THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE
--------------------------------------------------------
UNIFORM ARBITRATION ACT, S.C. CODE XXX. 15-48-10, ET SEQ.
----------------------------------------------------------
(LAW CO-OP. 1976 AND SUPP. 1997).
---------------------------------
MASTER COIN MACHINE AGREEMENT
THIS MASTER COIN MACHINE AGREEMENT (this "Agreement") is made and entered
into effective as of the 9th day of November, 1998, by and between Gold Strike,
Inc., a South Carolina corporation (the "Company"), American Bingo & Gaming
Corp., a Delaware corporation ("ABG"), Xxxx & Dye Enterprises, LLC, a South
Carolina limited liability company (the "Operator"), and Xxxxxxx X. Xxxx
("Xxxx") and Xxxxx X. Xxx ("Dye"), individually, as to Sections 9 and 20 only.
WHEREAS, the Company and the Operator desire to enter into a contract
through which the Company will supply the Operator with video gaming machines
("Machines") to be used at the locations identified on Exhibit A attached hereto
(the "Existing Locations") and at additional locations operated by the Operator
for which the Company and the Operator shall mutually agree to have the Company
supply Machines (the "Future Locations", with the Existing Locations and the
Future Locations referred to collectively as the "Locations");
NOW, THEREFORE, in consideration of the premises, the mutual promises and
covenants of the parties hereto set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company, ABG and the Operator, intending to be legally bound, agree as follows:
1. Exclusive Right. The Company shall have the exclusive right to place
-----------------
Machines in the Existing Locations, and any Future Locations as the Company and
the Operator may mutually agree, during the term of this Agreement and any
extension or renewal hereof, at the rates set forth in Section 2 below. During
the term of this Agreement and any extensions or renewals thereof, no other
person, firm or corporation, including the Operator, shall have the right to
operate, install, store, use or exhibit, in any manner, Machines upon any of the
Locations at which the Company is supplying Machines.
2. Consideration. The Company shall receive 30% of the total gross revenues
--------------
after payouts of winnings on all Machines in the Existing Locations,
whether such Machines are owned, leased or otherwise maintained in such
locations. The Company shall receive 30%, or such different percentage as the
Company and the Operator shall mutually agree, of the total gross revenues after
payouts of winnings on all Machines in the Future Locations, whether such
Machines are owned, leased or otherwise maintained in such locations. The
Operator shall be responsible for collecting all revenue generated by the
Machines and shall remit to the Company its share of the total gross revenues on
each Machine no less frequently than once every week when the Company's
representative visits each Location. The Operator shall be responsible for all
costs related to the operation of each Location.
1
3. Term. The term of this Agreement shall be for three years. At the end
-----
of the three-year term, the Company and the Operator may extend this Agreement
on terms mutually agreeable to all parties if such parties can reach agreement
on the terms of the extension at least ninety days before the end of the
three-year term.
4. Machine Licenses. The Company shall be responsible for obtaining all
------------------
machine licenses necessary to operate the Machines at the Locations. The
Operator shall reimburse the Company for 50% of the cost of all machine licenses
for all Machines provided to the Operator during the term of this Agreement
by paying $20 per week per Machine. This weekly charge for machine licenses
shall be paid to the Company on a weekly basis when the Company's representative
visits each Location. The weekly charge for the licenses is subject to increase
or decrease at any time as the cost of such licenses is adjusted by the
applicable state regulatory agency. In the event the Operator and the Company
mutually agree for the Company to maintain additional machine licenses for which
there are no Machines provided to the Operator under this Agreement, the
Operator shall pay to the Company $40 per week for each such license, or such
higher amount as shall be calculated based upon the cost of such license when
amortized on a weekly basis. This weekly charge for such additional licenses
shall be paid to the Company on a weekly basis and the Company's representative
shall pick-up the money from the Operator's corporate headquarters every Monday.
5. Machine Payouts. The payouts for all Machines operated pursuant to this
-----------------
Agreement shall be set at no less than 92% and no more than 97%. The Operator
shall not set the payouts outside of this range without obtaining the prior
written consent of the Company. For these purposes, the payout percentage shall
be calculated by dividing the total winnings by the total play revenues.
6. Business of Operator.
-----------------------
a. The Operator shall obtain and maintain all necessary business licenses
and other licenses required to operate the Locations; provided, however, the
Company shall obtain and maintain the necessary machine licenses as set forth in
Section 4 above.
b. The Operator, ABG and the Company shall maintain proper, timely and
accurate books and records of all activities undertaken pursuant to this
Agreement as required by law or otherwise. Each party shall provide such
information to any other party as requested by such other party in order for
such other party to maintain proper, timely and accurate books and records of
all activities undertaken pursuant to this Agreement.
c. The Operator shall operate its business and each of the Locations, and
ABG and the Company shall conduct their respective businesses related to
providing Machines hereunder, in compliance with all applicable laws,
regulations, rules and ordinances. The Operator shall not permit any violations
of any laws, regulations, rules or ordinances to occur on any of the Locations
which result from actions of the Operator. In addition, the Operator
2
shall take all actions which are reasonable and customary for the Operator's
business to prevent any violations of any laws, regulations, rules or ordinances
to occur on any of the Locations which result from actions of any third party.
d. The Operator acknowledges and agrees that the Locations shall only be
used to conduct a video gaming business. The Operator shall not maintain, permit
or allow any action, product or service at any of the Locations which would be
counter to the positive image of the Company or an impairment to the licensing
of any operations of the Company or any subsidiary or affiliate in any
jurisdiction or venue.
e. The Operator shall notify the Company, and ABG or the Company shall
notify the Operator, in writing within 24 hours after obtaining any knowledge
that the notifying party is not, or allegedly is not, in compliance with any of
the terms of this Section, unless such notice is prohibited by applicable laws
or regulations.
7. Machines. All Machines placed at any of the Locations shall remain the
---------
sole and exclusive property of the Company and neither the Operator nor any
third party shall have any right or claim to any Machine. All Machines so placed
at any Location shall bear the name of the Company and shall state thereon that
said Machines are the sole property of the Company. The Operator shall take all
actions which are reasonable and customary for the Operator's business in an
effort to protect and safeguard the Machines, not only from theft and damage but
also from any lien, encumbrance or other attachment. The Operator is also
responsible for directing and supervising its employees, agents and other
representatives in a way that is reasonable and customary for the Operator's
business in an effort to protect the Machines from being cheated, robbed or
damaged, and the Operator shall pay the Company for any such loss or damage
caused by the Operator's failure to so direct and supervise its employees,
agents or other representatives.
8. Repair and Maintenance of Machines. The Operator shall have the full
--------------------------------------
responsibility for taking all action which is reasonable and customary for the
Operator's business to maintain and repair the Machines during the term of this
Agreement, and shall at all times keep each Machine in good repair and working
order; provided, however, the Operator shall not be responsible for repairing or
replacing Machines that are damaged or destroyed by fire, flood, vandalism or
some other catastrophic event unless the damage or destruction resulted from or
involved the negligence or willful, wanton, reckless or intentional conduct of
the Operator or an employee, agent or other representative of the Operator. The
Company shall be responsible for providing all parts which may be necessary to
repair or maintain any Machine, with all used parts returned to the Company;
provided, however, the Company shall not be responsible for providing parts due
to damage to a Machine that resulted from or involved the negligence or willful,
wanton, reckless or intentional conduct of the Operator or an employee, agent or
other representative of the Operator.
9. Cage Cash. At the time of execution of this Agreement, the Company
----------
loaned to the Operator "cage cash" at the Existing Locations which in the
aggregate totalled $70,000. The total amount of such "cage cash" loaned to the
Operator is evidenced by an unsecured promissory note (the "Note") which accrues
interest at the prime interest rate (as quoted in the Wall Street Journal)
-------------------
plus 2% per annum. The principal and interest on the Note is due in full six
3
months after the date of this Agreement, without notice. The Note may be
prepaid at any time without penalties. The Note is personally guaranteed by
Xxxxxxx X. Xxxx and Xxxxx X. Xxx, jointly and severally.
10. Leases and Subleases.
----------------------
a. Effective as of the date of execution of this Agreement, the Operator
subleased from ABG or a subsidiary of ABG those Existing Locations which are
leased by ABG or a subsidiary of ABG as noted on Exhibit B attached hereto. The
terms and conditions of the subleases are comparable to the terms of the lease
agreements for such properties; provided, however, the monthly rents for the
subleases are as follows: (i) for the Charleston area locations identified as
Gold Strike/Lucky I, Ponderosa and Beacon I, the monthly rent is equal to $100
multiplied by the number of Machines operated at the respective location during
the month, but in no event less than the number of Machines operated at the
respective location on the date of execution of this Agreement, which monthly
rent per Machine shall increase at each anniversary date of the respective
sublease by the consumer price index for the applicable region for the prior
twelve-month period plus one percent; and (ii) for the Augusta area locations
identified as Lucky 4, Double 7/Wild Cherry and Golden Palace, the monthly rent
is equal to the monthly rent set forth in the underlying lease agreement for
each such location. The Operator hereby agrees that it will not take any action,
or fail to take any action, which in any way may jeopardize the effectiveness of
any of the leases underlying these subleases. In addition, ABG and the Company
each agree that they will take all reasonable efforts to obtain the necessary
consents required for these respective locations to be subleased to the Operator
under the existing underlying leases, and to maintain and preserve the leases
underlying these subleases. Upon termination of the lease underlying a sublease,
it is understood that the respective sublease will also terminate and that
accordingly this Agreement will terminate with respect to that respective
Existing Location.
b. Effective as of the date of execution of this Agreement, the Operator
leased from ABG or a subsidiary of ABG the Existing Location at 0000 Xxxxxxxxxx
Xxxxxxx xx Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx. The Operator and ABG or its
subsidiary, as applicable, entered into a lease agreement for this location. The
monthly rent for this lease is equal to $100 multiplied by the number of
Machines operated at the location during the month, but in no event less than
the number of Machines operated at the location on the date of execution of this
Agreement, which monthly rent per Machine shall increase at each anniversary
date of the lease by the consumer price index for the applicable region for the
prior twelve-month period plus one percent.
c. The Operator is also leasing from the Company the furniture, fixtures
and equipment, excluding the Machines and the machine licenses (the "Personal
Property"), at the respective Locations as of the date of execution of this
Agreement. For the six locations which are subleased by the Operator, as noted
in Section 10.a. above, and the one location which is leased by the Operator, as
noted in Section 10.b. above, the Personal Property being leased is listed on an
4
exhibit attached to the respective subleases and lease. For the Southern Sport
location in North Augusta, the Personal Property being leased is set forth on
Exhibit C attached hereto. The Operator is responsible for all maintenance,
service and repairs that are reasonable and customary for the Operator's
business to keep the Personal Property in good repair and working order,
ordinary wear and tear excepted, during the term of this Agreement, including
but not limited to replacing any Personal Property that is destroyed or damaged
such that it cannot be repaired. The Operator is also responsible for paying
taxes and maintaining insurance on the Personal Property during the term of this
Agreement. The Operator acknowledges and agrees that it is receiving the
Personal Property "as is" and that the Company and ABG are not providing any
representations or warranties regarding the condition of the Personal Property
or the performance of such Personal Property during the term of this Agreement.
In addition, the parties expressly agree that the Company and ABG will not be
liable or responsible for any defects or deficiencies related to the Personal
Property.
d. The Operator shall reimburse ABG, or its respective subsidiary, for the
cost of utilities at each leased and subleased Location, as set forth in each
respective sublease agreement and lease agreement.
e. All monthly lease and sublease payments by the Operator shall be
received by ABG no later than the first day of the respective month without
notice. With respect to the Operator's payment of its pro rata share of fire
insurance and real estate taxes for certain Locations where applicable, the
Company shall provide the Operator with notice of the Operator's pro rata amount
of such expenses and the due date for such payment to the Company.
f. The lease and all of the subleases shall immediately terminate upon
termination of this Agreement.
11. Employee Nonsolicitation. The Operator agrees that during the term of
--------------------------
this Agreement and for six months after the termination of this Agreement the
Operator and its subsidiaries and affiliates will not, directly or indirectly,
without the Company's prior written consent, employ or solicit the employment of
any person who is employed by ABG or any subsidiary or affiliate of ABG while
such person is employed by ABG and/or its subsidiaries or affiliates, and for a
period of six months after such person has terminated employment with, or has
been terminated from employment with, ABG and/or any of its subsidiaries or
affiliates.
12. Escrow. Upon execution of this Agreement, the shareholders of the
------
Operator provided the Company with shares of ABG common stock equal to $200,000
based on the closing price of the stock on the business day prior to the date of
execution of this Agreement, which stock shall be held in escrow during the term
of this Agreement. In addition, 2% of the total gross revenues after payouts of
winnings on all Machines in the Existing Locations to be paid to the Company
during the first twelve months of this Agreement shall also be held in escrow
during the term of this Agreement. The purpose of this escrow is to provide
security to the Company and ABG for any liabilities of the Operator for which a
third party could reasonably be expected to seek to recover from ABG or the
Company ("Liabilities"), and as a means to compensate the Company and ABG in
5
the event there is a deficiency or penalty relating to any Machine supplied to
the Operator pursuant to this Agreement issued by any regulatory or enforcement
authority as a result of the action or failure to act of the Operator which
deficiency or penalty could reasonably be expected to, or actually does, result
in a fine or penalty, the revocation or termination of the license for such
Machine, or the seizure of such Machine ("Deficiencies"). The Company or ABG
may pay such fines and penalties directly out of the escrowed funds in the event
any such fine or penalty of the Operator is not paid timely by the Operator,
unless the Operator has diligently protested such fine or penalty in good faith.
Upon termination of this Agreement, an audit or review of the Operator shall be
performed and an audit or review report (the "Report") issued within sixty days
after the date of termination of this Agreement. If, the audit or review
reveals that there are no outstanding Liabilities or Deficiencies, the remaining
shares of ABG common stock held in escrow shall be returned to the registered
owners of such stock and the remaining cash balance held in escrow shall be
returned to the Operator not later than the close of business on the fifth
business day following the issuance of the Report; provided, however, if ABG's
Chief Executive Officer believes such action should be approved by ABG's Board
of Directors, the cash and stock shall be returned as soon as ABG's Board can
meet or otherwise take action to approve the return of the cash and stock.
However, if such audit or review reveals that there are any such Liabilities or
Deficiencies, then the Company may continue to hold in escrow an amount of stock
and cash sufficient to provide for such Liabilities and Deficiencies. In the
event the value of the cash and stock held in escrow exceeds the estimated
liability for such Liabilities and Deficiencies, then the Company shall first
release stock from escrow and then cash from escrow to reduce the value in
escrow to approximate the estimated liability for such Liabilities and
Deficiencies. To the extent additional Liabilities or Deficiencies are
identified after the completion of the audit or review, sufficient cash and/or
stock shall be retained in the escrow to provide for such additional Liabilities
and Deficiencies. The escrow shall be decreased from time to time as
Liabilities and/or Deficiencies are resolved, but only to the extent that the
escrow exceeds the remaining identified Liabilities and Deficiencies. The
escrow shall be maintained until such time as all identified Liabilities and
Deficiencies are resolved. Regardless of the existence of the escrow, the
Operator shall remain liable for all such Liabilities and Deficiencies.
13. Inspection of Records and Locations. The Operator shall make available
-------------------------------------
to the Company, or its designated representatives, all records and information
necessary for the Company to audit and confirm the amount of the proceeds paid
to the Company pursuant to the terms of this Agreement. In addition, the
Company, or its designated representatives, shall have the right to enter any of
the Locations at any time to inspect the Machines or read the video game
meters.
14. License to Use Trade Name. The Company hereby grants to the Operator a
---------------------------
license to use the trade name "Gold Strike" during the term of this Agreement at
all of the Locations, to the extent the Company has any rights to the use of
such trade name. By granting this license, the Company is not providing any sort
of assurance or representation that it actually has any right to use such trade
name. This license does not grant the Operator any right to use any other
corporate name of ABG, the Company or any of their subsidiaries or affiliates
and the Operator is expressly prohibited from using the corporate names of ABG
6
or any of its subsidiaries or affiliates or in any way implying that any of such
entities are in any way involved in the ownership, management or operation of
any of the Locations.
15. Insurance. The Operator shall maintain insurance, as the primary
---------
insured party, in connection with the operation of its business at the Locations
which is reasonable and customary for such business, including, but not limited
to, fire and casualty insurance, commercial property insurance, commercial
general liability insurance, and workers' compensation insurance. The Company
and ABG shall be additional named insured parties under such insurance policies.
16. Relationship of the Parties. Nothing contained in this Agreement shall
-----------------------------
be deemed to constitute a relationship of agency, joint venture, partnership or
any other relationship between the parties other than that specified. The
Operator certifies that it is not a party to, nor does it have a covenant or
restriction with, any other party in connection with any coin machine agreement,
lease and/or service agreement which may conflict with the Operator's
obligations and duties under this Agreement, and the Operator will not enter
into any such restrictive agreement without the prior written consent of the
Company.
17. Breach by Operator.
---------------------
a. In the event the Operator breaches (i) the exclusivity provision of
Section 1 of this Agreement by placing the Machine of another supplier in any
Location in which the Company's Machines are placed pursuant to this Agreement,
or (ii) the access to Machines provision of Section 13 of this Agreement by
refusing to grant the Company or its employees, agents or other representatives
access to any Machine during normal business hours, or (iii) its obligations to
pay money to the Company or ABG pursuant to this Agreement by making any such
payment more than three days late, then the Company shall provide the Operator
with notice of such breach. If there are two or more breaches of the type set
forth in (i) above during the term of this Agreement, or eleven or more breaches
of the type set forth in (ii) above during any twelve-month period, or five or
more breaches of the type set forth in (iii) above during any twelve-month
period, then in addition to any other remedy which may exist at law or in
equity, the Company and ABG may elect to terminate this Agreement in whole, or
partially terminate this Agreement by terminating it only with respect to the
Location to which the breach relates, terminate the related subleases and leases
and remove the Machines from all of the Locations, or only the Location with
respect to which this Agreement is terminated in part, without interference from
the Operator and shall be entitled to damages of a sum equal to the cost of the
unexpired portion of the license on each such Machine, plus the Company's
portion of the average weekly total gross revenue after payouts of winnings for
each such Machine multiplied by the number of weeks that each such Machine is
out of service as a result of such termination, in whole or in part, of this
Agreement; provided, however, in the event the Company and ABG elect to
7
terminate this Agreement in whole, such damages shall be limited to the damages
related to the Location or Locations at which the breach occurred. The average
weekly total gross revenue after payouts of winnings for each Machine shall be
calculated based upon the respective Machine's actual activity for the ten week
period prior to such breach. The parties acknowledge and agree that a surprise
inspection of the Machines at a time other than during normal business hours at
which the Company is unable to access the Machines will not be deemed a breach
under (ii) above; provided, however, the Operator must take all reasonable
efforts to comply with the Company's requests to grant the Company access to the
Machines.
b. If the Operator breaches any other obligation under this Agreement, the
Operator shall have 15 days to cure such breach following written notice of such
breach; provided, however, that if the breach cannot be cured with due diligence
within such 15-day period but the Operator commences to cure such breach within
such period, the time within which to cure the breach shall be extended for such
period as may be necessary to complete the curing of the same with all due
diligence. If the Operator fails to cure its breach within the cure period, (i)
the Company and ABG may take any action at law or in equity as may be necessary
or desirable to enforce observance or performance of the obligation of the
Operator under this Agreement and (ii) if the breach materially adversely
affects the benefits to be received by the Company or ABG under this Agreement,
the Company and ABG may terminate this Agreement in whole, or partially
terminate this Agreement by terminating it only with respect to the Location to
which the breach relates, upon giving written notice of termination to the
Operator.
18. Breach by Company or ABG. If the Company or ABG breaches any obligation
-------------------------
under this Agreement, the Company or ABG shall have 15 days to cure such breach
following written notice of such breach; provided, however, that if the breach
cannot be cured with due diligence within such 15-day period but the Company or
ABG commences to cure such breach within such period, the time within which to
cure the breach shall be extended for such period as may be necessary to
complete the curing of the same with all due diligence. If the Company or ABG
fails to cure its breach within the cure period, (i) the Operator may take any
action at law or in equity as may be necessary or desirable to enforce
observance or performance of the obligation of the Company and ABG under this
Agreement and (ii) if the breach materially adversely affects the benefits to be
received by the Operator under this Agreement, the Operator may partially
terminate this Agreement by terminating it only with respect to the Location to
which the breach relates upon giving written notice of termination to the
Company and ABG.
19. Indemnification.
----------------
a. The Operator agrees to indemnify, defend and hold harmless the Company,
ABG and all of their subsidiaries, affiliates, agents, employees, assigns and
other related parties against any and all liabilities, claims, damages, losses,
expenses, costs or actions, including but not limited to legal fees and
expenses, which are incurred due to the Operator's negligence, action or
inaction which results in a violation of any law, regulation, rule or ordinance
or which otherwise is detrimental to the Company in connection with this
Agreement. The indemnification provided by the Operator pursuant to this
provision shall not exceed $300,000, subject to the following two exceptions:
(i) there shall be no limitation on the amount of the indemnification provided
in the event such liabilities, claims, damages, losses, expenses, costs or
actions, including but not limited to legal fees and expenses, are the result of
any criminal charge or conviction involving Mims, Dye, or the Operator, or any
of its employees, agents or other representatives; and (ii) in the event
8
such liabilities, claims, damages, losses, expenses, costs or actions, including
but not limited to legal fees and expenses, are the result of any willful,
intentional action by Mims, Dye, or the Operator, or any of its employees,
agents or other representatives, the indemnification provided hereunder shall be
limited to $500,000 if such willful, intentional action occurred during the
first twelve months of this Agreement and $400,000 if such willful, intentional
action occurred during the second twelve months of this Agreement.
b. The Company and ABG agree to indemnify, defend and hold harmless the
Operator and all of its subsidiaries, affiliates, agents, employees, assigns and
other related parties against any and all liabilities, claims, damages, losses,
expenses, costs or actions, including but not limited to legal fees and
expenses, which are incurred due to the Company's or ABG's negligence, action or
inaction which results in a violation of any law, regulation, rule or ordinance
or which otherwise is detrimental to the Operator in connection with this
Agreement. The indemnification provided by the Company and ABG pursuant to this
provision in the aggregate shall not exceed $300,000; provided, however, in the
event such liabilities, claims, damages, losses, expenses, costs or actions,
including but not limited to legal fees and expenses, are the result of any
willful, intentional action by the Company or ABG, or any of their employees,
agents or other representatives, the indemnification provided hereunder shall be
limited to $500,000 if such willful, intentional action occurred during the
first twelve months of this Agreement and $400,000 if such willful, intentional
action occurred during the second twelve months of this Agreement.
c. This Section 19 shall survive the termination of this Agreement.
20. Noncompete. The Operator, and its subsidiaries and affiliates, and Xxxx
-----------
and Dye hereby agree to the following noncompete provisions:
a. For a period of six months following the execution of this Agreement,
such parties shall not engage in the video gaming business as it relates to
route operations anywhere within South Carolina.
b. For a period of five years following the execution of this Agreement,
such parties shall not compete with any gaming route operation of the Company,
ABG or any of their subsidiaries or affiliates by in any way attempting to place
Machines in any route location at which Machines are being provided as of the
date of this Agreement by the Company, ABG or any of their subsidiaries or
affiliates.
c. For a period of five years following the execution of this Agreement,
such parties shall not engage in the business of operating, owning, managing,
supervising, promoting, providing consulting services to, or otherwise
participating in a bingo gaming facility in Alabama, Florida, Georgia, Kentucky,
9
Maryland, Mississippi, Montana, Nevada, New York, South Carolina, or Texas;
provided, however, this shall not prohibit the Operator, Xxxx or Dye from
operating a bingo gaming facility pursuant to a "Class C" bingo license, as that
term is defined in Section 12-21-4020 of the South Carolina Code, issued by the
State of South Carolina, or a comparable bingo license issued by any other
jurisdiction.
d. With respect to Xxxx, the provisions of this Section 20 shall not apply
to businesses operated by Xxxx Amusement Company Partnership, Xxxx Amusement
Operating Co., Palmetto State Distributing Company, Inc., or Universal Mortgage
and Loan Co. (collectively, the "Xxxx Businesses"), provided that within the
twelve month period immediately preceding the date of this Agreement Xxxx has
had, and during the term of this noncompete Xxxx shall have, no role, directly
or indirectly, in management or operations of any of the Xxxx Businesses, nor
shall Xxxx receive any payment or distribution of any kind, as compensation or
otherwise, from any such business other than dividends upon corporate stock
which are strictly proportional to the percentage of stock owned by him, or
distributions with respect to his capital accounts in partnerships which are
strictly proportional to the percentage of his capital account ownership in any
such partnership. However, if, due to the death or legal incapacity of Xxxx'
father and the inability or refusal of Xxxx' brother to manage any of the Xxxx
Businesses, Xxxx becomes active in managing one or more of the Xxxx Businesses,
Xxxx agrees that for a period of five years following the execution of this
Agreement the Xxxx Businesses in which Xxxx is active in management will not
compete with the Company, ABG or any of their subsidiaries or affiliates by in
any way attempting to place Machines in any route location at which Machines are
being provided by the Company, ABG or any of their subsidiaries or affiliates,
and the Company and ABG agree that for such five-year period the Company, ABG
and their subsidiaries and affiliates will not compete with any of the Xxxx
Businesses in which Xxxx is active in management by in any way attempting to
place Machines in any route location at which Machines are being provided by any
Xxxx Businesses in which Xxxx is active in management.
e. The parties hereto expressly agree that the noncompete provisions of
this Section 20 shall not apply to businesses operated by Edgefield Plaza
Associates ("Edgefield") at the real property located at 0000 Xxxxxxxxxx Xxxx in
Edgefield County, South Carolina, and in connection herewith Xxxx, as a general
partner of Edgefield, hereby agrees that before Edgefield shall enter into
leases for any of the twelve rooms for which Xxxx has authority and control for
leasing at such real property, the Company shall have the first option to enter
into a coin machine agreement with any such lessee whereby the Company shall
supply the lessee with the Machines to be operated on such property, on terms to
be agreed by the lessee and the Company. In addition, if Edgefield, or its
subsidiaries or affiliates, intends to operate a video gaming business at any of
the twelve rooms for which Xxxx has authority and control for leasing at such
real property, the Company shall have the first option to enter into a coin
machine agreement with Edgefield whereby the Company shall supply Edgefield with
the Machines to be operated on such property, on terms to be agreed by Edgefield
and the Company.
10
f. ABG and Xxxx mutually agree to terminate Section 8 of the Employment
Agreement dated September 24, 1997, as amended July 27, 1998, by and between ABG
and Xxxx; provided, however, Section 8.1 of such Employment Agreement, and the
other provisions of Section 8 of such Employment Agreement to the extent such
other provisions are relevant to Section 8.1, shall survive this termination of
Section 8 of the Employment Agreement. The Company, ABG and Xxxx also mutually
agree to terminate Article XI of the Agreement and Plan of Reorganization by and
among such parties dated August 13, 1997.
g. In the event of a breach by the Operator, or any of its subsidiaries or
affiliates, or Xxxx or Dye of any provision of this Section 20, the Company and
ABG shall have, in addition to any other remedies that they may have at law or
under this Agreement, the right to a temporary restraining order, temporary
injunction and permanent injunction restraining such person or entity from
violating or continuing a violation of the terms of this Section. The Operator,
Xxxx and Dye agree that in the event of such a breach, the amount of damages
would be difficult or impossible to determine, and as a result, in the event of
a breach by them they agree to a bond in the amount to be determined by a court
of competent jurisdiction.
h. Should any court of competent jurisdiction hold any portion of this
Section 20 to be unenforceable in whole or in part, such court shall be
authorized and requested to sever the offending provision from this Section, and
to reform this Section so as to comply as closely as possible with the
intentions of the parties as stated herein, so that it will be enforceable by
injunction.
i. This Section 20 shall survive the termination of this Agreement.
21. Impacts of Judicial, Legislative or Regulatory Actions. If during the
---------------------------------------------------------
term of this Agreement the South Carolina legislature enacts legislation or the
South Carolina Supreme Court definitively (after all applicable appeals) issues
a ruling and as a result of such legislation or ruling (a) game rooms of the
nature operated by the Operator become illegal, and the Operator cannot
reasonably modify its operations to bring its operations into compliance with
the legal requirements, thereby resulting in the Operator being forced to
discontinue its operations or (b) the primary and substantial portion of the
revenue from any Location must come from non-video poker operations thereby
making it impossible or unreasonable for the Operator to modify its operations
to bring its operations into compliance with the legal requirements, then the
Operator or ABG and the Company may terminate this Agreement upon notice to the
other party. Likewise, if during the twelve-month period preceding each July 1
during the term of this Agreement, beginning July 1, 1999, there is a change in
the tax rate on revenues from video gaming operations or other rules or
regulations governing video gaming activities that materially impacts the
profitability to the Operator or to ABG and the Company of operating their
respective businesses pursuant to this Agreement, the party whose profitability
is so impacted may terminate this Agreement by giving notice to the other party
not later than July 10 of such year, which notice shall include a detailed
statement of the reasons and support for such termination.
11
22. Binding Effect. This Agreement shall be binding upon and inure to the
----------------
benefit of the parties hereto and their respective successors and assigns.
23. Assignment. This Agreement and the rights and duties hereunder are not
-----------
assignable or transferable by the Operator without the prior written consent of
the Company and ABG, which consent will not be granted unless, among other
things, such assignee is determined, in the sole discretion of the Company and
ABG, to be qualified as to experience and character. This Agreement and the
rights and duties hereunder are freely assignable by the Company and ABG.
24. Waiver. Any failure on the part of any party hereto to comply with any
-------
of its obligations, agreements or conditions hereunder may be waived by any
other party to whom such compliance is owed. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver.
25. Entire Agreement. This Agreement constitutes the entire agreement among
-----------------
the parties hereto and supersedes and cancels any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties hereto relating to the transactions contemplated hereby or the
subject matter herein. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated, except in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
26. Severability. In the event that any provision of this Agreement or any
-------------
word, phrase, clause, sentence or other portion thereof should be held to be
unenforceable or invalid for any reason, such provision or portion thereof shall
be modified or deleted in such a manner so as to make this Agreement as modified
legal and enforceable to the fullest extent permitted under applicable laws.
27. Notices. All notices, requests, demands and other communications
--------
hereunder shall be in writing and shall be delivered by hand with a signed
receipt, by registered or certified mail, return receipt requested, postage
prepaid, by a recognized overnight courier, or by facsimile transmission with
the original sent by mail on that same day, addressed as follows:
If to the Company or ABG:
American Bingo & Gaming Corp.
0000 Xxxxxxxxxx Xxxxxxx
Xxxx Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
and to:
12
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxxxx
X. X. Xxx 00000 (29211)
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to the Operator:
Xxxx & Dye Enterprises, LLC
0000-X Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxx
and to:
XxXxxx Law Firm, P.A.
P. O. Xxx 00000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
If delivered personally, the date on which a notice, request, instruction
or document is delivered shall be the date on which such delivery is made and,
if delivered by mail, courier or facsimile, the date on which such notice,
request, instruction or document is received shall be the date of delivery. Any
party hereto may change its address specified for notices herein by designating
a new address by notice in writing in accordance with this Section.
28. Governing Law. This Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of South Carolina, without regard to
choice of law principles.
29. Counterparts. This Agreement may be executed in two or more
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
30. Arbitration. Except to the extent preempted by the Federal Arbitration
------------
Act, 9 U.S.C. 1 et seq. (1970), any claim or controversy arising out of, or
-- ---
relating to, any provision of this Agreement or the breach thereof shall, upon
written demand of any party, be settled by a panel of three arbitrators in
accordance with the Commercial Arbitration Rules then in effect of the American
Arbitration Association to the extent consistent with the laws of the State of
South Carolina and the Uniform Arbitration Act, S.C. Code 15-48-10, et seq.,
-- ---
(Law. Co-Op. 1976, as amended). Judgment rendered by the arbitrators may be
entered in the appropriate Court in Richland County, South Carolina, having
jurisdiction thereof. Arbitration shall be held in the County of Richland,
State of South Carolina.
13
IN WITNESS WHEREOF, the parties hereto have caused this Master Coin Machine
Agreement to be executed as of the date first above written.
GOLD STRIKE, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
--------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
--------------------------
Title: VP
--------------------------
AMERICAN BINGO & GAMING CORP.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
--------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
--------------------------
Title: VP
--------------------------
XXXX & DYE ENTERPRISES, LLC
By: /s/ Xxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxx Xxxx
--------------------------
Title: Member
--------------------------
/s/ Xxxxxxx X. Xxxx
-----------------------------
Xxxxxxx Xxxx
-----------------------------
As to Sections 9 and 20 Only
/s/ Xxxxx X. Xxx
-----------------------------
Xxxxx X. Xxx
As to Sections 9 and 20 Only
14
EXHIBIT A
EXISTING LOCATIONS
Charleston Area:
----------------
Gold Strike/Lucky I
Ponderosa
Beacon I
North Augusta Area:
--------------------
Double 7/Wild Cherry
Golden Palace
Lucky 4
Southern Sport
Columbia Area:
--------------
Charleston Highway
EXHIBIT B
LEASED AND SUBLEASED LOCATIONS
Charleston Area:
----------------
Gold Strike/Lucky I - subleased
Ponderosa - subleased
Beacon I -subleased
North Augusta Area:
--------------------
Double 7/Wild Cherry - subleased
Golden Palace - subleased
Lucky 4 - subleased
Columbia Area:
--------------
Charleston Highway -leased
EXHIBIT C
PERSONAL PROPERTY FOR SOUTHERN SPORT LOCATION
5 Bar stools
2 Regular chairs
1 Table
2 Calculators
2 Cameras
1 VCR
1 Monitor
9 Wastebaskets
1 Time clock
1 Coffee pot
1 Microwave
