<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) June 9, 1995
--------------------------------
Crown Casino Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 0-14939 63-0851141
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2415 West Northwest Highway, Suite 103, Dallas, Texas 75220-4446
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 352-7561
------------------------------
Not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 9, 1995, Crown Casino Corporation (the "Company") closed the
sale of a 50% interest in its St. Charles Gaming Company, Inc. subsidiary
("SCGC") to Louisiana Riverboat Gaming Partnership ("LRGP"). LRGP is a joint
venture owned 50% by Casino America, Inc. and 50% by Louisiana Downs, Inc., an
Edward J. DeBartolo company, and owns the Isle of Capri casino in Bossier City,
Louisiana. As a result, the Lake Charles, Louisiana riverboat casino project,
whose site has been under construction since March 1995, is now owned equally
by the Company and LRGP.
The purchase price for 50% of the SCGC stock sold by the Company was
$21 million, payable over five years, plus a warrant entitling the Company to
purchase up to 416,667 shares of Casino America common stock at an exercise
price of $12 per share. The purchase price was negotiated at arms-length by
the parties to the Agreement. The casino project is being managed by Casino
America and will be the fourth Isle of Capri themed property. The casino is
expected to open in the Summer of 1995.
ITEM 5. OTHER EVENTS.
Also on June 9, 1995, the Company obtained a waiver from its senior
lender for the extension of the maturity date of its senior debt, which became
due on June 5, 1995. The waiver extends the maturity date of the Company's
senior debt to the earlier of (1) the final approval or disapproval by the
Louisiana Office of State Police, Riverboat Gaming Division, of the anticipated
new $30 million financing between the Company's senior lender and LRGP and
SCGC, and (2) July 31, 1995. In connection with the waiver, LRGP has
guaranteed the repayment of the Company's existing senior debt. As previously
reported, LRGP and SCGC anticipate closing the $30 million financing prior to
July 31, 1995.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Proforma Financial Information.
The following proforma financial information is included in this
report:
Introduction to Condensed Consolidated Proforma Financial
Statements
Proforma Condensed Consolidated Balance Sheet (Unaudited) -
January 31, 1995
Proforma Consolidated Statement of Operations for the year
ended April 30, 1994 (Unaudited)
Proforma Consolidated Statement of Operations for the nine
months ended January 31, 1995 (Unaudited)
Notes to Proforma Condensed Consolidated Financial Statements
(c) Exhibits.
The following exhibits are hereby filed with this report:
2.1 - Amended Stock Purchase Agreement dated June 2, 1995
among Crown Casino Corporation, St. Charles Gaming
Company, Inc. and Louisiana Riverboat Gaming
Partnership.
4.1 - Waiver dated as of May 31, 1995 to Note Purchase
Agreement dated as of May 31, 1994, by and among Crown
Casino Corporation, St. Charles Gaming Company, Inc.,
Bank of New York and Nomura Holding America, Inc.
-2-
<PAGE> 3
10.1 - Security Agreement - Pledge dated June 9, 1995 by and
between Louisiana Riverboat Gaming Partnership and
Crown Casino Corporation
10.2 - Shareholders Agreement dated June 9, 1995 by and
between Crown Casino Corporation and Louisiana
Riverboat Gaming Partnership
-3-
<PAGE> 4
CROWN CASINO CORPORATION
PRO-FORMA FINANCIAL INFORMATION
SALE OF 50% OF SCGC
On June 9, 1995, Crown Casino Corporation ("Crown") closed the sale of a 50%
interest in its St. Charles Gaming Company, Inc. subsidiary ("SCGC") to
Louisiana Riverboat Gaming Partnership ("LRGP"). LRGP is a joint venture owned
50% by Casino America, Inc. and 50% by Louisiana Downs, Inc., an Edward J.
DeBartolo company, and owns the Isle of Capri casino in Bossier City,
Louisiana. As a result, the Lake Charles, Louisiana riverboat casino project,
whose site has been under construction since March 1995, is now owned equally
by Crown and LRGP.
The purchase price for 50% of the SCGC stock sold by Crown was $21 million,
payable over five years, plus a warrant entitling Crown to purchase up to
416,667 shares of Casino America common stock at an exercise price of $12 per
share. The purchase price was negotiated at arms-length by the parties to the
Agreement. The casino project is being managed by Casino America and will be
the fourth Isle of Capri themed property. The casino is expected to open in
the Summer of 1995.
Also on June 9, 1995, SCGC obtained a waiver from its senior lender for the
extension of the maturity date of its senior debt, which became due on June 5,
1995. The waiver extends the maturity date of SCGC's senior debt to the
earlier of (1) the final approval or disapproval by the Louisiana Office of
State Police, Riverboat Gaming Division, of the anticipated new $30 million
financing between SCGC's senior lender and LRGP and SCGC, and (2) July 31,
1995. In connection with the waiver, LRGP has guaranteed the repayment of
SCGC's existing senior debt. LRGP and SCGC anticipate closing the $30 million
financing prior to July 31, 1995.
SCGC was acquired by Crown on June 25, 1993. The financial results of SCGC
prior to it being acquired by Crown are not significant and have not been
reflected in the following Pro-Forma Statement of Operations for the year ended
April 30, 1994.
ACQUISITION OF GEMS
On December 13, 1993 Crown acquired 100% of the outstanding common stock of
Gaming Entertainment Management Services, Inc. ("GEMS"), a Nevada corporation
which was organized on September 22, 1992 for the purpose of developing a hotel
and casino project in Las Vegas, Nevada known as the Desert Winds Hotel and
Casino. GEMS via contract had the right to purchase an 18.6 acre parcel of
land in Las Vegas located on the southeast corner of Flamingo and Arville
across the street from the Gold Coast Hotel and Casino. The option was
exercised and the land was purchased in June 1994. GEMS has no operations
other than its development of the Desert Winds project. In connection with the
transaction the Company issued 850,000 shares of restricted common stock to the
GEMS shareholders and issued 35,000 shares of restricted common stock to a
company as a finder's fee.
PRO-FORMA FINANCIAL STATEMENTS
The following pro-forma consolidated balance sheet of Crown as of January 31,
1995 gives effect to the sale of 50% of Crown's interest in SCGC as if the sale
was consummated on January 31, 1995. The GEMS acquisition has already been
reflected in the historical consolidated balance sheet of Crown at such date.
<PAGE> 5
The following pro-forma consolidated statements of operations of Crown for the
nine months ended January 31, 1995 and for the year ended April 30, 1994 give
effect to the sale of a 50% interest in SCGC by Crown as if such sale had
occurred on May 1, 1993. The pro-forma consolidated statement of operations
for the year ended April 30, 1994 also gives effect to the acquisition of GEMS
under the purchase method of accounting as if it had occurred on May 1, 1993.
The pro-forma information is based on the historical financial statements of
Crown, SCGC and GEMS giving effect to the transactions described above and the
adjustments as described in the accompanying notes to the pro-forma condensed
consolidated financial statements and may not be indicative of the results that
actually would have occurred had the sale or acquisition taken place on the
date indicated or the results which may be obtained in the future.
<PAGE> 6
CROWN CASINO CORPORATION
PRO-FORMA CONDENSED CONSOLIDATED BALANCE SHEET
UNAUDITED
JANUARY 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Historical Deconsolidate Record Sale Pro-Forma
Consolidated SCGC and Record of 50% Interest Condensed
Crown on Equity Method in SCGC Consolidated
------------- ---------------- -------------- ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 903 $ (85) $ 900 $ 1,718
Receivables, net 156 156
Prepaid expenses 1,083 (1,003) 80
------- -------- -------- -------
Total current assets 2,142 (1,088) 900 1,954
Property and equipment:
Land held for development 16,560 16,560
Land deposit and site costs 57 (5) 52
Riverboat 14,906 (14,906)
Barges and improvements 350 (350)
Furniture, fixtures and equipment 8,803 (7,540) 1,263
------- -------- -------
40,676 (22,801) 17,875
Less accumulated depreciation (186) 11 (175)
------- -------- -------
40,490 (22,790) 17,700
Other assets:
Debt issuance costs, net 1,050 (1,050)
Non-compete agreement, net 342 (342)
License costs 9,125 (9,125)
Investment in SCGC 6,727 (3,364) 3,363
LRGP note receivable 20,000 20,000
------- -------- -------- -------
$53,149 $(27,668) $ 17,536 $43,017
======= ======== ======== =======
Current liabilities:
Accounts payable $ 591 $ (79) $ 512
Accrued liabilities 1,034 (918) (100) 16
Capital lease obligations 2,704 (2,700) 4
Note payable, net of discount 21,513 (21,513)
------- -------- -------- -------
Total current liabilities 25,842 (25,210) (100) 532
Capital lease obligations, less current portion 2,466 (2,458) 8
Deferred gain on sale 17,636 17,636
Stockholders' equity 24,841 24,841
------- -------- -------- -------
$53,149 $(27,668) $ 17,536 $43,017
======= ======== ======== =======
</TABLE>
See accompanying Notes to Pro-Forma Condensed Consolidated Financial
Statements.
<PAGE> 7
CROWN CASINO CORPORATION
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JANUARY 31, 1995
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Deconsolidate SCGC
Historical and Record on Pro-Forma
Crown Equity Method Adjustments Consolidated
---------- ------------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues $ - $ - $ -
Costs and expenses:
General and administrative 1,398 1,398
Gaming pre-opening and development 5,121 (4,668) 453
Depreciation and amortization 186 (83) 103
St. Charles Parish site abandonment 3,131 (3,131)
--------- ---------- --------- ---------
9,836 (7,882) 1,954
--------- ---------- --------- ---------
Net interest (income) expense:
Interest expense 4,800 (4,784) 16
Interest income (173) $ (1,725)(a) (1,898)
--------- ---------- --------- ---------
4,627 (4,784) (1,725) (1,882)
--------- ---------- --------- ---------
Equity in (income) loss of SCGC 9,700 (700)(c) 9,000
--------- ---------- --------- ---------
Loss before income taxes (14,463) 2,966 2,425 (9,072)
Provision (benefit) for income taxes (4,402) 2,966 673 (d) (763)
--------- ---------- --------- ---------
Net loss $ (10,061) $ - $ 1,752 $ (8,309)
========= ========== ========= =========
Loss per share $ (1.03) $ (.85)
========= =========
Weighted average shares outstanding 9,799 9,799
========= =========
</TABLE>
See accompanying Notes to Pro-Forma Condensed Consolidated Financial
Statements.
<PAGE> 8
CROWN CASINO CORPORATION
PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1994
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Deconsolidate SCGC GEMS
Historical and Record on May 1, 1993 to Pro-Forma
Crown Equity Method December 12, 1993 Adjustments Consolidated
---------- ------------------ ----------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
Costs and expenses:
General and administrative 1,425 594 2,019
Gaming pre-opening and development 981 (943) 38
Depreciation and amortization 371 (334) 37
--------- ---------- --------- -------- --------
2,777 (1,277) 594 2,094
--------- ---------- --------- -------- --------
Net interest (income) expense:
Interest expense 578 11 589
Interest income (197) $ (2,300)(a) (2,497)
--------- ---------- --------- -------- --------
381 11 (2,300) (1,908)
--------- ---------- --------- -------- --------
Equity in loss of SCGC 843 2,440 (b) 3,283
--------- ---------- --------- -------- --------
Loss from continuing operations before
income taxes (3,158) 434 (605) (140) (3,469)
Provision (benefit) for income taxes (1,106)
---------
434 897 (d) 225
---------- --------- -------- --------
Loss from continuing operations (2,052) (605) (1,037) (3,694)
Discontinued operations (177) (177)
--------- ---------- --------- -------- --------
Net loss $ (2,229) $ - $ (605) $ (1,037) $ (3,871)
========= ========== ========= ======== ========
Loss per share:
From continuing operations $ (.34) $ (.55)
From discontinued operations (.03) (.02)
--------- --------
$ (.37) $ (.57)
========= ========
Weighted average shares outstanding 5,989 6,778
========= ========
</TABLE>
See accompanying Notes to Pro-Forma Condensed Consolidated Financial
Statements.
<PAGE> 9
CROWN CASINO CORPORATION
NOTES TO PRO-FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
The sale of a 50% interest in SCGC by Crown causes Crown's remaining 50%
interest in SCGC to be accounted for under the equity method of accounting as
opposed to consolidating such results. Accordingly, all assets and
liabilities, as well as revenues and expenses, of SCGC have been removed from
Crown's historical consolidated financial statements. For balance sheet
purposes, Crown's remaining 50% interest in SCGC is reflected in the
"Investment in SCGC" account. Similarly, Crown's 50% interest in the
operations of SCGC have been reflected in the "Equity in loss of SCGC" account
in the accompanying Pro-Forma Consolidated Statements of Operations. However,
as noted below, since the realization of the gain on the sale of the 50%
interest in SCGC is not as yet reasonably assured, all of SCGC's loss (ie. not
just Crown's 50%) is recognized in the "Equity in loss of SCGC" account in the
accompanying Pro-Forma Consolidated Statements of Operations. The calculation
of Crown's (i) deferred gain on the sale of the 50% interest in SCGC, and (ii)
remaining basis in its 50% interest in SCGC, is as follows:
<TABLE>
<S> <C> <C>
Consideration for sale of 50% interest in SCGC $ 21,000
Crown's basis in SCGC:
Equity in SCGC $ 5,718
Conversion of SCGC debt to equity 1,009
-------
6,727
Percentage sold x 50%
-------
Basis sold 3,364
--------
Deferred gain $ 17,636
========
</TABLE>
The gain on the sale of the 50% interest in SCGC has been deferred until such
time as its realization is reasonably assured. Realization of such gain is
dependent on collection of the LRGP Note which in turn is principally dependent
on future operating profits, which have not as yet been assured. The principal
payments on the LRGP Note prior to maturity are limited to the amount of
distributions received by LRGP from SCGC's operations, and payment of such Note
is not guaranteed by LRGP. Similarly, no gain will be recognized for income
tax purposes as Crown will elect to report such gain as an installment sale.
NOTE
a - To record interest income at 11.5% on the $20,000 LRGP Note received in
the sale of the 50% interest in SCGC.
b - To record adjustment in equity in loss of SCGC due to the $4,000
buy-out of the Century Casinos, Inc. management agreement, net of an
income tax benefit of $1,560.
c - To record adjustment in equity in loss of SCGC to reflect a lower
interest expense of $1,100 due to the estimated difference in interest
rates to be obtained with LRGP's credit assistance (11.5% versus 13%),
and a lower level of debt issuance costs and discount and related
amortization thereof, net of an income tax benefit of $400.
d - To record the impact on income taxes of the adjustment described in
Note a above based upon a 39% effective income tax rate.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CROWN CASINO CORPORATION
By:/s/ Mark D. Slusser
-----------------------------
Mark D. Slusser
Vice President Finance
Dated: June 21, 1995
--------------------------
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE NO.
----------- ---------------------- ----------
<S> <C>
2.1 Amended Stock Purchase Agreement dated June 2, 1995 among Crown Casino
Corporation, St. Charles Gaming Company, Inc. and Louisiana Riverboat
Gaming Partnership.
4.1 Waiver dated as of May 31, 1995 to Note Purchase Agreement dated as of
May 31, 1994, by and among Crown Casino Corporation, St. Charles Gaming
Company, Inc., Bank of New York and Nomura Holding America, Inc.
10.1 Security Agreement - Pledge dated June 9, 1995 by and between Louisiana
Riverboat Gaming Partnership and Crown Casino Corporation
10.2 Shareholders Agreement dated June 9, 1995 by and between Crown Casino
Corporation and Louisiana Riverboat Gaming Partnership
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AMENDED STOCK PURCHASE AGREEMENT
THIS AMENDED STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of this 2nd day of June, 1995 but effective as of March 2, 1995
by and among CROWN CASINO CORPORATION, a Texas corporation ("Crown"), ST.
CHARLES GAMING COMPANY, INC., a Louisiana corporation (the "Company") and
LOUISIANA RIVERBOAT GAMING PARTNERSHIP, a Louisiana partnership ("LRGP").
RECITALS
A. Crown currently owns all of the outstanding capital stock of
the Company (the "Company Stock") and desires to sell 50% of the Company Stock
to LRGP.
B. LRGP is willing to purchase 50% of the Company Stock.
C. The Company's principal business will be the operation of a
riverboat casino and related facilities (the "Calcasieu Casino") in Calcasieu
Parish, Louisiana.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties do hereby agree as follows:
Section 1. Purchase and Sale of Stock. Crown shall sell, transfer,
assign and deliver and LRGP shall purchase 50% of the Company Stock ("LRGP
Stock") on the Closing Date (as hereinafter defined) for the purchase price of
$21,000,000. The purchase price shall be payable as follows: on the Closing
Date LRGP shall pay Crown the sum of $1,000,000 cash (less the $100,000 deposit
previously delivered and any amounts then owing by Crown to the Company) and
shall deliver to Crown a $20,000,000 Promissory Note (the "Purchase Money
Note") described below. In addition, at Closing, LRGP shall pay one-half of any
excess of current assets over Current Liabilities (as defined below) as of the
effective date of this Agreement and Crown shall pay to LRGP one-half of any
excess of Current Liabilities (as defined below) over current assets as of the
effective date of this Agreement. Current Liabilities of St. Charles for
purposes of this adjustment provision shall be defined as current liabilities,
exclusive of debt and lease obligations stated on Schedule 2. Also, at Closing,
Crown, St. Charles and LRGP shall pay such monies as may be required to account
for various adjustments and advances pursuant to Sections 6.C and 8.4. LRGP
shall advance funds to St. Charles to permit any payments required pursuant to
such sections. In
<PAGE> 2
addition, LRGP shall pay to Crown the Extension Fee, as defined below.
1.1 Purchase Money Note. The Purchase Money Note shall be executed
by LRGP in favor of Crown in the principal sum of $20,000,000, and shall be
substantially in the form of Exhibit A-1 hereto; the Purchase Money Note shall
be secured by the LRGP Stock pursuant to a Security Agreement-Pledge
substantially in the form of Exhibit A-2 hereto.
1.2 Warrant to Convert Purchase Money Note Into Equity. At the
Closing, Casino America, Inc., a Delaware corporation ("CSNO"), shall issue a
warrant (the "Warrant") to Crown, pursuant to which at any time prior to the
repayment in full of the Purchase Money Note, Crown shall have the right to
convert up to 50% of the principal amount outstanding on the Purchase Money
Note (but not more than a total conversion of $5,000,000) for common stock of
CSNO at a conversion rate of $12 per share. The Warrant shall be substantially
in the form of Exhibit B hereto.
1.3 Delivery of Common Stock. At the Closing, Crown shall deliver
certificates for the LRGP Stock in negotiable form, duly endorsed in blank or
with separate stock transfer powers attached, free and clear of all liens,
encumbrances, claims and other charges thereon of every kind.
1.4 Shareholders Agreement. At the Closing. Crown and LRGP shall
execute a shareholders agreement substantially in the form of Exhibit C hereto.
1.5 Closing. The consummation (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Phelps
Dunbar, 400 Poydras Street, New Orleans, Louisiana on that date which is not
more than ten days after all conditions of Closing set forth in Sections 8 and
9 have been satisfied or waived, or at such other time and place as shall be
mutually agreed upon by LRGP and Crown, but in no event later than May 31,
1995, (the date of Closing being herein referred to as the "Closing Date"). The
parties will use their best efforts to cause the Closing to occur by May 15,
1995. LRGP shall pay to Crown at Closing a fee (the "Extension Fee") equal to
$6,300 for each day after May 15, 1995 that the Closing actually occurs. If the
Closing has not occurred on or prior to May 31, 1995 any party hereto shall
have the right to abandon and not consummate the transactions contemplated
herein pursuant to Section 21 hereof.
Section 2. Management Agreement. On the effective date of this
Agreement, the Company and Riverboat Services, Inc., a wholly-owned subsidiary
of Casino America, Inc., entered into a management agreement for the operation
of the Calcasieu Casino, in the form of Exhibit D hereto.
-2-
<PAGE> 3
Section 3. Representations and Warranties of Crown. Crown represents
and warrants to LRGP as follows:
3.1 Organization, Good Standing and Authority. Crown is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, and has the corporate power and authority to
perform its business as presently conducted and to own and lease the properties
used in connection therewith. Crown is duly qualified to do business and is in
good standing in Louisiana, and is duly qualified to do business in all other
jurisdictions where the failure to so qualify would have a material adverse
impact on the financial condition or operations of Crown. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby are within the power of Crown and have been duly authorized
by all necessary corporate and other action. This Agreement constitutes the
valid obligation of Crown legally binding upon it and enforceable in accordance
with its terms.
3.2 Stock Ownership. Crown is the lawful owner of record and
beneficially owns all of the Company Stock, free and clear of any liens,
encumbrances, rights, equities, security interests and any other adverse claims
whatsoever (except for the security interest created by the Pledge Agreement
dated as of May 31, 1994 (the "Nomura Pledge Agreement") executed by Crown in
favor of Hibernia National Bank ("Hibernia") as agent for the purchaser of
Notes issued by the Company pursuant to the Note Purchase Agreement among the
Company, Crown, Hibernia and the Noteholders (as therein defined) (the "Nomura
Loan Agreement") (the Nomura Pledge Agreement, the Nomura Loan Agreement and
the ancillary instruments executed and defined in connection therewith are
herein sometimes called "Nomura Loan Documents"). Crown has full legal power
and authority to transfer and deliver the LRGP Stock in accordance with this
Agreement, and by delivery of a certificate therefor, and upon receipt of the
consents stated in Section 3.4 hereof, Crown will transfer to LRGP good and
marketable title to 50% of the Company Stock, free and clear of all liens,
encumbrances, equities and claims.
Neither Crown nor the Company is a party to, or bound by any
written or oral contract or agreement which grants to any person an option or
right of first refusal or other right to acquire at any time, or upon the
happening of any stated events, any of the Company Stock.
3.3 No Conflict. Except for the Nomura Loan Documents, neither the
execution, delivery or performance of this Agreement by Crown, nor the
consummation of the transactions contemplated hereby will (a) violate, conflict
with or result in a breach of any provisions of, constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, result in the termination of or accelerate the performance required by,
or
-3-
<PAGE> 4
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Crown under, any of the terms,
conditions or provisions of its Certificate of Incorporation or By-laws or any
note, bond, mortgage, indenture, deed of trust, lease, license, agreement or
other instrument or obligation which binds it or any of its assets or (b)
violate any order, writ, injunction, decree, statute, rule or regulation of any
governmental body applicable to Crown or any of its assets, except for the
consents stated in Section 3.4 hereof.
3.4 Consents. All consents, approvals or authorizations required
to be obtained by Crown or the Company in connection with the transactions
contemplated by this Agreement have been obtained, except for consent by Nomura
Holding America, Inc.
3.5 No Claims. Except as stated in Schedule 3.5 hereto, there is
no action, suit, proceeding or claim by any person, and no investigation by any
governmental agency, pending or threatened against Crown.
3.6 Disclosure. No representation or warranty by Crown in by this
Agreement or in the Schedules attached hereto contains any untrue statement of
material facts or omits to state any material facts necessary to make any
statement herein not misleading.
Section 4. Representations and Warranties of Crown and the Company.
Crown and the Company represent and warrant to LRGP as follows:
4.1. Organization, Standing, Qualification and Capitalization. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana, and has the corporate power and
authority to perform its business as presently conducted and to own and lease
the properties used in connection therewith. The Company is duly qualified to
do business and is in good standing in each jurisdiction where the conduct of
its business or the ownership of its property requires such qualification. The
Company has no subsidiary or direct or indirect ownership interest in any other
firm, partnership, corporation, association or business.
The authorized capital stock of the Company consists of 100,000 shares
of common stock, no par value. The Company has no authority to issue any other
series or class of capital stock or security. Of the authorized shares of
Common Stock there are only 100,000 fully paid and nonassessable shares validly
issued and outstanding, all of which are held of record and owned by Crown and
evidenced by certificate No. 3. All of such issued and outstanding shares of
Common Stock (a) have been duly authorized, validly issued and fully paid, and
are non-assessable, (b) have not been issued in violation of any agreement or
document restricting their issuance and (c) are registered as owned by Crown in
the
-4-
<PAGE> 5
Company's stock records. Except for the Nomura Loan Documents, neither Crown
nor the Company is a party to or bound by any written or oral contract or
agreement which grants to any person an option or right of first refusal or
other right of any character to acquire at any time, or upon the happening of
any stated events, shares of Common Stock of the Company whether or not
presently issued or outstanding.
4.2 Compliance. The business and operations of the Company have
been and are being conducted in compliance with all applicable laws, rules and
regulations of all authorities, noncompliance with which would have a material
adverse effect on its business, results of operations or prospects. The Company
is not in violation of any term or provision of its Certificate of
Incorporation or By-laws, or any indenture, contract, lease, agreement or
instrument by which it is bound or any applicable law, rule or regulation, the
violation of which would have a material adverse effect on its business,
financial or other condition or its prospects.
4.3 Financial Statements. The Company has delivered to LRGP copies
of the following financial statements, all of which have been prepared in
accordance with generally accepted accounting principles (except for the
absence of footnotes or as otherwise disclosed therein) applied on a basis
consistent with that of the preceding fiscal year.
(i) Balance sheet of the Company as of June 24, 1993, certified by
Fred Bastie & Associates, PC, certified public accountants,
and as of April 30, 1994 and January 31, 1995, prepared by the
Company, which balance sheets present fairly the financial
condition and assets and liabilities of the Company as of
their respective dates. The balance sheet of the Company as of
January 31, 1995 is attached as Schedule 4.3 hereto and will
be hereinafter called the "1995 Balance Sheet".
(ii) Statements of operations for the Company for the period from
inception to June 24, 1993, certified by Fred Bastie &
Associates, PC, certified public accountants, and for the
period from June 25, 1993 to April 30, 1994 and for the nine
months ended January 31, 1995, prepared by the Company, which
statements together with any notes to the respective
statements of net income present fairly the results of
operations of the Company for the said periods.
(iii) Balance sheet of Crown as of April 30, 1994 and statements of
income of Crown for the year then ended, certified by Coopers
& Lybrand, L.L.P., certified public accountants, which balance
sheet and statement of income present fairly the results of
operations of Crown for said period.
-5-
<PAGE> 6
4.4 Changes in Financial Condition. (a) Since January 31, 1995
there has not been (i) any adverse change in the financial condition or in the
operations, businesses or properties of the Company (except for expenses
incurred in the ordinary course of business); (ii) any damage, destruction or
loss, whether covered by insurance or not, materially and adversely affecting
the operations, businesses or properties of the Company; (iii) any declaration,
setting aside or payment of any dividend, or any distribution in respect of
capital stock of the Company, or any redemption, purchase or other acquisition
of any of such shares of the Company; (iv) any increase in the compensation
payable or to become payable by the Company to any of its officers, directors
or employees; (v) any change in the terms of any bonus, insurance, pension or
other benefit plan for or with any officers, directors or employees which
increases amounts paid, payable or to become payable thereunder; or (vi) any
complaints or other concerns which have been brought to the attention of the
Company and which relate to the Company's labor relations.
(b) Undisclosed Liabilities. There are no liabilities or
obligations of the Company either accrued, absolute, contingent or otherwise,
including, but not limited to, any tax liabilities due or to become due other
than (i) those reflected in the 1995 Balance Sheet, (ii) unpaid expenses
incurred since the 1995 Balance Sheet in the ordinary course of business and
(iii) as stated in the Schedules to this Agreement and not heretofore paid or
discharged.
(c) All liabilities owing by the Company to Crown as of February
8, 1995 will be converted into equity. In addition, Crown will pay on behalf of
the Company or reimburse the Company for all interest on the debt of the
Company to Nomura Holding America, Inc. accrued through February 8, 1995, but
paid after the effective date of this Agreement.
4.5 No Conflict. Neither the execution, delivery or performance of
this Agreement by the Company, nor the consummation of the transactions
contemplated hereby will (a) violate, conflict with or result in a breach of
any provisions of, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, result in the
termination of or accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company under, any of the terms, conditions or
provisions of its Certificate of Incorporation or Bylaws or any note, bond,
mortgage, indenture, deed of trust, lease, license, agreement or other
instrument or obligation which binds it or any of its assets or (b) violate any
order, writ, injunction, decree, statute, rule or regulation of any
governmental body applicable to the Company or any of its assets, except for
the approvals and consents stated in Section 3.4 hereto.
-6-
<PAGE> 7
4.6 Title to And Condition of Properties. (a) The Company has good
and marketable title to all its properties and assets reflected in the 1995
Balance Sheet, free and clear of all mortgages, claims, liens, pledges,
equitable interests, charges or other encumbrances of any nature whatsoever,
except any mortgages, liens, pledges, charges or other encumbrances disclosed
in the 1995 Balance Sheet or in Schedule 4.6 hereto, and liens for current
taxes not yet due and payable.
(b) All of the personal property reflected on the 1995 Balance
Sheet, together with any personal property acquired thereafter, including
without limitation, the Calcasieu Casino riverboat and all of the gaming and
other equipment located thereon, are in good condition and working order,
ordinary wear and tear excepted. The Calcasieu Casino riverboat is completed
and has been paid for in full.
4.7 Tax Matters. The amounts set up as provisions for taxes on the
1995 Balance Sheet are sufficient for the payment of all foreign, federal,
state, county and local taxes, and all employment and payroll related taxes,
including any penalties or interest thereon, whether disputed or not, of the
Company accrued for or applicable to all periods ended on or prior to January
31, 1995. The Company did not and will not realize any gain or income of any
kind with respect to activities subsequent to January 31, 1995 and through the
Closing Date except gain and income incurred in the ordinary course of business
subsequent to January 31, 1995. The Company has timely made all deposits
required by law to be made with respect to employees' withholding taxes. The
Company has timely filed all income, foreign, franchise, excise, employment and
payroll related, real and personal property, sales and gross receipts tax
returns and all other tax returns which were required to be filed by it, and
has paid, or has set up adequate reserves for the payment of, all taxes shown
on such returns. No agreement for the extension of time for the assessment of
any deficiency or adjustment with respect to any tax return filed by the
Company has been assessed, and the Company has no knowledge of any assessed tax
deficiency proposed or threatened against the Company.
4.8 Litigation and Labor Matters. Except as stated in Schedule 4.8
hereto, (a) there is no litigation, proceeding, governmental investigation or
claim pending or, to the Company's knowledge, threatened, against or related to
the Company, or its properties or business; (b) the Company is not in default
with respect to any order, writ, injunction or decree of any court or federal,
state, municipal or governmental department, commission, board, bureau, agency
or instrumentality; and (c) the Company has not committed, and the Company has
not received any notice of union election or claim that the Company has
committed any unfair labor practice under applicable federal or state law.
-7-
<PAGE> 8
4.9 Insurance. The Company is insured under various policies of
fire, liability and other forms of insurance, as stated in Schedule 4.9 hereto,
which policies are valid and enforceable in accordance with their terms and
provide adequate insurance for the business of the Company and its assets and
properties; all outstanding claims under such policies are described in said
Schedule 4.9. To the Company's knowledge, there is no liability for
retrospective insurance premium adjustments for any period prior to the date
hereof, except as stated in Schedule 4.9 hereto.
4.10 Patents, Trademarks and Copyrights. There are no patents,
patent applications, registered trademarks, registered service marks, trademark
and service mark applications, unregistered trademarks and service marks,
copyrights and copyright applications, owned or filed by the Company or in
which the Company has an interest and the nature of such interest. Except for
the right to use "Isle of Capri", no other patent, trademark or service mark,
copyright or license is necessary to permit the business of the Company to be
conducted as now conducted or as heretofore or proposed to be conducted. No
person, firm or corporation has any proprietary, financial or other interest in
any of such patents, patent applications, registered trademarks, registered
service marks, trademark and service mark applications, unregistered trademarks
and service marks, copyrights and copyright applications, and there are no
violations by others of any of the rights of the Company thereunder. To the
knowledge of Crown and the Company, the Company is not infringing upon any
patent trademark or service mark, or copyright or otherwise violating the
rights, of any third party, and no proceedings have been instituted or are
pending or, to the knowledge of the Company, are threatened, and no claim has
been received by the Company, alleging any such violation. The Company is not a
party to or bound by any license agreement requiring the payment by the Company
of any royalty payment.
4.11 Contracts and Commitments. Except as stated in Schedule 4.11
hereto, the Company is not a party to any written or oral contract or
commitment or any letter of intent, letter of understanding or other similar
instrument. Copies of all such instruments have been provided to counsel for
LRGP. Except as stated in Schedule 4.11, the Company, and to the Company's
knowledge, the other parties to the above contracts have complied with the
provisions thereof, such contracts are valid and enforceable, no party is in
default thereunder, and no event has occurred which but for the passage of time
or the giving of notice would constitute a default thereunder. The Company has
terminated its management agreement with Century Casinos, Inc. ("Century")
effective March 18, 1995 in consideration of the payment by the Company of $4
million in cash.
4.12 Defaults. The Company is not in default in the performance,
observance or fulfillment of any obligation, covenant
-8-
<PAGE> 9
or condition contained in any debenture or note, or contained in any
conditional sale or equipment trust agreement, or loan or other borrowing
agreement to which the Company is a party.
4.13 Restrictions. The Company is not subject to any charter or
other corporate restriction or any judgment, order, writ, injunction or decree,
which materially and adversely affects the businesses, operations, prospects,
properties, assets or condition, financial or otherwise, of the Company.
4.14 Pension Plans. There are no plans of the Company to which the
Employee Retirement Income Security Act ("ERISA") applies, in whole or in part.
4.15 Employees. Schedule 4.15 hereto sets forth the names,
addresses and social security numbers of all employees of the Company, their
rates of compensation and all other material terms and conditions of their
employment. Except as set forth in Schedule 4.15, all such employees may be
terminated immediately without any further or ongoing contractual obligations
whatsoever. The Company is not a party to any collective bargaining agreement,
and the Company is not aware of any attempts to organize its employees.
4.16 Compliance with Laws. The Company has complied with and is not
in default under, or in violation of, any laws, ordinances, rules, regulations
or orders (including, without limitation, any antitrust, environmental,
securities, employment, safety, health or trade laws, ordinances, rules,
regulations or orders) applicable to the operations, businesses or properties
of the Company which materially and adversely affect or, so far as Crown can
now foresee, may in the future materially and adversely affect, the business,
operations, prospects, properties, assets or condition, financial or otherwise,
of the Company.
4.17 Consents. Except as stated in Section 3.4 hereof, all
consents, approvals or authorizations required to be obtained by the Company in
connection with the transactions contemplated by this Agreement have been
obtained.
4.18 No Claims. Except as stated in Schedule 4.18 hereto, there is
no action, suit, proceeding or claim by any person, and no investigation by any
governmental agency, pending or threatened against the Company.
4.19 Disclosure. No representation or warranty by the Company in
this Agreement or in the Schedules hereto contains any untrue statement of
material facts or omits to state any material facts necessary to make any
statement herein not misleading.
Section 5. Representations and Warranties of LRGP. LRGP represents and
warrants to Crown that:
-9-
<PAGE> 10
5.1 Organization and Authority. LRGP is a general partnership duly
organized and validly existing under the laws of the State of Louisiana, and
has full power and authority to own its properties and assets and to carry on
its business as presently conducted. The partners of LRGP are, and will be at
Closing, Louisiana River Site Development, Inc. and CSNO, Inc. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby are within the power of LRGP and have been duly authorized
by all necessary corporate and other action. This Agreement constitutes the
valid obligation of LRGP legally binding upon it, enforceable in accordance
with its terms.
5.2 Validity of Contemplated Transactions. Except for the
provisions of the note in the face amount of $35 million of LRGP to CSNO, Inc.,
neither the execution, delivery or performance of this Agreement by LRGP, nor
the consummation of the transactions contemplated hereby will (a) violate,
conflict with or result in a breach of any provisions of, constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, result in the termination of or accelerate the performance
required by, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of LRGP under, any of the
terms, conditions or provisions of its Articles of Partnership or any note,
bond, mortgage, indenture, deed of trust, lease, license, agreement or other
instrument or obligation which binds it or any of its assets or (b) violate any
order, writ, injunction, decree, statute, rule or regulation of any
governmental body applicable to LRGP or any of its assets.
5.3 Investment Representations. The Company Stock being delivered
pursuant to the provisions of this Agreement is being purchased by LRGP for
investment for its own account and not with a view to the distribution thereof.
5.4 Compliance. The business and operations of LRGP have been and
are being conducted in compliance with all applicable laws, rules and
regulations of all authorities, noncompliance with which would have a material
adverse effect on its business, results of operations or prospects. LRGP is not
in violation of any term or provision of its Articles of Partnership, or any
indenture, contract, lease, agreement or instrument by which it is bound or any
applicable law, rule or regulation, the violation of which would have a
material adverse effect on its business, financial or other condition or its
prospects.
5.5 Financial Statements. LRGP has delivered to Crown copies of
the following financial statements, all of which have been prepared in
accordance with generally accepted accounting principles (except for the
absence of footnotes and as otherwise disclosed therein) applied on a basis
consistent with that of the preceding fiscal year.
-10-
<PAGE> 11
(i) Balance sheets as of December 31, 1994, prepared by LRGP,
which balance sheets together with any notes to the respective
balance sheets present fairly the financial condition and
assets and liabilities of LRGP as of their respective dates.
(ii) Income statement of LRGP for the fiscal year ended December
31, 1994, prepared by LRGP, which statement together with any
notes to the respective statements of net income present
fairly the results of operations of LRGP for the said periods.
5.6 Changes in Financial Condition. (a) Since December 31, 1994
there has not been (i) any adverse change in the financial condition or in the
operations, businesses or properties of LRGP; or (ii) any damage, destruction
or loss, whether covered by insurance or not, materially and adversely
affecting the operations, businesses or properties of LRGP.
5.7 Litigation. There is no litigation, proceeding, governmental
investigation or claim pending or threatened, against or related to LRGP, or
its properties or business and not covered by insurance; and (b) LRGP is not in
default with respect to any order, writ, injunction or decree of any court or
federal, state, municipal or governmental department, commission, board,
bureau, agency or instrumentality.
5.8 Defaults. LRGP is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained in
any debenture or note, or contained in any conditional sale or equipment trust
agreement, or loan or other borrowing agreement to which LRGP is a party.
5.9 Compliance with Laws. LRGP has complied with and is not in
default under, or in violation of, any laws, ordinances, rules, regulations or
orders (including, without limitation, any safety, health or trade laws,
ordinances, rules, regulations or orders) applicable to the operations,
businesses or properties of LRGP which materially and adversely affect or, so
far as LRGP can now foresee, may in the future materially and adversely affect,
the business, operations, prospects, properties, assets or condition, financial
or otherwise, of LRGP.
5.10 Disclosure. No representation or warranty by LRGP in this
Agreement contains any untrue statement of material facts or omits to state any
material facts necessary to make any statement herein not misleading.
Section 6. Conduct of Business Pending Closing. A. Pending the
Closing, Crown and the Company covenant in favor of LRGP as follows (which
covenants may not be modified without the consent of LRGP):
-11-
<PAGE> 12
6.1 Business in the Ordinary Course. Except for transactions
incurred in the ordinary course of business, the Company shall refrain from
engaging in any transactions except with the concurrence of LRGP, which will
not be unreasonably withheld.
6.2 Accounting Changes. The Company will not make any change in
its accounting procedures and practices from those in existence at January 31,
1995.
6.3 Capitalization, Options and Dividends. The Company will not
(i) make any change in its Articles of Incorporation or By-Laws (except to the
extent necessary to implement the provisions of this Agreement and the
Shareholders Agreement attached as Exhibit C hereto), (ii) issue or reclassify
or alter any shares of its outstanding or unissued capital stock, (iii) grant
options, warrants or other rights of any kind to purchase, or agree to issue
any shares of its capital stock, (iv) purchase, redeem or otherwise acquire for
a consideration any shares of its capital stock, or (v) declare, pay, set aside
or make any dividends or other distribution or payment in respect of its
capital stock.
6.4 Encumbrance of Assets. The Company will not mortgage, pledge
or encumber any of its properties or assets, except to LRGP to secure Debt of
the Company to LRGP.
6.5 Employment Agreements. The Company will not enter into any
employment agreements, will keep in effect its present salary administration
program (including pension plans and other fringe benefits), and will not
increase the compensation of any of its directors, officers or employees; nor
shall the Company make any contribution to any profit-sharing or pension plan,
deferred compensation or other employee benefit plan.
6.6 Real Property Acquisition, Dispositions and Leases. The
Company will not acquire or dispose of real estate or enter into leases of real
estate or equipment, except for (a) the leases of the real property consisting
of approximately 16 acres in Calcasieu Parish, Louisiana, for the site of the
Calcasieu Casino (the "Site") as stated in Schedule 8.6 hereto, and (b) the
purchase of real property in the area surrounding the Site for an aggregate
purchase price not to exceed $2,500,000 on terms and conditions approved by
LRGP.
6.7 Litigation During Interim Period. The Company will promptly
advise LRGP in writing of the commencement or threat against the Company of any
suit, proceeding, or claim by any person.
6.8 Inspection. LRGP and its officers, attorneys, accountants and
representatives shall be permitted to examine the property, books and records
of Crown (as they relate to the Company) and the Company, and such officers,
attorneys, accountants
-12-
<PAGE> 13
and representatives shall be afforded access to such property, books and
records and Crown and the Company will upon reasonable request furnish LRGP
with any information reasonably required in respect to Crown and the Company's
property, assets and business and will provide LRGP with copies of any
contract, document or instrument listed in any Schedule hereto. No such
examination, however, shall constitute a waiver or relinquishment on the part
of LRGP of its right to rely upon the covenants, representations and warranties
made by Crown and the Company herein.
6.9 Good Will. The Company will use its best efforts to preserve
the good will of suppliers and others having business relations with it.
6.10 Insurance. The Company will not cause or permit any of its
current insurance contracts to be cancelled or terminated or any coverage
thereunder to lapse unless, simultaneously therewith, replacement policies
providing equal or greater coverage for substantially the same premiums are in
effect.
6.11 Closing. Crown and the Company will each use all reasonable
efforts to bring about the satisfaction of the conditions of Closing specified
in Section 8 hereof as they relate to such party.
6.12 No Breach. The Company and Crown will not commit or omit to do
any act which act or omission would cause a breach of any agreement, contract
or commitment or which would have a material adverse effect on the Company's
financial condition, results of operations, business or prospects.
6.13 No Violation. The Company and Crown will not violate any law,
statute, rule, governmental regulation or order, which violation would have a
material adverse effect on the Company's financial condition, results of
operations, business or prospects.
B. Pending the Closing, LRGP covenants and agrees that it will
use all reasonable efforts to bring about the conditions of Closing specified
in Section 9 hereof as they relate to LRGP.
C. From and after the effective date hereof, LRGP or an affiliate
thereof shall provide loans (the "Loans") to the Company for all expenses and
development costs (in amounts to be agreed upon by LRGP and Crown) related to
the Calcasieu Casino accrued or incurred by the Company since February 8, 1995,
including, but not limited to, the sum of $4,000,000 to buy out the Management
Agreement between the Company and Century Casinos, Inc., and the payment of
interest on the loan evidenced by the Nomura Loan Documents (the "Nomura Loan")
from and after February 8, 1995. In addition, LRGP may, in its discretion, and
with Crown's consent, make advances ("Crown Advances") on the Loans to enable
St. Charles to pay interest on the Nomura Loan accrued prior to February 8,
-13-
<PAGE> 14
1995 and unpaid on February 8, 1995 plus any other obligations of St. Charles
or Crown to others. LRGP shall be repaid from Crown the total amount of all
Crown Advances immediately prior to the Closing. The maximum amount of all such
Loans shall not exceed $45,000,000 in the aggregate. The Loans shall be
represented by a note or notes of the Company bearing interest at 11.5% per
annum and shall be repaid by the Company in four (4) equal quarterly
installments of principal and interest beginning three (3) months after the
Closing Date (or as otherwise agreed by the parties), and shall be guaranteed
by Crown until the Closing and, if the Closing does not occur, until repayment
in full notwithstanding any termination of this Agreement pursuant to Section
21(a) or otherwise. If the Closing occurs, the guarantee of Crown shall be
released immediately and effective as of the Closing.
In the event that on or after the Closing Date LRGP guaranties any
debt of the Company and/or the Company refinances its existing indebtedness to
and/or borrows new monies from Nomura Holding America, Inc. (the "Nomura Loan")
on terms where (i) LRGP is either a co-issuer with the Company on the Nomura
Loan or a guarantor of the Nomura Loan, and/or (ii) LRGP becomes a co-borrower
or guarantor of additional or other indebtedness of the Company to a third
party lender, the Company hereby agrees to reimburse LRGP immediately on demand
and indemnify LRGP against any amount which LRGP may hereafter pay to Nomura on
the Nomura Loan or such third party lender on such other loan(s). This
reimbursement obligation shall be absolute and unconditional irrespective of
any counterclaim or defense to payment which the Company may have against
Nomura or such third party lender. The Company agrees to execute any further
instrument as LRGP shall reasonably require to evidence said reimbursement and
indemnity obligation.
LRGP shall use its best efforts to obtain third party financing for
the Company on terms satisfactory to Crown, the Company and LRGP, but without
the requirement for (i) Crown to grant a security interest in the 18.6 acres of
land owned by a subsidiary of Crown located in Las Vegas, Nevada and other
Crown assets, (ii) Crown to guarantee such financing and, (iii) Crown and LRGP
to grant a security interest in the Company Stock; provided, however, that if
such third party lender requires the pledge of the Company Stock as a first
priority security interest for such financing, Crown and LRGP agree to do so
and Crown further agrees to subordinate its security interest in the LRGP Stock
to the first priority security interest in favor of such third party lender.
In the event that on or after the Closing Date, LRGP or its designated
affiliate [including Casino America Inc. ("CSNO")] obtains funds from the
issuance of equity or debt securities or commercial loan proceeds or from other
sources to refinance the indebtedness of the Company to Nomura, other third
party lenders, and LRGP and to otherwise develop the Calcasieu Casino, LRGP
and/or such affiliate shall make loans to the Company and the Company
-14-
<PAGE> 15
agrees that the loans shall bear interest at the cost of such funds to LRGP
and/or such affiliate (including offering costs) to the extent that the loaned
funds are derived solely from debt securities or a commercially reasonable rate
to the extent that the loan funds are derived solely from equity securities or
in part from equity and debt securities, shall be secured by substantially all
assets, and if required by an unrelated third party stock of the Company, and
shall otherwise be on terms commercially reasonable terms satisfactory to the
Company, Crown, LRGP and CSNO.
In the event that Crown is required to subordinate the Purchase Money
Note to certain indebtedness (the "Hibernia Loan") of LRGP to Hibernia National
Bank ("Hibernia") in order for LRGP to obtain funds to loan to the Company,
LRGP agrees (i) not to accept advances on the Hibernia Loan unless such
advances are immediately re-loaned to the Company, (ii) to make all principal
and interest payments on the Hibernia Loan promptly when due (irrespective of
LRGP's ability to simultaneously obtain repayment thereof from the Company) and
(iii) to repay the Hibernia Loan in full not later than the repayment in full
of the indebtedness of the Company to Nomura.
Section 7. Liability and Indemnification . (a) Crown shall defend,
indemnify and hold harmless LRGP against and in respect of any and all
liability, damage, loss, deficiency, cost and expenses arising out of or
otherwise in respect of (i) any misrepresentation, breach of warranty (or
claims which would constitute a breach of warranty if true) or non-fulfillment
of any agreement or covenant contained in this Agreement, certificate or other
instrument furnished by Crown or the Company, (ii) the costs and expenses
incurred after the Closing Date, including attorneys fees, judgments, fines and
amounts paid in settlements of all actions, suits or proceedings, whether
civil, criminal, administrative or investigative, involving the Company which
relate to acts or omissions occurring prior to the date hereof, and (iii) any
and all actions, suits, proceedings, audits, demands, assessments, judgments,
costs and legal and other expenses incident to any of the foregoing or the
enforcement of this Section, but only to the extent that any such liability,
damage, loss, deficiency, cost or expense exceeds $5,000 individually and
$25,000 in the aggregate, provided, however, such limitation shall not apply to
a breach of Section 4.4(b).
(b) LRGP shall defend, indemnify and hold harmless Crown against
and in respect of any and all liability, damage, loss, deficiency, cost and
expenses arising out of or otherwise in respect of (i) any misrepresentation,
breach of warranty or nonfulfillment of any agreement or covenant contained in
this Agreement, certificate or other instrument furnished by LRGP, and (ii) any
and all actions, suits, proceedings, audits, demands, assessments, judgments,
costs and legal and other expenses incident to any of the foregoing or the
enforcement of this Section.
-15-
<PAGE> 16
Section 8. Conditions Precedent to LRGP's Obligations. All obligations
of LRGP under this Agreement are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions;
8.1 Representations and Warranties. Crown's and the Company's
representations and warranties contained in this Agreement, certificates or
other instrument delivered pursuant to the provisions hereof shall be true and
correct as of the effective date of this Agreement and as of the Closing Date
(except those made as of a specific date) as though such representations and
warranties were made at and as of such time, and Crown and the Company shall
have delivered to LRGP a certificate dated the Closing Date and signed by them
to such effect.
8.2 Compliance with Agreements. Crown and the Company shall have
performed or complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or at the Closing,
and Crown and the Company shall have delivered to LRGP a certificate dated the
Closing Date and signed by them to such effect.
8.3 Opinion of Counsel. Crown and the Company shall have delivered
to LRGP an opinion of their counsel, dated the Closing Date, substantially in
the form of Exhibit E hereto.
8.4 Debt to and From Parent. Any Debt of the Company to Crown
existing on the date of this Agreement or at Closing which shall not have been
repaid shall have been converted to shareholders equity by increasing paid-in
capital. Any debt of the Company to Crown incurred after February 8, 1995
shall be repaid immediately prior to Closing. Any Debt of Crown to the Company
existing at Closing shall be repaid in full immediately prior to the Closing.
8.5 Environmental Reports. Prior to executing the leases described
in Section 8.6 hereof, LRGP shall have received, reviewed and approved Phase I
(or Phase II or Phase III if deemed necessary by LRGP) environmental
engineering reports on the property subject to said proposed leases.
8.6 Leases. The Company and landlord(s) shall have executed leases
and recorded memorandums of leases of the Site pursuant to the options to lease
described in Schedule 8.6 hereto.
8.7 Regulatory Approvals. The Company, Crown and LRGP shall have
received all necessary approvals of governmental authorities to consummate the
transactions contemplated by this Agreement.
8.8 Hart-Scott-Rodino Filing. Crown and LRGP (and any other
required parties) shall have made any filings with the Federal Trade Commission
required by the Hart-Scott-Rodino Antitrust
-16-
<PAGE> 17
Improvements Act of 1976, and shall not have received any timely objection to
the consummation of the transactions contemplated by this Agreement.
8.9 Litigation. There shall not have been filed, or to the
knowledge of Crown or the Company, threatened, any action, suit, proceeding or
claim by any person, which if successful would have a material adverse effect
on the business of the Company or the transactions contemplated by this
Agreement. No action or proceeding shall have been threatened or instituted
before a court or other governmental body by any person, governmental agency or
public authority to restrain or prohibit the transactions contemplated by this
Agreement or to obtain damages or other material relief in connection with the
execution of this Agreement or the consummation of the transactions
contemplated hereby. In addition, no governmental agency shall have given
notice to the effect that consummation of the transactions contemplated by this
Agreement would constitute a violation of any law or that it intends to
commence proceedings to restrain consummation of the transactions contemplated
hereby.
8.10 Satisfactory Proceedings. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby and
all certificates, opinions, agreements, instruments and documents referred to
in this Section 8 or incident to any such transactions shall be reasonably
satisfactory in form and substance to LRGP and its counsel. Crown and the
Company shall furnish to LRGP and its counsel such supporting documentation and
evidence of the satisfaction of any or all of the conditions precedent
specified in this Section 8 as LRGP or its counsel may reasonably request.
8.11 Financing Consent. Crown and the Company shall have obtained
the consent of Nomura Holding America, Inc. to all of the transactions
contemplated by this Agreement.
8.12 Delivery of Company Stock. Crown shall have delivered the LRGP
Stock to LRGP, free and clear of any liens, encumbrances, rights, equities,
security interests and other adverse claims whatsoever, except for the security
interest in favor of Crown to secure the Purchase Money Note.
Section 9. Conditions Precedent to Crown's Obligations. All
obligations of Crown under this Agreement are subject to the fulfillment, prior
to or at the Closing, of each of the following conditions:
9.1 Representations and Warranties. The representations and
warranties of LRGP contained in this Agreement or in any certificate or other
instrument delivered pursuant to the provisions hereof shall be true and
correct as of the effective date of this Agreement and as of the Closing Date
as though such
-17-
<PAGE> 18
representations and warranties were made at and as of such time, and LRGP shall
have delivered to Crown a certificate dated the Closing Date and signed by it
to such effect.
9.2 Compliance with Agreements. LRGP shall have performed or
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing, and LRGP shall
have delivered to Crown a certificate dated the Closing Date and signed by it
to such effect.
9.3 Opinion of Counsel. LRGP shall have delivered to Crown an
opinion of LRGP's counsel, dated the Closing Date, substantially in the form of
Exhibit F hereto.
9.4 Regulatory Approvals. The Company, LRGP and Crown shall have
received all applicable approvals of governmental authorities to consummate the
transactions contemplated by this Agreement.
9.5 Hart-Scott-Rodino Filing. Crown and LRGP (and any other
required parties) shall have made any filings with the Federal Trade Commission
required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and not
have received any timely objection to the consummation of the transactions
contemplated by this Agreement.
9.6 No Action. No action or proceeding shall have been threatened
or instituted before a court or other governmental body by any person,
governmental agency or public authority to restrain or prohibit the
transactions contemplated by this Agreement or to obtain damages or other
material relief in connection with the execution of this Agreement or the
consummation of the transactions contemplated hereby. In addition, no
governmental agency shall have given notice to the effect that consummation of
the transactions contemplated by this Agreement would constitute a violation of
any law or that it intends to commence proceedings to restrain consummation of
the transactions contemplated hereby.
9.7 Satisfactory Proceedings. All corporate and other proceedings
and actions taken in connection with the transactions contemplated hereby and
all certificates, opinions, agreements, instruments and documents referred to
in this Section 9 or incident to any such transactions shall be reasonably
satisfactory in form and substance to Crown and its counsel. LRGP shall furnish
to Crown and its counsel such supporting documentation and evidence of the
satisfaction of any or all of the conditions precedent specified in this
Section 9 as Crown or its counsel may reasonably request.
9.8 Loans. LRGP or an affiliate shall have provided, or caused to
be provided by a third party lender, the Loans to the Company as contemplated
by Section 6.C. hereof, and the Company shall have entered into a loan
agreement acceptable to LRGP and
-18-
<PAGE> 19
Crown with a third party lender providing for loans in an amount not to exceed
$45,000,000, unless otherwise agreed by the parties, to be used in the manner
set forth in Section 6.C. hereof, or, alternatively, the Company and LRGP shall
have entered into a loan agreement acceptable to Crown and LRGP whereby LRGP
shall loan such funds up to the maximum amount referred to above in accordance
with the terms of Section 6.C. hereof.
Section 10. Broker and Finder's Fees. Crown and the Company represent
and warrant to LRGP that they have not engaged or dealt with any person who may
be entitled to any broker fee or commission in respect of the execution of this
Agreement or the consummation of the transactions contemplated hereby. LRGP
represents and warrants to Crown that it has not engaged or dealt with any
broker or other person who may be entitled to any brokerage fee or commission
in respect of the execution of this Agreement or the consummation of the
transactions contemplated hereby. Each of the parties hereto shall indemnify
and hold the others harmless against any and all claims, losses, liabilities or
expenses which may be asserted against such other parties as a result of such
first mentioned party's dealings, arrangements or agreements with any such
broker or person. Notwithstanding the foregoing, with the written approval of
Crown and LRGP which may be given or withheld in each such party's sole and
absolute discretion, the Company may pay a finders fee to Sid Goldstein and/or
Mike Profit in connection with the transactions contemplated by this Agreement.
Section 11. Expenses. Crown and LRGP shall each bear their own
expenses in connection with the Agreement and the transactions contemplated
thereby. Unless otherwise agreed by LRGP, Crown shall also bear the expenses of
the Company in connection with this Agreement and the transactions contemplated
hereby.
Section 12. Announcements. LRGP and Crown will consult and cooperate
with each other as to the timing and content of any announcements of the
transactions contemplated hereby to the general public or to employees,
customers or suppliers. Except as otherwise required by applicable law, neither
party without the consent of the other, will issue any press release concerning
the transactions contemplated by this Agreement, it being the intent of the
parties that any press releases will be issued simultaneously and the contents
thereof will be approved by all parties.
Section 13. Further Actions and Assurances. LRGP and Crown will
execute and deliver any and all documents, and will cause any and all other
action to be taken, either before or after Closing, which may be necessary or
proper to effect or evidence the provisions of this Agreement and the
transactions contemplated hereby.
Section 14. Purchase Money Note Restructure. Notwithstanding any of
the foregoing, in the event that the Company (with the
-19-
<PAGE> 20
consent of both Crown and LRGP) enters into one or more financing arrangements
with persons unaffiliated with Crown or LRGP, the terms of the Purchase Money
Note (including interest rate and repayment terms) and/or the collateral
arrangements shall be adjusted so as to comply with any affirmative or negative
covenants (including limitations on distributions) imposed by such third party
lender on the Company; in such event, the Purchase Money Note shall be amended
to reflect such required adjustments.
Section 15. Counterparts. This Agreement may be executed in several
counterparts each of which is an original. This Agreement and any counterpart
so executed shall be deemed to be one and the same instrument. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
Section 16. Contents of Agreement; Parties in Interest, Etc. This
Agreement sets forth the entire understanding of the parties. Any previous
agreements or understandings between the parties regarding the subject matter
hereof are merged into and superseded by this Agreement. This Agreement may not
be assigned by any party hereto without the prior written consent of the other
parties. Subject to the foregoing, all representations, warranties, covenants,
terms, conditions and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective heirs, legal
representatives, successors and assigns of Crown, the Company and LRGP.
Section 17. Governing Law. This Agreement is being delivered and is
intended to be performed in the State of Louisiana and shall be construed and
enforced in accordance with the laws thereof.
Section 18. Section Headings and Gender. The section headings herein
have been inserted for convenience of reference only and shall in no way modify
or restrict any of the terms or provisions hereof. The use of the masculine
pronoun herein when referring to any party has been for convenience only and
shall be deemed to refer to the particular party intended regardless of the
actual gender of such party.
Section 19. Schedules and Exhibits. All Schedules and Exhibits
referred to in this Agreement are intended to be and are hereby specifically
made a part of this Agreement.
Section 20. Notices. Any notice or demand which, by provision of this
Agreement, is required or permitted to be given or served by LRGP to or on
Crown and the Company shall be deemed to have been sufficiently given and
served for all purposes (if mailed) three calendar days after being deposited,
postage prepaid, in the United States Mail, registered or certified mail, or
(if delivered by express courier) one Business Day after being delivered to
such courier, or (if delivered in person) the same day
-20-
<PAGE> 21
as delivery, in each case addressed (until another address or addresses is
given in writing by Crown to LRGP) as follows:
Crown Casino Corporation
2415 West Northwest Highway, Suite 103
Dallas, Texas 75220
Attention: Mr. Mark D. Slusser
Vice President - Finance
St. Charles Gaming Company, Inc.
c/o Crown Casino Corporation
2415 West Northwest Highway, Suite 103
Dallas, Texas 75220
Attention: Mr. Mark D. Slusser
Vice President - Finance
with a copy to:
T. J. Falgout, III, Esq.
Stumpf & Falgout
1400 Post Oak Boulevard, Suite 400
Houston, Texas 77056
Any notice or demand which, by any provision of this Agreement, is
required or permitted to be given or served by Crown to or on LRGP shall be
deemed to have been sufficiently given and served for all purposes (if mailed)
three calendar days after being deposited, postage prepaid, in the United
States Mail, registered or certified mail, or (if delivered by express courier)
one Business Day after being delivered to such courier, or (if delivered in
person) the same day as delivery, in each case addressed (until another address
or addresses are given in writing by LRGP to Crown) as follows:
Louisiana Riverboat Gaming Partnership
c/o Louisiana River Site Development, Inc.
The Edward J. DeBartolo Corporation
7620 Market Street
Youngstown, Ohio 44513-3287
Attention: Mr. Gerald Wiemann
Vice President
-21-
<PAGE> 22
Louisiana Riverboat Gaming Partnership
c/o CSNO, Inc.
Casino America, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Attention: Mr. James E. Ernst
Chief Executive Officer
with copies to:
Mr. Arthur Wolfcale
Vice President and Secretary
Edward J. DeBartolo Corporation
7620 Market Street
Youngstown, Ohio 44512-6085
and
Allan B. Solomon, Esq.
Chairman of the Executive Committee
Casino America, Inc.
2200 Corporate Blvd., N.W., Suite 310
Boca Raton, Florida 33431
Section 21. Termination. (a) This Agreement may be terminated at any
time prior to the Closing (i) by consent of Crown, the Company and LRGP; (ii)
by LRGP if any of the conditions described in Section 8 hereof have not been
met as of the proposed Closing Date and have not been waived by LRGP; (iii) by
Crown if any of the conditions described in Section 9 hereof have not been met
as of the proposed Closing Date and have not been waived by Crown; or (iv) by
any party if the Closing has not occurred by May 31, 1995. Any termination
pursuant to this Section 21 shall be effective immediately upon the giving of
notice by the terminating party to the other party. In the event of termination
pursuant to this Section 21(a), this Agreement shall become null and void and
no party shall have any obligations to any other party.
(b) If this Agreement is terminated as a result of the breach by
Crown or the Company of its obligations hereunder, LRGP shall be entitled to
the return of the $100,000 deposit made prior to the execution of this
Agreement. Such right shall be in addition to any and all other rights and
remedies which would be available to LRGP at law or in equity.
Section 22. Exclusivity. From and after the date of this Agreement
until the earlier of the Closing Date or the termination of this Agreement
pursuant to Section 21 hereof, Crown and the Company will not solicit or
encourage inquiries or proposals with respect to, or furnish any information
relating to, or participate in any negotiations or discussions concerning, any
acquisition of
-22-
<PAGE> 23
the Calcasieu Casino, or any of the Company Stock or any other matters
contemplated by this Agreement, and Crown and the Company shall instruct their
officers, directors, agents and affiliates to refrain from doing so. Crown and
the Company will notify LRGP immediately if any such serious inquiries or
proposals are received by Crown or the Company, or if any such information is
requested from Crown of the Company, or any such negotiations are sought to be
initiated with Crown or the Company, and any response thereto shall be approved
in advance by LRGP.
Section 23. No Waiver. The failure by any party to enforce any of its
rights hereunder shall not be deemed to be a waiver of such rights, unless such
waiver is an express written waiver which has been signed by the waiving party.
Waiver of any one breach shall not be deemed to be a waiver of any other breach
of the same or any other provisions hereof.
Section 24. Survival. The representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing for a period
of five (5) years thereafter except that the representations and warranties
contained in Sections 3.1, 3.2, 3.3, 3.4 and 4.1 shall survive for the maximum
period permitted by applicable law.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
CROWN CASINO CORPORATION
By: /s/ Mark D. Slusser
--------------------------------------
Name: Mark D. Slusser
Title: Vice President
-23-
<PAGE> 24
ST. CHARLES GAMING COMPANY, INC.
By: /s/ Mark D. Slusser
--------------------------------------
Name: Mark D. Slusser
Title: Vice President
LOUISIANA RIVERBOAT GAMING PARTNERSHIP,
a Louisiana general partnership
By: LOUISIANA RIVER SITE DEVELOPMENT,
INC., General Partner, a wholly-owned
subsidiary of Louisiana Downs, Inc.
By: /s/ Gerald Wiemann
------------------------------
Name: Gerald Wiemann
Title: Vice President,
Secretary and
Treasurer
By: CSNO, INC., General Partner, a
wholly-owned subsidiary of Casino
America, Inc.
By: /s/ Allan B. Solomon
------------------------------
Name: Allan B. Solomon
Title: Secretary and Treasurer
-24-
<PAGE> 1
IN WITNESS WHEREOF, the undersigned have caused this May 1995
Waiver to be duly executed and delivered as of the date first above written.
ST. CHARLES GAMING COMPANY, INC.
By:
---------------------------
Title:
NOMURA HOLDING AMERICA INC.
By:
---------------------------
Title:
Accepted, Acknowledged and Agreed to:
CROWN CASINO CORPORATION
By:
-------------------------------
Title:
GAMING ENTERTAINMENT MANAGEMENT SERVICES, INC.
By:
-------------------------------
Title:
BANK OF NEW YORK, as successor to
Hibernia National Bank,
as Agent for the Purchasers
By: /s/ Sheila S. Papelbon
-------------------------------
Title: Assistant Vice President
<PAGE> 1
EXHIBIT 10.1
SECURITY AGREEMENT - PLEDGE
ARTICLE I.
Parties, Collateral and Obligations
THIS SECURITY AGREEMENT - PLEDGE (the "Security Agreement") dated on
or as of the 9th day of June, 1995 (the "Effective Date"), by and between
LOUISIANA RIVERBOAT GAMING PARTNERSHIP, a Louisiana partnership ("Debtor"), and
CROWN CASINO CORPORATION, a Texas corporation ("Secured Party").
W I T N E S S E T H:
WHEREAS, of even date herewith, Debtor has purchased from Secured
Party fifty percent (50%) of the issued and outstanding shares of capital stock
consisting of fifty thousand (50,000) shares (the "Shares") of ST. CHARLES
GAMING COMPANY, INC., a Louisiana corporation ("SCGC"), pursuant to the terms
and conditions of that certain Amended Stock Purchase Agreement dated June 2,
1995, but effective March 2, 1995, by and among Secured Party, SCGC and Debtor
(the "Purchase Agreement"); and
WHEREAS, of even date herewith, Secured Party and Debtor, as
shareholders of SCGC, have entered into that certain Shareholders Agreement
(the "Shareholders Agreement");
WHEREAS, as partial payment of the purchase price of the Shares,
Debtor has executed and delivered to Secured Party that certain Promissory Note
of even date herewith in the original principal sum of Twenty Million and
No/100 Dollars ($20,000,000), bearing interest at the rate stated therein, and
any and all renewals, extension and modifications thereof (the "Note"); and
WHEREAS, the obligations of Debtor pursuant to the Note are to be
secured by the Shares, and as an inducement to Secured Party, Debtor hereby
agrees to pledge such Shares to secure the repayment of the Note.
NOW, THEREFORE, as an inducement to Secured Party to accept the Note,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, Debtor grants to Secured Party a security interest in the
following property:
An aggregate of fifty thousand (50,000) shares of the authorized,
issued and outstanding Common Stock, no par value, of SCGC represented
by certificate number 105, registered in the name of Debtor on the
stock books and records of SCGC, with a stock power, duly endorsed in
blank, attached to each certificate.
<PAGE> 2
All property of all kinds in which the Secured Party is herein granted a
security interest shall hereinafter be called the "Collateral". Debtor agrees
to execute such stock powers, endorse such instruments or execute such
additional pledge agreements or other documents as may be required by the
Secured Party in order to effectively grant to Secured Party the pledge of and
security interest in the Collateral.
The security interest granted herein secures the payment of all
payments due from Debtor to Secured Party pursuant to the terms and provisions
of the Note (the "Obligations").
ARTICLE II.
Warranties and Covenants of Debtor
Debtor hereby warrants, covenants and agrees that until the
Obligations have been repaid in full:
(a) Except as specified in the Purchase Agreement or the
Shareholders Agreement, it is the owner of the Collateral free from
any adverse claim, security interest, encumbrance or other claims or
rights of third parties whatsoever, save and except only the lien and
security interest granted hereby.
(b) Except as specified in the Purchase Agreement or the
Shareholders Agreement, Debtor will keep the Collateral free from any
liens, security interests or encumbrances, save and except only the
lien and security interest granted hereby.
(c) Debtor waives any right to require Secured Party to proceed
against another person or exhaust the Collateral or to pursue any
other remedies which Secured Party may have. Except as otherwise set
forth in the Note, Debtor waives presentment, demand for performance,
notice of nonperformance, protest, notice of protest and dishonor with
respect to the Collateral.
(d) This Agreement constitutes the legal, valid and binding
obligation of the Debtor, enforceable in accordance with its terms.
The Debtor's execution and delivery of this Agreement has been
approved, in writing, by its General Partners, Louisiana River Site
Development, Inc. and CSNO, Inc., and no other consents or approvals
are necessary for its proper execution or enforceability.
2
<PAGE> 3
(e) As soon as available and in any event within ninety (90) days
after the close of each fiscal year of the Debtor, the Debtor shall
deliver to the Secured Party the unaudited balance sheet of the Debtor
as at the end of such year and the unaudited statement of income of
the Debtor for such year.
(f) As soon as available and in any event within forty-five (45)
days after the close of each fiscal quarter of the Debtor, the Debtor
shall deliver to the Secured Party the unaudited balance sheet of the
Debtor as at the end of such fiscal quarter and the unaudited
statement of income of the Debtor for such fiscal quarter.
(g) Debtor will cause to be paid prior to delinquency all taxes
and assessments heretofore or hereafter levied or assessed against the
Collateral, or any part thereof, or against the Secured Party for or
on account of the indebtedness secured hereby or the interest created
by this Security Agreement and will furnish Secured Party with
receipts or other satisfactory evidence showing payment of such taxes
and assessments at least ten (10) days prior to the applicable default
date therefor.
(h) If the validity or priority of this Security Agreement or of
any right, title, security interest or other interests created or
evidenced hereby shall be attacked, endangered or questioned or if any
legal proceedings are instituted against Debtor with respect thereto,
Debtor will give prompt written notice thereof to Secured Party and at
Debtor's own cost and expense will diligently endeavor to cure any
defect that may be developed or claimed, and will take all necessary
and proper steps for the defense of such legal proceedings, and
Secured Party (whether or not named as a party to legal proceedings
with respect thereto) is hereby authorized and empowered to take such
additional steps as in its judgment and discretion may be necessary or
proper for the defense of any such legal proceedings or the protection
of the validity or priority of this Security Agreement and the right,
title, security interest and other interests created or evidenced
hereby, and all expenses so incurred of every kind and character shall
be a demand obligation owing by Debtor and the party incurring such
expenses shall be subrogated to all rights of the person receiving
such payment.
(i) Debtor will, on request of Secured Party, (i) promptly correct
any defect, error or omission which may be discovered in the contents
of this Security Agreement or in any other instrument executed in
connection herewith or in the execution or acknowledgment thereof;
(ii) execute, acknowledge, deliver and record or file such further
instruments (including without limitation further security agreements,
financing statements and continuation statements) and do such further
acts as may be necessary,
3
<PAGE> 4
desirable or proper to carry out more effectively the purposes of this
Security Agreement and such other instruments and to subject to the
security interests hereof and thereof any property intended by the
terms hereof and thereof to be covered hereby and thereby, including
specifically, but without limitation, any renewals, additions,
substitutions, replacements or appurtenances to the then Collateral;
and (iii) execute, acknowledge, deliver, procure and record or file
any document or instrument (including specifically any financing
statement) deemed advisable by Secured Party to protect the security
interest hereunder against the rights or interests of third persons,
and Debtor will pay all costs connected with any of the foregoing.
(j) Except as specified in the Purchase Agreement or the
Shareholders Agreement, Debtor will not sell, exchange, lend, assign,
transfer or otherwise dispose of all or any part of the Collateral or
any interest therein, or permit any of the foregoing, without the
prior written consent of Secured Party.
ARTICLE III.
Events of Default
The term "Event of Default", whenever used in this Security Agreement,
shall mean any one or more of the following events or conditions:
(a) Failure by Debtor to make payment of the Obligations as the
same become due in accordance with the terms thereof, and such failure
continues for a period of ten (10) days from the scheduled due date
thereof, or
(b) Debtor shall have (i) except as allowed in accordance with the
terms of the Shareholders Agreement, dissolved or terminated its
existence without the express written assumption of the Obligations by
the transferee with the consent of the Secured Party, which consent
will not be unreasonably withheld, (ii) made a general assignment for
the benefit of creditors, (iii) been adjudicated a bankrupt or
insolvent, or (iv) filed a voluntary petition in bankruptcy or a
petition or any answer seeking an arrangement with creditors or to
take advantage of any insolvency law or any answer admitting the
material allegations of a petition filed against it in bankruptcy; or
(c) Any breach of Debtor's representations and warranties
contained herein, or any intentional misstatement or omission of fact
or failure to state facts necessary to make such representations and
warranties not misleading; or
4
<PAGE> 5
(d) Any breach by Debtor of any covenant, agreement or undertaking
of Debtor contained in this Security Agreement, and continuance of
such breach for a period of thirty (30) days after the receipt by
Debtor from Secured Party of notice of such breach.
ARTICLE IV.
Remedies
Upon the happening and continuance of any Event of Default specified
in Article III above, at the option of Secured Party the Obligations shall
become immediately due and payable without presentment or demand or any notice
to Debtor or any other person obligated thereon, and Secured Party shall have
and may exercise any or all of the rights and remedies of a secured party under
the Uniform Commercial Code as adopted in the State of Texas, and as otherwise
granted herein or under any other law or under any other agreement executed by
Debtor, including, without limitation, the right and power to sell, at public
or private sale or sales, or otherwise dispose of or utilize such portion of
the Collateral and any part or parts thereof in any manner authorized or
permitted under said Uniform Commercial Code after default by a debtor, and to
apply the proceeds thereof toward payment of any costs and expenses and
attorney's fees and legal expenses thereby incurred by Secured Party and toward
payment of the Obligations in such order or manner as Secured Party may elect,
and any surplus shall be paid to the Debtor. Debtor agrees that receipt by
Debtor of notice of sale or other disposition of the Collateral at least ten
(10) days before the time of the sale or disposition, such notice shall be
deemed reasonable and shall fully satisfy any requirement of giving notice.
ARTICLE V.
Secured Party's Powers and Duties
with Respect to Collateral
(a) Secured Party shall be entitled to receive and have delivered
to Secured Party, to be held by Secured Party under this Security
Agreement as Collateral, all stock dividends and stock issued as a
result of stock splits, and Debtor shall immediately pledge and
deposit with Secured Party any such stock that may come into its
possession or control. Until a default shall have occurred and be
continuing, Debtor shall be entitled to receive all cash dividends
upon the shares of stock of SCGC which are at any time pledged as
Collateral hereunder.
5
<PAGE> 6
(b) Unless and until a default hereunder shall have occurred and
be continuing, Debtor shall have the right to vote all shares of stock
pledged as Collateral with the same force and effect as though such
shares were not pledged hereunder, and Debtor shall have the right to
retain the shares of stock pledged as Collateral in its own name.
(c) Secured Party shall be under no duty to collect any amount
which may be or become due on any of the Collateral, to collect
principal, interest or dividends, to keep the same insured, to make
any presentments, demands or notices of protest, in connection with
any of the Collateral, or to do anything for the enforcement and
collection of Collateral or the protection thereof.
(d) Not limiting the generality of any of the foregoing but in
amplification of the same, Secured Party shall not be liable to or
responsible for any diminution in the value of the Collateral from any
cause whatsoever, other than the active misfeasance of Secured Party.
If all of the Obligations are paid in full and if there are no sums
due and owing by Debtor to Secured Party hereunder, all rights of
Secured Party shall terminate and the Collateral shall become wholly
clear of the security interest evidenced hereby and such security
interest shall be released by Secured Party.
(e) Notwithstanding anything contained herein, the Secured Party
agrees to subordinate its security interest in the Collateral to a
lender which provides financing to SCGC on terms acceptable to Secured
Party and which requires a first priority security interest in the
Collateral as a condition to providing such financing; provided,
however, that so long as no default has occurred under such financing
arrangement, SCGC shall be permitted to make distributions on the
Collateral to the Maker, if available.
ARTICLE VI.
Notices
All notices, demands and requests which may be given or which are
required to be given by any party to the others shall be in writing and shall
be deemed effective when either: (a) personally delivered to the intended
recipient; (b) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (c)
delivered in person to the address set forth below for the party to which the
notice was given; (d) deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, Emery or
Purolator, addressed to such party at the address specified below; or (e) sent
by facsimile, telegram or telex, provided that receipt for such facsimile,
telegram or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above. Notices shall be
6
<PAGE> 7
effective on the date of delivery or receipt or, if delivery is not accepted,
on the earlier of the date that delivery is refused or three (3) days after the
date the notice is mailed. For purposes of this Article, the addresses of the
parties for all notices are as follows (unless changes by similar notice in
writing are given by the particular person whose address is to be changed):
(a) If to Secured Party, to:
Crown Casino Corporation
Attn: Mr. Mark D. Slusser, Vice President - Finance
2415 W. Northwest Highway, Suite 103
Dallas, Texas 75220,
with a copy to:
T. J. Falgout, III, Esq.
Stumpf & Falgout, P.C.
1400 Post Oak Boulevard, Suite 400
Houston, Texas 77056;
(b) If to Debtor, to:
Louisiana Riverboat Gaming Partnership
Louisiana River Site Development Inc., General Partner
c/o The Edward J. DeBartolo Corporation
7620 Market Street
Youngstown, Ohio 44513-3287
Attn: Mr. Gerald Wiemann, Vice President,
and to:
Louisiana Riverboat Gaming Partnership
CSNO, Inc., General Partner
c/o Casino America, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Attn: Mr. James E. Ernst, Chief Executive Officer
7
<PAGE> 8
with a copy to:
Mr. Arthur Wolfcale
Vice President and Secretary
The Edward J. DeBartolo Corporation
7620 Market Street
Youngstown, Ohio 44512-6085
and
Allan B. Solomon, Esq.
Chairman of the Executive Committee
Casino America, Inc.
2200 Corporate Blvd., N.W., Suite 310
Boca Raton, Florida 33431.
ARTICLE VII.
Survival of Agreements,
Representations and Warranties
All agreements, representations and warranties contained herein or
made in writing by or on behalf of Debtor in connection with the transactions
contemplated hereby shall survive the execution and delivery of this Security
Agreement, and any investigation at any time by Secured Party or on its behalf.
ARTICLE VIII.
Miscellaneous
(a) No right or remedy in this Security Agreement or the Note is
intended to be exclusive of any other right or remedy, but every such
right or remedy shall be cumulative and shall be in addition to every
other right or remedy herein or therein conferred, or now or hereafter
existing at law or in equity or by statute.
(b) No delay or omission by Secured Party in the exercise of any
right or remedy shall impair such right or remedy or any other right
or remedy or shall be construed to be a waiver of any default or an
acquiescence therein; and every right and remedy herein conferred or
now or hereafter existing at law or in equity or by statute, may be
exercised separately or concurrently and in such order and as often as
may be deemed expedient by Secured Party. Not limiting the generality
of the foregoing, pursuit or exercise of any right
8
<PAGE> 9
or remedy herein, in the Note, or by law or in equity or by statute,
shall not be, and shall not be considered to be, an election against,
waiver or relinquishment of, any other right or remedy.
(c) The invalidity or unenforceability of any of the rights or
remedies herein provided in any jurisdiction shall not in any way
affect the right to the enforcement in such jurisdiction or elsewhere
of any of the other rights or remedies herein provided.
(d) THIS SECURITY AGREEMENT IS BEING DELIVERED AND IS INTENDED TO
BE PERFORMED IN THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF SUCH STATE.
(e) This Security Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the parties hereto.
(f) The headings of this Security Agreement are for the purpose of
reference only and shall not limit or otherwise affect any of the
terms hereof.
(g) Whenever the context requires, the gender of all words used
herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and the plural.
(h) This Security Agreement may be executed simultaneously 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.
(i) THIS SECURITY AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
9
<PAGE> 10
IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered as of the date first above written.
DEBTOR:
LOUISIANA RIVERBOAT GAMING PARTNERSHIP,
a Louisiana general partnership
By: Louisiana River Site Development,
Inc., General Partner, a wholly-owned
subsidiary of Louisiana Downs, Inc.
By: /s/ Gerald Wiemann
------------------------------------
Name: Gerald Wiemann
----------------------------------
Title: Vice President
---------------------------------
By: CSNO, Inc., General Partner, a
wholly-owned subsidiary of Casino
America, Inc.
By: /s/ Allan B. Solomon
------------------------------------
Name: Allan B. Solomon
----------------------------------
Title: Vice President
---------------------------------
SECURED PARTY:
CROWN CASINO CORPORATION
By: /s/ Edward R. McMurphy
---------------------------------------------
Edward R. McMurphy, President
10
<PAGE> 1
EXHIBIT 10.2
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") is made and entered
into as of this 9th day of June, 1995 by and between CROWN CASINO CORPORATION,
a Texas corporation ("Crown") and LOUISIANA RIVERBOAT GAMING PARTNERSHIP, a
Louisiana partnership ("LRGP"), the sole shareholders of St. Charles Gaming
Company, Inc., a Louisiana corporation ("Company")(Crown and LRGP,
individually a "Shareholder" and together the "Shareholders").
RECITALS
A. Each of the Shareholders owns 50% of the outstanding capital stock
of the Company ("Company Stock").
B. The Shareholders desire to enter into this Agreement to regulate
certain aspects of their relationship and to provide for, among other things,
restrictions on the transfer or other disposition of securities or assets of
the Company and in matters relating to the corporate governance of the
Company.
NOW, THEREFORE, in consideration of the recitals and the respective
covenants, representations and agreements herein contained, the parties hereto
agree as follows:
Section 1. Restrictions on Transfer of Company Stock
1.1 General Restrictions. Except as expressly permitted herein, no
Shareholder shall sell, assign, transfer, mortgage, charge or otherwise
encumber or suffer any third party to sell, assign, transfer, mortgage, charge
or otherwise encumber or contract to do or permit any of the foregoing,
whether voluntarily or by operation of law (herein sometimes collectively
called a "transfer"), any part or all of the Company Stock without the written
consent of the other Shareholder, and any attempt to do so shall be void ab
initio. The giving of such consent in any one or more instances shall not limit
or waive the need for such consent in any other subsequent instances and shall
always be at such shareholder's sole and absolute discretion.
1.2 Permitted Transfers. Either Shareholder may, without the consent
of the other Shareholder: (a) Upon 30 day's prior written notice, transfer its
Company Stock to another legal entity which the Shareholder either controls or
is controlled by, or to another legal entity in which a majority equity
interest is controlled by the Shareholder.
(b) LRGP may pledge all of its Company Stock to Crown as
security for the $20,000,000 purchase money note given by LRGP to
<PAGE> 2
Crown representing a portion of the purchase price of the Company Stock owned
by LRGP.
(c) In the event LRGP is liquidated and dissolved, it may
transfer its Company Stock to its partners.
(d) Either Shareholder has the right to pledge its Company
Stock as security for indebtedness, so long as secured party receives the
Company Stock subject to the terms of this Agreement and so long as the pledge
thereof does not constitute an event of default under any agreement to which
the Company is a party.
1.3 Sale of Company Stock: Right of First Refusal. If at any time
after January 1, 1996, either Shareholder (the "Offeror") receives a bona fide
Offer from a third party unrelated to either Shareholder for the purchase of
all or any part of the Offeror's Company Stock which it desires to accept, the
Offeror shall send a copy of the Offer, in the manner provided in this
Agreement for the giving of notices, to the other Shareholder (the "Offeree"),
which shall disclose the name and address of the proposed purchaser. The
Offeree shall have the absolute right to purchase the portion of the Company
Stock subject to the Offer upon the terms and conditions set forth in the
Offer, except that the Offeree shall not be required to pay a broker's
commission, if any. The Offeree shall, within 30 days of such receipt, specify
in a notice to the Offeror whether or not the Offeree desires to accept the
Offer. If the Offeree timely accepts the Offer, the Closing of the sale of
the Company Stock shall take place within 60 days thereafter (or as soon
thereafter as practicable if the transaction is delayed solely by reason of
the time constraints in receiving third-party consents). Failure to send such
notice of acceptance within said 30-day period shall constitute an election by
the Offeree to reject the Offer, and the Offeror may then sell the Company
Stock subject to the Offer to the proposed purchaser whose name and address
were disclosed in the Offer, but only upon the same terms and conditions as
those set forth in the Offer and only within 180 days after the expiration of
said 30-day period; otherwise, any such sale shall be considered null and void
and the Company Stock of the Offeror shall remain subject to all the
provisions of this Subsection 1.3. If the consideration offered by a third
party under this Section 1.3 consists of property, the value thereof shall be
determined by reference to any established national exchange if such property
consists of tradable securities or other readily tradable commodities, by an
appraiser mutually agreed to by the Shareholders, or by submission to
arbitration in New Orleans, Louisiana, before an arbitrator chosen in
accordance with the rules and regulations of the American Arbitration
Association.
-2-
<PAGE> 3
1.4 Sale of Company Assets: Right of First Refusal. If at any time
after January 1, 1996, the Company or either Shareholder receives a bona fide
Offer from a third party unrelated to either Shareholder to purchase all or
substantially all of the Company's assets for consideration that consists of
at least 75% cash and/or highly liquid marketable securities, then the Company
or the Shareholder (as the case may be) shall, within ten (10) days of
receiving the Offer and regardless of any desire to accept or reject the
Offer, give written notice (the "Asset Notice") to the other Shareholder (or
the Shareholders) of the Offer and the terms and conditions of the Offer. Each
Shareholder shall, within thirty days after the receipt of such notice, give
written notice to the other Shareholder stating whether or not such
Shareholder desires to accept the Offer. If both Shareholders desire to accept
the Offer, the sale to the third-party shall proceed. If one Shareholder
desires to accept the Offer (the "Accepting Shareholder") but the other
Shareholder desires to reject the Offer (the "Rejecting Shareholder"), then
the Rejecting Shareholder (or the Company at the Rejecting Shareholder's
option) shall purchase all of the shares of stock of the Accepting
Shareholder. The purchase price for each Accepting Shareholder's stock and the
terms and conditions of payment shall be the same as the Accepting
Shareholder would have received had the Offer been accepted, the sale
consummated and the Company thereafter dissolved as provided herein. Such
purchase price must be paid within 180 days of the rejection by the Rejecting
Shareholder of the Asset Notice. If the consideration offered by any
third-party under this Section 1.4 consists of property, the value thereof
shall be determined by reference to any established national exchange if such
property consists of tradable securities or other readily tradeable
commodities, by an appraiser mutually agreed to by the Shareholders, or by
submission to arbitration in New Orleans, Louisiana, before an arbitrator
chosen in accordance with the rules and regulations of the American
Arbitration Association.
1.5 Sale of Company Stock: Gaming Suitability. (a) If the State of
Louisiana determines for any reason that either (i) a Shareholder is not a
suitable applicant for a gaming license or (ii) that a Shareholder is not
suitable to continue as a licensee, and the Shareholder has exhausted all
reasonable opportunities to cure any deficiencies in an application or appeal,
then that Shareholder's Company Stock shall be purchased by the Company or by
the other Shareholder, at such other Shareholder's option, for a purchase
price equal to the fair market value of the Company's stock, as mutually agreed
upon by the Shareholders or an appraiser appointed by mutual agreement of the
Shareholders, and if not agreed within 30 days, as determined by arbitration
in Lake Charles, Louisiana, before an arbitrator chosen in accordance with
the rules and regulations of the American Arbitration Association.
-3-
<PAGE> 4
All loans payable to such Shareholder, if requested by such Shareholder, shall
also be repaid at such time, and any requirement of such Shareholder to make
additional loans shall cease, and the Company shall use its best efforts to
relieve such Shareholder from any guaranties or other security given or
provided by such Shareholder on behalf of the Company. If for any reason this
procedure is unacceptable to the State of Louisiana, then the Company may at
its option take any steps reasonably necessary to comply with the request of
the State of Louisiana, and the departing Shareholder hereby consents to such
steps. The departing Shareholder shall not participate in dividends of the
Company after the date its Company Stock is purchased or disposed of pursuant
hereto.
(b) At the option of the Company or the purchasing Shareholder, the
purchase price may be paid over a period of five years, with 20% to be paid in
the first year and the balance to be paid over the remaining four years in
equal annual installments with interest at the prime rate as published in the
southeast edition of the Wall Street Journal on the date of the closing of
such purchase, or, if not available, the prime rate charged at such date by
Citibank, N.A., New York.
1.6 Restraining Order. In the event that any Shareholder shall at any
time transfer or attempt to transfer its Company Stock in violation of the
provisions of this Agreement and any rights hereby granted, then the other
Shareholder shall, in addition to all rights and remedies at law and in
equity, be entitled to a decree or order restraining and enjoining such
transfer and the defending Shareholder shall not plead in defense thereto that
there would be an adequate remedy at law; it being expressly acknowledged and
agreed that damages at law will be an inadequate remedy for a breach or
threatened breach or the violation of the provisions concerning transfer as
set forth in this Agreement.
1.7 Transferee Obligations. Notwithstanding any other provision of
this Agreement as to any transfer under this Section 1, any transferee shall
execute and deliver to the other Shareholder and the Company a counterpart
hereof, and the other Shareholder shall agree to such conditions of transfer,
the performance of such acts, the execution and delivery of such agreements,
certificates or other instruments and the rendering of such covenants or
undertakings by the transferee of the Company Stock, as counsel for the
Company may reasonably determine to be necessary to avoid the violation of any
federal and state securities or gaming laws with respect to such transfer, to
evidence the transferee's agreement to be bound by all the terms and
provisions hereof and to evidence the intent of the transferee
-4-
<PAGE> 5
to purchase the Company Stock for investment and not with a view to the
distribution thereof.
1.8 Securities Act. (a) Each Shareholder agrees that, in addition to
the other requirements herein relating to the transfer, it will not transfer
any Company Stock except pursuant to an effective registration statement under
the Securities Act of 1933, as amended, or upon receipt by the Company of an
opinion of counsel to the Shareholder reasonably satisfactory to the Company
or its counsel to the effect that no registration statement is required
because of the availability of an exemption from registration under the
Securities Act of 1933, as amended.
(b) Each certificate representing Company Stock shall be
endorsed with the following legends and such other legends that may be
required by applicable law:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE RESTRICTIONS CONTAINED IN A SHAREHOLDERS AGREEMENT
DATED , 1995 (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY). NO REGISTRATION OR TRANSFER OF
SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE COMPANY
UNTIL AND UNLESS ALL APPLICABLE RESTRICTIONS SHALL HAVE BEEN
COMPLIED WITH."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF
SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend shall also bear such legend unless in the
opinion of counsel for the Company the Company Stock represented thereby is no
longer subject to the provisions of this Agreement or to the restrictions
imposed under the Securities Act of 1933, as amended, or state securities
laws, in which case the applicable legend may be removed.
Section 2. Corporate Governance
2.1 Nominations to Board of Directors. From and after the date
hereof, each Shareholder shall vote or cause to be voted all shares of Company
Stock over which such Shareholder has voting control, at any regular or
special meeting of Shareholders called for the purpose of filling positions on
the board of directors, or to execute a written consent in lieu of such
meeting of Shareholders, and shall take all actions necessary to insure the
election to the board of four individuals: two individuals (the
-5-
<PAGE> 6
"Crown nominees") to be designated by Crown and two individuals (the "LRGP
nominees") to be designated by LRGP. If prior to his election to the Board of
Directors, any nominee shall be unable or unwilling to serve as a director of
the Company, the Shareholder who nominated such nominee shall be entitled to
nominate a replacement to serve on the board of directors.
2.2 Vacancies. In the event that a vacancy is created on the Board of
Directors at any time by the death, disability, retirement, resignation or
removal (with or without cause) of a director, the Shareholder who nominated
such director shall nominate a replacement to serve on the Board of Directors.
2.3 Covenant to Vote. Each Shareholder hereby irrevocably and
unconditionally agrees to take all actions necessary to call, or to cause the
Company and the appropriate officers and directors of the Company to call, a
special or annual meeting of Shareholders of the Company and to vote all
shares of Company Stock owned by such Shareholder in favor of, or take all
actions by written consent in lieu of any such meeting necessary to cause, the
election as members of the Board of Directors of those individuals so
nominated in accordance with Subsection 2.2. In addition, each Shareholder
agrees to vote the shares of Company Stock owned by such Shareholder upon any
matter arising under this Agreement submitted to a vote of the Shareholders in
a manner that will implement the terms of this Agreement.
2.4 Removal. If either Shareholder requests that a director nominated
by such Shareholder and elected to the Board of Directors be removed from the
Board of Directors (with or without cause) by written notice to the other
Shareholder, such director shall be removed and each Shareholder agrees to
vote all shares of Company Stock owned by such Shareholder to effect such
removal or to consent in writing to effect such removal upon such request. No
director shall be removed without cause except as provided in this Subsection
2.4.
2.5 Affirmative Board Vote. The affirmative vote of at least three of
the members of the Board of Directors shall be required to approve any action
of the Board of Directors.
2.6 No Conflict with Articles or By-Laws. Each Shareholder shall vote
its shares of Company Stock, and shall take all actions necessary, to ensure
that the Articles of Incorporation and By-Laws of the Company do not, from
time to time, conflict with the provisions of this Agreement.
2.7 Cash Distributions. Each Shareholder shall vote its shares of
Company Stock and shall take all actions necessary to
-6-
<PAGE> 7
ensure that the Company distributes as dividends at the end of each fiscal
quarter (or such shorter period as the Board of Directors may agree upon) all
of its cash on hand available for such distribution after providing and
reserving for the payment of all debts and other obligations and the provision
of such reserves as the Board of Directors reasonably determines is
appropriate.
Section 3. Competition
3.1 Mutual Covenants. Other than as set forth herein, the
Shareholders may engage independently or with others in other business
ventures of any nature and description, including, without limitation, real
estate and gaming activities (which may be geographically proximate to the
business of the Company) and the management and operation thereof. Neither the
Company or any Shareholder shall have any right by virtue of this Agreement or
the relationship created hereby in or to such other ventures or activities,
or to the income or proceeds derived therefrom; and the pursuit of such
ventures, even if competitive with the business of the Company, shall not be
deemed wrongful or improper. A Shareholder shall not be obligated to present
any particular investment opportunity to the Company even if such opportunity
is of the character which, if presented to the Company, could be taken by the
Company, and such Shareholder shall have the right to take for its own account
(individually or as a trustee) or to recommend to others any such particular
investment opportunity. Notwithstanding anything set forth herein to the
contrary, any information generated for or by reason of this Agreement or the
transactions contemplated hereby, which is not generally available to members
of the public, shall remain confidential and shall not be disclosed by any
party hereto without the written consent of the other, unless required by law.
3.2 Specific Covenant. Notwithstanding the foregoing, the
Shareholders agree that while they are Shareholders of the Company and for a
period of two years after the sale by a Shareholder of its stock in the
Company, such Shareholder will not, alone or through an affiliated person or
otherwise, or as a member or partner of any partnership, limited partnership,
limited liability company or similar entity, or as a shareholder or investor
in any corporation or other entity directly or indirectly owned or managed, or
otherwise connected with, engage in the operation of gaming activities within
a one hundred (100) mile radius of the location of the Company's casino
riverboat on the Calcasieu River in Calcasieu Parish, Louisiana.
3.3 Right of First Refusal. Crown hereby agrees that LRGP shall have
the right to participate with Crown or any affiliate of Crown, including its
subsidiary, Gaming Entertainment Management
-7-
<PAGE> 8
Services, Inc. ("GEMS"), in the development of an 18.6 acre parcel of land in
the gaming district of Las Vegas, Nevada if Crown or GEMS develop the property
on a joint venture basis. Accordingly, Crown shall offer to LRGP any proposed
arrangement for such development before GEMS is permitted to develop such
property in a joint venture or other similar arrangement with another person.
LRGP shall within thirty (30) days of receiving a joint venture proposal for
GEMS, either accept or reject participation in a joint venture under the same
terms and conditions of such proposal.
Section 4. Miscellaneous Provisions
4.1 Term. This Agreement shall terminate upon the mutual agreement of
the Shareholders.
4.2 Recapitalization Exchanges Affecting Company Stock. The
provisions of this Agreement shall apply to any and all securities of the
Company which may be issued in respect of, in exchange for, or in substitution
of the Company Stock, and shall be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, reclassification and the like
occurring after the date hereof.
4.3 Counterparts. This Agreement may be executed in several
counterparts, each of which is an original. This Agreement and any counterpart
so executed shall be deemed to be one and the same instrument.
4.4 Governing Law. This Agreement is being delivered and is intended
to be performed in the State of Louisiana and shall be construed and enforced
in accordance with the laws thereof.
4.5 Section Headings and Gender. The section headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. The use of the masculine
pronoun herein when referring to any party has been for convenience only and
shall be deemed to refer to the particular party intended regardless of the
actual gender of such party.
4.6 Notices. Any notice or demand which, by provision of this
Agreement, is required or permitted to be given or served by LRGP to or on
Crown shall be deemed to have been sufficiently given and served for all
purposes (if mailed) three calendar days after being deposited, postage
prepaid, in the United States Mail, registered or certified mail, or (if
delivered by express courier) one Business Day after being delivered to such
couriers or (if delivered in person) the same day as delivery, in each case
-8-
<PAGE> 9
addressed (until another address or addresses is given in writing by Crown to
LRGP) as follows:
Crown Casino Corporation
2415 West Northwest Highway, Suite 103
Dallas, Texas 75220
Attention: Mr. Mark D. Slusser
Vice President - Finance
with a copy to:
T. J. Falgout, III, Esq.
Stumpf & Falgout
1400 Post Oak Boulevard, Suite 400
Houston, Texas 77056
Any notice or demand which, by any provision of this Agreement, is
required or permitted to be given or served by the Crown to or on LRGP shall
be deemed to have been sufficiently given and served for all purposes (if
mailed) three calendar days after being deposited, postage prepaid, in the
United States Mail, registered or certified mail, or (if delivered by express
courier) one Business Day after being delivered to such courier, or (if
delivered in person) the same day as delivery, in each case addressed (until
another address or addresses are given in writing by LRGP to Crown) as
follows:
Louisiana Riverboat Gaming Partnership
c/o Louisiana River Site Development, Inc.
The Edward J. DeBartolo Corporation
7620 Market Street
Youngstown, Ohio 44513-3287
Attention: Mr. Gerald Wiemann
Vice President
Louisiana Riverboat Gaming Partnership
c/o CSNO, Inc.
Casino America, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Attention: Mr. James E. Ernst
Chief Executive Officer
-9-
<PAGE> 10
with copies to:
Mr. Arthur Wolfcale
Vice President and Secretary
The Edward J. DeBartolo Corporation
7620 Market Street
Youngstown, Ohio 44512-6085
and
Allan B. Solomon, Esq.
Chairman of the Executive Committee
Casino America, Inc.
2200 Corporate Blvd., N.W., Suite 310
Boca Raton, Florida 33431
4.7 Remedies. The parties hereto acknowledge that monetary damages
are inadequate for a breach hereof, and hereby agree that the provisions of
this Agreement shall be enforceable by equitable relief, including specific
performance, and each of the parties hereby waives any defense in the
enforcement of this Agreement through equitable relief. However, equitable
relief shall not be an exclusive remedy for breach of this Agreement and the
election of specific performance, damages or any other remedy hereunder shall
not preclude the exercise of any other remedy in connection with such relief
or from time to time hereafter.
CROWN CASINO CORPORATION
By: /s/ Mark D. Slusser
-----------------------------
Name: Mark D. Slusser
Title: Vice President
LOUISIANA RIVERBOAT GAMING PARTNERSHIP,
a Louisiana general partnership
By: LOUISIANA RIVER SITE DEVELOPMENT,
INC., General Partner, a wholly-owned
subsidiary of Louisiana Downs, Inc.
By: /s/ Gerald Wiemann
-------------------------
Name: Gerald Wiemann
Title: Vice President
-10-
<PAGE> 11
By: CSNO, INC., General Partner, a
wholly-owned subsidiary of Casino
America, Inc.
By: /s/ Allan B. Solomon
--------------------------
Name: Allan B. Solomon
Title: Secretary and Treasurer
