SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15,
1995
FLORIDA GAMING CORPORATION
(Exact name of registrant as specified in charter)
Delaware 0-9099 59-1670533
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
1750 South Kings Highway
Fort Pierce, Florida 34945-3099
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (407) 464-7500
(Former name or former address,
if changed since last report.)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
Florida Gaming Corporation announced that the Company has
agreed to provide up to $5 million in financing to the Rincon, San
Luiseno Band of Mission Indians. Proceeds of the loan will be used
for working capital for the River Oaks Casino, which the Rincon
Band currently owns and operates in San Diego County, California.
The Casino currently conducts Class II gaming.
The Loan Agreement will take effect when at least 400 gaming
machines are in operation at the Casino. Florida Gaming has agreed
to make up to $5 million available to the Rincon Band during the
seven-year term of the Agreement beginning on the effective date.
In lieu of interest on the loan, Florida Gaming will receive a
royalty during the term of the Loan Agreement equal to 12-1/2
percent of all gaming revenues of the Casino other than from gaming
machines, plus a percentage of all revenues from gaming machines.
The percentage of gaming machine revenues is 12-1/2 percent during
the first five years and 11 percent during the sixth and seventh
years of the Loan Agreement. Florida Gaming has agreed to grant
the Rincon Band 25,000 shares of its common stock in two annual
installments when the Loan Agreement takes effect. FGC has also
agreed to advance $120,000 to the Rincon Band in September, which
will represent an initial draw on the loan if the Loan Agreement
takes effect. The Loan Agreement can be terminated if it does not
take effect by October 31, 1995.
The operation of gaming machines at the Casino is currently
prohibited by a preliminary injunction issued by the United States
District Court for Southern California. The injunction was sought
by the United States Attorney for Southern California, based upon
federal circuit court decisions that the operation of gaming
machines by Native American tribes in California was prohibited by
the Indian Gaming Regulatory Act because gaming machines were
prohibited by California law and to date California Governor Wilson
has refused to enter into a gaming compact with California tribes.
Since the preliminary injunction was imposed on the Rincon Band,
the United States Court of Appeals has agreed to review its prior
decisions in light of a recent California appellate court decision
that California law permits the operation of gaming machines by the
California Lottery, contributing to the uncertain parameters of
Indian gaming in California.
The Rincon Band plans to request a hearing in the U.S.
District Court at the earliest possible date to consider the
lifting of the injunction based on the Rincon Band's belief that it
now complies with all conditions for the operation of gaming
machines under the Indian Gaming Regulatory Act. As part of this
effort, the Rincon Band has now assumed the direct management of
the Casino, is completing a settlement with the former third-party
managers of the Casino, and has entered into the Loan Agreement
with Florida Gaming. No hearing date has been set, and there can
be no assurance that the injunction will be lifted. The lifting of
the injunction would place the Rincon Band in a position comparable
to the three other Native American tribes in San Diego County and
the 22 other tribes in California that already operate gaming
machines.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit 10.1 --Loan Agreement among Rincon, San Luiseno
Band of Mission Indians and Florida Gaming Corporation
dated September 11, 1995.
Exhibit 99.1 -- Press Release dated September 15, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FLORIDA GAMING CORPORATION
By /s/ Timothy L. Hensley
Timothy L. Hensley
Executive Vice President, Treasurer
and Chief Financial Officer
Date: September 18, 1995
RINCON, SAN LUISENO BAND OF MISSION INDIANS
LOAN AGREEMENT
THIS AGREEMENT is made as of this 11th day of September, 1995,
between the Rincon, San Luiseno Band of Mission Indians (herein the
"Rincon Band" or "Borrower"), whose notice address is the Rincon
Indian Reservation, Post Office Box 58, Valley Center, California
92082 and Florida Gaming Corporation, a Delaware corporation
(herein "FGC" or "Lender") whose notice address is 1750 South Kings
Highway, Fort Pierce, Florida 34945-3099.
W I T N E S S E T H:
A. General Aims of the Rincon Band. The Rincon Band is
recognized as eligible by the Secretary of the Interior for special
programs provided by the United States because of its special
status as a sovereign government and who is recognized as
possessing powers of self-government. The Rincon Band operates a
facility for Class II gaming and, if permitted, Class III gaming,
as defined by the Indian Gaming Regulatory Act of 1988, 25 U.S.C.
Sections 2701-2721 ("IGRA"), and conducts other gaming and
commercial activities on land ("the Property") currently held in
trust for the Rincon Band by the United States of America, in order
to further the health, welfare, and economic status of Rincon Band
members.
B. Recitation of Agreements. To attain the ends identified
in Paragraph A above, the Rincon Band and the Lender have
negotiated this Loan Agreement (the "Loan Agreement"), a Promissory
Note (the "Note") and a Security Agreement ("the Security
Agreement"). Under the Loan Agreement, Lender has agreed to loan
the Rincon Band up to Five Million Dollars ($5,000,000.00) (the
"Loan") as working capital to enable the Rincon Band to operate,
renovate, improve, or expand a gaming facility ("the Facility") on
the Property. The Rincon Band has executed the Note evidencing the
indebtedness created by the Loan. The Loan Agreement, the Note,
and the Security Agreement are each being executed in consideration
of the others.
C. Assignment to Tribal Enterprise. The Rincon Band has
advised FGC, and FGC acknowledges, that the Rincon Band intends to
form a separate corporation or other agency under tribal law (the
"Enterprise") for the purpose of conducting the gaming and
commercial activities on the Property contemplated by this
Agreement and holding the property of the Rincon Band to be used in
those activities. The Rincon Band and FGC contemplate and agree
that the Rincon Band shall assign all of its rights, duties,
limitations and obligations under this Agreement and the other Loan
Documents to the Enterprise, and references to the "Borrower" and
to the "Rincon Band" shall be deemed to include the Enterprise
after such assignment..
1. Definition of Terms. As used in this Agreement, the
following terms will have the meanings indicated:
1.1 Collateral. That Collateral described in the
Security Agreement.
1.2 Commencement Date. "Commencement Date" shall mean
the date upon which the last to occur of the following occurs: (a)
effectiveness of order of the United States District Court for the
Southern District of California terminating its preliminary
injunction prohibiting the Rincon Band from offering electronic or
electro-mechanical games of chance, slot machines of any kind, or
any other game of chance defined as Class III gaming by IGRA; (b)
commencement of operation of Gaming Machines at the Facility; (c)
the execution of the Loan Documents; and (d) the execution of an
agreement between the Rincon Band and the Columbia Group, L.L.C.
settling claims between them on terms approved by FGC.
1.3 Commission. The "Commission" shall mean the gaming
Commission of the Rincon Band, with jurisdiction to oversee on
behalf of the Rincon Band gaming activities conducted on lands
subject to tribal jurisdiction.
1.4 Contractor. Any person who has agreed to furnish
services, labor, or materials under a Construction Agreement.
1.5 Cost Estimate. A detailed breakdown of Borrower's
good faith estimate of (i) all direct and indirect costs (including
so-called "soft costs") to be incurred by Borrower in connection
with any expansion and related renovation, improvement, and
equipping of the Facility. Specifically, without limiting the
generality of the foregoing, the Cost Estimate shall include, as
applicable, all fees (architectural, engineering, development,
governmental, legal, accounting, etc.), bond and insurance (title,
hazard, liability, etc.) premiums, loan fees, interest, taxes,
marketing costs, basic construction cost, the costs of acquiring by
purchase or otherwise any necessary equipment, necessary start-up
costs, necessary working capital, the cost of any tenant
improvements to be borne by Borrower, and the amount of any
contingency reserves. The Cost Estimate shall include the contract
price for each Construction Agreement. If a portion of the
contract price of any item on the Cost Estimate is to be paid by
someone other than Borrower, or is to be reimbursed to Borrower,
Borrower shall set forth in the cost Estimate the name(s) of the
other party(ies) obligated to pay or reimburse such portion and the
percentage or amounts to be paid or reimbursed by such party(ies).
At Lender's request, Borrower shall furnish lender documentation
reasonably satisfactory to Lender evidencing the obligation of such
other party(ies) to pay or reimburse such portion, and copies of
any instruments or agreements securing such payment. The Cost
Estimate shall be in form and substance satisfactory to Lender.
When approved by Lender, the items set forth in the Cost Estimate
shall be included on applicable AIA forms which shall thereafter be
deemed the Cost Estimate and shall be used to requisition advances
under the Loan, as hereinafter defined. Any cost incurred by the
Borrower in obtaining such Cost Estimates shall be lent to the
Borrower by the Lender.
1.6 Drop. "Drop" shall mean all moneys deposited by
players in the Gaming Machines.
1.7 Effective Date. "Effective Date" shall mean the
date upon which this Agreement, the Security Agreement, and the
Promissory Note have received all approvals required by applicable
law to make them effective.
1.8 Enterprise. "Enterprise" shall mean the corporation
or other agency to be duly organized under tribal law and owned by
the Rincon Band, which shall own the Facility and conduct gaming
and other commercial activities on the Property on behalf of the
Rincon Band. It is contemplated that upon the organization of the
Enterprise, all rights, obligations, duties and limitations of the
Rincon Band under the Loan Documents shall be assigned to the
Enterprise.
1.9 Facility. The building located on the Property, as
it presently exists and as it may be renovated, expanded, improved
or replaced from time to time, including improvements constructed
and to be considered or installed in the Facility.
1.10 Gaming Machines. "Gaming Machines" shall mean
video, electronic or electromechanical games of chance and/or slot
machines located on the Property.
1.11 General Contract. The agreement for the general
renovation, improvement and possible expansion of the Facility.
1.12 General Manager. "General Manager" shall mean a
person selected by the Rincon Band and employed by the Enterprise
and shall be the person responsible for and shall have the
necessary authority to carry out the day-to-day operation of the
Enterprise. The General Manager shall not be affiliated with FGC
in any manner.
1.13 Gross Receipts. "Gross Receipts" shall mean the
total revenues, determined in accordance with generally accepted
accounting principles ("GAAP"), received from all gaming activities
on the Property, excluding any and all revenues from Gaming
Machines, proceeds of the Loan and the proceeds of loans made to
the Enterprise from any source.
1.14 Lender's Representative. A person or persons
designated by Lender to audit, inspect and report to Lender and
otherwise act for Lender in accordance with the terms of this
Agreement.
1.15 Loan. The loan made pursuant to the Loan Documents,
as hereinafter defined.
1.16 Loan Documents. This Agreement, the Note in the
total amount of up to Five Million Dollars ($5,000,000.00) and all
extensions, renewals, modifications, substitutions, and
consolidations thereof; the Security Agreement and Financing
Statement necessary to perfect Lender's security interest in the
personal property comprising the Collateral; and any assignments
thereof.
1.17 Major Subcontracts. The contracts entered into
between the General Contractor and the subcontractors who will
perform the following work with respect to a Project (the "Major
Subcontractors"): structural, mechanical (plumbing, heating,
ventilating, and air conditioning), electrical, glass and glazing,
masonry, paving, and landscaping.
1.18 Net Profits. "Net Profits" shall mean the total
amount of monies remaining from Gross Receipts after the payment of
all Operating Expenses.
1.19 Operating Expenses. "Operating Expenses" shall mean
all expenses necessary for the operation of the Enterprise and
maintenance of the Facility and equipment, in amounts comparable to
other like-kind gaming facilities which shall be calculated in
accordance with generally accepted accounting principles ("GAAP").
1.20 Other Gaming. "Other Gaming" shall mean activities
defined as "Class III Gaming" under the IGRA.
1.21 Plans. The final plans, drawings, and
specifications for any renovation, expansion and improvement of the
Facility, and all modifications thereof.
1.22 Project. Any expansion and related renovation,
improvement, and equipping of the Facility.
1.23 Property. The "Property" shall mean a parcel of
land, more particularly described in Appendix "A" attached as a
part hereof, on which the Facility presently is located, which
parcel is held by the United States in trust for the Rincon Band.
Title to the Property at all times will be held solely by the
Rincon Band, or by the United States of America in trust for the
Rincon Band.
2. Lending Agreement. Subject to the terms and conditions
of this Agreement, Lender agrees to lend to Borrower and Borrower,
in Borrower's reasonable discretion, agrees to borrow from Lender
a sum not to exceed Five Million Dollars ($5,000,000.00) to be
evidenced by the Note. Notwithstanding the foregoing, Lender shall
not be obligated to advance more than Five Million Dollars
($5,000,000.00).
3. Loan Documents.
3.1 Note. The Loan shall be evidenced by the Note.
Borrower shall make payments of principal on the 10th day of each
month in an amount equal to 1% of the principal balance outstanding
from time to time. In no event may Borrower make payments of
principal in an amount that would reduce the outstanding principal
balance of the Loan to less than $100,000, except upon the
termination of this Agreement pursuant to Section 12.12 hereof.
3.2 Security Agreement and Financing Statement. A
security agreement between Lender and Borrower dated as of the date
of this Agreement that grants the Lender a security interest in all
of the Collateral to be evidenced by a financing statement to be
filed upon the records of San Diego County, California.
4. Royalty.
4.1 Royalty Payments. In addition to all other amounts
payable hereunder, the Rincon Band shall make weekly payments (the
"Royalty") to FGC for a period of seven (7) years from the
Commencement Date. The Royalty shall equal 12.5% of Gross Receipts
for the preceding week, plus the portion of the Drop for the
preceding week calculated as follows:
Portion of Drop
Period Payable to FGC
_________________ ___________________
First Five Years 12.5%
Sixth and Seventh Years 11%
FGC and the Rincon Band agree that, after the Commencement Date,
they will negotiate to modify the frequency of Royalty payments
upon the request of either party.
4.2 Grant of FGC Shares. In consideration of the
Royalty and other promises contained herein, FGC agrees to grant
the Rincon Band a total of 25,000 shares of FGC's common stock, par
value $.10 per share ("Shares"), to be issued in two installments
of 12,500 Shares, the first installment to be issued on the
Commencement Date and the second installment to be issued on the
first anniversary of the Commencement Date.
5. Conditions of Lending. The obligation of Lender to
perform this Agreement and to make any advance under the Note on or
after the Commencement Date shall be subject to the performance by
Borrower of the following conditions precedent:
5.1 Approvals. The Loan Documents shall have received
all approvals required from governmental authorities.
5.2 Loan Documents. The Loan Documents shall have been
duly executed, acknowledged (where appropriate), delivered to
Lender by the required parties, all in form and substance
satisfactory to Lender.
5.3 Authority. Lender shall receive, at its option, a
fully executed copy of the approval of this Agreement, the Security
Agreement, the Note, and any other document requiring approval by
a governmental agency, including agencies of the Rincon Band.
5.4 Insurance. Lender shall have received, at its
option, certificates, policies, or other evidence of the existence
of the insurance coverages required under Section 8.7 below.
5.5 Representations. All representations and warranties
made by Borrower in this Agreement shall be true and correct on and
as of the date of each advance with the same effect as if made on
such date; provided, however, that the representations set forth in
Section 5.6 hereof relating to damage to the Facility need not be
true if the provisions of Section 5.6 hereof are complied with.
5.6 No Damage to Facility. The Facility shall not have
been materially injured or damaged by fire or other casualty unless
Lender shall have received insurance proceeds and/or other sums
sufficient, in Lender's good faith judgment, to effect the
satisfactory restoration of the damaged portion of the Facility and
to permit completion thereof.
5.7 No Litigation or Bankruptcy. Neither Borrower, nor
the Enterprise, nor any Project or any portion thereof, nor the
General Contractor engaged for such Project shall be the subject of
any pending or threatened litigation, claim, or dispute which, in
Lender's good faith judgment, might materially adversely affect
Borrower, the Enterprise, or the General Contractor, or might
otherwise materially adversely affect the security for the Loan or
the Borrower's ability to timely perform its obligations under the
Loan Documents. Further, neither the Borrower, the Enterprise, nor
the General Contractor shall be the subject of any pending or
threatened bankruptcy, insolvency, reorganization, or similar
proceedings which, in Lender's good faith judgment, would
materially adversely affect the security for the Loan or the
ability of the Borrower or the Enterprise to perform its
obligations under the Loan Documents.
5.8 Lender's Expenses. Borrower shall have paid to
Lender, or to any other person entitled thereto, all fees and costs
then due and payable by Borrower pursuant to this Agreement or
pursuant to any of the other Loan Documents.
5.9 No Default. There shall be no Default under any of
the Loan Documents, regardless of whether any applicable grace
period has expired.
5.10 Nonwaiver. The failure of Lender to demand the
satisfaction of any one or more of the conditions precedent as to
the any advance under the Note will not constitute a waiver of such
condition as to any later advances or in any matter prejudice the
rights of Lender thereafter to require full compliance with the
terms of this Agreement.
5.11 Advisory Opinion. The Rincon Band shall have
received an advisory opinion of the National Indian Gaming
Commission that the Loan Agreement does not constitute a
"management agreement" within the meaning of IGRA and the rules
thereunder.
5.12 Conditions of Advances for Projects. In addition
to the conditions set forth in Sections 5.1 through 5.11 applicable
to all advances under the Note after the Commencement Date, the
obligation of Lender to make any advance under the Note to finance
any Project shall be subject to the following conditions:
5.12.1 Cost Estimate. In connection with any
advance to finance, in whole or in part, any Project,
Lender shall have received the Cost Estimate, together
with such supporting data as Lender might reasonably
require so that Lender shall be satisfied that the
proceeds of the Loan shall be sufficient to complete the
Project.
5.12.2 Plans. Lender shall have received
satisfactory evidence that the Plans, including any
modifications, have been approved by all requisite
governmental authorities prior to commencement of any
work. If the final plans for any Project are not
available prior to making an advance of the Loan, Lender
may make advances for construction and installation of
those portions of the Project for which it has received
approval of the Plans, but Lender shall not be obligated
to make any advances for work for which the Plans have
not been approved.
5.12.3 Permits. Lender shall have received
satisfactory evidence that all permits, including, and
without limitation, the building permit(s), required by
any governmental authority to authorize any Project have
been issued and are in full force and effect. If all
permits are not available prior to the closing of the
Loan, it shall be within Lender's discretion to advance
such sums under the Loan for work for which all
applicable permits have been received. At Lender's
option, Borrower shall furnish Lender reasonable evidence
that all other permits required in order to accomplish
any Project in accordance with the Plans, and within the
budget established by the Cost Estimate, will be
available when necessary.
5.12.4 Construction Agreements. Lender shall
have received copies of the executed originals of the
General Contract, the Major Subcontracts and, at its
option, any other construction contracts and any
modifications or amendments satisfactory to Lender.
5.12.5 Bonding of Contractors. The General
Contractor for any Project shall furnish to Lender a dual
obligee performance and payment bond in an amount
satisfactory to the Lender and at its option, Lender
shall have received dual obligee performance and/or
payment bonds from the contractors under any Major
Subcontract, which bonds shall be in form and amount
satisfactory to Lender, except that if finding a General
Contractor with an adequate bond becomes unreasonably
expensive or difficult the Rincon Band may select a
General Contractor with a reduced bond or with no bond at
all with Lender's approval.
5.12.6 Final Advance. Lender shall not be
obligated to make the final advance for labor and
materials under the Loan until the following conditions
have been satisfied: (a) all conditions stated above in
Section 5 of this Agreement shall have been satisfied,
and (b) Lender shall have received, in form and substance
satisfactory to it: (i) certificate(s) from, at Lender's
option, the architect, General Contractor, and/or
Lender's Representative to the effect that the Facility
(including all landscaping and on-site and any off-site
Improvements) has been completed substantially in
accordance with the Plans (identifying the Plans
including all changes thereto), and certifying such
other matters as Lender may reasonably require; (ii)
evidence that the Project complies with all fire codes
and regulations that would be applicable to the Facility
and the Property if the State of California or any of its
political subdivisions had complete regulatory
jurisdiction over the Facility and property; and (iii) if
Lender so requests, evidence that the building complies
with fire insurance rating schedule requirements.
5.12.7 Lender Acceptance of Assurances or
Representations. Lender agrees that it will not
unreasonably refuse to accept or approve any assurance or
representation tendered to it by the Borrower or others
that were made in good faith and in reasonable
conformance to Plans previously agreed to by the parties
or to reasonable standards of the relevant profession or
industry.
6. Advances. Notwithstanding the fact that the Note is in
the amount of Five Million Dollars ($5,000,000.00), advances
thereunder will be made by Lender from time to time on the written
request of Borrower for the following purposes and subject to the
following limitations:
6.1 Schedule of Advances.
6.1.1 Initial Advances. Lender agrees to
disburse $60,000 to Borrower for each of the Enterprise
payrolls payable on September 8, 1995 and September 22,
1995. Lender agrees to make its best efforts (i) to
schedule a hearing by the United States District Court
for the Southern District of California at the earliest
possible date to consider the termination of a
preliminary injunction prohibiting the operation of
Gaming Machines on the Property; and (ii) to enter into
a settlement agreement terminating the involvement of the
Columbia Group, L.L.C. with gaming on the Property on
terms approved by FGC. Borrower and Lender agree that if
the Commencement Date has not occurred on or before
September 30, 1995, they will negotiate in good faith for
additional advances for Enterprise payrolls payable in
October 1995.
6.1.2 Escrowed Funds. Lender agrees to
deposit $400,000 in escrow, which shall be disbursed to
Borrower upon the commencement of operations of at least
400 Gaming Machines at the Facility and the satisfaction
of the other conditions set forth in an agreement with
the escrow agent. The escrowed funds will be used for
payment to the Columbia Group, L.L.C. under the terms of
the settlement agreement between the Borrower and the
Columbia Group, L.L.C.
6.1.3 Subsequent Advances. After the
Commencement Date, disbursements of the Loan proceeds
will be made by a series of advances by Lender to
Borrower, and provided that on the date of each such
advance all covenants, conditions, and agreements
required for such advance have been performed, satisfied,
or waived or deferred by Lender.
6.2 Use of Proceeds. The proceeds of each advance
hereunder shall be used solely for the following items: (i) the
acquisition of equipment, furniture, furnishings, and fixtures;
(ii) working capital; (iii) payments under a settlement agreement
with the Columbia Group, L.L.C.; and (iv) the renovation, and
possible expansion of the Facility to the extent that the amounts
thereof are in conformity with the Cost Estimate and to the extent
that they represent expenses incurred by Borrower in connection
with the Project. Notwithstanding any of the foregoing, nothing
herein contained shall obligate Lender to advance such funds under
the Note for payment of any item related to a Project not included
in the approved Cost Estimate.
6.3 Stored Materials. Lender shall make advances for
materials ("Stored Materials") purchased by Borrower and stored on
or off the Property but not yet incorporated into the Facility only
if Borrower has available for inspection by Lender (i) proof that
the insurance policies required under Section 8.7 below cover such
stored materials, (ii) written evidence that the ownership of the
Stored Materials vested in Borrower free of liens or other claims,
and (iii) evidence satisfactory to Lender that the Stored Materials
are protected against theft or damage.
6.4 Request for Advance. After the Commencement Date,
Lender shall not be required to make advances under the Note more
often than biweekly. At a reasonable time before the date on which
an advance is requested, Borrower will notify Lender of the total
amount of the requested advance and, for any advance to finance a
Project, will furnish to Lender, on applicable AIA Forms, an
itemized list of costs to be paid from such advance with the
certificate of Borrower and the General Contractor to the effect
that all costs incurred to the date of the preceding advance have
been paid in full, all work has previously been performed in a good
and workmanlike manner in accordance with the Plans and that no
change order or other modification of the Construction Agreements
has been effected, except those previously approved by Lender in
writing. Subject to such exceptions as to which Lender has been
previously advised in writing by Borrower, each request for advance
by Borrower shall be deemed a certification by Borrower to Lender
that the representations and warranties contained in this Agreement
remain true and correct as of the date of such request and that the
information in the request is true and correct and that no
condition exists, or with the giving of notice or the passage of
time, or both, would exist, which would constitute a default under
any of the Loan Documents.
6.5 Additional Instruments. Simultaneously with each
request for an advance under the Note, Borrower will furnish or
cause to be furnished to the Lender such invoices, receipts,
inventories, certificates of insurance, surveys, title policy
endorsements, lien waivers, opinions and/or certificates relating
to the provisions of this Agreement, and such other instruments as
might reasonably be required by Lender.
6.6 Inspection of Project. Lender reserves the right,
as a cost of construction, to inspect the Facility prior to the
disbursement of each requested advance to finance a Project, and
(i) approve the progress and the workmanship of the Project; (ii)
verify compliance with the Plans; (iii) verify the percentage of
the completion as set forth in such requests for advances; and (iv)
satisfy itself that all work for which such advance is requested
has been performed and all materials for which such advance is
requested are in place, or as to Stored Materials, are owned by the
Borrower and suitably safeguarded. Such inspection will be
performed in a timely manner and not unreasonably delay the
disbursement of any advance. Neither Lender, Lender's
Representative, nor Lender's agents or employees, shall be liable,
either directly or indirectly, for any loss, claim or damage which
may arise as a result of defective design or construction of the
renovation, improvement and possible expansion of the Facility,
provided that such persons or entities were not directly involved
in the design of any ultimately defective construction. It is
understood that the Borrower shall cause to be provided to the
Lender design plans, on an "As Built" basis, for all work completed
pursuant to this Loan. The plans shall include all aspects of
construction and surveillance systems.
6.7 Manner of Payment. On satisfaction of the
requirements contained herein and subject to the provisions of
Sections 6.3 above, Lender shall be obligated to disburse the
approved amount, to Borrower, or to a joint checking account for
which withdrawals shall require signatures of designees of both
Borrower and Lender solely for such purpose (which account Borrower
hereby pledges as additional security for the Loan) or, Lender may
make payment directly to the payee(s) for the account of the
Borrower at the direction of Borrower.
6.8 Excess Costs. If the cost of any item set forth on
a request for an advance to finance a Project exceeds the Cost
Estimate applicable to that item due to the Borrower's unilateral
modification of plans previously agreed to by the parties, any such
excess cost will be paid by Borrower out of Borrower's separate
funds; provided the foregoing shall not apply if Borrower can
demonstrate to the satisfaction of Lender that (i) cost savings
equal to or greater than the total excess costs incurred to date
have been effected or (ii) sufficient funds are available in any
contingency reserve set forth in the Cost Estimate to pay such
excess cost and any other known or anticipated excess costs for
which a request for advance has not yet been submitted.
Notwithstanding the foregoing, funds shall be advanced from any
such contingency reserve only to the extent they represent out-of-
pocket expenses incurred by Borrower for items set forth in the
Cost Estimate. If Borrower can demonstrate to Lender's reasonable
satisfaction that (i) permanent cost savings have been or will be
achieved in respect of any item in the budget for the Facility as
approved by Lender and set forth in the Cost Estimate; and (ii) the
funds available under the loan attributable to such cost savings
are needed to fund excess costs attributable to one or more other
items in the Cost Estimate, Lender agrees to advance such funds for
such excess costs, provided the Project can otherwise be completed
on time and within the budget set forth in the Cost Estimate, as
determined in the good faith reasonable judgment of Lender.
7. Representation and Warranties. Borrower represents and
warrants as follows:
7.1 Inducements.
7.1.1 Organization. The Rincon Band is
recognized as eligible by the Secretary of the Interior
for special programs provided by the United States to
Indians because of their status, and is recognized as
possession powers of self-government, including: full
power and authority to own its property and assets, to
conduct gaming and commercial activities at the Facility
on the Property in the manner and in the places in which
it is proposed to be conducted, and to perform its
obligations with respect to the Loan Documents. At the
time of the assignment of the rights, obligations,
limitations and duties of the Rincon Band under this
Agreement to the Enterprise, the Enterprise will be an
agency of the Rincon Band, duly organized and validly
existing under tribal law. The Enterprise will have all
requisite power and authority to conduct the gaming and
commercial activities on the Property contemplated by
this Agreement and to own the personal property to be
used in connection therewith.
7.1.2 Authority. The Rincon Band has taken all
action required by the Rincon Band's law, its
Constitution and By-laws, the laws of the United States,
and all other applicable laws to authorize the execution,
delivery, and performance of the Loan Documents. At the
time of the assignment of the rights, obligations,
limitations and duties of the Rincon Band under this
Agreement to the Enterprise, the Enterprise will have
taken all action required under its articles of
incorporation or other organizational documents and other
applicable law to enter into, execute, deliver and
perform the obligations of the Rincon Band under this
Agreement.
7.1.3 No Violation or Conflict. The execution,
delivery, and performance by the Rincon Band and the
Enterprise of the Loan Documents will not violate any
provision of the Constitution, Articles of Association,
any laws or agreements governing the Rincon Band and the
Enterprise, the laws of the United States, or any other
applicable law, and will not conflict with or result in
any breach of any provisions of, or constitute a default
under, or result in the imposition of any lien or charge
upon any asset of the Rincon Band under, or result in the
acceleration of any obligation under the terms of any
agreement or document binding upon the Rincon Band.
7.2 No Litigation. There are no judgments filed or
actions, suits, investigations, or proceedings pending, or to the
knowledge of Borrower, threatened, against or affecting Borrower or
the Collateral, at law or in equity, before or by any person which,
to the knowledge of Borrower, would have a material adverse effect
on the business, assets, financial condition or results of
operations of Borrower or the Collateral.
7.3 No Default. The making and performance by Borrower
of this Agreement and the other Loan Documents will not violate any
provisions or constitute a default under any indenture, agreement,
or instrument to which Borrower is a party or by which Borrower or
the Collateral is bound or affected.
7.4 Ownership. Borrower now has or will hereafter
acquire title to the Collateral free and clear of all prior claims,
liens, encumbrances, and title retention devices.
7.5 Plans. The Plans and any and all revisions thereto
have been submitted or will be submitted to Lender prior to any
loan advances. To the extent required, the Plans have been
approved or will be approved by all governmental authorities having
jurisdiction over the Facility, and the Property, or the Project,
or the use, occupancy or operation thereof prior to any loan
advances.
7.6 Compliance.
7.6.1 Compliance with Legal Requirements
Relating to the Project. The Rincon Band shall keep in
full force and effect and shall perform and comply with
all terms and conditions of all permits, license,
approvals, and exemptions necessary for the operation of
gaming and any other commercial activities conducted on
the Property. Upon receipt of any notice of
noncompliance, violation, termination, cancellation,
revocation, or default with respect to any of the
foregoing, the Rincon Band shall immediately notify
Lender and enclose a copy of such notice. If the Rincon
Band shall fail to perform its obligations hereunder with
respect to any such permit, license, approval, or
exemption, Lender may take such action as it deems
appropriate in connection therewith to perform such
obligations to the extent necessary to cure such failure.
No such action by Lender shall obligate Lender either to
the Rincon Band or to any third party, to assume any
obligations for the Rincon Band under any such
instrument.
7.6.2 Loan Agreement, Note, and Security
Agreement. The Rincon Band shall keep in full force and
effect and shall perform and comply with all terms and
conditions of the Loan Agreement, the Note, the Security
Agreement, and all other agreements to which it is a
party or by which it is bound and which are necessary for
the completion of any Project and the operation of gaming
and other commercial activities on the Property, and the
Rincon Band shall defend and maintain its rights
thereunder.
7.6.3 Title to Property, Facility and
Enterprise. The Rincon Band shall defend and maintain
title to the assets relating to the Property and the
Facility. The Rincon Band shall not create, assume or
suffer to exist any mortgage, security interest, lien,
charge, or encumbrance of any kind on any assets relating
to the Property or the Facility or the Enterprise, other
than security interests of the Columbia Group, L.L.C.,
which shall be subordinate to the security interests of
the Lender.
7.6.4 Sale of Property, Facility or Enterprise.
Without the prior written consent of the Lender, the
Rincon Band shall not sell, lease, transfer or otherwise
dispose of all or any part of the assets relating to the
Property, the Facility or the Enterprise.
7.6.5 Maintenance of Property, Facility and
Enterprise. The Rincon Band shall keep the assets
relating to the Property, the Facility and the
Enterprise, both real and personal, in good order and
condition and shall make all necessary repairs,
replacements, and improvements thereto so that its
business may be properly and advantageously conducted.
7.7 Cost Estimates. Any Cost Estimate will be true and
correct and, to the best of Borrower's knowledge, after diligent
investigation, will contain all anticipated costs to complete any
Project. In arriving at such Cost Estimate, Borrower may rely on
representations made to it by the Lender. Should such costs,
whether for materials, equipment, or services, exceed the
estimate(s) in the budget as agreed to by both parties, the Lender
agrees to lend the Borrower such additional monies as may be
necessary to complete the Project in reasonable conformity with the
previously agreed to plans and specifications but not to exceed ten
(10%) percent over the Cost Estimate, or Five Million Dollars
($5,000,000.00), whichever is less.
7.8 Utilities. All utility services necessary for any
Project and the conduct of gaming and commercial activities on the
Property are available at the boundaries of the Property. Upon
completion of the Project, direct connection will be made to all
such utility facilities.
7.9 Full Disclosure. Neither this Agreement nor any
statement or instrument referred to herein or any other
information, report, or statement delivered to Lender by Borrower,
or any other party on Borrower's behalf, contains any untrue
statement or omits to state a material fact necessary to make the
statements herein or therein not misleading. Borrower has full
disclosed to Lender the existence and terms of all agreements,
written or oral, relating to Borrower's acquisition, ownership,
financing, leasing, management, and maintenance of the Property and
the Facility, the renovation, improvement and possible expansion of
the Facility, and the equipping, start-up and operation of the
Enterprise which would be material to Lender's decision to make the
Loan on the terms herein stated.
8. Borrower's Covenants. Borrower hereby covenants with
Lender as follows:
8.1 Project. Any Project will be accomplished in a good
and workmanlike manner in substantial accordance with the Plans,
any governmental and quasi-governmental requirements, and all
provisions of the Loan Documents. Such work will be prosecuted
with due diligence and continuity in accordance with a schedule.
Borrower will use its best efforts to complete renovation,
improvement and possible expansion of the of the Facility on or
before the scheduled completion date. A Project shall be deemed
completed when all conditions precedent to Lender's obligation to
make the final advance for labor and materials, as set forth in
Section 5.20 above, have been satisfied.
8.2 Rincon Band Licenses and Amendments to its Gaming
Control Ordinance. The Rincon Band further agrees that any actions
by the Commission or any other tribal agency, including any
amendments made to the Gaming Control Ordinance, will be a
legitimate effort to ensure that Class II Gaming and Other Gaming
is conducted in a manner that adequately protects the environment,
the public health and safety, and the integrity of the gaming and
commercial activities conducted on the Property. The Rincon Band
agrees that unless required to do so by law or court order, neither
the Rincon Band, the Commission, nor any other tribal agency will
adopt any amendments to the Articles of Association or the Gaming
Control Ordinance, or any other ordinance, law, or provision that
will prejudice FGC's rights under this Agreement, the Note, or the
Security Agreement, or any amendments to those agreements.
8.3 License Fees. The Rincon Band agrees that there
shall be no other taxes, license fees, registration fees, transfer
or assignment fees, or any other fees or impositions of any sort by
the Rincon Band, the Commission or any other tribal agency levied,
charged, or imposed upon the FGC, or any affiliate or principal;
provided, however, the Rincon Band may recoup actual expenses for
administrative costs associated with any licensing of FGC or the
Lender's Representative.
8.4 Additional Documents. Borrower will execute such
additional instruments as may be required by any of the Loan
Documents or reasonably requested by Lender in order to carry out
the intent of this Agreement or to perfect or give further
assurance of any of the rights granted or provided for under the
Loan Documents.
8.5 Notice of Litigation, Etc. Borrower will promptly
advise Lender in writing of (i) all litigation, regardless of
amount, affecting or threatened against the Property, the Facility,
the gaming or other commercial activities conducted on the
Property, or the Enterprise; (ii) all complaints, claims, charges,
and contemplated complaints, claims and charges of which Borrower
has knowledge made by any governmental authority in respect of the
Property, the Facility, the gaming or other commercial activities
conducted on the Property, or the Enterprise; (iii) any material
difficulty in obtaining labor or materials when needed for timely
completion of any Project in accordance with the Plans and this
Agreement; (iv) any anticipated increase or decrease in any line
item of the Cost Estimate; (v) any material damage or injury to the
Property or the Facility or any part thereof; (vi) any event of
default under any of the Loan Documents; (vii) the occurrence of
any event which, with the lapse of time or giving of notice, or
both, might mature into an event of default under any of the Loan
Documents or under any other agreement by which Borrower or the
Collateral is bound; and (viii) any other matter which has resulted
in, or might result in, a material adverse change in the financial
condition of Borrower or the Enterprise, or materially impair
Borrower's or the Enterprise's ability to perform its obligations
under the Loan Documents.
8.6 Inspections. Borrower will permit Lender's
Representative and other consultants as to whom Lender gives
Borrower reasonable notice free access to inspect the Property and
the Facility, and the materials to be used therein and will make
available for audit and inspection all contracts, records, plans,
and shop drawings (including the Plans) relating to the gaming or
other commercial activities conducted on the Property and any
Project. Borrower will cooperate with Lender, Lender's
Representative, and any other representative or consultant of
Lender to enable them to perform these functions. The cost of such
inspections shall be deemed to be a construction cost or an
Operating Expense, as the case may be.
8.7 Insurance. Borrower will maintain, or cause its
contractors to maintain, with responsible insurance carriers
licensed to do business in the State of California insurance
satisfactory to Lender covering the gaming or other commercial
activities conducted on the Property and any Project as follows:
8.7.1 During the course of any Project,
builder's risk insurance ("the Builder's Risk Policy") on
"all risk" basis (including collapse) on a completed
value form for full replacement value covering the
interest of Borrower and its Contractors in all work
incorporated in the Facility and all materials and
equipment on or about the Facility. All materials and
equipment in any off-site storage location intended for
permanent use in the Facility or incident to a Project
shall be insured on an "all risk" basis as soon as the
same have been acquired by Borrower;
8.7.2 Comprehensive general liability insurance
in an amount not less than Five Hundred Thousand Dollars
($500,000.00) for each occurrence and One Million Dollars
($1,000,000.00) in the aggregate for bodily injury and
Five Hundred Thousand Dollars ($500,000.00) for property
damage; and an excess liability policy (umbrella form)
with combined single limit of One Million Dollars
($1,000,000.00). The comprehensive general liability
insurance shall include premises liability, contractor's
protective liability on the operations of all
subcontractors, completed operations and blanket
contractual liability. The automobile liability shall
cover owned, non-owned, and hired vehicles. All such
policies shall include the Rincon Band or the Enterprise,
and the Lender as insureds.
8.7.3 Upon expiration of the Builder's Risk
policy, insurance against loss or damage by fire and such
other risks or hazards (including burglary and theft) as
are insurable under then available standard forms of "all
risk" insurance policies for the full replacement cost
value of the Facility, including the improvements added
in the Project (including an "agreed amount"
endorsement).
8.7.4 Worker's Compensation and Employer's
Liability Insurance subject to the statutory limits of
the State of California.
8.7.5 Such other insurance with respect to the
Facility and in such amounts as Lender from time to time
may reasonably request against such other insurable
hazards which at the time are commonly insured against in
respect of property similar to the Facility.
The insurance polices required under clauses 8.7.1, 8.7.3 and 8.7.5
above shall contain a standard non-contributory endorsement in
favor of Lender and shall not have a coinsurance clause of less
than eighty percent (80%). The insurance required under clause
8.7.2 above shall name Lender as an additional insured. All
insurance required hereunder shall contain a provision requiring at
least twenty (20) days' prior written notice to Lender before any
cancellation (including nonpayment of premium), material changes or
reduction shall be effective. Borrower may effect any insurance
coverage required by this Agreement under blanket insurance
policies, provided that Lender shall be furnished evidence
satisfactory that the protection afforded Borrower and Lender under
such blanket insurance policy is not less than that which would
have been afforded under separate policies relating only to the
Project.
8.8 Performance of Obligations. Borrower will pay all
of its obligations when due, prior to the date on which penalties
attach thereto. Borrower will perform all of Borrower's
obligations under the General Contract and Major Subcontracts and
will enforce the performance of the obligations of the other
parties thereto.
8.9 Records. Borrower will keep and maintain full and
accurate accounts and records of its operations according to
generally accepted accounting principles and practices applied on
a basis consistent with prior periods and will permit Lender and
Lender's Representative to have access thereto and to make audits,
examinations, and copies thereof at all reasonable times. The cost
to the Borrower to keep and maintain such records shall be
reimbursed as an Operating Expense of the Enterprise.
8.10 Creation of Liens. Borrower will not create,
assume, or suffer to exist any mortgage, pledge, security interest,
encumbrance, or other lien (including the lien of an attachment,
judgment, or execution) securing a charge or obligation affecting
any or all of the Collateral, excluding only; (i) liens for
governmental charges which are not delinquent or the validity of
which is being contested in good faith by appropriate proceedings;
(ii) deposits made to secure statutory and other obligations
incurred in the ordinary course of Borrower's business; and (iii)
security interests securing Borrower's indebtedness to the Columbia
Group, L.L.C. (which shall be subordinate to Lender's securities
interests) and any lien which has been previously approved by
Lender in writing.
8.11 Transfers. Borrower shall not sell, assign, convey,
or otherwise transfer, or suffer, or permit the sale, assignment,
conveyance, or other transfer of any of the Collateral, or any
interest therein.
9. Default.
9.1 Borrower's Default. Lender may terminate all
obligations of Lender to make further disbursement under the Loan
Documents, and Lender may declare the Note and all other
indebtedness and obligations of Borrower owing to Lender to be
immediately due and payable if any of the following events shall
occur and are not either remedied by Borrower within any grace
period stated or waived by Lender.
9.1.1 Nonpayment. Failure to pay when due
any Royalty, principal, or late charge required to be
paid to Lender, or others, under the terms of the Loan
Documents, and the failure to cure such default within
thirty (30) days after the due date of such payment;
9.1.2 Breach of Agreement. Default by
Borrower in the performance or observance of any
agreement (other than for non-payment of money or the
other defaults specified in Sections 9.1.3 through 9.1.7
below) contained in the Loan Documents or under the terms
of any other instrument delivered to Lender in connection
with the Loan and the failure of Borrower to cure such
default within sixty (60) days after written notice from
Lender;
9.1.3 Lien Filings. The existence, for a
period of sixty (60) days or more, after Borrower becomes
aware of the same, of any lien in favor of someone other
than Lender or the Columbia Group, L.L.C., on the
Collateral, or any portion thereof, or discharge,
satisfactory to Lender;
9.1.4 Condemnation. Eminent domain
proceedings are commenced with respect to all or any
material portion of the Facility or any interest therein,
unless Lender reasonably determines, in its good faith
judgment, that any taking pursuant thereto would not
materially adversely affect the value of the Facility or
its intended use;
9.1.5 Representation and Warranties. Any
representation, warranty, statement, certificate,
schedule, or report made or furnished to Lender by or on
behalf of Borrower proves to be knowingly false or
knowingly erroneous in any material respect at the time
of the making thereof or any representation or warranty
ceases to be complied with in any material respect;
9.1.6 Bankruptcy. Borrower or the
Enterprise becomes insolvent or the institution of
bankruptcy, reorganization, liquidation, or receivership
proceedings by or against Borrower, the Enterprise or the
General Contractor engaged for any Project, and, in the
case of any involuntary proceedings, such proceedings are
not dismissed within forty-five (45) days after the
institution thereof; provided Lender shall not be
obligated to make any advance under this Agreement and
the Note while any such proceedings are pending; or
9.1.7 Judgment; Attachment. Entry by any
court of a final judgment against Borrower which, in the
reasonable judgment of Lender, materially and adversely
affects or will affect, Borrower's ability to perform its
covenants and agreements under the Loan Documents or
impairs any security for the Loan; or any attachment of
any of the Collateral which is not discharged to the
satisfaction of Lender or before the transfer of any
interest therein.
9.2 Lender's Default. Borrower may terminate all
obligations of Borrower to Lender under this Agreement other than
Borrower's obligation to repay the outstanding principal balance of
the Note if any of the following events shall occur and are not
either remedied by Lender within any grace period stated or waived
by Borrower.
9.2.1 Nonpayment of Advance. Failure to pay
when due any advance required to be paid to Borrower, or
others, under the terms of the Loan Documents, and the failure
to cure such default within thirty (30) days after the date
requested for such payment;
9.2.2 Breach of Agreement. Default by Lender in
the performance or observance of any agreement (other than for
non-payment of advances or the other defaults specified in
Sections 9.2.3 through 9.2.4 below) contained in the Loan
Documents or under the terms of any other instrument delivered
to Borrower in connection with the Loan and the failure of
Lender to cure such default within sixty (60) days after
written notice from Borrower;
9.2.3 Representation and Warranties. Any
representation or warranty, made to Borrower by or on behalf
of Lender proves to be knowingly false or knowingly erroneous
in any material respect at the time of the making thereof or
any representation or warranty ceases to be complied with in
any material respect; or
9.2.4 Bankruptcy. Lender becomes insolvent or
the institution of bankruptcy, reorganization, liquidation, or
receivership proceedings by or against Lender, and, in the
case of any involuntary proceedings, such proceedings are not
dismissed within forty-five (45) days after the institution
thereof.
10. Business and Affairs in Connection with the Enterprise.
10.1 Authority and Responsibility. All business and
affairs in connection with the day-to-day operation, management and
maintenance of the gaming and other commercial activities on the
Property shall be the sole responsibility of the Rincon Band,
through the Enterprise, including but not limited to: (1)
maintaining and improving the gaming facility; (2) establishing
days and hours of operation; (3) hiring, firing, training and
promoting employees; (4) maintaining the books and records of the
Enterprise, subject to the requirements of the Gaming Ordinance of
the Rincon Band, the Indian Gaming Regulatory Act of 1988, and any
other applicable requirements; (5) preparing the operation's
financial statements and reports of the Enterprise; (6) hiring and
supervising security personnel; (7) providing fire protection
services; (8) placing advertising and marketing programs; (9)
paying bills and expenses of the Enterprise (10) establishing and
administering employment practices; (11) obtaining and maintaining
insurance coverage, including coverage of public liability and
property loss or damage; (12) complying with all provisions of the
Internal Revenue Code applicable to the Enterprise; (13)
maintaining and providing food, beverage and tobacco sales and
service for the Enterprise; and (14) providing the National Indian
Gaming Commission or other governmental agencies with information
necessary to comply with the IGRA, regulations issued thereunder,
and other applicable law.
10.2 Rincon Band Responsibilities: Engagement of Auditor;
Employee Background Checks; NEPA. The Rincon Band, through the
Enterprise, shall: (1) engage the services of an independent
auditor, the costs of which shall be an Operating Expense of the
Enterprise, to perform such services as may be required to comply
with the Indian Gaming Regulatory Act of 1988, and any regulations
duly adopted thereunder, or any other applicable requirement
relating to such audits; (2) perform such background checks on
employees or prospective employees of the Enterprise as may be
required to comply with the IGRA, and any regulations adopted
thereunder, or any other applicable requirement; (3) supply the
National Indian Gaming Commission with all information necessary
for the Rincon Band to comply with the regulations of the
Commission issued pursuant to the National Environmental Policy
Act; and (4) provide to the National Indian Gaming Commission or
other governmental agencies information necessary to comply with
IGRA, regulations issued thereunder, and other applicable law.
10.3 Establishment of Accounting and Cash Management
Systems. The Rincon Band shall install systems for the monitoring
of all funds of the Enterprise. Such systems at all times shall;
(1) include an adequate system of internal accounting controls; (2)
permit the preparation of financial statements in accordance with
generally accepted accounting principles; (3) be susceptible to
audit; (4) allow for the calculation of any annual fees payable to
the National Indian Gaming Commission or other authority; (5)
permit the calculation of the Royalty; and (6) provide for the
allocation of operating expenses or overhead expenses among the
Rincon Band, the Enterprise, and any other user of shared
facilities and services. The Rincon Band shall maintain and police
the systems of cash management in order to prevent any loss of
proceeds from the Enterprise. Lender's Representative, accompanied
by the General Manager, shall have the right to inspect and audit
the systems at all times.
10.3.1 Access. Lender's Representative shall have
full right to be present, at the General Manager's
option, in the count room or at a surveillance station
affording an equal opportunity for observation, and
oversee the counting of the cash revenues of the
Enterprise on a daily basis. It is specifically
understood that the General Manager shall be present at
all times during the subject oversight period and only
employees designated by the General Manager may complete
the physical counting of revenues.
10.3.2 Bank Accounts. The Rincon Band shall select
a bank for the deposit and maintenance of funds of the
Enterprise, and shall establish such bank accounts as it
deems appropriate. The Enterprise shall maintain at
least four accounts, a general account in which all
receipts of the Enterprise will be deposited (the
"General Account"), an account for Operating Expenses
(the "Expense Account"), an account for payroll (the
"Payroll Account"), and an account for prizes (the "Prize
Account"). The General Account and the Operating Account
shall be joint bank accounts in the name of both Borrower
and Lender, requiring signatures of designated
representatives of both Lender and Borrower for any
withdrawals. Transfers shall be made from the General
Account to the Expense Account, the Payroll Account, and
the Prize Account, and all transfers from the General
Account shall be signed both by the General Manager or
his designee and by the Lender's Representative. All
depositories and the accounts therein shall be federally
insured.
10.3.3 Daily Deposits to General Account. The
Rincon Band shall collect all gross sales, revenues, and
any other proceeds connected with or arising from the
operation of the Enterprise, including the sale of all
products, tobacco, alcohol, food and refreshments and all
other activities on the Property, and deposit them into
the General Account at least once during each twenty-four
(24) hour period. All money received by the Enterprise
on each day that it is open must be counted at the close
of operations for that day or at least once during each
twenty-four hour period. Adequate security shall be
provided in transporting the funds to the bank. The
parties agree to obtain a bonded transportation service
to effect the safe transportation of the daily receipts
to the bank, if such service is available at reasonable
cost. The expense of transportation shall be an Operating
Expense.
10.3.4 No Cash Disbursements. Neither the Rincon
Band, the Enterprise, nor the General Manager shall make
any cash disbursements from any fund of the Enterprise
for any reason whatsoever except for the payment of cash
prizes. Any and all other payments or disbursements by
the Enterprise shall be made by check drawn against an
Enterprise account. The General Manager shall have the
obligation to promptly file any reports of gaming
winnings and the names of winners as may be required by
the Internal Revenue Service of the United States.
10.4 Reporting, Accounting and Books of Account.
10.4.1 Statements. The Rincon Band shall prepare
and provide to FGC comparative financial statements
monthly, quarterly and annually of all sales, revenues,
and all other amounts collected and received. Such
financial statements must include all deductions and
disbursements made in connection with the Enterprise and
in conformance with the budget.
10.4.2 Books of Account. The Rincon Band shall
maintain full and accurate books of account of the
Enterprise at an office in the Facility or at such other
location as may be designated by the Rincon Band. The
books and the records shall be maintained on a GAAP
basis, modified to include inventories, prepaid insurance
premiums, accrued incentive compensation, accrued
progressive jackpot payout, and any other assets or
liabilities the Enterprise shall record in order to avoid
a significant fluctuation in monthly distributions to the
Rincon Band and FGC. Lender's Representative shall have
access to the daily operations of the Enterprise and
shall have the right to inspect, examine and copy all
such books and supporting business records during normal
business hours while in the present of and after notice
to the General Manager.
11. Dispute Resolution, Binding Arbitration and Limited
Consent to Suit.
11.1 Informal Resolution. Any disagreement or dispute
arising between the parties under this Agreement shall be resolved,
whenever possible, by meeting and conferring. A party may request
such a meeting by giving notice to the other, and the parties shall
meet within seven (7) days of the notice. If the disagreement or
dispute cannot be resolved to the mutual satisfaction of the
parties within ten (10) days after the meeting, then any party
shall have the right to call for binding arbitration as provided
below.
11.2 Request for Binding Arbitration. In the event that
any dispute or disagreement cannot be resolved as provided in
Section 11.1 of this Agreement, or in the event of any attempted
termination of this Agreement, or any other dispute which arises
between the parties hereunder, including any dispute as to the
validity of this Agreement or the other Loan Documents, any party
may call for binding arbitration pursuant to California Law.
Judgment upon any award rendered by the arbitrators may be entered
and enforced by a court subject to the provisions of this Section
11 of this Agreement. However, the Rincon Band expressly asserts
its sovereign immunity by not allowing or being subject to any
injunctive relief, whether permanent or temporary, or remedy of
specific performance except as agreed to or modified herein.
11.2.1 Selection of Arbitrators. The Board of
Arbitrators shall be comprised of three arbitrators, one
arbitrator to be selected by the Rincon Band, one
arbitrator to be selected by FGC, and a third arbitrator
to be selected by the first two arbitrators. However,
the parties may agree to use a single arbitrator. The
arbitrator(s) shall be attorney(s) licensed to practice
law in any State of the United States of America.
11.2.2 Venue for Arbitration. The venue for
arbitration under this Agreement shall be the County of
San Diego, California, or such other county as the
parties may agree. The parties shall share the costs of
any arbitration proceeding equally.
11.3 Consent to Suit. By this Agreement, the Rincon Band
does not waive, limit or modify its sovereign immunity from
unconsented suit, except as specifically provided in Section 11 of
this Agreement. The Rincon Band does expressly waive in a limited
manner its sovereign immunity from unconsented suit, and does
consent to be sued, specifically limited to the following actions
and judicial remedies:
11.3.1 Claim Made Only by FGC. Claims to which
this Section 11 applies must be made directly by FGC or
its permitted assigns as a corporate entity, and not by
any representative, agent, partner, or other entity of
FGC, or by any other person, corporation, partnership or
entity whatsoever.
11.3.2 Venue. Venue and jurisdiction for any
action brought hereunder any action brought for
enforcement of a remedy hereunder shall be in the United
States District Court for the District of California in
which the Reservation of the Rincon, San Luiseno Band of
Mission Indians lies, the United States Court of Appeals
for the Ninth Circuit, and the United States Supreme
Court. If the United States Courts decide they have no
jurisdiction, then and only then shall venue and
jurisdiction be in the Superior Court for the County of
San Diego, California, and appropriate appellate courts
of the State of California, and the United States Supreme
Court. The Rincon Band, through the Commission, hereby
expressly waives any right to proceed before any tribal
court or authority of the Rincon Band, and further
expressly waive any right to require FGC to exhaust
tribal remedies prior to the bringing any dispute
resolution provided for in this Section 10, or any action
in the United States Courts or the Courts of the State of
California as provided herein.
11.3.3 Monetary Damages. The Rincon Band consents
to the enforcement of any arbitration award pursuant to
this Section 11. Such enforcement shall be limited to
money damages, except as specifically provided in this
Section 11. The arbitrator(s) and/or courts shall have
no authority or jurisdiction to execute against any trust
assets of the Rincon Band, including the Property or the
Facility. The arbitrator(s) and/or courts shall have the
authority or jurisdiction to execute against (i) any
undistributed or future proceeds of the Enterprise or any
other gaming operation of the Rincon Band, and (ii) any
other assets of the Enterprise (not including the
Property or the Facility). If there has been a
termination without just cause by the Rincon Band,
pursuant to the terms of this Agreement, FGC shall be
entitled to the damages specified in those sections, and
to a sum equal to the present value of the income FGC
would have received, absent termination. Such sum shall
be calculated by the arbitrators by applying California
law. If there has been a termination for any reason by
FGC, FGC shall be entitled to repayment of the
outstanding principal balance of the Note on, and any
Royalty payable through, the date of such termination.
11.3.4 No Injunctive or Other Relief. The Rincon
Band specifically declines to consent to any action for
or the issuance of any injunctive relief or specific
performance against the Rincon Band or the Enterprise and
it asserts its sovereign immunity as to those remedies
except as stated herein. The Rincon Band and the
Enterprise expressly waive their sovereign immunity from
suit, to allow temporary and limited injunctive relief
for the sole purposes as follows: (1) to allow FGC and
its officers and principals to obtain their personal
belongings from the Enterprise; (2) to allow FGC and its
officers or designees to enter the land of the Rincon
Band to enforce and execute any money judgment that it
may receive through arbitration; and, (3) to enforce the
rights of the parties hereto to have a determination of
the reasonableness and timeliness of consent of the
parties when required under this Agreement.
12. Miscellaneous. The parties further agree as follows:
12.1 Notices. Any notice required to be given pursuant
to this Agreement shall be delivered by either by Certified Mail,
Return Receipt Requested, or by Federal Express or other national
courier, addressed to the Rincon, San Luiseno Band of Mission
Indians, as follows:
Chairperson, Rincon Band Tribal Business Committee
1 East Tribal Road
Valley Center, California 92082
with a copy to:
Darrell Gentry, Tribal Administrator
1 East Tribal Road
Valley Center, California 92082
and to FGC at:
Florida Gaming Corporation
1750 South Kings Highway
Fort Pierce, Florida 34945-3099
Attention: W. Bennett Collett
Chairman and Chief Executive Officer
with a copy to:
R. James Straus
Brown Todd & Heyburn PLLC
3200 Providian Center
Louisville, Kentucky 40202-3363
or to such other address as the Rincon Band or FGC may in writing
specify, using the notice procedure of this Section. Any such
notice shall be deemed given five (5) days following deposit in the
United States mail or receipt by courier.
12.2 No Waiver; Cumulative Remedies. No failure on the
part of Lender to exercise, and no delay in exercising, any right
or remedy hereunder, or otherwise provided by law or equity, will
operate as a waiver thereof. Each right and remedy provided under
the Loan Documents is distinct and cumulative to all other rights
or remedies provided thereunder or afforded by law or equity, and
may be exercised concurrently, independently, or successively, in
any order whatsoever. If Lender shall elect to selectively and
successively enforce its rights under any one or more of the Loan
Documents securing payment of the Note, such action shall not be
deemed a waiver or discharge of any other lien or encumbrance
securing payment of the Note until such time as Lender shall have
been paid in full all sums owing to Lender.
12.3 Survival of Representations. All representations
and warranties made herein shall survive the making of the Loan
hereunder and the delivery of the Loan Documents.
12.4 No Third Party Beneficiaries or Assignment. Nothing
in this Agreement, express or implied, is intended to confer upon
any person, other than the parties hereto and their respective
successors and permitted assigns, any rights or remedies under or
by reason of this Agreement. Notwithstanding the foregoing, it is
contemplated and agreed that (i) the Rincon Band will assign all of
its rights, obligations, limitations and duties hereunder to the
Enterprise, when duly organized as a corporation or other agency of
the Rincon Band; and (ii) FGC may assign all of its rights and
obligations under this Agreement and the other Loan Documents to a
wholly owned subsidiary of FGC.
12.5 Approvals. When approval by any party is required
hereunder, such approval will not be unreasonably withheld.
12.6 Notices. Any notices, requests, demands, or other
communications required or permitted hereunder shall be sufficient
if made in writing and (i) delivered personally, or (ii) sent by
certified mail, postage prepaid, return receipt requested and
addressed to the appropriate party at its address(es) as set out in
this Agreement or to such other address as such party may
substitute by written notice as above provided.
12.7 Construction. This Agreement and the other Loan
Documents shall be construed in accordance with the laws of the
State of California. Nothing in this Agreement will be construed
to constitute Lender as a joint venturer with Borrower or to
constitute a partnership between Lender and Borrower. The
descriptive headings of the sections of this Agreement are for
convenience only and are not to be used in the construction of the
contents of this Agreement. This Agreement may be executed in
multiple counterparts, each of which will be an original
instrument, but all of which will constitute one agreement. As
used in this Agreement the words "hereunder" or "herein" shall be
deemed to refer to this Agreement as a whole. In the event of
inconsistency between this Agreement and any other Loan Documents,
this Agreement shall control.
12.8 Binding Effect; Joint and Several Liability; Agents.
This Agreement shall be binding on Borrower and Lender and their
respective successors and assigns and will inure to the benefit of
Borrower and Lender and their respective successors and assigns.
Notwithstanding the foregoing, and except the permitted assignment
to the United States of America, Borrower will not assign its
rights under this Agreement without Lender's prior written consent,
and any such attempted assignment will be void without such
consent. In exercising any rights hereunder or taking any action
provided for herein, Lender may act through its employees, agents,
or independent contractors as authorized by Lender.
12.9 Expiration of Agreement. If 400 Gaming Machines
are not in operation on the Property on or before October 31, 1995,
either Borrower or Lender may terminate this Agreement by
delivering notice of termination to the other, and upon such
delivery, the parties shall have no further obligations to each
other; provided, however, that if during the one-year period
following termination in accordance with this Section 12.9,
Borrower obtains a commitment from another source of financing that
will enable the commencement of the operation of Gaming Machines on
the Property, Lender shall have the right of first refusal to
provide financing on the same terms as such other source or, at
Lender's option, terms more advantageous to the Borrower. Lender
shall exercise its right to provide financing under this Section
12.9 by delivering written notice including the terms on which it
will provide financing no later than the tenth calendar day after
Borrower delivers to Lender the terms proposed by the other source
of financing.
12.10 FGC's Covenant of Non-Interference. FGC,
acting as a Lender under this Agreement, agrees that it will not
directly or indirectly interfere with or attempt to influence the
internal affairs or governmental decisions of the Rincon Band, its
members, the Commission or its Government. For purposes of this
Agreement, interference with or influencing internal affairs or
governmental decisions shall be defined as any attempt to influence
a decision of the Rincon Band, the Rincon Tribal Business
Committee, or any officer or agency of the Rincon Band, by doing
any of the following acts: offering bribes, making written or oral
threats to the personal, financial or employment status of any
person or thing, or similar intentional acts. Normal discussion
relating to operating, managing and/or maintaining the Enterprise
or otherwise conducting normal Enterprise activities shall not
constitute interference with or attempting to influence the
internal affairs or governmental decisions of the Rincon Band.
Interference shall be grounds for termination only if such
interference has been determined to have taken place by a decision
of an arbitrator under the arbitration provisions of Section 11 of
this Agreement.
12.11 Right of First Refusal. If the Rincon Band
elects to engage an independent contractor to manage the
Enterprise, FGC shall have a right of first refusal to negotiate
and enter into a agreement with the Rincon Band for the provision
of management services in accordance with IGRA and the rules
promulgated thereunder.
12.12 Term of this Agreement. The term of this
Agreement shall commence on the Commencement Date and shall
continue until the Loan shall have been paid in full and Borrower
shall have paid or fully performed all of its other obligations
hereunder, including the obligation to pay the Royalty.
Executed and delivered as of the date first above written.
"Lender": FLORIDA GAMING CORPORATION
A Delaware corporation
By: /s/ W. Bennett Collett
W. Bennett Collett
Chairman and Chief Executive Officer
"Borrower": RINCON, SAN LUISENO BAND OF MISSION
INDIANS, a federally recognized
Indian Tribe
By: /s/ Robert Calac
Robert Calac, Chairman
/s/ Vernon Wright
Vernon Wright, Vice-Chairman
/s/ Ruth Calac
Ruth Calac, Council Member
/s/ Patricia Duro
Patricia Duro, Council Member
KXE.E5837
F:\USERS\179\FLAGAMNG\RINCON\8K091595
mny 09/11/95
FOR IMMEDIATE RELEASE
Fort Pierce, Fla, September 18, 1995 -- Florida Gaming
Corporation (NASDAQ Small Cap-"BETS") today announced that the
Company has agreed to provide up to $5 million in financing to the
Rincon, San Luiseno Band of Mission Indians. Proceeds of the loan
will be used for working capital for the River Oaks Casino, which
the Rincon Band currently owns and operates in San Diego County,
California.
The Loan Agreement will take effect when at least 400 gaming
machines are in operation at the Casino. Florida Gaming has agreed
to make up to $5 million available to the Rincon Band during the
seven-year term of the Agreement. In lieu of interest on the loan,
Florida Gaming will receive a royalty during the term of the Loan
Agreement equal to 12-1/2 percent of all gaming revenues of the
Casino other than from gaming machines, plus 12-1/2 percent of the
"Drop" or "Handle" from gaming machines during the first five years
and 11 percent during the sixth and seventh years of the Loan
Agreement. Florida Gaming has also agreed to grant the Rincon Band
25,000 shares of its common stock in two annual installments when
the Loan Agreement takes effect. Florida Gaming also agreed to
advance $120,000 to the Rincon Band in September, which will
represent an initial draw on the loan if the Loan Agreement takes
effect.
The operation of gaming machines at the Casino is currently
prohibited by a preliminary injunction issued by the United States
District Court for Southern California. The injunction was sought
by the United States Attorney for Southern California, based upon
federal circuit court decisions that the operation of gaming
machines by Native American tribes in California was prohibited by
the Indian Gaming Regulatory Act because gaming machines were
prohibited by California law, and to date California Governor
Wilson has refused to enter into a gaming compact with California
tribes. Since the preliminary injunction was imposed on the Rincon
Band, the United States Court of Appeals has agreed to review its
prior decisions in light of a recent California appellate court
decision that California law permits the operation of gaming
machines by the California Lottery, contributing to the uncertain
parameters of Indian gaming in California.
The Rincon Band plans to request a hearing in the U.S.
District Court at the earliest possible date to consider the
lifting of the injunction. This request is based on the Rincon
Band's belief that it now complies with all conditions for the
operation of gaming machines under the Indian Gaming Regulatory
Act. As part of this effort, the Rincon Band has now assumed
direct management of the Casino, is completing a settlement with
the former third-party managers of the Casino, and has entered into
the Loan Agreement with Florida Gaming. No hearing date has been
set, and there can be no assurance that the injunction will be
lifted. The lifting of the injunction would place the Rincon Band
in a position comparable to the three other Native American tribes
in San Diego County and the 22 other tribes in California that
already operate Casinos with gaming machines.
W. Bennett Collett, Chairman of Florida Gaming, stated, "We
believe that San Diego County (population 2.7 million) is one of
the most promising leisure and gaming markets in the country.
Florida Gaming is very pleased to be involved with the Rincon Tribe
in this endeavor. If the pending legal issues can be resolved in
a timely manner, the Rincon River Oaks Casino could be in full
operation within a few weeks."
Florida Gaming announced on June 26, 1995, an Agreement with
Centrum X Corporation that gives Florida Gaming right of first
refusal in a joint venture to build and manage a casino on the
Tonkawa Indian Tribe reservation in Oklahoma. If Florida Gaming
exercises its right of refusal, the Tonkawa Management Agreement
will be transferred by Centrum X to a newly-formed corporation to
be 80% owned by Florida Gaming and 20% by Centrum X and its
associates.
On August 28, 1995, Florida Gaming Corporation announced the
signing of a Management Agreement with the Ponca Indian Tribe of
Nebraska to build and operate a casino in Douglas County (Omaha)
for Class II and Class III gaming as authorized by the Indian
Gaming Regulatory Act. Under the Agreement, the Ponca Tribe will
receive 70% of the net revenues from gaming, with Florida Gaming
receiving 30%. The Management Agreement has a 5-year term
beginning upon the commencement of gaming at the facility. The
Agreement, is subject to approval by the National Indian Gaming
Commission, the acquisition of land that can be taken in trust
under the Indian Gaming Regulatory Act as the site for the facility,
the execution of definitive financing agreements, and certain other
conditions. Under the Indian Gaming Regulatory Act, certain gaming
activities are also subject to the negotiation of a compact between
the Ponca Tribe and the State of Nebraska.
Florida Gaming Corporation also owns and operates Jai-Alai and
Inter-Track Wagering (I.T.W.) Pari-Mutuel facilities in Fort
Pierce, Florida.
Contact: W. Bennett Collett, Chairman, or Timothy L. Hensley,
Executive Vice President, (502) 589-2000 or (407) 464-7500.
