<PAGE 1>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _______________ to ____________
Commission file number 0-19049
American Gaming & Entertainment, Ltd.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Delaware 74-2504501
________________________________ ________________________________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
One Woodland Avenue, Paramus, New Jersey 07652
__________________________________________________
(Address of principal executive offices)
(609) 822-8505
__________________________
(Issuer's telephone number)
______________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No ___
Number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date.
Class Outstanding at September 30, 1998
_________________________ ______________________________
Common Stock, $.01 par value 12,532,102 shares
<PAGE 2>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1998 1997
____________ ____________
ASSETS
Current Assets
Cash $ 152,000 $ 381,000
Restricted cash 1,105,000 630,000
Prepaid expenses 154,000 232,000
Other current assets 359,000 313,000
____________ ____________
Total current assets 1,770,000 1,556,000
Assets held for sale 435,000 431,000
Casino barge and improvements, subject to
lease, net of accumulated depreciation of
$4,909,000 - 1998 and $3,907,000 - 1997 7,684,000 8,686,000
Furniture, fixtures and equipment,
net of accumulated depreciation
of $78,000 - 1998 and $71,000 - 1997 7,000 14,000
Other non-current assets 262,000 465,000
_____________ ____________
$ 10,158,000 $ 11,152,000
============= ============
See Notes to Consolidated Financial Statements
<PAGE 3>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1998 1997
____________ ____________
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Amounts due to related parties:
Accrued interest $ 20,987,000 $ 16,788,000
Dividends payable 2,403,000 1,953,000
Accrual for lease costs 2,701,000 2,701,000
Current portion of long term debt 40,510,000 40,510,000
__________ __________
66,601,000 61,952,000
Accounts payable 132,000 68,000
Accrued payroll and related expenses 2,000 12,000
Accrued expenses and other current
liabilities 2,056,000 1,389,000
Short term portion of estimated net
liabilities for subsidiaries in
bankruptcy 1,646,000 1,162,000
_________ _________
Total current liabilities 70,437,000 64,583,000
__________ __________
Long term portion of estimated net
liabilities for subsidiaries in bankruptcy 2,845,000 3,329,000
_________ _________
73,282,000 67,912,000
__________ __________
Commitments and Contingencies
Stockholders' Deficiency
Preferred stock, 1,000,000 shares authorized:
Series A preferred stock, par value
$.01 per share, 55,983 shares issued 1,000 1,000
Series C and D cumulative preferred
stock, and Series E preferred stock,
par value $.01 per share, 4,000 shares
authorized and issued for each series 15,552,000 14,602,000
Common stock, par value $.01 per share;
50,000,000 shares authorized, 12,556,137
shares issued (including 24,035 shares
held in treasury) 126,000 126,000
Additional paid-in capital 41,888,000 43,288,000
Cost of shares held in treasury (25,000) (25,000)
Accumulated deficit (120,666,000) (114,752,000)
_____________ ____________
(63,124,000) (56,760,000)
_____________ ____________
$ 10,158,000 $ 11,152,000
============= ============
See Notes to Consolidated Financial Statements
<PAGE 4>
<TABLE>
AMERICAN GAMING & ENTERTAINMENT LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
__________________ ___________________
1998 1997 1998 1997
________ ________ ________ _______
<S> <C> <C> <C> <C>
Revenues $ - $ 136,000 $ 445,000 $ 516,000
_________ _________ __________ __________
Costs and expenses
Selling, general and administrative 397,000 503,000 1,283,000 1,247,000
Depreciation and amortization 336,000 295,000 1,009,000 887,000
_________ _________ ___________ __________
Total costs and expenses 733,000 798,000 2,292,000 2,134,000
_________ ________ ___________ __________
Operating loss (733,000) (662,000) (1,847,000) (1,618,000)
_________ ________ __________ __________
Other income (expense)
Interest income 26,000 19,000 70,000 57,000
Interest expense (1,353,000) (1,415,000) (4,137,000) (4,161,000)
Net gain on sale of investments - 3,000 - 5,000
_________ _________ _________ _________
Total other income (expense) (1,327,000) (1,393,000) (4,067,000) (4,099,000)
_________ _________ _________ _________
Net loss (2,060,000) (2,055,000) (5,914,000) (5,717,000)
Dividends and accretion on
preferred stock 467,000 467,000 1,400,000 1,400,000
_________ _________ __________ __________
Net loss for common stockholders $ (2,527,000) $ (2,522,000) $ (7,314,000) $ (7,117,000)
============ ============ ============ ============
Loss for common stockholders per
common share $ (0.20) $ (0.20) $ (0.58) $ (0.57)
============ =========== ============ ===========
Weighted average number of common
shares outstanding 12,532,102 12,532,102 12,532,102 12,532,102
============ =========== ============ ===========
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE 5>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unuadited)
Nine Months ended September 30,
1998 1997
________ ________
Operating Activities
Net loss $ (5,914,000) $ (5,717,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Restricted proceeds from investment (445,000) (513,000)
Depreciation and amortization 1,009,000 887,000
Accrued interest 4,199,000 4,157,000
Interest income from restricted cash (30,000) -
Reversal of previously recorded
interest expense (62,000) -
Changes in operating assets and liabilities
Other current assets 78,000 149,000
Other non-current assets (4,000) (6,000)
Accounts payable, accrued expenses
and other current liabilities 721,000 142,000
_________ _________
Net cash used in operating activities (448,000) (901,000)
_________ _________
Investing Activities
Proceeds from asset dispositions - 110,000
_________ _________
Net cash provided by
investing activities - 110,000
_________ _________
Financing Activities
Proceeds from notes receivable and other
long-term assets 219,000 176,000
Utilization of proceeds from charter
of casino barge - 822,000
Principal payments on notes payable and
other long-term obligations - (119,000)
_________ _________
Net cash provided by
financing activities 219,000 879,000
_________ _________
Increase (decrease) in cash (229,000) 88,000
Cash at beginning of year 381,000 265,000
_________ _________
Cash at end of period $ 152,000 $ 353,000
============ ============
See Notes to Consolidated Financial Statements
<PAGE 6>
AMERICAN GAMING & ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited Consolidated Interim Financial Statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB and
Article 10 of Regulation S-X. The unaudited Consolidated Interim Financial
Statements include the accounts of American Gaming & Entertainment, Ltd.
and its subsidiaries (collectively, the "Company"). The unaudited
Consolidated Interim Financial Statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
Company, all adjustments (including normal recurring accruals) and
disclosures (including events occurring subsequent to September 30, 1998)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 1998 may
not be indicative of the results that may be expected for the year ending
December 31, 1998. For further information, reference is also made to the
Consolidated Financial Statements contained in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997.
The accompanying unaudited Consolidated Interim Financial Statements have
been prepared on a going concern basis, which contemplates continuity of
operations, realization of assets and liquidation of liabilities in the
ordinary course of business. As further described in Note 2, the Company
has sustained recurring operating losses since its inception. The Company
has also had a history of insufficient liquidity and has been dependent
upon its largest stockholder, Shamrock Holdings Group, Inc. ("Shamrock"),
and certain related entities (The Bennett Funding Group, Inc. ("Bennett
Funding") and Bennett Management and Development Corp. ("Bennett
Management"), collectively with Shamrock, the "Bennett Entities") for both
working capital and project related financing. As a result, the Company's
recurring losses, negative working capital, stockholders' deficiency,
defaults under its debt agreements, uncertainties relating to the ability
to consummate the liquidation of certain of its subsidiaries (see Notes 2
and 3) and uncertainties relating to the bankruptcy filings of the Bennett
Entities and securities fraud charges by the federal government against
Bennett Funding and Bennett Management raise substantial doubt about the
ability of the Company to continue as a going concern. Management's plans
concerning these matters are discussed in Note 2. The accompanying
unaudited Consolidated Interim Financial Statements do not include any
additional adjustments that might result from the outcome of these
uncertainties.
NOTE 2: LIQUIDITY AND CONTINUATION OF BUSINESS
Given the Company's present financial and liquidity position, the legal
problems described above relating to the Bennett Entities (see Note 1) and
the Company's other litigation described below (see Note 8), the business
of the Company is unlikely to continue to be the ownership of equity
interests in casino gaming ventures. Additionally, the Company's ability to
continue in business is dependent upon numerous factors, discussed below.
<PAGE 7>
The Company had available cash of approximately $152,000 as of September
30, 1998. The Company believes that such cash is sufficient to fund the
Company's operations, excluding the Company's obligations to Shamrock and,
if applicable, Bennett Management, through the end of 1998, based on the
Company's current level of operations and projected expenditures.
The Company's only current significant source of cash receipts is payments
of $25,000 per month through August 2000 under a note (the "Keno Note")
issued by American Heartland Corporation ("AHC") to the Company in
connection with the sale of its keno operations. On September 22, 1998, AHC
asserted set offs against the Keno Note aggregating approximately $198,000
(see Note 8).
Pursuant to a Charter Agreement (the "Charter Agreement") dated as of
February 17, 1995 between the Company and President Mississippi Charter
Corporation ("PMCC"), PMCC is leasing the Gold Coast Barge from the
Company. On November 6, 1998, PMCC and the Company entered into a First
Amendment to Charter (the "Charter Amendment", collectively with the
Charter Agreement, the "Charter") (see Note 3). Pursuant to the Charter
Amendment, among other things, (i) PMCC paid $4,105,000 into an escrow
account (the "Escrow Account") for the benefit of the creditors of AMGAM
Associates ("AMGAM") and American Gaming and Resorts of Mississippi, Inc.
("AGRM"), each a wholly-owned subsidiary of the Company, (ii) PMCC shall
pay into the Escrow Account a monthly charter payment of $215,000 (the
"PMCC Payments") for 16 1/2 months, commencing December 1, 1998 and ending on
April 15, 2000 (the "Remaining Charter Term"). Pursuant to a settlement
agreement (the "Settlement Agreement") agreed to by the Company, AMGAM,
AGRM, Shamrock and the Committees, the Company and Shamrock, collectively,
(a) should receive approximately $2,997,000 from the payment made by PMCC
into the Escrow Account and (b) should receive approximately $161,000 per
month from the PMCC Payments (the "AGEL/Shamrock Payments"). However, the
Settlement Agreement is subject to the approval of the United States
Bankruptcy Court, Southern District of Mississippi (the "Mississippi
Bankruptcy Court"), and there can be no assurance that the Settlement
Agreement will be approved or that AGEL and/or Shamrock will receive any
payments from the Escrow Account.
Notwithstanding a prior agreement which provided that the Company would
receive 20% of any AGEL/Shamrock Payments (the "Escrow Allocation
Agreement"), the Company and the Bennett Entities agreed on October 21,
1998 that any AGEL/Shamrock Payments would be escrowed and disbursed only
upon the order of the United States Bankruptcy Court, Northern District of
New York (the "New York Bankruptcy Court").
The Company expects that it will not have sufficient cash to operate beyond
December 31, 1998 if it does not receive payments under the Keno Note, the
Mississippi Bankruptcy Court and the New York Bankruptcy Court do not
approve disbursements to AGEL of any portion of the PMCC Payments and the
Company is unable to generate additional cash through the sales of assets,
or otherwise. The Company would then need to pursue a formal plan of
reorganization or liquidation of the Company.
The Company's ability to continue in business is also dependent upon (i)
obtaining Shamrock's and, if necessary, Bennett Management's agreement to
modify, terminate or restructure on terms
<PAGE 8>
acceptable to the Company all obligations due from the Company to Shamrock
and, if applicable, Bennett Management, (ii) consummating the liquidations
under Chapter 11 of the Code of AMGAM and AGRM, under plans acceptable to
the Company, resulting in a liquidation of the various trade and debt
obligations of those entities, and (iii) satisfactorily resolving
litigation filed against the Company. (See Note 8 for material developments
in legal proceedings). However, there can be no assurance the Company will
be successful in those efforts. If the Company is unsuccessful in these
efforts, the Company would then need to pursue a formal plan of
reorganization or liquidation of the Company.
Either reorganization or liquidation would generally result in the sale of
the Company's assets to satisfy outstanding obligations. If either such
action is necessary, all of the Company's obligations would probably not be
completely satisfied and the stockholders of the Company would probably not
recover any of their investment in the Company.
For a discussion of specific factors affecting the Company's liquidity and
continuation of business, see the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997.
As of September 30, 1998, the Company had recorded as "Restricted Cash" in
the accompanying unaudited Consolidated Interim Financial Statements
approximately $1,105,000 (the "Restricted Cash") attributable to profit
distributions and interest thereon received by the Company relating to the
Company's 24.5% beneficial equity interest (the "RSR Interest") in RSR, LLC
("RSR"), a limited liability company formed by the Company and a group of
non-affiliated individuals, representing the equivalent of a 4.9% equity
interest in a riverboat gaming and entertainment complex in the City of
Rising Sun, Indiana on the Ohio River (the "Rising Sun Project"). The
Company has transferred legal title to the RSR Interest to NBD Bank, N.A.,
as trustee ("NBD"). NBD is holding the distributions received in respect of
the RSR Interest in trust until such time as NBD sells the RSR Interest,
for the benefit of the Company (see Note 3).
NOTE 3: SIGNIFICANT DEVELOPMENTS WITH RESPECT TO INVESTMENTS
Mississippi
On November 6, 1998, PMCC and the Company entered into the Charter
Amendment. The Charter Amendment was entered into with the concurrence of
AMGAM, AGRM, the Official Committee of Unsecured Creditors of AMGAM
Associates, the Official Committee of Unsecured Creditors of American
Gaming and Resorts of Mississippi, Inc. (collectively, the "Committees")
and Shamrock (collectively with the Company, the "AMGAM Group"). Pursuant
to the Charter Amendment, among other things, (i) PMCC paid $4,105,000 into
the Escrow Account, (ii) PMCC shall pay into the Escrow Account the PMCC
Payments for the Remaining Charter Term, (iii) PMCC shall pay into the
Escrow Account a late fee of $21,500 for each PMCC Payment which is paid
later than the tenth of such month, (iv) PMCC and the AMGAM Group will fund
equally an escrow account not to exceed $1,000,000 to remove the Gold Coast
Barge from PMCC's Biloxi, Mississippi site at the end of the Remaining
Charter Term, (v) at any time during the Remaining Charter Term, PMCC has
the right to make a written offer to purchase the Gold Coast Barge, which
offer shall be deemed accepted unless rejected by the
<PAGE 9>
AMGAM Group within thirty days of receipt of such offer, (vi) the Charter
or the Gold Coast Barge may be assigned or sold, subject to PMCC's written
consent, which may not be unreasonably withheld, (vii) during the Remaining
Charter Term, PMCC has a right of first refusal to purchase the Gold Coast
Barge on the same terms and conditions set forth in any offer acceptable to
the AMGAM Group and (viii) PMCC and the AMGAM Group executed mutual
releases and are filing appropriate pleadings seeking dismissal, with
prejudice, of all lawsuits and counterclaims, including suits brought by
the Company against PMCC and President Riverboat Casino - Mississippi, Inc.
and counterclaims filed by PMCC against the Company alleging various
respective breaches of the Charter Agreement.
On August 21, 1998, AMGAM, AGRM, the Committees and the Company filed a
disclosure statement (the "Disclosure Statement") and joint plan of
liquidation (the "Plan") for AMGAM and AGRM in the Mississippi Bankruptcy
Court. The Mississippi Bankruptcy Court has scheduled a preliminary hearing
on the Disclosure Statement on December 18, 1998.
The Plan incorporates the Settlement Agreement. Pursuant to the Plan, the
Company would transfer to a creditors trust for the holders of allowed
claims in the bankruptcy proceedings of AMGAM and AGRM (excluding the
Company and Shamrock) (a) an undivided 25% ownership interest in the Gold
Coast Barge and (b) the Charter. Such assets will be held by a trustee (the
"Mississippi Trustee"). The Mississippi Trustee would receive and disburse
in accordance with the terms of the Plan (a) all PMCC Payments and (b) with
respect to the acquisition by PMCC from AMGAM of substantially all of the
furniture, fixtures and equipment, including certain slot machines,
formerly used in the operation of the Gold Shore Casino (the "FF&E
Payments").
Pursuant to the Plan, each administrative and priority claim, as defined in
the U.S. Bankruptcy Code (the "Code"), incurred in connection with the
bankruptcy proceedings of AMGAM and AGRM would be paid in full from the
respective estates of AMGAM and AGRM in accordance with statutory
priorities pursuant to the Code.
Pursuant to the Plan, each secured claim (excluding a first preferred ship
mortgage (the "Ship Mortgage") held by Shamrock on the Gold Coast Barge)
would be either paid in full from the sale of the related collateral or
satisfied in full by abandoning the collateral to the secured creditor.
Pursuant to the Plan, each unsecured claim, excluding any claims of the
Company and Shamrock ("Third Party Claims"), would be paid from the assets
of the respective estates of AMGAM and AGRM, including (a) the funds
remaining in an escrow account for the benefit of the creditors of AMGAM
and AGRM, (b) all FF&E Payments made since October 1, 1995, (c)
approximately $1,108,000 from the payment made by PMCC into the Escrow
Account pursuant to the Charter Amendment, (d) approximately $54,000 from
the PMCC Payments for the Remaining Charter Term, and (e) 25% of the net
proceeds of a sale of the Gold Coast Barge, if any. Most Third Party Claims
would be paid on a pro rata basis, however, certain Third Party Claims
would only be paid after all other Third Party Claims are paid.
Pursuant to the Plan, the Company's and Shamrock's unsecured claims and the
Ship Mortgage (in the collective claimed amount of $33,000,000) would be
paid from (a) the AGEL/Shamrock
<PAGE 10>
Payments and (b) 75% of the net proceeds of a sale of the Gold Coast Barge,
if any. As discussed above, the Company and the Bennett Entities agreed
that any AGEL/Shamrock Payments would be escrowed and disbursed only upon
the order of the New York Bankruptcy Court (see Note 2).
Pursuant to the Plan, all equity interests in AMGAM and AGRM would be
canceled as of the effective date of the Plan.
The amounts to be paid to creditors would be subject to the claim allowance
process in the AMGAM and AGRM bankruptcies, pursuant to which all allowed
claim amounts, in the order set forth above, would be fixed for purposes of
distributions under the Plan.
There can be no assurance that that the creditors in the AMGAM and AGRM
bankruptcy proceedings will approve the Plan in accordance with the
provisions of the Code or that the Plan will thereafter be confirmed by the
Mississippi Bankruptcy Court.
Harolds Club Casino
Prior to 1996, Shamrock assumed responsibility for all carrying costs of
the Harolds Club property in Reno, Nevada including, but not limited to,
lease payments under certain land leases held by the Company related to the
Harolds Club, taxes, insurance and utilities. Such land leases were
assigned by the Company to Shamrock as of September 29, 1998. The Company
could still be ultimately obligated under such leases, pursuant to certain
guaranties of lease executed by the Company. The Company has been informed
by Shamrock and the lessors under such leases that Shamrock has not made
any lease payments from April 1996 through September 1998 due under such
leases or quarterly property taxes due under such leases, collectively
totaling approximately $2,462,000. The lessors have, among other rights,
the right to terminate the respective leases and hold the Company
responsible for all obligations under such leases through the end of the
respective lease terms. The Company has recorded the unpaid lease payments
and property taxes from April 1996 through September 1998 (the "Unpaid
Harolds Obligations") as current liabilities as of September 30, 1998. The
Company has also recorded the amounts of the Unpaid Harolds Obligations as
a receivable due from Shamrock, but, as a result of the Company's
determination that there is a substantial likelihood that such amounts will
be uncollectible, the Company has fully reserved for such amounts at the
same time such amounts have been recorded as a receivable.
On October 8, 1998, the New York Bankruptcy Court, authorized the sale by
Shamrock of the Harolds Club. Shamrock advised the Company that such sale
is scheduled to close by October 30, 1998. However, the Company understands
that the closing has been delayed, although anticipated to occur shortly.
The leases discussed above shall terminate at closing, and the Company
shall be released from all obligations under such leases, except for
environmental conditions resulting from the Company's intentional or
negligent conduct. Additionally, lawsuits filed against the Company by the
five lessors of the Harolds Club property and cross-claims filed against
the Company by co-defendants will be dismissed upon closing.
<PAGE 11>
Rising Sun
The other members of RSR are currently obligated to purchase the RSR
Interest at an average appraised fair market value. The Company and the
other members of RSR are in the process of obtaining separate appraisals of
the RSR Interest. Upon the closing of the sale of the RSR Interest, the
Restricted Cash and the proceeds from such sale shall be distributed by NBD
to the Company.
Sioux City Sue
During 1995, the Company leased the "Sioux City Sue" riverboat vessel and
supporting barge (collectively, the "Vessels") from Bennett Management. The
Company, pursuant to such lease, insured the Vessels and named Bennett
Management as an additional insured party. In or about September 1995, the
Vessels were vandalized and burglarized and in or about December 1995, the
supporting barge was grounded (collectively, the "Claims"). Effective
August 10, 1998, the Company assigned to Bennett Management the Company's
right to proceed against the underwriters who issued the marine insurance
policy covering the Vessels and the right to collect insurance proceeds
from the Claims.
NOTE 4: AMOUNTS DUE TO RELATED PARTIES AND LONG-TERM DEBT
The Company is delinquent in the payment of (i) interest due under the
Company's various loan agreements with Shamrock and (ii) rent which was due
under an operating lease between the Company and Bennett Management (the
"SCS Lease") with respect to the Vessels, which SCS Lease Shamrock orally
represented to the Company that Bennett Management, prior to its bankruptcy
filing, assigned to Shamrock. The Company has therefore classified all
indebtedness due to Shamrock as current liabilities in the accompanying
unaudited Consolidated Interim Financial Statements. At September 30, 1998
and December 31, 1997, the Company had accrued for financial statement
purposes outstanding amounts due Shamrock of approximately $66,601,000 and
$61,952,000, respectively, including accrued interest of approximately
$20,987,000 and $16,788,000, respectively.
Such amounts due Shamrock also include approximately $2,701,000 due under
the SCS Lease and accrued dividends of approximately $2,403,000 and
$1,953,000 at September 30, 1998 and December 31, 1997, respectively, on
the Company's Series C Cumulative Preferred Stock ("Series C Preferred
Stock") and Series D Cumulative Preferred Stock ("Series D Preferred
Stock").
The balance of accrued long-term debt due Shamrock at September 30, 1998
and December 31, 1997 is comprised of approximately (i) $1,066,000, at the
end of each period, related to a working capital line of credit, (ii)
$2,041,000, at the end of each period, related to a term loan to assist the
Company in financing pertaining to a casino in Biloxi, Mississippi which
the Company owned, managed and operated in prior years (the "Gold Shore
Casino"), (iii) $5,917,000, at the end of each period, of indebtedness
recorded by the Company relating to payments received pursuant to the
Charter Agreement to which Shamrock asserted it was entitled, (iv)
$384,000, at the end of each period, related to the Company's utilization
of slot machine sales proceeds,
<PAGE 12>
which slot machines were beneficially owned by Bennett Management and which
slot machine proceeds Shamrock orally represented to the Company that
Bennett Management, prior to its bankruptcy filing, assigned to Shamrock
and (v) $31,101,000, at the end of each period, related to project
financing for the Gold Shore Casino.
The accrued outstanding amount due Shamrock at September 30, 1998
represents approximately 91% of the Company's liabilities in the
accompanying unaudited Consolidated Interim Financial Statements as of such
date and is substantially in excess of the Company's estimates of the fair
value of the Company's assets.
The Company has entered into the Escrow Allocation Agreement, under which
amounts received by Shamrock will reduce the Company's indebtedness to
Shamrock (see Note 3). The Company has also agreed to repay indebtedness
to Shamrock of $125,000 from the sale in 1997 of certain securities, which
amount has not yet been paid to Shamrock.
NOTE 5: OTHER RELATED PARTY ISSUES
Shamrock, of which Richard C. Breeden, the bankruptcy trustee (the
"Trustee") is the sole stockholder, owns (i) 4,423,454 shares of Common
Stock, and (ii) all of the Company's outstanding Series A Preferred Stock,
convertible into, and voting as, 1,399,565 shares of Common Stock.
Additionally, the Trustee owns (i) an additional 1,500,000 shares of Common
Stock and (ii) all of the Company's outstanding Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock, convertible as of
September 30, 1998 into 1,327,131,307 shares of Common Stock. The Company
does not have a sufficient number of authorized shares of Common Stock to
enable the conversion of all of the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock. On April 1, 1996 the
Board of Directors voted to request the stockholders of the Company to
approve an amendment to the Company's Restated Certificate of Incorporation
increasing the number of authorized shares of Common Stock to 500,000,000
shares no later than the next annual meeting of the Company's stockholders.
The Board of Directors has not set a date for such annual meeting. Assuming
the Trustee converted as of September 30, 1998 that number of shares of the
Series C Preferred Stock, the Series D Preferred Stock and the Series E
Preferred Stock convertible into the total number of the Company's
presently authorized but unissued shares of Common Stock (i.e. 37,467,898
shares), the Trustee, on behalf of the estates of certain Bennett Entities
and Shamrock, would own approximately 86.8% of the total outstanding shares
of Common Stock and approximately 87.1% of the total voting power
represented by the total outstanding voting securities of the Company.
Assuming the Company's stockholders approve an amendment to the Company's
Restated Certificate of Incorporation increasing the number of authorized
shares of Common Stock to 500,000,000 shares and the Trustee converted as
of September 30, 1998 that number of shares of the Series C Preferred
Stock, the Series D Preferred Stock and the Series E Preferred Stock
convertible into the total number of the Company's authorized but unissued
shares of Common Stock immediately after giving effect to such amendment
(i.e. resulting in a total of 487,467,898 shares of Common Stock being
issued to the Trustee as of such date), the Trustee, on behalf of the
estates of certain Bennett Entities and Shamrock, would own approximately
98.7% of both the total outstanding shares of Common Stock and the total
voting power represented by the total outstanding voting securities of the
Company.
<PAGE 13>
NOTE 6: DECONSOLIDATION OF AMGAM AND AGRM
As a result of the bankruptcy proceedings under Chapter 11 of the Code with
respect to AMGAM and AGRM, and the expected liquidation of these
subsidiaries in the near future, the Company's control of these entities is
likely to be temporary. In accordance with generally accepted accounting
principles, the Company has elected to deconsolidate AMGAM and AGRM and
present the results of operations for AMGAM and AGRM on the equity basis of
accounting as a single line item in the accompanying unaudited Consolidated
Interim Statements of Operations for financial reporting purposes. A
combined unaudited condensed balance sheet of these entities as of
September 30, 1998 and December 31, 1997 is as follows:
September December
30, 1998 31, 1997
__________ _________
Assets
Current Assets and Other $3,796,000 $3,767,000
Property and Equipment, Net 41,000 41,000
__________ __________
Total Assets $3,837,000 $3,808,000
========== ==========
Liabilities and Stockholders' Deficiency
Current Liabilities $29,912,000 $27,862,000
Amounts Due to Parent 12,147,000 12,147,000
Stockholders' Deficiency (38,222,000) (36,201,000)
__________ __________
Total Liabilities and
Stockholders' Deficiency $ 3,837,000 $ 3,808,000
========== ==========
NOTE 7: RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement establishes standards for reporting and disclosure
of comprehensive income. Reclassification of financial information for
earlier periods presented for comparative periods is required under SFAS
No. 130. The Company adopted SFAS No. 130 effective January 1, 1998. This
statement only requires additional disclosures in the Company's
consolidated financial statements and its adoption did not have any impact
on the Company's consolidated financial position or results of operations.
Currently the Company has no components of other comprehensive income.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This statement establishes
standards for the reporting of information about operating segments and
requires the reporting of selected information about operating segments in
interim financial statements. Reclassification of segment information for
earlier periods presented for comparative periods is required under SFAS
No. 131. The Company adopted SFAS No. 131 effective January 1, 1998
although presentation for interim periods in the initial year of adoption
is not required. Adoption of this statement is not expected to result in
any changes to the Company's presentation of financial information for the
year ending December 31, 1998.
<PAGE 14>
NOTE 8: CONTINGENCIES
On September 22, 1998, AHC asserted various set offs against the Keno Note
aggregating approximately $198,000. AHC has asserted that the Company
improperly repaired a computer used for generating keno tickets and is
seeking indemnification from the Company of approximately $131,000
resulting from its defense of an action brought by an individual alleging
receipt of a winning keno ticket. AHC is also seeking reimbursement of
approximately $62,000 as a result of the Company's alleged breach of
representations and warranties regarding two keno computer systems. The
Company has advised AHC that it disputes the set offs alleged by AHC. The
Company also advised AHC that any non-payment of the Keno Note would
constitute an event of default under the Keno Note, enabling the Company to
declare the entire unpaid principal balance of the Keno Note, together with
accrued interest, immediately due and payable. However, if the Company is
unable to prevent AHC from setting off the payments due under the Keno
Note, the Company's business and financial condition would be materially
adversely effected. The Company would then need to pursue a formal plan of
reorganization or liquidation which would generally result in the sale of
the Company's assets to satisfy outstanding obligations. There can be no
assurance that if either action is required to be pursued that all such
obligations would be completely satisfied. Further, in the event of either
action, it is unlikely that stockholders of the Company will recover any of
their investment in the Company.
As previously disclosed in the Company's Quarterly Report on Form 10-QSB
for the period ended September 30, 1997, on November 2, 1995 IGT filed a
complaint against the Company in the Circuit Court of Harrison County,
Mississippi, Second Judicial District (the "IGT Complaint") seeking a
judgment against the Company under a guaranty agreement (the "IGT
Guaranty") by the Company to IGT of (i) the principal amount of
approximately $3,306,000 plus accrued interest of approximately $864,000
and (ii) attorneys fees of approximately $108,000. On October 13, 1997 the
Company paid IGT $375,000, which amount had been previously accrued, to
settle such lawsuit.
IGT has alleged that such settlement was contingent on the Company and
Shamrock and related entities waiving any claim to payments made by PMCC to
AMGAM relating to the purchase of IGT slot machines from AMGAM. The Company
and Shamrock have agreed to waive such claim and are negotiating the form
of waiver of such claim with IGT. If the New York Bankruptcy Court does not
approve the execution of the waiver by Shamrock, then, to the extent (i)
funds are not paid to IGT pursuant to a plan of liquidation in the
bankruptcy proceeding of AMGAM and (ii) the IGT Guaranty is enforceable
against the Company, the Company's business and financial condition would
be materially adversely affected. Management is unable, with any degree of
certainty, to predict the outcome, or to estimate the amount of liability,
if any, that may result from this action. However, should the plaintiff
prevail, this litigation would have a material adverse effect on the
Company's business and financial condition. The Company would then need to
pursue a formal plan of reorganization or liquidation which would generally
result in the sale of the Company's assets to satisfy outstanding
obligations. There can be no assurance that if either action is required to
be pursued that all such obligations would be completely satisfied.
Further, in the event of either action, it is unlikely that stockholders of
the Company will recover any of their investment in the Company.
<PAGE 15>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations: Comparison of the three month periods ended
September 30, 1998 and September 30, 1997
Revenues
The Company did not record any revenues for the three months ended
September 30, 1998. The Company currently receives an annual distribution
equal to (i) 4.9% of the first $10,000,000 of annual net cash flow from the
operations of the Rising Sun Project, if any, and (ii) 1.63% of annual net
cash flow in excess of $45,000,000 from such operations, if any. Through
the six months ended June 30, 1998, the Company had received substantially
all of its anticipated annual distribution for 1998. For the three months
ended September 30, 1997, the Company recorded revenues of approximately
$133,000 attributable to the RSR Interest. Cash received from the Rising
Sun Project is recorded as "Restricted Cash" in the accompanying unaudited
Consolidated Balance Sheets (see Note 2).
Costs and Expenses
Selling, general and administrative expenses were approximately $485,000
for the three months ended September 30, 1998, representing an decrease of
approximately $106,000 or approximately 21% when compared to the three
months ended September 30, 1997. Such decrease was primarily due to
decreases in compensation, rent, insurance and consulting expenses.
Depreciation and amortization costs were approximately $336,000 for the
three months ended September 30, 1998, representing an increase of
approximately $41,000 or approximately 14% when compared to the three
months ended September 30, 1997. The furniture, fixtures and equipment on
the Gold Coast Barge were being depreciated over a useful life of 15 years
for the three months ended September 30, 1997; the Company reevaluated the
useful life of such assets in the fourth quarter of 1997 and determined
that such assets have a useful life of 10 years. Accordingly, for the three
months ended September 30, 1998, the Company depreciated such assets based
on a remaining useful life of six years.
Net interest expense for the three months ended September 30, 1998 was
approximately $1,327,000, a decrease of approximately $69,000 or
approximately 5% compared to the three months ended September 30, 1997.
Interest expense decreased approximately $62,000 while interest income
increased approximately $7,000 during the three months ended September 30,
1998 compared to the three months ended September 30, 1997. Interest
expense for the three months ended September 30, 1998 included a reversal
of previously recorded interest expense in the amount of approximately
$62,000 due to a refund of such interest pursuant to a legal settlement.
The Company recorded a net gain of approximately $3,000 for the three
months ended September 30, 1997 related to the sale of certain furniture,
fixtures and equipment. No such gain was recorded for the three months
ended September 30, 1998.
<PAGE 16>
Results of Operations: Comparison of the nine month periods ended
September 30, 1998 and September 30, 1997
Revenues
Revenues for the three months ended September 30, 1998 were approximately
$445,000, a decrease of approximately $71,000 or approximately 14% when
compared to the nine months ended September 30, 1997. For the nine months
ended September 30, 1998 and September 30, 1997, the Company recorded
revenues of approximately $445,000 and $513,000, respectively, attributable
to the RSR Interest. Cash received from the Rising Sun Project is recorded
as "Restricted Cash" in the accompanying unaudited Consolidated Balance
Sheets (see Note 2).
Costs and Expenses
Selling, general and administrative expenses were approximately $1,283,000
for the nine months ended September 30, 1998, representing an increase of
approximately $122,000 or approximately 14% when compared to the nine
months ended September 30, 1997. However, selling, general and
administrative expenses for the nine months ended September 30, 1997
included the reversal of a previously recorded consulting expense in the
amount of approximately $195,000 due to a consulting firm advising the
Company that such firm was not seeking payment of such unpaid amount and a
reversal of previously recorded state taxes in the amount of approximately
$188,000 due to a tax refund. Exclusive of such reversals, selling, general
and administrative expenses decreased approximately $347,000 for the nine
months ended September 30, 1998 as compared to the nine months ended
September 30, 1997. Such decrease was primarily due to decreases in
compensation, rent, insurance, consulting expense and expenses related to
real property in Alabama and the Harolds Club in Nevada.
Depreciation and amortization costs were approximately $1,009,000 for the
nine months ended September 30, 1998, representing an increase of
approximately $81,000 or approximately 14% when compared to the nine months
ended September 30, 1997. The furniture, fixtures and equipment on the Gold
Coast Barge were being depreciated over a useful life of 15 years for the
nine months ended September 30, 1997; the Company reevaluated the useful
life of such assets in the fourth quarter of 1997 and determined that such
assets have a useful life of 10 years. Accordingly, for the nine months
ended September 30, 1998, the Company depreciated such assets based on a
remaining useful life of six and a half years.
Net interest expense for the nine months ended September 30, 1998 was
approximately $4,067,000, a decrease of approximately $37,000 or
approximately 1% compared to the nine months ended September 30, 1997.
Interest expense decreased approximately $24,000 while interest income
increased approximately $13,000 during the nine months ended September 30,
1998 compared to the nine months ended September 30, 1997. Interest expense
for the nine months ended September 30, 1998 included a reversal of
previously recorded interest expense in the amount of approximately $62,000
due to a refund of such interest pursuant to a legal settlement.
<PAGE 17>
The Company recorded a net gain of approximately $5,000 for the nine months
ended September 30, 1997 related to the sale of certain furniture, fixtures
and equipment. No such gain was recorded for the nine months ended
September 30, 1998.
Changes in Financial Condition, Liquidity and Capital Resources
As of September 30, 1998, the Company had no committed financing
arrangements and a working capital deficiency of approximately $68,667,000.
For a discussion of liquidity and capital resources, see Note 2 to the
unaudited Consolidated Interim Financial Statements.
Risk Factors; Forward Looking Statements
Management's Discussion and Analysis contains forward-looking statements
regarding the Company's future plans, objectives and expected performance.
These statements are based on assumptions that the Company believes are
reasonable, but are subject to a wide range of risks and uncertainties, and
a number of factors could cause the Company's actual results to differ
materially from those expressed in the forward-looking statements. These
factors include, among others, the uncertainties related to (i) the
Company's ability to obtain sufficient funds for its operations, through
payments to be received under the Keno Note, the charter of the Gold Coast
Barge, sales of assets, or otherwise, (ii) obtaining Shamrock's and, if
necessary, Bennett Management's agreement to modify, terminate or
restructure on terms acceptable to the Company all obligations due from the
Company to Shamrock and, if applicable, Bennett Management, (iii)
consummating the liquidations under Chapter 11 of the Code of AMGAM and
AGRM under plans acceptable to the Company, resulting in a liquidation of
the various trade and debt obligations of those entities, (iv)
satisfactorily resolving the legal proceedings filed against the Company
(see Note 8 to the unaudited Consolidated Interim Financial Statements),
and (v) the legal problems described above relating to certain Bennett
Entities (see Notes 1 and 2 to the unaudited Consolidated Interim Financial
Statements).
<PAGE 18>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a discussion of legal proceedings, see Note 8 to the unaudited
Consolidated Interim Financial Statements.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
For a discussion of defaults with respect to the Company's indebtedness due
to Shamrock, see Notes 2 and 4 to the unaudited Consolidated Interim
Financial Statements.
The Company has accrued and declared, but has not paid as of September 30,
1998, dividends totaling approximately $152,000 which were due and payable
on the outstanding shares of its Series C Preferred Stock as of December
31, 1994. The Company has accrued and declared, but has not paid as of
September 30, 1998, dividends totaling approximately $152,000 which were
due and payable on the outstanding shares of its Series D Preferred Stock
as of December 31, 1994.
Additionally, the Company has accrued, but has not declared or paid as of
September 30, 1998, dividends totaling approximately $1,100,000 which were
due and payable on the outstanding shares of its Series C Preferred Stock
from January 1, 1995 through September 30, 1998. The Company has accrued,
but has not declared or paid as of September 30, 1998, dividends totaling
approximately $1,000,000 which were due and payable on the outstanding
shares of its Series D Preferred Stock from January 1, 1995 through
September 30, 1998. Although such dividends do not constitute actual
liabilities of the Company until declared, the Company has accrued for such
dividends because, under the terms of the Series C Preferred Stock and the
Series D Preferred Stock, dividends are cumulative whether or not declared
and the Company is prohibited from paying dividends on, purchasing or
redeeming any of its Series A Preferred Stock or Common Stock so long as
any such cumulated dividends are unpaid. The Company is prohibited under
the General Corporation Law of Delaware from declaring such dividends
unless the Company has (i) capital surplus or (ii) net profits in the
fiscal year in which such dividends are declared and/or the preceding
fiscal year.
<PAGE 19>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
10.12 Settlement Agreement dated as of August 21, 1998 by and
between the Company, AMGAM Associates, American Gaming
and Resorts of Mississippi, Inc., Shamrock Holdings
Group, Inc., Bennett Management and Development Co., the
Official Committee of Unsecured Creditors of AMGAM
Associates, and the Official Unsecured Creditors
Committee of American Gaming and Resorts of Mississippi,
Inc.
10.25 Form of First Amendment to Charter, amending the Charter dated
as of February 17, 1995, made and entered into November 6,
1998 (effective as of December 1, 1998) by President
Mississippi Charter Corporation and the Company, with the
concurrence of AMGAM Associates, American Gaming and
Resorts of Mississippi, Inc., the Official Committee of
Unsecured Creditors of AMGAM Associates, the Official
Committee of Unsecured Creditors of American Gaming and
Resorts of Mississippi, Inc., and Shamrock Holdings
Group, Inc.
10.26 Letter agreement dated October 21, 1998 by and between
Shamrock Holdings Group, Inc., Bennett Management and
Development Co., AMGAM Associates, American Gaming and
Resorts of Mississippi, Inc., and the Company
11 Computation of Earnings Per Share.
27 Financial Data Schedule
(b) Reports on Form 8-K. The following reports were filed by the
Company during the second quarter of 1995:
(1) Form 8-K dated August 21, 1998 with respect to the filing of
a joint plan of liquidation in the AMGAM and AGRM bankruptcy proceedings
(see Note 3 to the unaudited Consolidated Interim Financial Statements).
<PAGE 20>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
American Gaming & Entertainment, Ltd.
Date: 11/13/98 By: J. DOUGLAS WELLINGTON
_____________________________________
J. Douglas Wellington
President and Chief Executive Officer,
and Principal Accounting Officer
<PAGE 21>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE NO.
10.12 Settlement Agreement dated as of August 21, 1998
by and between the Company, AMGAM Associates,
American Gaming and Resorts of Mississippi, Inc.,
Shamrock Holdings Group, Inc., Bennett Management
and Development Co., the Official Committee of
Unsecured Creditors of AMGAM Associates, and the
Official Committee of Unsecured Creditors of
American Gaming and Resorts of Mississippi, Inc. 22
10.25 Form of First Amendment to Charter, amending the
Charter dated as of February 17, 1995, made and
entered into November 6, 1998 (effective as of December
1, 1998) by President Mississippi Charter Corporation
and the Company, with the concurrence of AMGAM
Associates, American Gaming and Resorts of
Mississippi, Inc., the Official Committee of
Unsecured Creditors of AMGAM Associates, the
Official Committee of Unsecured Creditors of
American Gaming and Resorts of Mississippi, Inc.,
and Shamrock Holdings Group, Inc. 35
10.26 Letter agreement dated October 21, 1998 by and between
Shamrock Holdings Group, Inc., Bennett Management and
Development Co., AMGAM Associates, American Gaming and
Resorts of Mississippi, Inc., and the Company 46
11 Computation of Earnings Per Share. 49
27 Financial Data Schedule. 50
<PAGE 22>
EXHIBIT 10.12
SETTLEMENT AGREEMENT
This settlement agreement is entered into and made as of the date
below, by and between American Gaming and Entertainment, Ltd. ("AGEL"),
AmGam Associates ("AmGam"), American Gaming and Resorts of Mississippi,
Inc. ("AGRM"), Shamrock Holdings Group, Inc. ("Shamrock"), Bennett
Management and Development Co. ("Bennett"), the Official Committee of
Unsecured Creditors of AmGam Associates (the "AmGam Committee"), and the
Official Unsecured Creditors Committee of American Gaming and Resorts of
Mississippi, Inc. (the "AGRM Committee").
Recitals
Whereas AGEL is the owner of a casino barge in Biloxi,
Mississippi commonly known as the "Gold Coast Casino Barge,"
Whereas AmGam and AGRM (collectively the "Debtors") are chapter
11 debtors-in-possession in cases pending before the United States
Bankruptcy Court for the Southern District of Mississippi, Southern
Division (the "Court") and have filed adversary proceedings against AGEL,
Shamrock and Bennett seeking, among other things, to avoid the alleged
fraudulent transfer of the Gold Coast Casino Barge to AGEL (the "Avoidance
Action");
Whereas Richard C. Breeden is the duly-appointed chapter 11
trustee for Bennett and the president of Shamrock, both of which are
debtors in cases pending before the United States Bankruptcy Court for the
Northern District of New York;
Whereas the Avoidance Action is being prosecuted by the AmGam
Committee and the AGRM Committee (collectively the "Committees") as
representatives of the estates for the benefit of their respective estates;
Whereas AGEL, Shamrock and Bennett have asserted various defenses
to the allegations set forth in the Avoidance Action;
Whereas AGEL has filed proofs of claim against the Debtors in an
amount in excess of $44,664,514.45;
Whereas Shamrock asserts that it possesses claims against the
Debtors in an amount in excess of $29,816,595.00;
Whereas the Debtors assert various defenses to the claims filed
or asserted by AGEL and Shamrock;
Whereas the Gold Coast Casino Barge presently is being chartered
by AGEL to President Mississippi Charter Corporation ("President") pursuant
to a Charter Agreement dated February 17, 1995 (the "President Lease");
<PAGE 23>
Whereas President has purchased certain fixtures, furnishings and
equipment pursuant to an order entered by the United States District Court
for the Southern District of Mississippi on September 21, 1995 (the
"President FF&E Purchase");
Whereas the President Lease in the process of being amended
pursuant to a settlement agreement with President approved on December 9,
1997 by the Court (the "President Settlement");
Whereas the parties to this agreement have compromised the
disputes between them;
NOW THEREFORE, in full and final compromise and settlement of all
claims that AmGam, AGRM, the AmGam Committee and the AGRM Committee may
have against AGEL, Shamrock and/or Bennett, and of all claims that AGEL and
Shamrock may have against the Debtors, the Debtors' chapter 11 estates,
and/or their representatives, the undersigned covenant and agree as
follows:
Agreement
I. Settlement Terms:
A. On the eleventh (11th) day, or the first business day
thereafter, following entry of an order (i) approving this settlement
pursuant to Fed. R. Bankr. P. 9019 or (ii) confirming of a plan of
reorganization under 11 U.S.C. Section 1129 incorporating the terms of this
agreement, AGEL shall convey to a liquidating trustee appointed under a
confirmed plan of reorganization, or such other entity designated by the
Committees or appointed by the Court as the representative of the Debtors'
estates if a plan of reorganization has not been confirmed, (i) an
undivided 25% ownership interest in the Gold Coast Casino Barge, and (ii)
an undivided 25% interest in all rights of the owner/lessor under the
President Lease, which assets shall be held for the benefit of and
distribution to the holders of allowed claims in the AmGam and AGRM
bankruptcy cases, provided, however, that the terms of this provision will
be inoperative if such order has been stayed by order of the Court and
further that such terms will remain inoperative so long as such stay
remains in effect. The time allotted in this provision for conveyances
required by this provision may be extended with the consent of the parties.
For purposes of this provision, time shall be calculated in the same
manner provided for in Fed. R. Bankr. P. 9006(a).
B. AGEL and Shamrock agree, in consideration for the terms of this
settlement, to waive all of their secured claims against the Debtors, with
the exception of the allowed secured claim of Ship Mortgage, L.P., upon
entry of the order and the completion of the conveyances set forth in
subparagraph A of this section, and to have one collective general allowed
unsecured claim against the Debtors in the amount of $33,000,000.00, which
claim shall be fully satisfied in accordance with the conditions of this
agreement, and particularly, Sec. II hereinbelow. Except to the extent
otherwise set forth in this agreement, AGEL and Shamrock also agree upon
such occurrences to waive their right to receive distributions on their
collective allowed unsecured claim from any assets
<PAGE 24
of the AmGam and AGRM estates, including the estate's share of payments
under the President Lease and the President FF&E Purchase.
C. AGEL, the Debtors and the Committees further recognize and
agree that Shamrock holds a valid, properly perfected and unavoidable first
mortgage on or security interest in the Gold Coast Casino Barge in the
original principal amount of $2,040,603.75. In further consideration of
the terms of this settlement the Debtors, the AmGam Committee, and the AGRM
Committee agree not to contest the status of the Ship Mortgage L.P.
Preferred Ship Mortgage (the "Mortgage") now held by Shamrock as a properly
perfected and unavoidable first mortgage on or security interest in the
Gold Coast Casino Barge in the original principal amount of $2,040,603.75.
AGEL further agrees that it shall assume sole responsibility for the
satisfaction of the Mortgage, Shamrock and AGEL agree, as consideration for
the agreement by the Debtors, the AmGam Committee, and the AGRM Committee
not to challenge the Mortgage, that there shall be no charge or encumbrance
on account of such claim against the interests of other AmGam and AGRM
creditors, or the interests of the AmGam and AGRM estates, in the above
described 25% undivided ownership interest.
D. In resolution of any objection the Committees, the Debtors
and/or any representative of the estates have to the claims of AGEL,
Shamrock, and/or Bennett, the parties further agree that AGEL and/or
Shamrock or its assignee will be the only parties entitled to receive any
distributions for claims of any kind asserted against the Debtors by AGEL,
Shamrock and Bennett, or their officers, directors or stockholders whether
such claims are secured, unsecured, direct or acquired claims or otherwise.
E. The parties agree to act in good faith to take any and all
steps necessary to secure approval of the settlement and confirmation of a
plan of reorganization incorporating the terms of this settlement.
F. AGEL, Shamrock, Bennett, and the members of the committees
agree to vote in favor of, and the Committees will recommend that all other
creditors vote in favor of, any plan of reorganization which incorporates
the terms of this settlement.
G. Other than payments under this distribution structure from the
revenue stream generated by the President Lease and the payment described
in section II below, holders of allowed claims in the AmGam bankruptcy case
shall share only in distribution of assets owned by in the AmGam estate.
H. Other than payments under this distribution structure from the
revenue stream generated by the President Lease and the payments described
in section II below, holders of AGRM allowed claims shall share only in
distribution of assets owned by the AGRM estate.
II. Distribution of Lease Payments Under the President Lease:
A. All funds received from President under the terms of the
President Lease (including,
<PAGE 25>
without limitation, any past due arrearage payments paid pursuant to the
terms of the President Settlement) shall be disbursed upon receipt by the
liquidating trustee, or, if applicable, such other entity as may be
designated by the Committees or appointed by the Court as the
representative of the Debtors' estates:
1. 22.7% to the AmGam and AGRM estates respectively, to be
divided in accordance with agreements between the AmGam Committee and AGRM
Committees;
2. 2.3% exclusively to the AmGam estate to address certain
special needs of the AmGam estate; and
3. 75% to AGEL and/or Shamrock or their assignee(s), if any,
from which AGEL and Shamrock both agree to make a one-time contribution of
$41,000 each to the AmGam estate for disbursement to creditors of that
estate.
B. Funds received by each estate in accordance with subparagraph
A, shall be dedicated exclusively to the payment of creditors in each
respective estate.
III. Distribution of Proceeds from a Sale of the Gold Coast Casino
Barge:
Under the terms of the President Lease, the President has the
right to purchase the Gold Coast Casino Barge as specified therein. In the
event the President elects to make such purchase, 25% of the net proceeds
of the sale shall be delivered to the liquidating trustee appointed
pursuant to a plan of reorganization, or, if applicable, such other entity
as may be designated by the Committees or appointed by the Court to
represent the Debtors' estates, for distribution to holders of allowed
claims in the AmGam and AGRM estates, and the remaining 75% of the net
sales proceeds shall be paid to AGEL and/or Shamrock or its assignee. As
used in this provision, net proceeds is defined as those funds remaining
after payment of all usual, customary and reasonable closing expenses
related to the sale. Proceeds of the sale allocated to the AmGam and AGRM
estates pursuant to this provision shall be allocated between the
respective estates in accordance with the formula set forth in section II
above.
IV. Terms of the Trust
A. The parties agree to support a plan of reorganization which
provides that distributions to the parties under this agreement will be
made through a liquidating trust (the "Trust"). The terms of the Trust and
the rights and obligations of the trustee of the Trust (the "Trustee")
shall be set forth in a written trust agreement (the "Trust Agreement")
acceptable to the AmGam Committee, the AGRM Committee, AGEL, and Shamrock.
Any Trustee selected to serve must be acceptable to AGEL, Shamrock, and
the designated representative (the "Representative") of the holders of AGRM
and AmGam unsecured claims.
<PAGE 26>
B. The Trust Agreement shall provide that the Trustee shall have
no power to take any actions out of the ordinary course of business with
respect to the interest of the Gold Coast Casino Barge or the President
Lease held in the Trust without the consent and approval of the Trustee or
Representative, AGEL and Shamrock or its assignee. Such actions requiring
consent (and the procedures for obtaining necessary consents and resolving
any disputes among the parties hereto) will be generally defined in the
Trust Agreement, unless expressly provided for in this agreement, and shall
include any prepayment or other modification of the President Lease, any
proposed sale, transfer or any other disposition of the Gold Coast Casino
Barge, and the terms of any proposed settlement of any dispute or
litigation with the lessee of the Gold Coast Casino Barge that would result
in a reduction of or delay in receipt of any remaining unpaid lease
payments under the current terms of the President Lease.
C. As additional responsibilities, the Trustee shall receive and
shall have the sole responsibility for receiving all revenue generated from
payments owned by the President, or other sources, for lease or note
payments due as a result of the President Lease of the Gold Coast Casino
Barge including the purchases, under a note, of certain FF&E located
thereon. The Trustee shall also have responsibility for payment of such
funds as required herein and under the terms of a confirmed plan of
reorganization containing the provisions of this settlement agreement.
Except as stated in the following provision, neither the Trust nor the
Trustee shall assume or be obligated to pay or perform any obligation of
the owner under the President Lease, as amended, and AGEL and its
successors shall be and remain liable for all such owner's obligations and
shall indemnify and hold the Trust and the Trustee harmless from and
against all such liabilities and obligations; provided, that the Trust
shall assume only the obligations of the owner under the President Lease
that accrue and are first performable thereunder during the period
beginning on the Effective Date and ending on the date the Plan is fully
consummated or such earlier date of termination of the President Lease, but
such assumption, however, shall be enforced solely against the assets of
the Trust and shall not impose any liability on or be enforceable against
the Trustee or the beneficiaries of the Trust.
D. The Representative, AGEL and Shamrock shall cooperate with
each other in good faith and use their best efforts (i) to reach mutually
acceptable terms with respect to any proposed sale, transfer or other
disposition of the Casino Barge or any settlement of any dispute or
litigation with the lessee of the Casino Barge for which the Trustee
requires consent and approval as set forth in paragraph IV. B above, and
(ii) to establish procedures for timely response to any offer to purchase
which may be made by the President pursuant to the settlement with
President approved by the Bankruptcy Court by order dated January 7, 1998.
E. Upon consummation of the conveyance set forth in sub paragraph
A above, the Trustee shall be vested with (i) all rights and benefits
pertaining to the 25% undivided ownership interest in the Gold Coast Casino
Barge, and (ii) all rights the right to receive all charter hire and other
payments thereunder, to enforce the collection of any sums or obligations
payable or performable thereunder, to exercise any and all remedies
available to the owner thereunder, and to grant or withhold any consent
thereunder. The beneficiaries of the Trust shall be the creditors of AmGam
and AGRM, including AGEL and Shamrock or its assignee, if any.
<PAGE 27>
V. Conditions to Effectiveness of Agreement.
This agreement shall be subject to approval of the United States
Bankruptcy Court for the Northern District of New York (as to Shamrock and
Bennett) and the United States Bankruptcy Court for the Southern District
of Mississippi (as to AmGam and AGRM).
VI. Releases
Approval of the terms of this settlement as required by its terms
shall constitute a release and discharge by each of the parties of any and
all claims, whether known or unknown, presently existing or which may arise
in the future, that a party may have for any reason against another party
and/or such party's respective officers, directors, agents, employees,
legal representatives, trustees, and professionals (except as otherwise
expressly contemplated by this agreement).
VII. Miscellaneous
A. Choice of Law: This agreement shall be governed by and
construed in accordance with the laws of the State of Mississippi, except
where applicable federal laws apply.
B. Entire Agreement: This agreement constitutes the entire
agreement of the parties on the subjects contained herein and supersedes
all prior and contemporaneous negotiations and agreements, oral and
written, except that nothing in this agreement shall or shall be deemed to
supersede any prior agreements approved by applicable courts.
C. No Waiver: One or more waivers of a breach of any term or
provision of this agreement by any party shall not be construed as being a
waiver of a subsequent breach of the same covenant, term, or provision.
D. Modification: This agreement may be modified only in a writing
signed by the party to be charged.
E. Severability: If any provision or term of the agreement is
held illegal, invalid, or unenforceable, such provision or term shall be
fully severable and this agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision never had comprised part
of this agreement. The remaining terms of this agreement shall remain in
full force and effect.
F. Rules of Construction: The terms of this agreement shall be
construed in all cases as a whole, according to their fair meaning, and
shall not be construed strictly for or against any party. As used in this
agreement, the singular or plural number shall be deemed to include the
other whenever the context so indicates or requires.
G. Enforcement: The parties to this agreement agree that should
any party sue another
<PAGE 28>
party for that party's breach of the agreement, the suing party shall be
entitled to recover its/his attorneys fees and costs of court if
successful. The parties to this agreement concur and covenant that the
relief which may be sought to enforce the provision includes declaratory
and injunctive relief.
H. Successors and Heirs: This agreement shall be binding on the
parties and upon the parties' respective heirs, administrators, legal
representatives, trustees, executors, successors and assigns and shall
inure to the benefit of the parties and each of their respective heirs,
administrators, legal representatives, trustees, executors, successors and
assigns.
<PAGE 29>
AGREED AS OF THIS 21st day of August 1998.
AMGAM ASSOCIATES, DEBTOR
BY: JOHN HEDGLIN
________________________
ITS: Counsel
________________________
<PAGE 30>
AMERICAN GAMING & RESORTS OF
MISSISSIPPI, INC., DEBTOR
BY: JOHN HEDGLIN
______________________
ITS: Counsel
______________________
<PAGE 31>
AMERICAN GAMING &
ENTERTAINMENT, LTD, A DELAWARE
CORP.
BY: J. DOUGLAS WELLINGTON
_____________________
ITS: President & CEO
AND
BYRD & WISER
BY: ROBERT BYRD 8/21/98
______________________
ITS COUNSEL
<PAGE 32>
SHAMROCK HOLDINGS GROUP, INC.,
A DELAWARE CORP.
BY: RICHARD C. BREEDEN
________________________
ITS: President
________________________
AND
Baker & Botts LLP
BY: BOBBIE T. SHELL
________________________
ITS COUNSEL
BENNETT MANAGEMENT AND
DEVELOPMENT CO.
BY: RICHARD C. BREEDEN
__________________________
ITS TRUSTEE
AND
Baker & Botts LLP
BY: BOBBIE T. SHELL
__________________________
ITS COUNSEL
<PAGE 33>
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS OF AMGAM
ASSOCIATES
BY: PATRICIA J. JOYNER
______________________
ITS: President
AND
T. Glover Roberts
BY: T. GLOVER ROBERTS
______________________
ITS COUNSEL
<PAGE 34>
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS OF
AMERICAN GAMING AND RESORTS
OF MISSISSIPPI, INC.
BY: TIM FOWLKES
______________________
ITS: Chairman
AND
WILLIAM S. BOYD, III
______________________
BY: William S. Boyd, III
ITS COUNSEL
<PAGE 35>
EXHIBIT 10.25
FIRST AMENDMENT TO CHARTER
This Amendment (the "Amendment"), amending the Charter dated as of
February 17, 1995 (the "Charter") between American Gaming & Entertainment,
Ltd. ("AGEL"), owner, and President Mississippi Charter Corporation
("Charterer"), is made and entered into this 6th day of November, 1998,
(effective as of December 1, 1997), by Charterer, on the one hand, and
AGEL, as owner with the concurrence of the following parties (hereinafter
sometimes referred to collectively as the "AmGam Group"), on the other
hand: AmGam Associates, a Mississippi partnership ("AmGam"), American
Gaming & Resorts of Mississippi, Inc., a Mississippi corporation ("AGRM"),
the Official Committee of the Unsecured Creditors of AmGam, the Official
Committee of the Unsecured Creditors of AGRM, AGEL and Shamrock Holdings,
Inc. (formerly known as Bennett Holdings Group, Inc.) ("Shamrock").
WHEREAS, pursuant to the Charter, Charterer chartered from AGEL the
vessel known as the Gold Coast Barge, U.S.O.C. No. 995650;
WHEREAS, Charterer desires to amend the Charter as hereinafter set
forth; and
WHEREAS, the parties have entered into a letter agreement dated
October 22, 1997 setting forth the financial terms of this Amendment,
agreeing to settle certain litigation, and setting forth other
understandings among the parties (the "Term Sheet");
WHEREAS, this Term Sheet has been approved by the United States
Bankruptcy Court for the Northern District of New York and the United
States Bankruptcy Court for Southern District of Mississippi.
WHEREAS, the members of the AmGam Group have proposed to settle all
disputes among themselves pursuant to an agreement dated November 11, 1996
(the "Global Settlement");
NOW THEREFORE, in consideration of the foregoing and of the
representations, warranties and covenants in this Amendment and in the
Charter, and for other good and valuable consideration set forth in the
Term Sheet, the parties agree that the Charter shall be amended to conform
with provisions of the Term Sheet as follows:
DEFINITIONS
Capitalized terms used herein and not otherwise defined or redefined shall
have the meanings set forth in the Charter. The following terms, however,
shall be defined for purposes of this Amendment and for purposes of the
Charter provisions that survive this Amendment as follows:
<PAGE 36>
1. The term "Owner" as used in this Charter shall refer to AGEL.
2. The term "Charter" as used hereinbelow and in the Charter shall
hereinafter refer to the Charter, as it has been amended by this Amendment.
Any reference to the Charter in the Charter itself, whether directly or
through the use of words such as "herein," shall refer to the Charter as
amended by this Amendment.
3. The term "Closing Date" shall mean the date of execution of
this Amendment.
4. The term "Payee" shall refer to the law firm of Rimmer,
Rawlings, MacInnis & Hedglin, in its capacity as the escrow agent for the
escrow account of AmGam established pursuant to the Order of the Bankruptcy
Court dated April 28, 1996 (as amended on August 1, 1996), or such other
person or entity designated by the Bankruptcy Court or designated to
Charterer by the Owner in writing.
I. CHARTER PERIOD
Section 2 of the Charter shall be amended by deleting the entire
Section 2 and substituting, in lieu thereof, the following:
The amended charter period for the Vessel shall extend from December
1, 1997 until April 15, 2000, unless earlier terminated because the Vessel
has been sold to Charterer or a third party (the "Charter Period"). The
date of the expiration of the Charter Period shall be referred to herein as
the "Charter Expiration Date". Upon the Charter Expiration Date, unless
the Vessel shall have been purchased by Charterer pursuant to Section 15 of
the Charter (as amended by this Amendment), the Vessel shall be returned
to the Owner in accordance with the terms of Section 13 of the Charter.
II. CHARTER HIRE AND INITIAL PAYMENT
Section 3 of the Charter shall be amended by deleting the entire
Section 3 and substituting, in lieu thereof, the following:
(a) On the Closing Date, Charterer shall pay the Payee the sum of One
Million, Five Hundred Twenty-Five Thousand Dollars
<PAGE 37>
($1,525,000.00) representing past due sums pursuant to the original charter
and in addition thereto, all monthly Charter Hire payments that have
accrued since December 1, 1997, up until the Closing Date. In connection
therewith, the parties shall execute the Agreement of Release attached
hereto as Exhibit A.
(b) The Charter Hire owed by Charterer under the Charter for each
month of the Charter Period shall be Two Hundred Fifteen Thousand Dollars
($215,000.00). The Charter Hire for any partial calendar month during the
Charter Period shall be equal to Two Hundred Fifteen Thousand Dollars
($215,000.00) multiplied by a fraction the numerator of which is the number
of Charter Period days in such partial month and the denominator of which
is the total number of days in such month. From and after the Closing
date, the Charter Hire for each month shall be paid prior to the tenth of
the month.
(c) From and after the Closing date, if the Charter Hire in any
particular month is not paid by the tenth calendar day of such month, then
Charterer shall pay to Payee a late fee of $21,500, together with the
Charter Hire for such month.
III. INSURANCE
Subsection (a) of Section 5 of the Charter shall be amended to delete
Subsection 5(a) and to substitute the following language prior to the
"provided however":
(a) Charterer shall obtain and maintain during the Charter Period, at
Charterer's sole cost and expense, insurance in such amounts covering the
Vessel and all equipment aboard the Vessel against such risks as Owner
shall reasonably determine to be desirable to fully protect its economic
interests in the Vessel (which amounts shall in no event be less than
$9,000,000, provided that the value survey submitted to Charterer's
underwriter supports such value to the reasonable satisfaction of such
underwriter), and shall obtain and maintain during the Charter Period at
Charterer's sole cost and expense general liability and such other
insurance policies with respect to the Vessel and the operation to be
conducted on the Vessel and at the Dockage Site, and in such amounts, as
Charterer shall reasonably determine to be necessary or appropriate. In no
event shall the amount of general liability insurance be less than
$12,000,000. Both the Owner and Charterer shall be named as insureds with
waiver of subrogation under the general liability policies (and such other
policies as Charterer shall deem appropriate) and as loss payees under all
other insurance policies so obtained and maintained. Charterer's
responsibility for the cost of the insurance required to be obtained and
maintained under this Section 5 shall for the cost of the insurance
required to be obtained and maintained under this Section 5 shall commence
upon delivery of the Vessel to Charterer at the Delivery Site on the
Commencement Date.
<PAGE 38>
IV. REPRESENTATIONS AND WARRANTIES
Section 6(b) of the Charter shall be amended to add a new paragraph
(xi), which shall read as follows:
(xi) Except as disclosed on Exhibit B to this Amendment, (A) Charterer
is not aware of nor has it received any notice, written or oral, by any
governmental agency or entity that an order or directive has been issued or
will be issued relating to any known condition or defect with respect to
the Vessel; (B) Charterer is unaware of any condition or defect that may
result in a claim for a breach of the representations and warranties of
Owner under Section 6(a) of the Charter, other that those items released
pursuant to the release attached hereto as Exhibit A; and (C) following
the date hereof, Charterer will disclose to Owner each and every notice,
written or oral, by any governmental agency or entity advising that an
order or directive has been or will be issued relating to a breach of any
representation and warranty under Section 6(a) hereof.
V. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 8(a) shall be amended to add the following clause at the end
of the sentence comprising Section 8(a) of the Charter, to read as follows:
"; provided, however, that Owner shall be responsible for any breach of the
representations and warranties of Owner under Section 6(a) of the Charter
only to the extent that such breach was not known to Charterer on the
Closing Date. Breaches of representations and warranties that were known
to Charterer on or before the Closing Date are waived and released to the
fullest extent of the law."
VI. REDELIVERY
The first sentence of Section 13(a) shall be deleted in its entirety,
and the following shall be substituted in lieu thereof:
(a) Subject to Charterer's exercise of the Purchase Option set forth
in Section 15 of the Charter (as amended by this Amendment), Owner shall
cause the Vessel (other than the Electrical Equipment, the Fire Pump and
the Transition Equipment) to be removed from the Dockage Site no later than
ten (10) business days after the Charter Expiration Date.
Section 13(b) shall be amended to read as follows:
Upon redelivery of the Vessel, the Owner may require that the Vessel
be surveyed by a qualified independent marine surveyor
<PAGE 39>
mutually acceptable to the Owner and the Charterer. Charterer shall
reimburse Owner for one-half of the reasonable costs of the marine survey
obtained pursuant to this Section 13(b) up to a maximum reimbursement of
Five Thousand ($5,000.00) Dollars. In addition to Charterer's obligations
pursuant to Sections 9 and 11 of the Charter, which shall remain intact,
Charterer shall be obligated to redeliver the Vessel in the same condition
that Charterer last used the Vessel in its normal business operations.
A new section 13(c) shall be added as follows:
(c) On February 1, 2000 (assuming the Charter has not been terminated
prior thereto), Charterer shall establish an escrow account, and shall
escrow up to $500,000.00 of the Charter Hire due from February 1, 2000
until the end of the Charter Period (the "Removal Escrow"), to fund Owner's
share of the cost of the removal of the Vessel at the termination of the
Charter Period. The Charterer shall fund its equal share of the Removal
Escrow concurrently with Owner. If the amounts held in the Removal Escrow
are greater than the cost of the removal of the Vessel under Section 13(a),
then any excess shall be paid to Owner and Charterer equally upon the
removal of the Vessel in accordance with Section 13(a).
A new Section 13(d) shall be added to the Charter, to read, in
its entirety, as follows:
(d) Upon termination of the Charter, for any reason (i) Charterer
shall leave in place all wiring, connections, switches, splitters,
couplings and junctions necessary to operate slot and player tracking
Systems; and (ii) Charterer shall be entitled to remove from the Vessel all
furniture, slot, tracking and other equipment and all other property owned
by Charterer;
VII. PURCHASE OPTION
Section 15 shall be deleted in its entirety, and a new Section 15
shall be substituted in lieu thereof to read as follows:
Section 15. Purchase Option. At any time during the Charter Period,
Charterer shall have the right to make a written offer to purchase the
Vessel, which offer shall be addressed to every member of the AmGam Group,
or their assigns. The AmGam Group (or their assigns) shall have the right
to accept or reject the offer within thirty days receipt of the
written notice from Charterer. Charterer's written offer shall state "The
AmGam Group shall have the right to accept or reject this offer within
thirty days of receipt of this written notice from Charterer, and if it
this written offer is not rejected in 30 days, it is deemed accepted." The
offer shall contain the following language:
<PAGE 40>
"If the Charterer delivers a written offer containing the
foregoing language and if the AmGam Group does not reject the
offer within 30 days of receipt of the written offer, then such
offer shall be deemed to have been accepted."
Any rejection shall be communicated in writing. Upon acceptance, the
parties shall take all actions necessary or appropriate (including the
cancellation of any liens that members of the AmGam Group shall have) to
cause Charterer to receive a good and merchantable title to the Vessel,
free and clear of all liens and encumbrances.
VIII. ASSIGNMENT
Section 17 of the Charter shall be amended by deleting Section 17 in
its entirety and substituting in lieu thereof, the following:
Section 17. Assignment of Sale of Barge.
(a) The Charter, the right to receive payments thereunder, or any
other interest therein, may be assigned by individual members of the AmGam
Group upon the written consent of Charterer, which consent shall not be
unreasonably withheld; provided, however, that the assignee must assume in
writing all of the assignor's obligations under the Charter (including
without limitation, Owner's indemnification obligations pursuant to Section
8 of the Charter). No assignment shall be permitted unless the transferring
party and the transferee shall have received all governmental approvals,
consents and actions necessary to effectuate such Transfer, and such
Transfer shall not unreasonably disturb Charterer's peaceful enjoyment of
the Vessel during the Charter Period. Any assignment of a percentage
interest in the Charter must also include the sale of the same percentage
interest in the Vessel pursuant to Section 17(b), and the "Sale Notice"
provided for in Section 17(b) shall include the terms and conditions of the
assignment of the Charter.
(b) The Vessel, or any interest therein, may be sold subject to the
Charter at any time during the Charter Period; provided, however, that
Charterer shall have the first right of refusal with respect to any such
sale. Notice of a proposed sale shall be provided to Charterer by
registered mail, setting forth the name of the proposed transferee, the
price to be paid and any other relevant terms of the proposed transaction
(a "Sale Notice"). Charterer shall have the right, exercisable within
thirty days of the date that a Sale Notice is received, (a) to purchase
only the Vessel, or any interest therein, on the same terms and conditions
set forth in the Sale Notice, in which case the Charter shall remain
outstanding, or (b) to purchase both the interest in the
<PAGE 41>
Vessel and the interest in the Charter proposed to be transferred. If
Charterer does not exercise its right of first refusal, then the proposed
transfer can be effected on the same terms and conditions contained in the
Sale Notice within sixty days of the termination of the thirty-day period
during which Charterer had the right to exercise its right of first
refusal. If the Vessel, or such interest therein, is not sold within such
sixty-day period, then the proposed sale cannot be consummated without
giving Charterer another Sale Notice and allowing Charterer to exercise its
right of first refusal.
(c) The AmGam Group shall structure any settlement among the members
of the AmGam Group so that, if Charterer exercises its rights to purchase
the Vessel (or portion thereof) pursuant to this Section 17, Charterer
shall receive a good and merchantable title to the Vessel (or portion
thereof), free and clear of all liens or encumbrances.
IX. NOTICES
Section 19 of the Charter shall be amended to provided for notice as
follows:
If to Charterer:
President Mississippi Charter Corporation
c/o President Casinos, Inc.
800 North First Street
St. Louis, Missouri 63102
Fax: (314) 622-3049
Attention: John S. Aylsworth
With a copy to;
Virginia Boulet
Phelps Dunbar, L.L.P.
400 Poydras Street
New Orleans, Louisiana 70130
If to Owner, to all of the following:
American Gaming & Entertainment, Ltd.
c/o Douglas Wellington
1 Woodland Avenue
Paramus, New Jersey 07652
with a copy to:
Robert A. Byrd
145 Main Street
Biloxi, Mississippi 39530
<PAGE 42>
AmGam Associates and American Gaming & Resorts of Mississippi, Inc.
c/o John Hedglin
Rimmer, Rawlings, MacInnis & Hedglin, P.A.
1290 Deposit Guaranty Plaza
Jackson, Mississippi 39201
The Official Committee of the Unsecured Creditors of AmGam Associates
c/o T. Glover Roberts
Sheinfeld, Maley & Kay, P.C.
1700 Pacific Avenue
Suite 4400
Dallas, Texas 75201
The Official Committee of the Unsecured Creditors of American Gaming &
Resorts of Mississippi, Inc.
c/o William S. Boyd, III
Attorney at Law
1225 Thirty-First Avenue
Gulfport, Mississippi 39501
Shamrock Holdings, Inc.
c/o Richard Breeden
2 Clinton Square
Syracuse, New York 13202
with a copy to:
Brenda T. Rhoades
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
WHEREFORE, this Amendment has been executed by the parties as of the
date first above mentioned.
PRESIDENT MISSISSIPPI CHARTER CORPORATION
________________________
BY:
ITS:
PRESIDENT RIVERBOAT CASINO-MISSISSIPPI, INC.
________________________
BY:
ITS:
<PAGE 43>
AMERICAN GAMING & ENTERTAINMENT, LTD.
J. DOUGLAS WELLINGTON
________________________
BY: J. Douglas Wellington
ITS: President & CEO
AMGAM ASSOCIATES
J. DOUGLAS WELLINGTON
________________________
BY: J. Douglas Wellington
ITS: Manager
AMERICAN GAMING & RESORTS OF MISSISSIPPI, INC.
J. DOUGLAS WELLINGTON
________________________
BY: J. Douglas Wellington
ITS: President
THE OFFICIAL COMMITTEE OF THE UNSECURED CREDITORS OF AMGAM ASSOCIATES
________________________
BY:
ITS:
THE OFFICIAL COMMITTEE OF THE UNSECURED CREDITORS OF AMERICAN GAMING &
RESORTS OF MISSISSIPPI, INC.
________________________
BY:
ITS:
SHAMROCK HOLDINGS, INC.
________________________
BY:
ITS:
Subject to Bankruptcy Court approval in the United States Bankruptcy Court
for the Northern District of New York.
<PAGE 44>
STATE OF ___________________
COUNTY OF __________________
Personally appeared before me, the undersigned authority in and for
the said County and State, within my jurisdiction, the within
_____________________, who acknowledged that he is _____________________,
respectively of PRESIDENT MISSISSIPPI CHARTER CORPORATION, a
_________________ Corporation, and that for and on behalf of said
corporation, and as its act and deed, he signed, sealed and delivered the
above and foregoing instrument for the purposes mentioned on the day and
year therein mentioned, after first having been duly authorized by said
corporation so to do.
GIVEN under my hand and official seal of office on this the ___ day of
________________________, 1998.
______________________
Notary Public
My Commission Expires:
________________________
STATE OF ___________________
COUNTY OF __________________
Personally appeared before me, the undersigned authority in and for
the said County and State, within my jurisdiction, the within
_____________________, who acknowledged that he is _____________________,
respectively of PRESIDENT RIVERBOAT CASINO-MISSISSIPPI, INC., a
_________________ Corporation, and that for and on behalf of said
corporation, and as its act and
<PAGE 45>
deed, he signed, sealed and delivered the above and foregoing instrument
for the purposes mentioned on the day and year therein mentioned, after
first having been duly authorized by said corporation so to do.
GIVEN under my hand and official seal of office on this the ____ day
of ________________________, 1998.
_____________________
Notary Public
My Commission Expires:
________________________
STATE OF New Jersey
COUNTY OF Bergen
Personally appeared before me, the undersigned authority in and
for the said County and State, within my jurisdiction, the within J.
Douglas Wellington, who acknowledged that he is President & CEO,
respectively of AMERICAN GAMING & ENTERTAINMENT, LTD., a Delaware
Corporation, and that for and on behalf of said corporation, and as its act
and deed, he signed, sealed and delivered the above and foregoing
instrument for the purposes mentioned on the day and year therein
mentioned, after first having been duly authorized by said corporation so
to do.
GIVEN under my hand and official seal of office on this the 26 day of
October, 1998.
MONICA SHAMON
_________________
Notary Public
My Commission Expires:
Dec. 8, 2002
<PAGE 46>
EXHIBIT 10.26
October 21, 1998
J. Douglas Wellington
President & CEO
American Gaming & Entertainment, Ltd.
One Woodland Avenue
Paramus, NJ 076S2
Re.: In re The Bennett Funding Group. Inc.
Case No 96-61376 (as substantively consolidated,
"Bennett")
In re Shamrock Holdings Group, Inc. ("Shamrock")
Case No. 98-63631
Dear Mr. Wellington:
This letter agreement is written in connection with the Motions
(collectively, the "Motions") to Approve Compromise of Controversies filed
in each of the above-referenced bankruptcy cases regarding a compromise of
certain controversies among American Gaming & Entertainment, Ltd. ("AGEL"),
AmGam Associates ("AmGam"), American Gaming and Resorts of Mississippi,
Inc. ("AGRM"), Shamrock, Bennett, the Official Committee of Unsecured
Creditors of AmGam Associates (the "AmGam Committee"), and the Official
Committee of Unsecured Creditors of American Gaming and Resorts of
Mississippi, Inc. (the "AGRM Committee") relating to the Mississippi
bankruptcy cases of AmGam and AGRM (the "Mississippi Global Settlement
Agreement"). A hearing on the Motions is scheduled to be heard by the
United States Bankruptcy Court for the Northern District of New York ("the
Court") in the Shamrock and Bennett cases on October 22, 1998.
In connection therewith, AGEL, Shamrock and Bennett agree as follows,
1. Notwithstanding any document or agreement to the contrary,
including, without limitation, paragraph XI of the Settlement Agreement or
a certain letter agreement dated November 5, 1977 (each of which are
attached to the Motions), the
<PAGE 47>
J. Douglas Wellington
October 21, 1998
Page 2
Mississippi Global Settlement Agreement shall not constitute a waiver,
release, or settlement of any claim or defense held by or among AGEL,,
Bennett or Shamrock against one another; and
2. All monies to be paid to AGEL and/or Shamrock pursuant to the
Mississippi Global Settlement Agreement shall be deposited into a joint
interest-bearing account in the name of AGEL, Shamrock and Bennett pending
further order of the Court with respect to the entitlement of those parties
to the same. The interest earned thereon sha1l be allocated pro rata to the
monies deposited into the account as those monies may ultimately be
disbursed to the parties in accordance with the further order of the Court.
3. All right, title and interest of AGEL, Shamrock and Bennett in
interests granted by or in connection with the Mississippi Global
Settlement Agreement (with the exception of the $2,040,003.75 first
mortgage on or security interest in the Casino Barge (as defined in the
Mississippi Globa1 Settlement Agreement)) shall be held jointly by AGEL,
Shamrock and Bennett pending further Order of the Court.
Shamrock and Bennett recognize that AGEL is desirous of resolving all
issues relating to AGEL's indebtedness to Shamrock and agree to begin
discussions with AGEL in an effort to do so as promptly an possible.
This letter agreement is executed and delivered for the purpose of
allowing the Court to consider the Mississippi Global
<PAGE 48>
J. Douglas Wellington
October 21, 1998
Page 3
Settlement while preserving the respective rights of AGEL, Shamrock and
Bennett among themselves.
THE BENNETT FUNDING GROUP, INC, Debtor
By RICHARD C. BREEDEN
_____________________
By Richard C. Breeden, Trustee
SHAMROCK HOLDINGS GROUP, INC.,
Debtor in Possession
By RICHARD C. BREEDEN
______________________
By Richard C. Breeden, authorized officer
Acknowledged and agreed to by:
AMGAM ASSOCIATES
By J. DOUGLAS WELLINGTON
_______________________
Management Committee (Title)
AMERICAN GAMING & RESORTS OF
MISSISSIPPI, Ltd.
By J. DOUGLAS WELLINGTON
_______________________
President (Title)
AMERICAN GAMING & ENTERTAINMENT, LTD.
By J. DOUGLAS WELLINGTON
_______________________
President and Chief Executive Officer (Title)
<PAGE 49>
EXHIBIT 11
<TABLE>
AMERICAN GAMING & ENTERTAINMENT, LTD.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
Three Months Ended Nine months Ended
September 30, September 30,
1998 1997 1998 1997
____ ____ ____ ____
<S> <C> <C> <C> <C>
Weighted average number
of shares for computation 12,532,102 12,532,102 12,532,102 12,532,102
=========== =========== =========== ===========
Net loss $(2,060,000) $(2,055,000) $(5,914,000) $(5,717,000)
Dividends and accretion
on preferred stock 467,000 467,000 1,400,000 1,400,000
___________ ___________ ___________ ___________
Net loss for common
Stockholders $(2,527,000) $(2,522,000) $(7,314,000) $(7,117,000)
=========== =========== =========== ===========
Loss for common stockholders
per common share $(0.20) $(0.20) $(0.58) $(0.57)
====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF AMERICAN GAMING &
ENTERTAINMENT, LTD. FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 152,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,770,000
<PP&E> 12,678,000
<DEPRECIATION> 4,987,000
<TOTAL-ASSETS> 10,158,000
<CURRENT-LIABILITIES> 66,601,000
<BONDS> 0
0
15,553,000
<COMMON> 126,000
<OTHER-SE> (63,250,000)
<TOTAL-LIABILITY-AND-EQUITY> 10,158,000
<SALES> 0
<TOTAL-REVENUES> 445,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,292,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,137,000
<INCOME-PRETAX> (5,914,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,914,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,314,000)
<EPS-PRIMARY> (0.58)
<EPS-DILUTED> (0.58)
</TABLE>
