<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
Commission File Number: 0-8698
CONCORDE GAMING CORPORATION
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-0716683
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3290 LIEN STREET
RAPID CITY, SOUTH DAKOTA 57709
----------------------------------------
(Address of principal executive offices)
(605) 341-7738
---------------------------
(Issuer's telephone number)
Not Applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 8, 1998, there were
23,673,126 shares of the issuer's $.01 par value common stock outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE> 2
INDEX
CONCORDE GAMING CORPORATION
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements Page No.
--------
<S> <C>
Condensed Consolidated Balance Sheet at December 31, 1997 (unaudited) 1
Condensed Consolidated Statements of Operations for 2
Three Months Ended December 31, 1997 and 1996 (unaudited)
Condensed Consolidated Statements of Cash Flows for 3
Three Months Ended December 31, 1997 and 1996 (unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
<PAGE> 3
CONCORDE GAMING CORPORATION
Condensed Consolidated Balance Sheet
December 31, 1997
(unaudited)
<TABLE>
<S> <C>
Assets
Current assets:
Cash $ 387,247
Restricted cash 440,241
Trade and notes receivable 81,047
Prepaid expenses 396,622
Other 495,753
----------
Total current assets 1,800,910
Property and equipment, net 4,099,421
Notes receivable, less current maturities 95,000
Intangibles, net 1,047,697
Deferred income taxes 102,000
Other 283,611
----------
$7,428,639
==========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable, related party $ 790,000
Note payable, bank 100,000
Current maturities of long-term debt 499,560
Accounts payable 92,860
Accrued payroll and related costs 71,311
Other 243,052
Income taxes payable 83,671
----------
Total current liabilities 1,880,454
----------
Long-term debt, less current maturities 456,471
----------
Stockholders' equity:
Common stock, $.01 par value, authorized 500,000,000 shares,
issued 23,673,126 at December 31, 1997 and September 30, 1997 236,731
Preferred stock, $.01 par value; authorized
10,000,000 shares; no shares issued and outstanding --
Additional paid-in capital 3,855,246
Retained earnings 999,737
----------
5,091,714
----------
$7,428,639
==========
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE> 4
CONCORDE GAMING CORPORATION
Condensed Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended December 31,
1997 1996
------------ ------------
<S> <C> <C>
Revenues:
Casino $ 780,123 --
Food and beverage 66,381 12,363
Video lottery 53,499 1,964,694
Management agreement -- 208,371
Other 7,986 1,460
------------ ------------
Gross revenues 907,989 2,186,888
Less: promotional allowances (20,985) --
------------
Net revenues 887,004 2,186,888
------------ ------------
Costs and expenses:
Casino 571,392 --
Food and beverage 39,350 6,789
Video lottery 69,498 1,855,758
Other operating expense -- 39,815
Selling, general and administrative 382,823 182,802
Business development 161,084 23,017
Depreciation and amortization 84,027 165,681
------------ ------------
Total costs and expenses 1,308,174 2,273,862
------------ ------------
Loss from operations (421,170) (86,974)
------------ ------------
Other income (expense):
Interest income 7,633 582
Other income 2,502 22,766
Interest expense and financing costs (28,765) (157,788)
------------ ------------
(18,630) (134,440)
------------ ------------
Loss before income taxes (439,800) (221,414)
Federal and state income tax benefit (158,800) (81,200)
------------ ------------
Net loss $ (281,000) (140,214)
============ ============
Basic and diluted loss per share $ (0.01) (0.01)
============ ============
Weighted-average common shares outstanding 23,673,126 21,929,793
============ ============
Weighted-average common and
common equivalent shares outstanding 23,673,126 21,929,793
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
CONCORDE GAMING CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three months ended December 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (281,000) (140,214)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation and amortization 84,027 165,681
(Gain) on sale of property and equipment -- (5,373)
Deferred income tax (36,000) --
Other 410 (9,800)
Changes in assets and liabilities:
Receivables 3,128 42,823
Prepaid expenses and other 116,909 19,061
Accounts payable and accrued expenses (3,641) 147,533
Income taxes payable (122,800) (126,600)
------------ ------------
Net cash provided by (used in) operating activities (238,967) 93,111
------------ ------------
Cash flows from investing activities:
Principal payments received on long-term receivables -- 159,678
Purchase of property and equipment (1,023,023) (3,897)
Payments for casino development costs (105,659) (3,346)
Other (248,154) 14,079
------------ ------------
Net cash provided by (used in) investing activities (1,376,836) 166,514
------------ ------------
Cash flows from financing activities:
Principal payments on long-term debt (90,692) (492,541)
Net change in short-term borrowings 890,000 225,000
Payments received on stock subscription 129,832 19,832
------------ ------------
Net cash provided by (used in) financing activities 929,140 (247,709)
------------ ------------
Net increase (decrease) in cash (686,663) 11,916
Cash, beginning of year 1,073,910 120,572
------------ ------------
Cash, ending of year $ 387,247 132,488
============ ============
Supplemental disclosures of cash flow information:
Cash payments for:
Interest $ 23,261 86,165
============ ============
Income taxes $ -- 50,000
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
(unaudited)
(1) Summary of Significant Accounting Policies:
Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements
of Concorde Gaming Corporation and its majority-owned subsidiaries (the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and the rules
and regulations of the U.S. Securities and Exchange Commission.
Accordingly, they do not include all of the information and notes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three
month period ended December 31, 1997 are not necessarily indicative of
the results that may be expected for the year ending September 30,
1998.
The accompanying condensed consolidated financial statements, and
related notes thereto, should be read in conjunction with the audited
consolidated financial statements of the Company, and notes thereto,
for the year ended September 30, 1997 included in the Company's 1997
Annual Report on Form 10-KSB.
Earnings Per Share
During the three months ended December 31, 1997, the Company adopted
Statement of Financial Accounting Standard # 128, Earnings per Share.
This statement established standards for computing and presenting
earnings per share and required restatement of all prior-period
earnings per share data presented. A reconciliation of income and
shares for basic and diluted earnings per share ("EPS") is as follows:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
December 31, 1997 December 31, 1996
----------------------------------------- -----------------------------------------
Per- Per-
Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS net loss ($ 281,000) 23,673,126 ($0.01) ($ 140,214) 21,929,793 ($0.01)
Effect of Dilutive
Securities:
Options 0 0
----------- ------------- ------ ----------- ------------- ------
Diluted EPS net loss ($ 281,000) 23,673,126 ($0.01) ($ 140,214) 21,929,793 ($0.01)
=========== ============= ====== =========== ============= ======
</TABLE>
4
<PAGE> 7
(2) Obligations to Bayfront Ventures/Subsequent Events
The Company is a party to a joint venture agreement ("JV Agreement")
dated August 27, 1997 with Goldcoast Entertainment Cruises, Inc.
("Goldcoast"). The joint venture ("Bayfront Ventures") was formed for
the purpose of constructing, owning, operating and managing an offshore
gaming vessel (the "Vessel") from dockage at Bayfront Park in Miami,
Florida. The JV Agreement requires a minimum capital contribution of
$6,405,000 (the "Capital Contribution") from the Company. At December
31, 1997, the Company had contributed approximately $3,000,000 to
Bayfront Ventures. Although Bayfront Ventures has obtained financing
for the vessel (as described below), its ability to purchase
operational equipment, fund start-up costs and meet other working
capital requirements are contingent upon the Company making its Capital
Contribution.
On April 20, 1998, the Company entered into an agreement with Bruce H.
Lien, the majority shareholder of the Company, whereby Mr. Lien has
agreed to provide the Company with a line of credit in the amount of
$3,000,000 (the "Project Line of Credit"), which may be used by the
Company to fund the Capital Contribution. Advances under the Project
Line of Credit will bear interest at a rate of 18% per annum, which
interest shall accrue until the Option Expiration Date (defined below),
and principal and interest shall be payable over three years beginning
on the Option Expiration Date. In consideration of the Project Line of
Credit, the Working Capital Line of Credit (defined below) and the
guaranty by Mr. Lien under the Line of Credit (defined below), the
Company granted Mr. Lien an option (the "Option") to purchase all or a
portion of the Company's interest in Bayfront Ventures pursuant to an
option agreement dated April 20, 1998. The Option may be exercised by
Mr. Lien at any time on or prior to the pursuant to an Option Agreement
dated April 20, 1998 date one year from the date of grant ("Option
Exercise Date"). The exercise price shall be equal to the Capital
Contribution plus accrued interest under the Project Line of Credit,
less any advances made under the Project Line of Credit, each as of the
date of exercise. In addition, Mr. Lien shall be required to assume all
of the Company's obligations related to Bayfront Ventures.
In March 1998, Bayfront Ventures obtained a line of credit of up to
$5.0 million (the "Line of Credit") in order to complete the
construction of the Vessel. The Line of Credit bears interest at an
adjustable rate equal to 3.75% per annum above the prime rate, as
published in the Wall Street Journal (currently 12.25%). The Line of
Credit will be secured by, among other things, a First Preferred Ship
Mortgage on the Vessel and the guaranties of Mr. Lien, Mrs. Lien, the
Company, Goldcoast and certain other individuals (the "Guarantors").
The Line of Credit is due and payable upon the initial funding of the
Permanent Financing (defined below).
In March 1998, Bayfront Ventures also received a commitment for
permanent financing (the "Permanent Financing"), which will replace the
Line of Credit after the Vessel construction has been completed. The
Permanent Financing will be the lower of $5,200,000 or 70% of the
lesser of the cost of the Vessel or its estimated fair market value
at the time of delivery. The Permanent Financing will be evidenced by a
promissory note payable in fifty-nine (59) equal payments calculated on
an eight (8) year amortization, along with accrued interest, with a
final balloon payment equal to the outstanding principal and interest
at maturity. The interest rate will be fixed at the five-year U.S.
Treasury Note Rate plus 4%. The Permanent Financing will be secured by,
among other things, a First Preferred Ship Mortgage on the Vessel, a
first priority security interest in the Vessel's gear, equipment and
property, excluding gaming equipment. The Permanent Financing will also
be guarantied by the Guarantors.
5
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The statements contained in this report, if not historical, are forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995, and involve risks and uncertainties that could cause actual
results to differ materially from the financial results described in such
forward looking statements. These risks and uncertainties include, but are not
limited to, changes in gaming regulations and tax rates in Colorado, Florida,
and other jurisdictions that could impact the Company's operations, changes in
economic conditions, declining popularity of gaming, competition in Colorado and
Florida and other jurisdictions, and the level and rate of growth in the
Company's operations. The success of the Company's business operations is in
turn dependent on factors such as the effectiveness of the Company's marketing
strategies to grow its customer base and improve customer response rates,
general competitive conditions within the gaming industry and general economic
conditions. Further, any forward looking statement or statements speak only as
of the date on which such statement was made, and the Company undertakes no
obligation to update any forward looking statement or statements to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. Therefore, forward-looking
statements should not be relied upon as a prediction of actual future results.
OVERVIEW
The management agreement ("Management Agreement") between the Company
and the Three Affiliated Tribes ("TAT") pursuant to which it managed the 4 Bears
Casino & Lodge was terminated upon the closing of an agreement (the "Settlement
Agreement") effective February 13, 1997. In addition, in 1997 the Company
transferred substantially all of the assets related to its video lottery route
operations in South Dakota ("Video Lottery Assets") for substantially all of the
assets used in the operation of the Golden Gates Casino ("Golden Gates"),
located in Black Hawk, Colorado. The transfer of the Video Lottery Assets was
completed in June 1997 and the Golden Gates assets were transferred to the
Company on July 21, 1997. As a result of these transactions, the Company will
not receive any future revenues pursuant to the Management Agreement or from the
Video Lottery Assets. Currently, Golden Gates is the Company's sole source of
revenue.
RESULTS OF OPERATIONS
Three Months ended December 31, 1997 Compared to Three Months ended December 31,
1996
Revenues. Total revenues decreased 59.4% to $887,004 for the three
months ended December 31, 1997, compared to $2,186,888 for the three months
ended December 31, 1996, primarily as a result of the termination of the
Management Agreement in February 1997 and the transfer of the Video Lottery
Assets in June 1997. Video lottery revenues decreased 97.3% to $53,499 for the
three months ended December 31, 1997, compared to $1,964,694 for the three
months ended December 31, 1996. There were no revenues from the Management
Agreement for the three months ended December 31, 1997 compared to $208,371 for
the three months ended December 31, 1996. The Company continued to operate one
video lottery casino during the three months ended December 31, 1997 which
generated video lottery and food and beverage revenues of $61,529 during this
period. This video lottery casino ceased operations effective December 19, 1997
and the Company intends to sell the assets related to this operation. Golden
Gates generated gaming revenues of $780,123 and other revenues, primarily food
and beverage, of $45,352 for the three months ended December 31, 1997.
Costs and Expenses. Total costs and expenses decreased 42.5% to
$1,308,174 for the three months ended December 31, 1997, compared to $2,273,862
for the three months ended December 31, 1996, primarily as a result of the
termination of the Management Agreement in February 1997 and the transfer of the
Video Lottery Assets in June 1997. Casino operating expenses for Golden Gates
were $571,392 for the three months ended December 31, 1997. Video lottery costs
decreased 96.3% to $69,498 for the three months ended December 31, 1997,
compared to $1,855,758 for the three months ended December 31, 1996. Selling,
general and administrative expenses increased 109.4% to $382,823 for the three
months ended December 31, 1997, compared to $182,802 for the three months ended
December 31, 1996, due primarily to costs associated with Golden Gates. Business
development expenses increased to $161,084 for the three months ended December
31, 1997, compared to $23,017 for the three months ended December 31, 1996, as a
result of costs related to the development and management of Bayfront Ventures.
Depreciation and amortization decreased 49.3% to $84,027 for the three months
ended December 31, 1997, compared to
6
<PAGE> 9
$165,681 for the three months ended December 31, 1996, due primarily to the
transfer of the Video Lottery Assets in June 1997.
Other Income and Expense. Interest expense and financing costs
decreased to $28,765 for the three months ended December 31, 1997, compared to
$157,788 for the three months ended December 31, 1996. This decrease is
primarily attributable to the Company using the proceeds from the Settlement
Agreement to reduce its notes payable to $1,846,031 at December 31, 1997,
compared to $4,267,214 at December 31, 1996. Interest expense for the three
months ended December 31, 1997 was also reduced by the capitalization of $13,473
of interest expense related to the construction of the Vessel.
Federal and State Income Taxes. The Company recorded a Federal and
State income tax benefit of $158,800 for the three months ended December 31,
1997, compared to a benefit of $81,200 for the three months ended December 31,
1996. The Company records an income tax benefit using the estimated effective
tax rate for the fiscal year if the amount of loss incurred is reasonably
expected to be offset by future income or is available for carry back to
previous years.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $387,247 at December 31,
1997, compared to $1,073,910 at September 30, 1997, a decrease of $686,663. In
accordance with two agreements with the Company's lenders, the Company had
restricted cash of $440,241 at December 31, 1997, compared to $288,894 at
September 30, 1997. Cash of $288,894 was released in March 1998 when one of the
lending agreements was retired. The decrease in cash reflects the use of funds
primarily for the construction of the Vessel.
During the three months ended December 31, 1997, the Company used cash
flow from operating activities of $238,967, compared to generating cash flow of
$93,111 during the three months ended December 31, 1996. The decrease in cash
flow from operations is due primarily to a decrease in operating income.
Investing activities used cash of $1,376,836 during the three months
ended December 31, 1997, compared to cash provided by investing activities of
$166,514 during the three months ended December 31, 1996. The Company used
$1,023,023 during the three months ended December 31, 1997 for the acquisition
of property and equipment (primarily for the construction of the Vessel),
compared to $3,897 during the three months ended December 31, 1996. Principal
payments received on long-term receivables were $159,678 during the three months
ended December 31, 1996, compared to $0 during the three months ended December
31, 1997.
Financing activities provided cash of $929,140 during the three months
ended December 31, 1997, compared to cash used in financing activities of
$247,709 during the three months ended December 31, 1996. Short-term borrowings
provided cash of $890,000 during the three months ended December 31, 1997,
compared to $225,000 during the three months ended December 31, 1996. Principal
payments on long-term debt were $90,692 during the three months ended December
31, 1997, compared to $492,541 during the three months ended December 31, 1996.
Payments received on stock subscription provided cash of $129,832 during the
three months ended December 31, 1997, compared to $19,832 during the three
months ended December 31, 1996, an increase of $110,000. This increase is a
result of the sale of the promissory note reported as a stock subscription for
$110,000 to BHL Capital Corporation ("BHL Capital"), a company controlled by Mr.
Lien. The sales price of the promissory note was approximately $8,000 less than
the remaining principal balance and as a result, Additional Paid-In Capital was
reduced by this amount.
The Company had a working capital deficit of $79,544 at December 31,
1997. The working capital deficit is a result of the Company using short-term
borrowings for the construction of the Vessel.
7
<PAGE> 10
From November 1997 through February 1998, the Company borrowed
$1,440,000 from Mr. Lien and BHL Capital in order to meet its obligations under
the JV Agreement and for working capital. The amounts were borrowed pursuant to
promissory notes that are due on demand and bear interest at 18%. In March 1998,
the Company borrowed an additional $500,000 from Mr. Lien to repay the bank term
note that was due in June 1998 and for working capital. This loan is evidenced
by a promissory note which requires monthly payments of $8,500 plus accrued
interest at 12% per annum, with the balance due on February 28, 1999. The
Company was required to pledge all of the assets of Golden Gates to a third
party lender of Mr. Lien. In April 1998, Mr. Lien signed a commitment letter
whereby he has agreed to provide additional working capital to the Company in an
amount not to exceed $500,000 (the "Working Capital Line of Credit"), the terms
of which will be negotiated in the event advances are made under the Working
Capital Line of Credit. In addition, on April 20, 1998 Mr. Lien agreed to
provide the Company with a line of credit in the amount of $3,000,000 which may
be used to fund the Capital Contribution under the JV Agreement. See "Note 2 to
Consolidated Financial Statements" for a more detailed description of Bayfront
Ventures.
Future Operations
As of December 31, 1997, the Company's cash flow from operations was
not sufficient to meet the Company's current working capital requirements.
However, due to increased cash flow from Golden Gates combined with Vessel
financing commitments and the financing commitment from Mr. Lien, the Company
believes it will have sufficient cash flow to meet such requirements. See "Note
2 to Consolidated Financial Statements."
8
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description
10.1* Letter Agreement between Bayfront Ventures and BNC
Financial Corporation dated March 17, 1998.
10.2* Promissory Note dated March 17, 1998 executed by Bayfront
Ventures in favor of BNC Financial Corporation in the
principal amount of $5,000,000.
10.3* Guaranty dated March 17, 1998 executed by Concorde Gaming
Corporation in favor of BNC Financial Corporation.
10.4* Promissory Note dated November 11, 1997 executed by
Concorde Gaming Corporation in favor of BHL Capital
Corporation in the principal amount of $500,000.
10.5* Demand Note dated December 23, 1997 executed by Concorde
Gaming Corporation in favor of BHL Capital Corporation in
the principal amount of $290,000.
10.6* Promissory Note dated March 6, 1998 executed by Concorde
Gaming Corporation and Concorde Cripple Creek, Inc. in
favor of BHL Capital Corporation in the principal amount of
$500,000.
10.7* Agreement dated November 7, 1997 between BHL Capital
Corporation and Concorde Gaming Corporation.
10.8* Agreement dated December 23, 1997 executed by Concorde
Gaming Corporation in favor of BHL Capital Corporation.
27* Financial Data Schedule.
- ----------
* Filed herewith.
b. Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter for which
this report is filed.
9
<PAGE> 12
Signatures:
In accordance with the requirements of the Exchange Act, the registrant
caused the report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONCORDE GAMING CORPORATION
Date: May 8, 1998 By: /s/ David L. Crabb
----------------------------------------
David L. Crabb, Chief Financial Officer
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
10.1* Letter Agreement between Bayfront Ventures and BNC
Financial Corporation dated March 17, 1998.
10.2* Promissory Note dated March 17, 1998 executed by Bayfront
Ventures in favor of BNC Financial Corporation in the
principal amount of $5,000,000.
10.3* Guaranty dated March 17, 1998 executed by Concorde Gaming
Corporation in favor of BNC Financial Corporation.
10.4* Promissory Note dated November 11, 1997 executed by
Concorde Gaming Corporation in favor of BHL Capital
Corporation in the principal amount of $500,000.
10.5* Demand Note dated December 23, 1997 executed by Concorde
Gaming Corporation in favor of BHL Capital Corporation in
the principal amount of $290,000.
10.6* Promissory Note dated March 6, 1998 executed by Concorde
Gaming Corporation and Concorde Cripple Creek, Inc. in
favor of BHL Capital Corporation in the principal amount of
$500,000.
10.7* Agreement dated November 7, 1997 between BHL Capital
Corporation and Concorde Gaming Corporation.
10.8* Agreement dated December 23, 1997 executed by Concorde
Gaming Corporation in favor of BHL Capital Corporation.
27* Financial Data Schedule.
</TABLE>
- ----------
* Filed herewith.
<PAGE> 1
EXHIBIT 10.1
March 17, 1998
Bayfront Ventures
c/o Concorde Gaming Corporation
3290 Lien Street
Rapid City, SD 57702
ATTENTION: MR. JERRY BAUM
Dear Mr. Baum:
BNC Financial Corporation (the "Lender") is pleased to advise Bayfront
Ventures, a Florida general partnership (the "Borrower"), that the Lender hereby
extends to the Borrower a line of credit of up to Five Million and No/100ths
Dollars ($5,000,000.00) (the "Line of Credit") pursuant to which the Lender will
make advances (the "Advance(s)") to the Borrower for the Borrower's account upon
the following terms and conditions:
1. Documents; etc. The Borrower has delivered, or will deliver,
to the Lender before the initial Advance is made, the following documents (this
Agreement together with each of the following defined documents and each other
instrument, document, guaranty, mortgage, deed of trust, chattel mortgage,
pledge, power of attorney, consent, assignment, contract, notice, security
agreement, lease, financing statement, patent, trademark or copyright
registration, subordination agreement, trust account agreement, or other
agreement executed and delivered by any Loan Party with respect to this
Agreement or to create or perfect any security interest in any collateral
securing the payment of the Loan (the "Collateral") (in each case as originally
executed and as amended, modified or supplemented from time to time) being
sometimes hereinafter referred to collectively as the "Loan Documents" and
individually as a "Loan Document") and other items, all containing or to contain
provisions acceptable to the Lender and its counsel:
(a) a Note (such Note together with each renewal,
replacement or substitute note therefor being the "Note") executed by
the Borrower;
(b) a Security Agreement ( the "Security Agreement")
executed by the Borrower granting to the Lender a security interest in
the Collateral described therein to secure repayment of the Note and
all present or future obligations of the Borrower to the Lender
together with Uniform Commercial Code Standard Form UCC-1 Financing
Statements sufficient to perfect the Lender's security interests in
such Collateral and UCC searches from the filing offices in all states
required by the Lender which reflect that no other person holds a prior
security interest in any such Collateral except as permitted by Section
8(a);
(c) a First Preferred Ship Mortgage ( the "Ship
Mortgage") in the form of EXHIBIT A attached hereto executed by the
Borrower mortgaging to the Lender the Miami Princess, a 200 feet x 40
feet gaming vessel being constructed for the Borrower by Keith Marine,
Inc. (the "Builder") pursuant to a Vessel
<PAGE> 2
Bayfront Ventures
March 17, 1998
Page 2
Construction Agreement dated as of August 27, 1997 (together with the
"Specifications" and "Contract Drawings" described therein as amended
to date and as the same may be further amended, modified or
supplemented in accordance with this Agreement being the "Construction
Contract") together with all other documents required by the Lender as
being necessary or convenient to record such Ship Mortgage as a first
preferred ship mortgage on the Miami Princess; provided, however, that
the Lender may defer the Borrower's execution and delivery of the Ship
Mortgage until a later date to be determined by the Lender in its sole
discretion;
(d) one or more Guaranties (each a "Guaranty" and
collectively the "Guaranties") respectively executed by Brustuen H.
Lien ("B. Lien"), Deanna Lien ("D. Lien"), David N. Grossman ("D.
Grossman"), Patricia J. Grossman ("P. Grossman"), Michael A. Hlavsa
("M. Hlavsa"), Deborah L. Hlavsa ("D. Hlavsa"), Concorde Gaming
Corporation, a Colorado corporation ("Concorde") and Goldcoast
Entertainment Cruises, Inc., a Florida corporation ("Goldcoast;" and
together with B. Lien, D. Lien, D. Grossman, P. Grossman, M. Hlavsa, D.
Hlavsa and Concorde being sometimes hereinafter referred to
collectively as the "Guarantors" and individually as a "Guarantor")
(Borrower and the Guarantors being sometimes hereinafter referred to
collectively as the "Loan Parties" and individually as a "Loan Party");
(e) a copy of the Borrower's general partnership
agreement (the "Partnership Agreement") certified by an officer of
Concorde to be a true, correct and complete copy thereof together with:
(i) a certificate by each of Concorde and Goldcoast that no unwaived or
uncured default exists thereunder; and (ii) a Certificate of
Partnership issued by the Florida Secretary of State;
(f) resolutions of all of the Borrower's general partners
authorizing the execution, delivery and performance of the Loan
Documents to which the Borrower is a party;
(g) certified Bylaws and Articles of Incorporation of
each corporate Loan Party;
(h) resolutions of the Board of Directors of each
corporate Loan Party ratifying the execution, delivery and performance
of the Partnership Agreement and authorizing the execution, delivery
and performance of the Loan Documents to which the Borrower and/or such
Loan Party is a party;
(i) a certificate by the secretary or assistant secretary
of each corporate Loan Party certifying the names of the officers of
such person authorized to sign the Loan Documents to which the Borrower
and/or such Loan Party is a party together, in each case, with a sample
of the true signatures of such officers;
(j) Certificates of Good Standing for each corporate Loan
Party of recent date issued by the Secretary of State of the state of
such person's organization, the Secretary of State of the State of
Florida and by the Secretary of State of each other state required by
the Lender;
(k) evidence of insurance required by any Loan Document
including without limitation, builder's risk insurance during the
period of construction of the Miami Princess;
(l) $100,000.00 in immediately available funds as a
non-refundable origination fee, which origination fee is non-refundable
and is earned upon the execution hereof regardless of whether the
Borrower obtains any Advance hereunder;
<PAGE> 3
Bayfront Ventures
March 17, 1998
Page 3
(m) $9,000.00 in immediately available funds to reimburse
the Lender for its due diligence and for its legal fees and expenses
payable by the Borrower pursuant to Section 7(e), receipt of which is
hereby acknowledged by Lender, which amount is refundable only to the
extent that the sum of such legal fees and expenses are less than
$7,500.00;
(n) an Assignment and Agreement appropriately executed
and delivered by the Builder and the Borrower pursuant to which, among
other things, the Borrower assigns all of its right, title and interest
in the Construction Contract to the Lender and the Builder consents to
such assignment and agrees to perform the Construction Contract on
behalf of the Lender following the occurrence of an Event of Default;
(o) a Statement (the "Cost Statement") of the costs of
construction (the "Construction Costs") of the Miami Princess by line
item appropriately completed and duly executed and delivered by the
Builder, the Borrower and DeJong and Lebet, Inc. (the "Naval
Architect"), which Cost Statement shall show: (i) Construction Costs
through the stage of completion set forth on Schedule 1(o) attached
hereto and incorporated herein by reference (the "Required Stage of
Completion"); and (ii) show sufficient funds either paid by the
Borrower to the Builder or any third party providing goods and services
in connection with the design or construction of the Miami Princess or
deposited by the Borrower with Lender (collectively the "Borrower
Equity Funds") to pay all Construction Costs through the Required Stage
of Completion;
(p) an Assignment of Plans relating to the Miami Princess
appropriately completed and duly executed and delivered by the Builder
and the Naval Architect;
(q) a Certificate relating to the Miami Princess
appropriately completed and duly executed and delivered by the Naval
Architect;
(r) a Survey of the Miami Princess showing the
replacement cost by a n established yard as being not less than
$8,000,000.00;
(s) an executed copy of a binding commitment (the "CFS
Commitment") by Caterpillar Financial Services, Inc. ("CFS") to make a
loan (the "CFS Loan") to permanently finance the Miami Princess in an
amount not less than the Loan; and
(t) such other approvals, opinions or documents as the
Lender may reasonably request.
2. Loan.
(a) Advances. The Lender has agreed, on the terms and
conditions stated herein, to make Advances to the Borrower from time to
time on any business day during the period from the date hereof and
ending on the earlier of September 30, 1998 or the date on which the
Lender terminates the Line of Credit pursuant to Section 9 hereof (such
earlier date being the "Termination Date"); provided, however, that the
Lender shall not be required to make an Advance if, after giving effect
to such Advance the aggregate outstanding principal amount of the
Advances (the "Loan") would exceed the lesser at that time of the Line
of Credit or the lesser (such lesser amount being the "Maximum Loan
Amount") of: (a) 70% of the purchase price of the Miami Princess at the
Required Stage of Completion; or (b) 70% of the estimated fair market
value of the Miami Princess at the Required Stage of Completion. Within
the limits set forth above, the
<PAGE> 4
Bayfront Ventures
March 17, 1998
Page 4
Borrower may obtain Advances from the Lender pursuant to this Section
2(a) and to Section 2(d). Each Advance shall be in the minimum amount
of $10,000.00.
(b) Note. The Advances shall be evidenced by, and be
payable in accordance with the terms of, the Note. The Lender shall
maintain records of the amount of each Advance and of the amount of all
payments on the Note. The aggregate outstanding principal amount of all
Advances set forth on the records of the Lender shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on the
Note.
(c) Interest on the Advances. The Borrower agrees to pay
interest on the outstanding principal amount of each Advance from the
date of such Advance until such Advance is paid at the rates and at the
times specified in the Note.
(d) Borrowing Procedure.
(i) Advances. Without limiting other terms and
conditions hereof, the Borrower and the Lender agree as
follows:
(A) Advances shall be disbursed by the
Lender solely for the purpose of
paying the Construction Costs of
the Miami Princess shown on the
Cost Statement. Each request for an
Advance proceeds shall be in the
form of EXHIBIT B attached hereto
and must be given so as to be
received by the Lender not later
than 11:00 a.m., Minneapolis time,
on the 3rd business day prior to
the date of the requested Advance.
Unless the Lender determines that
any applicable condition specified
in this Section 2 has not been
satisfied, the Lender will make the
amount of the requested Advance
available to the Borrower by
transferring the amount thereof in
immediately available funds to the
Builder for application to the
relevant 'Interim Installment
Invoice" or "Final Invoice" payable
under the Construction Contract.
Loan proceeds used to pay
Construction Costs that are not
provided by the Builder (e.g. fees
payable to the Naval Architect or
to the interior designer for the
Miami Princess or for the
acquisition and installment of
equipment) shall be paid by the
Lender directly to the supplier
upon receipt of an invoice therefor
and subject to the requirements of
subsection (D) hereof.
(B) No disbursement of a requested
Advance shall constitute a waiver
of any Event of Default or event
which, with notice and/or lapse of
time, would constitute an Event of
Default (such event being a
"Default") or any condition
precedent to the obligation of the
Lender to make any further Advance.
The Borrower acknowledges that the
amount of the Line of Credit may
not be sufficient to pay all of the
Construction Costs and that the
Borrower is solely responsible for
the payment of all such
Construction Costs in excess of the
Line of Credit. The Borrower will
provide the Lender with periodic
updates of changes in the
Construction Costs in accordance
with Section 8(k). If requested by
the Lender, the
<PAGE> 5
Bayfront Ventures
March 17, 1998
Page 5
Borrower shall also furnish to the
Lender a copy of each contract with
each of its direct contractors.
(C) The Lender shall have the right to
conduct such inspections of the
Miami Princess as it deems
necessary or desirable for the
protection of the Lender's
interests. Neither the Borrower nor
any third party shall have the
right to use or rely upon the
Lender's inspections or any other
reports generated by the Lender. By
advancing funds after any
inspection of the Miami Princess,
the Lender shall not be deemed to
waive any Default or Event of
Default.
(D) The Lender shall not be obligated
to make any Advance at any time
unless and until the Borrower has
provided the Lender with evidence
that the Borrower has paid
sufficient Construction Costs so
that all remaining unpaid
Construction Costs do not exceed
the available amount of the Line of
Credit (the "Available Funds"). If:
(1) the Borrower requests any
change to the Construction Costs
that would increase the amount
thereof after giving effect to any
reallocation of Cost Statement line
items permitted by Section 8(l)
(the "Increased Construction
Costs"); or (2) the Lender or the
Borrower determines that the
Available Funds are insufficient to
pay in full the Construction Costs
through the Required Stage of
Completion (such insufficiency
being the "Deficiency"), it shall
notify the other party of such
determination, then, in either
case, the Borrower shall, within
three (3) business days after such
request or notice, deposit with the
Lender funds equal to the amount of
the Increased Construction Costs or
the Deficiency, as the case may be.
All funds deposited, or to be
deposited, by the Borrower shall be
used to pay Construction Costs
before any additional Advance is
made. The Borrower hereby assigns
and pledges to the Lender all funds
so deposited as additional security
for the payment of the Loan and the
Borrower's other obligations under
this Agreement or any other Loan
Document. The Borrower may not
reallocate items of cost or change
the Cost Statement without the
consent of the Lender except as
provided in Section 8(l).
(ii) Conditions Precedent. Each request for an
Advance shall be deemed a representation and warranty that all
conditions precedent to such credit extension under Section 5
are satisfied as of the date of such request and as of the
date of such extension.
(e) Prepayment.
(i) Voluntary. The Borrower shall have the
right, by giving written notice to the Lender by not later
than 2:00 p.m. (Minneapolis time) on the business day of such
payment, to voluntarily prepay the Loan in whole or in part at
any time without premium or penalty.
<PAGE> 6
Bayfront Ventures
March 17, 1998
Page 6
(ii) Mandatory.
(A) If, at any time, the Loan exceeds
the lesser of the Line of Credit or
70% of the Maximum Loan Value, then
the Borrower, upon demand, shall
prepay the amount of such excess
together with interest on the amount
prepaid.
(B) Contemporaneously with the initial
funding of the CFS Loan, the
Borrower shall prepay the Loan,
accrued interest thereon, and all of
the Borrower's other outstanding
obligations under this Agreement or
any other Loan Document in full and
the Line of Credit shall terminate.
(iii) No Reborrowing. No part of any prepayment of
the Loan may be reborrowed.
3. Payments. Any other provision of this Agreement to the
contrary notwithstanding, the Borrower shall make all payments of interest on
and principal of the Loan and all payments to the Lender with respect to payment
of other fees, costs and expenses payable under any Loan Document in immediately
available funds to the Lender at its address for notices hereunder. The Borrower
authorizes the Lender to charge from time to time against the Borrower's account
with the Depository Bank any such payments when due and Lender will use its
reasonable efforts to notify Borrower of such charges. The Borrower hereby
authorizes the Lender to make an Advance, at the Lender's sole discretion, to
pay, on behalf of the Borrower, any amount due to the Lender under any Loan
Document without further action on the part of the Borrower and regardless of
whether the Borrower is able to comply with the terms, conditions and covenants
of this Agreement at the time of such Advance.
4. Set-off, Etc. Upon the occurrence and during the continuance
of an Event of Default, the Lender and each of its affiliates including, without
limitation, BNC National Bank of Minnesota ("BNCM"), may offset any and all
balances, credits, deposits (general or special, time or demand, provisional or
final), accounts or monies of the Borrower then or thereafter with the Lender or
such affiliate, or any obligations of the Lender or such affiliate to the
Borrower, against the obligations of the Borrower arising under this Agreement
or any other Loan Document. The Borrower hereby grants to the Lender and each of
its affiliates a security interest in all such balances, credits, deposits,
accounts or monies.
5. Conditions Precedent to All Credit Extensions. The obligation
of the Lender to extend any credit to the Borrower shall be subject to the
satisfaction of each of the following conditions, unless waived in writing by
the Lender:
(a) The representations and warranties set forth in Section 6
shall be true and correct on the date of the requested credit extension and
after giving effect thereto; and
(b) No Event of Default or Default shall have occurred and be
continuing on the date of the requested credit extension or after giving effect
thereto.
6. Representations and Warranties. To induce the Lender to extend
credit hereunder, the Borrower represents and warrants that:
<PAGE> 7
Bayfront Ventures
March 17, 1998
Page 7
(a) the Borrower is a general partnership validly organized and
existing and in good standing under the laws of the state of its organization,
has full power and authority to own its property and conduct its business
substantially as presently conducted by it and is duly qualified to do business
and is in good standing in each jurisdiction where the nature of its business
makes such qualification necessary;
(b) the Borrower has full power and authority to enter into and to
perform its obligations under the Loan Documents to which such the Borrower is a
party;
(c) the Loan Documents constitute the legal, valid, and binding
obligations of the Borrower which is a party thereto and are enforceable against
the Borrower in accordance with their respective terms subject only to
bankruptcy, insolvency, reorganization, moratorium or similar laws at the time
in effect affecting the enforceability of rights of creditors generally and by
general equitable principles which may limit the right to obtain equitable
remedies;
(d) the Borrower's execution, delivery and performance of the Loan
Documents to which the Borrower is a party have been duly authorized by all
necessary partnership action, do not require the consent or approval of any
person which has not been obtained, and do not conflict with any agreement
binding upon the Borrower or any of the Borrower's property;
(e) there is no litigation, arbitration or governmental proceeding
pending against the Borrower or affecting the business, property or operations
of the Borrower which, if determined adversely to the Borrower, would have a
material adverse effect on the condition (financial or otherwise), the business,
property or operations of the Borrower;
(f) neither the Borrower nor any member of a group which is under
common control with the Borrower (the Borrower's "ERISA Affiliates") has
maintained, established, sponsored or contributed to any employee benefit plan
which is a defined benefit plan ("Plan") covered by Title IV of the Employee
Retirement Income Security Act of 1974 and the rules and regulations thereunder
("ERISA");
(g) the proceeds of the Loan will be used to partially finance the
construction and equipping of the Miami Princess; no part of the proceeds of the
Loan will be used by the Borrower for any purpose which violates, or which is
inconsistent with, any regulations promulgated by the Board of Governors of the
Federal Reserve System;
(h) the Borrower is in compliance in all material respects with
all federal, state and local laws, rules and regulations applicable to it;
(i) The Borrower's internally prepared interim financial
statements dated January 31, 1998, copies of which have been furnished to the
Lender, have been prepared in accordance with the generally accepted accounting
principles consistently applied with those of the preceding fiscal year (such
consistently applied accounting principles being "GAAP") and present fairly the
financial condition of the Borrower as of such dates and the result of their
combined operations for the periods then ended;
(j) since the date of the financial statements referred to in
Section 6(i), neither the condition (financial or otherwise), the business, the
properties nor the operations of the Borrower has been materially and adversely
affected in any way;
<PAGE> 8
Bayfront Ventures
March 17, 1998
Page 8
(k) the Borrower has filed all Federal and State income and other
tax returns which are required to be filed, and has paid all taxes as shown on
said returns and all assessments received by the Borrower to the extent that
such taxes have become due;
(l) the Borrower possesses adequate licenses, permits, franchises,
patents, copyrights, trademarks and trade names, or rights thereto, to conduct
its business substantially as now conducted and as presently proposed to be
conducted;
(m) the Borrower is not in default of a material provision under
any material agreement, instrument, decree or order to which it is a party or by
which it or its property is bound or affected;
(n) the Borrower has good title to all of their respective
properties and assets, including, without limitation, the collateral for the
Loan, free and clear of all mortgages, security interests, liens and
encumbrances, except as permitted by Section 8(a);
(o) the Borrower reasonably believes that the so-called "Year 2000
Problem" (ie. the inability of the Borrower's computer applications to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999") will not result in a material adverse
change in Borrower's business, condition (financial or otherwise), operations,
properties or prospects, or ability to repay the Loan;
(p) the Borrower is a citizen of the United States within the
meaning of the Ship Mortgage Act and 46 C.F.R. ss.67.35 in that each of its
general partners are citizens and at least 75 percent of the equity interests in
the Borrower are owned by citizens;
(q) the Line of Credit equals or exceeds the total of all
remaining unpaid Construction Costs of the Miami Princess through the Required
Stage of Completion;
(r) all representations and warranties contained in this Section 6
shall survive the delivery of the Loan Documents, the making of the Loan, and no
investigation at any time made by or on behalf of the Lender shall diminish its
rights to rely thereon.
7. Affirmative Covenants. The Borrower covenants and agrees with
the Lender that, for so long as the Loan remains unpaid or the Line of Credit is
available to the Borrower, the Borrower shall:
(a) furnish to the Lender:
(i) as soon as available and in any event within 90 days
after the end of each of the Borrower's fiscal years, a copy of the
Borrower' s annual report, including balance sheet and related
statements of earnings, partners' equity and cash flows for such fiscal
year, with comparative figures for the preceding fiscal year, prepared
in accordance with GAAP;
(ii) as soon as available and in any event within 20 days
after the end of each month of the Borrower's fiscal year, a copy of
the Borrower' internally prepared financial statements, consisting of a
balance sheet as of the close of such month and related statements of
earnings for such month and from the beginning of such fiscal year to
the end of such month prepared in accordance with GAAP and certified as
accurate by the chief financial officer or treasurer of Concorde; and
<PAGE> 9
Bayfront Ventures
March 17, 1998
Page 9
(iii) such other financial or other information or
certification as the Lender may reasonably request;
(b) maintain and preserve its partnership existence;
(c) maintain insurance of such types and in such amounts as are
maintained by companies of similar size engaged in the same or similar
businesses and as may be required by any Loan Document; provided, however, that
each policy insuring any collateral securing the Loan shall name the Lender as
the loss payee;
(d) file all federal and state tax income and other returns
(including, without limitation, withholding tax returns) which are required and
make payments as required of such taxes; provided, however, that the Borrower
shall not be required to pay any such tax so long as the validity thereof is
being contested in good faith by appropriate proceedings and adequate book
reserves shall have been set aside with respect thereto;
(e) reimburse the Lender for reasonable expenses, fees and
disbursements (including, without limitation, reasonable attorneys' fees and
legal expenses), incurred in connection with the preparation or administration
of this Agreement or any other Loan Document or the Lender's enforcement of the
obligations of the Borrower under any Loan Document, whether or not suit is
commenced, which attorneys' fees and legal expenses shall include, but not be
limited to, any attorneys' fees and legal expenses incurred in connection with
any appeal of a lower court's judgment or order; provided, however that the
Lender agrees that the Borrower's obligations to reimburse the Lender for its
attorneys' fees and legal expenses incurred in connection with the preparation
of this Agreement and the other Loan Documents shall be limited to the sum of
$7,500.00 plus out-of-pocket expenses;
(f) permit the Lender and its representatives at reasonable times
and intervals and upon reasonable notice to visit the Borrower's offices and
inspect such person's books and records including, without limitation,
permitting the Lender to examine any collateral securing the Loan and reimburse
the Lender for all examination fees and expenses incurred in connection with
such examinations at its then current rate for such services and for its
out-of-pocket expenses incurred in connection therewith; provided, however that
the Lender agrees that, so long as no Default or Event of Default has occurred
and is continuing, the Borrower's obligations to reimburse the Lender for its
examinations shall be limited to no more than $900.00 per examination for each
of two examinations;
(g) maintain in full force and effect all of its material rights,
licenses, certifications, franchises and comply with all applicable laws and
regulations necessary to enable it to conduct its business;
(h) expeditiously complete and fully pay for the construction and
equipping of the Miami Princess in a good and workmanlike manner and in
accordance with the contracts, subcontracts and Plans, and in compliance with
all applicable governmental requirements, and any applicable covenants,
conditions, restrictions and reservations, so that completion occurs on or
before September 30, 1998;
(i) correct or cause to be corrected (i) any defect in the Miami
Princess or (ii) any departure in the construction of the Miami Princess from
the Plans or governmental requirements;
(j) deliver to the Lender revised, sworn statements of estimated
costs of the Miami Princess, showing changes in or variations from the original
Cost Statement, as soon as such changes are known to the Borrower and, if
requested by the Lender, the Borrower shall furnish the Lender with copies of
all changes or modifications in the Plans,
<PAGE> 10
Bayfront Ventures
March 17, 1998
Page 10
contracts or subcontracts for the construction of the Miami Princess, prior to
incorporation of any such change or modification into the Miami Princess,
whether or not the Lender's consent to such change or modification is required;
(k) pay and discharge, when due, all taxes, assessments and other
governmental charges upon the Miami Princess, as well as all claims for labor
and materials which, if unpaid, might become a lien or charge upon the Miami
Princess, regardless of whether the Loan is fully advanced or disbursed;
(l) use the Loan proceeds solely to pay, or to reimburse the
Borrower for paying, the Construction Costs shown on the Cost Statement approved
by the Lender and incurred by the Borrower in connection with the acquisition,
development and construction of the Miami Princess and shall take all steps
necessary to assure such use of Loan proceeds by its contractors;
(m) upon completion of the Miami Princess, the Borrower shall
furnish the Lender with all items required to evidence completion of the Miami
Princess including, without limitation: (i) a certification from the Naval
Architect that the Miami Princess has been completed in accordance with the
approved Plans; (ii) the evidence of insurance required by the Ship Mortgage;
(iii) copies of all licenses and permits required for operation of the Miami
Princess; and (iv) photographs of the completed Miami Princess;
(n) upon completion of the Miami Princess, the Borrower shall
immediately deliver to the Lender, or in accordance with the Lender's written
direction, any document that may be necessary or convenient to have the Miami
Princess documented under the laws of the United States including, without
limitation, a Manufacturer's Certificate of Origin (CG-1270), A Certification of
the Builder (CG-1261), a Certificate of Measurement of tonnage and an
Application for Initial Issue, Exchange, Replacement of Certificate of
Documentation; or Redocumentation and to have the Ship Mortgage recorded as a
first preferred ship mortgage under the laws of the United States;
(o) immediately upon the Lender's request, execute and deliver the
Ship Mortgage to the Lender if the Borrower has not previously done so;
(p) maintain, at all times, the Borrower' s Net Worth at not less
than $2,000,000, where Net Worth means, at any date of determination, the
difference between: (i) the total assets appearing on the Borrower's balance
sheet at such date prepared in accordance with GAAP, after deducting adequate
reserves in each case where, in accordance with GAAP, a reserve is proper; and
(b) the total liabilities appearing on such balance sheet; and
(q) cause any and all obligations of the Borrower to any Guarantor
or to any affiliate of the Borrower to be subject and subordinate at all times
to all of the Borrower's indebtedness and liabilities to the Lender, whether
such indebtedness is now existing or hereafter arising, direct or indirect,
absolute or contingent, joint or several, whether as maker, endorser, surety,
guarantor or otherwise, and including all principal, interest (including any
interest accruing subsequent to the commencement of any proceeding against or
with respect to the Borrower under the Bankruptcy Code, 11 U.S.C. 101, et seq.),
fees, expenses, attorneys' fees and legal expenses owing to the Lender, as well
as the notes or other instruments evidencing the same, and all extensions,
renewals and refinancings thereof except that so long as no Default or Event of
Default has occurred and is continuing or would result from any of the following
payments, the Borrower may pay a monthly advance to Goldcoast of no more than
$20,000 strictly in accordance with the terms of the Partnership Agreement (the
"Goldcoast Advance"). The Borrower's obligations under this subsection (p) shall
include, without limitation, causing any Guarantor or Affiliate to execute and
deliver to the Lender a subordination agreement, on the Lender's standard form,
subordinating the obligations of the Borrower to any Guarantor or affiliate to
the obligations of the Borrower to the Lender. For the purposes of this
Agreement, "affiliate" shall mean with respect
<PAGE> 11
Bayfront Ventures
March 17, 1998
Page 11
to a party, any person or entity that controls, is controlled by or is under
common control with such party, with "control" and its derivatives meaning
ownership of 50 percent or more of the voting interests in the entity in
question. 8. Negative Covenants. The Borrower hereby agrees with the Lender that
so long as the Note remains unpaid or the Line of Credit is available to the
Borrower, the Borrower shall not, without the Lender's prior written consent:
(a) create security interests or mortgages encumbering the
Borrower's assets except: (i) security interests in favor of the Lender; (ii)
other security interests described on Schedule 8(a) attached hereto and
incorporated herein by reference; or (iii) security interests created in
connection with capitalized lease obligations or other purchase money
indebtedness incurred in connection with the acquisition of equipment for the
Miami Princess, but only to the extent that: (A) such equipment is gaming
equipment such as slot machines, video poker machines and similar machines; (B)
such security interest attaches only to the equipment then being acquired by the
Borrower, did not and does not attach to the Borrower's current assets and does
not secure any other indebtedness; (C) no Default or Event of Default has
occurred and is continuing at the time of the proposed creation of such security
interest or would result therefrom; (D) no portion of the purchase price of the
relevant equipment has been, or should have been paid, as part of the
Construction Costs; (E) the indebtedness intended to be secured by such security
interest is permitted by Section 8(b); and (F) the Borrower has provided the
Lender with at least ten (10) business days prior written notice of the
Borrower's intent to grant such purchase money security interest;
(b) create, incur, assume or suffer to exist any indebtedness
except: (i) the indebtedness under this Agreement or any other Loan Document;
(ii) current liabilities (other than borrowed money) incurred in the ordinary
course of business; (iii) other indebtedness described on Schedule 8(b) attached
hereto and incorporated herein by reference; or (iv) capitalized lease
obligations or purchase money indebtedness incurred in connection with the
acquisition of equipment, but only to the extent that: (A) the aggregate amount
of such indebtedness does not exceed the lesser of: (1) $250,000.00; or (2) the
maximum amount of indebtedness which the Borrower could then occur without
violating Section 8(n) while maintaining its ability, after giving effect to the
indebtedness which the Borrower then proposes to incur, additional indebtedness
equal to the sum of the entire undrawn amount of the Line of Credit plus $1.00;
and (B) no Default or Event of Default has occurred and is continuing at the
time of the proposed incurrence of such indebtedness or would result therefrom;
(c) lease or sell all or any substantial portion of its property
and business to any other entity or entities, whether in one transaction or a
series of related transactions;
(d) consolidate with or merge into or with any other entity or
entities;
(e) declare or pay any dividends or distributions, purchase,
redeem, retire or otherwise acquire for value any of the Borrower's partnership
interests (or any warrant or option to purchase any such partnership) now or
hereafter outstanding, or return any capital to its partners as such;
(f) acquire, make or hold any investment in any other person
except: (i) cash and cash equivalents; or (ii) other investments described on
Schedule 8(f) attached hereto and incorporated herein by reference;
(g) assume, guarantee, endorse or otherwise become liable upon the
obligation of any person, firm or corporation except by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, nor sell any notes or accounts receivable with or without recourse;
<PAGE> 12
Bayfront Ventures
March 17, 1998
Page 12
(h) engage in any business other than the business of operating
the Miami Princess;
(i) maintain, establish, sponsor or contribute to any Plan which
is a defined benefit plan, or permit any of its ERISA Affiliates to do so;
(j) make any future loan or advance to, or otherwise extend any
credit to, the Borrower's or any of its partner's officers, directors,
shareholders, partners, members, managers or affiliates or to any member of any
such person's immediate family except that the Borrower may pay the Goldcoast
Advance strictly in accordance with Section 7(p);
(k) make or consent to any change or modification in the Plans,
contracts or subcontracts, and no work shall be performed with respect to any
such change or modification if such change or modification would in any material
way alter the design or structure of the Miami Princess or increase or decrease
the cost of the construction of the Miami Princess by $100,000.00 or more for
any single change or modification, or if the aggregate amount of all changes and
modifications exceeds $150,000.00; provided, however, that, regardless of
whether the Lender's consent is required for any such change or modification,
the Borrower shall deposit the amount of any Increased Construction Costs with
Lender in accordance with Section 2(d)(i)(D) contemporaneously with the
Borrower's making of, or consenting to, any such change or modification ;
(l) make or consent to any change or modification in any line item
of the Construction Cost Statement except: (i) as permitted by Section 8(k); or
(ii) that any cost savings in a line item can be reallocated to other line item
upon certification by the Naval Architect and the Builder certifying that such
line item has been completed in accordance with the Plans and specifying the
cost of completion and the resulting cost savings;
(m) (i) amend, modify or supplement: (A) the Construction Contract
(except for changes permitted by Section 8(k)); (B) the Architect's Agreement;
(C) the Use Agreement dated as of June 25, 1997 between the Borrower and the
Bayfront Park Management Trust, a limited agency and instrumentality of the City
of Miami, Florida , as amended by an Addendum to Use Agreement dated as of
August 29, 1997 (as so amended, the "Use Agreement"); or (D) the CFS Commitment;
or (ii) waive any other party's performance of, or compliance with, any material
term thereof; or
(n) permit its Leverage Ratio (the ratio of its Total Liabilities
to its Net Worth) to be more than 6 to 1 at any time, where Total Liabilities
means, at the time of any determination, the amount of all items of indebtedness
of the Borrower that would constitute "liabilities" for balance sheet purposes
in accordance with GAAP; or
9. Event of Default. The occurrence of any one or more of the
following shall constitute an Event of Default ("Event of Default") hereunder:
(a) the Borrower shall default in the due and punctual payment of
any installment of interest or principal on the Loan on the date when due, or in
due and punctual payment of any other amount which is due and payable to the
Lender under any Loan Document on the date when due;
(b) the Borrower shall default in the due performance or
observance of any covenant set forth in Section 7(m), (n) or (o), in Section 8
or in the Ship Mortgage;
<PAGE> 13
Bayfront Ventures
March 17, 1998
Page 13
(c) any Loan Party shall default (other than those defaults
covered by other subsections of this Section 9 in the due performance or
observance of any term, covenant, agreement or warranty contained in any Loan
Document on its part to be performed, and such default shall continue for a
period of 30 days after written notice thereof from the Lender to the Borrower;
(d) any Loan Party shall default and fail to cure such default in
the time provided therein, under the terms of any agreement, indenture, deed of
trust, mortgage, promissory note or security agreement governing the borrowing
of money (other this Agreement and the other Loan Documents) and: (i) the
maturity of any amount owed under such document or instrument is accelerated; or
(ii) such default shall continue unremedied or unwaived for a period of time to
permit such acceleration;
(e) any Loan Party shall become insolvent or generally fail to
pay, or admit in writing such Loan Party's inability to pay such Loan Party's
debts as they become due; or any Loan Party shall apply for, consent to, or
acquiesce in, the appointment of a trustee, receiver or other custodian for such
Loan Party or for such Loan Party's property, or make a general assignment for
the benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian shall be appointed for any
Loan Party or for a substantial part of such Loan Party's property and not be
discharged within 60 days; or any bankruptcy, reorganization, debt arrangement,
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding shall be commenced in respect of any Loan
Party or be consented to or acquiesced in by such Loan Party or remain for 60
days undismissed; or any Loan Party shall take any action to authorize any of
the foregoing; (f) any judgments, writs, warrants of attachment, executions or
similar process (not covered by insurance) shall be issued against any Loan
Party or any of such Loan Party's assets where the aggregate amount of such
judgments, writs, warrants of attachment, executions or similar process exceed
$25,000.00 for any or all of the Loan Parties and are not released, vacated,
suspended, stayed, abated or fully bonded prior to any sale and in any event
within 30 days after its issue or levy;
(g) Concorde shall cease to control the Borrower's management
committee or shall cease to own at least 80% of the equity interests in the
Borrower;
(h) B. Lien and D. Lien, collectively, shall cease to own at least
51% of Concorde's issued and outstanding capital stock or shall cease to have
the power to elect a majority of Concorde's directors or shall cease to direct
Concorde's management policies;
(i) the Lender, in its sole discretion, shall determine in good
faith that there has been a material adverse change in the condition (financial
or otherwise), business or property of any Loan Party;
(j) any representation or warranty set forth in this Agreement or
any other Loan Document shall be untrue in any material respect on the date as
of which the facts set forth are stated or certified;
(k) any Guarantor who is a natural person shall die or become
incompetent;
(l) any Loan Party shall seek to revoke, repudiate or disavow the
enforceability of any Loan Document;
(m) Borrower shall fail to document the Miami Princess under the
laws of the United States immediately upon completion thereof or the Ship
Mortgage shall fail to be recorded against the Miami Princess as a first
preferred ship mortgage under the laws of the United States contemporaneously
with the documenting of the Miami Princess;
<PAGE> 14
Bayfront Ventures
March 17, 1998
Page 14
(n) Work on the Miami Princess shall be substantially abandoned,
or shall, by reason of the Borrower's fault, be unreasonably delayed or
discontinued for a period of ten (10) consecutive day;
(o) The Borrower shall fail to timely make any deposit required by
Section 2(d)(i)(D);
(p) The Borrower or CFS shall terminate the CFS Commitment; or
(q) The conduct of the Borrower's contemplated gaming cruise to
no-where business shall be judicially determined to violate any applicable
Federal or state law or any Federal or applicable state law shall be enacted
which prohibits or restricts the conduct of such business.
Upon the happening of: (1) any Event of Default described in Section 9(e), the
full unpaid principal amount of the Note and all other obligations of the
Borrower to the Lender shall automatically be due and payable without any
declaration, notice, presentment, protest or demand of any kind (all of which
are hereby waived) and the Line of Credit shall automatically terminate; or (2)
any other Event of Default, the Lender, upon written notice, may terminate the
Line of Credit and may declare the outstanding principal amount of the Note and
all other obligations of the Borrower to the Lender to be due and payable
without other notice, presentment, protest or demand of any kind, whereupon the
full unpaid amount of the Note and any and all other obligations, which shall be
so declared due and payable, shall be and become immediately due and payable. In
addition, the Lender may exercise any right or remedy available to it pursuant
to any Loan Document, at law or in equity. Without limiting the generality of
the foregoing, the Lender may (but shall not be obligated to) take over and
complete the construction of the Miami Princess in accordance with the Plans,
with such changes therein as the Lender may, in its discretion, deem
appropriate, all at the risk, cost and expense of the Borrower and, in
connection therewith, the Lender may assume or reject any contracts entered into
by the Borrower in connection with the Miami Princess, may enter into additional
or different contracts, and may pay, compromise and settle all claims in
connection with the Miami Princess. All costs and expenses, including attorneys'
fees, incurred by the Lender in completing or attempting to complete the Miami
Princess (whether aggregating more, or less, than the face amount of the Note),
shall be deemed Advances made by the Lender to the Borrower hereunder, and the
Borrower shall be liable to the Lender, on demand, for the repayment of such
sums, together with interest on such sums from the date of their expenditure at
the Default Rate specified in the Note. The Lender may, in its discretion, at
any time abandon work on the Miami Princess, after having commenced such work,
and may recommence such work at any time. Nothing in this Section 9 shall impose
any obligation on the Lender either to complete or not to complete the Miami
Princess. For the purpose of carrying out the provisions of this Section 9, the
Borrower irrevocably appoints the Lender its attorney-in-fact, with full power
of substitution, to execute and deliver all such documents, to pay and receive
such funds, and to take such action as may be necessary, in the judgment of the
Lender, to complete the Miami Princess, to document it under the laws of the
United States and to record the Ship Mortgage as a first preferred ship mortgage
against the Miami Princess in accordance with the laws of the United States.
This power of attorney is coupled with an interest and is irrevocable.
<PAGE> 15
Bayfront Ventures
March 17, 1998
Page 15
10. Miscellaneous.
(a) Notices Any notices or demands required or contemplated
hereunder shall be written and shall be effective two days after the placing
thereof in the United States mails postage prepaid, addressed to the relevant
party at its address set forth on the signature page hereto or upon transmission
by telecopy to the relevant party at the telecopy number set forth on the
signature page hereto and a confirmation is received or at any other address or
telecopy number as may be designated by the party in a notice to the other
parties provided, however, that any notice to the Lender pursuant to Section
2(d) shall not be deemed given until received by the Lender.
(b) Governing Law. This Agreement, the Note and each other Loan
Document shall be governed by, interpreted and construed in accordance with the
internal laws, but not the law of conflicts, of the State of Minnesota.
(c) Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer its
rights hereunder without the prior written consent of Lender.
(d) Waivers, Amendments; etc. The provisions of this Agreement, or
any other Loan Document, may from time to time be amended, modified or waived,
if such amendment, modification or waiver is in writing and consented to by the
Borrower and the Lender.
(e) Inconsistencies, etc. In the event of any conflict or
inconsistency between or among the provisions of this Agreement and any other
Loan Document, it is intended that the provisions of this Agreement and such
other Loan Document be enforceable except to the extent that the enforcement of
such provisions is irreconcilable and, in that event, the provisions of this
Agreement shall be controlling.
(f) WAIVER OF TRIAL BY JURY. THE BORROWER AND THE LENDER WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS (i) UNDER THE LOAN DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
THEREWITH OR (ii) ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
(g) Limitation of Liability. Neither the Lender nor any affiliate
of the Lender shall have any liability with respect to, and the Borrower hereby
waives, releases and agrees not to sue upon, any claim for any special, indirect
or consequential damages suffered by the Borrower in connection with, arising
out of, or in any way related to, this Agreement, the Note or any other Loan
Document, or the transactions contemplated and the relationship established
hereby or thereby, or any act, omission or event occurring in connection
herewith or therewith.
BNC FINANCIAL CORPORATION
By /s/ James Moore
------------------------------------
Its Vice President
------------------------------------
4150 South Second Street
St. Cloud, MN 56301
Attention: Mr. James Moore
Telecopy No: (320) 259-0535
<PAGE> 16
Bayfront Ventures
March 17, 1998
Page 15
Accepted, acknowledged and agreed to this ____ day of March, 1998.
BAYFRONT VENTURES, A FLORIDA GENERAL
PARTNERSHIP
By Concorde Gaming Corporation
A General Partner
By /s/ Jerry L. Baum
------------------------------------
Its President
------------------------------------
c/o Concorde Gaming Corporation
3290 Lien Street
Rapid City, SD 57702
Attention: Mr. Jerry Baum
Telecopy No: (605) 342-0247
Subscribed and sworn to before me
this ____ day of March, 1998.
- ----------------------------------
Notary Public
<PAGE> 17
LIST OF SCHEDULES
Schedule 1(o) Required Stage of Completion
Schedule 8(a) Security Interests
Schedule 8(b) Debt
Schedule 8(f) Investments
<PAGE> 18
Schedule 1(o)
Required Stage of Completion
<PAGE> 19
Schedule 8(a)
Security Interests
<PAGE> 20
Schedule 8(b)
Debt
<PAGE> 21
Schedule 8(f)
Investments
<PAGE> 1
EXHIBIT 10.2
PROMISSORY NOTE
U.S. $5,000,000.00 MARCH 17, 1998
FOR VALUE RECEIVED, on the Termination Date (as defined in the Loan
Agreement hereinafter defined) the undersigned, Bayfront Ventures, a Florida
general partnership (the "Borrower"), promises to pay to the order of BNC
Financial Corporation (the "Lender") the principal sum of Five Million and
No/100ths Dollars (U.S. $5,000,000.00) or, if less, the aggregate unpaid
principal amount of all Advances (as hereinafter defined) made by the Lender to
the Borrower pursuant to the Loan Agreement.
The Borrower promises to pay interest (computed on the basis of the
number of days elapsed in a year of 360 days) on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full at a
fluctuating annual rate equal to 3.75% per annum above the Prime Rate of
Interest; provided, however, that, notwithstanding anything to the contrary
contained herein, upon the occurrence and during the continuance of any Event of
Default, the rate of interest hereunder shall be 5.75% per annum above the Prime
Rate of Interest (the "Default Rate"). The term "Prime Rate of Interest" shall
mean the prime rate of interest published from time to time in the Midwest
Edition of the Wall Street Journal as the prime rate; provided, however that:
(a) if a range of rates is published, then the Prime Rate of Interest means the
highest rate within the range; and (b) if the Midwest Edition of the Wall Street
Journal does not publish the Prime Rate of Interest, then the term "Prime Rate
of Interest" shall mean the rate of interest publicly announced by Norwest Bank
Minnesota, National Association, Minneapolis Office, as its Prime Rate, Base
Rate, Reference Rate or the equivalent of such rate, whether or not such bank
makes loans to customers at, above, or below said rate. Interest shall be due
and payable on the first day of each calendar month, starting on April 1, 1998,
and at maturity. Each change in the fluctuating interest rate shall take effect
simultaneously with the corresponding change in the Prime Rate of Interest.
Both principal and interest are payable in lawful money of the United
States of America to the Lender at 4150 South Second Street, Suite 350, St.
Cloud, MN 56301 (or other location specified by the Lender) in immediately
available funds.
<PAGE> 2
This Note is the Note referred to in, and is entitled to the benefits
of, the Letter Loan Agreement dated as of March 17, 1998 (the Letter Loan
Agreement as amended, modified, supplemented or restated from time to time being
the "Loan Agreement;" capitalized terms not otherwise defined herein being used
herein as therein defined) between the Borrower and the Lender. The Loan
Agreement, among other things, (i) provides for the making of Advances (the
"Advances") by the Lender to the Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Advance
being evidenced by this Note; (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events prior to the
maturity hereof upon the terms and conditions therein specified; (iii) contains
provisions for the mandatory prepayment hereof upon certain conditions; and (iv)
permits the voluntary prepayment hereof, without premium or penalty, upon
certain conditions.
Presentment and demand for payment, notice of dishonor, protest and
notice of protest are hereby waived. In the event of default, the Borrower
agrees to pay costs of collection and reasonable attorneys' fees (whether or not
suit is commenced), including, without limitation, attorneys' fees and legal
expenses incurred in connection with any appeal of a lower court's judgment or
order.
BAYFRONT VENTURES, a Florida general
partnership
By: Concorde Gaming Corporation
A General Partner
By: /s/ Jerry L. Baum
------------------------------------
Its: President
------------------------------------
Subscribed and sworn to before me
this ____ day of March, 1998.
- ----------------------------------
Notary Public
<PAGE> 1
EXHIBIT 10.3
Concorde
GUARANTY
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and to induce BNC Financial Corporation (the
"Lender"), at its option at any time or from time to time to make loans or
extend other accommodations to or for the account of Bayfront Ventures, a
Florida general partnership (the "Borrower"), the undersigned hereby absolutely
and unconditionally guarantee(s) to the Lender the full and prompt payment and
performance when due, whether at maturity or earlier by reason of acceleration
or otherwise, of each and every debt, liability and obligation of every type
which Borrower may now or at any time hereafter owe to the Lender, whether such
debt, liability or obligation now exists or is hereafter created or incurred,
and whether it is or may be direct or indirect, due or to become due, absolute
or contingent, primary or secondary, liquidated or unliquidated, or joint,
several or joint and several (all such debts, liabilities and obligations are
hereinafter collectively referred to as the "Indebtedness").
The undersigned further acknowledges and agrees with the Lender that:
1. No act or thing need occur to establish the liability of the
undersigned hereunder, and no act or thing except full payment and discharge of
all Indebtedness shall in any way exonerate the undersigned or modify, reduce,
limit or release the liability of the undersigned hereunder.
2. This is an absolute, unconditional and continuing guaranty of
payment of the Indebtedness and shall continue to be in force and be binding
upon the undersigned until the Indebtedness is paid in full after the
termination of the Line of Credit, or until this guaranty is revoked as to
future transactions by written notice actually received by the Lender. Such
revocation shall not be effective as to Indebtedness existing or committed for
at the time of actual receipt of such notice by the Lender, or as to any
renewals, extensions and refinancings thereof. If there be more than one
guarantor hereunder, such revocation shall be effective only as to the one so
revoking. The dissolution or adjudication of bankruptcy of the undersigned shall
not revoke this guaranty, except upon actual receipt of written notice thereof
by the Lender and only prospectively, as to future transactions, as herein set
forth.
3. The undersigned represents and warrants to the Lender that:
(a) the undersigned is a corporation duly organized and existing in good
standing and has full power and authority to make and deliver this guaranty; (b)
the execution, delivery and performance of this guaranty by the undersigned have
been duly authorized by all necessary action of its directors and shareholders
and do not and will not violate the provisions of, or constitute a default
under, any presently applicable law or its articles of incorporation or bylaws
or any agreement presently binding on it; (c) this guaranty has been duly
executed and delivered by the authorized officers of the undersigned and
constitutes its lawful, binding and legally enforceable obligation; (d) the
authorization, execution, delivery and performance of this guaranty do not
require notification to, registration with, or consent or approval by, any
federal, state or local regulatory body or administrative agency; (e) the
undersigned's preliminary audited financial statements dated September 30, 1997
and internally prepared interim financial statements dated January 31, 1998,
copies of which have been furnished to the Lender, have been prepared in
accordance with the generally accepted accounting principles consistently
applied with those of the preceding fiscal year (such consistently applied
accounting principles being "GAAP") and present fairly the financial condition
of the undersigned as of such dates and the result of its operations for the
periods then ended; (g) since September 30, 1997, neither the condition
(financial or otherwise), the business, the properties nor the operations of the
undersigned has been materially and adversely affected in any way; (h) the
undersigned has filed all Federal and State income and other tax returns which
are required to be filed, and has paid all taxes as shown on said returns and
all assessments received by the undersigned to the extent that such taxes have
become due; (i) the undersigned possesses adequate licenses, permits,
franchises, patents, copyrights, trademarks and trade names, or rights thereto,
to conduct its business substantially as now conducted and as presently proposed
to be conducted; (j) the
<PAGE> 2
undersigned is not in default of a material provision under any material
agreement, instrument, decree or order to which it is a party or by which it or
its property is bound or affected; (k) the undersigned has good title to all of
its properties and assets, including, without limitation, the collateral for the
Loan, free and clear of all mortgages, security interests, liens and
encumbrances, except as permitted by Section 6(f); (l) the undersigned
reasonably believes that the Year 2000 Problem will not result in a material
adverse change in the undersigned's business, condition (financial or
otherwise), operations, properties or prospects, or ability to repay the
Indebtedness; and (m) the undersigned is a citizen of the United States within
the meaning of the Ship Mortgage Act and 46 C.F.R. ss. 67.39 in that: (A) it is
incorporated under the laws of the State of Colorado ; (B) its chief executive
officer, by whatever title, is a citizen, (C) its chairman of the board of
directors is a citizen; (D) no more of its directors are non-citizens than a
minority of the number necessary to constitute a quorum; and (E) at least 75% of
the stock interest in the undersigned is owned by citizens.
4. The liability of the undersigned hereunder shall be limited to
the Indebtedness.
5. The undersigned hereby waives any right of contribution,
reimbursement, recourse or subrogation available to the undersigned against any
person liable to payment of the Indebtedness, or as to any collateral security
therefor; provided, however, that such waiver shall terminate on the 366th day
following the payment in full of the Indebtedness after the termination of any
commitment on part of the Lender to extend additional credit to the Borrower if,
and only so long as, no bankruptcy or reorganization proceedings have been
commenced by or against the Borrower under the United States Bankruptcy Code, 11
U.S.C. ss. 101, et seq. during the one year period following such payment date.
6. So long as the Indebtedness remains unpaid or the Line of
Credit is available to Borrower, the undersigned agrees:
(a) to furnish to the Lender:
(i) as soon as available and in any event within 90 days
after the end of each of the undersigned's fiscal
years (or April 30, 1998, with respect to the
undersigned's 1997 fiscal year), a copy of the
undersigned's audited annual report, including
balance sheet and related statements of earnings,
stockholders' equity and cash flows for such fiscal
year, with comparative figures for the preceding
fiscal year, prepared in accordance with generally
accepted accounting principles consistently applied
(such consistently applied accounting principles
being "GAAP") and certified without qualification or
exception (other than a going-concern exception
arising solely from the lack of financing for the
Miami Princess) by the undersigned's current
independent public accountants or other independent
public accountants satisfactory to the Lender and
accompanied by the management letter, if any,
delivered by such independent public accountants to
the undersigned and the undersigned's response
thereto;
(ii) as soon as available and in any event within 20 days
after the end of each month of the undersigned's
fiscal year, a copy of the undersigned' internally
prepared financial statements, consisting of a
balance sheet as of the close of such month and
related statements of earnings for such month and
from the beginning of such fiscal year to the end of
such month prepared in accordance with GAAP and
certified as accurate by the chief financial officer
or treasurer of the undersigned; and
(iii) other financial or other information or certification
as the Lender may reasonably request;
(b) to maintain and preserve its corporate existence;
<PAGE> 3
(c) to file all federal and state tax income and other returns
(including, without limitation, withholding tax returns) which
are required and make payments as required of such taxes;
provided, however, that the undersigned shall not be required
to pay any such tax so long as the validity thereof is being
contested in good faith by appropriate proceedings and
adequate book reserves shall have been set aside with respect
thereto;
(d) to permit the Lender and its representatives at reasonable
times and intervals and upon reasonable notice to visit the
undersigned's offices and inspect the undersigned's books and
records and solely with respect to any examination made after
the occurrence and during the continuance of an Event of
Default, reimburse the Lender for all examination fees and
expenses incurred in connection with such examinations at its
then current rate for such services and for its out-of-pocket
expenses incurred in connection therewith;
(e) to maintain in full force and effect all of its material
rights, licenses, certifications, franchises and comply with
all applicable laws and regulations necessary to enable it to
conduct its business;
(f) not to create security interests or mortgages encumbering the
undersigned's assets except: (i) security interests in favor
of the Lender; (ii) other security interests described on
Schedule 6(f) attached hereto and incorporated herein by
reference; or (iii) security interests created in connection
with capitalized lease obligations or other purchase money
indebtedness but only to the extent that: (A) such security
interest attaches only to the assets then being acquired by
the undersigned, did not and does not attach to the
undersigned's current assets and does not secure any other
indebtedness; (B) no Default or Event of Default has occurred
and is continuing at the time of the proposed creation of such
security interest or would result therefrom; and (C) the
indebtedness intended to be secured by such security interest
is permitted by Section 6(g);
(g) not to create, incur, assume or suffer to exist any
indebtedness except: (i) the indebtedness under this guaranty
or any other Loan Document; (ii) current liabilities (other
than borrowed money) incurred in the ordinary course of
business; (iii) other indebtedness described in the January
31, 1998 balance sheet delivered to the Lender or on Schedule
6(g) attached hereto and incorporated herein by reference; or
(iv) capitalized lease obligations or purchase money
indebtedness incurred in connection with the acquisition of
equipment, but only to the extent that: (A) the aggregate
amount of such indebtedness does not exceed the lesser of: (1)
$250,000.00; or (2) the maximum amount of indebtedness which
the undersigned could then occur without violating Section
6(n) while maintaining its ability, after giving effect to the
indebtedness which the undersigned then proposes to incur,
additional indebtedness equal to the sum of the entire undrawn
amount of the Line of Credit plus $1.00; and (B) no Default or
Event of Default has occurred and is continuing at the time of
the proposed incurrence of such indebtedness or would result
therefrom;
(h) not to lease or sell all or any substantial portion of its
property and business to any other entity or entities, whether
in one transaction or a series of related transactions;
(i) not consolidate with or merge into or with any other entity or
entities;
(j) not to declare or pay any dividends or distributions,
purchase, redeem, retire or otherwise acquire for value any of
the undersigned's stock (or any warrant or option to purchase
any such partnership) now or hereafter outstanding, or return
any capital to its stockholders as such;
<PAGE> 4
(k) not to assume, guarantee, endorse or otherwise become liable
upon the obligation of any person, firm or corporation except
by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business, nor sell any
notes or accounts receivable with or without recourse;
(l) engage in any business other than the businesses engaged in on
the date of this guaranty;
(m) not to change its United States citizenship as determined by
46 C.F.R. ss.67.39;
(n) maintain, at all times, its Net Worth at not less than
$2,000,000.00. "Net Worth means, at any date of determination,
the difference between: (i) the total assets appearing on the
undersigned's balance sheet at such date prepared in
accordance with GAAP, after deducting adequate reserves in
each case where, in accordance with GAAP, a reserve is proper;
and (b) the total liabilities (the "Total Liabilities")
appearing on such balance sheet where the Borrower's assets
and liabilities are consolidated with the undersigned's other
assets and liabilities; and/or
(o) permit, at any time, its ratio of Total Liabilities to Net
Worth to be more than 4 to 1;
7. The undersigned will pay or reimburse the Lender for all costs
and expenses (including reasonable attorneys' fees and legal expenses) incurred
by the Lender in connection with the protection, defense or enforcement of this
guaranty, whether or not suit is commenced, which attorneys' fees and legal
expenses shall include, but not be limited to, any attorneys' fees and legal
expenses incurred in connection with any appeal of a lower court's judgment or
order.
8. This guaranty is unsecured.
9. Whether or not any existing relationship between the
undersigned and Borrower has been changed or ended and whether or not this
guaranty has been revoked, the Lender may, but shall not be obligated to, enter
into transactions resulting in the creation or continuance of Indebtedness,
without any consent or approval by the undersigned and without any notice to the
undersigned. The liability of the undersigned shall not be affected or impaired
by any of the following acts or things: (i) any acceptance of collateral
security, guarantors, accommodation parties or sureties for any or all
Indebtedness; (ii) any one or more extensions or renewals of Indebtedness
(whether or not for longer than the original period) or any modification of the
interest rates, maturities or other contractual terms applicable to any
Indebtedness; (iii) any waiver or forbearance granted to Borrower, any delay or
lack of diligence in the enforcement of Indebtedness, or any failure to
institute proceedings, file a claim, give any required notices or otherwise
protect any Indebtedness; (iv) any full or partial release of, settlement with,
or agreement not to sue, Borrower or any other guarantor or other person liable
in respect of any Indebtedness; (v) any discharge of any evidence of
Indebtedness or the acceptance of any instrument in renewal thereof or
substitution therefor; (vi) any failure to obtain collateral security (including
rights of setoff) for Indebtedness, or to see to the proper or sufficient
creation and perfection thereof, or to establish the priority thereof, or to
protect, insure, or enforce any collateral security; or any modification,
substitution, discharge, impairment, or loss of any collateral security; (vii)
any foreclosure or enforcement of any collateral security; (viii) any transfer
of any Indebtedness or any evidence thereof; (ix) any order of application of
any payments or credits upon Indebtedness; (x) any election by the Lender under
ss. 1111(b)(2) of the United States Bankruptcy Code.
10. The undersigned waive(s) any and all defenses and claims of
Borrower, or any other obligor pertaining to Indebtedness, except the defense of
discharge by payment in full. Without limiting the generality of the foregoing,
the undersigned will not assert, plead or enforce against the Lender any defense
of waiver, release, discharge in bankruptcy, statute of limitations, res
judicata, statute of frauds, anti-deficiency statute, fraud, incapacity,
minority, usury, illegality or unenforceability which may be available to
Borrower or to any other person liable for any Indebtedness. The undersigned
expressly agree(s) that the undersigned shall be and remain liable for any
deficiency
<PAGE> 5
remaining after foreclosure of any mortgage or security interest securing
Indebtedness, whether or not the liability of Borrower or any other obligor for
such deficiency is discharged pursuant to statute or judicial decision.
11. The undersigned waive(s) presentment, demand for payment,
notice of dishonor or nonpayment and protest of any instrument evidencing
Indebtedness. The Lender shall not be required first to resort for payment of
the Indebtedness to Borrower or other persons or their properties or first to
enforce, realize upon or exhaust any collateral security for indebtedness,
before enforcing the guaranty.
12. If any payment applied by the Lender to Indebtedness is
thereafter set aside. recovered, rescinded or required to be returned for any
reason (including, without limitation, the bankruptcy, insolvency or
reorganization of Borrower or any other obligor), the Indebtedness to which such
payment was applied shall for the purposes of this guaranty be deemed to have
continued in existence, notwithstanding such application, and this guaranty
shall be enforceable as to such Indebtedness as fully as if such application had
never been made.
13. The undersigned acknowledges and agrees that the Lender (a)
has not made any representations or warranties with respect to, (b) does not
assume any responsibility to the undersigned for, and (c) has no duty to provide
information to the undersigned regarding, the enforceability of any of the
Indebtedness or the financial condition of the Borrower or any guarantor. The
undersigned has independently determined the creditworthiness of the Borrower
and the enforceability of the Indebtedness and until the Indebtedness is paid in
full will independently and without reliance on the Lender continue to make such
determinations.
14. The liability of the undersigned under this guaranty is in
addition to and shall be cumulative with all other liabilities of the
undersigned to the Lender as guarantor or otherwise, without any limitation as
to amount, unless the instrument or agreement evidencing or creating such other
liability specifically provides to the contrary.
15. This guaranty shall be enforceable against each person signing
this guaranty. If there be more than one signer of this guaranty or if there be
more than one guarantor of the Indebtedness, all agreements and promises herein
shall be construed to be joint and several with all other guarantors of the
Indebtedness, whether pursuant to this guaranty or separate guaranty and shall
be fully binding upon and enforceable against any or all of the undersigned and
the other guarantors. This guaranty shall be binding upon the undersigned and
the successors and assigns of the undersigned and shall inure to the benefit of
the Lender and its participants, successors and assigns. Any invalidity or
unenforceability of any provision or application of this guaranty shall not
affect other lawful provisions and application hereof, and to this end the
provisions of this guaranty are declared to be severable. This guaranty may not
be waived, modified, amended, terminated, released or otherwise changed except
by a writing signed by the undersigned and the Lender. This guaranty shall be
governed by the substantive laws (other than the law of conflicts) of the State
of Minnesota. The undersigned waive(s) notice of the Lender's acceptance hereof.
16. The undersigned hereby irrevocably submits to the jurisdiction
of any Minnesota state court or federal court over any action or proceeding
arising out of or relating to this guaranty, and the undersigned hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Minnesota state or federal court. The
undersigned hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. The undersigned irrevocably consents to the service of copies of the
summons and complaints and any other process which may be served in any such
action or proceeding by the mailing by United States certified mail, return
receipt requested, of copies of such process to the undersigned's address shown
on the signature page. The undersigned agrees that a judgment final by appeal or
expiration of time to appeal without an appeal being taken in any such action or
proceeding shall be conclusive and may be enforced in any other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
paragraph shall affect the right of the Lender to serve legal process in any
other manner permitted by law or affect the right of the Lender to bring any
action or proceeding against the undersigned or its property in the courts of
any other jurisdiction.
<PAGE> 6
17. Wherever possible, each provision of this guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this guaranty. In any action or proceeding involving any
state corporate law, or any state or federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of the undersigned hereunder would otherwise be held or determined
to be void, invalid or unenforceable on account of the amount of the
undersigned's liability under this guaranty, then, notwithstanding any other
provision of this guaranty to the contrary, the amount of such liability shall,
without any further action by the undersigned, the Lender or any other person,
be automatically limited and reduced to the highest amount which is valid and
enforceable as determined in such action or proceeding.
18. THE UNDERSIGNED HEREBY EXPRESSLY WAIVE(S) ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER
THIS GUARANTY OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (b)
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND
AGREE(S) THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 7
IN WITNESS WHEREOF, this guaranty has been duly executed by the
undersigned this 17th day of March, 1998.
Concorde Gaming Corporation
By: /s/ Jerry L. Baum
------------------------------------
Its: President
------------------------------------
Address: 3290 Lien Street
Rapid City, SD 57709-0505
Attention:_______________
Telecopy No. (605) 342-0247
Subscribed and sworn to before me
this ____ day of March, 1998.
- ----------------------------------
Notary Public
<PAGE> 8
Schedule 6(f)
Existing Security Interests
<PAGE> 9
Schedule 6(g)
Existing Indebtedness
<PAGE> 1
EXHIBIT 10.4
$500,000 PROMISSORY NOTE Rapid City, South Dakota
November 11, 1997
FOR VALUE RECEIVED, CONCORDE GAMING CORPORATION ("MAKER"), a Colorado
corporation with its principal place of business at 3290 Lien Street, Rapid
City, South Dakota, promises to pay to the order of BHL CAPITAL CORPORATION
("HOLDER"), a South Dakota corporation with its principal place of business at
3290 Lien Street, Rapid City, South Dakota, on demand after 90 days from the
date of this Promissory Note the sum of Five Hundred Thousand and no/100 Dollars
($500,000.00) together with interest at the rate of 18% per annum until paid.
MAKER shall pay HOLDER all accrued interest hereon quarterly.
The MAKER may prepay this Promissory Note in whole or in part at any
time without penalty. The validity, construction and enforceability of, and the
rights and obligations of the MAKER and HOLDER under this Note shall be governed
by, construed and enforced in accordance with the laws of the State of South
Dakota.
The undersigned waives demand, presentment, notice of non-payment,
protest, notice of protest and notice of dishonor. The makers, endorsers,
sureties and guarantors hereof hereby severally waive presentment for payments,
notice of non-payment, protest and notice of protest. Time is of the essence. No
delay or omission on the part of the HOLDER in exercising any right hereunder
shall operate as a waiver of such right or of any other remedy under this
Promissory Note. A waiver on any one occasion shall not be construed as a bar to
or waiver of any such right on a future occasion.
In the event that this Note is placed in the hands of attorneys for
collection after default, the undersigned agrees to pay in addition to the
principal and interest, all attorney's fees and collection costs (including
attorney's fees and collection costs incurred in realizing upon any collateral
securing this Note) incurred in collecting any amounts due under this Note.
The undersigned hereby severally agree to pay all costs for any
collections necessary.
CONCORDE GAMING CORPORATION
(MAKER)
By: Jerry L. Baum
Its: President
Signature: /s/ Jerry L. Baum
------------------------------
Jerry L. Baum
<PAGE> 1
EXHIBIT 10.5
$290,000.00 DEMAND NOTE Rapid City, South Dakota
December 23, 1997
FOR VALUE RECEIVED, CONCORDE GAMING CORPORATION ("MAKER"), a Colorado
corporation with its principal place of business at 3290 Lien Street, Rapid
City, South Dakota, promises to pay to the order of BHL CAPITAL CORPORATION
("HOLDER"), a South Dakota corporation with its principal place of business at
3290 Lien Street, P.O. Box 505, Rapid City, South Dakota 57709, on demand in
immediately available funds the sum of Two Million Hundred Ninety Thousand and
No/100 Dollars ($290,000.00) together with interest on the outstanding amount
thereof at the following rate: an annual interest rate of eighteen percent (18%)
which shall be paid monthly on the last day of each month.
The Maker may prepay this Note in whole or in part at any time without
penalty.
In the event of default hereunder the undersigned agrees that HOLDER
shall have all rights reserved herein, including all expenses of collection. In
the event that this Note is placed in the hands of attorneys for collection
after default, the undersigned agrees to pay in addition to the principal and
interest, all attorney's fees and collection costs (including attorney's fees
and collection costs incurred in realizing upon any collateral securing this
Note) incurred in collecting any amounts due under this Note.
The undersigned waives demand, presentment, notice of non-payment,
protest, notice of protest and notice of dishonor.
The makers, endorsers, sureties and guarantors hereof hereby severally
waive presentment for payments, notice of non-payment, protest and notice of
protest. The payment schedule may be extended at the option of HOLDER of this
note.
The undersigned hereby severally agree to pay all costs for any
collections necessary.
CONCORDE GAMING CORPORATION
(MAKER)
By: David L. Crabb
Its: Treasurer
Signature: /s/ David L. Crabb
------------------------------
BHL CAPITAL CORPORATION
(HOLDER)
By: Kenneth Berger
Its: Executive Vice President
Signature: /s/ Kenneth Berger
------------------------------
<PAGE> 1
EXHIBIT 10.6
$500,000 Rapid City, South Dakota
March 6, 1998
PROMISSORY NOTE
FOR VALUE RECEIVED, CONCORDE GAMING CORPORATION and CONCORDE CRIPPLE
CREEK, INC. ("CO-MAKERS"), both Colorado corporations with their principal
places of business being at 3290 Lien Street, Rapid City, South Dakota, promises
to pay to the order of BRUCE H. LIEN ("HOLDER"), an individual with his
principal place of business at 3290 Lien Street, Rapid City, South Dakota 57702,
the sum of Five Hundred Thousand and No/100 Dollars ($500,000) together with
interest equal to the Reference Rate quoted by BNC National Bank, plus 3.5%.
Co-Makers shall make eleven (11) monthly payments of Eight Thousand Five Hundred
and No/100 Dollars ($8,500), plus interest, with the first monthly payment due
April 6, 1998. The entire unpaid principal and accrued and unpaid interest
hereon shall be due and payable in full on March 5, 1999.
The Co-Makers may prepay this Note in whole or in part at any time
without penalty.
In the event of default hereunder the undersigned agrees that HOLDER
shall have all rights reserved herein, including all expenses of collection. The
undersigned waives demand, presentment, notice of non-payment, protest, notice
of protest and notice of dishonor.
The makers, endorsers, sureties and guarantors hereof hereby severally
waive presentment for payments, notice of non-payment, protest and notice of
protest. The amount loaned by HOLDER shall be at HOLDER'S discretion and will
not exceed Six Hundred Ninety Thousand and No/100 Dollars. Payment schedule may
be extended at the option of HOLDER of this note.
The undersigned hereby severally agree to pay all costs for any
collections necessary.
CONCORDE GAMING CORPORATION
(CO-MAKER)
By: Jerry L. Baum
Its: President
Signature: /s/ Jerry L. Baum
------------------------------
CONCORDE CRIPPLE CREEK, INC.
(CO-MAKER)
By: Jerry L. Baum
Its: President
Signature: /s/ Jerry L. Baum
------------------------------
BRUCE H. LIEN
(HOLDER)
/s/ Bruce H. Lien
-----------------------------------------
Bruce H. Lien
<PAGE> 1
EXHIBIT 10.7
AGREEMENT
Agreement made effective November 7, 1997, between BHL Capital
Corporation ("BHL Capital"), a South Dakota corporation having its principal
office at 3290 Lien Street, P.O. Box 505, Rapid City, South Dakota 57709, and
Concorde Gaming Corporation (and its wholly-owned subsidiaries, collectively
"Concorde'), having its principal office at 3290 Lien Street, Rapid City, South
Dakota.
RECITALS
WHEREAS, Concorde is engaged in the general business of owning and
operating gaming companies, one of which is a partner in a joint venture ("Joint
Venture") in Miami, Florida, that intends to own and operate a gaming vessel off
the coast of Florida; and
WHEREAS, Concorde desires to obtain funds and commercial credit for
operation of its business against its future revenues from the Joint Venture and
its other gaming operations; and
WHEREAS, BHL Capital has allowed Concorde to use certain real estate
that BHL Capital owns, referred to herein as "Copper Oaks", as collateral for
some of Concorde's financing with the understanding that it will receive certain
fees, as described below, for doing so.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the parties agree as follows:
1. COMPENSATION. Concorde hereby agrees to pay BHL Capital on the
first business day of each month $10,625.00 for as long as Concorde uses Copper
Oaks as collateral for Concorde's financing. The fees shall equal $349.32 per
day and the monthly payment shall be pro rata in the event Copper Oaks is
released as collateral during a partial month.
2. TAXES. If at anytime BHL Capital shall be required to pay any
state, federal, or local sales or excise tax on sales or services performed
hereunder, the amount of the tax so paid by BHL Capital shall be charged to
Concorde's account.
3. SUCCESSORS AND ASSIGNS. This agreement shall be binding upon
the parties hereto and their successors and assigns.
In witness whereof, the parties have executed this agreement at 3290
Lien Street, Rapid City, South Dakota effective the day and year first written
above.
BHL CAPITAL CORPORATION CONCORDE GAMING CORPORATION
/s/ Bruce H. Lien /s/ Jerry L. Baum
- ---------------------------------- -----------------------------------
Bruce H. Lien, President Jerry L. Baum, CEO & President
<PAGE> 1
EXHIBIT 10.8
ASSIGNMENT
For One Hundred Ten Thousand and No/100 Dollars ($110,000.00), Concorde
Gaming Corporation (the "Assignor"), a Colorado corporation, does hereby sell,
transfer, assign and set over to BHL Capital Corporation 3290 Street, P.O. Box
505, Rapid City, South Dakota 57709, its successors and assigns, all of the
Assignor's right, title and interest in and to that certain Secured Promissory
Note dated August 1, 1989 and in the amount of $460,763.00 payable to the order
of Bruce H. Lien, or his assigns, by the Super Seer Corporation, mailing address
being P.O. Box 700, Evergreen, Colorado 80439.
IN WITNESS WHEREOF, Assignors have caused this Assignment to be
executed at Rapid City, South Dakota, this 23rd day of December, 1997.
CONCORDE GAMING CORPORATION
/s/ David L. Crabb
David L. Crabb, CFO and Treasurer
Witnessed by:
--------------------
(Print Name)
--------------------
(Signature)
Date:
----------------------------
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<ARTICLE> 5
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 387,247
<SECURITIES> 0
<RECEIVABLES> 81,047
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<INVENTORY> 24,878
<CURRENT-ASSETS> 1,800,454
<PP&E> 4,233,080
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0
0
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