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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): February 1, 1999
North American Gaming and Entertainment Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-5474 75-2571032
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(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
13150 Coit Road, Suite 125, Dallas, Texas 75240
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(Address of principal execute offices, including zip code)
(972) 671-1133
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
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Restructure of OM Operating, L.L.C.
Effective April 15, 1998, North American Gaming and Entertainment
Corporation (the "Company") and Donald I. Williams ("Williams") entered into
Amendment No. One (the "Amendment") to the Operating Agreement (the "Operating
Agreement") of OM Operating, L.L.C. ("Operator") to effect a restructuring of
Operator which the Company believed effectively addressed certain preliminary
questions and concerns raised by the Louisiana Gaming Control Board ("Gaming
Control Board") and the Video Gaming Division of the Gaming Enforcement Section
of the Office of State Police within the Department of Public Safety and
Corrections (the "Division") in their review of Operator's application for
renewal of its license to operate video poker casinos. The Company elected to
voluntarily effect the restructure of Operator even though the Gaming Control
Board had not made a final determination whether Operator's existing structure
satisfied the Louisiana residency requirements of the Louisiana Video Draw Poker
Devices Control Law and the Rules and Regulations promulgated thereunder (the
"Louisiana Act"). However, when the Company presented the Amendment and related
documents to the Division, the Division expressed serious concerns and doubts
that the Amendment would satisfy the Louisiana Act and indicated the Division
would recommend that Operator's license to operate video poker casinos in
Louisiana not be renewed, unless various changes were implemented to comply with
the Louisiana Act. Among the concerns expressed by the Division were the 20%
gross income allocation to the Company under the Operating Agreement and its
contribution, pursuant to the Amendment, by the Company to Operator for
additional interests in Operator which were then assigned to Williams in
exchange for a $4 million nonrecourse note (the "Note"), in addition to certain
other aspects of Amendment No. One and the related documents. Rather than risk
loss of the Operator's license, the Company has entered into further amendments
to the Operating Agreement and various documents put into place in conjunction
with the Amendment, and has agreed to transfer 50% of its remaining Louisiana
gaming interests (including 50% of its interest in Operator, River Port Truck
Stop, LLC and the Gold Rush Truck Stop) to certain former holders of Class A
Preferred Stock of the Company and certain related persons and entities in
exchange for mutual releases and settlements, dismissal of pending litigation
and cancellation of debentures, dividends and Common Stock of the Company
("Common Stock"). The Company believes the further restructuring of Operator
effectively addresses the concerns raised by the Division. The Company has
submitted to the Division and Gaming Control Board the documents effecting the
further restructure of Operator for their review in connection with Operator's
license renewal request. There can be no assurance that the Gaming Control
Board will agree with the Company's conclusion that Operator, as further
restructured, complies with the residency requirements of the Louisiana Act, but
the Company believes the Gaming Control Board will agree with such restructure
and with the Company's conclusion.
As part of the further restructure of Operator, the Company entered into a
Release and Settlement Agreement (the "Settlement Agreement") with, among
others, Williams and ten former holders of Class A Preferred Stock of the
Company (the "North Louisiana Group") on February 2, 1999, but to become
automatically effective as of March 31, 1999. The North Louisiana Group
currently own 5,614,632 shares of Common Stock (representing approximately 13.4%
of the issued and outstanding shares of Common Stock) and $306,959.61 in
principal amount of subordinated debentures, and are owed accrued dividends of
$254,982 accrued on the Class A Preferred Stock prior to its conversion to
Common Stock. As part of the Settlement Agreement and pursuant to related
documents executed in connection therewith, the North Louisiana Group agreed,
among other things, to (i) dismiss with prejudice its pending lawsuit against
the Company for the payment of accrued dividends and agreed to cancel all
accrued dividends payable to the
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North Louisiana Group; (ii) mark their subordinated debentures "canceled" and
return them to the Company and cancel all principal and accrued interest
thereunder; (iii) return to the Company for cancellation all shares of Common
Stock owned by the North Louisiana Group; (iv) be responsible on a 50/50 basis
with the Company for any funds expended in settlement with any other former
holders of Class A Preferred Stock which the Company may desire to pursue; (v)
assume 50% of the debt owed by the Company, to Regions Bank, Springhill Branch,
formerly known as Springhill Bank & Trust Company, relating to the Company's
Gold Rush Truck Stop; and (vi) release all claims, known or unknown, which the
North Louisiana Group might have against, among others, the Company,
International Tours, Inc. ("International") and the officers and directors of
the Company as of the date of the Settlement Agreement. In return, the Company
(a) released all claims it might have, known or unknown, against, among others,
the North Louisiana Group as of the date of the Settlement Agreement; (b) agreed
to assign to one or more members of the North Louisiana Group a 24.5% interest
in Operator and a 25% interest in River Port Truck Stop, LLC ("River Port"); and
(c) agreed to assign to one or more members of the North Louisiana Group 50% of
the Company's ownership of the Gold Rush Truck Stop.
Under the Settlement Agreement, Williams agreed to release all claims he
might have, known or unknown, against, among others, the Company, International,
the officers and directors of the Company and the North Louisiana Group as of
the date of the Settlement Agreement, and the Company agreed to release all
claims the Company might have, known or unknown, against, among others, Williams
as of the date of the Settlement Agreement. Williams also agreed, among other
things, to (i) mark his subordinated debenture in the original principal amount
of $93,900 "canceled" and return it to the Company and cancel all principal and
accrued interest thereunder; (ii) return to the Company for cancellation 824,000
shares of Common Stock owned by Williams, 1,279,000 shares of Common Stock owned
by P. & J. Williams, L.L.C. (an affiliated entity) and 450,000 shares of Common
Stock owned by New Orleans Video Poker Company, Inc. (an affiliated entity), an
aggregate of 2,553,000 shares (representing approximately 6.1% of the issued and
outstanding shares of Common Stock); (iii) cancel the $78,000 of accrued
dividends payable to Williams accrued on the Class A Preferred Stock prior to
its conversion to Common Stock; and (iv) pay to the Company certain amounts
which could aggregate between $150,000 and $300,000 over six years in
conjunction with the possible additional settlements by the Company with other
former holders of Class A Preferred Stock which the Company may desire to
pursue. The Company and Williams also entered into amendments to several other
existing agreements in connection with the Settlement Agreement as described in
the following paragraphs.
The Company and Williams entered into a Second Amendment (the "Second
Amendment") to Operator's Operating Agreement, to become effective March 31,
1999. The Second Amendment operates to amend the Operating Agreement, as
amended by the Amendment, to delete all references to the Note and to the
contribution of the 20% special gross income allocation so that neither
provision shall ever have been deemed to have existed and neither provision
shall have ever been of any force or effect. As a result, the Note is deemed to
never have existed and the 20% special gross income allocation was not deemed to
have been contributed by the Company for additional ownership interests in
Operator. Under the Second Amendment, the Operating Agreement will be amended
to terminate, and to delete all references to, the 20% gross income allocation
after March 31, 1999 and no further allocation or distributions will be made to
the Company pursuant to such 20% special gross income allocation. Thereafter,
distributions will be made in accordance with capital accounts and the Sharing
Ratios of the Members, which will be 51% to Williams, 24.5% to the Company and
24.5% to one or more members of the North Louisiana Group; provided, however,
Williams is entitled under the Second Amendment to distribution of the initial
$4,166 to be distributed per month up to a maximum of $50,000 per year, which
distributions are to be credited against any other distributions to Williams
during such
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year. Pursuant to the Second Amendment, Operator will no longer be managed by a
manager and, instead, will be managed by the members, who shall take actions by
the vote of members owning at least 65% of the Sharing Ratios, except for
certain enumerated major decisions which require unanimous vote. Related
agreements were also entered into to become effective as of March 31, 1999
canceling the Note and the Company's security interest in the ownership
interests of Williams securing the Note.
The Company and Operator also entered into a Termination of Consulting and
Administrative Agreement (the "Termination") to become effective March 31, 1999.
The Termination has the effect of terminating the Consulting and Administrative
Agreement entered into between the Company and Operator on April 15, 1998 (the
"Consulting Agreement") pursuant to which the Company agreed to provide
consulting and administrative services relating to the daily management of each
of Operator's video poker casinos, and pursuant to which the Company received a
fee of $400,000 per year for rendering such services, reduced by $50,000 for
each existing video poker casino Operator loses the right to operate, and
increased by $50,000 for each new video poker casino operated by Operator during
the term of the Consulting Agreement.
Williams and Operator also entered into a Second Amendment to Employment
Agreement (the "Employment Amendment") to become effective March 31, 1999 which
amends the Employment Agreement dated April 15, 1998 pursuant to which Williams
received an annual salary of $250,000, was eligible to participate in any
employee benefit plans of Operator, was furnished the use of a company
automobile and was reimbursed for expenses incurred on behalf of Operator during
the course of his employment. Under the Employment Amendment, Williams will
receive an annual salary of $100,000 and will continue to be eligible to
participate in any employee benefit plans of Operator, but will no longer be
furnished the use of a company automobile or be reimbursed for expenses. Under
the Employment Agreement, as amended by the Employment Amendment, the Employment
Agreement terminates on March 31, 2004.
As part of the Settlement Agreement, the Company and Operator have modified
the terms of the lease of the Gold Rush Truck Stop by the Company to Operator.
The Company and Operator have entered into a Lease Agreement (the "Lease") to
become effective March 31, 1999 for an initial term of six months and thereafter
to be a month-to-month lease until terminated by either party, with or without
cause, on 60 days' prior written notice. The Company will be responsible for
major repairs and Operator will be responsible for nonmajor repairs and
maintenance, and Operator will pay a rental of $33,333.33 per month for the term
of the Lease. The Company and Williams also mutually agreed to terminate the
right of first refusal previously granted to Williams to purchase the land and
buildings constituting the Gold Rush Truck Stop, or any portion thereof, if the
Company proposed to sell them to a third party. In conjunction with the Lease,
the Company has agreed to be solely responsible for the indebtedness to Regions
Bank, Springhill Branch, formerly known as Springhill Bank & Trust Company,
which is secured by a mortgage on the Gold Rush Truck Stop. As of December 31,
1998, the outstanding principal balance of such indebtedness was approximately
$613,000.
Pursuant to the Second Amendment, the parties agreed to delete the
requirement that all video poker gaming opportunities within Louisiana that
either party desires to pursue must first be presented to Operator for its
review and determination whether it desires to pursue such opportunity.
Effective March 31, 1999, all parties will be free to pursue any video poker
gaming opportunities they may desire without first offering the opportunity to
Operator or any other member. Likewise, Williams is no longer entitled to
receive a finder's fee of $50,000 for each opportunity brought by him to
Operator which is consummated by Operator.
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River Port Truck Stop - Port Allen, Louisiana
Pursuant to the Settlement Agreement, the Operating Agreement of River Port
(the "River Port Operating Agreement") was also amended to provide that it shall
be managed by the members in the same manner as described above for OM under its
amended Operating Agreement, and to provide that Williams will own 50% of the
membership interests and Sharing Ratios, and the Company will own 25% and one or
more members of the North Louisiana Group will own the remaining 25%. Other
conforming changes were made to make the River Port Operating Agreement
consistent with the Operating Agreement of OM, as amended by the Second
Amendment. The amendments to the River Port Operating Agreement will also
become effective March 31, 1999.
Item 4. Changes in Registrant's Certifying Accountant.
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Effective February 1, 1999, the Company engaged Sartain Fischbein & Co. as
its independent accountant to audit the Company's financial statements.
Item 5. Other Events.
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The letter of intent entered into between International, GalaxSea Cruises
and Tours, Inc. ("GalaxSea"), I.T. Cruise, Inc. ("IT Cruise"), Points North
Digital Technologies, Inc. and Travel Distribution Resource Group, Inc. for the
sale of the cruise and travel-related assets of each of International, GalaxSea
and IT Cruise, which constitute substantially all of the assets of GalaxSea and
IT Cruise, has terminated by its terms and there is no pending negotiation by
the Company with Points North Digital Technologies, Inc., Travel Distribution
Resource Group, Inc. or any other party concerning the potential sale of any of
the assets of GalaxSea and I.T. Cruise.
Item 7. Financial Statements and Exhibits
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(b) A pro forma condensed balance sheet as of December 31, 1998 and a pro
forma condensed statement of operations for the year ended December
31, 1998 reflecting the impact of the transactions effected pursuant
to the Settlement Agreement and related documents will be filed by an
amendment to this Form 8-K on or before April 15, 1999, which is
fifteen calendar days after the effective date of the Settlement
Agreement and related documents.
(c) Exhibits - The following exhibits are filed herewith:
10.1 Release and Settlement Agreement dated February 2, 1999 by and
among the parties referenced therein, together with various
Exhibits thereto (but exclusive of various Schedules thereto).
10.2 Settlement Agreement dated February 2, 1999 by and among the
parties referenced therein.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
February 5, 1999
NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
By: /s/ E.H. Hawes
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E.H. Hawes II, President
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EXHIBIT 10.1
RELEASE AND SETTLEMENT AGREEMENT
THIS RELEASE AND SETTLEMENT AGREEMENT (the "Agreement") is made effective
the 2nd day of February, 1999, by and among:
DONALD I. WILLIAMS, an individual of the full age of majority, domiciled in
the Parish of Pointe Coupee, State of Louisiana, married to and living with
Margaret R. Williams, and whose social security number is ###-##-####, and
whose mailing address is 903 East Main Street, New Roads, Louisiana 70760
("Don"); and
MARGARET R. WILLIAMS, an individual of the full age of majority domiciled
in the Parish of Pointe Coupee, State of Louisiana, married to and living
with Donald I. Williams, and whose social security number is ###-##-####,
and whose mailing address is 903 East Main Street, New Roads, Louisiana
70760 ("Peggy") (Don and Peggy are collectively referred to as the
"Williams"); and
O. P. PEARSON, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Elaine
Pearson, and whose social security number is ###-##-####, and whose mailing
address is 612 Bonner Street, Homer, Louisiana 71040 ("OP"); and
ELAINE PEARSON, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with O. P.
Pearson, and whose social security number is ###-##-####, and whose mailing
address is 612 Bonner Street, Homer, Louisiana 71040 ("Elaine"); and
HARRY WOODALL, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Marry
Woodall, and whose social security number is ###-##-####, and whose mailing
address is 849 Edgewood Drive, Homer, Louisiana ("Harry"); and
MARRY WOODALL, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Harry
Woodall, and whose social security number is ###-##-####, and whose mailing
address is 849 Edgewood Drive, Homer, Louisiana ("Marry"); and
LARRY JORDAN, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Betty
Jordan, and whose social security number is ###-##-####, and whose mailing
address
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is 3896 Butler Avenue, Haynesville, Louisiana 71038 ("Larry"); and
BETTY JORDAN, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Larry
Jordan, and whose social security number is ____________, and whose mailing
address is 3896 Butler Avenue, Haynesville, Louisiana 71038 ("Betty"); and
ARLINGTON FARMS, INC., a corporation organized under the laws of the State
of Louisiana, whose taxpayer identification number is 72-1194665, and whose
mailing address is 101 Arlington Drive, Homer, Louisiana 71040, represented
herein by Loy F. Weaver, its President, ("Arlington Farms"); and
ALYSON HECKEL, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Joseph
Heckel, and whose social security number is ###-##-####, and whose mailing
address is 2558 Hwy. 146, Homer, Louisiana 71040 ("Alyson"); and
JOSEPH HECKEL, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Alyson
Heckel, and whose social security number is ###-##-####, and whose mailing
address is 2558 Hwy. 146, Homer, Louisiana 71040 ("Joe"); and
CHARLES E. WEAVER, an individual of the full age of majority domiciled in
the Parish of Orleans, State of Louisiana, a single man, and whose social
security number is ###-##-####, and whose mailing address is 920 Poeyfare
St., Apt. 281, New Orleans, Louisiana 70130 ("Charles"); and
RAY WEAVER, an individual of the full age of majority domiciled in the
Parish of Webster, State of Louisiana, married to and living with JOYCE
WEAVER, and whose social security number is ###-##-####, and whose mailing
address is 431 S.E. 5th Avenue, Sibley, Louisiana 71073 ("Ray"); and
JOYCE WEAVER, an individual of the full age of majority domiciled in the
Parish of Webster, State of Louisiana, married to and living with Ray
Weaver, and whose social security number is ###-##-####, and whose mailing
address is 431 S.E. 5th Avenue, Sibley, Louisiana 71073 ("Joyce"); and
LOY F. WEAVER, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Cathey
Weaver, and whose
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social security number is ###-##-####, and whose mailing address is 101
Arlington Drive, Homer, Louisiana 71040 ("Loy"); and
CATHEY WEAVER, an individual of the full age of majority domiciled in the
Parish of Claiborne, State of Louisiana, married to and living with Loy
Weaver, and whose social security number is ###-##-####, and whose mailing
address is 101 Arlington Drive, Homer, Louisiana 71040 ("Cathey")
(Arlington Farms, Alyson, Joe, Charles, Ray, Joyce, OP, Elaine, Harry,
Marry, Larry, Betty, Loy and Cathey are collectively referred to as the
"North Louisiana Group"); and
E. H. HAWES, II, an individual of the full age of majority domiciled in the
County of Delaware, State of Oklahoma, married to and living with Janice
Hawes, and whose social security number is ###-##-####, and whose mailing
address is Shangri-la Resort, Vista Towers, Afton, Oklahoma 74331 ("Ed");
and
JANICE HAWES, an individual of the full age of majority domiciled in the
County of Delaware, State of Oklahoma, married to and living with E. H.
Hawes, II, and whose social security number is ____________, and whose
mailing address is Shangri-la Resort, Vista Towers, Afton, Oklahoma 74331
("Janice") (Ed and Janice are collectively referred to as the "Hawes"); and
OM OPERATING, L.L.C., a limited liability company organized under the laws
of the State of Louisiana, whose taxpayer identification number is
____________, and whose mailing address is 13150 Coit Road, Suite 125,
Dallas Texas 75240, represented herein by its sole and only members, Don
and NAG ("OMO"); and
NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION, a corporation
organized under the laws of the State of Delaware, whose taxpayer
identification number is 75-2571032, and whose mailing address is 13150
Coit Road, Suite 125, Dallas, Texas 75240, represented herein by its duly
authorized President, Ed H. Hawes, II ("NAG"); and
INTERNATIONAL TOURS, INC., a corporation organized under the laws of the
State of Oklahoma, whose taxpayer identification number is _______________,
and whose mailing address is 13150 Coit Road, Suite 125, Dallas, Texas
75240, represented herein by its duly authorized Chairman, E. H. Hawes, II
("International"); and
RIVER PORT TRUCK STOP, L.L.C., a limited liability company organized under
the laws of the State of Louisiana, whose taxpayer identification number is
____________, and whose mailing address is 13150 Coit Road, Suite 125,
Dallas, Texas 75240, represented herein
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by its sole and only members, Don and NAG ("River Port") (all of the
foregoing are referred to collectively as the "Parties" and individually as
a "Party").
BACKGROUND
A. OM Investors, Inc. ("OMI") was previously a Louisiana corporation
engaged in the business of operating video poker truck stop casinos.
B. On or about July 25, 1994, OMI contributed all of its assets to OMO in
exchange for a 49% membership interest in OMO.
C. On or about October 17, 1994, NAG acquired all of the outstanding
capital stock of OMI from the former shareholders of OMI (collectively, the "OMI
Shareholders").
D. On or about November 27, 1995, OMI merged into NAG.
E. Pursuant to the terms of the Operating Agreement of OMO, Don owned and
continues to own a 51% membership interest in OMO and OMI owned and subsequently
NAG owned and continues to own a 49% membership interest in OMO.
F. Don and NAG formed River Port to own and operate a video poker truck
stop casino in Port Allen, Louisiana. This truck stop is under construction at
this time. Don owns a 50.1% and NAG owns a 49.9% membership interest in River
Port. The Articles of Organization of River Port incorrectly indicate that each
of Don and NAG own 50.0% membership interests.
G. Louisiana State Police and other governmental regulators
(collectively, the "Regulators") have questioned certain of the terms of the
Operating Agreement of OMO as not being in compliance with certain of the
regulations governing the ownership and operation of video poker truck stop
casinos.
H. Don and NAG previously amended the terms of the Operating Agreement of
OMO in an attempt to satisfy the concerns of the Regulators, and are desirous of
further amending the terms and provisions of the Operating Agreement at this
time in order to satisfy the concerns of the Regulators.
I. Certain of the former shareholders of OMI, namely, the North Louisiana
Group, have made allegations and filed adversarial proceedings against NAG, and
have made certain allegations against Don and other OMI Shareholders.
J. The undersigned are desirous of settling all disputes between them,
and except as provided in this Agreement and in the other agreements to be
executed in connection herewith, are desirous of releasing any and all claims
that each may have against the other.
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K. NAG is desirous of transferring certain of its membership interests in
OMO and River Port to members of the North Louisiana Group.
L. Don and members of the North Louisiana Group are amenable to disposing
of certain capital stock, dividends and debentures that they hold in NAG.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual releases set forth herein
and the transfers described herein, the parties to this Agreement and the other
persons represented by parties to this Agreement as referred to in this
Agreement, do hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES BY NAG AND ED.
--------------------------------------------
As a material inducement to Don, the North Louisiana Group, OMO and River
Port to execute this Agreement and to perform or cause the same to be performed,
each of Ed and NAG, severally, as it relates to each of them, and not jointly,
hereby represents and warrants to each of Don, each member of the North
Louisiana Group, OMO and River Port, that:
1.1 Recitals. The representations regarding facts involving NAG and Ed
--------
that are contained in the recitals of this Agreement are true and complete and
are deemed to be representations and warranties made by NAG and Ed.
1.2 Corporate Existence. NAG is a corporation duly organized, validly
-------------------
existing and in good standing under the laws of the State of Delaware. Ed has
full authority to execute this Agreement on behalf of NAG.
1.3 Membership Interest. NAG is the owner of a 49% membership interest in
-------------------
OMO and a 50% membership interest in River Port. Except as contemplated by this
Agreement, NAG has not previously assigned or transferred or granted a security
interest in any of its membership interests in OMO or River Port or its rights
thereunder, nor is it under any restriction from entering into the transactions
contemplated under this Agreement.
1.4 Authorization. The execution, delivery and performance of this
-------------
Agreement by NAG and Ed and the consummation of the actions contemplated hereby
have been duly and effectively authorized by the Board of Directors of NAG. NAG
does not believe that the approval of the shareholders of NAG is necessary, but
it is anticipated that shareholder approval may, nonetheless, be sought. The
execution by NAG and Ed of this Agreement and any related agreement or
certificate executed in connection herewith: (a) will not cause either NAG or Ed
to violate or contravene (i) any applicable provision of law, (ii) any rule or
regulation of any agency of government, assuming, for this purpose any required
consent of the Regulators has been obtained, or (iii) any order,
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writ, judgment, injunction, decree, determination or award; and (b) will not
violate or be in conflict with, result in a breach of, or constitute (with or
without notice or lapse of time or both) a default under the articles of
incorporation or bylaws or other corporate agreements of NAG, any loan or credit
agreement, loan agreement, note agreement, deed of trust, mortgage, pledge,
security agreement or other agreement, lease or other instrument, commitment or
arrangement to which NAG or Ed is a party or by which any of the properties,
assets or rights of NAG is bound or affected, assuming, for this purpose, NAG
has obtained consent from Springhill Bank & Trust and from Cottonport Bank.
1.5 Authority and Consents. Ed and NAG have the right, power, legal
----------------------
capacity and authority to enter into and perform its obligations under this
Agreement, and NAG and Ed believe that no approvals or consents of any persons
other than the undersigned are necessary in connection with it, except that it
is anticipated that approval by the NAG shareholders may be sought.
1.6 Litigation. To the best of NAG's knowledge, except as disclosed on
----------
Schedule 1.6 there is not pending or threatened, any suit, action, arbitration,
- ------------
or legal, administrative, or other proceeding, or governmental investigation
against or affecting OMO or any of its businesses, assets, or financial
condition, nor any circumstances known to exist by NAG which would give rise to
any action, suit or proceeding against OMO. OMO is not in default with respect
to any order or decree of any such governmental agency or instrumentality, and
OMO is not a party to any judgments, orders or decrees whatever which adversely
affect or pertain to its operations or its assets. OMO is not presently engaged
in any legal action to recover monies due OMO or damages sustained by OMO.
1.7 Title to Property and Encumbrances. To the best of NAG's knowledge,
----------------------------------
(a) OMO has good, valid and marketable title to its assets subject to no
mortgage, pledge, lien, charge, security interest, encumbrance or restriction of
any kind, including without limitation, any retained interest or security
interest of any conditional vendor, except as disclosed on Schedule 1.7, (b) OMO
------------
has not heretofore obligated itself to dispose of or assign any of its assets,
and (c) the assets of OMO are in existence and are in the sole possession of
OMO.
1.8 Financial Statements. Schedule 1.8 to this Agreement sets forth the
-------------------- ------------
balance sheet of OMO as of December 31, 1997 and December 31, 1998. Such
statements were prepared internally by NAG on a basis consistent with past
practices and fairly represents the financial position of OMO as of the
respective dates of such balance sheets.
1.9 Absence of Undisclosed Liabilities. As of December 31, 1998, to the
----------------------------------
best of NAG's knowledge, OMO had no trade payables other than as set forth on
Schedule 1.9 hereto (which includes the trade payables of the truck stop,
- ------------
restaurant and convenience store operations of NAG relating to OMO's gaming
operations). To the best of NAG's knowledge, Schedule 1.9 also sets out the
------------
current
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assets of OMO (including the current assets of the truck stop, restaurant and
convenience store operations of NAG relating to OMO's gaming operations). The
relative difference between the total current assets and the trade payables of
OMO (including the current assets and current liabilities of the truck stop,
restaurant and convenience store operations of NAG relating to OMO's gaming
operations) shall not materially change prior to March 31, 1999. To the best of
NAG's knowledge, the accounts receivable of NAG described on Schedule 1.9 were
------------
created in the ordinary course of business and are collectible. To the best of
NAG's knowledge, as of December 31, 1998, OMO did not have any debt, liability,
or obligation of any nature, whether accrued, absolute, contingent, or
otherwise, and whether due or to become due, that is not expressly set forth on
the financial statements attached as Schedule 1.8.
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1.10 Intentionally omitted.
---------------------
1.11 Existing Employment Contracts. To the best of NAG's knowledge, (a)
-----------------------------
OMO is not a party to any written or oral collective bargaining agreement or
other contracts with any labor union, and (b) OMO has no employment contracts,
pension, profit sharing or bonus plans for employees which cannot be terminated
by the employer without payment and on not more than fifteen (15) days' notice,
except for the Employment Agreement with Don.
2. REPRESENTATIONS AND WARRANTIES OF DON.
-------------------------------------
As a material inducement to NAG, Ed, the North Louisiana Group, OMO and
River Port, to execute this Agreement and to perform or cause the same to be
performed, Don represents and warrants to NAG, Ed, the North Louisiana Group,
OMO and River Port, that:
2.1 Recitals. The representations regarding facts involving Don that are
--------
contained in the recitals of this Agreement are true and complete and are deemed
to be representations and warranties made by Don.
2.2 Authorizations. The execution, delivery and performance of this
--------------
Agreement by Don and the consummation of the transactions contemplated hereby
have been duly and effectively authorized. The execution by Don of this
Agreement or any related agreement or certificate executed in connection
herewith: (a) will not cause Don to violate or contravene (i) any applicable
provision of law, (ii) any rule or regulation of any agency of government, or
(iii) any order, writ, judgment, injunction, decree, determination or award; and
(b) will not violate or be in conflict with, result in a breach of, or
constitute (with or without notice or lapse of time or both) a default under any
loan or credit agreement, loan agreement, note agreement, deed of trust,
mortgage, pledge, security agreement or other agreement, lease or other
instrument, commitment or arrangement to which Don is a party or by which any of
the properties, assets or rights of Don is bound or affected.
7
<PAGE>
2.3 Authority and Consents. Don has the right, power, legal capacity, and
----------------------
authority to enter into and perform its obligations under this Agreement, and no
approvals or consents of any persons other than Don are necessary in connection
with it.
2.4 Membership Interest. Don is the owner of a 51% membership interest in
-------------------
OMO and a 50.1% membership interest in River Port. Except as contemplated by
this Agreement and pursuant to the Assignment and Security Agreement referred to
in Section 5.4, Don has not previously assigned or transferred or granted a
security interest in any of its membership interests in OMO or River Port or its
rights thereunder, nor is it under any restriction from entering into the
transactions contemplated under this Agreement.
2.5 Litigation. To the best of Don's knowledge, except as disclosed on
----------
Schedule 1.6 there is not pending or threatened, any suit, action, arbitration,
- ------------
or legal, administrative, or other proceeding, or governmental investigation
against or affecting OMO or any of its businesses, assets, or financial
condition, nor any circumstances known to exist by NAG which would give rise to
any action, suit or proceeding against OMO. OMO is not in default with respect
to any order or decree of any such governmental agency or instrumentality, and
OMO is not a party to any judgments, orders or decrees whatever which adversely
affect or pertain to its operations or its assets. OMO is not presently engaged
in any legal action to recover monies due OMO or damages sustained by OMO.
2.6 Title to Property and Encumbrances. To the best of Don's knowledge,
----------------------------------
(a) OMO has good, valid and marketable title to its assets subject to no
mortgage, pledge, lien, charge, security interest, encumbrance or restriction of
any kind, including without limitation, any retained interest or security
interest of any conditional vendor, except as disclosed on Schedule 1.7, (b) OMO
------------
has not heretofore obligated itself to dispose of or assign any of its assets,
and (c) the assets of OMO are in existence and are in the sole possession of
OMO.
2.7 Existing Employment Contracts. To the best of Don's knowledge, (a)
-----------------------------
OMO is not a party to any written or oral collective bargaining agreement or
other contracts with any labor union, and (b) OMO has no employment contracts,
pension, profit sharing or bonus plans for employees which cannot be terminated
by the employer without payment and on not more than fifteen (15) days' notice,
except for the Employment Agreement with Don.
2.8 Liabilities. Don has not incurred any material obligations on behalf
-----------
of OMO or River Port that remain outstanding of which NAG is unaware.
3. REPRESENTATIONS AND WARRANTIES OF THE NORTH LOUISIANA GROUP.
-----------------------------------------------------------
As a material inducement to NAG, International, Ed, Don, OMO and River
Port, to execute this Agreement and to perform or cause the same to be
performed, each member of the North Louisiana Group, severally, as it relates to
each of them, and not jointly,
8
<PAGE>
represents and warrants to NAG, International, Ed, Don, OMO and River Port,
that:
3.1 Recitals. The representations regarding facts involving the North
--------
Louisiana Group that are contained in the recitals of this Agreement are true
and complete and are deemed to be representations and warranties made by the
North Louisiana Group.
3.2 Authorizations. The execution, delivery and performance of this
--------------
Agreement by such member of the North Louisiana Group and the consummation of
the transactions contemplated hereby have been duly and effectively authorized.
The execution by such member of the North Louisiana Group of this Agreement or
any related agreement or certificate executed in connection herewith: (a) will
not cause such member of the North Louisiana Group to violate or contravene (i)
any applicable provision of law, (ii) any rule or regulation of any agency of
government, or (iii) any order, writ, judgment, injunction, decree,
determination or award; and (b) will not violate or be in conflict with, result
in a breach of, or constitute (with or without notice or lapse of time or both)
a default under any loan or credit agreement, loan agreement, note agreement,
deed of trust, mortgage, pledge, security agreement or other agreement, lease or
other instrument, commitment or arrangement to which such member of the North
Louisiana Group is a party or by which any of the properties, assets or rights
of such member of the North Louisiana Group is bound or affected.
3.3 Authority and Consents. Such member of the North Louisiana Group has
----------------------
the right, power, legal capacity, and authority to enter into and perform its
obligations under this Agreement, and no approvals or consents of any persons
other than such member of the North Louisiana Group are necessary in connection
with it.
4. RELEASES AND INDEMNITIES.
------------------------
4.1 Release and Indemnity Agreements by Ed, International and NAG.
-------------------------------------------------------------
4.1.1 Release Agreements by Ed, International and NAG. Except for
-----------------------------------------------
those liabilities arising under this Agreement or the other agreements that are
attached to this Agreement as Exhibits, to be executed in connection with this
Agreement (collectively, along with this Agreement, the "Transaction Documents")
or as specifically described in Section 4.5 of this Agreement, which the parties
agree shall survive the execution of this Agreement, Ed, International, and NAG,
individually and on behalf of any other entities that are owned in whole or
controlled by Ed, International or NAG (collectively, the "NAG Releasors"), do
hereby, jointly, severally and in solido, release, discharge and acquit each
-- ------
member of the North Louisiana Group, Don, Peggy, OMO and River Port, together
with their respective shareholders, employees, officers, members, partners,
directors, subsidiaries, insurers, heirs, spouses, successors and assigns
(collectively, the "non-NAG Releasees"), from any and all manner of actions,
causes of actions, suits, debts, dues, sums of money, accounts, reckonings,
bonds,
9
<PAGE>
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, executions, obligations, claims and
demands whatsoever in law, admiralty or equity, in tort, contract or otherwise,
whether known or unknown, suspected or unsuspected, absolute or contingent,
which any of the NAG Releasors may or might have and/or to which any of the NAG
Releasors 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 Agreement, including, but not limited to, the
following:
(a) that OMI or its shareholders breached any representations or
warranties that they made to NAG at the time of the merger of OMI into NAG
or at the time of the purchase by NAG of the stock of GalaxSea Cruises &
Tours, Inc. and I. T. Cruise, Inc., or at any other time or as part of any
other transaction;
(b) that any person breached any representations concerning the
economic interest owned by NAG in OMO;
(c) any causes of action based on slander or libel from allegations
made that Don or members of the North Louisiana Group have tarnished the
reputation of NAG with the Regulators; and
(d) based on allegations that the structure of OMO was not in
compliance with state law.
4.1.2 Unknown Facts. Each of NAG, International and Ed acknowledges
-------------
and agrees that there is a risk that the facts in respect to which this
Agreement is made may hereafter prove to be other than or different from the
facts as now known by Ed, International and/or NAG, or believed by Ed,
International and/or NAG to be true, and that as a result thereof, Ed,
International and/or NAG may subsequently discover, incur, or suffer claims
and/or damages which were unknown, unsuspected or unanticipated on the execution
date hereof and which, if known, suspected or anticipated on such date may have
materially affected their decision to execute this Agreement. Notwithstanding
the foregoing, however, Ed, International and/or NAG expressly accepts the risk
of such claims and/or damages and agrees that this Agreement shall, in all
respects, be effective with respect thereto.
4.1.3 Indemnity. Each of Ed, International and NAG shall, severally,
---------
as it relates to each of them, and not jointly, indemnify each of the non-NAG
Releasees from any and all liability, loss, damage or expense, including
reasonable attorneys' fees, which the non-NAG Releasees may suffer or incur as a
consequence of any attempt by Ed, International or NAG or any other NAG Releasor
owned in whole or controlled by them to rescind the releases contained in this
Agreement, to have any provision hereof to be declared invalid, illegal or
unenforceable, or otherwise to pursue any claim, demand, or cause of action
against any of the non-NAG
10
<PAGE>
Releasees, except pursuant to those claims that are reserved to Ed,
International or NAG hereunder, respectively.
4.1.4 Binding Effect of Releases. The releases by Ed and NAG
--------------------------
contained in this Agreement shall be binding upon Ed and NAG and anyone else
deriving or who might hereafter derive any rights from or through them. Further,
Ed and NAG acknowledge that it is their obligation to pay their own attorneys'
fees and agree to hold harmless and indemnify the non-NAG Releasees from and
against any claims for such attorneys' fees which may be due or hereafter
claimed.
4.1.5 Legal Advice. Each of Ed and NAG hereby acknowledges that they
------------
are executing this Agreement, including but not limited to, the releases
contained herein, freely and voluntarily after receiving full advice concerning
their rights from legal counsel, and it is not based in any manner upon
representations made to them by any of the members of the North Louisiana Group,
Don or by any other person.
4.2 Release and Indemnity Agreements by the North Louisiana Group.
-------------------------------------------------------------
4.2.1 Release Agreements by the North Louisiana Group. Except for
-----------------------------------------------
those liabilities arising under this Agreement or the other Transaction
Documents, or as specifically described in Section 4.5 of this Agreement, which
the parties agree shall survive the execution of this Agreement, each member of
the North Louisiana Group, individually and on behalf of any other entities that
are owned in whole or controlled by such member of the North Louisiana Group
(collectively the "NL Releasors"), do hereby, jointly, severally and in solido,
-- ------
release, discharge and acquit each of Don, Peggy, Hawes, International, NAG,
OMO, and River Port, together with their respective employees, officers,
members, partners, directors, subsidiaries, insurers, heirs, spouses, successors
and assigns (collectively the "non-NL Releasees"), from any and all manner of
actions, causes of actions, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, executions,
obligations, claims and demands whatsoever in law, admiralty or equity, in tort,
contract or otherwise, whether known or unknown, suspected or unsuspected,
absolute or contingent, which any of the NL Releasors may or might have and/or
to which any of the NL Releasors 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 Agreement, including, but not
limited to the following:
(a) any breaches of representations, warranties, covenants or
obligations made by NAG, International, or Ed in connection with the merger
of OMI into NAG, or in connection with the sale of GalaxSea Cruises &
Tours, Inc. and I. T. Cruise, Inc. by International to NAG;
11
<PAGE>
(b) any and all claims previously made by members of the North
Louisiana Group related to allegations of breaches of fiduciary duty by
various OMI Shareholders in connection with the formation of OMO, the
opening of certain video poker truck stop casinos by certain of the OMI
Shareholders, including without limitation Gold Rush and Diamond Jubilee;
(c) claims that Don did not actually own a 51% membership interest in
OMO or a 50% membership interest in River Port;
(d) any breaches of representations, warranties, covenants or
obligations made by OMI or NAG in connection with the acquisition by NAG of
all of the capital stock of OMI; and
(e) all claims made in the following adversarial proceedings:
Harry Woodall, et al v. North American Gaming and Entertainment, Inc.,
---------------------------------------------------------------------
Civil Action No. CV98-15035, United States District Court, Western
District of Louisiana, Shreveport, Louisiana.
4.2.2 Unknown Facts. Each member of the North Louisiana Group
-------------
acknowledges and agrees that there is a risk that the facts in respect to which
this Agreement is made may hereafter prove to be other than or different from
the facts as now known by the members of the North Louisiana Group, or believed
by the members of the North Louisiana Group to be true, and that as a result
thereof, the members of the North Louisiana Group may subsequently discover,
incur, or suffer claims and/or damages which were unknown, unsuspected or
unanticipated on the execution date hereof and which, if known, suspected or
anticipated on such date may have materially affected their decision to execute
this Agreement. Notwithstanding the foregoing, however, each member of the North
Louisiana Group expressly accepts the risk of such claims and/or damages and
agrees that this Agreement shall, in all respects, be effective with respect
thereto.
4.2.3 Indemnity. Each member of the North Louisiana Group shall,
---------
severally, as it relates to each of them, and not jointly, indemnify each of the
non-NL Releasees from any and all liability, loss, damage or expense, including
reasonable attorneys' fees, which the non-NL Releasees may suffer or incur as a
consequence of any attempt by the North Louisiana Group or any other NL Releasor
owned in whole or controlled by such member of the North Louisiana Group to
rescind the releases contained in this Agreement, to have any provision hereof
to be declared invalid, illegal or unenforceable, or otherwise to pursue any
claim, demand, or cause of action against any of the non-NL Releasees, except
pursuant to those claims that are reserved to such member of the North Louisiana
Group hereunder.
12
<PAGE>
4.2.4 Binding Effect of Releases. The releases by each member of the
--------------------------
North Louisiana Group and other NL Releasors contained in this Agreement shall
be binding upon the North Louisiana Group and other NL Releasors and anyone else
deriving or who might hereafter derive any rights from or through them. Further,
each member of the North Louisiana Group acknowledge that it is their obligation
to pay their own attorneys' fees and agree to hold harmless and indemnify the
non-NL Releasees from and against any claims for such attorneys' fees which may
be due or hereafter claimed.
4.2.5 Legal Advice. Each member of the North Louisiana Group hereby
------------
acknowledges that they are executing this Agreement, including but not limited
to, the releases contained herein, freely and voluntarily after receiving full
advice concerning their rights from their attorneys, Sharp, Henry, Cerniglia,
Colvin & Weaver, L.L.C., and Blackburn & Sulzer, and it is not based in any
manner upon representations made to them by Hawes, International, NAG or Don, or
by any other person.
4.3 Release and Indemnity Agreements by Williams.
--------------------------------------------
4.3.1 Release Agreements by Williams. Except for those liabilities
------------------------------
arising under this Agreement or the other Transaction Documents, or as
specifically described in Section 4.5 of this Agreement, which the parties agree
shall survive the execution of this Agreement, the Williams, individually and on
behalf of any other entities that are owned in whole or in part by Don or Peggy,
including, without limitation, P. & J. Williams, L.L.C. and New Orleans Video
Poker Company, Inc. ("NOVPC") (collectively, the "Don Releasors"), do hereby,
jointly, severally, and in solido, release, discharge and acquit each of Hawes,
---------
NAG, International, the North Louisiana Group, OMO and River Port, together with
their respective employees, officers, members, partners, directors,
subsidiaries, insurers, heirs, spouses, successors and assigns (collectively the
"non-Don Releasees"), from any and all manner of actions, causes of actions,
suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, executions, obligations, claims and
demands whatsoever in law, admiralty or equity, in tort, contract or otherwise,
whether known or unknown, suspected or unsuspected, absolute or contingent,
which any of the Don Releasors may or might have and/or to which any of the Don
Releasors 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 Agreement, including, but not limited to the
following:
(a) any breaches of representations, warranties, covenants or
obligations made by NAG, International, or Ed in connection with the merger
of OMI into NAG, or in connection with the sale of GalaxSea Cruises &
Tours, Inc. and I. T. Cruise, Inc. by International to NAG; and
13
<PAGE>
(b) any breaches of representations, warranties, covenants or
obligations made by OMI or NAG in connection with the acquisition by NAG of
all of the capital stock of OMI.
4.3.2 Unknown Facts. The Williams acknowledge and agree that there
-------------
is a risk that the facts in respect to which this Agreement is made may
hereafter prove to be other than or different from the facts as now known by the
Williams, or believed by the Williams to be true, and that as a result thereof,
the Williams may subsequently discover, incur, or suffer claims and/or damages
which were unknown, unsuspected or unanticipated on the execution date hereof
and which, if known, suspected or anticipated on such date may have materially
affected their decision to execute this Agreement. Notwithstanding the
foregoing, however, the Williams expressly accept the risk of such claims and/or
damages and agrees that this Agreement shall, in all respects, be effective with
respect thereto.
4.3.3 Indemnity. The Williams shall, severally, as it relates to
---------
each of them, and not jointly, indemnify each of the non-Don Releasees from any
and all liability, loss, damage or expense, including reasonable attorneys'
fees, which the non-Don Releasees may suffer or incur as a consequence of any
attempt by the Williams or any other Don Releasor to rescind the releases
contained in this Agreement, to have any provision hereof to be declared
invalid, illegal or unenforceable, or otherwise to pursue any claim, demand, or
cause of action against any of the non-Don Releasees, except pursuant to those
claims that are reserved to the Williams hereunder.
4.3.4 Binding Effect of Releases. The releases by the Williams and
--------------------------
other Don Releasors contained in this Agreement shall be binding upon the
Williams and other Don Releasors and anyone else deriving or who might hereafter
derive any rights from or through them. Further, the Williams acknowledge that
it is their obligation to pay their own attorneys' fees and agree to hold
harmless and indemnify the non-Don Releasees from and against any claims for
such attorneys' fees which may be due or hereafter claimed.
4.3.5 Legal Advice. The Williams hereby acknowledge that they are
------------
executing this Agreement, including but not limited to the releases contained
herein, freely and voluntarily after receiving full advice concerning their
rights from their attorneys, Kean, Miller, Hawthorne, D'Armond, McCowan &
Jarman, L.L.P., and it is not based in any manner upon representations made to
them by Ed, NAG, or any member of the North Louisiana Group, or by any other
person.
4.4 Release and Indemnity Agreements by OMO and River Port.
-------------------------------------------------------
4.4.1 Release Agreements by OMO and River Port. Except for those
----------------------------------------
liabilities arising under this Agreement or the other Transaction Documents, or
as specifically described in Section 4.5 of this Agreement, which the parties
agree shall survive the
14
<PAGE>
execution of this Agreement, OMO and River Port, individually and on behalf of
any other entities that are owned in whole or in part by OMO or River Port
(collectively, the "LLC Releasors"), do hereby, jointly, severally and in
--
solido, release, discharge and acquit each member of the North Louisiana Group,
- ------
Hawes, NAG, International, Don and Peggy, together with their respective
employees, officers, members, partners, directors, subsidiaries, insurers,
heirs, spouses, successors and assigns (collectively, the "non-LLC Releasees"),
from any and all manner of actions, causes of actions, suits, debts, dues, sums
of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, obligations, claims and demands whatsoever in law, admiralty or
equity, in tort, contract or otherwise, whether known or unknown, suspected or
unsuspected, absolute or contingent, which any of the LLC Releasors may or might
have and/or to which any of the LLC Releasors 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 Agreement.
4.4.2 Unknown Facts. Each of OMO and River Port acknowledges and
-------------
agrees that there is a risk that the facts in respect to which this Agreement is
made may hereafter prove to be other than or different from the facts as now
known by OMO and/or River Port, or believed by OMO and/or River Port to be true,
and that as a result thereof, OMO and/or River Port may subsequently discover,
incur, or suffer claims and/or damages which were unknown, unsuspected or
unanticipated on the execution date hereof and which, if known, suspected or
anticipated on such date may have materially affected their decision to execute
this Agreement. Notwithstanding the foregoing, however, OMO and/or River Port
expressly accepts the risk of such claims and/or damages and agrees that this
Agreement shall, in all respects, be effective with respect thereto.
4.4.3 Indemnity. Each of OMO and River Port shall, jointly,
---------
severally and in solido, indemnify each of the non-LLC Releasees from any and
-- ------
all liability, loss, damage or expense, including reasonable attorneys' fees,
which the non-LLC Releasees may suffer or incur as a consequence of any attempt
by OMO or River Port or any other LLC Releasor to rescind the releases contained
in this Agreement, to have any provision hereof to be declared invalid, illegal
or unenforceable, or otherwise to pursue any claim, demand, or cause of action
against any of the non-LLC Releasees, except pursuant to those claims that are
reserved to OMO and River Port hereunder.
4.4.4 Binding Effect of Releases. The releases by OMO and River Port
--------------------------
contained in this Agreement shall be binding upon OMO and River Port and anyone
else deriving or who might hereafter derive any rights from or through them.
Further, OMO and River Port acknowledge that it is their obligation to pay their
own attorneys' fees and agree to hold harmless and indemnify the non-
15
<PAGE>
LLC Releasees from and against any claims for such attorneys' fees which may be
due or hereafter claimed.
4.5 Reservation of Rights. Notwithstanding anything to the contrary in
---------------------
this Agreement, each Party expressly reserves all rights and any and all claims,
demands, debts, actions, causes of action, rights of indemnification, costs,
expenses and liabilities of whatsoever kind or nature, arising out of the
following:
(a) representations and warranties and obligations contained in this
Agreement;
(b) the liabilities of the respective Parties arising out of the
Transaction Documents and/or the underlying agreements being amended by the
Transaction Documents;
(c) the obligations of the respective parties under the operating
agreements of OMO and River Port that accrue after the date of this
Agreement;
(d) the Sublease; and
(e) as between Ed, International, NAG and the members of the North
Louisiana Group, the separate agreements referenced in Section 6.9 as being
signed between them.
5. COVENANTS.
---------
Ed, NAG, OMO, River Port, each member of the North Louisiana Group and
Williams hereby consent to the execution of the following described documents,
and the underlying transactions evidenced by these documents, and hereby agree
to execute, where their execution is necessary as indicated on the document, the
following described documents:
5.1 Second Amendment to Operating Agreement of OMO. The members of OMO
----------------------------------------------
and OMO shall execute the Second Amendment to Operating Agreement of OMO in the
form and substance of Exhibit 5.1 attached hereto.
-----------
5.2 First Amendment to Operating Agreement. The members of River Port
--------------------------------------
shall execute the First Amendment to Operating Agreement of River Port in the
form and substance of Exhibit 5.2 attached hereto (the "First Amendment-River
-----------
Port"). This instrument shall further terminate the effectiveness of that
letter agreement by and between NAG and Don dated July 17, 1998.
5.3 Return of Note. NAG shall deliver to Don on March 31, 1999, the
--------------
original of the Note dated April 15, 1998, in the original principal amount of
$4,000,000.00, made by Don and payable to NAG (the "Note"), which Note shall be
marked "Canceled."
5.4 Cancellation of Assignment and Security Agreement. NAG and Don shall
-------------------------------------------------
execute the Cancellation of Assignment and Security Agreement in the form and
substance of Exhibit 5.4 attached hereto
-----------
16
<PAGE>
(the "Cancellation"), which Cancellation shall further cancel the Power of
Attorney executed by Don in favor of NAG dated April 15, 1998. NAG shall further
deliver to Don on March 31, 1999, the original of Membership Interest
Certificate number 2 issued by OMO evidencing the issuance of 51 Sharing Ratios
in the name of Donald I. Williams, which certificate was pledged under that
certain Assignment and Security Agreement.
5.5 Termination of Consulting and Administrative Agreement. NAG and OMO
------------------------------------------------------
shall enter into the Termination of Consulting and Administrative Agreement in
the form and substance of Exhibit 5.5 attached hereto (the "Termination"). This
-----------
instrument shall further terminate and cancel the Consulting and Administrative
Agreement entered into by and between NAG and River Port by instrument dated
July __, 1998 [sic].
5.6 Second Amendment to Employment Agreement. OMO, River Port and Don
----------------------------------------
shall enter into the Second Amendment to Employment Agreement in the form and
substance of Exhibit 5.6 attached hereto (the "Second Amendment-Employment"),
-----------
which instrument shall cancel the effectiveness of that first amendment to the
employment agreement executed by River Port, OMO and Don in July of 1998, and
cancel the employment arrangement between Don and River Port, such that Don
shall continue as an employee of OMO, but shall not be an employee of River
Port.
5.7 Lease. NAG and its wholly owned subsidiary, Ozdon Investments, Inc.,
-----
and OMO shall enter into the lease agreement in the form and substance of
Exhibit 5.7 attached hereto (the "Gold Rush Lease").
- -----------
5.8 Amendment to Articles - OMO. NAG and Don, as appropriate, shall
---------------------------
execute the Second Amendment to Articles of Organization of OMO in the form and
substance of Exhibit 5.8 attached hereto.
-----------
5.9 Amendment to Articles - River Port. NAG and Don, as the sole members,
----------------------------------
shall execute the First Amendment to Articles of Organization of River Port in
the form and substance of Exhibit 5.9 attached hereto.
-----------
6. AGREEMENTS CONCERNING THE MANAGEMENT OF OMO AND RIVER PORT.
----------------------------------------------------------
6.1 Gold Rush. Upon the termination of the Gold Rush Lease, OMO shall
---------
convey to NAG the video gaming machines located in the Gold Rush Truck Stop, all
cash upon the premises, the Gold Rush's pro rata portion of the sweep account
maintained by OMO and all of the furniture, fixtures and equipment owned by OMO
at the Gold Rush Truck Stop, and NAG shall assume all payables related to the
operation of the Gold Rush Truck Stop. The cash to be located at the Gold Rush
Truck Stop shall be that cash that would be there in the ordinary course of
business. Prior to the termination of the Gold Rush Lease, cash shall be
removed from the Gold Rush Truck Stop only in the ordinary course of business.
17
<PAGE>
6.2 New Orleans Video Poker. The Parties acknowledge that OMO has a
-----------------------
sublease from NOVPC (the "Sublease").
6.3 River Port Residency Requirement. The portion of the Membership
--------------------------------
Interests and Sharing Ratios of River Port that are transferred by NAG to
members of the North Louisiana Group shall be restricted. Because Louisiana
residents must own more than 50% of the Membership Interests, these restricted
members shall not transfer their interest to anyone that would result in River
Port not satisfying this residency requirement.
6.4 Administration and Management. It is the goal of all of the Parties
-----------------------------
to have all of OMO's functions handled in its Louisiana office provided the
concerns set forth below are met. However, certain functions currently
performed in Dallas by the following NAG employees: Sue Feldman (Personnel
Administrator), Sally Taylor (Controller), Susan Vasquez (Corporate Operations
Administrator), Lynn McDermott (Accounting Clerk) and Kim Testa (Accounting
Clerk), shall continue to be performed by those employees for the benefit of OMO
and River Port. These employees shall remain employees of NAG, but their costs
to NAG shall be reimbursed by OMO to the extent such costs are of the type
described on Schedule 6.4.1. These monthly costs shall not exceed the amounts
--------------
set forth on Schedule 6.4.1. The functions to be performed by these employees
shall be those historically performed by them as described in Schedule 6.4.2.
--------------
Prior to April 30, 1999, or at any time thereafter, Don shall present to NAG a
proposal to cease using the Dallas employees to perform these functions and to
instead use other existing or new employees of OMO in the Louisiana office to
perform these same functions. If NAG consents to this proposal, then the change
shall be made. NAG shall not unreasonably withhold its consent to this
proposal. In determining whether or not to consent to the proposal, NAG shall
consider whether or not the functions can be performed in Louisiana at least as
efficiently as they have been performed in Dallas but on a more economic basis.
6.5 Day to Day Decisions. Mark Bellon or his replacement shall make all
--------------------
day to day on-site operational decisions in consultation with representatives of
the members of OMO. The North Louisiana Group shall be represented by one
representative, as shall NAG. Don shall represent himself unless he appoints
someone else to do so.
6.6 Administrative Fee. Certain administrative functions of River Port
------------------
will be handled by OMO employees or the Dallas NAG employees as described in
Section 6.4. River Port shall pay OMO the administrative fee described in this
Section 6.6 and in Schedule 6.6 attached hereto. If Don or any members of the
------------
North Louisiana Group or NAG (collectively, the "Members" or, individually, a
"Member") own, in the aggregate, at least twenty-five (25%) percent of the
equity interests of a video poker truck stop casino in Louisiana ("Louisiana
Casino") or in an entity that owns a Louisiana Casino, then at the request of
that Member, OMO shall perform the same administrative duties for that Louisiana
Casino that OMO and NAG have performed for OMO's truck stops out of
18
<PAGE>
the Dallas and Louisiana offices for a fee that shall depend on whether OMO is
performing the administrative work for all or just one or two of the following
elements of a truck stop casino (a) restaurant, (b) truck stop and convenience
store, and (c) gaming. The fee shall be equal to the amounts described in
Schedule 6.6. The fee shall be payable in two (2) installments per month on the
- ------------
first (1/s t/) and the fifteenth (15/th/). Notwithstanding the foregoing, the
employees at the Louisiana Casino shall not be OMO's. The rights of the Members
---
under this Section 6.6 shall not be assignable. Louisiana Casinos are not
required to use OMO for this function, but are entitled to. To the extent OMO
performs administrative work for any entities that are not owned by all of the
members of OMO, this information shall be maintained confidential to the extent
possible. OMO shall use its best efforts not to disclose information concerning
the Louisiana Casino to Members that do not own the Louisiana Casino. OMO's
obligation under this Section 6.6 to perform these administrative duties shall
terminate upon the first to occur of: (a) the consent or vote of Members of OMO
owning at least 65% of the Sharing Ratios to terminate the provision of these
services, (b) the sale by OMO of all of its truck stops or the closing of all of
OMO's truck stops, and (c) December 31, 2009. Certain functions are, or will be,
performed in Dallas for some period of time by employees of NAG for the benefit
of River Port as described in Section 6.4. OMO will reimburse NAG for the costs
of such employees as provided above in Section 6.4.
6.7 Cancellation of Subordinated Debenture, Dividends and Stock. Don
-----------------------------------------------------------
shall deliver to NAG on March 31, 1999, the original of the Subordinated
Debenture, dated June 10, 1996, in the original principal amount of $93,900,
made by NAG and payable to Don, which Subordinated Debenture shall be marked
"Canceled", and Don hereby agrees that no accrued interest thereunder shall be
due and payable by NAG and shall also be considered canceled. Don further
agrees that all accrued dividends on the Class A Preferred Stock of NAG owned by
Don prior to its conversion into common stock shall be deemed canceled and no
such dividends shall ever be required to be declared or paid to Don or any party
claiming through him. Don also agrees that all shares of common stock of NAG
owned by Don (824,000 shares), P. & J. Williams, L.L.C. (1,279,000 shares) and
New Orleans Video Poker Company, Inc. (450,000 shares) shall be deemed to be
repurchased and redeemed by NAG without further consideration on the earlier of
(i) the day following the vote by the shareholders of NAG (either at a duly
called meeting or by written consent) on the approval or ratification of such of
the transactions contemplated by this Agreement as NAG shall submit to the
shareholders for approval or ratification, or (ii) upon written notice to Don,
P. & J. Williams, L.L.C. and New Orleans Video Poker Company, Inc. that the
repurchase and redemption shall be deemed effective (the "Redemption Date"). On
the Redemption Date, Don shall deliver, and shall cause each of P. & J.
Williams, L.L.C. and New Orleans Video Poker Company, Inc. to deliver to NAG for
cancellation the original stock certificates or a Lost Stock Affidavit (without
bond or insurance being required) representing the repurchased and redeemed
shares noted above, which certificates
19
<PAGE>
shall be duly and properly endorsed reflecting NAG as the transferee. After the
date of this Agreement, Don shall not, and shall cause each of P. & J. Williams,
L.L.C. and New Orleans Video Poker Company, Inc. not to, sell, assign, pledge,
encumber, hypothecate or otherwise transfer or dispose of such repurchased and
redeemed shares, or otherwise restrict in any way his or their ability to
deliver such repurchased and redeemed shares on the Redemption Date. Don
represents and warrants to NAG that he has the power to cause, and will cause,
each of P. & J. Williams, L.L.C. and New Orleans Video Poker Company, Inc. to
comply with the provisions of this Agreement.
6.8 Payment to NAG. NAG shall use its best efforts to obtain the release
--------------
of Williams (and their affiliates, including but not limited to, P. & J.
Williams, L.L.C. and New Orleans Video Poker Company, Inc.) from Lamar Ozley,
Jeff Robinson, David McCall and Delwin Morton, and the release by Hawes, NAG,
International and all members of the North Louisiana Group of Lamar Ozley, Jeff
Robinson, David McCall and Delwin Morton. All of the releases described in the
preceding sentence shall be all encompassing, unconditional releases
(collectively, the "Releases"). At the time all of the Releases are obtained,
Don will grant a reciprocal release of Lamar Ozley, Jeff Robinson, David McCall
and Delwin Morton provided prior to this time no causes of action, third party
demands, suits or arbitrations have been filed by any of Lamar Ozley, Jeff
Robinson, David McCall and Delwin Morton against Williams (or their affiliates).
In the event NAG obtains all of these Releases prior to December 31, 2004, Don
shall pay NAG $50,000.00 per year for a period commencing on the later of (i)
1999 or (ii) the year in which the last of all of the Releases is fully signed
and delivered to Don (which year is referred to as the "Release Year") and for
each of the remaining calendar years until and including the year 2004, which
obligation shall be fulfilled by Don out of and shall be limited to
distributions (not salary) Don receives from OMO for the calendar year for which
the payment is due. If this payment is due for a calendar year, it shall be due
and payable on December 31 of that year.
During each calendar year commencing with the year 1999 that is prior to
the Release Year, until and including the year 2004, Don shall pay NAG $25,000
per year, which obligation shall be fulfilled by Don out of and shall be limited
to distributions (not salary) in excess of $200,000 (for the years 1999 through
2003) and $300,000 (for the year 2004) that Don receives from OMO for the
calendar year for which this payment is due. If this payment is due for a
calendar year, it shall be due and payable on December 31 of that year. In no
calendar year shall both the $50,000 payment and the $25,000 payment be due and
under no circumstances shall either the $50,000 payment or the $25,000 payment
be due for any calendar year after the year 2004.
6.9 Instruments between NAG and the North Louisiana Group. It is
-----------------------------------------------------
understood that NAG and members of the North Louisiana Group are executing
certain other instruments concerning the agreements between them. Those
instruments are in no way a condition
20
<PAGE>
precedent to the obligations of the Parties under this Agreement or the
Transaction Documents. However, Don does hereby consent to the transfer of
Membership Interests and Sharing Ratios in OMO and River Port by NAG on March
31, 1999, to all or certain members of the North Louisiana Group that result in
the change in ownership described below, and hereby agrees to transfer on March
31, 1999, 0.1% of his Membership Interests and Sharing Ratio in River Port to
NAG or the members of the North Louisiana Group in connection herewith. This
consent shall apply to any future transfers. The Parties hereby acknowledge that
after all such transfers, the Membership Interests and Sharing Ratios of OMO and
River Port at March 31, 1999, shall be owned as follows:
OMO
---
Membership Interests
Member and Sharing Ratios
------ ------------------
Don 51.00%
NAG 24.50%
All or certain members of
North Louisiana Group 24.50%
River Port
----------
Membership Interests
Member and Sharing Ratios
------ ------------------
Don 50.00%
NAG 25.00%
All or certain members of
North Louisiana Group 25.00%
6.10 Renewal. The Parties shall exert their best efforts to obtain a
-------
renewal of OMO's gaming license.
6.11 Transferees. The provisions of this Article 6 shall be binding on
-----------
the transferees of the Parties' Membership Interests and Sharing Ratios in OMO
and River Port.
6.12 Truckstops and Fuel Operations. To the extent that any of the
------------------------------
truckstop, convenience store, restaurant or gaming interests that are part of
what are commonly referred to among NAG, OMO and Don as King's, Longhorn,
Pelican, Diamond Jubilee and Route Operations, are held or operated in the name
of NAG, NAG shall on March 31, 1999, or sooner with the consent of NAG and Don,
assign to OMO all of NAG's right, title and interest therein subject to
obtaining any consents necessary, and OMO shall assume all payables of NAG
described on Schedule 1.9, and shall assume and thereafter be responsible for
------------
operating such truck stop, convenience store, restaurant and gaming interests in
accordance with the operative documents in place for each. If the required
consents cannot be obtained, OMO and NAG agree that they will enter into
whatever agreements as are necessary to cause OMO to receive the full
21
<PAGE>
economic benefits and be subject to the full economic burdens as if such
assignment had taken place.
6.13 Ordinary Course. NAG hereby represents and warrants to all other
---------------
Parties that since December 31, 1998, it has managed and administered, and
hereby covenants that until March 31, 1999, it will manage and administer, OMO
in OMO's ordinary course of business consistent with past practice, including,
but not limited to, the maintenance of the sweep account, the payment of
payables (e.g., the Gold Rush payables will not be paid in a preferential
manner), the retention of cash in the stores, the retention of cash in OMO bank
accounts, and the maintenance of the King's escrow account.
6.14 Springhill Bank. NAG hereby agrees to assume all indebtedness of OMO
---------------
to Regions Bank, Springhill Branch, formerly known as Springhill Bank & Trust
Company and indemnify and hold harmless OMO with respect thereto.
7. NOTICES.
-------
Any notice, demand, request, approval, consent or other communication
(collectively "Notice") concerning this Agreement or any matter arising in
connection with this Agreement shall be in writing and addressed as follows:
If to any member of the North Louisiana Group, to:
Mr. Loy F. Weaver
101 Arlington Drive
Homer, Louisiana 71040
With a copy to:
Mr. Patrick E. Henry
SHARP, HENRY, CERNIGLIA, COLVIN & WEAVER, L.L.C.
522 East Main Street
Post Office Box 239
Homer, Louisiana 71040
If to Don or Peggy, to:
Mr. Donald I. Williams
903 East Main Street
New Roads, Louisiana 70760
With a copy to:
Mr. G. Blane Clark, Jr.
KEAN, MILLER, HAWTHORNE, D'ARMOND
McCOWAN & JARMAN, L.L.P.
Post Office Box 3513
Baton Rouge, Louisiana 70821
22
<PAGE>
If to International or Ed, to:
Mr. E. H. Hawes, II
Shangri-la Resort, Vista Towers
Afton, Oklahoma 74331
If to NAG, to:
North American Gaming and
Entertainment Corporation
13150 Coit Road, Suite 125
Dallas, Texas 75240
With a copy to:
Mr. Michael D. Parsons
GLAST, PHILLIPS & MURRAY
2200 One Galleria Tower
13355 Noel Road, L.B. 48
Dallas, Texas 75240-6657
Any notice shall be given by either (i) personal delivery, in which event
it shall be deemed given on the date of delivery, or (ii) certified mail, return
receipt requested, in which event it shall be deemed given three (3) business
days after the date postmarked. Any party may change any address for the
delivery of Notice to such Party by giving notice in accordance with the
provisions of this Article 7.
8. MISCELLANEOUS
-------------
8.1 Successors. The rights and obligations of the parties under this
----------
Agreement, shall inure to the benefit of and be binding upon the parties and all
persons who succeed to their respective rights and obligations.
8.2 ENTIRE AGREEMENT; AMENDMENTS; WAIVERS. THIS AGREEMENT CONSTITUTES THE
-------------------------------------
ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE TRANSACTIONS
DESCRIBED HEREIN, SUPERSEDING ALL PRIOR NEGOTIATIONS, DISCUSSIONS, AGREEMENTS
AND UNDERSTANDINGS, WHETHER ORAL OR WRITTEN RELATING TO THE SUBJECT MATTER
HEREOF. THIS AGREEMENT MAY NOT BE AMENDED AND NO RIGHTS HEREUNDER MAY BE WAIVED
EXCEPT BY WRITTEN DOCUMENT SIGNED BY THE PARTY TO BE CHARGED WITH SUCH AMENDMENT
OR WAIVER. NO WAIVER OF ANY OF THE PROVISIONS OF THIS AGREEMENT SHALL BE DEEMED
OR SHALL CONSTITUTE A WAIVER OF ANY OTHER PROVISIONS HEREOF (WHETHER OR NOT
SIMILAR) NOR SHALL SUCH WAIVER CONSTITUTE A CONTINUING WAIVER UNLESS OTHERWISE
EXPRESSLY PROVIDED.
8.3 Counterparts. This Agreement may be signed in one or more
------------
counterparts or duplicate signature pages with the same force and effect as if
all required signatures were contained in a single
23
<PAGE>
original instrument. Any one or more such counterparts or duplicate signature
pages may be removed from any one or more original copies of this Agreement and
annexed to other counterparts or duplicate signature pages to form a completely
executed original instrument. Each Party shall sign the Agreement and where
indicated the other Transaction Documents and forward the original of same to
Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, L.L.P. who will then
forward copies of complete sets to all Parties.
8.4 Captions. The captions contained in this Agreement were inserted for
--------
the convenience of reference only. They do not in any manner define, limit or
describe the provisions of this Agreement or the intentions of the parties.
8.5 Gender/Singular/Plural. Whenever masculine, feminine, neuter,
----------------------
singular, plural, conjunctive or disjunctive terms are used in this Agreement,
they shall be construed to read in whatever form is appropriate to be this
Agreement applicable to all the parties and all circumstances, except where the
context of this Agreement clearly dictates otherwise.
8.6 Governing Law. This Agreement was prepared and negotiated in the
-------------
State of Louisiana. In the event of any dispute concerning or arising out of
this Agreement, the laws of the State of Louisiana shall govern without regard
to conflict of law principles thereof and control the construction and
enforcement of this Agreement.
8.7 Severability. In the event that one or more provisions of this
------------
Agreement or the application thereof shall be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions or any other application thereof shall in no way be affected or
impaired.
8.8 Survival of Representations. The agreements, covenants, warranties
---------------------------
and representations of the parties in this Agreement shall survive the execution
of this Agreement.
8.9 Further Acts. As may be required from time to time after January 31,
------------
1999, the Parties shall execute any other instruments or agreements as shall be
necessary to implement the transactions contemplated by this Agreement.
24
<PAGE>
STATE OF ______________
COUNTY OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
__________, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
E. H. HAWES, II
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
25
<PAGE>
STATE OF OKLAHOMA
COUNTY OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
__________, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
JANICE HAWES
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
26
<PAGE>
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at Baton Rouge,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
DONALD I. WILLIAMS
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
27
<PAGE>
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at Baton Rouge,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
MARGARET R. (PEGGY) WILLIAMS
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
28
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
O. P. PEARSON
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
29
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
ELAINE PEARSON
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
30
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
HARRY WOODALL
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
31
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
MARRY WOODALL
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
32
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
LARRY JORDAN
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
33
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
BETTY JORDAN
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
34
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES: ARLINGTON FARMS, INC.
______________________________ By:___________________________
Printed Name:______________
Title:_____________________
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
35
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
ALYSON HECKEL
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
36
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
JOSEPH HECKEL
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
37
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
CHARLES E. WEAVER
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
38
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
RAY WEAVER
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
39
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
JOYCE WEAVER
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
40
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
LOY F. WEAVER
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
41
<PAGE>
STATE OF LOUISIANA
PARISH OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
______________________________ ______________________________
CATHEY WEAVER
______________________________
______________________________
NOTARY PUBLIC
My commission expires:________
42
<PAGE>
STATE OF ______________
COUNTY OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
__________, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION, a
Delaware corporation
______________________________ By:___________________________
E. H. Hawes, II, President
______________________________
______________________________
NOTARY PUBLIC
My commission expires:__________
43
<PAGE>
STATE OF ______________
COUNTY OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
__________, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES: OM OPERATING, L.L.C., a
Louisiana limited liability
company
By: North American Gaming and
Entertainment Corporation,
Member
______________________________ By:______________________
E. H. Hawes, II,
President
______________________________
______________________________
NOTARY PUBLIC
My commission expires:__________
44
<PAGE>
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at Baton Rouge,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
OM OPERATING, L.L.C.
______________________________ By:___________________________
Donald I. Williams, Member
______________________________
______________________________
NOTARY PUBLIC
My commission expires:__________
45
<PAGE>
STATE OF ______________
COUNTY OF _____________
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at __________,
__________, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES: RIVER PORT TRUCK STOP, L.L.C.,
a Louisiana limited liability
company
By: North American Gaming and
Entertainment Corporation,
Member
______________________________ By:______________________
E. H. Hawes, II,
President
______________________________
______________________________
NOTARY PUBLIC
My commission expires:__________
46
<PAGE>
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
THUS DONE, READ AND SIGNED by the undersigned Appearer(s) at Baton Rouge,
Louisiana, this _____ day of February, 1999, before me, Notary, and the
undersigned competent witnesses, after due reading of the whole.
WITNESSES:
RIVER PORT TRUCK STOP, L.L.C.
______________________________ By:___________________________
Donald I. Williams, Member
______________________________
______________________________
NOTARY PUBLIC
My commission expires:__________
Exhibits:
5.1 Second Amendment to Operating Agreement of OMO
5.2 First Amendment to Operating Agreement of River Port
5.4 Cancellation of Assignment and Security Agreement
5.5 Termination of Consulting and Administrative Agreement
5.6 Second Amendment to Employment Agreement
5.7 Lease Agreement
5.8 Second Amendment to Articles of Organization - OMO
5.9 First Amendment to Articles of Organization - River Port
Schedules:
1.6 Description of Litigation
1.7 Description of Liens
1.9 Description of Liabilities
6.4.1 Description of Dallas Expenses
6.4.2 Description of Dallas Employees Duties
6.6 Administrative Fee
47
<PAGE>
EXHIBIT 5.1
TO RELEASE AND SETTLEMENT AGREEMENT
SECOND AMENDMENT TO OPERATING AGREEMENT
OF OM OPERATING, L.L.C.
THIS SECOND AMENDMENT TO OPERATING AGREEMENT ("Second Amendment"), is made
February 2, 1999 but to become effective as of the 31st day of March, 1999, by
and among the undersigned members of OM Operating, L.L.C. (the "Company") and
the Company.
BACKGROUND
A. The Company was formed as a Louisiana limited liability company on
April 26, 1994 pursuant to the filing of articles of organization with the
Louisiana Secretary of State's office (the "Articles").
B. The Articles were amended pursuant to those certain Amended and
Restated Articles of Organization filed with the Louisiana Secretary of State's
office on or about July 25, 1994 ("Amended Articles"), which, among other
things, amended the name of the Company to be "OM Operating, L.L.C."
C. The members of the Company executed an Operating Agreement, which
operating agreement was signed on July 18, 1994 by OM Investors, Inc., and on
another date by Don Williams (the "Operating Agreement").
D. The Operating Agreement was amended pursuant to that certain Amendment
No. One to Operating Agreement of OM Operating Company, L.L.C. dated effective
April 15, 1998, which agreement was executed by North American Gaming and
Entertainment Corporation, a Delaware Corporation ("NAG"), the successor in
interest to OM Investors, Inc., and Donald I. Williams ("Williams"), which
amendment is referred to herein as the ("First Amendment").
E. The members of the Company desire to further amend the Operating
Agreement, as previously amended pursuant to the First Amendment.
F. All terms defined in the Operating Agreement shall have the same
meaning in this Second Amendment unless otherwise defined herein.
AGREEMENT
NOW, THEREFORE, the undersigned hereby agrees as follows:
1. Amendments.
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1.1 Section 1 and Section 2 of the First Amendment shall be deemed null
and void and shall have no force or effect as if these
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sections had never been contained within the First Amendment. The Note shall be
treated as if it never existed.
1.2 NAG, Williams and OMO hereby agree that the 20% gross income
allocation in favor of NAG that is described in Section 4.1 of the Operating
Agreement is hereby deleted effective at 11:59 p.m. on March 31, 1999. The
parties hereto acknowledge and agree that the Membership Interest and Sharing
Ratios in the Company are owned 49% by NAMGC and 51% by Williams, and it is the
intent of the parties that Capital Accounts of the parties as a result of these
transactions shall be in the ratio of 49% for NAMGC and 51% for Williams for all
purposes after the effective date of this Second Amendment, without
distributions of cash or other property to either Member, and the parties hereto
agree to take such actions as is permitted under the Code and the regulations
adopted thereunder to cause the Capital Accounts to be consistent therewith;
provided, however, such actions shall not be deemed to include or require the
amendment of any prior tax return to report differently any allocations or
distributions reported therein.
1.3 The introductory paragraph of Section 4.4 is hereby amended to read as
follows:
"Distributions of available cash, less a reserve (over and above the
sweep account funds that the Company is required to maintain) equal to
$150,000.00 (subject to increase or decrease from time to time by vote of
the Members in good faith to cause such reserve to approximate the funds
necessary to operate the Company for two months) shall be distributed
monthly in the following order of priority:"
1.4 Sections 4 and 6 of the First Amendment purported to delete Sections
4.1 and 4.4.1 and all references in the Operating Agreement to the twenty (20%)
percent gross income allocation. Section 4 and Section 6 of the First Amendment
are deemed null and void such that Section 4.1, Section 4.4.1, and all
references in the Operating Agreement to the 20% gross income allocation as
provided in the Operating Agreement shall be deemed to have been in full force
and effect until 11:59 p.m. on March 31, 1999 (the "Effective Time"). Upon the
Effective Time, Section 4.1 and Section 4.4.1 and all references in the
Operating Agreement to the twenty (20%) gross income allocation shall be deleted
and shall be and is hereby amended to read as follows:
"To Williams or his successors in the amount of $4,166 per month until his
total distributions for the year equals $50,000, until the fifth
anniversary of the Effective Time, whereupon the distributions to Williams
required under this Section 4.4.1 shall cease;"
1.5 Section 4.4.3 is hereby amended to read as follows, and the paragraph
following Section 4.4.3 added in the First Amendment
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is hereby deleted effective March 31, 1999, for any allocations made for taxable
periods after March 31, 1999:
"Any remaining distribution shall be distributed to the Members in
accordance with their respective Sharing Ratios; provided, however, the
distributions made to Williams under Section 4.4.1 (including prior months)
shall be credited against Williams distributions to be made under this
Section 4.4.3 to the extent any such distributions under Section 4.4.1 have
not been previously credited against distributions under this Section
4.4.3."
1.6 Article 5 of the Operating Agreement, as previously amended, including
Sections 5.1 through 5.5, inclusive, is hereby amended in its entirety to read
as follows:
"5. MANAGEMENT. The business of the Company shall be conducted under the
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exclusive management of its Members, who shall have exclusive authority to
act for the Company in all matters. The Members from time to time, may
designate certain Members or non-Members to act for the Company in certain
matters. The following actions shall require the unanimous vote of the
Members: (i) borrowing money, which shall not be deemed to preclude
incurring trade and operating payables in the ordinary course of business;
(ii) pledging any property of the Company as collateral for any loan or
indebtedness; (iii) guaranteeing or in any other way becoming responsible
for the debt of any other party; (iv) entering into any new agreement or
modifying any existing agreement for the lease, management or operation of
any truck stop or truck stop video poker casino; (v) entering into any
agreement to acquire, own, sell or otherwise dispose of a truck stop or
truck stop video poker casino; and (vi) modifying any existing agreement,
note, loan, document or instrument to which the Company is a party or by
which it or any of its assets may be subject or bound. Don shall be
responsible for preparing (or having prepared) and presenting to the
Members at least two weeks prior to January 1 of each year a budget of the
Company's proposed operations and expenditures for the following year,
which proposed budget may be subject to question and change by the Members
prior to approval and which shall be approved by the Members on or before
January 15 of the year to which the budget relates. Once the budget has
been approved by the Members, any increase in any line item of more than 5%
shall require approval of the Members prior to implementing, incurring or
allowing such increase."
1.7 The introductory paragraph of Section 6.1 is hereby amended in its
entirety to read as follows:
"Subject to the provisions of Sections 6.4, 6.5 and 6.6, which shall
supersede the provisions of this Section 6.1, Members shall have the right
to assign or transfer all or any part of their Membership Interest
("Assignment") only in accordance with these provisions."
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1.8 Section 6.3.3, as previously amended, is further amended to change
the existing references to "NAMGC's" to references to "the other Members'."
1.9 Section 6.4 is hereby amended to delete the last sentence and to
change existing references to "NAMGC" to references to "the other Members."
1.10 The introductory paragraph of Section 6.5 is hereby amended to
replace the reference to "NAMGC and Williams (which shall be binding on his
transferees under Section 6.4" to a reference to "All Members (which shall be
binding on Williams' transferees under Section 6.4)."
1.11 Section 6.5.1 is hereby amended to change the reference to "NAMGC" to
a reference to "all other Members."
1.12 Section 6.5.2 is hereby amended in its entirety to read as follows:
"6.5.2 Loss of Suitability. In the event that any Member other than
-------------------
Williams (or his permitted transferees) fails to continue to meet the
suitability requirements under Applicable Laws, then the provisions of
Section 6.5.3 shall immediately become applicable and this non-suitable
Member shall be referred to in Section 6.5.3 as the Nonsuitable Member and
all other Members or their permitted transferees shall be referred to
individually and collectively as the Other Member.
1.13 Section 6.5.3 is hereby amended to add the following paragraph at the
end of the existing language:
"In the event there is more than one "Other Member," these persons shall
vote by eighty (80%) percent of the remaining Sharing Ratios (excluding the
Sharing Ratios held by the Nonsuitable Member)to determine the position of
the Other Member. If a vote of eighty (80%) percent of the remaining
Sharing Ratios is not obtained, the proposed Assignee shall be deemed
rejected. If the proposed Assignee is rejected, the Other Members voting
for rejection or failing to vote for approval shall deliver their reasons
to the Nonsuitable Member and the Nonsuitable Member shall retain all
rights and remedies against these Other Members but not against the
remaining Members who were willing to approve the proposed Assignee. If
the Other Member ultimately is determined to have the right to purchase the
interest of the Nonsuitable Member, they may purchase the interests on a
pro rata basis based on the Membership Interest and Sharing Ratios owned by
the Other Members that are desirous of purchasing this interest; provided,
however, that if the Nonsuitable Member is an assignee of the Membership
Interest and Sharing Ratios of NAMGC, then NAMGC shall have the right to
purchase all of the Membership Interest and Sharing Ratios of the
Nonsuitable Member."
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1.14 Section 6.6 is hereby amended to delete the second sentence in its
entirety. All the references to the assignment of the Consulting and
Administrative Agreement should also be deleted as this agreement is being
terminated. Section 6.6 is hereby further amended to add the following
paragraph at the end of the existing language.
"In the event there is more than one "Other Member", the term "Other
Member" shall mean collectively all of the Members other than the Selling
Member and the position of the Other Member shall be determined by vote of
eighty (80%) percent of the remaining Sharing Ratios (excluding the Sharing
Ratios held by the Selling Member) of the Other Members voting. If a vote
of eighty (80%) percent of the remaining Sharing Ratios is not obtained,
the proposed Purchaser shall be deemed rejected. If the proposed Purchaser
is rejected, the Other Members voting for rejection or failing to vote for
approval shall deliver their reasons to the Selling Member and the Selling
Member shall retain all rights and remedies against these Other Members but
not against the remaining Members who were willing to approve the proposed
Purchaser."
1.15 Intentionally omitted.
1.16 Section 8.5 is hereby amended by deleting the language that was added
pursuant to the First Amendment. In addition, the following language is added:
"Each Member may pursue, on his own, any opportunity, even those that come
to him in his capacity as a Member or employee of the Company, and no other
Member or the Company shall have any claim or cause of action against that
Member. This includes, but is not limited to, those projects previously
held or considered by the Company. However, no Member (or affiliate
thereof) opening a video poker truck stop facility that will not be owned
by the Company shall solicit the employment of Mark Bellon or any other
employee of the Company or River Port Truck Stop, L.L.C. ("River Port")
(including, but not limited to, employees located at King's), unless such
employee has first been terminated by the Company or River Port, as
applicable."
1.17 Section 8.16 is hereby amended to change the reference to Williams'
salary from $250,000 per year to "$250,000 per year until March 31, 1999, and
$100,000 per year thereafter," and to change the term to be one that would
expire on March 31, 2004. Also, the reference to "NAMGC" shall be changed to be
a reference to "the Members (acting by unanimous vote)." Also, the last
sentence is deleted.
1.18 Section 8.17 is hereby amended to add the following sentence:
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"The term of the Consulting and Administrative Agreement shall expire at
the Effective Time. After the Effective Time, the Consulting and
Administrative Agreement shall be of no further force or effect. NAMGC
hereby acknowledges that it has received payment of all amounts to which it
is entitled to payment under this agreement as of the date this Second
Amendment was executed and is not owed any additional money from the
Company under the Consulting and Administrative Agreement through such
date."
1.19 Section 8.18 is hereby deleted in its entirety and replaced with
"Intentionally Omitted."
1.20 Section 8.19 is hereby deleted in its entirety and replaced with
"Intentionally Omitted."
1.21 Section 8.20 is hereby deleted in its entirety and replaced with
"Intentionally Omitted."
1.22 All references in the Operating Agreement to decisions being made by
a Manager are hereby amended to require the vote or consent of the Members.
1.23 Section 2.8 is hereby amended by deleting the words "...Members
holding the requisite number of votes required to authorize such action at a
meeting of Members,..." and substituting the following words in their place
"...all of the Members,..."
1.24 Section 8.21 is hereby amended to change the reference to "NAMGC and
Williams" to reference to "All Members", and to change the reference to "NAMGC,
Williams or the Company" to a reference to "the Company or Members owning sixty-
five (65%) percent or more in Sharing Ratios."
1.25 Section 8.23 is hereby deleted in its entirety and replaced with
"Intentionally Omitted."
2. Lack of Manager. The undersigned Members of the Company hereby acknowledge
---------------
that the Company does not have a Manager at this time, and therefore, this
Second Amendment is being executed by the Members.
3. Binding Effect. Except as expressly amended herein, the Operating
--------------
Agreement, as previously amended, shall remain unchanged and in full force and
effect.
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THUS EXECUTED in the presence of the undersigned competent witnesses
effective on the 2nd day of February, 1999.
WITNESSES: NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
______________________________ By:___________________________
E. H. Hawes, II, President
______________________________ OM OPERATING, L.L.C.
BY: NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION,
Member
By:_______________________
E. H. Hawes, II,
President
WITNESSES: OM OPERATING, L.L.C.
______________________________ By:_____________________________
Donald I. Williams, Member
______________________________ ________________________________
Donald I. Williams, Individually
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EXHIBIT 5.2
TO RELEASE AND SETTLEMENT AGREEMENT
FIRST AMENDMENT TO OPERATING AGREEMENT OF
RIVER PORT TRUCK STOP, L.L.C.
This First Amendment to Operating Agreement (the "First Amendment") is made
February 2, 1999, but to become effective as of the 31st day of March, 1999, by
and among the undersigned members of River Port Truck Stop, L.L.C. (the
"Company") and the Company.
BACKGROUND
A. The Company was formed as a Louisiana limited liability company on
April 13, 1998.
B. The undersigned, constituting all of the members of the Company,
executed an Operating Agreement last dated July 24, 1998 (the "Operating
Agreement").
C. The Members of the Company desire to amend the Operating Agreement,
all as more particularly set forth in this First Amendment.
D. All terms defined in the Operating Agreement shall have the same
meaning in this First Amendment unless otherwise defined herein.
AGREEMENT
NOW, THEREFORE, the undersigned hereby agrees as follows:
1. Amendments.
----------
1.1 All references in the Operating Agreement to decisions being made by a
Manager are hereby amended to require the vote or consent of the Members.
1.2 Article 5, including Sections 5.1 through 5.5, inclusive, of the
Operating Agreement is hereby deleted in its entirety and replaced with the
following language:
"5. MANAGEMENT. The business of the Company shall be conducted under the
----------
exclusive management of its Members, who shall have exclusive authority to
act for the Company in all matters. The Members from time to time, may
designate certain Members or non-Members to act for the Company in certain
matters. The following actions shall require the unanimous vote of the
Members: (i) borrowing money, which shall not be deemed to preclude
incurring trade and operating payables in the ordinary course of business;
(ii) pledging any property of the Company as collateral for any loan or
indebtedness; (iii)
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guaranteeing or in any other way becoming responsible for the debt of any
other party; (iv) entering into any new agreement or modifying any existing
agreement for the lease, management or operation of any truck stop or truck
stop video poker casino; (v) entering into any agreement to acquire, own,
sell or otherwise dispose of a truck stop or truck stop video poker casino;
and (vi) modifying any existing agreement, note, loan, document or
instrument to which the Company is a party or by which it or any of its
assets may be subject or bound. Don shall be responsible for preparing (or
having prepared) and presenting to the Members at least two weeks prior to
January 1 of each year a budget of the Company's proposed operations and
expenditures for the following year, which proposed budget may be subject
to question and change by the Members prior to approval and which shall be
approved by the Members on or before January 15 of the year to which the
budget relates. Once the budget has been approved by the Members, any
increase in any line item of more than 5% shall require approval of the
Members prior to implementing, incurring or allowing such increase."
1.3 The introductory paragraph of Section 6.1 is hereby amended in its
entirety to read as follows:
"Subject to the provisions of Sections 6.4, 6.5 and 6.6, which shall
supersede the provisions of this Section 6.1, Members shall have the right
to assign or transfer all or any part of their Membership Interest
("Assignment") only in accordance with these provisions."
1.4 Section 6.3.3 is further amended to change the existing references to
"NAMGC's" to references to "the other Members'".
1.5 Section 6.4 is hereby amended to delete the last sentence and to
change existing references to "NAMGC" to references to "the other Members."
1.6 The introductory paragraph of Section 6.5 is hereby amended to replace
the reference to "NAMGC and Williams (which shall be binding on his transferees
under Section 6.4)" to a reference to "All Members (which shall be binding on
Williams' transferees under Section 6.4)."
1.7 Section 6.5.1 is hereby amended to change the reference to "NAMGC" to
a reference to "all other Members."
1.8 Section 6.5.2 is hereby amended in its entirety to read as follows:
"6.5.2 Loss of Suitability. In the event that any Member other than
-------------------
Williams (or his permitted transferees) fails to continue to meet the
suitability requirements under Applicable Laws, then the provisions of
Section 6.5.3 shall immediately
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become applicable and this non-suitable Member shall be referred to in
Section 6.5.3 as the Nonsuitable Member and all other Members or their
permitted transferees shall be referred to individually and collectively as
the Other Member.
1.9 Section 6.5.3 is hereby amended to add the following paragraph at the
end of the existing language:
"In the event there is more than one "Other Member," these persons shall
vote by eighty (80%) percent of Sharing Ratios to determine the position of
the Other Member. If a vote of eighty (80%) of the remaining sharing
Ratios is not obtained, the proposed Assignee shall be deemed rejected. If
the proposed Assignee is rejected, the Other Members voting for rejection
or failing to vote for approval shall deliver their reasons to the
Nonsuitable Member and the Nonsuitable Member shall return all rights and
remedies against those Other Members but not against the remaining Other
Members who were willing to approved the proposed Assignee. If the Other
Member ultimately is determined to have the right to purchase the interest
of the Nonsuitable Member, they may purchase the interests on a pro rata
basis based on the Membership Interest and Sharing Ratios owned by the
Other Members that are desirous of purchasing this interest; provided,
however, that if the Nonsuitable Member is an assignee of the Membership
Interest and Sharing Ratios of NAMGC, then NAMGC shall have the right to
purchase all of the Membership Interest and Sharing Ratios of the
Nonsuitable Member."
1.10 Section 6.6 is hereby amended to delete the second sentence in its
entirety. All the references to the assignment of the Consulting and
Administrative Agreement should also be deleted as this agreement is being
terminated. Section 6.6 is hereby further amended to add the following
paragraph at the end of the existing language.
"In the event there is more than one "Other Member", the term "Other
Member" shall mean collectively all of the Members other than the Selling
Member and the position of the Other Member shall be determined by vote of
eighty (80%) percent of the remaining Sharing Ratios (excluding the Sharing
Ratios held by the Selling Member) of the Other Members voting. If a vote
of eighty (80%) percent of the remaining Sharing Ratios is not obtained,
the proposed Purchaser shall be deemed rejected. If the proposed Purchaser
is rejected, the Other Members voting for rejection or failing to vote for
approval shall deliver their reasons to the Selling Member and the Selling
Member shall retain all rights and remedies against these Other Members but
not against the remaining Members who were willing to approve the proposed
Purchaser."
1.11 Intentionally Omitted.
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1.12 The following language in Section 8.5 is hereby deleted:
"Except as provided in that certain Operating Agreement, as amended, of OM
Operating, L.L.C., to which NAMGC and Williams are parties."
In addition the following language is hereby added at the end of the
existing language:
"Each Member may pursue, on his own, any opportunity, even those that come
to him in his capacity as a Member or employee of the Company, and no other
Member or the Company shall have any claim or cause of action against that
Member. This includes, but is not limited to, those projects previously
held or considered by the Company. However, no Member (or affiliate
thereof) opening a video poker truck stop facility that will not be owned
by the Company shall solicit the employment of Mark Bellon or any other
employee of the Company or OM Operating, L.L.C. ("OM")(including, not
limited to, employees located at King's), unless such employee has first
been terminated by the Company or OM, as applicable."
1.13 Section 8.16 is hereby amended to add the following sentence:
"The employment agreement between the Company and Williams shall be
terminated as of January 31, 1999."
1.14 Section 8.17 is hereby amended to add the following sentence:
"The Consulting and Administrative Agreement shall be terminated as of
March 31, 1999."
1.15 Section 8.18 is hereby amended to replace the references to "NAMGC and
Williams" to references to "all Members" and the reference to "NAMGC, Williams
or the Company" to a reference to "the Company or Members owning at least 65% in
Sharing Ratios."
1.16 Section 2.8 is hereby amended by deleting the words "...Members
holding the requisite number of votes required to authorize such action at a
meeting of Members,..." and substituting the following words in their place
"...all of the Members,..."
1.17 Section 4.3 is amended to delete the paragraph following Section
4.3.2.
2. Letter Agreement. The letter agreement between North American Gaming and
----------------
Entertainment Corporation and Donald I. Williams dated July 17, 1998, is hereby
terminated and of no further force or effect.
3. Lack of Manager. The undersigned Members of the Company hereby acknowledge
---------------
that the Company does not have a Manager at this
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time, and therefore, this First Amendment is being executed by the Members.
4. Binding Effect. Except as expressly amended herein, the Operating
--------------
Agreement, as previously amended, shall remain unchanged and in full force and
effect.
THUS EXECUTED in the presence of the undersigned competent witnesses
effective on the 2nd day of February, 1999.
WITNESSES: NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
______________________________ By:_____________________________
E. H. Hawes, II, President
______________________________ RIVER PORT TRUCK STOP, L.L.C.
BY: NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION,
Member
By:________________________
E. H. Hawes, II,
President
WITNESSES: RIVER PORT TRUCK STOP, L.L.C.
______________________________ By:_____________________________
Donald I. Williams, Member
______________________________ ________________________________
Donald I. Williams, Individually
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EXHIBIT 5.4
TO RELEASE AND SETTLEMENT AGREEMENT
CANCELLATION OF ASSIGNMENT AND SECURITY AGREEMENT
THIS CANCELLATION OF COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT (the
"Cancellation") is made February 2, 1999 but to become effective as of the 31st
day of March, 1999 (the "Effective Date"), by and between:
DONALD I. WILLIAMS, an individual of the full age of majority, domiciled in
the Parish of Point Coupee, State of Louisiana, married to and living with
Margaret R. Williams, and whose social security number is ###-##-####, and
whose mailing address is 903 East Main Street, New Roads, Louisiana 70760
("Don"); and
NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION, a corporation
organized under the laws of the State of Delaware, whose taxpayer
identification number is 75-2571032, and whose mailing address is 13150
Coit Road, Suite 125, Dallas, Texas 75240, represented herein by its duly
authorized President, E. H. Hawes, II ("NAG").
BACKGROUND
A. NAG and Don entered into that certain Assignment and Security
Agreement dated effective April 15, 1998 (the "Assignment")
B. Pursuant to the Assignment, Don granted NAG a security interest in his
Membership Interest and Sharing Ratios in OM Operating, L.L.C. ("OMO") as
collateral for certain indebtedness.
C. NAG and Don are desirous of terminating the effect of the Assignment.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged, NAG and
Don hereby make and issue this cancellation on the following terms and
conditions:
1. CANCELLATION.
------------
1.1 Promissory Note. NAG and Don hereby cancel the effect of that certain
---------------
Note, dated April 15, 1998, in the original principal amount of Four Million and
No/100 ($4,000,000.00) Dollars, made by Don, payable to NAG (the "Note"), as if
the Note had never been executed. The Note shall be deemed to be null and void
and of no force or effect.
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1.2 Assignment. NAG and Don do each agree that the Assignment is canceled
----------
and that Don is released from all of his obligations as set out in the
Assignment. NAG hereby releases, terminates and cancels the Assignment in its
entirety. The parties do each acknowledge and agree that they, individually and
collectively, have no remaining rights or obligations under the Assignment and
that the Assignment no longer encumbers or otherwise affects the Membership
Interest or Sharing Ratios of Don in OMO in any way. NAG shall deliver to Don
on the Effective Date the original of Membership Certificate number 2 issued by
OMO in the name of Donald I. Williams evidencing 51 Sharing Ratios.
1.3 Power of Attorney. NAG and Don further hereby terminate the effect of
-----------------
that certain Power of Attorney executed by Donald I. Williams in favor of NAG,
dated April 15, 1998.
2. INSTRUCTIONS TO UCC FILING CLERK.
--------------------------------
To the extent that NAG or any other person filed a UCC-1 financing
statement to evidence the Assignment, NAG hereby agrees to file the necessary
UCC-3 termination statement to terminate the effectiveness of the Assignment.
3. GOVERNING LAW.
-------------
This Cancellation shall be construed in accordance with and governed by the
laws of the state of Louisiana, without regard to conflict of law principles
thereof.
4. COUNTERPARTS.
------------
This Cancellation may be signed in one or more counterparts, each of which
shall be an original and all of which shall constitute one in the same
instrument.
5. HEADINGS.
--------
The headings of the several sections of this Cancellation have been
prepared for convenience of reference only and shall not control, affect the
meaning of, or be taken as an interpretation of any provisions of this
Cancellation.
THUS DONE AND SIGNED in the presence of the undersigned competent
witnesses, effective the 2nd day of February, 1999.
WITNESSES: NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
______________________________ By:_____________________________
E. H. Hawes, II, President
______________________________
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WITNESSES:
______________________________ ________________________________
Donald I. Williams, Individually
______________________________
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EXHIBIT 5.5
TO RELEASE AND SETTLEMENT AGREEMENT
TERMINATION OF CONSULTING AND ADMINISTRATIVE AGREEMENT
THIS TERMINATION OF CONSULTING AND ADMINISTRATIVE AGREEMENT (the
"Termination") is made February 2, 1999 but to become effective as of the 31/st/
day of March, 1999, by and among:
NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION, a corporation
organized under the laws of the State of Delaware, whose taxpayer
identification number is 75-2571032, and whose mailing address is 13150
Coit Road, Suite 125, Dallas, Texas 75240, represented herein by its duly
authorized President, E. H. Hawes, II ("NAG");
OM OPERATING, L.L.C., a limited liability company organized under the laws
of the State of Louisiana, whose taxpayer identification number is
____________, and whose mailing address is 13150 Coit Road, Suite 125,
Dallas, Texas 75240, represented herein by its sole and only members,
Donald I. Williams and NAG ("OMO"); and
RIVER PORT TRUCK STOP, L.L.C., a limited liability company organized under
the laws of the State of Louisiana, whose taxpayer identification number is
____________, and whose mailing address is 13150 Coit Road, Suite 125,
Dallas, Texas 75240, represented herein by its sole and only members,
Donald I. Williams and NAG ("River Port").
BACKGROUND
A. NAG and OMO entered into that certain Consulting and Administrative
Agreement, dated effective April 15, 1998 (the "C&A Agreement").
B. NAG and River Port Truck Stop, L.L.C. entered into a Consulting and
Administrative Agreement, dated July ___, 1998, that referenced this C&A
Agreement (the "River Port C&A Agreement").
C. NAG and OMO are desirous of terminating the effectiveness of the C&A
Agreement.
D. NAG and River Port are desirous of terminating the effectiveness of
the River Port C&A Agreement.
E. The parties wish to enter into this Termination in order to terminate
the C&A Agreement and the River Port C&A Agreement.
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AGREEMENT
NOW, THEREFORE, based on the mutual covenants and considerations expressed
herein, the parties hereby agree as follows:
1. Termination. The parties hereto agree that, effective as of March 31,
-----------
1999, the C&A Agreement and the River Port C&A Agreement shall terminate and no
party hereto shall have any further liability to the other under either the C&A
Agreement or the River Port C&A Agreement.
2. Binding Effect. This Termination shall be binding upon and shall
--------------
inure to the benefit of the parties hereto, their heirs, successors and assigns.
3. Non-Assignment. Each of the parties hereto represents and warrants to
--------------
the others that they have not assigned any of their rights or obligations under
the C&A Agreement or the River Port C&A Agreement to any other person.
4. Governing Law. This Termination shall be construed in accordance with
-------------
and governed by the laws of the state of Louisiana, without regard to conflict
of law principles thereof.
5. Counterparts. This Termination may be signed in one or more
------------
counterparts, each of which shall be an original and all of which shall
constitute one in the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Termination to be
executed as of February 2, 1999.
WITNESSES: RIVER PORT TRUCK STOP, L.L.C.
______________________________ By:_____________________________
Donald I. Williams, Member
______________________________
OM OPERATING, L.L.C.
By:_____________________________
Donald I. Williams, Member
WITNESSES: NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
______________________________ By:_____________________________
E. H. Hawes, II, President
______________________________
2
<PAGE>
RIVER PORT TRUCK STOP, L.L.C.
By: North American Gaming and
Entertainment Corporation,
Member
By:________________________
E. H. Hawes, II,
President
OM OPERATING, L.L.C.
By: North American Gaming and
Entertainment Corporation,
Member
By:________________________
E. H. Hawes, II,
President
3
<PAGE>
EXHIBIT 5.6
TO RELEASE AND SETTLEMENT AGREEMENT
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") is
made February 2, 1999 but to become effective as of the 31st day of March, 1999
(the "Effective Date"), by and among:
DONALD I. WILLIAMS, an individual of the full age of majority, domiciled in
the Parish of Pointe Coupee, State of Louisiana, married to and living with
Margaret R. Williams, and whose social security number is ###-##-####, and
whose mailing address is 903 East Main Street, New Roads, Louisiana 70760
("Don");
RIVER PORT TRUCK STOP, L.L.C., a limited liability company organized under
the laws of the State of Louisiana, whose taxpayer identification number is
____________, and whose mailing address is 13150 Coit Road, Suite 125,
Dallas, Texas 75240, represented herein by its sole and only members, Don
and NAG ("River Port"); and
OM OPERATING, L.L.C., a limited liability company organized under the laws
of the State of Louisiana, whose taxpayer identification number is
____________, and whose mailing address is 13150 Coit Road, Suite 125,
Dallas, Texas 75240, represented herein by its sole and only members, Don
and NAG ("OMO").
BACKGROUND
A. Don and OMO entered into that certain Employment Agreement dated
effective April 15, 1998 (the "Employment Agreement").
B. The Employment Agreement was amended pursuant to that certain
Amendment to Employment Agreement (the "First Amendment") dated July __, 1998
[sic] by and among River Port, OMO and Don.
C. The undersigned parties desire to amend certain provisions of the
Employment Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, Don, OMO and River Port agree as follows:
1
<PAGE>
1. Amendments.
----------
1.1 The effect of the First Amendment shall be deemed terminated and of no
force or effect, and neither party shall have any rights or obligations under
said First Amendment from the Effective Date forward.
1.2 Section 2.02 of the Employment Agreement is hereby amended in its
entirety to read as follows:
"EMPLOYEE shall have those duties assigned to it by the unanimous vote of
the Members of OMO, with respect to which, Don shall be entitled to vote.
Don shall report all efforts that he undertakes to Mark Bellon or Mark's
successor. It is understood that EMPLOYEE may own his own video poker
truck stop locations or other business enterprises. In the event EMPLOYEE
or his Affiliates do own video poker truck stop locations, then EMPLOYEE
shall be permitted to spend time in the management and operation of those
locations. "
1.3 Section 3.01 of the Employment Agreement is hereby amended to read as
follows:
"3.01 Term. The term of the EMPLOYEE's employment hereunder shall
----
commence on the Effective Date and terminate on March 31, 2004."
1.4 Section 3.03 of the Employment Agreement is hereby amended by deleting
the paragraph following the indented language and replacing it with the
following:
"Prior to declaring the EMPLOYEE in default and sending him a notice of
termination under this Section 3.03, EMPLOYER shall give EMPLOYEE written
notice of the alleged defaults and fifteen (15) days to cure the alleged
defaults. In the event EMPLOYEE fails to cure the alleged defaults in this
time period, then EMPLOYER shall be entitled to terminate this Agreement."
1.5 Section 3.04 of the Employment Agreement is hereby amended to delete
subsection (a) and to replace it with "Intentionally omitted."
1.6 Section 4.01 of the Employment Agreement is hereby amended to replace
the reference to "$250,000.00" with a reference to "$250,000.00 until March 31,
1999, and $100,000.00 after March 31, 1999," and to delete the sentence
following the reference to "250,000.00."
1.7 Section 4.02(d) of the Employment Agreement is hereby amended to
replace the reference to "$175,000.00" to a reference to "$100,000.00".
2
<PAGE>
1.8 Sections 5.03, 5.04 and 5.05 of the Employment Agreement are hereby
amended to delete the existing language and to replace it with "Intentionally
omitted."
2. Binding Effect. Except as expressly amended herein, the Employment
--------------
Agreement shall remain unchanged and in full force and effect.
3. Governing Law. This Second Amendment shall be construed in accordance with
-------------
and governed by the laws of the State of Louisiana, without regard to conflict
of law principles thereof.
4. Counterparts. This Second Amendment may be signed in one or more
------------
counterparts, each of which shall be an original and all of which shall
constitute one in the same instrument.
THUS DONE AND SIGNED by OMO, River Port and Don in the presence of the
undersigned competent witnesses effective on the 2nd day of February, 1999.
WITNESSES: OM OPERATING, L.L.C.
______________________________ By:_____________________________
Donald I. Williams, Member
______________________________ RIVER PORT TRUCK STOP, L.L.C.
By:_____________________________
Donald I. Williams, Member
________________________________
Donald I. Williams, Individually
WITNESSES: NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
______________________________ By:_____________________________
E. H. Hawes, II, President
______________________________ OM OPERATING, L.L.C.
By: North American Gaming and
Entertainment Corporation,
Member
By:________________________
E. H. Hawes, II,
President
3
<PAGE>
RIVER PORT TRUCK STOP, L.L.C.
By: North American Gaming and
Entertainment Corporation,
Member
By:________________________
E. H. Hawes, II,
President
4
<PAGE>
EXHIBIT 5.7
TO RELEASE AND SETTLEMENT AGREEMENT
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is entered into by and between North
American Gaming and Entertainment Corporation and its wholly owned subsidiary
Ozdon Investments, Inc. (collectively referred to herein as "Landlord") and OM
Operating, L.L.C. ("Tenant") effective as of March 31, 1999 (the "Effective
Date").
R E C I T A L S:
---------------
1. Leased Premises.
(a) Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the land and improvements located at the address commonly known as
8412 I-49 North Service Road, Opelousas, Louisiana and more particularly
described on Exhibit No. I attached hereto (hereinafter referred to as the
"Leased Premises"), which Leased Premises are commonly known as The Gold
Rush Truck Stop and Video Poker Casino. The lease of the Leased Premises
is expressly made subject to the first lien held by Springhill Bank & Trust
Company and the second lien held by A. Keith Weber and E.H. Hawes II.
(b) The Leased Premises are delivered to Tenant and are being leased
"AS IS" and "WITH ALL FAULTS," and Landlord makes no representation or
warranty of any kind, expressed or implied, with respect to the condition
of the Leased Premises (including habitability, fitness or suitability for
particular purpose of the Leased Premises, or that the Leased Premises or
the improvements to the Leased Premises have been constructed in a good and
workmanlike manner). TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
LANDLORD HEREBY DISCLAIMS, AND TENANT WAIVES THE BENEFIT OF, ANY AND ALL
EXPRESS, IMPLIED OR STATUTORY WARRANTIES, INCLUDING IMPLIED WARRANTIES OF
HABITABILITY, FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE, OR THAT
THE LEASED PREMISES OR THE IMPROVEMENTS IN THE LEASED PREMISES HAVE BEEN
CONSTRUCTED IN A GOOD AND WORKMANLIKE MANNER. TENANT EXPRESSLY
ACKNOWLEDGES THAT LANDLORD DID NOT CONSTRUCT OR APPROVE THE QUALITY OF
CONSTRUCTION OF THE LEASED PREMISES.
2. Term. The term of this Lease ("Term") shall be for a period
commencing as of the Effective Date and terminating on September 30, 1999 and
shall continue thereafter until terminated, with or without cause, by either
party on sixty (60) days' prior written notice, provided, either party may give
notice of termination at any time on or after the date which is sixty (60) days
prior to September 30, 1999. Notwithstanding anything to the contrary contained
herein, in the event that the Louisiana Gaming
1
<PAGE>
Control Board or other applicable governmental authority revokes or suspends or
fails to renew Tenant's license to operate video poker devices on the Leased
Premises, Tenant may terminate this Lease upon written notice to Landlord.
3. Intentionally omitted.
4. Rent And Other Amounts Payable By Tenant.
(a) As base rental for the lease and use of the Leased Premises ("Base
Rent"), Tenant will pay Landlord at the Landlord's office or other location
as Landlord may direct, without demand and without deduction, abatement or
setoff (except as otherwise expressly provided for in Paragraph 8 or
Paragraph 17), the Base Rent in the amount of Thirty-Three Thousand, Three
Hundred Thirty-Three and 33/One Hundred Dollars ($33,333.33) per month of
this Lease, payable in advance on the first day of each calendar month, for
each and every month in the Term, in lawful money of the United States,
commencing April 1, 1999. If the Term does not end on the last day of a
calendar month, Tenant will pay in advance a pro rata part of such sum as
Base Rent for such partial month, which pro rata amount shall be figured on
a per diem basis. All past due installments of Base Rent shall bear
interest at the rate indicated in Paragraph 33 from the date due until
paid.
(b) Tenant shall pay, before delinquency, all taxes, fees or charges,
rates, duties and assessments that are imposed, levied or assessed directly
against Tenant, or assessed against the Leased Premises or any equipment,
furniture, movable trade fixtures and other personal property located in
the Leased Premises. Tenant shall also pay, before delinquency, business
and other taxes, fees or charges, rates, duties and assessments imposed,
levied or assessed because of Tenant's occupancy of the Leased Premises or
on the business or income of Tenant generated from the Leased Premises.
5. Use. Tenant shall be entitled to use the Leased Premises solely for
the purpose of operating a qualified truck stop facility and video poker casino
in full compliance with all applicable local, state and federal laws, rules,
regulations and ordinances; and Tenant expressly covenants and agrees to operate
the truck stop and video poker casino facility in such a manner as to allow
Tenant to operate the maximum number of video poker devices allowed by law (the
current maximum allowed is fifty (50) devices). In addition, Tenant covenants
and agrees to operate its approved business in a reputable and efficient manner.
6. Services To Be Provided by Landlord.
(a) Landlord shall be solely responsible for maintaining and repairing
the foundation, outer walls and roof of the Leased Premises and all other
major repairs and replacements,
2
<PAGE>
and Tenant shall be responsible for all other operations of the Leased
Premises including nonmajor repairs and maintenance of all other areas of
the Leased Premises and the maintenance of utilities and other services to
the Leased Premises. Landlord will also make any repairs to the Leased
Premises required because of negligence or willful misconduct of Landlord
or because of structural defects in the Leased Premises or any other major
repairs or replacements. For purposes of this Lease, "structural defects"
shall be limited to defects in the foundation and in the load bearing
components of walls, columns and other supports (such as studs within load
bearing walls). Repairs, if any, required because of the failure of the
foundation to withstand any movement of the soil under or around the Leased
Premises as a result of changes in moisture saturation shall also be deemed
to be caused by "structural defects".
(b) No interruption, moratorium or malfunction of any services, or
failure of any machinery, equipment or systems, or components thereof, to
operate, or malfunction in the operation thereof, for any cause whatsoever
shall constitute an eviction or disturbance of Tenant's use and possession
of the Leased Premises or a breach by Landlord of any of its obligations
hereunder or render Landlord liable for damages or entitle Tenant to be
relieved from any of its obligations hereunder (including the obligation to
pay Base Rent) or grant Tenant any right of setoff or recoupment.
(c) Tenant shall also pay for, before delinquencies, the cost or
charge for all other materials and services not expressly the obligation of
Landlord that are furnished to Tenant or used on, in or about the Leased
Premises by Tenant during the Term of this Lease.
7. Repair and Maintenance.
(a) Except for the maintenance and repairs which are the
responsibility of Landlord, Tenant shall maintain the Leased Premises,
including all fixtures installed by Tenant, in good and tenantable
condition and repair and shall promptly make all necessary repairs and
replacements thereto, including, without limitation, those caused by fire
or other casualty, all at Tenant's sole expense, under the supervision and
with the approval of Landlord. Such repairs and replacements shall be in
quality and class equal to the original work. Without diminishing such
obligations of Tenant, if Tenant fails to make such repairs or replacements
within fifteen (15) days after the occurrence of the damage or injury,
Landlord may at its option make such repair and Tenant shall pay Landlord
for the cost thereof upon demand, plus interest thereon, as provided in
this Lease, from demand until payment. In addition, Tenant shall pay the
cost of repair and replacement due to damage or injury done to the Leased
Premises or any part thereof or any part of the Leased Premises, by Tenant
or
3
<PAGE>
Tenant's agents, employees, contractors, licensees or invitees. Such amount
shall be paid by Tenant to Landlord upon demand, plus interest thereon, as
provided in this Lease, from demand until payment. Upon termination of this
Lease, Tenant will surrender the Leased Premises to Landlord in the same
condition in which they existed at the commencement of the Lease or as
subsequently improved by Landlord or Tenant, excepting only ordinary wear
and tear, condemnation and damage required hereunder to be repaired at
Landlord's expense.
(b) Tenant acknowledges that it has inspected the Leased Premises and
Tenant's taking possession of the Leased Premises shall be conclusive
evidence as against the Tenant that the Leased Premises were in good order
and satisfactory condition when the Tenant took possession. No promise of
the Landlord to alter, remodel, repair or improve the Leased Premises and
no representation respecting the condition of the Leased Premises have been
made by Landlord to Tenant.
(c) Landlord makes no representations or warranties that the Leased
Premises, as presently constructed and improved or as same shall be
constructed or improved in accordance with this Lease, are in compliance
with, or shall subsequently comply with, any statutory or regulatory
requirements that may be applicable to the Leased Premises, Tenant or
Landlord. In the event that, in order for the Tenant to operate its
business within the Leased Premises, alterations or improvements must be
made to the Leased Premises to cause same to come into compliance with any
statutory or regulatory requirement, such alterations and improvements
shall be subject to Landlord's prior written approval, and they shall be
made at the sole cost and expense of Landlord. In the event that the
Tenant continues to operate its business within the Leased Premises in
violation of any statutory or regulatory requirement, the Tenant agrees to
indemnify and hold Landlord harmless of, from and against any and all
losses, costs and expenses (including, but not limited to reasonable
attorneys' fees) which may be incurred by the Landlord as a result of such
failure to comply with any statutory or regulatory requirements. In the
event that the Leased Premises, or any portion or aspect of any of them is
determined to fail to comply with any statutory or regulatory requirement,
such failure of compliance shall not constitute a default or a failure of
performance on the part of the Landlord pursuant to the terms and
provisions of this Lease.
8. Insurance; Fire and Other Casualty.
(a) Tenant shall maintain, at its sole cost and expense, fire and
extended coverage insurance on the Leased Premises in an amount not less
than the "replacement cost" thereof, as defined in a replacement cost
endorsement to be attached thereto. Each such insurance policy shall name
the Landlord
4
<PAGE>
as the insured and shall be for Landlord's benefit and under Landlord's
sole control.
(b) If at any time during the Term, the Leased Premises or any portion
thereof shall be damaged or destroyed by fire or other casualty, then
Landlord shall have the election either (i) to terminate this Lease and
retain all insurance proceeds or (ii) to repair and reconstruct the Leased
Premises to substantially the same condition in which they existed
immediately prior to such damage or destruction, except that under no
circumstances shall Landlord be required to repair, replace or reconstruct
any property, furniture or trade fixtures owned by Tenant. If Landlord
elects to repair and reconstruct the premises, Landlord shall be entitled
to the full amount of the insurance proceeds on the policies maintained by
Tenant for Landlord's benefit.
(c) In any of the aforesaid circumstances described in Paragraph 8(b),
Base Rent shall abate proportionately during the period and to the extent
that the Leased Premises or portion thereof are untenantable or unfit for
use by Tenant in the ordinary conduct of its business. If Landlord has
elected to repair and restore the Leased Premises to the extent stated
above, this Lease shall continue in full force and effect and such repairs
shall be made by Landlord as soon as reasonably possible, time being of the
essence.
(d) Notwithstanding the provisions of Subparagraphs (b) and (c) of
this Paragraph 8, if the Leased Premises or any portion of the Leased
Premises is damaged by fire or other casualty resulting from the fault or
negligence of Tenant or any of Tenant's agents, employees, contractors,
licensees or invitees, the Base Rent hereunder shall not be diminished
during the repair of such damage.
(e) Notwithstanding anything herein to the contrary, if Landlord's
Mortgagee requires that the insurance proceeds be applied to indebtedness
owed to such mortgagee, Landlord may terminate this Lease by delivering
written notice of termination to Tenant within three (3) days after the
requirement is made by Landlord's Mortgagee, whereupon all further rights
and obligations of each party hereunder shall cease and terminate.
9. Compliance with Laws and Usage. Tenant, at its own expense, except as
set forth in Paragraph 7(c) herein, will (i) promptly comply with all federal,
state, municipal and other laws, ordinances, rules and regulations applicable to
the Leased Premises and the business conducted therein by Tenant; (ii) not
engage in any activity which would cause Tenant's fire and extended coverage
insurance to be canceled or the rate therefor to be increased (unless Tenant
timely pays any such increase); (iii) not commit any act which is a nuisance,
disturbance or annoyance to Landlord, or which might, in the judgment of
Landlord, damage
5
<PAGE>
Landlord's good will or reputation or tend to injure or depreciate the Leased
Premises; (iv) not commit or permit waste in the Leased Premises; and (v) not
paint, erect or display any sign, advertisement, placard or lettering on the
Leased Premises without Landlord's prior written approval.
10. Indemnity. Landlord shall not be liable for and Tenant agrees to
indemnify and save harmless Landlord and its affiliates and their agents,
servants, directors, officers and employees (collectively "Indemnitees") from
and against any and all liabilities, damages, claims, suits, costs (including
costs of suit, attorneys' fees and costs of investigation) and actions of any
kind arising or alleged to arise by reason of injury to or death of any person
or damage to or loss of property occurring on, in, or about the Leased Premises
or by reason of any other claim whatsoever of any person or party occasioned or
alleged to be occasioned by any negligent or grossly negligent act or omission
on the part of Tenant or any invitee, patron, licensee, employee, director,
officer, agent, servant, owner, contractor, subcontractor, or tenant of Tenant,
or on the part of any person entering the Leased Premises under the expressed or
implied invitation of Tenant, or by any breach, violation or nonperformance of
any covenant of Tenant under this Lease. If any action or proceeding shall be
brought by or against any Indemnitee in connection with any such liability or
claim, Tenant, on notice from the Indemnitee, shall defend such action or
proceeding, at Tenant's expense, by or through attorneys reasonably satisfactory
to the Indemnitee. The provisions of this Paragraph shall apply to all
activities of Tenant with respect to the Leased Premises, whether occurring
before or after execution of this Lease. Tenant's obligations under this
Paragraph shall not be limited to the limits or coverage of insurance maintained
or required to be maintained by Tenant under this Lease.
11. Waiver of Liability. No Indemnitee shall be liable in any manner to
Tenant or any other person or party for any injury to or death of persons or for
any loss of or damage to property of Tenant, its employees, agents, customers,
invitees or to others, regardless of whether such property is entrusted to
employees of the Leased Premises or such loss or damage is occasioned by
casualty, theft or any other cause of whatsoever nature, unless caused by the
willful misconduct or gross negligence of the particular Indemnitee. In no
event shall any Indemnitee be liable in any manner to Tenant or any other person
or party as the result of the acts or omissions of Tenant, its agents,
employees, contractors, invitees, patrons, licensees, directors, officers,
tenants, or any person or party entering the Leased Premises under the expressed
or implied invitation of Tenant. All personal property upon the Leased Premises
shall be at the risk of Tenant only, and no Indemnitee shall be liable for any
damage thereto or theft thereof, whether or not due in whole or in part to the
negligence of any Indemnitee.
6
<PAGE>
12. Waiver of Subrogation. Regardless of fault or negligence, Landlord
and Tenant hereby waive any claim arising in favor of one against the other, or
anyone claiming through either, by way of subrogation or otherwise, for any loss
of or damage to any property of either which loss or damage is covered under
their respective casualty insurance policies (including extended coverage or
any such policies maintained on their behalf under the terms of this Lease).
Said waiver shall be in addition to any other waiver or release contained in
this Lease with regard to loss or damage to property of either. Landlord and
Tenant each shall request its insurer to consent to such waiver and agree to
waive all rights of subrogation against the other party, and Tenant shall
provide Landlord with all endorsements necessary to evidence the consent of its
insurer.
13. Additional Tenant's Insurance. Tenant shall also maintain at all
times during the term of this Lease, at Tenant's expense: (i) Commercial General
Liability Insurance including Bodily Injury and Property Damage Liability on an
occurrence basis with respect to Tenant's business and occupancy of the Leased
Premises with policy limits and deductibles satisfactory to Landlord from time
to time; (ii) Worker's Compensation Insurance for all Tenant's employees working
in the Leased Premises in an amount sufficient to comply with applicable laws or
regulations; (iii) Business Interruption Insurance in an amount sufficient to
reimburse Tenant for direct or indirect loss of at least twelve months' earnings
attributable to perils commonly insured against by prudent tenants or
attributable to prevention of access to the Leased Premises as a result of such
perils; and (iv) Insurance against such other perils and in such amounts as
Landlord may from time to time reasonably require in writing. Such request
shall be made on the basis that the insurance coverage requested is customary at
the time for prudent tenants engaged in the business in which Tenant is engaged.
All policies of insurance maintained by Tenant shall (i) be in a form and
substance reasonably acceptable to Landlord; (ii) be issued by an insurer
licensed to do business in the state in which the Leased Premises are situated
and which insurer shall otherwise be reasonably acceptable to Landlord; (iii)
require at least thirty (30) days written notice to Landlord before termination
or material alteration; and (iv) with respect to insurance, required under
subparagraphs (i) and (iii), name Landlord and Landlord's Mortgagee as an
"additional insured". Tenant shall, upon the commencement of the Term of this
Lease and thereafter within thirty (30) days prior to the expiration of each
such policy, promptly deliver to Landlord certified copies or other evidence of
such policies and evidence satisfactory to Landlord that all premiums have been
paid and the policies are in effect. Tenant shall provide Landlord with an
original certificate of insurance upon execution of this Lease. If Tenant fails
to comply with the insurance requirements set forth in Paragraph 13, then
Landlord may (in addition to having available to it all other remedies provided
herein upon an occurrence of an Event of Default), obtain such insurance and
Tenant shall pay to Landlord on
7
<PAGE>
demand, the premium cost thereof, plus interest provided in this Lease.
14. Additions and Fixtures.
(a) Tenant shall not make any alteration, change, improvement, repair,
replacement or addition to the Leased Premises ("Alteration") without the
prior written consent of Landlord. The Alteration must, in the reasonable
opinion of Landlord, be architecturally and aesthetically harmonious with
the existing Leased Premises. If Landlord consents to the Alteration, the
work in such connection shall be at Tenant's expense, but be performed by
workers and contractors approved by Landlord in advance and in writing, and
shall be performed in a manner and upon terms and conditions and at times
satisfactory to and approved in advance in writing by Landlord. All work
to be performed by or for Tenant will be performed diligently and in a
first-class, workmanlike manner, and in compliance with all applicable
laws, ordinances, regulations and rules of any public authority having
jurisdiction over the Leased Premises and/or Tenant. Landlord has the
right, but not the obligation, to inspect periodically the work on the
Leased Premises and may require or make changes in the method or quality of
the work.
Except for costs that Landlord agrees with Tenant in writing to pay,
Tenant shall pay for all costs incurred or arising out of any Alterations
and shall not permit a mechanic's or materialman's lien to be asserted
against the Leased Premises. On Landlord's request, Tenant shall deliver
to Landlord proof of payment and lien waivers and releases reasonably
satisfactory to Landlord of all costs incurred or arising out of any
Alterations. If for any reason Tenant fails to discharge any such
obligation, and a mechanic's or materialman's lien is filed against any
portion of the Leased Premises, then in addition to any other right or
remedy of Landlord for an occurrence of an Event of Default under this
Lease, Landlord may (but is not obligated to) discharge the lien, either by
paying the amount due or by procuring a bond, or by any other means. Any
amount paid by Landlord to obtain the discharge of the lien, with interest
as provided in this Lease, shall be paid by Tenant to Landlord on demand.
(b) Tenant may remove its trade fixtures, office supplies and movable
office furniture and equipment not attached to the Leased Premises
provided: (i) such removal is made prior to the termination of the Term;
(ii) Tenant is not in default of any obligation or covenant under this
Lease at the time of such removal; and (iii) Tenant promptly repairs all
damage caused by such removal. All other property at the Leased Premises
and any Alteration of the Leased Premises (including wall-to-wall
carpeting, paneling or other wall covering) and any other article attached
or affixed to the Leased Premises (any of which as stated above shall
require
8
<PAGE>
Landlord's prior written consent) shall remain, or if applicable, shall
become the property of Landlord upon construction or installation and shall
remain upon and be surrendered with the Leased Premises as part thereof at
the termination of this Lease, (however, Landlord shall not have any
obligation to insure or rebuild or replace any such Alterations), and
Tenant hereby waives all rights to any payment or compensation therefor.
15. Assignment and Subletting. Neither Tenant, nor Tenant's legal
representatives or successors in interest by operation of law or otherwise,
shall assign this Lease or sublease the Leased Premises or any part thereof or
mortgage, pledge or hypothecate its leasehold interest in this Lease or grant
any concession or license within the Leased Premises without the prior express
written permission of Landlord, and any attempt to do any of the foregoing
without the prior express written permission of Landlord shall be an Event of
Default hereunder and such attempted act shall be void and of no effect. This
prohibition against assigning or subletting shall be construed to include a
prohibition against any assignment or subletting by operation of law. Tenant
shall pay Landlord, on demand, all reasonable costs (including attorneys' fees)
incurred by Landlord in connection with any request by Tenant under this
Paragraph 15(a), hereunder, whether or not such request is approved.
Consent by Landlord to a particular assignment or sublease or other
transaction shall not be deemed a consent to any other or subsequent
transaction. If this Lease be assigned or if the Leased Premises be subleased
(whether in whole or in part) or in the event of the mortgage, pledge or
hypothecation of the leasehold interest or grant of any concession or license
within the Leased Premises without the prior express written permission of the
Landlord, or if the Leased Premises be occupied in whole or in part by anyone
other than Tenant without the prior express written permission of Landlord,
Landlord may nevertheless collect Rent from the assignee, sublessee, mortgagee,
pledgee, party to whom the leasehold interest was hypothecated, concessione or
licensee or other occupant and apply the net amount collected to the Rent
payable hereunder, but no such transaction or collection of Rent or application
thereof by Landlord shall be deemed a waiver of the provisions of this Lease
relating to assignment and subletting of this Lease, or a release of Tenant from
the further performance by Tenant of its covenants, duties and obligations
hereunder.
16. Subordination and Attornment.
(a) Tenant accepts this Lease subject and subordinate to any mortgage,
deed of trust or other mortgage, deed of trust or other lien presently
existing or hereafter placed upon the Leased Premises and to any renewals
and extensions thereof; provided that such subordination is expressly
contingent upon the execution of a nondisturbance agreement by any holder
of any mortgage or other lien upon the Leased Premises but Tenant
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agrees that any mortgagee and/or beneficiary of any such deed of trust or
other lien ("Landlord's Mortgagee") and/or Landlord shall have the right
(but shall not be obligated) at any time to subordinate such mortgage, deed
of trust or other lien to this Lease on such terms and subject to such
conditions as Landlord's Mortgagee may deem appropriate in its discretion.
Upon demand, Tenant agrees to execute such further instruments
subordinating this Lease, as Landlord's Mortgagee shall request, in a form
satisfactory to Landlord's Mortgagee.
(b) If a mortgagee or other lienholder or any other purchaser acquires
the Leased Premises as a purchaser at a foreclosure sale (any such
mortgagee or other lienholder or purchaser at a foreclosure sale being each
hereinafter referred to as the "Purchaser at Foreclosure"), then Tenant
shall (at the sole and absolute election of the Purchaser at Foreclosure)
thereafter remain bound to the terms of this Lease to the same effect as if
a new and identical Lease between the Purchaser at Foreclosure, as
Landlord, and Tenant, as Tenant, had been entered into for the remainder of
the Term of the Lease in effect at the time of the foreclosure. Tenant
shall, on request, execute any certificate or instrument necessary or
desirable further to confirm a Purchaser at Foreclosure's election to
continue (or discontinue) the Lease in effect after foreclosure, as above
provided. If the Purchaser at Foreclosure elects to continue this Lease,
Tenant shall attorn and pay rent to the Purchaser at Foreclosure as if that
party were a signatory to this Lease as "Landlord".
(c) In the event that Tenant shall fail to execute any instrument
described in (a) or (b) above promptly as requested, Tenant hereby
irrevocably constitutes Landlord as Tenant's attorney-in-fact to execute
such instrument in Tenant's name, place and stead, it being stipulated by
Landlord and Tenant that such agency is coupled with an interest in
Landlord and is, accordingly, irrevocable.
17. Eminent Domain. If there shall be taken by exercise of the power of
eminent domain during the Term of this Lease any of the Leased Premises,
Landlord may elect to terminate this Lease or to continue same in effect. If
Landlord elects to continue the Lease, the Base Rent shall be reduced in
proportion to the area of the Leased Premises to be taken and Landlord shall
repair any damage to the Leased Premises resulting from such taking. All sums
awarded or agreed upon between Landlord and the condemning authority for the
taking of the interest of Landlord or Tenant, whether as damages or as
compensation, will be the property of Landlord. If this Lease should be
terminated under any provision of this Paragraph 17, Base Rent shall be payable
up to the date that possession is taken by the condemning authority and Landlord
will refund to Tenant any prepaid unaccrued Base Rent less any sum then owing by
Tenant to Landlord.
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18. Access by Landlord. Landlord, its agents and employees shall have
access to and the right to enter upon the Leased Premises at any reasonable time
to examine the condition thereof, to make any repairs or alterations required to
be made by Landlord hereunder, to show the Leased Premises to prospective
purchasers, mortgagees or tenants and for any other purpose deemed reasonable by
Landlord. In addition, Landlord may post "For Rent" signs on or about the
Leased Premises advertising the Leased Premises for lease.
19. Landlord's Lien and Security Interest. In addition to its statutory
lien to secure Landlord in the payment of Base Rent and to secure the payment of
all Base Rent due and to become due hereunder and the faithful performance of
all the other covenants of this Lease required by Tenant to be performed, Tenant
hereby grants to Landlord an express contract lien on and security interest in
all machinery, equipment, personal property, furniture, furnishings, chattels or
merchandise which may now or in the future be placed in the Leased Premises,
together with all proceeds thereof and proceeds of any insurance which may
accrue to Tenant by reason of damage to or destruction of any such property.
The provisions of this Paragraph 19 shall constitute a security agreement under
the Texas Uniform Commercial Code ("Code"), and Landlord as "Secured Party"
shall have all the rights and remedies afforded to a secured party under the
Code. This lien and security interest are given in addition to the Landlord's
statutory lien(s) and shall be cumulative thereto. Upon request of Landlord,
Tenant agrees to execute Uniform Commercial Code financing statements relating
to the aforesaid security interest.
20. Default and Remedies.
(a) Each of the following acts or omissions of Tenant or occurrences
shall constitute an "Event of Default":
(i) Failure or refusal by Tenant to timely pay Base Rent or
other payments hereunder and such failure shall continue for ten (10)
days after Tenant is notified thereof.
(ii) Failure to perform or observe any other covenant or
condition of this Lease by Tenant to be performed or observed prior to
the expiration of a period of thirty (30) days following written
notice to Tenant of such failure.
(iii) Desertion or vacation of the Leased Premises or any
significant or substantial portion thereof.
(iv) The filing or execution or occurrence of any of the
following with respect to either Tenant or any guarantor of this
Lease: a petition in bankruptcy or other insolvency proceeding by or
against any of them; or
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a petition or answer seeking relief under any provision of the
Bankruptcy Code or an assignment for the benefit of creditors or
composition; or a petition or other proceeding by or against any of
them for the appointment of a trustee, receiver or liquidator of any
of them or any of their property; or a proceeding by any governmental
authority for the dissolution or liquidation of any of them.
Notwithstanding the preceding, in the event that Tenant's failure to
perform or observe any covenant or condition of this Lease (other than one
involving the payment of money) cannot be cured within the 30-day notice and
cure period permitted pursuant to the preceding provisions of Paragraph
20(a)(ii), such cure period shall be extended for such period of time not to
exceed 90 days, as is reasonably necessary to permit the Tenant to cure the
failure to perform or observe a covenant or condition, such extended cure period
to exist for only such period of time (up to 90 days) during which the Tenant
shall be diligently prosecuting and proceeding with its efforts to cure the
default. During this extended cure period, the Landlord shall exercise none of
its rights or remedies hereunder except to the extent necessary to, on an
emergency basis, protect and preserve its rights in and to and the condition of
the Leased Premises.
(b) This Lease and the Term and estate hereby granted and the demise
hereby made are subject to the limitation that if and whenever any Event of
Default shall occur, Landlord may, at its option, in addition to all other
rights and remedies given hereunder or by law or equity, do any one or more
of the following:
(i) Terminate this Lease, in which event Tenant shall
immediately surrender possession of the Leased Premises to Landlord.
(ii) Enter upon and take possession of the Leased Premises and
expel or remove Tenant and any other occupant therefrom, with or
without terminating the Lease.
(iii) Change or alter locks and other security devices at the
Leased Premises prohibiting entry into the Leased Premises and deny
Tenant's access thereto. In connection with such change or alteration
of locks, Landlord shall have no obligation to advise Tenant of the
change of locks other than to provide written notice at the Leased
Premises of the person Tenant may contact, during normal business
hours for the Leased Premises, to acquire additional information.
Furthermore, Tenant waives all rights under Section 92.008 of the
Texas Property Code, to which it is otherwise entitled.
(iv) Perform any action required to be performed by Tenant
hereunder.
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(c) Exercise by Landlord of any one or more remedies hereunder granted
or otherwise available shall not be deemed to be an acceptance of surrender
of the Leased Premises by Tenant, whether by agreement or by operation of
law, it being understood that such surrender can be effected only by the
written agreement of Landlord and Tenant. No such alteration of security
devices and no removal or other exercise of dominion by Landlord over the
property of Tenant or others at the Leased Premises shall be deemed
unauthorized or constitute a conversion, Tenant hereby consenting, after
any Event of Default, to the aforesaid exercise of dominion over Tenant's
property within the Leased Premises. All claims for damages by reason of
such re-entry and/or repossession and/or alteration of locks or other
security devices are hereby waived, as are all claims for damages by reason
of any distress warrant, forcible detainer proceeding, sequestration
proceedings, or other legal process. Tenant agrees that any re-entry by
Landlord may be pursuant to judgment obtained in forcible detainer
proceedings or other legal proceedings or without the necessity for any
legal proceedings, as Landlord may elect, and Landlord shall not be liable
in trespass or otherwise.
(d) In the event Landlord elects to terminate the Lease by reason of
an Event of Default, then notwithstanding such termination, Tenant shall be
liable, as damages to Landlord and not as a penalty, for the breach of this
Lease, and shall pay to Landlord the total of (i) the costs of recovering
the Leased Premises and the sum of all Base Rent and other indebtedness
accrued to the date of such termination, (ii) the Base Rent due hereunder
which was suspended or waived because of any "free rent period", (iii) the
amount expended by Landlord in constructing any tenant finish required
under this Lease, (iv) all commissions paid by Landlord in connection with
this Lease, (v) the amount of the excess of (a) the total Base Rent and
other benefits which Landlord would have received under this Lease for the
remainder of the Term (at the rates then in effect) together with all other
expenses incurred by Landlord in connection with Tenant's default, over (b)
the Fair Market Value of the Balance of the Lease Term (as hereinafter
defined) as of the time of such breach; and (iv) all other sums of money
and damages then owing by Tenant to Landlord. As used herein, the term
"Fair Market Value of the Balance of the Lease Term" shall mean the
difference between an amount equal to all Base Rent and other benefits
payable over the remainder of the Lease Term, minus the reasonable rental
value of the Leased Premises for the same period, by comparison to other
tenants of the Leased Premises (or, if there are no comparable tenants in
the Leased Premises, in comparable Leased Premises) and to other leasing
space of comparable size, similarly situated, for a lease term comparable
to the remainder of the Term, with such difference discounted to a present
value based upon a rate of ten percent (10%) per annum.
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(e) In the event that Landlord elects to repossess the Leased Premises
without terminating the Lease, then Tenant shall be liable for and shall
pay to Landlord all Base Rent and other indebtedness accrued to the date of
such repossession, plus Base Rent required to be paid by Tenant to Landlord
during the remainder of the Term until the date of expiration of the Term
as stated in Paragraph 2 (or Paragraph 3, as applicable), diminished by any
net sums thereafter received by Landlord through reletting the Leased
Premises during said period (after deducting expenses incurred by Landlord
as provided in Subparagraph 20(f) hereof). Actions to collect amounts due
by Tenant provided for in this Paragraph may be brought from time to time
by Landlord during the aforesaid period, on one or more occasions, without
the necessity of Landlord's waiting until expiration of such period; and in
no event shall Tenant be entitled to any excess of Base Rent (or Base Rent
plus other sums) obtained by reletting over and above the Base Rent
provided for in this Lease.
(f) In the case of an Event of Default, Tenant shall also be liable
for and shall pay to Landlord in addition to any sum provided to be paid
above: (i) broker's fees incurred by Landlord in connection with reletting
the whole or any part of the Leased Premises; (ii) the reasonable cost of
removing and storing Tenant's or other occupant's property; (iii) the
reasonable cost of repairing, altering, remodeling or otherwise putting the
Leased Premises into condition acceptable to a new tenant or tenants; and
(iv) all reasonable expenses incurred by Landlord in enforcing Landlord's
remedies, including reasonable attorneys' fees. Past due Base Rent and
other past due payments shall bear interest from maturity until paid by
Landlord to Tenant at the rate described in Paragraph 33 hereof.
(g) In the event of repossession of the Leased Premises after an Event
of Default, Landlord shall not have any obligation to relet or attempt to
relet the Leased Premises, or any portion thereof, or to collect Base Rent
after reletting; but Landlord shall have the option to relet or attempt to
relet; and in the event of reletting, Landlord may relet the whole or any
portion of the Leased Premises for any period, to any tenant, and for any
use and purpose.
(h) If Tenant should fail to make any payment or cure any Event of
Default hereunder within the time herein permitted, Landlord, without being
under any obligation to do so and without thereby waiving such default, may
make such payment and/or remedy such other Event of Default for the account
of Tenant (and enter the Leased Premises for such purpose) and thereupon
Tenant shall be obligated to, and hereby agrees to pay Landlord upon demand
all costs, expenses and disbursements (including reasonable attorneys'
fees) incurred by Landlord in taking such remedial action.
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(i) In the event of any default by Landlord, Tenant's exclusive remedy
shall be an action for damages (Tenant hereby waiving the benefit of any
laws granting the right to terminate this Lease, to a lien upon the
property of Landlord and/or upon Base Rent due Landlord), but prior to any
such action Tenant will give Landlord written notice specifying such
default with particularity, and Landlord shall have thirty (30) days (plus
an additional reasonable period as may be required by Landlord to cure such
default, if Landlord shall diligently pursue the cure of such default until
same shall be cured) in which to cure any such default. Unless and until
Landlord fails to so cure any default after such notice, Tenant shall not
have any remedy or causes of action by reason thereof. All obligations of
Landlord hereunder will be construed as covenants, not conditions, and all
such obligations will be binding upon Landlord only during the period of
its ownership of the Leased Premises and not thereafter. Landlord shall
have no personal liability for the performance of any obligations
hereunder, recourse by any party for default against Landlord being limited
to Landlord's interest in the Leased Premises. Tenant shall have no right
to abate, withhold or set off rent in the event of any default by Landlord.
The term "Landlord" shall mean only the owner of the Leased Premises at the
date of commencement of the Term, and in the event of the transfer by such
owner (or subsequent owner) of its interest in the Leased Premises, such
previous owner shall thereupon be released and discharged from all
covenants and obligations of the Landlord under this Lease thereafter
accruing, and Tenant agrees to look only to the new owner for the
performance of the obligations of Landlord hereunder.
(j) In any circumstances where Landlord is permitted to enter upon the
Leased Premises during the Term, whether for the purpose of curing any
default of Tenant or repairing damage resulting from fire or other casualty
or an eminent domain taking or where Landlord is otherwise permitted
hereunder or by law to go upon the Leased Premises, no such entry shall
constitute an eviction or disturbance of Tenant's use and possession of the
Leased Premises or a breach by Landlord of any of its obligations hereunder
or render Landlord liable for damages for loss of business or for any other
reason or entitle Tenant to be relieved from any of its obligations
hereunder or grant Tenant any right of setoff or recoupment or other
remedy; and in connection with any such entry incident to performance of
repairs, replacements, maintenance or construction, all of the aforesaid
provisions shall be applicable notwithstanding that Landlord may elect to
take Leased Premises materials in, to or upon the Leased Premises that may
be required or utilized in connection with such entry by Landlord.
(k) The remedies of Landlord hereunder, at law or in equity, shall be
deemed cumulative, and no remedy of Landlord, whether exercised by Landlord
or not, shall be deemed to be in
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exclusion of any other. Except as may be otherwise herein expressly
provided, in all circumstances under this Lease where prior consent or
permission of one party ("first party") is required before the other party
("second party") is authorized to take any particular type of action, the
matter of whether to grant such consent or permission shall be within the
sole and exclusive judgment and discretion of the first party.
(l) The obligation of Tenant to pay all Base Rent and other sums
hereunder provided to be paid by Tenant and the obligation of Tenant to
perform Tenant's other covenants and duties hereunder constitute
independent, unconditional obligations to be performed at all times
provided for hereunder, save and except only when an abatement thereof or
reduction therein is herein expressly provided for and not otherwise.
Tenant waives and relinquishes all rights which Tenant might have to claim
any nature of lien against or withhold, deduct from or offset against any
Base Rent and other sums provided hereunder to be paid Landlord by Tenant.
Tenant waives and relinquishes any right to assert, either as a claim or as
a defense, that Landlord is bound to perform or is liable for the
nonperformance of any implied covenant or implied duty of Landlord not
expressly herein set forth.
(m) Notwithstanding anything in this Lease to the contrary, in any
bankruptcy filed by or against Tenant, all Base Rent or other amounts
payable by Tenant or on behalf of Tenant to Landlord under this Lease,
whether or not expressly denominated as rent, shall constitute credit
provided to the Bankruptcy Estate which shall have the priority set forth
in Section 364(c)(1) of the Bankruptcy Code, and such designation as credit
shall be binding on any trustee, assignee, or receiver of Tenant.
Notwithstanding the foregoing, should Landlord's Section 364(c)(1) priority
not be allowed, then any rents or other amounts due to Landlord under this
Lease shall constitute administrative priority allowed pursuant to, inter
-----
alia, Section 503(b) of the Bankruptcy Code. Furthermore, Tenant agrees
----
not to seek any extension under Section 365(d) of the Bankruptcy Code.
(n) Any person or entity to which this Lease is assigned pursuant to
the provisions of the Bankruptcy Code shall be deemed, without further act
or deed, to have assumed all of the obligations arising under this Lease on
and after the date of such assignment. Any such assignee shall upon demand
execute and deliver to Landlord an instrument confirming such assumption.
21. Nonwaiver. Neither acceptance of Base Rent by Landlord nor failure
by Landlord to complain of any action, non-action or default or Event of Default
of Tenant shall constitute a waiver of any of Landlord's rights hereunder.
Waiver by Landlord of any right for any default or Event of Default of Tenant
shall not
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constitute a waiver of any right for either a subsequent default or Event of
Default of the same obligation or any other default or Event of Default. Receipt
by Landlord of Tenant's keys to the Leased Premises shall not constitute an
acceptance of surrender of the Leased Premises. No payment by Tenant or receipt
by Landlord of a lesser amount than the Base Rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated Base Rent, nor
shall any endorsement or statement on any check or any letter accompanying any
check or payment as Base Rent be deemed an accord and satisfaction, and Landlord
may accept such check or payment without prejudice to Landlord's right to
recover the balance of such Base Rent or pursue any other remedy in the Lease
provided.
22. Holding Over. If Tenant should remain in possession of the Leased
Premises after the expiration of the Term without execution by Landlord and
Tenant of a new lease, then Tenant shall be deemed to be occupying the Leased
Premises as a tenant-at-sufferance, subject to all the covenants and obligations
of this Lease and at a daily rental of 150% of the per day Base Rent provided
hereunder, computed on the basis of a thirty (30) day month. Additionally,
Tenant shall pay Landlord for all damages, consequential as well as direct,
sustained by Landlord by reason of Tenant's retention of possession longer than
sixty (60) days after the scheduled expiration of the Term. If any property not
belonging to Landlord remains at the Leased Premises after the expiration of the
Term of this Lease, Tenant hereby authorizes Landlord to make such disposition
of such property as Landlord may desire without liability for compensation or
damages to Tenant in the event that such property is the property of Tenant, and
in the event that such property is the property of someone other than Tenant,
Tenant agrees to indemnify and hold Landlord harmless from all suits, actions,
liability, loss, damages, and expenses in connection with or incident to any
removal, exercise or dominion over, and/or disposition of such property by
Landlord. The provisions of this Paragraph do not exclude Landlord's right of
re-entry or any other right of Landlord hereunder.
23. Notice. Any notice or request which may or shall be given under the
terms of this Lease shall be in writing and shall be either delivered by hand to
the Landlord's office (for Landlord) or the Leased Premises (for Tenant) or sent
by United States Registered or Certified Mail, postage prepaid, addressed to the
parties hereto at the respective addresses set out opposite their names below.
Such addresses may be changed from time to time by either party giving notice as
provided above. Notice shall be deemed given when delivered (if delivered by
hand) or when postmarked (if sent by mail) to the following addresses:
Tenant: Landlord:
------ --------
OM Operating, L.L.C. North American Gaming and
c/o North American Gaming Entertainment Corporation
and Entertainment Corporation 13150 Coit Road, Suite 125
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13150 Coit Road, Suite 125 Dallas, Texas 75240
Dallas, Texas 75240 Attn: President
Attn: President
and
---
OM Operating, L.L.C.
c/o Mr. Don Williams
903 East Main
New Roads, Louisiana 70760
24. Landlord's Mortgagee.
(a) If the Leased Premises are at any time subject to a mortgage
and/or mortgage or deed of trust lien, then in any instance in which Tenant
gives notice to Landlord alleging default by Landlord hereunder, Tenant
will also simultaneously give a copy of such notice to each Landlord's
Mortgagee (provided Landlord or Landlord's Mortgagee shall have advised
Tenant of the name and address of Landlord's Mortgagee), and each
Landlord's Mortgagee shall have the right (but not the obligation) to cure
or remedy such default during the period that is permitted to Landlord
hereunder, plus an additional period of thirty (30) days, and Tenant will
accept such curative or remedial action (if any) taken by Landlord's
Mortgagee with the same effect as if such action had been taken by
Landlord.
(b) Tenant agrees that from time to time Tenant will, within ten (10)
days after a written request from Landlord, execute, acknowledge and,
deliver to Landlord a statement in writing certifying (i) that this Lease
is unmodified and in full force and effect (or if there have been
modifications that the same is in full force and effect as modified and
identifying the modifications), (ii) the dates to which the Base Rent and
other charges have been paid (iii) that the Landlord is not in default or
specifying each such default of which the person making the certificate may
have knowledge, and (iv) such other matters as Landlord may reasonably
request, or as may be requested by Landlord's current or prospective
Mortgagees, insurance carriers, auditors, or prospective purchasers.
25. Quiet Enjoyment. Provided Tenant complies with its covenants, duties
and obligations hereunder, Tenant shall quietly have, hold and enjoy the Leased
Premises during the Term as against Landlord, subject to the terms and
provisions of this Lease, and any exceptions, encumbrances or restrictions filed
of record in the parish where the Leased Premises are located and affecting the
Leased Premises.
26. Time of Essence. In all instances where either Landlord or Tenant is
required hereunder to pay any sum or do any act at a
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particular indicated time or within an indicated period, it is understood that
time is of the essence.
27. Mechanic's Lien. If, because of any act or omission of Tenant, its
employees, agents, contractors or subcontractors, any mechanic's lien or other
lien, charge or order for the payment of money shall be filed against Landlord
or against all or any portion of the Leased Premises, Tenant shall, at its own
cost and expense, cause the same to be discharged of record within thirty (30)
days after the filing thereof, and Tenant shall indemnify and save harmless
Landlord against and from all costs, expenses, liabilities, suits, penalties,
claims and demands, including, without limitation, reasonable attorneys' fees,
resulting therefrom.
28. Intentionally omitted.
29. Invalidity of Particular Provisions. If any clause or provision of
this Lease is or becomes illegal, invalid or unenforceable because of present or
future laws or any rule or regulation of any governmental or quasi-governmental
body or any court holding effective during the Term, the intention of the
parties hereto is that the remaining parts of this Lease shall not be affected
thereby unless such invalidity is, in the sole determination of the Landlord,
essential to the rights of both parties, in which event Landlord has the right,
but not the obligation, to terminate this Lease on written notice to Tenant.
30. No Reinstatement. No receipt of money by Landlord from Tenant after
the termination of this Lease shall reinstate, continue or extend the Term of
this Lease, or imply consent for any action for which Landlord's consent is
required.
31. Limitation of Implied Warranty. Landlord's duties and warranties are
limited to those expressly stated in this Lease and shall not include any
implied duties or implied warranty now or in the future. LANDLORD HAS NOT MADE,
AND TENANT MAY NOT RELY ON, ANY REPRESENTATIONS OR WARRANTIES WITH REGARD TO THE
LEASED PREMISES OR OTHERWISE, EXPRESSED OR IMPLIED, EXCEPT AS STATED IN THIS
LEASE. IN PARTICULAR, LANDLORD HAS NOT AUTHORIZED ANY AGENT OR BROKER TO MAKE A
REPRESENTATION OR WARRANTY INCONSISTENT WITH THE TERMS OF THIS LEASE AND TENANT
MAY NOT RELY ON ANY SUCH INCONSISTENT REPRESENTATION OR WARRANTY.
32. Captions and Binding Effect. Paragraph captions are for convenience
only and neither limit nor amplify the provisions of this Lease. The provisions
of this Lease shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the parties, but this
provision shall in no way alter the restriction herein in connection with
assignment and subletting by Tenant.
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33. Interest. Notwithstanding any provision of the Lease to the contrary,
whenever this Lease provides for the payment of interest to Landlord, the rate
of interest shall be the maximum rate allowed by applicable law, and if there is
no maximum rate, then twelve percent (12%) per annum. However, regardless of
any provision contained herein, or in any other document executed in connection
herewith, no Landlord or holder of this Lease shall ever be entitled to receive,
collect or apply, as interest on any amount owing hereunder, any amount in
excess of the maximum non-usurious contract rate of interest allowed from time
to time by applicable law ("Highest Lawful Rate"), and in the event any Landlord
or holder of this Lease ever receives, collects, or applies, as interest, any
such excess, such amount as would be excessive same shall be ipso facto reduced
----------
to the amount permitted by law; and if all amounts of this Lease shall be paid
in full, any excess shall forthwith be paid to Tenant. In determining whether or
not the interest paid or payable, under any specific contingency, exceeds the
Highest Lawful Rate, the Landlord or holder of this Lease and Tenant shall, to
the maximum extent permitted by law (a) characterize any non-principal payment
as an expense, fee or premium rather than as interest; (b) exclude voluntary
prepayment and the effects thereof; and (c) compare the total amount of interest
collected, contracted for, charged or received with the total amount of interest
which could be contracted for, charged or received throughout the entire
contemplated term of this Lease at the Highest Lawful Rate; provided that if all
of Tenant's obligations under this Lease are paid and performed prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence hereof exceeds the Highest Lawful Rate, the Landlord
or holder of this Lease shall refund to the Tenant the amount of such excess,
and in such event, no Landlord or holder of this Lease shall be subject to any
penalties provided by any laws for collecting, contracting for, charging or
receiving interest in excess of the Highest Lawful Rate.
34. Consents or Approvals. Wherever it is provided in this Lease that the
Landlord or the Tenant has the right to consent to or approve a proposed action
by the other party or the right to consent to or approve any other matter or
thing, the party entitled to grant or deny such consent or approval shall not
unreasonably withhold or delay such consent or approval. Further, and
notwithstanding the preceding, in the event that a party requests the consent or
approval of the other party to the Lease, such consent or approval shall be
deemed to have been granted if not expressly denied in writing, within five (5)
business days from the date that the requesting party has requested such consent
by notice in writing to the other party in accordance with the provisions of
this Lease. Further, any refusal to consent or approve shall be effective only
in the event that the refusal or denial is sent within the 5-business day period
required, and such refusal or denial provides the reasonable basis for such
refusal or denial. Further, for purposes of this Lease, a "business day" shall
be any calendar day which is not a Saturday, Sunday or legal holiday in
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the State of Texas or Louisiana during which national banks are closed.
35. Attorneys' Fees. If, as a result of any breach or default by Landlord
or Tenant of their respective obligations under this Lease, an attorney is
employed to enforce or defend any rights or remedies hereunder, the prevailing
party shall be entitled to receive reimbursement for its reasonable attorneys'
fees and expenses and court costs incurred.
36. Force Majeure. If the performance by Landlord or Tenant of any
provision of this Lease is delayed or prevented by any act of God, strike,
lockout, shortage of material or labor, restriction by any governmental
authority, civil riot, flood and any other cause not within the control of
Landlord or Tenant, then the period for Landlord's or Tenant's performance of
the provision shall be automatically extended for the same amount of time that
Landlord or Tenant is so delayed or hindered.
37. Use of Language. Words of any gender used in this Lease include any
other gender, and words in the singular include the plural, unless the context
otherwise requires.
38. Damage from Certain Causes. Landlord is not liable or responsible to
Tenant for any loss or damage to any property or person occasioned by theft,
fire, act of God, public enemy, injunction, riot, strike, insurrection, war,
court order, requisition, or order of governmental body or authority, or for any
damages or inconvenience that may arise through repair or alteration of any part
of the Leased Premises.
39. Governing Law. This Lease and the rights and obligations of the
parties hereto shall be interpreted, construed and enforced in accordance with
the local laws of the State of Louisiana.
40. Asbestos or Other Hazardous Substances. Tenant shall not cause or
permit any hazardous substance or solid waste to be unlawfully brought upon,
kept or used in or about the Leased Premises by Tenant or its agents, employees,
contractors or invitees. If Tenant breaches the obligations stated in the
preceding sentence (which shall be an Event of Default under this Lease), or if
the presence of a hazardous substance or solid waste otherwise unlawfully occurs
as a result of Tenant's use or occupancy of the Leased Premises, then Tenant
shall indemnify, defend and hold harmless Landlord and Landlords' parents,
subsidiaries, affiliates, officers, directors, employees, agents, attorneys and
representatives from any and all claims judgments, damages, penalties, fines,
costs, liabilities or losses which arise during or after the Lease Term as a
result of such contamination, and Tenant shall, at its sole cost and expense,
cause the removal or containment of any such contamination in accordance with
all laws, rules, and/or regulations of any governmental authority having
jurisdiction. Furthermore, if Landlord discovers any
21
<PAGE>
hazardous substance or solid waste on or about the Leased Premises, including,
but not limited to asbestos in the Leased Premises, Landlord shall have the
option to terminate this Lease upon fifteen (15) days notice to Tenant. The term
"hazardous substances" and "solid waste" shall have the meanings specified in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Texas Water Code and the Texas Solid Waste Disposal Act.
41. Amendment. Except where (a) otherwise authorized, permitted or
required by the express terms of this Lease and (b) notice to, consent or
approval of, or joinder by any party has been expressly waived by the provisions
hereof, no amendment, modification, deletion, release, termination or extension
of; alteration, variance or change in; or supplement to, the provisions of this
Lease shall be valid or effective or otherwise binding on the parties hereto,
unless, and until, such amendment, etc., shall have been reduced to writing and
- -----------------
executed by the parties hereto with the same formality as this Lease.
42. Intentionally omitted.
43. Entire Agreement. THE PARTIES HERETO EXPRESSLY ACKNOWLEDGE AND AGREE
THAT, WITH REGARD TO THE SUBJECT MATTER OF THIS LEASE AND THE TRANSACTIONS
CONTEMPLATED HEREIN (a) THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES HERETO
AND (b) THIS LEASE, INCLUDING THE DEFINED TERMS AND ALL EXHIBITS AND ADDENDUMS,
IF ANY, ATTACHED HERETO, (i) EMBODIES THE FINAL AND COMPLETE AGREEMENT BETWEEN
THE PARTIES; (ii) SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS NEGOTIATIONS, OFFERS,
PROPOSALS, AGREEMENTS, COMMITMENTS, PROMISES, ACTS, CONDUCT, COURSE OF DEALING,
REPRESENTATIONS, STATEMENTS, ASSURANCES AND UNDERSTANDINGS, WHETHER VERBAL OR
WRITTEN, AND (iii) MAY NOT BE VARIED OR CONTRADICTED BY EVIDENCE OF ANY SUCH
PRIOR OR CONTEMPORANEOUS MATTER OR BY EVIDENCE OF ANY SUBSEQUENT ORAL AGREEMENT
OF THE PARTIES HERETO.
LANDLORD:
NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
By:___________________________
Its:__________________________
OZDON INVESTMENTS, INC.
By:___________________________
Its:__________________________
22
<PAGE>
TENANT:
OM OPERATING, L.L.C.
By: North American Gaming and
Entertainment Corporation,
a Member
By:_______________________
Its:______________________
By: Donald I. Williams, a Member
By:_______________________
Donald I. Williams
23
<PAGE>
EXHIBIT 5.8
TO RELEASE AND SETTLEMENT AGREEMENT
SECOND AMENDMENT TO ARTICLES OF ORGANIZATION
OF OM OPERATING, L.L.C.
BE IT KNOWN that on the dates hereinafter set forth,
BEFORE the undersigned Notaries Public duly commissioned and qualified
within and for the hereinafter named Parish or County and State, and in the
presence of the witnesses hereinafter named and undersigned,
PERSONALLY CAME AND APPEARED:
OM OPERATING, L.L.C., appearing herein by and through all of its members,
North American Gaming and Entertainment Corporation, a Delaware corporation
("NAG") and Donald I. Williams ("Don");
who declared that:
Pursuant to the provisions of La. R.S. 12:1309, OM Operating, L.L.C. does
hereby adopt this Second Amendment to its Articles of Organization.
1. Section 4.1 of the Articles of Organization is hereby amended to read
as follows:
"The Company shall be managed by its members."
2. Section 4.3 of the Articles of Organization is hereby amended to read
as follows:
"Members do not have the authority to bind the Company without a
certificate of authority executed in accordance with Section 4.5 of these
Articles granting a member or nonmember the required authority."
3. This amendment was approved by all of the members of this Company as
evidenced by the Written Consent attached hereto.
4. Except as amended herein, the Articles of Organization, as previously
amended, shall remain unchanged and in full force and effect.
1
<PAGE>
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
THUS DONE AND SIGNED in Baton Rouge, Louisiana, by the undersigned member
of this limited liability company in the presence of the undersigned competent
witnesses, who have hereunto signed their names together with said member and
me, Notary, on the ____ day of February, 1999.
WITNESSES: OM OPERATING, L.L.C.
______________________________ By:___________________________
Donald I. Williams, Member
______________________________
____________________________
Notary Public
2
<PAGE>
STATE OF ______________
COUNTY OF _____________
THUS DONE AND SIGNED in _____________, __________, by the undersigned
member of this limited liability company in the presence of the undersigned
competent witnesses, who have hereunto signed their names together with said
member and me, Notary, on the ____ day of February, 1999.
WITNESSES: OM OPERATING, L.L.C.
By: North American Gaming and
Entertainment Corporation,
Member
______________________________ By:______________________
E. H. Hawes, II,
President
______________________________
______________________________
Notary Public
3
<PAGE>
WRITTEN CONSENT OF ALL OF THE
MEMBERS OF
OM OPERATING, L.L.C.
The undersigned, being all of the members of OM Operating, L.L.C. (the
"Company"), do hereby give their consent to amending the Company's Articles of
Organization such that Section 4.1 shall be amended in its entirety to read as
follows:
"The Company shall be managed by its members."; and
such that Section 4.3 shall be amended in its entirety to read as follows:
"Members do not have the authority to bind the Company without a
certificate of authority executed in accordance with Section 4.5 of these
Articles granting a member or nonmember the required authority."
Except as amended herein, the Articles of Organization shall remain
unchanged.
This consent is given in lieu of a meeting of the members which meeting and
notice thereof are formally waived.
This consent is given effective this 2nd day of February, 1999.
______________________________
Donald I. Williams
NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
By:___________________________
E. H. Hawes, II, President
CERTIFICATE
I, Donald I. Williams, a member of OM Operating, L.L.C., certify that the
above named members are all of the members of OM Operating, L.L.C. as of the 2nd
day of February, 1999.
________________________________
Donald I. Williams, Member
4
<PAGE>
EXHIBIT 5.9
TO RELEASE AND SETTLEMENT AGREEMENT
FIRST AMENDMENT TO THE ARTICLES OF ORGANIZATION
OF RIVER PORT TRUCK STOP, L.L.C.
BE IT KNOWN THAT on the dates hereinafter set forth,
BEFORE the undersigned Notaries Public duly commissioned and qualified
within and for the hereinafter named Parish or County and State, and in the
presence of the witnesses hereinafter named and undersigned,
PERSONALLY CAME AND APPEARED:
RIVER PORT TRUCK STOP, L.L.C., appearing herein by and through all of its
members, North American Gaming and Entertainment Corporation, a Delaware
corporation ("NAG") and Donald I. Williams ("Don");
who declared that:
Pursuant to the provisions of La. R.S. 12:1309, River Port Truck Stop,
L.L.C. does hereby adopt this First Amendment to its Articles of Organization.
1. Article 5 of the Articles of Organization is hereby deleted in its
entirety.
2. This amendment was approved by all of the members of this Company as
evidenced by the Written Consent attached hereto.
3. Except as amended herein, the Articles of Organization shall remain
unchanged and in full force and effect.
1
<PAGE>
STATE OF LOUISIANA
PARISH OF EAST BATON ROUGE
THUS DONE AND SIGNED in Baton Rouge, Louisiana, by the undersigned member
of this limited liability company in the presence of the undersigned competent
witnesses, who have hereunto signed their names together with said member and
me, Notary, on the ____ day of February, 1999.
WITNESSES: RIVER PORT TRUCK STOP, L.L.C.
______________________________ By:___________________________
Donald I. Williams, Member
______________________________
____________________________
Notary Public
2
<PAGE>
STATE OF ______________
COUNTY OF _____________
THUS DONE AND SIGNED in ______________, __________, by the undersigned
member of this limited liability company in the presence of the undersigned
competent witnesses, who have hereunto signed their names together with said
member and me, Notary, on the ____ day of February, 1999.
WITNESSES: RIVER PORT TRUCK STOP, L.L.C.
By: North American Gaming and
Entertainment Corporation,
Member
______________________________ By:______________________
E. H. Hawes, II,
President
______________________________
______________________________
Notary Public
3
<PAGE>
WRITTEN CONSENT OF ALL OF THE
MEMBERS OF
RIVER PORT TRUCK STOP, L.L.C.
The undersigned, being all of the members of River Port Truck Stop, L.L.C.
(the "Company"), do hereby give their consent to amending the Company's Articles
of Organization such that Article 5 shall be deleted in its entirety.
Except as amended herein, the Articles of Organization shall remain
unchanged.
This consent is given in lieu of a meeting of the members which meeting and
notice thereof are formally waived.
This consent is given this 2nd day of February, 1999.
______________________________________
Donald I. Williams
NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
By:___________________________
E. H. Hawes, II, President
CERTIFICATE
I, Donald I. Williams, a member of River Port Truck Stop, L.L.C., certify
that the above named members are all of the members of River Port Truck Stop,
L.L.C., as of the 2nd day of February, 1999.
________________________________
Donald I. Williams, Member
4
<PAGE>
SCHEDULE 1.6
TO RELEASE AND SETTLEMENT AGREEMENT
DESCRIPTION OF LITIGATION
1. King's litigation.
1
<PAGE>
SCHEDULE 1.7
TO RELEASE AND SETTLEMENT AGREEMENT
DESCRIPTION OF LIENS
See attached.
1
<PAGE>
SCHEDULE 1.8
TO RELEASE AND SETTLEMENT AGREEMENT
FINANCIAL STATEMENTS
See attached.
1
<PAGE>
SCHEDULE 1.9
TO RELEASE AND SETTLEMENT AGREEMENT
DESCRIPTION OF LIABILITIES
See attached.
1
<PAGE>
SCHEDULE 6.4.1
TO RELEASE AND SETTLEMENT AGREEMENT
DESCRIPTION OF DALLAS EXPENSES
See attached.
1
<PAGE>
SCHEDULE 6.4.2
TO RELEASE AND SETTLEMENT AGREEMENT
DESCRIPTION OF DALLAS EMPLOYEE DUTIES
See attached.
2
<PAGE>
SCHEDULE 6.6
TO RELEASE AND SETTLEMENT AGREEMENT
Annual Fee
Function Per Louisiana Casino Semi-Monthly
- -------- For Each Function Installment
----------------- -----------
Truck stop and
convenience store $ 30,000 $1,250
Restaurant $ 30,000 $1,250
Gaming $ 40,000 $1,667
All $100,000 $4,167
1
<PAGE>
EXHIBIT 10.2
SETTLEMENT AGREEMENT
This Settlement Agreement, (hereinafter referred to as the
"Agreement"), is entered into and executed on this, the 2nd day of February,
1999, but to become effective as of March 31st, 1999, by and between Loy F.
Weaver, Cathey Weaver, Joe Heckel, Alyson Heckel, O.P. Pearson, Elaine Pearson,
Betty Jordan, Larry Jordan, Marry Woodall, Harry Woodall, Charles E. Weaver, Ray
Weaver, Joyce Weaver and Arlington Farms, Inc., all competent adults and
citizens of the State of Louisiana, (hereinafter referred to collectively as
"Weaver, et al"), and North American Gaming & Entertainment Corporation,
(hereinafter referred to as "NAG"), a Delaware Corporation having Dallas, Texas
as its principal place of business.
RECITALS
WHEREAS, both Weaver, et al, and NAG, (hereinafter sometimes
collectively referred to as the "Parties"), agree that Weaver, et al, may have
several claims and legal rights against NAG, including but not limited to,
rights derived from their position as holder of common and preferred stock of
that corporation; and
WHEREAS, the parties have engaged in significant negotiations in order
to settle the claims and potential claims mentioned above without the necessity
for further litigation; and
WHEREAS, the parties acknowledge that NAG currently owns and possesses
a 49% ownership and revenue interest in O.M. Operating, L.L.C., (hereinafter
referred to as "O.M.O."); and
WHEREAS, the parties acknowledge that NAG possesses a 49.9%
ownership/revenue interest in River Port Truck Stop, L.L.C., (hereinafter
referred to as "River Port"); and
WHEREAS, the parties acknowledge that NAG, through its wholly owned
subsidiary, Ozdon Investments, Inc., owns the property commonly known as the
Gold Rush Truck Stop and Video Poker Casino, (hereinafter referred to as the
"Gold Rush"), located near
1
<PAGE>
Opelousas, Louisiana; and
WHEREAS, the parties acknowledge that NAG has executed a lease with
O.M.O. regarding the Gold Rush for the purpose of operating a truck stop and
video poker casino; and
WHEREAS, the parties acknowledge that, in order to bring an end to the
aforementioned litigation between the parties, NAG has freely chosen and elected
to transfer and deliver 50% of its current Louisiana gaming interests, including
but not limited to, O.M.O., Gold Rush and River Port, (hereinafter referred to
as the "Current Gaming Interests"); to Weaver, et al; and
WHEREAS, the parties acknowledge that, for purposes of this Agreement,
the term "interests" shall include rights to and claims regarding: cash, real
estate, gaming devices, furniture, other property and such contractual/legal
rights that NAG may currently possess, or may subsequently be entitled to
exercise regarding the ownership and/or operation of Current Gaming Interests
within the state of Louisiana; and
WHEREAS, the parties acknowledge that, in order to bring an end to the
aforementioned litigation between the parties, Weaver, et al, have freely chosen
and elected to waive, dismiss and relinquish all claims and legal actions it may
currently have against NAG and others by execution of that certain Release and
Settlement Agreement dated of even date, herewith between NAG. Weaver, et al,
and the other parties named therein (the "Release Agreement"); and
WHEREAS, Weaver, et al, herein specifically reserve the right to
assign any and all rights they may obtain herein unto a Louisiana Corporation or
L.L.C. as they may create hereinafter; and
WHEREAS, Loy Weaver, herein specifically represents, warrants and
guarantees that his is vested with the legal authority to ratify this settlement
on behalf of Alyson Heckel, Joe Heckel, Cathey Weaver, Charles E. Weaver, Ray
Weaver, Joyce Weaver, O.P. Pearson, Elaine Pearson, Betty Jordan, Larry Jordan,
Marry Woodall, Harry Woodall and Arlington
2
<PAGE>
Farms, Inc. and that this settlement, including all actions necessary to
consummate the transactions contemplated herein, are legally binding on, and
enforceable against, Weaver, et al, (Photocopies of the documents evidencing
this authority are attached hereto as Exhibits "A", "B", "C", "D" and "E"); and
NOW, THEREFORE, in consideration of the mutual assurances, covenants,
conditions and promises contained herein, Weaver, et al, and NAG, agree as
follows:
1) Weaver, et al, agree to waive, relinquish and surrender all claims to
any dividends from NAG;
2) Weaver, et al, agree to dismiss the lawsuit presently pending
against NAG with prejudice;
3) Weaver, et al, agree to waive, relinquish and surrender all claims to
subordinated debentures of NAG and to return all debentures to NAG marked
"cancelled";
4) On the earlier of (i) the day following the vote by the shareholders of
NAG (either at a duly called meeting or by written consent) on the
approval or ratification of such of the transactions contemplated by the
Release Agreement as NAG shall submit to the shareholders for approval or
ratification, or (ii) upon written notice to Weaver, et al, that the
surrender of their common stock held in NAG shall be deemed effective (the
"Redemption Date"), Weaver, et al, shall deliver to NAG for cancellation,
the original stock certificates representing all shares of common stock
owned by Weaver, et al, (which totals 5,614,632 shares), which
certificates shall be duly and properly endorsed reflecting NAG as
transferee. After the date of this Agreement, Weaver, et al, shall not
sell, assign, pledge, encumber, hypothecate or otherwise transfer or
dispose of such shares, or otherwise restrict in any way their ability to
deliver such shares to NAG on the Redemption Date;
5) Weaver, et al, agree to be responsible for 50% of any funds expended in
settlement with other former holders of Class A Preferred Stock of NAG;
6) The Parties agree that Weaver, et al, shall immediately assume 50% of the
debt owed to Regions Bank, Springhill Branch, formerly known as Springhill
Bank & Trust Company,
3
<PAGE>
that is associated with loans secured by the Gold Rush;
7) NAG agrees to transfer 50% of its Louisiana Current Gaming Interests to
Weaver, et al, including but not limited to, all interests held and/or
related to O.M.O., Gold Rush & River Port;
8) NAG asserts that its board of directors has authorized E.H. Hawes, II, in
his capacity as an officer of that corporation, to execute this agreement
on behalf of NAG;
9) The parties agree that all information exchanged during the course of the
negotiations is confidential in nature and subject to the exercise of a
"settlement & negotiation" privilege, except to the extent NAG is required
to disclose it in its SEC filings or otherwise required to disclose it to
any government authority;
10) The parties hereby agree to co-operate in the execution of all further
documents necessary to effectuate this agreement;
11) This agreement may be modified or amended only in writing, duly executed
by Weaver, et al, and NAG;
12) In the event that any portion of this agreement is found to be invalid,
illegal, void or unenforceable, all other provisions of this agreement
shall, nevertheless, remain in full force and effect;
13) This agreement shall be binding both upon Weaver, et al, and NAG, as well
as their respective heirs, assigns and/or legatees; and
4
<PAGE>
14) The law of the State of Louisiana shall govern this agreement.
By:
-------------------------------------- North American Gaming &
Loy F. Weaver (personally and as Entertainment Corporation
authorized agent Arlington Farms, Inc.
O.P. & Elaine Pearson, Harry & Marry
Woodall, Larry & Betty Jordan, Ray &
Joyce Weaver, Charles E. Weaver and By:
Joe & Alyson Heckel) -------------------------
E.H. Hawes, II, President
By:
--------------------------------------
Cathey Weaver
5
