EXHIBIT 4.5
SHAREHOLDERS AGREEMENT
THIS AGREEMENT made the 14 day of September, 2006.
BETWEEN:
GAMING VENTURES PLC,
incorporated in Isle of Man
("GV")
AND:
GOLDEN PALACE LIMITED,
incorporated in Antigua and Barbuda
("GP")
AND:
RNG GAMING LIMITED,
incorporated in the Isle of Man
(the "CORPORATION")
WHEREAS:
(1) all of the issued shares of the Corporation are owned of record by the
following shareholders in the following amounts:
ORDINARY SHARES
---------------
GV 1,000,000 ordinary shares of (pound)0.0001 each
GP 250,000 ordinary shares of (pound)0.0001 each
(2) this Agreement concerns the business and affairs of the Corporation.
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
ARTICLE 1
INTERPRETATION AND PURPOSE
1.01 DEFINITIONS
In this Agreement:
"ACCOUNTANT" means the accountant(s) of the Corporation from time to time
appointed pursuant to this Agreement;
"ACT" means the Companies Acts 1931 to 2004, being Acts of the Government
of the Isle of Man, and any other similar Acts of the Government of the
Isle of Man;
"BANK" means the bank or other financial institution at which the
Corporation from time to time maintains its general business account;
"BOARD" means the board of directors of the Corporation from time to time;
"BUSINESS DAY" means a day other than a Saturday, Sunday or statutory
holiday in the Isle of Man;
"CONTROL" means, with respect to any corporation, the ownership,
beneficially and legally, of voting securities in the capital of such
corporation, to which are attached more than 50% of the votes that may be
cast to elect the directors of such corporation and such votes are
sufficient (and are exercised) to elect a majority of the directors
thereof, and "CONTROL" shall also mean the management of the day-to-day
operations and business of such corporation;
"DIRECTORS" means the directors of the Corporation (excluding the Managing
Director);
"MANAGING DIRECTOR" shall be the non-voting managing director appointed
from time to time under SECTION 2.03(1);
"PRIME RATE" for any particular day means the prime lending rate of
interest for such day established and announced from time to time by the
Royal Bank of Scotland as its reference rate of interest per annum for
determining interest rates on Isle of Man Currency demand loans to Isle of
Man customers;
"SECURITIES" means shares of any class or a debt obligation of the
Corporation to a Shareholder and includes a certificate evidencing such a
share or debt obligation;
"SHARES" means the Ordinary shares of the Corporation;
"SHAREHOLDERS" means GV and GP;
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"TRANSFER" means to sell, assign, surrender, gift, transfer, pledge,
mortgage, charge, create a security interest in, hypothecate or otherwise
encumber or deal with any interest, legal or beneficial, in the
subject-matter of the transfer;
"TRANSFER VALUE" means the fair market value of Shares to be transferred in
accordance with this Agreement as agreed between the vendor and the
purchaser or as determined in accordance with ARTICLE 5; and
"TRANSFER VALUATION DATE" means the date on which an event described in
this Agreement, which initiates a right or obligation to purchase Shares,
occurs.
1.02 INTERPRETATION OF "SUBSIDIARY":
For the purposes of this Agreement, a corporation shall be deemed to be a
"SUBSIDIARY" of another corporation if, but only if,
(1) it is controlled by,
(a) that other, or
(b) that other and one or more corporations each of which is
controlled by that other, or
(c) two or more corporations each of which is controlled by that
other; or
(2) it is a subsidiary of a corporation that is that other's subsidiary.
"SUBSIDIARIES" means more than one Subsidiary.
1.03 INTERPRETATION OF "AFFILIATE"
For the purposes of this Agreement a corporation shall be deemed to be an
"AFFILIATE" of another corporation if, but only if, one of them is the
Subsidiary of the other or both are Subsidiaries of the same corporation or
each of them is controlled by the same person. "AFFILIATES" means more than
one Affiliate.
1.04 CONFLICT
In the event of a conflict between any provision of this Agreement and any
provision of the Memorandum of Association of the Corporation, the
provision of this Agreement shall govern and, at the request of any
Shareholder, the Memorandum of Association shall be amended as may be
necessary to remove the conflict.
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ARTICLE 2
MANAGEMENT
2.01 BOARD OF DIRECTORS
(1) The Board shall consist of up to 4 directors (excluding the "Managing
Director"). While GP owns 20% of the Shares, it shall be permitted to
appoint 1 of the directors and GV shall be permitted to appoint the
remainder of the directors. Upon GP becoming the owner of 50% of the
Shares, GP and GV shall each be entitled to appoint an equal number of
the directors. Should a director who was an appointee of a Shareholder
die or resign from the Board, or should a director who that
Shareholder appointed be removed, the Shareholder in these cases shall
be permitted to appoint a director to replace the director who died,
resigned or was removed. The directors of GP and GV shall, from time
to time, jointly appoint a non-voting "Managing Director" who shall
have the powers and responsibilities set forth below and who shall
remain in that position for so long as he/she shall have the
confidence of all directors.
(2) The Board shall meet at least once in every one month until otherwise
determined by unanimous consent of the Board. The Board shall meet at
the registered office of the Corporation or at a location determined
by the Managing Director and if a meeting of the Board is not held
during any one month period (or other period as determined by
unanimous consent of the Board), any director may call a meeting of
the Board on 96 hours prior notice to the other directors. At each
meeting of the Board, unless waived unanimously by the Board, the
Managing Director shall report fully to the Board with respect to the
current status of the operations of the Corporation and with respect
to all major developments or planned action involving the Corporation
and shall present to the meeting complete current financial
information with respect to the Corporation.
(3) A quorum for meetings of the Board shall consist of a majority of the
members of the Board, which must include the Managing Director and one
GV director and one GP director. If a quorum is not obtained at any
meeting, the meeting shall be adjourned and may be reconvened upon 7
days notice to the directors, at which reconvened meeting the quorum
shall be those directors present at the meeting.
(4) Any or all directors may participate in a meeting of the Board by
means of such telephone, electronic or other communication facilities
as permit all persons participating in the meeting to hear and
communicate with each other simultaneously and a director
participating in such a meeting by such means is deemed to be present
at the meeting.
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2.02 SIGNING OFFICERS
The authorized signing officers of the Corporation shall be the Managing
Director (who will also be the Corporation's President) and/or any
delegates of the Managing Director.
2.03 APPROVAL OF MATTERS
(1) "MATERIAL ACTION" means any one or more of the following:
(a) any change in the Memorandum of Association of the Corporation;
(b) any change in the authorized or issued capital of the
Corporation;
(c) the entering into of any agreement or the making of any offer or
the granting of any right capable of becoming an agreement to
allot or issue any shares of the Corporation;
(d) any action which may lead to or result in a material change in
the nature of the business of the Corporation;
(e) the entering into of any agreement other than in the ordinary
course of the Corporation's business;
(f) the taking of any steps to wind-up or terminate the corporate
existence of the Corporation;
(h) the sale, lease, exchange or disposition of the entire
undertaking or property or assets of the Corporation;
(i) the taking, holding, subscribing for or agreeing to purchase or
acquire shares in the capital of any body corporate other than a
wholly-owned Subsidiary of the Corporation, to be located in
Israel, whose business will consist of providing the Corporation
with technology development services;
(j) the entering into of a partnership or of any arrangement for the
sharing of profits, union of interests, joint venture or
reciprocal concession with any person;
(k) the entering into of an amalgamation, merger or consolidation
with any other body corporate;
(l) the redemption or purchase by the Corporation of its issued
Shares;
(m) the repayment of any loans owing by the Corporation to any
Shareholder, except as contemplated in SECTION 3.03;
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(n) the fixing, paying or changing of any salary, bonus or fee to any
party or any director of the Corporation, except as approved by
in an approved operating budget or as approved by the Board's
Budget Committee or Compensation Committee;
(o) the appointment or removal of officers of the Corporation at any
time during the initial 12 month period following the signing of
this Agreement or at any time after the exercise by GP of the
"Option" referred to in the Share Subscription and Option
Agreement entered into between the parties contemporaneously with
this Agreement;
(p) the delegation by the Board of any of its powers, except as
specifically set forth in this Agreement; and
(r) any agreement with or commitment to any party to this Agreement.
(2) No Material Action shall be taken without the consent of both
Shareholders.
(3) The Managing Director shall take all actions reasonably possible to
ensure that:
(a) the Corporation does not violate the terms of any credit facility
it has established with any lender;
(b) the Corporation shall comply, in all material respects with all
applicable laws, rules, regulations and orders applicable to the
Corporation, its assets, or its business;
(c) the Corporation shall duly observe and conform to all valid
requirements of any governmental authorities relative to the
conduct of its business or to its properties or assets;
(d) the Corporation shall maintain and keep in full force and effect
its corporate existence and all licenses and permits necessary to
ensure the proper conduct of its business, including without
limitation, preserving and maintaining all of its proprietary
rights;
(e) the Corporation shall maintain its leased premises and useful
assets in good working order and condition, and shall make all
necessary and needful repairs, renewals, replacements, additions
and improvements thereto;
(f) the Corporation will keep all of its assets (excluding money and
other intangible assets) in its leased premises;
(g) the Corporation shall keep proper books of records and accounts
in which full, true and correct entries in accordance with
generally accepted accounting principles will be made of all
dealings or transactions relating to its business and activities;
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(h) the Corporation shall pay all of its obligations and liabilities
when due, including (without limitation) all taxes, assessments
and governmental charges or levies imposed upon it or upon its
income or profits or upon any property securing any obligations
under this Agreement, and maintain appropriate reserves for the
accrual of the same in accordance with generally accepted
accounting principles; provided, however, that (unless and until
foreclosure, distraint, sale or other similar proceedings shall
have been commenced) nothing in this section shall require the
Corporation to observe or conform to any requirements of a
governmental authority, or to pay any obligation or liability, so
long as the validity thereof shall be contested in good faith by
appropriate proceedings diligently prosecuted and provided that
provision is made for the eventual payment thereof in the event
it is found that such are payable by the Corporation;
(i) the Corporation will maintain, with financially sound and
responsible companies, insurance in such form and in such amounts
and against such risks as is customarily carried by companies
engaged in the same or a similar business and operating like
properties, including without limitation: (a) insurance on its
properties against loss or damage by fire or other hazard, (b)
adequate insurance against liability on account of or damage or
injury to persons and property and under all applicable ▇▇▇▇▇▇▇'▇
compensation laws, and (c) directors and officers liability
insurance in an amount not less than US$3,000,000 and with a
deductible of not more than US$25,000;
(j) the Corporation shall furnish to its Shareholders prompt notice
of all actions, suits and proceedings before any court, tribunal
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, materially affecting the
Corporation or its business, operations or properties;
(k) the Corporation shall furnish to its Shareholders prompt written
notice of any material adverse change in the business,
properties, conditions or operations, financial or otherwise, of
the Corporation, a statement setting forth details of such a
material adverse change and the action of which the Corporation
proposes to take with respect thereto;
(l) the Corporation shall furnish to any Shareholder, promptly after
such Shareholder's request, such other information respecting the
condition or operations, financial or otherwise, of the
Corporation as such Shareholder may from time to time reasonably
request;
(m) the Corporation shall immediately give its Shareholders written
notice of any condition or event which has resulted or would with
passage of time result in:
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(i) a material adverse change in the Corporation's business,
properties, conditions or operations, financial or
otherwise;
(ii) a material breach or non-compliance with any term, condition
or covenant of any material contract to which the
Corporation is a party or by which it or its property may be
bound;
(iii) any litigation or proceedings affecting any of the
transactions contemplated by this Agreement or affecting the
Corporation which, if adversely determined, might have a
materially adverse affect upon the financial condition,
business or operations of the Corporation; and upon the
Corporation's receipt of any notice or process service, of
any litigation or claims of any kind in excess of $100,000,
initiated or asserted against the Corporation, which might
subject the Corporation to liability, whether covered by
insurance or not;
(iv) any dispute between the Corporation and any governmental
regulatory body or other party which might materially affect
the transactions contemplated by this Agreement or
materially interfere with the normal business operations of
the Corporation; or
(v) the imposition of any lien, levy, attachment or execution on
its business or assets created or imposed by any
governmental entity or any creditor and shall cause such
liens or other process to be satisfied within no more than
30 days;
(n) the Corporation shall furnish to its Shareholders prompt notice
of all actions, suits and proceedings before any court, tribunal
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, materially affecting the
Corporation or its business, operations or properties;
(o) the Corporation shall comply with all of its obligations under
this Agreement;
(p) any capital or operating expenditures of the Corporation, not
approved by a capital or operating budget adopted by the
unanimous consent of the Board, will not be made without the
unanimous consent of the Board except as permitted by the Budget
Committee or the Compensation Committee of the Board (both of
which committees shall consist of one nominee of GV and one
nominee of GP) - the nominees on such committee(s) shall give or
withhold their consent within 36 hours after receiving a request
to consider the proposed expenditure(s);
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(q) no action contemplated in SECTION 2.03(3) shall occur except as
permitted in accordance with the terms of that section; and
(r) give written notice to the Shareholders of any failure to meet
any of the obligations set forth in SECTIONS 2.03(3)(A) through
2.03(3)(P), inclusive, as soon as the Managing Director becomes
aware of such failure.
(4) The Managing Director shall have the sole authority and power to cause
the Corporation to do any action that is not a Material Action and to
make any decision on behalf of the Corporation that does not relate to
a Material Action. Except as limited by this Agreement, the Managing
Director shall have the sole responsibility, authority and power to
manage the business and affairs of the Corporation.
2.04 SOFTWARE RELATED ACTIONS
At any time during the initial 15 month period following the signing of
this Agreement or at any time after the exercise by GP of the "Option"
referred to in the Share Subscription and Option Agreement entered into
between the parties contemporaneously with this Agreement, the Corporation
shall not develop, sell, license, lease or otherwise make software,
products or services available to any third party (including Affiliates of
any party to this Agreement), or make any commitment or enter into any
agreement to do any of the foregoing, without the unanimous consent of the
Board.
ARTICLE 3
FINANCIAL MATTERS
3.01 EQUITY PARTICIPATION
Each Shareholder represents and warrants that it is the registered owner of
that number and class of the Shares set out opposite such Shareholder's
name in the recitals to this Agreement. GV further warrants and represents
that Zone 4 Play, Inc. (a Nevada company) and Zone 4 Play, Inc. (a Delaware
company) are creditors of GV and therefore have liens on GV Shares securing
the above debt. In the event that Shares are to be transferred pursuant to
this Agreement, the Shareholders undertake that such Shares shall be free
and clear of all claims, liens and encumbrances whatsoever. Each
Shareholder represents and warrants that no person, firm, corporation,
partnership, trust or other entity has any agreement or option or right
capable of becoming an agreement for the purchase of such Shares except as
set forth in this Agreement.
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3.02 CAPITAL
If the Corporation requires additional funds, the Board shall convene and
arrive at a satisfactory decision on the matter. Any such decision to
determine the mechanism under which additional funds are raised shall
require the unanimous consent of the Board.
3.03 PAYMENTS AND DISTRIBUTIONS
All funds from time to time available to the Corporation which in unanimous
opinion of the Board are not otherwise required for the Corporation's
purposes shall be paid, applied and distributed as follows:
(1) first to the making of any payments which are due from the Corporation
to any bank or lender other than a Shareholder;
(2) secondly, to the repayment of interest owing on loans from
Shareholders to the Corporation, such payments to be made PRO RATA in
accordance with the interest owing;
(3) thirdly, to the repayment of the principal amount of loans from
Shareholders to the Corporation, such payments to be made PRO RATA in
accordance with the principal amounts owing to each Shareholder; and
(4) fourthly, but subject to the other provisions of this Agreement, the
balance shall be distributed to the Shareholders by way of dividends.
3.04 ACCOUNTANT
All of the Shareholders, by unanimous agreement on a yearly basis, shall
appoint the accountants of the Corporation. The accountants of the
Corporation shall have access to all books, accounts, records, vouchers,
checks, papers and documents which relate to the Corporation, including
those of the Shareholders.
3.05 BOOKS OF ACCOUNT
Subject to all applicable, laws, proper books of account and records shall
be kept by the Corporation at such place as shall be determined by the
unanimous agreement of the directors and entries shall be made therein in
accordance with generally accepted accounting principles. Upon giving not
less than 14 days notice to the Managing Director, each Shareholder may
require a meeting with the Managing Director at which meeting such
Shareholder or its nominee shall have free access to examine such books of
account and records, provided that any confidential information which is
obtained shall not be disclosed to others or used for any improper purpose.
Each Shareholder shall at all times, without any concealment or
suppression, furnish correct information, accounts and statements to the
Shareholders and the Corporation in respect of all transactions pertaining
to the Corporation.
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3.06 FINANCIAL REPORTING
The Board shall cause the Managing Director to prepare and send to each
Shareholder:
(1) an un-audited profit and loss statement and balance sheet as at the
end of each calendar quarter, prepared in accordance with generally
accepted accounting principles applied on a consistent basis with
prior periods and setting forth in the statements in comparative form
figures for the corresponding calendar quarter in the preceding year -
such documents to be sent to the Shareholders within 45 days following
the end of each calendar quarter; and
(2) annual financial statements, prepared by the Accountants, containing:
(a) the balance sheet of the Corporation, prepared in accordance with
generally accepted accounting principles applied on a consistent
basis; and
(b) a statement of profit and loss and a statement of changes in
financial position, prepared in accordance with generally
accepted accounting principles applied on a consistent basis of
the Corporation for such period;
such statements shall be audited, unless otherwise determined by
unanimous consent of all Shareholders, and shall be sent to the
Shareholders within 90 days after the end of each fiscal year of the
Corporation.
3.07 BUDGETS
The Corporation shall adopt and keep in place, by unanimous consent of the
directors, a current operating budget and a current capital budget. Any
expenditure not permitted under an applicable budget may be made only with
the unanimous consent of the directors.
3.08 SHAREHOLDER'S AUDIT
A Shareholder (the "AUDITING SHAREHOLDER") may from time to time (but not
more than once during any 12 month period) upon making a written request to
the Managing Director (the "AUDIT REQUEST"), at its own expense, cause an
audit to be made of the Corporation's books and accounts by a chartered
accountant or certified public accounts appointed by such Shareholder. Such
audit shall be conducted in the presence of the Managing Director and/or
his/her nominees at a place determined by the Managing Director. Within 7
days of receiving an Audit Request, the Managing Director will notify the
Auditing Shareholder of the place and time at which such audit may be
conducted (which time shall be not later than the 21st day after the Audit
Request was delivered. Such auditor shall, for the purpose of performing
the audit, have access to all books, accounts, records, vouchers, checks,
papers and documents of or which relate to the Corporation's business and
shall be entitled to require from the Shareholders, directors, officers and
employees of the Corporation, such information and explanations as in its
opinion are necessary to enable him to make such an audit. The results of
the audit shall be disclosed to the Corporation and the Shareholders. If
the audit discloses that there are material irregularities in the books and
accounts of the Corporation, then the Shareholder who has caused the audit
to be made shall be reimbursed by the Corporation for all costs and
expenses incurred by him to have such audit performed. If the audit report
identifies material irregularities, the Auditing Shareholder may cause a
follow-up audit to be conducted to verify that the Corporation has
corrected the material irregularities; the cost of the follow-up audit
shall be borne by the Corporation.
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3.09 BANK ACCOUNT
The Corporation shall maintain a bank account or bank accounts with a Bank
located in the Isle of Man. All bank accounts of the Corporation shall be
kept in the name of the Corporation. All monies received for the account of
the Corporation shall be paid immediately into a bank account of the
Corporation in the same drafts, checks, bills or cash in which they are
received.
3.10 WIND-UP
(1) If the Shareholders unanimously agree to wind-up the Corporation, the
wind-up shall be conducted in a manner whereby its entire assets are
sold and the net proceeds (after payment of all of the Corporation's
debts and obligations) shall be divided between the Shareholders on a
PRO RATA basis having regard to the respective number of Shares they
own.
(2) During the wind-up, each asset of the Corporation shall be offered for
sale to the highest bidder (be it a Shareholder or a third party).
Every bidder must bid on each asset individually, but may make such
bid conditional upon being the successful bidder for other specified
assets.
(3) If a third party makes the highest bid for an asset, then either or
both Shareholders may (within 10 Business Days after the bidding
process for the assets of the Corporation ends) offer to match the
third party's bid. If only one Shareholder offers to match the bid, it
shall be entitled to purchase the asset. If both Shareholders offer to
match the bid, the Shareholders shall conduct additional rounds of
bidding between them until one of the Shareholders outbids the other
(at a price for the asset which is higher than that offered by the
third party).
(4) Upon the completion of the wind-up of the Corporation, the
Shareholders and their Affiliates shall not be restricted in any way
from engaging in the Corporation's former activities, unless they
mutually agree otherwise.
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ARTICLE 4
DEALING WITH SECURITIES
4.01 NO TRANSFER OF SECURITIES OR RIGHTS
A Shareholder shall not Transfer any Securities or rights under this
Agreement except as permitted by this Agreement or with the written consent
of all other Shareholders.
4.02 NOTATION ON SECURITIES
The following language shall be conspicuously noted on all Share
certificates of the Corporation and on all share certificates issued to
Shareholders:
"The shares represented by this certificate are subject to all the
terms and conditions of a unanimous shareholders agreement made as of
September 14, 2006, a copy of which is on file at the registered
office of the Corporation."
4.03 INITIATION OF SALE PROVISIONS
No Shareholder shall initiate a sale or purchase under this Article until
such time as any sale or purchase previously initiated under this Article
has been completed or otherwise ceased to be effective.
4.04 NEW SHAREHOLDERS
If a Transfer of Shares to a person who is not an existing Shareholder
under this Agreement (the "TRANSFEREE") is permitted in accordance with
this Agreement, the Transferee shall as a condition of Transfer enter into
an agreement with the Corporation and the remaining Shareholders pursuant
to which the Transferee shall be entitled to all the benefits and shall
assume all of the obligations of the transferor under this Agreement. The
Transferee must be an incorporated entity.
4.05 DEFAULT PROVISIONS
(1) For the purposes of this section:
(a) an "Event of Default" occurs whenever:
(i) a Shareholder:
(aa) becomes bankrupt or insolvent or takes the benefit
of any statute for bankrupt or insolvent debtors; or
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(bb) makes any assignment of corporate assets to one or
more of its creditors, or arrangement with its creditors for
the purpose of avoiding bankruptcy;
(ii) a receiver, receiver and manager, or other officer with
similar powers is appointed for all or any material part of
a Shareholder's property;
(iii) steps are taken or proceedings are initiated for the
dissolution, winding-up or other termination of a
Shareholder or for the liquidation of a Shareholder's
assets;
(iv) a Shareholder is in material default under any provision of
this Agreement, provided that:
(aa) if such default is not capable of rectification then no
notice of such default need be given by any other
Shareholder;
(bb) if such default is capable of rectification then such
default shall not become an "Event of Default" until
another Shareholder has given notice of the default to
such Shareholder and such default remains un-rectified
for a period of 20 Business Days following the giving
of such notice (however if the default is of a nature
that it cannot be rectified within 20 Business Days,
such 20 Business Day period shall be extended as
necessary provided that the rectification of the
default is begun promptly after receipt of such notice
and is pursued with due diligence to completion); or
(v) there is a Transfer (voluntarily or involuntarily) of all or
any of the Shareholder's Shares to any third party which is
not permitted by this Agreement.
(b) "Offeror" means the Shareholder referred to in SECTION 4.05(1)(A)
and "Offeree" means the other Shareholder.
(2) If an Event of Default occurs, the Offeree shall have the right to
purchase all (but not less than all) of the Shares owned by the
Offeror (the "OFFERED SHARES") at their Transfer Value as of the
Transfer Valuation Date in accordance with the provisions of this
section.
(3) If the Offeree desires to purchase Offered Shares due to an Event of
Default, it shall notify the other Offeror of such desire within 30
days of learning of the Event of Default and shall proceed with
diligence to have the Transfer Value determined as soon as reasonably
possible. For the purposes of this section, an Offeree shall be deemed
to have learned of the Event of Default no later than the date that it
receives notice to that effect from the other Shareholder.
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(4) As soon as the Transfer Value is determined, the Corporation shall by
notice (the "VALUE NOTICE") advise both Shareholders of the
determination and provide reasonable particulars of such
determination.
(5) The Offeree may only purchase the Offered Shares by notice (the
"ACCEPTANCE") given to the other Shareholder to this Agreement within
30 days following receipt of the Value Notice (the "ACCEPTANCE
PERIOD"). If the Offeree gives its Acceptance within the Acceptance
Period, the transaction of purchase and sale shall be completed on the
90th day following the expiry of the Acceptance Period (or the next
Business Day thereafter if the 90th day is not a Business Day). If the
Offeree does not give its Acceptance within the Acceptance Period, the
right of the Offeree to purchase the Offered Shares shall forthwith
cease with respect to the Event of Default for which the Value Notice
was given.
(6) All definitions in this section apply to this section only.
4.06 RIGHT OF FIRST REFUSAL - MARKET LAST
(1) Either Shareholder (the "OFFEROR") who desires to sell all of its
Shares (the "OFFERED SHARES") pursuant to this section shall first
make a bona fide offer to sell the Offered Shares to the other
Shareholder (the "OFFEREE") by giving notice (the "OFFER") referring
to this section and stating the terms upon which the Offeror desires
to sell the Offered Shares.
(2) The Offer shall:
(a) be in sufficient detail that it can reasonably be accepted and
completed by the Offeree;
(b) include a purchase price payable in cash on closing; and
(c) include the place, time and date of closing, reasonably
established.
(3) The Offeree may only accept the Offer by notice (the "ACCEPTANCE")
given to the Offeror within 14 days following receipt of the Offer
(the "ACCEPTANCE PERIOD"). If the Offeree give its Acceptance within
the Acceptance Period, the transaction of purchase and sale shall be
completed on the 90th day following the expiry of the Acceptance
Period (or the next Business day thereafter if the 90th day is not a
Business Day).
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(4) If the Offered Shares are not purchased by the Offeree in accordance
with the foregoing provisions in this SECTION 4.06, the Offerors may
complete a sale of the Offered Shares to an incorporated entity (the
"PURCHASER") within 180 days after the expiry of the Acceptance Period
on terms no more favourable to the Purchaser than those stated in the
Offer. If such sale is not completed to the Purchaser within the 180
day period, the rights of the Offeree under this section shall again
take effect.
(5) All definitions in this section apply to this section only.
4.07 THIRD PARTY OFFER FOR 100% OF SHARES
(1) A Shareholder (the "FIRST SHAREHOLDER") who desires to sell all (but
not less than all) of its Shares (the "FIRST SHAREHOLDER'S SHARES")
pursuant to this section shall first obtain a bona fide offer (the
"INITIAL THIRD PARTY OFFER") from a third party (the "INITIAL THIRD
PARTY"), which third party is an incorporated entity, for the purchase
of all the issued and outstanding Shares of the Corporation (the
"OFFERED SHARES") together with a certified check payable to the
Corporation's lawyer in trust in an amount equal to at least 15% of
the purchase price.
(2) The Initial Third Party Offer shall:
(a) be in sufficient detail that it can reasonably be accepted and
completed by the Shareholders as vendors and either the Third
Party as purchaser for the Offered Shares or the other
Shareholder (the "SECOND SHAREHOLDER")as purchaser for the First
Shareholder's Shares;
(b) include a purchase price payable in cash on closing;
(c) be stated to be subject to the provisions of this section; and
(d) include the place, time and date of closing, reasonably
established.
(3) The First Shareholder shall then offer to sell the First Shareholder's
Shares to the Second Shareholder on the same terms as in the Initial
Third Party Offer by notice (the "OFFER") given to the Second
Shareholder referring to this section and including a copy of the
Initial Third Party Offer. Upon receiving the Initial Third Party
Offer, the First Shareholder must disclose to the Second Shareholder
any prior, existing or intended business or other connection, direct
or indirect, between the First Shareholder (and/or any of its
Affiliates of Subsidiaries) and the Initial Third Party; if the First
Shareholder fails to disclose such a connection, the Second
Shareholder shall have the right to terminate and void any sale of
Shares to the Initial Third Party.
(4) The Second Shareholder may within the 20 Business Day period (the
"ACCEPTANCE PERIOD") after receiving the Initial Third Party Offer:
(a) accept the Offer by notice (the "ACCEPTANCE") given to the First
Shareholder, in which case the Second Shareholder shall not be
required to provide a deposit prior to closing and the
transaction of purchase and sale shall be completed on the 20th
Business Day following the expiry of the Acceptance Period; or
- 16 -
(b) obtain a second bona fide offer (the "SUBSEQUENT THIRD PARTY
OFFER") from a third party (the "SUBSEQUENT THIRD PARTY"), which
third party is an incorporated entity, for the purchase of the
Offered Shares together with a certified check payable to the
Corporation's lawyer in trust in an amount equal to at least 15%
of the purchase price.
(5) If the Second Shareholder elects not to accept the Offer and obtains a
Subsequent Third Party Offer, which it desires to accept and which
yields greater net proceeds to the Shareholders than they would
receive under the Initial Third Party Offer, the Second Shareholder
shall provide a copy of the Subsequent Third Party Offer to the First
Shareholder and at that time must disclose to the First Shareholder
any prior, existing or intended business or other connection, direct
or indirect, between the Second Shareholder (and/or any of its
Affiliates of Subsidiaries) and the Subsequent Third Party; if the
Second Shareholder fails to disclose such a connection, the First
Shareholder shall have the right to terminate and void any sale of
Shares to the Subsequent Third Party. Subject to the foregoing, if the
Subsequent Third Party Offer does yield greater net proceeds to the
Shareholders than they would receive under the Initial Third Party
Offer, the Shareholders shall accept the Subsequent Third Party Offer
and sell the Offered Shares to the Subsequent Third Party on the terms
contained in the Subsequent Third Party Offer.
(6) If, within the Acceptance Period, the Second Shareholder does not
accept the Offer (to purchase the Shares of the First Shareholder at
the price per share contained in the Initial Third Party Offer) and
does not obtain a Subsequent Third Party Offer (that yields greater
net proceeds to the Shareholders than they would receive under the
Initial Third Party Offer) , the Shareholders shall accept the Initial
Third Party Offer and sell the Offered Shares to the Initial Third
Party on the terms contained in the Initial Third Party Offer.
(7) All definitions in this section apply to this section only.
- 17 -
4.08 BUY/SELL BETWEEN SHAREHOLDERS
(1) The Shareholders may sell shares between themselves on such terms as
they may agree at any time following the expiration of 24 months from
the signing of this Agreement.
(2) If a Shareholder (the "OFFEROR") desires to purchase all of the Shares
of the other Shareholder (the "OFFEREE") but the Shareholders cannot
agree (for any reason) to enter into such a transaction, the Offeror
has the right at any time to give written notice (the "NOTICE") to the
other Shareholder (the "OFFEREE"), which Notice shall refer to this
section and shall contain the following:
(a) an offer by the Offeror to purchase all of the Shares owned by
the Offeree (an "OFFER TO PURCHASE");
(b) an offer by the Offeror to sell all of the Shares owned by the
Offeror to the Offeree (an "OFFER TO SELL"); and
(c) the price to be paid for pursuant to the Offer to Purchase (the
"PURCHASE PRICE") and which must be payable in cash on closing.
(d) Without derogation from the above, the Offeree shall have the
right to purchase the Offeror's Shares at a price 15% lower than
the Purchase Price (the "DISCOUNTED PURCHASE PRICE").
Notwithstanding the above, no Notice may be given prior to the first
anniversary of the date of this Agreement.
(3) Within 14 days of the Notice being given, the Offeree shall be
entitled to accept either the Offer to Purchase or the Offer to Sell
(at the Discounted Purchase Price) by giving written notice of such
acceptance to the Offeror.
(4) If the Offeree accepts the Offer to Purchase, the Offeree shall sell
and the Offeror shall purchase all of the Shares owned by the Offeree
at the Purchase Price and the transaction of purchase and sale shall
be completed within 60 days of the expiry of the 14 day period
specified in SECTION 4.08(3).
(5) If the Offeree accepts the Offer to Sell, the Offeror shall sell and
the Offeree shall purchase all of the Shares owned by the Offeror at
the Discounted Purchase Price and the transaction of purchase and sale
shall be completed within 180 days of the expiry of the 14 day period
specified in SECTION 4.08(3).
- 18 -
(5) If the Offeree does not accept either the Offer to Purchase or the
Offer to Sell within the 14 day period specified in SECTION 4.08(3),
the Offeree shall be deemed to have accepted the Offer to Purchase of
the Offeror and to have given written notice of such acceptance
pursuant to the provisions of SECTION 4.08(3) on the last day upon
which such notice may have been given.
(6) All definitions in this section apply to this section only.
ARTICLE 5
VALUATION
5.01 SELECTION OF VALUATOR
If this Agreement provides for the purchase and sale of Shares at their
Transfer Value and if the Shareholders cannot agree on the Transfer Value,
then upon the request of any Shareholder, the Corporation's Accountant
shall determine the Transfer Value as at the applicable Transfer Valuation
Date. In the remainder of this section the Accountant is also referred to
as the "Valuator". For the purpose of determining the Transfer Value, the
Valuator may appoint, at the expense of the Corporation, an independent
valuator or appraiser to assist in such determination. The Valuator and any
valuator or appraiser assisting the Valuator shall act as an expert and not
as an umpire or arbitrator and shall not be bound by the rules of natural
justice and may elect, at their discretion, to hear representations from
any party to this Agreement with respect to the Transfer Value. The
determination of the Transfer Value made by the Valuator shall, for the
purposes of this Agreement, be final and binding on the parties to this
Agreement and no appeal shall lie therefrom.
Notwithstanding the foregoing, if any Shareholder disagrees with the
determination of the Accountant as to the Transfer Value, such Shareholder
may, by notice in writing to the other Shareholders, require an independent
qualified business valuator, which must be a national accounting firm in
the United Kingdom who is not the accountant or auditor for any party to
this Agreement, to review the Accountant's determination of the Transfer
Value and the determination of such independent valuator, which shall be
final and binding on the parties to this Agreement. The fees and
disbursements of the independent valuator shall be borne by the Shareholder
requesting the review unless the value found by the independent valuator
varies by more than 10% from the valuation determined by the Accountants
and provided that such variation is in favour of the Shareholder requesting
the review, in which event the fees and disbursements of such independent
auditor shall be borne by the Corporation.
5.02 DETERMINATION OF TRANSFER VALUE OF SHARES
If the Shareholders cannot agree on the Transfer Value, it shall be arrived
at by multiplying the fair market value of each issued and outstanding
Share (i.e. fair market value of all issued and outstanding Shares divided
by the number of issued and outstanding Shares) by the number of Shares to
be transferred.
- 19 -
5.03 TIMING FOR VALUATION
Such determination shall be made in writing and given to all Shareholders
and to the Corporation within 45 days of the date of the request made to
the Valuator to make such determination or as soon thereafter as may be
reasonably possible. If the Valuator fails to do so or is unwilling to do,
any party to the transaction of purchase and sale may apply to a court of
competent jurisdiction to have a substitute appointed for the Valuator.
5.04 COSTS OF VALUATION
All fees and disbursements charged by the Valuator shall be paid by the
parties to the transaction of purchase and sale or, at the Managing
Director's option, by the Corporation.
ARTICLE 6
CLOSING
6.01 CLOSING PROVISIONS
Unless otherwise provided for in this Agreement, the closing (the
"CLOSING") of any sale of Shares (the "TRANSFERRED SHARES") between
Shareholders (the seller of Transferred Shares being called the "VENDOR"
and the purchaser of Transferred Shares being called the "PURCHASER") shall
be held at the registered office of the Corporation at 11:00 a.m. on the
date provided for Closing and, at Closing:
(1) the Vendor shall:
(a) deliver to the Corporation signed resignations of the Vendor and
the Vendor's nominees, if any, as directors, officers and
employees of the Corporation, as the case may be, such
resignations to be effective at Closing;
(b) transfer the Transferred Shares to the Purchaser free from all
mortgages, charges, security interests, claims, encumbrances and
restrictions whatsoever (except restrictions created under this
Agreement). If, at Closing, the Transferred Shares are subject to
any mortgage, charge, security interest, claim, encumbrance or
restriction, then the Purchaser may do such acts and things, and
make such payments, as seem necessary to the Purchaser, acting
reasonably, in order to discharge such mortgage, charge, security
interest, claim, encumbrance or restriction and the Purchaser
shall deduct from the purchase price for the Transferred Shares
all costs and expenses incurred in so doing; and
(c) pay any amount owing to the Corporation by the Vendor; and
- 20 -
(d) deliver to the Corporation all records and documents belonging to
the Corporation and which are in the Vendor's possession or
control
(2) the Purchaser shall pay for the Transferred Shares by wire transfer
into a bank account specified by the Vendor; and
(3) any amount owing by the Corporation to the Vendor shall be paid by the
Corporation.
6.02 FAILURE TO CLOSE
(1) If the Vendor fails to complete the transaction of purchase and sale,
then the amount which the Purchaser would otherwise be required to pay
to the Vendor at Closing may be deposited by the Purchaser into a
trust account in the name of the Vendor at the bank branch used by the
Corporation. Upon making the deposit and giving the Vendor notice that
the deposit was made, the purchase of the Transferred Shares by the
Purchaser shall be deemed to have been fully completed and the
Transferred Shares shall be conclusively deemed to have been
transferred to and vested in the Purchaser and the Secretary of the
Corporation shall cause the name of the Purchaser to be entered in the
share register of the Corporation as the holder of the Transferred
Shares. The Vendor shall be entitled to receive the amount deposited
in the trust account upon satisfying the Vendor's obligations pursuant
to SECTION 6.01(1).
(2) If the Purchaser fails to complete the transaction of purchase and
sale, the Vendor may, at its option (exercisable by giving written
notice thereof to the Vendor on or as soon as reasonably practicable
after the intended Closing) and in addition to any other rights it may
have at law including seeking an order for specific performance and/or
damages, terminate the transaction and the Purchaser's right at that
time to purchase the Transferred Shares shall be deemed to be null and
void.
(3) If any Transfer of Shares is subject to review under the provisions of
any statute, the Closing shall be conditional upon the consent or
allowance or deemed consent or allowance of the purchase of the Shares
by the applicable public authority, which consent or allowance shall
be on terms and conditions reasonably satisfactory to the Purchaser.
Notwithstanding any other provision in this Agreement, the Closing
shall be delayed until the receipt of such consent or allowance or
deemed consent or allowance.
- 21 -
ARTICLE 7
TERMINATION
7.01 TERMINATION
This Agreement, excluding any non-competition provisions in it, shall
terminate upon:
(1) the written agreement of all Shareholders;
(2) the dissolution or bankruptcy of the Corporation or the making by the
Corporation of an assignment under the bankruptcy laws of any
applicable jurisdiction, or
(3) one Shareholder becoming the owner of all of the Shares.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.01 REPRESENTATIONS OF EACH SHAREHOLDER
Each Shareholder represents and warrants that:
(1) it has been duly incorporated or created and is validly subsisting and
in good standing under the laws of its jurisdiction of incorporation;
(2) it has the corporate power and authority to enter into and perform its
obligations under this Agreement;
(3) this Agreement has been duly authorized, executed and delivered by it
and constitutes a valid and enforceable obligation enforceable against
it in accordance with its terms; and
(4) it is not a party to, bound or affected by or subject to any
indenture, mortgage, lease, agreement, instrument, charter or by-law
provision, statute, regulation, judgment, decree or law which would be
violated, contravened, breached by or under which default would occur
or under which any payment or repayment would be accelerated as a
result of the execution and delivery of this Agreement or the
consummation of any of the transactions provided for in this
Agreement.
8.02 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation and GV represent and warrant that:
(1) the authorized capital of the Corporation consists of 20,000,000
Ordinary (voting) shares of (pound).0001 each;
(2) the Shares listed in the recitals above are the only authorized,
issued and outstanding Shares of the Corporation; and
- 22 -
(3) no person, firm, corporation, partnership, trust or other entity has
any agreement or option or right capable of becoming an agreement for
the purchase, subscription or issuance of any of the authorized and
unissued Shares of the Corporation.
8.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the representations and warranties made in this Agreement shall
survive the execution of this Agreement and shall be deemed to be
continuing.
ARTICLE 9
GENERAL CONTRACT PROVISIONS
9.01 APPLICATION OF THIS AGREEMENT
The terms of this Agreement shall apply MUTATIS MUTANDIS to any shares:
(1) resulting from the conversion, reclassification, redesignation,
subdivision or consolidation or other change of the Shares; and
(2) of the Corporation or any successor body corporate which may be
received by the Shareholders on a merger, amalgamation, arrangement or
other reorganization of or including the Corporation;
and prior to any such action being taken the parties shall give due
consideration to any changes which may be required to this Agreement in
order to give effect to the intent of this section.
9.02 FURTHER ASSURANCES
Each party shall sign such other documents and do and perform such other
acts as may, in the reasonable opinion of counsel for any other party, be
necessary or desirable in order to give full effect to this Agreement. Each
Shareholder agrees to vote and act as a shareholder of the Corporation to
fulfill the provisions of this Agreement and in all other respects to
comply with, and use all reasonable efforts to cause the Corporation to
comply with, this Agreement, and to the extent, if any, which may be
permitted by law, shall cause its respective nominee(s) as directors to act
in accordance with this Agreement.
- 23 -
9.03 ASSIGNMENT
Unless expressly permitted in this Agreement, no party may assign such
party's rights or obligations under this Agreement without the prior
written consent of all other parties.
9.04 TIME OF THE ESSENCE
Time shall be of the essence in respect of every part of this Agreement.
9.05 CONFIDENTIALITY
Each party agrees not to, at any time or under any circumstances, without
the unanimous prior consent of the other parties to this Agreement,
directly or indirectly communicate or disclose to any third party any
confidential knowledge or information howsoever acquired by such party
relating to or concerning the customers, products, technology, trade
secrets, systems, operations or other confidential information regarding
the property, business and affairs of the Corporation or any of its
Affiliates, nor shall such party utilize or make available any such
knowledge directly or indirectly in connection with any business or
activity in which such party is or proposes to be involved, or in
connection with the solicitation or acceptance of employment with any
person. Without limiting the generality of the foregoing, each Shareholder
agrees not to:
(1) permit any of its directors, officers, employees or agents to divulge
to any person, firm, association, syndicate, corporation or
organization the name of any customer, client or supplier of the
Corporation, and
(2) interfere with, entice away or otherwise attempt to obtain the
withdrawal of any employee of the Corporation.
9.06 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
9.07 NOTICES
Any demand, notice, request or other communication required or permitted to
be given in connection with this Agreement (referred to in this section as
a "NOTICE") shall be given in writing and delivered personally or by
next-day courier or by facsimile transmission. A notice shall be addressed
to the recipient as follows:
if to GV at ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇ ▇▇▇ and at fax
no. o
if to GP, at ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇'▇, Antigua WI and at fax no.
o
- 24 -
if the Corporation, to the Managing Director at the registered office
of the Corporation and to each Shareholder
or such other address as may be designated by written notice by any party
to the others. Such notice shall be conclusively deemed to have been given
and received when so delivered, provided that delivery actually made on a
day after normal business hours or on a day which is not a Business Day
shall be deemed to have been made at the commencement of the next Business
Day, and further provided that any notice transmitted by facsimile or other
form of recorded communication shall be deemed given and received on the
first Business Day after its transmission.
9.08 INTERPRETATION
(1) All references in this Agreement to sections are references to
sections of this Agreement unless otherwise provided.
(2) Unless the context requires otherwise, words importing the singular
number shall include the plural and vice versa, words importing the
masculine gender shall include the feminine and neuter genders and
vice versa, and words importing persons shall include individuals,
partnerships, associations, trusts, unincorporated organizations and
corporations and vice versa.
9.09 REFERENCES TO LAWS
Any references in this Agreement to any law, by-law, rule, regulation,
order or act of any government, governmental body or other regulatory body,
in whatever form, shall be construed as a reference to it as amended or
re-enacted from time to time or as a reference to any successor to it.
9.10 AMENDMENTS AND WAIVERS
No provision in this Agreement may be amended or waived except in writing.
9.11 SEVERABILITY
Any finding that a provision of this Agreement is invalid or unenforceable
shall apply only to such provision.
- 25 -
9.12 ENTIRE AGREEMENT
The parties expressly agree that in all respects pertaining to this
Agreement and its subject matter their rights, obligations and remedies
shall be governed exclusively by the terms of this Agreement and that this
Agreement supersedes any prior understandings and agreements between them
with respect to its subject matter. There are no representations,
warranties, terms, conditions, undertakings or collateral agreements,
express, implied or statutory, between the parties other than as expressly
made in this Agreement. For greater certainty, the parties expressly
exclude the application of or recourse to any rights, obligations and
remedies in tort.
9.13 ATTORNEY'S FEES AND LEGAL COSTS
Should any dispute be commenced between the parties concerning any
provision of this Agreement or the rights and duties of any person in
relation thereto, the prevailing party or parties in such dispute shall be
entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for their attorneys fees in such litigation which
shall be determined by the court in such litigation or in a separate action
brought for that purpose. For purposes of this section, the term
"prevailing party or parties" shall mean the party or parties who obtain
substantially the relief sought by such party or parties in such claim,
suit or other legal proceeding, whether by settlement, summary judgment,
judgment or otherwise.
9.14 CONSTRUCTION
The preparation of this Agreement has been a joint effort of the parties
and the resulting document shall not, solely as a matter of judicial
consideration, be construed more severely against one party than the other
parties.
9.15 COUNTERPARTS
This Agreement may be signed by the parties in separate counterparts each
of which when so signed and delivered shall be an original and all such
counterparts shall together constitute one instrument.
9.16 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Isle of Man. Each party to this Agreement attorns to the
exclusive jurisdiction of the courts of the Isle of Man.
- 26 -
ARTICLE 10
NON-COMPETITION
10.01 NON-COMPETITION
(1) GV covenants and agrees that neither it nor any of its Affiliates will
(individually or collectively), for so long as the Corporation is in
existence:
(a) in any manner whatsoever carry on or be engaged in or be
concerned with or interested in or advise, lend money to,
guarantee the debts or obligations of or permit its name or any
part thereof to be used or employed by any person, firm,
association, syndicate, corporation or organization engaged in or
concerned with or interested in any business anywhere in the
world related to or regarding online multiplayer blackjack
tournament which are similar to or competitive with the business
carried on by the Corporation; or
(b) develop, license and/or sell any online multiplayer blackjack
tournament software similar or competitive with the software
owned, developed, under development, licensed or sold by the
Corporation.
(2) GV hereby acknowledge that it has reviewed the provisions of SECTION
10.01(1) above, turned its mind to the reasonableness of its scope
(both as to geographical area and time period), consulted an
independent lawyer who has explained the implications of such section
to it, fully understands the implication of such section, and is
entirely satisfied that the provisions of such section in their
entirety are necessary and reasonable for the protection of the
legitimate business interests of the Corporation and each Shareholder
and should be given full force and effect.
(3) GV agree that the remedy at law for any breach of the provisions
hereof by it or by an Affiliate of it may be inadequate and that in
the event of such breach the Corporation and/or GP shall be entitled
to make an application to the appropriate court granting the
Corporation temporary and/or permanent injunctive relief against GV
and/or one or more of its Affiliates, without the necessity of proving
actual damage to the Corporation, for the purpose of preventing the
breaching party or parties from continuing such breach.
- 27 -
IN WITNESS WHEREOF THE PARTIES HAVE SIGNED THIS AGREEMENT:
)
) GAMING VENTURES PLC
)
)
) Per: /s/ ▇▇▇ ▇▇▇▇
) ------------------------
) Authorized Signing Officer
)
)
) GOLDEN PALACE LIMITED
)
)
) Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
) ------------------------
) Authorized Signing Officer
)
)
) RNG GAMING LIMITED
)
)
) Per: /s/ ▇▇▇ ▇▇▇▇
) ------------------------
) Authorized Signing Officer
)
- 28 -