EXHIBIT 10.12
SETTLEMENT AGREEMENT
This settlement agreement is entered into and made as of the date
below, by and between American Gaming and Entertainment, Ltd. ("AGEL"),
AmGam Associates ("AmGam"), American Gaming and Resorts of Mississippi,
Inc. ("AGRM"), Shamrock Holdings Group, Inc. ("Shamrock"), Xxxxxxx
Management and Development Co. ("Xxxxxxx"), the Official Committee of
Unsecured Creditors of AmGam Associates (the "AmGam Committee"), and the
Official Unsecured Creditors Committee of American Gaming and Resorts of
Mississippi, Inc. (the "AGRM Committee").
Recitals
Whereas AGEL is the owner of a casino barge in Biloxi,
Mississippi commonly known as the "Gold Coast Casino Barge,"
Whereas AmGam and AGRM (collectively the "Debtors") are chapter
11 debtors-in-possession in cases pending before the United States
Bankruptcy Court for the Southern District of Mississippi, Southern
Division (the "Court") and have filed adversary proceedings against AGEL,
Shamrock and Xxxxxxx seeking, among other things, to avoid the alleged
fraudulent transfer of the Gold Coast Casino Barge to AGEL (the "Avoidance
Action");
Whereas Xxxxxxx X. Xxxxxxx is the duly-appointed chapter 11
trustee for Xxxxxxx and the president of Shamrock, both of which are
debtors in cases pending before the United States Bankruptcy Court for the
Northern District of New York;
Whereas the Avoidance Action is being prosecuted by the AmGam
Committee and the AGRM Committee (collectively the "Committees") as
representatives of the estates for the benefit of 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;
Whereas the Gold Coast Casino Barge presently is being chartered
by AGEL to President Mississippi Charter Corporation ("President") pursuant
to a Charter Agreement dated February 17, 1995 (the "President Lease");
Whereas President has purchased certain fixtures, furnishings and
equipment pursuant to an order entered by the United States District Court
for the Southern District of Mississippi on September 21, 1995 (the
"President FF&E Purchase");
Whereas the President Lease in the process of being amended
pursuant to a settlement agreement with President approved on December 9,
1997 by the Court (the "President Settlement");
Whereas the parties to this agreement have compromised the
disputes between them;
NOW THEREFORE, in full and final compromise and settlement of all
claims that AmGam, AGRM, the AmGam Committee and the AGRM Committee may
have against AGEL, Shamrock and/or Xxxxxxx, and of all claims that AGEL and
Shamrock may have against the Debtors, the Debtors' chapter 11 estates,
and/or their representatives, the undersigned covenant and agree as
follows:
Agreement
I. Settlement Terms:
A. On the eleventh (11th) day, or the first business day
thereafter, following entry of an order (i) approving this settlement
pursuant to Fed. R. Bankr. P. 9019 or (ii) confirming of a plan of
reorganization under 11 U.S.C. Section 1129 incorporating the terms of this
agreement, AGEL shall convey to a liquidating trustee appointed under a
confirmed plan of reorganization, or such other entity designated by the
Committees or appointed by the Court as the representative of the Debtors'
estates if a plan of reorganization has not been confirmed, (i) an
undivided 25% ownership interest in the Gold Coast Casino Barge, and (ii)
an undivided 25% interest in all rights of the owner/lessor under the
President Lease, which assets shall be held for the benefit of and
distribution to the holders of allowed claims in the AmGam and AGRM
bankruptcy cases, provided, however, that the terms of this provision will
be inoperative if such order has been stayed by order of the Court and
further that such terms will remain inoperative so long as such stay
remains in effect. The time allotted in this provision for conveyances
required by this provision may be extended with the consent of the parties.
For purposes of this provision, time shall be calculated in the same
manner provided for in Fed. R. Bankr. P. 9006(a).
B. AGEL and Shamrock agree, in consideration for the terms of this
settlement, to waive all of their secured claims against the Debtors, with
the exception of the allowed secured claim of Ship Mortgage, L.P., upon
entry of the order and the completion of the conveyances set forth in
subparagraph A of this section, and 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
agreement, and particularly, Sec. II hereinbelow. Except to the extent
otherwise set forth in this agreement, AGEL and Shamrock also agree upon
such occurrences to waive their right to receive distributions on their
collective allowed unsecured claim from any assets
without limitation, any past due arrearage payments paid pursuant to the
terms of the President Settlement) shall be disbursed upon receipt by the
liquidating trustee, or, if applicable, such other entity as may be
designated by the Committees or appointed by the Court as the
representative of the Debtors' estates:
1. 22.7% to the AmGam and AGRM estates respectively, to be
divided in accordance with agreements between the AmGam Committee and AGRM
Committees;
2. 2.3% exclusively to the AmGam estate to address certain
special needs of the AmGam estate; and
3. 75% to AGEL and/or Shamrock or their assignee(s), if any,
from which AGEL and Shamrock both agree to make a one-time contribution of
$41,000 each to the AmGam estate for disbursement to creditors of that
estate.
B. Funds received by each estate in accordance with subparagraph
A, shall be dedicated exclusively to the payment of creditors in each
respective estate.
III. Distribution of Proceeds from a Sale of the Gold Coast Casino
Barge:
Under the terms of the President Lease, the President has the
right to purchase the Gold Coast Casino Barge as specified therein. In the
event the President elects to make such purchase, 25% of the net proceeds
of the sale shall be delivered to the liquidating trustee appointed
pursuant to a plan of reorganization, or, if applicable, such other entity
as may be designated by the Committees or appointed by the Court to
represent the Debtors' estates, for distribution to holders of allowed
claims in the AmGam and AGRM estates, and the remaining 75% of the net
sales proceeds shall be paid to AGEL and/or Shamrock or its assignee. As
used in this provision, net proceeds is defined as those funds remaining
after payment of all usual, customary and reasonable closing expenses
related to the sale. Proceeds of the sale allocated to the AmGam and AGRM
estates pursuant to this provision shall be allocated between the
respective estates in accordance with the formula set forth in section II
above.
IV. Terms of the Trust
A. The parties agree to support a plan of reorganization which
provides that distributions to the parties under this agreement will be
made through a liquidating trust (the "Trust"). 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 (the "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.
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 Gold Coast Casino Barge or the President
Lease held in the Trust without the consent and approval of the Trustee or
Representative, AGEL and Shamrock or its assignee. Such actions requiring
consent (and the procedures for obtaining necessary consents and resolving
any disputes among the parties hereto) will be generally defined in the
Trust Agreement, unless expressly provided for in this agreement, and shall
include any prepayment or other modification of the President Lease, any
proposed sale, transfer or any other disposition of the Gold Coast Casino
Barge, and the terms of any proposed settlement of any dispute or
litigation with the lessee of the Gold Coast 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. 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 Gold Coast Casino
Barge including 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 of
reorganization containing the provisions of this settlement agreement.
Except as stated in the following provision, neither the Trust nor the
Trustee shall assume or be obligated to pay or perform any obligation of
the owner under the President Lease, as amended, and AGEL and its
successors 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.
D. The Representative, AGEL and Shamrock shall cooperate with
each other in good faith and use their best efforts (i) 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 IV. B above, and
(ii) to establish procedures for timely response to any offer to purchase
which may be made by the President pursuant to the settlement with
President approved by the Bankruptcy Court by order dated January 7, 1998.
E. Upon consummation of the conveyance set forth in sub paragraph
A above, the Trustee shall be vested with (i) all rights and benefits
pertaining to the 25% undivided ownership interest in the Gold Coast Casino
Barge, and (ii) all rights 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 creditors of AmGam
and AGRM, including AGEL and Shamrock or its assignee, if any.
V. Conditions to Effectiveness of Agreement.
This agreement shall be subject to approval of the United States
Bankruptcy Court for the Northern District of New York (as to Shamrock and
Xxxxxxx) and the United States Bankruptcy Court for the Southern District
of Mississippi (as to AmGam and AGRM).
VI. Releases
Approval of the terms of this settlement as required by its terms
shall constitute a release and discharge by each of the parties of any and
all claims, whether known or unknown, presently existing or which may arise
in the future, that a party may have for any reason against another party
and/or such party's respective officers, directors, agents, employees,
legal representatives, trustees, and professionals (except as otherwise
expressly contemplated by this agreement).
VII. Miscellaneous
A. Choice of Law: This agreement shall be governed by and
construed in accordance with the laws of the State of Mississippi, except
where applicable federal laws apply.
B. Entire Agreement: This agreement constitutes the entire
agreement of the parties on the subjects contained herein and supersedes
all prior and contemporaneous negotiations and agreements, oral and
written, except that nothing in this agreement shall or shall be deemed to
supersede any prior agreements approved by applicable courts.
C. No Waiver: One or more waivers of a breach of any term or
provision of this agreement by any party shall not be construed as being a
waiver of a subsequent breach of the same covenant, term, or provision.
D. Modification: This agreement may be modified only in a writing
signed by the party to be charged.
E. Severability: If any provision or term of the agreement is
held illegal, invalid, or unenforceable, such provision or term shall be
fully severable and this agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision never had comprised part
of this agreement. The remaining terms of this agreement shall remain in
full force and effect.
F. Rules of Construction: The terms of this agreement shall be
construed in all cases as a whole, according to their fair meaning, and
shall not be construed strictly for or against any party. As used in this
agreement, the singular or plural number shall be deemed to include the
other whenever the context so indicates or requires.
G. Enforcement: The parties to this agreement agree that should
any party xxx another
party for that party's breach of the agreement, the suing party shall be
entitled to recover its/his attorneys fees and costs of court if
successful. The parties to this agreement concur and covenant that the
relief which may be sought to enforce the provision includes declaratory
and injunctive relief.
H. Successors and Heirs: This agreement shall be binding on the
parties and upon the parties' respective heirs, administrators, legal
representatives, trustees, executors, successors and assigns and shall
inure to the benefit of the parties and each of their respective heirs,
administrators, legal representatives, trustees, executors, successors and
assigns.
AGREED AS OF THIS 21st day of August 1998.
AMGAM ASSOCIATES, DEBTOR
BY: XXXX XXXXXXX
________________________
ITS: Counsel
________________________
AMERICAN GAMING & RESORTS OF
MISSISSIPPI, INC., DEBTOR
BY: XXXX XXXXXXX
______________________
ITS: Counsel
______________________
AMERICAN GAMING &
ENTERTAINMENT, LTD, A DELAWARE
CORP.
BY: J. XXXXXXX XXXXXXXXXX
_____________________
ITS: President & CEO
AND
XXXX & WISER
BY: XXXXXX XXXX 8/21/98
______________________
ITS COUNSEL
SHAMROCK HOLDINGS GROUP, INC.,
A DELAWARE CORP.
BY: XXXXXXX X. XXXXXXX
________________________
ITS: President
________________________
AND
Xxxxx & Xxxxx LLP
BY: XXXXXX X. XXXXX
________________________
ITS COUNSEL
XXXXXXX MANAGEMENT AND
DEVELOPMENT CO.
BY: XXXXXXX X. XXXXXXX
__________________________
ITS TRUSTEE
AND
Xxxxx & Xxxxx LLP
BY: XXXXXX X. XXXXX
__________________________
ITS COUNSEL
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS OF AMGAM
ASSOCIATES
BY: XXXXXXXX X. XXXXXX
______________________
ITS: President
AND
X. Xxxxxx Xxxxxxx
BY: X. XXXXXX XXXXXXX
______________________
ITS COUNSEL
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS OF
AMERICAN GAMING AND RESORTS
OF MISSISSIPPI, INC.
BY: XXX XXXXXXX
______________________
ITS: Chairman
AND
XXXXXXX X. XXXX, III
______________________
BY: Xxxxxxx X. Xxxx, III
ITS COUNSEL
