EXHIBIT 10.7
SHAREHOLDER AGREEMENT
THIS AGREEMENT made as of the 16th day of February, 1999
AMONG:
PLAYSTAR WYOMING HOLDING CORP., a corporation organized and
existing under the laws of Antigua
("PlayStar")
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XXXXXX XXXXX and XXXXXX XX XXXXXXXXX, both of the Province of
Ontario and being the sole shareholders of Cyberstation
("Xxxxx" and "Conceicao", respectively)
- and -
CYBERSTATION COMPUTERS & SUPPORT INC., a corporation organized
and existing under the laws of Ontario
(the "Corporation")
WHEREAS the authorized capital of the Corporation consisted of
an unlimited number of Common Shares, of which 1,000 Common Shares are issued
and outstanding;
AND WHEREAS Xxxxx, Xxxxxxxxx and PlayStar are the registered
and beneficial owners of all of the issued and outstanding Common Shares of the
Corporation;
AND WHEREAS Cyberstation International has granted to each of
PlayStar and the Corporation an exclusive perpetual royalty-free license by to
use the Licensed Property in the areas designated in each license;
AND WHEREAS the Shareholders wish to enter into this Agreement
to, among other things, provide for the management of the Corporation and to
regulate dealings with their investments in the Corporation;
AND WHEREAS it is the intention of the Parties that this
Agreement should constitute a unanimous shareholder agreement with respect to
the Corporation;
NOW THEREFORE for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the Parties agree as follows:
. Where used herein or in any amendment or supplement hereof, unless the context
otherwise requires, the words and phrases with initial capitals set forth below
will have the meanings so set forth therein.
"ACCEPTANCE NOTICE" has the meaning given in Section 4.5;
"ACT" means the BUSINESS CORPORATIONS ACT (Ontario);
"AFFILIATE" means, with respect to any Person, any other
Person who directly or indirectly controls, is controlled by,
or is under direct or indirect common control with, such
Person, and includes any Person in like relation to an
Affiliate. A Person is deemed to control another Person if
such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies
of such other Person, whether through the ownership of voting
securities, by contract or otherwise; and the term
"controlled" has a corresponding meaning;
"AGREEMENT" means this Agreement, including the Schedules to
this Agreement, as it or they may be amended or supplemented
form time to time, and the expressions "HEREOF", "HEREIN",
"HERETO", "HEREUNDER", "HEREBY" and similar expressions refer
to this Agreement and not to any particular Section or other
portion of this Agreement;
"ARM'S LENGTH" shall have the same meaning as that term is
given in the INCOME TAX ACT (Canada);
"ARTICLES OF INCORPORATION" means the articles of
incorporation of the Corporation, as amended or restated from
time to time in accordance with the provisions of this
Agreement and the Act;
"BOARD" means the board of directors of the Corporation;
"BUDGET" means the estimates of proposed and committed
expenditures and the subject matter of each expenditure with
respect to the development of the Licensed Property for the
subject period and a statement of objectives and plans with
respect to such expenditures;
"BUSINESS DAY" means any day except Saturday, Sunday or any
day on which banks are generally not open for business in the
City of Toronto;
"BUSINESS OF THE CORPORATION" means the business of the
activities associated with being the business of developing
proprietary software, systems and services used to provide
electronic commerce solutions that enable businesses to sell
products and services on the Internet;
"BUYER" has the meaning given in Section 5.1;
"BY-LAWS" means the by-laws of the Corporation in the form
enacted on the date hereof and any additions or amendments
thereto made after the date hereof;
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"CLAIMS" means all claims, damages (direct, indirect,
consequential or otherwise), losses, liabilities (whether
accrued, actual, contingent or otherwise), demands, suits,
judgments, causes of action, legal proceedings, penalties or
other sanctions and any costs and expenses arising in
connection therewith, including legal fees and disbursements
on a solicitor and own client basis (including all such legal
fees and disbursements in connection with any appeals), and
all accounting and professional fees and disbursements;
"COMMON SHARES" means the common shares of the Corporation
issued and outstanding from time to time;
"CONFIDENTIAL INFORMATION" of a Party means all information
(and all documents and other tangible items which record
information, whether on paper, in computer readable format or
otherwise) relating to such Party's business (including,
without limitation, business plans, property, way of doing
business or business results or prospects) which:
(a) at the time concerned is either protectable as a
trade secret under Applicable Law, or is otherwise of
a confidential nature (and is known or should have
been known by the other Party or its Representatives
as being of a confidential nature), and
(b) has been or is from time to time made known to or is
otherwise learned by the other Party or any of its
Representatives as a result of the relationship under
this Agreement,
including, without limitation, the following information:
(c) the terms of this Agreement;
(d) a Party's proprietary software; and
(e) a Party's business records,
but not including any information or documents or other
tangible items which at the time in question:
(f) have become generally available to the public other
than as a result of a disclosure by the other Party
or any of its Representatives;
(g) were available to the other Party or its
Representatives on a non-confidential basis before
the date of this Agreement; or
(h) become available to the other Party or its
Representatives on a non-confidential basis from a
Person other than the first-mentioned Party or any of
its Representatives who is not, to the knowledge of
such other Party or its Representatives, otherwise
bound by confidentiality obligations to such
first-mentioned Party or otherwise prohibited from
transmitting the information to the other Party or
its Representatives;
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"CYBERSTATION LICENSE AGREEMENT" means the license agreement
dated the date hereof entered into between Cyberstation
International, as licensor, and Cyberstation, as licensee with
respect to the Licensed Property; "CYBERSTATION INTERNATIONAL"
means Cyberstation International Limited, a St. Kitts company;
"DECLINING OFFEREE" has the meaning given in Section 4.7;
"DIRECTOR" means a person occupying the position of director
of the Corporation, and "Directors" means every Director;
"EQUITY SECURITIES" means the y issued and outstanding Common
Shares and any other shares in the capital of the Corporation
issued and outstanding at any time in the future, and any
rights, warrants, options or other instruments entitling the
holder, whether or not on a contingency, to acquire from the
Corporation shares of the Corporation, and any instruments
convertible or exchangeable, whether or not on a contingency,
into any of the foregoing;
"EQUITY SECURITYHOLDER" means the holder of any Equity
Security;
"FAIR MARKET VALUE" means the cash value of Equity Securities
as if determined in an open and unrestricted market in a
transaction between informed and prudent parties acting at
Arm's Length and under no compulsion to act, without a premium
for control or discount for minority interest, as established
by a national firm of business valuators retained by the
Corporation and selected by the Board without the
participation of directors, if any, nominated by a Shareholder
that has an interest in the transaction pursuant to which the
value of Equity Securities is being established;
"GAAP" means those accounting principles that are recognized
as being generally accepted in Canada from time to time as set
forth in the HANDBOOK published by the Canadian Institute of
Chartered Accountants, consistently applied;
"LICENSED PROPERTY" means the software and intellectual
property licensed by Cyberstation International to PlayStar
and to Cyberstation pursuant to the PlayStar License Agreement
and the Cyberstation License Agreement;
"LIEN" means any encumbrance, charge, pledge, hypothecation,
security interest, lien (whether statutory or otherwise),
prior assignment, option to purchase or adverse claim;
"OFFERED SECURITIES" has the meaning given in Section 4.5;
"OVERSUBSCRIPTION" has the meaning given in Section 6.1(2);
"PARTY" means a party to this Agreement and any reference to a
Party includes its successors and permitted assigns; and
"PARTIES" means every Party;
"PERSON" is to be broadly interpreted and includes an
individual, a corporation, a partnership, a trust, an
unincorporated organization, the government of a country or
any political subdivision thereof, or any agency or department
of any such government, and the executors, administrators or
other legal representatives of an individual in such capacity;
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"PLAYSTAR" means PlayStar Wyoming Holding Corp. and its
successors and permitted assigns;
"PLAYSTAR APPROVAL" means, in the case of a vote on a
resolution by the Board or a committee of the Board, the
approval of at least one PlayStar Director and, in the case of
a vote on a resolution or other matter by the Shareholders,
the approval of PlayStar;
"PLAYSTAR DIRECTOR" means a Director who was nominated by
PlayStar;
"PLAYSTAR LICENSE AGREEMENT" means the license agreement dated
the date hereof entered into between the Company, as licensor,
and PlayStar Sub, as licensee, with respect to the Licensed
Property;
"PLAYSTAR SUB" means Players Limited, an Antigua company and a
wholly-owned subsidiary of PlayStar;
"PROPORTION" has the meaning given in Section 6.1(2);
"REPRESENTATIVES" with respect to any Party means its
Affiliates and its or their respective directors, officers,
employees, agents and other representatives;
"SALE DATE" has the meaning given in Section 4.5;
"SELLER" has the meaning given in Section 4.5;
"SELLING NOTICE" has the meaning given in Section 4.5;
"SHAREHOLDER" means a Person listed in Schedule A so long as
that Person is the registered and beneficial owner of any
Equity Securities; and "SHAREHOLDERS" means every Shareholder;
"TAG-ALONG DEMAND" has the meaning given in Section 4.7;
"TAG-ALONG NOTICE" has the meaning given in Section 4.7;
"TAG-ALONG OFFER" has the meaning given in Section 4.7;
"TAGGING SECURITIES" has the meaning given in Section 4.7;
"THIRD PARTY" has the meaning given in Section 4.5; and
"TRANSFER" of an interest in any Equity Securities includes
any sale, exchange, transfer, assignment, gift, pledge,
encumbrance, hypothecation, alienation, transmission or other
transaction, whether direct or indirect and whether voluntary,
involuntary or by operation of law, by which the legal or
beneficial ownership of, or a security interest or other
interest in, the interest passes from one Person to another,
or to the same Person in a different capacity, whether or not
for value, and any change of Control of the legal or
beneficial owner of the interest or any Person that Controls,
directly or indirectly, such legal or beneficial owner of the
interest, other than a change of Control resulting from the
transmission of the interest of a deceased or incompetent
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Shareholder to the personal representative of such Shareholder
for so long as the interest continues to be held by the
personal representative of such Shareholder, and "TO TRANSFER"
and "TRANSFERRED" and similar expressions have corresponding
meanings.
. The division of this Agreement into Articles and Sections, the insertion of
headings and the provision of any table of contents are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
. Unless the context requires otherwise, words importing the singular include
the plural and vice versa and words importing gender include all genders.
. If any payment is required to be made or other action is required to be taken
pursuant to this Agreement on a day which is not a Business Day, then such
payment or action shall be made or taken on the next Business Day.
. Except as otherwise expressly provided in this Agreement, all dollar amounts
referred to in this Agreement are stated in Canadian Dollars and any payment
contemplated by this Agreement shall be made by cash, certified cheque or any
other method that provides immediately available funds.
. In calculating interest payable under this Agreement for any period of time,
the first day of such period shall be included and the last day of such period
shall be excluded.
. Any reference in this Agreement to any statute or any section thereof shall,
unless otherwise expressly stated, be deemed to be a reference to such statute
or section as amended, restated or re-enacted from time to time.
. Unless the context requires otherwise, references in this Agreement to
Articles, Sections or Schedules are to Articles, Sections or Schedules of this
Agreement.
. In addition to any requirements of the Act, the Corporation shall not take or
effect or agree to take or effect any of the actions with respect to the
following matters without the prior approval of the Board and PlayStar Approval:
(a) the amendment of the Articles, the making or repeal
of any by-law;
(b) the sale of a material asset of the Corporation out
of the ordinary course of business or the granting of
an option for such sale;
(c) the creation, issuance or amendment of any Equity
Securities, including any Shares, unless the
pre-emptive rights provided for in Article 6 of this
Agreement have been complied with;
(d) the acquisition of any assets unrelated to or not
necessary for, the conduct of the Business of the
Corporation and for greater certainty, this clause
does not relate to the acquisition of any assets
related to software, banking or electronic commerce;
(e) the carrying on, directly or indirectly, of any
on-line gaming activity;
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(f) the taking of any steps to wind-up, dissolve or
terminate the corporate existence of the Corporation
or any assignment for the general benefit of the
creditors of the Corporation or the making of any
proposal under the BANKRUPTCY AND INSOLVENCY ACT
(Canada) or any proceedings relating to it under any
reorganization, arrangement, readjustment of debt or
liquidation law including the COMPANIES' CREDITORS
ARRANGEMENTS ACT (Canada);
(g) approving any amendment to the Cyberstation License
Agreement;
(h) the giving of financial assistance, by means of loan,
guarantee or otherwise, to any Person.
. The number of directors to be elected shall be fixed at five, of which three
shall be nominated by Xxxxx and Conceicao and two by PlayStar. If the number of
directors is increased, PlayStar shall be entitled at all times to nominate that
number of directors, rounded up to the nearest whole number, represented by the
proportion of issued and outstanding Common Shares owned by it. Directors shall
be elected annually. All Shareholders shall vote their Equity Shares to elect
such nominees. A Shareholder may choose not to nominate anyone for election as a
Director or may nominate the same Person as another Shareholder nominates; in
each case, the number of directors shall be reduced accordingly. A vacancy among
the Directors shall be filled by the Shareholder whose nominee has ceased to
hold office as a director. A Shareholder has the exclusive right at any time to
remove any Director nominated by it and fill the vacancy created by the removal
of its nominee. All nominees of each Shareholder other than nominees of PlayStar
shall at all times be resident Canadians as such term is defined in the Act.
. Notwithstanding any provision contained in the By-laws, notice of any meeting
of the Board shall, unless waived, be given not less than seven days (exclusive
of the day on which the notice is delivered or sent but inclusive of the day by
which notice is given) before the meeting is to take place, such notice to
include or be accompanied by a general description of the matters to be dealt
with at the meeting.
. At least one PlayStar Director shall be a member of each committee of the
Board.
. Notwithstanding any contrary provision in the By-laws, the quorum for any
meeting of the Board or a committee of the Board shall be three directors, at
least one of whom shall be an PlayStar Director. A meeting shall be adjourned
for lack of a quorum by notice to all directors to a date at least 7 days
following the adjourned meeting. At any such reconvened meeting, the quorum
shall be not less than two-fifths of the directors and a PlayStar Director shall
not be required to constitute a quorum. If a director is unable to attend or if
it is unreasonable to expect a director to attend, all of the Shareholders shall
(at the request of the Shareholder which nominated such director and for the
duration of the reconvened meeting) replace that nominee with a nominee of such
Shareholder who is willing and able to attend the reconvened meeting, and at
such meeting the replacement nominee shall have all the rights and obligations
which the absent nominee would have had. Such replacement shall be done in
accordance with Section 2.2 prior to the reconvened meeting.
. One of the directors nominated by the owner of the greatest number of Common
Shares and subsequently elected to the Board shall act as Chairman. In
identifying which of such nominees is to so serve as Chairman, the nominator
shall use reasonable efforts to accommodate the preferences of the other
Shareholders. Notwithstanding any contrary provision in the By-laws, at any
meeting of the Board or any committee of the Board, the Chairman, in the case of
an equality of votes, will not be entitled to a second, casting or other
tie-breaking vote.
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. The Corporation shall at all times maintain at its registered office proper
books of account, which shall contain accurate and complete records of all
transactions, receipts, expenses, assets and liabilities of the Corporation and
shall provide all Shareholders reasonable access to them. Each Shareholder
acknowledges that all records, material and information pertaining to the
Corporation and any copies thereof obtained by any Shareholder are and shall
remain the exclusive property of the Corporation.
. The Corporation and shall prepare and provide to the Shareholders:
(a) within 30 days of the end of the first, second and
third fiscal quarters of each fiscal year, unaudited
consolidated quarterly financial statements including
a balance sheet as at the end of such quarter year
and statements of income and changes in financial
position for such quarter period with comparatives to
the same fiscal quarters in the immediately preceding
fiscal year;
(b) within 60 days of the end of each fiscal year,
audited consolidated financial statements including
without limitation a balance sheet prepared at the
end of such year, statements of income, changes in
financial position and changes in retained earnings
for such fiscal year, with comparatives for the
immediately preceding fiscal year; and
(c) such other information, accounts, data and
projections reasonably and practicably obtainable by
the Corporation as any Shareholder may reasonably
request from time to time.
. The Corporation shall maintain a system of accounting and reporting
established and administered in accordance with GAAP and satisfactory to the
Corporation's auditors or accountants. All financial statements and other
reporting made pursuant to Section 3.2 shall be prepared in accordance with GAAP
applied consistently with prior periods.
. The Corporation shall permit Persons designated by any Shareholder to visit
and inspect, at the Shareholder's expense, any properties of the Corporation, to
examine the books, data and financial records of the Corporation and to discuss
its affairs, finances and accounts with the financial officers of the
Corporation, all at such reasonable times and as often as may reasonably be
requested by the Shareholder. The Persons designated by the Shareholder pursuant
to this section may include accountants or management consultants or others
appointed by the Shareholder to examine all or any aspect of the operations of
the Corporation, and the Corporation agrees to answer any inquiries which such
Persons may make fully and fairly and to the best of its ability. The
Corporation agrees that such Persons may, in the course of their investigations,
discuss the business and affairs of the Corporation with the officers, directors
and employees of the Corporation and with the auditors or accountants of the
Corporation and others reasonably expected to have knowledge of the relevant
matters. The Corporation acknowledges that such Persons may prepare reports to
the Shareholder concerning the financial position and business prospects of the
Corporation and the Shareholder shall have no obligation to disclose the content
of such reports to the Corporation or any other Shareholder. Shareholders shall
have no duty to make any such visits, inspections or examinations or to have any
such discussions and shall not incur any liability or obligation nor lose any
rights for not making the same.
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. No Equity Securities of the Corporation or any interest therein shall be
Transferred and no Agreement or commitment shall be made to Transfer any Equity
Securities except in each case either with the consent of all the Shareholders
or pursuant to the applicable provisions of this Agreement, and any attempt to
do so without such consent or not pursuant to such provisions shall be void. The
Corporation shall not register or permit the registration of any transfer of
Equity Shares made otherwise than in compliance with the provisions of this
Agreement.
. Notwithstanding the provisions of Section 4.1 of this Agreement, any
Shareholder shall be permitted to transfer or otherwise dispose of all but not
part of the Equity Securities owned by him or it:
(a) if a corporate Shareholder, to an Affiliate, or
(b) if an individual Shareholder, to his spouse, any of
his children (or a trust or trusts established solely
or primarily for any such person or persons provided,
however, that where any such trust is not established
solely for the benefit of such person(s), the
remaining beneficiaries thereunder shall consist of
other members of such Shareholder's family and/or
organizations having philanthropic or charitable
goals) or to a corporation controlled by any one or
more of such persons,
provided that no such transfer or other disposition shall be effective until
PlayStar shall have consented in writing, which consent shall not be
unreasonably withheld, and the transferee shall have entered into an agreement
with PlayStar and the other Parties hereto (which agreement shall not constitute
a novation without the specific written agreement of the other parties hereto)
whereby such transferee agrees:
(i) to assume and be bound by all the obligations of the transferor
along with and not instead of the transferor and to be subject
to all the restrictions to which the transferor is subject
under the terms of this agreement; and
(ii) to retransfer such Equity Securities to the transferor if the
transferor shall cease to have DE FACTO control of the
transferee.
. This Agreement shall constitute consent by the Shareholders, as required by
the Articles of Incorporation, to any Transfer of Equity Securities made in
accordance with the provisions of this Agreement.
. A Shareholder may pledge all of its Equity Securities to a financial
institution to secure BONA FIDE loans to such Shareholder by such institution,
provided that such institution agrees in writing with all the Parties hereto
that in the event of realization it will be bound by the terms of Articles 4 and
5 INTER ALIA to sell such Equity Securities pursuant to Section 4.4 and, until
realization, the voting rights attached to such Equity Securities shall be
exercisable only by such Shareholder. Any Shareholder whose Equity Securities
have been realized upon shall continue to be bound by its obligations under this
Agreement arising or occurring on or before the date of realization.
. A Shareholder who desires to sell (the "Seller") all, but not less than all of
the Equity Securities owned by it (the "Offered Securities") shall give notice
(the "Selling Notice") to the other Shareholders (the "Other Shareholders") of
its intention so to do. The Selling Notice shall state the price per security at
which the Seller is prepared to sell the Offered Securities, shall provide that
the purchase price is to be paid in full on the completion of the sale and shall
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state the proposed date of sale (the "Sale Date"), which shall not be less than
30 days nor more than 60 days after the date on which the Selling Notice is
given to the Other Shareholders. In such event, unless all the Other
Shareholders and the Seller otherwise agree, the following provisions shall
govern such purchase and sale:
(a) The Selling Notice shall be deemed to be an offer,
irrevocable within the time hereinafter specified for
acceptance, by the Seller to sell the Offered
Securities to the Other Shareholders.
(b) Within 30 days after receipt of the Selling Notice,
each Other Shareholder may give to the Seller a
notice of acceptance (an "Acceptance Notice") which
shall set forth the number of Offered Securities
which such Other Shareholder is willing to purchase
from the Seller.
(c) If the Other Shareholders collectively are prepared
to purchase all or more than all of the Offered
Securities, then the Other Shareholders shall be
entitled to purchase the Offered Equity Securities as
nearly as may be in proportion to the number of
Equity Securities then held by them respectively. If
all of the Other Shareholders do not claim their
respective proportions, the unclaimed Offered
Securities shall be allocated so as to satisfy the
unsatisfied claims of Other Shareholders for Offered
Securities in excess of their proportions and, if the
claims in excess are more than sufficient to exhaust
such unclaimed Offered Securities, the unclaimed
Offered Securities shall be divided among the
remaining Other Shareholders in proportion to their
holdings of Equity Securities immediately before the
delivery of the Selling Notice. The allocation method
set out in this paragraph shall be, if necessary,
repetitively applied until either (i) all Offered
Securities are accepted, or (ii) all claims of the
Other Shareholders for Offered Securities are
satisfied. An Other Shareholder shall not be bound to
purchase any Offered Securities in excess of the
number which it agreed to purchase in its Acceptance
Notice.
(d) If none of the Other Shareholders accepts the offer
or the Other Shareholders collectively are not
prepared to purchase all of the Offered Securities,
then the Seller may, but need not, sell all or only
some of the Offered Securities to the Other
Shareholders as they may agree and may, but need not,
sell all or only some of the Offered Securities to
any other Person with whom the Seller deals at Arm's
Length (a "Third Party") within 90 days after the
Sale Date at a price per security not less than the
price per security and on terms and conditions not
more favourable than the terms and conditions on
which the Seller is required first to offer to sell
the Equity Securities to the Other Shareholders
pursuant to this Section 4.4. In the event that the
Seller does not sell the Offered Securities to a
Third Party within such 90 day period, then the
provisions of this Agreement shall once again apply
and so on from time to time.
(e) If the Seller has received, before the date of the
Selling Notice, a BONA FIDE offer from a Third Party
to purchase the Offered Securities for cash which the
Seller wishes to accept, then the Seller shall send a
copy of such offer to each Other Shareholder with the
Selling Notice and the terms and conditions of sale
set forth in the Selling Notice shall be the same as
those set forth in such offer, and the Sale Date
proposed shall not be less than 30 days nor more than
60 days after the date on which the Selling Notice is
given to each Other Shareholder. By delivering a
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Selling Notice, the Seller represents and warrants to
each Other Shareholder that no direct or indirect
collateral benefit or supplementary consideration
(whether or not in the nature of money, property,
securities or other benefits or opportunities) has
been or is to be paid or received by the Third Party
or any other Person with whom the Third Party does
not deal at Arm's Length, in connection with the
Third Party's offer and that such offer is not made
as part of or in connection with any other
transaction. Each such Other Shareholder shall be
entitled to obtain from the Seller all documents
relevant to this issue of collateral benefit or
supplementary consideration.
. No Party may sell Equity Securities as a part of or incidental to the sale of
any other assets or any other transaction in such a manner as would frustrate
the application of Section 4.5.
. If the Seller proposes to sell the Offered Securities to a Third Party
pursuant to Section 4.5, then the Seller shall, within 10 days following the
expiry of the 30 day period referred to in Section 4.5(b), give written notice
(the "Tag-Along Notice") of the identity of the Third Party and the price and
other material terms of the transaction (which shall be consistent with the
requirements of Section 4.5) to each of the Other Shareholders (a "Declining
Offeree") who elected not to exercise its right to purchase such Offered
Securities. A Declining Offeree may, not later than 10 days after receipt of the
Tag-Along Notice, deliver to the Seller a notice in writing invoking the
provisions of this Section 4.7 (a "Tag-Along Demand"). The Tag-Along Demand
shall be irrevocable and shall bind the Declining Offeree to sell all but not
less than all of the Equity Securities (the "Tagging Securities") owned by the
Declining Offeree to the Third Party, in accordance with the provisions of this
Section 4.7. If a Declining Offeree delivers a Tag-Along Demand, then the Seller
shall not complete the sale to the Third Party of any of the Offered Securities
unless the Third Party has delivered to the Declining Offeree an offer in
writing (the "Tag-Along Offer") to purchase the Tagging Securities from the
Declining Offeree. The Tag-Along Offer shall contain only such terms and
conditions as are identical to those upon which the Shareholder proposes to sell
to the Third Party the Offered Securities pursuant to Section 4.5, provided that
the offer price per Equity Security, which shall be specified in the Tag-Along
Offer, shall be the same consideration as, or the cash equivalent of, the
consideration per Equity Security at which the Shareholder proposes to sell the
Offered Securities to the Third Party pursuant to Section 4.5. The closing date
and other closing arrangements for the purchase and sale transaction between the
Declining Offeree and the Third Party shall be specified in the Tag-Along Offer
and shall be the same, MUTATIS MUTANDIS, as those specified between the Third
Party and the Shareholder.
. Each Seller who sells any Equity Securities pursuant to the provisions of this
Agreement shall hereby be deemed to warrant to each other Shareholder who
purchases such Equity Securities (such purchasing Shareholder being referred to
in this Article 5 as the "Buyer") that, at the time of closing of the
transaction of purchase and sale in question, (i) the Seller shall have good and
marketable title to such Equity Securities and (ii) the Buyer will acquire such
Equity Securities free of Liens, and in addition the Seller shall hereby be
deemed to agree to indemnify and save the Buyer harmless against any loss
suffered by the Buyer as a result of there being Liens on or any defect in the
title of the Seller to such Equity Securities.
. Unless otherwise provided for herein, each purchase and sale of Equity
Securities between Shareholders pursuant to this Agreement shall, unless
otherwise expressly provided herein or agreed upon by all parties to such
purchase and sale, be completed at the offices of the solicitors of the
Corporation at Toronto, Ontario on the 30th day after the date of the last
notice given by the Buyer or the Seller, as the case may be, pursuant to the
applicable sections of this Agreement.
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. At the time of closing of any purchase of Equity Securities of the Corporation
as set forth in Section 5.2, the Seller shall table:
(a) a certificate or certificates representing the Equity
Securities being sold by the Seller, duly endorsed by
the appropriate person in blank for transfer with
signatures guaranteed by a Canadian chartered bank,
trust company or member of a Canadian stock exchange
and transfers of any Equity Securities being sold in
such form as the Buyer may reasonably require;
(b) in the case of a sale of Equity Securities by a
person which is not a natural person, such
authorizing resolutions, orders and other instruments
as the solicitors for the Buyer shall reasonably
consider necessary to effect and evidence a valid
transfer of such Equity Securities;
(c) evidence of the consent of the directors or
shareholders to the transfer of Equity Securities in
question as required by the Articles of
Incorporation;
(d) the resignation of the Seller's nominees as directors
of the Corporation and releases executed by the
Seller's nominees, if any, as directors and officers
of the Corporation in form satisfactory to the Buyer
acting reasonably in respect of Claims against the
Corporation and the Purchaser for compensation and
indemnification arising from having been a director
or officer of the Corporation; and
(e) either provide the Buyer with evidence reasonably
satisfactory to the Buyer that the Vendor is not then
a non-resident of Canada within the meaning of the
INCOME TAX ACT (Canada) or provide the Purchaser with
a certificate pursuant to subsection 116(2) of the
INCOME TAX ACT (Canada), with a certificate limit in
an amount of not less than the purchase price for the
Equity Securities; provided that if such evidence or
certificate is not forthcoming, the Buyer shall be
entitled to make the payment of tax required under
the INCOME TAX ACT (Canada) and to deduct the amount
of the payment from the purchase price for the Equity
Securities;
Each Buyer shall pay for such Equity Securities by draft or cheque drawn or
certified by a reasonably creditworthy bank or like financial institution. If
the Seller fails to comply with the requirements set out in this section, the
Buyer shall, in addition to its other rights, including its right to specific
performance, be entitled to rescind the related agreement of purchase and sale
and shall have an action for damages. The Seller hereby irrevocably constitutes
and appoints any Person who at the date of closing is a Director or officer of
the Corporation, a true and lawful attorney-in-fact and agent for, in the name
of and on behalf of the Seller to execute and deliver all documents, instruments
and corporate records as may be necessary to effectively transfer and assign the
Seller's Equity Securities to the Buyer on the books of the Corporation. Such
appointment and power of attorney being coupled with an interest, shall not be
revoked by the insolvency, bankruptcy or incapacity of the Seller and the Seller
hereby ratifies and confirms and agrees to ratify and confirm all that such
attorney may lawfully do or cause to be done by virtue of the provisions hereof.
. If, on the date of closing of any sale and purchase of Equity Securities of
the Corporation, the Seller is indebted to the Corporation in an amount recorded
on the books of the Corporation and verified by the auditor, then unless
otherwise agreed in writing between the Corporation and the Seller, each Buyer
shall pay the purchase price payable therefor by him to the Corporation by
tabling and delivering to the Secretary of the Corporation, at the time of
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closing of such purchase and sale, the purchase price for such Equity Securities
and the Corporation shall apply the total purchase price proceeds to repayment
of the indebtedness of the Seller to the Corporation. If such proceeds exceed
such indebtedness, the Corporation shall pay the excess over to the Seller at
the time of closing of such purchase and sale. In the event that the Seller
sells all of the Equity Securities of the Corporation owned by him and the
indebtedness of the Seller to the Corporation exceeds the proceeds of such sale,
then the Seller shall at the date of closing pay the balance of such
indebtedness to the Corporation to retire such indebtedness.
. If, on the date of closing of any sale and purchase of Equity Securities of
the Corporation, the Corporation is indebted to the Seller all of whose Equity
Securities are purchased by other Shareholders pursuant to Article 4, or if such
Seller is the guarantor of any indebtedness of the Corporation, the Buyers
shall, at the time of closing, purchase such indebtedness at a price equal to
the outstanding amount thereof plus accrued interest PRO RATA in accordance with
the number of Equity Securities purchased by them and cause any such guarantee
to be released.
. No Equity Securities of the Corporation shall be Transferred, whether pursuant
to any provision of Article 4 or otherwise, by the Corporation or a Shareholder
to any Person other than a Shareholder until the proposed transferee or
purchaser executes and delivers to the parties hereto an agreement to the same
effect as this Agreement and any further agreement with respect to the
Corporation to which the Shareholders are then, or are then required to be,
party, and unless the proposed transferee or purchaser, on becoming a party to
this Agreement, would be in compliance with its provisions including without
limitation Article 8 hereof. Upon the proposed transferee or purchaser so doing,
such agreements shall enure to the benefit of and be binding upon all of the
parties to them as if all had executed and delivered the same agreements.
. Any Shareholder who sells all of the Equity Securities of the Corporation
owned by it in accordance with the terms of this Agreement shall thereafter be
released and discharged from the performance of all of its covenants and
obligations hereunder from and after the date of such sale and compliance by the
transferee with Section 5.6 except from its obligations under Article 8 and any
other obligations under this Agreement which by their terms are to survive any
such sale.
(1) If the Corporation wishes at any time or from time to time to issue
Equity Securities, then the Corporation shall first offer the Equity Shares to
the Shareholders in accordance with the provisions of Section 6.1(2), but the
Shareholders shall have no pre-emptive right on the issuance of Equity
Securities:
(a) for consideration other than money;
(b) as a share dividend; or
(c) pursuant to the exercise of conversion privileges,
options or rights to acquire additional Equity
Securities previously granted by the Corporation.
(2) The Corporation shall first offer to issue Equity Securities to the
Shareholders in accordance with the following provisions:
(a) The offer to issue Equity Securities shall be made by
notice given to each Shareholder. The notice shall
set out a description of the Equity Securities to be
offered, the proposed use of the proceeds of the
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issue, the purchase price and the purchase date which
shall be a date not earlier than 30 days after the
date of such notice.
(b) Each Shareholder shall have the right to subscribe
for and purchase up to that number of the Equity
Securities mentioned in the notice (referred to in
this Section 6.1 as such Shareholder's "Proportion")
which is equal to the number determined by
multiplying the total number of Equity Securities
offered by a fraction, the numerator of which shall
be the number of Common Shares owned by such
Shareholder at the date of such notice and the
denominator of which shall be the total number of
Common Shares owned by all the Shareholders at the
date of such notice. A Shareholder may subscribe for
a number of such Equity Securities in excess of its
Proportion (an "Oversubscription") but shall have no
right to purchase Equity Securities in excess of its
Proportion except as provided in this Section 6.1(2).
Such subscription rights shall be exercised by the
Shareholder by giving notice of acceptance to the
Corporation within 15 days after the receipt of the
notice from the Corporation. If the Shareholder does
exercise such subscription rights, it shall
subscribe, purchase and pay for such Equity
Securities on the purchase date set forth in the
notice of the Corporation.
(c) If all the Shareholders do not subscribe for any or
all of their respective Proportions, then the Equity
Securities not subscribed for shall be used to
satisfy the Oversubscriptions and if the
Oversubscriptions exceed the unsubscribed Equity
Securities, then the unsubscribed Equity Securities
shall be divided among the Shareholders who submitted
Oversubscriptions PRO RATA to their relative
Proportions, but no Shareholder shall be bound to
take any such Equity Securities in excess of the
amount it so desires.
. If any of the Equity Securities of any issue are not subscribed for and taken
up in accordance with the provisions of Section 6.1(2), then the Corporation
may, during the period of 30 days following the expiry of the offer to the
Shareholders, offer to sell the Equity Securities not taken up by the
Shareholders to any other Person, provided that the price at which such Equity
Securities may be allotted and issued shall not be less than the subscription
price offered to the Shareholders and the terms of payment shall not be more
favourable than the terms offered to the Shareholders, and provided further that
such purchaser or purchasers shall, at the time of purchase, agree to become a
party to this Agreement and be bound by the provisions of this Agreement.
.
(1)Each Party shall (and shall cause each of its Representatives (as
defined below) to) hold in strictest confidence and not use in any manner
whatsoever, other than as expressly contemplated by this Agreement, any
Confidential Information (as defined below) of the other Party.
(2)Section 7.1(1) shall not apply to the disclosure of any Confidential
Information where such disclosure is required by Applicable Law. In that case,
the Party required to disclose (or whose Representative is required to disclose)
shall, as soon as possible in the circumstances, notify the other Party of the
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requirement. Upon receiving such notification the other Party may, if it wishes,
take any reasonable action to challenge the requirement, and such disclosing
Party shall (or shall cause the applicable Representative to), at the expense of
the other Party, assist the other Party in taking such reasonable action.
(3)Following the termination of this Agreement, each Party shall (and
shall cause each of its Representatives to) promptly, following a request from
the other Party, return to the requesting Party all copies of any tangible items
(other than this Agreement), if any, which are or which contain Confidential
Information of the requesting Party; provided however that if the Party so
obligated to return Confidential Information or its Representatives have
prepared summaries or analyses containing or concerning any Confidential
Information, such Party may, instead of returning the summaries or analyses,
destroy them and provide a certificate to that effect to the requesting Party.
. Each of the Corporation, Xxxxx and Xxxxxxxxx agrees that such Party will not,
nor will it permit an affiliate of such Party to, engage directly or indirectly
in any on-line gaming activity during the term of this Agreement or for a period
of one year following its termination without the prior written consent of
PlayStar.
. Pursuant to the PlayStar License Agreement and the Cyberstation License
Agreement, Cyberstation International has granted to each of PlayStar Sub and
the Corporation an exclusive perpetual royalty-free license to exploit the
Licensed Property in the areas designated in their respective License
Agreements. PlayStar and the Corporation agree that it is in their mutual
interest to jointly develop the Licensed Property and enhancements thereto.
The Corporation and PlayStar agree to use their reasonable efforts to prepare
and agree upon a Budget for the development of enhancements to the Licensed
Property annually and to agree upon a fair and reasonable apportionment of costs
relating to such Budget.
. Each Shareholder and each successor transferee (at the time it becomes a party
to this Agreement) hereby represents and warrants to the other Shareholders and
to the Corporation that it:
(a) has capacity and authority to enter into this
Agreement and to perform its obligations hereunder;
(b) is not a party to, bound by or subject to any
indenture, mortgage, agreement, instrument, charter
or by-law provision, statute, regulation, order,
judgment, decree or law which would be violated,
contravened or breached by, or under which any
default would occur as a result of, the execution and
delivery by such Shareholder of this Agreement or the
performance by such Shareholder of any of the terms
of this Agreement;
(c) has duly authorized, executed and delivered this
Agreement and that this Agreement constitutes a
legal, valid and binding obligation of it enforceable
in accordance with its terms except as such
enforcement may be limited by applicable bankruptcy,
insolvency and other laws affecting the enforcement
of creditors' rights and subject to general equitable
principles;
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(d) owns beneficially and of record the Equity Securities
which are expressed to be owned by it in the recitals
to this Agreement;
(e) is neither party to nor bound by any agreement
regarding the ownership of its Equity Securities,
other than this Agreement or as contemplated hereby;
(f) is complying with its obligations under this
Agreement; and
(g) will ensure that each of the foregoing
representations and warranties will continue to be
true and correct for so long as the Shareholder holds
any Equity Securities.
. This Agreement, together with any Schedules attached to this Agreement and any
agreements and documents to be delivered pursuant to the terms of this
Agreement, constitutes the entire agreement between the Parties pertaining to
the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written. There are
no conditions, representations, warranties or other agreements between the
Parties in connection with the subject matter of this Agreement, whether oral or
written, express or implied, statutory or otherwise, except as specifically set
out in this Agreement.
. In the event of inconsistency between this Agreement and the Articles of
Incorporation or By-laws, this Agreement shall apply, and the Parties shall
immediately make all changes to the Articles of Incorporation and By-laws as are
necessary and lawful to render them consistent with this Agreement.
. No amendment of this Agreement will be effective unless made in writing and
signed by the Parties.
. A waiver of any default, breach or non-compliance under this Agreement is not
effective unless in writing and signed by the Party to be bound by the waiver.
No waiver shall be inferred from or implied by any failure to act or delay in
acting by a Party in respect of any default, breach, non-observance or by
anything done or omitted to be done by another Party. The waiver by a Party of
any default, breach or non-compliance under this Agreement shall not operate as
a waiver of that Party's rights under this Agreement in respect of any
continuing or subsequent default, breach or non-compliance (whether of the same
or any other nature).
. Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such prohibition or unenforceability and shall be severed from the balance of
this Agreement, all without affecting the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
. Time shall be of the essence of this Agreement in all respects.
(1)Any notice or other communication required or permitted to be given by
this Agreement shall be in writing and shall be effectively given and made if
(i) delivered personally; or (ii) sent by prepaid courier service; or (iii) sent
by registered mail; or (iv) sent prepaid by fax or other similar means of
electronic communication, in each case to the applicable address set out below:
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IF TO PLAYSTAR:
PlayStar Wyoming Holding Corp.
The Dollar Building
Nevis Street, Top Floor
St. John's, Antigua, WI
Attention: Xxxxxxx X.X. Xxxxxx
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
Blake, Xxxxxxx & Xxxxxxx
Box 00
Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: X. X. Xxxxx
Fax: (000) 000-0000
IF TO XXXXX OR XXXXXXXXX, ADDRESSED TO XXXXX AND/OR CONCEICAO,
AS THE CASE MAY BE:
c/o Cyberstation Computers & Support Inc.
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxx
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxx
1 First Canadian Place
000 Xxxx Xxxxxx Xxxx
P.O. Box 160, Suite 700
Toronto, Ontario
M5X 1C7
Attention: Xxx Xxxxxx
Fax: (000) 000-0000
-17-
IF TO CYBERSTATION:
Cyberstation Computers & Support Inc.
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxx
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxx
1 First Canadian Place
000 Xxxx Xxxxxx Xxxx
P.O. Box 160, Suite 700
Toronto, Ontario
M5X 1C7
Attention: Xxx Xxxxxx
Fax: (000) 000-0000
(2)Any notice or other communication so given shall be deemed to have been
given and received on the day of delivery if delivered, or on the day of faxing
or sending by other means of recorded electronic communication, provided that
such day is a Business Day and such notice or other communication is so
delivered, faxed or sent before 4:30 p.m. on such day. Otherwise, such notice or
communication shall be deemed to have been given and received on the next
following Business Day. Any notice or other communication sent by registered
mail shall be deemed to have been given and received on the fifth Business Day
following the mailing thereof; provided however that no such notice or other
communication shall be mailed during any actual or apprehended disruption of
postal services. Any such notice or other communication given in any other
manner shall be deemed to have been given and received only upon actual receipt.
(3)Any Party may from time to time change its address under this Section
10.7 by notice to the other Parties given in the manner provided by this
Section.
. Any tender of documents pursuant to this Agreement may be made upon the
Parties or their respective solicitors.
. Nothing in this Agreement shall be deemed in any way or for any purpose to
constitute any Party the partner of any other Party.
. This Agreement shall enure to the benefit of, and be binding on, the Parties
and their respective heirs, executors, administrators, successors and permitted
assigns. Except as otherwise provided herein, no Shareholder may assign or
transfer, whether absolutely, by way of security or otherwise, all or any part
of its rights or obligations under this Agreement without the prior written
consent of the other Shareholders. From and after such time as a Shareholder
ceases to hold any Equity Securities, such Shareholder shall cease to be
entitled to any further rights under the provisions of this Agreement but shall
not be relieved of any obligations under this Agreement which arose in respect
of such Equity Security holding up to and including such time.
. The Parties acknowledge and agree that all restrictions contained in this
Agreement are reasonable and valid and that all defences to the strict
enforcement thereof are hereby waived, and that the rights, privileges,
restrictions and conditions set forth in this Agreement are special and unique
such that a breach thereof cannot be adequately compensated through an award of
damages. Accordingly, any Party shall be entitled to temporary and permanent
-18-
injunctive relief and for an order for specific performance against every other
Party who is in breach of this Agreement without the necessity of having to
prove damages. Any remedy set forth in or contemplated by this Agreement shall
be in addition to and not in substitution for or dependent upon any other
remedy.
. The provisions of this Agreement relating to Shares shall apply MUTATIS
MUTANDIS to any securities into which the Shares or any of them may be converted
or changed, to any securities of the Corporation resulting from a
reclassification, subdivision or consolidation of any Shares, to any securities
of the Corporation which are received by the Shareholders as a dividend in kind,
and to any securities of the Corporation or of any successor body corporate
which may be received by the Shareholders on an amalgamation, reorganization,
merger or combination of the Corporation.
. This Agreement shall come into force and be effective as of and from the date
of this Agreement appearing on the first page hereof and will continue in full
force until the earlier of the date upon which this Agreement is terminated by
the written agreement of the Shareholders or the Corporation is dissolved
pursuant to the Act (provided that if the Corporation is dissolved and is
subsequently revived pursuant to the Act, the dissolution shall be deemed not to
have occurred for the purposes of this Section).
. This Agreement constitutes a written agreement among all of the shareholders
of the Corporation restricting the powers of the Directors to manage or
supervise the management of the business and affairs of the Corporation within
the meaning of the Act.
. All certificates evidencing Shares shall have the following legend endorsed
thereon:
"The Corporation and the securities evidenced by this
certificate are subject to, and the disposition and transfer
of such securities are restricted by, a unanimous shareholder
agreement, a copy of which may, at the request of any
shareholder of the Corporation, be examined at the principal
business office of the Corporation during normal business
hours."
. Each Party shall promptly do, execute, deliver or cause to be done, executed
and delivered all further acts, documents and things in connection with this
Agreement that another Party may reasonably require for the purposes of giving
effect to this Agreement.
. This Agreement shall be construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable in the Province of Ontario and
shall be treated in all respects as an Ontario contract. Each of the Parties
irrevocably attorns to the jurisdiction of the courts of the Province of
Ontario.
. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same instrument. Counterparts may be executed
either in original or faxed form and the Parties adopt any signatures received
by a receiving fax machine as original signatures of the Parties; provided,
however, that any Party providing its signature in such manner shall promptly
forward to the other Party an original of the signed copy of this Agreement
which was so faxed.
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IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
on the date first written above.
PLAYSTAR WYOMING HOLDING CORP.
By:
--------------------------------------
Xxxxxxx X.X. Xxxxxx, President
XXXXXX XXXXX
XXXXXX XX XXXXXXXXX
CYBERSTATION COMPUTERS & SUPPORT INC.
By:
--------------------------------------
Xxxxxx Xxxxx, President
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