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EXHIBIT 10.37
PURCHASE OPTION AGREEMENT
This PURCHASE OPTION AGREEMENT is dated as of the 22nd day of January,
1999 by and between FLORIDA CASINO CRUISES, INC., a Georgia corporation, (the
"Owner" or "FCCI") and LEISURE EXPRESS CRUISE, LLC, a Colorado limited liability
company ("Charterer").
WHEREAS, Owner and Charterer have entered into a BAREBOAT CHARTER PARTY
AGREEMENT of even date herewith (the "Charter") concerning the charter of the
Vessel as defined therein (the "Vessel");
WHEREAS, the Charter requires that this Agreement be entered into in
connection therewith;
WHEREAS, the parties acknowledge the Vessel is presently encumbered by
two ship's mortgages, being a first mortgage in favor of Brownsville Bank (the
"First Mortgage" or the "Brownsville Bank Mortgage") and a second mortgage in
favor of Branch Xxxxxxxx (the "Second Mortgage" or the "Xxxxxxxx Mortgage")
which are recorded at the U.S. Coast Guard National Vessel Documentation Center,
and a third mortgage in favor of Xxxx Xxxxxx (the "Third Mortgage" or the
"Xxxxxx Mortgage") and a fourth mortgage in favor of LEISURE TIME CASINOS AND
RESORTS, INC. (the "Fourth Mortgage" or the "Leisure Time Mortgage")
NOW, THEREFORE, in consideration of the premises and the sum of TEN AND
NO/100 DOLLARS ($10.00) and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged by each of the parties hereto,
it is hereby agreed as follows:
1. Provided that the Charter is in full force and effect and there has
not occurred and is continuing an Event of Default thereunder, Charterer shall
have the option to purchase the Vessel (OR, at Charterer's election, all of the
outstanding stock of FLORIDA CASINO CRUISES, INC., a Georgia corporation) prior
to the expiration of the Charter on April 30, 1999.
2. The aforesaid purchase option shall be exercised, if at all, by
written notice from the Charterer to the Owner not less than TEN (10) days prior
to the proposed closing date (the "Closing Date") of the closing (the "Closing")
of said purchase which Closing Date shall not be earlier than April 21, 1999,
nor later than April 30, 1999. In the event Charterer fails to give notice of
its election to purchase by April 30,1999, Owner will use best efforts to give
written notice to Charterer inquiring as to Charterer's intent. Charterer's
notice to exercise the option shall set forth the Closing Date and whether
Charterer has elected to purchase the Vessel or the stock of FCCI.
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3. Prior to the Closing Date, Owner shall cause the Xxxxxxxx Mortgage
to be paid in full and satisfied.
4. The purchase price of the vessel shall be equal to the sum of the
outstanding balance of: (i) the Brownsville Bank Mortgage at the date of
Closing; PLUS (ii) Charterer's assumption of the Third Mortgage in favor of J.
XXXX XXXXXX, his successors and/or assigns in the principal amount of TWO
MILLION EIGHT HUNDRED FIFTY THOUSAND AND NO/l00 DOLLARS ($2,850,000.00); PLUS
(iii) Charterer's assumption of the Leisure Time Mortgage (as hereinafter
defined) in the amount of ONE MILLION SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS
($1,700,000.00).
5. From and after the Closing date, the indebtedness secured by the
Xxxxxx Mortgage shall bear interest at the rate of TEN PERCENT (10%) per annum,
shall be fully amortized over a SEVENTY-TWO (72) month period and shall be due
and payable in equal monthly installment payments of FIFTY-TWO THOUSAND SEVEN
HUNDRED NINETY-EIGHT AND 64/100 DOLLARS ($52,798.64) per month commencing on the
date ONE (1) month after the Date of Closing and continuing on the same date of
each and every month thereafter until paid in full.
6. In addition, during the term of the Charter Party, Owner agrees to
place additional ship's mortgage on the Vessel (which shall be subordinate and
inferior to the Brownsville Bank, Xxxxxxxx and Xxxxxx Mortgages) in the amount
of ONE MILLION SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS ($1,700,000.00) and
shall be in favor of LEISURE TIME CASINOS AND RESORTS, INC., a Colorado
corporation (the "Leisure Time Mortgage"). The Leisure Time Mortgage shall be
without interest, shall be non-recourse (i.e., the holder agrees to look solely
to the Vessel as collateral security for repayment of such mortgage and neither
J. Xxxx Xxxxxx nor Florida Casino Cruises, Inc. shall have any personal
liability for its payment) and shall be due and payable in a single balloon
payment on the earlier to occur of (i) closing of the sale of the Vessel, or
(ii) on December 31, 2001.
7. From and after the date hereof, as between Owner and Charterer,
Owner shall have no further personal obligation for payment of any accounts
payable with respect to the Vessel (the "Disclosed Accounts Payable") whether
such liability accrued prior to or after the date the Charter. During the term
of the Charter, Charterer shall have the right but not the obligation, to settle
any and all Disclosed Accounts Payable (on behalf of Owner and not on
Charterer's own account) on such terms and condition: as Charterer shall deem
appropriate. In the event Owner has failed to disclose a particular account
payable or other claim as of the date hereof (an "Undisclosed Account Payable")
and prior to the Closing Date the Charterer discovers that the total outstanding
balance of the Disclosed and Undisclosed Accounts Payable is in excess of ONE
MILLION FOUR HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($1,450,000.00) (the
"Maximum Accounts Payable Amount") Owner shall be responsible to discharge
Undisclosed Accounts Payable in excess of the Maximum Accounts Payable Amount in
a
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manner such that any Undisclosed Amount Payable does not become a lien, charge
or obligation against either the Vessel or FCCI, it being the intent of the
parties that at the time of the closing of the option, Owner is able to convey
"free and clear" title to the Vessel or FCCI stock as applicable except for the
above described ship's mortgages and outstanding Disclosed Accounts Payable not
yet settled.
8. Asset or Stock Election Provisions. Owner and Charterer agree that
Charterer shall have right to elect either to purchase the Vessel as an
asset-type purchase, or to purchase all of the stock in the Vessel's owner,
Florida Casino Cruises, Inc., a Georgia corporation ("FCCI"). In the event
Charterer elects to purchase the Vessel rather than the stock of FCCI, the
Purchase Price of the Vessel shall be as set forth hereinabove in paragraph 4
PLUS the $50,000.00 cash payment set forth in paragraph 9 iv) hereinbelow and
title to the Vessel shall be conveyed by Owner to the Charterer subject to the
three outstanding ship mortgages (which Charterer agrees to assume and to pay)
and the balance of Disclosed Accounts Payable not yet settled by Charterer.
Further, in the Charterer elects to purchase the Vessel and not the stock of
FCCI, Charterer agrees to pay to FCCI, a sum equal the incremental Federal
income tax difference between the sale of the stock and the sale of assets for
gain realized by J. Xxxx Xxxxxx on his Federal income tax return (together with
the amount of additional tax due as a result of the incremental payment)
(collectively, the "Tax Payment Amount") which Tax Payment Amount shall be due
and payable by Charterer not later than December 10, 2000. In addition,
Charterer agrees to execute a ship's mortgage in favor of FCCI in the principal
amount of the Tax Payment Amount (the "Xxxxxx Tax Payment Mortgage") which
mortgage shall be subordinate solely to the Brownsville Bank first ship's
mortgage and the Xxxxxx second ship's mortgage. In the event the Leisure Time
Mortgage is not satisfied at closing, Charterer cause the then holder of the
Leisure Time Mortgage to execute a subordination of its mortgage to the lien of
the Xxxxxx Tax Payment Mortgage so that title to the Vessel will be conveyed by
Owner to Charterer subject to the following liabilities (for which Charterer
shall be primarily liable):
i) The Brownsville Bank Mortgage;
ii) The Xxxxxx Mortgage (in favor of J. Xxxx Xxxxxx
personally);
iii) The Xxxxxx Tax Payment Mortgage (in favor of FCCI);
iv) The Leisure Time Mortgage, if applicable; and
v) The balance of any remaining unsettled Disclosed
Accounts Payable.
In the event Charterer elects to purchase the outstanding stock of FCCI
rather than the Vessel, the Purchase Price of the stock shall be TWO MILLION
EIGHT HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($2,850,000.00) which sum shall
be due and payable by Charterer to J. Xxxx Xxxxxx and shall be evidenced by
Charterer's promissory note in the amount of TWO MILLION EIGHT HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($2,850,000.00) and secured by ship's mortgage
subordinate and inferior solely to the Brownsville Bank first ship's mortgage
(the Xxxxxx Purchase Money Second Mortgage') PLUS the $50,000.00 cash payment
set forth in
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paragraph 9.iv) hereinbelow. The note secured by the Xxxxxx Purchase Money
Second Mortgage shall bear interest at the rate of TEN PERCENT (10%) per annum
shall be fully amortized over a SEVENTY-TWO (72) month period and shall be due
and payable monthly installment payments of FIFTY-TWO THOUSAND SEVEN HUNDRED
NINETY-EIGHT AND 64/100 DOLLARS ($52,798.64) per month commencing on the date
ONE (1) month after the date. of Closing and continuing on the same date on the
same date of each and every month thereafter until paid in full. Similar to the
asset election scenario, in the event the Leisure Time Mortgage is not satisfied
at the stock purchase Closing, Charterer shell cause the then holder of the
Leisure Time Mortgage to execute a subordination of its Mortgage to the lien of
the Xxxxxx Purchase Money Second Mortgage so that title to the Vessel will be
conveyed by Owner to Charterer subject to the following liabilities:
i) The Brownsville Bank Mortgage;
ii) The Xxxxxx Purchase Money Second Mortgage (in favor
of J. Xxxx Xxxxxx personally);
iii) The Leisure Time Mortgage, if applicable; and
iv) The balance of any remaining unsettled Disclosed
Accounts Payable.
Regardless of whether Charterer elects to purchase the Vessel or the
stock of FCCI, from and after the Closing Date, all remaining Outstanding
Disclosed Accounts Payable shall be the responsibility of Charterer and
Charterer shall indemnify and hold FCCI and J. Xxxx Xxxxxx harmless from any and
all personal liability for payment of same.
9. During the term of the Charter, in addition to the charter hire
payments due to Owner under the Bareboat Chatter Party, Charterer shall also
make:
(i) all lease payments due under the Harbortowne Marina
Lease with respect to dockage rights in Dania Florida
for which Charterer shall enjoy the benefit of all
marina use and dockage rights in favor of the Vessel
under such dock lease and
ii) the sum of FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00) payable to J. Xxxx Xxxxxx at the time of
the Closing hereunder which payment shall be in
addition to the Purchase Price of the stock or
Vessel, as applicable.
10. Any default by a party hereunder shall be a default by such party
under the Bareboat Charter Party Agreement and any default by a party under the
Bareboat Charter Party Agreement shall be a default by such party hereunder.
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IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed as of the day and year first above written.
Signed, Sealed and delivered CHARTERER
in the presence of:
LEISURE EXPRESS CRUISE, L.L.C.
a Colorado Limited liability company
By: /s/
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Xxxxx X. Xxxxx
Executive Vice-President
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Signed, Sealed and delivered CHARTERER
in the presence of:
FLORIDA CASINO CRUISES, INC.
a Georgia corporation
By: /s/
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J. Xxxx Xxxxxx
President
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