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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: March 29, 1995
(Date of earliest event reported)
ALLIANCE GAMING CORPORATION
a Nevada corporation
(Exact name of registrant as specified in its charter)
Nevada 0-4281: 88-0104066
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation File Number) Identification No.)
4380 Boulder Highway
Las Vegas, Nevada 89121
(Address of principal executive offices, including zip code)
(702) 435-4200
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 29, 1995, Alliance Gaming Corporation, a
Nevada corporation (the "Company"), consummated certain transac-
tions whereby the Company's wholly-owned subsidiary, United
Gaming Rainbow, a Nevada corporation ("UGR"), acquired from The
Rainbow Casino Corporation, a Mississippi corporation ("RCC"),
the general partnership interest in the Rainbow Casino-Vicksburg
Partnership, L.P., a Mississippi limited partnership (the "Part-
nership"), and increased its partnership interest in the Partner-
ship. Such transactions were accomplished pursuant to (1) a
Consolidation Agreement dated as of March 29, 1995 (the "Consoli-
dation Agreement") among the Company, UGR, RCC, National Gaming
Mississippi, Inc., a Delaware corporation ("NGM"), HFS Gaming
Corp., a Delaware corporation ("HFS"), and, as to certain mat-
ters, National Gaming Corporation, a Delaware corporation and the
parent corporation of NGM ("NGC"), Rainbow Development Corpora-
tion, a Mississippi corporation ("RDC"), and John A. Barrett, Jr.
and Leigh Seippel, and (2) a Second Amended and Restated Partner-
ship Agreement dated as of March 29, 1995 (the "Amended Partner-
ship Agreement") between UGR, as general partner, and RCC, as
limited partner. Messrs. Barrett and Seippel are the sole owners
of RCC.
As previously reported, on July 16, 1994, the Rainbow
Casino located in Vicksburg, Mississippi (the "Casino") opened
for business to the public. At such time, RCC was the general
partner in the Partnership (owning a 55% interest) and UGR was
the limited partner in the Partnership (owning a 45% interest).
The Casino, which is located on the Mississippi River
in Vicksburg, is approximately 24,000 square feet and has approx-
imately 573 gaming machines and 28 table games. The Casino forms
part of a project which includes certain restaurant facilities
under construction (as described below) as well as a family
entertainment park and hotel, each of which is also under con-
struction, and which are described further below (collectively,
the "Project"). In connection with the transactions completed by
the Consolidation Agreement and Amended Partnership Agreement,
the Partnership intends to rename the Project "Vicksburg Land-
ing".
The Consolidation Agreement provides that in connection
with the assumption of approximately $1,140,000 of liabilities
related to the completion of the Project which survived the
opening of the Casino (for which RCC was to have been responsible
but failed to satisfy) by NGM, and a related cash payment by UGR
to NGM in connection therewith, (a) UGR became the general
partner in the Partnership and RCC became the limited partner in
the Partnership and (b) the respective interests of UGR and RCC
in the Partnership were adjusted as described herein. The source
of fund for such cash payment by UGR was working capital of the
Company. In connection with such cash payment, NGM agreed to
undertake the obligation of RCC to complete certain uncompleted
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items related to the Casino and to be responsible for liabilities
relating to the completion of the Casino (and to indemnify UGR
and its affiliates in connection therewith). As adjusted by the
Consolidation Agreement and the Amended Partnership Agreement,
RCC is entitled to receive, for a period of 15 years from January
1, 1995, subject to extension for one-year periods (in the event
that for each one-year period during such 15-year term, a minimum
annual payment of $50,000 is not made), 10% of the Net Cash Flow
(as defined therein, generally to consist of cash available for
distribution to the partners in the Partnership after all expens-
es are paid and after giving effect to existing debt service),
which amount shall increase to 20% of the portion of the Net Cash
Flow attributable (on an imputed straight line basis) to that
portion of Gross Gaming Revenues (as defined therein) which
exceeds $35 million. UGR is entitled to receive all other
amounts associated with the Partnership (including all proceeds
in respect of financings, recapitalizations and other capital
transactions involving the Partnership or its assets). The
Amended Partnership Agreement also provides for customary terms,
including certain obligations on the part of RCC to transfer its
interest in the Partnership upon a sale or disposition of the
entire Project (irrespective of the type of transaction) by UGR.
In addition, accrued and unpaid amounts in respect of the royalty
previously payable to UGR (which was prospectively cancelled in
connection with the Consolidation Agreement) and certain other
accrued and unpaid amounts owing to UGR were capitalized as a
Partnership debt obligation which has a priority relative to
RCC's interest as described above.
The Consolidation Agreement provides that of the first
$4 million of Additional Capital (as defined therein) which
hereafter may be provided to the Partnership, UGR will fund $2
million and NGM will fund $2 million (of such aggregate $4
million, a $500,000 waiver fee will be payable to HFS). The
Additional Capital (net of such fee) will be applied to complete
uncompleted portions of the Project (including the restaurant,
which UGR has agreed to complete, subject to force majeure and
similar events, by June 30, 1995), and to make improvements in
the Project at the discretion of UGR. Such amounts (and the
capitalized accruals described above) are evidenced by certain
promissory notes issued by the Partnership to each of UGR and
NGM. In addition to such $4 million, UGR has the right, at its
option, to fund additional amounts to improve the Project, of
which an additional $1.5 million (i.e., for an aggregate of $5.5
million, inclusive of such capitalized amounts) would be funded
on a priority basis relative to RCC's interest in Net Cash Flow
described above. Such additional amounts would also be evidenced
by such promissory notes. The shares of common stock of the
Company previously issued to Messrs. Barrett and Seippel, who are
the sole owners of RCC (as previously reported), and held in
escrow, were released upon execution of the Consolidation Agree-
ment (certain of such shares have been pledged by RCC to NGM to
satisfy liabilities of RCC to NGM as security for certain contin-
gent obligations of RCC in connection with the Consolidation
Agreement) and all other liabilities of RCC relating to comple-
tion of the Project (except as set forth in the Consolidation
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Agreement) have been released. In addition, the Consolidation
Agreement provides for certain additional shares of the Company
to be issued to Messrs. Barrett and Seippel if the Casino
achieves certain operating income targets on or prior to December
31, 1999. In connection with the Consolidation Agreement, the
Company and its affiliates, on the one hand, and RCC and Messrs.
Barrett and Seippel and their affiliates, on the other hand,
exchanged releases.
The financing to the Project (and related liens and
encumbrances) previously provided by HFS (and previously assigned
to NGM) will remain in full force and effect substantially as
originally provided and the royalty payable to HFS in connection
with marketing services provided and to be provided by HFS will
also remain in effect as originally provided.
As described above, contiguous to the Casino and
restaurant sites and constituting a part of the Project are (1) a
family entertainment park which is in the process of being
completed (and has been funded by third parties), and will be
operated as a "Funtricity" theme park, by a subsidiary of Six
Flags, Inc., and (2) a hotel which is in the process of being
completed (and has been funded by third parties), and will be
operated by a subsidiary of AmeriHost Properties, Inc. under a
Days Inn franchise. Such sites were leased by the Partnership on
a net basis to an entity providing financing to Six Flags, Inc.
and the hotel company, respectively, pursuant to long term ground
leases.
As previously reported, Mississippi Ventures, Inc., a
Nevada corporation and wholly-owned subsidiary of the Company
("MVI"), continues to manage the Casino and the Project on behalf
of the Partnership pursuant to a management agreement dated
October 28, 1993. MVI shall receive an annual fee plus certain
additional fees based on the cash flow (before giving effect to
payment of royalties) derived from the operation of the Casino.
The Partnership expects to enter into final arrange-
ments with Food Courts, Inc. to operate on a long-term basis a
number of food court style franchise and buffet restaurants at
the restaurant facility. It is expected that such agreement will
provide for percentage rents payable to the Partnership.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Audited Financial Statements of Rainbow Casino-Vicksburg
Partnership, L.P.
Balance Sheets as of December 31, 1994 and July 15, 1994
Statement of Operations for the period from February 19,
1993 (inception) through December 31, 1994
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(b) Unaudited Pro Forma Information
The required pro forma information is currently being com-
piled. Such information will be filed under cover of Form
8-K/A as soon as practicable, but not later than 60 days
after the date Form 8-K must be filed.
(c) Exhibits
2.1 Press Release dated March 31, 1995.
2.2 Consolidation Agreement dated as of March 29, 1995 among
the Company, UGR, RCC, the Partnership, NGM, HFS, NGC, RDC
and Messrs. Barrett and Seippel.
2.3 Second Amended and Restated Agreement of Limited Partnership
dated as of March 29, 1995 between UGR, as general partner,
and RCC, as limited partner
2.4 Class A Note dated March 29, 1995 issued by the Partnership
to UGR.
2.5 Class B Note dated March 29, 1995 issued by the Partnership
to NGM.
2.6 Class B Note dated March 29, 1995 issued by the Partnership
to UGR.
2.7 Letter Agreement dated March 29, 1995 among UGR, RCC, John
A. Barrett, Jr., Leigh Seippel and Butler, Snow, O'Mara,
Stevens & Cannada.
2.8 Release dated March 29, 1995 by UGR and the Company and
their affiliates of RCC, RDC, John A. Barrett, Jr. and Leigh
Seippel and their affiliates (other than the Partnership).
2.9 Release dated March 29, 1995 by RCC, RDC, John A. Barrett,
Jr. and Leigh Seippel and their affiliates of UGR and
the Company and their affiliates (other than the
Partnership).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Alliance Gaming Corporation
Dated: April 13, 1995 By: /s/Steve Greathouse
Name: Steve Greathouse
Title: President and CEO
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EXHIBIT INDEX
(a) Audited Financial Statements of Rainbow Casino-Vicksburg
Partnership, L.P.
Balance Sheets as of December 31, 1994 and July 15, 1994
Statement of Operations for the period February 19, 1993
(inception) through December 31, 1994
(b) Unaudited Pro Forma Information
The required pro forma information is currently being com-
piled. Such information will be filed under cover of Form
8-K/A as soon as practicable, but not later than 60 days
after the date Form 8-K must be filed.
(c) Exhibits
2.1 Press Release dated March 31, 1995.
2.2 Consolidation Agreement dated as of March 29, 1995 among
the Company, UGR, RCC, the Partnership, NGM, HFS, NGC, RDC
and Messrs. Barrett and Seippel.
2.3 Second Amended and Restated Agreement of Limited Partnership
dated as of March 29, 1995 between UGR, as general partner,
and RCC, as limited partner.
2.4 Class A Note dated March 29, 1995 issued by the Partnership
to UGR.
2.5 Class B Note dated March 29, 1995 issued by the Partnership
to NGM.
2.6 Class B Note dated March 29, 1995 issued by the Partnership
to UGR.
2.7 Letter Agreement dated March 29, 1995 among UGR, RCC, John
A. Barrett, Jr., Leigh Seippel and Butler, Snow, O'Mara,
Stevens & Cannada.
2.8 Release dated March 29, 1995 by UGR and the Company and
their affiliates of RCC, RDC, John A. Barrett, Jr. and Leigh
Seippel and their affiliates (other than the Partnership).
2.9 Release dated March 29, 1995 by RCC, RDC, John A. Barrett,
Jr. and Leigh Seippel and their affiliates of UGR and
the Company and their affiliates (other than the
Partnership).
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Exhibit 2.1
ALLIANCE
GAMING
CORPORATION
Media Contact: Investor Contact:
Johnann Mcllwain John Alderfer
Alliance Gaming Corporation Alliance Gaming Corporation
(702) 435-4200 (702) 435-4200
FOR IMMEDIATE RELEASE
ALLIANCE GAMING CORPORATION ANNOUNCES
RESTRUCTURING OF VICKSBURG PARTNERSHIP
LAS VEGAS, NEVADA, MARCH 31, 1995 -- Alliance Gaming Corporation
(NASDAQ: ALLY) announced that it acquired a substantial addi-
tional interest in the Rainbow Casino-Vicksburg Partnership, L.P.
and has now become the general partner in that partnership,
assuming full management and operational control of the Vicksburg
project. Alliance, which was formerly the 45% limited partner,
has restructured its arrangements with The Rainbow Casino Corpo-
ration ("RCC"), which was formerly the 55% general partner, so
that Alliance now owns the casino and related restaurant facili-
ties, subject to Hospitality Franchise Systems' ("HSF") existing
royalty arrangements and a 10% interest in cash flows (increasing
to 20% in certain circumstances) held by RCC, which will continue
over the next 15 years.
In connection with the restructuring, Alliance and National
Gaming Corp. (an affiliate of HFS) assumed full responsibility
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for completion of open items relating to the project. Alliance
and National Gaming each agreed to fund certain additional
amounts to the project in connection with its completion and the
addition of improvements to the project. Initially, the parties
are funding approximately $1.3 million (split evenly between
them) and National Gaming has committed to fund half of up to an
additional $2.7 million (with Alliance to fund the other half),
from which certain fees will be payable to HFS.
Steve Greathouse, Chairman and Chief Executive Officer of Alli-
ance, commented, "We are very pleased with the results of the
restructuring of the Rainbow Casino partnership. We look forward
to continued progress in Vicksburg where we will be working with
National Gaming, Six Flags and AmeriHost, as well as RCC, to
complete development of the Rainbow site with modest additional
capital. This will be accomplished in part by the inclusion in
the project of a hotel and a mini-theme park which are being
financed by third parties.
"As a result of our new general partner status, we expect to
provide significant managerial and operational leadership in
order to make the Vicksburg project a first class family enter-
tainment and gaming experience, and to significantly broaden and
enhance consumer appeal. In recognition of this new beginning,
we are renaming the project Vicksburg Landing," Mr. Greathouse
said.
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Alliance Gaming Corporation is a diversified gaming company and
the nation's largest private gaming device route operator cur-
rently serving Nevada and Louisiana. The Company operates land-
based and dockside casinos in Nevada and Mississippi, and designs
and manufactures gaming devices.
# # #
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Exhibit 2.2
CONSOLIDATION AGREEMENT
Consolidation Agreement dated as of March 29, 1995
among (A) The Rainbow Casino Corporation, a Mississippi corpora-
tion ("RCC"), (B) National Gaming Mississippi, Inc., a Delaware
corporation ("NGM"), and HFS Gaming Corp., a Delaware corporation
("HFS"), (C) Alliance Gaming Corporation, a Nevada corporation
formerly known as United Gaming, Inc. ("Alliance"), and United
Gaming Rainbow, a Nevada corporation and wholly-owned subsidiary
of Alliance ("UGR"), (D) Rainbow Casino-Vicksburg Partnership,
L.P., a Mississippi limited partnership (the "Partnership"), and
(E) for the purposes set forth above their signatures hereto, Mr.
John A. Barrett, Jr., Mr. Leigh Seippel, Rainbow Development
Corporation, a Mississippi corporation, and National Gaming
Corp., a Delaware corporation.
R E C I T A L S :
A. Alliance, on the one hand, and RCC and Messrs.
Barrett and Seippel, on the other hand, are parties to a Basic
Agreement dated as of October 28, 1993, as amended as of February
25, 1994, June 29, 1994 and July 16, 1994 (the "Basic Agree-
ment"), and UGR, on the one hand, and RCC, on the other hand, are
parties to an Amended and Restated Partnership Agreement dated as
of July 16, 1994 (the "Partnership Agreement") in respect of the
Partnership. The parties desire to amend the Basic Agreement and
the Partnership Agreement to give effect to certain events which
have occurred after the dates thereof, including without limita-
tion, to reflect that UGR shall be and become the general partner
in the Partnership and shall exclusively manage and operate the
business and affairs of the Partnership, RCC shall be and become
the limited partner in the Partnership, and that the Partnership
shall on the date hereof issue the Notes (as defined in the
Amended Partnership Agreement referred to below) to UGR and NGM.
B. NGM is the holder by assignment from HFS or an
affiliate thereof of certain mortgages and other liens against
the Project (as defined in the Basic Agreement), and has a
material interest in the full and timely consummation of the
transactions contemplated by this Agreement.
C. Pursuant to the terms of a certain Marketing and
Services Agreement dated as of March 15, 1994 entered into
between RCC and HFS (which the parties confirm is hereby as-
signed, transferred and set over, in all respects, by RCC to and
for the benefit of the Partnership), HFS has agreed to provide
certain marketing services in connection with the Project and is
entitled to receive the HFS Royalty (as defined therein). HFS
has a material interest in the full and timely consummation of
the transactions contemplated by this Agreement.
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A G R E E M E N T :
The parties agree as follows (capitalized terms not
defined herein have the meanings ascribed to them in the Basic
Agreement).
1. Amendment and Termination of Certain Documents;
Etc. (a) The Partnership Agreement shall be amended and restat-
ed to be in the form attached hereto as Exhibit A (the "Amended
Partnership Agreement"); it being the intention of the parties
that such Amended Partnership Agreement reflects, among other
things, (i) that UGR shall be the general partner and RCC shall
be the limited partner therein and that, in such capacity, RCC
shall be entitled to the benefits of the RCC Interest (as defined
in the Amended Partnership Agreement), (ii) that UGR and NGM
shall be the holders of Notes, which shall represent indebtedness
of the Partnership to UGR and NGM upon the funding by UGR and NGM
to or on behalf of the Partnership of certain amounts to fund
costs of the Project as provided herein and therein, and
(iii) the parties' respective intentions relating to certain
amendments of their existing relationships, including providing
that UGR shall exclusively exercise all management and control of
the Project.
(b) Each of the documents and instruments executed and
delivered prior to the date hereof between RCC or Messrs. Barrett
or Seippel or any of their respective affiliates (other than the
Partnership), on the one hand, and Alliance or any of its affili-
ates (other than the Partnership), on the other hand, shall be
terminated and of no further force and effect, including without
limitation, those documents set forth as being terminated in the
Releases attached hereto as Exhibits B-1 and B-2, except that the
documents and instruments identified on Schedule A to each of
such Releases shall survive the execution and delivery of such
Releases, this Agreement and the Amended Partnership Agreement.
Except as set forth in this Agreement, nothing contained in this
Agreement shall affect the HFS Financing Documents (as defined in
the Amended Partnership Agreement), which shall remain in full
force and effect as originally stated.
(c)(I) Subject to the provisions hereinafter set
forth, NGM shall (i) complete and pay for the "work to be
done" specified in Exhibit C-1 hereto in a good and workman-
like manner, free and clear of all liens or encumbrances
connected with or arising from the construction or comple-
tion of such work, and (ii) promptly pay or cause to be paid
the invoices relating to the "completed work not paid for"
and "claims in dispute" as set forth in Exhibit C-1 and pay
for, settle, remove and clear any lien or encumbrance or
otherwise discharge any claim by any person or entity on
account of unpaid amounts in respect of any goods or servic-
es furnished to or in connection with the construction or
completion of the Project on or prior to the date hereof,
except for the work required to completed by
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UGR as set forth in Section 4 below or in respect of the
City of Vicksburg Agreement (as defined below). NGM shall
use commercially reasonable efforts, subject to force
majeure, to complete all work specified in Exhibit C-1 on or
before May 31, 1995. UGR and NGM shall cooperate with one
another (and NGM shall keep UGR informed of the progress of
such work and relevant events and shall consult with UGR) in
order to ensure the completion of the Exhibit C-1 work as
soon as practicable after the date hereof in accordance with
the provisions hereof. NGM shall be entitled to retain all
recoveries set forth in Exhibit C-1 when received and the
parties hereto shall use their respective commercially
reasonable efforts and shall reasonably cooperate to attempt
to ensure the collection of such amounts; provided, that
such efforts shall not include the requirement to pay any
additional funds.
(II) At such time that NGM shall have completed the
"work to be done" on Exhibit C-1 in accordance with the
standards described above, NGM shall provide written notice
thereof to the Partnership. The Partnership shall have a
period of 90 to object to such completion notice; if the
Partnership does so object, it shall provide written notice
of such objection to NGM within such 90 day period and NGM
and UGR shall thereafter expeditiously meet and use their
best efforts to resolve such dispute (including the defemi-
nation of the completion date). Nothing contained in this
subsection (II) shall affect NGM's or National Gaming
Corp.'s obligations under or in respect of clause (ii) of
Section 1(c)(I) above or Section 3 below. If the Partner-
ship fails to so object within such 90-day period, the "work
to be done" as set forth on Exhibit C-1 shall be deemed
completed on the date of receipt of such notice from NGM.
(III) Alliance, UGR and the Partnership agree that
upon completion of such work and payment of the amounts
specified in Exhibit C-1 by NGM, RCC and Messrs. Barrett and
Seippel shall be released and discharged from all obliga-
tions and liabilities with respect to the completion of the
Project, except as otherwise set forth in the next succeed-
ing sentence and except in respect of any breaches of the
representations contained in Section 1(d) below. RCC repre-
sents and warrants that all work required to be completed by
RCC, Messrs. Barrett and Seippel or the Partnership under
certain ground leases with AP Hotels of Mississippi, Inc.
and Chartwell Associates IV, L.P. dated June 21, 1994 and
June 30, 1994, respectively, is included within the work
described in Exhibit C-1, except (i) the required relocation
(and the negotiation, completion and payment therefor) of
the employee parking lot from 1.5 miles in proximity to the
Project, to five miles in proximity to the Project, which
work shall be and remain the full responsibility of RCC and
not of the Partnership nor NGM
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(and RCC (and not the Partnership nor NGM) shall be liable
for any loss, cost, damage or expense resulting from the
failure to obtain such relocation), and (ii) the negotiation
for (and completion and payment in respect thereof)
availability of an on-call rental pump pursuant to paragraph
6 of Schedule 3.2(b) of the ground lease with Chartwell
Associates IV, L.P., which work shall be and remain the full
responsibility of RCC and not of the Partnership or NGM (and
RCC (and not the Partnership nor NGM) shall be liable for
any loss, cost, damage or expense resulting from the failure
to negotiate a definitive agreement to obtain such on-call
rental pump); provided, that the Partnership shall pay for
the cost of the actual rental of such pump as opposed to the
costs described above. RCC, Alliance, UGR, the Partnership
and Messrs. Barrett and Seippel acknowledge and agree that
NGM has agreed to undertake the obligations under this
Section 1(c) at the request of, and as an accommodation to,
RCC, Alliance, UGR, the Partnership, Messrs. Barrett and
Seippel in order to resolve certain matters between the
parties. Except as expressly set forth in this Section
1(c), neither NGM, National Gaming Corp. or HFS shall have
any liability or obligation to RCC, Alliance, UGR, the
Partnership, Messrs. Barrett or Seippel with respect to the
completion of the Project.
(d) RCC (and as to themselves only, individually and
severally, Mr. Barrett and Mr. Seippel) represent and warrant to
NGM and Alliance that, except as set forth in Exhibit C-1 hereto
and except for the agreement dated February 7, 1994 as amended
July 11, 1994 between the Partnership and the City of Vicksburg
(the "City of Vicksburg Agreement"), neither the Partnership nor
RCC nor Messrs. Barrett or Seippel have incurred nor does there
exist on behalf of the Partnership any outstanding liabilities or
obligations or any kind, contingent, fixed or otherwise, related
to the completion of the Project.
(e) UGR and RCC and Messrs. Barrett and Seippel each
hereby directs Butler, Snow, O'Mara, Stevens & Cannada, to
release any and all shares of common stock held by such firm as
escrow agent pursuant to the Escrow Agreement dated August 11,
1994 among such firm, as escrow agent, and UGR, RCC and Messrs.
Barrett and Seippel, to or as directed by RCC, and each confirms
that the duties of such law firm in connection therewith are
discharged in full. A copy of this Agreement shall be furnished
to such firm in furtherance of such direction in accordance with
the letter attached hereto as Exhibit D. Upon Messrs. Barrett
and Seippel furnishing to Alliance customary representations and
opinion letters and tendering their existing stock certificates,
Alliance shall expeditiously (but within 10 business days) cause
substitute or replacement stock certificates to be issued to such
persons. The parties acknowledge that pursuant to certain Pledge
and Security Agreements dated as of the date hereof given by
Messrs. Barrett and Seippel to NGM, Mr. Barrett and Mr. Seippel
are each required to deliver 35,000 shares of such common stock
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to NGM (for an aggregate of 70,000 shares) in accordance with a
certain pledge agreement among Messrs. Barrett and Seippel and
NGM (which blocks of 35,000 shares shall each be evidenced by two
certificates evidencing 17,500 shares each). Doyle & Bachman and
Alliance, by signature below, acknowledges that each will use its
commercially reasonable efforts to cause certificates represent-
ing such shares to be issued and delivered to NGM upon tender by
Mr. Barrett and Seippel of the existing stock certificates.
Alliance additionally agrees that it shall, at the request of
NGM, cause the Form S-3 registration statement (the "Form S-3")
currently in effect in respect of 600,000 shares of stock issued
to Messrs. Barrett and Seippel to be amended in accordance with
commercially reasonable standards (including NGM furnishing
standard and customary affidavits and similar documents typically
furnished by selling stockholders) to enable NGM to dispose of
such stock in accordance with the Securities Act of 1933, and it
shall not deregister such stock covered by the Form S-3 other
than as permitted by the indemnification agreement filed as
exhibit to the Form S-3 and it shall, subject to such agreement
(including the term of effectiveness of the Form S-3), undertake
commercially reasonable efforts to maintain the availability of
the Form S-3 for use in connection with the disposition of such
stock.
(f) In connection with the transactions contemplated
hereby, in the event that, between the date hereof and December
31, 1999, the casino forming a part of the Project achieves
EBITDAR (as defined in the Amended Partnership Agreement) of at
least $10.5 million in respect of any continuous 12 calendar
month period, Alliance shall deliver to Messrs. Barrett and
Seippel in equal amounts (on a date specified by Alliance, which
shall be within 180 days of the end of such 12 calendar month
period), at the option of Alliance, an aggregate of $1 million in
cash or an aggregate of $1 million worth of Alliance's common
stock, par value $.10 per share (the "Common Stock"), based upon
a price per share equal to the average of the closing prices of
the Common Stock on the Nasdaq National Market (or the then prin-
cipal trading market for the Common Stock) for the 30 trading
days immediately preceding the day which is two business days
prior to the date of issuance, as specified by the Partnership.
In the event that Alliance delivers shares of Common Stock, such
shares of Common Stock shall be registered for sale under the
Securities Act of 1933 (on such form of registration statement as
Alliance shall elect) and under applicable state blue sky laws;
provided, that RCC shall have entered into such agreements with
Alliance and the Partnership (including without limitation,
relating to indemnification and the furnishing of information)
and executed such other documents and instruments (in form
reasonably satisfactory to Alliance) and taken such other actions
as shall then be customary for selling stockholders in public
offerings of equity securities; it being understood that an
agreement in the form previously executed in respect of the S-3
registration statement of Alliance effective on the date hereof
in respect of 600,000 shares of Common Stock shall be satisfacto-
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ry. In the event that Alliance fails to pay such cash amount or
cause the shares of Common Stock (as registered as described
above) to be issued in a timely manner, as set forth above, such
$1 million (or lesser amount as shall be outstanding) shall
accrue interest at the lesser of (i) the prime rate as in effect
from time to time as announced by Morgan Guaranty Trust Company
of New York plus 2% per year and (ii) the maximum rate permitted
by applicable law, from and after such 180th day until paid in
full.
(g) On the date hereof, the Partnership shall pay by
check $68,750 to Mr. Barrett and $68,750 to Mr. Seippel, consti-
tuting repayment of loaned cash advanced by them on the
Partnership's behalf as a temporary security for the gaming bond
issued prior to casino completion. Such amount may be paid by
Alliance on behalf of the Partnership; the Partnership shall
immediately reimburse Alliance for such amounts or establish an
appropriate inter-company account in respect thereof. Each of
RCC and Messrs. Barrett and Seippel, as applicable, hereby
assigns, transfers and sets over unto the Partnership (i) all of
RCC's and Messrs. Barrett's and Seippel's right, title and
interest in and to each bond heretofore established by or in the
name of RCC or Messrs. Barrett or Seippel relating to the Pro-
ject, including without limitation, those referenced in Section 3
of the June 29, 1994 amendment to the Basic Agreement and (ii)
all of RCC's and Messrs. Barrett's and Seippel's rights and
benefits under the Management Agreement (as defined below), which
the Partnership shall have the right to exercise in the sole
discretion of UGR.
(h)(x) Mr. Barrett owns a house located at 1440
Warrenton Road, Vicksburg, Mississippi which, together with
the property on which it is located, is presently under
lease to the Partnership. Mr. Barrett hereby grants to the
Partnership the right, at the option of the Partnership, (i)
to purchase, subject to no liens or encumbrances, his house
(and the property on which such house is located and any
related rights) for cash or (ii) to enter into at least a
three-year lease in respect thereof (with a duration speci-
fied by the Partnership) containing an option to purchase at
the price set forth below (which option shall be exercisable
during the lease term and for a period of 60 days thereaf-
ter), on the same terms and conditions as the existing lease
(at the rental rates presently in effect; provided, that if
the Partnership elects a lease which is longer than one
year, the monthly rental for periods after such one-year
period shall be $100 greater than the monthly rental in
effect on the date hereof). The Partnership shall provide
to Mr. Barrett notice of such election within 60 days from
the date hereof and thereafter the parties shall expedi-
tiously proceed to close such transactions. The purchase
price, in the event of a purchase, shall be $77,000, which
Mr. Barrett represents and warrants to be his actual funded
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costs of acquisition, with all closing costs to be paid by
the Partnership.
(y) Mr. Seippel owns a house located at Lot 17, Part
Lot 18 Walnut Ridge, Vicksburg, Mississippi. Mr. Seippel
shall sell and the Partnership shall purchase Mr. Seippel's
house (and the property on which such house is located and
any related rights) on a date specified by the Partnership
which shall be between 10 and 60 days after the date hereof.
The purchase shall be pursuant to a purchase agreement
containing customary terms and conditions, including that
the property on which the house is located is subject to no
liens or encumbrances or restrictions on the Partnership's
intended use thereof. The purchase price shall be $70,000,
which Mr. Seippel represents and warrants to be his actual
funded costs of acquisition, with all closing costs to be
paid by the Partnership.
(z) The Partnership hereby assigns such option and,
when executed, such purchase agreement, to HFS and NGM as
additional security for the obligations of the Partnership
under the HFS Financing Documents. Messrs. Barrett and
Seippel acknowledge that rights under such option and pur-
chase agreement may be exercised by HFS and/or NGM in the
event that HFS and/or NGM acquires title to the
Partnership's land as a result of foreclosure, deed in lieu
of foreclosure or otherwise. The Partnership shall notify
NGM and HFS of the acquisition or leasing by the Partnership
of the aforesaid properties and shall, upon the request of
NGM or HFS, cause the Partnership to grant a mortgage encum-
bering such properties to NGM and HFS as security for the
obligations of the Partnership under the HFS Financing
Documents.
(i) If requested by UGR, Rainbow Development Corpora-
tion shall grant to the Partnership, at the cost and expense of
the Partnership, but for no additional consideration, non-exclu-
sive easements across its land (at such locations as the parties
shall reasonably agree) to provide for the construction and usage
of a north entrance roadway to the Project.
2. Certain Advances and Partnership Matters. (a) It
is contemplated that certain additional amounts of capital (the
"Additional Capital") may be required by the Partnership to fund
costs incurred in connection with the completion of the work
described in Exhibit C-1, to upgrade the present condition and
configuration of the Project, including without limitation, the
completion of the restaurant contemplated to be constructed
thereat, and to pay to HFS the fee required to be paid by the
Partnership pursuant to Section 2(b)(iv) below. UGR and NGM
hereby agree to fund to or on behalf of the Partnership an
aggregate amount of up to but not in excess of the first $4
million of such Additional Capital in the manner hereinafter set
forth. Such $4 million shall be funded 50% by UGR and 50% by NGM
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on a pari passu basis. The balance of any Additional Capital
above $4 million required for the completion, upgrading or
working capital of the Project shall be funded solely by UGR in
accordance with the applicable provisions of the Amended Partner-
ship Agreement, and neither NGM or HFS shall have any obligation
to fund or finance any portion thereof. Amounts funded by NGM
hereunder shall be evidenced by the Class B Note in the principal
amount of $2 million issued by the Partnership to NGM in the
manner specified in the Amended Partnership Agreement. Amounts
funded by UGR hereunder and under the Amended Partnership Agree-
ment, together with certain accrued and unpaid amounts owed by
the Partnership to UGR or its affiliates, shall be evidenced by
the Class B Note in the principal amount of $3.5 million issued
by the Partnership to UGR in the manner specified in the Amended
Partnership Agreement. UGR shall establish appropriate inter-
company accounts with such affiliates in respect thereof.
(b) The parties agree that the first $4 million of
Additional Capital shall be utilized by the Partnership and shall
be funded to or on behalf of the Partnership as follows:
(i) On the date hereof, the Partnership shall pay or
be deemed to have paid to NGM the sum of $1,141,000 (the
"Completion Payment") in consideration of NGM's undertaking
to complete and pay for the Exhibit C-1 work in accordance
with the provisions hereof. UGR shall fund 50% of such
Completion Payment to, or as otherwise directed by, NGM and
NGM shall be deemed to have funded on the date hereof the
remaining 50% of such Completion Payment on a pari passu
basis. The Partnership shall be indebted, on the date
hereof, to each of UGR and NGM the amount of $570,500 (plus
the applicable additional amount under clause (iv) below) in
respect of each's Class B Note in connection with such
funding of the Completion Payment.
(ii) The Partnership shall pay to or as directed by
UGR an amount up to but not in excess of $950,000 to be
utilized for the payment of costs and expenses as and when
incurred in its sole discretion in connection with the
completion of the restaurant at the Project in accordance
with the provision hereof. NGM shall fund 50% of such
amounts as and when incurred based upon draw requests sub-
mitted in accordance with the provisions hereof. The re-
maining 50% of such amounts shall be deemed funded by UGR on
a pari passu basis as and when actually incurred. The
Partnership shall be indebted to each of UGR and NGM in the
amounts funded under this clause (ii) in respect of each's
Class B Note.
(iii) An amount up to the difference between
$2,359,000 and the amount actually funded under clause (ii)
above shall be funded 50% by UGR and 50% by NGM (on a pari
passu basis) to the Partnership based upon draw requests
submitted in accordance with the provisions hereof for
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additional costs and expenses, including working capital,
incurred by the Partnership in connection with the Project,
which additional costs and expenses shall be subject to the
reasonable approval of NGM and UGR. The Partnership shall
be indebted to each of UGR and NGM in the amounts funded
under this clause (iii) in respect of each's Class B Note.
(iv) The Partnership shall pay to HFS in the manner
hereinafter set forth a fee in the aggregate amount of
$500,000 (the "Waiver Fee") in consideration of the waiver
by HFS of certain defaults under the HFS Financing Documents
in accordance with the provisions of Section 3(c) below.
Contemporaneously with any funding under clauses (i), (ii)
and (iii) above, the Partnership shall pay to HFS a portion
of the Waiver Fee in an amount equal to the amount of such
funding multiplied by .142857; the final installment of the
Waiver Fee shall be paid not later than September 30, 1995
irrespective of whether the full $4 million committed to be
funded hereunder has been funded by such date. The Waiver
Fee shall be funded 50% by UGR and 50% by NGM. The Partner-
ship shall be indebted to each of UGR and NGM in the amounts
funded under this clause (iv) in respect of each's Class B
Note.
Amounts under clauses (ii), (iii) and (iv) shall be
funded within three business days of receipt by NGM and UGR of a
draw request, in form reasonably satisfactory to each of NGM and
UGR, setting forth a reasonably detailed use of proceeds of each
such draw request, together with such supporting documents as the
parties shall deem reasonable or appropriate; provided, that NGM
shall have the right solely with respect to fundings under clause
(iii) (and as clause (iv) is affected thereby) to reasonably
approve the expenditure of such funds and that NGM's review of
draw requests submitted under clause (ii) shall be limited solely
to verification that such amounts have been expended in connec-
tion with the restaurant. In the event NGM shall reasonably
object to expenditure of funds under clause (iii) above, NGM and
UGR shall expeditiously meet and use their best efforts to
resolve such dispute.
(c) In the event that NGM shall fail to fund any
amounts hereunder for any reason, UGR shall have the right to
fund such amounts in its sole discretion and the Partnership
shall be indebted to UGR in respect thereof under the Class B
Note issued to UGR as provided in the Amended Partnership Agree-
ment. UGR shall be permitted to fund amounts to the Partnership
in excess of the amounts provided for in this Agreement in its
sole discretion and the Partnership shall be indebted to UGR
under the Class B Note issued to UGR up to the maximum principal
amount thereof, as provided in the Amended Partnership Agreement.
In no event shall UGR have the right hereafter to fund monies to
the Partnership in respect of Additional Capital in excess of the
aggregate of (A) the difference between (i) $3.5 million and (ii)
$935,052, which is
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<PAGE>
the amount evidenced by the Class B Note in respect of accrued
and unpaid amounts owed by the Partnership to UGR on the date
hereof, and (B) any amounts funded by UGR upon failure by NGM to
fund amounts required to be funded by NGM hereunder, unless such
fundings are made expressly subordinate in right of payment to
the Class B Notes issued to NGM as of the date hereof.
(d) RCC, the Partnership and Messrs. Seippel and
Barrett acknowledge and agree that in accordance with the provi-
sions of the Basic Agreement and the Partnership Agreement,
Alliance is owed accrued and unpaid United Royalties (as defined
therein) and certain other amounts in the aggregate amount of
$935,052, as set forth in Exhibit A to the Amended Partnership
Agreement. The Partnership is indebted to UGR in such amount
under the Class B Note issued to UGR. Alliance and UGR hereby
waive any and all future rights to any United Royalty all of
which are prospectively terminated effective as of the date of
this Agreement; it being understood that all references to the
United Royalty or royalties payable under the Basic Agreement or
Partnership Agreement are hereby deleted. Nothing in the forego-
ing waiver shall affect the validity and enforceability of the
Class B Note issued to UGR.
(e) Each of the Class A Note and the Class B Notes
shall have an equal priority in payment and none of such Notes
shall be senior or subordinate to the others. Payments on the
Notes shall be made on a pari passu basis; it being understood
that in the event that less than the entire amount due and owing
in respect of the Notes is available for payment or otherwise
collected by the holders of the Notes, such pari passu payment
shall be determined, with respect to each Note, by multiplying
the total amount available for payment in respect of all Notes by
a fraction, the numerator of which shall be the amount then due
and owing under such Note, and the denominator of which shall be
the aggregate amount then due and owing under all of the Notes.
Each of UGR and NGM (so long as it is a holder of a Note) and any
successor holders shall hold all payments received or collected
in respect of the Notes in excess of its pro rata share, as
described above, in trust for the benefit of the other and shall
promptly remit any such excess to the other Note holder. By its
signature below and acceptance of a Note, each holder of any of
the Notes agrees that it shall not accelerate the indebtedness
evidenced by any Note by reason of a payment default or otherwise
or seek to enforce payment of interest on or principal of such
holders' Note during any period of time that the Partnership does
not have sufficient cash available to make any such payment;
rather, the amount of any unpaid installment of interest and/or
principal shall accrue (at the lower of the rate otherwise in
effect under the Notes plus 2% per year and the maximum rate
permitted by applicable law) and shall be payable at such time
that sufficient Partnership cash is available, as determined by
UGR in its capacity as general partner in the Partnership;
provided, that the foregoing forbearance shall not be applicable
in the event that the Partnership causes any distribution to be
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<PAGE>
made to the partners in the Partnership (in such capacities) at
such time that any such payment of interest on or principal of
any Note is in arrears. The Partnership shall promptly inform
UGR and NGM of any anticipated payment default under the Notes
and shall substantiate the inadequacy of cash available to make
payments on the Notes in a manner reasonably satisfactory to UGR
and NGM.
(f) UGR and the Partnership acknowledge and agree
that, subject to the provisions of Section 9.11 of the Amended
Partnership Agreement relating to confidentiality, during such
time that its Class B Note is outstanding, NGM shall have the
right to receive copies of all books and records, audits and
reports generated by the Partnership, including those reports
required to be prepared and supplied to the Partners under
Article VII of the Amended Partnership Agreement. NGM shall be
provided reasonable access to such books and records, at reason-
able times on reasonable notice, during such time that its Class
B Note is outstanding.
3. National Gaming and HFS Matters. (a) In consider-
ation of the payment of the Completion Payment, NGM shall comply
with the covenants set forth in Section 1(c) above. As addition-
al consideration of the payment of the Completion Payment, NGM
shall indemnify and hold harmless Alliance and its affiliates and
their respective directors, officers, employees and their respec-
tive agents (collectively, the "Indemnified Persons") in accor-
dance with the provisions of Section 3(b) below.
(b) NGM hereby agrees, upon demand of any Indemnified
Person, to indemnify and hold each Indemnified Person harmless
from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs,
expenses or disbursements (including without limitation, the
reasonable fees and expenses of counsel for such Indemnified
Persons), which any Indemnified Person may or shall incur direct-
ly as a result of the breach by NGM of the provisions of clauses
(i) or (ii) of Section 1(c) above; it being understood that NGM
shall not be liable for any consequential damages or loss of
profits. The obligations under clauses (i) or (ii) of Section
1(c) above are hereafter called the "Indemnified Liabilities").
To the extent that the foregoing indemnification may be unen-
forceable because it is violative of any application law or
public policy, NGM shall contribute the maximum portion which it
is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Liabilities incurred
by any Indemnified Person. The foregoing indemnity shall be
binding upon any entity with or into which NGM may merge or
consolidate or which may acquire all or substantially all of the
business or assets of NGM.
(c) RCC, Alliance, UGR and the Partnership hereby
acknowledge and agree that RCC and the Partnership are in default
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<PAGE>
under the HFS Financing Documents and HFS and NGM are entitled to
pursue remedies under the HFS Financing Documents as a result of
thereof. At the request of RCC, Alliance, UGR and the Partner-
ship and in consideration of payment by the Partnership to HFS of
the Waiver Fee, HFS and NGM hereby waive any and all defaults or
breaches thereunder as a result of the failure to complete the
Remaining Work by the Remaining Work Completion Date (each as
defined in the August 11, 1994 amendment to the HFS Financing
Agreement (as hereinafter defined)); such waiver and forbearance
being effective through and including June 30, 1995; provided,
that in no event shall HFS or NGM have the right to declare a
default under the HFS Financing Agreement as a result of the
failure to complete any item of work for which NGM is responsible
under Section 1(c) hereof. In addition, HFS and NGM each repre-
sents and warrants that, to its knowledge, there is no default or
breach under the HFS Financing Agreements other than as set forth
above.
(d) The term "HFS Financing Agreement" as used herein
shall mean that certain Casino Financing Agreement dated August
3, 1993 between Hospitality Franchise System, Inc. (successor by
merger to HFS Brands, Inc.) and RCC, as amended by letter agree-
ment dated as of February 25, 1994 and as further amended by
letter agreement dated as of August 11, 1994. The HFS Financing
Agreement is hereby amended as follows:
(i) Section 4(g) of the HFS Financing Agreement, as
set forth in paragraph 8 of the February 25, 1994 letter amend-
ment is hereby deleted in its entirety and the following substi-
tuted therefor:
(g) Notwithstanding the actual amount which may
or shall become due and payable under paragraph 4(f) above,
NGM (successor in interest to HFS with respect to the Loan)
and HFS hereby expressly agree that in the event of any
foreclosure proceeding, exercises of the right of power of
sale or similar proceeding or exercise of remedies under the
documents securing the Loan and the HFS Royalty at any time
that any principal, interest or other sums remain outstand-
ing under the Loan (as opposed to the time that such princi-
pal, interest and other sums have been repaid and according-
ly only the obligation to pay the HFS Royalty remains out-
standing), the "Net Proceeds" realized upon any such fore-
closure sale, exercise of the right of power of sale or
similar proceeding shall be distributed as follows:
(i) first, to pay to National Gaming Mississip-
pi, Inc. ("NGM") all accrued and unpaid interest,
principal and other sums due and owing with respect to
the HFS Loan;
(ii) second, to pay to HFS all accrued and
unpaid HFS Royalty amounts due and payable under para-
graphs 4(b) and 4(d) above;
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(iii) third, to pay to UGR and NGM all accrued
and unpaid interest on and the outstanding principal
amount of the Notes on a pari passu basis determined in
accordance with Section 2(e) of a Consolidation Agree-
ment among RCC, the Partnership, Alliance Gaming Corpo-
ration, HFS and certain other parties dated as of March
29, 1995; and
(iv) fourth, to HFS and the Partnership, on an
equal priority basis, in accordance with the following
formula: (a) one-third of such remaining Net Proceeds
shall be payable to HFS in respect of the HFS Liquidat-
ed Royalty Amount (the "HFS Amount"); (b) the remainder
of the Net Proceeds shall be paid to the Partnership,
to be distributed in accordance with the Amended Part-
nership Agreement dated March 29, 1995.
The term "Net Proceeds" shall mean the cash pro-
ceeds received from a foreclosure sale or exercise of simi-
lar remedy with respect to the Project and other collateral,
including the Barges, relating solely to the Casino minus
all applicable reasonable fees and expenses incurred by HFS
in connection with the foreclosure. It is expressly under-
stood that the special distribution of proceeds set forth in
this paragraph 4(g) is intended to apply solely with respect
to the distribution of proceeds relating to a foreclosure
with respect to the Project and the other collateral relat-
ing solely to the Project and not the proceeds realized with
respect to enforcement of remedies against the Development
Site. HFS, NGM, UGR, the Partnership and Alliance acknowl-
edge that pending distribution of the Net Proceeds each
shall hold such Net Proceeds in trust for the others respec-
tively, to the extent provided above and shall promptly
cause the distribution of the same in the manner set forth
above.
(ii) Section 10 of the August 11, 1994 letter agree-
ment constituting a part of the HFS Financing Agreement is hereby
amended by deleting paragraphs (f), (g) and (h) thereof and
substituting the following therefor:
(f) if Development Corp., the Vicksburg Partner-
ship or any general partner of the Vicksburg Partnership
shall make an assignment for the benefit of creditors;
(g) if a court of competent jurisdiction enters a
decree or order for relief with respect to any of Develop-
ment Corp., the Vicksburg Partnership or any general partner
in the Vicksburg Partnership under Title 11 of the United
States Code as now constituted or hereafter amended or under
any other applicable Federal or state bankruptcy law or
other similar law, or if such court enters a decree or order
appointing a receiver, liquidator, assignee,
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trustee, sequestrator (or similar official) of any of
Development Corp., the Vicksburg Partnership or any general
partner of the Vicksburg Partnership, or of any substantial
part of their respective properties, or if such court
decrees or orders the winding up or liquidation of the
affairs of any of Development Corp., the Vicksburg
Partnership or any general partner of the Vicksburg
Partnership;
(h) if any of the Development Corp., the
Vicksburg Partnership or any general partner in the
Vicksburg Partnership files a petition or answer or consent
seeking relief under Title 11 of the United States Code as
now constituted or hereafter amended, or under any other
applicable Federal or state bankruptcy law or other similar
law, or if any of Development Corp., the Vicksburg Partner-
ship or any general partner of the Vicksburg Partnership
consents to the institution of proceedings thereunder or to
the filing of any such petition or to the appointment of or
taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official)
of any of Development Corp., the Vicksburg Partnership or
any general partner of the Vicksburg Partnership, or of any
substantial part of their properties, or if any of Develop-
ment Corp., the Vicksburg Partnership or any general partner
of the Vicksburg Partnership fails generally to pay their
debts as such debts become due, or if any of Development
Corp., the Vicksburg Partnership or any general partner of
the Vicksburg Partnership takes any action in furtherance of
any action described in this subparagraph.
(iii) The parties acknowledge that UGR has succeeded
to the interest of RCC as general partner in the Partnership.
The HFS Financing Agreement is therefore amended to provide, in
substance, that (A) UGR shall have the right to perform any
covenant or agreement to be performed by RCC or the Partnership
under the HFS Financing Agreement (provided, that UGR shall not
take any action which would create an obligation or liability on
the part of RCC), (B) all rights and powers exercisable by RCC as
general partner of the Partnership or otherwise under the HFS
Financing Agreement shall be exercisable by UGR, as general
partner, and (C) all notices to be given or received by the
Partnership shall be given and received by UGR, as general
partner of the Partnership.
(iv) Except as otherwise provided above, the HFS
Financing Agreement and all documents executed and delivered in
connection therewith remain in full force and effect and unmodi-
fied. RCC, UGR, Rainbow Development Corporation and the Partner-
ship certify to NGM and HFS that there is outstanding on the HFS
Loan as of February 28, 1995, the principal amount of $9,289,065,
with interest accrued and unpaid thereon from February 28, 1995;
the HFS Financing Agreement and all documents executed and
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delivered in connection therewith are valid, binding and enforce-
able in accordance with their respective terms and provisions,
and there are no counterclaims, defenses or offsets which may be
asserted with respect thereto, or which may in any manner affect
the collection or collectibility of the principal, interest and
other sums (including the HFS Royalty) evidenced and secured
thereby, nor is there any basis whatsoever for any such counter-
claim, defense or offset. RCC, UGR, Rainbow Development Corpora-
tion, the Partnership and Messrs. Barrett and Seippel acknowledge
and agree that in connection with any enforcement proceeding by
HFS or NGM under or in respect of the HFS Financing Agreement or
any document executed and delivered in connection therewith or
otherwise, no defense, counter or cross claim, suit or proceeding
shall be interposed or maintained by such persons or entities
relating to lender liability, equitable subordination or any
similar theory (e.g., relating to a claim that the indebtedness
of HFS Royalty ought to be released, limited or subordinated) as
a result of the execution and delivery of this Agreement, the
completion of a portion of the Project by NGM in accordance with
this Agreement or other actions taken by HFS or NGM in connection
with this Agreement and the transactions contemplated thereby.
4. Alliance Matters. In consideration of the monies
to be funded to UGR in accordance with Section 2(b)(ii) hereof,
UGR shall complete and pay for the construction of the restau-
rant, walkways and canopies (including the walkways and canopies
provided to be constructed for the benefit of AP Hotels of
Mississippi, Inc. under its ground lease with the Partnership)
and any other work described on Exhibit C-2 hereto, in a good and
workmanlike manner free and clear of all liens connected with or
arising from the completion or construction of such work. UGR
shall use commercially reasonable efforts, subject to force
majeure, to cause the restaurant to open for business not later
than June 30, 1995. The foregoing obligations as well as UGR's
obligations under Section 2 above shall, by execution of this
Agreement, be guaranteed by Alliance (and shall be binding upon
any entity with or into which Alliance may merge or consolidate
or which may acquire all or substantially all of the business or
assets of Alliance).
5. Releases; Etc. On the date hereof, Alliance and
UGR are delivering to RCC and Messrs. Barrett and Seippel a
release in the form attached hereto as Exhibit B-1 hereto and RCC
and Messrs. Barrett and Seippel are delivering to Alliance and
UGR a release in the form attached hereto as Exhibit B-2 hereto.
6. Miscellaneous. (a) Expenses. Except as set
forth in Exhibit C-1 hereto, each of the parties shall bear its
own out of pocket legal and other expenses in connection with the
preparation, negotiation and execution of this Agreement, the
Amended Partnership Agreement and any related documents or
instruments.
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(b) Governing Law; Modification. This Agreement
shall be governed by and construed in accordance with the inter-
nal laws of the State of Mississippi, without regard to princi-
ples of conflicts of law. This Agreement shall not be modified
or amended except in writing signed by all parties hereto.
(c) Survival. The respective representations, warran-
ties and agreements of each of the parties contained in this
Agreement shall survive the consummation of the transactions
contemplated hereby and thereby.
(d) Further Assurances. Each party shall hereafter
execute and deliver all additional documents or instruments and
take all further actions as shall be reasonably necessary or ap-
propriate in furtherance of or better to assure the rights
granted under this Agreement and the Amended Partnership Agree-
ments.
(e) Gaming Approvals. No payment shall be made
hereunder or right granted to any person or entity if such
payment or granting of such rights would be in violation of
applicable laws or regulations or necessitate a finding of
suitability that has not been obtained; in such event each of the
parties shall in good faith negotiate and as appropriate any
necessary amendments or modifications to this Agreement and/or
the Amended Partnership Agreement.
(f) Assignment and Successors. Subject to Section
6(e) above and the Amended Partnership Agreement, Alliance, UGR,
NGM and RCC and the Partnership shall have the right to assign
all or any of their respective rights hereunder or under the
Amended Partnership Agreement to any other person or entity;
provided, that each of the parties hereto shall remain liable in
respect of its obligations hereunder. This Agreement and the
rights and obligations of the parties hereto shall inure to the
benefit of and be binding upon their respective successors and
assigns.
(g) Notices. All notices hereunder shall be in
writing and shall be furnished in the manner provided in the
Partnership Agreement; provided, that any notice to NGM or HFS
shall be provided to c/o National Gaming Corporation, 339 Jeffer-
son Road, Parsippany, New Jersey 07054, with a copy to Battle
Fowler, 75 East 55th Street, New York, New York 10022; attention:
Mary Ann Villari, Esq.
(h) Jurisdiction. Each of the parties hereto irrevo-
cably submits to the non-exclusive jurisdiction of any federal
court sitting in Jackson, Mississippi or Vicksburg, Mississippi
and any appellate court therefrom over any controversy arising
out of this Agreement.
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(i) Management Agreement. Except as set forth herein,
the Management Agreement dated as of October 28, 1993 among the
Partnership, Mississippi Ventures, Inc. and RCC (the "Management
Agreement"), shall remain in full force and effect as originally
stated and as amended.
(j) Amendment. In amending the Partnership Agreement,
it is the intention of the parties to adjust their roles and
interests in the Partnership and the parties agree to so treat
the amendments as such, and not as a purchase or sale of inter-
ests in the Partnership.
(k) Counterparts. This Agreement may be executed in
counterparts, and by facsimile signature; each such counterpart
shall be deemed to be an original instrument and all of which
counterparts together shall be deemed to be one and the same
instrument.
(l) Due Authority; Etc. Each of the parties hereto
represents and warrants to the others, as applicable, that it is
duly authorized to enter into this letter agreement and the
execution and delivery of such agreements and the consummation of
the transactions contemplated thereby, (i) have been duly and
validly authorized by all necessary or appropriate corporate
actions, and (ii) do not and will not violate any applicable laws
or regulations, contracts or agreements to which such party is
bound or its respective organizational documents.
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In Witness Whereof, the parties have entered into this
Agreement effective as of the date hereof.
The Rainbow Casino Corporation
By:/s/Leigh Seippel
Name: Leigh Seippel
Title: President
Alliance Gaming Corporation
By:/s/Steve Greathouse
Name: Steve Greathouse
Title: President and CEO
United Gaming Rainbow
By:/s/Steve Greathouse
Name: Steve Greathouse
Title: President
National Gaming Mississippi,
Inc.
By:/s/James E. Buckman
Name: James E. Buckman
Title: Vice President
HFS Gaming Corp.
By:/s/ James E. Buckman
Name: James E. Buckman
Title: Executive Vice
President
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Rainbow Casino-Vicksburg
Partnership, L.P.
By: United Gaming Rainbow, its
general partner
By:/s/Steve Greathouse
Name: Steve Greathouse
Title: President
Messrs. Barrett and Seippel join in this Agreement for the
limited purpose of Sections 1(b), 1(c), 1(d), 1(e), 1(f), 1(g),
1(h), 3(d), 5 and 6.
/s/John A. Barrett, Jr.
John A. Barrett, Jr.
/s/Leigh Seippel
Leigh Seippel
Rainbow Development Corporation joins in this Agreement for the
limited purposes of Sections 1(i) and 3(d) above.
Rainbow Development Corporation
By:/s/Leigh Seippel
Name: Leigh Seippel
Title: President
National Gaming Corp. hereby irrevocably and unconditionally
guarantees the obligations of National Gaming Mississippi, Inc.
under the above agreement and acknowledges that such obligation
shall be binding upon any entity with or into which National
Gaming Corp. may merge or consolidate or which may acquire all or
substantially all of the business or assets of National Gaming
Corp.
National Gaming Corp.
By:/s/James E. Buckman
Name: James E. Buckman
Title: Vice President
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The undersigned agrees to Section 1(e) above.
Doyle & Bachman
By:/s/James D. Bachman
Name: James D. Bachman
Title: Partner
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Exhibit A to
Consolidation Agreement
RAINBOW CASINO-VICKSBURG PARTNERSHIP, L.P.
(A Mississippi Limited Partnership)
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of March 29, 1995 (the "Agreement"), is
entered into by and between United Gaming Rainbow, a Nevada
corporation ("UGR"), as general partner, and The Rainbow Casino
Corporation, a Mississippi corporation, as limited partner ("RCC"
or the "Limited Partner").
R E C I T A L S :
A. RCC, as general partner, and UGR, as limited
partner, are partners in a limited partnership pursuant to the
Mississippi Limited Partnership Act, Secs. 74-14-101 et seq. of
the Mississippi Code of 1972, as amended (the "Mississippi Act"),
pursuant to an Amended and Restated Limited Partnership Agreement
dated as of July 16, 1994 (the "Original Agreement"), which
carried forward the Partnership. UGR and RCC desire to amend and
restate the Original Agreement, pursuant to the Mississippi Act
and upon the terms and conditions set forth in this Agreement, to
effect the changes set forth herein, including without limita-
tion, by UGR being and becoming the general partner in the
Partnership and RCC being and becoming the Limited Partner.
B. Pursuant to the Original Agreement, the Partner-
ship issued to UGR Special Limited Partnership Interests (as
defined therein) in the aggregate amount of $3.25 million, as
more particularly provided therein. Pursuant to the Consolida-
tion Agreement (as defined below) and as provided in Section 4.04
below, such Special Limited Partnership Interests shall be
cancelled and in exchange therefor the Partnership is issuing to
UGR on the date hereof a Class A Note (as defined below) in the
principal amount of $3.25 million. In addition, pursuant to the
Consolidation Agreement, amounts in respect of accrued and unpaid
royalties payable to UGR, accrued and unpaid amounts in respect
of Distributions (as defined below) in respect of, and Redemp-
tions (as defined below) of, such Special Limited Partnership
Interests and certain other accrued and unpaid amounts, through
and including the date hereof, in the aggregate amount of
$935,052 (as set forth in Exhibit A hereto), shall hereafter
constitute an obligation of the Partnership which shall consti-
tute a portion of the indebtedness evidenced by the Class B Note
(as defined below) in the maximum principal amount of $3.5
million issued on the date hereof by the Partnership to UGR.
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C. The Partnership is also issuing to National Gaming
Mississippi, Inc., a Delaware corporation ("NGM"), a Class B
Note in the maximum principal amount of $2 million pursuant to
the Consolidation Agreement.
A G R E E M E N T :
The parties agree that the Original Agreement shall be
amended and restated as follows:
Article I: Organizational Matters
1.01 Formation; Etc. UGR and RCC hereby agree to
continue as partners (sometimes referred to herein as the "Part-
ners") in continuation of the Partnership under the Mississippi
Act as described in Recital A above. On or prior to the date
hereof (or within five business days hereafter), UGR and RCC have
caused (or shall cause) to be filed an amended certificate of
limited partnership (a "Certificate") in the office of the
Secretary of State of the State of Mississippi reflecting the
fact that UGR is the general partner and RCC is the limited
partner in the Partnership. Failure to effect such filing in a
timely manner shall not affect the Partners' respective rights or
obligations hereunder.
1.02 Partners. UGR shall, from and after the date
hereof, be the sole general partner in the Partnership (the
"General Partner"). RCC shall, from and after the date hereof,
be the sole Limited Partner. Each additional Limited Partner, if
any, upon execution and delivery of a counterpart of this Agree-
ment, as provided for herein, shall become a limited partner in
the Partnership and shall be reflected as such on the books and
records of the Partnership. UGR shall not admit any other Person
as a Partner if the effect thereof is to reduce amounts otherwise
payable to RCC hereunder, as provided herein.
1.03 Documents. The Partners acknowledge and ratify
the filing of each Certificate by UGR and RCC and, after the
execution and delivery of this Agreement, the General Partner
shall cause to be filed such other certificates or filings as may
be required for the operation of a limited partnership in the
State of Mississippi. The General Partner shall thereafter file
any necessary amendments to the Certificate, and shall otherwise
do all things necessary or appropriate for the maintenance of the
Partnership as a limited partnership under the laws of the State
of Mississippi.
1.04 Name. The Partnership's name is "Rainbow Casino-
Vicksburg Partnership, L.P." The Partnership's business shall be
conducted under the name "Rainbow Casino-Vicksburg Limited
Partnership" or under any other name or names reasonably deemed
advisable by the General Partner from time to time, including
without limitation, the name of the General Partner or any
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Affiliate thereof or any trade style or trade names. The words
"Limited Partnership" or letters "L.P." shall be included in the
name of the Partnership where necessary to comply with the laws
of any jurisdiction that so requires.
1.05 Registered Office; Principal Office. Unless and
until changed by the General Partner, the registered office of
the Partnership in the State of Mississippi shall be located at
1440 Warrenton Road, Vicksburg, Mississippi 39180. The principal
office of the Partnership shall be c/o Alliance Gaming Corpora-
tion, 4380 Boulder Highway, Las Vegas, Nevada 89121, or such
other place in the United States as may from time to time be
reasonably designated by the General Partner (provided, that the
General Partner shall not charge any overhead in respect of such
office if not maintained at the Project site, except as reflected
in the management fee under the Management Agreement (as in
effect on the date hereof)). The General Partner shall give
prompt written notice of any such change to the Limited Partner.
The Partnership may maintain offices at such other place or
places within or outside the State of Mississippi as the General
Partner deems desirable or advisable.
1.06 Duration. The Partnership has commenced opera-
tions prior to the date hereof and shall continue until December
31, 2010, unless earlier terminated pursuant to Article VII or
extended pursuant to Article V hereof.
1.07 Purposes and Powers. The Partnership is orga-
nized for the object and purpose of conducting, operating and
disposing of the Rainbow Business, and to engage in all such
activities and transactions as are reasonably related to or
incidental to the foregoing. In the event that the General
Partner proposes to enter into any transaction or series or
related transactions on behalf of the Partnership that are
material to the Rainbow Business with Alliance Gaming Corporation
or any of its Affiliates (other than the Partnership), the
General Partner shall notify the Limited Partner of such proposed
transaction (together with a reasonably detailed written descrip-
tion thereof), and the Limited Partner shall have the right to
consent (in its reasonable discretion) to the fact that the
economic terms of such transaction are no less favorable to the
Partnership than the terms on which such a transaction would have
been effected with an unaffiliated third party; it being under-
stood that failure to respond to such General Partner's notice
within 10 days thereof shall constitute the Limited Partner's
consent. The Rainbow Business shall not be conducted by the
General Partner other than through the Partnership. The Partner-
ship may conduct and operate the Rainbow Business through divi-
sions or other formats, utilizing trade styles or trade names.
The Partnership shall have all powers necessary or incidental,
suitable, desirable or convenient for the accomplishment of the
aforesaid purposes as limited above, alone or with others, as
principal or as agent.
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1.08 Power of Attorney. Subject to Section 1.07
above, the Limited Partner hereby constitutes and appoints the
General Partner and each of its authorized officers and attor-
neys-in-fact, with full power of substitution, as its true and
lawful agent and attorney-in-fact, with full power and authority
in its name, place and stead, in a manner not prohibited by this
Agreement, to execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices all certificates,
documents and other instruments that the General Partner deems
necessary or appropriate to form, qualify or continue the exis-
tence or qualification of the Partnership as a limited partner-
ship in the State of Mississippi. The foregoing power of attor-
ney is irrevocable and a power coupled with an interest, and it
shall survive and not be affected by the subsequent death,
incompetency, dissolution, bankruptcy or termination of the
Limited Partner or the transfer of all or any portion of the
Limited Partner's Interest and shall extend to the Limited
Partner's successors and assigns.
1.09 Ownership of Property. Legal title to all
assets, rights and property (including without limitation, all
cash and cash deposits in whatever form held, including in gaming
machines), whether real, personal or mixed and whether tangible
or intangible, acquired by the Partnership shall be acquired,
held, owned and subsequently conveyed in the name of the Partner-
ship and no Partner, individually or collectively, shall have any
ownership interest in such partnership properties or any portion
thereof. Subject to Section 1.07 above, (a) the Partnership
shall have the power to acquire, own, lease, sublease, manage,
operate, hold, deal in, control or dispose of any interest in
real property constituting part of the Project and (b) the
Partnership shall also have the power to acquire, own, hold,
manage, sell, transfer, convey, assign, exchange, pledge or
otherwise dispose of the stock of or other interest in any
Person, foreign or domestic.
Article II: Definitions
For the purposes of this Agreement, the following terms
shall have the following meanings:
"Affiliate" of any Person means any other person
Controlled by, Controlling or under common Control with such
first Person, including without limitation, directors, officers,
employees, stockholders and agents of such first Person or any
other Person Controlled by, Controlling or under common Control
with such first Person. "Control," "Controlling" or "Controlled"
as to any Person shall mean the possession, directly or indi-
rectly, of the power to direct or cause the direction of the
management and/or policies of such Person, whether through
ownership of voting securities or partnership interests, by
agreement or understanding or otherwise.
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"Alliance Agreements" shall mean the Basic Agreement
dated as of October 28, 1993 among Alliance Gaming Corporation
(formerly known as United Gaming, Inc.), The Rainbow Casino
Corporation, John A. Barrett, Jr. and Leigh Seippel, as amended
to date by agreements among such Persons and certain other
Persons, including by the Consolidation Agreement.
"Allowed Deductions" shall mean deductions from Net
Cash Flow consisting of :
(i) NGM and/or HFS royalties and interest and princi-
pal in respect of the HFS Financing Agreements, each as
provided for in the HFS Financing Agreements as presently in
effect;
(ii) interest and principal in respect of the existing
obligations of the Partnership to International Game Tech-
nology, Inc. or any of its affiliates, as presently in
effect;
(iii) interest and principal in respect of existing
obligations to the Partnership to Kossens, Inc. or any of
its affiliates, as presently in effect;
(iv) interest and principal in respect of the Class A
Note issued by the Partnership on the date hereof to UGR in
the maximum principal amount of $3.25 million; it being
understood that from and after the date hereof no further
royalty shall accrue in respect of any Special Limited
Partnership Interests or under the Alliance Agreements in
any circumstance, the maximum principal amount of Class A
Notes to be given effect for purposes of computation of the
Net Cash Flow from which the RCC Interest is payable being
$3.25 million; and
(v) interest and principal in respect of the Class B
Notes issued by the Partnership on the date hereof to UGR
and NGM in the amounts of $3.5 million and $2 million,
respectively; such Class B Notes being for purposes of
funding Permitted Capital Expenditures in the aggregate of
up to but not in excess of $5.5 million, such that the maxi-
mum principal amount of the Class B Notes for purposes of
computation of Net Cash Flow from which the RCC Interest is
payable being $5.5 million or such lesser amount as shall
have been funded in respect of such Class B Notes, in con-
formity with the terms of this Agreement and the Consolida-
tion Agreement.
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In calculating Allowed Deductions it is agreed that the
General Partner is authorized to amend the terms of the indebted-
ness and other items in clauses (i) through (v) above or to
obtain substitute, replacement or additional financing in respect
of the Project, each, in the General Partner's sole discretion;
provided, that, notwithstanding any such action or any other
recapitalization of the Partnership, or any other action of the
Partnership or the General Partner, the RCC Interest shall
continue to be calculated solely based upon Net Cash Flow calcu-
lated based on the provisions set out above in this definition,
throughout the term of the RCC Interest and based on a maximum
aggregate principal amount of Notes of $8.75 million to be repaid
in accordance with their terms, as provided herein.
"Class A Note" shall mean the Class A Note issued by
the Partnership to UGR on the date hereof in accordance with
Section 4.04 hereof in the maximum principal amount of $3.25
million.
"Class B Note" shall mean each of the Class B Notes
issued by the Partnership to UGR and NGM on the date hereof in
accordance with Section 4.04 hereof in the maximum principal
amounts of $3.5 million and $2 million, respectively. The Class
B Notes shall accrue interest on and the principal amounts
thereunder shall be repayable solely based upon the amounts
funded or deemed funded by UGR and NGM hereunder and under the
Consolidation Agreement. As of the date hereof, the Partnership
has incurred indebtedness to (and such amounts shall be deemed
funded by) (a) UGR in the amounts of $935,052 in respect of
accrued and unpaid amounts described on Exhibit A hereto and
$651,999.92 as provided in Section 2(b) of the Consolidation
Agreement and (b) NGM in the amount of $651,999.92 as provided in
the Consolidation Agreement. The Class B Notes shall be subject
to the final sentence of Section 3.04 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute or statutes thereto.
"Consolidation Agreement" shall mean the Consolidation
Agreement dated as of the date hereof among RCC, NGM, HFS Gaming
Corp., a Delaware corporation, Alliance Gaming Corporation, UGR
and, as to certain matters, John A. Barrett, Jr., Leigh Seippel,
Rainbow Development Corporation, a Mississippi corporation, and
National Gaming Corp., a Delaware corporation, and Doyle &
Bachman, a law partnership.
"EBITDAR" shall mean earnings from the Project, before
giving effect to depreciation, amortization, interest and princi-
pal payments (including payments of interest on and principal of
the HFS Financing Agreements to HFS or NGM or any of their
respective Affiliates and payments of interest on and principal
of the Notes), royalties payable to HFS, capital expenditures,
and federal, state and local taxes (provided that such taxes are
not paid by the Partnership)(but after giving effect to specifi-
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cally gaming-related taxes, which shall constitute a deduction
from earnings of the Partnership), all as determined in accor-
dance with generally accepted accounting principles, consistently
applied.
"Event of Withdrawal" shall mean, with respect to the
General Partner, any bankruptcy or insolvency of the General
Partner and the events specified under Section 79-14-402(a) of
the Mississippi Act.
"Gross Gaming Revenues" shall mean gaming revenues
derived from the casino forming a part of the Project, in accor-
dance with generally accepted accounting principles, consistently
applied, i.e., for any applicable period, the amounts retained by
such casino in respect of players' wagers, less payments to
winning players and all applicable gaming taxes.
"HFS" shall mean Hospitality Franchise Systems, Inc. or
any of its Affiliates (and shall include NGM or any of its
Affiliates); "HFS Financing Agreements" shall mean the various
financing agreements, marketing and servicing agreements and
other documents and instruments in effect on the date hereof
among the Partnership, either of the Partners (or any of their
respective Affiliates) and HFS or NGM, as amended or supplemented
and in effect from time to time.
"Interest" shall mean, as to each Partner, all applica-
ble rights of such Partner under this Agreement.
"Management Agreement" shall mean the Management
Agreement dated as of October 28, 1993 among Mississippi Ven-
tures, Inc., the Partnership, RCC, John A. Barrett, Jr. and Leigh
Seippel, as amended to date.
"Net Cash Flow" shall mean EBITDAR of the Project, on a
freestanding basis, exclusive of any overhead, service or other
charges of the General Partner, Alliance Gaming Corporation or
any Affiliate thereof (other than the Partnership, as permitted
by this Agreement) other than the Management Fee (as presently in
effect and as provided for in the Management Agreement, including
any incentive or performance based management fees), prepared on
a consistently applied generally accepted accounting principles
basis for the Project, less deductions for, but only for Allowed
Deductions.
"Net Income" or "Net Loss" for any taxable year shall
mean the taxable income or the taxable loss of the Partnership
for such taxable year as determined for U.S. federal income tax
purposes.
"Notes" means, collectively, the Class A Note and the
Class B Notes.
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"Permitted Capital Expenditures" shall mean expendi-
tures made by UGR or NGM or any of their respective Affiliates to
or as directed by the Partnership or otherwise designated by the
General Partner (in its sole discretion) in connection with the
Project or the Rainbow Business, whether from the cash available
in or generated by the Project or from UGR's or NGM's or such
Affiliates' own or borrowed funds, and in each case, whether or
not such expenditures are, in accordance with generally accepted
accounting principles, properly classified as capital expendi-
tures; provided, that the aggregate amount of such expenditures
(including the amount provided to be expended under the Consoli-
dation Agreement) shall not have exceeded the difference between
$5.5 million and the amount funded on the date hereof in respect
of the Class B Notes (i.e., $2,239,051.84), from and after the
date hereof. Nothing herein shall limit UGR's ability to fund
additional amounts to the Project so long as such additional
amounts are not evidenced by a Class B Note.
"Person" shall mean any individual, company, corpora-
tion, association, governmental or quasi-governmental authority
or other entity.
"Project" shall mean a dockside casino, restaurants,
concessions and related activities in Vicksburg, Mississippi
(including the contiguous family entertainment park and hotel).
"Rainbow Business" shall mean the business and opera-
tions heretofore and hereafter conducted by the Partnership,
consisting of the development, ownership and operation of the
Project.
"RCC Interest" shall mean the Interest of RCC as
Limited Partner in the Partnership calculated as 10% of Net Cash
Flow of the Partnership for each fiscal year of the Partnership
from January 1, 1995 through the term of this Partnership as set
forth in Section 1.06 hereof, subject to earlier termination as
provided in Article VII hereof and to extension of such date as
provided in this definition; provided, that RCC shall be enti-
tled to a 20% share of Net Cash Flow to the extent (but solely to
the extent) allocable on a straight line proportionate basis to
Gross Gaming Revenues in any fiscal year in excess of $35,000,000
(e.g., if gross gaming revenues are $38,000,000 and Net Cash Flow
is $5,000,000, the RCC Interest shall be (a) $5,000,000 x 35/38 x
10% plus (b) $5,000,000 x 3/38 x 20%). The term of the RCC
Interest shall be for 15 years, commencing January 1, 1995;
provided, that if the RCC Interest does not produce at least
$50,000 per calendar year in actual payments to RCC, or a compen-
sating payment up to the difference between $50,000 and the
amount of the RCC Interest otherwise payable by the Partnership
is not made for such calendar year to RCC, then the term of the
RCC Interest shall be extended for an additional consecutive 12-
month period in each such case.
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"Transfer" shall mean the direct or indirect sale,
donation, assignment (as collateral or otherwise), pledge,
hypothecation, encumbrance, transfer or disposition of any
Interest; "Transferor" and "Transferee" shall have correlative
meanings to the foregoing.
Article III: Management and Operation of the Business
3.01 Management of the Partnership. (a) The manage-
ment and operation of the Partnership shall be exclusively vested
in the General Partner, which may exercise all powers necessary
or convenient for the accomplishment of the purposes of the
Partnership on behalf of and in the name of the Partnership. The
Partnership has previously entered into a Management Agreement,
which Management Agreement is ratified and remains in full force
and effect. In addition to the powers now or hereafter granted
to a general partner of a limited partnership under applicable
laws or which are granted to the General Partner under any other
provision of this Agreement, the General Partner shall, subject
to the other provisions of this Agreement, have full power and
authority to do all things and on such terms as it may deem
necessary or desirable to conduct the business of the Partnership
and to effectuate the purposes set forth herein and in the
Consolidation Agreement; provided, that in any transaction
between the Partnership, on the one hand, and Alliance Gaming
Corporation and its Affiliates (other than the Partnership), on
the other hand, such transaction shall be conducted in accordance
with the standards of Section 1.07 hereof or the financial conse-
quences of such transaction to the Partnership if materially
adverse to the Partnership's EBITDAR as calculated for purposes
of the Net Cash Flow shall be disregarded to the extent (but
solely to the extent) less favorable to the Partnership than
articulated in such standards.
Notwithstanding the foregoing, the General Partner
shall not (i) liquidate the Partnership prior to December 31,
2010 (or such later date as may be provided for in Article V
hereof), other than as the result of an Event of Termination, or
(ii) modify or amend this Agreement or the Management Agreement
in a manner which is materially adverse to the Limited Partner,
in each case, without the consent of the Limited Partner.
Nothing contained in this Agreement shall affect the duration of
the royalty payable to HFS in connection with the HFS Financing
Agreements, which royalty shall survive the termination of the
Partnership to the extent provided therein.
(b) The respective liabilities of the Partners in
respect of the completion of the Project shall be solely as set
forth in the Consolidation Agreement and no Partner shall have
any liability in respect thereof other than as set forth therein.
(c) The Partnership may have employees and agents who
may be designated as officers with titles designated by the
General Partner, and who in such capacities may act for and on
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behalf of the Partnership. Nothing in this Section 3.01(c) shall
affect the parties' respective rights or obligations under or
pursuant to the Management Agreement for purposes of calculating
Net Cash Flow or otherwise under this Agreement.
3.02 Relationship Between the General Partner and the
Limited Partners. (a) Each of the Partners hereby approves,
ratifies and confirms the execution, delivery and performance by
the Partnership of the Consolidation Agreement and accompanying
documents and all other documents or instruments heretofore
executed by or on behalf of the Partnership or in connection
therewith and the HFS Agreement.
(b) The acts of the General Partner in carrying on the
business of the Partnership as authorized herein shall bind the
Partnership. The Limited Partner shall not have any right to,
and shall not, (i) take part in the management or control (within
the meaning of the Mississippi Act) of the Partnership's busi-
ness, (ii) act for or bind the Partnership, (iii) transact any
business in the name of or on behalf of the Partnership, or (iv)
withdraw from the Partnership as a limited partner until the
Limited Partner has assigned its Interest pursuant to and in
accordance with the provisions hereof. The Limited Partner, in
its capacity as limited partner, shall only have the rights and
powers specifically granted to the Limited Partner in this Agree-
ment or pursuant to the Mississippi Act.
(c) Neither the General Partner nor the Limited
Partner shall be obligated to make any further contributions to
the capital of the Partnership except as provided in the Consoli-
dation Agreement.
(d) The liability of the Limited Partner to third
parties shall be limited as provided in the Mississippi Act. The
Limited Partner acknowledges and agrees that it shall be liable
to the Partnership for any money or other property distributed,
paid or conveyed to it by the Partnership, only to the extent
required by the Mississippi Act.
(e) Notwithstanding any other term of this Agreement,
none of the Partners, their respective Affiliates or their
respective stockholders, directors, officers, employees, ser-
vants, direct or indirect partners, attorneys or agents, or the
officers of the Partnership shall be liable to the Partnership or
any other Person or any such Affiliate or officer, director,
direct or indirect partner, stockholder, employee, attorney or
agent for any act or omission taken or omitted in good faith by
or for such Persons; provided, that such act or omission did not
constitute fraud, willful violation of law, willful violation of
this Agreement, reckless disregard of the duties of such person
or gross negligence in the performance of its duties, in each
such case, in relationship to the Partnership.
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3.03 Partnership Funds. The funds of the Partnership
shall be deposited in such account or accounts as are designated
by the General Partner.
3.04 Permitted Capital Expenditures. Each amount that
is designated by the General Partner as a Permitted Capital
Expenditure (which the General Partner may so designate in its
sole discretion but which shall include all amounts funded under
Section 2 of the Consolidation Agreement) shall be deemed to be
and constitute a part of the indebtedness evidenced by the Class
B Notes; provided, that in no event shall the aggregate principal
amount of all Permitted Capital Expenditures exceed $5.5 million
for purposes of computation of the RCC Interest. Such amount
shall not be renewed by borrowing, repayment and reborrowing or
otherwise, but such limit shall apply only for the purpose of
computation of the RCC Interest and shall not otherwise limit in
any manner the business, financing or operations of the Partner-
ship.
Article IV: Allocations of Net Income and Net Losses;
Etc.
4.01 [Intentionally Omitted].
4.02 Allocation of Items of Net Income and Net Loss.
Except as required by Section 4.03 hereof or otherwise required
by the Code, Net Income for any fiscal year of the Partnership
shall be allocated to the General Partner and the Limited Partner
on a pro rata basis in accordance with the actual distribution of
cash to the Partners as provided in Article V hereof. Net Loss
shall be allocated in proportion to and to the extent of the
difference, if positive, between cumulative Net Income and
cumulative cash distributed to the Partners, and thereafter to
the General Partner. The forms K-1 issued to the Partners shall
be as specified in Section 8.04(c) hereof.
4.03 Section 704(c) of the Code and Treasury Regula-
tion Section 1.704-1(b)(4)(i). Partnership income, gains, losses
and deductions shall, solely for income tax purposes, be
allocated among the Partners in accordance with Section 704(c)
of the Code and the Treasury regulations promulgated thereunder
with respect to contributed property, and in accordance with
Treasury Regulation Section 1.704-1(b)(4)(i) with respect to
revalued property, so as to take account of any difference
between the adjusted basis to the Partnership of any property for
federal income tax purposes and its fair market value at the time
such property was contributed to the Partnership, or at the time
such property was revalued in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f). The depreciation allocation will be
limited to the federal income tax depreciation on the contributed
or revalued assets. All Partners shall report the amounts
attributable to them under this Agreement in accordance with the
Form K-1 provided to them by the Tax Matter Partner.
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4.04 Issuance of Notes. (a) On the date hereof, the
Partnership is issuing to (i) UGR the Class A Note in the princi-
pal amount of $3.25 million (all of which shall be deemed funded
and outstanding as of the date hereof) and (ii) each of UGR and
NGM a Class B Note in the original principal amount of $3.5
million and $2 million, respectively. Of such amounts, (x)
$935,052 in respect of accrued and unpaid amounts as set forth on
Exhibit A hereto and $651,999.92, as contemplated by the Consoli-
dation Agreement, shall be deemed funded by UGR and outstanding
as of the date hereof and (y) $651,999.92, as contemplated by the
Consolidation Agreement, shall be deemed funded by NGM and
outstanding as of the date hereof. Additional amounts of Permit-
ted Capital Expenditures that hereafter are funded by UGR or NGM
shall be deemed to be outstanding under the Class B Notes upon
funding thereof.
(b) The Class A Note shall bear interest at a rate of
7.5% per year on the outstanding principal amount thereof and
shall be repayable on the basis of 77 level monthly payments of
interest and principal, commencing on April 1, 1995. The Class B
Notes shall bear interest at a rate of 10% per year as applied to
the amount funded thereunder and shall be repayable on the basis
of 84 monthly level payments of interest and principal (as
adjusted for additional amounts of indebtedness incurred and
outstanding thereunder after the date hereof), commencing April
1, 1995. Amounts under the Notes (of interest or principal) that
are unpaid after any applicable payment date shall bear interest
at the rate otherwise in effect plus 2% per year.
Article V: Distributions; Etc.
5.01 RCC Interest. The Limited Partner shall be
entitled to receive the RCC Interest, as provided herein, for so
long as the term of such Interest shall be in effect as provided
herein, and the General Partner shall receive all other revenues,
profits, income, cash and other property or assets of the Part-
nership. Such payments of the RCC Interest shall be calculated
from the Partnership's fiscal year financial statements as
reported on by its independent accounting firm on the basis
provided for herein, shall be payable in quarterly estimated
installments based upon the prior fiscal year's Net Cash Flow of
the Partnership in the subject quarter and shall be subject to
final adjustment on a whole fiscal year basis (by supplemental
payment to RCC or by offset of the succeeding year's accruals or
payment by RCC to UGR in the final year of the Partnership, as
the case may be) within 120 days of the end of each fiscal year
of the Partnership. A pro forma illustration of the basis of
computation of the RCC Interest is attached hereto as Schedule B.
5.02 Sale of Partnership or Partnership Business. In
the event of a sale or its substantial equivalent of all or
substantially all of the General Partner's Interest or of all or
substantially all of the assets or business of the Partnership
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(irrespective of the form of such transaction), then either (a)
the RCC Interests shall be conveyed additionally at the option of
the General Partner in its sole discretion; provided, that RCC
shall be allocated a share of the total transaction proceeds in
respect of the RCC Interest on a basis reflecting its then
present value with reference to the valuations of the subject
transaction (as mutually agreed between the General Partner and
RCC, or failing agreement within 15 days of consummation of such
transaction, then, as determined by Arbitration (as defined below
in this paragraph)) or, alternatively, (b) if mutually agreed
between the acquiror, the General Partner and RCC, the RCC
Interest shall be preserved by the terms of the subject transac-
tion. It is understood and agreed that the consent of RCC shall
not be required for any such transaction, except in any transac-
tion involving an Affiliate of the General Partner. "Arbitra-
tion" shall mean an arbitration conducted under the rules of the
American Arbitration Association by either a mutually satisfacto-
ry independent arbitrator (or failing agreement on such a person
within 15 days after either party requests Arbitration in writ-
ing, then, by a panel of three independent arbitrators of which
one will be selected by each of the parties and the third will be
selected by such nominees, and failing that agreement, then, by
the American Arbitration Association). The General Partner shall
keep the Limited Partner reasonably informed of the status of
negotiations and progress of any such transaction and shall
provide to the Limited Partner copies of relevant final (and with
respect to material documents, draft) transaction documents. In
the event of a transaction described in clause (a) above, the
General Partner shall, upon consummation thereof if the Partners
shall not have then agreed upon the amount allocable to the RCC
Interest, cause to be delivered to a third party escrow agent
designated by the General Partner an amount reasonably estimated
by the General Partner to be allocable to the Limited Partner in
respect of the RCC Interest, which amount shall be held in an
interest-bearing escrow account with a bank or financial institu-
tion. Such amount shall be held pursuant to a then-customary
escrow agreement and all or a portion thereof, together with
accrued and unpaid interest, disbursed upon the final determi-
nation of the amount allocable to the Limited Partner, as de-
scribed above, or as otherwise jointly directed in writing by the
Partners; at such time, if the amount allocable to the Limited
Partner is greater than the principal amount so held in escrow,
the General Partner shall cause to be paid such discrepancy,
together with interest thereon at the rate earned in such escrow
account.
5.03 Certain Rights. The foregoing provisions in
this Article V (and the correlative definitions) are included in
this Agreement solely for the purpose of calculating the amounts
payable to the Limited Partner and are not intended to limit or
restrict in any way the General Partner's right to operate the
business of the Partnership in its sole discretion, including
without limitation, to incur any financing or capital expenditure
that is not a Permitted Capital Expenditure.
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5.04 Term. The term of the Partnership may be extend-
ed as provided in the definition of RCC Interest.
Article VI: [Intentionally Omitted]
Article VII: Termination and Dissolution
7.01 Events of Termination. The Partnership shall not
be dissolved unless in good faith. The Partnership shall be
dissolved and its affairs wound up pursuant to Section 7.02
hereof, and this Agreement shall terminate upon the first to
occur of any of the following events (each, an "Event of Termina-
tion"): (a) the execution by each Partner of a unanimous written
consent to dissolution and payment in full in cash of the Notes
and the then net present value of estimated future payments of
the RCC Interest over its remaining scheduled term, as provided
for in Article V above; (b) the sale or other disposition of all
or substantially all of the assets of the Partnership and provi-
sion for the sale or continuance of the RCC Interest as provided
in Article V; (c) the dissolution, winding-up, cessation of
business or withdrawal of all of the Partners; (d) an Event of
Withdrawal unless at the time of the occurrence of such Event of
Withdrawal there is at least one General Partner who is autho-
rized and agrees to continue the business of the Partnership
without dissolution (and, if there are no remaining general
partners, a majority in interest of the limited partners shall
make selection of a new General Partner and, if RCC is the sole
limited partner, RCC shall be permitted to elect to continue the
Partnership in its sole discretion); or (e) December 31, 2010 or
such later date as may be provided pursuant to this Agreement for
the full term of the RCC Interest in Article V above.
7.02 Winding-Up. Upon the occurrence of an Event of
Termination, the Partnership's affairs shall be wound up, its
debts paid and its business and property, rights and assets
disposed of in an orderly manner as shall be determined by the
General Partner and the General Partner shall receive all proper-
ty, rights or assets of the Partnership after provision for
payment of the amounts to RCC as provided in Section 5.02 above.
The Limited Partner shall not have any right to share or partici-
pate in any such property, rights or assets remaining after such
payments, all of which shall be and belong solely to the General
Partner.
Article VIII: Reports to Partners
8.01 Books of Account. Appropriate records and books
of account shall be kept by the General Partner and by the
manager under the Management Agreement, at the principal place of
business of the Partnership. The Limited Partner shall be
provided reasonable access to such books and records, at reason-
able times on reasonable prior notice for the purpose of verify-
ing the amounts payable to it under Article V above and shall be
provided a quarterly estimated computation thereof by the General
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Partner and an annual final computation reported on by the
independent accounting firm of the Partnership (including without
limitation, a computation of the RCC Interest in each period) and
unaudited monthly summaries of the operations of the Partnership.
8.02 Audit and Report. The books and records of the
Partnership shall be kept in accordance with generally accepted
accounting principles, which is consistent with the requirements
of Section 704 of the Code and the Treasury Regulations thereun-
der, and shall be audited by independent certified public accoun-
tants of the General Partner's selection. The General Partner
shall provide to the Limited Partner and the holders of Notes on
a timely basis annual and quarterly balance sheets, statements of
income (loss) for each applicable period and of such Partner's
capital accounts, statements of Net Cash Flow; and the amount of
such Partner's share in each item of Partnership's taxable income
or loss for each year which must be separately accounted for by a
Partner pursuant to section 702(a) of the Code and any other
information needed to prepare the Partner's federal, state and
local income tax returns and reports.
8.03 Fiscal Year. The fiscal year and taxable year of
the Partnership shall end on June 30.
8.04 Tax Matters. (a) The General Partner is hereby
designated as the "Tax Matters Partner" under Section 6231(a)(7)
of the Code, to manage administrative tax proceedings conducted
at the Partnership level by the Internal Revenue Service with
respect to Partnership matters. The General Partner is specif-
ically directed and authorized to take whatever steps the General
Partner deems necessary or desirable to perfect such designation,
including without limitation, filing any forms or documents with
the Internal Revenue Service and taking such other action as may
from time to time be required under any Treasury Regulation. The
Tax Matters Partner shall not be liable to the Partnership or any
other Partner for any act or omission taken or suffered by it in
such capacity in good faith and in the reasonable belief that
such act or omission is in or is not opposed to the best inter-
ests of the Partnership; provided, that such act or omission is
not in violation of the Agreement and does not constitute gross
negligence, fraud or a willful violation of law.
(b) Within five business days of receipt, a Partner
shall give to the remaining Partners written notice of such
Partner's receipt from any taxing authority of any notification
of any audit or investigation of the Partnership or any other tax
proceeding or proposed tax adjustment affecting the Partnership.
(c) The Tax Matters Partner shall cause income and
other required federal, state and local tax returns for the
Partnership to be prepared on a basis consistent with the terms
of this Agreement and timely filed with the appropriate authori-
ties. The forms K-1 issued to the Limited Partner in respect of
15
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<PAGE>
each fiscal year of the Partnership shall report income in an
amount equal to the cash distributed to such Partner. The Tax
Matters Partner shall make or maintain in effect tax elections as
it shall deem to be appropriate.
(d) Each Partner and the Partnership shall cooperate
with and assist, at its own expense, the Tax Matters Partner in
connection with any federal, state, local or foreign tax matter
affecting the Partnership or any entity in which the Partnership
has an interest, including without limitation, providing any
records or supporting data with respect to assets or liabilities
transferred to the Partnership, preparing any tax return or
assisting as requested on any audit.
Article IX: Miscellaneous
9.01 Transfers of Interests; Admission of Additional
Partners. (a) Subject to applicable requirements of the Missis-
sippi Act and applicable gaming laws and regulations, the General
Partner and the Limited Partner shall have the right to Transfer
their respective Interests to any Person, subject to the provi-
sions of this Agreement; provided, that, except to its stockhold-
ers on the date hereof, the Limited Partner shall not be permit-
ted to Transfer its Interests without the prior written consent
of the General Partner, which shall not be unreasonably withheld.
(b) Upon compliance with Section 9.01(a) hereof with
respect to the Transfer of all or any portion of its Interest,
the Transferee shall become a Limited Partner or General Partner,
as the case may be, and shall succeed proportionately to the
Interest Transferred by the Transferor and shall become subject
to all of the obligations of the Transferor with respect to such
Interests, only upon compliance with the following additional
conditions: (i) the proposed Transferee shall have executed an
amendment to this Agreement, and shall have executed such other
instruments as the General Partner may deem necessary or desir-
able, to admit such Transferee as a Partner (including the
execution of a counterpart of this Agreement and an appropriate
supplement to this Agreement pursuant to which such Partner shall
agree to be bound by and comply with the terms and provisions
hereof) and (ii) the Transferor shall have paid to the Partner-
ship all of the Partnership's expenses connected with such
Transfer and substitution (including without limitation, the
legal and accounting fees and disbursements of the Partnership).
(c) If the Transferor is the General Partner, upon
compliance with the terms of Sections 9.01(a) and (b) hereof, the
admission of the Transferee as a successor General Partner shall
occur, and for all purposes shall be deemed to have occurred, im-
mediately prior to the withdrawal of the Transferor General
Partner from the Partnership as a general partner of the Partner-
ship. Upon such withdrawal, the General Partner shall cease to
be a general partner of the Partnership and the successor General
Partner shall, and is hereby authorized to, continue the business
16
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<PAGE>
of the Partnership without dissolution. In accordance with the
Mississippi Act, the successor General Partner shall execute and
file an appropriate amendment to the Certificate to reflect its
admission to the Partnership.
(d) Notwithstanding any provision of this Agreement to
the contrary, no Transfer of any Interest shall be effective to
convey any Interest in the Partnership until the Transferee
executes all necessary certificates or other documents and per-
forms all acts required in accordance with the laws of the State
of Mississippi and any other applicable law, and any and all
documents as shall be required from time to time by the rules and
regulations of any regulatory body or commission having a juris-
diction over the Partnership, to the full extent necessary to
constitute such Transferee a Partner and preserve the status of
the Partnership as a partnership after the completion of such
Transfer in accordance with such laws. Each such Transferee by
accepting the Transfer of an Interest agrees upon the request of
a Partner to execute such certificates or other documents and to
perform such acts and gives the power of attorney set forth in
Section 1.09 as fully as though such Transferee was an original
signatory hereto.
(e) If any Partnership Interest is sold, assigned, or
transferred during any taxable year of the Partnership in compli-
ance with the provisions of this Section 9.01, Net Income, Net
Loss, each item thereof, and all other items attributable to such
Interest for such period shall be divided and allocated between
the Transferor and the Transferee by taking into account their
varying interests during the period in accordance with Code
Section 706(d), using any conventions permitted by law and
reasonably selected by the General Partner. All distributions on
or before the date of such Transfer shall be made to the Trans-
feror, and all distributions thereafter shall be made to the
Transferee. Solely for the purposes of making such allocations
and distributions, the Partnership shall recognize such Transfer
not later than the end of the calendar month during which it is
given notice of such Transfer.
9.02 Applicable Law. Notwithstanding the place where
this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof
shall be construed under the internal laws, and not the laws
pertaining to conflicts or choice of law, of the State of Missis-
sippi.
9.03 Binding Agreement. Except as expressly provided
in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and
assigns. This Agreement shall be binding upon the successors and
assigns of the Partners.
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<PAGE>
9.04 Notices. All notices hereunder shall be in
writing and shall be deemed to have been duly given if personally
delivered, mailed by registered or certified mail, return receipt
requested, or by telex or telecopy and confirmed by mail as
aforesaid to the Partnership or to the General Partner, at 4380
Boulder Highway, Las Vegas, Nevada 89121; Attention: General
Counsel, with a copy to Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel, 919 Third Avenue, New York, New York 10022; Attention:
David Robbins, Esq. or such other address or addresses as to
which the Partners shall have been given notice, and to the
Limited Partner, to The Rainbow Casino Corporation, c/o Barrett
Refining Corporation, 23 East Ninth, Suite 329, Shawnee, Oklahoma
74801 and Leigh Seippel, c/o Doyle & Bachman, 919 Eighteenth
Street, N.W., Washington, D.C. 20006; Attention: James D.
Bachman, Esq., with a copy to Doyle & Bachman, 919 Eighteenth
Street, N.W., Washington, D.C. 20006; Attention: James D.
Bachman, Esq., and such notice shall be deemed to have been given
as of the date delivered, telexed or telecopied or if mailed, the
second day after being so mailed.
9.05 Counterparts. This Agreement may be executed in
counterparts and by facsimile transmission, all of which together
shall constitute one agreement binding on all the parties not-
withstanding that all the parties are not signatories to the
original or the same counterpart.
9.06 Amendments. Any waiver, modification or amend-
ment to this Agreement shall be effective when signed by each
Partner.
9.07 Severability. If any provision of this Agree-
ment, or the application of such provision to any person or
circumstance, shall be held invalid, the remainder of this
Agreement or the application of such provision to other persons
or circumstances shall not be affected thereby.
9.08 Confidentiality. The Limited Partner shall not,
during the term of this Agreement, disclose any confidential or
proprietary information with respect to the Partnership to any
person, except (a) with the prior written consent of the General
Partner, (b) or as may be required by applicable law or adminis-
trative or judicial process.
9.09 Creditors. None of the provisions of this
Agreement shall be for the benefit of or enforceable by any cre-
ditors of the Partnership or other person doing business with the
Partnership (other than as provided herein).
9.10 Waiver. No failure by any party to insist upon
the strict performance of any covenant, duty, agreement, or con-
dition of this Agreement or to exercise any right or remedy con-
sequent upon a breach thereof shall constitute a waiver of any
such breach or any other covenant, duty, agreement or condition.
18
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<PAGE>
9.11 Certain Provision Relating to Holders of Notes.
The holders of the Notes (in such capacity) shall not be, and
shall have none of the rights and none of the obligations of,
Partners of the Partnership. Without limiting the foregoing, the
holders of the Notes (in such capacity) shall have no liability
for Partnership debts or to make advances to the Partnership,
except as provided in the Consolidation Agreement, and no right
to take part in the management or control of the Partnership's
business, act or bind the Partnership, transact any business in
the name of or on behalf of the Partnership. Except for payment
of the Notes, the holders of the Notes (in such capacity) shall
not have any right to participate in the property, rights or
assets of the Partnership. The Partnership shall provide the
holders of the Notes on a timely basis annual and quarterly
balance sheets, and statements of income (loss) for each applica-
ble period. Holders of the Notes shall not disclose any confi-
dential or proprietary information with respect to the Partner-
ship except (a) with the prior written consent of the General
Partner, or (b) as may be required by applicable law or adminis-
trative or judicial process. Holders of the Notes may transfer
their Notes to any Person.
9.12 Loan and Other Financing Proceeds. The proceeds
of any loan, financing, refinancing or other capital or similar
transaction shall not constitute revenues for purposes of calcu-
lating EBITDAR, and all of such proceeds shall be retained by
and be the exclusive property of, the Partnership and allocated
solely to the General Partner and have no effect on the RCC
Interest.
19
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands as of this 29th day of March, 1995.
United Gaming Rainbow,
General Partner
By:____________________________
Name:
Title:
The Rainbow Casino Corporation,
Limited Partner
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
The undersigned joins as manager of the Project (and not as a
Partner):
Mississippi Ventures, Inc.
By: _________________________
Name:
Title:
20
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Schedule A
Calculation of Accrued and Unpaid Royalties,
Distributions, Redemptions and Other Amounts
Constituting a Part of a Class B Promissory Note Issued to UGR
Less: Balance As
Original Payments of March 28,
Amount Balance Received 1995
Special Limited
Partnership Interests $ 3,250,000 $ 0 $3,250,000
Redemptions 163,368 0 163,368
Accrued Management Fee 70,027 0 70,027
Royalties through
February 28, 1995 689,999 (233,728) 456,271
March 1 through
March 28, 1995 97,838 97,838
Other (Pre-opening,
payroll, travel,
miscellaneous) 639,009 (491,461) 147,548
$ 4,910,241 $(725,189) $4,185,052
Less 3,250,000
Balance $ 935,052
<PAGE>
<PAGE>
SCHEDULE B
PRO FORMA ILLUSTRATION
COMPUTATION
RCC INTEREST*
Project Revenue
Gross Gaming Revenues 30,000,000
Food, Beverage, Rent, Other
Project Revenue 2,000,000
Total Revenue 32,000,000
Less Operating Costs
Gaming Taxes 5,500,000
Food/Beverage and other Project
Costs 1,000,000
Casino Payroll & Related Expenses 9,400,000
Operating Expenses Including
Marketing & Comps 5,000,000
Base Management Fee (including any
future additional incentive
management fees which,
however, are not included in
such $100,000 amount) 100,000
Total Operating Costs 21,000,000
EBITDAR 11,000,000
Less Allowed Deductions
HFS Royalty 3,600,000
Existing NGC Principal & Interest
Payment 1,250,000
Existing IGT Payment 1,250,000
<PAGE>
<PAGE>
Existing Kossen Payment 100,000
Class A Note Payment 600,000
Class B Notes Payment 700,000
Total 7,500,000
NET CASH FLOW 3,500,000
RCC INTEREST 350,000
* These amounts are for illustrative purposes only and no
representation is made that the amounts set out above are
achievable or that Operating Costs or Allowed Deductions are
the actual or estimated amounts that would be payable at
corresponding revenue levels.
-2-
<PAGE>
<PAGE>
Exhibit B-1
R E L E A S E
Alliance Gaming Corporation, a Nevada corporation, and
United Gaming Rainbow, a Nevada corporation (together with their
respective affiliates and their respective officers, directors,
employees and agents, the "Releasors"; each, a "Releasor"), each
hereby releases and discharges each of The Rainbow Casino Corpo-
ration, a Mississippi corporation, Rainbow Development Corpora-
tion, a Mississippi corporation, and Mr. John A. Barrett, Jr. and
Mr. Leigh Seippel, and each of their respective partners and
affiliates (other than Rainbow Casino-Vicksburg Partnership,
L.P.) and their respective officers, directors, employees and
agents (the "Releasees"; each, a "Releasee") and their respective
successors and assigns, from all actions, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agree-
ments, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, including
without limitation, those under the Basic Agreement dated October
28, 1993, as amended, among The Rainbow Casino Corporation,
Messrs. John A. Barrett, Jr. and Leigh Seippel and Alliance
Gaming Corporation, and the Escrow Agreement, Mortgage and
Agreement by Barrett Refining Corporation attached as Exhibits to
such October 28, 1993 agreement, in law or equity, which against
the Releasees, the Releasors and the Releasors' successors and
assigns ever had, now have or hereafter can, shall or may have,
for, upon, or by reason of any matter, cause or thing whatsoever
from the beginning of the world to the date of this Release,
except the rights and obligations under the documents listed on
the attached Schedule A, which shall survive the execution and
delivery of this Release.
This Release may not be changed orally.
<PAGE>
<PAGE>
In Witness Whereof, the Releasors have caused this
Release to be executed by its duly authorized officer.
Dated: March , 1995 Alliance Gaming Corporation
By:_________________________
Name:
Title:
United Gaming Rainbow
By:_________________________
Name:
Title:
In presence of:
______________________________
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<PAGE>
State of New York ss.:
County of New York
On March , 1995 before me personally came
_____________________ , to me known, who, by me duly sworn, did
depose and say that deponent resides at ________________________
________________________________________________________________
that deponent is the ___________________ of Alliance Gaming
Corporation and that deponent signed deponent's name in executing
the foregoing Release on behalf of Alliance Gaming Corporation.
___________________________________
Notary Public
State of New York ss.:
County of New York
On March , 1995 before me personally came
_____________________ , to me known, who, by me duly sworn, did
depose and say that deponent resides at _________________________
_________________________________________________________________
that deponent is the ___________________ of United Gaming Rainbow
and that deponent signed deponent's name in executing the
foregoing Release on behalf of United Gaming Rainbow.
___________________________________
Notary Public
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<PAGE>
Schedule A to Release
1. Second Amended and Restated Partnership Agreement of Rainbow
Casino-Vicksburg Partnership, L.P. dated March 29, 1995 among
United Gaming Rainbow, as general partner, and The Rainbow Casino
Corporation, as limited partner, and Notes issued by such part-
nership on the date hereof.
2. Consolidation Agreement dated March 29, 1995 among The
Rainbow Casino Corporation, John A. Barrett, Jr., Leigh Seippel,
Rainbow Development Corporation, National Gaming Mississippi,
Inc., National Gaming Corporation, HFS Gaming Corp., Alliance
Gaming Corporation, United Gaming Rainbow and Rainbow Casino-
Vicksburg Partnership, L.P.
3. Promissory Note dated as of July 16, 1994 from United Gaming
Rainbow to The Rainbow Casino Corporation.
4. Promissory Notes dated October 28, 1993 and July 16, 1994
from John A. Barrett, Jr. and Leigh Seippel to Alliance Gaming
Corporation and Pledge Agreement dated October 28, 1993 from John
A. Barrett, Jr. and Leigh Seippel to Alliance Gaming Corporation.
5. Management Agreement dated October 28, 1993 among Rainbow
Casino-Vicksburg Partnership, L.P., Mississippi Ventures, Inc.
and The Rainbow Casino Corporation, and the applicable provisions
of the Basic Agreement dated as of October 28, 1993, as amended,
incorporated therein.
6. Section 7(a)(b) of the Letter Agreement dated as of February
25, 1994 between The Rainbow Casino Corporation and Alliance
Gaming Corporation, as consented to by Messrs. Barrett and
Seippel and Hospitality Franchise Systems, Inc. and the applica-
ble provisions of the Basic Agreement dated as of October 28,
1993, as amended, incorporated therein.
7. Sections 1 and 4 of the Letter Agreement dated as of July 16,
1994 between The Rainbow Casino Corporation and John A. Barrett,
Jr. and Leigh Seippel, on the one hand, and Alliance Gaming
Corporation and United Gaming Rainbow, on the other hand.
8. Letter agreement dated December 20, 1994 among Alliance
Gaming Corporation and the Selling Stockholders set forth there-
in, including Mesrrs. Barrett and Seippel.
<PAGE>
<PAGE>
Exhibit B-2
R E L E A S E
The Rainbow Casino Corporation, a Mississippi corpora-
tion, Rainbow Development Corporation, a Mississippi corporation,
and Mr. John A. Barrett, Jr. and Mr. Leigh Seippel (together with
their respective affiliates and their respective officers,
directors, employees and agents, the "Releasors"; each, a "Relea-
sor"), each hereby releases and discharges each of Alliance
Gaming Corporation and United Gaming Rainbow and each of their
respective partners and affiliates (other than Rainbow Casino-
Vicksburg Partnership, L.P.) and their respective officers,
directors, employees and agents (the "Releasees"; each, a "Re-
leasee") and their respective successors and assigns, from all
actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, including without limitation, those under the
Basic Agreement dated October 28, 1993, as amended, among The
Rainbow Casino Corporation, Messrs. John A. Barrett, Jr. and
Leigh Seippel and Alliance Gaming Corporation, and the Escrow
Agreement, Mortgage and Agreement by Barrett Refining Corporation
attached as Exhibits to such October 28, 1993 agreement, in law
or equity, which against the Releasees, the Releasors and the
Releasors' successors and assigns ever had, now have or hereafter
can, shall or may have, for, upon, or by reason of any matter,
cause or thing whatsoever from the beginning of the world to the
date of this Release, except the rights and obligations under the
documents listed on the attached Schedule A, which shall survive
the execution and delivery of this Release.
This Release may not be changed orally.
<PAGE>
<PAGE>
In Witness Whereof, the Releasors have caused this
Release to be executed by its duly authorized officer.
Dated: March 29th, 1995 The Rainbow Casino Corporation
By:_________________________
Name: Leigh Seippel
Title: President
Rainbow Development Corporation
By:_________________________
Name: Leigh Seippel
Title: President
___________________________
John A. Barrett, Jr.
___________________________
Leigh Seippel
In presence of:
______________________________
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<PAGE>
<PAGE>
District of Columbia ss.:
On March 29th, 1995 before me personally came Leigh
Seippel, to me known, who, by me duly sworn, did depose and say
that deponent resides at Fair Oaks Farm, Route 9D, P.O. Box 193,
Cold Springs, N.Y. 10516, that deponent is the President of The
Rainbow Casino Corporation and that deponent signed deponent's
name in executing the foregoing Release on behalf of The Rainbow
Casino Corporation.
___________________________________
Notary Public
District of Columbia ss.:
On March 29th, 1995 before me personally came Leigh
Seippel, to me known, who, by me duly sworn, did depose and say
that deponent resides at Fair Oaks Farm, Route 9D, P.O. Box 193,
Cold Springs, N.Y. 10516, that deponent is the President of
Rainbow Development Corporation and that deponent signed
deponent's name in executing the foregoing Release on behalf of
Rainbow Development Corporation.
___________________________________
Notary Public
State of Oklahoma
ss.:
County of Pottawatomie
On March 24, 1995 before me personally came John A.
Barrett, Jr., to me known, who, by me duly sworn, did depose and
say that deponent resides at 3311 North Oklahoma, Shawnee,
Oklahoma 74801, and that deponent signed deponent's name in
executing the foregoing Release.
___________________________________
Notary Public
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<PAGE>
<PAGE>
District of Columbia ss.:
On March 29th, 1995 before me personally came Leigh
Seippel, to me known, who, by me duly sworn, did depose and say
that deponent resides at Fair Oaks Farm, Route 9D, P.O. Box 193,
Cold Springs, N.Y. 10516, and that deponent signed deponent's
name in executing the foregoing Release.
___________________________________
Notary Public
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<PAGE>
<PAGE>
Schedule A to Release
1. Second Amended and Restated Partnership Agreement of Rainbow
Casino-Vicksburg Partnership, L.P. dated March 29, 1995 among
United Gaming Rainbow, as general partner, and The Rainbow Casino
Corporation, as limited partner, and Notes issued by such part-
nership on the date hereof.
2. Consolidation Agreement dated March 29, 1995 among The
Rainbow Casino Corporation, John A. Barrett, Jr., Leigh Seippel,
Rainbow Development Corporation, National Gaming Mississippi,
Inc., National Gaming Corporation, HFS Gaming Corp., Alliance
Gaming Corporation, United Gaming Rainbow and Rainbow Casino-
Vicksburg Partnership, L.P.
3. Promissory Note dated as of July 16, 1994 from United Gaming
Rainbow to The Rainbow Casino Corporation.
4. Promissory Notes dated October 28, 1993 and July 16, 1994
from John A. Barrett, Jr. and Leigh Seippel to Alliance Gaming
Corporation and Pledge Agreement dated October 28, 1993 from John
A. Barrett, Jr. and Leigh Seippel to Alliance Gaming Corporation.
5. Management Agreement dated October 28, 1993 among Rainbow
Casino-Vicksburg Partnership, L.P., Mississippi Ventures, Inc.
and The Rainbow Casino Corporation, and the applicable provisions
of the Basic Agreement dated as of October 28, 1993, as amended,
incorporated therein.
6. Section 7(a)(b) of the Letter Agreement dated as of February
25, 1994 between The Rainbow Casino Corporation and Alliance
Gaming Corporation, as consented to by Messrs. Barrett and
Seippel and Hospitality Franchise Systems, Inc. and the applica-
ble provisions of the Basic Agreement dated as of October 28,
1993, as amended, incorporated therein.
7. Sections 1 and 4 of the Letter Agreement dated as of July 16,
1994 between The Rainbow Casino Corporation and John A. Barrett,
Jr. and Leigh Seippel, on the one hand, and Alliance Gaming
Corporation and United Gaming Rainbow, on the other hand.
8. Letter agreement dated December 20, 1994 among Alliance
Gaming Corporation and the Selling Stockholders set forth there-
in, including Mesrrs. Barrett and Seippel.
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<PAGE>
EXHIBIT C-1
RAINBOW CASINO COMPLETION LIST
WORK TO BE DONE
Estimated Cost
CURB WORK SOUTH ROAD 7,000
PARKING LOT 6,500
BASIN 3,000
RAIL AT BOAT: (Any upgrade Alliance
responsibility) 7,500
GUARDRAIL 5,000
LEVEE EARTHWORK SIX FLAGS 25,000
SIX FLAGS SITE UTILITIES, STORM SANITARY 32,000
STRIPING 5,000
LANDSCAPING (Any upgrade Alliance
responsibility) 40,000
PAVEMENT MARKING 6,000
EROSION MAINTENANCE BENEATH 50,000
RAHWORTH PROPERTY (EXCLUDING
RETAINING WALLS)
BARGE BASIN REPAIR 25,000
SUBTOTAL 399,433
COMPLETED WORK NOT PAID FOR
INVOICES OUTSTANDING 406,000
UNPAID INVOICES PRE OPENING 105,000
UNPAID PRE OPENING INVOICES
RETURNED TO PARTNERSHIP 54,000
SUBTOTAL 565,000
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<PAGE>
CLAIMS IN DISPUTE
BENCHMARK SETTLEMENT 350,000
NEIGHBORS, MRS. ALEXANDER AND
MR. RAHWORTH ESTIMATED NUISANCE VALUE
CLAIMS ARISING BASED ON EVENTS PRIOR TO
MARCH 15, 1995 20,000
REAL ESTATE TAXES (REDUCED BY PRO RATA
SHARE TO BE PAID BY PARTNERSHIP) 30,000
KRAMER, LEVIN LEGAL FEES 27,000
UNPAID MAY & COMPANY INVOICES 14,000
SUBTOTAL 441,000
TOTAL LIABILITIES 1,405,433
RECOVERIES
CITY RECOVERY IMPACT FEE REBATE
FOR CERTAIN DEVELOPMENT 235,000
SETTLEMENT REDUCTIONS:
ELLIS STEEL OFFER 5,000
NEIL SCHAFFER OFFER 20,000
MAINTENANCE SERVICES
INVOICE OUTSTANDING 4,433
TOTAL 264,433
TOTAL LIABILITIES AFTER
RECOVERIES 1,141,000
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<PAGE>
Exhibit C-2
Work to be Completed by UGR
Liabilities and obligations relating to the completion
of the restaurant, walkways and canopies, including the walkways
and canopies provided to be constructed for the benefit of AP
Hotels of Mississippi, Inc. under its ground lease with the
Partnership, and other work not set forth in Exhibit C-1.
<PAGE>
<PAGE>
EXHIBIT D
March 29, 1995
Daniel G. Hise, Escrow Agent
Butler, Snow, O'Mara, Stevens & Cannada
17th Floor
Deposit Guaranty Plaza
P. O. Box 22567
Jackson, Mississippi 39225-2567
Re: Amendment and Termination of
August 11, 1994 Escrow Agreement
Dear Mr. Hise:
Reference is made to a certain Escrow Agreement dated
August 11, 1994 (the "Escrow Agreement"), between United Gaming
Rainbow, The Rainbow Casino Corporation, John A. Barrett, Jr.,
Leigh Seippel, and Butler, Snow, O'Mara, Stevens & Cannada, as
Escrow Agent.
This letter will serve to amend and terminate the
Escrow Agreement 1994 and is hereby entered by the undersigned
parties in order to permit release of all of the Escrow Property
in accordance with the instructions set forth herein.
The parties hereby agree that, upon execution of this
Amendment, the Escrow Agent shall (i) release to John A. Barrett,
Jr. the Stock Certificate No. 17902 representing 150,000 shares
of United Gaming, Inc. and made out to John A. Barrett, Jr., and
(ii) release to Leigh Seippel the Stock Certificate No. 17899
representing 150,000 shares of United Gaming, Inc. and made out
to Leigh Seippel. The transfer of these stock certificates to
Mr. Barrett and Mr. Seippel shall be accomplished by the Escrow
<PAGE>
<PAGE>
Agent upon execution of this Letter Agreement by sending both
stock certificates via overnight delivery to James D. Bachman,
Esq., Doyle & Bachman, 919 18th Street, N.W., Washington, D. C.
20006.
The parties also agree that, upon completion of distri-
bution of the stock in accordance with the instructions herein,
the Escrow Agreement shall terminate and all duties of the Escrow
Agent shall have been discharged in full under the Escrow Agree-
ment.
UNITED GAMING RAINBOW THE RAINBOW CASINO CORPORATION
By:_________________________ By:___________________________
Leigh Seippel, President
____________________________ ______________________________
John A. Barrett, Jr. Leigh Seippel
Accepted and Agreed:
BUTLER, SNOW, O'MARA, STEVENS
& CANNADA, As Agent
By:_________________________
Daniel G. Hise,
Partner
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<PAGE>
<PAGE>
Exhibit 2.3
RAINBOW CASINO-VICKSBURG PARTNERSHIP, L.P.
(A Mississippi Limited Partnership)
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of March 29, 1995 (the "Agreement"), is
entered into by and between United Gaming Rainbow, a Nevada
corporation ("UGR"), as general partner, and The Rainbow Casino
Corporation, a Mississippi corporation, as limited partner ("RCC"
or the "Limited Partner").
R E C I T A L S :
A. RCC, as general partner, and UGR, as limited
partner, are partners in a limited partnership pursuant to the
Mississippi Limited Partnership Act, Sections 74-14-101 et seq.
of the Mississippi Code of 1972, as amended (the "Mississippi
Act"), pursuant to an Amended and Restated Limited Partnership
Agreement dated as of July 16, 1994 (the "Original Agreement"),
which carried forward the Partnership. UGR and RCC desire to
amend and restate the Original Agreement, pursuant to the
Mississippi Act and upon the terms and conditions set forth in
this Agreement, to effect the changes set forth herein, including
without limitation, by UGR being and becoming the general partner
in the Partnership and RCC being and becoming the Limited
Partner.
B. Pursuant to the Original Agreement, the Partner-
ship issued to UGR Special Limited Partnership Interests (as
defined therein) in the aggregate amount of $3.25 million, as
more particularly provided therein. Pursuant to the Consolida-
tion Agreement (as defined below) and as provided in Section 4.04
below, such Special Limited Partnership Interests shall be
cancelled and in exchange therefor the Partnership is issuing to
UGR on the date hereof a Class A Note (as defined below) in the
principal amount of $3.25 million. In addition, pursuant to the
Consolidation Agreement, amounts in respect of accrued and unpaid
royalties payable to UGR, accrued and unpaid amounts in respect
of Distributions (as defined below) in respect of, and Redemp-
tions (as defined below) of, such Special Limited Partnership
Interests and certain other accrued and unpaid amounts, through
and including the date hereof, in the aggregate amount of
$935,052 (as set forth in Exhibit A hereto), shall hereafter
constitute an obligation of the Partnership which shall consti-
tute a portion of the indebtedness evidenced by the Class B Note
(as defined below) in the maximum principal amount of $3.5
million issued on the date hereof by the Partnership to UGR.
C. The Partnership is also issuing to National Gaming
Mississippi, Inc., a Delaware corporation ("NGM"), a Class B
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Note in the maximum principal amount of $2 million pursuant to
the Consolidation Agreement.
A G R E E M E N T :
The parties agree that the Original Agreement shall be
amended and restated as follows:
Article I: Organizational Matters
1.01 Formation; Etc. UGR and RCC hereby agree to
continue as partners (sometimes referred to herein as the "Part-
ners") in continuation of the Partnership under the Mississippi
Act as described in Recital A above. On or prior to the date
hereof (or within five business days hereafter), UGR and RCC have
caused (or shall cause) to be filed an amended certificate of
limited partnership (a "Certificate") in the office of the
Secretary of State of the State of Mississippi reflecting the
fact that UGR is the general partner and RCC is the limited
partner in the Partnership. Failure to effect such filing in a
timely manner shall not affect the Partners' respective rights or
obligations hereunder.
1.02 Partners. UGR shall, from and after the date
hereof, be the sole general partner in the Partnership (the
"General Partner"). RCC shall, from and after the date hereof,
be the sole Limited Partner. Each additional Limited Partner, if
any, upon execution and delivery of a counterpart of this Agree-
ment, as provided for herein, shall become a limited partner in
the Partnership and shall be reflected as such on the books and
records of the Partnership. UGR shall not admit any other Person
as a Partner if the effect thereof is to reduce amounts otherwise
payable to RCC hereunder, as provided herein.
1.03 Documents. The Partners acknowledge and ratify
the filing of each Certificate by UGR and RCC and, after the
execution and delivery of this Agreement, the General Partner
shall cause to be filed such other certificates or filings as may
be required for the operation of a limited partnership in the
State of Mississippi. The General Partner shall thereafter file
any necessary amendments to the Certificate, and shall otherwise
do all things necessary or appropriate for the maintenance of the
Partnership as a limited partnership under the laws of the State
of Mississippi.
1.04 Name. The Partnership's name is "Rainbow Casino-
Vicksburg Partnership, L.P." The Partnership's business shall be
conducted under the name "Rainbow Casino-Vicksburg Limited
Partnership" or under any other name or names reasonably deemed
advisable by the General Partner from time to time, including
without limitation, the name of the General Partner or any
Affiliate thereof or any trade style or trade names. The words
"Limited Partnership" or letters "L.P." shall be included in the
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<PAGE>
name of the Partnership where necessary to comply with the laws
of any jurisdiction that so requires.
1.05 Registered Office; Principal Office. Unless and
until changed by the General Partner, the registered office of
the Partnership in the State of Mississippi shall be located at
1440 Warrenton Road, Vicksburg, Mississippi 39180. The principal
office of the Partnership shall be c/o Alliance Gaming Corpora-
tion, 4380 Boulder Highway, Las Vegas, Nevada 89121, or such
other place in the United States as may from time to time be
reasonably designated by the General Partner (provided, that the
General Partner shall not charge any overhead in respect of such
office if not maintained at the Project site, except as reflected
in the management fee under the Management Agreement (as in
effect on the date hereof)). The General Partner shall give
prompt written notice of any such change to the Limited Partner.
The Partnership may maintain offices at such other place or
places within or outside the State of Mississippi as the General
Partner deems desirable or advisable.
1.06 Duration. The Partnership has commenced opera-
tions prior to the date hereof and shall continue until December
31, 2010, unless earlier terminated pursuant to Article VII or
extended pursuant to Article V hereof.
1.07 Purposes and Powers. The Partnership is orga-
nized for the object and purpose of conducting, operating and
disposing of the Rainbow Business, and to engage in all such
activities and transactions as are reasonably related to or
incidental to the foregoing. In the event that the General
Partner proposes to enter into any transaction or series or
related transactions on behalf of the Partnership that are
material to the Rainbow Business with Alliance Gaming Corporation
or any of its Affiliates (other than the Partnership), the
General Partner shall notify the Limited Partner of such proposed
transaction (together with a reasonably detailed written descrip-
tion thereof), and the Limited Partner shall have the right to
consent (in its reasonable discretion) to the fact that the
economic terms of such transaction are no less favorable to the
Partnership than the terms on which such a transaction would have
been effected with an unaffiliated third party; it being under-
stood that failure to respond to such General Partner's notice
within 10 days thereof shall constitute the Limited Partner's
consent. The Rainbow Business shall not be conducted by the
General Partner other than through the Partnership. The Partner-
ship may conduct and operate the Rainbow Business through divi-
sions or other formats, utilizing trade styles or trade names.
The Partnership shall have all powers necessary or incidental,
suitable, desirable or convenient for the accomplishment of the
aforesaid purposes as limited above, alone or with others, as
principal or as agent.
1.08 Power of Attorney. Subject to Section 1.07
above, the Limited Partner hereby constitutes and appoints the
3
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General Partner and each of its authorized officers and attor-
neys-in-fact, with full power of substitution, as its true and
lawful agent and attorney-in-fact, with full power and authority
in its name, place and stead, in a manner not prohibited by this
Agreement, to execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices all certificates,
documents and other instruments that the General Partner deems
necessary or appropriate to form, qualify or continue the exis-
tence or qualification of the Partnership as a limited partner-
ship in the State of Mississippi. The foregoing power of attor-
ney is irrevocable and a power coupled with an interest, and it
shall survive and not be affected by the subsequent death,
incompetency, dissolution, bankruptcy or termination of the
Limited Partner or the transfer of all or any portion of the
Limited Partner's Interest and shall extend to the Limited
Partner's successors and assigns.
1.09 Ownership of Property. Legal title to all
assets, rights and property (including without limitation, all
cash and cash deposits in whatever form held, including in gaming
machines), whether real, personal or mixed and whether tangible
or intangible, acquired by the Partnership shall be acquired,
held, owned and subsequently conveyed in the name of the Partner-
ship and no Partner, individually or collectively, shall have any
ownership interest in such partnership properties or any portion
thereof. Subject to Section 1.07 above, (a) the Partnership
shall have the power to acquire, own, lease, sublease, manage,
operate, hold, deal in, control or dispose of any interest in
real property constituting part of the Project and (b) the
Partnership shall also have the power to acquire, own, hold,
manage, sell, transfer, convey, assign, exchange, pledge or
otherwise dispose of the stock of or other interest in any
Person, foreign or domestic.
Article II: Definitions
For the purposes of this Agreement, the following terms
shall have the following meanings:
"Affiliate" of any Person means any other person
Controlled by, Controlling or under common Control with such
first Person, including without limitation, directors, officers,
employees, stockholders and agents of such first Person or any
other Person Controlled by, Controlling or under common Control
with such first Person. "Control," "Controlling" or "Controlled"
as to any Person shall mean the possession, directly or indi-
rectly, of the power to direct or cause the direction of the
management and/or policies of such Person, whether through
ownership of voting securities or partnership interests, by
agreement or understanding or otherwise.
"Alliance Agreements" shall mean the Basic Agreement
dated as of October 28, 1993 among Alliance Gaming Corporation
(formerly known as United Gaming, Inc.), The Rainbow Casino
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Corporation, John A. Barrett, Jr. and Leigh Seippel, as amended
to date by agreements among such Persons and certain other
Persons, including by the Consolidation Agreement.
"Allowed Deductions" shall mean deductions from Net
Cash Flow consisting of :
(i) NGM and/or HFS royalties and interest and princi-
pal in respect of the HFS Financing Agreements, each as
provided for in the HFS Financing Agreements as presently in
effect;
(ii) interest and principal in respect of the existing
obligations of the Partnership to International Game Tech-
nology, Inc. or any of its affiliates, as presently in
effect;
(iii) interest and principal in respect of existing
obligations to the Partnership to Kossens, Inc. or any of
its affiliates, as presently in effect;
(iv) interest and principal in respect of the Class A
Note issued by the Partnership on the date hereof to UGR in
the maximum principal amount of $3.25 million; it being
understood that from and after the date hereof no further
royalty shall accrue in respect of any Special Limited
Partnership Interests or under the Alliance Agreements in
any circumstance, the maximum principal amount of Class A
Notes to be given effect for purposes of computation of the
Net Cash Flow from which the RCC Interest is payable being
$3.25 million; and
(v) interest and principal in respect of the Class B
Notes issued by the Partnership on the date hereof to UGR
and NGM in the amounts of $3.5 million and $2 million,
respectively; such Class B Notes being for purposes of
funding Permitted Capital Expenditures in the aggregate of
up to but not in excess of $5.5 million, such that the maxi-
mum principal amount of the Class B Notes for purposes of
computation of Net Cash Flow from which the RCC Interest is
payable being $5.5 million or such lesser amount as shall
have been funded in respect of such Class B Notes, in con-
formity with the terms of this Agreement and the Consolida-
tion Agreement.
In calculating Allowed Deductions it is agreed that the
General Partner is authorized to amend the terms of the indebted-
ness and other items in clauses (i) through (v) above or to
obtain substitute, replacement or additional financing in respect
of the Project, each, in the General Partner's sole discretion;
provided, that, notwithstanding any such action or any other
recapitalization of the Partnership, or any other action of the
Partnership or the General Partner, the RCC Interest shall
continue to be calculated solely based upon Net Cash Flow calcu-
5
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lated based on the provisions set out above in this definition,
throughout the term of the RCC Interest and based on a maximum
aggregate principal amount of Notes of $8.75 million to be repaid
in accordance with their terms, as provided herein.
"Class A Note" shall mean the Class A Note issued by
the Partnership to UGR on the date hereof in accordance with
Section 4.04 hereof in the maximum principal amount of $3.25
million.
"Class B Note" shall mean each of the Class B Notes
issued by the Partnership to UGR and NGM on the date hereof in
accordance with Section 4.04 hereof in the maximum principal
amounts of $3.5 million and $2 million, respectively. The Class
B Notes shall accrue interest on and the principal amounts
thereunder shall be repayable solely based upon the amounts
funded or deemed funded by UGR and NGM hereunder and under the
Consolidation Agreement. As of the date hereof, the Partnership
has incurred indebtedness to (and such amounts shall be deemed
funded by) (a) UGR in the amounts of $935,052 in respect of
accrued and unpaid amounts described on Exhibit A hereto and
$651,999.92 as provided in Section 2(b) of the Consolidation
Agreement and (b) NGM in the amount of $651,999.92 as provided in
the Consolidation Agreement. The Class B Notes shall be subject
to the final sentence of Section 3.04 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute or statutes thereto.
"Consolidation Agreement" shall mean the Consolidation
Agreement dated as of the date hereof among RCC, NGM, HFS Gaming
Corp., a Delaware corporation, Alliance Gaming Corporation, UGR
and, as to certain matters, John A. Barrett, Jr., Leigh Seippel,
Rainbow Development Corporation, a Mississippi corporation, and
National Gaming Corp., a Delaware corporation, and Doyle &
Bachman, a law partnership.
"EBITDAR" shall mean earnings from the Project, before
giving effect to depreciation, amortization, interest and princi-
pal payments (including payments of interest on and principal of
the HFS Financing Agreements to HFS or NGM or any of their
respective Affiliates and payments of interest on and principal
of the Notes), royalties payable to HFS, capital expenditures,
and federal, state and local taxes (provided that such taxes are
not paid by the Partnership)(but after giving effect to specifi-
cally gaming-related taxes, which shall constitute a deduction
from earnings of the Partnership), all as determined in accor-
dance with generally accepted accounting principles, consistently
applied.
"Event of Withdrawal" shall mean, with respect to the
General Partner, any bankruptcy or insolvency of the General
Partner and the events specified under Section 79-14-402(a) of the
Mississippi Act.
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"Gross Gaming Revenues" shall mean gaming revenues
derived from the casino forming a part of the Project, in accor-
dance with generally accepted accounting principles, consistently
applied, i.e., for any applicable period, the amounts retained by
such casino in respect of players' wagers, less payments to
winning players and all applicable gaming taxes.
"HFS" shall mean Hospitality Franchise Systems, Inc. or
any of its Affiliates (and shall include NGM or any of its
Affiliates); "HFS Financing Agreements" shall mean the various
financing agreements, marketing and servicing agreements and
other documents and instruments in effect on the date hereof
among the Partnership, either of the Partners (or any of their
respective Affiliates) and HFS or NGM, as amended or supplemented
and in effect from time to time.
"Interest" shall mean, as to each Partner, all applica-
ble rights of such Partner under this Agreement.
"Management Agreement" shall mean the Management
Agreement dated as of October 28, 1993 among Mississippi Ven-
tures, Inc., the Partnership, RCC, John A. Barrett, Jr. and Leigh
Seippel, as amended to date.
"Net Cash Flow" shall mean EBITDAR of the Project, on a
freestanding basis, exclusive of any overhead, service or other
charges of the General Partner, Alliance Gaming Corporation or
any Affiliate thereof (other than the Partnership, as permitted
by this Agreement) other than the Management Fee (as presently in
effect and as provided for in the Management Agreement, including
any incentive or performance based management fees), prepared on
a consistently applied generally accepted accounting principles
basis for the Project, less deductions for, but only for Allowed
Deductions.
"Net Income" or "Net Loss" for any taxable year shall
mean the taxable income or the taxable loss of the Partnership
for such taxable year as determined for U.S. federal income tax
purposes.
"Notes" means, collectively, the Class A Note and the
Class B Notes.
"Permitted Capital Expenditures" shall mean expendi-
tures made by UGR or NGM or any of their respective Affiliates to
or as directed by the Partnership or otherwise designated by the
General Partner (in its sole discretion) in connection with the
Project or the Rainbow Business, whether from the cash available
in or generated by the Project or from UGR's or NGM's or such
Affiliates' own or borrowed funds, and in each case, whether or
not such expenditures are, in accordance with generally accepted
accounting principles, properly classified as capital expendi-
tures; provided, that the aggregate amount of such expenditures
(including the amount provided to be expended under the Consoli-
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dation Agreement) shall not have exceeded the difference between
$5.5 million and the amount funded on the date hereof in respect
of the Class B Notes (i.e., $2,239,051.84), from and after the
date hereof. Nothing herein shall limit UGR's ability to fund
additional amounts to the Project so long as such additional
amounts are not evidenced by a Class B Note.
"Person" shall mean any individual, company, corpora-
tion, association, governmental or quasi-governmental authority
or other entity.
"Project" shall mean a dockside casino, restaurants,
concessions and related activities in Vicksburg, Mississippi
(including the contiguous family entertainment park and hotel).
"Rainbow Business" shall mean the business and opera-
tions heretofore and hereafter conducted by the Partnership,
consisting of the development, ownership and operation of the
Project.
"RCC Interest" shall mean the Interest of RCC as
Limited Partner in the Partnership calculated as 10% of Net Cash
Flow of the Partnership for each fiscal year of the Partnership
from January 1, 1995 through the term of this Partnership as set
forth in Section 1.06 hereof, subject to earlier termination as
provided in Article VII hereof and to extension of such date as
provided in this definition; provided, that RCC shall be enti-
tled to a 20% share of Net Cash Flow to the extent (but solely to
the extent) allocable on a straight line proportionate basis to
Gross Gaming Revenues in any fiscal year in excess of $35,000,000
(e.g., if gross gaming revenues are $38,000,000 and Net Cash Flow
is $5,000,000, the RCC Interest shall be (a) $5,000,000 x 35/38 x
10% plus (b) $5,000,000 x 3/38 x 20%). The term of the RCC
Interest shall be for 15 years, commencing January 1, 1995;
provided, that if the RCC Interest does not produce at least
$50,000 per calendar year in actual payments to RCC, or a compen-
sating payment up to the difference between $50,000 and the
amount of the RCC Interest otherwise payable by the Partnership
is not made for such calendar year to RCC, then the term of the
RCC Interest shall be extended for an additional consecutive 12-
month period in each such case.
"Transfer" shall mean the direct or indirect sale,
donation, assignment (as collateral or otherwise), pledge,
hypothecation, encumbrance, transfer or disposition of any
Interest; "Transferor" and "Transferee" shall have correlative
meanings to the foregoing.
Article III: Management and Operation of the Business
3.01 Management of the Partnership. (a) The manage-
ment and operation of the Partnership shall be exclusively vested
in the General Partner, which may exercise all powers necessary
or convenient for the accomplishment of the purposes of the
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Partnership on behalf of and in the name of the Partnership. The
Partnership has previously entered into a Management Agreement,
which Management Agreement is ratified and remains in full force
and effect. In addition to the powers now or hereafter granted
to a general partner of a limited partnership under applicable
laws or which are granted to the General Partner under any other
provision of this Agreement, the General Partner shall, subject
to the other provisions of this Agreement, have full power and
authority to do all things and on such terms as it may deem
necessary or desirable to conduct the business of the Partnership
and to effectuate the purposes set forth herein and in the
Consolidation Agreement; provided, that in any transaction
between the Partnership, on the one hand, and Alliance Gaming
Corporation and its Affiliates (other than the Partnership), on
the other hand, such transaction shall be conducted in accordance
with the standards of Section 1.07 hereof or the financial conse-
quences of such transaction to the Partnership if materially
adverse to the Partnership's EBITDAR as calculated for purposes
of the Net Cash Flow shall be disregarded to the extent (but
solely to the extent) less favorable to the Partnership than
articulated in such standards.
Notwithstanding the foregoing, the General Partner
shall not (i) liquidate the Partnership prior to December 31,
2010 (or such later date as may be provided for in Article V
hereof), other than as the result of an Event of Termination, or
(ii) modify or amend this Agreement or the Management Agreement
in a manner which is materially adverse to the Limited Partner,
in each case, without the consent of the Limited Partner.
Nothing contained in this Agreement shall affect the duration of
the royalty payable to HFS in connection with the HFS Financing
Agreements, which royalty shall survive the termination of the
Partnership to the extent provided therein.
(b) The respective liabilities of the Partners in
respect of the completion of the Project shall be solely as set
forth in the Consolidation Agreement and no Partner shall have
any liability in respect thereof other than as set forth therein.
(c) The Partnership may have employees and agents who
may be designated as officers with titles designated by the
General Partner, and who in such capacities may act for and on
behalf of the Partnership. Nothing in this Section 3.01(c) shall
affect the parties' respective rights or obligations under or
pursuant to the Management Agreement for purposes of calculating
Net Cash Flow or otherwise under this Agreement.
3.02 Relationship Between the General Partner and the
Limited Partners. (a) Each of the Partners hereby approves,
ratifies and confirms the execution, delivery and performance by
the Partnership of the Consolidation Agreement and accompanying
documents and all other documents or instruments heretofore
executed by or on behalf of the Partnership or in connection
therewith and the HFS Agreement.
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(b) The acts of the General Partner in carrying on the
business of the Partnership as authorized herein shall bind the
Partnership. The Limited Partner shall not have any right to,
and shall not, (i) take part in the management or control (within
the meaning of the Mississippi Act) of the Partnership's busi-
ness, (ii) act for or bind the Partnership, (iii) transact any
business in the name of or on behalf of the Partnership, or (iv)
withdraw from the Partnership as a limited partner until the
Limited Partner has assigned its Interest pursuant to and in
accordance with the provisions hereof. The Limited Partner, in
its capacity as limited partner, shall only have the rights and
powers specifically granted to the Limited Partner in this Agree-
ment or pursuant to the Mississippi Act.
(c) Neither the General Partner nor the Limited
Partner shall be obligated to make any further contributions to
the capital of the Partnership except as provided in the Consoli-
dation Agreement.
(d) The liability of the Limited Partner to third
parties shall be limited as provided in the Mississippi Act. The
Limited Partner acknowledges and agrees that it shall be liable
to the Partnership for any money or other property distributed,
paid or conveyed to it by the Partnership, only to the extent
required by the Mississippi Act.
(e) Notwithstanding any other term of this Agreement,
none of the Partners, their respective Affiliates or their
respective stockholders, directors, officers, employees, ser-
vants, direct or indirect partners, attorneys or agents, or the
officers of the Partnership shall be liable to the Partnership or
any other Person or any such Affiliate or officer, director,
direct or indirect partner, stockholder, employee, attorney or
agent for any act or omission taken or omitted in good faith by
or for such Persons; provided, that such act or omission did not
constitute fraud, willful violation of law, willful violation of
this Agreement, reckless disregard of the duties of such person
or gross negligence in the performance of its duties, in each
such case, in relationship to the Partnership.
3.03 Partnership Funds. The funds of the Partnership
shall be deposited in such account or accounts as are designated
by the General Partner.
3.04 Permitted Capital Expenditures. Each amount that
is designated by the General Partner as a Permitted Capital
Expenditure (which the General Partner may so designate in its
sole discretion but which shall include all amounts funded under
Section 2 of the Consolidation Agreement) shall be deemed to be
and constitute a part of the indebtedness evidenced by the Class
B Notes; provided, that in no event shall the aggregate principal
amount of all Permitted Capital Expenditures exceed $5.5 million
for purposes of computation of the RCC Interest. Such amount
shall not be renewed by borrowing, repayment and reborrowing or
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otherwise, but such limit shall apply only for the purpose of
computation of the RCC Interest and shall not otherwise limit in
any manner the business, financing or operations of the Partner-
ship.
Article IV: Allocations of Net Income and Net Losses;
Etc.
4.01 [Intentionally Omitted].
4.02 Allocation of Items of Net Income and Net Loss.
Except as required by Section 4.03 hereof or otherwise required
by the Code, Net Income for any fiscal year of the Partnership
shall be allocated to the General Partner and the Limited Partner
on a pro rata basis in accordance with the actual distribution of
cash to the Partners as provided in Article V hereof. Net Loss
shall be allocated in proportion to and to the extent of the
difference, if positive, between cumulative Net Income and
cumulative cash distributed to the Partners, and thereafter to
the General Partner. The forms K-1 issued to the Partners shall
be as specified in Section 8.04(c) hereof.
4.03 Section 704(c) of the Code and Treasury Regula-
tion Section 1.704-1(b)(4)(i). Partnership income, gains, losses
and deductions shall, solely for income tax purposes, be
allocated among the Partners in accordance with Section 704(c) of
the Code and the Treasury regulations promulgated thereunder with
respect to contributed property, and in accordance with Treasury
Regulation Section 1.704-1(b)(4)(i) with respect to revalued
property, so as to take account of any difference between the
adjusted basis to the Partnership of any property for federal
income tax purposes and its fair market value at the time such
property was contributed to the Partnership, or at the time such
property was revalued in accordance with Treasury Regulation
Section 1.704l(b)(2)(iv)(f). The depreciation allocation will be
limited to the federal income tax depreciation on the contributed
or revalued assets. All Partners shall report the amounts
attributable to them under this Agreement in accordance with the
Form K-1 provided to them by the Tax Matter Partner.
4.04 Issuance of Notes. (a) On the date hereof, the
Partnership is issuing to (i) UGR the Class A Note in the princi-
pal amount of $3.25 million (all of which shall be deemed funded
and outstanding as of the date hereof) and (ii) each of UGR and
NGM a Class B Note in the original principal amount of $3.5
million and $2 million, respectively. Of such amounts, (x)
$935,052 in respect of accrued and unpaid amounts as set forth on
Exhibit A hereto and $651,999.92, as contemplated by the Consoli-
dation Agreement, shall be deemed funded by UGR and outstanding
as of the date hereof and (y) $651,999.92, as contemplated by the
Consolidation Agreement, shall be deemed funded by NGM and
outstanding as of the date hereof. Additional amounts of Permit-
ted Capital Expenditures that hereafter are funded by UGR or NGM
shall be deemed to be outstanding under the Class B Notes upon
funding thereof.
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(b) The Class A Note shall bear interest at a rate of
7.5% per year on the outstanding principal amount thereof and
shall be repayable on the basis of 77 level monthly payments of
interest and principal, commencing on April 1, 1995. The Class B
Notes shall bear interest at a rate of 10% per year as applied to
the amount funded thereunder and shall be repayable on the basis
of 84 monthly level payments of interest and principal (as
adjusted for additional amounts of indebtedness incurred and
outstanding thereunder after the date hereof), commencing April
1, 1995. Amounts under the Notes (of interest or principal) that
are unpaid after any applicable payment date shall bear interest
at the rate otherwise in effect plus 2% per year.
Article V: Distributions; Etc.
5.01 RCC Interest. The Limited Partner shall be
entitled to receive the RCC Interest, as provided herein, for so
long as the term of such Interest shall be in effect as provided
herein, and the General Partner shall receive all other revenues,
profits, income, cash and other property or assets of the Part-
nership. Such payments of the RCC Interest shall be calculated
from the Partnership's fiscal year financial statements as
reported on by its independent accounting firm on the basis
provided for herein, shall be payable in quarterly estimated
installments based upon the prior fiscal year's Net Cash Flow of
the Partnership in the subject quarter and shall be subject to
final adjustment on a whole fiscal year basis (by supplemental
payment to RCC or by offset of the succeeding year's accruals or
payment by RCC to UGR in the final year of the Partnership, as
the case may be) within 120 days of the end of each fiscal year
of the Partnership. A pro forma illustration of the basis of
computation of the RCC Interest is attached hereto as Schedule B.
5.02 Sale of Partnership or Partnership Business. In
the event of a sale or its substantial equivalent of all or
substantially all of the General Partner's Interest or of all or
substantially all of the assets or business of the Partnership
(irrespective of the form of such transaction), then either (a)
the RCC Interests shall be conveyed additionally at the option of
the General Partner in its sole discretion; provided, that RCC
shall be allocated a share of the total transaction proceeds in
respect of the RCC Interest on a basis reflecting its then
present value with reference to the valuations of the subject
transaction (as mutually agreed between the General Partner and
RCC, or failing agreement within 15 days of consummation of such
transaction, then, as determined by Arbitration (as defined below
in this paragraph)) or, alternatively, (b) if mutually agreed
between the acquiror, the General Partner and RCC, the RCC
Interest shall be preserved by the terms of the subject transac-
tion. It is understood and agreed that the consent of RCC shall
not be required for any such transaction, except in any transac-
tion involving an Affiliate of the General Partner. "Arbitra-
tion" shall mean an arbitration conducted under the rules of the
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American Arbitration Association by either a mutually satisfacto-
ry independent arbitrator (or failing agreement on such a person
within 15 days after either party requests Arbitration in writ-
ing, then, by a panel of three independent arbitrators of which
one will be selected by each of the parties and the third will be
selected by such nominees, and failing that agreement, then, by
the American Arbitration Association). The General Partner shall
keep the Limited Partner reasonably informed of the status of
negotiations and progress of any such transaction and shall
provide to the Limited Partner copies of relevant final (and with
respect to material documents, draft) transaction documents. In
the event of a transaction described in clause (a) above, the
General Partner shall, upon consummation thereof if the Partners
shall not have then agreed upon the amount allocable to the RCC
Interest, cause to be delivered to a third party escrow agent
designated by the General Partner an amount reasonably estimated
by the General Partner to be allocable to the Limited Partner in
respect of the RCC Interest, which amount shall be held in an
interest-bearing escrow account with a bank or financial institu-
tion. Such amount shall be held pursuant to a then-customary
escrow agreement and all or a portion thereof, together with
accrued and unpaid interest, disbursed upon the final determi-
nation of the amount allocable to the Limited Partner, as de-
scribed above, or as otherwise jointly directed in writing by the
Partners; at such time, if the amount allocable to the Limited
Partner is greater than the principal amount so held in escrow,
the General Partner shall cause to be paid such discrepancy,
together with interest thereon at the rate earned in such escrow
account.
5.03 Certain Rights. The foregoing provisions in
this Article V (and the correlative definitions) are included in
this Agreement solely for the purpose of calculating the amounts
payable to the Limited Partner and are not intended to limit or
restrict in any way the General Partner's right to operate the
business of the Partnership in its sole discretion, including
without limitation, to incur any financing or capital expenditure
that is not a Permitted Capital Expenditure.
5.04 Term. The term of the Partnership may be extend-
ed as provided in the definition of RCC Interest.
Article VI: [Intentionally Omitted]
Article VII: Termination and Dissolution
7.01 Events of Termination. The Partnership shall not
be dissolved unless in good faith. The Partnership shall be
dissolved and its affairs wound up pursuant to Section 7.02
hereof, and this Agreement shall terminate upon the first to
occur of any of the following events (each, an "Event of Termina-
tion"): (a) the execution by each Partner of a unanimous written
consent to dissolution and payment in full in cash of the Notes
and the then net present value of estimated future payments of
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the RCC Interest over its remaining scheduled term, as provided
for in Article V above; (b) the sale or other disposition of all
or substantially all of the assets of the Partnership and provi-
sion for the sale or continuance of the RCC Interest as provided
in Article V; (c) the dissolution, winding-up, cessation of
business or withdrawal of all of the Partners; (d) an Event of
Withdrawal unless at the time of the occurrence of such Event of
Withdrawal there is at least one General Partner who is autho-
rized and agrees to continue the business of the Partnership
without dissolution (and, if there are no remaining general
partners, a majority in interest of the limited partners shall
make selection of a new General Partner and, if RCC is the sole
limited partner, RCC shall be permitted to elect to continue the
Partnership in its sole discretion); or (e) December 31, 2010 or
such later date as may be provided pursuant to this Agreement for
the full term of the RCC Interest in Article V above.
7.02 Winding-Up. Upon the occurrence of an Event of
Termination, the Partnership's affairs shall be wound up, its
debts paid and its business and property, rights and assets
disposed of in an orderly manner as shall be determined by the
General Partner and the General Partner shall receive all proper-
ty, rights or assets of the Partnership after provision for
payment of the amounts to RCC as provided in Section 5.02 above.
The Limited Partner shall not have any right to share or partici-
pate in any such property, rights or assets remaining after such
payments, all of which shall be and belong solely to the General
Partner.
Article VIII: Reports to Partners
8.01 Books of Account. Appropriate records and books
of account shall be kept by the General Partner and by the
manager under the Management Agreement, at the principal place of
business of the Partnership. The Limited Partner shall be
provided reasonable access to such books and records, at reason-
able times on reasonable prior notice for the purpose of verify-
ing the amounts payable to it under Article V above and shall be
provided a quarterly estimated computation thereof by the General
Partner and an annual final computation reported on by the
independent accounting firm of the Partnership (including without
limitation, a computation of the RCC Interest in each period) and
unaudited monthly summaries of the operations of the Partnership.
8.02 Audit and Report. The books and records of the
Partnership shall be kept in accordance with generally accepted
accounting principles, which is consistent with the requirements
of Section 704 of the Code and the Treasury Regulations thereun-
der, and shall be audited by independent certified public accoun-
tants of the General Partner's selection. The General Partner
shall provide to the Limited Partner and the holders of Notes on
a timely basis annual and quarterly balance sheets, statements of
income (loss) for each applicable period and of such Partner's
capital accounts, statements of Net Cash Flow; and the amount of
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such Partner's share in each item of Partnership's taxable income
or loss for each year which must be separately accounted for by a
Partner pursuant to section 702(a) of the Code and any other
information needed to prepare the Partner's federal, state and
local income tax returns and reports.
8.03 Fiscal Year. The fiscal year and taxable year of
the Partnership shall end on June 30.
8.04 Tax Matters. (a) The General Partner is hereby
designated as the "Tax Matters Partner" under Section 6231(a)(7)
of the Code, to manage administrative tax proceedings conducted
at the Partnership level by the Internal Revenue Service with
respect to Partnership matters. The General Partner is specif-
ically directed and authorized to take whatever steps the General
Partner deems necessary or desirable to perfect such designation,
including without limitation, filing any forms or documents with
the Internal Revenue Service and taking such other action as may
from time to time be required under any Treasury Regulation. The
Tax Matters Partner shall not be liable to the Partnership or any
other Partner for any act or omission taken or suffered by it in
such capacity in good faith and in the reasonable belief that
such act or omission is in or is not opposed to the best inter-
ests of the Partnership; provided, that such act or omission is
not in violation of the Agreement and does not constitute gross
negligence, fraud or a willful violation of law.
(b) Within five business days of receipt, a Partner
shall give to the remaining Partners written notice of such
Partner's receipt from any taxing authority of any notification
of any audit or investigation of the Partnership or any other tax
proceeding or proposed tax adjustment affecting the Partnership.
(c) The Tax Matters Partner shall cause income and
other required federal, state and local tax returns for the
Partnership to be prepared on a basis consistent with the terms
of this Agreement and timely filed with the appropriate authori-
ties. The forms K-1 issued to the Limited Partner in respect of
each fiscal year of the Partnership shall report income in an
amount equal to the cash distributed to such Partner. The Tax
Matters Partner shall make or maintain in effect tax elections as
it shall deem to be appropriate.
(d) Each Partner and the Partnership shall cooperate
with and assist, at its own expense, the Tax Matters Partner in
connection with any federal, state, local or foreign tax matter
affecting the Partnership or any entity in which the Partnership
has an interest, including without limitation, providing any
records or supporting data with respect to assets or liabilities
transferred to the Partnership, preparing any tax return or
assisting as requested on any audit.
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Article IX: Miscellaneous
9.01 Transfers of Interests; Admission of Additional
Partners. (a) Subject to applicable requirements of the Missis-
sippi Act and applicable gaming laws and regulations, the General
Partner and the Limited Partner shall have the right to Transfer
their respective Interests to any Person, subject to the provi-
sions of this Agreement; provided, that, except to its stockhold-
ers on the date hereof, the Limited Partner shall not be permit-
ted to Transfer its Interests without the prior written consent
of the General Partner, which shall not be unreasonably withheld.
(b) Upon compliance with Section 9.01(a) hereof with
respect to the Transfer of all or any portion of its Interest,
the Transferee shall become a Limited Partner or General Partner,
as the case may be, and shall succeed proportionately to the
Interest Transferred by the Transferor and shall become subject
to all of the obligations of the Transferor with respect to such
Interests, only upon compliance with the following additional
conditions: (i) the proposed Transferee shall have executed an
amendment to this Agreement, and shall have executed such other
instruments as the General Partner may deem necessary or desir-
able, to admit such Transferee as a Partner (including the
execution of a counterpart of this Agreement and an appropriate
supplement to this Agreement pursuant to which such Partner shall
agree to be bound by and comply with the terms and provisions
hereof) and (ii) the Transferor shall have paid to the Partner-
ship all of the Partnership's expenses connected with such
Transfer and substitution (including without limitation, the
legal and accounting fees and disbursements of the Partnership).
(c) If the Transferor is the General Partner, upon
compliance with the terms of Sections 9.01(a) and (b) hereof, the
admission of the Transferee as a successor General Partner shall
occur, and for all purposes shall be deemed to have occurred, im-
mediately prior to the withdrawal of the Transferor General
Partner from the Partnership as a general partner of the Partner-
ship. Upon such withdrawal, the General Partner shall cease to
be a general partner of the Partnership and the successor General
Partner shall, and is hereby authorized to, continue the business
of the Partnership without dissolution. In accordance with the
Mississippi Act, the successor General Partner shall execute and
file an appropriate amendment to the Certificate to reflect its
admission to the Partnership.
(d) Notwithstanding any provision of this Agreement to
the contrary, no Transfer of any Interest shall be effective to
convey any Interest in the Partnership until the Transferee
executes all necessary certificates or other documents and per-
forms all acts required in accordance with the laws of the State
of Mississippi and any other applicable law, and any and all
documents as shall be required from time to time by the rules and
regulations of any regulatory body or commission having a juris-
diction over the Partnership, to the full extent necessary to
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constitute such Transferee a Partner and preserve the status of
the Partnership as a partnership after the completion of such
Transfer in accordance with such laws. Each such Transferee by
accepting the Transfer of an Interest agrees upon the request of
a Partner to execute such certificates or other documents and to
perform such acts and gives the power of attorney set forth in
Section 1.09 as fully as though such Transferee was an original
signatory hereto.
(e) If any Partnership Interest is sold, assigned, or
transferred during any taxable year of the Partnership in compli-
ance with the provisions of this Section 9.01, Net Income, Net
Loss, each item thereof, and all other items attributable to such
Interest for such period shall be divided and allocated between
the Transferor and the Transferee by taking into account their
varying interests during the period in accordance with Code
Section 706(d), using any conventions permitted by law and
reasonably selected by the General Partner. All distributions on
or before the date of such Transfer shall be made to the Trans-
feror, and all distributions thereafter shall be made to the
Transferee. Solely for the purposes of making such allocations
and distributions, the Partnership shall recognize such Transfer
not later than the end of the calendar month during which it is
given notice of such Transfer.
9.02 Applicable Law. Notwithstanding the place where
this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof
shall be construed under the internal laws, and not the laws
pertaining to conflicts or choice of law, of the State of Missis-
sippi.
9.03 Binding Agreement. Except as expressly provided
in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and
assigns. This Agreement shall be binding upon the successors and
assigns of the Partners.
9.04 Notices. All notices hereunder shall be in
writing and shall be deemed to have been duly given if personally
delivered, mailed by registered or certified mail, return receipt
requested, or by telex or telecopy and confirmed by mail as
aforesaid to the Partnership or to the General Partner, at 4380
Boulder Highway, Las Vegas, Nevada 89121; Attention: General
Counsel, with a copy to Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel, 919 Third Avenue, New York, New York 10022; Attention:
David Robbins, Esq. or such other address or addresses as to
which the Partners shall have been given notice, and to the
Limited Partner, to The Rainbow Casino Corporation, c/o Barrett
Refining Corporation, 23 East Ninth, Suite 329, Shawnee, Oklahoma
74801 and Leigh Seippel, c/o Doyle & Bachman, 919 Eighteenth
Street, N.W., Washington, D.C. 20006; Attention: James D.
Bachman, Esq., with a copy to Doyle & Bachman, 919 Eighteenth
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Street, N.W., Washington, D.C. 20006; Attention: James D.
Bachman, Esq., and such notice shall be deemed to have been given
as of the date delivered, telexed or telecopied or if mailed, the
second day after being so mailed.
9.05 Counterparts. This Agreement may be executed in
counterparts and by facsimile transmission, all of which together
shall constitute one agreement binding on all the parties not-
withstanding that all the parties are not signatories to the
original or the same counterpart.
9.06 Amendments. Any waiver, modification or amend-
ment to this Agreement shall be effective when signed by each
Partner.
9.07 Severability. If any provision of this Agree-
ment, or the application of such provision to any person or
circumstance, shall be held invalid, the remainder of this
Agreement or the application of such provision to other persons
or circumstances shall not be affected thereby.
9.08 Confidentiality. The Limited Partner shall not,
during the term of this Agreement, disclose any confidential or
proprietary information with respect to the Partnership to any
person, except (a) with the prior written consent of the General
Partner, (b) or as may be required by applicable law or adminis-
trative or judicial process.
9.09 Creditors. None of the provisions of this
Agreement shall be for the benefit of or enforceable by any cre-
ditors of the Partnership or other person doing business with the
Partnership (other than as provided herein).
9.10 Waiver. No failure by any party to insist upon
the strict performance of any covenant, duty, agreement, or con-
dition of this Agreement or to exercise any right or remedy con-
sequent upon a breach thereof shall constitute a waiver of any
such breach or any other covenant, duty, agreement or condition.
9.11 Certain Provision Relating to Holders of Notes.
The holders of the Notes (in such capacity) shall not be, and
shall have none of the rights and none of the obligations of,
Partners of the Partnership. Without limiting the foregoing, the
holders of the Notes (in such capacity) shall have no liability
for Partnership debts or to make advances to the Partnership,
except as provided in the Consolidation Agreement, and no right
to take part in the management or control of the Partnership's
business, act or bind the Partnership, transact any business in
the name of or on behalf of the Partnership. Except for payment
of the Notes, the holders of the Notes (in such capacity) shall
not have any right to participate in the property, rights or
assets of the Partnership. The Partnership shall provide the
holders of the Notes on a timely basis annual and quarterly
balance sheets, and statements of income (loss) for each applica-
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ble period. Holders of the Notes shall not disclose any confi-
dential or proprietary information with respect to the Partner-
ship except (a) with the prior written consent of the General
Partner, or (b) as may be required by applicable law or adminis-
trative or judicial process. Holders of the Notes may transfer
their Notes to any Person.
9.12 Loan and Other Financing Proceeds. The proceeds
of any loan, financing, refinancing or other capital or similar
transaction shall not constitute revenues for purposes of calcu-
lating EBITDAR, and all of such proceeds shall be retained by
and be the exclusive property of, the Partnership and allocated
solely to the General Partner and have no effect on the RCC
Interest.
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IN WITNESS WHEREOF, the parties hereto have hereunto
set their hands as of this 29th day of March, 1995.
United Gaming Rainbow,
General Partner
By:/s/Steve Greathouse
Name: Steve Greathouse
Title: President
The Rainbow Casino Corporation,
Limited Partner
By:/s/Leigh Seippel
Name: Leigh Seippel
Title: President
By:/s/John A. Barrett, Jr.
Name: John A. Barrett, Jr.
Title: Chairman
The undersigned joins as manager of the Project (and not as a
Partner):
Mississippi Ventures, Inc.
By:/s/Steve Greathouse
Name: Steve Greathouse
Title: President
20
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Schedule A
Calculation of Accrued and Unpaid Royalties,
Distributions, Redemptions and Other Amounts
Constituting a Part of a Class B Promissory Note Issued to UGR
Less: Balance As
Original Payments of March 28,
Amount Balance Received 1995
Special Limited
Partnership Interests $ 3,250,000 $ 0 $3,250,000
Redemptions 163,368 0 163,368
Accrued Management Fee 70,027 0 70,027
Royalties through
February 28, 1995 689,999 (233,728) 456,271
March 1 through
March 28, 1995 97,838 97,838
Other (Pre-opening,
payroll, travel,
miscellaneous) 639,009 (491,461) 147,548
$ 4,910,241 $(725,189) $4,185,052
Less 3,250,000
Balance $ 935,052
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SCHEDULE B
PRO FORMA ILLUSTRATION
COMPUTATION
RCC INTEREST*
Project Revenue
Gross Gaming Revenues 30,000,000
Food, Beverage, Rent, Other
Project Revenue 2,000,000
Total Revenue 32,000,000
Less Operating Costs
Gaming Taxes 5,500,000
Food/Beverage and other Project
Costs 1,000,000
Casino Payroll & Related Expenses 9,400,000
Operating Expenses Including
Marketing & Comps 5,000,000
Base Management Fee (including any
future additional incentive
management fees which,
however, are not included in
such $100,000 amount) 100,000
Total Operating Costs 21,000,000
EBITDAR 11,000,000
Less Allowed Deductions
HFS Royalty 3,600,000
Existing NGC Principal & Interest
Payment 1,250,000
Existing IGT Payment 1,250,000
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Existing Kossen Payment 100,000
Class A Note Payment 600,000
Class B Notes 700,000
Total 7,500,000
NET CASH FLOW 3,500,000
RCC INTEREST 350,000
* These amounts are for illustrative purposes only and no
representation is made that the amounts set out above are
achievable or that Operating Costs or Allowed Deductions are
the actual or estimated amounts that would be payable at
corresponding revenue levels.
2
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Exhibit 2.4
23674694.33D
CLASS A UNSECURED NOTE
$3,250,000 New York, New York
As of March 29, 1995
FOR VALUE RECEIVED, RAINBOW-CASINO-VICKSBURG
PARTNERSHIP, L.P., a Mississippi limited partnership, having an
office at 1440 Warrenton Road, Vicksburg, Mississippi (collec-
tively, "Maker"), promises to pay to UNITED GAMING RAINBOW, a
Nevada corporation having an office at 4380 Boulder Highway, Las
Vegas, Nevada 89121 ("Payee"), or order, at said office, or at
such other place as may be designated, from time to time, in
writing by Payee, the principal sum of THREE MILLION TWO HUNDRED
FIFTY THOUSAND and 00/100 Dollars ($3,250,000.00) in lawful money
of the United States of America, with interest thereon from and
including the date of this Note to, but not including, the date
this Note is paid in full calculated in the manner hereinafter
set forth, as follows:
(i) consecutive installments each in an amount to be
determined in accordance with paragraph 2 hereof shall be
due and payable on April 1, 1995, and on the first day of
each calendar month thereafter to and including the Maturity
Date, each of which installments shall be applied first to
the payment in full of interest calculated in the manner
hereinafter set forth and then in reduction of the Principal
Balance;
<PAGE>
<PAGE>
(ii) the entire Principal Balance, together with all
interest accrued and unpaid thereon calculated in the manner
hereinafter set forth and all other sums due under this
Note, shall be due and payable on the Maturity Date.
1. The following terms as used in this Note shall
have the following meanings:
(i) The term "Amended Partnership Agreement" shall
mean the Second Amended and Restated Agreement of Limited
Partnership" dated as of March 29, 1995 entered into
between Payee, as general partner, and The Rainbow Casino
Corporation, a Mississippi Corporation ("RCC"), as limited
partner.
(ii) The term "Consolidation Agreement" shall mean a
certain Consolidation Agreement dated March 29, 1995 entered
into among RCC, National Gaming Mississippi, Inc. and HFS
Gaming Corp., both Delaware corporations; Alliance Gaming
Corporation, a Nevada corporation formerly known as United
Gaming, Inc., and Payee, a wholly-owned subsidiary of
Alliance; Maker; and for limited purposes John A. Barrett,
Jr. and Leigh Seippel, and National Gaming Corp., a Delaware
corporation.
(iii) The term "Debt" shall mean all principal,
interest and other sums of any nature whatsoever which may
or shall become due to Payee in accordance with the
provisions of this Note.
2
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<PAGE>
(iv) The term "Loan" shall mean the loan in the
principal sum $3,250,000 deemed to have been advanced by
Payee to Maker in accordance with the provisions of Section
4.04 of the Amended Partnership Agreement, which loan shall
be evidenced by this Note.
(v) The term "Maturity Date" shall mean August 1,
2001.
(vi) The term "Principal Balance" shall mean the
outstanding principal balance of this Note from time to
time.
2. Subject to the provisions of this Note hereinafter
set forth, the entire Principal Balance shall bear interest at
the Fixed Rate from and including the date of this Note to, but
not including, the date this Note is paid in full. The term
"Fixed Rate" shall mean seven and one-half (7.5%) percent per
annum. The Fixed Rate shall be calculated for the actual number
of days elapsed on the basis of a 360-day year. The installments
of principal and interest payable under clause (ii) of this Note
shall be in an amount sufficient to fully amortize such amount in
seventy-seven (77) consecutive installments, commencing April 1,
1995 through and including the Maturity Date.
3. Maker shall have the right to prepay the Principal
Balance in whole, or in part, without penalty or premium upon not
less than three (3) Business Days' prior written notice to Payee
specifying the intended date of prepayment, which date of
3
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<PAGE>
prepayment shall not be more than forty-five (45) days after the
date of such notice, and the amount to be prepaid and upon
payment of all interest and other sums then due and payable
pursuant to the provisions of this Note.
4. It is hereby expressly agreed that the entire Debt
shall become immediately due and payable at the option of Payee
on the happening of any of the following events, each an Event of
Default:
(i) subject to the provisions of paragraph 2(e) of the
Consolidation Agreement, if any portion of the Debt is not
paid within fifteen (15) days after the same is due and
payable;
(ii) if Maker or any general partner of Maker shall
make an assignment for the benefit of creditors;
(iii) if a court of competent jurisdiction enters a
decree or order for relief with respect to Maker or any
general partner of Maker under Title 11 of the United States
Code as now constituted or hereafter amended or under any
other applicable Federal or state bankruptcy law or other
similar law, or if such court enters a decree or order
appointing a receiver, liquidator, assignee, trustee,
sequestrator (or similar official) of Maker or any general
partner of Maker, or of any substantial part of their
respective properties, or if such court decrees or orders
the winding up or liquidation of the affairs of Maker or any
4
<PAGE>
<PAGE>
general partner and such decree or order is not dismissed,
discharged or vacated of record within twenty (20) days
after the same has been entered; or
(iv) if Maker or any general partner of Maker files a
petition or answer or consent seeking relief under Title 11
of the United States Code as now constituted or hereafter
amended, or under any other applicable Federal or state
bankruptcy law or other similar law, or if Maker or any
general partner of Maker consents to the institution of pro-
ceedings thereunder or to the filing of any such petition or
to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of Maker or any general partner of
Maker, or of any substantial part of their properties, or if
Maker or any general partner of Maker fails generally to pay
their debts as such debts become due, or if Maker or any
general partner of Maker takes any action in furtherance of
any action described in this subparagraph.
5. On the happening of any Event of Default or if the
Debt is not paid in full on the Maturity Date, Maker shall there-
after pay interest on the Principal Balance from the date of such
event or the Maturity Date, as the case may be, until the date
the event of default is cured or the Principal Balance is paid in
full, in the case of failure to pay at maturity, at a rate per
annum (calculated for the actual number of days elapsed on the
basis of a 360-day year) equal to two (2%) percent per annum plus
5
<PAGE>
<PAGE>
the Fixed Rate, provided, however, that such interest rate shall
in no event exceed the maximum interest rate which Maker may by
law pay.
6. Maker hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of
this Note. If any payment under this Note is not made when due,
Maker agrees to pay all costs of collection when incurred,
including reasonable attorneys' fees (which costs shall be added
to the amount due under this Note and shall be receivable there-
with). Maker agrees to perform and comply with or cause to be
performed and complied with each of the terms, covenants and
provisions contained in this Note and the Consolidation Agreement
on the part of Maker to be observed or performed. No release of
any security for the payment of this Note or extension of time
for payment of this Note, or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note or
the Consolidation Agreement made by agreement between Payee and
any other person or party shall release, discharge, modify,
change or affect the liability of Maker under this Note or the
Consolidation Agreement.
7. This Note is subject to the express condition that
at no time shall Maker be obligated or required to pay interest
on the Principal Balance at a rate which could subject Payee to
either civil or criminal liability as a result of being in excess
of the maximum rate which Maker is permitted by law to contract
or agree to pay. If by the terms of this Note Maker is at any
6
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<PAGE>
time required or obligated to pay interest on the Principal
Balance at a rate in excess of such maximum rate, the rate of
interest under this Note shall be deemed to be immediately
reduced to such maximum rate and interest payable hereunder shall
be computed at such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied
and shall be deemed to have been payments in reduction of the
Principal Balance.
8. The terms of this Note shall be governed by and
construed under the laws of the State of New York, without regard
to principles of conflicts of laws.
9. This Note may only be modified, amended, changed
or terminated by an agreement in writing signed by Payee and
Maker. No waiver of any term, covenant or provision of this Note
shall be effective unless given in writing by Payee and if so
given by Payee shall only be effective in the specific instance
in which given.
10. Maker acknowledges that this Note and Maker's
obligations under this Note are and shall at all times continue
to be absolute and unconditional in all respects, and shall at
all times be valid and enforceable irrespective of any other
agreements or circumstances of any nature whatsoever which might
otherwise constitute a defense to this Note and the obligations
of Maker under this Note or the obligations of any other person
or party relating to this Note or the obligations of Maker here-
under or otherwise with respect to the Loan. This Note sets
7
<PAGE>
<PAGE>
forth the entire agreement and understanding of Payee and Maker,
and Maker absolutely, unconditionally and irrevocably waives any
and all right to assert any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to this Note or
the obligations of Maker under this Note or the obligations of
any other person or party relating to this Note or the obliga-
tions of Maker hereunder or otherwise with respect to the Loan in
any action or proceeding brought by Payee to collect the Debt, or
any portion thereof. Maker acknowledges that no oral or other
agreements, understandings, representations or warranties exist
with respect to this Note or with respect to the obligations of
Maker under this Note, except those specifically set forth in
this Note.
11. No delay on the part of Payee in exercising any
right or remedy under this Note or the Consolidation Agreement or
failure to exercise the same shall operate as a waiver in whole
or in part of any such right or remedy. No notice to or demand
on Maker shall be deemed to be a waiver of the obligation of
Maker or of the right of Payee to take further action without
further notice or demand as provided in this Note or the
Consolidation Agreement.
12. Maker agrees to submit to personal jurisdiction in
the State of New York in any action or proceeding arising out of
this Note and, in furtherance of such agreement, Maker hereby
agrees and consents that without limiting other methods of
obtaining jurisdiction, personal jurisdiction over Maker in any
8
<PAGE>
<PAGE>
such action or proceeding may be obtained within or without the
jurisdiction of any court located in New York and that any pro-
cess or notice of motion or other application to any such court
in connection with any such action or proceeding may be served
upon Maker by registered or certified mail to or by personal
service at the last known address of Maker, whether such address
be within or without the jurisdiction of any such court.
13. Maker (and the undersigned representative of
Maker, if any) represents that Maker has full power, authority
and legal right to execute and deliver this Note and that the
Debt hereunder constitutes a valid and binding obligation of
Maker.
14. MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, AND PAYEE BY ITS ACCEPTANCE OF THIS NOTE IRREVOCABLY AND
UNCONDITIONALLY WAIVES, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF
OR OTHERWISE RELATING TO THE LOAN, THIS NOTE, THE OR THE
CONSOLIDATION AGREEMENT.
15. Whenever used, the singular number shall include
the plural, the plural the singular, and the words "Payee" and
"Maker" shall include their respective successors and assigns,
provided, however, that Maker shall in no event or under any
circumstance have the right without obtaining the prior written
consent of Payee to assign or transfer its obligations under this
Note in whole or in part, to any other person, party or entity.
9
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Maker has duly executed this Note
the day and year first above written.
RAINBOW CASINO-VICKSBURG PARTNERSHIP,
L.P., a Mississippi limited partnership
By: United Rainbow Gaming, a Nevada
corporation
By: /s/Steve Greathouse
Steve Greathouse, President
10
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<PAGE>
STATE OF NEVADA )
ss:
COUNTY OF CLARK )
On the 28th day of March, 1995, before me personally
came Steve J. Greathouse to me known, who being by me duly sworn,
stated that he resides at 4380 Boulder Hwy., Las Vegas, Nevada,
that he is President of UNITED RAINBOW GAMING, the corporation
described in and which executed the above instrument as general
partner of RAINBOW CASINO-VICKSBURG PARTNERSHIP, L.P. and that he
signed his name thereto by order of the board of directors of
that corporation as the free act and deed of the corporation, as
such general partner.
/s/___________________________
Notary Public
<PAGE>
<PAGE>
Exhibit 2.5
23674694.33D
CLASS B UNSECURED NOTE
(NATIONAL GAMING MISSISSIPPI, INC.)
New York, New York
$2,000,000 As of March 29, 1995
FOR VALUE RECEIVED, RAINBOW-CASINO-VICKSBURG
PARTNERSHIP, L.P., a Mississippi limited partnership, having an
office at 1440 Warrenton Road, Vicksburg, Mississippi (collec-
tively, "Maker"), promises to pay to NATIONAL GAMING MISSISSIPPI,
INC., a Delaware corporation having an office at 339 Jefferson
Road, Parsippany, New Jersey 07054 ("Payee"), or order, at said
office, or at such other place as may be designated, from time to
time, in writing by Payee, the principal sum of TWO MILLION and
00/100 Dollars ($2,000,000.00) in lawful money of the United
States of America, or so much thereof as may be advanced pursuant
to the Consolidation Agreement (hereinafter defined), with
interest thereon from and including the date of this Note to, but
not including, the date this Note is paid in full calculated in
the manner hereinafter set forth, as follows:
(i) consecutive installments each in an amount to be
determined in accordance with paragraph 2 hereof shall be
due and payable on April 1, 1995, and on the first day of
each calendar month thereafter to and including the Maturity
Date, each of which installments shall be applied first to
the payment in full of interest calculated in the manner
<PAGE>
<PAGE>
hereinafter set forth and then in reduction of the Principal
Balance;
(ii) the entire Principal Balance, together with all
interest accrued and unpaid thereon calculated in the manner
hereinafter set forth and all other sums due under this
Note, shall be due and payable on the Maturity Date.
1. The following terms as used in this Note shall
have the following meanings:
(i) The term "Consolidation Agreement" shall mean
a certain Consolidation Agreement dated March 29, 1995
entered into among The Rainbow Casino Corporation, a
Mississippi corporation ("RCC"); Payee and HFS Gaming Corp.,
a Delaware corporation; Alliance Gaming Corporation, a
Nevada corporation formerly known as United Gaming, Inc. and
United Gaming Rainbow, a Nevada corporation ("UGR") and
wholly-owned subsidiary of Alliance; Maker; and for limited
purposes John A. Barrett, Jr. and Leigh Seippel, and
National Gaming Corp., a Delaware corporation pursuant to
the provisions of which, among other things, (a) Payee has
agreed to make a loan of up to $2,000,000 to the Partnership
and (b) UGR has agreed to make certain loans to the
Partnership to finance the completion of certain components
of a Casino and related amenities in Vicksburg, Mississippi.
(ii) The term "Debt" shall mean all principal,
interest and other sums of any nature whatsoever which may
2
<PAGE>
<PAGE>
or shall become due to Payee in accordance with the provi-
sions of this Note.
(iii) The term "Loan" shall mean the loan in the
principal sum of up to, but not in excess of, $2,000,000 to
be advanced by Payee to Maker in accordance with the provi-
sions of the Consolidation Agreement, which loan shall be
evidenced by this Note.
(iv) The term "Maturity Date" shall mean March 1,
2002.
(v) The term "Principal Balance" shall mean the
outstanding principal balance of this Note from time to
time.
2. Subject to the provisions of this Note hereinafter
set forth, the entire Principal Balance shall bear interest at
the Fixed Rate from and including the date of each advance of the
Loan to but not including the date this Note is paid in full.
The term "Fixed Rate" shall mean ten (10%) percent per annum.
The Fixed Rate shall be calculated for the actual number of days
elapsed on the basis of a 360-day year. The initial installments
of principal and interest payable under clause (ii) of this Note
shall be calculated based upon the initial advance of the Note
and shall be in an amount sufficient to fully amortize such
amount in 84 consecutive installments commencing on April 1, 1994
through and including the Maturity Date. The amount of each
amortization payment due and payable under clause (ii) of this
3
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<PAGE>
Note shall be recalculated by Payee each time that an additional
advance of the Loan is made, it being the intent that at all
times such amortization payments shall be in an amount sufficient
to fully amortize the Principal Balance, together with interest
thereon, over the remaining term of the Loan.
3. Maker shall have the right to prepay the Principal
Balance in whole, or in part, without penalty or premium upon not
less than three (3) Business Days' prior written notice to Payee
specifying the intended date of prepayment, which date of prepay-
ment shall not be more than forty-five (45) days after the date
of such notice, and the amount to be prepaid and upon payment of
all interest and other sums then due and payable pursuant to the
provisions of this Note.
4. It is hereby expressly agreed that the entire Debt
shall become immediately due and payable at the option of Payee
on the happening of any of the following events, each an Event of
Default:
(i) subject to the provisions of paragraph 2(e)
of the Consolidation Agreement, if any portion of the Debt
is not paid within fifteen (15) days after the same is due
and payable;
(ii) if Maker or any general partner of Maker
shall make an assignment for the benefit of creditors;
(iii) if a court of competent jurisdiction enters
a decree or order for relief with respect to Maker or any
4
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<PAGE>
general partner of Maker under Title 11 of the United States
Code as now constituted or hereafter amended or under any
other applicable Federal or state bankruptcy law or other
similar law, or if such court enters a decree or order
appointing a receiver, liquidator, assignee, trustee,
sequestrator (or similar official) of Maker or any general
partner of Maker, or of any substantial part of their res-
pective properties, or if such court decrees or orders the
winding up or liquidation of the affairs of Maker or any
general partner and such decree or order is not dismissed,
discharged or vacated of record within twenty (20) days
after the same has been entered; or
(iv) if Maker or any general partner of Maker
files a petition or answer or consent seeking relief under
Title 11 of the United States Code as now constituted or
hereafter amended, or under any other applicable Federal or
state bankruptcy law or other similar law, or if Maker or
any general partner of Maker consents to the institution of
proceedings thereunder or to the filing of any such petition
or to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of Maker or any general partner of
Maker, or of any substantial part of their properties, or if
Maker or any general partner of Maker fails generally to pay
their debts as such debts become due, or if Maker or any
general partner of Maker takes any action in furtherance of
any action described in this subparagraph.
5
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<PAGE>
5. On the happening of any Event of Default or if the
Debt is not paid in full on the Maturity Date, Maker shall there-
after pay interest on the Principal Balance from the date of such
event or the Maturity Date, as the case may be, until the date
the event of default is cured or the Principal Balance is paid in
full, in the case of failure to pay at maturity, at a rate per
annum (calculated for the actual number of days elapsed on the
basis of a 360-day year) equal to two (2%) percent per annum plus
the Fixed Rate, provided, however, that such interest rate shall
in no event exceed the maximum interest rate which Maker may by
law pay.
6. Maker hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of
this Note. If any payment under this Note is not made when due,
Maker agrees to pay all costs of collection when incurred,
including reasonable attorneys' fees (which costs shall be added
to the amount due under this Note and shall be receivable there-
with). Maker agrees to perform and comply with or cause to be
performed and complied with each of the terms, covenants and pro-
visions contained in this Note and the Consolidation Agreement on
the part of Maker to be observed or performed. No release of any
security for the payment of this Note or extension of time for
payment of this Note, or any installment hereof, and no altera-
tion, amendment or waiver of any provision of this Note or the
Consolidation Agreement made by agreement between Payee and any
other person or party shall release, discharge, modify, change or
6
<PAGE>
<PAGE>
affect the liability of Maker under this Note or the
Consolidation Agreement.
7. This Note is subject to the express condition that
at no time shall Maker be obligated or required to pay interest
on the Principal Balance at a rate which could subject Payee to
either civil or criminal liability as a result of being in excess
of the maximum rate which Maker is permitted by law to contract
or agree to pay. If by the terms of this Note Maker is at any
time required or obligated to pay interest on the Principal
Balance at a rate in excess of such maximum rate, the rate of
interest under this Note shall be deemed to be immediately
reduced to such maximum rate and interest payable hereunder shall
be computed at such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied
and shall be deemed to have been payments in reduction of the
Principal Balance.
8. The terms of this Note shall be governed by and
construed under the laws of the State of New York, without regard
to principles of conflicts of laws.
9. This Note may only be modified, amended, changed
or terminated by an agreement in writing signed by Payee and
Maker. No waiver of any term, covenant or provision of this Note
shall be effective unless given in writing by Payee and if so
given by Payee shall only be effective in the specific instance
in which given.
7
<PAGE>
<PAGE>
10. Maker acknowledges that this Note and Maker's
obligations under this Note are and shall at all times continue
to be absolute and unconditional in all respects, and shall at
all times be valid and enforceable irrespective of any other
agreements or circumstances of any nature whatsoever which might
otherwise constitute a defense to this Note and the obligations
of Maker under this Note or the obligations of any other person
or party relating to this Note or the obligations of Maker here-
under or otherwise with respect to the Loan. This Note sets
forth the entire agreement and understanding of Payee and Maker,
and Maker absolutely, unconditionally and irrevocably waives any
and all right to assert any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to this Note or
the obligations of Maker under this Note or the obligations of
any other person or party relating to this Note or the obliga-
tions of Maker hereunder or otherwise with respect to the Loan in
any action or proceeding brought by Payee to collect the Debt, or
any portion thereof. Maker acknowledges that no oral or other
agreements, understandings, representations or warranties exist
with respect to this Note or with respect to the obligations of
Maker under this Note, except those specifically set forth in
this Note.
11. No delay on the part of Payee in exercising any
right or remedy under this Note or the Consolidation Agreement or
failure to exercise the same shall operate as a waiver in whole
or in part of any such right or remedy. No notice to or demand
on Maker shall be deemed to be a waiver of the obligation of
8
<PAGE>
<PAGE>
Maker or of the right of Payee to take further action without
further notice or demand as provided in this Note or the
Consolidation Agreement.
12. Maker agrees to submit to personal jurisdiction in
the State of New York in any action or proceeding arising out of
this Note and, in furtherance of such agreement, Maker hereby
agrees and consents that without limiting other methods of
obtaining jurisdiction, personal jurisdiction over Maker in any
such action or proceeding may be obtained within or without the
jurisdiction of any court located in New York and that any pro-
cess or notice of motion or other application to any such court
in connection with any such action or proceeding may be served
upon Maker by registered or certified mail to or by personal
service at the last known address of Maker, whether such address
be within or without the jurisdiction of any such court.
13. Maker (and the undersigned representative of
Maker, if any) represents that Maker has full power, authority
and legal right to execute and deliver this Note and that the
Debt hereunder constitutes a valid and binding obligation of
Maker.
14. MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, AND PAYEE BY ITS ACCEPTANCE OF THIS NOTE IRREVOCABLY AND
UNCONDITIONALLY WAIVES, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF
OR OTHERWISE RELATING TO THE LOAN, THIS NOTE, THE OR THE
CONSOLIDATION AGREEMENT.
9
<PAGE>
<PAGE>
15. Whenever used, the singular number shall include
the plural, the plural the singular, and the words "Payee" and
"Maker" shall include their respective successors and assigns,
provided, however, that Maker shall in no event or under any
circumstance have the right without obtaining the prior written
consent of Payee to assign or transfer its obligations under this
Note in whole or in part, to any other person, party or entity.
IN WITNESS WHEREOF, Maker has duly executed this Note
the day and year first above written.
RAINBOW CASINO-VICKSBURG PARTNERSHIP,
L.P., a Mississippi limited partnership
By: United Rainbow Gaming, a Nevada
corporation
By:/s/Steve Greathouse
Steve Greathouse, President
10
<PAGE>
<PAGE>
STATE OF NEVADA )
ss:
COUNTY OF CLARK )
On the 28th day of March, 1995, before me personally
came Steve Greathouse to me known, who being by me duly sworn,
stated that he resides at Las Vegas, Nevada, that he is President
of UNITED RAINBOW GAMING, the corporation described in and which
executed the above instrument as general partner of RAINBOW
CASINO-VICKSBURG PARTNERSHIP, L.P. and that he signed his name
thereto by order of the board of directors of that corpora-
tion as the free act and deed of the corporation, as such general
partner.
/s/______________
Notary Public
<PAGE>
<PAGE>
Exhibit 2.6
23674694.33D
CLASS B UNSECURED NOTE
(UNITED GAMING RAINBOW)
New York, New York
$3,500,000 As of March 29, 1995
FOR VALUE RECEIVED, RAINBOW-CASINO-VICKSBURG
PARTNERSHIP, L.P., a Mississippi limited partnership, having an
office at 1440 Warrenton Road, Vicksburg, Mississippi (collec-
tively, "Maker"), promises to pay to UNITED GAMING RAINBOW, a
Nevada corporation having an office at 4380 Boulder Highway, Las
Vegas, Nevada 89121 ("Payee"), or order, at said office, or at
such other place as may be designated, from time to time, in
writing by Payee, the principal sum of THREE MILLION FIVE HUNDRED
THOUSAND and 00/100 Dollars ($3,500,000.00) in lawful money of
the United States of America, or so much thereof as may be
advanced pursuant to the Consolidation Agreement or the Amended
Partnership Agreement (each as hereinafter defined), with
interest thereon from and including the date of this Note to, but
not including, the date this Note is paid in full calculated in
the manner hereinafter set forth, as follows:
(i) consecutive installments each in an amount to
be determined in accordance with paragraph 2 hereof shall be
due and payable on April 1, 1995, and on the first day of
each calendar month thereafter to and including the Maturity
Date, each of which installments shall be applied first to
the payment in full of interest calculated in the manner
<PAGE>
<PAGE>
hereinafter set forth and then in reduction of the Principal
Balance;
(ii) the entire Principal Balance, together with
all interest accrued and unpaid thereon calculated in the
manner hereinafter set forth and all other sums due under
this Note, shall be due and payable on the Maturity Date.
1. The following terms as used in this Note shall
have the following meanings:
(i) The term "Amended Partnership Agreement"
shall mean the Second Amended and Restated Agreement of
Limited Partnership dated as of March 29, 1995 entered
into between Payee, as general partner, and RCC, as limited
partner.
(ii) The term "Consolidation Agreement" shall mean
a certain Consolidation Agreement dated March 29, 1995
entered into among The Rainbow Casino Corporation, a
Mississippi corporation ("RCC"); National Gaming
Mississippi, Inc. and HFS Gaming Corp., both Delaware
corporations; Alliance Gaming Corporation, a Nevada
corporation formerly known as United Gaming, Inc., and
Payee, a wholly-owned subsidiary of Alliance; Maker; and for
limited purposes John A. Barrett, Jr. and Leigh Seippel, and
National Gaming Corp., a Delaware corporation pursuant to
the provisions of which, among other things, (a) National
Gaming Mississippi, Inc. has agreed to make a loan of up to
2
<PAGE>
<PAGE>
$2,000,000 to the Partnership and (b) Payee has agreed to
make certain loans to the Partnership to finance the
completion of certain components of a Casino and related
amenities in Vicksburg, Mississippi.
(iii) The term "Debt" shall mean all principal,
interest and other sums of any nature whatsoever which may
or shall become due to Payee in accordance with the
provisions of this Note.
(iv) The term "Loan" shall mean the loan in the
principal sum of up to, but not in excess of, $3,500,000 to
be advanced by Payee to Maker in accordance with the provi-
sions of the Consolidation Agreement, which loan shall be
evidenced by this Note.
(v) The term "Maturity Date" shall mean March 1,
2002.
(vi) The term "Principal Balance" shall mean the
outstanding principal balance of this Note from time to
time.
2. Subject to the provisions of this Note hereinafter
set forth, the entire Principal Balance shall bear interest at
the Fixed Rate from and including the date of each advance of the
Loan to but not including the date this Note is paid in full.
The term "Fixed Rate" shall mean ten (10%) percent per annum.
The Fixed Rate shall be calculated for the actual number of days
elapsed on the basis of a 360-day year. The initial installments
3
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<PAGE>
of principal and interest payable under clause (ii) of this Note
shall be calculated based upon the initial advance of the Note
and shall be in an amount sufficient to fully amortize such
amount in 84 consecutive installments commencing on April 1, 1994
through and including the Maturity Date. The amount of each
amortization payment due and payable under clause (ii) of this
Note shall be recalculated by Payee each time that an additional
advance of the Loan is made, it being the intent that at all
times such amortization payments shall be in an amount sufficient
to fully amortize the Principal Balance, together with interest
thereon, over the remaining term of the Loan.
3. Maker shall have the right to prepay the Principal
Balance in whole, or in part, without penalty or premium upon not
less than three (3) Business Days' prior written notice to Payee
specifying the intended date of prepayment, which date of prepay-
ment shall not be more than forty-five (45) days after the date
of such notice, and the amount to be prepaid and upon payment of
all interest and other sums then due and payable pursuant to the
provisions of this Note.
4. It is hereby expressly agreed that the entire Debt
shall become immediately due and payable at the option of Payee
on the happening of any of the following events, each an Event of
Default:
(i) subject to the provisions of paragraph 2(e)
of the Consolidation Agreement, if any portion of the Debt
4
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is not paid within fifteen (15) days after the same is due
and payable;
(ii) if Maker or any general partner of Maker
shall make an assignment for the benefit of creditors;
(iii) if a court of competent jurisdiction enters
a decree or order for relief with respect to Maker or any
general partner of Maker under Title 11 of the United States
Code as now constituted or hereafter amended or under any
other applicable Federal or state bankruptcy law or other
similar law, or if such court enters a decree or order
appointing a receiver, liquidator, assignee, trustee,
sequestrator (or similar official) of Maker or any general
partner of Maker, or of any substantial part of their res-
pective properties, or if such court decrees or orders the
winding up or liquidation of the affairs of Maker or any
general partner and such decree or order is not dismissed,
discharged or vacated of record within twenty (20) days
after the same has been entered; or
(iv) if Maker or any general partner of Maker
files a petition or answer or consent seeking relief under
Title 11 of the United States Code as now constituted or
hereafter amended, or under any other applicable Federal or
state bankruptcy law or other similar law, or if Maker or
any general partner of Maker consents to the institution of
proceedings thereunder or to the filing of any such petition
or to the appointment of or taking possession by a receiver,
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liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of Maker or any general partner of
Maker, or of any substantial part of their properties, or if
Maker or any general partner of Maker fails generally to pay
their debts as such debts become due, or if Maker or any
general partner of Maker takes any action in furtherance of
any action described in this subparagraph.
5. On the happening of any Event of Default or if the
Debt is not paid in full on the Maturity Date, Maker shall there-
after pay interest on the Principal Balance from the date of such
event or the Maturity Date, as the case may be, until the date
the event of default is cured or the Principal Balance is paid in
full, in the case of failure to pay at maturity, at a rate per
annum (calculated for the actual number of days elapsed on the
basis of a 360-day year) equal to two (2%) percent per annum plus
the Fixed Rate, provided, however, that such interest rate shall
in no event exceed the maximum interest rate which Maker may by
law pay.
6. Maker hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of
this Note. If any payment under this Note is not made when due,
Maker agrees to pay all costs of collection when incurred,
including reasonable attorneys' fees (which costs shall be added
to the amount due under this Note and shall be receivable there-
with). Maker agrees to perform and comply with or cause to be
performed and complied with each of the terms, covenants and pro-
6
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<PAGE>
visions contained in this Note and the Consolidation Agreement on
the part of Maker to be observed or performed. No release of any
security for the payment of this Note or extension of time for
payment of this Note, or any installment hereof, and no altera-
tion, amendment or waiver of any provision of this Note or the
Consolidation Agreement made by agreement between Payee and any
other person or party shall release, discharge, modify, change or
affect the liability of Maker under this Note or the
Consolidation Agreement.
7. This Note is subject to the express condition that
at no time shall Maker be obligated or required to pay interest
on the Principal Balance at a rate which could subject Payee to
either civil or criminal liability as a result of being in excess
of the maximum rate which Maker is permitted by law to contract
or agree to pay. If by the terms of this Note Maker is at any
time required or obligated to pay interest on the Principal
Balance at a rate in excess of such maximum rate, the rate of
interest under this Note shall be deemed to be immediately
reduced to such maximum rate and interest payable hereunder shall
be computed at such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied
and shall be deemed to have been payments in reduction of the
Principal Balance.
8. The terms of this Note shall be governed by and
construed under the laws of the State of New York, without regard
to principles of conflicts of laws.
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9. This Note may only be modified, amended, changed
or terminated by an agreement in writing signed by Payee and
Maker. No waiver of any term, covenant or provision of this Note
shall be effective unless given in writing by Payee and if so
given by Payee shall only be effective in the specific instance
in which given.
10. Maker acknowledges that this Note and Maker's
obligations under this Note are and shall at all times continue
to be absolute and unconditional in all respects, and shall at
all times be valid and enforceable irrespective of any other
agreements or circumstances of any nature whatsoever which might
otherwise constitute a defense to this Note and the obligations
of Maker under this Note or the obligations of any other person
or party relating to this Note or the obligations of Maker here-
under or otherwise with respect to the Loan. This Note sets
forth the entire agreement and understanding of Payee and Maker,
and Maker absolutely, unconditionally and irrevocably waives any
and all right to assert any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to this Note or
the obligations of Maker under this Note or the obligations of
any other person or party relating to this Note or the obliga-
tions of Maker hereunder or otherwise with respect to the Loan in
any action or proceeding brought by Payee to collect the Debt, or
any portion thereof. Maker acknowledges that no oral or other
agreements, understandings, representations or warranties exist
with respect to this Note or with respect to the obligations of
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<PAGE>
Maker under this Note, except those specifically set forth in
this Note.
11. No delay on the part of Payee in exercising any
right or remedy under this Note or the Consolidation Agreement or
failure to exercise the same shall operate as a waiver in whole
or in part of any such right or remedy. No notice to or demand
on Maker shall be deemed to be a waiver of the obligation of
Maker or of the right of Payee to take further action without
further notice or demand as provided in this Note or the
Consolidation Agreement.
12. Maker agrees to submit to personal jurisdiction in
the State of New York in any action or proceeding arising out of
this Note and, in furtherance of such agreement, Maker hereby
agrees and consents that without limiting other methods of
obtaining jurisdiction, personal jurisdiction over Maker in any
such action or proceeding may be obtained within or without the
jurisdiction of any court located in New York and that any pro-
cess or notice of motion or other application to any such court
in connection with any such action or proceeding may be served
upon Maker by registered or certified mail to or by personal
service at the last known address of Maker, whether such address
be within or without the jurisdiction of any such court.
13. Maker (and the undersigned representative of
Maker, if any) represents that Maker has full power, authority
and legal right to execute and deliver this Note and that the
9
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<PAGE>
Debt hereunder constitutes a valid and binding obligation of
Maker.
14. MAKER HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, AND PAYEE BY ITS ACCEPTANCE OF THIS NOTE IRREVOCABLY AND
UNCONDITIONALLY WAIVES, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF
OR OTHERWISE RELATING TO THE LOAN, THIS NOTE, THE NOTE OR THE
CONSOLIDATION AGREEMENT.
15. Whenever used, the singular number shall include
the plural, the plural the singular, and the words "Payee" and
"Maker" shall include their respective successors and assigns,
provided, however, that Maker shall in no event or under any
circumstance have the right without obtaining the prior written
consent of Payee to assign or transfer its obligations under this
Note in whole or in part, to any other person, party or entity.
IN WITNESS WHEREOF, Maker has duly executed this Note
the day and year first above written.
RAINBOW CASINO-VICKSBURG PARTNERSHIP,
L.P., a Mississippi limited partnership
By: United Rainbow Gaming, a Nevada
corporation
By:/s/ Steve Greathouse
Steve Greathouse, President
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STATE OF NEVADA )
ss:
COUNTY OF CLARK )
On the 28th day of March, 1995, before me personally
came Steve J. Greathouse to me known, who being by me duly sworn,
stated that he resides at 4380 Boulder Hwy., Las Vegas, Nevada,
that he is President of UNITED RAINBOW GAMING, the corporation
described in and which executed the above instrument as general
partner of RAINBOW CASINO-VICKSBURG PARTNERSHIP, L.P. and that he
signed his name thereto by order of the board of directors of
that corporation as the free act and deed of the corporation, as
such general partner.
/s/_________________
Notary Public
<PAGE>
<PAGE>
Exhibit 2.7
March 29, 1995
Daniel G. Hise, Escrow Agent
Butler, Snow, O'Mara, Stevens & Cannada
17th Floor
Deposit Guaranty Plaza
P.O. Box 22567
Jackson, Mississippi 39225-2567
Re: Amendment and Termination of August 11, 1994
Escrow Agreement
Dear Mr. Hise:
Reference is made to a certain Escrow Agreement dated August
11, 1994 (the "Escrow Agreement"), between United Gaming Rainbow,
The Rainbow Casino Corporation, John A. Barrett, Jr., Leigh
Seippel, and Butler, Snow, O'Mara, Stevens & Cannada, as Escrow
Agent.
This letter will serve to amend and terminate the Escrow
Agreement 1994 and is hereby entered by the undersigned parties
in order to permit release of all of the Escrow Property in
accordance with the instructions set forth herein.
The parties hereby agree that, upon execution of this
Amendment, the Escrow Agent shall (i) release to John A. Barrett,
Jr. the Stock Certificate No. 17902 representing 150,000 shares
of United Gaming, Inc. and made out to John A. Barrett, Jr., and
(ii) release to Leigh Seippel the Stock Certificate No. 17899
representing 150,000 shares of united Gaming, Inc. and made out
to Leigh Seippel. The transfer of these stock certificates to
Mr. Barrett and Mr. Seippel shall be accomplished by the Escrow
Agent upon execution of this Letter Agreement by sending both
stock certificates via overnight delivery to James D. Bachman,
Esq., Doyle & Bachman, 919 18th Street, N.W., Washington, D.C.
20006.
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<PAGE>
The parties also agree that, upon completion of distribution
of the stock in accordance with the instructions herein, the
Escrow Agreement shall terminate and all duties of the Escrow
Agent shall have been discharged in full under the Escrow
Agreement.
UNITED GAMING RAINBOW THE RAINBOW CASINO CORPORATION
By: /s/Steve Greathouse By: /s/Leigh Seippel
Steve Greathouse Leigh Seippel, President
President and CEO
/s/John A. Barrett, Jr. /s/Leigh Seippel
John A. Barrett, Jr. Leigh Seippel
Accepted and Agreed:
BUTLER, SNOW, O'MARA, STEVENS
& CANNADA, As Agent
By: /s/Daniel G. Hise
Daniel G. Hise, Partner
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Exhibit 2.8
R E L E A S E
Alliance Gaming Corporation, a Nevada corporation, and
United Gaming Rainbow, a Nevada corporation (together with their
respective affiliates and their respective officers, directors,
employees and agents, the "Releasors"; each, a "Releasor"), each
hereby releases and discharges each of The Rainbow Casino
Corporation, a Mississippi corporation, Rainbow Development
Corporation, a Mississippi corporation, and Mr. John A. Barrett,
Jr. and Mr. Leigh Seippel, and each of their respective partners
and affiliates (other than Rainbow Casino-Vicksburg Partnership,
L.P.) and their respective officers, directors, employees and
agents (the "Releasees"; each, a "Releasee") and their respective
successors and assigns, from all actions, causes of action,
suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agree-
ments, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, including
without limitation, those under the Basic Agreement dated October
28, 1993, as amended, among The Rainbow Casino Corporation,
Messrs. John A. Barrett, Jr. and Leigh Seippel and Alliance
Gaming Corporation, and the Escrow Agreement, Mortgage and
Agreement by Barrett Refining Corporation attached as Exhibits to
such October 28, 1993 agreement, in law or equity, which against
the Releasees, the Releasors and the Releasors' successors and
assigns ever had, now have or hereafter can, shall or may have,
for, upon, or by reason of any matter, cause or thing whatsoever
from the beginning of the world to the date of this Release,
except the rights and obligations under the documents listed on
the attached Schedule A, which shall survive the execution and
delivery of this Release.
This Release may not be changed orally.
<PAGE>
<PAGE>
In Witness Whereof, the Releasors have caused this
Release to be executed by its duly authorized officer.
Dated: March 29, 1995 Alliance Gaming Corporation
By:/s/Steve Greathouse
Name: Steve Greathouse
Title: President and CEO
United Gaming Rainbow
By:/s/Steve Greathouse
Name: Steve Greathouse
Title: President
In presence of:
/s/Elsie Arnsten
Elsie Arnsten
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State of New York
ss.:
County of New York
On March 28, 1995 before me personally came
Steve Greathouse, to me known, who, by me duly sworn, did
depose and say that deponent resides at Las Vegas, Nevada
that deponent is the President of Alliance Gaming Corporation and
that deponent signed deponent's name in executing the foregoing
Release on behalf of Alliance Gaming Corporation.
/s/________________________________
Notary Public
State of New York
ss.:
County of New York
On March 28, 1995 before me personally came
Steve Greathouse, to me known, who, by me duly sworn, did
depose and say that deponent resides at Las Vegas, Nevada
that deponent is the President of United Gaming Rainbow and that
deponent signed deponent's name in executing the foregoing
Release on behalf of United Gaming Rainbow.
/s/________________________________
Notary Public
<PAGE>
<PAGE>
Schedule A to Release
1. Second Amended and Restated Partnership Agreement of Rainbow
Casino-Vicksburg Partnership, L.P. dated March 29, 1995 among
United Gaming Rainbow, as general partner, and The Rainbow Casino
Corporation, as limited partner, and Notes issued by such
partnership on the date hereof.
2. Consolidation Agreement dated March 29, 1995 among The
Rainbow Casino Corporation, John A. Barrett, Jr., Leigh Seippel,
Rainbow Development Corporation, National Gaming Mississippi,
Inc., National Gaming Corporation, HFS Gaming Corp., Alliance
Gaming Corporation, United Gaming Rainbow and Rainbow Casino-
Vicksburg Partnership, L.P.
3. Promissory Note dated as of July 16, 1994 from United Gaming
Rainbow to The Rainbow Casino Corporation.
4. Promissory Notes dated October 28, 1993 and July 16, 1994
from John A. Barrett, Jr. and Leigh Seippel to Alliance Gaming
Corporation and Pledge Agreement dated October 28, 1993 from John
A. Barrett, Jr. and Leigh Seippel to Alliance Gaming Corporation.
5. Management Agreement dated October 28, 1993 among Rainbow
Casino-Vicksburg Partnership, L.P., Mississippi Ventures, Inc.
and The Rainbow Casino Corporation, and the applicable provisions
of the Basic Agreement dated as of October 28, 1993, as amended,
incorporated therein.
6. Section 7(a)(b) of the Letter Agreement dated as of February
25, 1994 between The Rainbow Casino Corporation and Alliance
Gaming Corporation, as consented to by Messrs. Barrett and
Seippel and Hospitality Franchise Systems, Inc. and the
applicable provisions of the Basic Agreement dated as of October
28, 1993, as amended, incorporated therein.
7. Sections 1 and 4 of the Letter Agreement dated as of July 16,
1994 between The Rainbow Casino Corporation and John A. Barrett,
Jr. and Leigh Seippel, on the one hand, and Alliance Gaming
Corporation and United Gaming Rainbow, on the other hand.
8. Letter agreement dated December 20, 1994 among Alliance
Gaming Corporation and the Selling Stockholders set forth
therein, including Mesrrs. Barrett and Seippel.
<PAGE>
<PAGE>
Exhibit 2.9
R E L E A S E
The Rainbow Casino Corporation, a Mississippi
corporation, Rainbow Development Corporation, a Mississippi
corporation, and Mr. John A. Barrett, Jr. and Mr. Leigh Seippel
(together with their respective affiliates and their respective
officers, directors, employees and agents, the "Releasors"; each,
a "Releasor"), each hereby releases and discharges each of
Alliance Gaming Corporation and United Gaming Rainbow and each of
their respective partners and affiliates (other than Rainbow
Casino-Vicksburg Partnership, L.P.) and their respective
officers, directors, employees and agents (the "Releasees"; each,
a "Releasee") and their respective successors and assigns, from
all actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, con-
tracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims, and
demands whatsoever, including without limitation, those under the
Basic Agreement dated October 28, 1993, as amended, among The
Rainbow Casino Corporation, Messrs. John A. Barrett, Jr. and
Leigh Seippel and Alliance Gaming Corporation, and the Escrow
Agreement, Mortgage and Agreement by Barrett Refining Corporation
attached as Exhibits to such October 28, 1993 agreement, in law
or equity, which against the Releasees, the Releasors and the
Releasors' successors and assigns ever had, now have or hereafter
can, shall or may have, for, upon, or by reason of any matter,
cause or thing whatsoever from the beginning of the world to the
date of this Release, except the rights and obligations under the
documents listed on the attached Schedule A, which shall survive
the execution and delivery of this Release.
This Release may not be changed orally.
<PAGE>
<PAGE>
In Witness Whereof, the Releasors have caused this
Release to be executed by its duly authorized officer.
Dated: March 29, 1995 The Rainbow Casino Corporation
By:/s/Leigh Seippel
Name: Leigh Seippel
Title: President
Rainbow Development Corporation
By:/s/Leigh Seippel
Name: Leigh Seippel
Title: President
/s/John A. Barrett, Jr.
John A. Barrett, Jr.
/s/Leigh Seippel
Leigh Seippel
In presence of:
/s/___________________________
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District of Columbia
ss.:
On March 29th, 1995 before me personally came Leigh
Seippel, to me known, who, by me duly sworn, did depose and say
that deponent resides at Fair Oaks Farm, Route 9D, P.O. Box 193,
Cold Springs, N.Y. 10516, that deponent is the President of The
Rainbow Casino Corporation and that deponent signed deponent's
name in executing the foregoing Release on behalf of The Rainbow
Casino Corporation.
/s/________________________________
Notary Public
District of Columbia
ss.:
On March 29th, 1995 before me personally came Leigh
Seippel, to me known, who, by me duly sworn, did depose and say
that deponent resides at Fair Oaks Farm, Route 9D, P.O. Box 193,
Cold Springs, N.Y. 10516 that deponent is the President of
Rainbow Development Corporation and that deponent signed
deponent's name in executing the foregoing Release on behalf of
Rainbow Development Corporation.
/s/________________________________
Notary Public
State of Oklahoma
ss.:
County of Pottawatomie
On March 24, 1995 before me personally came John A.
Barrett, Jr., to me known, who, by me duly sworn, did depose and
say that deponent resides at 3311 North Oklahoma, Shawnee,
Oklahoma 74801 and that deponent signed deponent's name in
executing the foregoing Release.
/s/________________________________
Notary Public
<PAGE>
<PAGE>
District of Columbia
ss.:
On March 29th, 1995 before me personally came Leigh
Seippel, to me known, who, by me duly sworn, did depose and say
that deponent resides at Fair Oaks Farm, Route 9D, P.O. Box 193,
Cold Springs, N.Y. 10516, and that deponent signed deponent's
name in executing the foregoing Release.
/s/________________________________
Notary Public
<PAGE>
<PAGE>
Schedule A to Release
1. Second Amended and Restated Partnership Agreement of Rainbow
Casino-Vicksburg Partnership, L.P. dated March 29, 1995 among
United Gaming Rainbow, as general partner, and The Rainbow Casino
Corporation, as limited partner, and Notes issued by such
partnership on the date hereof.
2. Consolidation Agreement dated March 29, 1995 among The
Rainbow Casino Corporation, John A. Barrett, Jr., Leigh Seippel,
Rainbow Development Corporation, National Gaming Mississippi,
Inc., National Gaming Corporation, HFS Gaming Corp., Alliance
Gaming Corporation, United Gaming Rainbow and Rainbow Casino-
Vicksburg Partnership, L.P.
3. Promissory Note dated as of July 16, 1994 from United Gaming
Rainbow to The Rainbow Casino Corporation.
4. Promissory Notes dated October 28, 1993 and July 16, 1994
from John A. Barrett, Jr. and Leigh Seippel to Alliance Gaming
Corporation and Pledge Agreement dated October 28, 1993 from John
A. Barrett, Jr. and Leigh Seippel to Alliance Gaming Corporation.
5. Management Agreement dated October 28, 1993 among Rainbow
Casino-Vicksburg Partnership, L.P., Mississippi Ventures, Inc.
and The Rainbow Casino Corporation, and the applicable provisions
of the Basic Agreement dated as of October 28, 1993, as amended,
incorporated therein.
6. Section 7(a)(b) of the Letter Agreement dated as of February
25, 1994 between The Rainbow Casino Corporation and Alliance
Gaming Corporation, as consented to by Messrs. Barrett and
Seippel and Hospitality Franchise Systems, Inc. and the
applicable provisions of the Basic Agreement dated as of October
28, 1993, as amended, incorporated therein.
7. Sections 1 and 4 of the Letter Agreement dated as of July 16,
1994 between The Rainbow Casino Corporation and John A. Barrett,
Jr. and Leigh Seippel, on the one hand, and Alliance Gaming
Corporation and United Gaming Rainbow, on the other hand.
8. Letter agreement dated December 20, 1994 among Alliance
Gaming Corporation and the Selling Stockholders set forth
therein, including Mesrrs. Barrett and Seippel.
<PAGE>
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ERNST & YOUNG LLP 4200 One Shell Square Phone: 504 581 4200
701 Poydras Street
New Orleans
Louisiana 70139-9869
Report of Independent Auditors
The Partners
Rainbow Casino Vicksburg Partnership, L.P.
We have audited the accompanying balance sheets of Rainbow Casino
Vicksburg Partnership, L.P. as of July 15, 1994 and December 31,
1994 and the related statements of operations, partners' capital
(deficit), and cash flows for the period from February 19, 1993
(inception) through December 31, 1994. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of materail misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Rainbow Casino Vicksburg Partnership, L.P. at July 15, 1994
and December 31, 1994, and the results of operations and its cash
flows for the period from February 19, 1993 (inception) through
December 31, 1994 in conformity with generally accepted
accounting principles.
Ernst & Young LLP
March 15, 1995, except for Note 6
as to which the date is March 29, 1995
<PAGE>
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Rainbow Casino Vicksburg Partnership, L.P.
Balance Sheets
December 31 July 15
1994 1994
Assets
Current assets:
Cash $ 1,220,880 $ 1,031,814
Accounts receivable 30,801 -
Inventories 14,841 28,855
Prepaid expenses 89,667 198,197
Total current assets 1,356,189 1,258,866
Property and equipment:
Land 24,500 24,500
Land improvements 4,249,626 3,712,672
Gaming facility and
related improvements 4,113,407 4,091,422
Furniture and gaming
equipment 6,047,601 5,997,931
Construction in process 159,763 145,659
14,594,897 13,972,184
Less accumulated depreciation
and amortization 834,754 4,800
13,760,143 13,967,384
Other assets:
Deferred licensing costs,
net of accumulated amor-
tization of $71,844 at
December 31, 1994 and $0
at July 15, 1994 84,906 156,750
Other assets 426,134 256,125
511,040 412,875
Total assets $ 15,627,372 $ 15,639,125
<PAGE>
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December 31 July 15
1994 1994
Liabilities and partners'
capital (deficit)
Current liabilities:
Notes payable $ 179,824 $ 258,403
Accounts payable 730,352 3,919,039
Accrued expenses 1,484,378 347,475
Due to general partner 46,501 -
Accrued royalties and
management fee due to
related party 532,398 785,698
Current portion of
long-term debt 2,993,836 2,617,186
Current portion of
capital lease obligation 34,265 37,762
Total current liabilities 6,001,554 7,965,563
Long-term debt,
less current portion 13,152,691 10,479,613
Capital lease obligation,
less current portion 151,549 166,306
Partners' capital (deficit):
General partner (2,052,735) (1,664,400)
Limited partners (1,625,687) (1,307,957)
(3,678,422) (2,972,357)
Total liabilities and
partners' capital (deficit) $ 15,627,372 $15,639,125
See accompanying notes.
<PAGE>
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Rainbow Casino Vicksburg Partnership, L.P.
Statement of Operations
Period from February 19, 1993 (inception) through December
31, 1994
Revenue:
Casino $ 9,797,593
Food and beverage 23,501
Total revenue 9,821,094
Operating expenses:
Casino 3,883,914
Food and beverage 10,458
Gaming taxes 1,524,001
General and administrative 794,639
Marketing and promotion 873,402
Management fee - related party 45,832
Depreciation and amortization 906,598
Royalty fees 1,670,120
Other 172,173
Preopening costs 2,802,090
Total operating expenses 12,683,227
Operating loss (2,862,133)
Interest expense 750,504
Net loss $(3,612,637)
See accompanying notes.
<PAGE>
