EXHIBIT 10.1
AMENDMENT NO. ONE
TO
OPERATING AGREEMENT
OF
OM OPERATING, L.L.C.
This Amendment No. One ("Amendment") is entered into effective as of April
15, 1998 and amends that certain Operating Agreement of OM Operating, L.L.C.
dated as of July 18, 1994 (the "Agreement") by and between OM Investors, Inc.,
whose Membership Interest is now owned by North American Gaming and
Entertainment Corporation ("NAMGC"), and Xxxxxx X. Xxxxxxxx ("Xxxxxxxx"). This
Amendment is executed by NAMGC and Xxxxxxxx for the purposes set forth herein.
Capitalized terms used in this Amendment shall have the same meaning as in the
Agreement, unless the context herein clearly indicates otherwise.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged by each of the parties
hereto, the parties hereto acknowledge and agree as follows:
1. NAMGC hereby contributes its 20% gross income allocation set forth in
Section 4.1 in exchange for Xxxxxxxx' agreement that NAMGC owns 99% of the
Membership Interests (herein so called) and Sharing Ratios and Xxxxxxxx owns 1%.
2. Concurrently and simultaneously with the contribution of the 20% gross
income allocation and acquisition of Membership Interests and Sharing Ratios
from the Company aggregating 99% of the Membership Interests and Sharing Ratios
by NAMGC, NAMGC hereby sells, assigns and transfers to Xxxxxxxx 50% of the
Membership Interests and Sharing Ratios owned by NAMGC in consideration of the
execution and delivery by Xxxxxxxx of a $4,000,000 Note (the "Note") payable to
NAMGC and simultaneous pledge by Xxxxxxxx of his Membership Interests and
Sharing Ratios as collateral security for repayment of the Note. Following the
sale, assignment and transfer to Xxxxxxxx, the parties hereto acknowledge and
agree that the Membership Interests and Sharing Ratios in the Company are owned
49% by NAMGC and 51% by Xxxxxxxx, and it is the intent of the parties that the
Capital Accounts of the parties as a result of these transactions shall be in
the ratio of 49% for NAMGC and 51% for Xxxxxxxx for all purposes after the date
of this Amendment, without distributions of cash or other property to either
Member, and the parties hereto agree to take such actions to cause the Capital
Accounts to be consistent therewith. Further, the parties consent to and
acknowledge the pledge by Xxxxxxxx of his Membership Interests and Sharing
Ratios to NAMGC.
3. Section 2.6.3 is hereby amended to read in its entirety as follows:
"2.6.3 Vote Necessary for Decisions. Except as otherwise provided in
the Act, the Articles or the Operating Agreement, all decisions of the
Members shall be made by
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Members owning 65% of the Sharing Ratios."
4. Section 4.1 is hereby deleted and all references in the Agreement to
the 20% gross income allocation are also hereby deleted, including, without
limitation, the references at Sections 4.2 and 4.4.1.
5. Section 4.4 is hereby amended to delete the word "unanimous". Section
4.4 is also hereby amended to add the following paragraph after Subsection
4.4.3:
"Notwithstanding the above provisions of this Section 4.4, the Company
shall distribute, if not already distributed through monthly
distributions, an amount to each Member equal to forty percent (40%)
of the net taxable income of the Company for the preceding taxable
year allocated to each Member, so the Members may use such
distributions to pay their individual taxes on their pro rata share of
said taxable income, with such distribution, or the remainder thereof
after taking into account monthly distributions, to be made within
seventy-five (75) days following the end of the taxable year to which
such distribution relates".
6. Section 4.4.1 is hereby deleted.
7. Section 5.1 is hereby amended by deleting the word "unanimous" and by
adding the following clause and sentence at the end of the first sentence
thereof:
"of the Members; provided, however, that notwithstanding the foregoing
provision or any other provision in this Operating Agreement to the
contrary, for as long as the Note remains unpaid there shall only be
one Manager of the Company and NAMGC shall be entitled to designate
and appoint, and change from time to time, such Manager with the
consent of Xxxxxxxx (which consent shall not be unreasonably withheld)
by delivering written notice to Xxxxxxxx, whereupon Xxxxxxxx shall
have five (5) days to object to such appointment or change by
delivering written notice thereof to NAMGC, and upon any such
objection, NAMGC shall designate a different Manager and deliver
written notice thereof to Xxxxxxxx for his consent; and, provided,
further, that in the event the appointed Manager repeatedly fails to
satisfactorily perform such Manager's duties hereunder, Xxxxxxxx shall
have the right to notify NAMGC who shall appoint a new Manager if the
existing Manager does not cure such failures. NAMGC's designation and
appointment as Manager as of the date of this Amendment is Xxxxxx X.
Xxxxx, which is hereby approved by Xxxxxxxx. Upon payment in full of
the Note, the Manager designated by NAMGC shall be deemed
automatically removed and the Members shall elect one or more Managers
under Section 5.1."
8. Section 5.2 is hereby amended by deleting the last sentence and
replacing it with the following sentence:
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"Subject to the provisions of Section 5.1, any Manager elected or
appointed by the Members may be removed at any time by a vote of
Members owning 65% of the Sharing Ratios."
9. Section 5.3 is hereby amended by deleting the first sentence.
10. Sections 5.3.1 and 5.3.2 are hereby amended by deleting everything
appearing after the word "Company" in each Section.
11. Section 5.3.3 is hereby amended by deleting words "Managers or".
12. Section 5.3.4 is hereby amended by adding the following clause at the
end of such Section: ", other than Xxxxxxxx under his Employment Agreement
described in Section 8.16 or NAMGC under its Consulting and Administrative
Agreement described in Section 8.17".
13. Sections 5.3.5 and 5.3.6 are hereby amended by deleting the word
"unanimous".
14. Section 5.3.9 is hereby amended to add the following clause at the end
of such Section: "to take such actions as are within his authority otherwise
granted in this Section 5.3".
15. Section 5.3.10 is hereby amended by deleting the word "unanimous" in
both places where it is used and by deleting the clause "or, where authorized
herein, by majority vote of Members".
16. Section 5.4 is hereby amended by deleting the word "unanimous".
17. Section 5.4.1 is hereby amended by deleting the words "five" and
"unanimous".
18. Section 5.4.14 is hereby deleted.
19. Section 5.5 is hereby amended by deleting the words "unanimous vote"
and adding in place thereof the words "vote of Members owning at least 65% of
the Sharing Ratios".
20. Sections 6.3.1 and 6.3.2 are hereby deleted and replaced with the
phrase "Intentionally Omitted."
21. Section 6.3.3 is hereby amended to change "OM's" to "NAMGC's", and by
adding the following clause at the end of such Subsection: ", except
in accordance with Section 6.4, Section 6.5 or Section 6.6."
22. Section 6.3.4 is hereby amended to read in its entirety as follows:
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"6.3.4 Agrees that he shall not have the right to transfer or assign
his Membership Interests or Sharing Ratios, or any portion thereof or
rights therein, to any person unless such person is a Louisiana
resident that satisfies all of the suitability requirements under
applicable Louisiana law necessary for the Company to obtain and hold
all Louisiana gaming licenses necessary for the operation of its video
poker casinos, and except in accordance with Section 6.4, Section 6.5
or Section 6.6."
23. A new Section 6.4 is hereby added:
"6.4 Transfer to Family Members by Xxxxxxxx. Notwithstanding any
provision hereof to the contrary, including Sections 6.1, 6.3.3 and
6.3.4, Xxxxxxxx shall be entitled to transfer all or a portion of his
Membership Interests and Sharing Ratios by inter vivos gift or at
death to (i) his spouse, (ii) his descendants, or (iii) a limited
liability company or family partnership owned 100% by Xxxxxxxx, his
spouse and/or his descendants, provided, (a) such transferee shall
take such Membership Interests and Sharing Ratios fully subject to the
terms and conditions of this Agreement and shall execute a written
instrument acknowledging such fact and agreeing to be bound by all of
the terms and conditions of this Agreement, and (b) such transferee is
a Louisiana resident that satisfies all of the suitability
requirements under applicable Louisiana law necessary for the Company
to obtain and hold all Louisiana gaming licenses necessary for the
operation of its video poker casinos. Upon satisfaction of the
foregoing, such transferee shall be considered a Member hereunder. It
shall not be necessary to obtain the prior consent of NAMGC to any
such allowed transfer, but Xxxxxxxx shall provide prior written notice
of the pending transfer to NAMGC and evidence that all of the
conditions set forth in this Section 6.4 have been satisfied, as a
condition precedent to the valid and effective transfer. Any such
transferee shall take such Membership Interests and Sharing Ratios
fully subject to the Note and any shortfall loans made pursuant to
Section 8.18(c), together with any security interests, pledges and/or
assignments of Cash Flow or collateral related thereto."
24. A new Section 6.5 is hereby added:
"6.5 Buy-Sell Upon Loss of Suitability. NAMGC and Xxxxxxxx (which
shall be binding on his transferees under Section 6.4) hereby agree to
the following buy-sell provisions in the event either of them fails to
meet the suitability requirements under the Louisiana Video Draw Poker
Devices Control Law or other applicable gaming laws (the "Applicable
Laws") necessary for the Company to obtain and hold all Louisiana
gaming licenses necessary for the operation of its video poker
casinos, or, in the case of Xxxxxxxx (or such transferees), Xxxxxxxx
(or such transferees) ceases to be a Louisiana resident:
6.5.1 Xxxxxxxx' Loss of Suitability. In the event Xxxxxxxx (or his
transferees under Section 6.4, as applicable) fails to continue to
meet the suitability requirements under
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Applicable Laws or ceases to be a Louisiana resident, then the
provisions of Section 6.5.3 shall immediately become applicable and
Xxxxxxxx (or such transferee) shall be referred to as the "Nonsuitable
Member" in Section 6.5.3 and NAMGC shall be referred to as the "Other
Member" in Section 6.5.3.
6.5.2 NAMGC's Loss of Suitability. In the event NAMGC fails to
continue to meet the suitability requirements under Applicable Laws,
then the provisions of Section 6.5.3 shall immediately become
applicable and NAMGC shall be referred to in Section 6.5.3 as the
Nonsuitable Member and Xxxxxxxx (or such transferees) shall be
referred to individually and collectively as the Other Member.
6.5.3 Buy-Sell Procedures. Upon the occurrence of the situation
described in Section 6.5.1 or Section 6.5.2, as applicable, so that
this Section 6.5.3 becomes applicable, the Nonsuitable Member shall
have the right to contest, in accordance with applicable
administrative and judicial process, at its or his expense, the
determination by the applicable governmental authority that the
Nonsuitable Member has become unsuitable, or the Nonsuitable Member
may accept such determination. Upon the acceptance of such
determination (without contest, or during the administrative and
judicial process), or at the conclusion of the applicable
administrative and judicial process at which time the determination of
unsuitability was upheld, whichever occurs first, the Nonsuitable
Member shall have thirty (30) days (or such shorter period of time if
required by law or mandated by applicable governmental authorities) to
sell, gift or otherwise transfer such Nonsuitable Member's Membership
Interests and Sharing Ratios to a transferee who meets the suitability
requirements of Applicable Laws, who must also be a Louisiana resident
if Xxxxxxxx (or his transferee) is the Nonsuitable Member, at such
price as may be negotiated between the Nonsuitable Member and the
person or entity to whom the Nonsuitable Member's Membership Interests
and Sharing Ratios will be assigned (the "Assignee"); provided,
however, that the Other Member must give his or its consent to the
transfer to the Assignee and to the Assignee becoming a Member
hereunder, which consent may not be unreasonably withheld; and,
provided, further, that if the Other Member objects and withholds
consent, such Other Member must deliver along with his or its written
objection the specific detailed reasons for objecting to such Assignee
and the reasons why the Other Member believes such reasons satisfy the
requirement that the consent has been withheld in the exercise of
"reasonable" discretion. If the Nonsuitable Member believes that such
reasons do not constitute a "reasonable" objection, the Nonsuitable
Member shall be entitled to object by written notice to the Other
Member giving the reasons therefor, and if the Nonsuitable Member and
Other Member shall not be able to agree within five (5) days whether
the Assignee is acceptable or not acceptable, the Nonsuitable Member
shall not transfer the Membership Interests and Sharing Ratios to such
proposed Assignee, but shall retain all rights and remedies, including
for damages, which he or it may have against Other Member if the
rejection by the Other Member is
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ultimately determined not to have been reasonable. Notwithstanding the
foregoing, if the Other Member has rejected a proposed Assignee, the
Nonsuitable Member shall have the opportunity to present other
proposed Assignees who will be reviewed by the Other Member in
accordance with this Section 6.5.3, until expiration of the thirty
(30) days (or such shorter period of time if required by law or
mandated by applicable governmental authorities).
If the Other Member does not object to the proposed Assignee, or
objects but the Nonsuitable Member and Other Member are able to agree
that such proposed Assignee is acceptable during the five (5) day
period referenced above, the Nonsuitable Member shall be entitled to
transfer his or its Membership Interests and Sharing Ratios to the
proposed Assignee, which transfer must be effective prior to the
expiration of the thirty (30) day period (or shorter period required
by law or dictated by the governmental authorities) referenced in the
preceding paragraph, and upon closing thereof, the Assignee shall take
such Membership Interests and Sharing Ratios fully subject to the
terms and conditions of this Agreement and shall execute a written
instrument acknowledging such fact and agreeing to be bound by all of
the terms and conditions of this Agreement. Upon satisfaction of the
foregoing, the Assignee shall be considered a Member hereunder.
In the event the Nonsuitable Member shall not be able to find a
proposed Assignee, or the Other Member objects to such proposed
Assignee in the exercise of reasonable discretion, or the closing of
the transfer to the Assignee does not take place within the required
time period noted in the preceding paragraph, the Other Member shall
have the right to locate a suitable purchaser of the Nonsuitable
Member's Membership Interests and Sharing Ratios for a period of
ninety (90) days after the expiration of the thirty (30) day period
referenced in the first paragraph of this Section 6.5.3 to locate a
purchaser (including, but not limited to the Other Member, himself or
itself) who meets the suitability requirements under Applicable Law
and the Nonsuitable Member hereby agrees to sell his or its Membership
Interests and Sharing Ratios to such purchaser at a purchase price
equal to two (2) times the Nonsuitable Member's allocable share of the
net operating income of the Company for the preceding calendar year,
with such purchase price to be paid in cash prior to expiration of
said ninety (90) day period.
25. The Agreement is hereby amended by adding new Section 6.6 to read as
follows:
"Right of Members to Sell Membership Interests and Sharing Ratios.
Each Member shall have the absolute right to sell his or its
Membership Interest and Sharing Ratios to any person or entity at such
price and upon such terms and conditions as may be agreed between the
selling Member ("Selling Member") and such person or entity, upon
compliance with the terms and conditions of this Section 6.6. Further,
NAMGC shall have the right to assign the Consulting and Administrative
Agreement
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(referenced in Section 8.17) to such person or entity upon such terms
and conditions as may be negotiated between NAMGC and such purchaser
or entity.
In order for the Selling Member to be able to sell his or its
Membership Interests and Sharing Ratios, and for NAMGC to assign the
Consulting and Administrative Agreement if it is the Selling Member,
the Selling Member must give written notice to the other Member (the
"Other Member") that the Selling Member plans to sell his or its
Membership Interests and Sharing Ratios (and assign the Consulting and
Administrative Agreement, if applicable) to a proposed purchaser (the
"Purchaser") at least thirty (30) days prior to consummation of the
proposed sale. The Other Member shall then be required within fifteen
(15) days following receipt of such notice of proposed sale to consent
to the Purchaser purchasing the Selling Member's Membership Interests
and Sharing Ratios (and the Consulting and Administrative Agreement,
if applicable) and to such Purchaser becoming a Member hereunder,
which consent may not be unreasonably withheld. In the event the Other
Member objects in writing and withholds consent within said fifteen
(15) day period, such Other Member must deliver along with his or its
written objection the specific detailed reasons for objecting to such
Purchaser becoming a Member, and/or such Purchaser becoming an
assignee under and assuming the Consulting and Administrative
Agreement, if applicable, and the reasons why the Other Member
believes such reasons satisfy the requirement that the consent has
been withheld in the exercise of "reasonable" discretion. If the
Selling Member believes that such reasons do not constitute a
"reasonable" objection, the Selling Member shall be entitled to object
by written notice to the Other Member giving the reasons therefor, and
if the Selling Member and Other Member shall not be able to agree
within five (5) days whether the Purchaser is acceptable or not
acceptable as a Member, or as an assignee under the Consulting and
Administrative Agreement, if applicable, the Selling Member (i) shall
not transfer the Membership Interests and Sharing Ratios to such
proposed Purchaser if that was the objection; or (ii) may sell the
Membership Interests and Sharing Ratios to such proposed Purchaser if
the Other Member did not object, but not assign the Consulting and
Administrative Agreement to such proposed Purchaser if that was the
objection; or (iii) may elect not to transfer the Membership Interest
and Sharing Ratios to such proposed Purchaser or assign the Consulting
and Administrative Agreement because said assignment was objected to
by the Other Member; but the Selling Member shall retain all rights
and remedies, including for damages, which he or it may have against
the Other Member if the rejection by the Other Member of either the
transfer of Membership Interests and Sharing Ratios or the assignment
of the Consulting and Administrative Agreement, as applicable, is
ultimately determined not to have been reasonable.
If the Other Member does not object to the proposed Purchaser, or
objects but the Selling Member and Other Member are able to agree that
such proposed Purchaser is acceptable during the five (5) day period
referenced above, the Selling Member
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shall be entitled to transfer his or its Membership Interests and
Sharing Ratios to the proposed Purchaser, and NAMGC shall be entitled
to assign the Consulting and Administrative Agreement to such
Purchaser if allowed under the preceding paragraph, and upon closing
thereof, the Purchaser shall take such Membership Interests and
Sharing Ratios fully subject to the terms and conditions of this
Agreement and shall execute a written instrument acknowledging such
fact and agreeing to be bound by all of the terms and conditions of
this Agreement. Upon satisfaction of the foregoing, the Purchaser
shall be considered a Member hereunder. Further, at such closing,
NAMGC shall assign the Consulting and Administrative Agreement to such
Purchaser who shall assume all of the rights, responsibilities and
duties of NAMGC thereunder, and NAMGC shall be released from any
further responsibilities, duties, obligations or obligations
thereunder.
26. Section 8.2 is hereby amended by deleting the words "OM Investors,
Inc." and substituting in their place the words "North American Gaming and
Entertainment Corporation" and adding the following clause at the end of such
Section: "to satisfy its financial reporting requirements under applicable
securities laws".
27. Section 8.4.1 is hereby amended by substituting the word "shall" for
the word "may" in the first sentence of such Section.
28. Section 8.5 is hereby amended by adding the following clause at the
beginning of such Section: "Subject to the provisions of Section 8.18,".
29. Section 8.6 is hereby amended by adding the word "Manager," before the
word "Member" in the second line of such Section.
30. Section 8.8 is hereby amended by adding the following clause at the
end of the first sentence: "owned by the Company."
31. Section 8.10 is hereby amended by deleting the words "addressed as
shown on the first page hereof" appearing at the end of the first sentence, and
by substituting in their place the following words "addressed to the latest
address of the addressee appearing in the records of the Company".
32. The Agreement is hereby amended by adding new Sections 8.16, 8.17,
8.18 and 8.19 to read as follows:
"8.16 Employment Agreement with Xxxxxxxx. The Company is hereby
authorized to enter into an Employment Agreement with Xxxxxxxx, dated
of even date herewith, pursuant to which the Company will pay to
Xxxxxxxx a salary of $250,000 per year for a term to expire at the
later of expiration of four years or upon payment in full by Xxxxxxxx
of the Note. Thereafter, there shall be no Employment Agreement
between
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the Company and Xxxxxxxx unless NAMGC approves the terms and
conditions thereof, including the salary. As part of the Employment
Agreement dated of even date herewith, Xxxxxxxx shall be reimbursed
for reasonable expenses incurred by him on behalf of the Company or in
furtherance of his obligations under the Employment Agreement."
"8.17 Consulting and Administrative Agreement. The Company is hereby
authorized to enter into the Consulting and Administrative Agreement
with NAMGC dated as of the date of this Amendment."
"8.18 No Acquisition of Operations by Certain Parties.
(a) Each of Xxxxxxxx (and any permitted transferee or assignee
pursuant to Section 6.4, all of such persons or entities being
hereinafter collectively and individually referred to along with
Xxxxxxxx in this Section 8.18 as "Xxxxxxxx") and NAMGC (for itself and
its subsidiaries) agree that they will bring all truck stop video
poker casino opportunities in Louisiana to the Company for evaluation
and pursuit by the Company and neither will, directly or indirectly in
any manner, be involved with or obtain an interest in any other such
opportunity without first bringing it to and offering it to the
Company; and, in this regard, Xxxxxxxx agrees that any such
opportunity pursued by his wife or daughters shall be deemed for all
purposes to be an opportunity that should have been brought by him to
the Company, and Xxxxxxxx, therefore, agrees to bring any such
opportunity to the Company in accordance with this Section; provided,
however, that this prohibition shall not prohibit NAMGC from acting as
manager of a truck stop video poker casino pursuant to a bona fide
management agreement with a third party. When such opportunity is
brought to the Company, the person or entity bringing such opportunity
to the Company (hereinafter, the "Finder") shall set forth in detail
all of the essential terms and conditions relating to the
participation in such opportunity by the Finder which is being made
available to the Company. The Company shall have thirty (30) days to
determine whether to pursue and obtain such opportunity. If NAMGC
decides the Company should pursue and obtain any such opportunity
presented by Xxxxxxxx, then NAMGC's decision shall be binding on the
Company and Xxxxxxxx and no other vote of the Members shall be
required. If Xxxxxxxx decides the Company should pursue and obtain any
such opportunity presented by NAMGC (or any of its subsidiaries), then
Xxxxxxxx' decision shall be binding on the Company and NAMGC and no
other vote of the Members shall be required. Written notice of the
decision to pursue and obtain any presented opportunity shall be
delivered to the Finder within thirty (30) days following the date the
Finder has delivered the description of the opportunity in the detail
required by this Section 8.18 to the non-presenting party and to the
Company. Subject to the other terms and conditions of this Section
8.18, if the Company decides not to pursue and obtain an opportunity
presented by the Finder, the Finder may for the following one hundred
twenty (120) days pursue such
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opportunity upon the same terms and conditions described in the
presentation made to the non-presenting party pursuant to this Section
8.18; provided, if the terms and conditions ultimately vary by 5% or
more either way then the Finder shall be obligated to bring the
opportunity back to the Company for re-consideration and may not
pursue the opportunity himself or itself or with any other participant
until the opportunity has been re-presented to the Company for
consideration pursuant to this Section 8.18 as if it had never been
presented; and, provided, further, if the opportunity is not fully
documented and closed by the Finder within said one hundred twenty
(120) days, then the Finder must again re-present the opportunity to
the Company for re-consideration. All opportunities shall be brought
to the Company in accordance with this Section 8.18 notwithstanding
the fact that one or more opportunities have been brought to the
Company which were not pursued by the Company. The parties hereto
agree that the Port Xxxxx project, the "Houma" project and the
"Goldrush" project have been presented to the Company and the Company
has elected to pursue such opportunities. The parties also acknowledge
that Xxxxxxxx is the Finder for each of these three opportunities.
NAMGC agrees to adopt a policy that officers and key employees cannot
individually pursue truck stop video poker casinos in Louisiana and
NAMGC agrees to vigorously pursue its rights against any officer or
key employee violating such policy so that such opportunities shall be
brought to NAMGC, who in turn shall bring them to the Company in
accordance with this Section 8.18(a). Further, NAMGC agrees to obtain
a written agreement from X.X. Xxxxx, XX whereby he agrees that he will
not pursue any video poker truck stop casinos in Louisiana, and will
bring all such opportunities to NAMGC, for as long as he is an
officer, director or beneficial owner of 5% or more of the outstanding
common stock of NAMGC, so that NAMGC can then bring those
opportunities to the Company in accordance with this Section 8.18(a).
(b) NAMGC and Xxxxxxxx hereby agree that a Finder may not bring to
the Company for its consideration more than ten (10) opportunities
during any calendar year; may not bring to the Company for
consideration more than four (4) opportunities at any one time; and
may not bring to the Company for consideration any opportunity which,
when coupled with the projects already under consideration or
construction, would exceed four (4) opportunities and projects. It is
acknowledged and agreed that this prohibition is to prevent either
party from overloading the other party and the Company with
opportunities so that opportunities cannot be pursued by the Company
because of the magnitude thereof, resulting in the Finder being
allowed to pursue such opportunities. Neither party desires such
result and, therefore, they agree to these prohibitions. As a result
of these prohibitions, neither party will be able to pursue any such
opportunities which they are prohibited from bringing to the Company,
until such opportunities have actually been presented to the Company
in accordance with this Section 8.18. It is further acknowledged and
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agreed that Xxxxxxxx and any of his permitted assignees and
transferees under Section 6.4 shall be considered as one "Finder" for
this purpose, so that as a group they are limited by the number of
opportunities specified in this Section 8.18(b).
(c) The Company, NAMGC and Xxxxxxxx agree that the Company will
attempt to finance each new project with debt, to the extent possible.
If down payments or other equity is required, Xxxxxxxx and NAMGC will
discuss and determine whether the Company has sufficient funds to make
any such down payment or equity payment, or whether the Members will
make additional capital contributions to fund such down payment, or
whether the Company will allow other equity participants to be owners
of such project, upon such terms and conditions as Xxxxxxxx and NAMGC
shall agree. If Xxxxxxxx and NAMGC agree that additional capital
contributions should be made by the Members, to the extent the
"Finder's Fee" (discussed in Section 8.18(f) below) payable to
Xxxxxxxx for such project is not sufficient to fund his share of the
capital contribution, then NAMGC shall loan to Xxxxxxxx any shortfall.
Any such loan to Xxxxxxxx by NAMGC to cover any shortfalls shall bear
interest at 2% over the fluctuating prime rate announced from time to
time in The Wall Street Journal. If capital contributions are
required, they shall be made 51% by Xxxxxxxx and 49% by NAMGC. If
NAMGC loans the amount of any shortfall to Xxxxxxxx, Xxxxxxxx agrees
to pledge and assign to NAMGC all cash flow distributed to Xxxxxxxx by
the Company, not already designated for payment of his taxes or as
payment under the Note, to be applied by NAMGC to repayment in full of
such shortfall loan, and to enter into such security agreements and
other documents determined to be necessary or advisable by NAMGC to
formalize such pledge and assignment of cash flow. Subject to this
assignment and security interest, if any, all operating profits and
cash and other distributions from any new projects, other than the
five existing video poker casinos operated by the Company as of the
date of this Amendment, shall be allocated and distributed 51% to
Xxxxxxxx and 49% to NAMGC, and each such new projects will be
accounted for separately so that operating profit shall mean the gross
revenues attributable to such location after reduction for related
debt service for such location, rental payments for such location,
other expenses directly related to such location, a prorata portion of
the salary paid to Xxxxxx X. Xxxxxxxx ("X. Xxxxxxxx"), and the
Finder's Fee paid to X. Xxxxxxxx for such location, but prior to
payments under the Note or NAMGC's Consulting and Administrative
Agreement, other than the $50,000 attributable to such location.
(d) Subject to the limitations described in Section 8.18(b), if the
Company is not able to obtain financing for a project, through debt,
down payments, capital contributions and/or other equity participants
under the provisions of Section 8.18(c) within one hundred twenty
(120) days after electing under Section 8.18(a) to pursue an
opportunity, the Finder shall have the right to pursue such
opportunity as if the opportunity had been rejected initially by the
Company effective as of the expiration of such one hundred twenty
(120) day period, or earlier upon written notice by the
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Company and the non-presenting party that the Company will not be able
to obtain satisfactory financing to pursue the opportunity, provided,
the non-Finder shall have a right of first refusal to participate in
such opportunity upon the same terms and conditions offered by Finder
to one or more third parties, as long as the non-Finder delivers
written notice of its election to so participate to the Finder within
fifteen (15) calendar days after receipt of such terms and conditions
from Finder. Non-Finder shall not be entitled to pursue such
opportunity during the period Finder is pursuing it under this Section
8.18(d), and thereafter may pursue it only if the non-Finder brings
such opportunity first to the Company in accordance with this Section
8.18, whereupon X. Xxxxxxxx shall be entitled to his Finder's Fee if
the Company consummate such opportunity and X. Xxxxxxxx was the
original Finder.
(e) Xxxxxxxx hereby represents and warrants to, and agrees with,
the Company and NAMGC that neither Xxxxxxxx nor any affiliated person
or entity will hire or retain any employee or former employee of the
Company or NAMGC as an employee, consultant or otherwise in any other
capacity with respect to any opportunity pursued by Xxxxxxxx or any
affiliated person or entity.
NAMGC hereby represents and warrants to, and agrees with, the Company
and Xxxxxxxx that neither NAMGC nor any of its subsidiaries or
affiliated entities will hire or retain any employee or former
employee of the Company or Xxxxxxxx as an employee, consultant or
otherwise in any other capacity with respect to any opportunity
pursued by NAMGC or its subsidiaries or affiliated entities.
(f) The Company hereby agrees to pay X. Xxxxxxxx a "Finder's Fee"
(herein so called) of $50,000 for each new truck stop video poker
casino project brought to the Company by X. Xxxxxxxx which is accepted
and constructed by the Company, with such payment to be made upon the
Company obtaining satisfactory financing and receiving funding under
such financing arrangements to commence construction."
"8.19 Port Xxxxx Project. NAMGC and Xxxxxxxx agree to use their
respective best efforts to develop the new location in Port Xxxxx, and
to obtain the necessary financing. Upon obtaining satisfactory
financing, NAMGC will cause the existing lease covering the Port Xxxxx
location to be assigned to River Port Truck Stop, LLC, an entity to be
formed to be owned 50% by NAMGC and 50% by Xxxxxxxx. NAMGC and
Xxxxxxxx each agree that River Port Truck Stop, LLC can issue
additional units to reduce Xxxxxxxx' and NAMGC's interests to no less
than 40% each (such reduction to be pro rata), at the election of
NAMGC. Xxxxxxxx will be paid a Finder's Fee upon the opening of the
truck stop video poker casino at this location. The operations of this
video poker casino will be accounted for separately from the five
existing video poker casinos operated by the Company as of the
Effective Date of this Amendment so that all operating profit (after
related debt service for such location, rental payments for such
location, other expenses directly
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related to such location, a prorata portion of Xxxxxxxx' salary, and
the Finder's Fee paid to X. Xxxxxxxx for such location, but prior to
payments under the Note or NAMGC's Consulting and Administrative
Agreement, other than the $50,000 attributable to such location) will
be allocated and distributed to Xxxxxxxx and NAMGC according to their
membership interests and sharing ratios in River Port Truck Stop,
LLC."
"8.20 License and Lease of The Gold Rush. NAMGC, for itself and Ozdon
Investments, Inc., its wholly owned subsidiary ("Ozdon"), hereby
agrees that the License to Operate Video Poker Casino ("License")
dated December 15, 1995 between Ozdon and the Company shall continue
in full force and effect until the tenth anniversary of the date of
this Amendment; provided, however, such License shall be extended by
NAMGC/Ozdon if the Company elects to extend for an additional five (5)
years the lease described in the following paragraph.
NAMGC/Ozdon also agree to enter into a ten (10) year triple net lease
with the Company, leasing to the Company the land and buildings owned
by NAMGC/Ozdon constituting The Gold Rush Truck Stop, in exchange for
rental payments of $400,000 per year pursuant to which NAMGC/Ozdon
will be responsible for foundation, outer walls and roof and the
Company will be responsible for all other repairs and maintenance.
NAMGC/Ozdon also agree to a five (5) year renewal option of such lease
if elected by Xxxxxxxx, on behalf of the Company, by written notice to
NAMGC/Ozdon at least one hundred eighty (180) days prior to expiration
of the initial ten (10) year term, during which renewal term the rent
will be increased (but not decreased) based on a comparison of the
Consumer Price Index at December 31, 1997 for the area in which The
Gold Rush Truck Stop is located, compared to the Consumer Price Index
for such area as of the last day of the initial ten (10) year term.
NAMGC/Ozdon will also include in the lease a right of first refusal
granted to Xxxxxxxx providing that in the event a sale of the land and
buildings, or any portion thereof, constituting The Gold Rush Truck
Stop is proposed, NAMGC/Ozdon will give to Xxxxxxxx a right of first
refusal to purchase such land and buildings, or any portion thereof,
constituting The Gold Rush Truck Stop on the same terms and conditions
as proposed in the proposed sale. In the event of a proposed sale,
Xxxxxxxx must exercise his right of first refusal by delivering
written notice of his election to NAMGC/Ozdon within fifteen (15) days
after delivery of notice of the proposed sale to Xxxxxxxx and must
enter into a binding agreement to purchase such land and buildings, or
any portion thereof, constituting The Gold Rush Truck Stop upon the
same terms and conditions as the proposed purchaser within fifteen
(15) days thereafter, with closing to occur no later than thirty (30)
days after such contract is entered into. In the event any of these
time deadlines are missed by Xxxxxxxx, NAMGC/Ozdon shall have the
right to sell such land and buildings, or any portion thereof,
constituting The Gold Rush Truck Stop to the proposed purchaser free
and
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clear of any restrictions or right of first refusal held by Xxxxxxxx
as long as such sale to such proposed purchaser is upon the terms and
conditions presented to Xxxxxxxx, or within five percent (5%) either
way and is closed within ninety (90) days thereafter ; but if the
variance is greater than five percent (5%) or the sale is not closed
within ninety (90) days thereafter, then NAMGC/Ozdon must re-present
the proposed purchase to Xxxxxxxx under this paragraph as though it
had never been presented.
The Company is authorized to negotiate and enter into a lease setting
forth the above terms, and such other terms as may be agreeable by
NAMGC and are customary in leases of this kind."
"8.21 Best Efforts to Retain Licenses. NAMGC and Xxxxxxxx agree to
take such actions as is deemed reasonably necessary by NAMGC, Xxxxxxxx
or the Company to aid the Company in retaining or obtaining any
gaming, liquor or other licenses of the Company required to operate in
Louisiana."
"8.22 Right to Inspect Books and Records. Each of the Members and
their representatives shall have the right to inspect and make copies
from all books and records of the Company at any time upon reasonable
notice to the Company".
"8.23 Section 754 Election. At the request of Xxxxxxxx, the Company
will make an election under Section 754 of the Code with regard to his
Membership Interests and Sharing Ratios acquired from NAMGC pursuant
to Section 2 of this Amendment."
33. Section 9.1.4 is hereby deleted.
34. Any references to "OM Investors, Inc." or "OM" which have not been
deleted or modified pursuant to this Amendment shall be deemed to be
automatically amended to refer instead to "North American Gaming and
Entertainment Corporation" or "NAMGC", as applicable.
EXECUTED as of the date and year first above written.
NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
By: /s/ X.X. Xxxxx, XX,
----------------------------------------
Its: President
----------------------------------
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
XXXXXX X. XXXXXXXX
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