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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8 - K
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 1, 1996
SODAK GAMING, INC.
(Exact name of registrant as specified in its charter)
South Dakota 0-21754 46-0407053
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(State or other (Commission File Number) (IRS Employer Identification No.)
jurisdiction of
incorporation)
5301 S. Highway 16
Rapid City, South Dakota 57701
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(Address of principal executive offices)
Registrant's telephone number, including area code: (605) 341-5400
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INFORMATION TO BE INCLUDED IN THIS REPORT
Item 2. Acquisition or Disposition of Assets.
On July 1, 1996, pursuant to a Stock Purchase Agreement by and between the
Registrant and John Parker, John Nix and Gamblers Supply Management Company
(GSMC), the Registrant acquired all of the outstanding shares of GSMC, which
owns, leases and operates a casino gaming facility (the Miss Marquette) located
at Marquette, IA. The Miss Marquette gaming facility consists of a 226-foot
river boat, which is leased from the Registrant, gaming machines and equipment
and dockside facilities, which include a 24-room hotel, parking lots, marina,
restaurant, lounge, other support facilities and related furniture, fixtures and
equipment. The river boat has 698 slot machines and 30 table games. It is
anticipated that the Registrant will continue to operate the Miss Marquette
gaming facility in a manner similar to that in which it was operated under its
prior ownership.
Pursuant to the Stock Purchase Agreement, all the outstanding shares of
Common Stock of GSMC were acquired for One Million Dollars ($1,000,000) which
amount was funded from the Registrant's Credit Facility. In addition to the
purchase price, the Registrant has guaranteed a GSMC note payable to John Parker
and John Nix (the Sellers) in the aggregate of Four Million Four Hundred
Thousand Dollars ($4,400,000), which is payable in 36 equal monthly payments
including interest at 8% beginning August 1, 1996. The Registrant continues to
hold notes receivable relating to prior loans from the Registrant to GSMC to
finance the dockside facility and gaming equipment, and also has lease payments
receivable and accrued interest receivable from GSMC totaling $22,583,833 as of
June 30, 1996.
Item 7. Financial Statements and Exhibits.
(a) and (b)
The Financial Statements and the pro forma financial information
relating to the transaction
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described in Item 2 of this report (collectively the "Financial Information"),
which are required to be filed as part of this Report pursuant to paragraphs (a)
and (b) of Item 7 of Form 8-K, are not included with this filing in reliance on
Item 7 (a) (4) and 7 (b) (2) of Form 8-K. It is impracticable to provide the
Financial Information at the time this Report is filed. In accordance with Item
7(a) (4) of Form 8-K, the Financial Information will be filed by amendment to
this Report on Form 8-K/A as soon as practicable, but not later than September
13, 1996.
(c) The following documents are filed as Exhibits to this Report:
2 Stock Purchase Agreement, dated as of July 1, 1996, by and among
John Parker, John Nix and Gamblers Supply Management Company.
99 (a) Management Agreement, dated as of June 10, 1994, by and between
Gamblers Supply Management Company and Marquette Gaming Corporation.
99 (b) Dock Site Agreement, dated as of June 10, 1994, by and between
the City of Marquette, Iowa and Gamblers Supply Management Company.
99 (c) Non-Negotiable Promissory Note dated July 1, 1996, between Gamblers
Supply Management Company and John E. Nix guaranteed by Sodak
Gaming, Inc.
99 (d) Non-Negotiable Promissory Note dated July 1, 1996, between Gamblers
Supply Management Company and John T. Parker guaranteed by Sodak
Gaming, Inc.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 15, 1996 SODAK GAMING, INC.
By
\s\ David R. Johnson
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Chief Financial Officer
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Index of Exhibits
Exhibit No.
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2 Stock Purchase Agreement, dated as of July 1, 1996, by and among John
Parker, John Nix and Gamblers Supply Management Company.
99 (a) Management Agreement, dated as of June 10, 1994, by and between
Gamblers Supply Management Company and Marquette Gaming Corporation.
99 (b) Dock Site Agreement, dated as of June 10, 1994, by and between the
City of Marquette, Iowa and Gamblers Supply Management Company.
99 (c) Non-Negotiable Promissory Note dated July 1, 1996, between Gamblers
Supply Management Company and John E. Nix, guaranteed by Sodak Gaming,
Inc.
99 (d) Non-Negotiable Promissory Note dated July 1, 1996, between Gamblers
Supply Management Company and John T. Parker, guaranteed by Sodak
Gaming, Inc.
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Exhibit 2
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, dated as of June 30, 1996, by and between
Sodak Gaming, Inc., a South Dakota corporation (the "Purchaser"), and John
Parker, an individual, John Nix, an individual, (hereinafter collectively
referred to as "Sellers"), and Gamblers Supply Management Company, a South
Dakota corporation (the "Company");
WHEREAS, Sellers own ten thousand (10,000) shares of common stock, par
value $1.00 per share, of the Company, constituting all the issued and
outstanding shares of capital stock of the company (such shares being referred
to herein as the "Stock").
WHEREAS, Sellers desire to sell, and Purchaser desires to purchase the
Stock on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration, receipt of which
is hereby acknowledged, the parties hereto agree as follows;
1. Purchase and Sale of Stock
1.1 All Right, Title and Interest of Sellers. Sellers agree to sell to
Purchaser, and Purchaser agrees to purchase from Sellers, all of the right,
title and interest of Sellers in and to the Stock at the Closing (as defined in
Section 1.3) on the terms and subject to the conditions set forth in this
Agreement.
1.2 Purchase Price. The aggregate purchase price for the Stock is One
Million Dollars ($1,000,000.00) (the "Purchase Price"), payable in the manner
provided in Section 1. 3.
1.3 The Closing.
(a) The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of the Purchaser, at
10:00 a.m. July 1, 1996 (the "Closing Date"), or at such other place and on such
other date as is mutually agreeable to Purchaser and Sellers. The Closing will
be effective as of the close of business on June 30, 1996.
(b) Subject to the conditions set forth in this Agreement, the
parties agree to consummate the following "Closing Transactions" on the Closing
Date:
(i) Sellers will assign and transfer to Purchaser good and
valid title in and to the Stock, free and clear of all liens, by delivering to
Purchaser a stock certificate or certificates representing the Stock, duly
endorsed for transfer or accompanied by duly executed stock
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powers endorsed in blank with requisite stock transfer tax stamps, if any,
attached;
(ii) On the day of closing or the first business day
thereafter, Purchaser shall remit to Sellers a sum of one million dollars
($1,000,000.00) by wire transfer of immediately available funds to the account
designated by Sellers to Purchaser prior to Closing.
(iii) On the Date of Closing shall deliver Promissory
Notes between GSMC as Promisor and Sellers as Promisees in the aggregate amount
of Four Million Four Hundred Thousand Dollars ($4,400,000.00) payable in
thirty-six (36) equal monthly installments at eight percent (8%) interest, with
the first payment due thirty (30) days from date of closing. Performance of the
terms and conditions of said note shall be guaranteed by the Purchaser.
1.4 Section 338(h)(10) Election. The Sellers and the Purchaser
shall make an election on Form 8023-A under Section 338(h)(10) of the Internal
Revenue Code. Section 338(h)(10) and the income tax regulations thereunder
provide that any taxable gain on the deemed asset sale will pass through to the
selling S corporation shareholders of the Company on the final S corporation
federal income tax return. The selling shareholders do not recognize gain or
loss on the sale of their stock.
In connection with the Section 338(h)(10) election, the Purchaser
and the Sellers agree to sign Form 8023-A on or before Closing.
The Sellers shall prepare or have prepared on their behalf final
S corporation income tax returns reflecting the results of the Section
338(h)(10) election, and shall provide the Purchaser an opportunity to review
such returns for 30 days prior to filing.
Each of the parties shall deliver to the other the documents
required to be delivered pursuant to this Agreement.
1.5 Release of Sellers Personal Guarantees and Obligations.
Purchaser agrees to release and indemnify Sellers personal
guarantees and obligations either from Sodak or third parties identified with
specificity in Annex 1.5.
2. Representations and Warranties of Sellers and the Company.
The Sellers and Company represent and warrant to the Purchaser:
2.1 Organization, Standing, Etc.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of South Dakota. The Company has
all requisite power and
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authority and all authorizations, licenses, permits and certifications necessary
to carry on its business to own, operate, and hold its properties and assets, to
enter into this Agreement and carry out the provisions of this Agreement.
The Articles and Bylaws of the Company presently in effect have
been delivered to the Purchaser and are true and complete. Such Articles and
Bylaws have not been restated, amended or repealed since such delivery.
The Company has no Subsidiaries or direct or indirect equity
interest (by way of stock ownership or otherwise) in any firm, corporation,
partnership, joint venture, association or business.
The Company has elected, and the Internal Revenue Service has
acknowledged, the Company's status as an S corporation for Federal income tax
purposes. The Company and the Sellers have taken no action to invalidate the S
corporation election.
2.2 Qualification.
The Company is duly qualified, licensed or domesticated as a
foreign corporation in good standing in each jurisdiction where the nature of
its activities or of its owned or leased properties makes such qualification,
licensing or domestication necessary.
2.3 Capital Stock.
The authorized capital stock of the Company consists of one
million (1,000,000) shares of Common Stock, par value One Dollar ($1.00) per
share, and the Company has no authority to issue any other capital stock.
The number of shares of Common Stock issued and outstanding is
ten thousand (10,000). All of such issued and outstanding shares are duly
authorized, validly issued, fully paid and nonassessable, and have not been
issued in violation of any preemptory rights.
The Company has no other equity securities or securities
containing any equity features authorized, issued or outstanding. There are no
agreements or other rights or arrangements existing which provide for the sale
or issuance of capital stock by the Company and there are no rights,
subscriptions, warrants, options, conversion rights or agreements of any kind
outstanding to purchase or otherwise acquire from the Company any shares of
capital stock or other securities of the Company of any kind. There are no
agreements or other obligations (contingent or otherwise) which may require the
Company to repurchase or otherwise acquire any shares of its capital stock.
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2.4 Indebtedness.
The Company has no Indebtedness for Borrowed Money (as
hereinafter defined) except as disclosed on the latest Balance Sheet (as
hereinafter defined) or in Annex 2.4.
The Company has no indebtedness or amounts payable to Sellers
except the Promissory Notes referenced in Section 1.3(b)(iii).
2.5 Common Stockholders.
Sellers own, beneficially and of record, all right, title and
interest in and to the Stock free and clear of any security interests, claims,
liens, pledges, options, encumbrances, charges, agreements, voting trusts,
proxies or other agreements, restrictions or limitations of any kind and, on the
Closing Date, the delivery of by Sellers of a certificate or certificates in the
manner set forth in Section 1.3(b) hereof will transfer good and valid title to
the Stock to Purchaser, free and clear of any security interests, claims, liens,
pledges, options, encumbrances, charges, agreements, voting trusts, proxies or
other arrangements, restrictions or other legal or equitable limitations of any
kind.
No holder of shares of Common Stock or any other security of the
Company or any other Person is entitled to any preemptive right, right of first
refusal or similar right as a result of the issuance of the Stock or otherwise.
There is no voting trust, agreement or arrangement among any of
the holders of voting stock of the company affecting the exercise of the voting
rights of such stock.
2.6 Corporate Acts and Proceedings.
All corporate acts and proceedings required for the
authorization, execution and delivery of this Agreement, the offer, issuance and
delivery of the Stock and the performance of this Agreement and the terms of the
Articles by the Company have been lawfully and validly taken or will have been
so taken prior to the Closing.
2.7 Compliance with Laws and Other Instruments.
The business and operations of the Company have been and are
being conducted in all material respects in accordance with all applicable state
and federal rules and regulations.
The execution, delivery and performance by the Company of this
Agreement and the observance of the terms of the Articles:
(a) will not require from the Board or stockholders of the
Company any
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consent or approval except such as shall have been obtained prior to the
Closing;
(b) to the best of the Company's and Seller's knowledge,
information and belief, there will be no requirement for any authorization,
consent, approval, license exemption of or filing or registration with any court
or governmental department, commission, board, bureau, agency or instrumentality
of government, except such as shall have been obtained or made prior to Closing.
(c) upon being approved by the Iowa Racing and Gaming Commission
will not cause the Company to violate or contravene: (i) any provision of law
presently in effect, (ii) any rule or regulation presently in effect of any
agency or government, domestic or foreign, (iii) any order, writ, judgment,
injunction, decree, determination or award presently in effect, or (iv) any
provision of the Articles or Bylaws;
(d) to the best of the Company's knowledge and belief after
reasonable investigation, will not violate or be in conflict with, result in a
breach of or constitute (with or without notice or lapse of time or both) a
default under, any material indenture, loan or credit agreement, note agreement,
deed or trust, mortgage, security agreement or other agreement, lease,
instrument, commitment or arrangement to which the Company is a party or by
which the Company or any of its properties, assets or rights is bound or
affected; and
(e) will not result in the creation or imposition of any Material
Lien.
(f) to the best of the company's knowledge, information and
belief after reasonable inquiry, will not result in Purchaser or the Company
becoming subject to, or become liable for, the payment of any tax not in the
ordinary course of business except as disclosed in Annex 2.12.
Except in prior agreements with Purchaser or as otherwise
disclosed in this Agreement or the balance sheet, the Company is not in
violation of, or (with or without notice of lapse of time or both) in default
under, any term or provision of its Articles or Bylaws or of any material
indenture, loan or credit agreement, note agreement, deed of trust, mortgage,
security agreement or other agreement, material lease, instrument, commitment or
arrangement to which the Company is a party or by which any of the Company's
properties, assets or rights is bound or affected.
To the best of the Company's and Seller's knowledge, information
and belief, the Company is not subject to any restriction of any kind or
character which materially and adversely
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affects in any way its business, properties, assets or prospects. The Company
and the Sellers are not subject to any restriction of any kind or character
which prohibits the Company or the Sellers from entering into this Agreement or
would prevent or make materially burdensome the performance of or compliance
with all or any part of this Agreement or the Articles or the consummation of
the transactions contemplated hereby.
2.8 Binding Obligations.
This Agreement has been duly executed and delivered by Sellers
and the Company, and constitute the legal, valid and binding obligations of ea
ch of the Company and the Sellers and is enforceable against the Company, each
of the Sellers and in accordance with their respective terms, except as such
enforcement is limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles of general application (whether considered in an action at law or in
equity).
2.9 Securities Laws.
Subject to the representations and warranties of Purchaser
contained in Section 3.2, the sale of the Stock by the Sellers is and will be
exempt from the registration and prospectus delivery requirements of the
Securities Act, and have been registered or qualified (or are exempt from
registration and qualification) under the registration or qualification
requirements of all applicable state securities laws.
2.10 No Brokers or Finders.
No Person has, or as a result of the transactions contemplated
herein will have, any right or valid claim against the Company or the Purchaser
for any commission, fee or other compensation as a finder or broker, or in any
similar capacity.
2.11 Financial Statements.
Attached hereto as Annex 2.11 are (a) the Company's audited
balance sheet (the "Balance Sheet") as of December 31, 1995, (the "Balance Sheet
Date") and the audited statements of income and retained earnings, and cash
flows for the year then ended, and (b) the Company's unaudited balance sheet as
of May 19, 1996, and the unaudited statements of income and retained earnings
for the twenty week period then ended. The balance sheet of the company as of
May 19, 1996, is herein referred to as the "Latest Balance Sheet."
These financial statements (i) have been prepared from the books
and records
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of the Company, (ii) present fairly the financial condition of the Company at
the dates therein specified and the results of its operations for the periods
therein specified, and (iii) have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior
accounting periods, except with respect to unaudited financial statements which
do not include notes to financial statements which are required by generally
accepted accounting principles, and normal year-end adjustments.
2.12 Absence of Undisclosed Liabilities.
Except as reflected in the Latest Balance Sheet, the Company has
no Material liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due to become due, whether known or unknown, and regardless
of when asserted) arising out of transactions or events heretofore entered into,
or any action or inaction, or any state of facts existing, with respect to or
based upon transactions of events heretofore occurring, except (i) liabilities
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business (none of which is a material uninsured liability for breach
of contract, breach of warranty, tort, infringement, claim or lawsuit) or (ii)
as disclosed on Annex 2.12 hereto.
2.13 Changes.
Except as disclosed on Annex 2.13 hereto, since May 19, 1996, the
Company has not:
(a) discharged or satisfied any material Liens other than those
securing current liabilities shown on the latest Balance Sheet and current
liabilities incurred since the latest Balance Sheet Date in the usual and
ordinary course of business;
(b) paid any material obligation or liability other than current
liabilities shown on the latest Balance Sheet and current liabilities incurred
since the latest Balance Sheet Date in the usual and ordinary course of
business;
(c) mortgaged, pledged or subjected to Lien any of its material
assets, tangible or intangible;
(d) sold, transferred or leased any of its material assets except
in the usual and ordinary course of business;
(e) canceled or compromised any material debt or claim, or waived
or released any material right;
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(f) suffered any material physical damage, destruction or loss
(whether or not covered by insurance);
(g) entered into any material transaction other than in the usual
and ordinary course of business except for this Agreement;
(h) encountered any labor difficulties or labor union organizing
activities;
(i) declared or paid any dividends on or made any other
distributions with respect to, or purchased or redeemed, any of its outstanding
capital stock;
(j) made any change in the accounting principles, methods or
practices followed by it or depreciation or amortization policies or rates
theretofore adopted; or
(k) entered into any agreement, or otherwise obligated itself, to
do any of the foregoing.
2.14 Material Agreements of the Company.
Except as expressly set forth in this Agreement and the Latest
Balance Sheet, or as disclosed on Annex 2.14 hereto, the Company is not a party
to any written or oral:
(a) agreement with any labor union;
(b) agreement for the purchase of material fixed assets or for
the purchase of materials, supplies or equipment in excess of customary
operating requirements;
(c) agreement for the employment of any officer, individual,
employee or other Person on a full time basis or any agreement with any Person
for consulting services;
(d) bonus, pension, profit sharing, retirement, stock purchase,
stock option, deferred compensation, medical, hospitalization or life insurance
or similar plan, contract or understanding with respect to any or all of the
employees of the Company or any other Person;
(e) Material indenture, loan or credit agreement, note agreement,
deed of trust, mortgage, security agreement, promissory note or other agreement
or instrument relating to or evidencing Material Indebtedness for Borrowed Money
or subjecting any asset or property of the Company to any Material Lien or
evidencing any Indebtedness;
(f) guaranty of any material Indebtedness;
(g) lease or agreement under which the Company is lessee of or
holds or operates any property, real or personal, owned by any other Person
under which payments to such Person exceed Ten Thousand Dollars ($10,000) per
annum;
(h) lease or agreement, other than in the ordinary course of
business, under which the Company is lessor or permits any person to hold or
operate any property, real or personal,
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owned or controlled by the Company;
(i) agreement granting any preemptive right, right of first
refusal or similar right to any Person;
(j) agreement obligating the Company to pay any royalty or
similar charge for the use or exploitation of any tangible or intangible
property out of the ordinary course of business;
(k) covenant not to compete or other restriction on the Company's
ability to conduct its business or engage in any other activity;
(l) agreement or other commitment or arrangement with any Person
continuing for a period of more than three months from the Closing Date which
involves an expenditure or receipt by the Company in excess of Ten Thousand
Dollars ($10,000) and is not in the ordinary course of business.
The Company and the Sellers have furnished to the Purchaser true and
complete copies of all material agreements and other documents. All parties
having material contractual arrangements with the Company are in substantial
compliance therewith and none are in default in any material respect thereunder.
With the exception of a power of attorney issued by GSMC to Iowa Attorneys Burns
Mossman and Tom Whitney for the purpose of participating in the sales and use
tax negotiations with the State of Iowa, the Company has issued no other powers
of attorney.
2.15 Key Persons.
The individuals in Annex 2.15 are designated Key Persons in the
full-time employment of the Company. The Sellers' and the Company's knowledge,
no Designated Key Person, except for Dorian Doyon, who is employed by the
Company, has any plans to terminate his employment with the Company, and the
Company has no plans to terminate the employment of any such Designated Key
Person.
To the Sellers' and the Company's knowledge after reasonable
inquiry, no Designated Key Person of the Company is a party to or is otherwise
bound by any agreement or arrangement (including, without limitation, licenses,
covenants, or commitments of any nature), or is subject to any judgment, decree,
or order of any court or administrative agency, (a) that would substantially
conflict with such employee's obligation diligently to promote and further the
interest of the Company or (b) that would substantially conflict with the
Company's business as now conducted.
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To the best of the Sellers' and the Company's information,
knowledge, and belief, after reasonable inquiry, the Company has complied in all
material respects with all laws relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity, collective bargaining
and payment of Social Security and other taxes. Except pursuant to ordinary
arrangements of employment compensation, and as otherwise disclosed herein, the
Company is not under any obligation or liability to any officer, director,
employee or Affiliate of the Company.
2.16 Taxes, Assessments, and Governmental Charges.
Except as disclosed in Annex 2.12, all required federal, state
and local tax returns of the Company have been accurately prepared in a
substantially correct manner and duly and timely filed, and all federal, state
and local taxes required to be paid with respect to the periods covered by such
returns have been paid. The Company is not delinquent in the payment of any tax,
assessment or governmental charge, except for the state sales tax issue as
disclosed in the documents included herein.
Except as referenced in Annex 2.12, the accrual for taxes, assessments and
governmental charges adequately reflected on the Latest Balance Sheet and are in
accordance with generally accepted accounting principles. Since May 19, 1996,
the Company has made adequate provisions on its books of account for all taxes,
assessments and governmental charges with respect to its business, properties
and operations for such period.
The Company has withheld or collected from its employees (not
including independent contractors), sums substantially adequate to pay taxes
required to be withheld or collected therefrom and have paid the same (or same
are held in reserve and will be paid prior to becoming delinquent) to the proper
tax receiving authorities or authorized depositaries.
There is no limitation on the ability of Sellers to make the
election under Section 338(h)(10) of the Code referred to in Section 1.4.
2.17 Patents, Licenses, and Other Intangible Assets.
Except as included in Annex 2.17, no patents, trademarks, service
marks, trade names, copyrights or licenses and rights with respect to the
foregoing, are used in or necessary for the conduct of the Company's business as
now conducted which, may infringe upon or constitute a violation of any right of
any Person with respect to same; the Company is not obligated or under any
liability to make any payments of any royalties, fees, or otherwise, to any
owner of any patent, trademark, service mark, trade name, copyright or other
intangible asset with respect to the use thereof or in connection with the
conduct of its business.
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2.18 Employment Benefit Plans -- ERISA.
The Company does not maintain and has not made contributions to
any pension, profit sharing or other employee retirement benefit plan. The
Company has no liability with respect to any such plan (including, without
limitation, any unfunded past service or other liability or any accumulated
funding deficiency) or any liability to the Pension Benefit Guaranty Corporation
or under Title IV of the Employee Retirement Income Security Act of 1974, as
amended, with respect to a multi-employer pension benefit plan, nor would the
Company have any such liability if any such plan were terminated or if the
Company withdrew, in whole or in part, from any multi-employer plan.
2.19 Title to Property and Encumbrances.
Except as otherwise disclosed in this Agreement and on Annex 2.19
and with such exceptions as are immaterial individually and in the aggregate,
the Company has good and marketable title to all its properties and assets,
including without limitation the properties and assets reflected in the Latest
Balance Sheet and the properties and assets used in the conduct of its business,
except for properties disposed of in the ordinary course of business since May
19, 1996, and except for properties held under valid and subsisting leases that
are in full force and effect and that are not in default, subject to no Lien,
except those which are shown and described on the latest Balance Sheet or as
otherwise disclosed in this Agreement.
2.20 Condition of Properties.
With only such exceptions as are immaterial individually and in
the aggregate, all facilities, machinery, equipment, fixtures, vehicles and
other properties owned, leased or used by the Company are in reasonably good
operating condition and repair.
2.21 Insurance Coverage.
There is in full force and effect one or more policies of
insurance issued by insurers of recognized responsibility, insuring the Company
and its properties and business against such losses and risks, and in such
amounts, as are customary in the case of corporations of established reputation
engaged in the same or similar business and similarly situated. The Company has
not been refused any insurance coverage sought or applied for, and the Company
and the Sellers have no reason to believe that the Company will be unable to
renew its existing insurance coverage upon
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terms at least as favorable as those presently in effect, other than possible
increases in premiums that do not result from any act or omission of the
Company.
2.22 Litigation.
Except as disclosed on Annex 2.22 hereto, there is no legal
action, suit, arbitration or other legal, administrative or other governmental
investigation, inquiry or proceeding (whether federal, state, local or foreign)
pending or to the best of the Sellers' and the Company's information , knowledge
and belief, after reasonable inquiry, threatened against or affected the Company
or its properties, assets or business or any of the Designated Key Persons that
will have an adverse effect on the Company. To the best of the Sellers' and the
Company's information, knowledge and belief, after reasonable inquiry, no
Designated Key Person is in default with respect to any order, writ, judgment,
injunction, decree, determination or award of any court or of any governmental
agency or instrumentality (whether federal, state, local or foreign).
2.23 Licenses.
To the best of the Sellers' or the Company's information ,
knowledge and belief, after reasonable inquiry, the Company possesses from the
appropriate agency, commission, board and governmental body and authority,
whether state, local or federal, all licenses, permits, authorizations,
approvals, franchises and rights that are necessary for the Company to engage in
the business currently conducted by it; and except for any administrative error
or action or conduct contrary to law by any governmental entity, including any
unknown to the Company and the Sellers as of the date of execution of this
Agreement and at the time of the Closing, all such certificates, licenses,
permits, authorizations and rights have been lawfully and validly issued, and
are in full force and effect, and to the best of the Sellers' and the Company's
information, knowledge, and belief, there is no reasonable grounds or basis for
revocation, cancellation, withdrawal, termination, or suspension of any such
certificates, licenses, permits, etc.
2.24 Interested Party Transactions.
Except as otherwise disclosed in Annex 2.24 no officer, director
or stockholder of the Company or any Affiliate or "associate" (as such term is
defined in Rule 405 of the Commission under the Securities Act) of any such
Person or the Company has, either directly or indirectly, (a) an interest in any
Person which (i) furnishes or sells services or products which are furnished or
sold or are proposed to be furnished or sold by the Company, or (ii) purchase
from or
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sells or furnishes to, or proposes to purchase from, sell to or furnish to, the
Company any goods or services, or (b) a beneficial interest in any contract or
agreement to which the Company is a party or by which it may be bound or
affected.
2.25 Prohibited Payments.
Neither the Company nor the Sellers have offered, promised or
given to any governmental official, any political party or official thereof, any
candidate for political office, or any person, while knowing or having reason to
know that all or a portion of such money or thing of value will be offered,
promised or given, directly or indirectly, to any of the foregoing for the
purpose of influencing action, omission or decision by the recipient in order to
obtain or retain business for the Company or the Sellers, or to direct business
to others, except for any payment permitted by U.S. federal or state or other
applicable law.
2.26 Disclosure.
The representations and warranties contained in this Agreement or
in any Certificate, Schedule or Annex furnished by the Company and the Sellers
to the Purchaser pursuant hereto, taken as a whole, do not contain any untrue
statement of a material fact.
2.27 Company Representation Termination
The Company's representation terminates at closing.
Notwithstanding the foregoing the Seller's representations and warranties shall
continue past closing. Sellers release the Company from all claims arising out
of the acquisition based on indemnification or contribution.
2.28 Environmental Matters.
Except as disclosed as number 3 of the Environmental Disclosures
section of Annex 2.28, the Company is, and at all times has been, in full
compliance with, and is not in violation of or liable under, any Environmental
Law. No Seller or the Company has any basis to expect, nor has any of them or
other person for whose conduct they are or may be held to be responsible
receives, any actual or threatened order, notice, or other communication from
(i) any governmental body or private citizen acting in the public interest of
any actual or potential violation or failure to comply with any Environmental
Law, or of any actual or threatened obligation to undertake and bear the costs
of any environmental, health, and safety liabilities with respect to any of the
facilities or any other properties or assets (whether real or personal) in which
Sellers or the Company has or has had an interest.
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No expenditure except as disclosed in Annex 2.28 will be required
in order for Purchaser to comply with any Environmental Law in effect at the
time of the Closing in connection with the operation or continued operation of
the business of the Company or the real property in a manner consistent with the
current operation thereof by the Company.
Sellers have disclosed and delivered to Purchaser all
environmental reports and investigations which the Company or Sellers have
obtained or ordered with respect to the business of the Company and the real
property.
3. Representations and Warranties by Purchaser.
The Purchaser represents and warrants to the Company as follows:
3.1 Organization, Standing, Etc.
The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of South Dakota. The Purchaser
has all requisite power and authority to carry on its business, to own and hold
its properties and assets, to enter into this Agreement and to carry out the
provisions of this Agreement.
3.2 Corporate Acts and Proceedings.
All corporate acts and proceedings required for the
authorization, execution, and delivery of this Agreement and the performance of
this Agreement by Purchaser have been lawfully and validly taken or will have
been so taken prior to Closing.
3.3 Compliance with Laws and Other Instruments.
To the best of its information, knowledge and belief after
reasonable inquiry, the Purchaser is not presently in violation of any gaming
law, rule or regulation, or any other law, that would prohibit or prevent the
Company from doing business or from obtaining any consent, approval,
certification, recertification, licensing, and/or acquiring exemptions from
appropriate governmental or tribal jurisdictions in which Company is presently
operating and doing business, or which have been disclosed in accordance
herewith as jurisdictions in which Company intends to do business. The
execution, delivery and performance by the Purchaser of this Agreement to the
best of the Purchaser's information, knowledge and belief after reasonable
inquiry, will not require any authorization, consent, approval, license,
exemption of filing or registration with any court, governmental department,
commission, board, bureau, agency or instrumentality or instrumentality of
government, except as shall be obtained prior to Closing; notwithstanding this
provision, it is acknowledged and
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agreed by the parties hereto, that the business and operations of the Company,
after Closing, may be contingent upon the Purchaser obtaining authorization,
consent, approval, certification, recertification, licensing and/or acquiring
exemption from or by any jurisdictions in which Company is presently operating
and doing business, and to this extent, certain jurisdictions may be affected,
until Company and Purchaser have complied with such administrative rules and
regulations provided that same are individually and in the aggregate immaterial
on the business, properties, finances or prospects of Company. The Purchaser is
not subject to any restriction of any kind which prohibits the Purchaser from
entering into this Agreement or would prevent or make materially burdensome its
performance of or compliance with all or any part of this Agreement or of the
consummation of the transactions contemplated hereby.
3.4 No Brokers or Finders.
No person, firm or corporation has or will have, as a result of
any act or omission by Purchaser, any right, interest or valid claim against the
Purchaser for any commission, fee or other compensation as a finder or broker,
or in any similar capacity in connection with the transactions contemplated by
this Agreement.
3.5 Litigation.
There is no legal action, suit, arbitration or other legal,
administrative or other governmental investigation, inquiry or proceeding
(whether federal, state, local or foreign) pending or threatened against or
affecting the Purchaser which prevents or makes burdensome its performance of or
compliance with all or any part of this Agreement or consummation of the
transactions contemplated hereby.
3.6 Disclosure.
The representations and warranties contained in this Agreement or in
any Certificate, Schedule or Annex furnished by the Purchaser to the Seller or
pursuant hereto, taken as a whole, do not contain any untrue statement of a
material fact.
4. Conditions of Purchaser's Obligations.
The obligation of the Purchaser to purchase and pay for the Stock
which it has agreed to purchase on the Closing Date is subject to the
fulfillment prior to or on the Closing Date of the following conditions, any of
which may be waived in whole or in part by the Purchaser.
(a) No Misrepresentation. The representations and warranties of
the
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Company and the Sellers under this Agreement shall be deemed to have been made
again on the Closing Date and shall then be true and correct in all material
respects.
(b) Compliance with Agreement. The Company and the Sellers shall
have performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by it or
them on or before the Closing Date.
(c) No Default. Except as otherwise disclosed in the balance
sheet or this Agreement, there shall not exist on the Closing Date any Default
(as hereinafter defined) or Event of Default (as hereinafter defined) or any
event or condition which, with the giving of notice or lapse of time or both,
would constitute a Default or Event of Default.
(d) Certificate of Officer and of Sellers. The Company and the
Sellers shall have delivered to the Purchaser a certificate dated the Closing
Date, executed by its Chief Executive Officer certifying the satisfaction of the
conditions specified in paragraphs (a), (b) and (c) of this Section 4.
(e) Opinion of Company's Counsel. The Purchaser shall have
received from counsel for the Company and the Sellers, a favorable opinion dated
the Closing Date in a form attached to this Agreement and incorporated herein.
(f) Articles. The Articles shall have been filed with the
Secretary of State of the State of South Dakota, and a copy of the Articles
certified by such Secretary of State shall have been delivered to the Purchaser.
(g) Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals required under applicable state securities
laws shall have been obtained for the lawful execution, delivery and performance
of this Agreement and the performance of the Articles, including without
limitation, the offer and sale of the Stock.
(h) Gaming Suitability. The Purchaser shall have determined, in
its reasonable judgment, that its association with the Company may not result in
a disciplinary action or the loss of or inability to reinstate any registration,
certification, license or approval held by the Purchaser or its Affiliates under
any gaming laws and the Company shall have qualified or been found suitable, and
maintained such status, under any gaming laws under which it is required to
qualify or be found suitable.
(i) Supporting Documents. The Purchaser shall have received the
following:
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(i) Copies of resolutions of the Board of the Company,
certified by the Secretary of the Company, authorizing and approving the
Articles and, as to the Board, the execution, delivery and performance of this
Agreement and the performance of the Articles, and all other documents and
instruments to be delivered pursuant hereto and thereto;
(ii) A certificate of incumbency executed by the Secretary
of the Company certifying the names, titles and signatures of the officers
authorized to execute the documents referred to in subparagraph (i) above and
further certifying that the Articles and Bylaws of the Company delivered to the
Purchaser at the time of the execution of this Agreement have been validly
adopted and have not been amended or modified, except to the extent provided in
the Articles; and
(iii) A release and waiver executed by each of the Sellers
stating that except for the Notes to be issued to Seller at Closing Date, the
Company has no further obligation to the Sellers or their affiliates of any
kind, including any obligation to pay interest, dividends, accrued salaries or
any other form of compensation.
(iv) Evidence of the transfer of all real property,
including any buildings thereon, to the Company, free and clear of any
undisclosed liens, mortgages or encumbrances.
(v) A goodwill/noncompete agreement signed by each of the
Sellers that shall preclude the Sellers' and any of their Affiliates or Agents
from engaging in gaming activities within one hundred miles (100) of the site of
the existing operation for a five year period. Nothing in this subsection shall
prohibit Sellers from engaging in gaming activities at the Meskwaki Indian
Settlement located near Tama, Iowa.
(vi) Resignations (effective as of the Closing Date) from
such of the Company's officers and directors, as Purchaser has requested.
(vii) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the
Purchaser may reasonably and timely request for a period of one (1) year after
closing.
(j) Section 338(h) (10) Election. The Purchaser shall have
received an election executed by the Sellers on Form 8023-A under Section
338(h)(10) of the Internal Revenue Code.
(k) Proceedings and Documents. All corporate and other
proceedings and
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actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and doc uments mentioned herein
or incident to any such transactions, shall be reasonably satisfactory in form
and substance to the Purchaser and Sellers.
5. Conditions of the Sellers' Obligations.
--------------------------------------
The obligation of the Sellers to sell the Stock which they have
agreed to sell on the Closing Date is subject to the fulfillment prior to or on
Closing Date of the following conditions, any of which may be waived in whole or
in part by the Sellers.
(a) No Misrepresentation. Representations and warranties of the
Purchaser under this Agreement shall be deemed to have been made again on the
Closing Date and shall then be true and correct in all material respects.
(b) Compliance with Agreement. The Purchaser shall have performed
and complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with by it on or before
the Closing Date.
(c) No Default. There shall not exist on the Closing Date any
Default (as hereinafter defined) or any event or condition which, with the
giving of notice or lapse of time or both, would constitute a Default.
(d) Certificate of Officer. The Purchaser shall have delivered to
the Sellers a certificate dated the Closing Date, executed by its Chief
Executive Officer or President certifying the satisfaction of the conditions
specified in paragraphs (a), (b) and (c) of this Section 5.
(e) Gaming Suitability. The Sellers and the Company shall have
determined, in its reasonable judgment, that its association with the Purchaser
may not result in a disciplinary action or the loss of or inability to reinstate
any registration, certification, license, or entitlement held by the Company or
its Affiliates under any gaming law(s) and the Purchaser shall have qualified or
been found suitable, and maintained such status, under any gaming laws under
which it is required to qualify or be found suitable as a Stockholder of the
Company.
(f) Supporting Documents. The Sellers shall have received the
following:
(i) Copies of resolutions of Purchaser's Board certified by
the Secretary of the Purchaser, that the execution, delivery and performance of
this Agreement are duly authorized in accordance with Purchaser's Certificate of
Incorporation and Bylaws;
(ii) A certificate of incumbency executed by the Secretary
of the Purchaser certifying the names, titles and signatures of the officers
authorized to execute the
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documents referred to in subparagraph (i) above; and
(iii) Unsecured promissory notes payable by the Company to
the Sellers having an aggregate principal amount of Four Million Four Hundred
Thousand ($4,400,000.00), which notes will bear 8% interest and shall be paid in
thirty six (36) equal monthly installments, with the first payment due thirty
(30) days after closing. Such notes to sellers represent the entire amounts
payable to Sellers.
(iv) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the Company
may reasonably request.
(g) Proceedings and Documents. All corporate and other
proceedings and actions taken in connection with the transactions contemplated
hereby and all certificates, opinions, agreements, instruments and documents
mentioned herein or incident to any such transactions, shall be reasonably
satisfactory in form and substance to the Company.
6. Affirmative Covenants of Sellers.
The Sellers agree that they will cause the Company to observe each
term set forth in this Agreement and that they will do the following during the
period prior to Closing:
6.1 Maintain Corporate Rights and Facilities.
Maintain and preserve its corporate existence and all rights,
franchises and other authority adequate for the conduct of its business;
maintain its properties, equipment and facilities in good order and repair,
ordinary wear and tear excepted; and exercise its best efforts to conduct its
business in an orderly manner without voluntary interruption.
6.2 Maintain Insurance.
Maintain in full force and effect a policy or policies of
insurance issued by insurers of recognized responsibility, insuring it and its
properties and business against such losses and risks, and in such amounts, as
are customary in the case of corporations of established reputation engaged in
the same or a similar business and similarly situated.
6.3 Pay Taxes and Other Liabilities.
Pay and discharge, before the same become delinquent and before
penalties accrue thereon, all taxes, assessments and governmental charges upon
or against it or any of its properties, and all its other material liabilities
at any time existing, except to the extent and so long as the same are being
contested in good faith and by appropriate proceedings in such manner as not
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to cause any materially adverse effect upon its financial condition. This
subsection shall not apply to any contested sales and use taxes or assessments
as disclosed in Annex 2.12.
6.4 Records and Reports.
Accurately and fairly maintain its books of account in accordance
with generally accepted accounting principles, permit the Purchaser and/or its
representatives to have access to and to examine its properties, books and
records, and subject to prior approval of an officer or officers of the Company
designated to give such approval, same to be determined on an item-by-item
basis, make copies and extracts therefrom at such reasonable times and intervals
as the Purchaser may request; and to discuss its affairs, finances and accounts
with officers and auditors designated by Company to give such information, to
the extent and at such times and intervals as is reasonable.
6.5 Sellers' Cooperation.
Sellers shall take all reasonable actions necessary or desirable
to assist Purchaser in obtaining all licenses, permits and approvals required
for the operation of the Company's business from and after the Closing Date.
6.6 Conduct of Business. From the date of this Agreement to the
Closing Date, unless Purchaser shall otherwise agree in writing or as otherwise
expressly contemplated or permitted by other provisions of this Agreement:
(a) the business of the Company shall be conducted only in, and
the Company shall not take any action except in, the ordinary course, on an
arms-length basis and in accordance, in all material respects, with all
applicable laws, rules and regulations and past practices;
(b) the Company shall not, directly or indirectly, (i) amend or
propose to amend its Articles or Bylaws; (ii) issue or sell any of its equity
securities, securities convertible into or exchangeable for its equity
securities, warrants, options or other rights to acquire its equity securities;
(iii) redeem, purchase, acquire or offer to acquire, directly or indirectly, any
shares of capital stock of or any other ownership interest in the Company (iv)
split, combine, or reclassify any outstanding shares of capital stock of the
Company, or declare, set aside or pay any dividend or other distribution payable
in cash, property or otherwise with respect to shares of capital stock of the
Company; (v) borrow any amount or incur or become subject to any liability,
except liabilities incurred in the ordinary course of business; (vi) discharge
or satisfy any Lien on the properties or assets of the Company or pay any
liability, except otherwise in the ordinary course of business, (vii) sell,
assign, transfer, mortgage, pledge or subject to any Lien any of its assets,
except (A) in the
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ordinary course of business; provided, that any such sale, assignment or
transfer of any real property shall not be considered in the ordinary course of
business, (B) Liens for current property taxes not yet due and payable and (C)
Liens which do not affect the value of, or interfere with the past or future use
or ability to convey, the property subject thereto or affected thereby; (viii)
cancel any debt or claims or waive any rights, except in the ordinary course of
business; (ix) acquire (by merger, exchange, consolidation, acquisition of stock
or assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or assets thereof; (x) make any single or
group of related capital expenditures or commitments therefor in excess of
$10,000 or enter into any lease or group of related leases with the same party
which involves aggregate lease payments payable of more than $10,000 for any
individual lease or involves more than $10,000 for any group of related leases
in the aggregate; or (xi) enter into or propose to enter into, or modify or
propose to modify, any agreement, arrangement or understanding with respect to
any of the matters set forth in this Section 6.6(b);
(c) the Company shall not, directly or indirectly, enter into or
modify any employment, severance or similar agreement or arrangements with, or
grant any bonuses, wage, salary or compensation increases, or severance or
termination pay to, or promote, any director, officer, employee, group of
employees or consultant or hire any employee, except as needed to maintain
current employment levels;
(d) the Company shall not adopt or amend any bonus, profit
sharing, stock option, pension, retirement, deferred compensation, or other
employee benefit plan, trust, fund, contract or arrangement for the benefit or
welfare of any employees, except as required by law;
(e) the Company shall not enter into any settlement or similar
agreement with respect to, or take any other significant action with respect to
the conduct of, any action, suit, proceeding, order or investigation which is
set forth on Annex 2.22 or which the Company becomes a party after the date of
this Agreement, without the prior written consent of the Purchases;
(f) with respect to properties leased by the Company, the Company
shall not renew, exercise an option to extend, cancel or surrender any lease of
real property nor allow any such lease to lapse, without the consent of
Purchases; and
(g) the Company shall not agree to do and neither of the Sellers
shall not cause the Company to do or agree to do, any of the foregoing.
7. Definitions.
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Unless the context otherwise requires, the terms defined in this
Section 7 shall have the meanings specified for all purposes of this Agreement.
Except as otherwise expressly provided, all accounting terms used
in this Agreement, whether or not defined in this Section 7, shall be construed
in accordance with generally accepted accounting principles.
"Affiliate" shall mean any Person that directly or indirectly
controls, is controlled by, or is under common control with, the indicated
Person. "Agent" of a Person shall mean any officer, director, employee, agent,
partner, stockholder or Affiliate of such Person.
"Agreement" shall mean this Agreement.
"Board" shall mean the Board of Directors of the Company.
"Common Stock" shall have the meaning assigned to it in Section
"Commission" shall mean the Securities and Exchange Commission.
"Default" shall mean a default or failure in the due observance
or performance of any covenant, condition or agreement on the part of either
party hereto or any of their respective Subsidiaries to be observed or performed
under the terms of this Agreement, or the Articles, if applicable, if such
default or failure in performance shall remain unremedied for thirty (30) days
from date of notice in accordance with the notice provisions set forth herein,
unless default is to Sodak under prior agreements, or is disclosed in the
balance sheet or this Agreement.
"Equity Security" shall mean any stock of the Company or any
security convertible, with or without consideration, into any such stock, or any
security carrying warrant or right to subscribe to or purchase any such stock ,
or any such warrant or right.
In addition to any occurrence under the definition "Default"
referenced herein, "Event of Default" shall mean (a) the failure of the Company
to pay any Indebtedness for Borrowed Money, or any interest or premium thereon,
within ten (10) days after the same shall become due, whether such Indebtedness
shall become due by scheduled maturity, by required prepayment, by acceleration,
by demand or otherwise, (b) an event of default under any agreement or
instrument evidencing or securing or relating to any such Indebtedness, or (c)
the failure of the Company to perform or observe under any agreement or
instrument evidencing or securing or relating to any such Indebtedness when such
term, covenant or agreement is required to be performed or observed.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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"Indebtedness" shall mean any obligation of the Company, except
sales and use tax obligations, contingent or otherwise, which under generally
accepted accounting principles is required to be shown on the balance sheet of
the Company as a liability. Any obligation secured by a Lien on, or payable out
of the proceeds of production from, property of the Company shall be deemed to
be Indebtedness even though such obligation is not assumed by the Company.
"Indebtedness for Borrowed Money" shall mean (a) any obligation
of the Company, except sales and use tax obligations, contingent or otherwise,
indebtedness in respect of money borrowed (including, without limitation,
Indebtedness which represents the unpaid amount of the purchase price of any
property and is incurred in lieu of borrowing money or using available funds to
pay such amounts and not constituting an account payable or expense accrual
incurred or assumed in the ordinary course of business of the Company, (b) all
Indebtedness evidenced by a promissory note, bond or similar written obligation
to pay money, or (c) all such Indebtedness guaranteed by the Company or for
which the Company is otherwise contingently liable.
"Key Person" shall mean an employee who holds the position of
department head or higher level supervisor, not including corporate officers.
"Latest Balance Sheet" and "Balance Sheet Date" shall have the meanings assigned
to these terms in Section 2.11 hereof.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction and including any lien or charge
arising by statute or other law.
"Material" unless otherwise defined the section in which the term
is utilized shall mean any transaction, occurrence, liability, obligation,
agreement, indenture, deed, trust, mortgage, asset or claim valued at more than
fifteen thousand dollars ($15,000).
"Person" shall include all natural persons, corporations,
business trusts, associations, companies, partnerships, joint ventures and other
entities and governments and agencies and political subdivisions.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Stockholder" shall mean any Person of record owning the Common
Stock on or after the Closing.
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"Subsidiary" shall mean any corporation, association or other
business entity at least 50% of the outstanding voting stock of which is at the
time owned or controlled directly or indirectly by the Company or by one or more
of such subsidiary entities or both.
8. Enforcement.
8.1 Remedies at Law or in Equity.
If any Default shall occur or if any representation or warranty
made by or on behalf of any party to this Agreement or in any certificate,
report or other instrument delivered under or pursuant to any term hereof shall
be untrue or misleading as of the date of this Agreement, the Closing Date or
the date it was made, furnished or delivered, the non-defaulting party may
proceed to protect and enforce its rights by suit in equity or action at law,
whether for the specific performance of any term contained in this Agreement or
the Articles or for an injunction against the breach of any such term or in aid
of the exercise of any power granted in this Agreement or the Articles, or to
enforce any other legal or equitable right of the Purchaser, or to take any one
or more of such actions.
The prevailing party in any dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party under or with respect to this Agreement or the Articles,
including, without limitation, such reasonable fees and expenses of attorneys
and accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
8.2 Cumulative Remedies.
None of the rights, powers or remedies conferred upon either party
hereto shall be mutually exclusive, and each such right, power or remedy shall
be cumulative and in addition to every other right, power or remedy, whether
conferred hereby or by the Articles or now or hereafter available at law, in
equity, by statute or otherwise.
8.3 No Implied Waiver.
Except as expressly provided in this Agreement, no course of
dealing between the Sellers and the Purchaser and no delay in exercising any
such right, power or remedy conferred hereby or by the Articles or now or
hereafter existing at law, in equity, by statute or otherwise, shall operate as
a wavier of, or otherwise prejudice, any such right, power or remedy.
9. Miscellaneous.
9.1 Waivers and Amendments.
By mutual consent, any obligations and rights of the respective
parties hereto
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may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely), and the parties may enter into a supplementary agreement(s) for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of any supplemental agreement or
modifying in any manner the rights and obligations hereunder of the Purchaser,
the Sellers, and the Company.
The foregoing notwithstanding, no such waiver or supplemental
agreement shall affect any of the rights of either party hereto created by the
Articles or by the corporate laws of the State of South Dakota without
compliance with all applicable provisions of the Articles and the corporate laws
of the State of South Dakota.
Neither this Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally or by course of dealing, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in this Section 9.1.
Parties hereto agree that execution of a facsimile of this
Confidential Disclosure and Non-Circumvention Agreement shall have the same
force and effect as an executed original and shall be binding upon the parties
hereto.
9.2 Waiver not a forbearance.
Any forbearance by any party hereto in exercising any right or
remedy hereunder or otherwise afforded by law, shall not be a waiver or preclude
the exercise of such right or remedy by either party.
9.3 Notices.
All notices, requests, consents and other communications required
or permitted hereunder shall be in writing and shall be hand delivered, mailed
postage prepaid by registered or certified mail, or delivered by overnight
delivery service as follows:
(a) If to the Company:
Gambler's Supply Management Company
600 E. 52nd Street
North Sioux Falls, SD 57104
(b) If to the Purchaser:
Sodak Gaming, Inc.
Attn: General Counsel
5301 S. Highway 16
Rapid City, SD 57701
(c) If to the Sellers:
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John T. Parker and John E. Nix
600 E. 52nd St. North
Sioux Falls, SD 57104
Any such notice, request, consent and other communication shall
for all purposes of this Agreement be treated as being effective or having been
given when delivered if delivered personally, when received if sent by certified
or registered mail, or delivered by overnight delivery service, addressed and
postage prepaid as aforesaid. Notwithstanding the foregoing, any party hereto
may change its address for notice purposes by giving the other parties to this
Agreement written notice in accordance herewith.
9.4 Indemnification.
(a) Indemnification by Seller. The Sellers shall jointly and
severally indemnify and hold harmless the Purchaser and its Agents from any
loss, damage, liability or claim, including attorneys' fees and defense costs
reasonably incurred arising from:
(i) any representation or warranty of the Company or the
Sellers in this Agreement (or in any certificate, report or other instrument
delivered pursuant hereto) that is untrue, misleading, materially inaccurate, or
materially incomplete as of the date of this Agreement, the Closing Date or the
date it was made, furnished or delivered;
(ii) any actions, activities or material obligations
required to be performed by the Company not disclosed by Company or Seller in
accordance with Section 2.12 of this Agreement;
(iii) any tax audit, tax claim, tax deficiency, tax penalty
or tax liability of the Company made or assessed by federal, state or local
authorities for periods on or prior to the Closing Date, except as disclosed in
the balance sheet or in Annex 2.12; and
(iv) any cause of action, claims, actions, suits,
investigations or other proceedings arising out of any conduct by Company that
occurred prior to closing which results in any revocation of any license,
certification, registration under any gaming laws of any jurisdiction.
(b) Indemnification by Purchaser. Purchaser shall indemnify and
hold harmless the Sellers and their agents, and each of them, from any loss,
damage, liability, or claim, including attorney's fees and defense costs
reasonably incurred arising from:
(i) any representation or warranty of the Purchaser in this
Agreement (or in any certificate, report or other instrument delivered pursuant
hereto) that is untrue, inaccurate, incomplete or misleading as of the date of
this Agreement, the Closing Date or the date it was made, furnished or
delivered;
26
<PAGE>
(ii) any claims, actions suits, investigations or other
proceedings arising out of any conduct by Purchaser which results in any
revocation of any license, certification, or registration under any gaming laws
of any jurisdiction.
(c) Indemnification Time Period. The rights of the Purchaser to
indemnification by Seller pursuant to Section 9.4(a)(i) and 9.4(a)(ii) shall
exist for a period of three years after the Closing Date and pursuant to Section
9.4(a)(iii) for a period of five years after the Closing Date and the rights of
the Seller and the Company to indemnification pursuant to Section 9.4(b)(i)
shall exist for a period of three years after the Closing Date. There shall be a
five (5) year limitation period for any claim by either party for
indemnification under the subsections herein pertaining to the conduct of the
other party which results in any revocation of any license, registration or
certification under any gaming laws of any jurisdiction.
(d) Upon notice to Sellers specifying in reasonable detail the
basis for indemnification pursuant Paragraph 9.4(a) of this Agreement, Purchaser
may set off any amount to which it may be entitled under this Section against
amounts otherwise payable under the Promissory Notes referenced in Section
5(f)(iii) of this Agreement. The exercise of such right of set-off by Purchaser
in good faith, whether or not ultimately determined to be justified, will not
constitute an event of default under the Promissory Notes or any instrument
securing a Promissory Note. If Sellers prevail in a dispute arising from a set
off exercised by Purchaser, Purchaser agrees to pay Sellers interest on the
withheld funds. The rate of interest on the withheld funds shall be equal to
twelve percent (12%) per annum; said amount shall constitute the eight percent
(8%) per annum otherwise payable pursuant the Promissory Notes plus an
additional four percent (4%) for the period in which the set off was effected.
Neither the exercise of nor the failure to exercise such right of set-off will
constitute an election of remedies or limit Purchaser in any manner in the
enforcement of any other remedies that may be available to it.
9.5 Severability.
Should any one or more of the provisions of this Agreement or of
any agreement entered into pursuant to this Agreement be determined to be
illegal or unenforceable, all other provisions of this Agreement and of each
other agreement entered into pursuant to this Agreement shall be given effect
separately from the provision or provisions determined to be illegal or
unenforceable and shall not be affected thereby.
The Parties hereto agree to reimburse the prevailing party for
all reasonable attorney's fees incurred in the defense or pursuit of claim from
any dispute arising from or relating
27
<PAGE>
to this Agreement
9.6 Parties in Interest.
To the extent permitted by this Agreement all the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto, whether so expressed or not, and, in particular, shall inure to the
benefit of and be enforceable by the Purchaser. This Agreement shall not run to
the benefit of or be enforceable by any Person other than a party to this
Agreement and its successors and assigns.
9.7 Assignment.
This Agreement and the promissory note referred to in Section
5(f)(iii) shall not be assignable by either party hereto without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
9.8 Headings.
The headings of the Sections and paragraphs of this Agreement
have been inserted for convenience of reference only and do not constitute a
part of this Agreement.
9.9 Governing Law.
This Agreement and the legal relationship between the parties
hereto shall be governed and construed in accordance with the laws of the State
of South Dakota. In the event of any dispute between the parties, venue shall be
proper only in the State of South Dakota, or in the United States District Court
for the District of South Dakota, and the parties hereby submit themselves to
the jurisdiction of such courts.
9.10 Expenses.
The Company agrees, whether or not the transactions contemplated
hereby are consummated, to pay, and hold the Purchaser harmless from liability
for the payment of,
(i) stamp and other taxes, excluding income taxes, which may be
payable with respect to the execution and delivery of this Agreement or the
issuance, delivery or acquisition of the Stock; and
(ii) all costs of the Company's performance of and compliance
with this Agreement and the Articles.
28
<PAGE>
9.11 Counterparts.
This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, with the same effect as if
all parties had signed the same document. All such counterparts shall be deemed
an original, shall be construed together and shall constitute one and the same
instrument.
SODAK GAMING, INC. GAMBLER'S SUPPLY MANAGEMENT COMPANY
By: /s/ Roland Gentner By: /s/ John Parker
----------------------------- ---------------------------------
Its: President and COO Its: President and CEO
----------------------------- ---------------------------------
SELLERS:
By: /s/ John Parker
-----------------------------
John Parker
By: /s/ John Nix
-----------------------------
John Nix
STATE OF SOUTH DAKOTA )
)ss.
COUNTY OF PENNINGTON )
On this the ____ day of ______________, 1996, before me, the undersigned
officer, personally appeared __________________________, who acknowledged
himself to be the _____________ of Sodak Gaming, Inc., a South Dakota
corporation, and that he, as such ______________, being authorized so to do,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as _______________________. In Witness
Whereof, I have hereunto set my hand and official seal.
(SEAL) ____________________________________
Notary Public
My Commission Expires: _____________
29
<PAGE>
STATE OF SOUTH DAKOTA )
)ss.
COUNTY OF _______________ )
On this the ____ day of ______________, 1996, before me, the undersigned
officer, personally appeared __________________________, who acknowledged
himself to be the _____________ of Gamblers Supply Management Company, a South
Dakota corporation, and that he, as such ______________, being authorized so to
do, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as _______________________.
In Witness Whereof, I have hereunto set my hand and official seal.
(SEAL) ____________________________________________
Notary Public
My Commission Expires: _____________________
30
<PAGE>
Exhibit 99(a)
MANAGEMENT AGREEMENT
This Management Agreement is made and entered into this 10th day of June, 1994,
by and between Gamblers Supply Management Company, a South Dakota corporation
(hereafter "Operator") and the Marquette Gaming Corporation, an Iowa nonprofit
corporation (hereafter "MGC").
WHEREAS, Operator desires to operate and manage casino gambling on excursion
gambling boats and related activities in and about Marquette, Iowa (hereafter:
"gaming operation"); and
WHEREAS, MGC desires to promote economic development in the Marquette, Iowa
vicinity, by conducting- excursion gambling under applicable Iowa gaming laws
and regulations and desires Operator to manage the gaming operation, all in
accordance with the terms and conditions of this Agreement as hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Appointment of Operator and Manager.
A. Acceptance. Marquette Gaming Corporation hereby appoints Gamblers Supply
Management Company, and Gamblers Supply Management Company hereby accepts such
appointment, as the exclusive Manager and Operator of the gaming operation upon
the terms and conditions hereinafter set forth.
B. Operator Activities. MGC acknowledges that the Operator is in the business of
managing gaming operations and may in the future engage in such activity both
for its own account and for others. It is hereby expressly agreed that the
Operator and its affiliates may engage in such activities and may manage or
operate facilities other than those to be managed for MGC whether or not such
other facility may compete directly or indirectly with those of MGC, except as
prohibited in paragraph 4.
C. Independent Contractor. In the performance of its duties under this
Agreement, the Operator shall occupy the position of an independent contractor
with respect to MGC. Nothing contained herein shall be construed as making the
parties hereto partners or joint venturers, nor, except as expressly otherwise
provided herein, construed as making the Operator an agent or employee of MGC.
D. Sponsoring Organization. MGC agrees to act as the "qualified sponsoring
organization" as that term is defined in Iowa Code Chapter 99F in connection
with the license applications of MGC and Operator to the Iowa Racing and Gaming
Commission ("IRGC").
2. Conditions Precedent. This Agreement and the appointment of Operator as
exclusive operating and management agent is subject to the conditions precent
that:
<PAGE>
A. Prior to commencing operation, Operator and MGC shall obtain the required
licenses from the Iowa Racing and Gaming Commission to conduct casino gambling
and to operate an excursion gambling boat;
B. Approval of this Agreement, amendments thereto, and other ancillary
agreements by the Iowa Racing and Gaming Commission;
C. The execution of a Dock Site Agreement by the City of Marquette, as Lessor,
and Gamblers Supply Management Company, as Lessee, in the form attached hereto
as Exhibit A, and incorporated herein by this reference;
D. Operator obtaining a permit from the U.S. Army Corps of Engineers to moor the
excursion and gambling boat in the Mississippi River channel at the dock site
described in Exhibit A and operate the boat in areas defined as Pools 9 and 10.
3. Term.
----
A. The term of this Agreement shall be for a period of twenty-five (25) years
from the date this Agreement is executed. This Agreement may be terminated by
Operator upon one hundred eighty (180) days written notice by certified mail to
the registered agent of MGC, and upon such termination the Operator shall pay to
MGC in addition to all sums then accrued but not yet paid, an amount equal to
twenty-five percent (25%) of the payments received by MGC from the Operator
pursuant to this Agreement for the last full year of casino gambling prior to
termination. For purposes of this subparagraph, the "last full year" means the
year ending on the last anniversary date of the commencement of casino gambling
preceding the termination notice. If the termination notice is sent prior to the
first anniversary date of the commencement of casino gambling, the payment shall
be an amount equal to twenty-five percent (25%) of the payments received by MGC
from the Operator pursuant to this Agreement for the first full year of casino
gambling.
B. This Agreement shall automatically terminate upon the happening of the
following events:
i. Cancellation of gambling or excursion boat licenses as a result of an
unfavorable referendum after submission to the electorate;
ii. Non-renewal of licenses by the Iowa Racing and Gaming Commission; or
iii. Termination of the Dock Site Agreement. In the event this Agreement is
terminated as a result of a voluntary termination of the Dock Site Agreement
under paragraph 2A thereof, MGC shall receive that amount identified in
paragraph 3A of this Agreement.
C. After the commencement of casino gambling operations, if the Operator, for
reasons which are in the Operator's exclusive control, fails to regularly
conduct casino gambling operations on an excursion boat which takes on
passengers exclusively at Marquette, Iowa, for any continuous period of sixty
(60) days or more, such inactivity shall, unless Operator resumes regularly
conducted gaming operations within thirty (30) days after written demand by MGC,
constitute a voluntary termination of this Agreement by the Operator under
paragraph 3A, above, and the Operator shall pay to MGC the
<PAGE>
amount provided in paragraph 3A.
4. Exclusivity. MGC agrees during the term of this Agreement that it shall not,
without the prior written consent of Operator, enter into any agreement with any
entity other than Operator to operate casino gambling or excursion gambling boat
operations in Marquette, Iowa, or any other additional geographical area subject
to the jurisdiction or control of the City of Marquette or MGC. Operator agrees
during the term of this Agreement it will not permit the boarding of passengers
on any excursion gambling boat operated by it in Pool 9 or Pool 10 of the
Mississippi River at any site other than the Marquette dock site.
5. Duties and Authority of the Operator. Subject to any limitations imposed by
state law or regulations of the Iowa Racing and Gaming Commission, the Operator
shall have the following duties and authority:
A. Exclusive Authority. The Operator shall have the sole and exclusive authority
to fully and completely manage and operate all aspects of the excursion boat
gambling operation, including, without limitation, casino gaming, concessions,
personnel, entertainment, security, prices, terms and conditions of occupancy,
hours of operation, casino gaming, excursion routes, and all other affairs
associated with or related to the operation thereof.
B. Establish Policies. The Operator shall direct and establish policies and
procedures for the Operator's employees who will have direct responsibility for
gaming operations. The Operator shall have the sole discretion to establish
terms and conditions of employment, and all other related policies.
C. Acquisition. The Operator shall supervise and have control over the making
and executing of all decisions concerning the acquisition of equipment, whether
original or replacement, furniture, fixtures, supplies, and the purchase, lease,
or other acquisition of the same. The Operator shall have control over the
making and executing of all decisions concerning the maintenance and repair of
all gaming properties.
D. Selection of Vendors. The Operator shall select all vendors, suppliers, and
independent contractors and subcontractors with respect to the gaming operation
and shall hire, discharge, and supervise all labor and employees required for
the operation and maintenance of the gaming operation, including on-site
managers.
E. Agreements. The Operator may with the prior consent of MGC negotiate and
execute in the name of and on account of MGC such agreements as the Operator
deems necessary or advisable for the furnishing of utilities, services,
concessions, and supplies for the maintenance, repair and operation of the
gaming operation and such other agreements which may be beneficial to the
excursion gambling boat operation or incidental to the matters for which the
Operator is responsible hereunder.
F. Policy. The Operator shall make all policy decisions and shall have control
over the making of all the routine decisions in connection with the daily
operations of the gaming operation.
<PAGE>
G. Compliance with Law. The Operator shall use its best efforts to cause all
things to be done, on behalf, in the name of and for the account of MGC,
necessary to comply with any statute, ordinance, law, rule, regulation, or order
of any governmental or regulatory body having jurisdiction over the matters
contained herein. The Operator shall apply for and attempt to obtain and
maintain all licenses and permits required or advisable (in the Operator's sole
judgment) in connection with the management and operation of all gaming
operations.
H. Accounting System. The Operator shall devise, establish, and supervise the
operation of an accounting system for the gaming operation.
I. Legal Actions. The Operator may with the prior consent of MGC cause to be
instituted, on behalf of and in the name of MGC, any and all legal actions or
proceedings it deems necessary or advisable to protect and maintain the gaming
operations as a commercially profitable business enterprise.
J. Insurance. Operator shall obtain, maintain, and keep in full force and effect
during the term of this Agreement comprehensive general public liability
insurance covering any premises at which the Operator conducts any activities
pursuant to this Agreement, operations, contracts, independent contractors,
personal injury and other normal coverage as provided by the standard "broad
form" liability policies against claims for bodily injury, death or property
damage, occurring in, on or about the premises, with coverage limits of not less
than $2,000,000.00 for bodily injury or death resulting from any one accident or
occurrence, but shall be increased to five million dollars ($5,000,000.00),
provided the cost per million for five million is not greater than the cost per
million for coverage of two million dollars. All insurance provided for herein
shall name MGC as an additional name insured and be effected under a valid and
enforceable policy or policies issued by insurers of recognized responsibility,
licensed to do business in the State of Iowa and approved by MGC. Certificates
of said policies, providing for thirty (30) days notice to MGC prior to
cancellation shall be delivered to MGC within twenty (20) days from the date of
the beginning of the term of this Agreement.
K. Payment of Taxes, Assessments and Other Charges. The Operator shall pay all
taxes, personal and real, assessments and other charges of every kind and nature
properly levied by any federal, state or local governmental authority with
respect to the gaming operations, on behalf of and in the name of MGC. The
Operator's responsibilities shall include furnishing such office space and/or
other facilities to such regulatory authorities as may be required.
L. Limitations. Notwithstanding anything to the contrary, the Operator shall not
be required to do, or cause to be done, anything for the account of MGC (i)
which may make the Operator liable to third parties; (ii) which constitutes
impermissible delegation of the duties and responsibilities of MGC, including,
but not limited to, the purchase and construction of capital improvements, the
sale or disposition of all or substantially all of MGC's assets; or (iii) which
may not be commenced, undertaken, or completed because of acts of God, strikes,
governmental regulations or laws, acts of war, or other types of events beyond
the Operator's control whether similar or dissimilar to the foregoing.
M. Excursion Gambling Boat. The Operator shall furnish, at its sole expense, an
excursion gambling boat with a minimum capacity of 750 passengers which will
take on passengers exclusively at the
<PAGE>
leased premises described in the Dock Site Agreement.
6. Compensation Payable to MGC. As compensation for the rights granted to the
Operator under this Agreement, the Operator shall pay to MGC the following
amounts:
A. Twenty-five cents ($.25) per ticketed passenger embarking on any excursion
gambling boat operated pursuant to this Agreement, payable in monthly
installments, with payments for each month due on or prior to the 15th day of
the following month; and
B. Beginning with the fourth year of this Agreement, the additional sum of
twenty-five cents ($.25) per ticketed passenger embarking on any excursion
gambling boat operated pursuant to this Agreement, payable as provided in
subparagraph A.; and
C. For purposes of paragraphs 6A and 6B, "ticketed passenger" shall mean every
person admitted during a calendar day on the excursion gambling boat, except
necessary officials and employees of Operator working on the boat.
The parties agree that the fees set forth in this paragraph are the sole
compensation to which MGC is entitled to under this Agreement. The Operator
agrees that neither it nor its officers, directors, partners, and shareholders,
if any, shall receive any share, percentage, or proportion of the money received
for admissions to the excursion gambling boat.
7. Wagering Taxes and Admission Fees. Operator shall pay any admission fees and
wagering taxes imposed pursuant to law.
8. License Applications. MGC and Operator agree to cooperate in the preparation
and filing of all documentation required by the Iowa Racing and Gaming
Commission. MGC and Operator will seek approval for a license to conduct the
gaming operations under Iowa Code Chapter 99F, and under applicable rules and
regulations of the IRGC. Operator shall pay for any required application fees,
bonds, and annual license fees.
9. Reports, Accounting and Auditing. The parties shall prepare and file all
reports, including financial reports, as may be required by each of them,
respectively, by applicable law and regulation of the Iowa Racing and Gaming
Commission. Each party shall keep such books and records and have audits
performed from time to time as required of each of them, respectively, by
applicable law and regulation. Operator shall pay for any and all audit and
accounting services for any reports, accounting, and audits required of either
party by the IRGC.
Each party agrees that the IRGC and every other party to this Agreement shall
have the right to audit each party's records to the extent necessary to provide
verification of compliance under this Agreement. In the event any party is not
in compliance with the terms of this Agreement, then in addition to all other
remedies provided for by law, each party shall have the right to specifically
enforce the terms and provisions of this Agreement.
10. Compliance with Laws. The parties jointly agree and hereby accept the
responsibility for compliance with the laws of Iowa and the rules promulgated by
the IRGC from time to time, as well
<PAGE>
as the laws of any other applicable governmental agency. Each party shall have
the right to contest by legal action or appeal any government law, regulation,
order, judgment or fine imposed upon said party. If a government agency imposes
a certain amount of time within which a party is permitted the opportunity to
take some corrective or other action, said party shall not be in default under
the terms of this Agreement until such time has passed and the corrective action
has not been taken, or the party has initiated legal action or an appeal to
obtain reversal of such requirement.
11. Default. The occurrence of any one or more of the following events shall
constitute a default by a party hereunder:
A. Failure of a party to perform or comply with any of the duties or obligations
imposed under the terms of this Agreement.
B. Suspension or revocation of any party's license under Chapter 99F of the Iowa
Code by the State of Iowa or IRGC.
C. Any party's adjudication as bankrupt or insolvent, or the appointment of a
receiver or an assignment for the benefit of creditors by or on behalf of any
party.
D. Liquidation of dissolution of a party, which liquidation or dissolution is
not caused by the other party.
E. At no time during the term of this Agreement shall Operator cause such
license (or renewal thereof) to be suspended, revoked or terminated for a period
in excess of one hundred twenty (120) days.
If one of the foregoing acts occurs and is not remedied by the defaulting party
within thirty (30) days after giving of written notice by any non-defaulting
party of said default, then the non-defaulting party shall have all legal and
equitable rights and remedies provided by law, including without limitation,
termination of this Agreement, specific performance, or injunctive relief. The
remedies of the non-defaulting party shall be cumulative, and the exercise of
any one or more remedies provided at law shall not be construed as a waiver of
any other remedies.
12. Indemnification. operator shall indemnify, defend and hold harmless MGC, its
officers, directors, employees, and agents, from and against any and all
liabilities, obligations, claims, damages, causes of action, costs and expenses,
incurred by, or asserted against MGC relating to any accident, injury to or
death of any persons, or loss of or damage to property occurring on the
excursion gambling boat or related to the gaming operation, compliance with
applicable gaming laws and pay of any fees or taxes imposed with respect to
gambling operations.
MGC shall indemnify, defend and hold harmless the Operator, its officers,
directors, employees, and agents, from and against any and all liabilities,
obligations, claims, damages, causes of action, costs and expenses, incurred by,
or asserted against Operator by reason of any accident, injury to or death of
any persons, or loss of or damage to property occurring as a result of any act
or omission by MGC arising out of the gaming operation.
13. MGC Office Space. Operator agrees to provide MGC with office space
sufficient for storage of
<PAGE>
MGC records and for board of directors meetings. MGC agrees that it will be
responsible for maintaining its own employees, including but not limited to
payment of compensation and all other legally imposed obligations.
14. Entire Agreement. This Agreement shall constitute the entire agreement and
understanding between the parties and supersedes any prior agreement or
understanding relating to the subject matter of this Agreement. This Agreement
may be modified or amended only by a written agreement signed by all the
parties, and subject to the approval of the IRGC, if necessary. The parties
hereby covenant they will agree to any amendments to this Agreement which may be
necessary or desirable in order to conform to federal tax law, Iowa statutes, or
administrative rules, including future legislative enactments and rules,
provided that such amendments do not materially alter the rights or obligations
of either party hereunder.
15. Severability. In the event any portion of this Agreement is determined by
competent jurisdiction to be void, illegal, or otherwise unenforceable, all
other terms of the Agreement shall remain in full force and effect and this
Agreement shall be in full force as if the void, illegal, or otherwise
unenforceable provisions did not exist.
16. Benefit. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective legal representatives, heirs, successors
and assigns.
17. Assignment. No party shall assign its rights or duties under this Agreement
without the prior written consent of the remaining parties, and in no event
shall any such assignment relieve the assigning party of its obligations under
the Agreement; provided, however, that the operator is specifically prohibited
from subcontracting any of its duties relating to casino gambling.
Notwithstanding the foregoing, it is further understood and agreed that the
operator may be sold to any party, and that said sale shall not constitute a
default under this paragraph or this Agreement. Provided further, that the
Operator shall not unreasonably withhold its consent to the assignment by MGC of
its rights under this Agreement to another "qualified sponsoring organization"
under Iowa Code Chapter 99F if such assignment is approved by the IRGC and if
such assignment does not alter the rights of the Operator hereunder.
GAMBLERS SUPPLY MANAGEMENT COMPANY
/s/ John Parker
By: ___________________________________
President
Its: __________________________________
MARQUETTE GAMING CORPORATION
/s/ G. William Dickey
By: ___________________________________
President
Its: __________________________________
/s/ Todd Kamm
By: ___________________________________
Secretary
Its: __________________________________
<PAGE>
DOCK SITE AGREEMENT
This Dock Site Agreement between the City of Marquette, Iowa
(hereafter "City") and Gamblers Supply Management Company, a South Dakota
corporation (hereafter "Company") is made this 10th day of June, 1994.
WHEREAS, the Company desires to operate and manage casino gambling on
excursion gambling boats and related activities in and about Marquette, Iowa;
and
WHEREAS, the City has entered into appropriate agreements with the
Iowa Department of Natural Resources relating to the control and ownership of
the docking facilities and adjacent land and desires to enter into an agreement
with Company for the development and management thereof.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Leased Premises. City leases to Company and Company rents from City
certain real property on the riverfront described as follows:
All that area bounded on the North by Bloody Run Creek, on the East by
the Mississippi River and on the South and West by the Sooline
Railroad right-of-way (hereafter "Dock Site"), more particularly
described in Exhibit A attached hereto and incorporated herein by this
reference.
2. Term.
A. The term of this Agreement shall be for a period of twenty-five
(25) years from the date this Agreement is executed. This Agreement may be
terminated by Company upon one hundred eighty (180) days written notice sent by
certified mail to the City, and upon such termination, Company shall pay to City
in addition to all other sums then accrued but not yet paid, an amount equal to
twenty-five percent (25%) of the total payments received by the City in the form
of wagering taxes, statutory passenger admission fees, and rental payments
pursuant to this Agreement for the last full year of casino gambling prior to
termination. For purposes of this subparagraph, the "last full year" means the
year ending on the last anniversary date of the commencement of casino gambling
preceding the termination notice. In the event the termination notice is sent
prior to the first anniversary date of the commencement of casino gambling, the
payment shall be an amount equal to twenty-five percent (25%) of the total of
such payments received by the City for the first full year of casino gambling.
B. This Agreement shall automatically terminate upon the happening of
the following events:
(i) Cancellation of gambling excursion boat licenses as a result of
an unfavorable referendum after submission to the electorate;
<PAGE>
(ii) Non-renewal of license by the IRGC; or
(iii) Termination of Management Agreement. In the event this Agreement
is terminated as a result of the voluntary termination of the Management
Agreement under paragraph 3A thereof, the City shall receive that amount
identified in paragraph 2A of this Agreement.
C. After the commencement of casino gambling operations, if the
Company, for reasons which are in the Company's exclusive control, fails to
regularly conduct casino gambling operations on an excursion boat which takes on
passengers exclusively at the leased premises for any continuous period of sixty
(60) days or more, such inactivity shall, unless Company resumes regularly
conducted gaming operations within thirty (30) days after written demand by the
City, constitute a voluntary termination of this Agreement by the Company under
paragraph 2A, above, and the Company shall pay to the City the amount provided
in paragraph 2A.
3. Conditions Precedent. This Agreement is subject to the conditions
precedent that:
A. Prior to commencement of operations, Company and the Marquette
Gaming Corporation (hereafter "MGC") shall obtain the required licenses from the
Iowa Racing and Gaming Commission to conduct casino gambling and to operate an
excursion gambling boat;
B. Approval of this Agreement, if necessary, amendments thereto, and
other ancillary agreements by the Iowa Racing and Gaming Commission, or any
other state agency;
C. The execution of a Management Agreement by MGC and Gamblers Supply
Management Company in the form attached hereto as Exhibit C, and incorporated
herein by this reference;
D. Company obtaining a permit from the U.S. Army Corps of Engineers to
moor the excursion gambling boat and barge in the Mississippi River channel at
the Dock Site described in Exhibit A and operate the boat in areas defined as
Pools 9 and 10.
E. Approval of this Agreement by the Iowa Department of Natural
Resources.
4. Dock Site Development. The Company shall, at its expense,
construct improvements to the Dock Site for docking facilities and other
purposes relating to the operation of gambling excursion boats and associated
activities. The plans or said improvements are attached hereto as Exhibit B and
incorporated herein by this reference. The City's execution of this Agreement
constitutes approval of such plans. Upon approval of the completed improvements
by the City's Engineer and satisfactory evidence furnished by the Company that
all contractors and subcontractors have been fully paid, ownership of the Dock
Site improvements shall be transferred to the City by the Company, subject to
the terms of this Agreement. The Company agrees to maintain the Dock Site and
all improvements thereon in compliance with all applicable governmental
requirements
5. Rental. As rental for the Dock Site premises, including use of
the excursion
<PAGE>
gambling boat dock and all other improvements thereon, the Company shall pay to
the City the following amounts:
A. The sum of One Hundred Five Thousand and No/100 Dollars
($105,000.00) per year, payable in equal monthly installments, on or prior to
the first day of each month, with the first installment due on the first day of
the month following execution of this Agreement; and
B. Twenty-five cents ($.25) per ticketed passenger embarking on any
excursion gambling boat operated by Company from the Dock Site, payable in
monthly installments, with the payment for each month due on or prior to the
15th day of the following month; and
C. Beginning with the fourth year of this Agreement, the additional
sum of twenty-five cents ($.25) per ticketed passenger, embarking on any
excursion gambling boat from the Dock Site, payable as provided in subparagraph
B., above.
D. Two and one-half percent (2.5%) of net gambling receipts in
excess of Twenty Million and No/100 Dollars ($20,000,000.00) with no applicable
cap during the first three (3) years of operation; and beginning with the fourth
year of operation, City shall receive 21% of net gambling receipts in excess of
Twenty Million and No/100 Dollars ($20,000,000.00) but not exceeding Forty
Million Dollars ($40,000,000.00), 5% of net gambling receipts in excess of
Forty Million and No/100 Dollars ($40,000,000.00) but not exceeding Sixty
Million and No/100 Dollars ($60,000,000.00), and 7.5% of net gambling receipts
in excess of Sixty Million and No/100 Dollars ($60,000,000.00), with no
applicable cap. "Net gambling receipts" are defined as gross gambling receipts
less winnings paid-to players and less any state wagering taxes paid. All sums
payable each year by the Company under this provision shall be paid within
ninety (90) days following each anniversary date of the commencement of casino
gambling.
The rental payments to be made by the Company shall be in addition to
all wagering taxes payable pursuant to Iowa law and the fifty cents ($.50) per
passenger admission fee which may be imposed on the Company by ordinance of the
City pursuant to Iowa Code (S) 99F.10. The City shall be granted access to such
records of the Company as may be necessary to verify passenger counts. For
purposes of this paragraph 5, "ticketed passengers" shall mean every person
admitted during a calendar day on the excursion gambling boat, except necessary
officials and employees of Company working on the boat.
6. Municipa1 Utilities. The Company shall construct and extend, at
its expense, water and sanitary sewer mains and related improvements from the
scares, municipal manhole to the above-described Dock Site. These utility
improvements shall be of sufficient quality and capacity to provide the
anticipated water and sanitary sewer needs of the excursion boat and associated
on-shore operations of the Company. The plans for such improvements shall be
subject to prior approval by the City and its Engineer. Upon approval of the
completed improvements by the City's Engineer and satisfactory evidence
furnished by the Company that all contractors and subcontractors have been fully
paid, ownership of the utility improvements shall be transferred to the City
together with all easements necessary for maintenance and access. The utility
improvements shall thereafter be part of the City's public utility system.
<PAGE>
7. Dock Site and Utility Improvements Purchase and Financing. In
exchange for the transfer of ownership of the Dock Site improvements, as
provided in paragraph 4, the City agrees to pay the Company the sum of Two
Hundred Thousand and No/100 Dollars ($200,000.00) or the Company's cost to
construct such improvements, whichever sum is less. In exchange for the transfer
of ownership of the utility improvements, as provided in paragraph 6, the City
agrees to pay to Company the sum of Fifty Thousand and No/100 Dollars
($50,000.00) or the Company's cost to construct such improvements, whichever sum
is less. These obligations shall not be general obligations of the City but
shall be payable solely from rental payments, wagering taxes and passenger
admission fees received by the City from the Company's excursion gambling boat
operations, pursuant to this Agreement or Management Agreement, and the City
shall not be required to pay annually to the Company on account of such
obligations a total amount, including interest at eight percent (8%), which is
more than ten percent (10%) of the City's total annual combined revenue from
river boat revenue from this Agreement or from MGC, all as may be more
particularly provided in a separate loan agreement between the parties.
8. Barge for Docking and Mooring. The Company shall provide, at
its expense, a barge and docks necessary for the docking and mooring of the
excursion gambling boat to the Dock Site. The barge shall remain the exclusive
property of Company. The Company shall be responsible for the labor and expense
in attaching and maintaining the barge to the Dock Site.
9. Use of Dock Site. The Company and its employees, agents,
licensees, and invites shall have the exclusive use of the Dock Site and barge,
and no other person shall be entitled to dock or moor at said site without the
prior written consent of the Company. No excursion gambling boat except those
operated by Company shall be permitted to dock at said site without the prior
consent of the City.
10. Maintenance, Utilities, and Operating Expense. Company shall be
responsible for all maintenance, utility and operating expenses including the
cost of electrical expense, heating expense, snow removal, lawn care, janitorial
services, garbage, water, sewer and other utility expenses, repairs, maintenance
costs, and all other operating expenses incurred in the occupancy of the Dock
Site and real estate as described above.
11. Taxes. The Company shall pay all sums assessed as property taxes
on the leased premises or the improvements based upon the normal assessed value
of said premises before the same become delinquent. In no event shall the City
impose any special or otherwise discriminatory tax upon the premises.
12. Nondiscrimination. It is agreed that with respect to the use of
the premises covered by this Agreement, the Company shall not exclude anyone
from participation in, deny anyone the benefits of, or otherwise subject anyone
to discrimination because of the person's race, color, national origin, age or
disability.
13. Improvements. The Company may make such alterations and
improvements to the Dock Site, at the Company's expense, as it may deem
desirable, provided only that the plans for such additional alterations and
improvements first be submitted and approved in writing by the
<PAGE>
City, which such approval shall not be unreasonably withheld, and further
provided that all necessary governmental approval shall have been secured by the
Company. All improvements shall become property of the City upon completion.
14. Mechanic's Liens. The Company shall not cause or suffer any lien
or encumbrance to attach to or go against the premises, improvements, building
or real estate upon which the forme- are located. If the Company shall cause a
lien or encumbrance to be filed, the Company shall cause the same to be canceled
and discharged of record by bond or otherwise as allowed by law at the expense
of the Company within thirty (30) days after the filing thereof.
15. Insurance. The Company shall, at its own cost and expense,
obtain and keep in force, at all times during the term of this Agreement, a
standard commercial general liability policy insuring the parties hereto against
all liability and loss for damage on account of public liability, including
injury, death, and property damage to third persons, allegedly occurring by
reason of the use of the premises, or the Company's operations thereon, with the
City as an additional named insured. Such policy shall be in an amount not less
than two million dollars ($2,000,000.00)single limit per occurrence but shall be
increased to five million dollars ($5,000,000.00) provided the cost per million
for five million dollars is not greater than the cost per million for coverage
of two million dollars. Certificates of said policies, providing for thirty (30)
days notice to the City prior to cancellation shall be delivered to the City
within twenty (20) days from the date of the beginning o' the term of this
Agreement. All insurance provided for herein shall be effected under a valid and
enforceable policy or policies issued by insurers of recognized responsibility,
licensed to do business in the state of Iowa and approved by the City.
16. Second Street Lease. The City is the owner of platted Second
Street which adjoins the Company's real estate on the west. The City is
presently seeking a federal grant and construction permits from the Army Corps
of Engineers and the Iowa Department of Natural Resources under which the flood
dike presently located on the west edge of the Company's real estate would be
moved to the west portion of Second Street. This project would include the
installation of a new storm sewer conduit under the dike and, potentially, the
acquisition and development of nest wetlands to mitigate any loss of wetlands
now located on Second Street. If said grant and all necessary permits are
secured, and if the Company pays or reimburses to the City all of the City's
share of the expense for such dike and storm sewer development on Second Street,
the City agrees, following completion of the dike project, to lease to the
Company, for parking purposes only, a portion of Second Street described as
follows: all that part of platted Second Street south of Bloody Run Creek and
North of Brown Street which is suitable for use for vehicular traffic. Provided,
however, that the City may, upon sixty (60) days written notice, terminate the
lease as to the West twenty-two (22) feet of such suitable space if such space
is necessary for City use. The term of this lease shall be identical to that of
this Dock Site Agreement and shall terminate at the same time. No additional
rental payments by the Company shall be required beyond those provided in
paragraph 5 of this Agreement. The Company shall have the right to improve the
leased premises for parking purposes at its own expense, subject to prior
approval of improvement plans by the City. Any such improvements shall, if
requested by the City, be removed by the Company upon termination of this
Agreement.
<PAGE>
17. Indemnification. The Company shall indemnify, defend and hold
harmless the City, its officers, directors, employees, and agents, from and
against any and all liabilities, obligations, claims, damages, causes of action,
costs and expenses, incurred by, or asserted against the City relating to any
accident, injury to or death of any persons, or loss of or damage to property
occurring in or about the Dock Site or in connection with the gaming operation,
compliance with applicable gaming laws, and payment of any fees or taxes imposed
with respect to gambling operations.
The City shall indemnify, defend and hold harmless the Company, its
officers, directors, employees, and agents, from and against any and all
liabilities, obligations, claims, damages, causes of action, costs and expenses,
incurred by, or asserted against the Company relating to any accident, injury to
or death of any persons, or loss of or damage to property occurring in or about
the Dock Site as a result of any act or omission by City.
18. Skywalk. If at such time during the term of this lease Company
determines it is necessary to demolish the planned skywalk which extends to the
leased premises, Company hereby grants to City the option of acquiring the
skywalk, in which event City shall substitute its own demolition bond in place
of that bond required of the Company.
19. Access. The City shall have access to the premises at all
reasonable times in order to discharge any obligations it may cave pursuant to
all agreements the City may enter into with the Iowa Department of Natural
Resources.
20. Vacation Upon Expiration. Upon the Expiration of the term of
this Agreement, or as otherwise terminated as provided by this Agreement, the
Company shall quietly yield and surrender to the City the premises in as good
condition and repair as when taken, reasonable wear and tear excepted.
21. Default. In the event the Company fails to pay any rental due
hereunder or fails to keep and perform any of the other terms and conditions of
this Agreement, time being of the essence, then thirty (30) days after written
notice of default from City, City may, if such default has not been corrected,
resort to any and all legal remedies or combination of legal remedies which City
may desire to assert including but not limited to:
A. Declare this lease at an end and terminate it;
B. Sue for the rent due and to become due under the lease and for
any damages sustained by City.
22. Entire Agreement. This Agreement shall constitute the entire
agreement and understanding between the parties and supersedes any prior
agreement or understanding relating to the subject matter of this Agreement.
This Agreement may be modified or amended only by a written agreement signed by
all the parties. The parties hereby covenant they will agree to any amendments
to this Agreement which may be necessary y or desirable in order to conform to
federal tax law, Iowa statutes, or administrative rules, including future
legislative enactments and
<PAGE>
rules, provided that such amendments do not materially alter the rights or
obligations of either party hereunder.
23. Severability. In the event any portion of this Agreement is
determined by competent jurisdiction to be void, illegal, or otherwise
unenforceable, all other terms of the Agreement shall remain in full force and
effect and this Agreement shall be in full force as if the void, illegal, or
otherwise unenforceable provisions did not exist.
24. Benefit. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns .
25. Assignment. No party shall assign its rights or duties under
this Agreement without the prior written consent of the remaining parties, and
in no event shall any such assignment relieve the assigning party of its
obligations under the Agreement; provided, it is understood and agreed that the
Company may be sold to any party, and that said sale shall not constitute a
default under this paragraph or this Agreement.
CITY OF MARQUETTE, IOWA
By______________________
Its Mayor
By_____________________
Its Clerk
GAMBLERS SUPPLY MANAGEMENT COMPANY
/s/ John Parker
By _____________________
Its President
/s/ John Nix
By _____________________
Its V.P.
<PAGE>
Exhibit 99(c)
NON-NEGOTIABLE PROMISSORY NOTE
$2,200,000.00 July 1, 1996
FOR VALUE RECEIVED, Gamblers Supply Management Company, a South Dakota
corporation ("Maker"), promises to pay to JOHN E. NIX, an individual resident
in South Dakota ("Payee"), in lawful money of the United States of America, the
principal sum of Two Million Two Hundred Thousand Dollars ($2,200,000.00),
together with interest on the unpaid principal balance at an annual rate equal
to eight percent (8%), in the manner provided below. Interest shall be
calculated on the basis of a year of 365 days, and charged for the actual number
of days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Stock Purchase Agreement, dated June 30,
1996, by and between Maker, Payee and Sodak Gaming, Inc., (the "Agreement"), and
is subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used
in this Note without definition shall have the respective meanings set forth in
the Agreement.
1. PAYMENTS
1.1 PRINCIPAL AND INTEREST
The principal amount of this Note, including interest, shall be due and payable
in thirty-six (36) equal consecutive monthly installments commencing on August
1, 1996, and on the first day of each month thereafter until paid in full.
1.2 MANNER OF PAYMENT
All payments of principal and interest on this Note shall be made by electronic
fund transfer in a method and location designated in writing by Payee to Payor.
If any payment of principal or interest on this Note is due on a day which is
not a Business Day, such payment shall be due on the next succeeding Business
Day. "Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of South Dakota.
1.3 PREPAYMENT
Maker may, without premium or penalty, at any time and from time to time, prepay
all or any portion of the outstanding principal balance due under this Note,
provided that each such prepayment is accompanied by accrued interest on the
amount of principal prepaid calculated to the date of such prepayment. Any
partial payments shall be applied to installments of principal in inverse order
of their maturity.
<PAGE>
1.4 RIGHT OF SET-OFF
Maker shall have the right to withhold and set-off against any amount due
hereunder the amount of any claim for indemnification or payment of damages to
which Maker may be entitled under the Agreement, as provided in Section 9.4
thereof.
2. DEFAULTS
2.1 EVENTS OF DEFAULT
The occurrence of any one or more of the following events with respect to Maker
shall constitute an event of default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for fifteen (15) days after
Payee notifies Maker therein in writing; provided, however, that the exercise by
Maker in good faith of its right of set-off pursuant to Section 1.4 above,
whether or not ultimately determined to be justified, shall not constitute an
Event of Default.
(b) If, pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of
debtors (a "Bankruptcy Law"), Maker shall (i) commence a voluntary case or
proceeding; (ii) consent to the entry of an order for relief against it in an
involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (i) is for relief against Maker in an involuntary case;
(ii) appoints a trustee, receiver, assignee, liquidator or similar official for
Maker or substantially all of Maker's properties, or (iii) order the liquidation
of Maker, and in each case the order or decree is not dismissed within one
hundred twenty (120) days.
2.2 NOTICE BY MAKER
Maker shall notify Payee in writing within five (5) days after the occurrence of
an Event of Default pursuant Section 2.1(b) or 2.1(c) above of which Maker
acquires knowledge.
2.3 REMEDIES
Upon the occurrence of an Event of Default hereunder (unless all Events of
Default have been cured or waived by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all rights and
remedies available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker shall pay
all reasonable costs and expenses incurred by or on behalf of Payee
<PAGE>
in connection with Payee's exercise of any or all of its rights and remedies
under this Note, including, without limitation, reasonable attorneys' fees.
3. MISCELLANEOUS
3.1 WAIVER
The rights and remedies of Payee under this Note shall be cumulative and not
alternative. No waiver by Payee of any right or remedy under this Note shall be
effective unless in a writing signed by Payee. Neither the failure nor any delay
in exercising any right, power or privilege under this Note will operate as a
waiver of such right, power or privilege and no single or partial exercise of
any such right, power or privilege by Payee will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right of Payee arising out of this Note can be discharged by Payee, in
whole or in part, by a waiver or renunciation of the claim or right unless in a
writing, signed by Payee; (b) no waiver that may be given by Payee will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on Maker will be deemed to be a waiver of any obligation of
Maker or of the right of Payee to take further action without notice or demand
as provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
3.2 NOTICES
Any notice required or permitted to be given hereunder shall be given in
accordance with Section 9.3 of the Agreement.
3.3 SEVERABILITY
If any provision in this Note is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Note will remain in full
force and effect. Any provisions of this Note held invalid or unenforceable
only in part or degree will remain in full force and effect to the extent not
held invalid or unenforceable. Capitalized terms used by not defined herein
have the meaning given to them in the Agreement.
3.4 GOVERNING LAW
This Note will be governed by the laws of the State of South Dakota without
regard to conflicts of laws principles.
3.5 PARTIES IN INTEREST
This Note shall bind Maker and its successors and assigns. This Note shall not
be assigned or transferred by Payee without the express prior written consent of
Maker, except by will or, in default thereof, by operation of law, which express
written consent shall not be unreasonably withheld.
<PAGE>
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
Parties hereto agree that execution of a facsimile of this Note shall have
the same force and effect as an executed original and shall be binding upon the
parties hereto.
GAMBLERS SUPPLY MANAGEMENT COMPANY
/s/ Roland Gentner
By: ____________________________________
Secretary and Treasurer
Its: ____________________________________
In accordance with, and as required by the terms and conditions of Section
1.3(b)(iii) of the Agreement, Sodak Gaming, Inc., a corporation duly organized
and existing under the laws of South Dakota, unconditionally guarantees payment
to Payee of all liabilities and indebtedness of the Maker under the terms and
conditions of the Promissory Note, whether at maturity, by acceleration or
otherwise, and in the case of any extension of time payment in whole or in part,
all sums shall be paid when due according to such extension.
Notwithstanding the foregoing, upon the Event of Default as defined in
Section 2.1 of the Non-Negotiable Promissory Note, Payee shall notify Sodak
Gaming, Inc. in writing of the occurrence of any Event of Default and the
Maker's failure to cure said default; If Sodak Gaming, Inc. cures the Event of
Default within twenty-one (21) days of receipt from Payee of notice of the Event
of Default and the failure of Maker to cure under 2.1 shall be deemed cured and
Payee shall have no remedies under 2.3.
SODAK GAMING, INC.
/s/ Roland Gentner
By: ___________________________________
President and COO
Its: ___________________________________
<PAGE>
Exhibit 99 (d)
NON-NEGOTIABLE PROMISSORY NOTE
$2,200,000.00 July 1, 1996
FOR VALUE RECEIVED, Gamblers Supply Management Company, a South Dakota
corporation ("Maker"), promises to pay to John T. Parker, an individual resident
in South Dakota ("Payee"), in lawful money of the United States of America, the
principal sum of Two Million Two Hundred Thousand Dollars ($2,200,000.00),
together with interest on the unpaid principal balance at an annual rate equal
to eight percent (8%), in the manner provided below. Interest shall be
calculated on the basis of a year of 365 days, and charged for the actual number
of days elapsed.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the Stock Purchase Agreement, dated June 30,
1996, by and between Maker, Payee and Sodak Gaming, Inc., (the "Agreement"), and
is subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.
1. PAYMENTS
1.1 Principal and Interest
The principal amount of this Note, including interest, shall be due and payable
in thirty-six (36) equal consecutive monthly installments commencing on August
1, 1996, and on the first day of each month thereafter until paid in full.
1.2 Manner of Payment
All payments of principal and interest on this Note shall be made by electronic
fund transfer in a method and location designated in writing by Payee to Payor.
If any payment of principal or interest on this Note is due on a day which is
not a Business Day, such payment shall be due on the next succeeding Business
Day. "Business Day" means any day other than a Saturday, Sunday or legal holiday
in the State of South Dakota.
1.3 Prepayment
Maker may, without premium or penalty, at any time and from time to time, prepay
all or any portion of the outstanding principal balance due under this Note,
provided that each such prepayment is accompanied by accrued interest on the
amount of principal prepaid calculated to the date of such prepayment. Any
partial payments shall be applied to installments of principal in inverse order
of their maturity.
<PAGE>
1.4 Right of Set-Off
Maker shall have the right to withhold and set-off against any amount due
hereunder the amount of any claim for indemnification or payment of damages to
which Maker may be entitled under the Agreement, as provided in Section 9.4
thereof.
2. DEFAULTS
2.1 Events of Default
The occurrence of any one or more of the following events with respect to Maker
shall constitute an event of default hereunder ("Event of Default"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for fifteen (15) days after
Payee notifies Maker therein in writing; provided, however, that the exercise by
Maker in good faith of its right of set-off pursuant to Section 1.4 above,
whether or not ultimately determined to be justified, shall not constitute an
Event of Default.
(b) If, pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of
debtors (a "Bankruptcy Law"), Maker shall (i) commence a voluntary case or
proceeding; (ii) consent to the entry of an order for relief against it in an
involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (i) is for relief against Maker in an involuntary case;
(ii) appoints a trustee, receiver, assignee, liquidator or similar official for
Maker or substantially all of Maker's properties, or (iii) order the liquidation
of Maker, and in each case the order or decree is not dismissed within one
hundred twenty (120) days.
2.2 Notice by Maker
Maker shall notify Payee in writing within five (5) days after the occurrence of
an Event of Default pursuant Section 2.1(b) or 2.1(c) above of which Maker
acquires knowledge.
2.3 Remedies
Upon the occurrence of an Event of Default hereunder (unless all Events of
Default have been cured or waiver by Payee), Payee may, at its option, (i) by
written notice to Maker, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon, immediately due and payable
regardless of any prior forbearance, and (ii) exercise any and all rights and
remedies available to it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this Note. Maker shall pay
all reasonable costs and expenses incurred by or on behalf of Payee
<PAGE>
in connection with Payee's exercise of any or all of its rights and remedies
under this Note, including, without limitation, reasonable attorneys' fees.
3. MISCELLANEOUS
3.1 Waiver
The rights and remedies of Payee under this Note shall be cumulative and not
alternative. No waiver by Payee of any right or remedy under this Note shall be
effective unless in a writing signed by Payee. Neither the failure nor any delay
in exercising any right, power or privilege under this Note will operate as a
waiver of such right, power or privilege and no single or partial exercise of
any such right, power or privilege by Payee will preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right of Payee arising out of this Note can be discharged by Payee, in
whole or in part, by a waiver or renunciation of the claim or right unless in a
writing, signed by Payee; (b) no wavier that may be given by Payee will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on Maker will be deemed to be a waiver of any obligation of
Maker or of the right of Payee to take further action without notice or demand
as provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
3.2 Notices
Any notice required or permitted to be given hereunder shall be given in
accordance with Section 9.3 of the Agreement.
3.3 Severability
If any provision in this Note is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Note will remain in full
force and effect. Any provisions of this Note held invalid or unenforceable only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable. Capitalized terms used by not defined herein have the
meaning given to them in the Agreement.
3.4 Governing Law
This Note will be governed by the laws of the State of South Dakota without
regard to conflicts of laws principles.
3.5 Parties in Interest
This Note shall bind Maker and its successors and assigns. This Note shall not
be assigned or transferred by Payee without the express prior written consent of
Maker, except by will or, in default thereof, by operation of law, which express
written consent shall not be unreasonably withheld.
<PAGE>
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
Parties hereto agree that execution of a facsimile of this Note shall have
the same force and effect as an executed original and shall be binding upon the
parties hereto.
GAMBLERS SUPPLY MANAGEMENT COMPANY
By: /s/ Roland Gentner
------------------------------
Its: Secretary and Treasurer
------------------------------
In accordance with, and as required by the terms and conditions of Section
1.3(b)(iii) of the Agreement, Sodak Gaming, Inc., a corporation duly organized
and existing under the laws of South Dakota, unconditionally guarantees payment
to Payee of all liabilities and indebtedness of the Maker under the terms and
conditions of the Promissory Note, whether at maturity, by acceleration or
otherwise, and in the case of any extension of time payment in whole or in part,
all sums shall be paid when due according to such extension.
Notwithstanding the foregoing, upon the Event of Default as defined in
Section 2.1 of the Non-Negotiable Promissory Note, Payee shall notify Sodak
Gaming, Inc. in writing of the occurrence of any Event of Default and the
Maker's failure to cure said default; If Sodak Gaming, Inc. cures the Event of
Default within twenty-one (21) days of receipt from Payee of notice of the Event
of Default and the failure of Maker to cure under 2.1 shall be deemed cured and
Payee shall have no remedies under 2.3.
SODAK GAMING, INC.
By: /s/ Roland Gentner
-----------------------------
Its: President and COO
-----------------------------
