EXHIBIT 11
AMENDMENT OF CONSTRUCTION LOAN AGREEMENT
This Agreement, entered this 19th day of September, 1996, by and between
Winners Entertainment, Inc. and its wholly owned subsidiary Mountaineer Park,
Inc. ("WINS/MPI") and Xxxxxxx X. Xxxxxxx, solely in his official capacity as
trustee of the estate of Xxxxxxx Management and Development Corp. and Xxxxxxx
Funding Group (the "Trustee").
WHEREAS, MPI as borrower, WINS as guarantor, and Xxxxxxx Management and
Development Corp. ("BMDC") as lender entered a Construction Loan Agreement
dated as of June 27, 1994, which was amended by agreements dated September
27, 1994, December 7, 1994, February 10, 1995, April 10, 1995, and July 7,
1995, and certain repayment terms of which were extended by agreements dated
October 31, 1995, November 28, 1995, and January 12, 1996 (the "Amended Loan
Agreement"); and
WHEREAS, MPI borrowed from BMDC in the aggregate $10.2 million
principally for renovations at the Mountaineer Racetrack and Gaming Resort
located in Chester, Xxxxxxx County, West Virginia; and
WHEREAS, the loans made pursuant to the Amended Loan Agreement are
evidenced by a Promissory Note dated June 28, 1994 and are secured by (i) the
real estate and improvements constituting the Mountaineer Racetrack and
Gaming Resort pursuant to a Credit Line Deed of Trust made June 27, 1994,
which is of record in Xxxxxxx County, West Virginia; and (ii) pursuant to the
agreement of January 12, 1996, certain personalty reflected by a UCC-1
Financing Statement dated July 2, 1996, which is of record in Charleston,
West Virginia; and
WHEREAS, pursuant to the Amended Loan Agreement MPI was obligated to
make payments of interest only through April of 1996 and since May of 1996
has been obligated to make payments of principal and interest on a thirty-six
(36) month schedule of amortization and has met all of its obligations with
respect to such payments through and including the payment that became due on
August 31, 1996; and
WHEREAS, pursuant to the Amended Loan Agreement WINS was obligated to
issue BMDC in the aggregate 1,530,000 shares of WINS common stock and did in
fact issue and deliver such shares (1,125,000 of which were mistakenly issued
in the name of Xxxxxxx Funding Group) (the "Shares"); and
WHEREAS, on July 1, 1996, MPI and WINS filed an adversary proceeding
against BMDC in the United States Bankruptcy Court for the Northern District
of New York, seeking compensatory and punitive damages, recoupment and
setoff, and other equitable relief, including declaratory and injunctive
relief for lender liability (the "Litigation"), and alleging, among other
things, that the conduct of BMDC had impaired WINS' and MPI's ability to
refinance the Amended Loan Agreement prior to the commencement of the
principal payments; and
WHEREAS, the Trustee desires to obtain the voluntary dismissal of the
Litigation in order to conserve the resources of the estate of BMDC; and
WHEREAS, in order to realize such cost savings, as well as to enhance
the value of the Shares, the Trustee is willing, subject to (i) the approval
of the United States Bankruptcy Court for the Northern District of New York
(the "Court") and (ii) the terms and conditions set forth below, to make the
accommodations set forth below:
NOW THEREFORE, in consideration of the mutual promises contained herein,
the adequacy and sufficiency of which are hereby acknowledged, the parties
agree as follows:
1. Bankruptcy Court Approval. The parties hereto acknowledge that
this Agreement is expressly subject to the approval of the Court, upon
application to be made by the Trustee upon proper notice to BMDC's creditors.
The Trustee shall use his best efforts to file this amendment with the Court
as soon as possible.
2. Effective Date. If this Agreement is approved by the Court, then
the Agreement shall become effective as of October 31, 1996 such that the
payment due from MPI on that date shall be subject to the terms hereof (the
"Effective Date").
3. Dismissal of the Litigation; Mutual Releases. WINS and MPI shall
dismiss the Litigation with prejudice. Each party shall bear its own legal
fees and expenses. The parties hereby agree to execute the Amended and
Restated Mutual Releases attached hereto as Exhibit A.
4. Settlement with American Gaming & Entertainment, Ltd. On the
Effective Date of this Agreement, the Trustee shall deliver to MPI the
acknowledgment of American Gaming & Entertainment, Ltd. and its wholly owned
subsidiary, Gamma of West Virginia, Inc. ("AGEL"), in the form attached
hereto as Exhibit B, that the Settlement Agreement dated as of June 30, 1995
(the "Settlement Agreement"), a copy of which is attached hereto as Exhibit
C, is in full force and effect and that WINS, MPI, and AGEL shall assume, for
purposes of such acknowledgment, that Termination, as that term is defined in
the Settlement Agreement, has occurred.
5. Modification of Principal Amortization. The Amended Loan Agreement
shall be further amended such that rather than thirty-six (36) equal payments
of principal (together with interest at the rate of 12.5% per annum) on the
last day of each month, MPI shall make payments of principal in the amount of
$75,000 per month for the months of October through March inclusive and
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$125,000 per month for the months of April through September inclusive as
follows:
October 31, 1996 $ 75,000
November 30, 1996 $ 75,000
December 31, 1996 $ 75,000
January 31, 1997 $ 75,000
February 28, 1997 $ 75,000
March 31, 1997 $ 75,000
April 30, 1997 $125,000
May 31, 1997 $125,000
June 30, 1997 $125,000
July 31, 1997 $125,000
August 31, 1997 $125,000
September 30, 1997 $125,000
October 31, 1997 $ 75,000
November 30, 1997 $ 75,000
December 31, 1997 $ 75,000
January 31, 1998 $ 75,000
February 28, 1998 $ 75,000
March 31, 1998 $ 75,000
April 30, 1998 $125,000
May 31, 1998 $125,000
June 30, 1998 $125,000
July 31, 1998 $125,000
August 31, 1998 $125,000
September 30, 1998 $125,000
October 31, 1998 $ 75,000
November 30, 1998 $ 75,000
December 31, 1998 $ 75,000
January 31, 1999 $ 75,000
February 28, 1999 $ 75,000
March 31, 1999 $ 75,000
April 30, 1999 Remaining Principal Balance
The interest rate shall remain the same (unless increased pursuant to
Paragraph 7 below). The term of the loans, however, shall not be changed,
and any principal balance outstanding on the termination date, together with
any accrued but unpaid interest, shall be due and payable on the date set
forth in the Amended Loan Agreement. MPI will give the Lender ten (10) days
notice of any prepayment.
6. WINS Shares: Right to Match/Option to Purchase. WINS hereby
acknowledges and confirms that BMDC is the owner of the Shares and that the
Shares are fully-paid and non-assessable. In the event the Trustee desires
to sell the Shares, in whole or in part, the Trustee shall provide WINS
written notice of a bona fide offer of a non-affiliate to purchase the
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Shares. Upon receipt of the Trustee's notice, WINS shall have seven (7)
business days in which to provide the Trustee written notice of its desire to
match such offer and purchase the Shares. Within three (3) business days
after providing notice, WINS shall deliver good funds representing the
purchase price to the Trustee against delivery of the certificates
representing the Shares, duly endorsed with Medallion signature guarantee.
If WINS does not desire to purchase the Shares or fails timely to deliver the
purchase price after providing notice of an intent to match a bona fide
offer, then the Trustee shall be permitted to sell the Shares to the offeror
without any further obligation to WINS. WINS shall have no liability for any
damages suffered by the Trustee or the estate of BMDC in the event WINS
provides notice of an intent to exercise its right to match, but for whatever
reason determines not to purchase the Shares. The right to match shall
terminate on December 31, 1997.
For a period commencing on the date MPI fully satisfies the loans (the
"Satisfaction Date") and terminating at the close of business (Eastern Time)
ten (10) business days thereafter (the "Option Period") -- assuming BMDC (or
the Xxxxxxx Funding Group) still owns the Shares -- WINS shall have the
option to purchase all (but not part) of the Shares for a price per share
equal to 90% of the average closing bid price of the Shares as reported by
Nasdaq for the twenty (20) consecutive trading days immediately preceding the
Satisfaction Date, but in no event less than $1.125 per share; provided that
if the exercise of the option by WINS during the Option Period would result
in liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended, because of the matching of the sale of shares upon the exercise of
the option with an acquisition of shares under the Amended Loan Agreement,
the option shall not become exercisable until the earliest date at which such
liability would not be triggered and shall extend for ten additional business
days from such date. Any delay of the date on which the option may be
exercised occasioned by compliance with Section 16(b) shall have no effect on
the price per share to be paid by WINS upon exercise of the option. Unless
the Shares have been sold prior to the Satisfaction Date in a transaction
consistent with this Agreement, the Trustee shall not sell the Shares to
anyone other than WINS or its assignee during the Option Period or any
extension thereof. The option is not applicable in the context of an
acquisition of all of the stock of WINS.
7. Additional Stock; Increased Interest Rate. (a) Article II,
Section 2.2 of the Amended Loan Agreement, "Issuance of Additional Shares,"
which was amended in its entirety on July 7, 1995 pursuant to Section 5 of
Construction Loan Agreement Amendment V, is hereby amended such that the
heading for Article II, Section 2.2 shall be "Issuance of Additional Shares;
Increased Interest Rate" and the final paragraph of such section is deleted
and replaced by the following:
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In the event the loans have not been prepaid in full by January 1,
1997, Winners shall at its sole option on January 2, 1997 either
(i) pay the Lender $500,000 or (ii) issue to Lender that number of
Winners shares which when multiplied by the average market price
would equal $750,000.
In the event the loans have not been prepaid in full by July 1,
1997, Winners shall at its sole option on July 2, 1997 either (i)
pay the Lender $750,000 or (ii) issue to Lender that number of
Winners shares which when multiplied by the average market price
would equal $1,000,000.
In the event the loans have not been prepaid in full by December
31, 1997, Winners shall at its sole option on January 2, 1998
either (i) pay the Lender $1,000,000 or (ii) issue to Lender that
number of Winners shares which when multiplied by the average
market price would equal $1,250,000.
(b) In the event the loans have not been prepaid in full by December
31, 1997, the interest rate on any outstanding balance shall, as of January
1, 1998, increase from 12.5% to 14.5% until paid in full; provided, however,
that (i) if the holder of the second trust on MPI's property (currently
Xxxxxxxxx, LLC pursuant to a Deed of Trust and Term Loan Agreement dated as
of July 2, 1996) for any reason does not approve such interest rate increase,
then the interest rate shall not increase; and (ii) in lieu thereof, the
schedule of amortization set forth in Section 5 above shall be further
amended, beginning with the payment due January 31, 1998, as follows:
January 31, 1998 $100,000
February 28, 1998 $100,000
March 31, 1998 $100,000
April 30, 1998 $200,000
May 31, 1998 $200,000
June 30, 1998 $200,000
July 31, 1998 $200,000
August 31, 1998 $200,000
September 30, 1998 $200,000
October 31, 1998 $100,000
November 30, 1998 $100,000
December 31, 1998 $100,000
January 31, 1999 $100,000
February 28, 1999 $100,000
March 31, 1999 $100,000
April 30, 1999 Remaining Principal Balance
To the extent additional amounts are not paid or shares issued pursuant
to Section 7(a), Lender shall be paid the original additional consideration
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of $2,500,000 of shares valued as of January 2, 1997 as provided in the
amendment of the Construction Loan Agreement dated July 5, 1995, less any
amounts paid or shares issued under Section 7(a).
To the extent any Shares issued pursuant to the Construction Loan
Agreement as hereby amended are restricted and are not eligible for public
sale pursuant to Court order or exemption, then such Shares shall have
piggyback registration rights with respect to any registered offering of
shares by WINS or any shareholder of WINS, except for registered offerings
undertaken in connection with the Term Loan Agreement dated as of July 2,
1996 among MPI, WINS, and Xxxxxxxxx, LLC, until December 31, 1997 and demand
registration rights after December 31, 1997 or any other time at which there
is a registered offering in connection with the Term Loan Agreement.
8. No Other Changes. No amendment, change, or modification of the
Amended Loan Agreement is intended except as specifically set forth herein.
During the term of the Construction Loan Agreement as amended hereby, MPI
will not amend any other loan agreement to which it is a party or become an
obligor under any new loan agreement without the permission of the Lender,
which permission will not be unreasonably withheld.
9. Notices. Any notices permitted or required hereunder shall be
deemed effective when actually received by the parties as follows:
If to WINS and MPI:
Xxxxx X. Xxxxxxxx, President
Mountaineer Park, Inc.
Xxxxx Xxxxx 0
Xxxxxxx, Xxxx Xxxxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxx & XxXxxxx, P.C.
0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
If to the Trustee:
Xxxxxxx X. Xxxxxxx, Trustee
Xxxxxxx Management and Development Corp.
0 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
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with a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
10. Court Jurisdiction; Cooperation. All parties to this agreement
submit to the jurisdiction of the Court for any disputes arising out of this
agreement. The parties agree to cooperate in effecting the intentions of
this agreement and to deliver additional documentation as may be required or
deemed appropriate to implement the intentions of the parties.
11. Trustee. The Trustee is entering into this settlement as Trustee
only and shall have no personal responsibility.
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IN WITNESS WHEREOF, the parties hereto have approved and executed this
Settlement Agreement as of the date first set forth above.
WINNERS ENTERTAINMENT, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxx, President
MOUNTAINEER PARK, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxx, President
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxx, Solely in His
Capacity as Trustee of the Estate of
Xxxxxxx Management and Development
Corp. and Xxxxxxx Funding Group
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Acknowledged and Agreed as to Paragraph 4 by:
AMERICAN GAMING & ENTERTAINMENT, LTD.
By: /s/ J. Xxxxxxx Xxxxxxxxxx
--------------------------------------
Its: President
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EXHIBIT A
AMENDED AND RESTATED MUTUAL RELEASE AGREEMENT
THE RELEASE EXTENDED BY MOUNTAINEER/WINNERS: The undersigned,
Mountaineer Park, Inc., and Winner's Entertainment, Inc. (herein sometimes
referred to collectively as "Mountaineer/Winners", for and in consideration
of the execution and delivery by Xxxxxxx X. Xxxxxxx, solely in his capacity
as trustee (the "Trustee") of the estate of Xxxxxxx Management & Development
Corp. and The Xxxxxxx Funding Group, Inc. of this Mutual Release Agreement,
and subject to the limitations hereinafter set forth, hereby RELEASE and
FOREVER DISCHARGE Xxxxxxx Management & Development Corp., The Xxxxxxx Funding
Group, Inc., and their officers, directors, shareholders, employees, agents,
servants, attorneys, successors, assigns, insurers, heirs and personal
representatives, subsidiaries, and each and every other corporate or other
type entity affiliated directly or indirectly with The Xxxxxxx Funding Group,
Inc. ("Xxxxxxx affiliated entities"), and also their officers, directors,
shareholders, employees, agents, servants, attorneys, successors, assigns,
insurers, heirs and personal representatives and Xxxxxxx X. Xxxxxxx, both
personally and as Trustee, of and from any and all claims, suits and causes
or action of whatsoever kind or character Mountaineer/Winners, or either of
them, now has or may hereafter have, by reason of any damages, losses or
expenses incurred or to be incurred and of whatever kind of character by the
undersigned Mountaineer Park, Inc. or Winner's Entertainment, Inc., arising
from or growing out of or in any way related to (1) the borrower-lender
relationship between Mountaineer Park, Inc. and Xxxxxxx Management &
Development Corp., or (ii) the relationships between or among any of the
undersigned or any of the other parties released by this or the following
paragraph ("other relationships") arising by reason of or growing out of or
in any way related to said borrower-lender relationship between Mountaineer
Park, Inc. and Xxxxxxx Management & Development Corp.
THE RELEASE EXTENDED BY XXXXXXX/XXXXXXX: The undersigned, Xxxxxxx
Management & Development Corp. and The Xxxxxxx Funding Group, Inc. (herein
sometimes referred to collectively as "Xxxxxxx/Xxxxxxx"), for and in
consideration of the execution and delivery by Mountaineer Park, Inc. and
Winner's Entertainment, Inc., of this Mutual Release Agreement, and subject
to the limitations hereinafter set forth, hereby RELEASE and FOREVER
DISCHARGE Mountaineer Park, Inc. and Winner's Entertainment, Inc., and their
officers, directors, shareholders, employees, agents, servants, attorneys,
successors, assigns, insurers, heirs and personal representatives,
subsidiaries, and each and every other corporate or other type entity
affiliated directly or indirectly with Winner's Entertainment, Inc.
("Winner's affiliated entities"), and also their officers, directors,
shareholders, employees, agents, servants, attorneys, successors, assigns,
insurers, heirs and personal representatives, of and from any and all claims,
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suits and causes of action of whatsoever kind of character Xxxxxxx/Xxxxxxx,
or either of them, now has or may hereafter have, by reason of any damages,
losses or expenses incurred or to be incurred and of whatever kind or
character by the undersigned Xxxxxxx Management & Development Corp. or The
Xxxxxxx Funding Group, Inc., arising from or growing out of or in any way
related to (i) the borrower-lender relationship between Mountaineer Park,
Inc. and Xxxxxxx Management & Development Corp., or (ii) the relationships
between or among any of the undersigned or any of the other parties released
by this or the preceding paragraph ("other relationships") arising by reason
of or growing out of or in any way related to said borrower-lender
relationship between Mountaineer Park, Inc. and Xxxxxxx Management &
Development Corp.
LIMITATIONS: The undersigned declare it to be their understanding and
intentions that their obligations under or related to the loan documents
evidencing said borrower-lender relationship occurring prior to September 19,
1996, shall never be or become the basis of (or a part of the basis of) a
claim, suit or cause of action by or against any of the undersigned. However,
it is agreed that the releases hereby extended will not preclude a claim,
suit or cause of action by any of the undersigned, nor an enforcement of
remedies available to Xxxxxxx Management & Development Corp. (or its
successors or assigns) under said loan documents, so long as such claim,
suit, cause of action or enforcement of remedies is based solely upon a
breach of obligation, or breach of duty, or failure to pay or failure to
perform occurring on or after September 20, 1996.
Mountaineer/Winners understand and agree that the aforesaid claims
hereby released by them include, but are not limited to, any claims and
possible claims stated in, implied by or inferred from (i) the content of a
certain letter dated September 25, 1996, from Mountaineer Park, Inc. to
Xxxxxxx Management & Development Corp. (signed by Xxxxx X. Xxxxxxxx and
addressed to Xxxxx X. Xxxxxx), and (ii) the content of a certain letter dated
September 6, 1995, from Mountaineer Park, Inc. to Xxxxxxx Management &
Development Corp. (also, signed by Xxxxx X. Xxxxxxxx and addressed to Xxxxx
X. Xxxxxx). Mountaineer/Winners further understand and agree that the
aforesaid Xxxxxxx affiliated entities hereby released include, but are not
limited to, American Gaming & Entertainment, Ltd., Gamma of West Virginia,
Inc., and Gamma International, Ltd., insofar as claims, suits and causes of
action by the undersigned would related directly or indirectly to the loan
which is the basis of the aforesaid borrower-lender relationship.
The undersigned hereby declare that the terms of this Release have been
completely read and are fully understood and voluntarily accepted for the
purpose of making a full and final compromise, adjustment and settlement,
subject to the above-stated limitations, of any and all claims, disputed or
otherwise, known or unknown, discovered or not discovered, on account of said
borrower-lender relationship or said other relationships and for the express
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purpose of precluding forever, subject to the above-stated limitations, any
further or additional claims, demands or suits against any and all entities
and persons named or referred to herein as a released party, arising out of
the aforesaid borrower-lender relationship or said other relationships.
The undersigned understand and agree that the aforesaid payments of cash
and execution and delivery of this Mutual Release Agreement were made by way
of settlement and that liability for any claims hereby released have been and
are specifically denied by the parties released hereby.
The undersigned represent and warrant that the terms hereof were reached
by them after full and complete opportunity to consult with counsel regarding
the settlement and the effect of this release; that they execute this release
voluntarily, freely, without compulsion or duress and mindful that it has
legal consequences precluding any further action, subject to the above-stated
limitations, on any claim they have or might have as to said borrower-lender
relationship or said other relationships against the parties released; and
that no person has made any promise or given any inducement whatsoever to
encourage them to make this settlement other than the considerations above
recited; and, that (i) no limitation or restriction exists as to the power or
the authority of the undersigned to execute this release, (ii) the persons
executing same on behalf of the undersigned have been duly authorized so to
do, and (iii) this release is valid and binding and the provisions hereof are
enforceable against the undersigned in accordance with its terms.
This Mutual Release Agreement may be executed in any number of
counterparts, each of which shall, for all purposes, be deemed to be an
original, but all such counterparts shall together constitute one and the
same instrument.
WITNESS the following signatures as of the 19th day of September, 1996.
MOUNTAINEER PARK, INC.
/s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------ ------------------------------
Witness Its: President
WINNER'S ENTERTAINMENT, INC.
/s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------ ------------------------------
Witness Its: President
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XXXXXXX MANAGEMENT & DEVELOPMENT
CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx, Solely in
His Capacity as Trustee of the
Estate of the Xxxxxxx Management
and Development Corp.
------------------------------
Witness
THE XXXXXXX FUNDING GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx, Solely in
His Capacity as Trustee of the
Estate of the Xxxxxxx Funding
Group, Inc.
------------------------------
Witness
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EXHIBIT B
AMERICAN GAMING & ENTERTAINMENT, LTD.
Bayport One
Yacht Club Drive, Suite 000
Xxxx Xxxxxxxx Xxxx, Xxx Xxxxxx 00000
September 19, 1996
Xx. Xxxxx X. Xxxxxxxx
President
Mountaineer Park, Inc.
Xxxxx Xxxxx 0
Xxxxxxx, Xxxx Xxxxxxxx 00000
Dear Xx. Xxxxxxxx:
On behalf of American Gaming & Entertainment, Ltd. and its wholly owned
subsidiary, Gamma of West Virginia, Inc., I am writing to acknowledge that
the Settlement Agreement dated as of June 30, 1995 and executed by Winners
Entertainment, Inc., Mountaineer Park, Inc., Gamma of West Virginia, Inc.,
and American Gaming & Entertainment, Inc. (the "Settlement Agreement") is in
full force and effect. Winners Entertainment, Inc. and Mountaineer Park,
Inc. may assume for purposes of this acknowledgment that Termination, as that
term is defined in the Settlement Agreement, has occurred. Accordingly, the
Management Agreement dated June 2, 1994 has automatically terminated and the
relationship among the parties to the Settlement Agreement is as set forth
therein.
ACKNOWLEDGED THIS 19th DAY OF September, 1996
BY: /s/ J. Xxxxxxx Xxxxxxxxxx
--------------------------------
J. Xxxxxxx Xxxxxxxxxx, President
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EXHIBIT C
SETTLEMENT AGREEMENT
This Settlement Agreement is entered as of June 30, 1995 among Winners
Entertainment, Inc., a Delaware corporation ("Winners"), Mountaineer Park,
Inc., a West Virginia corporation wholly owned by Winners ("Mountaineer"),
and Gamma of West Virginia, Inc., a West Virginia corporation wholly owned by
American Gaming & Entertainment, Ltd. ("Gamma").
WHEREAS, Mountaineer and Gamma (by assignment from American Gaming &
Entertainment, Ltd.) are parties to that certain Management Agreement made as
of June 2, 1994, as subsequently amended, concerning the management of
Permitted Activities (as that term is defined therein) at the Mountaineer
Racetrack & Resort (the "Management Agreement"); and
WHEREAS, Winners agreed to be bound by certain provisions of the
Management Agreement; and
WHEREAS, as of this date Winners, Mountaineer, and Gamma entered into a
Stay Agreement with respect to the Management Agreement (the "Stay
Agreement"); and
WHEREAS, as of July 1, 1995, Mountaineer and American Newco, Inc., a
corporation of which Xxxxxx X. Xxxxxxx and J. Xxxxxxx Xxxxx are sole
shareholders, are entering into a Consulting Agreement; and
WHEREAS, Gamma and/or its affiliates and Mountaineer and Winners wish to
provide for the termination of the Management Agreement subject to and in
accordance with the terms of the Stay Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants,
acknowledgments, and conditions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Termination of Agreements. The Management Agreement and, except as
otherwise specifically provided herein, all relationships established thereby
and obligations arising thereunder, shall immediately and automatically
terminate upon the termination of the Stay Agreement pursuant to Section 2(a)
thereof or the termination of the Consulting Agreement pursuant to Section
2(a), (b) or (c) thereof ("Termination"). Upon Termination, no party to this
Settlement Agreement shall have any further rights or obligations under
either the Management Agreement or any other written or oral agreement that
may have been in effect prior to the execution of this Settlement Agreement
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(except for the Consulting Agreement), all of which shall be of no further
force or effect. This Settlement Agreement shall not take effect and no
party shall have any rights or obligations hereunder until Termination.
2. Settlement of Accounts; Return of Records. Upon Termination, Gamma
will immediately cause its employees to vacate any rooms they are occupying
at the Mountaineer Lodge. Upon presentation of an invoice for (i) any long
distance telephone calls placed by Gamma employees from the Mountaineer Lodge
to a number other than the offices of AGEL; and (ii) any alcoholic beverages
charged by Gamma employees in the sixty (60) days preceding the effective
date of the Stay Agreement, Gamma shall be responsible for full payment to
Mountaineer. All such charges shall be made without pre-invoice interest at
the rates Mountaineer customarily charges its patrons for the same products
and services. Promptly upon determining in the ordinary course any
management fees due Gamma under the Management Agreement through June 30,
1995, Mountaineer will pay such fees in full. Gamma expressly agrees,
however, that Mountaineer may deduct from such payment as a setoff all sums
due Mountaineer from Gamma pursuant to this Section 2.
Upon Termination, Gamma shall return to Mountaineer all software,
records, manuals, books, forms, documents, notes, letters, memoranda,
reports, data tables, devices, and apparatus owned or possessed by
Mountaineer or Winners, regardless of who prepared them.
3. Mutual Releases. Except for those obligations expressly provided
for in this Settlement Agreement, including but not limited to Section 4
below (limited indemnity) Winners and Mountaineer on the one hand, and Gamma
and AGEL on the other hand, hereby forever release and discharge the other
and each of the other's officers, directors, shareholders, employees, agents,
affiliates, attorneys, successors, and assigns of and from any and all
claims, rights, duties, obligations, debts, liabilities, damages, injuries,
actions, and causes of action of every kind and nature, foreseen and
unforeseen, contingent and actual, liquidated and unliquidated, suspected and
unsuspected, disclosed and undisclosed, whether direct or by way of
indemnity, contribution, or otherwise, including without limitation all
claims which either party has or might have arising from or related to the
Management Agreement or any prior oral or written agreement among the
parties.
Each of the parties hereby acknowledges that it has been advised and is
aware of the provisions of Section 1542 of the Civil Code of the State of
California, and does hereby expressly waive and relinquish all rights and
benefits which it has or may have under said Section 1542, which reads as
follows:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
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at the time of executing the release, which if known by
him, must have materially affected his settlement with
the debtor.
Each party also waives any similar law or rule.
4. Limited Indemnity. Notwithstanding anything herein to the
contrary, Gamma and AGEL hereby agree to indemnify and hold Mountaineer and
Winners harmless from and against any and all claims, liabilities, losses,
actions, suits, or proceedings, at law or in equity, that if may incur or
with which it may be threatened by reason of either (i) allegations by third
parties that Gamma or AGEL employees engaged in willful or intentional
tortious conduct or wrongdoing; or (ii) allegations of willful or intentional
violations of the West Virginia Racetrack Video Lottery Act (though the
parties are currently unaware of any such allegations). This indemnification
shall include but not be limited to expenses (including attorneys' fees)
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever.
5. Express Waiver of Covenant Not To Compete; Services of American
Newco, Inc.
Mountaineer and Winners each expressly waives and releases Gamma from
non-competition provisions set forth in Section 7 of the Management
Agreement.
Gamma and AGEL hereby consent to Mountaineer's or Winners' future use of
the services of American Newco, Inc., a corporation wholly owned by Xxxxxx
Xxxxxxx, president of Gamma and AGEL, and J. Xxxxxxx Xxxxx, on a consulting
basis on terms upon which they may agree. Gamma and AGEL acknowledge that
such employment will not give rise to claims that Mountaineer or Winners
thereby engaged in unfair competition, or any similar wrongful conduct with
Gamma or AGEL.
6. Confidentiality. Gamma acknowledges that during the term of the
Management Agreement, it has had access to non-public information, including
trade secrets, that are the property of Mountaineer or Winners. From and
after the date hereof, Gamma agrees that it will not disclose to any person
information concerning Mountaineer, Winners, or the operation of Mountaineer
Racetrack & Resort that is not in the public domain.
7. Further Action. The parties hereto agree to provide, upon
reasonable notice, any further documents and to undertake any further action
reasonably required to effectuate the purposes of this Settlement Agreement,
including, but not limited to, compliance with requests made by state
regulators.
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8. Heirs, Successors and Assigns. This Settlement Agreement shall
inure to the benefit of, and shall be binding upon, the heirs, successors,
and assigns of the parties hereto as well as each party's present and former
affiliated corporations, predecessors, parent corporations, subsidiaries,
divisions, operating companies, officers, directors, agents, employees,
administrators, representatives, shareholders, accountants, and attorneys,
individually as well as in the capacity indicated. However, except as
expressly provided herein, this Settlement Agreement is not for the benefit
of any person not a party hereto or specifically identified as a beneficiary
herein, and is not intended to constitute a third party beneficiary contract.
9. Merger and Integration. This Settlement Agreement constitutes a
single, integrated written contract expressing the entire agreement of the
parties hereto with respect to the subject matter hereof. No covenants,
agreements, representations or warranties of any kind have been made by any
party hereto, except as specifically set forth in this Settlement Agreement.
All prior claims, discussions and negotiations have been and are merged and
integrated into, and are superseded by this Settlement Agreement.
10. Governing Law; Forum Selection. This Settlement Agreement shall be
construed in accordance with, and governed by, the laws of the State of West
Virginia. The parties hereto agree that any dispute concerning this
Settlement Agreement shall be litigated in the Circuit Court of Xxxxxxx
County, West Virginia, and the parties hereto agree to submit to the
jurisdiction of such court.
IN WITNESS WHEREOF, the parties hereto have approved and executed this
Settlement Agreement as of the date first set forth above.
WINNERS ENTERTAINMENT, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx, President
MOUNTAINEER PARK, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxx, President
GAMMA OF WEST VIRGINIA, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx, President
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AMERICAN GAMING & ENTERTAINMENT, LTD.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx, President
By: /s/ J. Xxxxxxx Xxxxx
-------------------------------------
J. Xxxxxxx Xxxxx, Executive Vice
President & Chief Operating Officer
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