<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, 1999
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, February 7, 2000 there were
24,020,402 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
PART 1 - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements Page No.
--------
<S> <C>
Consolidated Balance Sheet at December 31, 1999 (unaudited) 1
Consolidated Statements of Operations for 3
Three Months Ended December 31, 1999 and 1998 (unaudited)
Consolidate Statements of Stockholders' Equity for
Three Months Ended December 31, 1999 and 1998 (unaudited) 4
Consolidated Statements of Cash Flows for 5
Three Months Ended December 31, 1999 and 1998 (unaudited)
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
<PAGE> 3
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
- ----------------------------------------------------------------------------------------------------------
Current assets
Cash and cash equivalents $ 1,573,513
Current maturities of loan receivable 31,667
Trade receivables , less allowance for uncollectable
accounts, $112,407 in 1999 and $7,503 in 1998 544,228
Inventory 76,735
Prepaid expenses
Dock lease 337,500
Other 432,895
Deferred income taxes 139,000
-----------
TOTAL CURRENT ASSETS 3,135,538
-----------
Investments and long-term receivables
Loan receivable from related party 55,417
Other 201,896
-----------
257,313
-----------
Property and equipment
Land 1,097,080
Vessel 8,110,267
Gaming equipment, fixtures and furniture 3,786,077
Vehicles 41,320
Leasehold improvements 253,787
-----------
13,288,531
Less accumulated depreciation and amortization (1,285,635)
-----------
12,002,896
-----------
Intangibles and other
Dock rights, net 275,134
Other, principally goodwill, net 730,967
Deferred financing costs, net 280,832
-----------
1,286,933
-----------
$16,682,680
===========
</TABLE>
See Notes to Consolidated Financial Statements.
1
<PAGE> 4
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------
Current liabilities
Current maturities of long-term debt $ 904,971
Accounts payable 380,454
Accrued expenses
Payroll and payroll taxes 257,566
Accrued interest 74,473
Other 825,573
Income taxes payable 111,011
-----------
TOTAL CURRENT LIABILITIES 2,554,048
-----------
Long-term debt, less current maturities 7,732,411
-----------
Note payable to related party 5,234,310
-----------
Stockholders' equity
Common stock, par value $.01 per share, authorized
500,000,000 shares; issued and outstanding 24,020,402
at December 31, 1999 and 23,673,126 at December 31, 1998 240,204
Preferred stock, par value $.01 per share, authorized
standing at December 31, 1999 and 1998 -
Additional paid-in capital 3,888,576
Accumulated deficit (2,966,869)
-----------
1,161,911
-----------
$16,682,680
===========
</TABLE>
2
<PAGE> 5
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues
Casino $3,870,107 $ 2,761,894
Food and beverage 496,931 311,528
Other 524,073 334,648
---------- -----------
GROSS REVENUES 4,891,111 3,408,070
Less: promotional allowance 767,109 413,566
---------- -----------
NET REVENUES 4,124,002 2,994,504
---------- -----------
Costs and expenses:
Casino 2,413,872 1,231,708
Food and beverage 316,037 375,772
Management fees, to minority partner, related party 155,367 90,000
Selling, general and administrative 1,349,203 1,449,639
Depreciation and amortization 250,555 254,284
Pre-opening and start-up costs - 540,952
---------- -----------
4,485,034 3,942,355
---------- -----------
LOSS FROM OPERATIONS (361,032) (947,851)
---------- -----------
Other income (expense):
Interest income 14,566 13,980
Other income 4,324 11,512
Interest expense and financing costs:
Related parties (242,169) (250,689)
Other (239,601) (241,494)
---------- -----------
(462,880) (466,691)
---------- -----------
LOSS BEFORE INCOME TAXES (823,912) (1,414,542)
Federal and state income tax benefit - (108,300)
---------- -----------
NET LOSS $ (823,912) $(1,306,242)
========== ===========
Basic and diluted loss per share: $ (0.03) $ (0.06)
========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 6
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Retained
Additional earnings
Number Common paid-in (accumulated
of shares stock capital deficit) Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance September 30, 1998 23,673,126 236,731 3,855,246 (1,173,404) 2,918,573
Net loss - - - (1,306,241) (1,306,241)
---------- -------- ---------- ----------- -----------
Balance December 31, 1998 23,673,126 $ 236,731 $ 3,855,246 $ (2,479,645) $ 1,612,332
---------- -------- ---------- ----------- -----------
Net loss - - - 336,688 336,688
Issuance of 140,260 shares of common
stock relating to stock options exercised 140,260 1,403 19,636 - 21,039
Issuance of 187,016 shares of common
stock relating to stock bonuses 187,016 1,870 10,894 - 12,764
Issuance of 10,000 shares of common
stock relating to stock options exercised 10,000 100 1,400 - 1,500
---------- -------- ---------- ----------- -----------
Balance September 30, 1999 24,010,402 $ 240,104 $ 3,887,176 $ (2,142,957) $ 1,984,323
---------- -------- ---------- ----------- -----------
Net loss - - - (823,912) (823,912)
Issuance of 10,000 shares of common
stock relating to stock options exercised 10,000 100 1,400 - 1,500
---------- -------- ---------- ----------- -----------
Balance December 31, 1999 24,020,402 $240,204 $3,888,576 $(2,966,869) $ 1,161,911
========== ======== ========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 7
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (823,912) $(1,306,242)
Adjustments to reconcile net (loss) to net cash flows
provided by (used in) operating activities:
Note payable incurred for payment of accrued interest 76,557 -
Depreciation and amortization 250,555 254,284
Provision for doubtful accounts 9,662 -
Change in assets and liabilities:
Decrease (increase) in trade receivables 294,736 (66,573)
Decrease (increase) in prepaid expenses and inventory 37,099 (621,216)
Increase (decrease) in accounts payable and accrued expenses 208,234 (2,068,842)
Increase (decrease) in income taxes payable 111,011 (57,872)
---------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 163,942 (3,866,461)
---------- -----------
Cash flows from investing activities:
Purchase of property and equipment (66,629) (347,562)
Purchase of intangibles (43,750) -
Principal payments on loan receivable from related party 7,916 -
Decrease (increase) in other assets 31,237 (349,779)
---------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (71,226) (697,341)
---------- -----------
Cash flows from financing activities:
Net change in short-term borrowings, related parties - (75,500)
Proceeds from long-term borrowings:
Related parties 150,000 1,775,000
Other - 9,991,097
Principal payments on long-term borrowings, other (216,340) (6,242,622)
Principal payments on long-term borrowings, related parties (519,703) -
---------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (586,043) 5,447,975
---------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (493,327) 884,173
Cash and cash equivalents:
Beginning 2,066,840 714,764
---------- -----------
Ending $1,573,513 $ 1,598,937
========== ===========
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $ 548,040 $ 693,064
Income taxes - -
Supplemental Schedule of Noncash Investing and Financing Activities
Acquisition of property and equipment by incurring accounts payable - 43,380
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 8
CONCORDE GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(unaudited)
(1) Summary of Significant Accounting Policies:
Interim Financial Statements
The accompanying unaudited 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, 1999 are not necessarily indicative of
the results that may be expected for the year ending September 30,
2000.
The accompanying 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, 1999 included in the Company's 1999 Annual Report
on Form 10-KSB.
Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
December 31, 1999 December 31, 1998
----------------------------------------- -----------------------------------------
Loss Shares Loss Loss Shares Loss
(numerator) (denominator) Per Share (numerator) (denominator) Per Share
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
--------- ------ ----------- ------
Net loss ($823,912) 24,020,402 ($0.03) ($1,306,242) 23,673,126 ($0.06)
========= ====== =========== ======
Effect of dilutive securities
Options - -
Diluted EPS
--------- ---------- ------ ----------- ---------- ------
Net loss plus assumed
conversion of options ($823,912) 24,020,402 ($0.03) ($1,306,242) 23,673,126 ($0.06)
========= ========== ====== =========== ========== ======
</TABLE>
(2) Obligations to Bayfront Ventures
In October, 1998, Princesa Partners entered into a Loan Agreement and
Security Agreement with a group of lenders, which provided $8,400,000
in financing for the Princesa, related equipment and working capital
(the "Vessel Loan"). The Vessel Loan is secured by a ship mortgage and
all related furniture, furnishings, machinery and equipment (including
gaming equipment) owned by Casino Princesa or Princesa Partners. In
addition, Casino Princesa, the Company, Goldcoast and certain
individuals, including Mr. Bruce Lien, guaranteed the Vessel Loan. The
Vessel Loan bears interest at 10.375% with interest only payments
through January 1999. Monthly payments of $130,258, including interest,
commence February 1999 for sixty consecutive months, with the remaining
balance due January 2004. The Vessel Loan also requires mandatory
prepayment of principal in an amount equal to 12% of the amount of
Excess Revenue (as defined below) for each fiscal year, commencing
January 2000. Excess Revenue as defined in the Vessel Loan is the
excess of (i) the combined earnings of Princesa Partners and Casino
Princesa before taxes, depreciation and amortization minus the
principal and interest paid on the Vessel Loan during the fiscal year,
over (ii) $4,000,000. The Vessel Loan contains typical covenants with
respect to Princesa Partners and Casino Princesa, including net worth
restrictions, debt service requirements and limitations on the amount
of debt that can be incurred.
6
<PAGE> 9
(3) Segment Information
The Company's reportable segments are strategic business units that
offer similar products and services at separate geographical locations.
They are managed separately because each business requires different
technology and marketing strategies.
There are two reportable segments: the Casino Princesa and Golden Gates
Casino. The Casino Princesa is an offshore gaming vessel which sails
out of Miami, Florida. The Golden Gates Casino is located in Black
Hawk, Colorado.
The accounting policies applied to determine the segment information
are the same as those described in the summary of significant
accounting policies. The interest expense of each segment is
specifically identifiable to debt directly incurred to acquire the
segment's assets. No intercompany allocations or intersegment sales and
transfers have been made.
Management evaluates the performance of each segment based on profit or
loss from operations before income taxes, exclusive of nonrecurring
gains and losses.
Financial information in $1,000's with respect to the reportable
segments is as follows:
<TABLE>
<CAPTION>
Casino Princesa Golden Gates Total
1999 1998 1999 1998 1999 1998
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Casino $3,021 $1,659 $849 $1,103 $3,870 $ 2,762
Food and beverage 474 244 23 68 497 312
Other 507 325 17 10 524 335
------ ------- ---- ------ ------ -------
Gross revenues 4,002 2,228 889 1,181 4,891 3,409
Less promotional allowance 751 392 16 22 767 414
------ ------- ---- ------ ------ -------
Net revenues 3,251 1,836 873 1,159 4,124 2,995
------ ------- ---- ------ ------ -------
Cost and expenses
Casino 1,837 565 577 667 2,414 1,232
Food and beverage 290 311 27 65 317 376
Management fees 155 90 - - 155 90
Selling, general and administrative 914 1,009 208 250 1,122 1,259
Depreciation and amortization 165 176 70 58 235 234
Pre-opening and start-up costs - 541 - - - 541
Interest expense 220 260 20 13 240 273
------ ------- ---- ------ ------ -------
Total costs and expenses 3,581 2,952 902 1,053 4,483 4,005
====== ======= ==== ====== ====== =======
Segment profit (loss) $ (330) $(1,116) $(29) $ 106 $ (359) $(1,010)
====== ======= ==== ====== ====== =======
</TABLE>
7
<PAGE> 10
The following schedule is presented to reconcile amounts in the
foregoing segment information to the amounts reported in the Company's
consolidated financial statements.
<TABLE>
<CAPTION>
1999 1998
--------------------------
<S> <C> <C>
REVENUES
Segment net revenue $4,124 $ 2,995
Other - -
------ -------
Consolidated net revenue 4,124 2,995
====== =======
PROFIT
Total loss of reportable segments $ (119) $ (737)
Unallocated amounts:
Income (824)
Interest income 15 14
Other 3 12
------ -------
Total income items 18 (798)
------ -------
Expense
General and administrative 226 192
Business development - -
Other 15 20
Corporate interest 482 492
------ -------
Total expense items 723 704
------ -------
Consolidated net loss before income taxes $ (824) $(2,239)
====== =======
</TABLE>
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
Concorde Gaming Corporation (the "Company"), through a wholly-owned
subsidiary, Concorde Cripple Creek, Inc., a Colorado corporation, owns and
operates the Golden Gates Casino ("Golden Gates Casino"), a limited stakes
casino in Black Hawk, Colorado, and, through wholly-owned subsidiaries, Concorde
Cruises, Inc., a South Dakota corporation ("Concorde Cruises") and Conami, Inc.,
a Florida corporation ("Conami") owns an 80% interest in two joint ventures,
Bayfront Ventures, a Florida general partnership which conducts business under
the name Casino Princesa (the "Casino Princesa") and Princesa Partners, a
Florida general partnership ("Princesa Partners"), which owns and operate an
offshore gaming vessel (the "Princesa") from Bayfront Park, Miami, Florida.
Concorde Cruises owns an 80% interest in Casino
8
<PAGE> 11
Princesa and Conami owns an 80% interest in Princesa Partners. Princesa Partners
owns the Princesa and pursuant to a Charter Agreement (the "Charter") dated
October 2, 1998, charters the Princesa to the other joint venture, Bayfront
Ventures, which does business as the "Casino Princesa". The Casino Princesa
commenced operations in October, 1998.
Prior to June 1997, the Company was primarily engaged in the operation
of a video lottery route operation in South Dakota and prior to February 1997,
the Company also managed the 4 Bears Casino and Lodge in North Dakota. The
Company was incorporated as a Colorado corporation on September 1, 1976.
RESULTS OF OPERATIONS
Three Months ended December 31, 1999 Compared to Three Months ended December 31,
1998:
Revenues
Net revenues increased 38% to $4,124,002 for the three months ended
December 31, 1999, compared to $2,994,504 for the three months ended December
31, 1998.
Casino Princesa
Casino Princesa net revenues increased 77% to $3,251,540 for the
three months ended December 31, 1999 as a result of increased passengers,
compared to revenues of 1,835,630 for the three months ended December 31, 1998.
Golden Gates
Golden Gates net revenues decreased 25% to $872,462 for the three
months ended December 31, 1999, compared to revenues of $1,158,874 for the three
months ended December 31, 1998, primarily as a result of problems created
arising from the use of the casino's parking lot as a construction staging area
for the construction of a new covered parking structure. The temporary loss of
parking for the casino's customers during the construction of the parking garage
has adversely impacted customer flow and hence revenues.
Costs and Expenses
Total costs and expenses increased 14% to $4,485,034 for the three
months ended December 31, 1999, compared to $3,942,355 for the three months
ended December 31, 1998.
Casino Princesa
Casino expenses for Casino Princesa were $1,836,695 for the three
months ended December 31, 1999, compared to $564,720 for the Princesa's initial
three months of operation ended December 31, 1998. The change in casino expenses
can be effectively compared when pre-opening and start-up costs are added to the
December 31, 1999 casino expenses ($564,720 + $540,952 = $1,105,672) The
resulting comparison is a 66% increase in casino expenses over the comparable
quarter. The increase in expenses was caused by the Casino Princesa operating on
a full time basis. Food and beverage expenses for Casino Princesa decreased 7%
to $289,577 for the three months ended December 31, 1999, compared to $311,227
for the Princesa's initial three months of operation ended December 31, 1998 due
to operational efficiencies. Management fees to Goldcoast related to Casino
Princesa, paid in accordance with the Joint Venture Agreement, were $155,367 for
the three months ended December 31, 1999, compared to $90,000 for the three
months ended December 31, 1998 as a result of increased revenue. Selling,
general and administrative expenses were $914,545 for the three months ended
December 31, 1999, compared to $1,009,330 for the three months ended December
31, 1998 due to establishment of systems for expense control within the
organization. Depreciation and amortization decreased 6% to $165,345 for the
three months ended December 31, 1999, compared to $176,445 for the three months
ended December 31, 1998, primarily as a result of establishment of long term
depreciation and capitalization guidelines for the Casino Princesa. Pre-opening
and start-up costs, primarily related to Casino Princesa, were $0 for the three
months ended December 31, 1999, compared to $540,952 for the three months ended
December 31, 1998.
Golden Gates
Casino expenses for Golden Gates decreased 13% to $577,177 for the
three months ended December 31, 1999, compared to $666,988 for the three months
ended December 31, 1998, primarily due to the decrease in revenues. Food and
beverage expenses decrease 59% to $26,460 for the three months ended December
31, 1999, compared to $64,545 for the three months ended December 31, 1998,
primarily due to the restaurant being subleased and operated by a third party.
Selling, general and administrative expenses decreased 17% to $207,330 for the
three months ended December 31, 1999, compared to $249,718 for the three months
ended December 31, 1998. The change is directly related to the decrease in
9
<PAGE> 12
revenues. Depreciation and amortization increased 20% to $70,084 for the three
months ended December 31, 1999, compared to $58,297 for the three months ended
December 31, 1998 primarily as a result of the acquisition of fixed assets.
Other Income and Expense. Interest expense and financing costs to
related parties decreased to $242,169 for the three months ended December 31,
1999, compared to $250,689 for the three months ended December 31, 1998. Other
interest and financing costs decreased to $239,601 for the three months ended
December 31, 1999, compared to $241,494 for the three months ended December 31,
1998.
Federal and State Income Taxes. The Company recorded a Federal and
State income tax benefit of $0 for the three months ended December 31, 1999,
compared to a benefit of $108,300 for the three months ended December 31, 1998.
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 $1,573,513 at December 31,
1999, compared to $2,066,840 at September 30, 1998, a decrease of $493,327.
During the three months ended December 31, 1999, the Company provided
cash flow from operating activities of $163,942, compared to cash used of
$3,866,461 during the three months ended December 31, 1998.
Investing activities used cash of $71,226 during the three months ended
December 31, 1999, compared to $697,341 during the three months ended December
31, 1998. The Company used $66,629 during the three months ended December 31,
1999 for the acquisition of property and equipment, compared to $347,562 during
the three months ended December 31, 1998.
Financing activities used cash of $586,043 during the three months
ended December 31, 1999, compared to cash provided of $5,447,975 during the
three months ended December 31, 1998. Long-term borrowings from related parties
provided $150,000 for the three months ended December 31, 1999, compared to
$1,775,000 for the three months ended December 31, 1998. Long-term borrowings
from other sources provided $0 during the three months ended December 31, 1999,
compared to $9,991,097 during the three months ended December 31, 1998.
Short-term borrowings with related parties were reduced by $0 during the three
months ended December 31, 1999, while short-term borrowings with related parties
were reduced by $75,500 during the three months ended December 31, 1998.
Principal payments on long-term debt with related parties were $519,703 for the
three months ended December 31, 1999, compared to $0 for the three months ended
December 31, 1998. Principal payments on long-term debt from other sources were
$216,340 during the three months ended December 31, 1999, compared to $6,242,622
during the three months ended December 31, 1998.
Future Operations
The Company's ability to meet its working capital requirements is
dependent, in part, upon the future operations of the Casino Princesa, which
commenced operations in October 1998. On February 3, 2000, the Casino Princesa
closed on a $500,000 line of credit from The National City Bank of Evansville,
Indiana. Advances made on this line of credit will incur interest at prime plus
one percent. This line of credit is secured by the separate guarantees of
Princesa Partners and the Company, in addition to a security interest in
furniture, fixtures and equipment pursuant to a security agreement Princesa
Partners and Casino Princesa and a preferred ship mortgage on the Princesa with
Princesa Partners. The Company believes that cash flow from the Casino Princesa
and the Golden Gates Casino combined with its existing financing arrangements
and the $500,000 line of credit will be sufficient to meet its current working
capital requirements.
Factors Affecting the Company's Business and Prospects
There are many factors that affect the Company's business and the
results of its operations, some of which are beyond the control of the Company.
The following is a description of some of the important factors that may cause
the actual results of the Company's operations in future periods to differ from
those currently expected or desired.
10
<PAGE> 13
o The Company has incurred a significant amount of indebtedness and, although
the Company's cash flow from operations is currently sufficient to fund
debt service related thereto, it can give no assurances that future cash
flow from operations will continue to be sufficient to fund debt service.
o Due to the current indebtedness, the Company's ability to obtain additional
financing in the future and the Company's flexibility in reacting to
changes in the industry and economic conditions generally may be limited.
o The Company's success is partially dependent on its ability to anticipate
changing products and amenities and to efficiently develop and introduce
new products and amenities that will gain customer acceptance. If the
Company is unable to anticipate and introduce such products and amenities,
such inability may have an adverse effect on the Company's business.
o Claims have been brought against the Company and its subsidiaries in
various legal proceedings, and additional legal and tax claims arise from
time to time. It is possible that the Company's cash flows and results of
operations could be affected by the resolution of these claims.
o The Company operates in a very competitive environment, particularly in
Colorado. The growth in the number of slot machines inventory in Black
Hawk, Colorado, which is expected to increase substantially in 2000, and
the spread of legalized gaming in other states and countries, could
negatively affect our operating results.
o The Company's gaming operations in Colorado are highly regulated by
governmental authorities. Changes in applicable laws or regulations could
have a significant effect on our operations.
o The day cruise industry in Florida is not currently subject to regulation
by the state of Florida. However, the Florida Attorney General has filed
suit against one day cruise operator seeking to require it to eliminate its
slot machines, blackjack, dice and roulette tables. If successful, the
Florida Attorney General may file or seek to file suit against other day
cruise operators operating out of Florida. If the Florida Attorney
General's efforts are successful this could have a material adverse effect
on the operations of the Casino Princesa.
o The Company's gaming operations are subject to weather related seasonal
fluctuations. Revenues and cash flow of both the Colorado and Florida
operations are generally better during the Company's third and fourth
quarters when weather and travel conditions are generally most favorable.
o The Company's business is affected by changes in local, national and
international general economic and market conditions in the locations where
it operates and where its customers live. The Casino Princesa is
particularly affected by the economic situation in Latin America and South
America. Changes in economic conditions could have a material adverse
effect on the Company's business.
o From time to time, various state and federal legislators and officials have
proposed changes in tax laws, or in the administration of the law,
affecting the gaming industry. It is not possible to determine with
certainty the likelihood of possible changes in tax law or its
administration. These changes, if adopted, could have a material negative
effect on the Company's operating results.
o The Company's success is partially dependent on attracting and retaining
highly qualified management and gaming personnel. The Company's inability
to recruit or retain such personnel could adversely affect its business.
o The operation and passenger count of the Casino Princesa is directly
affected by weather conditions. Rain, high seas caused by winds, hurricanes
and tropical storms adversely affect daily passenger counts and may cause
the cancellation of day cruises.
11
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 15, 1999, the Association for Disabled Americans, Inc., The
Coral Springs Advocacy Committee for the Handicapped, Inc., Daniel Ruiz, Jorge
Luis Rodriquez, Ernst Rosenkrantz and Robert Cohen filed a lawsuit against the
Company and Goldcoast in the United States District Court for the Southern
District of Florida alleging violations of the Americans with Disabilities Act
(the "ADA") with respect to the Princesa and the facilities at which the
Princesa docks. The lawsuit seeks injunctive relief including an order requiring
modifications to the Princesa and the docking facilities to comply with the ADA,
and the closure of the Princesa and the docking facilities until such
modifications are complete. Although the Company intends to defend the lawsuit
vigorously, the impact, if any, of the lawsuit on the Company cannot at this
time be determined. The parties believe this matter will be ready for trial in
October 2000 if the matter cannot be settled. The parties are currently in
settlement negotiations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10.1* Preferred Ship Mortgage dated January 19, 2000 by Princesa
Partners in favor of The National City Bank of Evansville.
10.2* Loan Agreement dated January 18, 2000 between Bayfront
Ventures and The National City Bank of Evansville for a
$500,000 line of credit.
10.3* Security Agreement dated January 18, 2000 between Bayfront
Ventures and Princesa Partners in favor of The National
City Bank of Evansville.
10.4* Revolving Promissory Note dated January 18, 2000 payable by
Bayfront Ventures to The National Bank of Evansville.
10.5* Guaranty dated January 18, 2000 made by Princesa Partners
for the benefit of The National Bank of Evansville.
10.6* Guaranty dated January 18, 2000 made by Concorde Gaming
Corporation for the benefit of The National Bank of
Evansville.
27* Financial Data Schedule.
</TABLE>
- ----------------
* 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.
12
<PAGE> 15
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: February 7, 2000 By: /s/ Jerry L. Baum
--------------------------------------
Jerry L. Baum, Chief Executive Officer
<PAGE> 16
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10.1* Preferred Ship Mortgage dated January 19, 2000 by Princesa
Partners in favor of The National City Bank of Evansville.
10.2* Loan Agreement dated January 18, 2000 between Bayfront
Ventures and The National City Bank of Evansville for a
$500,000 line of credit.
10.3* Security Agreement dated January 18, 2000 between Bayfront
Ventures and Princesa Partners in favor of The National
City Bank of Evansville.
10.4* Revolving Promissory Note dated January 18, 2000 payable by
Bayfront Ventures to The National Bank of Evansville.
10.5* Guaranty dated January 18, 2000 made by Princesa Partners
for the benefit of The National Bank of Evansville.
10.6* Guaranty dated January 18, 2000 made by Concorde Gaming
Corporation for the benefit of The National Bank of
Evansville.
27* Financial Data Schedule.
</TABLE>
- ----------------
* Filed herewith.
<PAGE> 1
EXHIBIT 10.1
PREFERRED SHIP MORTGAGE
This Preferred Ship Mortgage is made as of January 18, 2000 by Princesa
Partners, a Florida general partnership having its principal office at 100 S.
Biscayne Boulevard, Suite 850, Miami, Florida (the "Mortgagor") in favor of The
National City Bank of Evansville, having its principal office at 227 Main
Street, Evansville, Illinois, (the "Mortgagee").
RECITALS
FIRST: The Mortgagor is the sole owner of the whole (100%) of the vessel
Princesa, official number 1073261, which is documented under and
pursuant to the laws of the United States of America.
SECOND: By the terms of a Loan Agreement dated January 18, 2000 (as amended,
modified, supplemented or restated from time to time and hereinafter
referred to as the "Loan Agreement") the Mortgagee has agreed to
extend to Bayfront Ventures a committed line of credit in an
aggregate amount not to exceed $500,000 outstanding at any one time
as evidenced by a note dated January 18, 2000 (the "Note").
THIRD: The Mortgagor has agreed to guarantee payment of Bayfront Ventures'
obligations (the "Obligations"). The guaranty is evidenced by a
Guaranty dated January 18, 2000 (hereinafter the "Guaranty").
FOURTH: Mortgagor has executed, and the vessel Princesa is subject to, a
First Preferred Ship Mortgage dated October 15, 1998.
FIFTH: The Mortgagor has duly authorized and directed the execution of this
Mortgage as a preferred ship mortgage under the Ship Mortgage Act,
1920, as amended and recodified, 46 U.S.C. Section 31321 et. seq.
(the "Ship Mortgage Act") on the said vessel.
NOW, THEREFORE, in order to secure the Guaranty and in consideration of
the premises and in order to induce the Mortgagee to make or maintain the
advances pursuant to the Loan Agreement and evidenced by the Note and in
consideration of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged:
THE MORTGAGOR hereby grants, bargains, sells, conveys, transfers,
assigns, releases, pledges, grants a security interest in, sets over,
hypothecates and mortgages unto the Mortgagee, its successors and assigns, the
whole (100%) of the vessel described on (Schedule A) attached hereto together
with all of its engines, boilers, machinery, covers, masts, bowsprits, boats,
spars, anchors, cables, chains, rigging, tackle, capstans, fittings, tools,
pumps and pumping equipment, gear, apparel, furniture, equipment, spare parts,
supplies, accessions and accessories and all other appurtenances thereunto
appertaining and belonging, whether now owned or hereafter acquired, whether on
board or not and also any and all additions, improvements and replacements
hereafter made in, for or to the Vessel, or
<PAGE> 2
any part thereof, or in or to its equipment and appurtenances aforesaid, and all
earnings, hire, freight or other monies obtained through the use and operation
thereof and all proceeds of the foregoing (all of the foregoing referred to
herein as the 'Vessel");
TO HAVE AND TO HOLD the Vessel unto the use and benefit of Mortgagee,
its successors and assigns, and to their own use and benefit forever;
PROVIDED, HOWEVER, that if Bayfront Ventures shall pay or cause to be
paid in full to Mortgagee all outstanding and unpaid Obligations, and if the
Lender shall have no obligation to advance additional funds to Bayfront Ventures
under the Loan Agreement, then upon payment by the Mortgagor of any recording or
other fees attendant to filing the satisfaction of this Mortgage with the United
States Coast Guard and thenceforth this Mortgage and everything herein contained
shall cease and be null and void; otherwise this Mortgage shall be and remain in
full force and effect; and
FURTHER PROVIDED, HOWEVER, that the Vessel is mortgaged to the
Mortgagee subject to the following further representations, warranties,
covenants, agreements, conditions and provisions of this Mortgage.
ARTICLE I
REPRESENTATIONS AND WARRANTIES
The Mortgagor hereby represents, warrants, and agrees as follows:
1.1 Mortgage is Legal, Valid and Binding. This Mortgage constitutes a
legal, valid and binding obligation of Mortgagor and, upon the filing hereof
with the United States Coast Guard National Vessel Documentation Center creates
a preferred ship mortgage in the Vessel which is enforceable against Mortgagor
in accordance with its terms.
1.2 Title to Vessel. The Mortgagor is the sole, true and lawful owner
and is lawfully possessed of the Vessel, and the Mortgagor owns all right, title
and interest in and to the Vessel free and clear of all complaints in rem,
libels, liens (maritime or otherwise), charges, claims, security interests,
mortgages or other encumbrances of any kind or nature except such as are
permitted by the terms of Section 2.10.
1.3 Citizen of United States. Mortgagor is a citizen of the United
States within the meaning of the Shipping Act, 1916, as amended, for the purpose
of operating the Vessel in coastwise trade and is entitled to own and operate
the Vessel under its marine documents.
2
<PAGE> 3
ARTICLE II
COVENANTS
Mortgagor covenants and agrees as follows:
2.1 Covenants in Loan Agreement. Mortgagor will fully perform all
covenants, agreements, obligations and conditions required of Mortgagor in the
Loan Agreement.
2.2 Maintain Citizenship and Documentation of Vessel. The Mortgagor
will at all times maintain the Vessel, so long as it shall be subject to the
lien hereof as a vessel of the United States and shall maintain the
documentation of the Vessel under the laws of the United States, and will
maintain the same hailing port for the Vessel as set forth in its original
documentation papers unless a change of said port is authorized by the
Mortgagee. Mortgagor shall continue to be a citizen of the United States
entitled to own and operate the Vessel in the U.S. coastwise trade under its
marine documents, which Mortgagor shall maintain in full force and effect.
2.3 Title to Vessel. Except to the limited extent permitted under
Section 2.11 of this Mortgage, Mortgagor shall continue to own and possess the
whole of the Vessel free from all complaints in rem, libels, liens (maritime or
otherwise), charges, claims, security interests, mortgages, pledges or other
encumbrances of any kind or nature (except in favor of Mortgagee). The Mortgagor
hereby does and will forever warrant and defend the title and possession of the
Vessel, and each part thereof, for the benefit of the Mortgagee, against any and
all claims and demands whatsoever.
2.4 Preservation of Mortgage Lien. The Mortgagor will comply with and
satisfy all provisions of law, including without limitation the Ship Mortgage
Act, and will take any and all such other action as may be required from time to
time in order to establish and maintain this Mortgage as a valid and perfected
preferred ship mortgage under the Ship Mortgage Act on the Vessel in accordance
with the terms hereof.
2.5 Transfer of Vessel. The Mortgagor shall not sell or transfer the
Vessel, or place or permit the Vessel to be placed under any foreign
registration or flag or change the hailing port of the Vessel, or do or suffer
or permit anything to be done, including placing the Vessel under charter, which
can or might adversely affect the registration or documentation of the Vessel
under the laws or regulations of the United States, without the prior written
consent of the Mortgagee.
2.6 Taxes. The Mortgagor will from time to time pay or discharge or
cause to be paid or discharged, as they become due and payable, all taxes,
assessments, and governmental charges levied or assessed or imposed upon the
Vessel.
2.7 Seizure of Vessel. If the Vessel shall at any time, while subject
to the lien hereof, be libeled, seized, detained, levied or attached under
process or color of legal authority for any cause whatsoever, the Mortgagor will
forthwith notify the Mortgagee in
3
<PAGE> 4
writing and, without expense to the Mortgagee, within ten (10) days from the
time of such libel, seizure, detention, levy or attachment, either shall cause
the Vessel to be released by filing an undertaking or stipulation or otherwise
as may be lawfully permitted or shall furnish the Mortgagee additional security
of a value acceptable to the Mortgagee. If the Mortgagor shall fail or neglect
to furnish additional security to the Mortgagee or otherwise to release the
Vessel from libel, seizure, detention, levy or attachment, the Mortgagee may
(but need not) furnish security to release the Vessel, and if, as a result of
such libel, seizure or attachment, the Vessel shall be sold at a marshal's sale
or otherwise under legal process, any insurance money, excess proceeds and other
sums recoverable with respect to the Vessel shall be paid to the Mortgagee and
held in escrow until such time as all Obligations are paid or the Mortgagee has
no further obligation to extend credit under the Credit Agreement.
2.8 Insurance. The Mortgagor will obtain and maintain insurance with
respect to the Vessel as required by the terms of the Preferred Ship Mortgage
dated as of October 15, 1998, in favor of the Mortgagee individually and as
agent for certain lenders (the "Prior Mortgage").
2.9 Operation and Maintenance of Vessel. The Mortgagor will operate or
take all actions necessary to cause the Vessel to be operated in full compliance
with (a) each applicable law, treaty, convention, order, rule or regulation of
the United States, any state or any other jurisdiction (foreign or otherwise)
wherein operated or any department or agency thereof, including without
limitation the Federal Maritime Commission, the U.S. Maritime Administration,
the United States Department of Transportation, the United States Coast Guard,
the Bureau of Customs, the United States Department of the Treasury and the
Federal Communications Commission. The Mortgagor will not remove the Vessel from
the limits of the United States except in the ordinary course of Mortgagor's
"gaming cruises to no-where" and subsequent return to the limits of the United
States. The Mortgagor will at all times and at its own cost and expense maintain
and preserve the Vessel in good condition, working order and repair, ordinary
wear and tear excepted, and will cause the Vessel to be kept fully equipped and
such equipment to be kept in good condition, working order and repair, ordinary
wear and tear excepted; provided, however, that Mortgagor shall make no
structural changes or alterations in the Vessel in excess of $25,000 without the
prior written consent of Mortgagee in each instance.
2.10 Creation of Liens. Neither the Mortgagor nor any other Person
(including without limitation any master or charterer of the Vessel) has or
shall have any right, power or authority to suffer, create, incur or permit to
be placed or imposed upon the Vessel, or any part thereof, or any of its cargo,
freights, profits or hire, any lien whatsoever other than (a) the lien of this
Mortgage or other liens in favor of Mortgagee or permitted under the loan
agreement dated October 15, 1998, (b) liens for damages arising out of tort, (c)
liens for crew's wages, (d) liens for general average or salvage (including
contract salvage), (e) maritime and other liens for repair, services, and
supplies to the Vessel arising in the ordinary course of business; provided,
however, that any permitted lien for repairs, services or supplies under
Subsection (e) above shall be subject and subordinate to the lien of this
Mortgage and further provided, however, that the Mortgagor shall, no later than
20 days after
4
<PAGE> 5
they become due, pay, satisfy or discharge any and all claims which, if unpaid,
might constitute or become liens or charges upon the Vessel, and any liens or
charges which may be levied against or imposed upon the Vessel, or (f) the Prior
Mortgage.
2.11 Requisition of Title to Vessel. In the event that title or
ownership of the Vessel shall be requisitioned, purchased or taken by any
government of any country or any agent thereof, the lien of this Mortgage shall
be deemed to attach to the claim for compensation and, to the extent available
after satisfaction of the requirements of the Prior Mortgage, the compensation,
purchase price, reimbursement or award shall be payable to the Mortgagee. The
Mortgagor shall promptly execute and deliver such documents, if any, and shall
promptly do and perform such acts, if any, as in the opinion of the Mortgagee
may be necessary or useful to facilitate or expedite the collection by the
Mortgagee of such compensation, purchase price, reimbursement or award.
2.12 Notice of Loss or Adverse Claim. In the event of (a) the actual
total loss of the Vessel (b) any requisition of the use of or title to, or
seizure or forfeiture of, the Vessel by any governmental authority or any other
party, or the attachment, levying upon, filing of an action in rem against,
detention, sequestration or taking into custody of the Vessel in connection with
any proceeding, (c) any marshal's or other sale of the Vessel, or (d) any
casualty, accident or damage to the Vessel involving an amount in excess of
$25,000, Mortgagor shall forthwith give notice by letter and telecopy to the
Mortgagee.
2.13 Copies of Mortgage and Notice. Mortgagor shall carry, or cause to
be carried, a certified copy of this Mortgage and of any amendments and
supplements hereto, or assignments hereof, with the Vessel's documents and on
board the Vessel with the ship's papers and will exhibit the same or cause the
same to be exhibited, on demand, to any Person having business with the Vessel
and to any representative of the Mortgagee. Unless otherwise approved by the
Mortgagee, a notice reading as follows, printed in plain type of such size that
it shall cover a space not less than six inches wide by nine inches high,
protected from exposure to the elements, shall be kept prominently displayed in
the wheelhouse and in the Captain's cabin on the Vessel:
Notice of Mortgage
This Vessel is covered by a Preferred Ship Mortgage from PRINCESA
PARTNERS, the Mortgagor to The National City Bank of Evansville, the
Mortgagee."
2.14 Further Action. From time to time Mortgagor shall, and the
Mortgagee may on behalf of Mortgagor, execute and deliver such other and further
instruments and assurances and take such other actions as in the opinion of
Mortgagee's counsel may reasonably be required to subject the Vessel more
effectually to the lien hereof and to the payment of the Obligations and for
operation of the Vessel as herein provided, and (in case of an Event of Default)
to effectuate sales as provided in Article III hereof
5
<PAGE> 6
ARTICLE III
DEFAULT
3.1 Events of Default. The occurrence of any of the following events
shall constitute an event of default (an "Event of Default):
(a) An Event of Default as defined therein shall occur under the Loan
Agreement;
(b) The Mortgagor shall fail to perform any covenant herein contained.
3.2 Remedies. If an Event of Default shall have occurred and be
continuing, then the Mortgagee may, in every case and concurrently or
separately:
(a) Exercise any or all remedies available to Mortgagee under the Loan
Agreement, including without limitation acceleration of payment of all
Obligations and termination of any obligation to advance additional monies to
Mortgagee;
(b) Exercise all the rights and remedies provided (i) under this
Mortgage; (ii) in foreclosure and otherwise given to mortgagees by the
provisions of the Ship Mortgage Act and acts amendatory thereof and
supplementary thereto; and (iii) to a secured party when a debtor is in default
under a security agreement by the Indiana Uniform Commercial Code;
(c) Exercise any other right or remedy provided by law or agreement,
including without limitation the right to recover deficiency or other judgment
for any amount due under the Loan Agreement or hereunder;
(d) Take and enter into possession of the Vessel, at any time, wherever
the same may be, without legal process and without being responsible for loss or
damage, and the Mortgagor or other person in possession forthwith upon demand of
the Mortgagee shall surrender to the Mortgagee possession of the Vessel and the
Mortgagee may, without being responsible for loss or damage, hold, lay up,
lease, charter, operate or otherwise use the Vessel for such time and upon such
terms as it may deem to be for its best advantage, accounting only for the net
profits, if any, arising from such use of the Vessel and charging upon all
receipts from the use of the Vessel or from any sale thereof or from the
exercise of any of the powers conferred by subparagraph (e) next following, all
costs, expenses, charges, damages or losses by reason of such use and with the
right to dock the Vessel free of charge at the Facilities (or elsewhere at
Mortgagor's expense);
(e) Demand, collect, receive, compromise and sue for, so far as may be
permitted by law, in the name of the Mortgagor, all earnings, revenues, income
and profits of the Vessel, all amounts due from insurers under any insurance
thereon as payments of losses or as return premiums or otherwise, all salvage
awards and recoveries, all recoveries in general average or otherwise, and all
other sums due or to become due in respect of the Vessel, or in respect of any
insurance thereon, from any person whomsoever, and to make, give and execute in
the name of the Mortgagor acquittances, receipts, releases or other discharges
for
6
<PAGE> 7
the same, and to endorse and accept in the name of the Mortgagor all instruments
in writing with respect to the foregoing, and the Mortgagor does hereby
irrevocably appoint the Mortgagee the true and lawful attorneys-in-fact of the
Mortgagor, upon the happening of an Event of Default, to do all said acts; and
(f) Take and enter into possession of the Vessel at any time, wherever
the same may be, without legal process and, if it seems desirable to the
Mortgagee and without being responsible for loss or damage, sell the Vessel upon
such terms and conditions as the Mortgagee may determine, free from any claim of
or by the Mortgagor, at a public sale or sales after advertisement or at a
private sale or sales after notice to the Mortgagor, at any place as the
Mortgagee may specify and in such commercially reasonable manner as the
Mortgagee may deem advisable.
In any suit to enforce its rights, powers or remedies, the Mortgagee
shall be entitled as a matter of right (i) to the appointment of a receiver or
receivers of the Vessel and the earnings thereof with full rights and powers to
use and operate the Vessel, and (ii) to a decree ordering and directing the sale
and disposition of the Vessel. The Mortgagee may become the purchaser at the
said sale, and the Mortgagee shall have the right to credit on the purchase
price any and all sums of money due to the Mortgagee hereunder.
Each and every right and remedy, herein given shall be cumulative and
in addition to every other remedy given hereunder or otherwise existing. The
exercise of any right or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right or remedy. No
waiver, delay or omission by the Mortgagee in the exercise of any right or
remedy accruing upon any Event of Default shall impair at such right or remedy
or be construed to be a waiver of any such Event of Default or to be any
acquiescence therein.
3.3 Application of Moneys. The proceeds of any judicial or other sale
of the Vessel and the net earnings from any management, charter, lease,
operation or other use of the Vessel, under any of the powers specified in
Section 3.2, together with the proceeds of any insurance, claim for damages, or
judgment and any other moneys received from or for the account of the Mortgagor
pursuant hereto or otherwise shall be applied as follows:
First: To the extent required, in the manner required by the terms of
the Prior Mortgage.
Second: To the payment of all expenses and charges including the
expenses of any sale, the expenses of any retaking, attorneys' fees hereunder,
court costs, and any other expenses or advances made or incurred by the
Mortgagee in the protection of its rights or the pursuance of its remedies
hereunder or caused by Mortgagor's default hereunder or under the Loan
Agreement, including advances made under Section 3.4 hereof, with interest at
the Default Rate and, if and to the extent so determined by the Mortgagee, to
the payment of, or to provide adequate indemnity against, liens claiming
priority over or equality with this Mortgage.
7
<PAGE> 8
Third: To the payment of the Obligations, including accrued interest to
the date of such payment, in any order the Mortgagee may determine.
Fourth: To the payment of any surplus thereafter remaining to the
Mortgagor or to whomsoever shall be entitled thereto, subject to set-off in
favor of Mortgagee for any other indebtedness of Mortgagor.
In the event that the proceeds are not sufficient to pay the amounts
specified in paragraphs "First" through "Third" above, the Mortgagee shall be
entitled to collect any deficiency from the Mortgagor or any other person
legally liable therefor.
3.4 Advances and Entry by Mortgagee. If the Mortgagor shall default in
the performance or observance of any of the covenants in this Mortgage, the
Mortgagee may, in its discretion, do any act or make any expenditures Mortgagee
deems necessary or appropriate to remedy such default or protect Mortgagee's
rights, including, without limitation of the foregoing, the obtaining of
insurance, the payment and discharge of taxes and liens, entry upon the Vessel
to make repairs (and for that purpose docking and maintaining the Vessel) and
defending suits. The Mortgagor shall reimburse the Mortgagee on demand, with
interest at the Default Rate for any and all reasonable expenditures so made or
incurred and for any and all damages or losses sustained by Mortgagee because of
Mortgagor's defaults. Until the Mortgagor has so reimbursed the Mortgagee for
such expenditures, advances and expenses, the amount thereof shall be a debt due
from the Mortgagor to the Mortgagee, and payment thereof shall be secured by the
lien of this Mortgage.
ARTICLE IV
MISCELLANEOUS
4.1 Notices. Notices permitted or required to be given hereunder shall
be in writing and shall be deemed sufficient if given by registered or certified
mail, postage prepaid, return receipt requested, addressed to the respective
addresses of the parties or at such other addresses as the respective parties
may designate by like notice from time to time. Notices so given shall be
effective upon the earlier of (a) receipt by the party to which notice is given,
or (b) on the fifth (5th) business day following the date such notice was
deposited in the United States mail. Any notice to the Mortgagee shall be
addressed to:
The National City Bank of Evansville
21 S.E. Third Street
Evansville, IN 47708
Attention: Stuart G. Harrington
Executive Vice President
8
<PAGE> 9
Notices to the Mortgagor shall be addressed to:
Princesa Partners
c/o Goldcoast Entertainment Cruises, Inc.
100 South Biscayne Blvd., Suite 850
Miami, FL 33131
Attention: Jerry Baum
with a copy to:
Conami, Inc.
3290 Lien Street
Rapid City, SD
Attention: Jerry Baum
4.2 Other Security. This Mortgage is given to secure the Obligations in
addition to other security and/or guaranties that may now or hereafter secure
the Obligations. The Mortgagee shall have no duty to exercise its rights or
remedies under either this Mortgage or any other security or guaranty in any
particular order, and the Mortgagor waives any right to require any marshalling
of assets.
4.3 Invalidity of Any Provision. If any provisions hereof shall be held
invalid or unenforceable according to law, the remaining provisions hereof shall
not be affected thereby and shall continue in full force and effect.
4.4 Successors and Assigns. All the covenants, stipulations, promises
and agreements contained in this Mortgage shall bind and inure to the benefit of
the Mortgagor and the Mortgagee and their respective successors and assigns;
provided, however, that nothing in this Section shall be deemed to permit any
sale or transfer of the Vessel otherwise prohibited hereunder.
4.5 No Waiver. No provision of this Mortgage or any other document and
none of the actions or omissions to act by the Mortgagee contemplated thereby
shall be deemed to or shall constitute a waiver by the Mortgagee of the
preferred status of this Mortgage or of any of the benefits, privileges or
provisions given by the Ship Mortgage Act.
4.6 Governing Law. This Mortgage shall be construed in accordance with
the laws of the State of Indiana and the general maritime law; provided,
however, that the parties shall be entitled to all rights conferred by any
applicable federal statute, rule or regulation. Mortgagor hereby submits to the
personal jurisdiction of the federal and state courts located in the State of
Indiana in respect of all matters relating to this Mortgage.
4.7 Amount and Maturity Date of Mortgage. The total amount of this
Mortgage is $500,000 plus interest and performance of Mortgage covenants, the
discharge amount is the same as the total amount and the maturity date of the
Note is March 1, 2001.
9
<PAGE> 10
IN WITNESS WHEREOF the Mortgagor has caused this instrument to be
executed in its name by as duly authorized officer as of the date above written.
In Presence of -
PRINCESA PARTNERS
By CONAMI, INC., Its General Partner
By
--------------------------------------
Its President
State of South Dakota)
) ss.
County of Pennington )
The foregoing instrument was acknowledged before me this _____________ day of
___________ 2000, by ___________________________ the _________________________
of CONAMI, INC., a Florida corporation, a general partner of PRINCESA PARTNERS,
a Florida general partnership, on behalf of the partnership.
- ----------------------------
Notary Public
10
<PAGE> 1
EXHIBIT 10.2
[NATIONAL CITY BANK LETTERHEAD]
January 18, 2000
Bayfront Ventures
3290 Lien Street
Rapid City, SD 57709
Attn.: Bob Drew
Dear Bob:
The National City Bank of Evansville (the "Bank") is pleased
to extend to Bayfront Ventures (the "Borrower") a committed line of credit (the
"Line of Credit"). This letter agreement (the "Loan Agreement") outlines the
terms and conditions pertaining to the Line of Credit.
1. LINE OF CREDIT.
(a) The Bank agrees to make loans (the "Advances") to the
Borrower from time to time from the Closing Date to and including the first
anniversary of the closing date, in an aggregate amount not to exceed $500,000
outstanding at any one time. The "Closing Date" is the date, not later than
February 1, 2000, when all of the conditions precedent specified in part A of
Annex I have been met.
(b) The Borrower may prepay the Advances from time to time in
whole or in part without premium or penalty. The Borrower may also reborrow
amounts previously prepaid, subject to the provisions of paragraph 1(c).
(c) By requesting any Advance, the Borrower shall be deemed to
have represented that all of the conditions precedent specified in part B of
Annex I have been satisfied as of the date of the request. Each Advance must be
in the amount of $5,000 or more. If a written or telephonic request for an
Advance is received on or before 2:00 p.m. Indiana time on a business day, the
requested Advance will be disbursed in such a way as the Bank and the Borrower
may agree or, in the absence of a contrary agreement, by crediting the
Borrower's account number _______________ (the "Business Account") on the same
business day. If a request is received later than 2:00 p.m., the Advance will be
disbursed on the next business day.
2. USE OF PROCEEDS.
The proceeds of the Advances made by the Bank under this Loan
Agreement shall be used by the Borrower for the Borrower's general business
purposes.
<PAGE> 2
Bob Drew
January 18, 2000
Page 2
3. THE NOTE.
The Borrower's obligation to repay any Advances under the Line
of Credit shall be evidenced by and payable pursuant to the terms of a single
revolving promissory note in the form of Exhibit A (the "Note").
4. COLLATERAL AND GUARANTEES.
The papers described below (the "Security Instruments") shall
secure and guarantee repayment of the Advances:
o A guaranty in the form of Exhibit B, whereby Princesa
Partners, a Florida general partnership ("Princesa
Partners"), shall have guaranteed payment of the
Borrower's obligations under this Loan Agreement,
including the Borrower's obligation to repay the Advances
with interest called for by the Note and pay costs and
expenses pursuant to paragraph 10 of this Loan Agreement
(collectively the "Obligations").
o A security agreement executed by the Borrower and Princesa
Partners, substantially in the form of Exhibit C, and
covering the property described therein (the "Security
Agreement").
o A ship mortgage of Princesa Partners substantially in the
form of Exhibit D, and covering the vessel Princesa,
official number 1073261 (the "Ship Mortgage").
o A guaranty in the form of Exhibit E (the "Concorde
Guaranty") whereby Concorde Gaming Corporation, a Colorado
corporation ("Concorde"), shall have guaranteed payment of
the Obligations.
5. PAYMENT.
All payments of principal and interest under the Note and of
any amounts payable hereunder shall be made in immediately available funds. In
the event any payment is not received from the Borrower on the date it is due,
the Bank is authorized to debit the Business Account for the amount of such
payment at the close of business on the due date or at any time thereafter.
<PAGE> 3
Bob Drew
January 18, 2000
Page 3
6. REPORTING.
So long as the Bank is committed to make Advances or any
Obligations are outstanding, the Borrower will deliver the following information
to the Bank, with such detail and supporting documentation as the Bank may
reasonably request:
o As soon as practicable, and in any event within 45 days
after the end of each fiscal quarter commencing with the
fiscal quarter ending December 31, 1999, a copy of the
financial statements of the Borrower, Princesa Partners
and Concorde for such quarter, consisting of their
respective balance sheets as at the end of such quarter
and their related statements of income for such quarter
and for the year-to-date then ended, all prepared in such
a manner as to present substantially the same information
as would be presented in financial statements prepared in
accordance with GAAP.
o As soon as practicable, but in any event within 120 days
after the end of each fiscal year of the Borrower,
Princesa Partners and Concorde, commencing with the fiscal
year ending September 30, 1999, copies of their annual
financial statements, consisting of their respective
balance sheets as of the end of such year, and their
related statements of income for such year, all prepared
in accordance with GAAP, and accompanied by the audit
report of Concorde prepared by a certified public account
reasonably acceptable to the Bank, containing an
unqualified opinion thereon, and a copy of such
accountant's management letters to the Borrower and
Princesa Partners. o Such other financial information
concerning the Borrower, Princesa Partners and Concorde as
the Bank may reasonably request.
7. SPECIAL COVENANTS.
The Borrower will comply with the following special covenants
so long as the Bank is obligated to make Advances or any Obligations are
outstanding:
o The Borrower will pay off the line of credit and not
reborrow for one period of at least 30 consecutive days
during the term of this Loan Agreement.
o The Borrower will comply with the financial covenants set
forth in paragraphs 19(l), (m) and (n) of the Guaranty,
Subordination Agreement, Security Agreement and Indemnity
made as of October 22, 1998 by the
<PAGE> 4
Bob Drew
January 18, 2000
Page 4
Borrower for the benefit of certain lenders listed therein
(the "Prior Agreement"); provided, however, that the
Borrower's obligation to comply with such financial
covenants shall continue notwithstanding payment of the
obligations guaranteed by the Borrowers pursuant to the
terms of the prior agreement.
o The Borrower will maintain a depositary account at a
financial institution located in Miami Dade County,
Florida, and will daily deposit the Gross Cash Receipts in
excess of operating cash needs in such account. The
Borrower will instruct the depositary institution to
transmit all of the funds deposited in such account to the
Business Account via automated clearinghouse each day, as
soon as such funds are available for withdrawal under such
depositary institution's funds availability rules.
8. OTHER COVENANTS.
The Borrower will comply with the additional covenants set
forth in Annex II so long as the Borrower has any obligations to the Bank under
this Loan Agreement, whether or not evidenced by the Note.
9. EVENTS OF DEFAULT.
Each of the following shall be an "Event of Default"
hereunder:
o The Borrower shall fail to make any payment due under this
Loan Agreement or under the Note, and the failure to pay
shall continue for a period of ten days after the Bank
mails to Borrower written notice of the Borrower's failure
to make any payment.
o The Borrower, Princesa Partners or Concorde shall be named
a debtor in a petition filed under the U.S. Bankruptcy
Code.
o Any representation made by or on behalf of the Borrower in
connection with this Loan Agreement or the transactions
contemplated hereby shall prove to have been materially
false or misleading when made.
o The Borrower shall fail to comply with any covenant
contained in this Loan Agreement (except the covenant to
pay the principal of and interest on the Note and any
amounts due under this Loan Agreement when due), in Annex
II or in any Security Instrument, and the Borrower shall
fail to cure such breach within the applicable period of
grace, if any.
<PAGE> 5
Bob Drew
January 18, 2000
Page 5
o Princesa Partners or Concorde shall notify the Bank that
it repudiates its guaranty.
o An Event of Default, as therein defined, shall occur under
any of the Loan Documents defined in paragraph 11(a).
Upon or after the occurrence of any Event of Default or event
which, with the giving of notice or passage of time, would be an Event of
Default, the Bank may terminate its commitment to make Advances. Upon the
occurrence of an Event of Default, the Bank may also demand payment in full of
the principal of and interest on the Note and any amounts owing under this Loan
Agreement and commence exercising its remedies under any security instruments.
10. COSTS AND EXPENSES.
The Borrower will pay on demand to the Bank all of the costs
and expenses incurred by the Bank in connection with the negotiation, drafting,
execution, administration and enforcement of this Loan Agreement, the Note and
the other instruments to be delivered in connection with this Loan Agreement,
including the reasonable fees and out-of-pocket expenses of counsel with respect
thereto.
11. MISCELLANEOUS.
This Loan Agreement and the other documents and instruments to
be delivered to the Bank in connection with this Loan Agreement (the "Loan
Documents") shall be governed by and construed in accordance with the laws of
the state of Indiana.
o No failure of delay on the part of the Bank in exercising
any right, power or remedy under the Loan Documents shall
operate as a waiver thereof.
o The Loan Documents shall be binding upon and shall inure
to the benefit of the Borrower, Princesa Partners,
Concorde and the Bank and their respective successors and
assigns; provided, however, that the Borrower shall not
have the right to assign any rights hereunder without the
prior written consent of the Bank.
o This Loan Agreement may not be amended except by a writing
signed by both an officer on behalf of the Bank and an
authorized representative of the Borrower.
<PAGE> 6
Bob Drew
January 18, 2000
Page 6
o The Loan Documents take the place of any preliminary
discussions between the Bank and the Borrower and
supercede any previous written agreements or
understandings between the Bank and the Borrower.
12. ACCEPTANCE.
The Borrower's signature below indicates its approval of all
of the terms of this Loan Agreement. This Loan Agreement shall become a contract
binding upon the Bank and the Borrower and their respective successors, assigns,
heirs and representatives if it is accepted on or before January 21, 2000, and
if a fee of $3,000 is paid to the Bank by that date. If this Loan Agreement is
not accepted by that date it shall be of no further force or effect.
Very truly yours,
NATIONAL CITY BANK OF EVANSVILLE
By
------------------------------------
Its Executive Vice President
Enclosures
Accepted and agreed to this
____ day of ______________, 2000.
BAYFRONT VENTURES
By Concorde Cruises, Inc., its General Partner
By
--------------------------------------------
Its President
<PAGE> 7
Bob Drew
January 18, 2000
Page 7
and by
GOLDCOAST ENTERTAINMENT CRUISES, INC., Its General Partner
By
-------------------------------------
Its President
<PAGE> 8
Annex I
CONDITIONS TO LENDING
Part A
- - The Bank will not make the first Advance under the Loan Agreement to which
these conditions are annexed (the "Loan Agreement") until the Bank receives the
following items, each in form and substance satisfactory to the Bank:
1. A duplicate (or counterpart) of the Loan Agreement duly accepted on
behalf of the Borrower.
2. The Note, duly executed on behalf of the Borrower.
3. Each Security Instrument described in paragraph 4 of the Loan
Agreement, duly executed on behalf of each party thereto.
4. Financing statements sufficient, when filed, to perfect the security
interests granted under any security agreements described in paragraph 4 of the
Loan Agreement.
5. Current searches in all appropriate filing offices showing that (i)
no state or federal tax liens have been filed and remain in effect against the
Borrower; (ii) no financing statements have been filed and remain in effect
against the Borrower except such as the Bank reasonable approves; and (iii) no
liens have been filed and remain in effect against the vessel Princesa, except
the First Preferred Ship Mortgage made as of October 15, 1998, in favor of the
Bank, individually and as agent for certain Lenders.
6. A certified copy of the resolutions of the General Partners of the
Borrower evidencing approval of the Loan Agreement and the other Loan Documents.
7. Copies of the Partnership Agreement of the Borrower, certified by a
partner of the Borrower as being true and correct copies thereof.
8. A signed copy of a certificate of one or more officers of a general
partner of the Borrower which shall certify the names of the persons authorized
to sign the Loan Agreement and the other Loan Documents to be delivered pursuant
to the Loan Agreement and to request Advances under the Loan Agreement.
9. A signed opinion of counsel for the Borrower addressed to the Bank
(i) to the effect that no litigation is pending or threatened against the
Borrower, except such as has been disclosed to the Bank or is covered by
insurance, (ii) to the effect that the Loan Documents have been duly and validly
authorized, executed and delivered by the Borrower and are enforceable, except
as limited by applicable bankruptcy, insolvency, reorganization,
<PAGE> 9
moratorium or similar laws affecting the enforcement of creditors' rights
generally and except to the extent that general equitable principles may limit
the right to obtain specific performance, and (iii) addressing other matters as
the bank may reasonably request.
10. A closing fee of $5,000.00
Part B
The obligation of the Bank to make each Advance (including the initial
Advance) shall be subject to the further conditions that on the date of such
Advance (a) the representations and warranties made by the Borrower to induce
the Bank to enter into the Loan Agreement are correct on and as of the date of
such Advance as though made on and as of such date, except to the extent that
such representations and warranties related solely to an earlier date; and (b)
no event has occurred and is continuing, or would result from such Advance,
which constitutes an Event of Default.
<PAGE> 10
Annex II
OTHER COVENANTS
The Borrower will comply with the additional covenants set forth below
so long as the Bank has any obligations under the letter agreement to which
these covenants are attached (the "Loan Agreement") or any amount is outstanding
under the Note:
1. The Borrower will keep accurate books of record and account in which
true and complete entries will be made in accordance with generally accepted
accounting principles consistently applied and, upon request of the Bank, will
give any representative of the Bank access to, and permit such representative to
examine, copy or make extracts from, any and all books, records and documents in
its possession, to inspect any of its properties and to discuss its affairs,
finances and accounts with any of its principal officers, all at such times
during normal business hours and as often as the Bank may reasonably request.
2. The Borrower will comply with the requirements of applicable laws
and regulations, the non-compliance with which would materially and adversely
affect its business or the financial condition of the Borrower.
3. The Borrower will pay or discharge before delinquent, (a) all taxes,
assessments and governmental charges levied or imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, (b) all federal, state and local taxes required
to be withheld by it, and (c) all lawful claims for labor, materials and
supplies which, if unpaid, might be law become a lien or charge upon any
properties of the Borrower; provided, that the Borrower shall not be required to
pay any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings.
4. The Borrower will keep and maintain all of its properties necessary
or useful in its business in good condition, repair and working order; provided,
however, that nothing in this paragraph shall prevent the Borrower from
discontinuing the operation and maintenance of any of its properties if such
discontinuance is, in the judgment of the Borrower, desirable in the conduct of
its business and not disadvantageous in any material respect to the Bank.
5. The Borrower will obtain and maintain insurance with insurers
believed by the Borrower to be responsible and reputable, in such amounts and
against such risks, including without limitation, liability insurance, property
and casualty insurance and business interruption insurance, as is usually
carried by companies engaged in similar business and owning similar properties
in the same general areas in which the Borrower operates. The policies of
insurance maintained by the Borrower pursuant to this paragraph shall name the
Bank as loss payee.
6. The Borrower will preserve and maintain its general partnership
existence and all of its rights, privileges and franchises; provided, however,
that the Borrower shall not be
<PAGE> 11
required to preserve any of its rights, privileges and franchises if its general
partners shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Borrower and that the loss thereof is not
disadvantageous in any material respect to the Bank.
7. Except for a) existing encumbrances of which the Borrower has
advised the Bank in writing, and b) the creation of purchase money security
interests of less than $100,000 in either slot machines or computer equipment,
the Borrower will not, without the prior written consent of the Bank, create,
incur, assume or suffer to exist any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance of any nature on any of its
assets, now owned or hereafter acquired, or assign or otherwise convey any right
to receive income or give its consent of the subordination of any right or claim
of the Borrower to any right or claim of any other person.
8. The Borrower will not sell, lease, assign, transfer or otherwise
dispose of all or a substantial part of its assets (whether in one transaction
or in a series of transactions) to any other person.
9. Except for its planned merger with Princesa Partners, the Borrower
will not consolidate with or merge into any person, or permit any other person
to merge into it, or acquire (in a transaction analogous in purpose or effect to
a consolidation or merger) all or substantially all the assets of any other
person.
10. The Borrower will not adopt, permit or consent to any change in
accounting principles other than as required by GAAP and will not adopt, permit
or consent to any change in its fiscal year.
<PAGE> 1
EXHIBIT 10.3
SECURITY AGREEMENT
This Security Agreement is made and given as of this 18th day
of January, 2000, by BAYFRONT VENTURES, a Florida general partnership (the
"Borrower") and PRINCESA PARTNERS, a Florida general partnership ("Princesa") in
favor of National City Bank of Evansville ( the "Lender").
Recitals
A. The Lender and the Borrower have entered into a Loan
Agreement of even date herewith (the "Loan Agreement"), pursuant to which the
Lender will make loans to the Borrower from time to time in an aggregate amount
not to exceed $500,000 (the "Loan") outstanding at any one time for the
Borrower's general business purposes. The Loan is to be evidenced by a single
revolving promissory note (together with any renewals, extensions or amendments,
the "Note"). Princesa has guaranteed payment of the Borrower's obligations under
the Loan Agreement and the Note pursuant to a Guaranty of even date herewith
(the "Guaranty"). All capitalized terms used herein, unless otherwise defined
shall have the meaning ascribed to such terms in the Loan Agreement.
B. The Borrower and Princesa are and will be the owners of
certain furniture, fixtures and equipment more fully described in Exhibit A
attached hereto (collectively, the "Equipment"), free and clear of any liens or
security interests, except such liens as are permitted by the Loan Agreement and
by Article 3, Section 3.1 of a loan agreement dated October 22, 1998 (the "Prior
Agreement") by and between Princesa and certain lenders including the Lender.
C. As security for the repayment of the Loan and Princesa's
obligations under the Guaranty, the Lender has required that the Borrower and
Princesa execute and deliver to the Lender this security agreement (the
"Security Agreement"), granting a security interest to the Lender in, among
other things, the Equipment.
D. The Note, the Loan Agreement, the Guaranty, this Security
Agreement and any other instruments or documents given as security for the Loan
are referred to herein as the "Loan Documents".
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged by the Borrower and Princesa, it is agreed as follows:
1. Grant of Security Interest. As security for the payment and
performance of the Note and all other liabilities, obligations and indebtedness
of the Borrower and Princesa to the Lender, due or to become due, direct or
indirect, absolute or contingent, joint or several, howsoever created, arising
or evidenced, now or hereafter at any time created, arising or evidenced under
or pursuant to the Loan Documents (hereinafter collectively referred to as the
<PAGE> 2
"Obligations"), the Borrower and Princesa do hereby transfer, assign and grant
to the Lender, its successors and assigns, a security interest in all of their
rights, title and interest in and to the following (hereinafter collectively
referred to as the "Collateral"), whether now owned or hereafter acquired or
arising:
(a) The Equipment; and
(b) All improvements, accessions, appurtenances, substitutions
and replacements to the Equipment, and all insurance proceeds and
condemnation awards payable therefrom or with respect thereto, together
with all proceeds and products thereof and all rights thereto.
2. The Borrower and Princesa represent, warrant, covenant and
agree:
(a) Organization. The Borrower and Princesa are general
partnerships, duly organized and existing pursuant to their respective
partnership agreements, and the Borrower and Princesa have full power
and authority to execute, deliver and perform the Loan Documents and to
own property and conduct business as presently conducted and as
proposed to be conducted.
(b) Authorization, Etc. The execution, delivery and
performance of this Security Agreement is duly authorized by all
necessary action on the part of the Borrower and Princesa and will not
(i) require any consent or approval of any entity which has not been
obtained; (ii) to their knowledge after due inquiry, violate any
provision of law, or (iii) violate any order of any court or other
agency of government having jurisdiction over the Borrower or Princesa,
the partnership agreement of the Borrower, the partnership agreement of
Princesa, or any provision of any indenture, agreement or other
instrument to which the Borrower or Princesa is a party or by which
they or any of their properties are bound. This Security Agreement
constitutes the legal, valid and binding obligation of the Borrower and
Princesa, enforceable against them in accordance with its terms
(subject to limitations as to enforceability which might result from
bankruptcy, insolvency or other similar laws affecting creditors'
rights generally).
(c) Performance by Borrower. Without the Lender's prior
written consent, neither the Borrower nor Princesa shall:
(i) sell, transfer or assign, or offer to sell,
transfer or assign, all or any part of the Collateral or
permit all or any part of the Collateral to be sold,
transferred or assigned;
(ii) remove or consent to the removal of any of the
Equipment from the vessel Princesa as described in the Ship
Mortgage referred to in the Loan Agreement, except as
necessary for repair of such Equipment, in the ordinary course
of business;
-2-
<PAGE> 3
unless 1) any such Equipment sold, transferred, assigned or removed is
promptly replaced with Equipment of at least equal value and utility,
and the security interest granted pursuant to this Security Agreement
attaches as a valid security interest in such replacement Equipment, or
2) the aggregate market value of all collateral sold, transferred,
assigned or removed and not replaced during the calendar year has not
exceeded $50,000.
(d) Title to Collateral. The Borrower or Princesa, as the case
may be, has good marketable title to all of the Collateral and none of
the Collateral is subject to any lien or security interest except for
the security interest created by this Security Agreement or the Prior
Agreement, including purchase money security interests in and financing
leases of equipment (used in the "Facilities" as defined in the Prior
Agreement) (the "Permitted Liens"). The Borrower and Princesa, other
than as disclosed, have not granted, and will not grant or permit to
exist, any lien or security interests in all or a portion of the
Collateral except Permitted Liens. The Borrower and Princesa shall
defend the Collateral against all claims and demands of all and any
other persons at any time claiming any interest therein adverse to the
Lender except for persons claiming Permitted Liens.
(e) Actions and Proceedings. To the best of the Borrower's or
Princesa's knowledge, there is no action, suit or proceeding at law or
in equity or by or before any governmental instrumentality or other
agency now pending or threatened against or affecting the Borrower or
Princesa which, if adversely determined, would have a material adverse
effect on the Borrower's or Princesa's interest in the Collateral or
would adversely affect the rights of the Borrower or Princesa to pledge
and assign all or a part of the Collateral or the rights and security
afforded the Lender hereunder.
(f) Insurance. The Borrower or Princesa, as the case may be,
agrees it will keep the Equipment insured at all times in accordance
with the requirements set forth in Section 6.2 of the Prior Agreement.
(g) Costs of Collection. In the event of any action or
proceeding to collect or realize upon the Collateral or to enforce any
of the Lender's rights hereunder, the Borrower shall pay all of the
Lender's reasonable costs and expenses, including without limitation
attorneys' fees and legal expenses incurred by the Lender, in
connection with or arising out of such collection or enforcement.
(h) Equipment to Remain Personal Property. The Borrower and
Princesa agree that, regardless of the manner of affixation, the
Equipment shall remain personal property and shall not become part of
the vessel Princesa, aboard which it is to be used, nor part of any
leasehold interest in real estate comprising the Project (as defined in
the Prior Agreement) or a fixture.
-3-
<PAGE> 4
3. Events of Default. It shall be an Event of Default under
this Security Agreement upon the happening of any of the following:
(a) an "Event of Default" shall occur and be continuing under
the Loan Agreement; or
(b) failure to comply with or perform in any material respect
any of the terms, conditions or covenants of this Security Agreement.
4. Remedies. Upon an Event of Default, the Lender may declare
all Obligations immediately due and payable, and may, at its option, without
notice, exercise any one or more of the following rights or remedies:
(a) either in person or by agent, with or without bringing any
action or proceeding, or by a receiver to be appointed by a court,
enforce and exercise all of the powers, rights and privileges of the
Borrower or Princesa, as the case may be, in respect of rights of
payment constituting Collateral and all of the powers, rights and
privileges reserved or granted to the Lender under this Security
Agreement; and
(b) may without demand, advertisement or notice of any kind
(except such notice as may be required under the applicable Uniform
Commercial Code (the "Code")) all of which are, to the extent permitted
by law, hereby expressly waived, lease or dispose of the Collateral by
public or private sale; and
(c) exercise any of the remedies available to a secured party
under the Code; and
(d) proceed to protect and enforce this Security Agreement by
suits or proceedings or otherwise, for the enforcement of any other
legal or equity available to the Lender; and
(e) take possession of the Collateral.
In the event that any notice is required to be given under the
Code such requirements for reasonable notice shall be satisfied by giving at
least ten (10) days' notice prior to the event or thing giving rise to the
requirement of notice. Upon an Event of Default, the Borrower and Princesa shall
make the Collateral available to the Lender at its direction.
5. Further Assurances. The Borrower and Princesa, as the case
may be, shall execute and deliver to the Lender, promptly and at the Borrower's
expense or Princesa's, such other documents and assurances and take such further
action as the Lender may reasonably request in order to effectively carry out
the intent and purpose of this Security Agreement and to establish and protect
the rights, interests and remedies of the Lender hereunder. This shall include,
-4-
<PAGE> 5
without limitation, providing Code financing statements and evidence of tax
filings and payments. The Borrower and Princesa agree that the Lender is
authorized, at its option, to file a carbon, photographic or other reproduction
of this Security Agreement as a financing statement, and such shall be
sufficient as a financing statement under the Code, and to file financing
statements or amendments thereto without the signature of the Borrower or
Princesa and, if a signature is required by law, then the Borrower or Princesa,
as the case may be, appoints Lender as their attorney-in-fact solely for the
purpose of executing any such financing statements.
6. Cumulative Remedies. All of the Lender's rights and
remedies herein are cumulative and in addition to any rights or remedies
available at law or in equity including the Code, and may be exercised
concurrently or separately. The Borrower shall pay all reasonable costs,
expenses, losses and legal costs (including attorneys' fees) incurred by the
Lender as a result of enforcing any terms or conditions of this Security
Agreement.
7. No Liability Imposed on Lender. The Lender shall not be
obligated to perform or discharge, nor does it hereby undertake to perform or
discharge any obligation, duty or liability, nor shall this Security Agreement
operate to place responsibility for the control, care, management or repair of
the Equipment upon the Lender, nor shall it operate to make the Lender
responsible for any dangerous or defective condition of the Equipment.
8. Indemnification. The Borrower and Princesa shall and do
hereby agree to indemnify against and to hold the Lender, its respective
officers, agents and employees, harmless of and from any and all liability, loss
or damage which any one or more of them may or might incur under or by reason of
this Security Agreement and of and from any and all claims and demands
whatsoever which may be asserted against any one or more of them by reason of
any alleged obligations or undertakings on their part to perform or discharge
any of the terms, covenants or agreements, excepting the gross negligence or
willful misconduct of Lender, its officers, agents and employees. Should Lender
incur any such liability, should Lender be required to defend against any such
claims or demands or should a judgment be entered against Lender, the amount
thereof, including costs, expenses, and reasonable attorneys' fees, which upon
payment by Lender shall bear interest thereon at the highest Default Rate (as
defined in the Prior Agreement) which would be applicable to any Note upon the
occurrence of an Event of Default under the Loan Agreement, shall be secured
hereby, and shall be added to the Obligations and the Borrower shall reimburse
the Lender for the same immediately upon demand.
9. Attorney in Fact. Upon the occurrence of any Event of
Default and at any time during the continuance thereof, the Borrower hereby
irrevocably appoints the Lender and its successors and assigns as its agent and
attorney-in-fact, which appointment shall be irrevocable during the term of this
Agreement, and which appointment is coupled with an interest, to exercise any
rights or remedies hereunder with respect to the Collateral or to endorse any
checks which constitute part of the Collateral.
-5-
<PAGE> 6
10. Expenses of Lender. All reasonable expenses in protecting,
storing, warehousing, insuring, handling and shipping of the Collateral, all
costs of keeping the Collateral free of liens, encumbrances and security
interests (other than the security interests created by this Agreement) and the
removing of the same and all excise, property, sales and use taxes imposed by
state, federal or local authority on any of the Collateral or with respect to
the sale thereof, shall be borne and paid for by the Borrower or Princesa, as
the case may be, and if the Borrower fails promptly to pay any amounts thereof
when due, the Lender may, at its option, but shall not be required to, pay the
same, and upon payment, the same shall constitute Obligations and shall bear
interest at the highest interest rate specified in the Note and shall be secured
by the security interests granted hereunder.
11. Continuing Rights. The rights and powers of the Lender or
receiver hereunder shall continue and remain in full force and effect until all
Obligations are paid in full.
12. Books and Records. The Lender shall have the same rights
to inspect, and the same duties with regards to confidentiality of, the
Borrower's books and records with respect to the Collateral, as are provided in
the Loan Agreement. The Lender shall have the authority, at any time, to require
the Borrower or Princesa as the case may be to place upon the Borrower's or
Princesa's books and records relating to the Collateral and other rights to
payment covered by the security interest created in this Security Agreement
hereby a notation stating that any such Collateral and other rights of payment
are subject to a security interest in favor of the Lender.
13. Principal Place of Business. The location of the principal
places of business of the Borrower and Princesa are set forth on the signature
page and will not be changed without thirty (30) days' prior written notice to
the Lender. The Borrower and Princesa represent that their respective books and
records concerning their respective accounts and chattel paper are located at
such address.
14. Name of Borrower. The Borrower's and Princesa's true names
are as set forth in the preamble hereto. The Borrower and Princesa have not used
any other name within the past five (5) years. The Borrower and Princesa agree
that they will not change names without thirty (30) days' written notice to the
Lender.
15. Successors and Assigns. This Security Agreement and each
and every covenant, agreement and provision hereof shall be binding upon the
Borrower and Princesa and their successors and assigns and shall inure to the
benefit of the Lender and its respective successors and assigns.
16. Severability. It is the intent of this Security Agreement
to confer to the Lender the rights and benefits hereunder to the full extent
allowable by law including all rights available under the Code. The
unenforceability or invalidity of any provisions hereof shall not render any
other provision or provisions herein contained unenforceable or invalid. Any
provisions found to be unenforceable shall be severable from this Security
Agreement.
-6-
<PAGE> 7
17. Notices. Notices permitted or required to be given
hereunder shall be deemed sufficient if given in the manner specified in the
Loan Agreement.
18. Captions and Headings. The captions and headings of the
various sections of this Security Agreement are for convenience only and are not
to be construed as confining or limiting in any way the scope or intent of the
provisions hereof. Whenever the context requires or permits, the singular shall
include the plural, the plural shall include the singular and the masculine,
feminine and neuter shall be freely interchangeable.
19. Governing Law; Jurisdiction, Etc. The provisions of the
Loan Agreement regarding governing law, jurisdiction, choice of forum and
enforcement of remedies are incorporated into this Security Agreement by
reference.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the Borrower and Princesa have caused this
Security Agreement to be executed as of the date first above written.
BAYFRONT VENTURES
By CONCORDE CRUISES, INC., Its
General Partner
By
--------------------------------
Its President
Address of Principal Place of Business:
100 South Biscayne Boulevard, Suite 850
Miami, FL 33131
Tax Identification No. 65-0721278
PRINCESA PARTNERS
By CONAMI, INC., Its General Partner
By
--------------------------------
Its President
Address of Principal Place of Business:
Princesa Partners
100 South Biscayne Blvd., Suite 850
Miami, FL 33131
Tax Identification No. 91-1927972
-8-
<PAGE> 9
EXHIBIT A
Description of Furniture, Fixtures and Equipment
The "Equipment" consists of all furniture, furnishings,
machinery and equipment of the Borrower or Princesa, whether now or hereafter
existing or owned, that is now or hereafter used, usable or intended to be used
in connection with, or located or intended to be located in, on or at, the
gaming vessel Princesa (as defined in the other Loan Documents), and shall
include, without limitation, all present and future slot, "keno" and other
gaming machines, equipment and devices, and all machinery, equipment, supplies,
furniture and furnishings used for or in connection with coin and money
changing, counting or storage, kitchen, dining room and food service facilities,
cleaning and maintenance, security and surveillance, office, bookkeeping and
back room facilities, and internal and external communications, and all
furniture, furnishings, equipment and supplies.
A-1
<PAGE> 1
EXHIBIT 10.4
REVOLVING PROMISSORY NOTE
$500,000 Evansville, Indiana
January 18, 2000
For Value Received, BAYFRONT VENTURES, a Florida General
Partnership (the "Borrower"), promises to pay to the order of The National City
Bank of Evansville, a national banking association (the "Bank") at its main
office in Evansville, Indiana, or at such other place as Bank may from time to
time designate in writing, on March 1, 2001, in lawful money of the United
States of America, the principal sum of Five Hundred Thousand and no/100 Dollars
($500,000), or so much thereof as remains unpaid (hereinafter the "Principal
Balance") as may be evidenced by the Bank's liability ledger record on such
date, together with interest on the Principal Balance remaining unpaid from time
to time, from the date hereof until full payment hereof, at the rate per annum
hereinafter specified, all in accordance with the terms hereinafter set forth.
This Note has a variable interest rate feature. Interest on
the Note may change if the Index Rate (as hereinafter defined) changes. The
Index Rate for this Note shall be the Wall Street Journal Prime Rate plus one
percent. Interest on the outstanding Principal Balance shall be computed on the
basis of actual days elapsed in a year of 360 days. Any change in the interest
rate resulting from a change in the Index Rate shall be effective on the day the
corresponding change is published in the Wall Street Journal. Borrower shall
make interest payments monthly. Interest accruing on the Principal Balance
during each calendar month shall be due and payable on the 10th day of the next
succeeding month, commencing on February 10, 2000 and continuing on the 10th day
of each and every month thereafter until paid in full. The entire remaining
Principal Balance and all accrued interest thereon shall be paid in full on
March 1, 2001.
The Bank shall send to the Borrower on the last day of each
month a statement showing the principal actually advanced and unpaid and
interest on such advanced and unpaid principal, as reflected by the Bank's
liability ledger record for the Borrower for such month. The Bank's liability
ledger record shall be presumed accurate until the contrary is established by
the Borrower. The statement shall be in the form of a demand interest bill, and
shall be deemed to be correct and accepted and conclusively binding upon the
Borrower unless the Borrower notifies the Bank in writing of any error the
Borrower contends is contained in such statement within thirty days after its
receipt.
This Note is issued pursuant to a certain Loan Agreement dated
January 18, 2000, between the Borrower and the Bank (the "Loan Agreement").
Under the Loan Agreement the Borrower may borrow, subject to the terms thereof,
from the Bank and may repay and reborrow all or any part of said amount from
time to time so long as the outstanding Principal Balance hereof never exceeds
$500,000. This Note shall evidence each and every such borrowing.
<PAGE> 2
So long as the Bank remains obligated to make advances to the
Borrower pursuant to the Loan Agreement, the liability of the Borrower hereunder
cannot be discharged by repayment of any or all advances made by the Bank to the
Borrower.
If any Event of Default occurs under the Loan Agreement, the
holder hereof may, at its option, by notice in writing to the Borrower, declare
immediately due and payable the entire Principal Balance on this Note then
outstanding and all interest thereon and the same shall be immediately due and
payable without further notice or demand.
The Borrower hereby waives presentment, protest and notice of
nonpayment and dishonor and agrees to pay all costs of collection, including
reasonable attorneys' fees, in case any payment shall not be made in accordance
with the provisions of this Note.
This Note shall be governed by the laws of the State of
Indiana.
BAYFRONT VENTURES
By Concorde Cruises, Inc.
Its General Partner
By
-----------------------------------------
Its President
and by
GOLDCOAST ENTERTAINMENT CRUISES, INC.,
Its General Partner
By
-----------------------------------------
Its President
2
<PAGE> 1
EXHIBIT 10.5
GUARANTY
This Guaranty is made as of the 18th day of January, 2000, by
PRINCESA PARTNERS, a Florida general partnership for the benefit of the National
City Bank of Evansville (the "Lender").
Bayfront Ventures, a Florida general partnership (the
"Borrower"), and the Lender have entered into a Loan Agreement of even date
herewith (together with all amendments, modifications and restatements of such
Agreement, the "Loan Agreement") setting forth the terms on which the Lender
will make certain advances to the Borrower, the proceeds of which will be used
by the Borrower for Borrower's general business purposes.
As a condition to making their advances under the Loan
Agreement, the Lender has required the execution and delivery of this Guaranty.
The Guarantor is an affiliate of Borrower. Guarantor is
dependant upon Borrower for a significant portion of it's revenue. The line of
credit outlined in the Loan Agreement is important and necessary for Borrower's
to continue to conduct it's business. Therefore, Guarantor accordingly expects
to receive direct economic benefits from the advances under the Loan Agreement.
ACCORDINGLY, the Guarantor, in consideration of the premises
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, hereby agrees as follows:
1. All terms defined in the Loan Agreement that are not
otherwise defined herein shall have the meanings given them in the Loan
Agreement.
2. The Guarantor hereby absolutely and unconditionally
guarantees to the Lender the full and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of (i) the Note,
including all interest thereon, and any extensions or renewals thereof and
substitutions therefor; and (ii) each and every other sum now or hereafter owing
to the Lender under the Loan Agreement or any other Loan Documents or under any
other promissory notes or agreements hereafter entered into by the Borrower (all
of said sums being hereinafter called the "Obligations").
3. The Guarantor will pay all reasonable costs, expenses and
attorneys' fees paid or incurred by the Lender in endeavoring to collect the
Obligations and in enforcing this Guaranty.
4. No act or thing need occur to establish the liability of
the Guarantor hereunder, and with the exception of full payment, no act or thing
(including, but not limited to, a discharge in bankruptcy of the Obligations,
and/or the running of the statute of limitations) relating to the Obligations
which but for this provision could act as a release of the liabilities of the
Guarantor hereunder, shall in any way exonerate the Guarantor, or affect,
impair, reduce or release this Guaranty and the liability of the Guarantor
hereunder; and this shall be a continuing, absolute and unconditional guaranty
and shall be in force and be binding upon the Guarantor until the Obligations
are fully paid.
<PAGE> 2
5. The liability of the Guarantor hereunder shall not be
affected or impaired in any way by any of the following acts or things (which
the Lender is hereby expressly authorized to do, omit or suffer from time to
time without notice to or consent of anyone): (i) any acceptance of collateral
security, guarantors, accommodation parties or sureties for any or all
Obligations; (ii) any extensions or renewal of any Obligations (whether or not
for longer than the original period) or any modification of the interest rate,
maturity or other terms of any Obligations; (iii) any waiver or indulgence
granted to the Borrower, any delay or lack of diligence in the enforcement of
any Notes or any other Obligations; (iv) any full or partial release of,
compromise or settlement with, or agreement not to sue, the Borrower or any
other guarantor or other person liable on any Obligations; (v) any release,
surrender, cancellation or other discharge of any Obligations or the acceptance
of any instrument in renewal or substitution for any instrument evidencing
Obligations; (vi) any failure to obtain collateral security (including rights of
setoff) for any Obligations, or to see to the proper or sufficient creation and
perfection thereof, or to establish the priority thereof, or to preserve,
protect, insure, care for, exercise or enforce any collateral security for any
of the Obligations; (vii) any modification, alteration, substitution, exchange,
surrender, cancellation, termination, release or other change, impairment,
limitation, loss or discharge of any collateral security for any of the
Obligations; (viii) any assignment, sale, pledge or other transfer of any of the
Obligations; or (ix) any manner, order or method of application of any payments
or credits on any Obligations. The Guarantor waives any and all defenses and
discharges available to a surety, guarantor, or accommodation co-obligor,
dependent on its character as such.
6. The Guarantor waives any and all defenses, claims, setoffs
and discharges of the Borrower, or any other obligor, pertaining to the
Obligations, except the defense of discharge by payment in full. Without
limiting the generality of the foregoing, the Guarantor will not assert against
the Lender any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
ultra vires acts, usury, illegality or unenforceability which may be available
to the Borrower in respect of the Obligations, or any setoff available against
the Lender to the Borrower, whether or not on account of a related transaction,
and the Guarantor expressly agrees that it shall be and remain liable for any
deficiency remaining after foreclosure of any security interest securing any
Obligations, notwithstanding provisions of law that may prevent the Lender from
enforcing such deficiency against the Borrower. The liability of the Guarantor
shall not be affected or impaired by any voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all the assets,
marshaling of assets and liabilities, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar event or proceeding affecting,
the Borrower or any of the Borrower's assets. The Guarantor will not assert
against the Lender any claim, defense or setoff available to the Guarantor
against the Borrower.
2
<PAGE> 3
7. The Guarantor also hereby waives: (i) presentment, demand
for payment, notice of dishonor or nonpayment, and protest of the Obligations;
(ii) notice of the acceptance hereof by the Lender and of the creation and
existence of all Obligations; and (iii) notice of any amendment to or
modification of any of the terms and provisions of any Loan Documents. The
Lender shall not be required to first resort for payment of the Obligations to
the Borrower or any other persons or corporations, their properties or estates,
or to any collateral, property, liens or other rights or remedies whatsoever.
8. Whenever, at any time or from time to time, the Guarantor
shall make any payment to the Lender hereunder, the Guarantor shall notify the
Lender in writing that such payment is made under this Guaranty for such
purpose. If any payment applied by the Lender to the Obligations is thereafter
set aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
the Borrower or any other obligor), the Obligations 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 Obligations as fully as if such application had never
been made.
9. No payment by the Guarantor pursuant to any provision
hereof shall entitle the Guarantor, by subrogation to the rights of the Lender
or otherwise, to any payment by the Borrower or out of the property of the
Borrower until all of the Obligations (including interest) and all reasonable
costs, expenses and attorneys' fees paid or incurred by the Lender in
endeavoring to collect the Obligations and enforcing this Guaranty have been
fully paid. The Guarantor will not exercise or enforce any right of
contribution, reimbursement, recourse or subrogation available to the Guarantor
as to any Obligations, or against any person liable therefor, or as to any
collateral security therefor, unless and until all such Obligations shall have
been fully paid and discharged.
10. This Guaranty shall constitute a continuing and
irrevocable Guaranty, and the Lender may continue, without notice to or consent
by the Guarantor, to make loans and extend other credit or financial
accommodation to or for the account of the Borrower in reliance upon this
Guaranty until written notice of revocation of this Guaranty shall have been
received by the Lender from the Guarantor. Any such notice of revocation shall
not affect this Guaranty in relation to any Obligations then existing or created
thereafter pursuant to any previous commitment of the Lender to the Borrower, or
any extensions or renewals of any such Obligations, and as to all such
Obligations and extensions or renewals thereof, this Guaranty shall continue
effective until the same have been fully paid with interest.
11. This Guaranty shall be binding upon the successors and
assigns of the Guarantor, and shall inure to the benefit of the successors and
assigns of the Lender.
3
<PAGE> 4
12. The Guarantor irrevocably (i) agrees that any suit, action
or other legal proceeding arising out of or relating to this Guaranty may be
brought in a court of record in the State of Indiana or in the Courts of the
United States located in such State, (ii) consents to the jurisdiction of each
such court in any suit, action or proceeding, (iii) waives any objection which
it may have to the laying of venue of any such suit, action or proceeding in any
such courts and any claim that any such suit, action or proceeding has been
brought in an inconvenient forum, and (iv) agrees that a final judgment in any
such suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
13. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, BASED ON
OR PERTAINING TO THIS GUARANTY OR ANY OTHER RELATED LOAN DOCUMENT TO WHICH THE
GUARANTOR IS A PARTY.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty
as of the day and year first above written.
PRINCESA PARTNERS
CONAMI, Inc., It's General Partner
By
------------------------------------------
Its President
4
<PAGE> 1
EXHIBIT 10.6
GUARANTY
This Guaranty is made as of the 18th day of January 2000, by CONCORDE
GAMING CORPORATION, (the "Guarantor") a Colorado corporation, for the benefit of
the National City Bank of Evansville (the "Lender").
Bayfront Ventures, a Florida general partnership (the "Borrower"), and
the Lender have entered into a Loan Agreement of even date herewith (together
with all amendments, modifications and restatements of such Agreement, the "Loan
Agreement") setting forth the terms on which the Lender will make certain
advances to the Borrower, the proceeds of which will be used by the Borrower for
the Borrower's general business purposes.
As a condition to making advances under the Loan Agreement, the Lender
has required the execution and delivery of this Guaranty.
The Guarantor indirectly owns an 80% interest in the Borrower and
accordingly expects to receive direct economic benefits from the advances under
the Loan Agreement.
ACCORDINGLY, the Guarantor, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby agrees as follows:
1. All terms defined in the Loan Agreement that are not otherwise
defined herein shall have the meanings given them in the Loan Agreement.
2. The Guarantor hereby absolutely and unconditionally guarantees to
the Lender the full and prompt payment when due, whether at maturity or earlier
by reason of acceleration or otherwise, of the Obligations.
3. The Guarantor will pay all reasonable costs, expenses and attorneys'
fees paid or incurred by the Lender in endeavoring to collect the Obligations
and in enforcing this Guaranty.
4. No act or thing need occur to establish the liability of the
Guarantor hereunder, and with the exception of full payment, no act or thing
(including, but not limited to, a discharge in bankruptcy of the Obligations,
and/or the running of the statute of limitations) relating to the Obligations
which but for this provision could act as a release of the liabilities of the
Guarantor hereunder, shall in any way exonerate the Guarantor, or affect,
impair, reduce or release this Guaranty and the liability of the Guarantor
hereunder; and this shall be a continuing, absolute and unconditional guaranty
and shall be in force and be binding upon the Guarantor until the Obligations
are fully paid.
<PAGE> 2
5. The liability of the Guarantor hereunder shall not be affected or
impaired in any way by any of the following acts or things (which the Lender is
hereby expressly authorized to do, omit or suffer from time to time without
notice to or consent of anyone): (i) any acceptance of collateral security,
guarantors, accommodation parties or sureties for any or all Obligations; (ii)
any extensions or renewal of any Obligations (whether or not for longer than the
original period) or any modification of the interest rate, maturity or other
terms of any Obligations; (iii) any waiver or indulgence granted to the
Borrower, any delay or lack of diligence in the enforcement of any Obligations;
(iv) any full or partial release of, compromise or settlement with, or agreement
not to sue, the Borrower or any other guarantor or other person liable on any
Obligations; (v) any release, surrender, cancellation or other discharge of any
Obligations or the acceptance of any instrument in renewal or substitution for
any instrument evidencing Obligations; (vi) any failure to obtain collateral
security (including rights of setoff) for any Obligations, or to see to the
proper or sufficient creation and perfection thereof, or to establish the
priority thereof, or to preserve, protect, insure, care for, exercise or enforce
any collateral security for any of the Obligations; (vii) any modification,
alteration, substitution, exchange, surrender, cancellation, termination,
release or other change, impairment, limitation, loss or discharge of any
collateral security for any of the Obligations; (viii) any assignment, sale,
pledge or other transfer of any of the Obligations; or (ix) any manner, order or
method of application of any payments or credits on any Obligations. The
Guarantor waives any and all defenses and discharges available to a surety,
guarantor, or accommodation co-obligor, dependent on its character as such.
6. The Guarantor waives any and all defenses, claims, setoffs and
discharges of the Borrower, or any other obligor, pertaining to the Obligations,
except the defense of discharge by payment in full. Without limiting the
generality of the foregoing, the Guarantor will not assert against the Lender
any defense of waiver, release, discharge in bankruptcy, statute of limitations,
res judicata, statute of frauds, anti-deficiency statute, fraud, ultra vires
acts, usury, illegality or unenforceability which may be available to the
Borrower in respect of the Obligations, or any setoff available against the
Lender to the Borrower, whether or not on account of a related transaction, and
the Guarantor expressly agrees that it shall be and remain liable for any
deficiency remaining after foreclosure of any security interest securing any
Obligations, notwithstanding provisions of law that may prevent the Lender from
enforcing such deficiency against the Borrower. The liability of the Guarantor
shall not be affected or impaired by any voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all the assets,
marshaling of assets and liabilities, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar event or proceeding affecting,
the Borrower or any of the Borrower's assets. The Guarantor will not assert
against the Lender any claim, defense or setoff available to the Guarantor
against the Borrower.
7. The Guarantor also hereby waives: (i) presentment, demand for
payment, notice of dishonor or nonpayment, and protest of the Obligations; (ii)
notice of the acceptance hereof by the Lender and of the creation and existence
of all Obligations; and
2
<PAGE> 3
(iii) notice of any amendment to or modification of any of the terms and
provisions of the Loan Documents. The Lender shall not be required to first
resort for payment of the Obligations to the Borrower or any other persons or
corporations, their properties or estates, or to any collateral, property, liens
or other rights or remedies whatsoever.
8. Whenever, at any time or from time to time, the Guarantor shall make
any payment to the Lender hereunder, the Guarantor shall notify the Lender in
writing that such payment is made under this Guaranty for such purpose. If any
payment applied by the Lender to the Obligations is thereafter set aside,
recovered, rescinded or required to be returned for any reason (including,
without limitation, the bankruptcy, insolvency or reorganization of the Borrower
or any other obligor), the Obligations 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 Obligations as fully as if such application had never been made.
9. No payment by the Guarantor pursuant to any provision hereof shall
entitle the Guarantor, by subrogation to the rights of the Lender or otherwise,
to any payment by the Borrower or out of the property of the Borrower until all
of the Obligations (including interest) and all reasonable costs, expenses and
attorneys' fees paid or incurred by the Lender in endeavoring to collect the
Obligations and enforcing this Guaranty have been fully paid. The Guarantor will
not exercise or enforce any right of contribution, reimbursement, recourse or
subrogation available to the Guarantor as to any Obligations, or against any
person liable therefor, or as to any collateral security therefor, unless and
until all such Obligations shall have been fully paid and discharged.
10. This Guaranty shall constitute a continuing and irrevocable
Guaranty, and the Lender may continue, without notice to or consent by the
Guarantor, to make loans and extend other credit or financial accommodation to
or for the account of the Borrower in reliance upon this Guaranty until written
notice of revocation of this Guaranty shall have been received by the Lender
from the Guarantor. Any such notice of revocation shall not affect this Guaranty
in relation to any Obligations then existing or created thereafter pursuant to
any previous commitment of the Lender to the Borrower, or any extensions or
renewals of any such Obligations, and as to all such Obligations and extensions
or renewals thereof, this Guaranty shall continue effective until the same have
been fully paid with interest.
11. This Guaranty shall be binding upon the successors and assigns of
the Guarantor, and shall inure to the benefit of the successors and assigns of
the Lender.
12. The Guarantor irrevocably (i) agrees that any suit, action or other
legal proceeding arising out of or relating to this Guaranty may be brought in a
court of record in the State of Indiana or in the Courts of the United States
located in such State, (ii) consents to the jurisdiction of each such court in
any suit, action or proceeding, (iii) waives any objection which it may have to
the laying of venue of any such suit, action or proceeding in any such
3
<PAGE> 4
courts and any claim that any such suit, action or proceeding has been brought
in an inconvenient forum, and (iv) agrees that a final judgment in any such
suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
13. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, BASED ON OR PERTAINING
TO THIS GUARANTY OR ANY OTHER RELATED LOAN DOCUMENT TO WHICH THE GUARANTOR IS A
PARTY.
14. The Guarantor hereby covenants with and for the benefit of the
Lender that the Guarantor will provide copies of its 10K and 10Q reports to the
Lender within five business days of their filing with the SEC.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
day and year first above written.
CONCORDE GAMING CORPORATION
By
--------------------------
Its
----------------------
4
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 1,573,513
<SECURITIES> 0
<RECEIVABLES> 542,728
<ALLOWANCES> 0
<INVENTORY> 76,735
<CURRENT-ASSETS> 3,134,038
<PP&E> 12,002,896
<DEPRECIATION> 1,285,635
<TOTAL-ASSETS> 16,681,180
<CURRENT-LIABILITIES> 2,554,048
<BONDS> 0
0
0
<COMMON> 240,104
<OTHER-SE> 920,307
<TOTAL-LIABILITY-AND-EQUITY> 16,681,180
<SALES> 0
<TOTAL-REVENUES> 4,124,002
<CGS> 0
<TOTAL-COSTS> 4,485,034
<OTHER-EXPENSES> (18,890)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 481,770
<INCOME-PRETAX> (823,912)
<INCOME-TAX> 0
<INCOME-CONTINUING> (823,912)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (823,912)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
