PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT dated as of May 31, 1997, by and among CROWN
CASINO CORPORATION, a Texas corporation (the "Purchaser"), and CASINO MAGIC
CORP., a Minnesota corporation (the "Seller"), being the majority shareholder
of CASINO MAGIC NEUQUEN S.A., a Republic of Argentina corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, the Seller is the owner of 559,998 shares of the issued and
outstanding shares of capital stock of the Company, such shares being of the
class and value as hereinafter set forth, and the Seller desires to sell
274,399 of such shares to the Purchaser (all of such shares of capital stock
to be sold hereunder herein collectively referred to as the "Shares"), and the
Purchaser desires to purchase the Shares, all upon the terms and conditions
set forth herein; and
WHEREAS, contemporaneously with the consummation of the transaction
contemplated hereunder, the Purchaser shall acquire from CASINO MAGIC
MANAGEMENT SERVICES, INC., a Mississippi corporation ("CMMS"), one (1) share
of the capital stock of the Company (the "CMMS Share"), pursuant to which, in
conjunction with the purchase of the Shares hereunder, the Purchaser shall
acquire an aggregate of 274,400 shares of capital stock of the Company; and
WHEREAS, the Company is indebted to the Seller as evidenced by a
Promissory Note from the Company to the Seller in the original principal
amount of $12,897,740.05 dated November 28, 1995, but effective December 27,
1994, bearing interest at a variable rate per annum based upon the prime rate
as quoted in the Wall Street Journal (the "Original Note"), and the Seller
desires to sell and assign, and the Purchaser desires to purchase, forty-nine
(49%) percent of the Seller's right, title and interest in, to and under the
Original Note; and
WHEREAS, the Seller has leased to the Company certain gaming equipment
(the "Leased Equipment"), and the Seller desires to sell and assign, and the
Purchaser desires to purchase, forty-nine (49%) percent of the Seller's right,
title and interest in and to (a) the Leased Equipment, (b) the Lease Agreement
between the Seller and the Company dated September 25, 1995 (the "Lease
Agreement") with respect to the Leased Equipment, and (c) the rentals paid by
the Company to the Seller therefor (the "Lease Payments"); and
WHEREAS, the Seller and the Company have entered into the Technical
Assistance Agreement dated September 25, 1995 (the "Technical Assistance
Agreement"), whereby the Seller has agreed to supply to the Company its
"know-how" (as defined in the Technical Assistance Agreement), for and in
consideration of a fee (the "Technical Assistance Fee") equal to three (3%)
percent of the total gross income of the Company from the operation of the
Casinos (as hereinafter defined), as more fully described therein, and the
Seller desires to sell and assign, and the Purchaser desires to purchase,
sixteen and four-tenths (16.4%) percent of the Seller's right, title and
interest in, to and under (a) the Technical Assistance Agreement and (b) the
Technical Assistance Fee; and
WHEREAS, the Seller and the Company have entered into the Trademark and
Trade Name License Agreement dated September 25, 1995 (the "Trademark
Agreement"), whereby the Seller has licensed to the Company the non-exclusive
right to use the trade name "Casino Magic" and the related symbols and
logotypes described therein, for and in consideration of a fee (the "Royalty")
equal to two (2%) percent of the gross income of the Company from the
operation of the Casinos, as more fully described therein, and the Seller
desires to sell and assign, and the Purchaser desires to purchase, forty-nine
(49%) percent of the Seller's right, title and interest in and to the proceeds
from the Royalty; and
WHEREAS, this Agreement sets forth the terms and conditions to which the
parties have agreed and further contemplates the execution and delivery of
certain collateral agreements and the consummation of certain related
transactions hereinafter described;
NOW, THEREFORE, in consideration of the mutual promises and covenants of
the parties, and subject to the terms and conditions set forth herein, the
parties agree as follows:
1. Sale and Purchase of Assigned Properties. The Seller agrees,
subject to the conditions to the Seller's obligations herein set forth, to
sell, assign and convey to the Purchaser on the Closing Date (as hereinafter
defined), free and clear of all security interests, pledges, liens, charges
and encumbrances, (a) the Shares, (b) forty-nine (49%) percent of the Seller's
right, title and interest in and to the Original Note, (c) forty-nine (49%)
percent of the Seller's right, title and interest in and to the Leased
Equipment, the Lease Agreement and the Lease Payments, (d) sixteen and
four-tenths (16.4%) percent of the Seller's right, title and interest in and
to the Technical Assistance Agreement and the Technical Assistance Fee, and
(d) forty-nine (49%) percent of the Seller's right, title and interest in and
to the Royalty. The Purchaser agrees, subject to the conditions to its
obligations herein set forth, to purchase and accept the Shares, forty-nine
(49%) percent of the Seller's right, title and interest in and to the Original
Note, the Leased Equipment, the Lease Agreement and the Lease Payments, and
the Royalty, and sixteen and four-tenths (16.4%) percent of the Seller's
right, title and interest in and to the Technical Assistance Agreement and the
Technical Assistance Fee, as aforesaid, for the consideration set forth in
Section 2(a) hereof. The Shares, the forty-nine (49%) percent interest to be
acquired by the Purchaser hereunder from the Seller in and to the Original
Note, the Leased Equipment, the Lease Agreement and the Lease Payments, the
Royalty, and the sixteen and four-tenths (16.4%) percent interest to be
acquired by the Purchaser hereunder from the Seller in and to the Technical
Assistance Agreement and the Technical Assistance Fee are herein collectively
referred to as the "Assigned Properties".
2. Purchase Price, Payment and Allocation.
3. Purchase Price. The total purchase price (the "Purchase Price")
for the Assigned Properties is SEVEN MILLION ($7,000,000) DOLLARS, payable by
the Purchaser to the Seller on the Closing Date by wire transfer.
4. Allocation. The Purchase Price for the Assigned Properties
shall be allocated as follows:
Shares $ 764,400
Retained Earnings $ 214,701
Original Note $ 4,226,743
Leased Equipment $ 785,812
Lease Agreement $ 504,312
Technical Assistance Agreement and
Technical Assistance Fee $ 168,467
Royalty $ 335,565
Total $7,000,000
5. Further Assurances. The Seller hereby agrees to execute and
deliver from time to time at the request of the Purchaser and without further
consideration, such additional instruments of conveyance and transfer and to
take such other action as the Purchaser may reasonably require more
effectively to convey, assign, transfer and deliver the Assigned Properties to
the Purchaser.
6. Representations and Warranties of the Seller. The Seller
represents and warrants to and agrees with the Purchaser that:
7. Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the Republic of Argentina and the Province of Neuquen. The Company
has full corporate power and authority to conduct its business as it is now
being conducted. The Seller has delivered to the Purchaser complete and
correct copies of the Articles of Incorporation (certified by the Secretary of
the Company) and By-Laws (certified by the Secretary of the Company) of the
Company as in effect on the date hereof.
8. Subsidiaries. The Company has one subsidiary, Casino Magic
Support Services, S.A. (the "Subsidiary"). Except for the Subsidiary, the
Company does not 8. own, directly or indirectly, any of the outstanding
capital stock or securities convertible into capital stock of any other
corporation, or 8. own, directly or indirectly, any participating interest in
any partnership, joint venture or other business enterprise.
9. Capital Stock. The authorized capital stock of the Company
consists of 560,000 nominal shares of stock, with a value of one peso ($1)
each, of which, on the date hereof, 560,000 shares are validly issued and
outstanding, fully paid and nonassessable and 559,998 of which are owned by
the Seller and two (2) shares of which are owned by CMMS. The Company does
not have any treasury shares, outstanding subscriptions, options or other
agreements or commitments obligating it to issue shares of capital stock.
Between the date hereof and the Closing Date, the Seller will not, and will
not permit the Company to issue or enter into any subscriptions, options,
agreements or other commitments in respect of the issuance, transfer, sale,
repurchase or encumbrance of any shares of capital stock.
1. Financial Statements. The Seller has delivered to the
Purchaser 1. the compiled balance sheet of the Company at its December 31,
1996 fiscal year end and the related compiled statement of earnings for the
Company, as certified by the Chief Financial Officer of the Seller; and 1.
the compiled balance sheet of the Company at April 30, 1997 (the "Financial
Statement Date") and the related compiled statement of earnings of the Company
for the four (4) month period then ended, as certified by the Chief Financial
Officer of the Seller (hereinafter referred to as "the Company's Financial
Statements"). The Company's Financial Statements (x) are in accordance with
the books of account and records of the Company and fairly present the
financial position of the Company at the date indicated, (y) contain and
reflect adequate reserves for all material liabilities and (z) were prepared
in accordance with generally accepted accounting principles applied on a basis
consistent with prior accounting periods ("GAAP"). Except to the extent
reflected or reserved against in the Company's Financial Statements, or any
Schedule provided for in this Section 3, the Company is not obligated for, nor
are any of its assets or properties subject to, any liabilities (whether
accrued, absolute, contingent or otherwise) or adverse obligations, whether or
not such liabilities or obligations are normally shown or reflected on a
balance sheet, other than liabilities and obligations arising in the ordinary
course of business since the date of the Company's Financial Statements, none
of which are material and adverse. The Company's Financial Statements
correctly reflect the liabilities of the Company at the Financial Statement
Date.
1. Absence of Certain Changes or Events. Except as set forth in
any Schedule delivered to the Purchaser pursuant to this Section 3 or except
as contemplated by this Agreement, since the Financial Statement Date, the
Company has not:
2. issued, delivered or agreed to issue or deliver any stock, bonds or
other corporate securities (whether authorized and unissued or held in the
treasury) or granted or agreed to grant any options, warrants or other rights
calling for the issuance thereof;
3. borrowed or agreed to borrow any funds or incurred, or become subject
to, any obligation or liability (absolute or contingent) except in the
ordinary course of business in customary amounts (not to exceed $100,000);
4. paid any obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the Company's Financial
Statements (or the notes thereto) and obligations or liabilities incurred
since the date thereof and permitted to be so incurred by the foregoing clause
(ii) of this Section (e);
5. declared or made, or agreed to declare or make, any payment of
dividends or distribution of any assets of any kind whatsoever to the Seller
or CMMS, or purchased or redeemed any shares of its capital stock;
6. except as otherwise permitted herein, sold or transferred, or agreed
to sell or transfer, any of its assets, properties or rights (except sales in
the ordinary course of business) or canceled or agreed to cancel, any debts or
claims;
7. entered or agreed to enter into any agreement or arrangement granting
any preferential rights to purchase substantially all of the assets,
properties or rights of the Company (including management and control
thereof), or requiring the consent of any party to the transfer and assignment
of such assets, properties or rights (or changes in management or control
thereof), or providing for the merger or consolidation of the Company with or
into another corporation;
8. except in the ordinary course of business, made or permitted any
amendment or termination of any contract, agreement or license to which it is
a party, including, without limitation, any of the contracts or agreements
contained in the Assigned Properties;
9. suffered any material losses or waived any rights of material value;
10. experienced any significant labor trouble; or
11. suffered any damage, destruction or loss, whether or not covered by
insurance, which materially and adversely affects its assets or business, or
had any material adverse change in the business, operations, financial
condition or prospects of the Company.
Between the date hereof and the Closing Date, the Seller shall not permit
the Company to do any of the things listed in Clauses (i) through (vii) of
this Section (e) without the prior written consent of the Purchaser, except as
otherwise permitted by this Agreement.
12. Tax Matters.
1. As used herein "Tax" or "Taxes" shall mean taxes of any kind
payable to any taxing authority of the Republic of Argentina, the Province of
Neuquen, the City of Neuquen, or any other country or jurisdiction including,
without limitation, 1. income, gross receipts, admission or head tax, ad
valorem, value added, sales, use, service, franchise, profits, real or
personal property, capital stock, license, payroll, withholding, employment,
social security, workers compensation, unemployment compensation and
insurance, utility, severance, production, excise, stamp, occupation, premium,
transfer and gains taxes, 1. customs duties, imposts, charges, levies, or
other assessments of any kind, 1. interest, penalties, and additions to tax
imposed with respect to the above taxes, and 1. any damages, costs, expenses,
fees or other liability arising from such Tax or Taxes.
1. The Company has filed all returns for Taxes required to be filed
by it and has paid all Taxes (including interest and penalties thereon, if
any) owing by it, except for (A) Taxes which have not yet accrued or otherwise
become due for which adequate provision has been made in the Company's
Financial Statements, and (B) all sums alleged to be due and owing by it to
the City of Neuquen for an admission or head tax (the "Head Tax") levied at
the rate of one (1) peso for each person admitted to the Company's Casino in
the City of Neuquen. The amount of alleged unpaid Head Tax as of May 29, 1997
is approximately 600,000 pesos.
2. Concession Contract. The Seller has delivered to the Purchaser
a true and correct copy of the Concession Contract for the Management,
Operation, Maintenance and Related Services of the Gaming Houses of the
Provincial Casino in the Cities of Neuquen and San Martin de Los Andes dated
December 21, 1994 (the "Concession Contract") with respect to the operation of
the Company's casinos located in San Martin de Los Andes and Neuquen,
Argentina (collectively, the "Casinos"). The Concession Contract has been
duly executed by the Company, is currently in effect, is valid and binding
upon the parties thereto and is enforceable in all material respects in
accordance with its terms. Neither the Company nor the Seller is aware of any
facts that would prevent the performance of the Concession Contract. The
Company is not in default under the Concession Contract and no claim of
default been asserted by the Province of Neuquen. The Company has committed
no act and there has been no omission which will result in the breach by it of
the Concession Contract.
3. Title to Properties and Related Matters. The assets reflected
in the Company's Financial Statements, were at the date thereof, and, except
for assets consumed or disposed of in the ordinary course of business since
the date thereof, are now owned by the Company by good title, free and clear
from all security interests, mortgages, liens, claims, defects and
encumbrances except liens, charges or encumbrances discussed or referred to in
the Company's Financial Statements or the related notes or schedules thereto.
All such assets (including the Leased Equipment) are in good operating
condition and repair, subject to ordinary wear and tear. All of such assets
have been properly maintained, with no extraordinary maintenance planned or
anticipated, and are adequate and sufficient for the operation of the
Company's business as historically operated by the Company. There are no
material capital expenditures currently contemplated or necessary to maintain
the current operation of the Company's business.
4. Consents. Prior to Closing the Company shall have obtained all
approvals or consents which must be obtained in order to effectuate the
transactions contemplated hereby and to satisfy the terms and conditions of
this Agreement
5. Litigation and Proceedings. Except for matters or proceedings
with respect to the Head Tax, certain employee matters, none of which
individually or in the aggregate are material, and a dispute with the
Argentinean customs officials regarding imported gaming equipment, there are
no actions, suits or proceedings pending or, to the knowledge of the Seller,
threatened against or affecting the Company or the Seller, at law or in
equity, or before or by any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind, which involve the possibility of any judgment or
liability not fully covered by casualty or liability insurance; and the
Company is not in default with respect to any judgment, order, writ,
injunction, decree, award, or, to the best of the Seller's knowledge and
belief, in default with respect to any rule or regulation of an court,
arbitrator or governmental department, commission, board, bureau, agency or
instrumentality.
6. Insurance Coverage. The Company maintains policies of casualty,
liability, use and occupancy, and other forms of insurance with reputable and
financially sound insurers, covering its properties and assets in amounts and
against such losses and risks as are generally maintained for comparable
businesses and properties, and valid policies for such insurance are now duly
in force.
7. Trademarks and Licenses. The Company owns or has all rights
necessary to use all trademarks and copyrights necessary for the conduct of
its business as currently conducted, including, without limitation, the right
to use the name "Casino Magic", and to the best of the Seller's knowledge and
belief, the conduct of such business does not conflict with or infringe upon
any trademark, trade name or copyright of others. The Company has, and will
continue to have, the right to use the name "Casino Magic" and all marks
associated therewith pursuant to the Trademark Agreement.
8. Approvals, Permits, Authorizations and Regulations. To the best of
the Seller's knowledge and belief, the Company's business is being conducted
in compliance with all applicable laws, ordinances, rules and regulations of
all governmental authorities, and neither the Company nor any officer,
director, stockholder, agent or employee has violated, in any material
respect, any law, ordinance, rule or regulation in connection with the
Company's business. Further, the Company has not received any notice (written
or otherwise) from any governmental authority asserting or investigating any
alleged failure to comply with any applicable law, ordinance or regulation
other than matters or proceedings related to the Head Tax and a dispute with
the Argentinean customs officials regarding imported gaming equipment.
9. Guarantees, Etc. The Company has not given any guarantee,
indemnity, warranty or bond, or incurred any other similar obligation or
created any security for or in respect of, liabilities, actual or contingent,
of any other person.
10. Absence of Adverse Agreements. The Company is not a party to
any instrument or agreement or subject to any charter or other corporate
restriction or any judgment, (other than a judgment relating to the
enforceability of the Head Tax) order, writ, injunction, decree, award, rule
or regulation which materially and adversely affects the business, properties,
assets or condition, financial or otherwise, of the Company.
11. No Defaults. The Company is not in default under, nor, to the
best of the Seller's knowledge and belief, has any event occurred which with
notice or lapse of time or both, could result in a waiver of any material
right or default under, any outstanding indenture, mortgage, lease, contract
or agreement (including, without limitation, the Concession Contract) to which
the Company is a party or by which the Company or its assets may be bound, or
under any provision of the Company's Articles of Incorporation or By-Laws (or
comparable instruments). All liabilities of the Company are, and will be on
the Closing Date, current and not in default.
12. No Conflicts. The execution and performance of this Agreement
and the transactions contemplated hereby will not violate any provision of or
result in a breach of or constitute a default under the Articles of
Incorporation or By-Laws of the Company, or under any order, writ, injunction
or decree of any court, governmental agency or arbitration tribunal, or under
any contract, agreement or instrument to which the Company is a party or by
which its properties may be bound, or, to the best of the Seller's knowledge
and belief, under any law, statute or regulation.
13. Books and Records. The books and records of the Company are in
all material respects complete and correct and to the best of the Seller's
knowledge and belief, have been maintained in accordance with good business
practice and reflect a true record of all meetings or proceedings of the Board
of Directors and Shareholders of the Company.
14. Brokers. Neither the Company nor the Seller, except for the
possible obligation of the Seller with Oppenheimer & Co., Inc., is a party to
or in any way obligated under a contract or other agreement, and there are no
outstanding claims against either of them, for the payment of any broker's or
finder's fees in connection with the origin, negotiation, execution or
performance of this Agreement.
15. Title to Shares and Authority. Each of the Seller and CMMS now
has and on the Closing Date will have valid title to the Shares and the CMMS
Share, respectively, and on the Closing Date will have full right, power and
authority and due authorization to sell and transfer such Shares and the CMMS
Share hereunder, and upon the delivery of and payment for such Shares and the
CMMS Share, the Seller, with respect to the Shares, and CMMS, with respect to
the CMMS Share, will transfer to the Purchaser valid title thereto, free and
clear of any security interests, pledges, liens or similar encumbrances. This
Agreement constitutes the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms.
16. Original Note. The unpaid balance of the Original Note is
$8,626,007, as of the date hereof. The Original Note has been entered into in
accordance with all applicable laws and there are no restrictions,
governmental or otherwise, on the payment of the Original Note in accordance
with its terms. The Seller has not pledged or assigned its rights under the
Original Note, and on the Closing Date the Seller will have full right, power
and authority to sell and assign to the Purchaser a forty-nine (49%) percent
interest in and to the Original Note, free and clear of all security
interests, liens and pledges. The Seller has delivered to the Purchaser a
true and correct copy of the Original Note.
17. Leased Equipment. The Seller now has and on the Closing Date
will have valid title to the Leased Equipment and on the Closing Date will
have full right, power and authority and due authorization to sell and
transfer a forty-nine (49%) percent interest in and to the Leased Equipment,
the Lease Agreement and the Lease Payments payable with respect thereto, and
upon delivery and payment for such interest in and to the Leased Equipment,
the Lease Agreement and the Lease Payments, the Seller will transfer to the
Purchaser valid title thereto, free and clear of any security interests,
pledges, liens or similar encumbrances. A true and correct copy of the Lease
Agreement and a list of the Leased Equipment have been delivered to the
Purchaser.
18. Trademark Agreement. The Seller has not pledged or assigned
its rights under the Trademark Agreement or to the Royalty, and on the Closing
Date the Seller will have full right, power and authority to sell and assign
to the Purchaser a forty-nine (49%) percent interest in and to proceeds from
the Royalty, free and clear of all security interests, liens and pledges.
Notwithstanding the foregoing, the Purchaser acknowledges that it is not
acquiring, nor shall it be deemed to acquire, any ownership or other rights
whatsoever in the trade names, trademark, logotypes and symbols covered by the
Trademark Agreement. The Seller has delivered to the Purchaser a true and
correct copy of the Trademark Agreement.
19. Technical Assistance Agreement. The Seller has not pledged or
assigned its rights under the Technical Assistance Agreement or to the
Technical Assistance Fee, and on the Closing Date the Seller will have full
right, power and authority to sell and assign to the Purchaser a sixteen and
four-tenths (16.4%) percent interest in and to the Technical Assistance
Agreement and the Technical Assistance Fee, free and clear of all security
interests, liens and pledges.
20. Bankroll and Reserves of the Company. As of the Closing Date,
the Company shall have cash on hand for the Casinos' bankroll and reserves for
all debts and other obligations of the Company in the amount of not less than
$350,000 (the "Reserve Amount"). The Reserve Amount is adequate for the
operation of the Casinos and the business of the Company in the ordinary
course of business as heretofore conducted. The cash on hand as of the
Closing Date in excess of the Reserve Amount shall be paid by the Company to
Casino Magic. Such excess cash on hand to be paid to Casino Magic is
approximately $321,733.
21. Disclosure. To the best of the Seller's knowledge, neither
this Agreement, the Schedules attached hereto, nor any other document
furnished by the Company or the Seller to the Purchaser, taken as a whole,
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained herein and therein not
misleading, and except as disclosed herein or therein, there is no fact (other
than matters of a general economic or a political nature which do not effect
the business of the Company uniquely) known to the Seller which materially
adversely effects or in the future can be reasonably expected to materially
adversely effect the properties, business, operations or financial condition
or prospects of the Company.
22. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller that:
23. Organization, Standing and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, and has full corporate power
and authority to conduct its business as it is now being conducted, to enter
into and carry out the provisions of this Agreement.
24. No Violation. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
24. violate any provision of the Articles of Incorporation or By-Laws of the
Purchaser, 24. violate any provision of any agreement or other obligation to
which the Purchaser is a party or by which the Purchaser is bound or to which
its assets are subject, 24. violate or result in a breach of, constitute a
default under, any judgment, order, decree, rule or regulation of any court,
governmental agency or arbitration tribunal to which the Purchaser is subject,
or 24. to the best of the Purchaser's knowledge and belief, violate any law,
statute or regulation.
25. Corporate Proceedings of the Purchaser. The execution,
delivery and performance of this Agreement has been authorized by the Board of
Directors of the Purchaser, and this Agreement constitutes the valid and
legally binding obligation of the Purchaser, enforceable in accordance with
its terms.
26. Brokers. The Purchaser is not a party to or in any way
obligated under a contract or other agreement, and there are no outstanding
claims against it, for the payment of any broker's or finder's fees in
connection with the origin, negotiation, execution or performance of this
Agreement.
27. Investment. The Shares will be acquired for investment and not
with a view to distribution thereof, nor with any intention of distributing or
selling or otherwise disposing of the Shares.
28. Disclosure. To the best of the Purchaser's knowledge, neither
this Agreement, nor any other document furnished by the Purchaser to the
Seller, taken as a whole, contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained
herein and therein not misleading.
29. Conditions to Obligations of the Purchaser. The obligations of
the Purchaser to consummate the transaction contemplated hereby shall be
subject to the satisfaction, on or before the Closing Date, of all of the
following conditions unless expressly waived in writing by the Purchaser:
30. Representations and Covenants. All representations and
warranties of the Seller contained in this Agreement shall be true in all
material respects on and as of the Closing Date as if such representations and
warranties were made on and as of such date (except to the extent any such
representation or warranty is made as of a specified date), and the Seller
shall have performed all agreements and covenants to be performed by it on or
prior to the Closing Date, and the Purchaser shall have received a certificate
dated the Closing Date, signed by the Seller, to the effect that such is the
case.
31. Opinion of Counsel. The Purchaser shall have received the
opinion of Robert A. Callaway, General Counsel for the Seller and the Company,
dated the Closing Date, to the effect that:
32. the Company is a corporation duly organized, validly existing and in
good standing under the laws of the Republic of Argentina and the Province of
Neuquen and has corporate power to carry on its business as it is now being
conducted;
33. the authorized capital stock and the outstanding shares of the
Company are as set forth in Section 3(c) hereof, and the Shares and the CMMS
Share are duly and validly issued, fully paid, non-assessable and outstanding;
34. this Agreement has been duly executed and delivered by the Seller and
constitutes the valid and binding obligation of the Seller enforceable in
accordance with its terms (except as otherwise limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and except that such counsel need not express an opinion as to whether
any covenant contained herein is specifically enforceable);
35. the CMMS Stock Purchase Agreement (as hereinafter defined) has been
duly executed and delivered by CMMS and constitutes the valid and binding
obligation of CMMS enforceable in accordance with its terms (except as
otherwise limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and except that such counsel need not
express an opinion as to whether any covenant contained herein is specifically
enforceable);
36. to such counsel's knowledge, after due inquiry, the transfer of the
Assigned Properties from the Seller and the CMMS Share from CMMS shall vest in
the Purchaser valid ownership in the Assigned Properties and the CMMS Share,
free and clear of all security interests, pledges, liens, encumbrances,
charges or assessments, and no other endorsement is required to transfer such
ownership to the Purchaser, and such counsel is not aware of any adverse claim
with respect to any Assigned Properties and the CMMS Share;
37. except as stated in such opinion or in Section 3 of this Agreement,
such counsel does not know of any litigation, proceeding or governmental
investigation pending or threatened against or relating to the Company or to
the properties or business of the Company or against the Seller relating to
the transactions contemplated by this Agreement;
38. to such counsel's knowledge, no authorization, consent or approval of
any court or governmental body or authority is necessary to the validity of
the transfer by the Seller of the Shares and by CMMS of the CMMS Share to the
Purchaser as provided in this Agreement and in the CMMS Stock Purchase
Agreement, respectively; and
39. to such counsel's knowledge, the consummation of the transaction
contemplated by this Agreement or the CMMS Stock Purchase Agreement will not
result in the breach of or constitute a default under the Articles of
Incorporation or By-Laws of the Company, or any loan, credit or similar
agreement or any court decree to which the Company, the Seller or CMMS is a
party and of which such counsel has knowledge, or by which any of them or
their properties may be bound.
40. Approval by Board of Directors of the Seller. The Purchaser
shall have received resolutions of the Board of Directors of the Seller,
certified by the Secretary or an Assistant Secretary of the Seller, approving
the transaction contemplated by this Agreement.
41. No Damage or Destruction. Prior to the Closing Date, there
shall not have occurred any casualty to any facility, property, equipment or
inventory owned or used by the Company as a result of which either 41. the
monetary amount of damage or destruction aggregates five (5%) percent or more
of the aggregate book value shown on the books of account of the entire
facilities, properties and equipment of the Company, or 41. the total monetary
amount of damage or destruction is less than five (5%) percent of the
aggregate book value shown on the books of account of the entire facilities,
properties and equipment of the Company, but more than $100,000, and such loss
shall not be substantially covered by valid, existing insurance underwritten
by responsible insurers.
42. No Material Adverse Changes. The Seller shall have delivered
to the Purchaser its certificate stating that there has been no material
adverse change (other than as permitted or contemplated under this Agreement)
in the business, operations, financial condition or properties of the Company
since the Financial Statement Date.
43. Absence of Litigation. No litigation, governmental action,
insolvency, receivership or other proceeding shall have been threatened,
asserted or commenced with respect to the transaction contemplated herein.
44. Shareholders' Agreement. The Purchaser and the Seller shall
have entered into a Shareholders' Agreement in substantially the form of
Exhibit "A" attached hereto.
45. Purchase of CMMS Share. The Purchaser and CMMS shall have
entered into a Stock Purchase Agreement (the "CMMS Stock Purchase Agreement")
whereby the Purchaser shall have acquired the CMMS Share.
46. Conditions to Obligations of the Seller. The obligations of
the Seller to consummate the transaction contemplated hereby shall be subject
to the satisfaction, on or before the Closing Date, of all of the following
conditions, unless expressly waived in writing by the Seller:
47. Representations and Covenants. All representations and
warranties of the Purchaser contained in this Agreement shall be true in all
material respects on and as of the Closing Date as if such representations and
warranties were made on and as of such date and the Purchaser shall have
performed all agreements and covenants to be performed by it on or prior to
the Closing Date, and the Seller shall have received a certificate dated the
Closing Date, signed by the President or a Vice President of the Purchaser, to
the effect that such is the case.
48. Opinion of Counsel. The Seller shall have received the opinion
of T. J. Falgout, III, General Counsel for the Purchaser, dated the Closing
Date, to the effect that:
49. the Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas and has corporate power
to carry on its business as it is now being conducted;
50. this Agreement has been duly authorized, executed and delivered by
the Purchaser, and (assuming valid execution and delivery by the other parties
hereto or thereto) is, or will be upon such execution, the valid and binding
obligation of the Purchaser in accordance with its terms (except as otherwise
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights, and except that such counsel need not express an
opinion as to whether any covenant contained herein is specifically
enforceable); and
51. to such counsel's knowledge, the consummation of the transaction
contemplated by this Agreement will not result in the breach of or constitute
a default under the Articles of Incorporation or By-Laws of the Purchaser, or
any loan, credit or similar agreement or any court decree to which the
Purchaser is a party or by which the Purchaser or its properties may be bound.
52. Certified Resolutions. The Seller shall have received
resolutions of the Board of Directors of the Purchaser, certified by the
Secretary or an Assistant Secretary of the Purchaser, authorizing the
execution, delivery and performance of this Agreement.
53. Shareholders' Agreement. The Purchaser and the Seller shall
have entered into a Shareholders' Agreement substantially in the form of
Exhibit "A" attached hereto.
54. The Closing. The execution and delivery of this Agreement and
the instruments, certificates and other documents required hereunder (the
"Closing") shall take place at the offices of Crown Casino Corporation, 4040
North MacArthur Boulevard, Suite 100, Irving, Texas, at 10:00 a.m. local time
on May 30, 1997, or at such subsequent time and day or other location as may
be mutually agreed by the Purchaser and the Seller. The date and time of such
execution and delivery is herein called the "Closing Date". On the Closing
Date, against delivery of the Purchase Price pursuant to Section 2 hereof, 54.
certification of ownership and a copy of the Company's stock register
representing the Purchaser's ownership of the Shares and the CMMS Share shall
be delivered by the Company, to the Purchaser, 54. the Original Note and the
unpaid principal and accrued interest thereon shall be evidenced by two (2)
promissory notes (the "New Notes"), one payable to the Seller and one payable
to the Purchaser, in the amount of 51% and 49%, respectively, of such unpaid
balance, which New Notes shall be substantially the same except for the
principal amount, and 54. a bill of sale and assignment conveying to the
Purchaser the Purchaser's interest in and to (i) the Leased Equipment, the
Lease Agreement and the Lease Payments, (ii) the Technical Assistance
Agreement and the Technical Assistance Fee, and (iii) the Royalty. The New
Notes referenced in (b) above and bill of sale and assignment referenced in
(c) above shall be in substantially the form attached hereto as Exhibits "B"
and "C", respectively.
55. Nature and Survival of Representations and Warranties.
56. Nature of Statements. All statements contained in any schedule
or any certificate or other instrument delivered by or on behalf of the Seller
or the Purchaser pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed representations and
warranties made by the Seller or the Purchaser, as the case may be.
57. Survival of Representations and Warranties. All
representations, warranties, covenants, agreements and undertakings contained
herein or in any Schedule, certificate or other document shall remain
operative and in full force and effect, and shall survive the Closing and the
delivery of all consideration and documents pursuant to this Agreement, and
shall continue in effect for a period of four (4) years after the Closing Date
and, as to representations made by the Seller concerning or affecting any tax
liability of the Company, until a date which is six (6) months after the
statute of limitations has run against the applicable taxing authorities;
provided, however, that any such representation, warranty, covenant, agreement
or undertaking as to which a bona fide claim shall have been asserted during
such survival period shall continue in effect until such time as such claim
shall have been resolved in accordance with the terms of this Agreement.
58. Indemnification by Seller and Related Matters.
59. Indemnification by Seller. The Seller agrees to defend,
indemnify and hold harmless the Purchaser and its successors and assigns,
from, against and in respect of any and all loss or damage resulting from:
60. the breach by the Seller of any of the warranties, representations,
covenants, agreements or undertakings contained herein;
61. the breach by CMMS of any of the warranties, representations,
covenants, agreements or undertakings contained in the CMMS Stock Purchase
Agreement; and
62. any liability arising out of any and all actions, suits, proceedings,
claims, demands, judgments, costs and expenses (including reasonable legal and
accounting fees) incident to any of the foregoing (collectively, the
"Losses").
63. Procedure for Making Claims. If and whenever the Purchaser
desires to claim indemnification by the Seller pursuant to the provisions of
this Section 9, the Purchaser shall promptly deliver to the Seller a
certificate signed by the Chairman of the Board, President or Vice President
of the Purchaser (the "Notice of Claim") 63. stating that the Purchaser, its
successors and assigns, has paid or properly accrued losses, damages or
expenses in an aggregate stated amount to which the Purchaser is entitled to
indemnification pursuant to this Section 9, provided, however, such notice
shall be given prior to the payment of an indemnity item if reasonable in
light of the circumstances causing, or threatening to cause, a loss, and 63.
specifying the individual items of loss, damage or expense included in the
amount so stated, the date each such item was paid or properly accrued and the
nature of the misrepresentation, breach of warranty or claim to which such
item is related, provided, however, failure to notify the Seller shall relieve
the Seller from liability only if it is prejudiced thereby. The Seller shall
have the right to defend any claim by a third party at the expense of the
Seller. The Purchaser shall provide to the Seller prompt and complete
disclosure of all pertinent information in the possession of or available to
the Purchaser and shall extend full and timely assistance in the cooperation
in the investigation of the defense of the claim, suit or action, with respect
to which such indemnification is claimed. The Seller, in the defense of any
such suit, action or proceeding, shall not consent to the entry of any
judgment or decree except with the written consent of the Purchaser, nor enter
into any settlement (except the written consent of the Purchaser) which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to the Purchaser of a release from every liability in respect of
such claim, suit, action or proceeding. In any defense of any claim by a
third party, the Purchaser shall have the right (but shall not be obligated)
to participate in such defense through counsel of its own selection and at its
own expense.
64. Head Tax. The Seller agrees to pay to the Company, directly,
or if not paid by the Seller directly, on demand by the Purchaser, out of
monies owed to the Seller under the Seller's New Note, the Lease Payments, the
Technical Assistance Fee and the Royalty, an amount equal to the unpaid Head
Tax for all periods prior to the Closing Date, if and when paid by the
Company. To the extent the Company pays such Head Tax and subsequently
receives a refund thereof or credit or offset therefor, the Seller shall be
reimbursed by the Company for the amount paid to the Company by the Seller
pursuant to this Section 9(c).
65. Customs Dispute. The Seller agrees to pay the Company,
directly, or if not paid by the Seller directly, on demand by the Purchaser,
out of monies owed to the Seller under the Seller's New Note, the Lease
Payments, the Technical Assistance Fee and the Royalty, an amount equal to the
fine, penalty or other assessment (the "Customs Assessment") imposed upon, and
paid by, the Company, arising out of the Company's dispute with the
Argentinean customs officials regarding the imported gaming equipment. To the
extent the Company pays the Customs Assessment and subsequently receives a
refund thereof or credit or offset therefor, the Seller shall be reimbursed by
the Company for the amount paid to the Company by the Seller pursuant to this
Section 9(d).
66. Indemnification by the Purchaser and Related Matters.
67. Indemnification by the Purchaser. The Purchaser agrees to
defend, indemnify and hold harmless the Seller and its successors and assigns,
from, against and in respect of any and all loss or damage resulting from:
68. the breach by the Purchaser of any of its warranties,
representations, covenants, agreements or undertakings contained herein; and
69. any liability arising out of any and all actions, suits, proceedings,
claims, demands, judgments, costs and expenses (including reasonable legal and
accounting fees) incident to any of the foregoing (collectively, the
"Losses").
70. Procedure for Making Claims. If and whenever the Seller
desires to claim indemnification by the Purchaser pursuant to the provisions
of this Section 10, the Seller shall promptly deliver to the Purchaser a
certificate signed by the Seller (the "Notice of Claim") 70. stating that the
Seller, its successors or assigns, have paid or properly accrued losses,
damages or expenses in an aggregate stated amount to which the Seller is
entitled to indemnification pursuant to this Section 10, and 70. specifying
the individual items of loss, damage or expense included in the amount so
stated, the date each such item was paid or properly accrued and the nature of
the misrepresentation, breach of warranty or claim to which such item is
related, provided, however, failure to notify the Purchaser shall relieve the
Purchaser from liability only if it is prejudiced thereby. The Purchaser
shall have the right to defend any claim by a third party at the expense of
the Purchaser. The Seller shall provide to the Purchaser prompt and complete
disclosure of all pertinent information in the possession of or available to
the Seller and shall extend full and timely assistance in the cooperation in
the investigation of the defense of the claim, suit or action, with respect to
which such indemnification is claimed. The Purchaser, in the defense of any
such suit, action or proceeding, shall not consent to the entry of any
judgment or decree except with the written consent of the Seller nor enter
into any settlement (except the written consent of the Seller) which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to the Seller of a release from every liability in respect of such
claim, suit, action or proceeding. In any defense of any claim by a third
party, the Seller shall have the right (but shall not be obligated) to
participate in such defense through counsel of its own selection and at its
own expense.
71. Expenses. The Seller and the Purchaser shall pay their own
expenses (including without limitation counsel and accounting fees and
expenses) incident to the preparation and carrying out of this Agreement and
the consummation of the transactions contemplated hereby.
72. Notices. All notices, demands and requests which may be given or
which are required to be given by either party to the other, and any exercise
of a right of termination provided by this Agreement, shall be in writing and
shall be deemed effective when either: 72. personally delivered to the
intended recipient; 72. sent by certified or registered mail, return receipt
requested, addressed to the intended recipient at the address specified below;
72. delivered in person to the address set forth below for the party to which
the notice was given; 72. 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
72. 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 effective on the date of delivery or receipt, of, 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 Paragraph,
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):
73. if to the Seller, to Casino Magic Corp., 711 Casino Magic Drive, Bay
St. Louis, MS 39530; Attention: Marlin F. Torguson, Chairman of the Board; Fax
(601) 467-7998;
With a copy to: Robert A. Callaway, General Counsel, Casino Magic Corp.,
711 Casino Magic Drive, Bay St. Louis, MS 39530; Fax (601) 467-3407;
74. or if to the Purchaser, to Crown Casino Corporation; 4040 North
MacArthur Boulevard, Suite 100, Irving, Texas 75038; Attention: Edward R.
McMurphy, President; Fax (972) 719-4466;
With a copy to: T. J. Falgout, III, Executive Vice President and General
Counsel, 4040 North MacArthur Boulevard, Suite 100, Irving, Texas 75038; Fax
(972) 719-4466.
Any party hereto may designate a different address by written notice given to
the other parties.
75. Satisfaction of Conditions; Termination.
76. Best Efforts to Satisfy Conditions. The Seller agrees to use
its best efforts to bring about the satisfaction of the conditions specified
in Section 5 hereof, and the Purchaser agrees to use its best efforts to bring
about the satisfaction of the conditions specified in Section 6 hereof.
77. Termination. This Agreement may be terminated, without
liability on the part of any party hereto to any other party hereto, by:
78. the Board of Directors of the Purchaser, if a material default shall
be made by the Seller in the observance or in the due and timely performance
by the Seller of any of the covenants of the Seller herein contained, or if
there shall have been a material breach by the Seller of any of the warranties
and representations of the Seller herein contained, or if the conditions of
this Agreement to be complied with or performed at or before the Closing shall
not have been complied with or performed at the time required for such
compliance or performance and such non-compliance or non-performance shall not
have been waived by the Purchaser; or
79. the Seller, if a material default shall be made by the Purchaser in
the observance or in the due and timely performance by the Purchaser of any of
the covenants of the Purchaser herein contained, or if there shall have been a
material breach by the Purchaser of any of its warranties and representations
herein contained, or if the conditions of this Agreement to be complied with
or performed by the Purchaser at or before the Closing shall not have been
complied with or performed at the time required for such compliance or
performance and such non-compliance or non-performance shall not have been
waived by the Seller.
In the event of termination by the Purchaser or the Seller as provided above,
written notice shall forthwith be given to the other party.
80. Miscellaneous.
81. Assignment. This Agreement may not be assigned by any party
hereto without the prior written consent of the other parties, provided,
however, the Purchaser shall have the right at any time prior to Closing to
assign this Agreement to a corporation wholly owned by the Purchaser, so long
as the Purchaser, by written agreement acceptable to the Seller, agrees to
guarantee the performance by such assignee of the terms and provisions hereof.
Subject to the foregoing, this .Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
82. Section and Paragraph Headings. The Section and Paragraph
headings of this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
83. Amendment. This Agreement may be amended only by an instrument
in writing executed by the parties hereto.
84. Entire Agreement. This Agreement and the exhibits, Schedules,
certificates and documents referred to herein constitute the entire agreement
of the parties, and supersede all understandings with respect to the subject
matter hereof.
85. Public Announcements. No publication and/or press release of
any nature shall be issued pertaining to this Agreement or the transaction
contemplated hereby without the prior written approval of the Purchaser and
the Seller, except as may be required by law.
86. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute
one and the same instrument.
87. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
88. Arbitration. All disputes or claims arising out of or in any
way relating to this Agreement shall be submitted to and determined by final
and binding arbitration under the rules of the American Arbitration
Association. Arbitration proceedings may be initiated by any party to this
Agreement upon notice to the other party and to the American Arbitration
Association and shall be conducted by three (3) arbitrators under the rules of
the American Arbitration Association in Dallas, Texas; provided, however, that
the parties may agree following the giving of such notice to have the
arbitration proceedings conducted with a single arbitrator. The notice must
specify in general the issues to be resolved in any such arbitration
proceeding. The arbitrators shall be selected by agreement of the parties to
the arbitration proceeding from a list of five (5) or more arbitrators
proposed to the parties by the American Arbitration Association or may be
persons not on such list as agreed to by the parties to such arbitration. If
the parties to the arbitration proceedings fail to agree on one (1) or more of
the persons to serve as arbitrators within fifteen (15) days after delivery to
each party hereto of the list as proposed by the American Arbitration
Association, then at the request of any such party to such proceeding, such
arbitrators shall be selected at the discretion of the American Arbitration
Association. Where the arbitrators shall determine that an arbitration
proceeding was commenced by a party frivolously or without a basis or
primarily for the purpose of harassment or delay, the arbitrators may assess
such party the cost of such proceedings including reasonable attorneys' fees
of any other party. In all other cases, each party to the arbitration
proceeding shall bear its own costs and its pro-rata share of the fees and
expenses charged by the arbitrators and the American Arbitration Association
in connection with any arbitration proceeding. Any award or equitable relief
granted by the arbitrators shall be enforced in accordance with the provisions
of Texas Statutes. Notwithstanding the foregoing, nothing herein will prevent
a party from seeking and obtaining equitable relief from a court of competent
jurisdiction pending a final decision of the arbitrators and the proper filing
of such decision with such court, in which event, each of the parties hereto
(i)consents and submits to the jurisdictionof the Courts of the State of Texas
and of the Courts of the United States for a judicial district within the
territorial limits of the State of Texas for all purposes of this Agreement,
including, without limitation, any action or proceeding instituted for the
enforcement of any right, remedy, obligation or liability arising under or by
reason hereof; and (ii) consents and submits to the venue of such action or
proceeding in the City of Dallas and County of Dallas, Texas (or such judicial
district of a Court of the United States as shall include the same).
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
as of the date and year first above written.
PURCHASER:
CROWN CASINO CORPORATION
By: /s/ Edward R. McMurphy
Edward R. McMurphy, President
SELLER:
CASINO MAGIC CORP.
By: /s/ Robert A. Callaway
Robert A. Callaway, Secretary