to do so.  If and to the extent that the Agent does disburse funds and it later becomes apparent that the Agent did not then receive a payment in an amount equal to the sum paid out, then any Person to whom the Agent made the funds available shall, on demand from the Agent:

 

(a)           refund the Agent the sum paid to that Person; and

 

(b)           reimburse the Agent for the additional amount certified by the Agent as being necessary to indemnify the Agent against any funding or other cost, loss, expense or liability sustained or incurred by the Agent as a result of paying out the sums before receiving it; provided, however, that if such funds were made available to any Bank, such additional amount shall be limited to interest on the sum to be repaid, for each day from the date such amount was disbursed until the date repaid to the Agent, at (for the first three days) the customary rate set by the Agent for correction of errors among banks, and thereafter at the fluctuating rate of interest announced from time to time in The Wall Street Journal as the “US prime rate” (or if such rate is no longer published by The Wall Street Journal, such rate as the Agent shall announce from time to time as its “prime rate”, which rate is not necessarily the lowest rate that the Agent charges to its customers), or, if greater and in respect of a Loan made to the Borrower, the rate from time to time prevailing on such Loan.

 

 

Section 12.             MISCELLANEOUS.

 

12.1.         Calculations and Financial Data.  Calculations hereunder (including, without limitation, calculations used in determining, or in any certificate of any Loan Party reflecting, compliance by any Loan Party with the provisions of this Agreement) shall be made and financial data required hereby shall be prepared both as to classification of items and as to amount in accordance with GAAP consistent with the Financial Statements described in Section 10.11(a); provided that for purposes of Sections 2.4(e) and 8.12 no effect shall be given to any change in GAAP from those in effect on November 30, 2004.

 

12.2.         Amendment and Waiver.  Except as otherwise provided, no provision of any of the Loan Documents may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Required Lenders (or the Agent on their behalf) and the Borrower, except that waivers of provisions relating to a Loan Party’s performance or non performance of its obligations hereunder or thereunder need not be signed by such Loan Party or any other Loan Party; provided however that: (i) the written consent of the Agent shall also be required to change, waive, discharge or terminate provisions of Section 11, and (ii) the written consent of the Guarantors shall also be required to change, waive, discharge or terminate provisions of Section 9A; and provided further that without the consent of all of the Banks (or the Agent on their behalf) no change, waiver, discharge or termination may be made that would decrease the principal of any Loan; decrease the interest rate payable on any Loan; decrease the rate of commitment commission payable pursuant to Section 4.1 or the amount of the fee payable pursuant to Section 4.2; extend the final maturity date of any Loan (except as expressly provided herein); change the definition of “Required Lenders” or modify this Section 12.2.  Any such change, waiver, discharge or termination shall be effective only in the specific instance and for the specific purposes for which made or given.

 

12.3.         Expenses.  (a)  Whether or not the transactions hereby contemplated shall be consummated, the Borrower shall pay all reasonable out of pocket costs and expenses of (x) the Agent, the Bank and any Bank Assignee, incurred in connection with the preparation, execution, delivery, administration, filing and recording of, and (y) of the Agent, the Banks and any Bank Assignee in the Obligations incurred in connection with the amendment (including any waiver or consent), modification, and enforcement of or preservation of any rights under, this Agreement, the other Loan Documents, the making and repayment of the Loans and the payment of all interest and fees, including, without limitation, (A) the reasonable fees and expenses of Hahn & Hessen LLP, counsel for the Agent, and any special or local counsel retained by the Agent, and with respect to enforcement, the reasonable fees and expenses of counsel for the Agent, any Bank or any Bank Assignee, (B) the reasonable fees and expenses of consultants and appraisers retained by the Agent in connection with the transactions contemplated hereunder, and (C) printing, travel, title insurance, mortgage recording, filing, communication and signing taxes and costs.  Without limiting the foregoing provisions of this Section 12.3(a), the Borrower shall pay all reasonable out-of-pocket costs and expenses of the Agent and the Banks incurred from time to time in connection with obtaining appraisals or valuations of the Collateral.

 

 

(b)           The Borrower agrees to pay, and to save the Agent and the Banks harmless from (x) all present and future stamp, filing and other similar taxes, fees or charges (including interest and penalties, if any), which may be payable in connection with the Loan Documents or the issuance of the Notes or any modification of any of the foregoing, and (y) all finder’s and broker’s fees in connection with the transactions contemplated by this Agreement and the other Loan Documents.

 

(c)           The Borrower agrees to indemnify, pay and hold harmless the Agent, each Bank, any Bank Assignee and each holder of a Note, solely in their capacities as such under or in relation to this Agreement and the other Loan Documents and not in any other capacity, and their respective present and future officers, directors, employees and agents (collectively, the “Indemnified Parties”) from and against all liability, losses, damages and expenses (including, without limitation, legal fees and expenses) arising out of, or in any way connected with, or as a result of (i) the execution and delivery of this Agreement, the other Loan Documents, or the documents or transactions contemplated hereby and thereby or the performance by the parties hereto or thereto of their respective obligations hereunder and thereunder or relating thereto; or (ii) any claim, action, suit, investigation or proceeding (in each case, regardless of whether or not the Indemnified Party is a party thereto or target thereof) in any way relating to any Collateral, the Borrower, any other Loan Party or Subsidiary or any Affiliate of any of the foregoing in respect of this Agreement, any other Loan Document or any other document or transaction in connection herewith or therewith or relating thereto; or (iii) any actual or alleged violation by any Loan Party, Affiliate or Subsidiary (or any predecessor in interest of any of them) of any Environmental Law, any Environmental Claim or Environmental Cost or the imposition of any Environmental Lien, or any breach of any covenant set forth in Section 7.14 or any representation or warranty set forth in Section 10.12; provided that the Borrower shall not be liable to any Indemnified Party for any portion of such liabilities, losses, damages and expenses sustained or incurred as a direct result of the gross negligence or willful misconduct of the Agent or any Bank.

 

(d)           All obligations provided for in this Section 12.3 and Sections 3.6, 3.7, 4.1, 5.2 and 11.6 shall survive any termination of this Agreement and the payment in full of the Loans.

 

12.4.         Benefits of Agreement; Descriptive Headings.  (a)  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns, and, in particular, shall inure to the benefit of the holders from time to time of the Notes; provided, however, that no Loan Party may assign or transfer any of its rights or obligations hereunder without the prior written consent of the Agent and the Banks and any such purported assignment or transfer shall be void; provided, further, however, neither the Agent nor the Banks may assign or transfer any of its rights or obligations hereunder except in compliance with Section 12.4(d) and any such purported assignment or transfer shall be void.  In furtherance of the foregoing, each Bank shall be entitled at any time to grant participations in the whole or any part of its rights and/or obligations under this Agreement, the Loan Documents or any Loan or Note to any Person.  No such participation pursuant to this Section 12.4(a) shall relieve any Bank from its obligations hereunder and the Borrower and the other Loan Parties need deal solely with the Agent and the Banks with respect to waivers, modifications and consents to this Agreement, the Loan Documents or the Notes.  Any such participant is referred to in this Agreement as a “Bank Assignee”.  The Borrower agrees that the provisions of Sections 3.4, 5.2 and 12.3 shall run to the benefit of each Bank Assignee and its participations or interests herein, and any Bank may enforce such provisions on behalf of any such Bank Assignee.  The Borrower hereby further agrees that any such Bank Assignee may, to the fullest extent permitted by applicable law, exercise the right of setoff with respect to such participation (and in an amount up to the amount of such participation) as fully as if such Bank Assignee were the direct creditor of the Borrower.  Any Bank may furnish any information concerning the Loan Parties in its possession from time to time to Bank Assignees (including prospective Bank Assignees).  Each Bank shall notify Borrower of any participation granted by it pursuant to this Section 12.4(a) but neither the Borrower’s approval nor that of any other Loan Party shall be required for any such participation.  Borrower shall not be responsible for any due diligence costs or legal expenses of such Bank Assignees in connection with their entering into such participation.

 

 

(b)           The descriptive headings of the various provisions of this Agreement and the other Loan Documents are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

 

(c)           Notwithstanding anything to the contrary contained herein or in any of the Loan Documents, unless the Agent, the Borrower or a Bank otherwise requests with respect to any specific exhibit, exhibits to this Agreement shall not be required to be attached to the execution or any other copy of this Agreement, and any references in this Agreement or the other Loan Documents to such exhibits as “Exhibits hereto,” “Exhibits to this Agreement,” or words of similar effect shall be deemed to refer to such document as executed by the parties thereto and delivered on the Closing Date.

 

(d)           Any Bank may at any time assign to any other Bank or any affiliate of any Bank, or to one or more additional banks or financial institutions (“Purchasing Banks”), all or any part of its Loans (and corresponding Note) pursuant to a Transfer Supplement (“Transfer Supplement”), substantially in the form of Exhibit C to this Agreement, executed by such Purchasing Bank, such transferor Bank and the Agent; provided, however, that without the consent of the Agent (subject to applicable law) each such assignment shall be limited to an amount equal to the lesser of (x) such Bank’s Loans then outstanding, or (y) a minimum amount of $1,000,000 and integral multiples of $500,000 above such amount; provided, further, however, that unless an Event of Default shall have occurred and be continuing, no Bank shall transfer any part of its Loan (and corresponding Note) to any person other than an Affiliate of a Bank without the prior written consent of the Borrower, which consent will not be unreasonably withheld.  Such Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Bank and the resulting adjustment of the percentage of the Loans and Notes (and related rights and obligations) held by the transferor Bank and the Purchasing Bank arising from the purchase by such Purchasing Bank of all or a portion of the rights and obligations of such transferor Bank pursuant to the Transfer Supplement.  Upon the consummation of any transfer to a Purchasing Bank pursuant to this Section 12.4(d), the transferor Bank, the Agent and the Borrower shall make appropriate arrangements so that, if required, a replacement Note (dated the same date as the Note being replaced) is issued to such transferor Bank and a new Note (dated the same date as the Note being replaced) or, as appropriate, a replacement Note (dated the same date as the Note being replaced) issued to such Purchasing Bank, in each case in principal amounts reflecting their outstanding Loans, as adjusted pursuant to such Transfer Supplement.

 

 

12.5.         Notices, Requests, Demands, etc.  Except as otherwise expressly provided herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be deemed to have been duly given or made when delivered if sent by Federal Express or other similar overnight delivery service, or when received (when mailed, postage prepaid, by registered or certified mail, return receipt requested), or (in the case of telex, telegraphic, telecopier or cable notice or electronic mail) when received by the telex, telegraph, telecopier or electronic mail “in-box” of the recipient:  (i) if to the Agent, at the Closing Office, (ii) if to a Bank, at the address specified with its signature below, and (iii) if to a Guarantor or the Borrower, at its address specified with its signature below (Attention: President), or to such other addresses as any of the parties hereto may hereafter specify to the others in writing, provided that communications with respect to a change of address shall be deemed to be effective when actually received.

 

12.6.         Governing Law.  THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED WHOLLY WITHIN THE STATE OF NEW YORK (REGARDLESS OF THE PLACE WHERE THIS AGREEMENT, OR ANY AMENDMENT HERETO, IS EXECUTED).

 

12.7.         Counterparts; Telecopies.  This Agreement and the other Loan Documents may be executed in any number of counterparts by the different parties hereto and thereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all counterparts for each Loan Document shall together constitute one and the same agreement.  Complete sets of counterparts of this Agreement shall be lodged with the Borrower and the Agent.  Telecopied and/or emailed signatures hereto and to the other Loan Documents shall be of the same force and effect as an original of a manually signed copy.

 

12.8.         Waiver.  No failure or delay on the part of the Agent or any Bank in exercising any right, power or privilege under this Agreement or any other Loan Document, and no course of dealing between any Loan Party or Subsidiary and the Agent or any Bank shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Agent or any Bank would otherwise have pursuant to such documents or at law or equity.  No notice to or demand on any Loan Party in any case shall entitle such Loan Party or any other Loan Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of the Agent or any Bank to any other or further action in any circumstances without notice or demand.

 

 

12.9.         Pro Rata Sharing.  The Banks agree among themselves that, with respect to all sums received by the Banks applicable to the payment of the principal of or interest on the Notes (except as otherwise provided in Section 3.6, 3.7, 5.2 or 5.3), equitable adjustment will be made between the Banks so that, in effect, all such sums shall be shared ratably by each of the Banks (in accordance with the outstanding principal amounts of their respective Notes) whether received by voluntary payment, by realization upon security, by the exercise of the right of set off or banker’s lien, by counterclaim or cross action or by the enforcement of any or all of the Notes or otherwise.  If any Bank receives any payment on its Note of a sum or sums in excess of its pro rata portion (except as otherwise provided in Section 3.6, 3.7, 5.2 or 5.3), then such Bank receiving such excess payment shall purchase for cash from the other Banks an interest in their Notes in such amount as shall result in a ratable participation by all of the Banks in the aggregate unpaid amount of Notes then outstanding; provided, however, that if all or any portion of such excess payment is thereafter recovered by such Bank, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.  Each of the Loan Parties party hereto hereby agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 12.9 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Bank were the direct creditor of such Loan Party in the amount of such participation.

 

12.10.       Jurisdiction.  EACH GUARANTOR AND THE BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST SUCH LOAN PARTY WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS OR THE DOCUMENTS DELIVERED IN CONNECTION THEREWITH MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS THE AGENT OR ANY BANK MAY ELECT, and, by execution and delivery hereof, each of the Guarantors and the Borrower accepts and consents for itself and in respect to its property, generally and unconditionally, the jurisdiction of the aforesaid courts and agrees that such jurisdiction shall be exclusive, unless waived by the Required Lenders in writing, with respect to any action or proceeding brought by it against the Agent or any Bank and any questions relating to usury.  Each of the Guarantors and the Borrower agrees that Sections 5 1401 and 5 1402 of the General Obligations Law of the State of New York shall apply to the Loan Documents and waives any right to stay or to dismiss any action or proceeding brought before said courts on the basis of forum non conveniens.  Each Loan Party hereby irrevocably consents that all process served or brought against such Loan Party with respect to any such proceeding in any such court in New York shall be effective and binding service in every respect if sent by registered mail, or (if permitted by law) by Federal Express or other similar overnight delivery service to such Loan Party at its address set forth below.  Nothing herein shall affect the right of the Agent or the Banks to serve process in any other manner permitted by law or shall limit the right of Agent or any Bank to bring proceedings against any Loan Party in the courts of any other court or tribunal otherwise having jurisdiction.

 

12.11.       Severability.  If any provision of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever.

 

 

12.12.       Right of Set off.  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 of the Banks and Bank Assignees is hereby authorized at any time or from time to time, without notice to any Loan Party 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, time or demand, provisional or final) and any other indebtedness at any time held or owing by such Bank or Bank Assignee to or for the credit or the account of any Loan Party against and on account of the obligations and liabilities of such Loan Party now or hereafter existing under any of the Loan Documents irrespective of whether or not any demand shall have been made thereunder and although said obligations, liabilities or claims, or any of them, shall be contingent or unmatured.  The Bank or Banks or Bank Assignee exercising any rights granted under this Section 12.12 shall thereafter notify the affected Loan Party and the Agent of such action; provided that the failure to give such notice shall not affect the validity of such set off and application.

 

12.13.       No Third Party Beneficiaries.  This Agreement is solely for the benefit of the Agent, the Banks, the Bank Assignees, the Borrower, the Guarantors and their respective successors and assigns (except as otherwise expressly provided herein) and nothing contained herein shall be deemed to confer upon anyone other than the parties hereto and their respective successors and assigns any right to insist on or to enforce the performance or observance of any of the obligations contained herein.  All conditions to the obligations of the Banks to make the Loans hereunder are imposed solely and exclusively for the benefit of the Banks and their respective successors, assigns and Bank Assignees and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms and no other Person shall under any circumstances be deemed to be beneficiary of such conditions.

 

12.14.       Survival; Integration.  (a)  Each of the representations, warranties, terms, covenants, agreements and conditions contained in this Agreement shall specifically survive the execution and delivery of this Agreement and the other Loan Documents and the making of Loans and shall, unless otherwise expressly provided, continue in full force and effect until the Loans together with interest thereon, the commitment commissions, the fees and compensation of the Agent, and all other sums payable hereunder or thereunder have been indefeasibly paid in full.

 

(b)           This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all other prior agreements, written or oral, on the subject matter hereof and thereof.  In the event of any direct conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control and govern; provided that the inclusion of supplemental rights or remedies in favor of the Agent or the Banks in any other Loan Document shall not be deemed a conflict with this Agreement.  Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

 

 

12.15.       Domicile of Loans.  Any Bank may make, maintain or transfer any of its Loans hereunder to, or for the account of, any branch office, subsidiary or affiliate of such Bank.

 

12.16.       Waiver of Jury Trial.  EACH OF THE BORROWER, THE GUARANTORS, THE AGENT AND THE BANKS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY LOAN PARTY, THE AGENT OR THE BANKS.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE BANKS ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

12.17.       Armored Cars.  PAB shall provide for, at its sole cost and expense, service by armored car (or other secure conveyance as determined by PAB in its sole discretion) to transport money from Monticello Raceway to PAB, which money shall be deposited in deposit, demand, or operating accounts maintained by Borrower or affiliates of Borrower at PAB.

 

12.18.       FDIC.  PAB represents that as of the date hereof, it is a member of the Federal Deposit Insurance Corporation (“FDIC”).  PAB agrees that so long as the Loan Agreement has not been repaid in full in cash, PAB shall not withdraw as a member of the FDIC.

 

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