Exhibit 10.4
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT, made as of June 16, 2004, by and among Palm
Beach Empress, Inc., a Delaware Corporation (the "Corporation"), Xxxxxxx Xxxxxxx
("Xxxxxxx"), and MJQ Corporation, a Nevada corporation ("MJQ"),
WITNESSETH THAT:
WHEREAS, the Corporation currently has authorized 1,000 shares of common
stock, par value $.01 per share, and has issued an outstanding 20 shares of
common stock, 10 of which are owned by each of Xxxxxxx and MJQ; and
WHEREAS, the parties hereto desire to provide for continuity of the
management of the Corporation, for certain restrictions on the disposition of
shares of common stock of the Corporation now held or hereafter acquired by them
or by others, for the disposition of such shares upon certain events, and for
certain provisions material to the governance of the Corporation;
NOW, THEREFORE, in consideration of the premises and the mutual and
dependent promises set forth in this Agreement, the parties hereto, intending to
be legally bound hereby, agree as follows:
Article I
DEFINITIONS
1.01 For the purposes of this Agreement, the following terms will have the
meanings set forth below, unless the context otherwise clearly requires:
"Affiliate", as applied to any Person, means any other person directly
or indirectly controlling, controlled by or under common control with, the first
specified Person.
"Board" means the Board of Directors of the Corporation.
"Corporation" means Palm Beach Empress, Inc., a Delaware corporation.
"Permitted Transferee" shall mean a Person to whom a Transfer may be
made pursuant to Section 2.03 hereof.
"Person" shall mean an individual or a corporation, partnership,
limited liability company, trust or other entity or organization, including a
governmental or political subdivision or an agency or instrumentality thereof.
"Shares" shall have the meaning set forth in Section 2.01 of this
Agreement.
"Xxxxxx/Cherry Hill Note" has the meaning set forth in Section 2.03
hereof.
"Tag-Along Notice" has the meaning set forth in Section 2.04 hereof.
"Tag-Along Shareholder" has the meaning set forth in Section 2.04
hereof.
"Transfer" has the meaning set forth in Section 2.01.
"Transferee" has the meaning set forth in Section 2.01.
"Transferor" has the meaning set forth in Section 2.04 hereof.
Article II
RESTRICTIONS ON TRANSFER
2.01 No shareholder shall transfer, sell, assign, pledge, hypothecate,
encumber or otherwise dispose of any shares of capital stock of the Corporation,
whether now owned or hereafter acquired (all collectively called the "Shares"),
to any Person (any such act by a shareholder being referred to as a "Transfer"
and any Person acquiring Shares from a shareholder or any subsequent transferee
of any such Person being hereinafter referred to as a "Transferee" of such
shareholder), except (i) in compliance with the Securities Act of 1933, as
amended, and applicable state law and (ii) as expressly permitted or required by
this Agreement. Any attempt to Transfer any Shares not in compliance with this
Agreement shall be null and void, and the Corporation shall ensure that neither
it nor any transfer agent shall register upon its books any Transfer of Shares
except a Transfer made in accordance with this Agreement.
2.02 A copy of this Agreement shall be filed with the Secretary of the
Corporation. All stock certificates representing Shares shall be prominently
marked with the following legend:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD
SUBJECT TO THE TERMS OF AN AGREEMENT AMONG THE CORPORATION
AND ITS SHAREHOLDERS, DATED AS OF JUNE 16, 2004, AS FROM
TIME TO TIME AMENDED, LIMITING THE HOLDER'S RIGHT TO
TRANSFER OR PLEDGE THE SHARES AND PROVIDING FOR THE
ACQUISITION OF THE SHARES OF SHAREHOLDERS UPON CERTAIN
EVENTS. NO SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION
OR OTHER CONVEYANCE OF THE SHARES WILL BE EFFECTIVE UNLESS
MADE IN ACCORDANCE WITH THE TERMS OF SAID AGREEMENT, A COPY
OF WHICH IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE
CORPORATION.
The foregoing legend required by this Agreement shall be in addition to
such other legend as the Corporation may deem appropriate in order to comply
with applicable provisions of federal and state securities laws.
2.03 Certain Permitted Transfers. None of the restrictions contained in
this Article 2 (other than restrictive legends pursuant to Section 2.02 and the
requirement of compliance with applicable law) shall apply to the following
Transfers:
a. Any Transfer by a shareholder with the prior written consent of all
other shareholders;
b. The pledge by Xxxxxxx of all of his Shares to Orion Casino
Corporation ("Orion") as collateral security for the promissory note dated of
even date herewith of Xxxxxx/Cherry Hill Partners, Limited Partnership payable
to the order of Orion (the "Xxxxxx/Cherry Hill Note") pursuant to that certain
Pledge Agreement between Xxxxxxx and Orion dated of even date herewith, and any
Transfer by the secured party pursuant to its rights under such Pledge
Agreement;
c. Any Transfer of MJQ's shares to any entity directly or indirectly
controlled by International Thoroughbred Breeders, Inc., provided, however, that
such Transferee shall, as a condition precedent to such Transfer, execute and
deliver to the Corporation an instrument reasonably satisfactory to the
Corporation and Xxxxxxx by which such Transferee agrees to be bound by the terms
of this Agreement;
d. The pledge by MJQ of its Shares to Xxxxxx X. Xxxxxx, Chapter 11
Trustee for the Bankruptcy Estate of Xxxxxx X. Xxxxxxx, and any Transfer by such
pledgee by reason of a default in payment or performance of any obligation
secured thereby;
e. A Transfer of Xxxxxxx'x Shares, upon his death, to his estate (but
not any distribution of Shares from such estate), provided, however, that such
Transferee shall, as a condition precedent to such Transfer, execute and deliver
to the Corporation an instrument reasonably satisfactory to the Corporation and
MJQ by which such Transferee agrees to be bound by the terms of this Agreement
(including, without limitation, the granting of the proxy in accordance with
Section 3.01 hereof); and
f. Transfers permitted or required by Section 2.04 or 2.05 of this
Agreement.
2.04 Tag-Along Rights. If at any time MJQ or any of its Permitted
Transferees proposes to Transfer by sale Shares to any proposed purchaser in a
transaction or series of related or similar transactions (other than Transfers
permitted by clauses (a), (c) or (d) of Section 2.03), MJQ shall afford Xxxxxxx
and his Permitted Transferees the opportunity to participate proportionately in
such Transfer in accordance with this Section 2.04. Xxxxxxx and each of his
Permitted Transferees (each, for purposes of this Section 2.04, a "Tag-Along
Shareholder") shall have the right to Transfer, at the same price per share and
upon identical terms and conditions as such proposed Transfer, the number of
shares owned by such Tag-Along Shareholder equal to (i) the total number of
Shares then owned by such Tag-Along Shareholder multiplied by (ii) a fraction,
the numerator of which is the total number of Shares to be transferred by MJQ
and its Permitted Transferees and the denominator of which is the total number
of shares then owned by Xxxxxxx, MJQ and their respective Permitted Transferees.
In connection with any proposed Transfer by MJQ or its Permitted
Transferees to which this Section 2.04 applies (each, under such circumstance, a
"Transferor"), MJQ and/or such Permitted Transferee, as applicable, shall give
prior written notice to each Tag-Along Shareholder of his or its right to sell
Shares hereunder (the "Tag-Along Notice"), which notice shall identify the
proposed purchaser and state the number of Shares proposed to be Transferred
by MJQ and its Permitted Transferees, the proposed price per share therefor and
other material terms and conditions of the proposed Transfer. The Tag-Along
Notice shall also contain a true and correct copy of any offer to or agreement
by the Transferor by or with the proposed purchaser to purchase such Shares.
Within ten (10) days after the date of delivery of the Tag-Along Notice,
any of the Tag-Along Shareholders may elect to participate in such Transfer
pursuant to the terms and conditions of such Tag-Along Notice by delivery of a
notice to the Transferor. Each participating Tag-Along Shareholder shall not be
required to make any representations and warranties to any Person in connection
with the Transfer except as to good title and the absence of liens, pledges,
security interests, charges and encumbrances with respect to such Tag-Along
Shareholder's Shares, the existence of such Tag-Along Shareholder (if it is not
a natural person) and the authority for and validity and binding effect of any
agreements entered into by such Tag-Along Shareholder in connection with such
Transfer, and the Tag-Along Shareholders shall not be required to provide any
indemnities in connection with the Transfer except for breach of such
representations and warranties.
Transfers by any party hereto in accordance with this Section 2.04 shall be
permitted by this Agreement, provided, however, that if the Transferee will not
be the sole shareholder of the Corporation immediately after the Transfer, such
transferee shall have executed and delivered to the Corporation an instrument in
writing by which it joins in and agrees to be bound by this Agreement.
2.05 Put Option. Commencing upon the later to occur of (i) the payment by
or for the account of Xxxxxx/Cherry Hill Partners, Limited Partnership of the
Section 1.1(a)(i) Installment (as defined in the Xxxxxx/Cherry Hill Note) and
(ii) the payment of the entire outstanding principal balance of that certain
loan in the original principal amount of $5 million by Turnberry Development,
LLC to Orion, evidenced by that certain promissory note in the principal amount
of $5 million payable by Orion to the order of Turnberry Development, LLC dated
February 24, 2004, Xxxxxxx and all (but not less than all) of his Permitted
Transferees shall have the right, exercisable at their option on or before, but
not after, April 1, 2010, to put all but not less than all of their Shares to
Orion in exchange for the Xxxxxx/Cherry Hill Note. In connection with such
transfers (both the Transfer of the Shares and the transfer of the Xxxxxx/Cherry
Hill Note), each party shall represent and warrant to the other that he or it
has good title to the Shares or Note so transferred by such party, as
applicable, free and clear of all liens, pledges, security interests, charges
and encumbrances, which representation and warranty shall survive the exchange
of the Shares for such Note. Except for the representation and warranty
specifically set forth above, Orion shall transfer the Xxxxxx/Cherry Hill Note
without recourse or warranty.
Article III
ADDITIONAL AGREEMENTS
3.01 Appointment of Proxy Agents. Subject to the last sentence of this
Section 3.01, each of Xxxxxxx and his Permitted Transferees (by their joining in
and agreeing to be bound hereby) hereby irrevocably constitutes and appoints
Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and each of them acting singly, for a
period of ten (10) years from the date hereof, his or its proxy,
attorney-in-fact and agent to vote the Shares then owned of record by such
shareholder or to act by written consent in respect of such Shares at any
meeting of shareholders of the Corporation or otherwise, with respect to the
election and removal of directors and with respect to all other matters
submitted to the shareholders of the Corporation, notwithstanding any conflict
of interest that said proxies may have in connection with the matter to be voted
upon. At any time within two years of the end of such 10-year period (and any
subsequent periods), each of Xxxxxxx and his Permitted Transferees may
irrevocably constitute and appoint Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and each
of them, acting singly, as his or its respective proxy, attorney-in-fact and
agent for the purposes and on the terms set forth in this Section 3.01 for an
additional 10-year period. If any of Xxxxxxx or his Permitted Transferees fails
to take the action referred to in the immediately preceding sentence, MJQ shall
be entitled, upon 10-days' written notice (during which period MJQ shall be
entitled to take such action and shall be deemed to have taken such action
within the time period specified above) to purchase all of the Shares held by
Xxxxxxx and his Permitted Transferees at a price equal to one-half of the excess
of the book value of the Corporation over the fair market value of any leasehold
or vessel charter interest in assets of the Corporation held by any third party.
The proxy and power of attorney hereby granted shall be coupled with an interest
and shall remain in full force and effect until the Xxxxxx/Cherry Hill Note
shall have been paid in full, at which time such proxy and power of attorney
shall automatically terminate without any further action.
3.02 Related Party Transactions. Without limiting the generality of Section
3.01, Xxxxxxx, for himself, his successors, assigns and personal or estate
representatives, hereby consents to all transactions of the Corporation with or
for the benefit of ITG Vegas, Inc., a Nevada corporation, Xxxxxxx X. Xxxxxx and
their respective Affiliates, notwithstanding any conflict of interest that they
may have in connection with the transaction and regardless of the fairness or
lack of fairness of such transaction, including but not limited to, and Xxxxxxx
acknowledges and agrees that the Corporation shall be permitted to do the
following: entering into a bareboat charter with ITG Vegas, Inc. or another
Affiliate of MJQ under terms which are materially less favorable to the
Corporation then could be obtained from a third party; obtaining loans and
advances from MJQ, all of which loans and advances shall be repaid in full (with
interest at a rate per annum fixed by MJQ but not exceeding 20% per annum) prior
to any distributions to shareholders of the Corporation; and pledging by the
Corporation of all of its revenues and income to Xxxxxx X. Xxxxxx, Chapter 11
Trustee for the Bankruptcy Estate of Xxxxxx X. Xxxxxxx, as collateral security
for obligations of ITG Vegas, Inc. to said Trustee, granting security interests
in assets of the Corporation to said Trustee and executing and delivering all
guarantees, pledge agreements and security agreements required by said Trustee
and any agreement by the Corporation in favor of said Trustee whereby the
Corporation shall be jointly and severally liable with ITG Vegas, Inc. for
obligations and liabilities to the Trustee.
Article IV
MISCELLANEOUS
4.01 Future Stock and Options. The Corporation agrees that it will not
issue any shares nor grant any options or other rights to purchase or otherwise
acquire any shares without the prior written consent of Xxxxxxx and all other
shareholders.
4.02 Remedies. The parties hereto agree that in the event of any breach of
this Agreement by any one of them, the other parties hereto would be irreparably
harmed and could not be made whole by monetary damages. The parties hereto
accordingly agree (i) to waive the defense in any action for specific
performance or injunctive relief that a remedy at law would be adequate and (ii)
that the parties hereto, in addition to any other remedy to which they may be
entitled at law or in equity, shall be entitled to specific performance and
injunctive relief with respect to the terms of this Agreement in any action
instituted in any court of competent jurisdiction. The parties hereto consent to
non-exclusive personal jurisdiction in any such action brought in the United
States District Court for the Southern District of Florida.
4.03 Representations. Each of the parties hereto represents and warrants to
the others that this Agreement has been duly authorized, executed and delivered
by such party and constitutes the legal, valid and binding obligation of such
party, enforceable against him or it in accordance with the terms hereof.
4.04 Amendments and Waivers. No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and non-exclusive of any
rights or remedies provided by law. This Agreement may not be amended, modified
or supplemented other than by a written instrument signed by each party hereto.
Any provision of this Agreement may be waived if, but only if, such waiver is in
writing and is signed by the party against whom the enforcement of such waiver
is sought.
4.05 Notices. All notices and other communications provided herein shall be
in writing and shall be delivered by hand, telecopied or sent by certified or
registered mail, return receipt requested, postage prepaid, in the manner set
forth on the signature page of this Agreement (or in such other manner as a
party shall specify by written notice given in accordance with this Section
4.05). All such notices shall be conclusively deemed to be received and shall be
effective, if sent by hand delivery or telecopy, upon receipt, or if sent by
registered or certified mail, on the 5th day after the day on which such notice
is mailed.
4.06 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal or
estate representatives, successors and permitted assigns. No shareholder party
hereto may assign any of his or its rights hereunder to any person other than a
transferee that has complied with the requirements of this Section in all
respects. Nothing in this Agreement either expressed or implied is intended to
confer on any Person other than the parties hereto and their respective
successors, permitted assigns, heirs and personal or estate representatives any
rights, remedies of obligations under or by reason of this Agreement.
4.07 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
4.08 Section Headings; Entire Agreement; Severability.
a. The section headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
b. This Agreement constitutes the entire Agreement and understanding
among the parties hereto with respect to the subject matter and supersedes any
and all prior agreements and understandings, written or oral, relating to the
subject matter hereof.
c. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdictions, it being intended that all rights and
obligations of the parties hereunder are severable and shall be severable to the
fullest extent permitted by law.
4.09 Counterparts. This Agreement may be signed in any number of
counterpart copies, each of which shall constitute an original and all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
[SIGNATURE PAGE 1 OF 1 OF THE SHAREHOLDERS' AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
PALM BEACH EMPRESS, INC.
By:
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Xxxxxxx X. Xxxxxx, President Xxxxxxx Xxxxxxx
MJQ CORPORATION
By:
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Xxxxxxx X. Xxxxxx, President
[ACKNOWLEDGMENT PAGE OF THE SHAREHOLDERS' AGREEMENT]
ACKNOWLEDGED, solely for the purpose of
confirming its agreement with Section 2.05 hereof:
ORION CASINO CORPORATION
By:
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Name:
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Title:
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