1
EXHIBIT 2.5
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
2
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
2
3
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
3
4
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.
(a) 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.
(b) 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
(c) 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.
3. Representations and Warranties of the Seller. The Seller
represents and warrants to and agrees with the Purchaser that:
(a) 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
4
5
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.
(b) Subsidiaries. The Company has one subsidiary, Casino
Magic Support Services, S.A. (the "Subsidiary"). Except for the
Subsidiary, the Company does not (i) own, directly or indirectly, any
of the outstanding capital stock or securities convertible into
capital stock of any other corporation, or (ii) own, directly or
indirectly, any participating interest in any partnership, joint
venture or other business enterprise.
(c) 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.
(d) Financial Statements. The Seller has delivered to
the Purchaser (i) 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
5
6
Financial Officer of the Seller; and (ii) 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.
(e) 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:
6
7
(i) 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;
(ii) 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);
(iii) 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);
(iv) 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;
(v) 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;
(vi) entered or agreed to enter into any agreement or
arrangement granting any preferential rights to purchase
substantially
7
8
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;
(vii) 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;
(viii) suffered any material losses or waived any
rights of material value;
(ix) experienced any significant labor trouble; or
(x) 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.
(f) Tax Matters.
(i) 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
8
9
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, (2) customs
duties, imposts, charges, levies, or other assessments of any kind,
(3) interest, penalties, and additions to tax imposed with respect to
the above taxes, and (4) any damages, costs, expenses, fees or other
liability arising from such Tax or Taxes.
(ii) 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.
(g) 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
Xxxxxx de Los Andes dated December 21, 1994 (the "Concession
Contract") with respect to the operation of the Company's casinos
located in San Xxxxxx de Los Andes and Neuquen, Argentina
(collectively, the
9
10
"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.
(h) 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.
10
11
(i) 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
(j) 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.
(k) 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.
(l) Trademarks and Licenses. The Company owns or has all
rights necessary to use all trademarks and copyrights necessary for
the conduct of its
11
12
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.
(m) 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.
(n) 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.
(o) 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)
12
13
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.
(p) 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.
(q) 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.
(r) 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
13
14
a true record of all meetings or proceedings of the Board of Directors
and Shareholders of the Company.
(s) Brokers. Neither the Company nor the Seller, except
for the possible obligation of the Seller with Xxxxxxxxxxx & 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.
(t) 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.
(u) 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
14
15
clear of all security interests, liens and pledges. The Seller has
delivered to the Purchaser a true and correct copy of the Original
Note.
(v) 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.
(w) 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.
(x) Technical Assistance Agreement. The Seller has not
pledged or assigned its rights under the Technical
15
16
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.
(y) 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.
(z) 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.
16
17
4. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to the Seller that:
(a) 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.
(b) No Violation. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any provision of the Articles of
Incorporation or By-Laws of the Purchaser, (ii) 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,
(iii) 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 (iv) to the best of the Purchaser's knowledge and belief,
violate any law, statute or regulation.
(c) 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.
(d) 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
17
18
payment of any broker's or finder's fees in connection with the
origin, negotiation, execution or performance of this Agreement.
(e) 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.
(f) 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.
5. 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:
(a) 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.
(b) Opinion of Counsel. The Purchaser shall have
received the opinion of Xxxxxx X. Xxxxxxxx, General Counsel for the
Seller and the Company, dated the Closing Date, to the effect that:
18
19
(i) 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;
(ii) 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;
(iii) 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);
(iv) 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);
19
20
(v) 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;
(vi) 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;
(vii) 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
(viii) 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
20
21
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.
(c) 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.
(d) 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 (i) 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 (ii) 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.
(e) 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.
21
22
(f) 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.
(g) Shareholders' Agreement. The Purchaser and the Seller
shall have entered into a Shareholders' Agreement in substantially the
form of Exhibit "A" attached hereto.
(h) 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.
6. 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:
(a) 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.
(b) Opinion of Counsel. The Seller shall have received
the opinion of X. X. Xxxxxxx, III, General Counsel for the Purchaser,
dated the Closing Date, to the effect that:
22
23
(i) 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;
(ii) 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
(iii) 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.
(c) 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.
23
24
(d) Shareholders' Agreement. The Purchaser and the Seller
shall have entered into a Shareholders' Agreement substantially in the
form of Exhibit "A" attached hereto.
7. 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, 0000
Xxxxx XxxXxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx, 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, (a)
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, (b) 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 (c) a xxxx 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 xxxx of sale and assignment referenced in (c) above
shall be in substantially the form attached hereto as Exhibits "B" and "C",
respectively.
8. Nature and Survival of Representations and Warranties.
(a) 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
24
25
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.
(b) 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.
25
26
9. Indemnification by Seller and Related Matters.
(a) 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:
(i) the breach by the Seller of any of the
warranties, representations, covenants, agreements or
undertakings contained herein;
(ii) the breach by CMMS of any of the warranties,
representations, covenants, agreements or undertakings
contained in the CMMS Stock Purchase Agreement; and
(iii) 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").
(b) 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")
(i) 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 (ii)
specifying the
26
27
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.
(c) 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,
27
28
the Seller shall be reimbursed by the Company for the amount paid to
the Company by the Seller pursuant to this Section 9(c).
(d) 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).
10. Indemnification by the Purchaser and Related Matters.
(a) 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:
(i) the breach by the Purchaser of any of its
warranties, representations, covenants, agreements or
undertakings contained herein; and
(ii) 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").
28
29
(b) 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") (i) 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 (ii) 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
29
30
participate in such defense through counsel of its own selection and
at its own expense.
11. 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.
12. 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: (i) personally delivered to the intended
recipient; (ii) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (iii)
delivered in person to the address set forth below for the party to which the
notice was given; (iv) deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, Xxxxx or
Purolator, addressed to such party at the address specified below; or (v) 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):
(a) if to the Seller, to Casino Magic Corp., 000 Xxxxxx Xxxxx
Xxxxx, Xxx Xx. Xxxxx, XX 00000; Attention: Xxxxxx X. Xxxxxxxx,
Chairman of the Board; Fax (000) 000-0000;
30
31
With a copy to: Xxxxxx X. Xxxxxxxx, General Counsel, Casino
Magic Corp., 000 Xxxxxx Xxxxx Xxxxx, Xxx Xx. Xxxxx, XX 00000; Fax
(000) 000-0000;
(b) or if to the Purchaser, to Crown Casino Corporation; 0000
Xxxxx XxxXxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000; Attention:
Xxxxxx X. XxXxxxxx, President; Fax (000) 000-0000;
With a copy to: X. X. Xxxxxxx, III, Executive Vice President
and General Counsel, 0000 Xxxxx XxxXxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000; Fax (000) 000-0000.
Any party hereto may designate a different address by written notice given to
the other parties.
13. Satisfaction of Conditions; Termination.
(a) 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.
(b) Termination. This Agreement may be terminated,
without liability on the part of any party hereto to any other party
hereto, by:
(i) 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
31
32
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
(ii) 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.
14. Miscellaneous.
(a) 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.
32
33
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
(b) 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.
(c) Amendment. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
(d) 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.
(e) 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.
(f) 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.
(g) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
(h) 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
33
34
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
34
35
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 jurisdiction of 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:
-----------------------------------------
Xxxxxx X. XxXxxxxx, President
SELLER:
-------
CASINO MAGIC CORP.
By:
-----------------------------------------
Xxxxxx X. Xxxxxxxx, Secretary
35
36
EXHIBITS
EXHIBITS DESCRIPTION
-------- -----------
"A" Shareholders' Agreement
"B" Promissory Notes
"C" Xxxx of Sale and Assignment
36
