Exhibit 10.5 to Form 8-K dated July 12, 1996 File No. 0-25022
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O P T I O N T O P U R C H A S E
Option to Purchase dated this 26th day of June, 1996, among CASINO CASINO
PLC, a company organized in the Island of Nevis under Section 4(6) of the Nevis
Business Corporation Ordinance 1984, as amended, whose address is P.O. Box 556,
Main Street, Charlestown, Nevis ("CasinoCorp"); and E.V.A. LIMITED, a limited
liability company organized in St. Vincent and the Grenadines under the
provisions of the Companies Act, Chapter 219, whose address is c/o Casino
Peniston, Peniston Valley, St. Vincent and the Grenadines ("EVA");
WITNESSETH:
A. West Indies Casinos and Consultants Limited, a limited liability
company organized in St. Vincent and the Grenadines under the provisions of the
Companies Act, Chapter 219 ("Landlord"), owns in fee simple that certain
property described as all that part or portion of the main building situated at
the town of Peniston, on a portion of the Peniston Estate in the Parish of St.
Andrew in the State of St. Vincent and the Grenadines, being the portion of the
buildings there situated known as the Emerald Valley Resort and Casino in which
a gambling casino is operated known as "Casino Peniston", including the bar area
lounge, rooms, restrooms, office and the generator room, and including all
gaming table apparatus, cutlery, furniture, fixtures and equipment
(collectively, the "Casino Premises"), together with the immediate curtilage and
the front gardens and lawn and the first buildings which contain Chalets 7/8,
9/10, and 11/12, including all furniture, fixtures, equipment and bedding. All
such premises, including the Casino Premises, are hereinafter referred to as the
"Demised Premises."
B. Emerald Isle Casino Limited, a limited liability company organized in
St. Vincent and the Grenadines under the provisions of the Companies Act,
Chapter 219 ("Emerald Isle"), holds a valid gaming license granted under the
relevant laws of St. Vincent and the Grenadines to operate a casino and gaming
operations on the Casino Premises (the "License").
C. Pursuant to that certain Lease dated December 31, 1994, among Landlord,
Emerald Isle and San Jose Group, an unincorporated partnership of Thomas Evans
and Richard C. Ayers ("San Jose Group"), the San Jose Group was granted a lease
of (i) the Demised Premises generally and of the Casino Premises specifically,
and (ii) the License itself and all right of Emerald Isle to operate a casino or
gaming operations on the Casino Premises or elsewhere pursuant to the License,
all for six (6) one-year periods commencing with the year beginning on February
1, 1995 and ending January 31, 1996, and for the five (5) succeeding one-year
periods thereafter, ending on January 31, 2000 (the "Premises and Casino
Lease").
D. San Jose Group has, by instrument dated February 1, 1995, assigned all
of its rights whatever in, to and under the Premises and Casino Lease to EVA
(the "Lease Assignment").
E. CasinoCorp wishes to obtain an option to purchase from EVA for cash all
of the issued and outstanding shares (equity membership interests) of EVA,
except as may be required by law or otherwise to be retained by citizens or
residents of St. Vincent and the Grenadines, or alternatively, to purchase for
the same amount a direct assignment of the Premises and Casino Lease.
NOW, THEREFORE, for and in consideration of the sum of US$10.00 cash paid
in hand, the receipt and sufficiency of which both parties acknowledge, the
parties covenant as follows:
SECTION 1. GRANT OF OPTION.
On the terms and subject to the conditions of this Agreement, EVA hereby
grants to CasinoCorp an option (the "Option") to purchase, for the sum of
US$500,000.00 in lawful monies of the United States of America, paid in cash
(the "Exercise Price"), a direct assignment by EVA of the Premises and Casino
Lease, to be evidenced by a written form of assignment and such other
documentation as shall be necessary or customary under island law or as required
by island
counsel, which shall include all rights whatever to the Demised Premises and to
operate the casino on the Casino Premises. Alternatively, for such cash payment,
CasinoCorp shall purchase all of the issued and outstanding shares of capital
stock of EVA, excepting such nominal number of those shares as may be required
by law or otherwise to be retained by citizens or residents of St. Vincent and
the Grenadines (the "Option Shares"). The parties acknowledge that the share
capital of EVA consists of 50,000 shares, $1.00 each. EVA shall use its best
efforts to obtain the signatures upon this Agreement of all holders of Option
Shares. The Option Shares shall not be subject to any preemptive rights, options
or similar rights on the part of any shareholder or creditor of EVA or any other
person. EVA, and/or the registered shareholders of EVA, as the case may be,
shall be responsible for any sales, income or other taxes or charges payable by
them in respect of the assignment of the Premises and Casino Lease or the sale
of the Option Shares.
Unless sooner terminated by law or by its own terms, this Option shall be
binding and irrevocable for the period commencing on the effective date of this
Agreement and ending on 5:00 o'clock PM (Eastern Time) on the date which is
exactly eighteen (18) months later (the "Option Period").
In the event that CasinoCorp exercises this Option by purchasing the Option
Shares, at the closing of the purchase all certificates evidencing the Option
Shares shall be delivered to CasinoCorp, each duly endorsed by the registered
holder with signature duly witnessed, or together with a stock assignment duly
signed by the registered holder with signature medallion guaranteed or notarized
and, if the holder is a corporation or other entity, a corporate resolution or
other documentation evidencing the presenter's authority to sell and deliver the
shares.
SECTION 2. MANNER OF EXERCISE.
CasinoCorp may only exercise this Option by written notice to EVA delivered
by facsimile or in the form of hard copy to Managing Director at the Casino
Premises, to such other person or address as EVA shall later advise in writing.
Upon EVA's receipt of the exercise notice, the parties shall as promptly as
possible arrange a date, time and place for the closing. So long as EVA receives
such notice within the Option Period, this Option shall continue in effect so
long as the parties work in good faith to accomplish the closing and shall be
extended automatically upon the giving of such notice for such period as is
necessary to accomplish the closing or for EVA to deliver schedules or documents
requested or required hereunder.
SECTION 3. CLOSING MATTERS.
The closing of all transactions herein contemplated shall take place at a
date, time and place to be agreed upon by the parties. At the closing,
CasinoCorp shall deliver payment of the Exercise Price by means of cashier's or
bank check, money order, or certified check, or wire transfer.
SECTION 4. OFFICERS AND DIRECTORS OF EVA.
CasinoCorp shall have the sole right to decide and designate who shall be
the officers and directors of EVA following consummation of a purchase of the
Option Shares. Effective at Closing of a purchase of the Option Shares, all
officers and directors of EVA shall at the request of CasinoCorp deliver to
CasinoCorp their originally signed resignations from such positions. The persons
designated by CasinoCorp shall be elected to the Board of Directors of EVA and
shall be elected to such officer positions of EVA as CasinoCorp shall specify.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF EVA.
EVA hereby represents and warrants to CasinoCorp that the following are
true and correct as of the date hereof and will be true and correct through the
closing date as if made on that date:
(a) EVA is a limited liability company duly organized, validly
existing and in good standing under the provisions of the Companies Act,
Chapter 219, of St. Vincent and the Grenadines, with all requisite power and
authority to carry on the business in which it is engaged, to operate Casino
Peniston under the Casino License, to have and hold the Premises and Casino
Lease in accordance with its terms.
(b) As of the effective date of this Agreement, the authorized capital
stock of EVA consists of 50,000 shares of stock, $1.00 each, of which 50,000
shares are issued and outstanding, all of which are validly issued, fully paid
and nonassessable. CasinoCorp shall be given a current list of the registered
holders of all such outstanding shares and the number of shares held by each. No
shares of preferred stock are authorized. EVA is not a party to or bound by any
agreement, option, warrant or other instrument, arrangement, contract,
obligation, commitment or understanding of any character, whether written or
oral, express or implied, whereby EVA is bound to issue shares of its capital
stock or any instrument or right convertible into or exchangeable for its
capital stock. EVA has in effect no pension, profit-sharing or similar plan.
(c) There are no claims, actions, suits, proceedings or investigations
of any kind pending or threatened against or affecting EVA or any of its
properties or assets or business anywhere in the world.
(d) EVA has complied in all material respects with the Premises and
Casino Lease and the Casino License and all applicable laws, regulations and
rules, applicable to its business or properties.
(e) Prior to the Closing, EVA shall have furnished to CasinoCorp
copies of EVA's unaudited Balance Sheets, Statements of Income and Expense,
Statements of Cash Flows, Statement of Changes in Financial Position and
Statement of Shareholders' Equity for such periods as reasonably requested.
(f) All taxes, assessments and other charges owing to St. Vincent and
the Grenadines or to any taxing authority therein at the time of closing shall
have been paid or shall be deducted from the Exercise Price and all applicable
tax returns properly filed.
(g) EVA shall provide a schedule of all movable property (personal
property) it owns, all other property it owns, and all property of which it has
use under the Premises and Casino Lease or the Casino License.
(i) EVA shall provide a listing of all contracts to which it is a
party other than the Premises and Casino Lease. With respect to each such
contract, except as disclosed in writing to CasinoCorp (i) EVA is not in
default, (ii) the contract is legal, valid, binding, in full force and effect
and enforceable in accordance with its terms, and (iii) the contract will
continue after the Closing to be legal, valid, binding, in full force and effect
in accordance with its terms.
(j) EVA shall provide a schedule and description of all policies of
insurance (type of policy, coverage amounts, deductibles, etc.) of EVA in force.
All such policies shall be in force at the time of the Closing.
(k) EVA is not indebted to any officer, director, employee or
shareholder thereof as of the date of this Agreement, and no money or property
is owed to EVA by any officer, director, employee or shareholder thereof, except
as disclosed in writing to CasinoCorp.
(l) EVA shall provide a schedule of the annual rate of compensation
(including benefits) of all full-time employees of EVA. There is no obligation,
commitment or past repetitive historical practice of EVA to pay bonuses,
royalties or other similar compensation designed to reward past performance,
create incentive for future performance or otherwise to any director or officer
or other employee of EVA except as set forth on this schedule.
(m) The execution, delivery and performance by EVA of this Agreement
and any other agreements contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all
requisite corporate action EVA. This Agreement and any other agreement
contemplated hereby have been or will be as of the Closing Date duly executed
and delivered by EVA and constitutes and will constitute legal, valid and
binding obligations of EVA, enforceable against it in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies.
(n) No consent, approval, authorization or order of any court, or
other agency or authority of St. Vincent and the Grenadines is required for EVA
to consummate this Agreement.
(o) EVA does not have any powers of attorney, general or special, or
similar instruments or empowerments outstanding.
(p) The Casino and Premises Lease was duly executed and consummated
and was duly approved by all requisite corporate action of Landlord and Emerald
Isle and is in full force and effect and is not in default in any way. The Lease
Assignment was duly executed and consummated, and EVA obtained thereunder a
valid and legal assignment of all rights whatever of San Jose Group and San
Jose Group's partners in, to and under the Premises and Casino Lease. Further,
EVA is in full legal and actual possession of the Demised Premises and Casino
Premises and is operating Casino Peniston in accordance with the License.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF CASINOCORP.
CasinoCorp hereby represents and warrants to EVA that the following are
true and correct as of the date hereof and will be true and correct through the
closing date as if made on that date:
(a) CasinoCorp is a company duly organized, validly existing and in
good standing in the Island of Nevis under Section 4(6) of the Nevis Business
Corporation Ordinance 1984, as amended, with all requisite power and authority
to operate Casino Peniston under the Casino License, to have and hold the
Premises and Casino Lease in accordance with its terms. CasinoCorp has not
previously had operations of any kind and has no material assets or liabilities.
(b) There are no claims, actions, suits, proceedings or investigations
of any kind pending or threatened against or affecting CasinoCorp anywhere in
the world.
SECTION 7. ASSIGNMENT.
CasinoCorp may assign this Option without EVA's prior consent to Chelsea
Atwater, Inc., a Nevada corporation, and shall give EVA at least thirty (30)
days' written notice thereof prior to the effectiveness of such assignment. This
Option shall be exercisable in accordance with its terms by any permitted
successor or assignee or legal representative of CasinoCorp. EVA may not assign
or transfer any of its obligations or duties hereunder.
SECTION 8. MISCELLANEOUS PROVISIONS.
(a) This Option shall be binding upon the parties, and respective
successors, assigns and legal representatives and shall be governed and
interpreted under the laws of St. Vincent and the Grenadines. This Agreement
shall be interpreted as if all parties shared equally in its drafting and
preparation.
(b) This Option shall terminate only upon due exercise of this Option
and sale and delivery of the Option Shares, assignment and delivery of the
Premises and Casino Lease or expiration of the Option Period. The right of
CasinoCorp to exercise this Option is not contingent on any fact, event, thing
or person whatsoever other than timely exercise and payment of the Exercise
Price.
(c) The parties agree to conduct themselves and their mutual dealings
in connection with this Agreement in accordance with the highest standards of
commercial honor.
(d) This Agreement and the agreements contemplated hereby constitute
the entire agreement of the parties regarding the subject matter hereof, and
supersede all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
(e) If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Further, in lieu of such
illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
(f) The parties shall bear their own fees and expenses incurred in
connection with the transactions contemplated herein.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Agreement by such
party. Such facsimile copies shall constitute enforceable original documents.
IN WITNESS WHEREOF, the parties have executed this Option to Purchase, and
initialled each preceding page hereof, on the date first above indicated.
CASINO CASINO PLC: E.V.A. LIMITED:
By: /s/ Michael Ryan By: /s/ Thomas Evans
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Authorized Officer Managing Director