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EXHIBIT 10.29
DEPOSIT AGREEMENT
THIS DEPOSIT AGREEMENT ("Agreement") is made and given this 22nd day of
October, 1996, by NATIONAL GAMING COMPANIES, INC., a Minnesota corporation
(Borrower), whose post office address is 0000 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxx
Xxxxxxx, Xxxxxxxxx 00000 to XXXXXX & XXXXXXXXX INVESTMENTS CORPORATION, a
Minnesota corporation ("Lender"), whose post office address is 300 Pillsbury
Center, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000.
PRELIMINARY STATEMENT OF FACTS:
A. The Borrower is the owner of certain parcels of real estate situate in
City of Cripple Creek, County of Teller, State of Colorado all as more fully
described in Exhibit A attached hereto.
B. 000 Xxxxx Xxxxxx Limited Partnership, a Minnesota limited partnership
("Partnership") is the owner of an additional parcel of land also situate in
the City of Cripple Creek, County of Teller, State of Colorado as described in
Exhibit A on which land there is located improvements which are operated as a
gaming casino commonly known as the Jubilee Casino (Casino). The other parcels
owned by the Borrower provide parking and other facilities for use by the
Casino. As used in this Agreement the term Premises includes all of real
property and improvements thereon described in Exhibit A attached (Premises).
C. The Borrower is a limited partner of the Partnership holding a
97.165647% interest in the Partnership. Cripple Creek Corporation, a Minnesota
corporation, is also a partner of the Partnership and holds a 2% interest as
general partner and holds the remaining percentage interest of the Partnership
as a limited partner.
D. The Secured Party is making a loan to the Borrower in the amount of up
to Three Million Five Hundred Sixty-Four Thousand and no/100 Dollars
($3,564,000.00) ("Loan") the proceeds of which are being used to among other
things reimburse the Borrower for costs of acquiring its interest in the
Partnership, the stock of Cripple Creek Corporation, the Premises, to retire
existing indebtedness of the Partnership, to pay off short term debt of the
Partnership, to cover future development costs and to fund various reserves
required by the Secured Party.
E. In order to assure the payment to the Secured Party of the Loan the
Borrower will execute and deliver to the Secured Party its Promissory Note to
be dated of even date herewith in the principal amount of the Loan ("Note") and
the Borrower and Partnership are executing and delivery to the Public Trustee
of the County of Teller, Colorado their Deed of Trust and Security Agreement
and Fixture Financing Statement of even date herewith conveying in trust for
the benefit of Secured Party the Premises (the "Deed of Trust") and other
security instruments ("Other Security Instruments").
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F. The Note, Deed of Trust and Other Security Instruments are herein
sometimes collectively referred to as the Loan Documents.
G. The Loan and all sums due and payable under the Note, the Deed of Trust
and this Assignment are herein sometimes referred to as the Indebtedness
Secured Hereby.
H. Lender requires the Borrower to deposit in escrow with the Lender at
the closing of the Loan the sum of $800,000.00 ("Deposit") to provide a source
of funds as (i) an interest reserve to defray interest that accrues on the Loan
and (ii) a development cost reserve to defray costs incurred by the Borrower in
planning and developing a hotel facility on the Premises.
NOW THEREFORE, for value received, it is agreed as follows:
1. On the date of this Agreement the Borrower shall deposit with Lender
the sum of $800,000.00. Such Deposit shall be held in escrow with the Lender
and allocated to the following two separate accounts ("Reserve Accounts"):
a. an interest reserve account of $500,000.00 ("Interest Reserve")
and
b. a development cost reserve of $300,000.00 ("Development Reserve").
2. The Lender shall withhold the sums deposited in each Reserve Account
for disbursement solely for the following purposes:
a. Monthly as and when a payment of accrued interest is due Lender in
accordance with the terms of the Note the Lender shall automatically
withdraw from the Interest Reserve for credit to its account the amount of
the then accrued interest.
b. Not more frequently than monthly as and when the Borrower incurs
expenses in connection with the planning and development of the proposed
hotel addition to the Premises the Borrower may make application to the
Lender for a disbursement from the Development Reserve of an amount equal
to the actual costs so expended and payable to third parties not related to
and/or affiliated with the Borrower and/or its affiliates or entities
controlling or controlled by the Borrower or persons controlling or in
control of the Borrower. Such requests shall be accompanied by invoices
substantiating the amount requested for disbursement and if such invoice
represents an item that is lienable under local law accompanied by a waiver
of lien sufficient to extinguish any right of lien for such invoiced item.
Lender shall have no obligation to disburse any portion of the Deposit from a
Reserve Account (i) if an Event of Default has occurred and is continuing under
the Loan Documents, or (ii) to disburse any of the Deposit for any other purpose
or to any other person other than for which the Reserve Account was established,
provided if an Event of Default has occurred, the Lender may disburse any of the
Deposit in its discretion to the
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payment of any item for which a Reserve Account is established. Borrower hereby
grants to Lender a first security interest in the Deposits.
3. Lender shall provide Borrower on request not more frequently than
quarterly statements certifying the amount of the Deposit currently on account.
4. If an Event of Default (as defined therein) shall occur under the Deed
of Trust, the Lender may at its sole discretion elect either (a) to leave the
Deposits on deposit for disbursement at a later date to replace such items of
obsolete and worn out FF&E and Capital Improvements as Lender in its reasonable
discretion may deem necessary to be replaced and disburse directly to Lender or
to any suppliers in payment thereof when furnished or (b) may apply the Deposit
to repayment of the amounts in default under the Deed of Trust in such order of
application as Lender may elect.
5. During the term of this Agreement the Lender, shall hold and invest
the money from time to time in any one of the following investments
("Investments"):
a. Commercial Paper carrying the highest quality rating issued by
Standard & Poor's Corporation or Xxxxx'x Investors Services, Inc.; or
b. Instruments of Deposit in domestic banks (such as certificates of
deposit and demand and time deposits), if they have capital, surplus and
undivided profits of over $100,000,000, or if the principal amount of the
Deposit is fully insured by the Federal Deposit Insurance Corporation; or
c. Direct obligations of the United States Government or obligations
of agencies of the United States Government insured by the United States
Government; or
d. A money market fund managed by a recognized money market fund
manager.
It is the intent of the parties that the term of the Investment which will be
made by the Lender shall be of a duration such that funds will be immediately
available to Borrower after Lender' notification to Lender that the conditions
for release have been satisfied. Any interest earnings on the Investment shall
accrue pro rata to the benefit of the Reserve Accounts and shall be reported on
Borrower's Federal and State income tax returns and Borrower shall be reported
as the payee on all information returns forwarded the taxing authorities. Upon
payment in full of the Loan any excess Deposits shall be paid over to Borrower.
Borrower accepts all risk of loss (both principal and interest earnings) on the
Deposit and agrees Lender shall have no responsibility to manage the investment
of the Deposit, to maximize yield or otherwise and that Lender assumes no
responsibility for the safety or performance of the account in which the Deposit
is invested. All costs and expenses of Lender incurred in maintaining the
Account shall be the expense of Borrower.
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6. Borrower hereby agrees that in performing any of the duties hereunder,
Lender shall not incur any liability to anyone with respect to (i) any action
taken or omitted in good faith and after reasonable inquiry with respect to any
question relating to the duties and responsibilities of the Lender under this
Deposit Agreement, or (ii) any action taken or omitted in reliance upon any
instrument, including any written notice or instruction provided for in this
Deposit Agreement not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and accuracy of any
information contained therein, which the Lender shall in good faith believe to
be genuine, to have been signed or presented by a proper person or persons and
to conform with the provisions of this Deposit Agreement.
7. The Lender's obligations hereunder shall terminate as of the time it has
delivered all monies held by it to the proper party as herein provided. Borrower
and Lender may at any time, with each other's concurrence, substitute a third
party escrow agent in which event Lender shall transfer over to the new escrow
agent all Deposits and upon acceptance of this Agreement by the new escrow agent
the transferring Lender shall be relieved of any further responsibility
thereafter.
8. Anything contained herein to the contrary notwithstanding, in the event
of any dispute between or among the parties hereto, Lender at its option, shall
be permitted to tender into the Court of general jurisdiction where the Premises
are located, all monies and documents held by it and interplead Borrower with
respect thereto whereupon Lender's liabilities and obligations hereunder shall
be terminated.
9. Lender shall charge no fee for administering the Deposit.
10. It shall be a condition precedent to any disbursement of the Deposit
that there shall be no default under the Note or Event of Default under the Deed
of Trust and any Loan Documents executed pursuant to the Loan and all
representations, warranties, covenants, terms, conditions and agreements herein
and under the Note, Deed of Trustor other Loan Documents shall have been
complied with on the date of each disbursement of the Deposit. In the event
there is a default by Borrower hereunder or under the Note, or if an Event of
Default shall occur under the Deed of Trust or other Loan Documents, the Deposit
may at Lender's option be paid over to the Lender to be applied pursuant to
paragraph 4 hereof.
11. The failure of Lender to enforce strict performance of the terms and
conditions hereof shall not constitute a waiver of its rights hereunder.
12. This Agreement cannot be changed orally and this Agreement and the
proceeds hereunder may not be assigned by Borrower; however, this Agreement and
the rights of the Lender hereunder, including the right to direct the
disposition of the Deposit, shall upon notice to Borrower of an Assignment of
the Deed of Trust be deemed assigned to the subsequent holder of the Deed of
Trust and shall run with the Deed of Trust unless Lender has notified Borrower
to the contrary.
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13. Any notices and other communications permitted or required by the
provisions of this Agreement (except for telephonic notices expressly permitted)
shall be in writing and shall be deemed to have been properly given or served by
depositing the same with the United States Postal Service, or any official
successor thereto, designated as Registered or Certified Mail, Return Receipt
Requested, bearing adequate postage, or delivery by reputable private carrier
such as Federal Express, Airborne, DHL or similar overnight delivery service,
and addressed as hereinafter provided. Each such notice shall be effective upon
being deposited as aforesaid. The time period within which a response to any
such notice must be given, however, shall commence to run from the date of
receipt of the notice by the addressee thereof. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice sent. By giving to the
other party hereto at least ten (10) days' notice thereof, either party hereto
shall have the right from time to time and at any time during the term of this
Agreement to change its address and shall have the right to specify as its
address any other address within the United States of America.
Each notice to Lender shall be addressed as follows:
Xxxxxx & Xxxxxxxxx Investments Corporation
000 Xxxxxxxxx Xxxxxx
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Vice President - Deed of Trust Department
Each notice to Borrower shall be addressed as follows:
National Gaming Companies, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxxx 00000
14. Notwithstanding the place of execution of this instrument, the parties
to this instrument have contracted for Minnesota law to govern this instrument
and it is controllingly agreed that this instrument is made pursuant to and
shall be construed and governed by the laws of the State of Minnesota without
regard to the principles of conflicts of law.
15. The Debtor submit(s) and consent(s) to personal jurisdiction of the
Courts of the State of Minnesota and Courts of the United States of America
sitting in such State for the enforcement of this instrument and waive(s) any
and all personal rights under the laws of any state or the United States of
America to object to jurisdiction in the State of Minnesota. Litigation may be
commenced in any state court of general jurisdiction for the State of Minnesota
or the United States District Court located in that state, at the election of
the Secured Party. Nothing contained herein shall prevent Secured Party from
bringing any action against any other party or exercising any rights against any
security given to Secured Party, or against the Debtor personally, or against
any property of the Debtor,
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within any other state. Commencement of any such action or proceeding in any
other state shall not constitute a waiver of consent to jurisdiction or of the
submission made by the Debtor to personal jurisdiction within the State of
Minnesota.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto the day and year first above written.
NATIONAL GAMING COMPANIES, INC.,
a Minnesota corporation
By: /s/ Xxxxxx X. Xxxxxxx
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Its: President
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XXXXXX & XXXXXXXXX INVESTMENTS CORPORATION,
a Minnesota corporation
By: /s/ Xxxx Xxxxxx
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Its: Vice President
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EXHIBIT A
Legal Description
PARCEL 1A:
Lots 34 through 00,
Xxxxx 00,
XXXXXXX (xxx Xxxxxxx Xxxxx);
PARCEL 1B:
Lots 37 through 00,
Xxxxx 00,
XXXXXXX (xxx Xxxxxxx Xxxxx);
PARCEL 2:
Xxxx 00 xxx 00X,
(Xxx 00X being formerly known as Xxxx 00, 00 xxx 00),
Xxxxx 22,
FREMONT (now Cripple Creek),
according to the original plat as modified by the Subdivision Exemption
Plat recorded September 12, 1991 in Plat Book L Page 13;
PARCEL 3:
Xxxx 00, 00, xxx 00,
Xxxxx 00,
XXXXXXX (now Cripple Creek);
PARCEL 4:
The Surface only of
Lots 1 through 15,
Block 26,
FREMONT (now Cripple Creek);
X-0
0
XXXXXX 5:
Xxxx 0 xxxxxxx 00,
Xxxxx 0,
XXXXXXX XXXXXXX ADDITION TO THE CITY OF CRIPPLE CREEK;
NOTE: The North 1/2 of Xxxxxx Avenue lying Easterly of Fourth
Street and Westerly of the Midland Terminal Railway Right of Way
appears to have been vacated and probably should be included in any
legal documents.
All in Teller County, Colorado.
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