SHAREHOLDERS AGREEMENT
between
CENTURY CASINOS AFRICA (PROPRIETARY) LIMITED
CALEDON OVERBERG INVESTMENTS (PROPRIETARY) LIMITED
OVERBERG EMPOWERMENT COMPANY LIMITED
THE OVERBERG COMMUNITY TRUST
and
CALEDON CASINO BID COMPANY (PROPRIETARY) LIMITED
TABLE OF CONTENTS
PART I - INTRODUCTORY 1
2 INTRODUCTION 7
3 SUSPENSIVE CONDITIONS 8
PART 11 - THE COMPANY 9
4 THE COMPANY 9
5 GENERAL COMPANY AFFAIRS 9
6 MEMORANDUM AND ARTICLES OF ASSOCIATION 10
7 OBJECT OF THE COMPANY 10
PART III - SHAREHOLDINGS 11
8 SHAREHOLDING 11
9 PRE-EMPTIVE RIGHTS 11
10 COME-ALONG 17
11 TAG ALONG 18
12 FORCED SALES 19
13 DILUTION 23
PART IV - CORPORATE GOVERNANCE 24
14 DIRECTORS OF THE COMPANY 24
15 MEETINGS OF SHAREHOLDERS 27
PART V - BUSINESS OF THE COMPANY 28
16 CONDUCT OF THE BUSINESS OF THE COMPANY 28
17 FUNDING REQUIREMENTS OF THE COMPANY 28
18 BASIS OF ACCOUNTING FOR THE CASINO BUSINESS 31
PART VI - GENERAL 31
19 CESSION 31
20 PERFORMANCE 31
21 ARBITRATION 31
22 DOMICILIUM AND NOTICES 34
23 GENERAL 36
24 GOVERNING LAW AND JURISDICTION 37
25 LEGAL COSTS 37
ANNEXURES
ANNEXURE A RIGHTS ATTACHING TO PREFERENCE SHARES
ANNEXURE B NO ANNEXURE APPLICABLE
ANNEXURE C AMOUNTS TO BE DISTRIBUTED TO PREFERENCE
SHAREHOLDERS
SHAREHOLDERS AGREEMENT
between
CENTURY CASINOS AFRICA (PROPRIETARY) LIMITED
CALEDON OVERBERG INVESTMENTS (PROPRIETARY) LIMITED
OVERBERG EMPOWERMENT COMPANY LIMITED
THE OVERBERG COMMUNITY TRUST
and
CALEDON CASINO BID COMPANY (PROPRIETARY) LIMITED
PART I - INTRODUCTORY
1 In this agreement, clause headings are for convenience and shall
not be used in its interpretation and, unless the context clearly
indicates a contrary intention, -
1.1 an expression which denotes -
1.1.1 any gender includes the other genders;
1.1.2 a natural person includes an artificial or juristic person
and vice versa;
1.1.3 the singular includes the plural and vice versa;
1.2 the following expressions shall bear the meanings assigned to them
below and cognate expressions bear corresponding meanings -
1.2.1 "Act" - the Companies Act, 61 of 1973, as
amended;
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1.2.2 "the/this agreement" - the agreement as set out herein, together
with all its annexures, as amended from time to time;
1.2.3 "auditors" - the auditors of the company as appointed by the
company at its annual general meeting from time to time;
1.2.4 "board" - the board of directors of the company from time to
time;
1.2.5 "business" - the business to be conducted by the company from
time to time, being all business activities relating to,
associated with or connected to or furthering the Caledon
Casino, Hotel & Spa Resort;
1.2.6 "business day" - any calendar day, other than a Saturday,
Sunday or official public holiday in the Republic of
South Africa;
1.2.7 "Century" - Century Casino Africa (Proprietary) Limited, a private
company with limited liability duly incorporated in the Republic of
South Africa with registration number [96/10501/07];
1.2.8 "CCI" - Century Casinos Incorporated, a company incorporated in
the Xxxxx xx Xxxxxxxx , Xxxxxx Xxxxxx xx Xxxxxxx;
1.2.9 "COIL" - Caledon Overberg Investments (Proprietary) Limited, a
private company with limited liability duly incorporated
in the Republic of South Africa with registration
number [96/06728/07];
1.2.10 "company" and/or "Bidco" - Caledon Casino Bid Company
(Proprietary) Limited, a private company with limited
liability duly incorporated in the Republic of South Africa
with registration number [96/010708/07] (to be renamed
Century Casinos Caledon (Proprietary) Limited or such
other name as the Registrar of Companies may approve);
1.2.11 "control" of a shareholder includes, without limiting the generality
of the term -
1.2.11.1 the beneficial ownership of the majority in number of the issued
equity shares (or other equity interest) in the shareholder; or
1.2.11.2 the beneficial ownership of issued equity shares (or other equity
interest) in the shareholder entitling the beneficial owner
thereof to exercise less than a majority of the votes attaching
to all the issued equity shares (or other equity interest) in
the shareholder, where such voting power is sufficiently
dominant relative to the spread of other shareholdings or other
equity interest holdings in the shareholder that it does
constitute de facto control of the shareholder; or
1.2.11.3 the right, through shareholding or otherwise, to control the
composition of the board of directors (or other
controlling body) of the shareholder and, without prejudice
to the generality of the foregoing, the composition of such
board (or other controlling body) shall be deemed to be so
controlled if the person or entity holding the right may by the
exercise of some power, directly or indirectly, appoint or
remove the majority of the directors (or members of such
other controlling body); or
1.2.11.4 the right to control the management of the shareholder; or
1.2.11.5 the ability to exercise a material influence over financial and/or
trading policies of the shareholder;
1.2.12 "dispose" - sell, transfer, exchange, dispose of or otherwise
alienate;
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1.2.13 "Empowerco" - Overberg Empowerment Company Limited, a public company
with limited liability duly incorporated in the Republic of
South Africa with registration number;97/00328/06
1.2.14 "Hospitality" - Xxxxxx Xxxx Hospitality (Proprietary) Limited, a
private company with limited liability duly incorporated in
the Republic of South Africa with registration
number [80/00096/07]
1.2.15 "hotel management agreement" - the written hotel management
agreement dated [3 December 1999] concluded between Hospitality and
the company;
1.2.16 "management" - the chairman and the managing director or chief
executive officer, as the case may be, of the company
and all senior managers reporting directly to them or
either of them;
1.2.17 "ordinary shares" - ordinary par value shares of Rl each in the
share capital of the company;
1.2.18 "ordinary shareholders" - Century and COIL;
1.2.19 "parties" - Century, COIL, Empowerco, the trust and the
company;
1.2.20 "preference shares" - preference par value shares of Rl each in
the share capital of the company, having the rights and
being subject to the terms and conditions set out in annexure
A hereto;
1.2.21 "preference shareholders" - Empowerco and the trust;
1.2.22 "prime rate" - the publicly quoted annual prime/base rate of
interest from time to time levied by the company's bankers
on the unsecured overdrawn current accounts of its most
favoured private sector corporate customers (which rate
shall be evidenced by a certificate issued under the
hand of any manager
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of that bank, whose appointment as such it shall not be necessary
to prove), compounded monthly in arrears;
1.2.23 "PSGIB" - PSG Investment Bank Limited, registration number
1998/817396/06, a public company with limited liability duly
incorporated in the Republic of South Africa;
1.2.24 "sale agreement" - the written sale of shares agreement to be
concluded between CCI, COIL and the company contemporaneously
with the conclusion of this agreement, pursuant to which CCI
will acquire from COIL ordinary shares constituting 15% of all the
issued ordinary shares in the issued share capital in the
company, which shares CCI will subsequently transfer to Century;
1.2.25 "shareholders" - the registered members of the company bound by
this agreement from time to time;
1.2.26 "shareholders claims" - all amounts of whatsoever nature and however
arising owing by the company to a shareholder;
1.2.27 "signing date" - the date upon which this agreement is signed by the
party signing last in time;
1.2.28 "suspensive conditions" - the suspensive conditions set out in 3.1;
1.2.29 "trust" - The Overberg Community Trust, masters reference number
[IT2086/98]
1.3 any reference to any statute,"regulation or other legislation shall be
a reference to that statute, regulation or other legislation as at
the signature date, and as amended or substituted from time to
time;
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1.4 if any provision in a definition is a substantive provision conferring
a right or imposing an obligation on any party then,
notwithstanding that it is only in a definition, effect shall be
given to that provision as if it were a substantive provision in
the body of this agreement;
1.5 where any term is defined within a particular clause other than
this 1, that term shall bear the meaning ascribed to it in that
clause wherever it is used in this agreement;
1.6 where any number of days is to be calculated from a particular day,
such number shall. be calculated as excluding such particular day
and commencing on the next day. If the last day of such number so
calculated falls on a day which is not a business day, the last
day shall be deemed to be the next succeeding day which is a
business day;
1.7 any term which refers to a South African legal concept or process
(for example, without limiting the foregoing, winding-up or
curatorship) shall be deemed to include a reference to the equivalent
or analogous concept or process in any other jurisdiction in which
this agreement may apply or to the laws of which a party may be
or become subject;
1.8 the use of the word "including" followed by a specific example/s
shall not be construed as limiting the meaning of the general wording
preceding it and the eiusdem generis rule shall not be applied
in the interpretation of such general wording or such specific
example/s. The terms of this agreement having been negotiated,
the contra proferentem rule shall not be applied in the
interpretation of this agreement.
2 - INTRODUCTION
2.1 It is recorded that -
2.1.1 Century and COIL are, between them, the holders of all the
issued ordinary shares in the share capital of the company;
and
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2.1.2 Empowerco and the trust are, between them, fhe holders of all
the issued preference shares in the share capital of the
company.
2.2 The parties accordingly wish to regulate -
2.2.1 the governance of the company;
2.2.2 the structure of the company;
2.2.3 the financing of the company;
2.2.4 the business activities of the company; and
2.2.5 the relationship of the shareholders inter se as shareholders in
the company.
3 SUSPENSIVE CONDITIONS
3.1 This agreement, in its entirety, is subject to the suspensive
conditions that -
the sale agreement is concluded and becomes fully binding and
unconditional on the parties thereto by virtue of the fulfillment
or waiver, as the case may be, of all suspensive conditions to
which it may be subject; and
3.2 Should the suspensive condition not be fulfilled or waived, as the
case may be, then this agreement shall be of no further
force or effect and -
3.2.1 to the extent that this agreement may have been partially
implemented the parties shall be restored to the status
quo ante; and
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3.2.2 no party shall have any claim against any other arising out of
or in connection with this agreement except as contemplated
in this clause 3.
3.3 The parties shall use their respective best endeavours to procure
the timeous fulfilment of the condition.
PART 11 - THE COMPANY
4 THE COMPANY
It is recorded that, as at the signing date, the company has -
4.1 an authorised share capital of R4 000, consisting of 4 000
ordinary shares of which 4 000 ordinary shares are issued, and a
further 200 preference shares of Rl.00 each which are in the
process of being issued; and
4.2 a financial year ending on the last day of December of each year.
5 GENERAL COMPANY AFFAIRS
5.1 The parties shall procure that, by no later than December 31, 2000 -
5.1.1 the company's name is changed to Century Casinos Caledon
(Proprietary) Limited or such other name as the registrar
of companies may approve; and
5.1.2 the company adopts new standard set articles of association, in
the place and stead of its existing articles of association
as soon as possible after the signing date
5.2 Until the company in general meeting determines
otherwise -
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5.2.1 save for the company's other commitments for the year 2000,
the auditors shall be Xxxxx Xxxxxxxx Xxxxxx Xxxxxxxxx,
auditors of Cape Town;
5.2.2 the company shall have its registered address at the auditor's
main office in Cape Town; and
5.2.3 the secretary and public officer of the company shall be
J Forbes.
6 MEMORANDUM AND ARTICLES OF ASSOCIATION
6.1 the extent that the provisions of the memorandum and articles
of association of the company may conflict with or fail to record the
provisions of this agreement -
6.1.1 any shareholder may require the memorandum and/or articles
of association of the company to be amended accordingly;
and
6.1.2 the shareholders shall vote in favour of all resolutions of
the company necessary to amend the memorandum and/or articles of
association of the company in terms of 6.1.1.
6.2 Without detracting from the provisions of 6.1, to the extent that
the provisions of this agreement may conflict with the provisions
of the company's memorandum and/or articles of association or any
prior agreement between the shareholders regarding the subject
matter of this agreement, the provisions of this agreement shall take
precedence and shall be given effect to accordingly by the parties
to the extent that it is legally possible.
7 OBJECT OF THE COMPANY
7.1 The object of the company shall be to conduct the business on
sound commercial terms.
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PART III - SHAREHOLDINGS
8 SHAREHOLDING
8.1 After implementation of the transactions set out in the sale
agreement, the issued shares in the share capital of the company
will beneficially be owned in the following proportions by
the shareholders -
8.1.1 Century - 65% of the ordinary shares;
8.1.2 COIL - 35% of the ordinary shares;
8.1.3 Empowerco - 50% of the preference shares; and
8.1.4 the trust - 50% of the preference shares.
8.2 All ordinary shares shall rank pari passu in all respects.
8.3 All preference shares shall -
8.3.1 rank pari passu in all respects; and
8.3.2 have the rights, privileges and conditions set out in the
company's articles of association, which rights, privileges
and/or conditions may not be amended without the prior
approval of the ordinary shareholders in general meeting.
8.4 It is recorded that, as at signature date, the value of the
preference shares is their par value, being an aggregate
amount of [R200].
8.5 All parties to this Shareholder Agreement agree and approve
that CCI has the right to, transfer the shares acquired
by it pursuant to the sale agreement to Century.
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9 PRE-EMPTIVE RIGHTS
9.1 The ordinary shareholders shall not -
9.1.1 dispose of any of its ordinary shares in or claims against the company
unless it (referred to in this clause as "the seller) first offers to
sell such ordinary shares and an equivalent proportion of its claims
against the company ("claims") to the other ordinary shareholder
(referred to in this clause as "the offeree") save for a
disposition to a company, trust or other entity that currently
controls or is controlled by the seller.
9.1.2 save for the pledge and cession in favour of PSGIB in effect as at the
signing date, be entitled to cede, pledge or otherwise encumber any
shares in or claims against the company held by it from time
to time without the prior written consent of the other ordinary
shareholder.
9.2 No preference shareholder shall -
9.2.1 dispose of any of its preference shares in or claims against the
company unless such shareholder (referred to in this clause as
("the seller") first offers to sell such preference shares and an
equivalent proportion of its claims against the company ("claims")
to the other preference shareholder (referred to in this clause
as "the offeree");
9.2.2 be entitled to cede, pledge or otherwise encumber any shares in or
claims against the company held by it from time to time without
the prior written consent of the other shareholders.
9.3 The seller's offers in terms of 9.1 or 9.2, as the case may be -
9.3.1 shall be in writing and delivered to the offeree;
9.3.2 shall be irrevocable and shall remain open for acceptance by the
offeree for a period of thirty days after receipt;
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9.3.3 shall specify the claims and the number of shares which the seller is
offering to sell;
9.3.4 shall be accompanied, where applicable, by -
9.3.4.1 a written memorandum of the consideration as well as all of the
other terms and conditions that have been offered to the
seller orally; or
9.3.4.2 a true and complete copy of any written offer made to the seller
(which sets out the consideration and all other terms and
conditions of such offer),
by any bona fide third party in respect of the shares in and the
claims against the company which the seller wishes to accept,
and which in either case must contain the name of the bona fide
third party, and in the case where the bona fide third party is
an agent, the name of his ultimate principal;
9.3.5 if there is a bona fide offer from a third party, be deemed to be for
the consideration and subject to, mutatis mutandis, the terms and
conditions set out in the memorandum or written offer referred
to in 9.3.4;
9.3.6 subject to 9.2.1, shall, if there is no offer from a bona fide third
party, state that fact as well as the consideration and full
terms and conditions upon which the seller wishes to sell its shares
in and claims against the company;
9.3.7 shall be subject to the conditions that -
9.3.7.1 the seller's offer may be accepted by the offeree only on the basis
that all of the shares and claims offered are to be purchased as one
indivisible transaction;
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9.3.7.2 unless the offer referred to in 9.3.4 or the seller's offer referred
to in 9.3.6 provides to the contrary -
9.3.7.2.1 a written cession of the claims offered and accepted and delivery
of the share certificates in respect of all the shares
offered and accepted together with transfer forms in respect
of all such shares duly completed in accordance with the
articles of association of the company shall be made to the
purchaser within seven days after acceptance of the
seller's offer;
9.3.7.2.2 the consideration referred to in 9.3.5 or 9.3.6, as the case may
be, shall be payable against delivery as set out in
9.3.7.2.1;
9.3.8 shall not be subject to any other terms or conditions.
9.4 Should the offeree referred to in 9.2.1 not accept the seller's offer in
terms of 9.2 in respect of all the preference shares and claims so
offered, the seller shall offer such preference shares and
claims to the ordinary shareholders in the proportion in which they
hold ordinary shares in the issued ordinary share capital of the
company at the time mutatis mutandis on the basis set out in 9.3 save
that, any of the ordinary shareholders may accept an offer
made in terms of the preference shares and claims in respect of
a greater proportion of the preference shares and an equivalent
proportion of the seller's claims offered than his pro rata share
thereof, provided that such acceptance will only be effective in
respect of the excess -
9.4.1 if and to the extent that the other ordinary shareholder accepts the
offer in respect of a smaller proportion of the preference shares
and claims than its respective pro rata entitlement; and
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9.4.2 acceptance by both the ordinary shareholders together constitute
acceptance for all the preference shares and claims offered,
provided further that if acceptances in terms of this clause together
constitute acceptances for more than the preference shares and
claims offered, then the preference shares and claims offered shall be
apportioned amongst the accepting ordinary shareholders in the
proportions as near as may be to their existing ordinary shareholding
in the company on the date of the seller's offer, but on the basis
that no ordinary shareholder shall be obliged to purchase more
preference shares and claims than the proportion of the preference
shares and claims accepted by him;
9.5 Should -
9.5.1 after such offer to the ordinary shareholders in terms of 9.4, the
ordinary shareholders not accept such offer in respect of all the
preference shares and claims so offered; or
9.5.2 the offeree referred to in 9.1.1 not accept the seller's offer in
terms of 9.1 in respect of all the ordinary shares and claims
so offered,
the seller shall be entitled, subject to the remainder of the provisions
of this clause 9, for a period of thirty days after the expiry of
the time for last acceptance by the ordinary shareholders referred to
in 9.4 or the offeree, as the case may be, to dispose of all the
shares and claims included in the seller's offer to the bona fide
third party whose offer was disclosed in the seller's offer referred to
in 9.3 or, if the seller's said offer disclosed that there was no
bona fide third party offeror in respect of the shares and the
claims, then to any third party, provided that in either
instance -
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9.5.3 shares and the claims are transferred to the third party only at a
price and on terms and conditions not more favourable to the
purchaser than the price, terms and conditions set out in the
seller's offer referred to in 9.3;
9.5.4 the third party offers to the shareholders in writing to be bound by
the provisions of this agreement and any other existing shareholders'
agreement relating to the company; and
9.5.5 the third party agrees to purchase all the shares and claims which
were offered by the seller in terms of 9.1,
and provided further that in the case of a sale to a third party
whose identity had not yet been disclosed to the offeree and/or the
remaining shareholders, the seller shall disclose the name of the
proposed third party to the offeree if requested by the offeree
within seven days after the commencement of the thirty day period
referred to in this 9.5 and should the offeree within seven days
after the identity of the third party was disclosed, require the
seller by written request delivered to the seller to do so, the seller
shall be obliged to offer the shares to the offeree again in terms of
9.1, 9.2, 9.3 and 9.4 provided that should the offeree not accept
the seller's offer in respect of all shares and claims offered, the
seller shall be entitled to sell the shares to the third
party subject to the provision set out in this 9.4.
9.6 If all the shares and claims offered for sale by the seller are not sold
to the third party within the thirty days referred to in 9.4,
then the provisions of 9.1, 9.2, 9.3, 9.4 and this clause 9.6 shall
again apply to the seller's shares and claims.
9.7 If the seller's offer in terms of 9.1 and 9.2 is accepted in accordance
with the provisions of this clause, the seller hereby irrevocably
authorises the offeree to sign any share transfer form on the sellers
behalf for purposes of effecting due transfer to the offeree of the
shares sold against payment of the purchase price.
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9.8 Unless otherwise specified in the seller's offer, payment for shares and
claims acquired in terms of this clause 9 shall be effected against
delivery of a written cession of the claims and transfer of the
shares so acquired.
10 COME-ALONG
10.1 Notwithstanding any provision to the contrary contained in this
agreement, Century ("the disposer') may at any time give written
notice to the other ordinary shareholder ("the recipient") to the
effect that -
10.1.1 the disposer has received a written offer from a third party offering
to purchase ordinary shares constituting the entire issued
ordinary share capital of, and all of the shareholders' claims
of ordinary shareholders against, the company on such terms as
may be specified in such notice; and
10.1.2 the disposer's entire ordinary shareholding in the company and the
disposer's shareholders' claims against the company are available
for purchase by the recipient upon the terms so specified,
mutatis mutandis in accordance with the applicable provisions of 9.
10.2 Should the recipient not purchase all of the ordinary shares and all of
the shareholders' claims of the disposer in terms of 10.1.2 after
receipt of the disposer's written notice contemplated in 1 0. 1, the
disposer shall be entitled to sell all the ordinary shares and all the
shareholders' claims of the ordinary shareholders in and against the
company by way of written agreement entered into within sixty days
after the expiry of the time for acceptance of the disposer's
offer in terms of 10. l-, provided that -
10.2.1 the sale of shares ranking pari passu with each other shall be on the
same basis irrespective of holders; and
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10.2.2 such sale is to the third party offeror notified in the
disposer's notice referred to in 10.1 and upon the terms and
conditions not less favourable to the disposer and the
recipient than were notified in such notice.
11 TAG ALONG
11.1 Should Century ("the disposer") at any time receive a written offer
from a bona fide third party (save for a disposition to a company,
trust or other entity that currently controls or is controlled by the
seller) offering to purchase so many of the disposer's ordinary
shares as would constitute directly or indirectly a change in
control in the company which the disposer intends to accept, the
disposer shall be obliged to given written notice to the other
ordinary shareholder ("the recipient") to the effect that the
disposer has received such an offer which the disposer intends to
accept for cash and upon such further terms as may be specified
in such notice.
11.2 The disposer shall be obliged, if so notified in writing by the
recipient within fifteen days of receipt of the written notice
referred to in 11. 1, to attempt sell ordinary shares
constituting the entire ordinary shareholding of the disposer and
the recipient in the company and all shareholders' claims of
the disposer and the recipient against the company by way of a
written agreement to such third party, provided that -
11.2.1 the sale of ordinary shares ranking pari passu with each other shall
be on the same basis irrespective of holder; and
11.2.2 such sale is to the third party offeror identified in the disposer's
notice referred to in 11. 1 and upon terms and conditions not less
favourable to the disposer and the recipient than were
notified in such notice.
11.3 In the event of the entire issued ordinary share capital of
the company being sold in terms of this clause 11, the
purchaser of the shares and
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claims shall pay over the recipient's share of the purchase price to
it within ten business days of receipt of the purchase consideration
from the third party.
12 FORCED SALES
12.1 Should -
12.1.1 the entity or person controlling any shareholder as at the signing
date for any reason whatsoever loose such control or cease to
control that shareholder without the prior written approval of
all the other shareholders (save for loosing control to another
entity which is in fact controlled by that shareholder); or
12.1.2 any shareholder -
12.1.2.1 become subject to any provisional or final order for its
liquidation, winding-up or judicial management or for any
similar process to occur in respect of that shareholder; or
12.1.2.2 voluntarily, whether by way of members' resolution or otherwise,
place itself in liquidation; or
12.1.2.3 adopt any resolution, whether in general meeting or otherwise,
relating to its liquidation or winding-up; or
12.1.2.4 which is a trust, suffers any change in any of its trustees or
beneficiaries (whether beneficiaries in respect of income or
capital or both); or
12.1.2.5 and/or the entity or person controlling such shareholder, for any
reason whatsoever, lose or forfeit the approval of any
appropriate gaming authority required in relation to its
involvement in the company,
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then the shareholder referred to in 12.1.1 or 12.1.2, as the
case may be, ("offeror") shall be deemed to have offered to
sell all the shares and the shareholder's claims held by it to the
other shareholders of the company (on the basis that ordinary
shares shall be offered only to the other ordinary
shareholder and preference shares shall firstly be offered
to the other preference shareholder and thereafter to the ordinary
shareholders in proportion in which they hold ordinary shares in
the issued share capital of the company mutatis mutandis as
envisaged in 9.4) at a price equal to the fair market value
thereof, with effect from the day on which the event referred to
in 12.1.1 has taken place or the day prior to the day on which the
event referred to in 12.1.2 has taken place, as the case may be.
12.2 A deemed offer in terms of 12.1 -
12.2.1 shall be irrevocable and shall remain open for acceptance for a
period of forty five days from the date on which the relevant
offeree became aware of the deemed offer;
12.2.2 shall be subject to the conditions that -
12.2.2.1 the relevant transfer must be approved by all appropriate gaming
authorities;
12.2.2.2 a written cession of the claims offered and accepted and delivery
of the share certificates in respect of all the shares offered
and accepted together with transfer forms in respect of all
such shares duly completed in accordance with the articles of
association of the company shall be made to the offeree within
seven days after acceptance of the offer;
12.2.2.3 the consideration shall be payable against delivery of the shares
and claims as set out in 12.2.2.2;
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12.2.2.4 the offer may be accepted only on the basis that all of the
offeror's shares in and all of the offeror's claims against the
company are to be purchased as one indivisible transaction; and
12.2.3 shall not be subject to any other terms or conditions.
12.3 If any offeree acquires any shares in and claims against the company
from the offeror in terms of this clause 12, the offeree shall use
its best endeavours to procure the release of the offeror from all its
obligations which the offeror may have in terms of or arising out
of or in connection with any suretyship, guarantee, indemnity or
other act of intercession given, made or entered into by the
offeror on behalf of the company ("guarantees").
12.4 For purposes of this clause 12 -
12.4.1 "fair market value" means -
12.4.1.1 a price per share determined by a firm of independent auditors
(acting as experts and not as arbitrators) agreed upon by
the ordinary shareholders within fourteen days after the
date of acceptance in terms of 12.2.1, whose decision shall be
final and binding;
12.4.1.2 a price for the shareholder's claims equal to the book value
thereof;
12.4.2 should the ordinary shareholders fail to agree upon an independent
firm of auditors within fourteen days after the date of acceptance
in terms of 12.2.1, then such independent firm of auditors
shall be appointed by the chairman for the time being of the
South African Institute of Chartered Accountants;
20
12.4.3 the independent firm of auditors shall, in determining the fair
market value -
12.4.3.1 be obliged to call upon the shareholders to furnish it with
their respective written suggestions as to what the proper
method should be in valuing the shares, which written
suggestions must be delivered to the independent firm of
auditors within seven days after it has requested such
suggestions, whereafter the independent firm of auditors
shall decide upon the method to be applied;
12.4.3.2 have reference to the value of the shares in the open
market on a going concern basis as between a willing
purchaser and a willing seller;
12.4.4 all shareholders shall forthwith be informed of a valuation
of the shares in and shareholder's claims against the company
valued by the independent firm of auditors, who shall be obliged
to specify in writing to the shareholders the basis of the valuation
and the reasons therefor.
13 DILUTION
13.1 Subject to 17.2 and 17.3, the percentage of the total of the
shareholders' loans to the company held by any ordinary shareholder
shall at all times be equal to the percentage of the total
issued ordinary shares of the company held by that shareholder.
13.2 Accordingly, should any ordinary shareholder ("defaulting party")at
any time fail to contribute any capital or loans which it was
obliged to contribute to the company as specified in this agreement
or as otherwise agreed in writing, and remain in default for more
than fifteen days after receipt of a written notice from any of the
other ordinary shareholders or from the company calling upon the
defaulting party to remedy that
21
default, the ordinary shareholding in the company shall be adjusted
as set out in this clause 13.
13.3 Any ordinary shareholder wishing to have the ordinary shareholding
in the company adjusted as contemplated in 13.2 or the company, as
the case may be, shall give written notice to the defaulting party
that it requires the ordinary shareholding to be adjusted.
13.4 Within ten days after the date on which the notice was given in
terms of 13.3, the company shall issue to all ordinary
shareholders other than the defaulting party, at an issue price
based on the fair market value of the company at such time
(determined in the event of a dispute, mutatis mutandis, in
accordance with 12.4) minus 10%, such number of ordinary shares in
the company as will have the effect of adjusting the ordinary
shareholding of the ordinary shareholders in the company to
accord with the principles described in 13.1.
13.5 The ordinary shareholders shall vote in favour of all resolutions
of the company and shall execute all such documents as may be
required to bring about the implementation of 13.4, including, but
not limited to, the creation of new share capital by the company
to enable it to issue such further ordinary shares to the
non-defaulting ordinary shareholders.
13.6 Notwithstanding anything contained herein once the valuation of
the shares contemplated in this clause is complete, the defaulting
party shall have the right within 3 days of such completion to
elect rather to contribute the required capital or loan than be
diluted in terms of this clause.
PART IV - CORPORATE GOVERNANCE
14 DIRECTORS OF THE COMPANY
14.1 Until the ordinary shareholders otherwise resolve, the company
shall have a maximum of ten directors of which -
22
14.1.1 Century shall be entitled to appoint six;
14.1.2 COIL shall be entitled to appoint two;
14.1.3 Empowerco shall be entitled to appoint one; and
14.1.4 the trust shall be entitled to appoint one.
14.2 Any shareholder shall be entitled, on notice to the company, to
remove any director appointed by it and to appoint another
director in his stead.
14.3 Each director shall be entitled, on notice to the secretary to
the company and subject to the company obtaining all appropriate
gaming authority approvals in this regard, to appoint an
alternate director to act during his absence and in his stead.
14.4 Chairman and Vice Chairman of the board -
14.4.1 The chairman of the board shall be appointed by Century; and
14.4.2 shall have a second or casting vote.
14.4.3 A vice chairman of the board shall be appointed by COIL.
14.5 quorum for any directors' meeting of the company shall be all directors
appointed by Century and all directors appointed by COIL, or their
alternates, personally present.
14.6 Should a quorum not be present within thirty minutes after the time
appointed for the' commencement of any meeting of the directors of the
company, that meeting shall stand adjourned to the following day,
at the same time and place, or such other day, time or place as
the chairman of the meeting shall appoint. The adjourned meeting
may only deal with matters which were on the agenda of the meeting
which was adjourned.
23
14.7 Where a meeting has been adjourned as aforesaid, the company shall be
obliged to inform the directors who are not present at the adjourned
meeting of the time, date and place to which the meeting has been
adjourned by giving written notice of such adjourned meeting to
the directors in question.
14.8 If at any adjourned meeting the directors appointed by Century, or
their alternates, are present and the directors appointed by COIL,
or their alternates, are not, the directors present shall be a
quorum. If at any adjourned meeting the directors appointed by
Century, or their alternates, are not present, the meeting shall
again stand adjourned to the following day, at the same time and place,
or such other day, time or place as the chairman of the meeting shall
appoint. The adjourned meeting may only deal with matters which
were on the agenda of the meeting which was adjourned.
14.9 The directors present at the third adjournment of any meeting of the
board shall be a quorum.
14.10 The board shall also meet at the written request of the majority in
number of the directors, which request shall be delivered to the
company.
14.11 Each of the shareholders shall procure that each director and each
alternate director appointed by such shareholder shall upon his
appointment furnish the company in writing with a postal address
and facsimile number at which notice of meetings shall be given
to him.
14.12 The company shall give notice to all its directors and alternate
directors of all directors' meeting of the company at the address
provided for in 14.11.
24
14.13 Seven clear days' notice shall be given of all meetings of the
directors of the company unless the majority of the directors agree on
a shorter period of notice.
14.14 Each of the directors or his alternate, present at a meeting -
14.14.1 appointed by Century shall have six votes divided by the number of
directors present at the meeting appointed by Century;
14.14.2 appointed by each of COIL, Empowerco and the trust shall have one
vote each.
14.15 Without limiting the discretion of the directors to regulate their
meetings, the directors may confer by telephone, close circuit
television or other electronic means or audio or audiovisual
communication and a resolution passed at such a conference shall,
notwithstanding that the directors are not present together in one
place at the time of the conference, be deemed to have been passed at
a meeting of the directors duly called and constituted on the day
on which and at the time at which the conference was so held, it
being agreed that the provisions of this agreement relating to
meetings of directors shall apply mutatis mutandis to such
conferences.
14.16 Resolutions signed in writing by a majority of the directors (after
having been circulated to all the directors at the addresses
referred to in 14.11) shall be as valid and effectual as if passed
at a meeting of directors. The resolution may consist of several
documents each signed by one or more director (or their alternates).
14.17 Should a deadlock arise at any meeting of the directors of the
company, the matter in connection with which the deadlock
arose shall immediately be referred for determination to an ordinary
shareholders' meeting of the company which shall be convened
immediately and the resolution of the ordinary shareholders of the
company regarding the matter so referred
25
shall be the decision of the company regarding that matter.
A quorum for such a meeting shall include all the ordinary
shareholders.
15 MEETINGS OF SHAREHOLDERS
15.1 A quorum for a general meeting of the company shall be the minimum
number required by the Act, save that there shall be no quorum
unless CCI or Century (for so long as they are shareholders in the
company) and COIL (for so long as it is a shareholder in the
company) are represented in person or by proxy at such meeting.
15.2 Should a quorum not be present within thirty minutes after the
appointed time for a general meeting, the general meeting, if convened
by or on a requisition of members, shall be dissolved and in any other
case shall stand adjourned to the same day (of if that day is a
Saturday, Sunday or public holiday the next business day), two weeks
later at the same time and place and a quorum at the resumption of
the general meeting shall be the minimum number required by the Act,
save that there shall be no quorum unless CCI or Century
(for so long as it is a shareholder in the company) is represented in
person or by proxy at such meeting.
15.3 Subject to the provisions of the Act, all decisions taken at a meeting
of shareholders shall be taken by majority vote.
PART V - BUSINESS OF THE COMPANY
16 CONDUCT OF THE BUSINESS OF THE COMPANY
16.1 It is recorded that the company has, prior to the signing date,
concluded
16.1.1 a written casino management agreement with Century; and
16.1.2 a written hotel management agreement with Hospitality,
26
and that such management agreements shall remain in full force
and effect according to their tenor. No changes, cancellations,
other amendments, suspension or any other decision affecting these
agreements shall be made save for under the breach clauses without
the joint consent of Century and COIL. It is the understanding of
Century and COIL that the hotel management agreement includes all
hotel and accommodation on the resort as well as food & beverage
activities within the accommodation, or hotel and casino and this
cannot be managed by any third party.
16.2 The day to day affairs of the company not managed in terms of the
management agreements referred to in 16.1 shall be controlled by
the board.
17 FUNDING REQUIREMENTS OF THE COMPANY
17.1 It is recorded that, as at the signing date and taking into account
this transaction and excluding any sundry loan accounts or interest
paid or due and payable on any loan accounts
17.1.1 Century has made working capital loan funding available to the
company in the form of a shareholders' loan in an amount of
R19 500 000 and
17.1.2 COIL has made working capital loan funding available to the company
in the form of a shareholders' loan in an amount of
R10 500 000
17.2 All additional funding required by the company in respect of its
activities or for purposes of developing its business or funding
any other working capital requirement, as determined by the board
from time to time, shall be provided, unless the board determines
otherwise, by way of own funding contributed by the ordinary
shareholders, whether in the form of loans by the ordinary shareholders
to the company in the proportion of their ordinary shareholding
in the company or by way of further ordinary
27
share capital subscribed for by the ordinary shareholders. It is
recorded that it is not Century's intention to require additional
funding to be contributed primarily in order to dilute COIL.
17.3 Should the company be financed by loans from the ordinary
shareholders referred to in 17.2, such loans shall -
17.3.1 be made by the ordinary shareholders simultaneously (in proportion
to their respective ordinary shareholding in the company
at the time);
17.3.2 be unsecured;
17.3.3 shall bear interest at such rate and calculated and payable at such
intervals as may from time to time be determined by the board
provided that the rate of interest payable to one ordinary
shareholder shall at all times be the same as the rate of
interest payable to the other ordinary shareholder;
17.3.4 only be repayable when the board so resolves and then only on the
basis that the ordinary shareholders are repaid
simultaneously and proportionally; and
17.3.5 be repaid on the granting of an order (whether provisional or final)
of liquidation or judicial management of the company.
17.4 Notwithstanding anything to the contrary contained in this agreement,
no suretyship, financial guarantee or indemnity shall be required to
be given by any shareholder of the company without the
shareholder's prior written agreement.
17.5 If any suretyship, financial guarantee or indemnity is given by a
shareholder on behalf of the company for the purposes of any
obligation of the company, then the shareholders shall endeavour to
procure that such suretyship, financial guarantee or indemnity
be given by the
28
shareholders severally in proportion to their shareholding in the
company.
17.6 In the event of any shareholder nevertheless giving a suretyship,
financial guarantee or indemnity to anybody jointly and severally
with the consent of the other shareholders in accordance with the
provisions of this clause 17, the shareholders shall be liable under
any such suretyship, financial guarantee or indemnity as between each
other in proportion to their shareholding in the company at the
time of giving the suretyship, financial guarantee or indemnity,
irrespective of the terms of that suretyship, financial guarantee or
indemnity.
18 BASIS OF ACCOUNTING FOR THE CASINO BUSINESS
The basis of accounting for the casino business for the sole
purpose of determining the profits available for distribution to
the preference shareholders and the amount to be distributed to the
preference shareholders are set out in annexure C hereto, which
annexure shall not be exhaustive.
PART VI - GENERAL
19 CESSION
No party to this agreement shall cede, assign, transfer, encumber or
delegate any of their rights in terms of this agreement without the
consent of the other parties.
20 PERFORMANCE
The parties shall do all acts and sign all such documents as may be
required from time to time in order to implement and carry out the
terms and conditions of this agreement.
21 ARBITRATION
29
21.1 Should any dispute arise between the parties in connection with -
21.1.1 the formation or existence of;
21.1.2 the implementation of;
21.1.3 the interpretation or application of the provisions of;
21.1.4 the parties' respective rights and obligations in terms of or arising
out of, or the breach or termination of;
21.1.5 the validity, enforceability, rectification, termination or
cancellation, whether in whole or in part of;
21.1.6 any documents furnished by the parties pursuant to the provisions of,
this agreement or which relates in any way to any matter affecting
the interests of the parties in terms of this agreement, that
dispute shall, unless resolved amongst the parties to the dispute,
be referred to and be determined by arbitration in terms of
this clause.
21.2 Any party to this agreement may demand that a dispute be determined in
terms of this clause by written notice given to the other
parties.
21.3 This clause shall not preclude any party from obtaining interim relief
on an urgent basis from a court of competent jurisdiction pending the
decision of the arbitrator.
21.4 The arbitration shall be held -
21.4.1 at Cape Town or such other place as the parties to the dispute may
agree upon in writing;
21.4.2 with only the legal and other representatives of the parties to the
dispute present thereat;
30
21.4.3 mutatis mutandis in accordance with the provisions of the Supreme
Court Act, No. 59 of 1959, the rules made in terms of that act and
the practice of the division of the High Court referred to
in 21.9;
21.4.4 otherwise in terms of the Arbitration Act, No. 42 of 1965,
it being the intention that the arbitration shall be held and
completed as soon as possible.
21.5 The arbitrator shall be, if the matter in dispute is principally -
21.5.1 a legal matter, a practising advocate or attorney of Cape Town of at
least fifteen years' standing;
21.5.2 an accounting matter, a practising chartered accountant of Cape Town
of at least fifteen years' standing;
21.5.3 any other matter, any independent person,
agreed upon between the parties to the dispute.
21.6 Should the parties to the dispute fail to agree whether the dispute is
principally a legal, accounting or other matter within seven days
after the arbitration was demanded, the matter shall be deemed to
be a legal matter.
21.7 Should the parties fail to agree on an arbitrator within fourteen days
after the giving of notice in terms of 21.2, the arbitrator shall be
appointed at the request of either party to the dispute by the
President for the time being of the Law Society of the Cape of Good
Hope according to the provisions of 21.5.
31
21.8 The decision of the arbitrator shall be final and binding on the
parties to the dispute and may be made an order of the court referred
to in 21.9 at the instance of any of the parties to the dispute.
21.9 The parties hereby consent to the jurisdiction of the High Court of
South Africa (Cape Provincial Division) in respect of the proceedings
referred to in 21.4.
21.10 The parties agree to keep the arbitration including the subject-matter
of the arbitration and the evidence heard during the arbitration
confidential and not to disclose it to anyone except for purposes of
an order to be made in terms of 21.8.
21.11 The provisions of this clause -
21.11.1 constitute an irrevocable consent by the parties to any proceedings
in terms hereof and no party shall be entitled to withdraw there
from or claim at any such proceedings that it is not bound
by such provisions;
21.11.2 are severable from the rest of this agreement and shall remain in
effect despite the termination of or invalidity for any
reason of this agreement.
22 DOMICILIUM AND NOTICES
22.1 The parties choose domicilium citandi et executandi ("domicilium") for
all purposes relating to this agreement, including the giving of any
notice, the payment of any sum, the serving of any process,
as follows -
22.1.1 Century and physical 0 xxxxxx xxxxxx
the company Caledon 7230
facsimile 0282122773
32
22.1.2 COIL physical - 00 Xxxxx Xxxxxx
Xxxxxxx
Xxxx Xxxx
facsimile - 021 423 4407
22.1.3 Empowerco physical -
facsimile - 0
22.1.4 the Trust physical -
facsimile -
22.2 Any party shall be entitled from time to time, by giving written notice
to the others, to vary its physical domicilium to any other
physical address (not being a post office box or poste restante)
within the Republic of South Africa and to vary its facsimile
domicilium to any other facsimile number.
22.3 Any notice given or payment made by any party to another ("addressee")
which is delivered by hand between the hours of 09:00 and 17:00 on any
business day to the addressee's physical domicilium for the time being
shall be deemed to have been received by the addressee at the
time of delivery.
22.4 Any notice given by any party to another which is successfully
transmitted by facsimile to the addressee's facsimile domicilium for
the time being shall be deemed (unless the contrary is proved by the
addressee) to have been received by the addressee on the day
immediately-succeeding the date of successful transmission thereof.
22.5 This 22 shall not operate so as to invalidate the giving or receipt of
any written notice which is actually received by the addressee other
than by a method referred to in this 22.
33
22.6 Any notice in terms of or in connection with this agreement shall be
valid and effective only if in writing and if received or deemed to
be received by the addressee.
23 GENERAL
23.1 This agreement novates and replaces all written shareholder agreements
concluded between the company, COIL, Century, Century Casinos
Inc., Caledon Hotel Spa and Casino Resort (Proprietary) Limited,
Xxxxxx Xxxx Hospitality (Proprietary) Limited, Xxxxxxxxxx Country
Hotel and Spa (Proprietary) Limited and the Senator Trust.
23.2 This agreement constitutes the sole record of the agreement between the
parties in relation to the subject matter hereof. Neither party shall
be bound by any express, tacit or implied term, representation,
warranty, promise or the like not recorded herein. This agreement
supersedes and replaces all prior commitments, undertakings or
representations, whether oral or written, between the parties in
respect of the subject matter hereof.
23.3 No addition to, variation, novation or agreed cancellation of any
provision of this agreement shall be binding upon the parties unless
reduced to writing and signed by or on behalf of the parties.
23.4 No indulgence or extension of time which either party may grant to the
other shall constitute a waiver of or, whether by estoppel or
otherwise, limit any of the existing or future rights of the grantor
in terms hereof, save in the event and to the extent that the grantor
has signed a written document expressly waiving or limiting such
right.
23.5 Without prejudice to any other provision of this agreement, any
successor-in-title, including any executor, heir, liquidator, judicial
manager, curator or trustee, of either party shall be bound
by this agreement.
34
23.6 The signature by either party of a counterpart of this agreement shall
be as effective as if that party had signed the same document as
the other party.
24 DIVIDEND POLICY
The ordinary shareholders shall procure that in respect of each
financial year the company declares and pays a dividend equal to not
less than 1/3 of the after tax profits of the company.
Notwithstanding the above no such dividend shall be declared to the
extent that any such declaration or payment will;
24.1 cause the company to borrow money to effect such payment;
24.2 prevent the company from paying any of its debts as they may become due
and
payable in the ordinary course of business as well ensuring
that it has sufficient funds for capital expenditure
requirements and any developmental plans;
24.3 will be declared to the extent that the auditors of the company
certify that such dividend and payment is contrary to sound
business practice having regard to the financial position of
the company.
25.1 GOVERNING LAW AND JURISDICTION
25.1 This agreement shall in all respects (including its existence,
validity, interpretation, implementation, termination and
enforcement) be governed by the law of the Republic of South
Africa which is applicable to agreements executed and wholly
performed within the Republic of South Africa.
25.2 The parties hereby consent and submit to the' jurisdiction of the Cape
Provincial Division of the High Court of the Republic of South Africa
in respect of any dispute or claim arising out of or in connection
with this agreement.
35
26 LEGAL COSTS
Each party shall bear and pay its own legal and other costs in
respect of drafting, preparing and implementing this agreement.
Signed at Caledon on 4th November 2000
for Century Casinos Africa (Pty) Ltd.
/s/Xxxxx Xxxxxxxxxx
who warrants that he is duly
authorised hereto
Signed at on 2000
for Caledon Overberg Investments
(Proprietary) Limited
who warrants that he is duly
authorised hereto
Signed at on 2000
for Overberg Empowerment Company
Limited
who warrants that he is duly
authorised hereto
Signed at on 2000
for Overberg Community Trust
36
who warrants that he is duly
authorised hereto
Signed at Caledon on 4th November 2000
for Caledon Casino Bid Company
(Proprietary) Limited
/s/Xxxxx Xxxx
who warrants that he is duly
authorised hereto
We, Century Casinos Inc., Caledon Hotel Spa and Casino Resort (Proprietary)
Limited, Xxxxxx King Hospitality (Proprietary) Limited, Xxxxxxxxxx Country
Hotel and Spa (Proprietary) Limited and the Senator Trust, hereby agree and
consent to clause 23.1 of this agreement.
Signed at Caledon on 4th November 2000
for Century Casinos Inc.
/s/Xxxxx Xxxxxxxxxx
who warrants that he is duly
authorised hereto
Signed at Caledon on 4th November 2000
for Caledon Hotel Spa and Casino
Resort (Proprietary) Limited
/s/Xxxx Xxxxxx
who warrants that he is duly
authorised hereto
37
Signed at Caledon on 4th November 2000
for Xxxxxx King Hospitality
(Proprietary) Limited
/s/Xxxx Xxxxxx
who warrants that he is duly
authorised hereto
Signed at Caledon on 4th November 2000
for Senator Trust
/s/Xxxx Xxxxxx
who warrants that he is duly
authorised hereto
Signed at Caledon on 4th November 2000
for Xxxxxxxxxx Country Hotel
and Spa (Proprietary) Limited
/s/Xxxx Xxxxxx
who warrants that he is duly
authorised hereto
38
ANNEXURE
PREFERENCE SHARES
98.1 The following rights, privileges and conditions shall apply to the
preference shares (which for the avoidance of doubt shall not be
cumulative) having a par value of R1 each ("preference shares")
in the capital of the company -
98.1.1 Each preference share shall confer on the holder the right to receive
by way of dividend in respect of each financial year of the company
0.1% (one tenth of one per cent) of the after tax profits directly
attributable to the Caledon casino business in that year and prior
to the payment of interest or capital on shareholders' loans (other
than shareholders loans provided in respect of the casino business),
subject to, as determined by the directors of the company in their
sole and absolute discretion, any working capital, capital
expenditure requirements, loan obligations and liabilities,
attributable to the casino business and after taking into account
the amount of STC payable in relation to the dividends on the
preference shares and distributable reserves of the casino business.
The dividend (if any) shall be payable within 3 months after the
financial statements of the company have been audited and signed by
the directors of the company.
98.1.2 Should the casino business be wound up, each preference share shall
confer the right on the holder to receive out of funds which may
lawfully be applied for that purpose, in priority to the holders
of all other classes of shares in the share capital of the company,
0.1% (one tenth of one per cent) of any surplus directly
attributable to the casino business available for distribution
after payment of ail other liabilities attributable to such casino
business.
98.1.3 Save as set out herein, the holders of the preference shares shall
not be entitled to participate in the profits of the company or
any dividend payable on the winding-up of the company.
98.1.4 The preference shareholders shall have the right to attend general
meetings and adjourned meetings of the company but shall not,
save in circumstances envisaged in section 194, of the Company's
Xxx 0000, have the right to vote at any such meeting.
98.1.5 Should any preference shareholder wish to dispose of its shares, it
shall be required to do so in accordance with the pre-emptive rights
provisions contained in the articles of association of the
company
98.1.6 The terms of the preference shares may not be modified, altered,
varied, added or abrogated.
98.1.7 The preference shares shall not be redeemable except by agreement
between the company and the holders of the preference share willing
to have them redeemed.
98.2 The basis of accounting for the casino business of the company for the
sole purpose of determining the profits available for distribution
to the preference shareholders and the amount to be distributed
to the preference shareholders as set out in Annexure hereto
BASIS OF ACCOUNTING FOR THE CASINO BUSINESS OF THE COMPANY FOR THE SOLE PURPOSE
OF DETERMINING THE PROFITS AVAILABLE FOR DISTRIBUTION TO THE PREFERENCE
SHAREHOLDERS AND THE AMOUNT TO BE DISTRIBUTED TO THE PREFERENCE SHAREHOLDERS
1. Definitions
The following words and expressions shall bear the meanings assigned
to them below and cognate words and/or expressions shall bear
corresponding meanings:
1.1 "the casino business" means the casino business owned by the company
excluding, without limitation, the hotel, health spa, tourist village
which will be owned by the company;
1.2 "the preference shareholders" and "minority shareholders" means Overberg
Empowerment Company Ltd ("Empowerco"), and The Overberg Community
Trust ("the Trust");
1.3 "the remaining company business" means the business of the company but
excluding the casino business;
1.4 "the Trust" means the Trustees for the time being of the Overberg
Community Trust;
2. Books of account
2.1 The company shall maintain separate books of account for the casino
business. The casino business will be accounted for as a branch of the
company with "branch accounting" being used.
2.2 The branch accounts of the casino business ("branch accounts") will be
used to determine the profits available for distribution to the
minority shareholders.
3. Casino branch capital and undistributed profits
3.1 The casino business will have an initial branch capital of R2,5 million.
3.2 The cumulative branch profits of the casino business which have not been
distributed, whether by way of dividend to the minority
shareholders or by transfer to the remaining company business,
will be included as "retained undistributed profits" in the branch
accounts.
4. Finance for casino business
Any finance obtained by the company (including for the avoidance of
doubt, shareholders' loans which is related to the operation of the
casino business will be allocated directly to the casino business. The
interest and other costs and capital repayments of such finance
will be met by the casino business prior to the distribution of
dividends to minority shareholders.
5 Branch fixed assets
All fixed assets directly relating to the casino business (for the
avoidance of doubt, excluding the casino premises which will be an
asset of the remaining company business), will be included within the
books of account of the casino business. Similarly all liabilities
directly attributable to the casino business shall be recorded as
such in the branch accounts and shall be taken into account in
determining the profits of the casino business available for
distribution.
6. Bank accounts and working capital
6.1 Separate bank accounts will be maintained for the casino business.
6.2 Surplus funds generated by the casino business will either be placed on
deposit with approved banking institutions or may be lent to the
remaining company business on terms and conditions as to the
repayment of capital and interest only which reflect an arm's
length basis.
6.3 If any working capital facilities are arranged by the remaining company
business for the casino business, the casino business will be charged
with the cost of providing those facilities.
6.4 If any working capital is provided by the remaining company business to
the casino business, the casino business will be charged for these
funds on an arm's length basis and will be required to repay such
working capital together with interest prior to any payments of
dividends to the minority shareholders.
7. Services provided by the remainder
7.1 Where services are provided to the casino business by the remaining
company business, a charge will be made to the casino business on
an arm's length basis. Such services include but are not limited to the
provision of the casino premises and central resort services and the
basis of these charges is set out below.
7.2 Rent for the casino premises shall be based on the aggregate of cost of
the casino premises to the company and the premises leased to
the Trust, commencing at 20% of cost and escalating at 9% per annum.
The casino business shall bear all costs attributable to such premises
including but not limited to maintenance, repairs, insurance and the
like.
7.3 Central resort services and other shared services'shall be based on the
actual cost of providing the services which will be allocated on a
basis that reflects usage.
7.4 The cost of any other services provided by the remaining company
business shall be charged to the casino business on an arm's length
basis.
8. Costs and income of the casino operation
It is intended that all costs and all income directly relating to
the casino business should be reflected in the branch accounts.
9. Taxation
For the purposes of the branch accounts, the taxation charge relating
to the casino business will be calculated as if the casino business is
a stand alone company. STC relating to the payment of dividends to the
minority shareholders will be charged to the minority shareholders'
portion of the casino business. Payments of income tax (including
advance payments of taxation) attributable to the casino business will
be charged to the casino business on the dates that the
payments are or would have been made to the authorities.
10. Basis of preparation of branch accounts
The accounts of the casino business should be prepared using the same
accounting policies as used by the company in its statutory accounts
and the manner of their application thereof, subject to any
differences which arise from the intra-company transactions which
will be eliminated on the preparation of the company's statutory
accounts (e.g. the intra-company charges for central
services and rent).
11. Branch accounts to be prepared annually
The branch accounts prepared at the financial year end of the company
will be prepared using an equivalent format, mutatis mutandis, to
that used for the statutory accounts of the company. In particular,
the branch accounts will include a profit and loss account, a balance
sheet, a statement of source and application of funds and a statement of
the planned capital expenditure over the next two years. The branch
accounts will be sent to the minority shareholders. The costs of the
branch accounts shall be borne by the casino business.
12. Basis of determination of the distribution to be made from the branch
On the basis of the position shown in those branch accounts, the
directors of the company will determine in their sole and absolute
discretion the amount which can property be distributed from the
after-tax profits shown in the branch accounts, having regard to any
working capital, capital expenditure requirements, loan obligations
and liabilities of the casino business and after taking account of the
secondary tax payable in relation to the preference
dividends and the distributable reserves within the company.
Notwithstanding the aforegoing the directors shall in determining such
distribution have regard to the fact that the tax reflected in the
branch accounts may be more than the amount actually payable by the
company as a consequence of any losses incurred by the remaining
business.
13. Transfer OF Reserves to the remaining company business
Simultaneously with the distribution of dividends to minority
shareholders, the balance of the after tax profits determined by
the directors of the company as available for distribution shall
be transferred to the remaining company business.
14. Preparation of final branch accounts
In the event that the company were to lose its casino license,
final accounts would be prepared for the branch which would inter
alia record the profit/loss arising on the disposal of the
fixed assets.
