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
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-
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-
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-
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-
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-
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-
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-
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-
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-
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