Document:

Exhibit 10.3

 

EXECUTION VERSION

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT,  dated as of December 30, 2011, is entered into by and between NATIONAL BEEF PACKING COMPANY, LLC, a Delaware limited liability company (“National Beef”),  and U.S. PREMIUM BEEF, LLC, a Delaware limited liability company (the “Pledgor”).

 

RECITALS:

 

WHEREAS, Leucadia National Corporation (“Leucadia”), National Beef, Pledgor and the other Sellers named therein and TMK Holdings, LLC have entered into a Membership Interest Purchase Agreement dated as of December 5, 2011 (the “Purchase Agreement”), pursuant to which Leucadia will, among other things, purchase a portion of Pledgor’s (and the other Sellers’) respective membership interests in National Beef;

 

WHEREAS, Pledgor and National Beef are parties to that certain Cattle Purchase and Sale Agreement dated December 30, 2011 (as such agreement may be amended, modified, supplemented, extended, or restated from time to time, the “Cattle Agreement”); and

 

WHEREAS, as an inducement to National Beef to enter into the Cattle Agreement and as security for its obligations thereunder, Pledgor desires to grant to National Beef a perfected security interest in and to the Collateral (as defined herein), subject only to the prior first priority security interest held on the date hereof by CoBank, ACB, a federally chartered instrumentality of the United States (“CoBank”), pursuant to the terms of (a) the Pledge Agreement, dated as of July 26, 2011, by and between Pledgor and CoBank (as such agreement is in effect on the date hereof (including giving effect to the Consent and First Amendment to Pledge Agreement dated as of the date hereof (the “Consent and First Amendment”)), subject to any amendment, modification, supplement, extension or restatement as permitted by Section 3(b)(vi) hereof or unless otherwise consented to in writing by National Beef, the “CoBank Pledge Agreement”), entered into pursuant to the CoBank Loan Agreement (as defined herein) and (b) the Security Agreement, dated as of July 26, 2011, by and between Pledgor and CoBank (as such agreement is in effect on the date hereof (including giving effect to the Consent and First Amendment), subject to any amendment, modification, supplement, extension or restatement as permitted by Section 3(b)(vi) hereof or unless otherwise consented to in writing by National Beef, the “CoBank Security Agreement”; together with the CoBank Pledge Agreement, the “CoBank Security Documents”), entered into pursuant to the CoBank Loan Agreement (as defined herein).

 

NOW THEREFORE, for and in consideration of entering into the Cattle Agreement and to secure the obligations of Pledgor to pay damages to National Beef thereunder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                      Definitions and Interpretation of Agreement.  In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings indicated for

 

 

purposes of this Agreement (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

 

“Agreement” means this Pledge Agreement, as it may be amended, modified, supplemented, extended or restated from time to time.

 

“CoBank Loan Agreement” means, collectively, that certain Master Loan Agreement No. RI0992, dated July 26, 2011 (the “MLA”) and that certain Supplement No. RI0992T01  to the MLA, dated July 26, 2011, in each case, between Pledgor and CoBank, as each such agreement is in effect on the date hereof subject to any amendment, modification, supplement, extension or restatement as permitted by Section 3(b)(vi) hereof or as otherwise consented to in writing by National Beef.

 

“CoBank Loan Documents” means, collectively, the CoBank Loan Agreement and the CoBank Security Documents, and the other agreements or documents between Pledgor and CoBank entered into in connection with, or related to, each of the foregoing (in each case, as each such agreement is in effect on the date hereof subject to any amendment, modification, supplement, extension or restatement as permitted by Section 3(b)(vi) hereof or as otherwise consented to in writing by National Beef).

 

“Collateral” means the Membership Interests and, upon and during the continuance of a Default, all proceeds received by the Pledgor in respect of a transfer of or in exchange for such Membership Interests.

 

“Default” means the occurrence of any of the following:

 

(a)           an “Event of Default” as defined in the CoBank Loan Documents;

 

(b)           any representation or warranty made by Pledgor contained in this Agreement shall have been false or misleading in any material respect on or as of the date made or deemed made and, if susceptible to remedy, Pledgor shall have failed to remedy the effect of such incorrect or misleading representation or warranty within ten (10) days after notice from National Beef; provided that no such notice and cure period shall be required with respect to any such representation or warranty which was willfully incorrect or misleading when made;

 

(c)           any breach of any covenant made by Pledgor under this Agreement which has not been cured within ten (10) days after notice from National Beef; or

 

(d)           an event under which National Beef shall have the right to terminate, or shall have terminated, the Cattle Agreement pursuant to Section (7)(1) thereof, for which a breach by Pledgor has resulted in damages to National Beef, which National has demanded the damages to be paid by written notice to Pledgor and have become an obligation of Pledgor to National under the Cattle Agreement, and have been unpaid by Pledgor for at least (ten) 10 days.

 

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“Membership Interests” shall mean (i) all right, title and interest of Pledgor, whether legal or equitable, now or hereafter existing, and howsoever evidenced or arising, in National Beef as a member thereof, including, without limitation, Units (as defined in the Operating Agreement) (the “National Beef Units”) and (ii) all right, title and interest of Pledgor, whether legal or equitable, now or hereafter existing, and howsoever evidenced or arising, in Pennsylvania LLC as a member thereof, including, without limitation, Units (as defined in the Pennsylvania LLC Operating Agreement) (the “Pennsylvania LLC Units”).

 

“National Beef Operating Agreement” shall mean that certain First Amended and Restated Limited Liability Company Agreement of National Beef dated as of December 30, 2011, as amended, modified, supplemented, extended or restated from time to time.

 

“Obligations” means the performance of all covenants, agreements, and provisions of Pledgor in this Agreement and damages incurred by National Beef as a result of a breach by Pledgor of the Cattle Agreement that are an obligation of Pledgor to National Beef under the Cattle Agreement.

 

“Operating Agreements” means the National Beef Operating Agreement and the Pennsylvania Operating Agreement.

 

“Pennsylvania LLC” means National Beef Pennsylvania, LLC, a Delaware limited liability company, a subsidiary of National Beef formed to hold all of National Beef’s and its subsidiaries’ tangible and intangible assets located in the Commonwealth of Pennsylvania, the membership interests of which will be distributed to the members of National Beef as contemplated by Schedule 1.2(d) of the Purchase Agreement.

 

“Pennsylvania LLC Operating Agreement” means the Amended and Restated Limited Liability Company Agreement of Pennsylvania LLC dated as of December 30, 2011, as amended, modified, supplemented, extended or restated from time to time.

 

“Uniform Commercial Code” means the Uniform Commercial Code as in effect in the State of Delaware from time to time.

 

A Section is, unless otherwise stated, a reference to a section hereof, as the case may be. Section captions used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar purport when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise defined therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other documents made or delivered pursuant hereto.

 

2.                                      Grant of Security Interest.  For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure the payment and performance of all of the Obligations, Pledgor hereby grants to National Beef a lien on and a continuing

 

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security interest in the Collateral. The security interest granted to National Beef hereunder shall rank second in priority only to the security interest granted to CoBank under the CoBank Security Documents as in effect on the date hereof (subject only to any amendment, modification, supplement, extension or restatement as permitted by Section 3(b)(vi) hereof or as otherwise consented to in writing by National Beef) as security for the obligations of Pledgor under the CoBank Loan Agreement as in effect on the date hereof (subject only to any amendment, modification, supplement, extension or restatement as permitted by Section 3(b)(vi) hereof or as otherwise consented to in writing by National Beef).

 

3                                         Representations, Warranties and Covenants.

 

(a)                                  Pledgor represents and warrants to National Beef as of the date of this Agreement that: (i) National Beef has, or when this Agreement is delivered to National Beef will have, a valid perfected security interest in the Collateral free of all liens, claims and rights of third parties whatsoever other than the pledge under, and the lien and security interest created by, the CoBank Security Documents; (ii) all documentary, stamp or other similar taxes or fees owing in connection with the issuance, transfer and/or pledge of the Membership Interests have been paid and will hereafter be paid by Pledgor as such become due and payable; (iii) Pledgor is the lawful owner of the Collateral pledged by it hereunder free of all liens, claims and rights of third parties whatsoever other than the pledge under, and the lien and security interest created by, the CoBank Security Documents, with full right to deliver, pledge, assign and transfer such Collateral to National Beef hereunder; (iv) the Collateral represents all of Pledgor’s Membership Interests; (v) neither the respective members nor the respective managers of National Beef or Pennsylvania LLC have declared, nor do any of National Beef’s or Pennsylvania LLC’s respective governance agreements expressly provide, that any ownership interest in National Beef or Pennsylvania LLC, as applicable, is a “security” under Section 8-103(c) (or similar provision) of the Uniform Commercial Code of the state of its organization; (vi) all of the Membership Interests are uncertificated; (vii) other than the pledge under, and the lien and security interest created by, the CoBank Security Documents, the execution and delivery of this Agreement and the performance by Pledgor of its obligations hereunder do not and will not contravene or conflict with any provision of law or of any agreement binding upon or applicable to it or the Collateral and this Agreement is its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to the enforcement of creditors’ or secured creditors’ rights generally and subject to the qualification that general equitable principles may limit the availability of enforcement of certain remedies, including, without limitation, the remedy of specific performance; and (viii) except for the approvals or consents required under the Operating Agreements and subject to the provisions of the CoBank Security Documents, if National Beef exercises its rights under Section 6 hereof with respect to the Collateral, no approval or consent of any person or entity,

 

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including, without limitation, any other member of National Beef or Pennsylvania LLC, as applicable, is required for National Beef to exercise all rights granted by Pledgor to National under this Agreement with respect to the Collateral.

 

(b)                                 So long as the Obligations remain outstanding, Pledgor will, unless National Beef shall otherwise consent in writing: (i) at its sole expense, promptly deliver to National Beef, from time to time upon request of National Beef, such documents, reasonably satisfactory in form and substance to National Beef, with respect to the Collateral as National Beef may reasonably request, to preserve and protect, and to enable National Beef to enforce, its rights and remedies hereunder; (ii) notify National Beef and/or Pennsylvania LLC to note in the books and records of National Beef and/or Pennsylvania LLC, as applicable, the security interest granted to National Beef pursuant to this Agreement; (iii) not create or suffer to exist any lien, security interest or other charge, claim, right or encumbrance against, in or with respect to any of the Collateral except for (A) the pledge hereunder and the lien and security interest created hereby and (B) the pledge under, and the lien and security interest created by, the CoBank Security Documents; (iv) not enter into any agreement or permit to exist any restriction with respect to any of its right, title and interest in or to the Collateral other than pursuant hereto or the CoBank Security Documents; (v) not take or fail to take any action which would in any manner impair the enforceability of National Beef’s lien and security interest in any of the Collateral; and (vi) other than an extension of the term of the CoBank Loan Documents, not consent to any amendment, supplement, restatement, waiver or other modification of any of the terms or provisions of the Operating Agreements relating to the Collateral or CoBank Loan Documents, which in any case is contrary to the terms of this Agreement or any other CoBank Loan Document, could reasonably be expected to be adverse in any material respect to the rights, interests or privileges of National Beef or its ability to enforce the same, results in the imposition or expansion in any material respect of any restriction or burden on Pledgor or National Beef, reduces in any material respect any rights or benefits of Pledgor or National Beef or impairs the Collateral.

 

(c)                                  In the event that Pledgor fails or refuses to perform any of its obligations set forth herein, National Beef shall have the right, without obligation, to do all things it deems necessary or advisable to discharge the same and any sums paid by National Beef, or the cost thereof, including, without limitation, amounts to discharge and pay all amounts owed by Pledgor to CoBank under the CoBank Loan Documents and attorneys’ fees, shall constitute a part of the Obligations secured hereby and bear interest until paid at the interest rate equal to the prime lending rate as published in The Wall Street Journal plus 3%, and be secured by the Collateral; provided, however, that Pledgor acknowledges and agrees that nothing contained herein shall obligate National Beef or impose a duty upon National Beef to assume any duties or obligations of Pledgor with respect to any of the Collateral.

 

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(d)                                 Subject to the rights of CoBank under the CoBank Security Documents, upon any certification of the Membership Interests, Pledgor shall hold such certificates as National Beef’s agent and in trust for National Beef as additional Collateral and shall pledge and deliver to National Beef such certificates, along with proper instruments of assignment duly executed by Pledgor and by such other instruments or documents as National Beef or its counsel may reasonably request.

 

4.                                      Certain Permitted Activities.

 

(a)                                  Subject to the rights of CoBank under the CoBank Loan Documents, National Beef may, from time to time, without notice to Pledgor, take any or all of the following actions: (i) retain or obtain a lien upon, or a security interest in, the Collateral to secure the Obligations; and (ii) during the continuance of a Default, resort to the Collateral (without any marshalling) for payment of any of the Obligations, whether or not National Beef (A) shall have resorted to any other property securing any of the Obligations or any obligation hereunder or (B) shall have proceeded against any other obligor primarily or secondarily obligated with respect to any of the Obligations (all of the actions referred to in preceding clauses (A) and (B) being hereby expressly waived by Pledgor).

 

(b)                                 National Beef shall have no right to vote the Membership Interests or other Collateral or give consents, waivers or ratifications in respect thereof prior to the occurrence of a Default.  Subject to the rights of CoBank under the CoBank Security Documents, during the continuance of a Default, Pledgor shall have the right to vote any and all of the Membership Interests and other Collateral pledged by it hereunder and give consents, waivers and ratifications in respect thereof.

 

5.                                      Dividends, Distributions, etc.  National Beef shall have no right to distributions made on or in respect of the Collateral.

 

6.                                      Default

 

(a)                                  Subject to the rights of CoBank under the CoBank Security Documents, upon the occurrence of a Default, National Beef may redeem from Pledgor or sell so much of the Collateral as necessary to satisfy the Obligations (including, without limitation, any amounts necessary to satisfy Pledgor’s obligations under the CoBank Loan Documents), providing any such redemption or sale shall be after an appraisal of Fair Value of the Collateral as determined pursuant to Exhibit I hereto and the redemption or sale shall not be at a price less than the Fair Value.  No rights and remedies of National Beef expressed hereunder are intended to be exclusive of any other right or remedy under the Cattle Agreement, but every such right or remedy shall be cumulative and shall be in addition to all other rights and remedies herein conferred, or conferred upon National Beef under the Cattle Agreement or now or hereafter existing at law or in equity or by statute. No delay on the part of National Beef in the exercise of any  right or remedy shall

 

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operate as a waiver thereof, and no single or partial exercise by National Beef of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy. No action of National Beef permitted hereunder shall impair or affect the rights of National Beef in and to the Collateral.

 

(b)                                 (i) The Pledgor agrees that, in any sale of any of the Collateral when a Default shall have occurred and be continuing, subject to the rights of CoBank under the CoBank Security Documents, National Beef is authorized to comply with any limitation or restriction in connection with such sale as is necessary in order to avoid any violation of applicable law or the Operating Agreements (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any governmental regulatory authority or official, and Pledgor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall National Beef be liable nor accountable to Pledgor for any reasonable discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction, providing the sale price is at least Fair Value.

 

(ii)                                          Pledgor further agrees, after a Default shall have occurred and be continuing, and upon written request from National Beef, to (A) deliver to National Beef such information concerning Pledgor or the Collateral as National Beef shall reasonably request in connection with the sale of all or any portion of the Collateral, which information shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary to make such information not misleading, and (B) do or cause to be done all such other acts and things as may be necessary to make such sale of all or any portion of such Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental agencies or instrumentalities, domestic or foreign, having jurisdiction over any such sale.

 

Without limiting the foregoing paragraph, if National Beef decides to exercise its right to sell all or any of the Collateral, upon written request, Pledgor shall furnish or cause to be furnished to National Beef all such information as National Beef may request in order to qualify the Collateral as exempt securities, or the sale of such Collateral as exempt transactions, under federal and state securities laws.

 

Nothing herein shall be construed to be Pledgor’s consent to, or any obligation to undertake, a public offering of any pledged securities.

 

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(c)                                  For the purpose of carrying out the terms of this Agreement, Pledgor appoints National Beef, or any other person whom National Beef may designate, as attorney in fact, effective from the occurrence and during the continuance of any Default hereunder, with power to take any and all actions and to execute any and all documents and instruments that may, in the judgment of National Beef, be necessary or desirable to accomplish the purposes of this Agreement, including but not limited to (i) the power to pay off all obligations of Pledgor under the CoBank Loan Documents and terminate the CoBank Loan Documents, and (ii) do any and all things necessary to carry out the purposes of this Agreement.  Pledgor ratifies and approves all acts of such attorney.  Neither National Beef nor any other person or entity designated by it as attorney hereunder will be liable for any act or omission nor for any error of judgment or mistake of facts or law.  This power, being coupled with an interest, is irrevocable until this Agreement is terminated as herein provided.

 

7.                                      Application of Proceeds.  The proceeds of the Collateral redeemed or sold pursuant to the terms of Section 6 hereof shall be applied by National Beef as follows:

 

First: as required by the CoBank Loan Agreement; and

 

Second: to the Obligations in accordance with the Cattle Agreement and this Agreement.

 

8.                                      Nature of Obligations.  Pledgor acknowledges and agrees that Pledgor shall be liable for the Obligations. Pledgor represents and warrants to National Beef at all times that the Cattle Agreement directly or indirectly confers a material benefit on Pledgor.

 

9.                                      No Marshalling.  To the extent National Beef holds a security interest in other assets or interests of Pledgor, nothing contained herein shall require National Beef to proceed against any security interest in any of the assets or interests of Pledgor prior to enforcing its rights against the Collateral.

 

10.                               Indemnity.  Pledgor shall indemnify, defend and hold harmless National Beef and its members (other than Pledgor), agents, officers, managers and employees, and every attorney appointed pursuant to this Agreement (a) in respect of all liabilities and reasonable expenses incurred by them in good faith in the execution or purported execution of any rights, powers or discretions vested in them pursuant to this Agreement, and (b) for any losses arising in connection with the exercise or purported exercise of any of their rights, powers and discretions hereunder except that National Beef will be liable for any liabilities, expenses and losses which arise as a result of its own willful misconduct or gross negligence.

 

11.                               Filing as a Financing Statement.  National Beef shall be authorized to execute and file such UCC financing statements and other documents (in all public offices reasonably deemed necessary or appropriate by National Beef), and Pledgor shall do such other acts and things, all as National Beef may from time to time request, to establish and maintain

 

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a valid, perfected security interest in the Collateral to secure the payment of the Obligations.

 

12.                               Notices.  All notices hereunder shall be deemed to be duly given upon delivery in the form and manner set forth in Section 11 of the Cattle Agreement to the parties at the addresses set forth in Section 11 of the Cattle Agreement, as the same may be updated as provided therein.

 

13.                               Amendments.  No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed and delivered by National Beef and Pledgor. Any waiver of any provision of this Agreement, and any consent to any departure by Pledgor from the terms of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which given.

 

14.                               Termination of Agreement.  Pledgor agrees that its pledge hereunder is continuing and shall, unless sooner terminated by National Beef (notwithstanding, without limitation, that at any time or from time to time all Obligations may have been paid in full), terminate only when the Cattle Agreement terminates and the Obligations (including, without limitation, any and all extensions or renewals of any thereof, any and all interest on any thereof, and any and all expenses incurred by National Beef in seeking to collect any of the Obligations and to collect or enforce any rights under the Collateral) have been satisfied in full, at which time National Beef shall release any security interest in the Collateral as shall not have been sold or otherwise redeemed by National Beef pursuant to the terms hereof.  This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Obligations is rescinded or must otherwise be restored or returned by National Beef as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made.

 

15.                               Severability.  Any provision in this Agreement that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of this Agreement are declared to be severable.

 

16.                               Successors and Assigns.  The terms and provisions of this Agreement shall be binding upon and inure to the benefit of Pledgor and National Beef and their respective successors and permitted assigns, except that (a) Pledgor shall not have the right to assign its rights or obligations under this Agreement and (b) any assignment by National Beef must be made in compliance with the Cattle Agreement.

 

17.                               CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF DELAWARE.

 

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18.                               WAIVER OF JURY TRIAL. PLEDGOR AND NATIONAL BEEF HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.

 

19.                               CONSENT TO JURISDICTION. PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR DELAWARE STATE COURT SITTING IN THE STATE OF DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND PLEDGOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF NATIONAL BEEF TO BRING PROCEEDINGS AGAINST PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY PLEDGOR AGAINST NATIONAL BEEF OR ANY AFFILIATE OF NATIONAL BEEF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN THE STATE OF DELAWARE.

 

20.                               Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart.  This Agreement shall be effective upon execution by Pledgor and National Beef.

 

21.                               Miscellaneous.  Except as provided herein, Pledgor hereby expressly waives: (i) notice of the acceptance by National Beef of this Agreement and (ii) all diligence in defense, collection or protection of or realization upon this Pledge Agreement, any obligation hereunder, or any security for or guaranty of any of the foregoing.

 

(a)                                  No action of National Beef permitted hereunder shall in any way affect or impair the rights of National Beef and the obligations of Pledgor under this Agreement.  The Pledgor hereby acknowledges that, other than receiving CoBank’s written consent to create the lien and security interest for the benefit of National Beef hereunder, there are no conditions to the effectiveness of this Agreement that are not stated in this Agreement.

 

(b)                                 All obligations of Pledgor and rights of National Beef expressed in this Agreement shall be in addition to and not in limitation of those provided in applicable law or in any other written instrument or agreement relating to any of the Obligations.

 

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(c)                                  Pledgor shall reimburse National Beef for all costs and expenses incurred by National Beef (including, without limitation, attorneys’ fees and disbursements) to:  (i) commence, defend or intervene in any court proceeding relating to the Collateral or this Agreement; (ii) file a petition, complaint, answer, motion or other pleadings, or to take any other action in or with respect to any suit or proceeding (bankruptcy or otherwise) relating to the Collateral, this Agreement or the CoBank Loan Documents; (iii) protect, collect, lease, sell, or liquidate any of the Collateral; (iv) attempt to enforce any security interest in any of the Collateral or to seek any advice with respect to such enforcement; and (v) enforce any of National Beef’s rights to collect any of the Obligations.

 

[REMAINDER OF PAGE LEFT BLANK]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first above written.

 

 

	
 
    	
U.S.   PREMIUM BEEF, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steven D. Hunt
    
	
 
    	
Name:
    	
Steven   D. Hunt
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
NATIONAL   BEEF PACKING COMPANY, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Timothy M. Klein
    
	
 
    	
Name:
    	
Timothy   M. Klein
    
	
 
    	
Title:
    	
Chief   Executive Officer, President and Manager
    

 

[SIGNATURE PAGE TO PLEDGE AGREEMENT]

 

 

EXHIBIT I

 

Determination of Fair Value

 

The Fair Value of any Collateral to be sold or redeemed pursuant to Section 6 shall be determined as of the date of Default (the “Default Date”), which shall be determined by agreement between National Beef and the Pledgor, and shall be determined within twenty (20) business days after National Beef notifies Pledgor that it intends to sell or redeem the Collateral pursuant to Section 6 (the “Appraisal Notice”).  If National Beef and the Pledgor are unable to agree on the Fair Value of such Collateral as of the Default Date within such period, National Beef and Pledgor will each designate an appraiser to determine the Fair Value of such Collateral as of the Default Date, such appraisals to be delivered no later than forty-five (45) business days after the delivery of the Appraisal Notice.  If the lower of the two initial appraisals is equal to or greater than 90% of the higher of the two initial determinations, the Fair Value of such Collateral shall be the average of the two determinations.  If the lower of the two initial appraisals is less than 90% of the higher of the initial appraisals with respect to such Collateral, National Beef and the Pledgor shall attempt in good faith for a period of ten (10) business days following the later of the dates on which the two initial appraisals were delivered to determine a mutually acceptable Fair Value of such Collateral.  If an agreement is not reached during such period, National Beef and the Pledgor shall promptly (but in any event within five (5) business days after the completion of such ten business day period) direct the appraisers to designate a third appraiser to determine, within ten business days after such designation, which appraisal of the Fair Value of such Collateral by the initial two appraisers is the more accurate appraisal of Fair Value of such Collateral in the sole discretion of such third appraiser (who shall be limited to choosing one of the two initial determinations of Fair Value of such Collateral).  The determination of Fair Value by such third appraiser shall be final and binding on all parties.  Each party shall pay the cost of its initially appointed appraiser, and if a third appraiser is necessary, the appraisal costs of the third appraiser shall be shared equally by National Beef and the Pledgor.  The “Fair Value” shall be the fair market value of such Collateral, determined on the basis of the aggregate equity value of National Beef or Pennsylvania LLC, as applicable, valuing such Collateral as a proportionate interest in a going concern with reference to the relative economic rights and preferences of such Collateral as set forth in Article 5 of the applicable Operating Agreement, but without discount for marketability, lack of liquidity, minority status or otherwise.  In order to determine the aggregate equity value of National Beef or Pennsylvania LLC referred to in the preceding sentence after the Pennsylvania LLC Units have been distributed to the members of National Beef as contemplated by Schedule 1.2(d) of the Purchase Agreement, (i) the aggregate equity value of National Beef and Pennsylvania LLC shall be determined as if they were a single entity, (ii) the percentage of such aggregate equity value attributable to National Beef, on the one hand, and Pennsylvania LLC, on the other hand, shall be determined and (iii) all of such aggregate equity value shall be allocated between National Beef and Pennsylvania LLC in accordance with such percentages.  The Fair Value shall not take into account the value of National Beef, Pennsylvania LLC or the membership interests of any member of National Beef or Pennsylvania LLC, in each case, reflected on the books and records or financial statements of any such member of National Beef or Pennsylvania LLC.

 

 

EXECUTION VERSION

 

CONSENT AND FIRST AMENDMENT

TO PLEDGE AGREEMENT AND SECURITY AGREEMENT

 

This Consent and First Amendment to Pledge Agreement and Security Agreement (this “First Amendment”) is entered into this 30th day of December, 2011 (the “Effective Date”), by and between CoBank, ACB (“CoBank”), and U.S. Premium Beef, LLC, a Delaware limited liability company (“Pledgor”).  CoBank and Pledgor may be referred to in this First Amendment collectively as the “Parties” and individually as a “Party”.

 

RECITALS

 

A.                                   Pledgor and CoBank are parties to that certain Master Loan Agreement dated July 26, 2011 (the “Master Loan Agreement”), pursuant to which CoBank may, from time to time, make loans to Pledgor.  Each loan made by CoBank to Pledgor pursuant to the Master Loan Agreement is to be evidenced by a supplement to the Master Loan Agreement.  As of the Effective Date, CoBank has made one revolving term loan to Pledgor in the principal amount of $15,000,000, as evidenced by that certain Revolving Term Loan Supplement No. RI0992T01 dated July 26, 2011 (the “Supplement”).

 

B.                                     In connection with the Master Loan Agreement and Supplement, Pledgor and CoBank also executed (a) that certain Pledge Agreement dated July 26, 2011 (the “Pledge Agreement”), pursuant to which Pledgor pledged to CoBank all of Pledgor’s membership interests in National Beef Packing Company, LLC, a Delaware limited liability company (“National Beef”), as security for the Obligations defined in the Pledge Agreement and (b) that certain Security Agreement dated July 26, 2011 (the “Security Agreement”), pursuant to which Pledgor granted to CoBank a security interest in all of the personal property of Pledgor, including Pledgor’s membership interests in National Beef, as security for the Obligations defined in the Security Agreement.  Capitalized terms not otherwise defined in this First Amendment shall have the meanings given to them in the Pledge Agreement.

 

C.                                     Section 9 of the Master Loan Agreement prohibits Pledgor from, among other things, (1) selling any of its assets with an aggregate fair market value in excess of $200,000 in any calendar year, and (2) creating or permitting to exist any lien upon any of its property, in each case without CoBank’s prior written consent.

 

D.                                    Section 3(b) of the Pledge Agreement prohibits Pledgor from, among other things, (1) selling any of the Membership Interests, (2) creating or permitting to exist any lien on the Membership Interests, and (3) consenting to certain amendments or modifications of the Limited Liability Company Agreement of National Beef dated August 6, 2003 (the “National Beef Operating Agreement”), in each case without CoBank’s prior written consent.

 

E.                                      Section 3(J) of the Security Agreement prohibits Pledgor from, among other things, disposing of any Collateral (as defined in the Security Agreement), including the Membership Interests, without CoBank’s prior written consent.

 

F.                                      Pledgor intends to sell a portion of the Membership Interests to Leucadia National Corporation (the “Membership Interest Sale”).  As part of the Membership Interest Sale, it is

 

 

contemplated that National Beef (i) will form National Beef Pennsylvania, LLC, a new Delaware limited liability company, to hold all of its tangible and intangible assets located in the State of Pennsylvania (“PA Newco”) and (ii) will distribute membership interests in PA Newco (the “PA Newco Membership Interests”) to its members following consummation of the Membership Interest Sale (the “PA Distribution”).  Also, as part of the Membership Interest Sale, Pledgor will grant a lien upon the Membership Interests and the PA Newco Membership Interests upon receipt thereof in favor of National Beef (the “National Beef Pledge”) and (i) the National Beef Operating Agreement will be amended and restated in full (x) simultaneously with consummation of the Membership Interests Sale and (y) thereafter to give effect to the PA Distribution and (ii) the limited liability company agreement of PA Newco (the “PA Newco Operating Agreement”) will be amended and restated in full.

 

G.                                     Pledgor has requested that CoBank (i) consent to the Membership Interest Sale and the PA Distribution, (ii) release its security interest in, and liens on, the Membership Interests being sold pursuant to the Membership Interest Sale, (iii) consent to the National Beef Pledge and (iv) consent to the amendments and restatements of the National Beef Operating Agreement and the PA Newco Operating Agreement.

 

H.                                    CoBank is willing to provide its consent upon the terms and conditions contained in this First Amendment.

 

AGREEMENT

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

 

1.                                       Consent, Acknowledgment and Release.  Subject to the satisfaction of the other terms and conditions contained in this First Amendment, CoBank hereby consents to (a) the Membership Interest Sale, (b) the PA Distribution, (c) the National Beef Pledge, and (d) the amendments and restatements of the National Beef Operating Agreement and the PA Newco Operating Agreement.  CoBank hereby acknowledges the terms of the amended and restated National Beef Operating Agreement and the amended and restated PA Newco Operating Agreement, and releases the security interests granted pursuant to the Pledge Agreement and the Security Agreement in the Membership Interests being sold pursuant to the Membership Interest Sale.

 

2.                                       Amendments.

 

(a)                                  Schedule A.  Schedule A attached to the Pledge Agreement is hereby amended and restated in full and replaced with the Schedule A attached as Exhibit 1 to this First Amendment.

 

(b)                                 Recital.  The third Recital on the first page of the Pledge Agreement beginning, “WHEREAS, Pledgor is the legal and beneficial owner . . .” is hereby amended and restated in full to read as follows:

 

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WHEREAS, Pledgor is the legal and beneficial owner of the units and percentage interest in National Beef Packing (as hereinafter defined) and NBP (as hereinafter defined) that are set forth on Schedule A attached hereto; and

 

(c)                                  Definitions.

 

(i)                                     National Beef.  The term “National Beef” contained in Section 1 of the Pledge Agreement is hereby amended and restated in full to read as follows:

 

“National Beef” shall mean, (i) prior to the consummation of the PA Distribution, National Beef Packing and (ii) from and after the consummation of the PA Distribution, collectively, National Beef Packing and NBP.

 

(ii)                                  NBP.  Section 1 of the Pledge Agreement is hereby further amended to add new definitions to read as follows:

 

“National Beef Packing” shall mean National Beef Packing Company, LLC, a Delaware limited liability company.

 

“NBP” shall mean National Beef Pennsylvania, LLC, a Delaware limited liability company.

 

(iii)                               Operating Agreement.  The term “Operating Agreement” contained in Section 1 of the Pledge Agreement is hereby amended and restated in full to read as follows:

 

“Operating Agreement” shall mean, (i) prior to the consummation of the PA Distribution, that certain National Beef Packing Company, LLC First Amended and Restated Limited Liability Company Agreement dated as of December 30, 2011, as amended, modified or restated from time to time and (ii) from and after the consummation of the PA Distribution, collectively (A) that certain National Beef Packing Company, LLC Second Amended and Restated Limited Liability Company Agreement dated as of December 30, 2011, and (B) that certain National Beef Pennsylvania, LLC Amended and Restated Limited Liability Company Agreement dated as of December 30, 2011, both as amended, modified or restated from time to time.

 

3.                                       Conditions Precedent.  Notwithstanding any provision contained in this First Amendment to the contrary, this First Amendment shall not be effective unless and until CoBank shall have received:

 

(a)                                  this First Amendment, duly executed by Pledgor, CoBank and the Chairman of the Board of Managers of National Beef;

 

(b)                                 a fully executed copy of the Pledge Agreement between Pledgor and National Beef creating the National Beef Pledge, which shall be in substantially the same form as the draft received by CoBank as of the Effective Date;

 

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(c)                                  a fully executed copy of each of (i) the National Beef Packing Company, LLC First Amended and Restated Limited Liability Company Agreement, (ii) the National Beef Packing Company, LLC Second Amended and Restated Limited Liability Company Agreement and (iii) the National Beef Pennsylvania, LLC Amended and Restated Limited Liability Company Agreement, which, in each case, shall be in substantially the same form as the draft received by CoBank as of the Effective Date;

 

(d)                                 a fully executed Intercreditor Agreement (the “Intercreditor Agreement”) among CoBank, Pledgor and National Beef in form and substance satisfactory to CoBank in its discretion, addressing the priority of the liens created by the Pledge Agreement and the National Beef Pledge;

 

(e)                                  such other documents as CoBank may reasonably request by not less than five business days prior notice relating to the transactions addressed in this First Amendment, all in form and substance reasonably satisfactory to CoBank; and

 

(f)                                    an executed Resolution of the Board of Managers of National Beef in form and substance satisfactory to CoBank authorizing the execution of the Board of Managers Consent for National Beef attached to this First Amendment and the Intercreditor Agreement.

 

4.                                       Representations, Warranties and Agreements of Pledgor.  Pledgor hereby represents and warrants to CoBank and agrees that:

 

(a)                                  the execution, delivery and performance by Pledgor of this First Amendment are within the limited liability company powers of Pledgor, have been duly authorized by all necessary limited liability company action on the part of Pledgor and require no consent of, action by or in respect of, or filing, recording or registration with, any governmental or regulatory body, instrumentality, authority, agency or official or any other person or entity;

 

(b)                                 the execution, delivery and performance by Pledgor of this First Amendment do not conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under or result in any violation of, the terms of any of the organizational documents of Pledgor, any applicable law, rule, regulation, order, writ, judgment or decree of any court or governmental or regulatory body, instrumentality, authority, agency or official or any agreement, document or instrument to which Pledgor is a party or by which Pledgor or any of its property or assets is bound or to which Pledgor or any of its property or assets is subject;

 

(c)                                  this First Amendment has been duly executed and delivered by Pledgor and constitutes the legal, valid and binding obligation of Pledgor enforceable against Pledgor in accordance with its terms;

 

(d)                                 all of the representations and warranties made by Pledgor in the Master Loan Agreement, Supplement and any other document executed in connection with the same are true and correct in all material respects on and as of the Effective Date as if made on and as of the Effective Date;

 

(e)                                  as of the date of this First Amendment and after giving effect to this First Amendment, no Event of Default (as defined in the Master Loan Agreement) under or within the

 

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meaning of the Master Loan Agreement has occurred and is continuing, and no event has occurred which, with the passage of time, the giving of notice or both, would constitute and Event of Default;

 

(f)                                    none of Pledgor’s organizational or governing documents have been revised or amended since the execution of the Master Loan Agreement, all resolutions, incumbency certificates and the like delivered to Pledgor in connection with the Master Loan Agreement remain in full force and effect, and Pledgor remains in good standing in the state of its organization;

 

(g)                                 promptly after the PA Distribution is consummated, Pledgor shall provide CoBank with (1) an executed Resolution of the Board of Managers of PA Newco in form and substance satisfactory to CoBank authorizing the execution of the Board of Managers Consent for PA Newco attached to this First Amendment, and (2) the executed Board of Managers Consent for PA Newco attached to this First Amendment; and

 

(h)                                 for the avoidance of doubt, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure the payment and performance of all of the Obligations, Pledgor, from and after the consummation of the PA Distribution, hereby grants to CoBank a continuing security interest in all of Pledgor’s interest in that portion of the Collateral consisting of Membership Interests in PA Newco.

 

5.                                       Inconsistencies.  In the event of any inconsistency or conflict between this First Amendment and the Pledge Agreement, the terms, provisions and conditions contained in this First Amendment shall govern and control.

 

6.                                       Counterparts.  This First Amendment may be executed by the Parties in any number of counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same agreement. Receipt of an executed signature page to this First Amendment by facsimile, pdf or other electronic transmission shall constitute effective delivery thereof, provided that Pledgor shall promptly thereafter deliver an original of this First Amendment to CoBank.

 

7.                                       Pledge Agreement as Amended.  All references in the Pledge Agreement to “this Agreement” and any other references similar references shall hereafter mean the Pledge Agreement as amended by this First Amendment and as the same may from time to time be further amended, modified, extended, renewed or restated.  All references in the Master Loan Agreement and any other document executed in connection therewith to the Pledge Agreement shall hereafter mean the Pledge Agreement as amended by this First Amendment and as the same may from time to time be further amended, modified, extended, renewed or restated.  Except to the extent specifically amended by this First Amendment, all of the terms, provisions, conditions, covenants, representations and warranties contained in the Pledge Agreement shall be and remain in full force and effect and the same are hereby ratified and confirmed by the Parties.

 

8.                                       Authority.  CoBank represents and confirms that it is authorized under the Master Loan Agreement, the Pledge Agreement and the Security Agreement to enter into this First Amendment and release the security interests granted pursuant to the Pledge Agreement and the

 

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Security Agreement in the Membership Interests being sold pursuant to the Membership Interest Sale.

 

[Signatures on Following Page]

 

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IN WITNESS WHEREOF, the Parties have executed this Consent and First Amendment to Pledge Agreement and Security Agreement as of the Effective Date.

 

	
U.S.   PREMIUM BEEF, LLC,
    	
 
    
	
a   Delaware limited liability company
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Steven D. Hunt
    	
 
    
	
Name:
    	
Steven   D. Hunt
    	
 
    
	
Title:
    	
Chief   Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
COBANK,   ACB
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Hal Nelson
    	
 
    
	
Name:
    	
Hal   Nelson
    	
 
    
	
Title:
    	
Vice   President
    	
 
    
					

 

[Board of Managers Consents on Following Pages]

 

[SIGNATURE PAGE TO CONSENT AND FIRST AMENDMENT TO PLEDGE AGREEMENT AND SECURITY AGREEMENT]

 

 

BOARD OF MANAGERS CONSENT

OF

NATIONAL BEEF PACKING COMPANY, LLC

 

The undersigned, on behalf of the Board of Managers (as defined in the National Beef Operating Agreement) of National Beef Packing, hereby consents to the above First Amendment and reaffirms the Board of Managers’ prior consent attached to the Pledge Agreement, which consent remains in full force and effect.

 

In addition, the undersigned, on behalf of the Board of Managers, acknowledges that CoBank, or any purchaser of the Collateral, may become the owner of the Collateral if CoBank exercises its rights and remedies under the Pledge Agreement, and that the Applicable Holding Period (as defined in the National Beef Packing Company, LLC First Amended and Restated Limited Liability Company Agreement or the National Beef Packing Company, LLC Second Amended and Restated Limited Liability Company Agreement, as applicable) shall not apply to CoBank or any purchaser of the Collateral in such instance.

 

IN WITNESS WHEREOF, the undersigned has caused this Consent to be executed and delivered to be effective as of the Effective Date.

 

 

	
 
    	
By:
    	
/s/ Steven D. Hunt
    
	
 
    	
Name: Steven D. Hunt
    
	
 
    	
Title: Chairman of the Board of Managers
    

 

 

BOARD OF MANAGERS CONSENT

OF

NATIONAL BEEF PENNSYLVANIA, LLC

 

The undersigned, on behalf of the Board of Managers (as defined in the PA Newco Operating Agreement) of National Beef Pennsylvania, LLC, a Delaware limited liability company (“PA Newco”), hereby acknowledges the Consent and First Amendment to Pledge Agreement and Security Agreement (this “First Amendment”) dated December 30, 2011, by and between CoBank, ACB (“CoBank”), and U.S. Premium Beef, LLC, a Delaware limited liability company (“Pledgor”), consents to the pledge of the Collateral by Pledgor to CoBank pursuant to the Pledge Agreement and the First Amendment, and shall cause PA Newco to duly make a notation in its books and records that the Collateral has been pledged to CoBank and that CoBank has a first priority security interest therein.  Capitalized terms not otherwise defined herein shall have the meanings given to them in the First Amendment.

 

In addition, the undersigned, on behalf of the Board of Managers, agrees to cause PA Newco to comply exclusively with instructions originated by CoBank in accordance with the Loan Documents and Pledge Agreement, as amended by the First Amendment, with respect to the Collateral without further consent of the Pledgor.  The undersigned, on behalf of the Board of Managers, acknowledges that CoBank, or any purchaser of the Collateral, may become the owner of the Collateral if CoBank exercises its rights and remedies under the Pledge Agreement, and that the Applicable Holding Period (as defined in the National Beef Pennsylvania, LLC Amended and Restated Limited Liability Company Agreement) shall not apply to CoBank or any purchaser of the Collateral in such instance.

 

IN WITNESS WHEREOF, the undersigned has caused this Consent to be executed and delivered to be effective as of [Insert Date PA Distribution is Consummated].

 

	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title: Member of the Board of Managers
    
				

 

 

Exhibit 1

 

SCHEDULE A TO

PLEDGE AGREEMENT

 

	
Name of Pledgor
    	
 
    	
Units in National Beef
    	
 
    	
Percentage Interest in
   National Beef
    	
 
    
	
U.S. Premium Beef, LLC
    	
 
    	
1,507.29
    	
*
    	
15.0729
    	
%
    

 

*Also includes any units of PA Newco distributed to Pledgor in connection with the PA Distribution.Exhibit 10.1

 

Executive Medical Reimbursement Plan

Plan Document and Summary

 

As Adopted By

MTR Gaming Group, Inc.

 

 

EXECUTIVE MEDICAL REIMBURSEMENT PLAN

PLAN DOCUMENT AND SUMMARY

 

MTR Gaming Group, Inc. (the “Employer”) has established a plan known as an “Executive Medical Reimbursement Plan” (the “Plan”), for designated employees to reimburse for stipulated out of pocket medical and other expenses incurred by them, their spouses and eligible dependents.  This Summary describes the basic features of the Plan, how it operates, and how you can get the maximum advantage from it.  Attached to this Summary is an Appendix that describes information specific to your Plan.  All benefits received under the Plan will be taxable to the employee.

 

The benefits provided under the Plan are intended to be continued indefinitely, however, the Employer reserves the unilateral right and discretion to make any changes, without advance notice, to the Plan that it deems to be necessary or appropriate, in its discretion, to comply with applicable law, regulation, or other authority issued by a governmental entity.  The Plan Sponsor also reserves the unilateral right and discretion to amend, modify, or terminate, without advance notice, all or any part of the Plan and to make any other changes that it deems necessary or appropriate in its discretion.  Changes in the Plan may occur in any or all parts of the Plan, including coverage limitations set forth in the Plan.  You should not, therefore, assume that the benefits that are provided under the Plan will continue to be available or remain unchanged, and you should disregard any information or communication (written or oral) that would seem to limit the Employer’s absolute right and discretion to terminate, suspend, discontinue or amend such benefits.  Furthermore, the Plan Administrator reserves the unilateral right to interpret, construe, construct, and administer the terms and provisions of the Plan, in its discretion, including correcting any error or defect, supplying any omission, reconciling any inconsistency, and making all decisions concerning benefits, including any factual determinations, that may impact eligibility or a claim for benefits.  Decisions made by the Plan Administrator regarding benefits will be final and binding on all interested persons and subject only to the claims appeal procedures of the Plan.

 

PART 1.

GENERAL INFORMATION ABOUT THE REIMBURSEMENT PLAN

 

Q-1.                        What is the purpose of the Plan?

 

The purpose of the Plan is to reimburse eligible employees for “Eligible Medical Expenses” that they, or their Eligible Dependents, incur during the Plan Year.

 

Q-2.                        Who can participate in the Plan?

 

You may participate in the Plan if you meet the requirements to be an “Eligible Employee.”  Eligible Employees are a select group of management or highly compensated employees (as such term is defined in 29 C.F.R. § 2520.104-24) as determined from time to time by the Compensation Committee (the “Compensation Committee”) of the Board of Directors.  Eligible Employees who participate in the Plan are referred to in this Summary as “Participants.”

 

Q-3                           What is the effective date of the Plan?

 

The Plan’s effective date is November 1, 2011.  The Plan will have a short first plan year which will end on December 31, 2011.  Only claims for expenses incurred during November and December 2011 will be eligible for reimbursement for the short 2011 Plan Year.

 

You cannot participate in this Plan unless you participate in one of the major medical plans (the “Medical Plan”) offered by the Employer for its eligible employees and their dependents.  In order for you to be reimbursed for a dental or vision Eligible Expense (as set forth below), you must be enrolled in the respective dental or vision plan offered by the Employer.

 

Your participation in the Plan will begin on the date specified by the Compensation Committee.

 

Once you become a Participant, you may also receive reimbursements for Eligible Medical Expenses incurred by your “Eligible Dependents.”  Generally, “Eligible Dependents” means an employee’s legal spouse (as defined by applicable state law to the extent consistent with the Federal Defense of Marriage Act), an employee’s child (until the end of the year in which the child turns age 26) and any other individual who is a tax dependent as defined under Section 105(b) of the Internal Revenue Code of 1986, as amended (the “Code”).  Your child includes your son, daughter, stepchild, foster child, or legally 

 

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adopted child, regardless of such child’s tax dependent status, marital status, employment status, student status or residency.  In order for a medical, dental, or vision expense that your Eligible Dependent incurs to be reimbursable under the Plan, such Eligible Dependent must be enrolled in the respective Medical Plan, dental plan, or vision plan at the time the Eligible Dependent incurred such expense.

 

Q-4.                        When does coverage under the Plan end?

 

Your participation in the Plan shall terminate on the earliest of:

 

(a)          the date you cease to be an Employee;

 

(b)         the date you cease to meet the eligibility requirements for an “Eligible Employee” as set forth in Q-2 above; or

 

(c)          the date this Plan is terminated or amended to exclude you or the class of employees of which you are a member;

 

(d)         the date determined by the Compensation Committee.

 

Coverage for your Eligible Dependents ends on earliest of the following to occur:

 

(a)          the date your coverage ends;

 

(b)         for your spouse, the date that you and your spouse divorce or legally separate (or receive an annulment);

 

(c)          the date the individual ceases to meet the requirements of an Eligible Dependent;

 

(d)         the date the Plan is terminated or amended to exclude the individual or the class of dependents of which the individual is a member; or

 

(e)          the date determined by the Compensation Committee.

 

Q-5.                        What happens if I take a leave of absence?

 

Coverage under this Plan during a leave of absence is treated the same as it is under the Medical Plan.

 

Q-6.                        Do I pay for coverage under this Plan?

 

Benefits paid under the Plan are paid solely from the general assets of the Employer with no employee contributions required.

 

Q-7.                        What amount of “Eligible Medical Expenses” may be reimbursed by the Plan each Year?

 

Each year Participants will be eligible to receive reimbursements equal to the Maximum Annual Reimbursement Amount described below.  No benefits will be payable under the terms of the Plan until the Participant and any Eligible Dependents meet an annual aggregate deductible of $166.67 for the 2011 short Plan Year and $1,000 for the 2012 and succeeding Plan Years.

 

The Maximum Annual Reimbursement Amount that you may receive as reimbursement for Eligible Medical Expenses is $25,000 for the 2011 short Plan Year and $150,000 for the 2012 and succeeding Plan Years.

 

The Compensation Committee may change the Maximum Annual Reimbursement Amount or deductible for subsequent Plan Years

 

Q-8.                        What happens if I do not use the Maximum Annual Reimbursement Amount made available during the Plan Year?

 

This Plan does not provide for carry-over provisions.  Each Plan Year carries an independent Maximum Annual Reimbursement limit applicable to claims incurred during the Plan Year.

 

Q-9.                        What are “Eligible Medical Expenses”?

 

“Eligible Medical Expenses” are expenses incurred by you or your Eligible Dependents that satisfy the following conditions: a) the expenses are medical care expenses that would otherwise qualify for a deduction under Code Section 213 (irrespective of the income threshold set forth in Code Section 213) or are specifically set forth in this Q-9; b) the expenses have not been or will not be reimbursed by any other source, including but not limited to the Medical Plan, dental or vision insurance plans, a health savings account, another insurance or reimbursement arrangement, or a flexible spending account; c) the expenses 

 

 

must have been incurred during the Plan Year; and d) the expenses satisfy any additional conditions and/or limitations for an Eligible Medical Expense set forth below.

 

Whether or not the following expenses qualify for a deduction under Code Section 213, such expenses are Eligible Medical Expenses for purposes of the Plan:

 

·                  Medical :

 

·                  Copayments and deductibles under the Medical Plan

 

·                  Custodial care (includes custodial, domiciliary, residential, protective and supportive care including educational services, rest cures and convalescent care) for mental health, behavioral and/or eating disorders

 

·                  Travel expenses associated with long distance family visits related to residential care of minor children

 

·                  Experimental/Investigative treatment

 

·                  Hearing care services, including hearing aids

 

·                  Treatment for learning disabilities

 

·                  Nutritional counseling

 

·                  Skilled nursing for services after the patient has reached the maximum level of recovery possible for their particular condition

 

·                  Smoking cessation

 

·                  Wellness programs

 

·                  Nutrition programs

 

·                  Reversal of sterilization

 

·                  Over the counter medication

 

·                  Vitamins and supplements for nutrition

 

·                  Health club membership

 

·                  Dental:

 

·                  Amounts incurred over the $1,000 group dental plan annual maximum

 

·                  Copayments and deductibles under the group dental plan

 

·                  For services rendered outside of the plan’s schedule including copayments and deductibles

 

·                  Dental implants

 

·                  Charges in excess of reasonable and customary

 

·                  Vision plan:

 

·                  Copayments and deductibles under the group vision plan

 

·                  Expenses incurred for non-covered lens options

 

·                  Corrective eye surgery including radial keratotomy and photorefractive keratectomy

 

·                  Expenses for additional sets of glasses or contacts outside of the plan limits

 

The following expenses are not eligible for reimbursement under the Plan under any circumstance: i) qualified long term care services; ii) health insurance premiums (including COBRA premiums) other than premiums for individual insurance policies that do not require health underwriting; iii) cosmetic surgeries, procedures or related medicines, and therapies, iv) services 

 

 

that are unlawful where the person resides when the service is rendered, or v) services that are covered by any workers’ compensation or occupational disease law or insurance policy.  For purposes of this Plan, an expense is “incurred” when you or your Eligible Dependent is furnished the medical care or services giving rise to the claimed expense.

 

In addition, you may not be reimbursed for any expenses arising before the Plan became effective, before you became a Participant, or for any expenses incurred after your participation in the Plan terminates except to the extent provided below.

 

No advances will be paid for future or projected expenses.

 

Q-10.                 How do I receive Benefits (or reimbursements) under the Plan?

 

You will receive reimbursement forms to submit to the Plan Administrator (or Plan Service Provider designated by Employer).  You must complete the reimbursement form and submit it with the necessary supporting documentation.

 

The Plan Administrator (or Plan Service Provider) will review the claim and supporting documentation and determine the amount, if any, that is payable under the Plan. (See Q-11 below for your rights if a claim is denied.)  The Plan Administrator will advise you how often the payments are processed.  If your claim for benefits is approved in accordance with the terms of this Plan, you will receive reimbursement through payment.  Normal payroll tax withholding will apply.

 

If your claim for Eligible Medical Expenses is less than the Minimum Reimbursement Amount set forth in the Appendix, reimbursement for such expenses will accumulate until your approved expenses exceed the Minimum Reimbursement Amount.

 

You will not be reimbursed for Eligible Medical Expenses if the reimbursement exceeds the Maximum Annual Reimbursement Amount.

 

Q-10.                 How long do I have to submit claims for reimbursement?

 

If you are currently a participant, you must submit an expense incurred during a Plan Year no later than 90 days after the end of that Plan Year.  If you are no longer a participant, you have 90 days following your termination date to submit claims for reimbursement.

 

Q-11.                 What happens if my claim for benefits is denied?

 

If you are denied a benefit under the Plan, you should proceed in accordance with the following claims review procedures.

 

Step 1: Notice is received from the Plan Service Provider.  If your claim is denied, you will receive written notice from the Plan Service Provider that your claim is denied as soon as reasonably possible but no later than 30 days after receipt of the claim.  For reasons beyond the control of the Plan Service Provider, the Plan Service Provider may take up to an additional 15 days to review your claim.  You will be provided written notice of the need for additional time before the end of the 30-day period.  If the reason for the additional time is that you need to provide additional information, you will have 45 days from the notice of the extension to obtain that information.  The time period during which the Plan Service Provider must make a decision will be suspended until the earlier of the date that you provide the information or the end of the 45-day period.

 

Step 2:  Review your notice carefully.  Once you have received your notice from the Plan Service Provider, review it carefully.  The notice will contain:

 

·                  the reason(s) for the denial and the Plan provisions on which the denial is based;

 

·                  a description of any additional information necessary for you to perfect your claim and, why the information is necessary;

 

·                  a description of the Plan’s appeal procedures and the time limits applicable to such procedures;

 

·                  whether an internal rule or guideline was relied on in making the determination and a statement that you may request a copy of the guidelines or protocol; and

 

·                  a statement reminding you of your right to request all documentation relevant to your claim.

 

Step 3: If you disagree with the decision, you may file an Appeal.  If you do not agree with the decision of the Plan Service Provider, you may file a written appeal.  You should file your appeal no later than 180 days of receipt of the notice described in Step 1.  The Plan has established only one level of appeal and you should file your appeal with the Plan Administrator.  

 

 

You should submit all information identified in the notice of denial as necessary to perfect your claim and any additional information that you believe would support your claim.

 

Step 4: Except as provided below, final determinations of appealed matters will be made by the Compensation Committee of the Board of Directors.

 

Step 5.  Right to independent review.  If, after exhausting the internal appeals process described above, you are not satisfied with the final determination, in certain cases, you may choose to participate in an external review process in accordance with applicable law.  The external review process only applies if the adverse benefit determination is based on:

 

·                  medical judgment; or

 

·                  a rescission of coverage.

 

The external review process is not available in the case of an adverse benefit determination is based on your failure to meet the eligibility requirements for the Plan.

 

The external review process is binding on both you and the Plan except to the extent other remedies are available under state or federal law.  Contact the Plan Administrator for more information.

 

Q-12                    What should I do if have questions about the Plan?

 

If you have any questions about the Plan, you should contact the Plan Service Provider or the Plan Administrator.

 

PART 2.  COBRA CONTINUATION COVERAGE

 

COBRA is a federal law that gives certain employees, spouses, and dependent children of employees the right to temporary continuation of their health care coverage under the Employer’s group health plans at group rates.  If you or your Eligible Dependents incur an event known as a “Qualifying Event,” and if such individual is covered under the Plan when the Qualifying Event occurs, then the individual incurring the Qualifying Event will be entitled under COBRA to elect to continue his or her coverage for reimbursement for medical expenses under the Plan if he or she pays the applicable premium for such coverage.  “Qualifying Events” are certain types of events that would cause, except for the application of COBRA’s rules, an individual to lose his or her health insurance coverage.  Qualifying Events include the following events:

 

·                  Your termination from employment or reduction of hours;

 

·                  Your divorce or legal separation from your Spouse;

 

·                  Your becoming eligible to receive Medicare benefits;

 

·                  Your Dependent child’s ceasing to qualify as a Dependent.

 

If the Qualifying Event is termination from employment, then the COBRA continuation coverage runs for a period of 18 months following the date that regular coverage ended.  COBRA continuation coverage may be extended to 36 months if another Qualifying Event occurs during the initial 18-month period.  You are responsible for informing the Administrator of the second Qualifying Event within 60 days after the second Qualifying Event occurs.  COBRA continuation coverage may also be extended to 29 months in the case of an individual, who is disabled within 60 days after the date the entitlement to COBRA continuation coverage initially arose and who continues to be disabled at the end of the 18 months.  In all other cases to which COBRA applies, COBRA continuation coverage shall be for a period of 36 months.

 

PART 3.  OTHER IMPORTANT INFORMATION

 

Plan Administrator

 

The Plan Administrator’s name, address and telephone number appear in the Appendix to this Summary.  The Plan Administrator shall have the exclusive right to interpret the Plan and to decide all matters arising under the Plan, including the right to make determinations of fact, and construe and interpret the terms of the Plan, including possible ambiguities,

 

 

inconsistencies, or omissions in the Plan and the Summary issued in connection with the Plan.  The Plan Administrator may designate certain claims processing (including the initial determination as to whether a claim is payable) and day-to-day administrative responsibilities to a Plan Service Provider identified in the Appendix.  Nevertheless, the Plan Administrator reserves final discretionary authority for all matters arising under the Plan.

 

Type of Funding

 

The Plan is unfunded.  Benefits are paid directly from the general assets of the Employer.

 

Plan Year

 

The date of the end of the year for purposes of maintaining the fiscal records of each of the plans is set forth in the Appendix to this Summary.

 

Identifying Your Employer

 

The official name, business address, telephone number, and employer identification number (EIN) of the Plan sponsor appear in the Appendix to this Summary.  The names of any other employers who have adopted the Plan, if any, are set forth in the Appendix.

 

Official Plan Name

 

The official name of the Plan is MTR Gaming Group, Inc. Executive Medical Reimbursement Plan.

 

Agent for Service of Legal Process

 

Legal process may be served on the Plan Administrator.

 

Employment

 

Participation in the Plan does not give any participant the right to be retained in the employ of his or her employer or any other right not specified in those plans.

 

Effective Date of the Plan

 

The effective date of the Plan is set forth in the Appendix.

 

Coordination of Benefits

 

Only medical care expenses that have not been or will not be reimbursed by any other source may be Eligible Medical Expenses (to the extent all other conditions for Eligible Medical Expenses have been satisfied).  However, certain coverages (e.g., Medicare for Participants who are active employees and their Dependents, and TRICARE benefits as required by law) will pay benefits only after this Plan, to the extent required by applicable law.

 

Prohibition Against Assignment of Benefits

 

No Benefit payable at any time under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, or encumbrance of any kind.

 

Compliance with Law

 

Notwithstanding anything in the Plan to the contrary, in the event that the application of any provision or benefit in the Plan violates any law, rule, or regulation, the Plan shall be administered to the extent necessary to comply with such law, rules, or regulation.

 

Choice of Law

 

The provisions of the Plan shall be construed, administered, and enforced in accordance with the laws of the Commonwealth of Pennsylvania, to the extent not preempted by federal law.

 

Severability

 

Should any part of the Plan be invalidated by a court of competent jurisdiction, the remainder thereof shall be given effect to the maximum extent possible.

 

 

Effect of Mistake

 

In the event of a mistake as to the eligibility or participation of an Employee, or the allocations made to any Participant, or the amount of distributions made or to be made to a Participant or other person, the Plan Administrator shall, to the extent it deems practicable, cause to be allocated or cause to be withheld or accelerated, or otherwise make adjustment of, such amounts as will, in its judgment, accord to such Participant or other person the amounts to which he or she is properly entitled under the Plan.  Such action by the Administrator may include withholding of any amounts due the Plan or the Employer from other compensation paid by the Employer.

 

Overpayments or Errors

 

If it is later determined that you or your Eligible Dependents, as applicable, received an overpayment or a payment was made in error, you will be required to refund the overpayment or erroneous reimbursement to the Plan.

 

If you do not refund the overpayment or erroneous payment, the Plan and the Employer reserve the right to offset future reimbursement equal to the overpayment or erroneous payment.

 

Qualified Medical Child Support Orders (QMCSO)

 

This Plan will also provide benefits as required by any qualified medical child support order, as defined in ERISA  Section 609(a), and will provide benefits to dependent children placed with participants or beneficiaries for adoption under the same terms and conditions as apply in the case of dependent children who are natural children of participants or beneficiaries, in accordance with ERISA Section 609(c).  For more information on QMCSOs, contact the Plan Administrator, where you may obtain, without charge, a copy of the Plan’s QMCSO procedures.

 

Newborns’ and Mothers’ Health Protection Act of 1996

 

Under federal law, group health plans and health insurance issuers generally may not, under Federal law, restrict benefits for any hospital length of stay in connection with childbirth for the mother or newborn child to less than 48 hours following a vaginal delivery, or less than 96 hours following a cesarean section.  However, Federal law generally does not prohibit the mother’s or newborn’s attending provider, after consulting with the mother, from discharging the mother or her newborn earlier than 48 hours (or 96 hours as applicable).  In any case plans and issuers may not, under Federal law, require that a provider obtain authorization from the Plan or the issuer for prescribing a length of stay not in excess of 48 hours (or 96 hours).

 

Women’s Health and Cancer Rights Act of 1998 (WHCRA)

 

If you have had or are going to have a mastectomy, you might be entitled to certain benefits under the Women’s Health and Cancer Rights Act of 1998 (WHCRA).  For individuals receiving mastectomy-related benefits, coverage will be provided in a manner determined in consultation with the attending physician and the patient for:

 

·                  all stages of reconstruction of the breast on which the mastectomy has been performed;

 

·                  surgery and reconstruction on the other breast to produce a symmetrical appearance;

 

·                  prostheses; and

 

·                  treatment for physical complications of the mastectomy, including lymphedema.

 

These benefits will be provided subject to the same deductibles and coinsurance applicable to other medical and surgical benefits provided under the Plan.

 

If you would like more information on the WHCRA, contact the Plan Administrator.

 

 

PART 4.  HIPAA PRIVACY AND SECURITY

 

Scope and Purpose

 

The Plan uses protected health information (PHI) to the extent of and in accordance with the uses and disclosures permitted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  Specifically, the Plan will use and disclose PHI for purposes related to health care treatment, payment for health care and health care operations as defined in the Privacy Notice distributed to Plan Participants.  In addition, the Plan will implement safeguards to protect the confidentiality and integrity of electronic PHI.

 

Use and Disclosure of PHI

 

The Plan will disclose PHI to the Employer, or where applicable, an Affiliated Employer, only upon receipt of a written certification from the Plan Sponsor that the Plan documents have been amended to incorporate the provisions in this Section 4  and the Employer agrees to implement the provisions in Section 8.03 below.

 

Conditions Imposed on Employer

 

Notwithstanding any provision of the Plan to the contrary, the Employer agrees to:

 

·                  Not use or disclose PHI other than as permitted or required by the Plan document or as required by law;

 

·                  Ensure that any agents, including a subcontractor, to whom the Employer provides PHI received from the Plan agree to the same restrictions and conditions that apply to the Plan Sponsor with respect to such PHI;

 

·                  Not use or disclose a covered individual’s PHI for employment-related actions and decisions unless authorized by that individual;

 

·                  Not use or disclose a covered individual’s PHI in connection with any other benefit or employee benefit plan of the Plan Sponsor unless authorized by that individual;

 

·                  Report to the Plan any use or disclosure of PHI that is inconsistent with this Article XI, if it becomes aware of an inconsistent use or disclosure and to report to the Plan any use or disclosure of PHI that is a Security Incident of which it becomes aware;

 

·                  Make PHI available to an individual in accordance with HIPAA’s access requirements;

 

·                  Make PHI available for amendment and incorporate any amendments to PHI in accordance with HIPAA (45 C.F.R. § 164.526);

 

·                  Make available the information required to provide an accounting of disclosures in accordance with 45 C.F.R. § 164.528;

 

·                  Make internal practices, books and records relating to the use and disclosure of PHI received from Plan available to the Secretary of the U.S. Department of Health and Human Services for the purposes of determining the Plan’s compliance with HIPAA;

 

·                  If feasible, return or destroy all PHI received from the Plan that the Employer still maintains in any form, and retain no copies of such PHI when no longer needed for the purpose for which disclosure was made (or if return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction infeasible);

 

·                  To ensure adequate separation between the Plan and Employer as required by 45 C.F.R. § 164.504(f)(2)(iii) and described in this Article XI; and

 

·                  To implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of electronic PHI (other than enrollment/disenrollment information) and it will ensure that any agents or subcontractors to whom it provides such electronic PHI agrees to implement reasonable and appropriate safeguards to protect the information.

 

 

Designated Employees Who May Receive PHI

 

In accordance with the Privacy Rules, only certain Employees of the Employer who perform Plan administrative functions may be given access to PHI.  Those Employees who have access to PHI from the Plan are listed in the Privacy Notice, either by name or individual position.

 

Restrictions on Employees with Access to PHI

 

The Employees who have access to PHI listed in the Privacy Notice may only use and disclose PHI for Plan Administration functions that the Employer performs for the Plan, as set forth in the Privacy Notice, including but not limited to, quality assurance, claims processing, auditing, and monitoring.

 

Policies and Procedures

 

The Employer will implement policies and procedures setting forth operating rules to implement the provisions hereof.  In addition, the Employer will implement administrative, physical and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of electronic PHI that the Employer creates, receives, maintains or transmits on behalf of the Plan.

 

Privacy and Security Official.

 

The Plan shall designate a Privacy and a Security Official, who will be responsible for the Plan’s compliance with HIPAA’s Privacy and Security Rules.  The Privacy Official and the Security Official may be the same individual.  The Privacy and Security Officials are responsible for ensuring the Plan’s compliance with HIPAA’s Privacy and Security Rules.  The Privacy and Security Official may contract with or otherwise utilize the services of attorneys, accountants, brokers, consultants, or other third party experts as the Privacy and Security Official deems necessary or advisable.

 

Noncompliance

 

The Employer shall provide a mechanism for resolving issues of noncompliance, including disciplinary sanctions for personnel who do not comply with the provisions of this Section 4.

 

Definitions

 

As used in this Part 4, each of the following capitalized terms shall have the respective meaning given below:

 

“Privacy Notice” means the notice of the Plan’s privacy practices distributed to Participants in accordance with 45 C.F.R. § 164.520, as amended from time to time.

 

“Privacy Rules” means the privacy provisions of HIPAA and the regulations in 45 C.F.R. Parts 160 and 164.

 

“Security Rules” means the security provisions set forth in 45 C.F.R. Part 164.302 et seq.

 

“Protected Health Information” or “PHI” means individually identifiable health information as defined in 45 C.F.R. § 160.103.

 

“Security Incident” means an incident as defined in 45 C.F.R. §164.304.

 

Interpretation and Limited Applicability

 

This Section 4 serves the sole purpose of complying with the requirements of HIPAA and shall be interpreted and construed in a manner to effectuate this purpose.  Neither this Section 4 nor the duties, powers, responsibilities, and obligations listed herein shall be taken into account in determining the amount or nature of the Benefits provided to any person covered under this Plan, nor shall they inure to the benefit of any third parties.  To the extent that any of the provisions of this Section 4 are no longer required by HIPAA, they shall be deemed deleted and shall have no further force or effect.

 

 

Services Performed for the Employer

 

Notwithstanding any other provision of this Plan to the contrary, all services performed by a third party for the Plan in accordance with the applicable service agreement shall be deemed to be performed by a business associate on behalf of the Plan and subject to the administrative simplification provisions of HIPAA contained in 45 C.F.R. Parts 160 through 164, except services that relate to eligibility and enrollment in the Plan.  If a third party performs any services that relate to eligibility and enrollment to the Plan, these services shall be deemed to be performed on behalf of the Employer in its capacity as Plan sponsor and not on behalf of the Plan.

 

PART 5.  ERISA RIGHTS

 

As a Participant in the Plan, you may be entitled to certain rights and protection under ERISA.  ERISA provides that all plan participants are entitled to:

 

·                  Examine, without charge, at the Plan Administrator’s office and at other specified locations (such as worksites and union halls) all plan documents, including insurance contracts, collective bargaining agreements, and copies of all documents filed by the Plan with the U.S. Department of Labor or Internal Revenue Service, such as detailed annual reports and plan descriptions;

 

·                  Obtain copies of all plan documents and other plan information upon written request to the Plan Administrator (the Plan Administrator may charge a reasonable amount for the copies); and

 

·                  Receive a summary of the Plan’s annual information report (the Plan Administrator is required by law to furnish each Participant with a copy of this summary annual report).

 

In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefits plan.  The people who operate your Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of the Participants and beneficiaries.  No one, including the Employer, your union, or any other person, may discriminate against you in any way to prevent you from obtaining a Benefit from the Plan or from exercising your rights under ERISA.

 

If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial.  You have the right to have the Plan review and reconsider your claim.  Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for Benefits that is denied or ignored in whole or in part, and if you have exhausted the claims procedures available to you under the Plan, then you may file suit in state or federal court.  In addition, if you disagree with the Plan’s decision or lack thereof regarding the qualified status of a domestic relations order or a medical child support order, you may file suit in federal court.

 

If it should happen that plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or you may file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees (for example, if it finds that your claim is frivolous).  If you have any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about this part of the Summary Plan Description or about your rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

 

 

APPENDIX

 

EMPLOYER ORGANIZATION

 

	
Name   of Organization:
    	
MTR Gaming Group, Inc.
    
	
Federal   Employer ID Number:
    	
84-1103135
    
	
Mailing   Address:
    	
P.   O. Box 356
    
	
 
    	
Chester,   WV 26034
    
	
Street   Address:
    	
State   Route 2, South
    
	
City,   State, Zip:
    	
Chester,   WV 26034
    

 

PLAN INFORMATION

 

	
Plan   Name:
    	
MTR Gaming Group, Inc. Executive Medical Reimbursement Plan
    
	
Original   Effective Date:
    	
November 1, 2011
    
	
Plan Year Runs*:
    	
January 1st to December 31st
    

 

*This Plan is designed to run on a 12-month plan year period as stated above. A Short Plan Year may occur when the Plan is first established, when the plan year period changes, or at the termination of a Plan.

 

	
Plan   Administrator:
    	
MTR Gaming Group, Inc.
    
	
Street Address:
    	
Street Route 2, South
    
	
City, State, Zip:
    	
Chester, WV 26034
    
	
Phone:
    	
304-387-5712
    
	
 
    	
 
    
	
Plan Service Provider:
    	
INNOVA BENEFIT Services, LLC
    
	
Street Address:
    	
795 Pine Valley Drive, Suite 21
    
	
City,   State, Zip:
    	
Pittsburgh,   PA 15239
    
	
Phone:
    	
866-993-7702

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