LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of August 29, 1997, by and between CASINO
RESOURCE CORPORATION, a Minnesota corporation (the "COMPANY"), CASINO BUILDING
CORPORATION, a Minnesota corporation ("CBC") and XXXX XXXXXX FAMILY GENERAL
PARTNERSHIP, a Minnesota family general partnership ("BFP").
RECITALS:
A. The Company has requested that BFP lend the Company the principal
amount of Eight Hundred Thousand and 00/100 Dollars ($800,000.00) for operating
capital purposes.
B. BFP has agreed to lend such money on the terms and subject to the
conditions set forth herein.
C. The rights and obligations of the Company and BFP relating to the
transaction contemplated in this Agreement are fully contained in this
Agreement, a note executed by the Company (the "NOTE"), a mutual release
agreement by and between the Company, BFP and CBC and a stock pledge
agreement between the Company and BFP (the "STOCK PLEDGE AGREEMENT"), all of
even date herewith, and collectively referred to as the "LOAN DOCUMENTS".
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
promises set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. TERMS. The terms of lending upon which the parties have agreed
are as follows:
1.01 LOAN. BFP agrees to lend to the Company and the Company agrees to
borrow from BFP the sum of Eight Hundred Thousand and 00/100 Dollars
($800,000.00) (the "Loan") upon the terms and subject to the conditions of
this Agreement and as contained in the Note.
1.02 INTEREST; REPAYMENT. Interest on the unpaid principal balance of
the Note from time to time outstanding (computed on the basis of actual days
elapsed and a year of 365 days) shall accrue and be payable at the rate
stated therein. The Company shall pay interest only payments on a monthly
basis for the period commencing on the date hereof and terminating on the
first annual anniversary of the opening date of the Company's casino located
in Sousse, Tunisia. Monthly installments of interest are due and payable
within ten (10) days of the beginning of each calendar month. Such interest
shall equal the greater of twenty percent (20%) per annum or five percent
(5%) of the Casino's gross gaming win for its first year of operation,
calculated as follows (computed on the basis of the actual number of days
elapsed in a year of 365 days): (i) from the date hereof until the opening
of the Company's casino located in Sousse, Tunisia (the "CASINO") at the rate
of twenty
percent (20%) per annum; and (ii) from the date of opening of the Casino and
thereafter on a monthly basis, at the higher of an amount equal to twenty
percent (20%) per annum or an amount equal to the equivalent of five percent
(5%) of the gross amount of the Casino's monthly gaming win for the month in
which interest is being calculated; and (iii) following the end of the
Casino's first year of operation, a determination shall be made as to whether
the actual interest payable to BFP under subsections (i) and (ii) equal or
exceed five percent (5%) of the Casino's gross gaming win for such one (1)
year period; if such amounts payable under subsections (i) and (ii) are less
than five percent (5%) of such annual gross gaming win, then the difference
shall be paid to BFP within sixty (60) days following the end of such first
year of operations.
1.03 COLLATERAL AND PLEDGE. This Agreement and the Note are secured by a
pledge by the Company of all the issued and outstanding common stock of CBC
pursuant to the terms of the Stock Pledge Agreement. The sole asset of CBC,
the 154-room hotel located in Hinckley, Minnesota, and related furniture,
fixtures and equipment, are subject to a mortgage dated as of April 1, 1994,
in the original principal amount of Three Million Three Hundred Thousand
Dollars ($3,300,000.00), the current outstanding principal balance of which
is Two Million Five Hundred Forty Thousand Eighty and 00/100 Dollars
($2,540,080.00), in favor of Xxxxxx & Xxxxxxxxx Investments Corporation, as
mortgagee, a One Hundred Thousand and 00/100 Dollar ($100,000.00) line of
credit agreement in favor of Rural American Bank-Hinckley, and CBC will not
incur any other indebtedness, except accounts payable, leasehold financing
and accruals incurred in the ordinary course of business.
1.04 REPLACEMENT COLLATERAL. The Company may, at any time during the
term of this Agreement, choose to substitute $800,000.00 pursuant to the
terms of the Stock Pledge Agreement, as replacement collateral for the
collateral as described in Section 1.03. In the event the Company chooses
this option, BFP shall promptly execute a release of all interest in the CBC
common stock under the Stock Pledge Agreement.
1.05 PAYMENTS. All payments by the Company of principal and of interest
on the Note, and all fees, expenses, and other obligations under this
Agreement payable to BFP shall be made in immediately available funds on the
dates called for under this Agreement at Grand Casinos, Inc., c/o Xxxxxxx X.
Xxxxxxx, 000 Xxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000 or such other location as
BFP may require. If any payment of principal or of interest on the Note or
any fee payable hereunder becomes due and payable on a day which is not a
business day (any day when federal banks are not open for business), such
payment shall be made on the next succeeding business day and such extension
of time shall in such case be included in the computation of any interest on
such principal payment.
1.06 USE OF PROCEEDS. The proceeds under the Note shall be used by the
Company for operating capital for the Company.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY AND
CBC. The Company and CBC represent, warrant and covenant to BFP that:
2.01 ACCURACY OF INFORMATION. All information, certificates or
statements given to BFP pursuant to this Agreement and the other Loan
Documents will be true and complete when given.
2
2.02 ORGANIZATION AND AUTHORITY. The Company and CBC are validly
existing corporations in good standing under the laws of its state of
Minnesota, and each has all requisite power and authority, corporate or
otherwise, and possesses all licenses necessary, to conduct its business and
own its properties. The execution, delivery and performance of this
Agreement and the other Loan Documents (i) are within the Company's power;
(ii) have been duly authorized by proper corporate action; (iii) do not
require the approval of any governmental agency; and (iv) will not violate
any law, agreement or restriction by which the Company is bound. This
Agreement and the other Loan Documents are the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms.
2.03 EXISTENCE; BUSINESS ACTIVITIES; ASSETS. Subject to Section 1.04 of
this Agreement, CBC will (i) preserve its corporate existence, rights and
franchises; (ii) carry on its business activities in substantially the manner
such activities are conducted as of the date of this Agreement; (iii) not
liquidate, dissolve, merge or consolidate with or into another entity; and
(iv) not sell, lease, transfer or otherwise dispose of all or substantially
all of its assets.
2.04 COMPLIANCE WITH LAWS. CBC has complied with all laws applicable to
its business and its properties, and has all permits, licenses and approvals
required by such laws.
2.05 RESTRICTION ON INDEBTEDNESS. CBC will not create, incur, assume or
have outstanding any indebtedness for borrowed money (excluding its current
line of credit of One Hundred Thousand and 00/100 ($100,000.00) with Rural
American Bank-Hinckley) except (i) any indebtedness owing to BFP, (ii) any
other indebtedness outstanding on the date hereof, and disclosed to BFP prior
to the date hereof, provided that such other indebtedness shall not be
renewed, extended or increased, and (iii) accounts payable, leasehold
financing and accruals incurred in the ordinary course of business.
2.06 RESTRICTION ON CONTINGENT LIABILITIES. CBC will not guarantee or
become a surety or otherwise contingently liable for any obligations of
others, except pursuant to the deposit and collection of checks and similar
matters in the ordinary course of business.
2.07 INSURANCE. CBC will maintain insurance to such extent, covering
such risks and with such insurers as is usual and customary for businesses
with similar operations, and as is satisfactory to BFP, including insurance
for fire and other risks insured against by extended coverage, public
liability insurance and workers' compensation insurance; and designate BFP as
mortgagee and loss payee with related endorsements on any casualty policies
and take such other action as BFP may reasonably request to ensure that BFP
will receive the insurance proceeds on BFP's collateral.
2.08 TAXES AND OTHER LIABILITIES. CBC will pay and discharge, when due,
all of its taxes, assessments and other liabilities, except when the payment
thereof is being contested in good faith by appropriate procedures which will
avoid foreclosure of liens securing such items, and with adequate reserves
provided therefor.
2.09 NOTIFICATION TO BFP. CBC shall, within five (5) days of the receipt
of notification of the commencement of a foreclosure proceeding against the
hotel described in Section 3.01(b) hereof, notify BFP in writing of the
existence of a foreclosure proceeding.
3
2.10 NAME; LOCATIONS; TAX IDENTIFICATION NUMBER; SUBSIDIARIES. During
their existence, the Company since (1993) and CBC have done business solely
under their respective corporate names as set forth herein and under such
trade names and such other corporate names as disclosed to BFP in writing
before this Agreement is signed and delivered. The address of the Company's
and CBC's chief executive offices and principal places of business and their
respective federal tax identification numbers are set forth below their
respective signatures to this Agreement. Neither the Company nor CBC has any
subsidiaries except as set forth in Attachment 2.10 hereto.
2.11 FINANCIAL CONDITION; NO ADVERSE CHANGE. Before this Agreement was
signed and delivered, the Company and CBC delivered to BFP certain of their
unaudited financial statements. Those statements fairly present the
Company's and CBC's financial condition as the dates indicated therein and
were prepared in accordance with generally-accepted accounting principles.
Since the date of such financial statements, there has been no material
adverse change in the business, properties or condition (financial or
otherwise) of the Company and CBC.
2.12 REPORTING REQUIREMENTS. The Company and CBC will deliver to BFP
each of the following, in form and substance acceptable to BFP:
(a) as soon as available and in any event within ten (10) days after
the end of each month, a statement of the gross gaming win at the Casino,
certified as correct by an officer of the Company;
(b) as soon as available and in any event within thirty (30) days
after the end of each month, an unaudited/internal balance sheet and
statement of income and retained earnings of each of the Company and CBC as
at the end of and for such month and for the year to date period then ended,
prepared in accordance with GAAP (except for the inclusion of footnotes),
subject to year-end audit adjustments, and certified as correct by an officer
of the Company or CBC, as applicable; and
(c) immediately after the commencement thereof, notice in writing of
all litigation and of all proceedings before any governmental or regulatory
agency affecting the Company or CBC or which seek a monetary recovery against
the Company or CBC in excess of One Hundred Thousand and 00/100 Dollars
($100,000.00).
2.13 INSPECTION. Upon BFP's request, the Company and CBC will permit any
agent or accountant for BFP to audit, review, make extracts from or copy any
and all records of CBC and to inspect CBC's hotel, at all times during
ordinary business hours.
2.14 NO LIENS. CBC will keep all its assets free and clear of all security
interests, liens and encumbrances except the security interests existing on the
date hereof and disclosed in writing to BFP and other security interests
approved by BFP in writing.
2.15 NO SALE OR TRANSFER OF SHARES OF COMPANY AND CBC. Other than this
transaction, the Company will not sell, transfer, pledge, or grant a security
interest in, any shares of stock of CBC.
4
2.16 NO ISSUANCE OF CBC STOCK. The Company and CBC will each cause CBC
not to issue additional stock that is not pledged by the Company pursuant to
the Stock Pledge Agreement.
2.17 PLACE OF BUSINESS; NAME. The Company and CBC will not change the
location of their respective chief executive offices or principal places of
business without prior written notification to BFP. Neither the Company nor
CBC will change its name without prior written notification to BFP.
SECTION 3. EVENTS OF DEFAULT AND REMEDIES.
3.01 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default (an "EVENT OF DEFAULT"):
(a) The Company shall fail to make within ten (10) business days
after the same becomes due, whether by acceleration or otherwise (i) any
payment of principal on the Note or (ii) any payment of interest on the Note
or (iii) any fee or other amount required to be paid to BFP pursuant to this
Agreement; or
(b) The commencement of any foreclosure action against the 154-room
hotel located in Hinckley, Minnesota, which is owned by CBC and which
foreclosure action is not discharged within forty-five (45) days.
3.02 REMEDIES. If any Event of Default shall occur and is not cured by
the Company within the time required herein, then BFP may, in addition to
exercising any and all other remedies it may have, declare the outstanding
principal of the Note, the accrued interest thereon, and all other
obligations of the Company to BFP under this Agreement, to be forthwith due
and payable, whereupon the Note, all accrued interest thereon and all such
obligations shall immediately become due and payable, without presentment,
demand, protest, or other notice of any kind, all of which are hereby
expressly waived, anything in this Agreement or in the Note to the contrary
notwithstanding. In the event of the commencement of a foreclosure action
against the hotel described in Section 3.01(b) hereof, BFP is hereby granted
the right to cure any such default, in the event the Company fails to do so,
which gave rise to such foreclosure proceeding and otherwise take such
action to settle the foreclosure proceeding. Any amounts advanced by BFP in
connection with curing a default, including BFP's expenses and reasonable
attorneys' fees, shall be secured by the Stock Pledge Agreement and shall
accrue interest at the rate of interest as provided in Section 1.02 of this
Agreement.
SECTION 4. MISCELLANEOUS.
4.01 DELAY; CUMULATIVE REMEDIES. No delay on the part of BFP in
exercising any right, power or privilege hereunder or under any of the other
Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein specified are cumulative and are
not exclusive of any rights or remedies which BFP would otherwise have.
5
4.02 SUCCESSORS. The rights, options, powers and remedies granted in
this Agreement and the other Loan Documents shall extend to BFP and to its
successors and assigns, shall be binding upon the Company and its successors
and assigns and shall be applicable hereto and to all renewals and/or
extensions hereof; provided, however, that notwithstanding the foregoing,
the Company shall not be entitled to assign any of its rights or obligations
under this Agreement or any other document or instrument related hereto
without the prior written consent of BFP, which consent shall not
unreasonably be withheld.
4.03 NOTICES. Although any notice required to be given hereunder or
under any of the other Loan Documents might be accomplished by other means,
notice will always be deemed given when placed in the United States Mail,
with postage prepaid, or sent by overnight delivery service, or sent by
telex or facsimile, in each case to the address set forth below or as
amended:
If to Company: Casino Resource Corporation
000 Xxxxxxxxx Xxxx.
Xxxxx Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxx
with a copy to: Xxxxxxx, Rumble & Butler, P.A.
0000 Xxxxx Xxxxxx Towers
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxxx X. Xxxxxx
If to BFP: Xxxx Xxxxxx Family General Partnership
Grand Casinos, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxxxx
with a copy to: Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
3300 Norwest Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xx. Xxxx X. Sell
4.04 APPLICABLE LAW AND JURISDICTION; INTERPRETATION; JOINT LIABILITY.
This Agreement and all other Loan Documents shall be governed by and
interpreted in accordance with the laws of the state of Minnesota, except to
the extent superseded by Federal law. Invalidity any provision of this
Agreement shall not affect the validity of any other provision. THE COMPANY
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
SITUATED IN HENNEPIN COUNTY, MINNESOTA OR FEDERAL JURISDICTION WHERE BFP'S
OFFICE WHICH IS DESIGNATED IN THE NOTE AS THE PLACE FOR PAYMENT IS LOCATED
(OR, IN THE ABSENCE OF SUCH DESIGNATION, BFP'S MAIN OFFICE), AND
6
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY
ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE
NOTE, THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING
THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING.
Nothing herein shall affect BFP's rights to serve process in any manner
permitted by law, or limit BFP's right to bring proceedings against the
Company in the competent courts of any other jurisdiction or jurisdictions.
This Agreement, the other Loan Documents and any amendments hereto
(regardless of when executed) will be deemed effective and accepted only at
BFP's offices, and only upon BFP's receipt of the executed originals thereof.
4.05 COPIES. The Company hereby acknowledges the receipt of copies of
this Agreement and all other Loan Documents.
4.06 EXPENSES AND ATTORNEYS' FEES. The Company will reimburse BFP for
all reasonable attorneys' fees and all other costs, fees and out-of-pocket
disbursements (including fees and disbursements of counsel) incurred by BFP
in connection with the preparation, execution, delivery, defense and
enforcement of this Agreement or any of the other Loan Documents, including
fees and costs related to any waivers or amendments with respect thereto.
4.07 MODIFICATIONS. Notwithstanding any provisions to the contrary
herein, any term of this Agreement may be amended with the consent of the
Company; provided, that no amendment, modification, or waiver of any
provision of this Agreement or any of the other Loan Documents, nor consent
to any departure by the Company therefrom shall in any event be effective
unless the same shall be in writing and signed by BFP, and then such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
4.08 WAIVER. Neither any failure nor any delay on the part of BFP in
exercising any right, power, or privilege hereunder or under the Note shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercises or the exercise of any other right,
power or privilege. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice
or demand in the same, similar or other circumstances.
4.09 ENTIRE AGREEMENT. This Agreement and the Loan Documents embody
the entire agreement and understanding between BFP and the Company with
respect to the loan of $800,000 to the Company set forth herein.
4.10 CAPTIONS. The captions or headings in this Agreement are for
convenience only and in no way define, limit, or describe the scope or
intent of any provision of this Agreement.
4.11 COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as of the signature thereto were upon the
same instrument.
7
4.12 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable shall be ineffective to the extent of such prohibitions or
unenforceability without invalidating the remaining provisions hereof.
4.13 TIME OF ESSENCE. Time is of the essence of this Agreement and every
provision hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date set forth in the first paragraph.
XXXX XXXXXX FAMILY GENERAL
PARTNERSHIP
By
-----------------------------
Its
----------------------------
----------------------------
"BFP"
CASINO RESOURCE CORPORATION
By
-----------------------------
Xxxx X. Xxxxxx
Its President
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxxxx, XX 00000
TID Number: 00-0000000
"COMPANY"
8
CASINO BUILDING CORPORATION
By
-----------------------------
Xxxx X. Xxxxxx
Its President
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxxxx, XX 00000
TID Number: 00-0000000
"CBC"
9
ATTACHMENT 2.10
LIST OF SUBSIDIARIES OF CASINO RESOURCE CORPORATION
CRC of Branson, Inc.
Country Tonite Enterprises, Inc.
Casino Building Corporation
CRC of Tennessee, Inc.
CRC Palace, Inc.
Recreation Property Consultants, Inc.
Casino Entertainment Corporation of America
Country Tonite Theatre, LLC
CRC of Tunisia, S.A.
LIST OF SUBSIDIARIES OF CASINO BUILDING CORPORATION
None
10
