AMGAM/AGRM - AGEL SETTLEMENT AGREEMENT & TERM SHEET
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Whereas AmGam Associates, a chapter 11 debtor-in-possession ("AmGam")
and American Gaming and Resorts of Mississippi, Inc., a chapter 11
debtor-in-possession ("AGRM") (AmGam and AGRM collectively, the "Debtors") filed
adversary proceedings against American Gaming and Entertainment, Ltd. ("AGEL"),
Xxxxxxx Holdings, Inc., now known as Shamrock Holdings Group, Inc. ("Shamrock"),
and Xxxxxxx Management and Development Co. ("Xxxxxxx") seeking, among other
things, to avoid alleged fraudulent transfers (the "Avoidance Action");
Whereas the Avoidance Action is being prosecuted by the Official
Committees of Unsecured Creditors of AmGam and AGRM for the benefit to their
respective estates;
Whereas AGEL, Shamrock and Xxxxxxx have asserted various defenses to
the allegations set forth in the Avoidance Action;
Whereas AGEL has filed proofs of claim against the Debtors in an amount
in excess of $44,664,514.45;
Whereas Shamrock asserts that it possesses claims against the Debtors
in an amount in excess of $29,816,595.00;
Whereas the Debtors assert various defenses to the claims filed or
asserted by AGEL and Shamrock;
Therefore, in full and final compromise/settlement and satisfaction of
all claims that AmGam, AGRM, the AmGam Unsecured Creditors' Committee ("AmGam
Committee"), and the AGRM Unsecured Creditors' Committee ("AGRM Committee"), may
have against AGEL, Shamrock and Xxxxxxx, and of all claims that AGEL, Shamrock
and Xxxxxxx may have against the Debtors or the Debtors' chapter 11 estates or
their representatives, the undersigned agree to support any chapter 11
Liquidating Plan filed jointly in the AmGam and AGRM cases which contain the
following terms:
I. Settlement Participants:
A. AmGam;
B. AGRM;
C. AmGam Committee;
D. AGRM Committee;
E. AGEL;
F. Shamrock; and
X. Xxxxxxx
XX. Matters to be Settled:
A. Avoidance Action (Fraudulent Conveyance Litigation) with Motion for
Substantive Consolidation to be Dismissed;
B. Plan and Disclosure Statement Objections by both Debtors and AGEL;
and
C. Dispute between AGEL and Shamrock as to the proper holder of the
claims against the Debtors. Except as set forth in the previous sentence,
nothing in this settlement agreement shall be construed to settle, release or
otherwise compromise any claim AGEL, Shamrock or Xxxxxxx may have against each
other.
III. Settlement Mechanism and Goals:
A. Dismissal of Avoidance Action after entry of final Order of
Confirmation;
B. Liquidation Plan supported by both Debtors, both Committees, AGEL,
Shamrock and Xxxxxxx.
IV. Asset Distribution Mechanism and Formula:
A. AGEL and/or Shamrock or its assignee will be the only parties
entitled to receive any distributions under the Plan for claims of any kind
asserted against the Debtors by AGEL, Shamrock and Xxxxxxx, or their officers,
directors or stockholders whether such claims are secured, unsecured, direct or
acquired claims, or otherwise;
B. Prior to the final approval of any settlement agreement
incorporating these terms either by separate order or by confirming the chapter
11 Liquidating Plan to be filed jointly in the AmGam and AGRM cases, AGEL and
Shamrock shall advise both Debtors and both Committees, in writing, of the
allocation between AGEL and Shamrock or its assignee of the distributions
described in Sec. IV, Para. A above. Such agreed upon allocation shall become an
integral part of this settlement agreement and shall be incorporated into any
order approving this settlement agreement.
C. Subject to the terms and conditions of paragraph G below, AGEL and
Shamrock in consideration for the terms of this settlement agree to withdraw all
of their secured and unsecured claims against the Debtors and hereby agree to
have one collective general allowed unsecured claim against the Debtors in the
amount of $33,000,000.00, which claim shall be fully satisfied in accordance
with the conditions of this term sheet, and particularly, Sec. VI hereinbelow;
except to the extent otherwise set forth in this term sheet, AGEL and Shamrock
shall waive their claims against all assets in the AmGam and AGRM estates,
including all funds received from the President for the FF&E purchase which are
hereby deemed property of the AmGam estate and shall be dedicated to and used to
pay expenses of administration and other allowed unsecured claims in the AmGam
estate;
D. On the Effective Date of the Plan, AGEL shall convey to the
AmGam/AGRM Creditor's Trust (the "Trust") to be used for the holders of Allowed
Claims and created under the terms of the Plan (i) an undivided 22.7% ownership
interest in the asset known as the President Casino, and (ii) an undivided 22.7%
interest in all rights of the owner/lessor under the existing Charter Agreement
with the President (the "President Lease"), which assets shall be held by the
Trustee ("Trustee") of the Trust for the benefit of the holders of AmGam Allowed
Unsecured Claims and AGRM Allowed Unsecured Claims, AGEL and Shamrock or its
assignee until the Plan is fully consummated. The Trustee shall be vested with
all rights and benefits pertaining to the 22.7% undivided ownership interest in
the President Casino, including all rights of the owner under the President
Lease (including, without limitation, the right to receive all charter hire and
other payments thereunder, to enforce the collection of any sums or obligations
payable or performable thereunder, to exercise any and all remedies available to
the owner thereunder, and to grant or withhold any consent thereunder). The
beneficiaries of the Trust shall be the AmGam Creditors, the AGRM Creditors,
AGEL and Shamrock or its assignee.
E. As additional responsibilities, the Trustee shall receive and shall
have the sole responsibility for receiving all revenue generated from payments
owned by the President, or other sources, for lease or note payments due as a
result of the President Lease of the former Gold Coast Casino or the purchases,
under a note, of certain FF&E located thereon. The Trustee shall also have
responsibility for payment of such funds as required herein and under the terms
of a confirmed Plan containing the provisions of this term sheet. Except as
stated in the following proviso, neither the Trust nor the Trustee shall assume
or be obligated to pay or perform any obligation of the owner under the
President Lease, and AGEL shall be and remain liable for all such owner's
obligations and shall indemnify and hold the Trust and the Trustee harmless from
and against all such liabilities and obligations; provided, that the Trust shall
assume only the obligations of the owner under the President Lease that accrue
and are first performable thereunder during the period beginning on the
Effective Date and ending on the date the Plan is fully consummated or such
earlier date of termination of the President Lease, but such assumption,
however, shall be enforced solely against the assets of the Trust and shall not
impose any liability on or be enforceable against the Trustee or the
beneficiaries of the Trust.
F. Except as required in section VII herein, upon the Effective Date of
a confirmed Plan of Liquidation, the monthly payments under the President Lease
shall be collected by the Trustee and distributed in accordance with Section VI,
Paragraph B., Xxxxxxxxxxxx 0 xxxxxxxxxxx.
X. XXXX recognizes and agrees that Shamrock holds a valid, properly
perfected and unavoidable first mortgage on or security interest in the Casino
Barge in the original principal amount of $2,040,603.75. In consideration of the
terms of this settlement the AmGam Committee and the AGRM Committee agree not to
contest the Ship Mortgage L.P. preferred Ship's Mortgage now held by Shamrock as
a properly perfected and unavoidable first mortgage on or security interest in
the Casino Barge in the original principal amount of $2,040,603.75. AGEL agrees
that it shall assume sole responsibility for the satisfaction of Shamrock's
mortgage or security interest and Shamrock and AGEL agree, as consideration for
the agreement by the AmGam and AGRM creditors not to challenge the Ship
Mortgage, L.P. ship mortgage, that there shall be no charge or encumbrance
against the interests of the AmGam and AGRM creditors or the interests of the
AmGam and AGRM creditors in the Trust or the above described 22.7% undivided
ownership interest on account of such claim.
H. Other than payments under this distribution structure from the
revenue stream generated by the President Lease and the payment described in
section VII below, holders of Allowed Unsecured Claims in AmGam shall share only
in distribution of assets owned by and liquidated in the AmGam case.
I. Other than payments under this distribution structure from the
revenue stream generated by the President Lease and the payments described in
section VII below, holders of AGRM Allowed Unsecured Claims shall share only in
distribution of assets owned by the liquidated in the AGRM case.
J. For purposes of this settlement, the following treatment of claims
shall be included in a Plan of Liquidation:
(1) all allowed administrative claims in each estate shall be paid in
full at confirmation from assets of the respective estate;
(2) all allowed priority claims shall be paid in accordance with the
terms of the Plan;
(3) and all other claims treated in accordance with the Plan and
pursuant to priorities established by the Bankruptcy Code.
K. On behalf of the owners, the Trustee shall also have the power and
authority to act to recover lease payments or the casino itself, in the event of
a default under the President Lease or any other payment or performance
obligations by the President. The terms of the Trust shall give the Trustee the
discretion to use a portion of the $67,500.00 monthly payments from the
President Lease (not to exceed $2,500.00 per month) to create a reserve for
payment of the owner's share of the cost of redelivering the vessel to the owner
as provided in the President Lease, which reserve shall be in addition to the
$2,500.00 deduction from the monthly lease payment described in Sec. VI, Para.
B(2)(b) hereinbelow.
V. Use of Cash at Confirmation and During Plan Confirmation Period:
A. Cash Available at Confirmation and to be Generated During Term of
Plan:
(1) Estimate of value of assets to be available for liquidation and
distribution to creditors (estimated at October 15, 1996):
(a) AmGam:
(1)Cash on Hand per Debtor's operating reports (includes
FF&E collections & pro-rata share of Pres. lease pmnts.): $2,097,253
(2)A/C Rec.: FF&E purchase pmnts. (from Pres. Per Debtor's
operating reports) (13 mos. % $120,748.12) $1,569,724
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Total: $3,666,977
(3) AGRM:
Cash on hand (est.): $163,533
(2) Estimated cash flow for terms of plan (beginning October 1, 1996):
From President Lease payments ($67,500.00 x 45 mos)
$3,037,500.00
B. Further Distribution of Funds During Plan Consummation Period:
The remaining cash flow from FF&E and lease payments under the
President FF&E Note and Lease is distributed as follows:
(1) The Plan will dedicate all remaining payments by the
President relating to the FF&E purchase to payment of the Allowed
Claims of the AmGam Unsecured Creditor body, and all cash in the AmGam
estate at the time of confirmation shall likewise be so dedicated. The
AGRM assets likewise shall be dedicated to payment of the Allowed
Claims of the AGRM Unsecured Creditor body.
(2) From the Effective Date of the Plan, the payments received
under the President Lease shall be paid by the Trustee as follows:
(a) First, to the appropriate Distribution Funds
described in a Plan for the benefit of the Allowed Claims of
AmGam and AGRM creditors, excluding AGEL and Shamrock: $67,500.00
per month for distribution in accordance with the terms of the
Plan;
(b) Second, to a segregated account to be held by the
Trustee for use in paying any and all costs of protecting the
Casino leasehold asset in the event of default under the Casino
lease by the President: $2,500.00 per month; in the event that no
default has occurred at the end of twenty four months from the
Effective Date of the Plan, the Trustee, in his discretion, may
pay these funds in accordance with subparagraph (a) immediately
hereinabove (but such distribution shall in no event exceed the
sum of $60,000); in the event the Trustee chooses not to
distribute any funds accumulated in accordance with the
Paragraph, any funds accumulated hereunder and remaining in this
segregated account shall nevertheless be distributed in
accordance with Plan requirements at the time of the last
distribution;
(c) Thereafter, the balance of the monthly payment
shall be paid to AGEL and/or Shamrock or its assignee.
VI. Additional Requirements
A. Under the terms of the President Lease, the President has the right
to purchase the casino under certain conditions or to extend the term of the
President Lease for two additional terms of five years each.
B. In the event the President elects to purchase the casino during the
Plan consummation period, then out of the closing proceeds, there shall be
delivered to the Trustee, as seller, 22.7% of the net sales proceeds for use in
distribution to holders of the AmGam and AGRM claims under the Plan; those funds
shall then be distributed to the holders of such Allowed Claims in accordance
with the terms of the Plan; the remaining funds or 77.3% of the net sales
proceeds shall be paid to AGEL and/or Shamrock or its assignee, net proceeds
being defined as those funds remaining after payment of all closing expenses
related to the sale.
C. In the event the President elects to extend the President Lease for
the first extended term (the "First Extended Term"), or to modify the existing
charter with the consent and approval of the parties hereto, the Trustee shall
continue to receive the lease payments in accordance with the Plan and shall
escrow the same percentage amount described in B above for distribution to the
creditors of the AmGam and AGRM estate over the First Extended Term of the
extended lease.
D. Upon the occurrence of either event in B, or C, above, and the
payment of all requisite distributions, costs and expenses, the Plan shall be
deemed finally consummated.
E. All of the signatories hereto agree to vote for support any Plan of
Liquidation filed in the AmGam and AGRM cases containing the terms and
conditions described herein.
VII. Terms of the Trust
A. The terms of the Trust and the rights and obligations of the trustee
of the Trust (the "Trustee") shall be set forth in a written Trust Agreement
acceptable to the AmGam Committee, the AGRM Committee, AGEL and Shamrock. Any
Trustee selected to serve must be acceptable to AGEL, Shamrock, and the
designated representative (the "Representative") of the holders of AGRM and
AmGam Unsecured Claims entitled to a distribution from the liquidating Trust.
B. The Trust Agreement shall provide that the Trustee shall have no
power to take any actions out of the ordinary course of business with respect to
the interest of the Casino Barge or the President Lease held in the Trust
without the consent and approval of the Representative, AGEL and Shamrock or its
assignee. Such actions requiring consent will be generally defined in the Trust
Agreement and shall include any prepayment or other modification of the
President Lease, any proposed sale, transfer or any other disposition of any
interest in the Casino Barge, and the terms of any proposed settlement of any
dispute or litigation with the lessee of the Casino Barge that would result in a
reduction of or delay in receipt of any remaining unpaid lease payments under
the current terms of the President Lease.
C. The Representative, AGEL and Shamrock shall cooperate with each
other in good faith and use their best efforts to reach mutually acceptable
terms with respect to any proposed sale, transfer or other disposition of the
Casino Barge or any settlement of any dispute or litigation with the lessee of
the Casino Barge for which the Trustee requires consent and approval as set
forth in paragraph VII. B above. The Representative, AGEL and Shamrock or its
assignee agree to provide the other party with immediate notice of any proposed
purchase of the whole or partial interest in the Casino Barge. Upon receiving
written notice of the terms of any such proposed sale to which one party intends
to consent, the other party shall have five (5) business days to respond by
expressing in writing whether such proposal is acceptable. If the parties do not
both agree that the proposal is or is not acceptable, the parties shall meet
within five (5) business days, which meeting by agreement may take place
telephonically, of such response to determine whether the parties can agree on
an acceptable counteroffer. If the parties are still unable to agree to an
appropriate course of action, the parties shall submit the terms of the proposed
sale, and the reason for the opposing party's dissatisfaction with those terms
to an independent third party, mutually acceptable to both parties, whose
decision shall be binding on both parties. Prior to final approval of the terms
of this settlement agreement, the parties shall designate one or more mutually
acceptable independent third parties to fulfill this function in the event of
such a disagreement.
AGREED THIS THE day of November, 1996.
AMGAM ASSOCIATES, DEBTOR
BY:
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ITS:
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AMERICAN GAMING & RESORTS OF
MISSISSIPPI, INC., DEBTOR
BY:
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ITS:
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AMERICAN GAMING & ENTERTAINMENT, LTD,
A DELAWARE CORP.
BY:
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ITS:
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AND
XXXX & WISER
BY:
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ITS COUNSEL
SHAMROCK HOLDINGS GROUP, INC.,
A DELAWARE CORP.
BY:
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ITS:
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AND
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BY:
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ITS COUNSEL
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS OF AMGAM
ASSOCIATES
BY:
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ITS:
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OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF AMERICAN GAMING AND
RESORTS OF MISSISSIPPI, INC.
BY:
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ITS:
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