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EXHIBIT 10.12
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (the "Agreement") is made and entered
into as of May 31, 1997 by and between CASINO MAGIC CORP., a Minnesota
corporation ("Casino Magic"), and CROWN CASINO CORPORATION, a Texas corporation
("Crown"), being shareholders of CASINO MAGIC NEUQUEN S.A., a Republic of
Argentina company ("CMN") (Casino Magic and Crown, individually referred to as
a "Shareholder" and collectively as the "Shareholders").
W I T N E S S E T H:
WHEREAS, of even date herewith, pursuant to the Purchase Agreement
between Crown and Casino Magic dated as of May 31, 1997 (the "Purchase
Agreement"), Crown has purchased (a) 274,399 shares of the issued and
outstanding capital stock of CMN, (b) a forty-nine (49%) percent interest in
and to the Original Note, the Leased Equipment, the Lease Agreement, the Lease
Payments, and proceeds from the Royalty, and (c) a sixteen and four-tenths
(16.4%) percent interest in and to the Technical Assistance Agreement and the
Technical Assistance Fee (as all of such terms in (b) and (c) are defined in
the Purchase Agreement);
WHEREAS, of even date herewith, pursuant to the Stock Purchase
Agreement between Crown and CASINO MAGIC MANAGEMENT SERVICES, INC., a Minnesota
corporation ("CMMS") dated as of May 31, 1997 (the "CMMS Stock Purchase
Agreement"), Crown has purchased 1 share of the issued and outstanding capital
stock of CMN;
WHEREAS, as a result of Crown's purchase pursuant to the Purchase
Agreement and the CMMS Stock Purchase Agreement, Casino Magic owns 285,599
shares, CMMS owns 1 share, and Crown owns 274,400 shares of the issued and
outstanding capital stock of CMN (the "CMN Stock");
WHEREAS, CMN operates two (2) casinos (the "Casinos") located in San
▇▇▇▇▇▇ de Los Andes and Neuquen, Argentina, pursuant to the Concession Contract
for the Management, Operation, Maintenance and Related Services of the Gaming
Houses of the Provincial Casino in the Cities of Neuquen and San ▇▇▇▇▇▇ de Los
Andes dated December 21, 1994 (the "Concession Contract"); and
WHEREAS, the Shareholders desire to enter into this Agreement to
regulate certain aspects of their relationship and to provide for, among other
things, restrictions on the transfer or other disposition of securities or
assets of CMN and in matters relating to the corporate governance of CMN;
WHEREAS, the Notes (as hereinafter defined), the Leased Equipment, the
Lease Agreement, the Lease Payments, the Royalty, the Technical Assistance
Agreement and the Technical Assistance Fee are all hereinafter sometimes
collectively referred to as the "Assets";
NOW, THEREFORE, in consideration of the premises and the respective
covenants, representations and agreements herein contained, the parties hereto
agree as follows:
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Section 1. Restrictions on Transfer of CMN Stock.
1.1. General Restrictions. Except as expressly permitted herein,
no Shareholder shall sell, assign, transfer, mortgage, charge or otherwise
encumber or contract to do or permit any of the foregoing, whether voluntarily
or by operation of law (herein sometimes collectively called a "transfer"), any
part or all of the CMN Stock or the Assets without the written consent of the
other Shareholder, and any attempt to do so shall be void ab initio. The
giving of such consent in any one or more instances shall not limit or waive
the need for such consent in any other subsequent instances and shall always be
at such Shareholder's sole and absolute discretion.
1.2. Specific Restriction. Without limiting the foregoing Section
1.1 hereof, no Shareholder shall transfer (as defined in Section 1.1 hereof)
any part or all of the CMN Stock or the Assets, and any attempt to do so shall
be void ab initio, if such transfer would cause an event of default or breach
of any contract or agreement to which CMN is a party, including, without
limitation, the Concession Contract.
1.3. Permitted Transfers. Either Shareholder may, without the
consent of the other Shareholder:
(a) Upon thirty (30) days prior written notice, transfer
its CMN Stock to another legal entity which the Shareholder either
controls or is controlled by, or to another legal entity in which a
majority equity interest is controlled by the Shareholder, in which
event the Shareholder shall continue to control or be controlled by
such transferee, or continue to hold a majority equity interest
therein, during the term of this Agreement.
(b) Either Shareholder has the right to pledge its CMN
Stock as security for indebtedness, so long as the secured party
receives the CMN Stock subject to the terms of this Agreement and so
long as the pledge thereof does not constitute an event of default
under any agreement to which CMN is a party.
1.4. Sale of CMN Stock; Right of First Refusal.
(a) If either Shareholder (the "Offeror") receives a
definitive bona fide offer from a third party unrelated to either
Shareholder for the purchase of all or any part of the Offeror's CMN
Stock which it desires to accept, the Offeror shall send a copy of the
offer, in the manner provided in this Agreement for the giving of
notices, to the other Shareholder (the "Offeree"), which shall
disclose the name and address of the proposed purchaser. The Offeree
shall have the absolute right to purchase the portion of the CMN Stock
subject to the offer upon the terms and conditions set forth in the
offer, except that the Offeree shall not be required to pay a broker's
commission, if any. The Offeree shall, within thirty (30) days of
such receipt, specify in a notice to the Offeror whether or not the
Offeree desires to accept the offer. If the Offeree timely accepts
the offer, the closing of the sale of the CMN Stock shall take place
within sixty (60) days thereafter (or as soon thereafter as practical
if the transaction is delayed solely by reason of the time constraints
in receiving third-party
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consents). Failure to send such notice of acceptance within said
thirty (30) day period shall constitute an election by the Offeree to
reject the offer, and the Offeror may then sell the CMN Stock subject
to the offer to the proposed purchaser whose name and address were
disclosed in the offer, but only upon the same terms and conditions as
those set forth in the offer and only if such sale closes within one
hundred eighty (180) days after the expiration of said thirty (30) day
period; otherwise, any such sale shall be considered null and void and
the CMN Stock of the Offeror shall remain subject to all the
provisions of this Section 1.4. If the consideration offered by a
third party under this Section 1.4 consists of property, the value
thereof shall be determined by reference to any established national
exchange if such property consists of tradeable securities or other
readily tradeable commodities, by an appraiser mutually agreed to by
the Shareholders, or by submission to arbitration in accordance with
Section 7.8 hereof.
(b) If the purchasing Shareholder exercises its right of
first refusal as herein set forth, at closing, (1) the selling
Shareholder will cause its nominees to resign all corporate offices
and directorships of CMN and will agree to cooperate with the
purchasing Shareholder in the obtaining of all necessary approvals and
will agree to execute any and all instruments reasonably necessary to
accomplish the intention of this Section 1.4, (2) the purchasing
Shareholder shall cause the selling Shareholder to be released from
all guaranties by the selling Shareholder of any debts, obligations
and liabilities of CMN, and (3) the selling Shareholder's respective
share of the Assets, in addition to the CMN Stock purchased hereunder,
shall be assigned and transferred to the purchasing Shareholder.
1.5. Sale of CMN Stock; Gaming Suitability.
(a) If a Gaming Authority (as hereinafter defined)
determines for any reason that a Shareholder (the "Unsuitable
Shareholder") is not suitable to continue as a licensee or shareholder
of CMN, and the Unsuitable Shareholder has exhausted all reasonable
opportunities to cure any deficiencies in an application or appeal,
then at all times during which the Unsuitable Shareholder is deemed to
be unsuitable, CMN or the other Shareholder or a combination of both,
as determined by the other Shareholder and at such other Shareholder's
sole option, may purchase the Unsuitable Shareholder's CMN Stock and
Assets for a cash purchase price equal to the fair market value of the
CMN Stock and Assets, as mutually agreed upon by the Shareholders or
an appraiser appointed by mutual agreement of the Shareholders, and if
not agreed within thirty (30) days, as determined by arbitration in
accordance with Section 7.8 hereof. All loans payable to such
Unsuitable Shareholder, if requested by such Unsuitable Shareholder,
shall also be repaid at such time, and any requirement of such
Unsuitable Shareholder to make additional loans shall cease. The
departing Unsuitable Shareholder shall not participate in dividends of
CMN after the date its CMN Stock is purchased or disposed of pursuant
hereto.
(b) At the option of CMN or the purchasing Shareholder,
the purchase price may be paid over a period of two (2) years, with
50% to be paid in cash at the
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time of purchase, and the balance to be paid over the remaining two
(2) years in equal quarterly installments with interest at the prime
rate as published in the southwest edition of the Wall Street Journal
on the date of the closing of such purchase, or if not available, the
prime rate charged at such date by Citibank, N.A., New York.
(c) At closing, (1) the selling Shareholder will cause
its nominees to resign all corporate offices and directorships of CMN
and will agree to cooperate with the purchasing Shareholder in the
obtaining of all necessary approvals and will agree to execute any and
all instruments reasonably necessary to accomplish the intention of
this Section 1.5, (2) the purchasing Shareholder shall cause the
selling Shareholder to be released from all guaranties by the selling
Shareholder of any debts, obligations and liabilities of CMN, and (3)
the selling Shareholder's respective share of the Assets, in addition
to the CMN Stock purchased hereunder, shall be assigned and
transferred to the purchasing Shareholder.
(d) The term "Gaming Authority" or "Gaming Authorities"
shall mean all agencies of the Republic of Argentina or the Province
of Neuquen regulating gaming or related activities in Argentina.
1.6. Gaming License in Other Jurisdictions.
(a) If a gaming regulatory authority where either Crown
or Casino Magic operates or applies to operate a gaming establishment,
determines that Crown's or Casino Magic's, as the case may be, license
to operate such an establishment will be revoked or an application to
operate such an establishment will be denied because of the joint
ownership relationship of Crown and Casino Magic of CMN (a "Regulatory
Denial"), then the Shareholder (the "Moving Shareholder") whose
license or application will be revoked or denied (as applicable) shall
notify the other Shareholder (the "Other Shareholder") of such
regulatory action, and the Moving Shareholder shall initiate a
purchase of the Other Shareholder's CMN Stock and share of the Assets
hereunder or the sale of the Moving Shareholder's CMN Stock and share
of the Assets, on terms hereinafter set forth. The purchase price
shall be determined and paid in accordance with Sections 1.6 (b), (c)
and (d) hereof.
(b) In the event of a Regulatory Denial of the Moving
Shareholder, and subject to any required regulatory approval by the
Province of Neuquen, the Moving Shareholder may elect to initiate the
mandatory purchase or sale of the shares of CMN Stock and share of the
Assets of the Other Shareholder by giving written notice (the
"Buy-Sell Notice") in accordance with Section 7.6 hereof to the Other
Shareholder, which Buy-Sell Notice shall contain an offer by the
Moving Shareholder giving the Buy-Sell Notice to purchase all of the
shares of CMN Stock and the Assets owned by the Other Shareholder at a
price per share specified in the Buy-Sell Notice or, in the
alternative, an offer to sell all of the outstanding shares of CMN
Stock and the Assets of the Moving Shareholder to the Other
Shareholder at the same price. The effective date of the Buy-Sell
Notice shall be the date on which the Buy-Sell Notice has been sent to
the Other Shareholder in accordance with Section 7.6 hereof.
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(c) The Other Shareholder shall within thirty (30) days
from the effective date of the Buy-Sell Notice designate whether it
accepts the offer to purchase such shares and the Assets of the Moving
Shareholder or whether it accepts the offer to sell its shares and the
Assets to the Moving Shareholder. If the Moving Shareholder does not
receive written notice from the Other Shareholder within thirty (30)
days of the effective date of the Buy-Sell Notice, the Other
Shareholder shall be deemed conclusively to have accepted the Moving
Shareholder's offer to purchase the shares and the Assets of the Other
Shareholder.
(d) The purchase or sale described herein shall be
closed (i) within ninety (90) days of the effective date of the
Buy-Sell Notice at the offices of the purchasing Shareholder or, (ii)
if regulatory approval is required from the Province of Neuquen,
within thirty (30) days of the date of receipt of such approval. The
purchase price to be paid for the shares of CMN Stock and Assets being
acquired pursuant to this Section 1.6 shall be paid in accordance with
the terms of the Buy-Sell Notice. At closing, (1) the selling
Shareholder will cause its nominees to resign all corporate offices
and directorships of CMN and will agree to cooperate with the
purchasing Shareholder in the obtaining of all necessary approvals and
will agree to execute any and all instruments reasonably necessary to
accomplish the intention of this Section 1.6, (2) the purchasing
Shareholder shall cause the selling Shareholder to be released from
all guaranties by the selling Shareholder of any debts, obligations
and liabilities of CMN, and (3) the selling Shareholder's respective
share of the Assets, in addition to the shares of CMN Stock purchased
hereunder, shall be assigned and transferred to the purchasing
Shareholder.
1.7. Transferee Obligations. Notwithstanding any other provision
of this Agreement as to any transfer under this Section 1, any transferee shall
execute and deliver to the other Shareholder and CMN a counterpart hereof, and
the other Shareholder shall agree to such conditions of transfer, the
performance of such acts, the execution and delivery of such agreements,
certificates or other instruments and the rendering of such covenants or
undertakings by the transferee of the CMN Stock and Assets, as counsel for CMN
and the remaining Shareholder may reasonably determine to be necessary to avoid
the violation of any applicable securities or gaming laws with respect to such
transfer, to evidence the transferee's agreement to be bound by all the terms
and provisions hereof as if such transferee had been an original party hereto,
and to evidence the intent of the transferee to purchase the CMN Stock for
investment and not with a view to the distribution thereof. Any such
transferee shall be deemed a "Shareholder" hereunder and shall be bound by, and
shall comply with, all of the terms and provisions hereof.
1.8. Legends. The stock registration records of CMN, any stock
certificates and all documents representing an interest in the Assets shall
contain language to the effect that:
"THESE SECURITIES OR DOCUMENTS, AS THE CASE MAY BE, ARE
SUBJECT TO THE RESTRICTIONS CONTAINED IN A SHAREHOLDERS
AGREEMENT DATED AS OF MAY 31, 1997 (A COPY OF WHICH IS ON FILE
WITH THE PRESIDENT OF CMN). NO REGISTRATION OR TRANSFER OF
ANY INTEREST IN SUCH SECURITIES OR DOCUMENTS WILL BE VALID
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OR EFFECTIVE UNTIL AND UNLESS ALL APPLICABLE RESTRICTIONS
SHALL HAVE BEEN COMPLIED WITH."
Section 2. Corporate Governance.
2.1. Nominations to Board of Directors. The board of directors of
CMN shall consist of four (4) members. From and after the date hereof, each
Shareholder shall vote or cause to be voted all shares of the CMN Stock over
which such Shareholder has voting control, at any regular or special meeting of
shareholders called for the purpose of filling positions on the board of
directors, or to execute a written consent in lieu of such meeting of
shareholders, and shall take all actions necessary to insure the election to
the board of four (4) individuals: two (2) individuals (the "Casino Magic
Nominees") to be designated by Casino Magic and two (2) individuals (the "Crown
Nominees") to be designated by Crown. If prior to his election to the Board of
Directors, any nominee shall be unable or unwilling to serve as a director of
CMN, the Shareholder who nominated such nominee shall be entitled to nominate a
replacement to serve on the board of directors.
2.2. Vacancies. In the event that a vacancy is created on the
board of directors at any time by the death, disability, retirement,
resignation or removal (with or without cause) of a director, the Shareholder
who nominated such director shall nominate a replacement to serve on the board
of directors.
2.3. Covenant to Vote. Each Shareholder hereby irrevocably and
unconditionally agrees to take all actions necessary to call, or to cause CMN
and the appropriate officers and directors of CMN to call, a special or annual
meeting of the shareholders of CMN and to vote all shares of CMN Stock owned by
such Shareholder in favor of, or take all actions by written consent in lieu of
any such meeting necessary to cause, the election as members of the board of
directors of those individual so nominated in accordance with Section 2.1. In
addition, each Shareholder agrees to vote the shares of CMN Stock owned by such
Shareholder upon any matter arising under this Agreement submitted to a vote of
the shareholders in a manner that will implement the terms of this Agreement.
2.4. Removal. If either Shareholder requests that a director
nominated by such Shareholder and elected to the board of directors be removed
from the board of directors (with or without cause) by written notice to the
other Shareholder, such director shall be removed and each Shareholder agrees
to vote all shares of CMN Stock owned by such Shareholder to effect such
removal or to consent in writing to effect such removal upon such request. No
director shall be removed without cause except as provided in this Section 2.4.
2.5. Affirmative Board Vote. Three (3) affirmative votes of the
members of the board of directors shall be required to approve any action of
the board of directors. In the event of a tie vote, the vote of the President
of CMN shall be the tie-breaker. The President of CMN shall be a Casino Magic
appointee. The current President is ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
2.6. No Conflict With Articles or By-Laws. Each Shareholder shall
vote its shares of CMN Stock, and shall take all actions necessary to ensure
that the Articles of Incorporation and By-Laws of CMN do not, from time to
time, conflict with the provisions of this Agreement.
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2.7. Dividends. Notwithstanding Section 2.9 hereof, each
Shareholder shall vote its shares of CMN Stock and shall take all actions
necessary to ensure that CMN distributes as dividends at the end of each fiscal
quarter (or such shorter period as the board of directors may agree upon) all
of its cash on hand available for such distribution after providing and
reserving for the payment of all debts and other obligations and the provision
of such reserves as the board of directors reasonably determines is
appropriate.
2.8. Payments on Obligations to the Shareholders. The Shareholders
shall cause CMN to pay, in accordance with their terms, (a) the promissory
notes (the "Notes") in the original principal amounts of $4,399,264 and
$4,226,743, payable to Casino Magic and Crown, respectively,(b) the Lease
Payments which are payable 51% to Casino Magic and 49% to Crown (c) the Royalty
which is payable 51% to Casino Magic and 49% to Crown., and (d) the Technical
Assistance Fee which is payable 83.6% to Casino Magic and 16.4% to Crown.
Neither of the Shareholders shall be paid unless both are paid their respective
pro-rata amounts due under the foregoing obligations. Except for the Notes,
the Lease Payments, the Royalty, the Technical Assistance Fee, dividends
payable pursuant to Section 2.7 hereof and the reimbursement of direct expenses
(charged at cost) incurred by a Shareholder on behalf of CMN, there shall be no
fees, payments or other distributions to the Shareholders without the prior
written consent of both Shareholders. Casino Magic represents and warrants to
Crown that as of the date hereof, there are no unpaid Royalties, Lease Payments
or Technical Assistance Fees due and owing to Casino Magic from CMN.
2.9. Management. It is understood and agreed by the Shareholders
that in accordance with the terms and provisions of the Concession Contract,
Casino Magic shall oversee the day-to-day operations of CMN. However, any
matters not in the ordinary course or directly related to the day-to-day
operations of CMN shall be subject to the unanimous vote of the Shareholders.
The unanimous vote of the Shareholders shall be specifically required for the
following matters:
(a) Any change in the number of directors, any amendment
to the By-Laws or Articles of Incorporation of CMN, any issuance,
redemption or purchase from cancellation of shares of stock of CMN, or
any form of corporate reorganization, merger or liquidation;
(b) Subject to Section 2.7 hereof, declaration of any
dividends on any issued and outstanding capital stock of CMN;
(c) Any contract, agreement or commitment between CMN and
either of the Shareholders or any of their respective officers,
directors or affiliates (or any amendments thereto), including,
without limitation, the Notes, the Lease Agreement, the Technical
Assistance Agreement and the Trademark Agreement;
(d) Any commitment, contract or undertaking by CMN
requiring an expenditure in excess of $100,000 US;
(e) Any disposal by CMN of all or substantially all of
its assets, including, without limitation, the Casinos;
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(f) The borrowing of any money by CMN other than trade
payables in the ordinary course of business;
(g) The payment to either of the Shareholders except as
otherwise permitted pursuant to Section 2.8 hereof and except for
reimbursement to Casino Magic in the ordinary course of business for
such items as salaries, wages, benefits, liability insurance and
equipment, all such items to be reimbursed at cost;
(h) Any change in the auditors or attorneys of CMN; and
(i) Any amendment or modification to the Concession Contract.
The foregoing are not intended to be an exclusive list of the items
requiring unanimous approval, but are for purposes of illustration only,
provided, however, nothing contained herein is intended or shall be construed
to contravene the Concession Contract.
Section 3. Additional Casinos in Argentina. As part of the
consideration for Casino Magic's entry into this Agreement and the Purchase
Agreement, and subject to the terms hereof, Crown agrees that it will loan to
an entity or entities amounts sufficient to permit such entity or entities to
develop and commence the operation of other casinos in Argentina. It is
contemplated that such entity or entities will each be owned 52% by Crown and
48% by Casino Magic. While the terms of any such loan, the obligation of Crown
to make any loan, and the other relationships (including ownership) of the
Shareholders with respect to any such entity are subject to negotiation and the
mutual agreement of the Shareholders based upon all relevant economic factors,
the Shareholders shall use their commercially reasonable efforts to develop and
operate at least two (2) casinos in Argentina under the terms specified above.
For a period of ten (10) years, or for such longer period as the Shareholders
are both shareholders of CMN or its successor, neither Shareholder may develop,
own, operate, obtain any material benefit from, or have any direct or indirect
interest in, any casino which is located in Argentina and outside of Neuquen
Province, without the prior written consent of the other Shareholder.
Section 4. Technical Assistance Fee. In the event Casino Magic shall
cease to be a Shareholder hereunder, the Technical Assistance Agreement and the
Technical Assistance Fee shall, at the sole option of the remaining
Shareholders, terminate.
Section 5. Loan to Casino Magic-Bossier By CMN. On or before
August 15, 1997, Crown agrees to loan to CMN $1,000,000 (the "CMN Loan") and to
vote its CMN Stock and direct its designated directors of CMN to vote to cause
CMN to loan to Casino Magic of Louisiana Corp. or Jefferson Casino Corp.
(collectively, "Casino Magic-Bossier") $1,000,000 (the "Bossier Loan"). The
Bossier Loan and the CMN Loan shall be made on commercially reasonable terms
acceptable to Crown, and, further, shall bear interest at the rate of fifteen
(15%) percent per annum and CMN shall have the right of set-off to apply Casino
Magic's portion of cash distributions (including payments on the Assets due
from CMN) to repayment of the Bossier Loan. Casino Magic agrees to vote its
CMN Stock and to direct its designated directors to vote to cause CMN to
exercise its right of set-off to repay the Bossier Loan and to cause CMN to
repay the CMN Loan. The actual structure of the Bossier Loan shall be subject
to mutual approval by the Shareholders.
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Section 6. Trademarks, Service Marks and Trade Names.
(a) In the event Casino Magic ceases to be a Shareholder
hereunder, the parties to this Agreement agree that Casino Magic shall
retain all ownership of the Marks, and that they will do nothing
inconsistent with Casino Magic's ownership of the Marks, and that all
use of the Marks shall inure to the benefit of and be on behalf of
Casino Magic. Subject to the above, CMN shall have the non-exclusive
right and license to use the Marks in connection with the ownership
and operation of the Casinos pursuant to the Trademark Agreement on a
royalty-free basis for so long as CMN desires to use the Marks as long
as CMN abides by all provisions of this Agreement and all provisions
of the Trademark Agreement (except for the payment of a royalty
thereunder). The parties to this Agreement agree that nothing in this
non-exclusive license shall give any party other than Casino Magic any
right, title or interest in the Marks other than the right to use the
Marks in accordance with this Agreement and the Trademark Agreement,
and the parties to this Agreement agree they will not attack the title
of Casino Magic to the Marks or attack the validity of this
non-exclusive license.
(b) In the event Casino Magic ceases to be a Shareholder
hereunder, the parties agree that the nature and quality of all goods
sold or services rendered by CMN in connection with the Marks, and all
related advertising, promotional materials, and other related uses of
the Marks by CMN shall conform to standards set by and be under the
control of Casino Magic.
(c) In the event Casino Magic ceases to be a Shareholder
hereunder, CMN shall cooperate with Casino Magic in facilitating
Casino Magic's control of such nature and quality, and shall permit
reasonable inspection of CMN's operation, and will supply Casino Magic
with specimens of all uses of the Marks upon request. CMN shall
comply with all applicable laws and regulations and obtain all
appropriate government approvals pertaining to the sale, distribution
and advertising of goods and services rendered under the Marks.
(d) In the event Casino Magic ceases to be a Shareholder
hereunder, CMN shall use the Marks only in the form and manner and
with appropriate legends as prescribed from time to time by Casino
Magic, and shall not use any other marks in combination with any of
the Marks without prior written approval of Casino Magic, which
approval will not be unreasonably withheld.
Section 7. Miscellaneous Provisions.
7.1. Term. This Agreement shall terminate upon the occurrence of
any event which reduces the number of Shareholders to one or by the mutual
agreement of the Shareholders.
7.2. Recapitalization, Exchanges Affecting CMN Stock. The
provisions of this Agreement shall apply to any and all securities of CMN which
may be issued in respect of, in exchange for, or
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in substitution of the CMN Stock, and shall be appropriately adjusted for any
stock dividends, splits, reverse splits, combinations, reclassifications and
the like occurring after the date hereof.
7.3. Counterparts. This Agreement may be executed in several
counterparts, each of which is an original. This Agreement and any counterpart
so executed shall be deemed to be one and the same instrument.
7.4. Governing Law. THIS AGREEMENT IS BEING DELIVERED AND IS
INTENDED TO BE PERFORMED IN THE STATE OF TEXAS AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS THEREOF.
7.5. Section Headings and Gender. The section headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. The use of the masculine
pronoun herein when referring to any party has been for convenience only and
shall be deemed to refer to the particular party intended regardless of the
actual gender of such party.
7.6. Notices. All notices, demands and requests which may be given
or which are required to be given by any party to the other, shall be in
writing and shall be deemed effective when either: (a) personally delivered to
the intended recipient; (b) sent by certified or registered mail, return
receipt requested, addressed to the intended recipient at the address specified
below; (c) delivered in person to the address set forth below for the party to
which the notice was given; (d) deposited into the custody of a nationally
recognized overnight delivery service such as Federal Express Corporation,
Airborne, ▇▇▇▇▇ or Purolator, addressed to such party at the address specified
below; or (e) sent by facsimile, telegram or telex, provided that receipt for
such facsimile, telegram or telex is verified by the sender and followed by a
notice sent in accordance with one of the other provisions set forth above.
Notices shall be effective on the date of delivery or receipt or, if delivery
is not accepted, on the earlier of the date that delivery is refused or three
(3) days after the date the notice is mailed. For purposes of this Section,
the addresses of the parties for all notices are as follows (unless changes by
similar notice in writing are given by the particular person whose address is
to be changed):
If to Casino Magic, to Casino Magic Corp., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chairman of the Board; Fax: (▇▇▇) ▇▇▇-▇▇▇▇;
With a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇; Fax: (▇▇▇) ▇▇▇-▇▇▇▇;
Or if to Crown, to Crown Casino Corporation, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, President; Fax: (▇▇▇) ▇▇▇-▇▇▇▇;
With a copy to: ▇. ▇. ▇▇▇▇▇▇▇, III, Esq., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; Fax: (▇▇▇) ▇▇▇-▇▇▇▇.
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Any party hereto may designate a different address by written notice given to
the other party in accordance with this Section.
7.7. Remedies. The parties hereto acknowledge that monetary damages
are inadequate for a breach hereof, and hereby agree that the provisions of
this Agreement shall be enforceable by equitable relief, including specific
performance, and each of the parties hereby waives any defense in the
enforcement of this Agreement through equitable relief. However, equitable
relief shall not be an exclusive remedy for breach of this Agreement and the
election of specific performance, damages or any other remedy hereunder shall
not preclude the exercise of any other remedy in connection with such relief or
from time to time hereafter.
7.8. Arbitration; Consent to Jurisdiction. All disputes or claims
arising out of or in any way relating to this Agreement shall be submitted to
and determined by final and binding arbitration under the rules of the American
Arbitration Association. Arbitration proceedings may be initiated by any party
to this Agreement upon notice to the other party and to the American
Arbitration Association and shall be conducted by three (3) arbitrators under
the rules of the American Arbitration Association in Dallas, Texas; provided,
however, that the parties may agree following the giving of such notice to have
the arbitration proceedings conducted with a single arbitrator. The notice
must specify in general the issues to be resolved in any such arbitration
proceeding. The arbitrators shall be selected by agreement of the parties to
the arbitration proceeding from a list of five (5) or more arbitrators proposed
to the parties by the American Arbitration Association or may be persons not on
such list as agreed to by the parties to such arbitration. If the parties to
the arbitration proceedings fail to agree on one (1) or more of the persons to
serve as arbitrators within fifteen (15) days after delivery to each party
hereto of the list as proposed by the American Arbitration Association, then at
the request of any such party to such proceeding, such arbitrators shall be
selected at the discretion of the American Arbitration Association. Where the
arbitrators shall determine that an arbitration proceeding was commenced by a
party frivolously or without a basis or primarily for the purpose of harassment
or delay, the arbitrators may assess such party the cost of such proceedings
including reasonable attorneys' fees of any other party. In all other cases,
each party to the arbitration proceeding shall bear its own costs and its
pro-rata share of the fees and expenses charged by the arbitrators and the
American Arbitration Association in connection with any arbitration proceeding.
Any award or equitable relief granted by the arbitrators shall be enforced in
accordance with the provisions of Texas Statutes. Notwithstanding the
foregoing, nothing herein will prevent a party from seeking and obtaining
equitable relief from a court of competent jurisdiction pending a final
decision of the arbitrators and the proper filing of such decision with such
court, in which event, each of the parties hereto (a)consents and submits to
the jurisdiction of the Courts of the State of Texas and of the Courts of the
United States for a judicial district within the territorial limits of the
State of Texas for all purposes of this Agreement, including, without
limitation, any action or proceeding instituted for the enforcement of any
right, remedy, obligation or liability arising under or by reason hereof; and
(b) consents and submits to the venue of such action or proceeding in the City
of Dallas and County of Dallas, Texas (or such judicial district of a Court of
the United States as shall include the same).
7.9. Related Party Shareholder. As a result of the sale of one (1)
share of CMN Stock to Crown pursuant to the CMMS Stock Purchase Agreement, CMMS
is the owner of one (1) share of CMN Stock. Casino Magic agrees to cause CMMS
to be bound by the terms hereof and to vote its one (1) share of CMN Stock in
the same manner as required of Casino Magic hereunder and, if
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Casino Magic desires or is obligated to sell its shares of CMN Stock to Crown
or a third party in accordance with the terms hereof, Casino Magic agrees to
cause CMMS to sell its one (1) share of CMN Stock to Crown or a third party (if
applicable) for the purchase price of $1.00 U.S.
IN WITNESS WHEREOF, the parties hereto have executed this Shareholders
Agreement on or as of the day and year first above written.
CASINO MAGIC CORP.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
CROWN CASINO CORPORATION
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
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