AGREEMENT TO AMEND AND RESTATE DEBENTURE
THIS AGREEMENT TO AMEND AND RESTATE DEBENTURE is entered into
as of the 31st day of December, 1999, by and between CASINO RESOURCE
CORPORATION, a Minnesota corporation (the "Company"), and ▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING
CORP., a Delaware corporation (the "Holder").
BACKGROUND:
WHEREAS, the Company is the obligor under that certain Amended
and Restated Debenture dated as of February 1, 1999 (the "Existing Debenture")
in favor of Holder in the principal amount of One Million Five Hundred Thirty
Thousand Dollars ($1,530,000);
WHEREAS, the parties have agreed to modify the terms of the
Existing Debenture in certain respects, including, without limitation, to divide
the current balance due on the Existing Debenture into two separate debentures,
one of which will be in the form of Exhibit "A" attached hereto ("Debenture
Number One") and one of which will be in the form of Exhibit "B" attached hereto
("Debenture Number Two");
WHEREAS, this Agreement will have the effect, among other
things, of (a) extending the maturity date of a portion of the balance of the
Existing Debenture to December 31, 2002, (b) providing that principal and
interest will no longer be able to be paid (in part) in the common stock of the
Company, (c) modifying the acceleration and prepayment obligations under the
Existing Debenture, and (d) making certain other changes to the Existing
Debenture; and
WHEREAS, in consideration of the changes, the Company is
willing to grant to Holder an option to purchase Three Hundred Thousand
(300,000) shares of the common stock of the Company.
NOW THEREFORE, for and in consideration of the mutual
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the Company and the Holder hereby agree as follows:
1. Agreement to Amend and Restate. The Company and the Holder
hereby agree to amend and restate the Existing Debenture on the terms and
subject to the conditions set forth in this Agreement.
2. Representations and Warranties of Holder. Holder represents
and warrants to the Company that:
(a) It is the holder and owner of the Existing Debenture,
free and clear of all liens, security interests, pledges, claims, and
encumbrances of every kind, nature, and
description, and it has not assigned, endorsed, or otherwise transferred the
Existing Debenture, or any part thereof or interest therein, to any other person
or entity;
(b) Holder is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and has all requisite
corporate power and authority to execute this Agreement and all instruments to
be delivered by it hereunder and to perform its obligations hereunder and
thereunder;
(c) The execution and delivery of this Agreement and the
instruments to be delivered by Holder hereunder, the consummation of the
transactions provided for herein or therein, and the fulfillment of the terms
hereof or thereof by Holder, will not result in a breach of any of the terms and
provisions of or constitute a default under, or conflict with, any agreement or
other instrument by which it is bound, any judgment, decree, order, or award of
any court, governmental body or arbitrator applicable to it, or any applicable
law, rule, or regulation;
(d) This Agreement has been, and all instruments to be
delivered by Holder hereunder will be, executed and delivered by a duly
authorized representative of Holder; this Agreement constitutes, and each
instrument to be delivered by Holder hereunder will upon execution constitute,
the valid and binding obligation of Holder and is or will be enforceable against
it in accordance with its terms; and
(e) The remaining balance of the Existing Debenture,
including all accrued interest to the date of this Agreement is One Million
Twenty Eight Thousand Five Hundred Fifty -Three Dollars and Forty-Three Cents
($1,028,553.43).
3. Representations and Warranties of the Company. The Company
represents and warrants to the Holder that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of Minnesota, and has all requisite
corporate power and authority to execute this Agreement and all instruments to
be delivered by it hereunder and to perform its obligations hereunder and
thereunder;
(b) The execution and delivery of this Agreement and the
instruments to be delivered by the Company hereunder, the consummation of the
transactions provided for herein or therein, and the fulfillment of the terms
hereof or thereof by the Company, will not result in a breach of any of the
terms and provisions of or constitute a default under, or conflict with, any
agreement or other instrument by which it is bound, any judgment, decree, order,
or award of any court, governmental body or arbitrator applicable to it, or any
applicable law, rule, or regulation;
(c) This Agreement has been, and all instruments to be
delivered by the Company hereunder will be, executed and delivered by a duly
authorized representative of the Company; this Agreement constitutes, and each
instrument to be delivered by the Company
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hereunder will upon execution constitute, the valid and binding obligation of
the Company and is or will be enforceable against it in accordance with its
terms;
(d) The remaining balance of the Existing Debenture,
including all accrued interest to the date of this Agreement, is One Million
Twenty Eight Thousand Five Hundred Fifty -Three Dollars and Forty-Three Cents
($1,028,553.43); and
(e) Between February 1, 1999 and the date hereof, the
Company has fully performed all of its obligations under the Existing Debenture.
4. Conditions Precedent to Holder's Obligation to Close. The
following shall be conditions precedent to the obligation of Holder to close
hereunder, any of which may be waived in whole or in part by Holder:
(a) Each of the representations and warranties made by the
Company contained in this Agreement is now, and at all times after the date of
this Agreement to and including the Closing Date (as defined below) shall be,
true and correct in all material respects; and
(b) ▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have purchased from Holder, or
shall purchase from Holder contemporaneously with the closing of the
transactions contemplated by this Agreement, Nine Hundred Fifty-Two Thousand Two
Hundred Fifty (952,250) shares of the Common Stock of the Company for a purchase
price of Ten Cents ($0.10) per share pursuant to the terms of that certain Stock
Purchase Agreement of even date between Holder and ▇▇. ▇▇▇▇▇▇.
5. Condition Precedent to Company's Obligations to Close. The
following shall be a condition precedent to the obligation of the Company to
close hereunder, which may be waived, in whole or in part, by the Company: each
of the representations and warranties of Holder contained in this Agreement is
now, and at all times after the date of this Agreement to and including the
Closing Date shall be, true and correct in all material respects.
6. Closing:
(a) Closing Date. The Closing of the transactions provided
for in this Agreement shall take place at such location (or by the exchange of
documentation by courier) and on such date (as promptly after the date hereof as
possible) as shall be agreed upon between the President of the Company and the
President of the Holder. The date and time of Closing is referred to in this
Agreement as the Closing Date.
(b) Deliveries by the Company at Closing. At closing, the
Company shall deliver or cause to be delivered to the Holder each of the
following:
(i) A one-time cash payment by cashiers' check in the
amount of One Hundred Thirty-Two Thousand Nine Hundred Seventy-Six Dollars and
Ninety-Two Cents ($132,976.92);
3
(ii) Debenture Number One executed by the Company;
(iii) Debenture Number Two executed by the Company;
(iv) A Stock Option Agreement substantially in the form
of Exhibit "C" attached hereto executed by the Company;
(v) That certain Amendment to Escrow Agreement with
respect to that certain Escrow Agreement dated as of February 1, 1999 by and
among the Company, the Holder and Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP,
as Escrow Agent, substantially in the form of Exhibit "D" attached hereto,
executed by the Company and the Escrow Agent; and
(vi) That certain Pledge Agreement in the form of
Exhibit "E" attached hereto executed by the Company.
(c) Deliveries by Holder at the Closing. At the Closing,
Holder shall deliver or cause to be delivered to the Company each of the
following documents:
(i) The Existing Debenture marked "CANCELED";
(ii) That certain Amendment to Escrow Agreement with
respect to that certain Escrow Agreement dated as of February 1, 1999 by and
among the Company, the Holder and Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP,
as Escrow Agent, substantially in the form of Exhibit "D" attached hereto,
executed by Holder; and
(iii) That certain Pledge Agreement in the form of
Exhibit "E" attached hereto executed by the Holder.
7. Further Assurances. The Company and the Holder agree to
execute and deliver all such other instruments and to take all such other
actions as either of them may reasonably request from time to time, before or
after the Closing and without payment of further consideration, in order to
effectuate the transactions provided for herein. The parties shall cooperate
fully with one another and with their respective counsel and accountants in
connection with any steps required to be taken as part of their respective
obligations under this Agreement.
8. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay on
the part of either party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
4
(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the State of
Mississippi, notwithstanding any conflict-of-laws doctrines of any jurisdiction
to the contrary, and without the aid of any canon, custom or rule of law
requiring construction against the draftsman.
(c) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
delivered (personally, by telecopy, by courier service such as FedEx or by other
messenger) against receipt or upon actual receipt of registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below:
(i) If to Holder:
▇▇▇ ▇▇▇▇▇▇▇▇ Holding Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, III
with a copy, given in the manner
prescribed above, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Carrere & ▇▇▇▇▇▇▇, LLP
Bank One Center
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(ii) If to the Company:
Casino Resource Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
with a copy, given in the manner
prescribed above, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
5
Either party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this subparagraph for the giving of notice.
(d) Exhibits. All Exhibits attached hereto are hereby
incorporated by reference into, and made a part of, this Agreement.
(e) Binding Nature of Agreement; No Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that no party may assign or
transfer its rights nor delegate its obligations under this Agreement without
the prior written consent of the other parties hereto.
(f) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.
(g) Provisions Separable. The provisions of this Agreement
are independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
(h) Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
(i) Paragraph Headings. The Paragraph and subparagraph
headings in this Agreement have been inserted for convenience of reference only;
they form no part of this Agreement and shall not affect its interpretation.
(j) Gender, Etc. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context indicates is appropriate.
(k) Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and Holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or Holiday, then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or Holiday. For
purposes of this Agreement, the term "Holiday" shall mean a day, other than a
Saturday or Sunday, on which national banks in the State of Mississippi are
closed.
6
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Agreement as of the date first above written.
CASINO RESOURCE CORPORATION
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING CORP.
By:
Name: ▇▇▇ ▇▇▇▇▇▇▇▇, III
Title: President, Chief Executive Officer and
Treasurer
7
EXHIBIT A
Debenture Number One
DEBENTURE NUMBER ONE
(CASH COMPONENT DEBENTURE)
$342,655.48 December 31, 1999
PROMISE TO PAY. CASINO RESOURCE CORPORATION, a Minnesota corporation (the
"Company"), promises to pay to the order of ▇▇▇ ▇▇▇▇▇▇▇▇ Holding Corp., a
Delaware corporation (the "Holder"), Three Hundred Forty-Two Thousand Six
Hundred Fifty Five and 48/100 Dollars ($342,655.48), together with simple
interest at the fixed rate per annum of six percent (6%), with interest being
assessed on the unpaid principal balance of this Debenture as outstanding from
time to time, commencing on January 1, 2000, and continuing until this Debenture
is paid in full.
PAYMENT.
(a) The Company shall pay, in lawful money of the United States of America,
principal and interest on this Debenture in equal monthly installments of
Forty-Four Thousand Two Hundred Thirty Eight Dollars ($44,238) each (each an
"Installment Payment"), commencing on April 1, 2000, and continuing on the first
day of each succeeding month through and including October 1, 2000 (each such
payment date being referred to herein as a "Payment Date"). Any and all unpaid
principal and accrued but unpaid interest and any other amounts due hereunder
shall be due and payable at maturity on November 1, 2000.
(b) All payments due hereunder shall be made to the Holder's address for
notices set forth below or at such other place as the Holder may designate to
the Company in writing.
VOLUNTARY PREPAYMENT. The Company may prepay this Debenture in full or in part
at any time, provided that any such prepayment must be made in cash, unless
otherwise agreed to by the Holder. Early payments under this Debenture shall not
relieve the Company of its obligation to continue to make regularly scheduled
payments as required herein, but shall instead reduce the principal balance due,
and the Company may be required to make fewer payments under this Debenture.
MANDATORY PREPAYMENT.
(a) Upon the sale of the Company's casino located in Tunisia, North Africa
(whether by the sale of stock or assets, by merger or otherwise), if the down
payment (if any) of the purchase price plus all Balloon Payments (as defined
below) together exceed Three Hundred Thousand Dollars ($300,000), then the
Company shall pay the Holder a sum equal to such down payment and Balloon
Payments or the remaining balance due hereunder (including principal, accrued
interest and any other amounts due hereunder), whichever is less. In addition,
if such casino is sold for a cash sale price, the Company shall pay the Holder
such cash sale price or the remaining balance due hereunder, whichever is less.
Such repayment shall be made in cash promptly upon satisfaction of the foregoing
condition. For purposes of this Debenture, the term "Balloon Payment" means (i)
a payment that is at least twice the amount due on a monthly or other periodic
basis, and (ii) any final payment due.
(b) In the event that the Company receives any one time payment arising out
of (i) a sale or other disposition of assets, (ii) a settlement of pending
claims, (iii) a collection of notes receivable; (iv) proceeds of litigation, (v)
prepayment of any account receivable that arose out of a transaction outside of
the Company's ordinary course of business or (vi) a sale of equity securities to
more than one purchaser in exchange for cash (each an "Extraordinary Payment"),
and the amount of such Extraordinary Payment exceeds the then outstanding
principal balance of this Debenture, then the Company shall repay this Debenture
in full in cash within five (5) business days after receipt of such
Extraordinary Payment. In the event that the Company receives an Extraordinary
Payment in an amount which is less than the then outstanding principal balance
of this Debenture, then the Company shall pay the Holder a sum equal to Fifty
Percent (50%) of the amount of such Extraordinary Payment in cash within five
(5) business days after receipt of such Extraordinary Payment; such payment
shall be applied by the Holder to payment of the Installment Payments due
hereunder in the inverse order of their maturity. Nothing in this Debenture is
intended to create, nor shall it be deemed to create, a security interest in,
lien on, or pledge or assignment of any of the Company's notes or accounts
receivable.
(c) From the date of this Debenture through the date this Debenture is paid
in full, the Company shall furnish to the Holder no later than the second
business day after the receipt by the Company of an Extraordinary Payment a
certificate signed by the Chief Financial Officer of the Company identifying the
nature, source and amount of such Extraordinary Payment and calculating the
amount of prepayment required to be made under the terms of the section of this
Debenture entitled "Mandatory Prepayment."
REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the
Holder as of the date of this Debenture:
(a) Organization. The Company is a corporation which is duly organized,
validly existing and in good standing under the laws of the State of Minnesota.
(b) Authorization. The Company's execution, delivery and performance of
this Debenture has been duly authorized and does not conflict with, and will not
result in a violation of, or constitute or give rise to an event of default
under, the Company's articles of incorporation or bylaws. Furthermore, the
execution, delivery and performance by the Company of this Debenture does not
conflict with, and will not result in a violation of, or constitute or give rise
to an event of default under, any agreement or other instrument which may be
binding upon the Company or under any law or governmental regulation or court
decree or order applicable to the Company and/or its properties. The Company has
the power and authority to enter into the obligations evidenced by this
Debenture. The Company has the power and authority to own and to hold all of its
assets and properties and to carry on its business as presently conducted.
(c) Exchange Act Reports. The Company has duly filed with the Securities
and Exchange Commission (the "SEC") all reports, schedules, forms, statements
and other documents required to be filed by it under the Securities Exchange Act
of 1934 ("Exchange Act Reports") since January 1, 1998. As of their respective
dates, all such Exchange Act Reports filed by the Company since such date
complied in all material respects with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations of the SEC promulgated
thereunder applicable to such Exchange Act Reports, and none of such Exchange
Act Reports
2
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(d) Binding effect. This Debenture constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally and (ii) equitable principles that may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
The Company agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect until such time
as this Debenture shall be paid in full. The Company agrees to notify the Holder
immediately of any breach by the Company of any representation, warranty or
agreement of the Company contained herein or should any representation, warranty
or agreement made herein become untrue or false at any time. The Company further
agrees to indemnify and hold the Holder harmless against any breach by the
Company of any representation, warranty or agreement of the Company contained in
this Debenture.
NEGATIVE PLEDGE. As long as the Company owns its gaming casino in Tunisia, North
Africa, the Company shall not create, incur or suffer to exist any lien, pledge,
security interest or other encumbrance of any kind upon any of the slot machines
now or hereafter located at such casino (the "Pledge Property") and the Company
shall not remove any of the Pledge Property from the Company's casino in
Tunisia, North Africa without first notifying the Holder thereof and of the
location to which such Pledge Property will be removed. Except for sales or
other dispositions of obsolete or worn-out items comprising the Pledge Property,
the Company will not sell or otherwise dispose of any of the Pledge Property
without making the prepayment required under subsection (a) of the section above
entitled "Mandatory Prepayment".
MERGER. Notwithstanding any provision herein to the contrary, the Company shall
not consolidate or merge into or with any other person unless such person
expressly assumes all of the obligations of the Company under this Debenture.
DEFAULT. The following actions and/or inactions shall constitute events of
default under this Debenture:
(a) Default Under This Debenture. Should the Company (i) default in the
payment of any Installment Payment when due or within five (5) days of grace
thereafter, (ii) default in the payment of any other payment due under this
Debenture (including any prepayment required to be made under this Debenture) as
and when due or (iii) default in the performance of any other covenant,
condition or agreement contained in this Debenture and such default shall remain
unremedied fifteen (15) days after the occurrence thereof.
(b) Default Under Related Obligations. Should the Company default under any
other written obligation between the Company and the Holder.
3
(c) Default in Favor of Third Parties. Should the Company default under any
loan, extension of credit, security agreement, purchase or sales agreement or
any other agreement in favor of any other creditor or person that materially
impairs the ability of the Company to perform its obligations hereunder.
(d) Insolvency. Should the suspension, failure or insolvency, however
evidenced, of the Company occur or exist.
(e) Readjustment of Indebtedness. Should proceedings for readjustment of
indebtedness, reorganization, bankruptcy, composition or extension under any
insolvency law be brought by or against the Company, unless, if brought against
the Company, such proceedings are dismissed within sixty (60) days after the
filing thereof.
(f) Assignment for Benefit of Creditors. Should the Company file
proceedings for a respite from or make a general assignment for the benefit of
creditors.
(g) Receivership. Should a receiver of all or any part of the property of
the Company be applied for or appointed.
(h) Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of the Company be commenced.
(i) False Statements. Should any representation, warranty or material
statement of the Company made in writing in connection with the obligations
evidenced by this Debenture prove to be incorrect or misleading in any material
respect when made.
HOLDER'S RIGHTS UPON DEFAULT. Should any one or more events of default occur or
exist under this Debenture as provided above, the Holder shall have the right,
at its sole option, formally to declare this Debenture to be in default and to
accelerate the maturity and insist upon immediate payment in full in cash of the
unpaid principal balance then outstanding under this Debenture, plus accrued
interest, together with reasonable attorneys' fees, costs, expenses and other
fees and charges as provided herein.
WAIVERS. The Company hereby waives presentment for payment, protest, notice of
protest and notice of nonpayment. The Company agrees that the Holder's
acceptance of payment other than in accordance with the terms of this Debenture,
or the Holder's subsequent agreement to extend or modify such repayment terms,
or the Holder's failure or delay in exercising any rights or remedies granted to
the Holder, shall not have the effect of releasing the Company from its
obligations to the Holder. In addition, any failure or delay on the part of the
Holder to exercise any of the rights and remedies granted to the Holder shall
not have the effect of waiving any of the Holder's rights and remedies. Any
partial exercise of any rights and/or remedies granted to the Holder shall
furthermore not be construed as a waiver of any other rights and remedies, it
being the Company's intent and agreement that the Holder's rights and remedies
shall be cumulative in nature. The Company further agrees that, should any event
of default occur or exist under this Debenture, any waiver or forbearance on the
part of the Holder to pursue the rights and remedies available to the Holder
shall be binding upon the Holder only to the extent that the Holder specifically
agrees to any such waiver or forbearance in writing. A waiver or
4
forbearance on the part of the Holder as to one event of default shall not be
construed as a waiver or forbearance as to any other event of default.
ATTORNEYS' FEES. If the Holder refers this Debenture to an attorney for
collection, or files suit against the Company to collect this Debenture, or if
the Company files for bankruptcy or other relief from creditors, the Company
agrees to pay the Holder's reasonable attorneys' fees in connection with such
action.
NOTICES. Any notice or demand which, by provision of this Debenture, is required
or permitted to be served by one party hereto to or on the other party hereto
shall be deemed to have been sufficiently given and served for all purposes (if
mailed) three (3) calendar days after being deposited, postage prepaid, in the
United States mail, registered or certified mail, or (if delivered by express
courier) one (1) 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 is given in writing by one party hereto to the other party
hereto) as follows:
If to the Company:
Casino Resource Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Mr. ▇▇▇▇ ▇▇▇▇▇▇
If to the Holder:
▇▇▇ ▇▇▇▇▇▇▇▇ Holding Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇ ▇▇▇▇▇▇▇▇, III
GOVERNING LAW. The Company agrees that this Debenture and the obligations
evidenced hereby shall be governed under the laws of the State of Mississippi.
SUCCESSORS AND ASSIGNS LIABLE. The Company's obligations and agreements under
this Debenture shall be binding upon the Company's successors and permitted
assigns. The rights and remedies granted to the Holder under this Debenture
shall inure to the benefit of the Holder's successors and assigns, as well as to
any subsequent holder or holders of this Debenture.
CAPTION HEADINGS. Caption headings of the sections of this Debenture are for
convenience purposes only and are not to be used to interpret or to define the
provisions. In this Debenture, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Debenture is held to be invalid, illegal
or unenforceable by any court, that provision shall be deleted from this
Debenture and the balance of this Debenture shall be interpreted as if the
deleted provision never existed.
5
IN WITNESS WHEREOF, the Company and the Holder have each duly
executed this Debenture on the ______ day of January 2000, and have agreed that
this Debenture will be effective as of the 31st day of December, 1999.
COMPANY:
CASINO RESOURCE CORPORATION
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
HOLDER:
▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING CORP.
By:
Name: ▇▇▇ ▇▇▇▇▇▇▇▇, III
Title: President, Chief Executive Officer and
Treasurer
6
EXHIBIT B
Debenture Number Two
DEBENTURE NUMBER TWO
(STOCK COMPONENT DEBENTURE)
$685,897.95 December 31, 1999
PROMISE TO PAY. CASINO RESOURCE CORPORATION, a Minnesota corporation (the
"Company"), promises to pay to the order of ▇▇▇ ▇▇▇▇▇▇▇▇ Holding Corp., a
Delaware corporation (the "Holder"), Six Hundred Eighty Five Thousand Eight
Hundred Ninety Seven and 95/100 Dollars ($685,897.95), together with simple
interest at the fixed rate per annum of six percent (6%), with interest being
assessed on the unpaid principal balance of this Debenture as outstanding from
time to time, commencing on January 1, 2000, and continuing until this Debenture
is paid in full.
PAYMENT.
(a) Any and all unpaid principal and accrued but unpaid interest and any
other amounts due hereunder shall be due and payable in one lump sum at maturity
on December 31, 2002 in lawful money of the United States of America.
(b) All payments due hereunder shall be made to the Holder's address for
notices set forth below or at such other place as the Holder may designate to
the Company in writing.
VOLUNTARY PREPAYMENT. The Company may repay this Debenture in full or in part at
any time, provided that any such prepayment must be made in cash, unless
otherwise agreed to by the Holder. Early payments under this Debenture shall not
relieve the Company of its obligation to continue to make payments as required
under "Mandatory Prepayment", but shall instead reduce the principal balance
due.
MANDATORY PREPAYMENT.
(a) The Company shall pay to Holder, if as and when received by the Company
after the date hereof from Lakes Gaming, Inc. Fifty Percent (50%) of each amount
received by the Company from Lakes Gaming, Inc. under and pursuant to that
certain Conditional Release and Termination Agreement as revised and amended
dated July 1, 1999 to which the Company and Lakes Gaming, Inc. are parties or
the remaining balance due hereunder (including principal, accrued interest and
other amounts due hereunder), whichever is less.
(b) In addition to the foregoing, in the event that the Company receives
any other one time payment arising out of (i) a sale or other disposition of
assets, (ii) a settlement of pending claims, (iii) a collection of notes
receivable; (iv) proceeds of litigation, (v) prepayment of any account
receivable that arose out of a transaction outside of the Company's ordinary
course of business or (vi) a sale of equity securities to more than one
purchaser in exchange for cash (each an "Extraordinary Payment"), and the amount
of such Extraordinary Payment exceeds the then outstanding principal balance of
this Debenture, then the Company shall repay this Debenture in full in cash
within five (5) business days after receipt of such Extraordinary Payment. In
the event that the Company receives an Extraordinary Payment in an amount which
is less than the then outstanding principal balance of this Debenture, then the
Company shall pay the Holder a
sum equal to Fifty Percent (50%) of the amount of such Extraordinary Payment in
cash within five (5) business days after receipt of such Extraordinary Payment;
such payment shall be applied by the Holder to the payment due under this
Debenture. Nothing in this Debenture is intended to create, nor shall it be
deemed to create, a security interest in, lien on, or pledge or assignment of
any of the Company's notes or accounts receivable.
(c) From the date of this Debenture through the date this Debenture is paid
in full, the Company shall furnish to the Holder no later than the second
business day after the receipt by the Company of an Extraordinary Payment a
certificate signed by the Chief Financial Officer of the Company identifying the
nature, source and amount of such Extraordinary Payment and calculating the
amount of prepayment required to be made under the terms of the section of this
Debenture entitled "Mandatory Prepayment."
REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to the
Holder as of the date of this Debenture:
(a) Organization. The Company is a corporation which is duly organized,
validly existing and in good standing under the laws of the State of Minnesota.
(b) Authorization. The Company's execution, delivery and performance of
this Debenture has been duly authorized and does not conflict with, and will not
result in a violation of, or constitute or give rise to an event of default
under, the Company's articles of incorporation or bylaws. Furthermore, the
execution, delivery and performance by the Company of this Debenture does not
conflict with, and will not result in a violation of, or constitute or give rise
to an event of default under, any agreement or other instrument which may be
binding upon the Company or under any law or governmental regulation or court
decree or order applicable to the Company and/or its properties. The Company has
the power and authority to enter into the obligations evidenced by this
Debenture. The Company has the power and authority to own and to hold all of its
assets and properties and to carry on its business as presently conducted.
(c) Exchange Act Reports. The Company has duly filed with the Securities
and Exchange Commission (the "SEC") all reports, schedules, forms, statements
and other documents required to be filed by it under the Securities Exchange Act
of 1934 ("Exchange Act Reports") since January 1, 1998. As of their respective
dates, all such Exchange Act Reports filed by the Company since such date
complied in all material respects with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations of the SEC promulgated
thereunder applicable to such Exchange Act Reports, and none of such Exchange
Act Reports contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) Binding effect. This Debenture constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally and (ii) equitable principles that
2
may limit the availability of certain equitable remedies (such as specific
performance) in certain instances.
The Company agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect until such time
as this Debenture shall be paid in full. The Company agrees to notify the Holder
immediately of any breach by the Company of any representation, warranty or
agreement of the Company contained herein or should any representation, warranty
or agreement made herein become untrue or false at any time. The Company further
agrees to indemnify and hold the Holder harmless against any breach by the
Company of any representation, warranty or agreement of the Company contained in
this Debenture.
NEGATIVE PLEDGE. As long as the Company owns its gaming casino in Tunisia, North
America, the Company shall not create, incur or suffer to exist any lien,
pledge, security interest or other encumbrance of any kind upon any of the slot
machines now or hereafter located at such casino (the "Pledge Property"), and
the Company shall not remove any of the Pledge Property from the Company's
casino in Tunisia, North Africa without first notifying the Holder thereof and
of the location to which such Pledge Property will be removed. Except for sales
or other dispositions of obsolete or worn-out items comprising the Pledge
Property, the Company will not sell or otherwise dispose of any of the Pledge
Property without making the prepayment required under subsection (c) of the
section above entitled "Mandatory Prepayment".
MERGER. Notwithstanding any provision herein to the contrary, the Company shall
not consolidate or merge into or with any other person unless such person
expressly assumes all of the obligations of the Company under this Debenture.
DEFAULT. The following actions and/or inactions shall constitute events of
default under this Debenture:
(a) Default Under This Debenture. Should the Company (i) default in the
payment of any amount due under this Debenture (including any prepayment
required to be made under this Debenture) as and when due or within 5 days of
grace thereafter or (ii) default in the performance of any other covenant,
condition or agreement contained in this Debenture and such default shall remain
unremedied fifteen (15) days after the occurrence thereof.
(b) Default Under Related Obligations. Should the Company default under any
other written obligation between the Company and the Holder.
(c) Default in Favor of Third Parties. Should the Company default under any
loan, extension of credit, security agreement, purchase or sales agreement or
any other agreement in favor of any other creditor or person that materially
impairs the ability of the Company to perform its obligations hereunder.
(d) Insolvency. Should the suspension, failure or insolvency, however
evidenced, of the Company occur or exist.
(e) Readjustment of Indebtedness. Should proceedings for readjustment of
indebtedness, reorganization, bankruptcy, composition or extension under any
insolvency law be brought by or
3
against the Company, unless, if brought against the Company, such proceedings
are dismissed within sixty (60) days after the filing thereof.
(f) Assignment for Benefit of Creditors. Should the Company file
proceedings for a respite from or make a general assignment for the benefit of
creditors.
(g) Receivership. Should a receiver of all or any part of the property of
the Company be applied for or appointed.
(h) Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of the Company be commenced.
(i) False Statements. Should any representation, warranty or material
statement of the Company made in writing in connection with the obligations
evidenced by this Debenture prove to be incorrect or misleading in any material
respect when made.
HOLDER'S RIGHTS UPON DEFAULT. Should any one or more events of default occur or
exist under this Debenture as provided above, the Holder shall have the right,
at its sole option, formally to declare this Debenture to be in default and to
accelerate the maturity and insist upon immediate payment in full in cash of the
unpaid principal balance then outstanding under this Debenture, plus accrued
interest, together with reasonable attorneys' fees, costs, expenses and other
fees and charges as provided herein.
WAIVERS. The Company hereby waives presentment for payment, protest, notice of
protest and notice of nonpayment. The Company agrees that the Holder's
acceptance of payment other than in accordance with the terms of this Debenture,
or the Holder's subsequent agreement to extend or modify such repayment terms,
or the Holder's failure or delay in exercising any rights or remedies granted to
the Holder, shall not have the effect of releasing the Company from its
obligations to the Holder. In addition, any failure or delay on the part of the
Holder to exercise any of the rights and remedies granted to the Holder shall
not have the effect of waiving any of the Holder's rights and remedies. Any
partial exercise of any rights and/or remedies granted to the Holder shall
furthermore not be construed as a waiver of any other rights and remedies, it
being the Company's intent and agreement that the Holder's rights and remedies
shall be cumulative in nature. The Company further agrees that, should any event
of default occur or exist under this Debenture, any waiver or forbearance on the
part of the Holder to pursue the rights and remedies available to the Holder
shall be binding upon the Holder only to the extent that the Holder specifically
agrees to any such waiver or forbearance in writing. A waiver or forbearance on
the part of the Holder as to one event of default shall not be construed as a
waiver or forbearance as to any other event of default.
4
ATTORNEYS' FEES. If the Holder refers this Debenture to an attorney for
collection, or files suit against the Company to collect this Debenture, or if
the Company files for bankruptcy or other relief from creditors, the Company
agrees to pay the Holder's reasonable attorneys' fees in connection with such
action. In addition, the Company shall reimburse the Holder for all fees and
expenses of the Holder's outside counsel incurred in connection with the
preparation, negotiation, execution and delivery of this Debenture, provided
that the Company shall not be obligated to reimburse the Holder for fees and
expenses in excess of $12,500.00.
NOTICES. Any notice or demand which, by provision of this Debenture, is required
or permitted to be served by one party hereto to or on the other party hereto
shall be deemed to have been sufficiently given and served for all purposes (if
mailed) three (3) calendar days after being deposited, postage prepaid, in the
United States mail, registered or certified mail, or (if delivered by express
courier) one (1) 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 is given in writing by one party hereto to the other party
hereto) as follows:
If to the Company:
Casino Resource Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Holder:
▇▇▇ ▇▇▇▇▇▇▇▇ Holding Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇ ▇▇▇▇▇▇▇▇, III
GOVERNING LAW. The Company agrees that this Debenture and the obligations
evidenced hereby shall be governed under the laws of the State of Mississippi.
SUCCESSOR AND ASSIGNS LIABLE. The Company's obligations and agreements under
this Debenture shall be binding upon the Company's successors and permitted
assigns. The rights and remedies granted to the Holder under this Debenture
shall inure to the benefit of the Holder's successors and assigns, as well as to
any subsequent holder or holders of this Debenture.
CAPTION HEADINGS. Caption headings of the sections of this Debenture are for
convenience purposes only and are not to be used to interpret or to define the
provisions. In this Debenture, Whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Debenture is held to be invalid, illegal
or unenforceable by any court, that provision shall be deleted from this
Debenture and the balance of this Debenture shall be interpreted as if the
deleted provision never existed.
5
IN WITNESS WHEREOF, the Company and the Holder have each duly
executed this Debenture on the ______ day of January, 2000, and have agreed that
this Debenture will be effective as of the 31st day of December, 1999.
COMPANY:
CASINO RESOURCE CORPORATION
By:
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
HOLDER:
▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING CORP.
By:
Name: ▇▇▇ ▇▇▇▇▇▇▇▇, III
Title: President, Chief Executive Officer
and Treasurer
6
EXHIBIT C
Stock Option Agreement
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made as of the 4th day of January, 2000
by and between CASINO RESOURCE CORPORATION, a Minnesota corporation (the
"Company") and ▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING CORP., a Delaware corporation (the
"Optionee").
W I T N E S S E T H:
Company desires to grant to Optionee options to purchase shares of its
common stock, par value $0.01 each ("Shares").
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, each intending
to be legally bound hereby, agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
(a) "Affiliate" shall mean, with respect to an entity, another
person or entity controlling, controlled by, or under common control with the
first entity.
(b) The term "Expiration Date" shall mean 5:00 p.m., local time in
Ocean Springs, Mississippi on December 31, 2002.
(c) The term "Termination Date" shall mean 5:00 p.m. local time in
Ocean Springs, Mississippi on the day the Option terminates in accordance with
the terms of Paragraph 5.
(d) The term "transfer" shall mean any sale, assignment, transfer,
gift, donation, or other disposition, or any pledge, deposit, or placing of an
encumbrance upon.
(e) The term "Fair Market Value" with respect to a Share on any
particular date shall mean the closing price of a share of Company's common
stock on the day before such date on the national securities exchange (or
NASDAQ, as the case may be) where such shares are traded, or if such shares are
not then traded on a national securities exchange or on NASDAQ, the average of
the closing bid and closing asked prices of such shares on the day before such
date (excluding any such bid or asked prices submitted by the Company or any of
its Affiliates), or if there are no closing such prices, the fair market value
as estimated in good faith by the Chairman of the Company.
2. Grant of Option. The Company hereby grants to Optionee the right and
option (the "Option") to purchase Three Hundred Thousand (300,000) Shares (the
"Option Shares"), on the terms and subject to the conditions hereinafter set
forth in this Agreement. The number of Option Shares to which this Agreement
applies may be adjusted in the manner set forth in Paragraphs 6 and 10.
3. Option Price. The purchase price to be paid, if the Option is
exercised, shall be Seventeen Cents ($0.17) per Share (the "Option Price")
subject to adjustment hereunder, which shall be paid at the Closing (as
hereinafter defined) in the manner provided in this Agreement.
4. Exercise of Option. The following provisions shall apply to exercise
of the Option:
(a) Optionee shall exercise the Option by sending a notice of
election (the "Notice of Election") to the Company in the form attached hereto
and incorporated herein by reference. The Notice of Election shall be in
writing, shall be sent to the Company at the address and in the manner set forth
in subparagraph 13(c) hereof (unless such address has been changed in
2
the manner set forth in such subparagraph), and shall contain the information
about the Closing set forth in subparagraph 11(a) hereof.
(b) If exercised, the Option may be exercised as to some or all of
the Option Shares, and if with respect to some of the Option Shares, then the
Option shall continue until the Termination Date with respect to the remaining
Option Shares.
(c) The Option may be exercised at any time prior to the Termination
Date; provided, however, that the date and time of the exercise of the Option
shall be that day and time when the Notice of Election is actually received by
the Company.
(d) Payment for Shares shall be made in cash, by certified check
payable to the order of the Company, or by such other mode of payment
(including, without limitation, transfer of shares of common stock of the
Company) as the Company may approve.
(e) Optionee will become obliged to purchase the Option Shares on
the terms and conditions set forth in this Agreement and the Notice of Election
upon the sending by Optionee of the Notice of Election.
5. Term.
(a) Except as provided in subparagraph (b) of this Paragraph 5, the
Option will terminate at 5:00 p.m. local time in Ocean Springs, Mississippi on
the Expiration Date.
(b) In the event of dissolution or liquidation of the Company or
consummation of any transaction (i) in which the Company is not the surviving or
acquiring entity, (ii) in which the Company becomes an 80% or more owned
subsidiary of another company, or (iii) in which the shareholders of the Company
immediately before such transaction do not own immediately after such
transaction, shares entitling them, in the aggregate, to cast more then a
majority of votes for the
3
election of directors of the Company or the surviving company in the case of a
merger, consolidation, reorganization, or similar transaction, then the Option
may be terminated prior to the Expiration Date by action of the Board of
Directors of the Company, or such surviving company, as the case may be,
provided that (A) the Board of Directors selects a Termination Date which is at
least thirty (30) days after the date Optionee is given written notice of such
selection, and (B) if and to the extent that the Option expires on such date
unexercised, the Company shall contemporaneously therewith pay to Optionee with
respect to each Option Share which was not exercised the difference between the
Fair Market Value of a Share on such date and the Option Price.
6. Change or Exchange of Capital Stock.
(a) In the event that the outstanding shares of capital stock of the
Company shall be changed into or exchanged for a different number or kind of
shares of capital stock of the Company or shall be changed into or exchanged for
a different number or kind of shares of capital stock or other securities of the
Company or of another company (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, or otherwise), then there shall be
substituted for each remaining Option Share (those not acquired by exercise of
the Option prior to the record date for such merger, consolidation,
recapitalization, reclassification, split-up, or otherwise) the number and kind
of shares of capital stock or other securities into which each outstanding share
of capital stock of the Company shall be so changed or for which each such share
of capital stock shall be so exchanged. In the event that there shall be any
such change or exchange, then Optionee shall be entitled to purchase all of such
capital stock and other securities into which each Option Share shall have been
changed or for which it shall have been exchanged for the Option
4
Price which would have been required to be paid for such Option Share assuming
there had been no such change or exchange, and otherwise in accordance with the
terms of this Agreement.
(b) In the event that the outstanding Shares shall be subdivided
into a greater or combined into a lesser number of such shares, whether by stock
dividend, stock split or combination of shares, the Option Price shall be
proportionately decreased or increased, as the case may be, and the number of
remaining Option Shares (those not acquired by exercise of the Option prior to
the record date of such stock dividend, stock split, or combination of shares)
subject to the Option shall be proportionately increased or decreased as the
case may be, so as appropriately to reflect such subdivision or combination,
effective immediately upon the effectiveness of such subdivision or combination.
(c) No such adjustment shall be made, however, by reason of the
issuance of shares of common stock of the Company for cash, property, or
services; or by way of stock options, stock warrants, subscription rights, or
similar issuances authorized by the Board of Directors of the Company.
7. Representations and Warranties of Company. Company hereby makes the
following representations, warranties and agreements to and with Optionee:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Minnesota and has an
authorized capital of Thirty Million (30,000,000) shares of common stock, par
value One Cent ($0.01) per Share, and Five Million (5,000,000) shares of
preferred stock, par value One Cent ($0.01) per share, and the Company has the
power and authority to issue the number of Shares required to be so issued upon
the exercise of the Option.
5
(b) If the Option is exercised, the Company has the power and
authority to deliver good, marketable, and unencumbered title to such Shares as
to which Optionee shall have exercised the Option, free of all liens, security
interests, pledges, claims, options and rights of others. There are no
restrictions on Company's right to transfer such Shares to Optionee pursuant to
the terms of this Agreement if the Option is exercised, whether under any laws,
any regulations of governmental agencies or self-regulatory bodies, any
agreements with third parties, or otherwise. No transfer of record ownership of,
or beneficial interest in, any of the Shares to be reserved for issuance
hereunder will be made between the date hereof and Closing.
(c) This Agreement constitutes the valid and binding obligation of
Company, and is enforceable against it in accordance with its terms, except to
the extent that the enforcement thereof is limited by bankruptcy,
reorganization, insolvency, moratorium, or other similar laws or orders
affecting the enforcement of creditors' rights generally, or by equitable
principles.
8. Securities Laws Compliance Procedures. Optionee represents and
acknowledges that (i) it has had the opportunity to acquire all information
concerning the business, affairs, financial condition and prospects of the
Company which it deems relevant to making a fully informed decision regarding
the consummation of the transactions contemplated hereby and (ii) it has been
supplied with copies of the Company's latest annual report on Form 10-KSB, the
Company's latest quarterly report on Form 10-QSB, Company's latest proxy
statement, and Company's latest annual report to shareholders. Without intending
any limitation on the generality of the foregoing, Optionee understands and
acknowledges that neither the Company nor anyone acting on its behalf has made
any representations or warranties other than those contained herein or in the
related Agreement to Amend and Restate Debenture dated as of the date hereof
respecting the
6
Company or the future conduct of Company's business, and Optionee has not relied
upon any representations or warranties other than those contained herein or
therein otherwise in the belief that they were made on behalf of the Company.
9. Transfers. The Option is not transferable by Optionee except to an
Affiliate of Optionee or in connection with a sale of substantially all of the
capital stock or assets of Optionee (whether by direct sale, merger or
consolidation). Any attempt at assignment, transfer, pledge or disposition of
the Option contrary to the provisions hereof or the levy of any execution,
attachment or similar process upon the Option shall be null and void and without
force or effect.
10. Optionee's Ability to Reduce Number of Option Shares.
(a) At any time on or before December 31, 2000, Optionee shall have
the right, to be exercised by written notice (the "Relinquishment Notice") sent
to the Company in accordance with the terms of subparagraph 13(c), to reduce the
number of then remaining Option Shares by any number designated in the
Relinquishment Notice (but not more than Fifty Thousand (50,000) Option Shares
nor the remaining number of Option Shares, if fewer).
(b) If a Relinquishment Notice is given in compliance with the terms
of subparagraph (a) of this Paragraph 10, then the Company shall pay Optionee
the sum of One Dollar ($1.00) for each Option Share relinquished (the
"Relinquishment Payment") pursuant thereto. Such payment shall be made by
increasing the then outstanding principal balance of that certain Debenture
Number Two dated as of December 31, 1999 by and between the Company as Obligor
and Optionee as Payee and by executing and delivering a substitute Debenture
Number Two reflecting such increase in principal balance. If such debenture has
been completely repaid at the
7
time of the giving of the Relinquishment Notice, then the Relinquishment Payment
shall be made by the Company's execution of a debenture substantially in the
form of Debenture Number Two and which has a maturity date of December 31, 2002
and shall be in the principal amount of the aggregate Relinquishment Payment.
(c) From and after completion of transactions contemplated by
subparagraph (b) of this Paragraph 10, the number of Option Shares as to which
this Stock Option Agreement shall apply shall be the number of Option Shares
which could have been purchased immediately before the giving of the related
Relinquishment Notice reduced by such number of Option Shares set forth in such
Relinquishment Notice.
11. Closing.
(a) The Closing shall be held at a date and time to be selected by
Optionee in the Notice of Election; provided, however, that the date specified
in the Notice of Election shall not be more than forty-five (45) days after the
sending of such Notice of Election.
(b) Closing shall be held at the chief executive offices of the
Company or such other place as shall be agreed upon by the parties.
(c) At Closing, the Company shall deliver or cause to be delivered
to Optionee certificates for all of the Option Shares to be purchased by
Optionee pursuant to the Notice of Election issued to and registered in the name
of Optionee, and with all required transfer tax stamps, if any, affixed.
8
(d) At Closing Optionee shall pay by certified check or other draft
acceptable to Company the full Option Price required to be paid in cash for all
of the Option Shares to be purchased by Optionee pursuant to the Notice of
Election.
(e) At Closing, at the request of the Company, Optionee shall
deliver to the Company a certificate signed by Optionee certifying to the truth
and correctness as of the date of Closing of each of the representations,
warranties, acknowledgments, agreements, and confirmations set forth in
Paragraph 8 of this Agreement.
(f) At Closing, at the request of Optionee, the Company shall
deliver to Optionee a certificate signed by an officer of the Company certifying
to the truth and correctness as of the date of Closing of each of the
representations, warranties, acknowledgments, agreements and confirmations as
set forth in Paragraph 7 of this Agreement.
12. No Rights As Shareholder Pending Exercise. Optionee shall not have
any rights as a shareholder of the Company as a result of the existence of the
Option until and unless it shall acquire some or all of the Option Shares.
Without intending any limitation on the generality of the foregoing, Optionee
shall not be entitled to vote on any matter presented to the shareholders of the
Company nor to receive any dividends or other distributions made or declared by
the Company, the record date or ex-dividend date of which, respectively,
precedes the date on which some or all of the Option Shares are acquired
pursuant hereto.
13. Covenant to Make Exchange Act Filings. The Company hereby covenants
and agrees that it shall, at all times prior to the Termination Date while any
Option Shares remain subject to this Agreement, make on a timely basis all
filings required to be made by the
9
Company under the Securities Exchange Act of 1934, and the rules and regulations
promulgated thereunder.
14. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay on the part
of either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
(b) Controlling Law. This Agreement and all questions relating to
its validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the State of Mississippi,
notwithstanding any conflict-of-laws doctrines of such jurisdiction to the
contrary, and without the aid of any canon, custom or rule of law requiring
construction against the draftsman.
(c) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received when personally delivered or
when deposited in the United States mails, registered or certified mail, postage
prepaid, return receipt requested, addressed as set forth below:
10
(i) If to Optionee:
▇▇▇ ▇▇▇▇▇▇▇▇ Holding Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇ ▇▇▇▇▇▇▇▇, III
with a copy, given in the manner prescribed above, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Jones, Walker, Waechter, Poitevent, Carrere & ▇▇▇▇▇▇▇, L.L.P.
Place St. ▇▇▇▇▇▇▇
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(ii) If to Company:
▇▇▇▇ ▇. ▇▇▇▇▇▇
Casino Resource Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy, given in the manner prescribed above, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Either party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this subparagraph (c) for the giving of notice.
(d) Binding Nature of Agreement; No Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns, except that
neither party may assign or transfer its rights
11
(except as provided in Paragraph 9) nor delegate its obligations under this
Agreement without the prior written consent of the other party hereto.
(e) Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
(f) Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
(g) Paragraph Headings. The Paragraph and subparagraph headings in
this Agreement have been inserted for convenience of reference only; they form
no part of this Agreement and shall not affect its interpretation.
(h) Gender, Etc. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.
(i) Number of Days. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
Holidays; provided, however, that if the final day of any time period falls on a
Saturday, Sunday or Holiday, then the final day shall be deemed to be the next
day which is not a Saturday, Sunday or Holiday. For
12
purposes of this subparagraph (i), the term "Holiday" shall mean a day, other
than a Saturday or Sunday, on which national banks in the State of Mississippi
are closed.
13
IN WITNESS WHEREOF, the parties have executed this Agreement the date
first above written.
ATTEST:
CASINO RESOURCE CORPORATION
_______________________________ By:_____________________________
Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST:
▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING CORP.
_______________________________ By:_____________________________
14
NOTICE OF ELECTION
The undersigned and ____________________ (the "Company") are
parties to that certain Stock Option Agreement dated ________. Pursuant to the
terms thereof, the undersigned hereby exercises its option to purchase
____________ shares of the common stock, (the "Shares") par value $________ per
Share of the Company. Closing hereunder shall be held at the chief executive
offices of the Company at _____ _.m., local time on ____________________ ___,
________.
Please register the Shares in the name of the undersigned and
use the address set forth herein as the registered address of the undersigned.
The undersigned understands that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act") or under any
state securities law, and the Company is under no obligation to do so. The
undersigned understands that the Shares may not be resold or otherwise
transferred in the absence of such applicable registrations or exemptions from
the registration requirements. The undersigned understands that it may have to
hold the Shares for the indefinite future. The undersigned understands that the
Shares are "restricted securities" within the meaning of Rule 144 promulgated
under the Act.
The undersigned represents and warrants to the Company that it
(a) has been advised and understands that the Shares may not be transferred
without compliance with all applicable Federal and state securities laws; and
(b) has had all material information about the Company's business and financial
condition made available to it prior to exercise of the Option, and that he was
afforded the opportunity to ask questions of and receive answers from the
officers and directors of the Company with respect to the Company's business
affairs and prospects.
The undersigned represents and warrants that it is acquiring
the Shares for its own account as principal for investment and not with a view
to resale or distribution.
The undersigned understands that the Share certificate shall
bear a restrictive legend with respect to the transferability of the Shares
under the Act.
------------------------------ ----------------------------------
Name:
Address:
EXHIBIT D
Amendment to Escrow Agreement
AMENDMENT TO ESCROW AGREEMENT
This Amendment to Escrow Agreement is made as of the 31st day of
December, 1999, by and among CASINO RESOURCE CORPORATION, a Minnesota
corporation ("the Company"), ▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING CORP., a Delaware corporation
("▇▇▇▇▇▇▇▇"), and MESIROV ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, as Escrow Agent
(the "Escrow Agent").
RECITALS
A. The parties are parties to that certain Escrow Agreement dated March
3, 1999 growing out of that certain Amended and Restated Debenture dated as of
February 1, 1999, executed by the Company in favor of ▇▇▇▇▇▇▇▇ (the
"Debenture").
B. In connection with the amendment and restatement of the Debenture as
of the date hereof, the Company issued two new debentures (the "New Debentures")
to ▇▇▇▇▇▇▇▇, and the Company and ▇▇▇▇▇▇▇▇ desire to amend to Escrow Agreement on
the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter contained and subject to conditions hereinafter set forth, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. From and after the date hereof and in compliance with Section 8-301(2)
of the Uniform Commercial Code, Escrow Agent shall hold all of the Escrowed
Shares (as defined in the Escrow Agreement) currently in its possession as the
agent for ▇▇▇▇▇▇▇▇ pursuant to the terms of that certain Pledge Agreement by and
between ▇▇▇▇▇▇▇▇ as Pledgee and the Company as Pledgor dated the date hereof.
Escrow Agent shall not hold any of the Escrowed Shares on behalf of any other
person or entity and hereby releases any current or future security interest,
lien, or other claim which Escrow Agent may now or hereafter have or purport to
have in or on any of the Escrowed Shares. Annex A attached hereto reflects all
Escrowed Shares held by the Escrow Agent as of the date hereof.
2. Upon written acknowledgment by ▇▇▇▇▇▇▇▇ that the Company has satisfied
all of its obligations to ▇▇▇▇▇▇▇▇ under the New Debentures, any shares
remaining in escrow shall be returned to the Company by the Escrow Agent for
cancellation. Upon the written direction of ▇▇▇▇▇▇▇▇ that there has been a
default or an Event of Default under either of the New Debentures, Escrow Agent
shall promptly deliver the Escrowed Shares to ▇▇▇▇▇▇▇▇ or otherwise comply with
the written directions of ▇▇▇▇▇▇▇▇, notwithstanding any contrary instructions
received from the Company.
3. To the extent that the provisions of the Escrow Agreement are
inconsistent with the provisions of this Amendment, the terms of this Amendment
shall govern and be determinative. To the extent that the provisions of the
Escrow Agent are not inconsistent with and to the extent that the provisions of
the Escrow Agent are not modified by the terms of this
Amendment, the Escrow Agreement shall remain in full force and effect in
accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
made as of the day and year first above written.
CASINO RESOURCE CORPORATION
BY:_____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING CORP.
BY:______________________________
▇▇▇ ▇▇▇▇▇▇▇▇, III, President,
Chief Executive Officer and
Treasurer
MESIROV ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, Escrow
Agent
BY:______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
2
ANNEX A
Number of Escrowed
Certificate Number Shares
1. Certificate #: 3173 100,000
2. Certificate #: 3174 100,000
3. Certificate #: 3175 100,000
4. Certificate #: 3176 100,000
5. Certificate #: 3177 100,000
6. Certificate #: 3178 100,000
7. Certificate #: 3179 100,000
8. Certificate #: 3186 50,000
9. Certificate #: 3187 50,000
10. Certificate #: 3188 50,000
11. Certificate #: 3180 25,000
12. Certificate #: 3181 25,000
13. Certificate #: 3182 25,000
14. Certificate #: 3183 25,000
15. Certificate #: 3184 25,000
16. Certificate #: 3185 25,000
17. Certificate #: 3189 5,000
18. Certificate #: 3190 5,000
19. Certificate #: 3191 5,000
20. Certificate #: 3192 5,000
21. Certificate #: 3193 5,000
22. Certificate #: 3194 5,000
23. Certificate #: 3195 5,000
24. Certificate #: 3196 5,000
25. Certificate #: 3197 5,000
26. Certificate #: 3198 5,000
27. Certificate #: 3199 5,000
28. Certificate #: 3200 5,000
29. Certificate #: 3201 5,000
30. Certificate #: 3202 5,000
31. Certificate #: 3203 5,000
32. Certificate #: 3204 5,000
33. Certificate #: 3205 10,000
34. Certificate #: 3206 10,000
------
TOTAL 1,100,000
=========
3
EXHIBIT E
Pledge Agreement
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of the 31st day of December, 1999, by
and between Casino Resource Corporation, a Minnesota corporation ("Pledgor"),
and ▇▇▇ ▇▇▇▇▇▇▇▇ Holding Corp., a Delaware corporation ("Pledgee").
W I T N E S S E T H:
WHEREAS, Pledgor is obligated to Pledgee pursuant to that certain
Debenture Number One and that certain Debenture Number Two, each dated the date
hereof in favor of Pledgee (collectively the "Debentures"); and
WHEREAS, Pledgor and Pledgee are parties to that certain Escrow
Agreement dated March 3, 1999 as amended on the date hereof (the "Escrow
Agreement").
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Security for Liabilities. This Pledge Agreement is made for the
benefit of Pledgee to secure the payment of all amounts due to Pledgee by
Pledgor under the Debentures (collectively, the "Liabilities").
2. Pledge of Collateral.
2.1 Pledge. To secure the prompt payment when due of all of the
Liabilities, and for the other purposes set forth in Section 1 hereof, Pledgor
hereby pledges, assigns, hypothecates, transfers, and delivers to Pledgee a lien
on and security interest in all of the following collateral ("Collateral");
(a) All of the shares of Common Stock of Pledgor held by the
Escrow Agent under the Escrow Agreement;
(b) All securities acquired by Pledgor or Escrow Agent in its
capacity as such by way of stock split, stock dividend, or the like on or with
respect to any shares held by the Escrow Agent pursuant to the terms of the
Escrow Agreement;
(c) All dividends, securities, instruments, or other property
from time to time received, receivable, or otherwise distributed in respect of
or in exchange or substitution for any or all of the shares of common stock held
by the Escrow Agent pursuant to the terms of the Escrow Agreement, and all
certificates and instruments representing the same; and
(d) All proceeds of the foregoing.
2.2 Delivery of Collateral. The parties hereby agree that the
Collateral shall be deemed to have been delivered by Pledgor to Pledgee and is
being held on behalf of and for the benefit of Pledgee by the Escrow Agent
pursuant to the terms of the Escrow Agreement as amended on the date hereof.
2.3 Security Agreement. This Pledge Agreement shall be and be
deemed to be a Security Agreement under the Code (as hereinafter defined).
3. Voting. Unless and until an Event of Default (as defined in Section
7.1) shall have occurred and be continuing, Pledgee shall not be entitled to
vote any of the Collateral or to give consents, waivers, or ratifications in
respect thereof.
4. Dividends and Other Distributions. Unless and until an Event of
Default shall have occurred and be continuing, all cash dividends payable in
respect of the Collateral shall not be paid to Pledgee but shall be held in
pledge by Escrow Agent as a portion of the Collateral.
5. Representations and Warranties. Pledgor represents and warrants to
Pledgee that Pledgor (i) has good and marketable title to the Collateral free
and clear of all liens, security interests, encumbrances, or adverse claims of
any type except for the security interest in favor of Pledgee created by this
Pledge Agreement and Pledgee's rights under the Escrow Agreement, (ii) no
dispute, right of set-off, counterclaim, or defense exists with respect to all
or any part of the Collateral, (iii) all of the Collateral which consists of
common stock is fully paid and non-assessable, (iv) no financing statement or
other public evidence of a lien covering all or any part of the Collateral is on
file in any recording office except such as may have been filed in favor of
Pledgor relating to this Pledge Agreement, (v) no person or entity other than
Pledgee and Escrow Agent on behalf of Pledgee has control over any portion of
the Collateral, (vi) Pledgor's taxpayer identification number is ▇▇-▇▇▇▇▇▇▇ and
(vii) Pledgor's chief executive office is located in ▇▇▇▇▇▇▇ County,
Mississippi.
6. Covenants. Pledgor hereby covenants and agrees as follows:
6.1 Negative Pledge Covenant. Pledgor will not assign, sell,
mortgage, lease, transfer, pledge, grant a security interest in, encumber, or
otherwise dispose of any of the Collateral or any other shares of capital stock
owned (now or in the future) by Pledgor without the prior written consent of
Pledgee, and the inclusion of "proceeds" of the Collateral under the security
interest granted herein shall not be deemed a consent by Pledgee to any sale or
other disposition of any part or all of the Collateral except as expressly
permitted herein.
6.2 Pledgor to Pay Taxes. Pledgor shall pay, deposit, or otherwise
provide for the payment when due of all taxes, assessments, or contributions
required by law which may be levied or assessed against Pledgor, whether with
respect to any of the Collateral, to any wages or salaries paid by or to
Pledgor, or otherwise, and will deliver to Pledgee on demand, certificates
attesting thereto; provided, however, that Pledgor may contest any such taxes,
2
assessments, or contributions in good faith.
6.3 Financing Statements. Pledgor shall execute and deliver to
Pledgee such Uniform Commercial Code financing statements as are requested by
Pledgee from time to time to evidence and to perfect the security interest
created by this Pledge Agreement. To permit Pledgee to maintain properly filed
financing statements, Pledgor shall not change its name, taxpayer identification
number, corporate structure, or the location of its chief executive office
without three months' prior notice to Pledgee.
7. Events of Default; Remedies.
7.1 Events of Default. Each of the following shall constitute an
event of default ("Event of Default") hereunder:
(a) If Pledgor shall default in the payment when due or within
any applicable period of grace thereafter of any sum payable with respect to, or
in the observance or performance of any of the terms or conditions of either of
the Debentures;
(b) If any representation, warranty, or statement of fact made
3
by Pledgor to Pledgee in this Pledge Agreement, or in any other written document
delivered by Pledgor to Pledgee is false, misleading, incorrect, or incomplete
in any material respect when made;
(c) The making of any levy on, seizure of, or garnishment of
any of the Collateral; if Pledgor shall become insolvent (however defined or
evidenced) or make an assignment for the benefit of creditors, or making or
sending of notice of intended bulk transfer, or if there shall be convened a
meeting of the creditors or principal creditors of Pledgor or if a committee of
Pledgor's creditors is created or appointed for any reason; or
(d) If there should be filed by or against Pledgor any
petition for relief under the bankruptcy laws of the United States now or
hereafter in effect or under any insolvency, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity); or any petition or application to any court or
tribunal at law or in equity shall be filed by or against Pledgor for the
appointment of a receiver or trustee for Pledgor or any substantial portion of
Pledgor's property;
7.2 Remedies. In case an Event of Default shall occur and be
continuing,
(a) All of the liabilities of Pledgor shall, at the option of
the Pledgee, without notice, become immediately due and payable and Pledgee
shall thereupon have all rights and remedies provided hereunder and in any other
document between Pledgor or Pledgee or otherwise available at law or in equity;
(b) Pledgee shall have the right immediately, without further
action due by it, to set off against the liabilities any indebtedness,
liabilities or obligations of Pledgee in any capacity to Pledgor whether or not
then due, and Pledgee shall be deemed to have exercised its right of set off and
to have made such a charge against any such indebtedness, liabilities, or
obligations immediately upon the occurrence of such an Event of Default even
though such charge is made or entered on the books of Pledgee subsequent
thereto;
(c) Pledgee shall be entitled to exercise all of the rights,
powers, and remedies, whether vested in it by this Pledge Agreement, another
document, or by law, including without limitation, all rights and remedies of a
secured party of a debtor in default under the Uniform Commercial Code (the
"Code") in effect in the State of Mississippi or under other law for the
protection and enforcement of its rights with respect to the Collateral and the
collection of the liabilities under the Debentures, and Pledgee shall be
entitled without limitation, to exercise the following rights which Pledgor
agrees to be commercially reasonable:
(i) To receive all amounts payable with respect to the
Collateral otherwise payable to Pledgor under Section 4;
(ii) To direct the Escrow Agent under the Escrow Agreement
to transfer all or any part of the Collateral into Pledgee's
name or the name of its nominee or nominees and to deliver the
same forthwith to Pledgee;
(iii) To exercise all voting rights as to all of the
shares of the Collateral and all other corporate rights and
all conversion, exchange, subscription or other rights,
privileges or options pertaining thereto as if it were the
absolute owner thereof, including, without limitation, the
right to exchange any or all of the Collateral upon the
merger, consolidation, reorganization, recapitalization or
other readjustment of the issuer thereof, or upon the exercise
by such issuer of any right, privilege, or option pertaining
to any of the Collateral and, in connection therewith, to
deliver any of the Collateral to any committee, depository,
transfer agent, registrar or other designated agency upon such
terms and conditions as it may determine, all without
liability except to account for property actually received by
it, and to give all consents, waivers, and ratifications in
respect of the Collateral and otherwise to act with respect
thereto as though it were the outright owner thereof; but
Pledgee shall have no duty to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing; and
(iv) At any time, and from time to time, to sell, assign,
and deliver, or to grant options to purchase all or any part
of the Collateral in one or more parcels or any interest
4
therein, at any public or private sale, at any exchange,
broker's board, or at any of Pledgee's offices or elsewhere,
upon the giving of at least ten (10) calendar days' actual
notice of such proposed sale to Pledgor, for cash, on credit,
or for other property, for immediate or future delivery
without any assumption of credit risk, and for such price or
prices and on such terms as Pledgee in its absolute discretion
may determine best, free of any right or equity of redemption
in Pledgor which right or equity of redemption is hereby
expressly waived and released. Pledgee shall not be obligated
to make any sale of Collateral regardless of notice of sale
having been given. Pledgee may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and any such sale may, without any further
notice, be made at the time and place to which it was so
adjourned. At any such sale, unless prohibited by applicable
law, Pledgee may bid for or purchase all or any part of the
collateral..
(d) Pledgor recognizes that Pledgee may be unable to effect a
public sale of all or part of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, other Federal securities
laws and regulations, and applicable state securities laws and regulations, but
may be compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire all or
a part of the Collateral for their own account, for investment, and not with a
view to the distribution or resale thereof. If Pledgee deems it advisable to do
so for the foregoing or for other reasons, Pledgee is authorized to limit the
prospective bidders on or purchasers of any of the Collateral to such a
restricted group of purchasers and may cause to be placed on certificates for
any and all of the Collateral a legend to the effect that the shares represented
by such certificates have not been registered under the Securities Act of 1933,
as amended, and may not be disposed of in violation of the provisions of such
Act, and to impose such other limitations or conditions in connection with any
such sale as Pledgee deems necessary or advisable in order to comply with such
Act or any other securities or other laws. Pledgor acknowledges and agrees that
any private sale so made may be at prices and on other terms less favorable to
the Pledgor than if such Collateral were sold at public sale and that Pledgee
has no obligation to delay the sale of such Collateral for the period of time
necessary to permit the registration of such Collateral for public sale under
any securities laws. Pledgor agrees that a private sale or sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner. If any consent, approval, or authorization of any Federal,
state, municipal or other governmental department, agency or authority should be
necessary to effectuate any sale or other disposition of the Collateral, or any
partial sale or other disposition of the Collateral (other than a registration
under any applicable securities law), Pledgor will execute all applications and
other instruments as may be required in connection with securing any such
consent, approval or authorization and will otherwise use reasonable commercial
efforts to secure same.
7.3 Remedies Cumulative. All of the foregoing rights and remedies
5
may be exercised singly, or in combination, and shall be cumulative.
8. Further Assurances. Pledgor agrees that it will join with Pledgee in
executing without delay and without charge to Pledgee such documents as Pledgee
may deem necessary or appropriate to perfect and preserve Pledgee's security
interest in the Collateral, and agrees to do such further acts and things and
promptly to execute and deliver to Pledgee such additional conveyances,
assignments, stock powers, agreements, and instruments which Pledgee may require
or deem advisable to carry into effect the purposes of this Pledge Agreement or
further to assure and confirm unto the Pledgee, its rights, powers, and remedies
hereunder.
9. Termination. Whenever all amounts due under the Debentures have been
irrevocably paid in full, Pledgee shall terminate this Pledge Agreement upon
written notice to Pledgor and the Escrow Agent to terminate the escrow. Prior to
such termination, this Pledge Agreement shall be a continuing agreement in every
respect.
10. Miscellaneous.
10.1 Indulgences, Etc. Neither the failure nor any delay on the
part of Pledgee to exercise any right, remedy, power or privilege under this
Pledge Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
10.2 Controlling Law. This Pledge Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the State of
Mississippi, notwithstanding any conflict-of-laws doctrines of such jurisdiction
to the contrary, and without the aid of any canon, custom or rule of law
requiring construction against the draftsman.
10.3 Notices. All notices required or permitted to be given
hereunder shall be sent by certified mail, return receipt requested, or by a
nationally recognized courier service (such as FedEx), or by fax if promptly
confirmed by first class mail to the following respective addresses:
i) If to Pledgee:
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▇▇▇ ▇▇▇▇▇▇▇▇ Holding Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
ii) If to Pledgor:
Casino Resource Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
In addition, notice by mail shall be given by airmail if posted outside the
continental United States. Any party may alter the address to which
communications or copies are to be sent by giving notice of such change of
address in conformity with the provisions of this Section 9.3 for the giving of
notice.
10.4 Binding Nature of Agreement. This Pledge Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns.
10.5 Execution in Counterparts. This Pledge Agreement may be
executed in counterparts, each of which shall be deemed to be an original as
against either party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Pledge Agreement shall be
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of both of the parties reflected hereon as the
signatories.
10.6 Provisions Separable. The provisions of this Pledge Agreement
are independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
10.7 Entire Agreement. This Pledge Agreement, the Debentures, the
Escrow Agreement, the Stock Option Agreement, Stock Purchase Agreement, and the
Agreement to Amend and Restate Debentures contain the entire understanding
between the parties hereto with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
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and therein contained. The express terms hereof control and supersede any course
of performance and/or usage of the trade inconsistent with any of the terms
hereof. This Pledge Agreement may not be modified or amended other than by an
agreement in writing.
10.8 Section Headings. The Section and subsection headings in this
Pledge Agreement have been inserted for convenience of reference only; they form
no part of this Pledge Agreement and shall not affect its interpretation.
10.9 Gender, Etc. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine; feminine or neuter,
as the context indicates is appropriate.
10.10 Number of Days. In computing the number of days for purposes
of this Pledge Agreement, all days shall be counted, including Saturdays,
Sundays and Holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or Holiday, then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or Holiday. For the
purpose of this Pledge Agreement, (i) a "Holiday" shall be deemed to be a day
other than a Saturday or Sunday on which national banks with branches in the
State of Mississippi are closed; and (ii) a "Business Day" shall be deemed to be
a day other than a Saturday, Sunday, or Holiday.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Pledge Agreement on the day and year first above written.
Attest: CASINO RESOURCE CORPORATION
_______________________________ By:_______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Attest: ▇▇▇ ▇▇▇▇▇▇▇▇ HOLDING CORP.
_______________________________ By:_______________________________
Secretary ▇▇▇ ▇▇▇▇▇▇▇▇, III, President
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