STOCK TRANSFER AGREEMENT

 

                                                                   EXHBIT 10(10)

                           WINNERS ENTERTAINMENT, INC.

                            STOCK TRANSFER AGREEMENT

      AGREEMENT, dated as of July 2, 1996, between WINNERS ENTERTAINMENT, INC.,
a Delaware corporation (the "Company"), and MADELEINE LLC, a New York limited
liability company (the "Stockholder").

      WHEREAS, the Company is authorized to issue 25,000,000 shares of common
stock, par value $0.00001 per share (the "Common Stock");

      WHEREAS, in consideration for the Stockholder's making (i) a loan pursuant
to a Term Loan Agreement, dated as of July 2, 1996 (the "Loan Agreement") among
Mountaineer Park, Inc., a West Virginia corporation and a wholly-owned
subsidiary of the Company (the "Subsidiary"), the Company, as Guarantor, and the
Stockholder, and (ii) a commitment, pursuant to a commitment letter, dated as of
July 2, 1996, to make an $11,100,000 loan to the Subsidiary pursuant to the
terms and conditions set forth therein (the "Commitment"), the Company has
issued, and will in the future issue, shares of Common Stock (together with any
and all other shares of Common Stock owned by the Stockholder from time to time,
the "Shares") and warrants for the purchase of Common Stock (the "Warrants");

      WHEREAS, the Company and the Stockholder acknowledge that, in the event
that (i) the Stockholder were to own more than 5% of the outstanding Common
Stock of the Company, (ii) the Stockholder was not approved under the Company's
license (the "License") issued by the West Virginia Lottery Commission (the
"Commission") pursuant to Section ___, et. seq., of the West Virginia Code
(together with all rules and regulations promulgated thereunder, the "Code") to
engage in the video lottery business, and (iii) the Stockholder had the
authority to vote the Shares, that the License may be revoked by the Commission;

      WHEREAS, the Stockholder and the Company desire to avoid the occurrence of
any event that would cause the revocation of the License, and, in addition to
the provisions contained in the Warrants preventing the exercise thereof if such
exercise would jeapordize the License, have agreed to take the actions as
provided in this Agreement to assure that (i) the License will not be revoked
and (ii) the Stockholder will be compensated for any required divestiture of all
or a portion of the Shares;

      NOW, THEREFORE, in consideration of the mutual premises and agreements set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

                                   ARTICLE I.

                         Representations and Warranties

      Sec. 1.01.  Representations and Warranties.  Each of the parties hereto
represents and warrants that it has full power and authority to execute and
deliver this Agreement, and the execution and delivery of this Agreement will
not result in the breach of or default under, with or without the giving of
notice or the passage of time or both, any other agreement or arrangement to
which such party is a party or by which such party is bound.

                                   ARTICLE II.

                       Indemnification of the Stockholder

      Sec. 2.01 Indemnification of the Stockholder. To the fullest extent
permitted by law, the Company shall indemnify and hold harmless the Stockholder,
and any assignee of, or participant in, Stockholder's rights under and relating
to the Loan Agreement and the Commitment and their respective agents, officers,
directors, members and legal representatives (collectively, an "Indemnified
Party") from and against any loss or expense suffered or sustained by it by
reason of the fact that it is or was a Stockholder, including without limitation
any judgment, settlement, reasonable attorney's fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action or
proceeding, provided that such loss or expense did not result from the gross
negligence, willful misconduct, dishonesty or bad faith of the Indemnified
Party. The Company shall advance to the Indemnified Party reasonable attorney's
fees and other costs and expenses incurred in connection with the defense of any
action or proceeding which arises out of such conduct. The Indemnified Party
hereby agrees that, in the event it receives any such advance, it shall
reimburse the Company for such fees, costs and expenses to the extent that it
shall be determined that it was not entitled to indemnification under this Sec.
2.01.

                                  ARTICLE III.

                           Undertakings of the Parties

      Sec. 3.01 Approval of the West Virginia Lottery Commission. Each party
hereto agrees to use its best efforts to secure the approval (the "Approval") of
the Stockholder under the License such that the Stockholder may own in excess of
5% of the issued and outstanding Common Stock of the Company at any time and
from time to time. In connection with the undertaking provided for in this
Section 3.01, the Company shall, without limitation:

                  (i) prepare and submit to the Commission all applicable forms
            under the Code with respect to the Approval, use its best efforts to
            cause such Approval to become effective as soon as reasonably
            possible, promptly prepare and submit to the Commission such
            amendments and supplements as may be necessary to keep the Approval
            effective and current and to comply with the provisions of the Code;

                  (ii) notify the Stockholder promptly and, if requested by the
            Stockholder, confirm such advice in writing, (a) of any request by
            the Commission for amendments and supplements to any statement
            submitted to the Commission hereunder and related information or for
            additional information and (b) if, between the effective date of any
            Approval and the closing of any issuance of Shares by the Company,
            the representations and warranties of the Company contained in any
            information provided to the Commission cease to be true and correct
            in all material respects or if the Company receives any notification
            with respect to the suspension or qualification of the Approval or
            the initiation of any proceeding for such purpose;

                  (iii) make every reasonable effort to obtain the withdrawal of
            any order suspending the effectiveness of any Approval at the
            earliest possible moment and provide prompt notice to the
            Stockholder of the withdrawal of any such order;

                  (iv) within a reasonable time prior to the submission of any
            information to the Commission concerning the Stockholder, provide to
            the Stockholder and its counsel a copy of such information, and
            shall not at any time submit or make any amendment or supplement to
            any such submission of which the Stockholder and its counsel shall
            not have previously been advised and furnished a copy; and

                  (v) take, or refrain from taking, such other actions, and
            execute and deliver such other documents, as may reasonably be
            requested by the Stockholder or the Commission to obtain and
            maintain the Approval.

      3.02 Opinion of Counsel to the Commission. The Company agrees to use its
best efforts to secure an opinion of counsel to the Commission (the "Opinion")
that in the event that the Approval is not in effect, the Stockholder may own in
excess of 5% of the issued and outstanding Common Stock of the Company at any
time and from time to time, provided that the Stockholder does not, at any such
time, have the authority to vote or control the vote of over 5% of all of the
issued and outstanding Common Stock. In connection with the undertaking provided
for in this Section 3.02, the Company shall, without limitation, (i) prepare and
submit to the Commission and counsel to the Commission all applicable
information with respect to the Opinion, (ii) use its best efforts to cause the
issuance of the Opinion as soon as reasonably possible, and (iii) promptly
prepare and submit to the Commission and counsel therefor such amendments and
supplements as may be necessary to obtain and keep in effect the Opinion.

      3.03. Expenses of Approval and Opinion. All expenses incurred in effecting
the Approval and obtaining the Opinion (collectively, "Expenses"), including,
without limitation, all registration and filing fees, listing fees, printing
expenses, fees and disbursements of counsel for the Company and the Stockholder
and expenses of any audits incidental to or required for the Approval (other
than with respect to the financial statements of the Stockholder), shall be
borne by the Company.

                                   ARTICLE IV.

                                  Mandatory Put

      Sec. 4.01   Put Requirement.  In the event that (i) the Approval is not
in effect, (ii) the Opinion has not been obtained, (iii) the Stockholder owns
more than 5% of the issued and outstanding Common Stock, and (iv) there is no
other reasonable alternative that, in the opinion of counsel to the Company,
would satisfy the requirements of the Code (such alternative being acceptable
to the Stockholder in its sole and absolute discretion), then, promptly after
notice to the Stockholder by the Company, the Stockholder shall be obligated
to sell, and the Company obligated to purchase, from time to time, the
minimum number of Shares such that after giving effect to such purchase, the
Stockholder will own 5% or less of the Common Stock; provided, however, that
if the Shares are registered pursuant to an effective registration statement
under the Securities Act of 1933, as amended, the Stockholder shall use its
best efforts to divest such number of Shares in the public market.

      Sec. 4.02 Purchase Price. The price per Share at which the Company shall
purchase the Shares from the Stockholder pursuant to Sec. 4.01 hereof (the
"Purchase Price") shall be equal to the average Closing Price of the Common
Stock for the twenty (20) Business Days (as defined in the Loan Agreement)
immediately preceding the date of such purchase. "Closing Price" means the last
reported sale price regular way or, in case no such reported sale takes place on
such day, the average of the closing bid and asked prices regular way for such
day, in each case (i) on the principal national securities exchange on which
such security is listed or to which the Common Stock is admitted to trading or
(ii) if the Common Stock is not listed or admitted to trading on a national
securities exchange, in the over-the-counter market as reported by The Nasdaq
National Market, the The Nasdaq Small Cap or a comparable system, or (iii) if
the Common Stock is not listed on The Nasdaq National Market, the The Nasdaq
Small Cap or a comparable system, as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time in good faith
by the Board of Directors of the Company for that purpose. In the absence of all
of the foregoing, or if for any other reason the Closing Price of such security
cannot

be determined pursuant to the foregoing sentence, the Closing Price shall be the
fair market value of such security as determined in good faith by an appraiser
mutually agreed upon by the parties hereto.

      Sec. 4.03 Payment of the Purchase Price. The Purchase Price shall be
payable with respect to each Share, in cash, upon surrender thereof to the
Company; provided, however, that to the extent that the payment of the Purchase
Price in cash would result in the insolvency of the Company or, in the good
faith opinion of the Board of Directors of the Company, would reduce the
Company's working capital below the level required for the ongoing operation of
the Company's business in its ordinary course, the Purchase Price shall be paid
by the making of a loan therefore by the Stockholder, evidenced by a note made
by the Company (the "Note"). The principal of the Note shall be payable in full
on the date that is one year from the date of the purchase of Shares by the
Company. Interest on the Note shall be payable monthly and at maturity at a rate
of 24% per annum (calculated on the basis of a year of 360 days) or, if such
rate would be higher than the maximum rate allowed by applicable law, such
maximum allowable rate. The Note shall be governed by the laws of the State of
New York, and shall be payable to the order of the Stockholder or its designee.
If requested by the Stockholder, the Company shall cause the Note to be secured
by a first or second priority lien, pursuant to a deed of trust in form and
substance satisfactory to the Stockholder, on the Property (as defined in the
Loan Agreement).

      Sec. 4.04 Escrow Shares. In the event that a Note is issued pursuant to
Sec. 4.03 hereof the Company shall validly issue that number of duly authorized
shares of Common Stock (the "Escrow Shares") equal to the number of Shares
purchased by the Company and paid for with the Note, in the name of an escrow
agent (the "Agent"), to be selected by the Stockholder, and held by the Agent
pursuant to an escrow agreement (the "Escrow Agreement") containing such terms
and conditions as are customary for such transactions including, without
limitation, the following:

                  (i) upon receipt of a certificate of the Company,
      countersigned by the Stockholder, that all or any portion of the Note has
      been repaid, the Agent will surrender to the Company all or a pro rata
      portion, as the case may be, of Escrow Shares as set forth in such
      certificate;

                  (ii) upon receipt of a certificate of the Stockholder,
      countersigned by the Company, that the conditions that required the
      purchase of Shares by the Company have been cured, the Agent shall
      transfer the number of Escrow Shares set forth in such certificate to the
      Stockholder; and

                  (iii) such other provisions with respect to the voting rights
      of the Escrow Shares as the Commission may deem necessary in writing to
      keep in effect the License;

provided, however, that if the Shares have been registered pursuant to a valid
and effective registration statement under the Securities Act of 1933, as
amended, at the time of the issuance of the Note, the Stockholder will transfer
the Shares directly to the Agent to be held pursuant to the Escrow Agreement
upon receipt by the Stockholder of the Note, duly executed.

      Sec. 4.05   Conditions to Release of Escrow Shares.  (i)  At any time
after all or a portion of the principal amount of the Note is paid to the
Stockholder, upon request by the Company, the Stockholder shall countersign a
certificate to the Agent authorizing the release to the Company of the number
of Escrow Shares equal to the quotient of (a) the amount of the principal of
the Note that has been paid, and (b) the Purchase Price.

                  (ii) At any time that there are Escrow Shares, if the
acquisition of any number of such Escrow Shares by the Stockholder would not
cause the revocation of the License, then, upon request by the Stockholder, the
Company shall countersign a certificate to the Agent for

the transfer of such number of Escrow Shares to the Stockholder. Upon receipt by
the Stockholder of any Escrow Shares, the principal balance of the Note shall be
reduced by the product of (a) the number of Escrow Shares transferred to the
Stockholder and (b) the Purchase Price.

Each party hereto agrees to execute and deliver any and all documents,
agreements, instruments and certificates necessary or desirable to carry out the
intent of this Sec. 4.05. The expenses of the parties in connection with the
Agent and the transfers of the Escrow Shares shall be born by the Company;
provided, however, that the Company shall not be required to pay the fees of the
Agent in excess of the amount of a bona-fide offer by a potential escrow agent,
selected by the Company, submitted to the Stockholder prior to the engagement of
the Agent.

                                   ARTICLE V.

                           Effect of Other Agreements

            5.01 Articles of Incorporation. The terms, conditions and agreements
contained herein set forth the rights of the parties hereto with respect to any
repurchase of Shares by the Corporation, whether pursuant to Article VII of the
Restated Certificate of Incorporation (or any successor provision) of the
Company or otherwise; provided, however, that the Company hereby agrees that so
long as the Approval is effective, the Stockholder shall not be a "Disqualified
Holder" (as defined in the Restated Certificate of Incorporation of the Company
as in effect as of the date hereof) unless and until (i) the Company receives
written notification from a governmental authority with jurisdiction over it
that the continued ownership of the Shares by the Stockholder would result in
the loss or revocation of any lisence or franchise of a material nature
necessary for the conduct of the Company's business, and (ii) the Stockholder
has not cured the events giving rise to such notice within the time provided by
such governmental authority.

      5.02 Other Rights. Except as otherwise expressly set forth herein,
notwithstanding any other right that the Company may have to redeem Shares from
the Stockholder, the Company hereby expressly covenants that no such right shall
be exercised by it without the prior written consent of the Stockholder.

                                   ARTICLE VI.

                                  Miscellaneous

      Sec. 6.01. General. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts with the same effect
as if the parties executing such counterparts had all executed one counterpart,
provided, that the counterparts, in the aggregate, shall have been duly executed
by each of the parties hereto. The parties hereto hereby stipulate that the
transmission of a facsimile counterpart of this Agreement bearing a signature
purporting to be that of a party hereto received by either party at such party's
principal place of business shall (i) constitute an original of this Agreement,
and (ii) constitute delivery of this Agreement by the party transmitting such
facsimile.

      Sec. 6.02.  Amendments to Stockholder Agreement.  The terms and
provisions of this Agreement may be modified or amended at any time and from
time to time with the written consent of all of the parties hereto.

      Sec. 6.03.  Choice of Law.  Notwithstanding the place where this
Agreement may be executed by any of the parties hereto, the parties expressly
agree that all the terms and provisions hereof shall be construed under the
laws of the State of New York.

      Sec. 6.04.  Conflicts; Ratification; etc.  In the event that the
performance by any party hereto of any provision hereof would conflict with
or cause a default, whether with or without the or cause a default, whether
with or without the 

passage of time, under any other instrument, document or other agreement under
which such party is bound (any such occurrence a "Conflict"), such party shall
use its good faith best efforts to remedy or waive the Conflict such that the
full intent of this Agreement shall prevail.

      Sec. 6.05. Notices. Each notice or other communication relating to this
Agreement shall be in writing and delivered in person or by registered or
certified mail. All such communications shall be addressed to the appropriate
party (or his legal representative) at such party's address set forth under such
party's name on the signature page hereto. Either party hereto may designate a
new address by notice to that effect given to the other party hereto. Unless
otherwise specifically provided in this Agreement, a notice shall be deemed to
have been effectively given when mailed by registered or certified mail to the
proper address or delivered in person.

      Sec. 6.07.  Headings.  The titles of the Articles and the headings of
the Sections of this Agreement are for convenience of reference only, and are
not to be considered in construing the terms and provisions of this Agreement.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                       WINNERS ENTERTAINMENT, INC.

                                       By:  /S/ Edson R. Arneault
                                          --------------------------------------
                                       Name:  Edson R. Arneault
                                       Title: President

                                              1461 Glenneyre Street, Suite F
                                              Laguna Beach, California  92651

                                       MADELEINE LLC

                                       By: /s/  Kevin P. Genda
                                          --------------------------------------
                                       Name:  Kevin P. Genda
                                       Title: Power of Attorney

                                       950 Third Avenue, 20th Floor
                                       New York, New York  10022
                                       Attention:  Mr. Kevin P. Genda

 

Basic Info X:

Name: STOCK TRANSFER AGREEMENT
Type: Stock Transfer Agreement
Date: Aug. 14, 1996
Company: MTR GAMING GROUP INC
State: Delaware

Other info:

Date:

  • July 2 , 1996

Organization:

  • Mountaineer Park , Inc.
  • West Virginia Lottery Commission
  • Nasdaq National Market
  • National Association of Securities Dealers , Inc.
  • Board of Directors of the Company
  • Release of Escrow Shares
  • Restated Certificate of Incorporation of the Company

Location:

  • Delaware
  • West Virginia
  • Laguna Beach
  • California
  • New York

Money:

  • $ 0.00001
  • $ 11,100,000

Person:

  • Edson R. Arneault
  • Kevin P. Genda

Percent:

  • 5 %
  • 24 %