EXHIBIT 10.1
DATED 2009
NETPLAY TV PLC
and
TWO WAY MEDIA LIMITED
and
TWO WAY GAMING LIMITED
BUSINESS SALE AGREEMENT
for the sale and purchase of part of the business and assets of
Two Way Gaming Limited
CONTENTS
1. Interpretation 2
2. Conditions 8
3. Sale And Consideration 9
4. Liabilities And Assets 10
5. VAT 11
6. Completion 11
7. Client Balances 13
8. Post-Completion Conduct Of Challenge Jackpot 14
9. Post-Completion Conduct Of Winner And Teletext 16
10. Employees 17
11. Twm Contracts 21
12. Computer Contracts 22
13. Protection Of The Buyer's Interests 24
14. Restrictions On Transfer Of Consideration Shares 24
15. Entire Agreement 25
16. Miscellaneous 26
17. Third Party Rights 26
18. Further Assurance 26
19. Fees And Expenses 26
20. Announcements 26
21. Assignment 27
22. Notices 27
23. Waiver 27
24. Counterparts 28
25. Independent Expert 28
26. Governing Law And Jurisdiction 28
THIS AGREEMENT dated 2009 is made BETWEEN:-
(1) TWO WAY MEDIA LIMITED (CN 4904168) whose registered office is at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("TWM");
(2) TWO WAY GAMING LIMITED a company registered in Alderney with Company Number
1643 whose registered office is at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇ ("TWG");
(together, the "Sellers"), and
(4) NETPLAY TV PLC (CN 3954744) whose registered office is at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "Buyer").
BACKGROUND
(A) The Sellers carry on the Businesses.
(B) TWM provides the services of the Employees to TWG for the purpose of the
Challenge Jackpot Business.
(C) The Sellers have agreed to sell and the Buyer has agreed to buy the Assets
and the Challenge Jackpot Business on the terms and subject to the
conditions of this Agreement.
(D) TWM and the Buyer have agreed that the TWM Contracts shall be assigned to
the Buyer on the terms and subject to the conditions of this Agreement.
(E) The Sellers and the Buyer have agreed that the Buyer shall carry out the
services involved in the operation of the Winner Business and the Teletext
Business on the terms and subject to the conditions of this Agreement.
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement, each of the following shall, unless otherwise
stated, have the following meanings:-
"Act" the Companies ▇▇▇ ▇▇▇▇ (as amended from time to
time);
"2006 Act" the Companies ▇▇▇ ▇▇▇▇ (as amended from time to
time);
"AIM" the London Stock Exchange plc's market known as
AIM;
"AIM Rules" the rules of AIM (as amended from time to time);
"Assets" the Computer System, the Commercial Information and
all other assets owned by the Sellers and used
primarily or exclusively for the Challenge Jackpot
business (other than the Excluded Assets, the
Employees, the Licence, the Computer Contracts and
the Playtech Software);
2
"Business Day" a day (not being a Saturday or Sunday) on which
clearing banks are open for general banking
business in the City of London;
"Businesses" the Challenge Jackpot Business, the Winner Business
and the Teletext Business;
"Buyer's ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP of St Ann's Wharf, 112 Quayside,
Solicitors" ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇;
"Cash the amount of the Consideration which the Buyer
Consideration" elects to satisfy in cash;
"Challenge the business of operating the interactive gaming
Jackpot Business" business for VMTV known as "Challenge Jackpot";
"Challenge the loyalty points awarded to customers of the
Points" Businesses by TWG at the rate of one point per
£10 wagered;
"CJ Database" a database belonging to TWG including the details
of all customers of the Challenge Jackpot Business
and the Client Balances in a form containing the
data fields set out in Schedule 6 and containing
approximately 21,211 entries, of whom approximately
13,266 have been active since 1 July 2008;
"Client Balances" all amounts owed by TWG to the end users of the
Businesses that constitute a cash liability,
including the cash portion of each end user's
bonuses (excluding unfulfilled bonuses) or
unpresented cheques and one ▇▇▇▇▇ per Challenge
Point outstanding at balance, any pending cash outs
and any fulfilled Completion;
"Commercial the CJ Database, the Passwords and all other
Information" information, know-how, techniques, plans,
forecasts, advice, lists, marketing material and
records of the Sellers in relation to the Challenge
Jackpot Business, including the items listed in
Part 4 of Schedule 2;
"Completion" completion of the sale and purchase of the
Challenge Jackpot Business and the Assets;
"Completion has the meaning given to it in clause 6.3.3;
Client Balances"
"Computer all arrangements and agreements pursuant to which
Contracts" any third party provides any information technology
products or services to the Businesses including
all arrangements relating to the provision of
maintenance and support, security, disaster
recovery, facilities management, bureau and on-line
services to the Businesses and the agreements
particulars of which are set out in Part 1 of
Schedule 2;
"Computer System" all computer hardware and networks owned by the
Sellers for the purposes of the Businesses
including the Studio Equipment and the Gaming
Equipment but excluding the Playtech Software;
3
"Conditions" the conditions set out in clause 2.1;
"Consideration" the consideration specified in clause 3.2;
"Consideration such number of new ordinary shares of 5 ▇▇▇▇▇ each
Shares" in the capital of the Buyer as is calculated as
follows:-
X = A
-
B
where:-
X = the number of Consideration Shares
A = the amount of the Consideration
which the Buyer elects to satisfy
in Consideration Shares (and which
must be a multiple of B)
B = the average mid market price of
the Buyer's shares for the 20
Business Days prior to the
Completion Date;
"Disposal" whether directly or indirectly a sale, grant of
options over, transfer, charge, pledge or any other
disposition whatsoever, including an agreement to
effect or create any of the foregoing and "Dispose
of" shall be construed accordingly;
"Dispute Notice" has the meaning given to it in clause 9.7;
"Employees" the employees engaged in the Challenge Jackpot
Business immediately before Completion and listed
in Schedule 1;
"encumbrance" all encumbrances including any option, lien,
mortgage, debenture, charge, equity, rent charge,
right of pre-emption, ▇▇▇▇ of sale, assignment or
deposit for the purpose of security, pledge, right
of set-off, retention of title, hypothecation or
other encumbrance securing the repayment of monies
or other obligation or liability or any agreement
or commitment to create any of the foregoing;
"Excluded those assets belonging to VMTV, possession of
Assets" which, but not title to, is to be transferred to
the Buyer and details of which are set out in Part
7 of Schedule 2;
4
"Excluded all Liabilities incurred or arising in connection
Liabilities" with the Businesses prior to Completion, including
but not limited to:-
(a) all liability for Taxation as at Completion;
(b) all amounts owed to the Sellers' banks as at
Completion;
(c) all amounts accrued or otherwise due to creditors of
the Sellers as at Completion;
(d) all amounts owing by the Sellers under any of the TWM
Contracts as at Completion;
(e) amounts due and owing or accrued as at Completion in
respect of PAYE and National Insurance contributions in
respect of the Employees; and
(f) pension contributions due and owing or accrued as at
Completion in respect of the Employees;
"Expiry Date" has the meaning given to it in clause 8.7;
"Freelance the contracts listed in part 2 of Schedule 2;
Contracts"
"Gaming Equipment" the equipment set out in Part 5 of Schedule 2;
"Handover Payment" the sum of £223,855;
"IMAC" Ingenious Media Active Capital Limited of Ogier
▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"Independent a single independent chartered accountant of at
Expert" least ten years' qualification appointed in
accordance with clause 25;
"Key Individuals" ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇;
"Liabilities" in relation to any matter, all actions,
proceedings, costs, claims, losses, penalties,
fines, awards, expenses and demands incurred or
suffered by or brought or made against a party in
respect of such matter;
"Licence" the Full eGambling Licence issued by the Alderney
Gambling Control Commission to TWG;
"New Virgin the agreements to be finalised between VMTV and the
Agreements" Buyer pursuant to the heads of terms concluded
between those companies and referred to in the
announcement to be made following execution of this
Agreement;
"Passwords" all passwords within the Sellers' control required
to access and or administer the "Challenge Jackpot"
website and any other website operated in
conjunction with the Challenge Jackpot Business or
to access the CJ Database or any other database,
system or records operated or maintained in
relation to the Challenge Jackpot Business;
5
"Permitted a Disposal referred to in clause 14.2;
Disposal"
"Playtech the software licence and services agreement of
Contract" August 2008 between Playtech Software Limited
and Win Gaming;
"Playtech the Zonemas software being the software comprised
Software" in the TWG back office and the Mix TV software
being the software comprised in the broadcast
graphic system and TV games which are operated by TWG;
"Records" all books and records owned by the Sellers and
which relate to the Businesses save for the Sellers'
statutory books;
"Relevant WT as defined in clause 9.1;
Period"
"Resolutions" the resolutions of the shareholders of the Buyer in
substantially the same form as set out in Schedule
5;
"Seller Group any holding company of TWM and/or TWG and all
Company" companies or subsidiaries of TWM and/or TWG or of
any such holding company;
"Sellers' Macfarlanes LLP of ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇" ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"Studio Equipment" the equipment listed in Part 6 of Schedule 2;
"Subcontracting the period from Completion until (i) the earlier of
Period" 1 July 2009 and such time as the Buyer acquires a
Full eGambling Licence from the Alderney Gambling
Control Commission or (ii) such other date as may
be notified in writing by the Buyer to TWG in
accordance with clause 8.8;
"Tax" and all forms of taxation and duties, whether of the
"Taxation" United Kingdom or elsewhere including corporation
tax, advance corporation tax, VAT, H M Revenue &
Customs and other import duties and any other form
of tax or levy upon or in respect of income, profit
or gains received, made or accrued or deemed to
have been received, made or accrued prior to
Completion in respect of the Businesses and any
interest, charge, penalty or fine thereon in
relation to taxation and duties;
"Teletext the business of operating a gambling service which
Business" is marketed and distributed by Teletext Limited (CN
2694814) under the Teletext Contract;
"Teletext the contract between TWM, Teletext Limited and St
Contract" Minver Limited dated 14 August 2006;
"Teletext the database that contains the registration details
Database" of all customers of the Teletext Database;
6
"Transfer the Transfer of Undertakings (Protection of
Regulations" Employment) Regulations 2006 as amended from time
to time;
"TWG Client TWG's bank account with RBS International of Royal
Account" Bank Place, 1 Glategny ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, with account name: Two Way Gaming
- CLT; Sort Code: 162029; Account Number: ▇▇▇▇▇▇▇▇.
"TWM Contracts" the Freelance Contracts and the contracts listed in
Part 3 of Schedule 2;
"VAT" value added tax;
"Virgin Settlement Settlement an agreement between VMTV, Virgin Media
Agreement" Limited, TWM, TWG and Two Way Media Holdings
Limited in relation to settling certain issues
arising in respect of TWG's conduct of Challenge
Jackpot;
"VMTV" Virgin Media Television Limited, a company
registered inEngland and Wales with Company Number
2294553, having its registered office at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"Win Gaming" Win Gaming Media, Inc a company registered under
the laws of Delaware and whose principal place of
business is at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇;
"Winner Business" the business of operating an online casino,
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇;
"Winner Assets" the URL ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, the Winner Database
and all other assets owned by TWM for the conduct
of Winner (insofar as they are not comprised within
the Assets); and
"Winner Database" the database that contains the registration details
of all customers of the Winner Business.
1.2 In this Agreement:-
1.2.1 any gender includes any other gender;
1.2.2 the singular includes the plural and vice versa;
1.2.3 references to persons include bodies corporate, unincorporated
associations, governments, states, partnerships and trusts (in
each case, whether or not having separate legal personality);
1.2.4 the recitals and the Schedules form part of this Agreement and
the expression "this Agreement" includes the recitals and the
Schedules;
1.2.5 any reference to a statutory provision includes a reference to
any modification, consolidation or re-enactment of the provision
from time to time in force and all subordinate instruments,
orders or regulations made under it;
7
1.2.6 a reference to any of the parties includes, where appropriate,
persons deriving title under it;
1.2.7 general words shall not be given a restrictive interpretation by
reason of their being preceded or followed by words indicating a
particular class of acts, matters or things;
1.2.8 references to a person acting "directly or indirectly" include
acting alone or jointly with or by means of any other person; and
1.2.9 references to any document (including this Agreement) or a
provision thereof shall be construed as a reference to that
document or provision as from time to time supplemented, varied
or replaced.
2. CONDITIONS
2.1 The sale and purchase of the Challenge Jackpot Business and the Assets
is conditional upon:-
2.1.1 the due passing by the shareholders of the Buyer in general
meeting of the Resolutions; and
2.1.2 completion of the New Virgin Contracts in accordance with their
terms.
2.2 The Buyer shall use its reasonable endeavours to ensure the
satisfaction of the Conditions as soon as reasonably practicable after
Completion, including but not limited to, circulating the Resolutions
to shareholders as soon as possible and in any event within 10 days of
the date of this Agreement.
2.3 If the Conditions have not been fulfilled or waived by the Buyer on or
before 15 May 2009 (or such later date as the Buyer and the Sellers
agree in writing), the Sellers (acting together) shall have the right
to terminate this Agreement, in which event the Buyer shall pay to the
Sellers' Solicitors (to be apportioned among the Sellers as they see
fit) a sum equal to the lesser of:-
2.3.1 an amount equal to all costs, charges and expenses incurred by
the Sellers in connection with the negotiation, preparation,
performance and termination of this Agreement and the documents
in agreed form and all matters which it contemplates; and
2.3.2 £100,000.
which payment shall be in full and final satisfaction of all claims
which the Sellers might have in connection with this Agreement against
the Buyer.
2.4 During the period up to Completion each of the Sellers shall comply
with the provisions of Schedule 4 that apply to them.
2.5 Before issuing any Consideration Shares the Buyer shall deliver to the
Sellers a copy of a valuation of the Challenge Jackpot Business and
the Assets in the form required by Section 103 of the Act and to the
extent it is unable to do so the Buyer shall not be permitted to
satisfy the Consideration in Consideration Shares and shall pay the
Consideration in cash.
8
3. SALE AND CONSIDERATION
3.1 Subject to clause 2, the Sellers shall sell and the Buyer shall buy
the Assets and the Challenge Jackpot Business.
3.2 The consideration for the sale of the Challenge Jackpot Business and
the Assets shall be £2,000,000 together with the assumption by
the Buyer of the liabilities expressly referred to in this Agreement
as being assumed by the Buyer and the £2,000,000 shall be
satisfied at Completion in accordance with clause 6 as follows:-
3.2.1 by the payment of the Cash Consideration in cash; and/or
3.2.2 by the allotment and issue of the Consideration Shares to TWG
(or as they may reasonably direct but subject always to the
provisions of clause 14).
3.3 The split of the Consideration between Cash Consideration and
Consideration Shares shall be at the discretion of the Buyer.
3.4 The Consideration shall be apportioned as follows:-
3.4.1 the Computer System: £29,999;
3.4.2 the benefit (subject to the burden) of the TWM Contracts and any
other assets comprised within the definition of Assets: £1;
and
3.4.3 the Commercial Information: £1,970,000.
3.5 The Assets shall be sold:-
3.5.1 with full title guarantee; and
3.5.2 free from any encumbrance or third party right of any nature.
3.6 The Buyer warrants and undertakes to TWG that:-
3.6.1 the Consideration Shares shall be allotted and issued
conditionally upon, and upon the occurrence of, admission to AIM;
3.6.2 any Consideration Shares to be issued to TWG pursuant to this
Agreement shall be properly and effectively allotted and issued
to them in accordance with:-
(a) the Buyer's articles of association;
(b) section 103 of the Act; and
(c) the AIM Rules;
3.6.3 as soon as practicable after the issue of such Consideration
Shares the name of the allottee(s) shall be entered in the
register of members of the Buyer in respect of such Consideration
Shares;
9
3.6.4 it shall use all reasonable endeavours (excluding taking legal
proceedings of any type) to ensure that all the Consideration
Shares are admitted to listing and trading on AIM as soon as
reasonably practicable after they are allotted and issued and in
any event within 7 days of such allotment and issue;
3.6.5 if the Buyer is unable to procure the admission of the
Consideration Shares to AIM within 7 Business Days of their
allotment and issue then the Buyer may, by notice to the Seller,
elect to reduce the amount (if any) of the Consideration
otherwise required under this Agreement to be satisfied by the
allotment and issue of Consideration Shares (to zero if
necessary) and to satisfy all or part of such amount by way of a
cash payment. Any such payment shall be made as soon as
reasonably practicable in accordance with clause 6.5.2;
3.6.6 all the Consideration Shares shall be issued credited as fully
paid;
3.6.7 it will procure that the Buyer's registrars shall issue suitable
share certificates (or credit the appropriate CREST account) in
respect of all the Consideration Shares within 10 Business Days
of such Consideration Shares being issued and allotted;
3.6.8 all the Consideration Shares shall rank pari passu in all
respects with the existing issued ordinary shares of 5 ▇▇▇▇▇ each
in the capital of the Buyer as from the date on which such
Consideration Shares are issued; and
3.6.9 at the date of this Agreement its executive directors are not
knowingly relying on the guidance notes to AIM Rule 11 as a basis
for failing to withhold price sensitive information from
disclosure, it has made all regulatory announcements required by
the AIM Rules and is, in all material respects, in full
compliance with the requirements of the AIM Rules.
3.7 TWG warrants to the Buyer that the CJ Database has been properly
collated and (to the best of its knowledge and belief) stored and
managed in accordance with data protection legislation in each
applicable jurisdiction where the Challenge Jackpot Business is
conducted and (save as set out in any arrangements which the Buyer has
entered into with VMTV), subject to compliance with the undertakings
given in Clause 8, the Buyer will not be under any restrictions in
using the same for its conduct of the Challenge Jackpot Business with
effect from Completion.
4. LIABILITIES AND ASSETS
4.1 Subject to clause 4.2, the Buyer shall, assume responsibility for the
due and punctual payment, satisfaction and discharge of the
obligations of the Sellers arising from the date of Completion under
or in respect of:-
4.1.1 the TWM Contracts (but only insofar as copies of such contracts
or written details of their terms have been provided by the
Sellers to the Buyer prior to the date hereof);
4.1.2 the Client Balances;
10
4.1.3 all other liabilities, obligations and provisions of whatever
nature incurred by the Sellers as a result of the Buyer's
provision of the Challenge Jackpot Business with effect from
Completion; and
4.1.4 for the duration of the Relevant WT Period, those liabilities
arising pursuant to clauses 9.1 and 9.5.
4.2 Nothing in this Agreement shall transfer or be deemed to transfer to
the Buyer or constitute or be deemed to constitute an acceptance or
assumption by the Buyer of any of the Excluded Liabilities or any
other liability or obligation of the Sellers arising prior to
Completion, whether in relation to the Businesses or otherwise, except
as expressly set out in this Agreement.
4.3 The Buyer acknowledges that the Excluded Assets are and remain the
property of VMTV and that no title to the Excluded Assets shall be
transferred to the Buyer pursuant to this Agreement.
4.4 Subject to clause 4.3, at Completion, TWG will deliver to the Buyer
the Excluded Assets and the terms of this Agreement shall apply to the
Excluded Assets as if they were included in the definition of the
Assets.
5. VAT
All payments to be made or other consideration to be given (whether in cash
or otherwise) pursuant to this Agreement shall (except where otherwise
specifically stated) be taken to be exclusive of VAT (if applicable), and
if any VAT is properly chargeable in respect of the supplies for which such
payments are made or such consideration is given, such VAT shall be added
to the amount of, and be paid in addition to, them in cash.
6. COMPLETION
6.1 Completion shall take place at the offices of the Sellers' Solicitors
immediately following satisfaction of the conditions set out in clause
2 or at such other place or time as the parties may agree.
6.2 Title and risk of loss or damage to the Assets shall pass to the Buyer
at Completion. Title to those Assets which are capable of transfer by
delivery shall pass on such delivery.
6.3 At Completion the Sellers shall (so far as the following applies to
each of them):-
6.3.1 deliver to the Buyer the documents specified in Schedule 3;
6.3.2 deliver to the Buyer at their then present location:-
(a) the Computer System;
(b) the CJ Database;
(c) the Passwords; and
(d) all other physical assets;
11
6.3.3 calculate and notify the Buyer of the level of the Client
Balances as at 9am on the date of Completion (the "Completion
Client Balances") and ensure that such amounts remain (subject to
the provisions of this Agreement) in the TWG Client Account; and
6.3.4 use reasonable endeavours to procure that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇▇, or such other persons as the Buyer may nominate, be
authorised as signatories to the TWG Client Account.
6.4 The Buyer shall not be obliged to complete this Agreement until the
Sellers fully comply with clause 6.3.
6.5 At Completion, the Buyer shall:-
6.5.1 pay the first instalment of the Handover Payment in accordance
with clause 10.8 by telegraphic transfer to such bank account as
TWM shall nominate; and
6.5.2 pay the Cash Consideration (if any) by telegraphic transfer to
the client account of the Sellers' Solicitors (account name:
Macfarlanes Client No 1 Account; sort code: 15 10 00; account
number: 15388776); and/or
6.5.3 allot and issue to credited as fully paid and free from
encumbrances the Consideration Shares.
6.6 Any Consideration Shares shall be issued to TWG. To the extent that
prior to Completion TWG delivers to the Buyer's Solicitors suitable
evidence that TWG's rights to receive Consideration Shares have been
lawfully assigned to IMAC and/or Win Gaming then such shares will be
lawfully issued directly to IMAC and/or Win Gaming, subject to the
provisions of clause 14.
6.7 The receipt in the Sellers' Solicitors' bank account of the Cash
Consideration and the allotment of any Consideration Shares shall be a
full and sufficient discharge for the Consideration.
6.8 For a period of six years from Completion the Buyer will make the
Records available for inspection by representatives of the Sellers at
all reasonable times during business hours on reasonable advance
notice being given. The Buyer shall:
6.8.1 for a period of six years from Completion, allow the Sellers'
representatives to take copies, at the Sellers' expense, of any
of the Records reasonably required by them in respect of the tax
affairs of the Sellers; and
6.8.2 for a period of three years from Completion, allow the Sellers'
representatives to take copies, at the Sellers' expense of any of
the Records reasonably required by them.
6.9 If Completion has not occurred prior to 11 April 2009, the Buyer shall
provide office space to the Employees and all equipment necessary for
the Employees to carry on their roles until the earlier of Completion
and 15 May 2009.
12
7. CLIENT BALANCES
7.1 The Buyer acknowledges that the Client Balances are not the property
of TWM or TWG and that, subject to clause 7.7, nothing in this
Agreement shall operate to transfer, or create an obligation on either
TWM or TWG to transfer, the Client Balances to the Buyer.
7.2 From Completion until such time as the following conditions (the "CB
Conditions) are satisfied:-
7.2.1 the Buyer acquires a Full eGambling Licence from the Alderney
Gambling Control Commission; and
7.2.2 the Alderney Gambling Control Commission confirms to TWG in
writing that the Client Balances may be released to the Buyer
the Client Balances shall remain in the TWG Client Account.
7.3 From Completion until such time as the CB Conditions are satisfied the
Buyer and TWG shall, at the cost and expense of the Buyer, weekly on a
Business Day to be determined by the Buyer and TWG:-
7.3.1 calculate the level of the Client Balances at midday on such
day;
7.3.2 where necessary, verify whether monies in the TWG Client Account
as at Completion were sufficient to cover the Completion Client
Balances (after making appropriate reconciliation for unpresented
cheques, errors and timing differences) and if there was a
deficit then TWG shall forthwith pay into the TWG Client Account
an amount equal to that deficit; and
7.3.3 determine whether the amount of the Client Balances exceeds or
falls short of the level of the Completion Client Balances.
7.4 Subject to clause 7.3.2, whenever the Buyer and TWG have agreed or
determined the amount by which the Client Balances exceed or fall
short of the level of the Completion Client Balances:-
7.4.1 where the level of the Client Balances exceeds the level of the
Completion Client Balances, the Buyer shall, at its own cost and
expense, immediately pay into the TWG Client Account a sum equal
to the amount by which the level of the Client Balances exceeds
the level of the TWG Client Account; and
7.4.2 where the level of the Client Balances falls short of the level
of the Completion Client Balances, the signatories to the TWG
Client Account shall, at the cost and expense of the Buyer,
immediately procure the payment to the Buyer of a sum equal to
the amount by which the level of the Client Balances falls short
of the level of the TWG Client Account.
7.5 If at any time before the Buyer acquires a Full eGambling Licence from
the Alderney Gambling Control Commission:-
7.5.1 the Alderney Gambling Control Commission confirms to TWG in
writing that the Client Balances may be released to the Buyer;
and
13
7.5.2 the total cash liability to customers or clients of the
Businesses exceeds the level of the Client Balances
the Buyer shall, at its own cost and expense, as soon as possible, and
in any event within 24 hours of receiving notice from TWG, pay into
the TWG Client Account an amount equal to the amount by which such
total cash liability exceeds the level of the Client Balances.
7.6 The Buyer undertakes to indemnify TWG against every loss, liability
and cost that TWG may incur as a result of any failure on the part of
the Buyer to comply with its obligations under clauses 7.4.1 and 7.5.
In addition, the Buyer acknowledges that any failure on its part to
comply with its obligations under clause 7.4.1 and 7.5 may result in
the suspension or revocation of the Licence by the Alderney Gambling
Control Commission and the Buyer agrees that TWG shall bear no
responsibility for any such suspension or revocation.
7.7 As soon as reasonably practicable after the date on which the CB
Conditions are satisfied, the signatories to the TWG Client Account
shall transfer the Client Balances that relate to the Challenge
Jackpot Business to the Buyer. In the event that the CB Conditions are
satisfied prior to the termination of the Relevant WT period, then the
signatories to the TWG Client Account shall also transfer to the Buyer
as soon as reasonably practicable the Client Balances relevant to the
Winner and Teletext Businesses and upon the expiry of the Relevant WT
Period such Client Balances the Buyer shall procure that the Client
Balances relevant to the Winner and Teletext Businesses will be
transferred back to the Sellers.
7.8 Any dispute relating to Client Balances which cannot be agreed within
10 Business Days shall be referred to the Independent Expert.
8. POST-COMPLETION CONDUCT OF CHALLENGE JACKPOT
8.1 During the Subcontracting Period the Buyer shall, at its own cost and
expense, operate Challenge Jackpot as sub-contractor of TWG under the
terms of the Licence.
8.2 The Buyer undertakes, at its own cost and expense, during the
Subcontracting Period to:-
8.2.1 operate the Challenge Jackpot Business using the software and
hardware comprised in the Assets and/or (if so reasonably
requested by TWG with a view to ensuring compliance with the
Licence) as supplied by TWG and/or its sub-contractors from time
to time without amendment or modification;
8.2.2 adhere to the processes set out in the Two Way Gaming Internal
Control Systems Manual as approved by the Alderney Gambling
Control Commission;
8.2.3 retain the Key Individuals as employees of the Buyer; and
8.2.4 operate the gambling operations of Challenge Jackpot at the
direction of the Key Individuals and in accordance with any
reasonable requests made by TWG with a view to ensuring
compliance with the Licence.
14
8.3 Notwithstanding the terms of clause 8.1, the Buyer shall from
Completion be entitled to all revenues of the Challenge Jackpot
Business and be responsible for all costs, liabilities and expenses in
relation to the Buyer's operation of the Challenge Jackpot Business.
8.4 Until the expiry of the Subcontracting Period, TWG undertakes to the
Buyer that it shall at the expense of the Buyer, do all such acts and
things as are reasonably necessary to ensure that the Licence
continues in full force and effect.
8.5 The Buyer undertakes to indemnify TWG against every loss, liability
and cost that TWG may incur as a result of:-
8.5.1 any failure on the part of the Buyer to comply with its
obligations under clause 8.2; and
8.5.2 the Buyer's conduct of the Challenge Jackpot Business from
Completion.
8.6 TWG undertakes to indemnify the Buyer against every loss, liability
and cost that the Buyer may incur as a result of any failure on the
part of TWG to comply with its obligations under clause 8.4.
8.7 The Buyer recognises that the Licence will expire on 31 August 2009
(the "Expiry Date") and subject to clause 8.8 TWG shall not be
required to renew or apply for any renewal of the Licence and the
Buyer undertakes, at its own cost and expense, to use all reasonable
endeavours to procure a Full eGambling Licence from the Alderney
Gambling Control Commission for the purpose of the Businesses as soon
as practicable after Completion.
8.8 In the event that a delay arises in the Buyer obtaining a full
eGambling Licence which is beyond the control of the Buyer, TWG and
the Buyer agree that the Buyer may notify TWG in writing that the
Subcontracting Period shall be extended such that the Buyer may
continue to operate under the Licence in accordance with clause 8.2
beyond 1 July 2009 until no later than 31 August 2009 and, if it is
agreed between the Buyer and TWG, TWG shall use reasonable endeavours
to renew or extend the Licence beyond the Expiry Date, and in this
event the Buyer shall:-
8.8.1 indemnify TWG against all reasonable costs and expenses incurred
in connection with the maintenance, extension or renewal of the
Licence; and
8.8.2 pay to TWG the sum of £10,000 monthly in advance from 1
July 2009 until the date 30 days after the date on which the
Buyer notifies TWG that it has acquired a Full eGambling Licence
from the Alderney Gambling Control Commission
and TWG shall not unreasonably refuse to agree to obtain such a
renewal or extension.
8.9 In the event that the Buyer has not acquired a Full eGambling Licence
from the Alderney Gambling Control Commission prior to the expiry of
the Subcontracting Period, TWG shall, at the Buyer's cost and expense,
take all reasonable steps requested by the Buyer to migrate the
Challenge Jackpot Business to a different jurisdiction (subject always
to agreeing any such plan with the Alderney Gambling Control
Commission and provided that no steps would contravene the Licence)
but in the event that the Challenge Jackpot Business is not so
migrated the Buyer shall, at its own cost and expense, comply with the
terms of a plan agreed with the Alderney Gambling Control Commission
to terminate the Challenge Jackpot Business.
15
9. POST-COMPLETION CONDUCT OF WINNER AND TELETEXT
9.1 The Buyer undertakes, from Completion until 1 July 2009, or such later
date as the Buyer and the Sellers may agree in writing (the "Relevant
WT Period"), that it will carry out the services involved in the
operation of the Winner Business and the Teletext Business (including
those services as specified in the Teletext Contract), in each case as
a going concern with a view to profit and in accordance with the terms
of the Licence.
9.2 The Sellers shall use all reasonable endeavours to assist the Buyer in
respect of the carrying out by the Buyer of its obligations under
clause 9.1.
9.3 The Sellers hereby grant to the Buyer for the Relevant WT Period a
licence of the Winner Assets and the Teletext Database, solely to
enable the Buyer to perform its obligations under clause 9.1 and for
no other purpose and the Buyer undertakes that it shall not use the
information contained in either the Teletext Database or the Winner
Database to entice customers of either the Winner Business or the
Teletext Business, to use any other service owned or operated by the
Buyer or to market any other product offered by the Buyer to those
customers.
9.4 In the event of any failure on the part of the Buyer to comply with
its obligations under clause 9.1 the Sellers may revoke the licence
granted under clause 9.3 immediately upon notice in writing to the
Buyer and require the immediate return of the Winner Assets and the
Teletext Database.
9.5 Subject to clauses 9.1 to 9.3, from Completion:
9.5.1 the Buyer shall on a monthly basis account to the Sellers for
80% of all net profits (and, accordingly, the Buyer shall, for
the avoidance of doubt, be entitled to the remaining 20% in
consideration or the provision of the services under clause
9.1.1), calculated in accordance with the formulae set out in
Part 1 (in respect of Winner) and Part 2 (in respect of Teletext)
of Schedule 7, arising from the operation of the Winner Business
and the Teletext Business ("Profits");
9.5.2 the Buyer shalI be responsible for discharging all costs and
expenses in relation to the operation of the Winner Business and
the Teletext Business on behalf of the Sellers insofar as the
relevant income is sufficient save that nothing in this Agreement
shall oblige the Buyer to purchase any new equipment in order to
operate the Winner Business or the Teletext Business or to
discharge any costs and expenses to the extent that the income is
insufficient to meet such costs and expenses the Sellers jointly
and severally undertake to reimburse the Buyer within 7 days of
receiving notice in writing from the Buyer of the need for such
reimbursement;
9.5.3 in the event that the Sellers are required to reimburse the
Buyer in respect of costs and expenses in accordance with clause
9.5.2, the Sellers shall be entitled to revoke the licence
granted under clause 9.3 and the Buyer shall as soon as
reasonably practicable cease to incur any further such expenses
and the Relevant WT Period shall come to an end; and
16
9.6 Any Profits due to the Sellers shall be determined and paid (subject
to clause 9.7) by the Buyer on a monthly basis, such determination to
be made and notified in writing to TWG within 14 days of the end of
the relevant month and paid to TWG within 14 days of such
notification.
9.7 Any dispute as to the amount of Profits shall be notified by the
Sellers to the Buyer in writing in accordance with clause 22 of this
Agreement (a "Dispute Notice") within 14 days of the monthly
determination referred to at clause 9.6, failing which the Buyer's
determination of the Profits for that month shall be conclusive. On
receipt of a Dispute Notice the parties shall attempt to agree the
Profits due for the month in question. If agreement cannot be reached
within 30 days of receipt by the Buyer of a Dispute Notice the amount
of Profits due to the Sellers for that month shall be determined
conclusively by an Independent Expert appointed pursuant to clause 25
of this Agreement.
9.8 Until the earlier of the end of the Subcontracting Period and the end
of the Relevant WT Period, the Buyer undertakes, at its own cost and
expense (save as aforesaid), to:-
9.8.1 carry out the services involved in the operation of the Winner
Business and the Teletext Business using the software and
hardware comprised in the Assets and/or (to the extent reasonably
requested) as supplied by TWG and/or its sub-contractors from
time to time without amendment or modification;
9.8.2 adhere to the processes set out in the Two Way Gaming Internal
Control Systems Manual as approved by the Alderney Gambling
Control Commission; and
9.8.3 operate the gambling operations of the Winner Business and the
Teletext Business at the direction of the Key Individuals.
9.9 From such time as the Buyer acquires a Full eGambling Licence from the
Alderney Gambling Control Commission in respect of the Businesses,
insofar as it is involved in the operations of the Winner Business and
the Teletext Business it shall do so under the terms of such licence
and in so doing the Buyer undertakes, at its own cost and expense
(save as aforesaid), to do all such acts and things as are reasonably
necessary to ensure that such licence continues in full force and
effect for the remainder of the Relevant WT Period.
9.10 Notwithstanding anything else in this Agreement, the Buyer shall not
be liable for any Liabilities relating to the Winner Business or the
Teletext Business save as expressly set out in clause 9.5 and then
only to the extent the relevant costs and expenses can be satisfied
out income, but nothing shall relieve the Buyer of any liability in
respect of its obligations under clause 9.1 and in respect of any
liability as a result of its own negligence or wilful default.
10. EMPLOYEES
10.1 The Sellers and the Buyer acknowledge that the sale and purchase of
Challenge Jackpot constitutes a "relevant transfer" for the purposes
of the Transfer Regulations and that under the Transfer Regulations
the contracts of employment of the Employees shall have effect from
Completion as if they had been originally entered into between the
Buyer and the Employees (except insofar as such contracts relate to
old age, invalidity and survivors benefits under any occupational
pension scheme as referred to in regulation 10 of the Transfer
Regulations) or, in the case of a collective agreement in respect of
the Employees, between the Buyer and the relevant trades union (as the
case may be).
17
10.2 The Sellers shall perform and discharge (and shall procure the
performance and discharge of) all their obligations and the
obligations (if any) of any and all Seller Group Companies towards the
Employees for the period up to but excluding Completion including
paying all their remuneration/benefits, paying all mandatory PAYE and
national insurance contributions, paying any amounts agreed or
determined to be paid to any Employee whether in contract or in tort
or by way of remedy for unfair dismissal, redundancy, discrimination
or other breach of legal obligation in respect of his employment
before Completion, and discharging all the Sellers' obligations
towards the Employees under the Transfer Regulations and shall
indemnify the Buyer against all claims, costs, damages, demands,
expenses, fines, liabilities, losses, penalties and all legal and
other professional costs and expenses arising directly or indirectly
from:
10.2.1 any claim by any Employee arising from his employment with the
Sellers or any Seller Group Company including any termination by
the Seller or any Seller Group Company of the contract of
employment of any Employee during the period up to Completion;
10.2.2 any claim by any employee or former employee of the Seller or
any Seller Group Company (other than the Employees) arising from
his employment with the Seller or any Seller Group Company or the
termination of that employment by the Sellers or any Seller Group
Company (howsoever arising); and
10.2.3 subject to Clause 10.3.2 below, any failure by the Sellers or
any Seller Group Company to comply with their obligations under
regulations 13 and/or 14 of the Transfer Regulations.
10.3 The Buyer shall with effect from and including Completion assume
responsibility as the employer of the Employees and shall perform and
discharge for its own account all obligations towards the Employees
for the period from and including Completion including paying all
their remuneration and benefits, paying all mandatory PAYE and
national insurance contributions, paying any amounts agreed or
determined to be paid to any Employee whether in contract or in tort
or by way of remedy for unfair dismissal, redundancy, discrimination
or other breach of legal obligation in respect of his employment from
and including Completion, and discharging all the Buyer's obligations
towards the Employees under the Transfer Regulations and shall
indemnify the Sellers against all claims, costs, damages, demands,
expenses, fines, liabilities, losses, penalties and all legal and
other professional costs and expenses arising from:
10.3.1 the Buyer's performance and discharge of, or any failure by the
Buyer to perform or discharge, those obligations including any
termination by the Buyer of the contract of employment of any
Employee after Completion (whether by reason of redundancy or
otherwise);
10.3.2 any failure by the Buyer to comply with its obligations under
regulation 13(4) of the Transfer Regulations;
10.3.3 any claim by any Employee under or by reason of regulation 4(9)
of the Transfer Regulations; and
18
10.3.4 any claim by any Employee that the transfer involves or would
involve a change amounting to a repudiatory breach of his
contract of employment on the part of his employer.
10.4 If any contract of employment of a person other than an Employee has
effect following Completion as if originally made between the Buyer
and that person or is alleged to have such effect: (i) the Buyer shall
notify the Sellers of that effect or allegation (as the case may be)
promptly and in any event within ten Business Days of becoming aware
of it; (ii) within ten Business Days of receiving such notification,
the Sellers shall procure that an offer of employment is made to that
person on the same terms and conditions as applied to that person
immediately before Completion; and (iii) within ten Business Days of
such offer having been made (or within ten business days of
notification under 10.4 (i) above if no such offer is made), the Buyer
may terminate the employment of such person provided that the Buyer
complies with any relevant statutory dismissal procedures in force at
the time of such dismissal (including compliance with the ACAS code,
where relevant). The Sellers shall indemnify the Buyer against any
claims, costs, damages, demands, expenses, fines, liabilities, losses,
penalties and all legal and other professional costs and expenses
arising out of the employment or termination of employment of any
person by the Buyer in accordance with this clause.
10.5 The Sellers undertake to the Buyer:-
10.5.1 not to materially alter (whether to take effect prior to, on or
after Completion) (and procure that no Seller Group Company so
alters) any of the terms of employment or engagement of any of
the Employees or to promise or make any representation that any
such terms shall be altered;
10.5.2 not to make any deduction (and procure that no Seller Group
Company makes any deduction) from the salary or other wages due
to any of the Employees (otherwise than in respect of PAYE and
National Insurance contributions) unless such deduction shall
previously have been approved in writing by such of the
Employees;
10.5.3 not to terminate or take any steps to terminate the contract of
employment of, nor to dismiss (constructively or otherwise) (and
procure that no Seller Group Company terminates the contract of
employment of or dismisses) any of the Employees without the
prior written consent of the Buyer; and
10.5.4 not to transfer or move or re-deploy any of the Employees from
working within the Business, or induce any such Employee to
resign his employment from the Business or agree to transfer or
move or be re-deployed from the Business (and procure that no
Seller Group Company transfers or moves or re-deploys any of the
Employees or induce any Employee to resign or move or transfer)
without the prior written consent of the Buyer.
10.6 The Buyer shall:
10.6.1 promptly on becoming aware of any claim under clauses 10.1,
10.4 or 10.9 or any facts or circumstances that might give rise
to such a claim notify the Sellers in writing with full details
of the relevant claim, facts or circumstances;
19
10.6.2 promptly provide all information available in relation to any
such claim, facts or circumstances to the Sellers and shall
ensure that the Sellers shall be kept fully informed and shall be
provided on request with all information available and copies of
all correspondence and documentation relating to such claim;
10.6.3 subject to being satisfied that it is fully indemnified in
respect to the claim and its settlement take such action as the
Sellers may from time to time reasonably request in relation to
such claim, including to avoid, dispute, resist, appeal,
compromise or defend the claim;
10.6.4 if so required by the Sellers in writing, permit the Sellers to
take over the conduct of all proceedings and/or negotiations of
whatsoever nature arising in connection with the claim; and
10.6.5 not without the consent of the Seller settle any claim or admit
any liability.
10.7 The Sellers shall:
10.7.1 promptly on becoming aware of any claim under clause 10.3 or
any facts or circumstances that might give rise to such a claim
notify the Buyer in writing with full details of the relevant
claim, facts or circumstances;
10.7.2 promptly provide all information available in relation to any
such claim, facts or circumstances to the Buyer and shall ensure
that the Buyer shall be kept fully informed and shall be provided
on request with all information available and copies of all
correspondence and documentation relating to such claim;
10.7.3 subject to being satisfied that it is fully indemnified in
respect to the client and its settlement take such action as the
Buyer may from time to time reasonably request in relation to
such claim, including to avoid, dispute, resist, appeal,
compromise or defend the claim;
10.7.4 if so required by the Buyer in writing, permit the Buyer to
take over the conduct of all proceedings and/or negotiations of
whatsoever nature arising in connection with the claim; and
10.7.5 not without the consent of the Buyer settle any claim or admit
any liability.
10.8 Subject to clause 10.9 the Buyer shall pay to TWM the Handover Payment
in six equal monthly instalments as payment for TWM providing
assistance with an orderly handover of Challenge Jackpot.
10.9 If, during the period of seven months following Completion, any claims
are presented against the Buyer (whether as sole or co-respondent) in
respect of which the Buyer has the benefit of an indemnity under
clauses 10.1 or 10.4 above, no further instalments of the Handover
Payment shall be made to TWM until the last of those claims has been
settled and/or determined by an Employment Tribunal or Court and the
Buyer has offset any outstanding instalments against any reasonable
costs, damages, demands, expenses, fines, liabilities, losses,
penalties and all legal and other reasonable professional costs and
expenses incurred by the Buyer as a result of any such claims. Where:
20
10.9.1 the amount of such costs, damages, demands, expenses, fines,
liabilities, losses, penalties and all legal and other reasonable
professional costs and expenses incurred by the Buyer as a result
of a claim covered by clauses 10.2 or 10.4 exceeds the amount of
any outstanding instalments, then no further instalments shall be
made to TWM;
10.9.2 the amount of such costs, damages, demands, expenses, fines,
liabilities, losses, penalties and all legal and other reasonable
professional costs and expenses incurred by the Buyer as a result
of a claim covered by clauses 10.2 or 10.4 does not exceed the
amount of any outstanding instalments of the Handover Payment,
the outstanding instalments shall be reduced accordingly.
10.9.3 Should the Buyer exercise its right under this clause 10.9 to
set off any amount against the Handover Payment, it irrevocably
and unconditionally waives its right to seek any further payment
under clause 10.2 and/or 10.4 to the extent it has already set
off such payment under clause 10.9.
11. TWM CONTRACTS
11.1 Subject to clause 11.2.3:
11.1.1 TWM hereby assigns, or undertakes to use all reasonable
endeavours to procure the assignment of (as the case may be), the
benefit of each TWM Contract to the Buyer, at and with effect
from Completion;
11.1.2 after Completion, the Buyer shall:-
(a) perform the relevant obligations under each TWM Contract in
accordance with the terms of the TWM Contract; and
(b) indemnify TWM against every loss, liability and cost which
TWM may incur as a result of the Buyer's performance of
relevant obligations under a TWM Contract to the extent that
the loss, liability or cost is attributable to an act or
omission of the Buyer after Completion (including any loss,
liability or cost incurred as a result of defending or
settling a claim alleging such a liability)
and in each case, only to the extent that the terms of the
relevant TWM Contract have been provided to the Buyer prior to
the date hereof in writing; and
11.1.3 TWM shall indemnify the Buyer against every loss, liability and
cost which the Buyer may incur as a result of TWM's performance
of relevant obligations under a TWM Contract to the extent that
the loss, liability or cost is attributable to an act or omission
of TWM prior to Completion (including any loss, liability or cost
incurred as a result of defending or settling a claim alleging
such a liability).
11.2 If a TWM Contract cannot be assigned to the Buyer except by an
agreement of novation with, or consent to the assignment from, one or
more third parties:-
11.2.1 this Agreement does not constitute an assignment or attempted
assignment of the TWM Contract;
21
11.2.2 TWM shall at the Buyer's request use all reasonable endeavours
with the co-operation of the Buyer to procure such novation or
consent;
11.2.3 subject to clause 11.2.4, unless and until the TWM Contract is
novated or assigned with effect from Completion:-
(a) TWM will hold the benefit of the TWM Contract, or will
procure that such benefit is held, on trust for the Buyer
and (so far as it lawfully may) at its own cost give all
reasonable assistance to the Buyer to enable the Buyer to
enjoy the benefits of the TWM Contract and to enforce its
rights under it; and
(b) the Buyer will perform the TWM Contract in accordance with
its terms and conditions (to the extent that the terms of
the relevant TWM Contract have been provided to the Buyer
prior to the date hereof in writing) as sub-contractor to
TWM or such other party as is holding the benefit of the
relevant contract on trust for the Buyer (as the case may
be);
11.2.4 if it is unlawful for TWM to hold, or to procure the holding
of, the benefit of the Contract on trust for the Buyer and/or for
the Buyer to perform the TWM Contract as sub-contractor to TWM:-
(a) this Agreement does not constitute a declaration of trust
over the TWM Contract and/or (as the case may be) the
appointment or attempted appointment of a sub-contractor
under the TWM Contract; and
(b) TWM and the Buyer shall each (at the cost and expense of the
Sellers) use all reasonable endeavours to do or procure to
be done all such further acts and things and execute or
procure the execution of all such other documents as may be
necessary in order (as nearly as may be possible) to put TWM
and the Buyer in the position in which they would have been
had the benefit and burden of the TWM Contract passed to the
Buyer on Completion in the manner contemplated by the
preceding provisions of this clause 11.
12. COMPUTER CONTRACTS
12.1 The Buyer and TWG agree that nothing in this Agreement shall
constitute an assignment or novation or an attempted assignment or
novation of the Computer Contracts.
12.2 From Completion until the earlier of the expiry of the Subcontracting
Period and the date on which the relevant Computer Contract is
terminated or expires:-
12.2.1 TWG shall hold the benefit of each of the Computer Contracts
not so terminated or expired on trust for the Buyer and (so far
as it lawfully may) at the cost of the Buyer give all reasonable
assistance to enable the Buyer to enjoy the benefit of the
Computer Contracts;
12.2.2 the Buyer will perform all of TWG's obligations under the
Computer Contracts not so terminated in accordance with their
terms and conditions as sub-contractor to TWG.
22
12.3 The Buyer shall indemnify TWG against every loss, liability and cost
which TWG may incur as a result of the Buyer's performance or
non-performance of TWG's obligations under a Computer Contract to the
extent that the loss, liability or cost is attributable to an act or
omission of the Buyer from Completion (including any loss, liability
or cost incurred as a result of defending or settling a claim alleging
such a liability) until the end of the period referred to in clause
12.2.
12.4 The Buyer shall be responsible for the due and punctual payment of all
sums payable by TWG under the Computer Contracts during the period
referred to in clause 12.2 and shall pay all such sums to TWG, or to
such other party as TWG may direct, within 7 days of receiving
notification in writing from TWG of the nature and amount of any such
sum without deduction or set-off.
12.5 Subject to clause 12.6, TWG shall use reasonable endeavours to ensure
that the Computer Contracts are not terminated before the end of the
period referred to in clause 12.2 or such other later date as may be
agreed in writing between the Buyer and TWG.
12.6 The Buyer acknowledges that TWG wishes to wind down its operations as
soon as reasonably practicable and that notice has already been given
to terminate the ITEX contract and it will terminate on 1 September
2009. In the event that the Buyer does not require the benefit of any
of the Computer Contracts until 31 August 2009, the Buyer shall give
to the Sellers at least 30 days' notice that the Sellers may terminate
the relevant Computer Contract and the Sellers shall give notice to
terminate the relevant Computer Contract as soon as possible under the
terms of that Computer Contract, but the Buyer shall in all
circumstances remain liable to perform its obligations under clause
12.2.2 in respect of the ITEX contract until 1 July 2009 at the
earliest. The Buyer agrees to hold TWG harmless against any additional
cost (limited to the rental payment for the 30 day notice period for
the relevant Computer Contract and which does not include any costs
associated with termination of the ITEX contract) incurred by the
Sellers by virtue of any such early termination and the Buyer shall
cooperate with such early termination. Subject as aforesaid the Buyer
acknowledges that TWG may, at its own cost, serve notice to terminate
any or all of the Computer Contracts, such termination to occur on or
after 31 August 2009 (unless a later date has been agreed pursuant to
clause Subject to clause 12.6, TWG shall use reasonable endeavours to
ensure that the Computer Contracts are not terminated before the end
of the period referred to in clause 12.2 or such other later date as
may be agreed in writing between the Buyer and TWG.), and that TWG
shall bear no liability to the Buyer in respect of any consequences of
the service of such notice.
12.7 Subject to clause 12.8 and except as otherwise specified in clause
12.6, TWG shall bear all costs and expenses incurred as a result of
the termination of any of the Computer Contracts pursuant to the
sending of a notice in accordance with clause 12.6.
12.8 TWG undertakes to use all reasonable endeavours to procure that the
Buyer shall during the Subcontracting Period have the benefit of all
services provided by Playtech under the Playtech Contract reasonably
necessary for the conduct of the Businesses and the Buyer undertakes
to indemnify TWG against all costs, charges and expenses incurred by
TWG to third parties (which for the avoidance of doubt includes any
costs, charges and expenses payable to Win Gaming and/or Playtech) in
procuring the provision of such services by Playtech up to an
aggregate total of US$70,000 in relation to each calendar month
following Completion in respect of which such services are utilised.
23
13. PROTECTION OF THE BUYER'S INTERESTS
13.1 The Sellers covenant with the Buyer that they shall not directly or
indirectly:-
1.1.1 until the expiration of twenty-four months from Completion,
carry on or be engaged or interested in the business of running
Challenge Jackpot or any similar roulette game using a live
presenter and either a digitised, auto or live roulette wheel on
behalf of VMTV;
13.1.1 until the expiration of nine months from Completion, carry on
or be engaged or interested in the business of running Challenge
Jackpot, or any similar roulette game using a live presenter and
either a digitised, auto or live roulette wheel on behalf of any
UK broadcaster other than VMTV;
13.1.2 until the expiration of twelve months from Completion, solicit
or entice away or endeavour to solicit or entice away from the
Buyer any person employed in Challenge Jackpot in an executive,
technical, managerial or sales capacity at Completion with a view
to inducing that person to leave his employment;
13.1.3 until the expiration of twelve months from Completion, employ
any of the Employees, with the exception of the Key Individuals;
or
13.1.4 use or register or attempt to register or allow any third party
to use any name or style which includes the phrase "Challenge
Jackpot" (including any domain name previously registered by
either Seller) or any name (including a domain name) which is
likely to cause a third party to believe that such a name is
connected with Challenge Jackpot.
13.2 Each of the restrictions set out in clause 13.1 is separate and
severable, shall be enforceable by the Buyer independently of each of
the others and for the avoidance of doubt clause 13.4 shall apply to
each of them.
13.3 The restrictions set out in clause 13.1 are considered reasonable by
the parties and the Sellers acknowledge (having taken legal advice)
that, in the light of the consideration paid or to become payable
under this Agreement, the manner of its computation, the nature of
Challenge Jackpot and all other relevant matters, clause 13.1 is
necessary for the purpose of assuring to the Buyer the full benefit of
Challenge Jackpot and for the protection of the proprietary and
commercial interests of the Buyer.
13.4 If any provision of this Agreement shall be found by any court or body
or authority of competent jurisdiction to be invalid or unenforceable,
such provision shall be severed from the remainder of this Agreement,
which shall remain in full force and effect to the extent permitted by
law.
14. RESTRICTIONS ON TRANSFER OF CONSIDERATION SHARES
14.1 Subject to the provisions of clause 14.2, the Sellers undertake to the
Buyer (in order to ensure an orderly market in the Buyer's shares)
that they will not within 12 months of Completion Dispose of the legal
or beneficial ownership of or any other interest in any Consideration
Shares without the prior written consent of the Buyer.
14.2 The above undertaking shall not apply to a Disposal of Consideration
Shares made:-
24
14.2.1 from a Seller to either IMAC or Win Gaming;
14.2.2 in acceptance of a general offer for the whole of the issued
equity share capital of the Buyer (other than any equity share
capital held by or committed to the offeror and/or persons acting
in concert with the offeror) made in accordance with the City
Code on Takeovers and Mergers or the provision of an irrevocable
undertaking to accept such an offer; or
14.2.3 pursuant to any compromise or arrangement under Part 26 of the
2006 Act providing for the acquisition by any person (or group of
persons acting in concert) of 50% or more of the equity share
capital of the Buyer and which compromise or arrangement has been
sanctioned by the courts; or
14.2.4 under any scheme of reconstruction under section 110 of the
Insolvency ▇▇▇ ▇▇▇▇ in relation to the Buyer; or
14.2.5 a Disposal made pursuant to an offer by the Buyer to purchase
its own shares which is made on identical terms to all holders of
ordinary shares in the Buyer and otherwise complies with the Act,
the 2006 Act and the AIM Rules; or
14.2.6 pursuant to an order of a court of competent jurisdiction
requiring any Consideration Shares to be sold or transferred or a
consent order which has the same effect.
14.3 No Permitted Disposal shall be allowed if it would represent a breach
of the AIM Rules and all Permitted Disposals shall be effected through
the Buyer's Nomad or Broker in such an orderly manner as the Nomad or
Broker shall reasonably require, with a view to the maintenance of an
orderly market in the shares of the Buyer.
14.4 TWG undertakes to the Buyer that it shall carry out any Disposal
(other than a disposal carried out in accordance with clause 14.2) of
Consideration Shares prior to the fourth anniversary of Completion
through the Buyer's Nomad or Broker in such orderly manner as the
Nomad or Broker shall reasonably require, with a view to the
maintenance of an orderly market in the shares of the Buyer.
14.5 Win Gaming shall not be entitled to be issued with or have transferred
to them any Consideration Shares unless and until Win Gaming has
delivered to the Buyer an undertaking in the form previously supplied
to Win Gaming by the Buyer's Solicitors undertaking not to carry out
any Disposal (other than a disposal carried out in accordance with
clause 14.2) of Consideration Shares prior to the first anniversary of
Completion through the Buyer's Nomad or Broker in such orderly manner
as the Nomad or Broker shall reasonably require, with a view to the
maintenance of an orderly market in the shares of the Buyer and
agreeing that any such Consideration Shares shall be held in an
account with Panmure ▇▇▇▇▇▇ & Co (and subject to first complying with
any reasonable KYC procedures of that firm).
15. ENTIRE AGREEMENT
15.1 This Agreement constitutes the entire agreement and understanding of
the parties and supersede any previous agreement between the parties
relating to the subject matter of this Agreement.
25
15.2 Nothing in this clause 15 shall operate to limit or exclude any
liability for fraud.
16. MISCELLANEOUS
16.1 All notices, correspondence, information, orders or enquiries relating
to the Employees, the Businesses or any of the Assets received by the
Sellers on or after Completion shall immediately be forwarded to the
Buyer.
16.2 TWG undertakes to the Buyer that it will immediately notify the
interest of the Buyer in the Assets to the present insurer of the
Assets and will keep in force existing insurance policies in respect
of the Assets until:-
16.2.1 it receives written notice from the Buyer that it may cancel
such policies; or
16.2.2 30 Business Days after Completion
whichever is the sooner, provided that, for the avoidance of doubt,
nothing in this Agreement shall oblige TWG to renew any such insurance
policy beyond that period.
16.3 The following clauses shall survive termination of this Agreement:
clause 1 (Interpretation), 15 (Entire Agreement), 19 (Fees and
Expenses), 20 (Announcements), 21 (Assignment), 22 (Notices) and 26
(Governing Law and Jurisdiction).
17. THIRD PARTY RIGHTS
17.1 This Agreement does not create, confer or purport to confer any
benefit or right enforceable by any person not a party to it.
17.2 Any amendment or variation of the terms of this Agreement or any
document entered into or delivered in accordance with its provisions
shall be effective if made or confirmed in writing and signed by the
Sellers and the Buyer or the parties to such document and any other
person's consent shall not be required for any such amendment or
variation.
18. FURTHER ASSURANCE
18.1 The Sellers believe that all the rights and assets granted, assigned,
held on trust, sold or transferred by them pursuant to the terms of
this Agreement are sufficient to enable the Buyer to operate the
Challenge Jackpot Business as at Completion.
18.2 The Sellers shall at their own expense execute and register or procure
to be executed and registered all such deeds and documents and do all
acts and things as the Buyer may reasonably require to give effect to
this Agreement.
19. FEES AND EXPENSES
Without prejudice to clause 2.3, each of the parties to this Agreement
shall pay and bear its own costs of and incidental to the negotiation,
preparation and execution of this Agreement or any document executed or to
be delivered pursuant to it.
20. ANNOUNCEMENTS
20.1 Subject to clause 20.2, and except as required by law or by any
regulatory body of competent jurisdiction, no communication concerning
the transaction referred to in this Agreement or its terms shall be
made or despatched by any party without the prior written consent of
each of the other parties.
26
20.2 A party shall, if requested in writing by any other party, supply
whatever information and reports concerning such party which may be
required to comply with any applicable law or the regulations of any
recognised investment exchange relating to any listing particulars,
prospectus or circular to be published by it or any announcement
required to be made in relation to this Agreement or any matters
contemplated by it.
20.3 At or as soon as possible after Completion, the Sellers will
co-operate with the Buyer's reasonable requests in despatching, at the
Buyer's cost, notices in agreed form to the Employees and such other
third parties as the Buyer may reasonably request informing them of
the transfer of the Business.
21. ASSIGNMENT
Each of the parties shall be entitled to assign any or all of its rights
under this Agreement to any member of its group provided that if such
assignee shall subsequently cease to be a member of its group then the
relevant party shall procure that prior to such cessation that company will
reassign its rights to the relevant party or to another member of the
relevant party's group.
22. NOTICES
22.1 Any communication given under this Agreement shall be in writing and
delivered personally or prepaid recorded, special delivery or first
class post (or air mail post if to an address outside the United
Kingdom) to the address of the party who is to receive such
communication as set out in this Agreement or to such other address in
the United Kingdom as may from time to time be specified in writing by
the relevant party as its address for the purpose of this clause 22.
22.2 A communication shall be deemed to have been received:-
22.2.1 if delivered personally, at the time of delivery;
22.2.2 if sent by prepaid recorded, special delivery or first class
post, on the second Business Day after the date of posting; and
22.2.3 if sent by prepaid air mail post, on the fifth Business Day
from the date of posting.
22.3 Each party undertakes to notify the other parties in accordance with
this clause 22 if the address specified in this clause 22 is no longer
an appropriate address for the service of communications.
23. WAIVER
23.1 No failure to exercise or any delay in exercising any right or remedy
by the Buyer under this Agreement shall operate as a waiver of it or
of any other right or remedy under it. No single or partial exercise
of any such right or remedy by the Buyer shall prevent any further or
other exercise of it or the exercise of any other right or remedy.
27
23.2 The rights and remedies provided by this Agreement are cumulative and
(unless otherwise provided in this Agreement) are not exclusive of any
rights or remedies provided by law.
24. COUNTERPARTS
This Agreement may be executed in counterparts by the parties, each of
which when executed and delivered shall constitute an original, but which
together shall constitute one and the same instrument.
25. INDEPENDENT EXPERT
25.1 Any Independent Expert to be appointed under this Agreement shall be
nominated jointly by the Buyer and the Sellers or, in the absence of
agreement within seven days of any such party becoming entitled to
appoint an Independent Expert, to be nominated upon request by such
party by the President (or, if he is not available, the next most
senior officer) for the time being of the Institute of Chartered
Accountants in England and Wales.
25.2 Any Independent Expert shall act as expert and not as an arbitrator
and his decision shall be final and binding on the parties (in the
absence of manifest error, in which case such error shall be rectified
as soon as possible).
25.3 The costs of any Independent Expert shall be borne as he directs or,
in the absence of such direction, equally by the Sellers on one hand
and the Buyer on the other.
25.4 Any determination which is made by an Independent Expert under this
Agreement shall be without liability on the part of such Independent
Expert under other than for bad faith.
25.5 The Buyer and the Sellers shall give all such facilities and
information and all reasonable assistance to the Independent Expert to
enable him to make any determination required to be made by him under
this Agreement and shall allow him access to any books, records or
information relating to the subject matter of this Agreement held by
any of them.
26. GOVERNING LAW AND JURISDICTION
26.1 This Agreement shall be governed by, and construed in accordance with,
the laws of England and Wales.
26.2 Each party irrevocably agrees that the courts of England and Wales
shall have exclusive jurisdiction to hear and determine any suit,
action or proceedings and to settle any disputes which may arise out
of or in connection with this Agreement (or any documents entered into
in accordance with its provisions).
IN WITNESS of which the parties have executed this Agreement as a deed on the
date specified on page 1.
28
EXECUTED AS A DEED by NETPLAY TV
PLC acting by
a director, in the presence of:-
/s/
...............................
Signature of witness
Name:
Address:
Occupation:
EXECUTED AS A DEED by TWO WAY
GAMING LIMITED acting by
a director, in the presence of:-
/s/
...............................
Signature of witness
Name:
Address:
Occupation:
EXECUTED AS A DEED by TWO WAY
MEDIA LIMITED acting by
a director, in the presence of:-
/s/
...............................
Signature of witness
Name:
Address:
Occupation:
* EXHIBITS AND SCHEDULES TO EXHIBIT 10.1 HAVE BEEN OMITTED AND WILL BE FILED
WITH THE SECURITIES AND EXHCNAGE COMMISSION UPON REQUEST.
29