EXHIBIT 10(24)
DATED as of 30 June 1995
(1) THE PERSONS NAMED IN SCHEDULE 1
(2) MGM GRAND DIAMOND INC.
(3) MGM GRAND AUSTRALIA PTY LTD
(4) MGM GRAND, INC
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OPTION DEED
MGM GRAND AUSTRALIA PTY LTD
___________________________________
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HAMMOND SUDDARDS
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SOLICITORS
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TABLE OF CONTENTS
Clause No. Heading Page No.
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1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretation 6
2. BUSINESS REFERRALS 7
2.1 REFERRALS 7
2.2 Nature of Recommendation 7
2.3 Restrictions and Exceptions 8
3. CALL OPTIONS 8
3.1 Grant of Call Option 8
3.2 Appointment of Nominee 8
3.3 Option Exercisable in Full Only 9
3.4 Exercise Notice 9
3.5 Withdrawal of Notice 9
3.6 Contract for Sale and Purchase 9
3.7 No Encumbrance 11
3.8 Consideration 11
3.9 Venue and Completion Date 11
3.10 Acquisition Financing 11
3.11 Completion 13
3.12 Stamping and Registration of Transfers 14
4. EXCLUSIVE OPTION 14
5. REPRESENTATIONS AND WARRANTIES 16
5.1 Warranties by All Parties 16
5.2 Warranties by MGM Grand Diamond 16
5.3 Warranties by Option Holders 17
5.4 No Merger 17
6. UNDERTAKINGS 17
6.1 Duration 17
6.2 Funding of MGM Grand Australia 18
6.3 Gaming Activities in Northern Territory 19
6.4 Nominee Directors 20
6.5 Consultancy Services of Mr Osborne 23
6.6 Related Party Transactions 23
6.7 Final Shareholders Agreement 24
6.8 Exercise of Voting and Other Rights 24
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7. PROPOSED LISTING OF MGM GRAND AUSTRALIA 25
7.1 Listing 25
7.2 Commitment of Shareholders 25
7.3 No Obligation to List 26
8. PUT OPTION 26
8.1 Condition Precedent 26
8.2 Grant of Put Option 26
8.3 Option Exercisable only Jointly 26
8.4 Exercise Notice 27
8.5 No Withdrawal of Notice 27
8.6 Contract for Sale and Purchase 27
8.7 No Encumbrances 28
8.8 Consideration 28
8.9 Venue and Completion Date 29
8.10 Completion 29
8.11 Warranties by Option Holder 30
8.12 Partial Completion 30
9. DISPUTE RESOLUTION 31
9.1 Resolution By Auditor 31
9.2 General Dispute Resolution 31
10. INFORMATION 32
10.1 Reporting to Option Holders 32
10.2 Access By Option Holders 33
10.3 Disclosure by Nominee Director 33
10.4 Information Period 33
11. SHARE CERTIFICATE ENDORSEMENT 33
12. DEFAULT 34
12.1 Events of Default 34
12.2 General Indemnity 34
13. TERM 34
14. COSTS AND EXPENSES 34
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15. CONFIDENTIALITY AND ANNOUNCEMENTS 35
15.1 Confidentiality 35
15.2 Announcements 36
16. MISCELLANEOUS PROVISIONS 36
16.1 No Partnership 36
16.2 Assignment 36
16.3 Deed of Adherence 36
16.4 Waiver 37
16.5 Entire Agreement 37
16.6 Notices 37
16.7 Counterparts 38
16.8 Variations 38
16.9 Jurisdiction 38
16.10 Law 39
16.11 Consent of Option Holders 40
16.12 Guarantee by MGM Grand, Inc. 40
16.13 Effective Date 40
SCHEDULE 1 (Option Holders) 44
SCHEDULE 2 (Call Option Consideration) 45
SCHEDULE 3 (Put Option Consideration) 47
SCHEDULE 4 (Shareholder Covenants) 50
iii
DEED made as of 30 June 1995.
BETWEEN:
(1) THE PERSONS whose names and addresses are set out in Schedule 1 ("Option
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Holders").
(2) MGM GRAND DIAMOND. INC. a corporation organised and existing under the laws
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of the State of Nevada with its principal place of business at 3799 Las
Vegas Boulevard South, Las Vegas, Nevada 89109, United States of America
("MGM Grand Diamond"), and a wholly owned subsidiary of MGM Grand. Inc.
(3) MGM GRAND AUSTRALIA PTY LTD (A.C.N. 069 214 473) which is a company
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incorporated in the Northern Territory, Australia and has its registered
office at 3rd Floor, Diamond Beach Casino, Gilruth Avenue, Darwin City,
Northern Territory 0800, Australia ("MGM Grand Australia").
(4) MGM GRAND, INC. a corporation organised and existing under the laws of the
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State of Delaware with its principal place of business at 3799 Las Vegas
Boulevard South, Las Vegas, Nevada 89109, United States OF America
("MGMG").
BACKGROUND
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A. MGM Grand Australia has an authorised share capital of Five hundred million
dollars ($500,000,000) divided into Five hundred million (500,000,000)
Ordinary Shares of One dollar ($1.00) per share of which Two (2) shares
have been issued at par and as fully paid. MGMG is the registered owner of
One (1) of the issued shares and MGM Grand Diamond is the registered owner
of the other issued share and the beneficial owner of both of the issued
shares in MGM Grand Australia.
B. MGM Grand Diamond has agreed with the Option Holders that options over
certain of the issued capital of MGM Grand Australia shall be granted to
the Option Holders on the terms and conditions hereinafter appearing.
C. It is proposed and acknowledged by the other parties that after the date
hereof a wholly owned Australian subsidiary may be interposed between MGM
Grand Diamond and MGM Grand Australia, subject to compliance with the terms
of this instrument.
D. MGMG has guaranteed the performance by MGM Grand Diamond of its obligations
hereunder.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
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1.1 DEFINITIONS
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In this Deed and the Schedules unless the context otherwise requires
the following expressions shall have the following respective
meanings:
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"ACQUISITION FINANCE" means any and all Debt Financing Facilities or
arrangements to which MGM Grand Australia is a party but only to the
extent the proceeds of which are used to satisfy the "Purchase Price"
as defined in the Casino Sale Agreement or any other obligation of
MGMG or MGM Grand Australia pursuant to the Casino Sale Agreement, the
repayment of any indebtedness owned to Ultrabridge Darwin Limited or
Havewin Trading Limited pursuant to the Casino Sale Agreement, any and
all costs and expenses incurred or payable by any member of the MGM
Grand Australia Group in relation to or arising from the Casino Sale
Agreement or any ancillary or related document (including without
limitation this Deed). It is anticipated that such facilities are to
be made available pursuant to the term sheet annexed hereto and marked
with the letter "A" ("Term Sheet"). For the avoidance of doubt, it is
acknowledged that the Term Sheet provides for facilities in excess of
the Acquisition Finance and that such excess facilities shall not be
included in the definition of "Acquisition Finance."
"ASSOCIATE" has the same meaning as that ascribed to it in Section
26AAB(14) of the Income Tax Assessment Act 1936 except that references
to "taxpayer" shall deemed to be references to the party to this Deed
in relation to which the associate relationship is sought to be
determined:
"AGREED PROPORTION" means:-
(a) in relation to the Call Option Shares, the pro rata entitlement
(expressed as a fraction) of each of the Option Holders set out
opposite their names in Schedule 1 and as adjusted in accordance
with Clause 3.2(a) or in the case of a person nominated by an
Option Holder pursuant to Clause 3.2(b), opposite the name of the
Option Holder who nominates such person; and
(b) in relation to the Put Option Shares; the pro rata number of
MGMGA Shares held by each of the Option Holders, expressed as a
percentage of all MGMGA Shares held by the Option Holders at the
time any such calculation is made.
"BUSINESS DAY" means:
(a) for the purposes of Clause 16.6(c) a day on which banks are open
for business in the place of receipt of the notice or
communication given under that clause; and
(b) otherwise, a day on which banks are opened for business in Las
Vegas, Nevada;
"CALL OPTION" the rights granted by MGM Grand Diamond to the Option
Holders pursuant to Clause 3 for the Option Holders to require MGM
Grand Diamond to sell the Call Option Shares to the Option Holders (or
to the respective Option Holder's Nominee as such term is defined in
Clause 3.2(b)) in the Agreed Proportions;
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"CALL OPTION CONSIDERATION" means the total amount payable for all of
the Call Option Shares and determined in accordance with the formula
contained in Schedule 2;
"CALL OPTION EXERCISE DATE" the date on which the Call Option is
exercised in accordance with Clause 3;
"CALL OPTION PERIOD" means the period commencing on the second
anniversary of the Casino Sale Completion and ending on the forth
anniversary of the Casino Sale Completion, inclusive of those dates;
"CALL OPTION SHARES" means that number of MGMGA Shares which on the
Call Option Exercise Date and on Call Option Completion represent
Twenty two and one half percent (22.5%) of the Fully Diluted Capital
of MGM Grand Australia rounded up or down to the nearest whole number;
"CASINO" means the Diamond Beach Hotel Casino, Darwin, Australia and
associated hotel complex, which is currently situate predominately on
the land more particularly described as Lot 5244 in the Town of
Darwin, being the land comprised in Grant in Fee Simple Volume 112
Folio 148;
"CASINO LICENCE" means the casino licence as amended from time to time
granted to Diamond Darwin Pty Ltd (A.C.N. 009 641 089) pursuant to the
terms of the Casino Licensing and Control Act 1984 of the Northern
Territory of Australia;
"CASINO SALE AGREEMENT" means the agreement of even date between MGMG,
MGM Grand Australia, the shareholders of Ultrabridge Darwin, the
shareholders of Havewin and the Trustees of the Osborne Family Trust,
relating, amongst other things, to the sale and purchase of all of the
issued capital of Ultrabridge Darwin and Havewin and the Fifteen per
cent (15%) direct interest in Diamond Darwin Pty Ltd;
"CASINO SHARE SALE CONSIDERATION" means the "Purchase Price" as
defined in the Casino Sale Agreement;
"CASINO SALE COMPLETION" means "Completion" as defined in the Casino
Sale Agreement;
"COMPLETION" means the completion of each relevant sale and purchase
of MGMGA Shares pursuant to Clauses 3.11 and 3.12 in the case of the
Call Option and Clauses 8.9, 8.10 and 8.12 in the case of the Put
Options;
"DEBT FINANCING FACILITIES" means any financial accommodation or
facility other than an instalment sale contract, hire purchase or
chattel leasing accommodation or facility;
"ENCUMBRANCE" means any mortgage, pledge, lien, charge, assignment,
hypothecation, or other agreement or arrangement which has the same or
a similar effect to the granting of security;
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"EQUITY SECURITIES" means any shares or stock of a company whether
ordinary, deferred, preference or otherwise and whether voting or non-
voting and any rights convertible into or exercisable for any such
shares or stock including without limitation options, warrants and
subscription rights;
"FULLY DILUTED CAPITAL" means the issued share capital of MGM Grand
Australia after adjusting for the effect of the exercise of any option
over or rights convertible into Equity Securities of MGM Grand
Australia whether or not such option or rights of conversion are
exercisable at the time the determination is made;
"HAVEWIN" means Havewin Trading Limited a company incorporated in Hong
Kong and having its principal place of business at c/o 50 Cuscaden
Road, #08-01 HPL House, Singapore 1024;
"INSOLVENCY EVENT" in relation to a party means:-
(a) an order is made by a court of competent jurisdiction, or a
resolution is passed, for the winding-up, dissolution or
administration of that party (otherwise than in the course
of a reorganisation or restructure previously approved in
writing by the other parties);
(b) any step is taken (and not withdrawn within ninety (90)
days) to appoint a manager, receiver, administrative
receiver, administrator, trustee or other similar officer in
respect of that party and any assets of that party which
include the MGMGA Shares;
(c) that party convenes a general meeting of its creditors or
makes or proposes any arrangement or composition with, or
any assignment for the benefit of its creditors; or
(d) any party becomes unable to pay its debts as and when they
fall due;
"LIBOR" means the rate at which National Westminister Bank Plc offers
deposits in Australian dollars for an amount comparable to the amount
in relation to which the determination is required for a term of
Ninety (90) days to prime banks in the London Interbank Market at or
about 11:00 a.m. on the date the calculation is required to be made;
"LISTING" means the admission of MGM Grand Australia to the main board
of a recognised and reputable stock exchange, being the principal
stock exchange in the relevant jurisdiction, and the quotation of
MGMGA Shares on such stock exchange;
"MGM GROUP" means MGMG and any Subsidiary of MGMG;
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"MGM GRAND AUSTRALIA GROUP" means MGM Grand Australia and any
Subsidiary and the Territory Property Trust;
"MGMGA SHARES" means the ordinary MGMGA Shares of One Australian
dollar ($1.00) each in the capital of MGM Grand Australia;
"NOMINATED OPTION HOLDER" means Ultrabridge Securities Limited or
such other person as the Option Holders may nominate and
communicate to MGM Grand Diamond from time to time;
"OPTION HOLDERS" means the persons named in Schedule 1 and where
applicable such other person or persons as any Option Holder may
nominate and be approved by MGM Grand Diamond pursuant to Clause
3.2(b);
"OPTION HOLDERS' SOLICITORS" means Hammond Suddards of Moor
House, 119 London Wall, London, EC2Y SET or such other solicitors
as may be nominated by the Option Holders and communicated to MGM
Grand Diamond;
"PUT OPTION" means the right granted by MGM Grand Diamond to each
of the Option Holders pursuant to Clause 8.2 for the Option
Holders to require MGM Grand Diamond or its nominee to purchase
the put Option Shares from the Option Holders;
"PUT OPTION EXERCISE DATE" means the date on which the Put Option
shall be exercised by the Option Holders;
"PUT OPTION PERIOD" means the period commencing on the day
following the first anniversary of the day of Call Option
Completion and ending on the third anniversary of the day of Call
Option Completion, inclusive of those days;
"PUT OPTION SHARES" means all of the Equity Securities of MGM
Grand Australia held by the relevant Option Holders on the Put
Option Exercise Date;
"PUT OPTION CONSIDERATION" means the amount payable for the Put
Option Shares held by the relevant Option Holder and determined
in accordance with the provisions of Schedule 3;
"REBATE" means the amount payable by MGM Grand Diamond to the
Option Holders if the calculation of the call Option
Consideration results in a negative amount;
"RELATED BODY CORPORATE" of a body corporate means another body
corporate which is related to the first within the meaning of
Section 50 of the Corporations Law;
"SECURITIES" has the same meaning as that ascribed to it in
Section 92 of the Corporations Law;
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"SHAREHOLDER" means a shareholder of MGM Grand Australia
including MGMG, MGM Grand Diamond or, if applicable, their
respective relevant Subsidiaries which are shareholders of MGM
Grand Australia, and an Option Holder as and from Call Option
Completion;
"SUBSIDIARY" means:
(a) in the case of a body corporate, a subsidiary as defined in
Section 46 of the Corporations Law;
(b) in the case of trust estate of which any member of the MGM
Grand Australia Group or any of its directors are trustees
(whether solely or jointly) and acting in that capacity as
nominee of any member of the MGM Grand Australia Group or in
relation to which any member of the MGM Group is entitled to
participate in more than 50% of the income or capital of
such trust estate in any relevant accounting period;
(c) in the case of an unlimited partnership, a partnership in
which any member of the MGM Group has an interest or has the
right to acquire an interest in at least 50% of the
distributable profits or 50% of the net assets available on
a dissolution; and
(d) in the case of a limited partnership, a limited in which a
member of the MGM Group is a general partner, or has the
right to acquire at least 50% of the distributable profits
or 50% of the net assets available on a dissolution;
"TERRITORY PROPERTY TRUST" means the unit trust established by
deed on 28 September 1984 and entered into between Fernbank Pty
Ltd as trustee and Investnorth Management Pty Ltd as manager; and
"ULTRABRIDGE DARWIN" means Ultrabridge Darwin Limited a company
incorporated in the Cayman Islands, British West Indies and
having a registered office there at P.O. Box 309, Grand Cayman,
Cayman Islands, British West Indies.
1.2 INTERPRETATION
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In this Deed, except where the context otherwise requires:-
(a) headings shall be for ease of reference only and shall not
affect construction;
(b) references to any gender or the neuter shall include
references to any other gender and the neuter and reference
to the singular include references to the plural;
(c) references to "parties" or a "party" refers to parties or a
party to this Deed including a person that has agreed to-be
bound by the terms of the
6
Deed by executing such documents as may be required by the
other parties pursuant to Clause 16.3;
(d) references to any statutory provision shall include a
reference to that provision as amended, extented or re-
enacted and to any statutory replacement thereof either
before or after the date hereof and to any former statutory
provision replaced (with or without modification) by the
provision referred to. References to statutory provisions
are references to statutory provisions of the Commonwealth
of Australia unless otherwise stated;
(e) references to a person include a reference to a firm, body
corporate, unincorporated association or to a person's
executors or administrators;
(f) references to writing shall include any mode of reproducting
words in a non-transitory form;
(g) references to Clauses, Sub-clauses and Schedules shall,
unless otherwise specified be to Clauses, Sub-clauses and
Schedules of this Deed; and
(h) reference to "$" or "Dollar" are references to the lawful
currency of the Commonwealth of Australia.
2. BUSINESS REFERRALS
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2.1 REFERRALS
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Subject to Clause 2.3, MGMG (for its own part and on behalf of
the MGM Group) and the Option Holders (for their own part and on
behalf of every casino owned, controlled or operated by them or
any of them, from time to time including, without limitation,
Aspinalls Club, London, Aspinall's Casino S.A., Christchurch
Casino, New Zealand and any casino that has been licensed to use
the name "Aspinalls" by any entities owned or controlled by them
or any of them); (collectively with the Option Holders, the
"Option Holder Group") each agree, with each other, that where
appropriate, they shall recommend to suitable clients (being of
high net worth):-
(a) the casino and gaming activities of any of the MGM Group or
Option Holder Group; and
(b) the casino and gaming activities of any person in which the
other parties have a material interest and such interest is
known to the party proposing to make the recommendation.
2.2 NATURE OF RECOMMENDATION
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Recommendations pursuant to Clause 2.1 may be made verbally or in
such other manner as a party, in its absolute discretion, thinks
fit.
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2.3 RESTRICTIONS AND EXCEPTIONS
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Nothing in Clause 2.1 shall require a party to make any such
recommendation if to do so would:-
(a) breach any law, regulation, licensing condition or other
statutory or regulatory provision or internal code of practice,
and without limiting the generality of the foregoing including
any anti-trust, gaming, privacy or data protection provisions;
(b) in the sole and absolute discretion of such party, be contrary to
the commercial interests or contractual obligations of that party
which may exist from time to time; or
(c) other than as expressly provided in this Deed, imply a
restriction on the parties to compete with each other or place
themselves in potential conflict with each other.
3. CALL OPTIONS
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3.1 GRANT OF CALL OPTION
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In consideration of the mutual covenants herein provided and in
consideration of the Option Holders paying to MGM Grand Diamond, in
aggregate, in the Agreed Proportions the sum of Three hundred dollars
($300.00) now delivered by bankers draft by the Option Holders to MGM
(receipt of which is hereby acknowledged), MGM Grand Diamond hereby
grants to the Option Holders in the Agreed Proportions, the Call
Option on the terms and conditions contained in this Deed.
3.2 APPOINTMENT OF NOMINEE
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At any time before the exercise of the Call Option any of the Option
Holders may either:-
(a) transfer to any other Option Holder, with the consent of MGM
Grand Diamond, such consent not to be unreasonably withheld,
either in whole or in part, their Agreed Proportion of the Call
Option in which case the Agreed Proportions shall be adjusted to
reflect such transfer; or
(b) with the consent of MGM Grand Diamond to be granted or withheld
in its sole discretion, nominate a person in their place to have
the right to exercise that Option Holder's Agreed Proportion of
the Call Option provided that such person ("Option Holder's
Nominee") has executed an instrument in a form approved by MGM
Grand Diamond and the other parties to become bound by the
relevant provisions of this Deed pursuant to Clause 16.3(a).
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3.3 OPTION EXERCISABLE IN FULL ONLY
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The Call Option shall only be capable of being exercised during the
Call Option Period, and to the extent that it is not so exercised it
shall lapse and be incapable of further or subsequent exercise. The
Call Option shall be capable of being exercised only in respect of all
of the Call Option Shares.
3.4 EXERCISE NOTICE
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The Call Option shall be exercised by notice in writing by all of the
Option Holders to MGM Grand Diamond. Where MGM Grand Diamond receives
separate notices from one or more of the Option Holders respectively
exercising that Option Holder's right in full for its Agreed
Proportion, then each such notice shall be read together as one and
the same notice but no one notice shall be effective or deemed
properly given to MGM Grand Diamond unless and until the last such
notice is received by MGM Grand Diamond. The date of receipt of that
last notice shall be the Call Option Exercise Date.
3.5 WITHDRAWAL OF NOTICE
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(a) Subject to (b) below, an Option Holder shall not be entitled to
withdraw a notice served pursuant to Clause 3.4, once it has been
duly served.
(b) The Option Holders shall be entitled to withdraw a notice served
pursuant to Clause 3.4 at any time prior to the Call Option
Completion should there be a breach of Clause 4 or should any
matter, event or circumstance warranted by MGM Grand Diamond to
an Option Holder pursuant to Clause 5 be in an Option Holder's
reasonable opinion untrue or inaccurate, in any material respect.
Any such withdrawal of notice shall be in respect of all of the
Call Option Shares, and shall terminate the contract referred to
in Clause 3.6. Without prejudice to the rights of an Option
Holder which may arise in respect of a breach of Clause 4 or 5,
the Option Holders may at any time thereafter, during the Call
Option Period, re-exercise their rights to acquire the Call
Option Shares in accordance with this Clause 3.
3.6 CONTRACT FOR SALE AND PURCHASE
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(a) Subject to Clause 3.6(b), upon receipt by MGM Grand Diamond of a
notice from the Option Holders, given in accordance with this
Clause 3, a contract for the sale and purchase of the Call Option
Shares between MGM Grand Diamond as vendor and the Option Holders
as purchasers shall be created as at the Call Option Exercise
Date;
(b) It shall be a condition to Completion of the sale and purchase of
the Call Option Shares that:
(i) the Treasurer of the Commonwealth of Australia consents
under the Foreign Acquisitions and Takeovers Act 1975, to
the
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proposed acquisition by Option Holders of the Call Option
Shares, and the Treasurer is to be deemed to have so
consented:
(A) if the Option Holders receive written advice from the
Treasurer or on his behalf, without any term or
condition which the Option Holders considers
unacceptable, to the effect that the acquisition of the
Call Option Shares is not objected to under the Foreign
Acquisitions and Takeovers Act 1976; or
(B) if 10 days have elapsed from the day the Treasurer
ceased to be empowered to make any order under Part II
of the Foreign Acquisitions and Takeovers Act in
relation to the proposed acquisition because of lapse
of time, notice of the proposed acquisition of the Call
Option Shares having been given to the Treasurer under
the Foreign Acquisitions and Takeovers Act 1975;
(ii) the Option Holders and MGM Grand Diamond receiving not
later than 6 months after the Call Option Exercise Date, on
an unconditional basis, all relevant consents and approvals
required, if any, from any governmental authority including
the Government or relevant Minister of the Northern
Territory of Australia (including with respect to probity
of the Option Holders, to the extent required) in relation
to any change of interest in MGM Grand Australia; and
(iii) Casino Sale Completion shall have occurred.
(c) MGMG, MGM Grand Diamond and the Option Holders shall use their
best endeavours (other than by incurring substantial liabilities,
substantial obligations (including any divestment and
restrictions on business operations) or monetary obligations and
other than by consenting to any substantial alteration to the
terms of this Deed) to satisfy any request for information or
condition or conditions specified by or on behalf of the
Treasurer of the Commonwealth of Australia under the Foreign
Acquisitions and Takeovers Act 1975 as referred to in Clause
3.6(b). Each of the parties shall use their best endeavours to
obtain the fulfilment of the conditions in Clause 3.6(b) (i) and
(ii) in an expeditious manner, and shall give the others prompt
notice in writing upon it becoming aware whether or not any of
the conditions precedent referred to in Clause 3.6(b) (i) and
(ii) has been satisfied.
(d) The conditions to Completion set forth in Clause 3.6(b)(i) and
(ii) above shall be deemed not to have been satisfied if any of
the advice, consents or approvals referred to in Clause 3.6(b)(i)
and (ii) would have the effect of imposing substantial
liabilities, obligations or restrictions on the business
operations of the MGM Group. In the event of a dispute between
the parties as to whether or not a liability, obligation or
10
restriction is substantial such dispute shall be referred to
the Auditor pursuant to Clause 9.1.
3.7 NO ENCUMBRANCE
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The Call Option Shares shall be sold by MGM Grand Diamond as
beneficial owner free from all Encumbrances and adverse claims
(other than those granted in favour of MGM Grand Diamond pursuant
to this Deed including the legend contained in Clause 11),
together with all rights attaching thereto, as at the date of the
Call Option Completion, including all dividends declared or
payable distributions made or proposed on or after the Call
Option Exercise Date.
3.8 CONSIDERATION
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The total amount payable by the Option Holders to MGM Grand
Diamond for the sale and purchase of the Call Option Shares shall
be the Call Option Consideration, if it is a positive amount.
Each Option Holder shall be jointly and severally liable for the
Call Option Consideration, which shall be payable on the date of
the Call Option Completion.
3.9 VENUE AND COMPLETION DATE
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Completion of the sale and purchase of the Call Option Shares
shall take place between the hours of 9.00am and 3.00pm Las Vegas
time on the 5th Business Day after the latter of the satisfaction
of the conditions precedent referred to in Clause 3.6 and
determination of the Call Option Consideration or on such other
date as the parties may agree in writing at the office of MGM
Grand Diamond or at such other place as MGM Grand Diamond and the
Option Holders may agree.
3.10 ACQUISITION FINANCING
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(a) On or before Call Option Completion MGM Grand Diamond shall
procure:-
(i) that the Acquisition Financing is repaid in full from
the proceeds of an equity subscription made by MGM
Grand Diamond, or any wholly owned Subsidiary of MGM
Grand Diamond, to MGM Grand Australia as contemplated
by Clause 4.1 and that any and all Encumbrances
provided by any member of the MGM Grand Australia
Group in relation to the Acquisition Financing is
unconditionally released; or
(ii) the rights and obligations (including contingent
obligations) of MGM Grand Australia pursuant to or
arising from the Acquisition Financing are assigned or
novated in full, without recourse to any member of the
MGM Grand Australia Group and any and all Encumbrances
provided by any member of the MGM Grand Australia
Group in-relation to the Acquisition
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Financing is unconditionally released. However, if MGM
Grand Diamond is unable, after using its best
endeavours, to procure the assignment or novation of
the Acquisition Finance, without recourse, and the
unconditional release of all of the Encumbrances to
the extent they relate to or secure any of the
Acquisition Finance then MGMG covenants for the
benefit of the Option Holders and separately for the
benefit of the MGM Grand Australia Group to indemnify
and hold harmless the MGM Grand Australia Group from
and against all such claims, damages, liabilities and
costs arising therefrom. For the avoidance of doubt
this indemnity shall apply notwithstanding that MGM
Grand Diamond contrary to its obligations under this
Clause has not used its best endeavours to procure the
necessary event to occur.
(b) Without limitation to the obligations of MGM Grand Diamond
pursuant to Clause 3.10(a), as and from Call Option Exercise
Date, MGMG and MGM Grand Diamond shall indemnify and keep
indemnified, the Option Holders notwithstanding Call Option
Completion, for any loss, damage, cost or expenses incurred
or suffered by any of them as a direct or indirect result of
the obligations of MGM Grand Diamond pursuant to Clause
3.10(a) not being satisfied in full to the reasonable
satisfaction of the Nominated Option Holder at or before
Call Option Completion. Without limiting the generality of
the aforegoing it is expressly agreed that the loss of the
Option Holders will include:-
(i) 22.5% of the amount (after all related tax benefits to
the MGM Grand Australia Group, properly claimed in
respect of and arising from the Acquisition Finance)
by which the assets of the MGM Grand Australia Group
have been reduced by payments made (whether before or
after Call Option Completion) pursuant to the
Acquisition Financing or any Encumbrance granted by
any member of the MGM Grand Australia Group in
connection with the Acquisition Financing, which
payments have not been taken into account in the
calculation of the Call Option Consideration or which
have not been reimbursed to the MGM Grand Australia
Group PROVIDED HOWEVER to the extent such payment is
made to the Option Holders, MGM Grand Diamond shall be
released from its obligation pursuant to Clause
3.10(a) for that part of the Acquisition Finance to
which the payment relates; and
(ii) 22.5% of the additional borrowing costs, if any, in
relation to other Debt Financing Facilities due to the
gearing of the MGM Grand Australia Group or the
unavailability of collateral in either case as a
consequence of the Acquisition Finance has been taken
into account in calculation of the Call Option
Consideration.
12
3.11 COMPLETION
----------
At Completion:-
(a) MGM Grand Diamond shall deliver to (or make available to the
satisfaction of) each of the Option Holders:
(i) definitive certificates for the relevant MGMGA Shares
together with transfers thereof duly executed by the
registered holders thereof, (or if such certificate
has been lost or destroyed the necessary declaration
has been made as required by the Articles of
Association of MGM Grand Australia or the Corporations
Law for the issue of replacement certificates), in
favour of the Option Holders, in the Agreed
Proportions;
(ii) such consents or documents (if any) as may be required
to give evidence of title to the MGMGA Shares and to
sell, transfer or vest such title in the Option
Holders free from Encumbrance and to ensure that the
change of shareholders of MGM Grand Australia will not
cause MGM Grand Australia or any of its Subsidiaries
to be in breach of any material contract or licence
entered into by MGM Grand Australia or any of its
Subsidiaries (other than the Casino Licence); and
(iii) duly executed proxy forms in the form set out in the
Articles of Association of MGM Grand Australia,
appointing each Option Holder, in respect of its
Agreed Proportion of the Call Option Shares, as proxy
to exercise the right to vote attached to those Call
Option Shares in respect of all general meetings of
MGM Grand Australia, after Call Option Completion
pending registration of the transfer referred to in
(i) above; and
(b) Subject to MGM Grand Diamond complying with its obligations
above and the Option Holders being satisfied that there is
no breach by MGM Grand Diamond of a representation or
warranty referred to in Clause 4 or 5, each of the Option
Holders shall pay their Agreed Proportion of the Call Option
Consideration assuming it is a positive amount, to MGM Grand
Diamond, as specified in writing by MGM Grand Diamond, by
bank cheque, cashiers cheque or by direct debit or
telegraphic transfer to a bank account nominated in writing
by MGM Grand Diamond. If the Call Option Consideration is a
negative amount then on Completion MGM Grand Diamond shall
pay to the Option Holders the Rebate in the Agreed
Proportions, as specified in writing by the Nominated Option
Holder by bank cheque, cashier's cheque or by direct debit
or telegraphic transfer to a bank account nominated in
writing by the Nominated Option Holder.
13
3.12 STAMPING AND REGISTRATION OF TRANSFERS
--------------------------------------
(a) MGM Grand Diamond shall (so far as it is able) procure
that upon presentation to MGM Grand Australia of the stamped
transfers and relative share certificates for the transfer
of the Call Option Shares to the Option Holders, such
transfers shall be approved and the Option Holders shall be
registered as the holders of their respective entitlement
to the Call Option Shares.
(b) The Option Holders shall pay all stamp duty payable in
relation to the purchase of the Call Option Shares by them
pursuant to the exercise of the Call Option including any
fine or penalty for late payment.
4. EXCLUSIVE OPTION
----------------
4.1 The Call Option is an exclusive Option. Subject to Clause 4.2 but
without prejudice to any other provision contained in this Deed,
including Clause 5 unless MGM Grand Diamond or MGM Grand
Australia (as the case may be) provides full particulars to the
Nominated Option Holder and obtains the prior consent in writing
of the Nominated Option Holder, MGMG, MGM Grand Diamond and MGM
Grand Australia shall not, and MGM Grand Diamond shall procure
that MGM Grand Australia shall not) do any of the following from
the date hereof until the later of the expiry of the Call Option
Period and Call Option Completion, (if later):-
(a) permit any other person to acquire any Call Option Shares or
options over or rights convertible into Call Option Shares,
(other than to a member of the MGM Group provided such
member has signed a deed of adherence pursuant to Clause
16.3(c) expressly recongnising, amongst other things, the
Call Option rights conferred on the Option Holders pursuant
to Clauses 3.1 to 3.12 inclusive);
(b) permit the allotment of any Equity Securities of MGM Grand
Australia (other than an allotment of MGMGA Shares to MGM
Grand Diamond or to any member of the MGM Group pursuant to
Clause 6.2(b)(iii) or, subject to Clause 4.1(f), to a third
party provided such member (other than MGM Grand Diamond) or
third party, as applicable, has first signed a deed of
adherence pursuant to Clause 16.3(c);
(c) grant any other person an option to acquire Equity
Securities or issue any right that is convertible into
Equity Securities in MGM Grand Australia (other than to a
member of the MGM Group or, subject to Clause 4.1(f), to a
third party) provided such member (other than MGM Grand
Diamond) or third party, as applicable, has signed a deed of
adherence pursuant to Clause 16.3(c));
(d) vary the rights attaching to any Equity Securities, create
any new classes of Equity Securities, repurchase any Equity
Securities, or in any other manner vary or alter the share
capital of MGM Grand Australia;
14
(e) (i) except in relation to the proposed financing with Bank
of American (which financing includes the Acquisition
Finance), in the case of MGM Grand Diamond sell,
transfer, assign, create or permit the creation of any
Encumbrance over, declare itself trustee of or part
with possession of, any Call Option Shares or otherwise
create any interest therein except as expressly
permitted by this Deed; and
(ii) in the case of MGM Grand Australia, register any
transfer or recognise or give effect to any matter
referred to in Clause 4.1(e)(i);
(f) permit any act that would cause
(i) MGM Grand Diamond or MGM Grand Australia to cease to be
a Subsidiary of MGMG; or
(ii) a Subsidiary of MGM Grand Australia, whether such
Subsidiaries exists at or after the date of this Deed,
to cease to be a Subsidiary of MGM Grand Australia;
provided that nothing herein shall preclude the liquidation
and/or reorganisation of a Subsidiary as long as MGM Grand
Australia retains the direct or indirect beneficial
ownership or control of all of the material assets and
business thereof;
(g) permit any act to occur which would result in the MGM Grand
Australia Group not being entitled to at least Eighty five
per cent (85%) of the beneficial interest in the Territory
Property Trust and the underlying property currently held by
the Territory Property Trust; or
(h) change the auditor of MGM Grand Australia if the new auditor
is not one of the 6 largest internationally recognised
accounting firms.
4.2 In the event that MGM Grand Diamond proposes to enter into a
transaction prior to Call Option Completion, which if entered
into after Call Option Completion, would bring into operation
Part 10 or Part 11 of Schedule 4, MGM Grand Diamond and the
Option Holders shall have the rights provided for in such Parts
notwithstanding that Call Option Completion has not occurred.
Additionally, to the extent the exercise of such rights would
require a payment by MGM Grand Diamond or a third party to the
Option Holders in connection with the acquisition of the Option
Holders' rights to acquire the Call Option Shares, such payment
shall be determined as if the Call Option Shares were outstanding
but there shall be deducted from the consideration payable to the
Option Holders an amount equal to its relevant proportion of the
Call Option Consideration, which such amount shall be retained by
MGM Grand Diamond or paid to MGM Grand Diamond by such third
party, as the case may be. However, if the Call Option
Consideration is a negative amount then MGM Grand Diamond shall
pay to the Option Holders their relevant proportion of the
Rebate.
15
5. REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 WARRANTIES BY ALL PARTIES
-------------------------
Each party hereby represents and warrants to the other that it
has power to enter into and perform its obligations under this
Deed and it has taken all necessary action to authorise, and has
obtained all necessary authorisations, approvals and consents in
connection with, the execution and performance of this Deed.
5.2 WARRANTIES BY MGM GRAND DIAMOND
-------------------------------
MGM Grand Diamond represents and warrants to the Option Holders
at Casino Sale Completion, at the Call Option Exercise Date and
Completion that:-
(a) Subject to Clause 4.1, MGM Grand Diamond will be the
beneficial owner and in possession of the Call Option Shares
(including all evidence of title) and the Call Option Shares
are not the subject of any Encumbrance;
(b) the copy of the Memorandum and Articles of Association of
MGM Grand Australia exhibited to this Deed is a full and
true copy of the current Memorandum and Articles of
Association of MGM Grand Australia, and that there will be
no amendment to the Memorandum and Articles of Association
of MGM Grand Australia (except as may be required to comply
with applicable law), which was not the subject of the prior
written consent of the Option Holders if any such amendment
would adversely affect the rights of the Option Holders
pursuant to this Deed;
(c) the only issued Equity Securities of MGM Grand Australia are
MGMGA Shares;
(d) the Call Option Shares are fully paid and carry no rights
and are subject to no terms of issue other than as set out
in the Articles of Association of MGM Grand Australia;
(e) MGM Grand Diamond is entitled and competent to sell and
transfer the Call Option Shares subject to the Articles of
Association of MGM Grand Australia;
(f) any dividends, bonuses or other distributions declared made
or paid in relation to any of the Call Option Shares after
the exercise of the Call Option will be for the sole benefit
of the Option Holders and, if paid to MGM Grand Diamond,
will be forthwith paid to the Option Holders in their Agreed
Proportion by MGM Grand Diamond, by bank cheque;
16
(g) MGM Grand Diamond is not engaged in any proceedings, litigation,
arbitration or prosecution (whether as plaintiff or defendant or
otherwise) concerning or affecting the Call Option Shares and
that no legal or other proceedings are threatened or envisaged by
or against MGM Grand Diamond concerning the Call Option Shares
and that to the best knowledge, information and belief of MGM
Grand Diamond there are no circumstances likely to lead thereto;
(h) to the best knowledge, information and belief of MGM Grand
Diamond and MGM Grand Australia, other than routine matters for
which no material and adverse result is anticipated, no
governmental or official investigation or enquiry concerning the
MGMGA Shares or the ownership of any such shares by MGM Grand
Diamond is in progress or pending and there are no circumstances
which are likely to give rise to any proceedings,
investigation or enquiry;
(i) no Insolvency Event has occurred or been threatened or is
envisaged by or against MGM Grand Diamond; and
(j) any Related Party Transactions determined in Clause 6.6 and in
existence at the date of this Deed satisfy the requirements of
Clause 6.6.
5.3 WARRANTIES BY OPTION HOLDERS
----------------------------
Subject to Clause 3.6(b), the Option Holders represent and warrant to
MGM Grand Diamond at Call Option Exercise Date and Call Option
Completion that no governmental approval, licence or consent is
required to be obtained by any Option Holder in connection with the
grant of the Call Option, the exercise of the Call Option or
Completion, as applicable, except for such as have been obtained by
the relevant Option Holder and which do not and will not subject the
MGM Group or MGM Grand Australia Group to any new or additional
governmental restriction or limitation.
5.4 NO MERGER
---------
The representation and warranties in this Clause 5 shall not merge on
exercise of the Call Option or transfer of the Call Option Shares and
shall enure for the benefit of the party in whose favor it is given.
6. UNDERTAKINGS
------------
6.1 DURATION
--------
During the period commencing on the date hereof and expiring at the
end of the Call Option Period and, if the Call Option has been
exercised, thereafter until either:-
(a) a Listing of any Equity Securities of MGM Grand Australia has
occurred; or
17
(b) MGM Grand shall have acquired or the Option Holders have
disposed of all of the Put Option Shares,
the provisions of Clauses 6.2 - 6.8 inclusive shall apply.
However, in the case of paragraph (a) the provisions of Clauses
6.2, 6.5, 6.6 and 6.7 shall cease to apply immediately prior to
the official consent to such Listing being obtained from the
relevant stock exchange and in the case of Clauses 6.3, 6.4 and
6.8 shall cease to apply to the extent only that any of the
provisions contained in Clauses 6.3, 6.4 or 6.8 are incompatible
with such Listing or any applicable laws, rules or regulations
applying to MGM Grand Australia as a consequence of such Listing.
For the avoidance of doubt such provision shall not be
incompatible by reason only of their inability to be included in
the articles of association of MGM Grand Australia as and from
Listing.
6.2 FUNDING OF MGM GRAND AUSTRALIA
------------------------------
(a) (i) Subject to Clause 6.2(a)(ii), MGM Grand Diamond shall
ensure that all members of MGM Grand Australia Group
have sufficient funding to meet, as and when due.
(A) all gaming losses and other deficiencies in
working capital of the Casino; and
(B) capital required for the expansion, improvement or
refurbishment of the Casino.
(ii) Nothing in this Clause 6.2 shall limit or restrict in
any way the ability of MGM Grand Australia or MGM
Grand Australia Group to cease trading or enter into
voluntary liquidation.
(b) The funding to be provided to or procured by the MGM Grand
Australia Group, shall be limited to:-
(i) (SHAREHOLDER LOANS) loans made by MGM Grand Diamond or
an Associate of MGM Grand Diamond to MGM Grand
Australia Group which are unsecured and subordinated to
the claims of all other creditors of the MGM Grand
Australia Group. MGM Grand Diamond or its Associate (as
the case may be) shall be entitled to receive interest
on such loans to the extent only that such interest
reflects its actual external cost of the funds
("Actually External Cost") without regard to whether or
not MGM Grand Diamond or its Associate actually borrows
funds specifically for this purpose. Administrative
costs within the MGM Grand Group and the application of
any withholding taxes in Australia shall not be an
Actual External Cost of MGM Grand Diamond for the
purpose of this Clause. Prior to making any advance to
MGM Grand Australia Group, MGM Grand Diamond and the
Nominated Option Holder shall use good faith efforts to
agree upon the Actual External Cost to MGM Grand
Diamond of such funds, which in any event shall not be
less than
18
the aggregate of One per cent (1%) plus LIBOR for
loans of comparable maturities. MGM Grand Diamond
shall provide to the Nominated Option Holder
sufficient information to enable it to verify by
independent calculation the Actual External Cost. If
MGM Grand Diamond and the Nominated Option Holder can
not agree as to the Actual External Cost within 15
Business Days of the Nominated Option Holders first
being notified of the proposed advance then the Actual
External Cost shall be the cost certified by an
independent expert appointed pursuant to Clause 9.1.
Until such time as the independent expert has
certified, the Actual External Cost. MGM Grand Diamond
or its Associate may advance the funds to MGM Grand
Australia Group at the interest rate MGM Grand Diamond
believes reflects the Actual External Cost but subject
to an adjustment being made up or down to principal
and/or interest (at the election of the relevant
member of MGM Grand Australia Group) in the event that
the independent expert certifies a figure more than
Fifty (50) basis points higher or lower than the rate
then being imposed by MGM Grand Diamond;
(ii) (BANKS) by external third party lenders on the best
terms then available, which terms shall reflect that
MGMG and/or MGM Grand Diamond is prepared to provide a
guarantee for any such advances made direct to a
member of the MGM Grand Australia Group, where
necessary;
(iii) (EQUITY) from equity subscriptions by MGM Grand
Diamond or any member of the MGM Group or any Related
Body Corporate for MGMGA Shares, with the prior
written consent of the Nominated Option Holder, which
shall not be unreasonably withheld if such equity
subscription shall not dilute or adversely affect the
legal and commercial benefit of the Call Options.
6.3 GAMING ACTIVITIES IN NORTHERN TERRITORY
---------------------------------------
(a) MGMG (for its own part and on behalf of the MGM Group) and
each of the Option Holders (for their own part and on behalf
of the Option Holder Group) covenant with each other that
during the period referred to in Clause 6.3(b), all gaming
and related hotel activities conducted or controlled by any
one or more of:-
(i) the MGM Group on the one hand, and
(ii) the Option Holder Group on the other hand, as the case
may be,
in the Northern Territory of Australia, shall be conducted
solely through the MGM Grand Australia Group.
19
(b) The undertakings contained in Clause 6.3(a) shall only apply
until the earlier of:-
(i) the expiry of the Call Option Period, or if the Call
Option has been exercised, until such time as the
Option Holder disposes of its MGMGA Shares; and
(ii) no member of the MGM Grand Australia Group holds an
exclusive licence for table gambling in the Northern
Division of the Northern Territory of Australia
pursuant to the Gaming Control Act 1993 of the Northern
Territory of Australia or any other statute regulating
gaming in the Northern Territory of Australia.
6.4 NOMINEE DIRECTORS
-----------------
(a) (i) Prior to Call Option Completion, the Option Holders
collectively shall be entitled to appoint and remove at
least Twenty per cent (20%) in number of the directors
("Nominee Director's") comprising the board of
directors of MGM Grand Australia or the board of
directors or governing body of each and every
Subsidiary of MGM Grand Australia ("Relevant Boards")
and to remove and replace such appointee(s), and where
that percentage will result in a fraction, rounded up
to the next whole number. For the avoidance of doubt
the Option Holders collectively shall be entitled to
appoint at least one director on each board and to
remove and replace such appointee. Where there is more
than one Option Holder, from time to time, the right to
appoint and remove directors shall be exercised by the
Nominated Option Holder in writing.
(b) (i) As and from Call Option Completion the Option Holders
shall have the right, so long as any of them hold MGMGA
Shares, to appoint and remove directors on each and
every Relevant Board. The number of directors that may
be appointed and removed shall be determined by
reference to the aggregate percentage of MGMGA Shares
held by the Option Holders in accordance with the
formula contained in Clause 6.4(b)(ii). Where there is
more than one Option Holder, from time to time, the
right to appoint and remove directors shall be
exercised in writing by the Nominated Option Holder.
(ii) Subject to Clause 6.4(b)(iii) the minimum number of
Nominee Directors that may be appointed and removed by
the Option Holders, from time to time, shall be
determined by applying the percentage in the right hand
column shown opposite the relevant aggregate holding of
the Option Holders in the left hand column, to the
total number of directors of the Relevant Board.
20
AGGREGATE PERCENTAGE OF MINIMUM PERCENTAGE OF
MGMGA SHARES HELD BY DIRECTORS OF RELEVANT
OPTION HOLDERS BOARD TO BE APPOINTED
OR REMOVED
20%-22.5% 20%
less than 20% Nil
Where the calculation results in a fraction, then it
shall be rounded up to the next whole number. For the
avoidance of doubt the Option Holders shall be entitled
to appoint and remove at least one director and remove
such director so long as they collectively own at least
Twenty per cent 20% of the issued MGMGA Shares.
(iii) If the Option Holders cease collectively to hold a
minimum of Twenty per cent (20%) of the issued MGMGA
Shares other than by reason of transfer by any of the
Option Holders of any of their MGMGA Shares then for
the purposes of Clause 6.4(b)(ii) the aggregate
percentage of MGMGA Shares held by the Option Holders
shall be determined as if no MGMGA Shares were issued
after Call Option Completion.
(c) Any Nominee Director appointed by the Option Holders shall
be deemed to be the nominee of the Option Holders. The
appointment and removal of such director or directors (as
the case may be) shall take effect immediately upon receipt
of the relevant notices from the Nominated Option Holder
(subject to a consent to act as director from the proposed
Nominee Directors being attached to the notice). Any
proposed new appointment shall be communicated by the Option
Holders to MGM Grand Australia or the relevant body where
possible, at least Fourteen (14) days in advance. Any such
director shall not be appointed unless he or she
demonstrates to the reasonable satisfaction of MGM Grand
Australia that he or she satisfies all applicable
requirements concerning governmental approvals, licences and
good standing. If in the opinion of MGM Grand Australia the
Nominee Director may cause or contribute to any Government
or Minister including without limitation the Government or
relevant Minister of the Northern Territory adversely
varying, revoking, cancelling or not renewing the Casino
Licence, then such Nominee Director shall be removed
forthwith by the Option Holders.
(d) A Nominee Director shall be entitled to appoint and remove
an alternate from time to time. A Nominee Director shall
also be entitled to the same level of remuneration payable
to other non-executive directors and reimbursement, in full,
for all travelling, hotel and associated
21
expenses reasonably incurred by him in attending board
meetings or in relation to the business of the relevant
company, it being understood that in order to minimise the
incurring of such expenses, it is anticipated that non-
resident directors will, for the most part, participate in
board meetings by telephone, closed circuit television or
other electronic means of video or audio-visual
communication.
(e) All directors of a Relevant Board shall have one vote,
unless they are also the alternate for another director.
For the avoidance of doubt the Chairman of the Relevant
Board shall not have a casting vote in addition to his
deliberative vote.
(f) It is expressly agreed and acknowledged that it may be in
the best interests of all the relevant members of MGM Grand
Australia Group for such director to take into account and
act in such manner as he believes best protects the
interests of the Option Holders pursuant to this Deed.
However, nothing in this Clause shall in any way fetter the
discretion of any director to act in any manner he deems
fit, including in a manner which may not be in the best
interests of the Option Holders, it being acknowledged that
all directors, however selected, are subject to fiduciary
obligations under applicable law.
(g) In respect of each member of the MGM Grand Australia Group,
to which he has been appointed, each Nominee Director shall
be provided with adequate notice of all meetings of
directors and be supplied with proper and full agendas and
supporting papers. Notwithstanding anything contained in the
constituent documents of each member of the MGM Grand
Australia Group, no director's meeting shall be quorate
unless:-
(i) at least one Nominee Director or his alternate
attends,
(ii) all of the Nominee Directors waive their right to
attend; or
(iii) having been given at least Five (5) Business Days
prior proper notice no Nominee Director is present but
a majority of directors entitled to receive notice of
such meeting are present.
(h) Meetings may be in person or by contemporaneous link up by
telephone closed circuit television or other electronic
means of audio or audio visual communication, or any
combination thereof. No business shall be discussed at a
meeting of the Relevant Board, without the consent of the
Nominee Directors unless it has been adequately included in
the agenda that accompanied the notice of meeting.
(i) Subject to Clause 10 and Clause 15 of the Deed:
(i) each member of the MGM Grand Australia Group will
prepare and provide management information and reports
to its directors
22
sufficient for the efficient operation of the relevant
member of the MGM Grand Australia Group; and
(ii) Nominee Directors shall have the right to visit and
inspect any of the property of the MGM Grand Australia
Group, to inspect and take copies of all documents
relating to the MGM Grand Australia Group, including
without limiting the generality of the foregoing its
books of account, and to discuss its affairs, finances
and accounts with any of the officers of the MGM Grand
Australia Group or its auditors, at all reasonable
times and as often as such person may reasonably
request.
(j) Subject to Clause 10 and Clause 15 of the Deed each Nominee
Director is entitled to communicate any information (and
provide copies of such information) received by that
director in relation to any member of MGM Grand Australia
Group to an Option Holder. To the extent that the Nominee
Director requires specific confirmation, consent, or
ratification for any such disclosure from his fellow
directors or in general meeting, then the parties shall do
all things in their lawful power to assist in or procure
such confirmation, consent or ratification.
6.5 CONSULTANCY SERVICES OF MR OSBORNE
----------------------------------
Mr James Osborne shall at the request of MGM Grand Diamond
provide consultancy services to MGM Grand Australia periodically,
but in aggregate for a period of no more than four weeks during
each calendar year, until the earlier of the Call Option Exercise
Date or the expiry of the Call Option Period. The consultancy
services shall be provided at no remuneration (except for
reimbursement for travelling, hotel and associated expenses). The
manner and timetable pursuant to which such consulatancy services
are to be rendered shall be determined having regard to Mr
Osborne's other activities. Mr Osborne shall be a signatory to
this Deed solely to confirm his adherence to this Clause 6.5.
6.6 RELATED PARTY TRANSACTIONS
--------------------------
(a) Any contract, arrangement or transaction of whatsoever
nature between any member of the MGM Group or between any
Associate of the MGM Group and any member of MGM Grand
Australia Group ("Related Party Transaction") shall be
entered into on the basis:
(i) the relevant member or members of MGM Grand Australia
Group pays consideration no higher than would be
reasonable, prudent and appropriate for such member of
MGM Grand Australia Group to pay to an independent
party providing a comparable service or benefit; and
(ii) the relevant member or members of the MGM Grand
Australia Group received consideration no lower than
would be reasonable, prudent and appropriate for such
member to receive
23
from an independent party receiving a comparable
service or benefit.
(b) Any Related Party Transactions shall be approved by the
Relevant Board of MGM Grand Australia Group on the basis
that its terms are arms length, bona fide and reasonable,
with all board members being entitled to participate in such
determination. With respect to any Related Party Transaction
pursuant to which MGM Grand Australia Group would incur a
cost or grant a benefit to the MGM Group in excess of Two
hundred thousand dollars ($200,000) in respect of any one
transaction or if any independent series of transactions
exceeds Five hundred thousand dollars ($500,000) in any
twelve month period, if the Nominee Director disputes the
bona fide's or reasonableness of such Related Party
Transaction then the expert appointed under Clause 9.1 shall
determine whether or not the Related Party Transaction
satisfies the pre-conditions contained in this Clause 6.6.
6.7 FINAL SHAREHOLDERS AGREEMENT
----------------------------
(a) On or as soon as practicable after the Call Option
Completion the Option Holders, MGM Grand Diamond and MGM
Grand Australia shall execute a Final Shareholders'
Agreement ("Final Shareholders' Agreement") embodying all of
the provisions of this Deed which remain to be performed or
are capable of application and the covenants and condition
and ancillary provisions reasonable or desirable to give
full effect to the provisions contained in Schedule 4. MGM
Grand Diamond, MGM Grand Australia and the Option Holders
shall procure that any Subsidiary of MGM Grand Australia,
and any member of the MGM Group of whom any Equity
Securities in MGM Grand Australia or any Subsidiary have
been issued as permitted by this Deed, shall become a party
to such Final Shareholders' Agreement to the extent that it
is lawfully possible for such person to be a party to the
Final Shareholders' Agreement. The parties shall act in good
faith to conclude the Final Shareholders' Agreement within a
reasonable period which shall not exceed 3 months from the
date negotiations to prepare a Final Shareholders' Agreement
begin.
(b) As from the Call Option Completion and until the Final
Shareholders Agreement is executed by all of the then
existing parties to this Deed and such other members of the
MGM Group as may be necessary, the provisions contained in
Schedule 4 are intended and shall be construed to act as
covenants between all of the parties hereto to protect the
minority interest of the Option Holders and shall apply
notwithstanding anything to the contrary in the constituent
documents of any member of the MGM Grand Australia Group.
6.8 EXERCISE OF VOTING AND OTHER RIGHTS
-----------------------------------
(a) MGM Grand Diamond agrees to exercise its voting and other
rights attaching to its MGMGA Shares or arising from its
control of the
24
MGM Grand Australia Group to procure, so far as it lawfully
can, that each member of MGM Grand Australia Group and its
directors give effect to the terms and conditions of this
Deed.
(b) The Option Holders agree as and from Call Option Completion
(assuming the Call Option has been exercised) to exercise
their voting and other rights attaching to their MGMGA
Shares to procure, so far as they lawfully can, that their
Nominee Directors give effect to the terms and conditions of
this Deed.
(c) If in the option of the Option Holders and the MGM Grand
Diamond, each acting reasonably, it is necessary or
desirable to amend the articles of association of MGM Grand
Australia or any Subsidiary in order to comply with
applicable law or to give effect to the rights of the Option
Holders pursuant to this Deed (including Schedule 4), then
all parties shall exercise their voting and other right
attaching to or arising for the MGMGA Shares to attempt to
implement such changes.
7. PROPOSED LISTING OF MGM GRAND AUSTRALIA
---------------------------------------
7.1 LISTING
-------
MGM Grand Diamond recognises and acknowledges that one of the
preferred exit mechanisms for the Option Holders would be the
Listing of all the ordinary share capital of MGM Grand Australia.
If the Option Holder shall issue a notice to MGM Grand Diamond
that they wish MGM Grand Australia to obtain such a Listing
within twelve months from the date of the notice, then (subject
to any restriction imposed by law on MGM Grand Diamond, MGM Grand
Australia or the MGM Grand Australia Group member holding the
Casino Licence); MGM Grand Diamond shall give due consideration
to such request, including without limitation, to the extent it
deems it desirable to do so appoint an independent consultant of
appropriate experience to advise on the merits of obtaining a
Listing.
7.2 COMMITMENT OF SHAREHOLDERS
--------------------------
Nothing in Clause 7 shall oblige MGM Grand Diamond to sell any of
the MGMGA Shares held by it or to require MGM Grand Australia to
issue any new MGMGA Shares. However, if MGM Grand Diamond and the
Option Holders (assuming the Call Option has been exercised)
agree to seek to obtain a Listing, then the Option Holders agree
to all of their MGMGA Shares being quoted on the relevant Stock
Exchange and to offer by way of sale all or such portions of
their shareholding in MGM Grand Australia as MGM Grand Diamond
may request, provided that MGM Grand Australia and/or MGM Grand
Diamond sell in such offering the aggregate of not less than Ten
percent (10%) of the issued MGMGA Shares prior to any such
offering.
25
7.3 NO OBLIGATION TO LIST
---------------------
(a) For the avoidance of doubt neither MGM Grand Diamond nor the
Option Holders will be under any obligation to consent to a
Listing, such consent to be given or withheld in their sole
and absolute discretion, but the merits of such Listing
shall be considered in good faith once the request has been
made by the Option Holders upon MGM Grand Diamond pursuant
to Clause 7.1.
(b) Notwithstanding that a party has consented to a Listing such
consent may be withdrawn anytime prior to Listing, subject
to any third party contractual obligations, if any party so
elects as a result of an adverse movement in the proposed
issue price of a share on Listing or the imposition of
unreasonable conditions.
8. PUT OPTION
----------
8.1 CONDITION PRECEDENT
-------------------
If by the first anniversary of the Call Option Exercise Date:-
(a) no Listing of the ordinary share capital of MGM Grand
Australia has occurred or is not considered desirable by the
Option Holders and MGM Grand Diamond; or
(b) if the Listing has been obtained but the Listing is on a
market which has insufficient liquidity based on bona fide
estimates, to absorb a sale of all of the Call Option Shares
then held by the Option Holders, within a period of six
months after such Listing; then the following provisions of
this Clause 8 will apply. Any dispute concerning the
aforegoing shall be resolved in accordance with Clause 9.1.
8.2 GRANT OF PUT OPTION
-------------------
MGM Grand Diamond hereby grants to the Option Holders,
collectively an option to sell the Put Option Shares, for the Put
Option Consideration, free from all Encumbrances (other than
those that may be contained in this Deed).
8.3 OPTION EXERCISABLE ONLY JOINTLY
-------------------------------
The Put Option shall only be capable of being exercised:
(a) during the Put Option Period, or
(b) if an Event of Default (as defined in Clause 12) has
occurred prior to the commencement of the Put Option Period,
at any time after the occurrence of the Event of Default and
so long as such Event of Default is continuing, but in no
event after the expiration of the Put Option Period.
26
To the extent that the Put Option is not so exercised it shall
lapse and be incapable of further or subsequent exercise. The Put
Options shall be capable of being exercised by the Option Holders
only collectively in respect of the whole of the Put Option
Shares and only during the Put Option Period.
8.4 EXERCISE NOTICE
---------------
The Put Option shall be exercised collectively by notice in
writing by the Option Holders to MGM Grand Diamond.
8.5 NO WITHDRAWAL OF NOTICE
-----------------------
An Option Holder shall not be entitled to withdraw a notice
served pursuant to Clause 8.4, once it has been duly served.
8.6 CONTRACT FOR SALE AND PURCHASE
------------------------------
(a) Upon receipt by MGM Grand Diamond of a notice from the
Option Holders, given in accordance with Clause 8.4, a
contract for the sale and purchase of the Put Option Shares
between MGM Grand Diamond or subject to Clause 8.6(b)(iii)
its nominee ("MGM Nominee") as purchaser and the Option
Holders as vendors shall be created as at the date of
receipt of that notice. If MGM Grand Diamond nominates a
person to be the MGM Nominee to acquire the Put Option
Shares under this Clause 8.6 (details of the nominee are
communicated to the Option Holders at least five Business
Days before the Put Option Completion), MGM Grand Diamond
shall be responsible as the primary obligor and not as
surety for the payment of the Put Option Consideration.
(b) It shall be a condition to Completion of the sale and
purchase of the Put Option that
(i) the Treasurer of the Commonwealth of Australia
consents, under the Foreign Acquisitions and Takeovers
Act 1975, to the proposed acquisition by MGM Grand
Diamond (or subject to Clause 8.6(b)(iii) MGM Nominee)
of the Put Option Shares and the Treasurer is to be
deemed to have so consented:
(A) if MGM Grand Diamond (or subject to Clause
8.6(b)(iii) MGM Nominee) receives written advice
from the Treasurer on his behalf, without any term
or condition which MGM Grand Diamond (or MGM
Nominee) considers unacceptable, to the effect
that the acquisition of the Put Option Shares is
not objected to under the Foreign Acquisitions and
Takeovers Act 1976; or
(B) if 10 days have elapsed from the day the Treasurer
ceased to be empowered to make any order under
Part II of the Foreign Acquisitions and Takeovers
Act in
27
relation to the proposed acquisition because of
lapse of time, notice of the proposed acquisition
of the Put Option Shares having been given to the
Treasurer under the Foreign Acquisitions and
Takeovers Act 1975; and
(ii) the Option Holders and MGM Grand Diamond receiving not
later than six months after the Put Option Exercise
Date on an unconditional basis all relevant consents
and approvals required, if any, from any governmental
authority including the Government or relevant
Minister of the Northern Territory of Australia in
relation to any change of interest in MGM Grand
Australia; and
(iii) where the conditions referred to in the preceding sub-
paragraphs (b)(i) and (b)(ii) have not been satisfied
within 3 months of the Put Option Exercise Date but
are likely to be satisfied within a period of 3 months
if the purchaser of the Put Option Shares is MGM Grand
Diamond and not MGM Nominee, then notwithstanding
Clause 8.6(a), the purchaser of the Put Option Shares
shall be MGM Grand Diamond and no other person.
(c) MGM. MGM Grand Diamond (for itself and on behalf of any MGM
Nominee) and the Option Holders shall use their best
endeavours (other than by incurring substantial liabilities,
substantial obligations (including any divestment or
restrictions on business operations) or monetary obligations
and other than by consenting to any substantial alteration
to the terms of this Agreement) to satisfy any request for
information or condition or conditions specified by or on
behalf of the Treasurer of the Commonwealth of Australia
under the Foreign Acquisitions and Takeovers Act 1975 as
referred to in Clause 8.6(b). Each of the parties shall use
all their best endeavours to obtain the fulfilment of the
conditions in Clause 8.6(b) in an expeditious manner, and
shall give the others prompt notice in writing upon it
becoming aware whether or not any of the condition
precedents referred to in Clause 8.6(b) has been satisfied.
8.7 NO ENCUMBRANCES
---------------
The Put Option Shares shall be sold by the Option Holders as
beneficial owners free from all Encumbrances and adverse claims,
together with all rights attaching thereto, as at the date of the
Put Option Completion including all dividends declared or payable
or distributions made or proposed on or after the Put Option
Exercise Date.
8.8 CONSIDERATION
-------------
The total consideration payable for the purchase of the Put
Option Shares shall be the Put Option Consideration.
28
8.9 VENUE AND COMPLETION DATE
-------------------------
Completion of the sale and purchase of the Put Option Shares
shall take place between the hours of 9.00am and 3.00pm (Las
Vegas, Nevada time) on the fifth (5th) Business Day after the
latter of the satisfaction of the conditions precedent referred
to in Clause 8.6 and determination of the Put Option
Consideration in accordance with Schedule 3 or such other date as
the relevant Option Holder and MGM Grand Diamond may agree in
writing, at the office of MGM Grand Diamond or at such other
place as MGM Grand Diamond and the Option Holder may agree.
8.10 COMPLETION
----------
On Completion:
(a) the Option Holders shall deliver to (or make available to
the satisfaction of) MGM Grand Diamond or MGM Nominee (as
the case may be):
(i) definitive certificates for the relevant Put Option
Shares (or if such certificate has been lost or
destroyed the necessary declarations have been made as
required by the Articles of Association of MGM Grand
Australia or the Corporations Law for the issue of
replacement certificates) together with transfers
thereof duly executed by the registered holders
thereof, in favour of MGM Grand Diamond or MGM Nominee
(as the case may be);
(ii) such consents or documents (if any) as may be required
to give evidence of title to the relevant Put Option
Shares and to sell, transfer or vest such title in MGM
Grand Diamond or MGM Nominee (as the case may be) free
from Encumbrance; and
(iii) duly executed proxy forms in the form set out in the
Articles of Association of MGM Grand Australia
appointing MGM Grand Diamond or MGM Nominee (as the
case may be), as proxy to exercise the right to vote
attached to the relevant Put Option Shares in respect
of all general meetings of holders of Equity
Securities of MGM Grand Australia after the date of
Completion pending registration of the transfers
referred to in sub-paragraph (i) above;
(b) MGM Grand Diamond shall pay the Put Option Consideration to
the Option Holders as specified in writing by the Nominated
Option Holder by bank cheques, cashiers cheques, or by
direct debits or telegraphic transfers to the bank accounts
nominated in writing by the Nominated Option Holder; and
(c) MGM Grand Diamond shall procure that any loan made by any of
the Option Holders to any member of the MGM Grand Australia
Group is
29
repaid in full together with all interest accrued thereon to
the date of Put Option Completion.
8.11 WARRANTIES BY OPTION HOLDER
--------------------------
The Option Holder exercising the Put Option shall in respect of
the Put Option Shares registered in its name ("Relevant Put
Option Shares"), represent and warrant to MGM Grand Diamond or
MGM Nominee that on the day of Put Option Completion:-
(a) the Option Holder is the beneficial owner and in possession
of the Relevant Put Option Shares (including all evidence of
title) and such Relevant Put Option Shares will not at Put
Option Completion be the subject of any Encumbrance;
(b) the Option Holder is entitled and competent to sell and
transfer the Relevant Put Option Shares subject to the
Articles of Association of MGM Grand Australia;
(c) any dividends, bonuses or other distributions declared made
or paid in relation to any of the Relevant Put Option Shares
held by the Option Holder after the exercise of the Put
Option will be for the sole benefit of MGM Grand Diamond or
MGM Nominee (as the case may be) and, if paid to the Option
Holder, will be forthwith paid to MGM Grand Diamond or MGM
Nominee (as the case may be) or by the Option Holder, by
bank cheque;
(d) the Option Holder is not engaged in any proceedings,
litigation, arbitration or prosecution (whether as plaintiff
or defendant or otherwise) concerning or affecting the
Relevant Put Option Shares held by it and that no legal or
other proceedings are threatened or envisaged by or against
the Option Holder concerning the Relevant Put Option Shares
and that to the best knowledge, information and belief of
the Option Holder there are no circumstances likely to lead
thereto; and
(e) no Insolvency Event has occurred in relation to the Option
Holder.
8.12 PARTIAL COMPLETION
------------------
(a) MGM Grand Diamond or MGM Nominee (as the case may be) shall
not be obliged to complete the purchase of the Put Option
Shares if an Option Holder is in breach of any of its
obligations pursuant to Clause 8.10 or any representation
or warranty given by it pursuant to Clause 8.11 unless and
until such breach has been cured (if capable of remedy)
within 30 days of MGM Grand Diamond or MGM Nominee giving
notice to the defaulting party of such breach.
(b) MGM Grand Diamond or MGM Nominee (as the case may be) may,
at its option, pending the curing of the breach of
obligation referred to in Clause 8.12(a), elect to proceed
to Completion of the remainder of the
30
Put Option Shares held by the other Option Holders
notwithstanding Clause 8.12(a).
(c) Nothing contained in this Clause 8.12 shall limit or
otherwise restrict the rights and remedies, including
without limitation equitable remedies, which may be
available to MGM Grand Diamond or MGM Nominee (as the case
may be) by reason of the matters referred to in Clause
8.12(a).
9. DISPUTE RESOLUTION
------------------
9.1 RESOLUTION BY AUDITOR
---------------------
In the event that the Option Holders and MGM Grand Diamond are
unable to agree in relation to the matter referred to in Clauses
3.6(d), 3.10, 6.2(b)(i), 6.6, 8.1 or Schedules 2 or 3, then the
auditors for the time being of MGM Grand Australia shall as
experts and not as arbitrators make a determination in relation
to the subject matter in dispute, which in the absence of
manifest error shall be final binding. Any of the parties may
make a submission to the auditor in relation to the subject
matter of his proposed determination and the auditor shall be
given access to such information as he reasonably requires to
make a proper and full determination. The costs of the auditor
shall be borne as to one half by MGM Grand Diamond and, as to the
other half by the Option Holders. For the avoidance of doubt, MGM
Grand Diamond and the Option Holders intend that no such
resolution by MGM Grand Australia's auditor shall prevent such
auditor from continuing in the capacity of MGM Grand Australia's
independent auditor and in the event, in the opinion of such
auditor, it may not resolve such dispute and continue in such
capacity it shall designate an auditor of comparable standing to
resolve such dispute.
9.2 GENERAL DISPUTE RESOLUTION
--------------------------
(a) Unless a party has complied with Sub-Clauses 9.2(a) to (f),
that party may not commence court proceedings or arbitration
relating to any dispute arising from this instrument except
where that party seeks urgent interlocutory relief in which
case that party need not comply with this Clause when
seeking such relief. Where a party fails to comply with Sub-
Clauses 9.2(a) to (d) inclusive, any other party in dispute
with the party so failing to comply need not comply with
this Clause before referring the dispute to arbitration or
commencing court proceedings relating to that dispute or
defending or otherwise participating in any such arbitration
or court proceedings commenced by the party so failing to
comply.
(b) Any party claiming that a dispute has arisen under this
instrument between any of the parties shall give written
notice to the other party or parties in dispute designating
its representatives in negotiations relating to the dispute
and a person with authority to settle the dispute and each
other party given written notice shall promptly give notice
in writing to the parties in dispute designating as its
representatives in negotiations
31
relating to the dispute and a person with similar authority
to settle disputes.
(c) The designated persons shall, within ten days of the last
designation required by Sub-Clause 9.2(b), following
whatever investigations each deems appropriate, seek to
resolve the dispute.
(d) If the dispute is not resolved within the following ten days
(or within such further period as the representatives may
agree is appropriate) the parties in dispute shall within a
further ten days (or within such further period as the
representatives may agree is appropriate) seek to resolve
the whole or part of the dispute through the means of
mediation and shall agree on:
(i) the procedure and timetable for any exchange of
documents and other information relating to the
dispute;
(ii) procedural rules and a timetable for the conduct of
the mediation;
(iii) a procedure for selection and compensation of any
neutral person who may be employed by the parties in
dispute; and
(iv) whether the parties should seek the assistance of a
dispute resolution organisation.
(e) The parties acknowledge that the purposes of any exchange of
information or documents or the making of any offer of
settlement pursuant to this Clause 9.2 is to attempt to
settle the dispute between the parties and without prejudice
to their rights in any arbitration or court proceedings. No
party may use any information or documents obtained through
the dispute resolution process established by this Clause
for any purpose other than in an attempt to settle a dispute
between that party and other parties to this Deed.
(f) After the expiration of the time established by or agreed
under Sub-Clause 9.2(a) for agreement of the matters
referred to in Sub-Clause 9.2(d)(i) to (iv) inclusive, any
party which has complied with the provisions of Clause
9.2(a) to (d) inclusive may in writing terminate the dispute
resolution process provided for in those Clauses and may
then defer the dispute to arbitration or commence court
proceedings relating to the dispute.
10. INFORMATION
-----------
10.1 REPORTING TO OPTION HOLDERS
---------------------------
Subject to any express third party confidentiality restrictions
or as required by applicable law, MGM Grand Diamond and MGM Grand
Australia shall, during the period referred to in Clause 6.1
procure that the Option Holders are kept
32
regularly informed regarding the business and affairs of MGM
Grand Australia Group (including the Casino). Any such
information, subject to Clause 15.1, shall be treated as strictly
confidential unless MGM Grand Australia shall otherwise direct.
10.2 ACCESS BY OPTION HOLDERS
------------------------
Subject to any express third party confidentiality restrictions
or as required by applicable law, MGM Grand Diamond shall, during
the period referred to in Clause 6.l give the Option Holders such
information relating to the MGM Grand Australia Group as any of
the Option Holders may reasonably require and shall afford to an
Option Holder such facilities in relation thereto as it may
reasonably require. Subject to Clause 15.1 any such information
shall be treated strictly confidential unless MGM Grand Diamond
shall otherwise direct.
10.3 DISCLOSURE BY NOMINEE DIRECTOR
------------------------------
Subject to any express third party confidentiality restrictions
or as required by applicable law, during the period referred to
in Clause 6.1 a Nominee Director appointed by the Option Holders
pursuant to Clause 6.4 may, and shall on the request of an Option
Holder, provide such information to the Option Holder as he
considers appropriate or as may be reasonably requested by an
Option Holder from time to time. Subject to Clause 15.1 any such
information shall be treated as strictly confidential unless MGM
Grand Australia shall otherwise direct. To the extent that the
Nominee Director requires specific confirmation, consent, or
ratification for any such disclosure from his fellow directors or
in general meeting, then the parties shall do all things in their
lawful power to assist in or procure such confirmation, consent
or ratification.
10.4 INFORMATION PERIOD
------------------
The provisions contained in Clauses 10.1 to 10.3 inclusive shall
apply from the date of the Deed until the expiry of the Call
Option Period, or if the Call Option is exercised until such time
as the Option Holders have disposed all of the Equity Securities
of MGM Grand Australia held by the Option Holders.
11. SHARE CERTIFICATE ENDORSEMENT
-----------------------------
Immediately following:
Casino Sale Completion and until Listing, MGM Grand Australia and
MGM Grand Diamond shall ensure that all certificates in respect
of all Equity Securities of MGM Grand Australia issued before or
after the date of this Deed are endorsed with the following
notice:
"The securities comprised in this certificate are the
subject of, inter alia, a Deed dated [ ] 1995 and
made between [Ultrabridge Securities Limited, Cashew Nut
Holdings Limited, the Trustees of the Osborne Family Trust,
MGM Grand Diamond Inc., MGM Grand Australia Pty Ltd and MGM
Grand Inc.]"
33
MGM Grand Diamond shall thereafter procure that, so long as the
Call Options shall remain exercisable by the Option Holders, any
replacement certificates issued to it in respect of the Equity
Securities shall be similarly endorsed.
12. DEFAULT
-------
12.1 EVENTS OF DEFAULT
-----------------
It shall be an event of default in relation to a party (an
"Event of Default") if any party commits a material breach
of this Deed and (if capable of remedy) fails to remedy the
same (or establish plans to remedy the same in a manner
satisfactory to the non-defaulting parties) within thirty
(30) days of notice to do so being given by any other party
(and in which such other party expresses its intention to
exercise its rights under this Clause).
12.2 GENERAL INDEMNITY
-----------------
A party in respect of which an Event of Default occurs (a
"Defaulting Party") shall on demand from any other party,
indemnify such other party against any loss, cost, claim,
damage or expense (including but not limited to legal fees)
suffered or incurred:-
(a) as a result of any default by the Defaulting Party in
the performance of any of the obligations expressed to
be performed by it under this Deed or as the result of
an occurrence of an Event of Default which has occurred
in relation to such Defaulting Party; and/or
(b) in connection with the enforcement, preservation or
protection of any rights against the Defaulting Party
under this Deed.
13. TERM
----
This Deed shall, remain in full force and effect until the
earlier of:
(i) the end of the Call Option Period if the Call Options is
not exercised during such period;
(ii) following Call Option Completion, until replaced by the
Final Shareholders Agreements; or
(iii) such time as the Option Holders dispose of all their MGMGA
Shares.
14. COSTS AND EXPENSES
------------------
Each party shall bear its own costs and expenses in relation to
the negotiation, preparation and execution of this Deed and any
other documents referred to in this Deed or ancillary or
incidental to it. The Option Holders agree to bear all stamp duty
payable or assessable in connection with this Deed.
34
15. CONFIDENTIALITY AND ANNOUNCEMENTS
---------------------------------
15.1 CONFIDENTIALITY
---------------
Each party must keep:
(a) all information which it obtains concerning the
business, affairs or assets of MGM Grand Australia
Group; and
(b) the terms of this Deed or the Final Shareholders
Agreement; and
(c) all information relating to this Deed or the Final
Shareholders Agreement;
strictly confidential and must not, and must procure that
their respective professional advisers, officers, employees,
agents and auditors do not, without the prior written
consent of the other parties, disclose any of the above
information to any third party except:
(d) if required to make such disclosure by any court of
competent jurisdiction or in order to enforce any
rights under this Deed or the Final Shareholders
Agreement in any proceedings;
(e) pursuant to any court order;
(f) pursuant to any law or regulation having the force of
law including without limitation laws, regulations of
the government or relevant minister of the Northern
Territory of the Commonwealth of Australia or any
agency thereof;
(g) pursuant to the requirements of any recognised stock
exchange or securities regulatory body, such as the
United States Securities Exchange Commission;
(h) in circumstances where the information has come within
the public domain otherwise than by reason of a breach
by one of the parties of the provisions of this
Clause;
(i) to a bona fide intending purchaser of any of the MGMGA
Shares or to a bona fide intending director of a
company in the MGM Grand Australia Group subject to
that purchaser or intending director entering into a
confidentiality undertaking in favour of all the
parties in terms similar to this Clause;
(j) to professional advisers, and
(k) by a director to his appointor.
35
15.2 ANNOUNCEMENTS
-------------
Subject to Clause 15.2 (d)-(h) inclusive no public
announcement or communication relating to the negotiations
of the parties or the subject matter or terms of this Deed
or any other related agreement will be made or authorised by
or on behalf of any party without the prior written consent
of the other parties.
16. MISCELLANEOUS PROVISIONS
------------------------
16.1 NO PARTNERSHIP
--------------
Nothing in this Deed or in any document referred to in it
shall constitute any of the parties a partner of any other,
nor shall the execution, completion and implementation of
this Deed confer on any party any power to bind or impose
any obligations to any third parties on any other party or
to pledge the credit of any other party.
16.2 ASSIGNMENT
----------
None of the parties may assign any of their respective
rights or obligations under this Deed nor any of the
documents referred to in this Deed (including the Final
Shareholders Agreement) in whole or in part except in the
case of a Shareholder to a transferee of Equity Securities
described in Part 9 of Schedule 4 to this Deed who has
satisfied the conditions contained in that Part 9 "Permitted
Transferee" and otherwise with the consent of the other
parties. However, a Permitted Transferee's right to appoint
Nominee Directors pursuant to Clause 6.4 or its counterpart
in the Final Shareholders Agreement shall be restricted so
as to require any candidate for a position of Nominee
Director to be approved by the remaining Shareholders prior
to such appointment (such approval not to be unreasonably
withheld).
16.3 DEED OF ADHERENCE
-----------------
(a) The Option Holders shall not appoint any other person
as an Option Holder Nominee pursuant to Clause 3.2(b)
unless and until such person has entered into a deed
of adherence in relation to the terms of this Deed in
a form satisfactory to MGM Grand Diamond.
(b) MGM Grand Diamond shall not nominate an MGM Nominee
pursuant to Clause 8 unless and until such person has
entered into a deed of adherence in relation to the
terms of this Deed, in a form satisfactory to the
Option Holders, if any, who have not exercised the Put
Option.
(c) MGM Grand Diamond shall not transfer and MGM Grand
Australia shall not enter into any transactions
described and permitted by in Clause 4.1 (a), (b) or
(c) except upon compliance with the applicable
requirement concerning entry into a deed of adherence
in relation to the terms of this Deed, (including for
the avoidance of doubt Schedule 4) in
36
a form satisfactory to the Option Holders in the
exercise of reasonable judgement.
16.4 WAIVER
------
No delay by or omission of any party in exercising any
right, power, privilege or remedy under this Deed shall
operate to impair such right, power, privilege or remedy or
be construed as a waiver thereof. Any single or partial
exercise of any such right, power, privilege or remedy shall
not preclude any other or future exercise thereof or the
exercise of any other right, power, privilege or remedy.
The rights and remedies provided in this Deed are cumulative
and not exclusive of any rights and remedies provided by
law.
16.5 ENTIRE AGREEMENT
----------------
This Deed and other documents referred to in this Deed
contain the entire agreement between the parties with
respect to the subject matter hereof.
16.6 NOTICES
-------
(a) Any notice or other communication to be given by one
party to another under, or in connection with, the
matters contemplated by this Deed shall be addressed
to the recipient and sent to the address or facsimile
number, if any, of the recipient given in this Deed
for that purpose and marked for the attention of the
person so given or such other address, facsimile
number and/or marked for such other attention as the
recipient may from time to time specify by notice
given in accordance with this Clause to the party
giving the relevant notice or communication to it. In
the case of each Option Holder, the relevant details
as at the date of this Deed are set out in Schedule 1.
In the case of MGM Grand Diamond, MGM Grand Inc, or
MGM Grand Australia such details are:
Address: 3799 Las Vegas Boulevard South,
Las Vegas, Nevada 89109, USA
Facsimile Number: (702) 891 3334
For the attention of: K. Eugene Shutler Esq
with a copy to:
Address: Christensen, White, Miller,
Fink & Jacobs.
2121 Avenue of the Stars,
18th Floor, Los Angeles,
California 90067, USA
Facsimile Number: (310) 556 2920
For the Attention of: Gary N. Jacobs Esq
(b) Subject to (c) below, any notice or other
communication to be given by any party to any other
party under, or in connection with, the matters
contemplated by this Deed shall be in writing and
shall be given by letter delivered by hand or sent by
first class prepaid post (airmail if
37
overseas) or telex or facsimile, and shall be deemed to have
been received:-
(i) in the case of delivery by hand, when delivered;
(ii) in the case of first class prepaid post, on the fifth
Business Day following the day of posting; or
(iii) in the case of facsimile, on acknowledgement of the
addressee's facsimile receiving equipment.
(c) Any notice or other communication not received on a Business
Day or received after 5.00 pm local time on any Business Day
in the place of receipt shall be deemed to be received on
the next following Business Day. A notice shall not be
invalid by reason only that a copy of such notice has not
been served on any person nominated to receive copies of
notices.
16.7 COUNTERPARTS
------------
This Deed may be executed in any number of counterparts and by
the different parties on separate counterparts (which may be
facsimile copies), each of which when executed and delivered
shall constitute an original, but all the counterparts shall
together constitute but one and the same instrument.
16.8 VARIATIONS
----------
No variation to this Deed shall be effective unless made in
writing and signed by or on behalf of the parties.
16.9 JURISDICTION
------------
(a) All the parties irrevocably agree that the courts of the
Northern Territory of Australia are to have non-exclusive
jurisdiction to settle any disputes which may arise out of
or in connection with this Deed and that accordingly subject
to Clause 16.9(c) any suit, action or proceeding (together
in this Clause referred to as "Proceedings") arising out of
or in connection with this Deed may be brought in such
courts.
(b) Each party irrevocably waives any objection which it may
have now or hereafter to the laying of the venue of any
Proceedings in any such court as is referred to in this
Clause 16.9(a) and any claim that any such Proceedings have
been brought in an inconvenient forum and further
irrevocably agrees that a judgement in any Proceedings
brought in the courts of the Northern Territory of Australia
shall be conclusive and binding upon such party and may be
enforced in the courts of any other jurisdiction.
(c) Nothing contained in this Clause 16.9 shall limit the right
of any party to take Proceedings against any other party in
any other court of
38
competent jurisdiction, nor shall the taking of Proceedings
in one or more jurisdiction preclude the taking of
Proceedings in any other jurisdiction, whether concurrently
or not.
(d) Promptly after service of any process the party filing such
process shall dispatch a copy thereof to the other parties
by registered mail, postage prepaid, but failure of the
other parties to receive such copy shall not invalidate the
service of such process.
(e) The Parties to this Deed shall at all times maintain agents
for service of process in Australia. Such agents shall in
the case of the Option Holders be:
Address: Freehill Hollingdale & Page
MLC Centre
20 Martin Place
Sydney NSW 2000
Australia
Attn: Bruce K. Cutler
Telephone: (02) 225 5000
Fax: (02) 322 4000
and in the case of MGM Grand Diamond, MGM Grand Australia or
MGMG be:
Address: 3rd Floor, Diamond Beach Casino, Gilruth
Avenue, Darwin City, Darwin, Northern
Territory 0800, Australia
Telephone: (61) 89-46 2666
Fax: (61) 89-81 7553
Any writ, judgement or other notice of legal process shall
be sufficiently served on a party if delivered to such
agents at its address for the time being. Each party
undertakes not to revoke the authority of the above agents
and if for any reason any such agent no longer serves as
agent of a party to receive service of process, that it
shall promptly appoint another such agent and advise the
other parties thereof.
16.10 LAW
---
This Deed shall be governed by, and construed in all respects in
accordance with, the laws applicable in the Northern Territory of
Australia.
39
16.11 CONSENT OF OPTION HOLDERS
-------------------------
Where there is a reference in this Deed to the consent or
agreement of the Option Holders such consent or agreement shall
be deemed to have been given by all of the Option Holders if the
Nominated Option Holder so agrees or consents.
16.12 GUARANTEE BY MGM GRAND, INC.
----------------------------
MGM Grand guarantees the due and punctual performance by MGM
Grand Diamond or MGM Grand Australia of all of their respective
obligations under this Deed and shall indemnify and keep
indemnified any of the other parties for any loss, damage, cost
or expenses which may be suffered or incurred by them as a
result of the non-performance of the obligations of MGM Grand
Diamond and MGM Grand Australia hereunder. Without limiting the
generality of the aforegoing MGM Grand shall pay on demand any
amounts due for payment by MGM Grand Diamond pursuant to this
Deed if MGM Grand Diamond shall not have made such payment to
the person entitled within Five (5)Business Days of the date
such payment was due for payment.
16.13 EFFECTIVE DATE
--------------
This Deed shall be deemed to be effective and delivered as at 30
June 1995 notwithstanding that it was signed after 30 June 1995
provided all parties hereto sign a counterpart of this Deed.
40
EXECUTED AS A DEED
SIGNED for and on behalf )
of ULTRABRIDGE SECURITIES )
LIMITED as a Deed with effect )
from 30 June 1995 by: )
/s/ P. Marchetti /s/ G. McIntosh /s/ C. Papadimitrou
- --------------------------------- -----------------------------------
Signature of Witness Signature
P. Marchetti G. McIntosh C. Papadimitrou
- --------------------------------- -----------------------------------
Name of Witness Name
Director Director
-----------------------------------
Capacity
SIGNED for and on behalf )
of CASHEW NUT HOLDINGS )
LIMITED as a Deed with effect )
from 30 June 1995 by: )
/s/ /s/ Andrew Duncan
- ------------------------------ ------------------------------
Signature of Witness Signature
Andrew Duncan
- ------------------------------ ------------------------------
Name of Witness Name
Director
------------------------------
Capacity
SIGNED for and on behalf )
of CORTRUST AKTIENGESELLSCHAFT )
FUR TREUHANDSCHAFTEN AND DR )
LAMBERT GRASERN AS TRUSTEE OF ) [LOGO]
THE OSBORNE FAMILY TRUST as a )
Deed with effect from 30 June )
1995 by: )
/s/ Andrew Baker /s/ Andrew Baker
- ----------------------------- -----------------------------
Signature of Witness Signature
/s/ Dr. Lambert Grasern /s/ Dr. Lambert Grasern
_____________________________ _____________________________
Signature of Witness Signature
_____________________________
Capacity
41
SIGNED for and on behalf )
of MGM GRAND DIAMOND, INC. )
as a Deed with effect from 30 )
June 1995 by: )
/s/ K. Eugene Shutler /s/ Alex Yemenidiian
- --------------------------- ------------------------------
SIGNATURE OF WITNESS SIGNATURE
K. Eugene Shutler Alex Yemenidiian
- --------------------------- ------------------------------
NAME OF WITNESS NAME
Vice President
------------------------------
CAPACITY
THE COMMON SEAL )
of MGM GRAND AUSTRALIA PTY LTD )
was hereunto affixed by the authority )
of its directors and in the presence of)
with effect from 30 June 1995: )
/s/ Alex Yemenidiian /s/ K. Eugene Shutler
- --------------------------- ------------------------------
SIGNATURE SIGNATURE
Alex Yemenidiian K. Eugene Shutler
- --------------------------- ------------------------------
NAME NAME
Director Director
- ------------------------------ ------------------------------
CAPACITY CAPACITY
SIGNED for and on behalf )
of MGM GRAND INC. )
as a Deed with effect from 30 )
June 1995 by: )
/s/ K. Eugene Shutler /s/ Alex Yemenidiian
- --------------------------- ------------------------------
SIGNATURE OF WITNESS SIGNATURE
K. Eugene Shutler Alex Yemenidiian
- --------------------------- ------------------------------
NAME OF WITNESS NAME
President
------------------------------
CAPACITY
42
SIGNED for and on behalf of )
of JAMES OSBORNE )
to reflect his adherence to )
Clause 6.5 of this Deed )
with effect form 30 June )
1995 by: )
/s/ M. Kennedy /s/ James Osborne
- ------------------------ -------------------------
Signature of Witness James Osborne
/s/ M. Kennedy
- ------------------------
Name of Witness
43
SCHEDULE 1
----------
(OPTION HOLDERS)
NAME ADDRESS AND AGREED
- ---- ----------- ------
FACSIMILE NUMBER PROPORTION
---------------- ----------
1. Ultrabridge Securities Limited P O Box 309 1/3 (One third)
Grand Cayman
Cayman Islands
British West Indies
2. Cashew Nut Holdings Limited Queens House 1/3 (One third)
Don Road
St. Helier
Jersey SE4 0TH
Channel Islands
3. CorTrust Aktiengesellschaft fur Pflugstrasse 10, 1/3 (One third)
Treuhandschaften and Dr Lambert Postfach 1136
Grasern as trustees of the Osborne FL-9490 VADUZ
Family Trust Furstentum
Liechtenstein
44
SCHEDULE 2
----------
(CALL OPTION CONSIDERATION)
---------------------------
1. The Call Option Consideration shall be an amount expressed in Australian
Dollars equal to the amount calculated in accordance with the following
formula:
C=0.225 x (SSC + SSC(P X I) - D -AFC)
-----
360
where
C is the aggregate Call Option Consideration payable on exercise of the
Call Option;
SSC is $83,000,000, subject to the "Adjustments" as such term is defined
in the third sentence of Clause 3.1 of the Casino Sale Agreement to
reflect operations, certain balance sheet items, dividends and
distributions specified therein;
I is the average of One per cent (1%) plus LIBOR as at the Casino Sale
Completion and at the expiry of each 90 day period thereafter,
expressed as a decimal and pro-rated for periods of less than 90 days;
P is the number of days from the Casino Sale Completion until the Call
Option Completion; and
D is the aggregate amount of all distributions (whether in cash or in
specie), dividends (whether final, interim or bonus) and return of
capital to the shareholders of MGM Grand Australia made or agreed to
be made or paid or otherwise declared during the period referred to in
P above (except to the extent of distributions made after the Call
Option Exercise Date, to which Clause 5.2(e) of the Option Deed is
applicable).
AFC is:
(a) the aggregate amount of all repayments or prepayments of
principal under or pursuant to the Acquisition Financing;
(b) the aggregate amount of all interest payments made by MGM Grand
Australia under the Acquisition Financing;
(c) any other costs, expenses or payments made by MGM Grand Australia
or any Subsidiary of MGM Grand Australia in relation to the
Acquisition Financing or any Encumbrance granted in connection
with the Acquisition Financing; and
45
(d) the aggregate outstanding balance of the Acquisition Financing to
the extent it is not discharged or assumed pursuant to Clause
3.10(a):
in respect of paragraphs (a)-(c) made on or before the Call Option
Exercise Date, and in respect of paragraph (d) as at Call Option
Exercise Date, and in each case after deducting the benefit to the
MGM Grand Australia Group of any resulting Australian tax deduction,
tax credit or other tax properly claimed or claimable in respect of
such payment. However, if an amount that was claimable as at the date
of Call Option Completion is later determined by MGM Grand Australia
or the relevant tax authorities not to be properly claimable or to be
disallowed then the Call Option Consideration shall be adjusted and
the additional consideration shall be paid to the Option Holders
within Five (5) Business Days of a determination referred to above.
2. Where the calculation of the Call Option Consideration results in a
positive number then the Call Option Consideration required to be paid by
each of the Option Holders shall be its Agreed Proportion of the positive
number. However, where the calculation of the Call Option Consideration
results in a negative amount then MGM Grand Diamond shall pay an aggregate
amount equal to that negative amount ("Rebate") to the Option Holders in
the Agreed Proportions and no monetary payment will be required to be made
by the Option Holders to MGM Grand Diamond in respect of the exercise of
the Call Option.
3. If there is a bona fide dispute as to the calculation of I or D then
Completion of the Call Option shall nevertheless take place at the time and
place provided in this instrument and the aggregate Call Option
Consideration shall be Twenty two and one half per cent (22.5%) of SSC,
which shall be adjusted upward or downward as the case may be by the
payment or refund of monies within Five (5) Business Days of settlement of
the dispute as to interpretation or I or D. Any dispute shall be referred
to the expert appointed under Clause 9.1 to resolve.
46
SCHEDULE 3
----------
(PUT OPTION CONSIDERATION)
--------------------------
1. The Put Option Consideration shall be the consideration payable
to the Option Holders on the exercise of its Put Option. For each
MGMGA Share held by an Option Holder such person shall be
entitled to be paid an amount determined in accordance with the
following formula:-
(D X I)
FMV + FMV(-----)
( 360 )
PPS=----------------
NS
where
PPS is the price per MGMGA Share payable to an Option Holder on
exercise of the Put Option.
FMV is the "Fair Market Value" of MGM Grand Australia as at the
Put Option Exercise Date determined in accordance with the
following provisions of this Schedule 3;
NS is the number of issued MGMGA Shares of MGM Grand Australia
as at the Put Option Exercise Date;
I is the average of One per cent (1%) plus LIBOR (as at the
Put Option Exercise Date and at the expiry of each 90 day
period thereafter, expressed as a decimal and pro rated for
period of less than 90 days; and
D is the number of days from the relevant Put Option Exercise
Date to relevant Put Option Completion.
2. Subject to paragraph 7, the Fair Market Value of MGM Grand
Australia as at the Put Option Exercise Date shall be calculated
by taking the numerical average of the valuations determined by
two separate investment banks experienced in the valuation of
companies in Australia, one to be appointed by the Option Holders
and the other by MGM Grand Diamond ("Valuation Experts"). The
Option Holders and MGM Grand Diamond any also agree in the place
of one or more of the investment banks to use another suitable
professional firm or organisation. In either case all costs of
such valuations shall be for the account of the appointor.
3. Each Valuation Expert shall be provided with copies of all
submissions and letters of instruction (which documents should
fairly represent the brief given to the Valuation Expert) given
to the other Valuation Expert. Copies shall also be given to the
Option Holder or MGM Grand Diamond if they do not already possess
such documents. Additionally, each Valuation Expert may request
such other reasonable information to
47
assist it in making its determination and the parties shall
procure as far as they are legally able that MGM Grand Australia
Group provides the necessary information.
4. The Valuation Experts shall each be instructed to provide a
single amount as the Fair Market Value of MGM Grand Australia as
a complete entity without regard to minority shareholdings,
special rights conferred under the Articles of Association or
otherwise and any premium for control. If contrary to its
instructions the Valuation Expert does not express a single
amount as a Fair Market Value but express a range of values, then
for the purposes of determining the average of the valuations of
each Valuation Expert referred to in paragraph 2 of this Schedule
3, the median of such range shall be used. The Option Holder and
MGM Grand Diamond shall instruct their respective Valuation
Experts within Ten (10) Business Days of the Put Option Exercise
Date and instruct such Valuation Expert to provide a draft
valuation report within Twenty (20) Business Days. A copy of the
draft valuation report shall be served on the Option Holder and
MGM Grand Diamond and each of those parties shall have the right,
to be exercised within Ten (10) Business Days after receipt of
the draft valuation report, to respond in writing only, to the
Valuation Expert providing the draft valuation report with its
comments and observations in relation to the draft valuation
report. The Valuation Expert shall be further instructed to
complete and finalise its draft valuation report no less than
Fifteen (15) Business Days after it has served on the Option
Holder and MGM Grand Diamond a copy of the draft valuation
report.
5. If contrary to Clause 3.10(a) MGM Grand Diamond has not satisfied
its obligations thereunder as at Put Option Exercise Date then
the Fair Market Valuation of MGM Grand Australia shall be made on
the basis that such obligations under Clause 3.10(a) were deemed
to be satisfied as at Call Exercise Date.
6. Copies of the final valuation reports should be furnished to all
parties and if there is a dispute as to average valuation this
shall be resolved by the expert appointed pursuant to Clause 9.1.
7. If the Fair Market Values determined by each of the Valuation
Experts differ by more than 10% then the Option Holders and MGM
Grand Diamond shall appoint a new Valuation Expert to finally and
conclusively determine the Fiar Market Value. The new Valuation
Expert will be given copies of the parties prior submissions and
be instructed to determine the Fair Market Value in accordance
with this Schedule. If the Option Holders and MGM Grand Diamond
are unable to agree on the identity of the new Valuation Expert
then such Valuation Expert shall be nominated by the expert
appointed pursuant to Clause 9.1 of the Deed.
8. The Option Holder and MGM Grand Diamond agree that any
information received by them pursuant to the above provisions
from one or other Valuation Expert shall be treated as
confidential and used solely for the purpose of determining the
Fair Market Value and shall not be given to any third party. The
parties agree to co-operate with the reasonable requests of the
Valuation Experts.
9. Subject to paragraph 5 above, the parties may agree from time to
time the basis on which the valuation of the Fair Market Value is
to be determined by the Valuation
48
Expert. However, in the absence of agreement, prior to referral
to the Valuation Experts, each Valuation Expert shall make its
own determination of the proper basis for valuation.
49
SCHEDULE 4
----------
(SHAREHOLDER COVENANTS)
PART 1 STATUS
1.1 The terms, conditions and covenants contained in this Schedule 4
shall, as and from Call Option Completion, apply to each of the
then existing parties to this Deed in accordance with Clause
6.7(b) of this Deed.
1.2 To the extent of any conflict or inconsistency between any of the
preceding terms of this Deed and the provisions of this Schedule
4, the provisions of the Deed shall prevail.
1.3 In the event of the Listing of any Equity Securities of MGM Grand
Australia, as contemplated in the Deed, the terms, conditions and
covenants contained in this Schedule 4 shall thereupon lapse and
be of no further force or effect.
PART 2 INTERPRETATION
2.1 Terms defined in Clause 1.1 of the Deed shall have the same
meanings when used in this Schedule 4.
2.2 In this Schedule 4, the following additional expressions have the
following meanings:-
"Accounting Firms" means any of Arthur Andersen & Co, Ernst &
Young, Coopers & Lybrand, Deloitte Ross Tohmatsu, KPMG Peat
Marwick, Price Waterhouse and any successor of them or such other
accounting firm as the Shareholders shall unanimously approve;
"Annual Accounts" means the accounts approved in accordance with
Clause 4(b), audited in accordance with Clause 4(b)(ii) and
approved by the Relevant Board;
"Board" means the Board of Directors of a company;
"Financial Year" means a period beginning on 1 January of one
year and ending on 31 December in such year; and
"Third Party" means a person other than a Shareholder or an
Associate of a Shareholder.
2.3 Reference in this Schedule 4 to Clauses are references to Clauses
of this Schedule 4 unless otherwise stated.
50
PART 3 SCOPE
3.1 Notwithstanding the generality of the corporate objectives
enumerated in the Memorandum and Articles of Association, the
initial scope of MGM Grand Australia shall be the ownership,
management and operation of the Casino and other gaming and
related activities in the Northern Territory.
PART 4 POSITIVE COVENANTS
4.1 The parties shall use their best endeavors to ensure that:-
(a) each member of the MGM Grand Australia Group will prepare
and provide management information and reports to its
directors sufficient for the efficient operation of each
member of the MGM Grand Australia Group;
(b) each member of the MGM Grand Australia Group shall make
available to the Shareholders all information concerning the
business and operations of each member of the MGM Grand
Australia Group including, but not limited to, the following
reports which shall be furnished to the Shareholders:-
(i) as soon as practicable after the end of each calendar
quarter and in any event within Forty five (45) days
thereafter an unaudited profit and loss statement and a
monthly cash flow statement (with projections for the
following Six (6) months) of each member of the MGM
Grand Australia Group as at the end of the last
preceding calendar quarter and for the current
Financial Year to date, prepared in accordance with
previous financial statements, all in reasonable detail
and so certified by the principal financial or
accounting officer of each member of the MGM Grand
Australia Group;
(ii) as soon as practicable after the end of each Financial
Year an audited consolidated profit and loss account
and audited consolidated balance sheet for the MGM
Grand Australia Group prepared in accordance with
previous financial statements, all in reasonable detail
and so certified by the principal financial or
accounting officer of each member of the MGM Grand
Australia Group;
(iii) as soon as practicable after the end of each calendar
quarter and in any event within 45 days thereafter, an
unaudited balance sheet of each member of the MGM Grand
Australia Group as at the end of that quarter prepared
in accordance with previous financial statements all in
reasonable detail and so certified by the principal
financial or accounting officer of each member of the
MGM Grand Australia Group; and
(iv) before the end of each Financial Year an annual budget
for the next succeeding Financial Year on a monthly
basis for each member of the MGM Grand Australia Group
approved by the Relevant Board.
51
(c) each member of the MGM Australian Group shall incorporate
into its articles regulations to the effect:
(i) that meetings of the Board may be held by telephone or
other contemporaneous link up referred to in Clause
6.4(h) of the Deed and that resolutions passed at such
meetings shall be valid and effective; and
(ii) on the written request of a Nominee Director a board
meeting shall be convened in accordance with the
preceding paragraph within 10 Business Days of such
request.
PART 5 BOARD POLICY MATTERS
Notwithstanding any other provision of this Schedule 4 or the
Articles of Association of any member of the MGM Grand Australia
Group, the following events, matters or things shall be
considered and determined by a duly convened meeting of the
Relevant Board and not by any individual director nor committee
of directors of a member of the MGM Grand Australia Group:-
(a) the sale, disposal or grant of an Encumbrance, by that
member of or over any assets, or group of assets, having a
value of more than One million dollars $1,000,000 (other
than a bona fide arms length sale of trading stock in the
ordinary course of business);
(b) any loan or series of loans totalling to more than One
million dollars $1,000,000 being made to or by that member
or the repayment of any such loan to or by that member of
the MGM Grand Australia Group other than on terms previously
agreed by the Board;
(c) any formation, acquisition or disposition of any subsidiary
by that member;
(d) the adoption by that member of any budget;
(e) the incurring by that member of any one item of capital
expenditure or leasing expenditure of more than One million
dollars $1,000,000 if provision for such expenditure is not
made in the budget referred to in Clause 5(d) hereof or the
incurring by that member of the MGM Grand Australia Group of
a series of related items of capital expenditure or leasing
expenditure, in an aggregate amount of more than Three
million dollars ($3,000,000) if provision for such
expenditure is not made in the budget referred to in Clause
5(d) hereof;
(f) any merger with or takeover of any other business or entity
by that member;
(g) any increase in the fees due to any director of the Board;
(h) subject to Clause 6.6 of the Deed, any contract, arrangement
or transaction of whatsoever nature having a value in excess
of One hundred thousand dollars $1,000,000 between that
member and any member of the MGM Group or any
52
Associate of the MGM Group or any Nominee Director or
Associate of a Nominee Director;
(i) subject to Clause 12, the declaration or payment of any
dividend by MGM Grand Australia (whether in cash, shares, in
specie or otherwise) and the level to which any dividend is
to be franked;
(j) the creation or increase of any bonus, profit sharing or
share or stock option scheme by MGM Grand Australia;
(k) the approval of the Annual Accounts and;
(l) a change of auditor.
PART 6 MEMBERS' POLICY MATTERS
Notwithstanding any other provision of this Schedule 4 or the
Articles of Association of MGM Grand Australia, the parties
jointly and severally covenant with each other that without
approval of the Nominated Option Holder, they shall not:-
(a) except as may be required to comply with any mandatory
provision of applicable law, permit any alteration to the
Articles of Association, the Memorandum or the constituent
documents of any member of MGM Grand Australia, which
approval shall not be unreasonably withheld if the effect of
such alteration does not, in the opinion of the Option
Holders reasonably formed, adversely affect their rights
under those documents or this Deed or arising from their
MGMGA Shares;
(b) except as may be required to comply with a mandatory
provision of applicable law, permit any variation of the
rights attaching to any Equity Securities in the capital of
MGM Grand Australia;
(c) fail to use commercially reasonably efforts to procure that
MGM Grand Australia either directly or through a wholly
owned Subsidiary continues to beneficially own at least
Eighty five per cent (85%) of the Territory Property Trust
or the underlying property held as at the date of the Deed
and to operate directly or through a Subsidiary Undertaking
the business conducted at the Casino;
(d) permit the cancellation of any issued capital of any member
of the MGM Grand Australia Group;
(e) permit the sale or transfer by MGM Grand Australia of any
Equity Securities in any Subsidiary which would result in
that Subsidiary ceasing to be a Subsidiary and in the case
of the Territory Property Trust ceasing to be beneficially
owned by the MGM Grand Australia Group at a level of at
least Eighty five per cent (85%);
53
(f) permit a Subsidiary to cease to be a Subsidiary or in the
case of the Territory Property Trust ceasing to be
beneficially owned by the MGM Grand Australia Group at a
level of at least Eighty five per cent (85%); and
(g) permit the offer or allotment of any Equity Securities or
rights or options convertible into Equity Securities in MGM
Grand Australia, except if:-
(i) an offer is made pro rata to all Shareholders and on
identical terms;
(ii) the Shareholders have a minimum of 60 days to accept
for their proportion of the offer and to tender the
subscription amount; and
(iii) the proceeds of the proposed offer or allotment are
not to be used to retire, repay or prepay, either in
whole or in part, any indebtedness of MGM Grand
Australia or any Subsidiary funded or required to be
funded pursuant to Clause 6.2(a)(i) of the Deed.
(h) permit the purchase by MGM Grand Australia of any of its
share capital unless:-
(i) it is part of the Put Option and MGM Grand Australia
is the MGM Nominee; or
(ii) an offer is made pro rata to all Shareholders and on
identical terms.
PART 7 ACCOUNTS
Not later than four months after the end of each Financial Year,
the Annual Accounts of each member of the MGM Grand Australia
Group must be audited, by one of the Accounting Firms and
approved by its Board.
PART 8 TRANSFEREES BOUND
Any permitted transfer or issue of any Equity Securities of MGM
Grand Australia other than in relation to a Listing shall,
subject to this Schedule 4, be conditional upon:-
(a) compliance with the Articles of Association of MGM Grand
Australia;
(b) in the case of any transfer to a person who is not a party
to the Deed, such transferee first entering into an
agreement with the parties to the Deed pursuant to which
such transferee agrees to be bound by the surviving
provisions of the Deed (including this Schedule 4) provided
that the transferee shall not have the benefit of Clauses
8.1 to 8.12 inclusive of the Deed and undertakes to perform,
observe and enjoy all the transferring person's obligations
and rights under the Deed (including without limitation this
Schedule 4 and the obligation to act through the Nominated
Option Holder) so far as the same remain to be performed and
observed; and
54
(c) in the case of any issue of Equity Securities the allottee
of such Equity Securities first entering into a binding
agreement with the parties to the Deed in a form acceptable
to those persons and substantially similar to the surviving
provisions of the Deed (including this Schedule 4).
PART 9 RESTRICTIONS ON SALE OF MGMGA SHARES
9.1 The Shareholders agree that, without the prior written consent of
all of the Shareholders, they are not entitled to exercise their
right to sell or transfer their Equity Securities in MGM Grand
Australia, or any interest in them, except pursuant to the
following Clauses 10 and 11 and additionally in the case of the
Option Holders, except pursuant to Clause 8 of the Deed. For the
avoidance of doubt the Option Holders may exercise their rights
pursuant to Clause 8 of the Deed without having to comply with
any of the provisions of this Schedule 4.
PART 10 SALE WHERE WILLING PURCHASER IDENTIFIED
10.1 Any Shareholder ("Offeror Member") who desires to sell all (but
not some only) of its Equity Securities (the "Vendor Shares") to
a person who is not a Shareholder shall:-
(a) first obtain from a party desiring to acquire the Vendor
Shares (the "Proposed Purchaser") bona fide firm written
offers containing all the terms and conditions on and
subject to which such offers are made and each valid for a
period of at least 60 Business Days after the date of
receipt of the notice given under paragraph (b) of which:-
(i) the first shall be an offer to purchase the Vendor
Shares (the "Partial Offer"); and
(ii) the second shall be an offer directed to the Offeror
Member and to all other Shareholders to purchase all
the Equity Securities held by the Offeror Member and
the other Shareholders (the "Full OFfer") on the same
terms as are contained in the Partial Offer and at
least the same price per share but capable of
acceptance with respect to each class of Equity
Security and each Equity Security within that class;
(b) promptly submit to the other Shareholders full details of
the Partial Offer, the Full Offer and the Identity of the
Proposed Purchaser and written notice of the Offeror
Member's desire to sell; and
(c) for the avoidance of doubt, the sale of less than all of the
Shareholder's Equity Securities without the consent of all
of the Shareholders shall not be permitted.
10.2 The other Shareholders shall each have the option, exercisable by
written notice to the Offeror Member and MGM Grand Australia
within Ten (10) Business Days after receipt of the offer
documents referred to in Clause 10.1(b), either:-
55
(a) to direct the Offeror Member in respect of the holding of
Equity Securities of that other Shareholder to accept the
Full Offer on behalf of the Shareholder ("Notice of
Direction"): or
(b) for those other Shareholders who do not give a Notice of
Direction in accordance with paragraph (a) ("Remaining
Shareholders"), to acquire pro rata to their existing
holding of each class of Equity Securities the Equity
Securities held by the Offeror Member and of all Remaining
Shareholders ("Willing Vendors") who give a Notice of
Direction in accordance with paragraph (a) (jointly the
"Sale Shares") at a price and on terms and conditions set
forth in the Full Offer.
(c) For the avoidance of doubt, a shareholder is not obliged to
exercise any of the options described in Clause 10.2(a) or
(b).
10.3 (a) Subject to Clause 10.4, if the Remaining Shareholders
exercise the options granted pursuant to Clause 10.2(b)
within the period provided therein in respect of all of the
Sale Shares, then the Offeror Member and the Willing Vendors
shall (5) Five Business Days after satisfaction of last of
the conditions precedent contained in Clause 10.3(c) ("Sale
Shares Completion Date") transfer the relevant Sale Shares
to the Remaining Shareholders. If the Offeror Member or any
Willing Vendor defaults in transferring the relevant Sale
Shares pursuant to Clause 10.2(b) the Offeror Member and the
Willing Vendor shall be deemed to have irrevocably appointed
each director or secretary and MGM Grand Australia, as its
agent to execute a transfer of those shares to the purchaser
of them. The directors of MGM Grand Australia may register a
transfer of those Equity Securities notwithstanding that the
share certificates relating to those Equity Securities may
not have been delivered to MGM Grand Australia, may issue
new share certificates to the relevant transferees, and the
receipt by any such director or secretary of the net
proceeds of transfer shall be a full and effective discharge
in favour of the transferee.
(b) Completion of the sale and purchase of the Sale Shares shall
take place between the hours of 9.00 a.m. and 3.00 p.m.
Darwin time on the Sale Shares Completion Date or on such
other date, if any, that the parties to this Deed may agree,
at the registered office of MGM Grand Australia.
(c) (i) The transfer of the Sale Shares is subject to:-
(A) any requisite consent being granted or deemed to
have been granted pursuant to the terms of the
Foreign Acquisitions and Takeovers Act 1975 of
the Commonwealth of Australia; and
(B) the proposed transferees and MGM Grand Australia
receiving on an unconditional basis within Six (6)
months of the receipt of the offer documents
referred to in Clause 10.1(b) all necessary
consents and approvals required, if any, from any
governmental authority including the Government or
relevant Minister of the Northern Territory of
Australia (including with respect to the
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probity of the purchaser to the extent required)
in relation to any change of interest in MGM Grand
Australia.
(ii) (ii) MGMG, MGM Grand Diamond. MGM Grand Australia and the
Shareholders shall use their best endeavours (other
than incurring substantial liabilities, substantial
obligations (including any divestment and restrictions
on business operations) or monetary obligations and
other than by consenting to any substantial alteration
to the terms of this Schedule) to satisfy any request
for information or condition or conditions specified by
or on behalf of the Treasurer of the Commonwealth of
Australia under the Foreign Acquisitions and Takeovers
Act 1975 as referred to in Clause 10.3(c)(i). Each of
the parties shall use their best endeavours to obtain
the fulfilment of the conditions in Clause 10.3(c)(i)
in an expeditious manner, and shall give the others
prompt notice in writing upon it becoming aware whether
or not any of the condition precedents referred to in
Clause 10.3(c)(i) has been satisfied.
(d) On Completion:
(i) there shall be delivered or made available to the
Remaining Shareholders, pro rata to the number of Sale
Shares in relation to which they have exercised an
option ("Relevant Proportion") free from Encumbrance,
definitive certificates for the Sale Shares together
with transfers thereof duly executed by the Offeror
Member and Willing Vendors in favour of the Remaining
Shareholders in the Relevant Proportions; and
(ii) the Remaining Shareholders shall pay to the Offeror
Member and Willing Vendors, in the Relevant
Proportions, the aggregate price for the Sale Shares
set forth in the Full Offer, as directed in writing by
the Offeror Member or Willing Vendors, as the case may
be, by bank cheque or by direct credit or telegraphic
transfer to a bank account nominated by the Offeror
Member or Willing Vendors, as the case may be.
10.4 If the option granted pursuant to Clause 10.2(b) is not exercised
within the period provided therein in respect of all the Sale
Shares, no exercise of any option under that Clause will be valid
and the provisions of Clause 10.5 will apply.
10.5 (a) If the Remaining Shareholders fail or neglect to exercise
all of the options granted pursuant to Clause 10.2 within
the period provided therein, the Offeror Member and the
Willing Vendors may transfer all (but not some only) of the
Sale Shares to the Proposed Purchaser at any time within
three calendar months at the price per Sale Share contained
in the Full Offer after the earlier of either:-
(i) the expiration of the period within which the option
may be exercised pursuant to Clause 10.2(b); or
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(ii) receipt of written notice from the Remaining
Shareholders that they do not intend to exercise that
option.
(b) The conditions precedent referred to in Clause 10.3(c) shall
apply equally to the Proposed Purchaser as to any other
proposed transferee and the Offeror Member and Willing
Vendors shall procure that the conditions precedent are
satisfied before the expiry of the three calendar month
period referred to in Clause 10.5(a). If the conditions
precedent are not so satisfied within the said three
calendar month period then no transfer of the Sale Shares to
the Proposed Purchaser shall occur unless all of the other
shareholders so consent.
PART II TAKE-OVER OFFER BY THIRD PARTY
11.1 Subject to Clause 11.4, if a "Third Party makes an offer to
purchase all of the Equity Securities of MGM Grand Australia (a
"Third Party Offer") to MGM Grand or to any Shareholder (who
shall deliver such Third Party Offer to the Secretary of MGM
Grand Australia), then the following conditions shall apply:-
(a) the Secretary shall, by written notice, advise the
Shareholders of the identity of the Third Party, the price
and the other terms and conditions applicable to the Third
Party Offer; and
(b) the Secretary shall, within Ten (10) Business Days of the
date of receipt of the Shareholder's notice, convene a
meeting of Shareholders at which the Third Party Offer will
be considered and put to the vote by the Shareholders.
11.2 If Shareholders, in aggregate representing more than seventy-five
per cent (75%) per cent of the then issued MGMGA Shares, are
willing to accept the Third Party Offer ("the Offerors"), then
the following provisions shall apply:-
(a) the Offerors shall, with effect from the first Business Day
after the Shareholders' meeting, be deemed to have granted
an option to each of the Shareholders who are unwilling to
accept the Third Party Offer ("the Offerees") exercisable
within Ten (10) Business Days of the date of the meeting to
purchase the Offerors' Equity Securities in MGM Grand
Australia in the proportion which each Offeree's Equity
securities in MGM Grand Australia bears to the total number
of issued Equity Securities in MGM Grand Australia, inter
se, at the same price per share and otherwise on the same
terms and conditions as are set out in the Third Party
Offer;
(b) any Offeree willing to exercise its option must do so in
writing and deliver such notice to the Offerors prior to the
Ten (10) Business Days period referred to in paragraph (a);
and
(c) if the option is not exercised for the number of equities
equal to the Offerors' Equity Securities in MGM Grand
Australia, then, and in such event, no sale of the Offerors'
Equity Securities in MGM Grand Australia shall take place to
any accepting Offeree and the provisions of Clause 11.3
shall thereafter apply.
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11.3 Where no sale of the Offerors' Equity Securities in MGM Grand
Australia takes place in terms of Clause 11.2, then the Offerors
shall be entitled to accept the Third Party's Offer to purchase
all of the issued Equity Securities of MGM Grand Australia on
behalf of all Shareholders and in order to give effect to the
acceptance of the Third Party Offer, the Offereees hereby
nominate and irrevocably appoint the Offerors as their attorney
and agents in order to sell the all of the Equity Securities of
MGM Grand Australia (including the Offeree's Equity Securities)
to the Third Party at the price and on terms and conditions which
are no less favourable than those set out in the Third Party
Offer. Without limiting the generality of the foregoing, the
Offerees empower and authorise the Offerors to cause the
necessary documentation to be prepared and to sign such
documentation on behalf of the Offerees for the sale of all of
the Equity Securities of MGM Grand Australia to the Third Party,
to receive on their behalf their proportion of the net proceeds
of sale and to ratify and confirm anything done by their
aforesaid agents and attorneys pursuant to this Clause.
11.4 No Shareholder shall accept any offer from a Third Party pursuant
to Clause 11.1 unless it procures that the Third Party provides
an unconditional, enforceable representation for the benefit of
the Shareholders that such Third Party:
(a) is not an Associate of any of the Shareholders at the date
of the offer;
(b) neither it nor any of its Associates shall be or have the
option to become Associates of any of the Shareholders or
any of their Associates during the Twelve (12) months
following completion of the sale of the Equity Securities;
and
(c) neither before the date of the offer nor during the period
referred to in Clause 11.4 (b) has or will the Third Party
or any of its Associates enter into any agreement,
arrangement or understanding with any Shareholder or any
Associate of a Shareholder on terms which are not bona fide
arms length terms and which confer a direct or indirect
benefit on such Shareholder or its Associate attributable in
whole or part to the relevant entity being a holder or
former holder of Equity Securities of MGM Grand Australia.
11.5 Any Shareholder described in Clauses 11.4(a) to (c) shall
respectively indemnify and keep indemnified at all times after
completion of the sale of the Equity Securities all other
Shareholders for all loss, damages, and costs arising from the
breach of the respective representations of the Third Party made
or required to be made pursuant to Clause 11.4.
PART 12 DIVIDENDS
Subject to compliance with applicable law and third party
contractual obligations to which the MGM Grand Australia Group
may be subject, the Shareholders shall use their best endeavours
to ensure that at least Fifty per cent 50% of the annual
consolidated profits of MGM Grand Australia Group are distributed
to the Shareholders by way of dividends. Without limiting the
generality of the foregoing:-
59
(a) all and every preliminary matter required by law, this
Schedule 4 or the Articles of Association of any member of
MGM Australia Group to be done by any Shareholder or any
member of the MGM Grand Australia Group to procure the
availability of such profits for declaration and
distribution by MGM Grand Australia shall be done;
(b) all dividends shall be paid as far as practicable as fully
franked dividends;
(c) all final dividends shall be declared no later than 5 months
after the end of the relevant Financial Year and paid no
later than 6 months after the end of that Financial Year;
and
(d) where a third party contractual obligation has restricted
the amount of any dividends which maybe declared or paid in
any year, to an amount less than 50% of the annual
consolidated profits of MGM Grand Australia Group then as
soon as practicable after such contractual obligation ceases
to apply the Shareholders shall seek to ensure that MGM
Grand Australia shall declare and pay such level of
dividends as it is legally permitted to do to recoup such
shortfall in an expeditious manner. For the purposes of this
Clause the shortfall is the amount that would otherwise have
been paid pursuant to this Clause if the contractual
obligation had not existed. It is acknowledged that to
recoup such dividends expeditiously the level of dividends
may exceed 50% of annual consolidated profits of the MGM
Grand Australia Group in any one accounting period until the
average payment of dividends for the period from the date
this Schedule becomes effective until the date such
obligation ceases to apply is equal to or in excess of 50%
of the cumulative annual consolidated profits of the MGM
Grand Australia Group.
PART 13 AGREEMENT TO PREVAIL
13.1 The parties acknowledge that this Deed creates rights and
obligations which are in addition to the rights and obligations
created or to be created in the Articles of Association of MGM
Grand Australia and the parties hereto hereby confirm that such
rights and obligations are to be exercised and observed
concurrently and not in substitution one for another. The parties
agree that to the extent any conflict between any of those
respective rights and obligations arises at any time, the rights
and obligations created by this Deed (including this Schedule 4)
shall be exercised or observed to the exclusion of any right or
obligation created by the Articles of Association of any member
of the MGM Grand Australia Group so far as it permitted by law
and is necessary to resolve the conflict.
13.2 Each Shareholder agrees that it will vote and act at all times as
a member of MGM Grand Australia and will procure that to the
extent permitted by law any director of MGM Grand Australia which
it has appointed or who represents any of them will vote and act
at all times as a director of MGM Grand Australia and in all
respects shall use its best endeavours to take all such steps as
may reasonably be within its powers so as to cause any Subsidiary
to act in the manner contemplated by the provisions of this Deed
(including this Schedule 4) and so as to implement to their full
extent the provisions of this Deed (including this Schedule 4).
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13.3 The Shareholder shall procure that MGM Grand Australia
agrees that it will vote and act at all times and will
procure that to the extent permitted by law any director of
a Subsidiary will vote and act at all times as a director of
the Subsidiary and in all respects shall use their best
endeavours to take all such steps as may reasonably be
within their powers so as to cause any Subsidiary to act in
the manner contemplated by the provisions of this Deed
(including this Schedule 4) and so as to implement to their
full extent the provisions of this Deed (including this
Schedule 4).
PART 14 TERM OF AGREEMENT
14.1 A Shareholder will cease to be bound by the terms of this
Schedule 4 if it ceases to hold any Equity Securities and
all Shareholders will cease to be bound by the terms of this
Schedule 4 if MGM Grand Australia is the subject of a
Listing. If any person ceases to be bound by the terms of
this Schedule 4 as aforesaid, the person's liabilities and
obligations hereunder shall thenceforth be at an end of all
purposes, excepting any rights that the Shareholder may have
under the terms of this Schedule 4 prior to the person's
rights and obligations being at an end.
61