EXHIBIT 10.1
SHARE SUBSCRIPTION AND OPTION AGREEMENT
This Share Subscription and Option Agreement (the "AGREEMENT") is entered into
on this 14th day of September 2006, by and between RNG Gaming Limited (the
"CORPORATION") a company incorporated in the Isle of Man with its registered
office at 9 Myrtle Street, Douglas, Isle of Man and company number 117182C and
Golden Palace Ltd., a limited company registered pursuant to the laws of Antigua
and Barbuda ("GP") and Gaming Ventures plc ("GV"), a company incorporated in the
Isle of Man with its registered office at 9 Myrtle Street, Douglas, Isle of Man
and company number 117177C
W I T N E S S E T H :
WHEREAS GV is currently the sole shareholder of the Corporation, being the owner
of One Million (1,000,000) Ordinary Shares;
AND WHEREAS, the GP wishes to subscribe for an amount of the Corporation's
Ordinary Shares such that GP will have a shareholding equal to twenty percent
(20%) of the Corporation's then issued share capital (the "SHARES"), for the
aggregate sum of Six Hundred Thousand United States Dollars ($600,000) (the
"PURCHASE PRICE") to be paid by GP to the Corporation.
1. PURCHASE AND SALE; COMPLETION
(a) Upon the terms and subject to the conditions set forth in this
Agreement and in reliance upon the representations and warranties made
herein by each of the parties to the other, GP hereby subscribes for
the Shares as set out below and tenders herewith the total
subscription price as follows:
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NUMBER AND TYPE OF SHARES PRICE PER SHARE AGGREGATE PRICE
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Two Hundred Fifty Thousand
(250,000) Ordinary Shares $2.40 $600,000.00
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(b) Simultaneously with the signing of this Agreement, the Corporation
shall deliver to GP true and correct copies of the resolutions of the
Corporation's Board of Directors approving the transactions
contemplated herein, including Share subscription by GP in
consideration for the receipt of the Purchase Price. Upon the
completion of the foregoing conditions, GP shall deliver the Purchase
Price to the Corporation, by wire transfer, to an account designated
by the Corporation.
(c) The parties agree that the Purchase Price shall be retained by the
Corporation and used solely to satisfy the operational expenses of the
Corporation on a go-forward basis and, in particular, for software
development as mutually agreed to by GP and GV, and that the Purchase
Price shall not be used to satisfy any debts or obligations of the
Corporation which existed prior to the date of this Agreement.
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2. OPTION
(a) GP shall, from time to time throughout the Option Period (as defined
below), have the option, in its sole discretion, to purchase
additional percentage interests in the voting shares of the
Corporation (the "OPTION"). "OPTION PERIOD" means the period of time
commencing on the date of this Agreement and terminating upon the
earlier of: (1) the date which is fifteen (15) months from the date of
this Agreement; (2) the Corporation becoming a public company; or (3)
completion of a private placement of not less than Four Million United
States Dollars ($4,000,000) by third parties, at a price equal to a
valuation of Eighteen Million United States Dollars ($18,000,000.00).
For clarity, the exercise of the Option shall mean the purchase of
issued and outstanding Ordinary Shares directly from GV. The Option
may be exercised by GP on one or more occasion and in amounts to be
determined by GP in its sole discretion, provided that GP's total
ownership of the Ordinary Shares in the Corporation shall not exceed
fifty percent (50%), and not more than GV's holding. The Option
purchase price to be paid by GP for each additional percentage
interest in the Corporation shall be One Hundred Eighty Thousand
United States Dollars ($180,000.00).
(b) The Option shall be exercised, from time to time throughout the Option
Period, in accordance with the following terms and conditions:
(i) GP shall give written notice to the Corporation and to GV of its
desire to exercise the Option (the "OPTION NOTICE"), along with
payment to GV (by cheque or wire transfer) of 50% of the option
price (the "OPTION DEPOSIT").
(ii) The Option Notice delivered by GP shall specify the number and
class of shares of the Corporation to be purchased by GP from GV
(the "OPTION SHARES").
(iii) Within 3 business days of receipt of the Option Notice and
Option Deposit, GV shall deliver to GP:
a. share certificates representing the Option Shares, duly
endorsed for transfer to GP, and
b. a statutory declaration of an officer of GV confirming that
the Option Shares are owned by GV as the registered and
beneficial owner thereof with good and marketable title
thereto, free and clear of all mortgages, charges, pledges,
security interests, liens, encumbrances, actions, claims,
demands and equities of any nature whatsoever or howsoever
arising and any rights or privileges capable of becoming any
of the foregoing, and that GV's sale of the Option Shares to
GP has been duly authorized by all necessary corporate
action on the part of GV.
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(iv) Upon receipt of the foregoing share certificates and statutory
declaration, GP shall deliver the remaining 50% of the purchase
price for the Option Shares to GV.
3. CONDITIONS
This Agreement is conditional upon the parties entering into a unanimous
shareholders' agreement with respect to the Corporation, in a form mutually
satisfactory to the parties; and
4. CORPORATION'S REPRESENTATIONS AND WARRANTIES
The Corporation hereby represents and warrants that:
(a) VALID INCORPORATION. The Corporation is a corporation incorporated and
validly subsisting under the laws of the Isle of Man.
(b) AUTHORITY. The Corporation has the power, authority and capacity to
enter into this Agreement and to carry out its obligations under this
Agreement and the execution and delivery of this Agreement and the
completion of the transactions contemplated by this Agreement have
been duly authorized by all necessary action on the part of the
Corporation.
(c) BINDING OBLIGATION. This Agreement constitutes a valid and binding
obligation of the Corporation enforceable against the Corporation in
accordance with its terms subject, however, to limitations on
enforcement imposed by bankruptcy, insolvency, reorganization or other
laws affecting the enforcement of the rights of creditors and others
and to the extent that equitable remedies such as specific performance
and injunctions are only available in the discretion of the court from
which they are sought.
(d) LEGALITY. The entering into of this Agreement and the consummation of
the transactions contemplated hereby will not result in the violation
of any of the terms and provisions of the constating documents of the
Corporation or any applicable order of any court, arbitrator or
government authority having jurisdiction over the Corporation or of
any indenture or other agreement, written or oral, to which the
Corporation is a party or by which it is or may become bound or, to
the best of the knowledge and belief of the Corporation after due
inquiry, of any law or regulation.
(e) ISSUANCE OF SHARES. Upon the payment of the Purchase Price, the Shares
will be duly authorized, issued and delivered by the Corporation as
fully-paid and non-assessable securities of the Corporation.
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(f) SHARE ATTRIBUTES. Upon issuance, the Shares will have attached thereto
the rights, privileges, restrictions and conditions as set forth in
the Corporation's Memorandum of Association dated July 11, 2006, as
may be modified by the unanimous shareholders' agreement to be entered
into by the parties.
(g) OWNERSHIP OF SOFTWARE AND INTELLECTUAL PROPERTY. The Corporation
proprietary multi-player blackjack software, more particularly
described in SCHEDULE A hereto the "SOFTWARE") and all intellectual
property as described in SCHEDULE B (the "INTELLECTUAL PROPERTY") is
and shall remain throughout the Option Period the sole and exclusive
property of the Corporation. No person or corporation has made or
threatened to make any claims that the Software, the Intellectual
Property or the operation of the business of the Corporation is in
violation of or infringes any proprietary, intellectual property or
trade rights of any third party. To the best knowledge of the
Corporation, no third party is in violation of or is infringing upon
any intellectual property rights of the Corporation.
(h) NO BREACH OR DEFAULT. The Corporation is not in default under any
contract to which it is a party or by which it is bound, nor has any
event occurred which, after the giving of notice or the passage of
time or both, would constitute a default under any such contract. The
Corporation has no reason to believe that the parties to such
contracts will not fulfill their obligations under such contracts in
all material respects or are threatened with insolvency.
(i) LITIGATION. There are no actions, suits or proceedings with respect to
the Corporation involving claims by or against the Corporation which
are pending or threatened against the Corporation, at law or in
equity, or before or by any governmental body. No basis for any
action, suit or proceeding exists to the best of Corporation's
knowledge, and there are no orders, judgments, injunctions or decrees
of any court or governmental agency with respect to which the
Corporation has been named or to which the Corporation is a party,
which apply, in whole or in part, to the business of the Corporation,
or to any of the assets or properties of the Corporation or the
Corporation's shares or which would result in any material adverse
change in the business or prospects of the Corporation.
(j) POWERS OF ATTORNEY. There are no persons holding powers of attorney
from the Corporation.
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(k) INTERESTED PARTY TRANSACTIONS. No officer, director or shareholder of
the Corporation, or any affiliate or immediate family member of any
such person or entity or the Corporation, has or has ever had, either
directly or indirectly, (a) an interest in any person or entity which
(i) furnishes or sells services or products which are furnished or
sold or are proposed to be furnished or sold by the Corporation, or
(ii) purchases from or sells or furnishes to the Corporation any goods
or services, or (b) a beneficial interest in any contract or agreement
to which the Corporation is a party or by which it may be bound or
affected. There are no such existing arrangements or proposed
transactions between the Corporation and any officer, director, or
shareholder of the Corporation, or any affiliate, associate or
immediate family member of any such person. No employee, shareholder,
officer, or director of the Corporation (or immediate family member of
any such person) is indebted to the Corporation, nor is the
Corporation indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than reasonable wages due in
the ordinary course of business.
(l) NO MISREPRESENTATION OR OMISSION. No representation or warranty by the
Corporation in this section 4 or in any other section of this
Agreement, or in any certificate or other document furnished or to be
furnished by the Corporation pursuant hereto:
(i) contains or will contain any untrue statement of a material fact;
or
(ii) omits or will omit to state a material fact necessary to make the
statements contained therein not misleading; or
(iii) will omit to state a material fact necessary in order to provide
GP with accurate information as to the Corporation's business.
5. GP'S REPRESENTATIONS AND WARRANTIES
(a) CORPORATE EXISTENCE. GP is a duly registered company established
pursuant to the laws of Antigua.
(b) CORPORATE AUTHORITY. GP has all requisite right, power and authority
to enter into this Agreement and to consummate the transactions
contemplated herein. All corporate actions on the part of GP necessary
for the authorisation, execution, delivery, and performance of all of
GP's obligations under this Agreement have been taken. This Agreement,
when executed and delivered by or on behalf of GP, shall constitute
the valid and legally binding obligations of GP, legally enforceable
against GP in accordance with its respective terms. No consent,
approval, order, licence, permit, action by, or authorisation of or
designation, declaration, or filing with any governmental authority on
the part of GP is required that has not been, or will not have been,
obtained by GP in connection with the valid execution, delivery and
performance of this Agreement.
(c) EXPERIENCE OF GP. GP, either alone or together with its
representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the
merits and risks of the prospective investment in the Shares, and has
so evaluated the merits and risks of such investment. GP is able to
bear the economic risk of an investment in the shares and, at the
present time, is able to afford a complete loss of such investment.
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6. NOTICES
(a) Any notice, request, instruction or other document required by the
terms of this Agreement to be given to any other party hereto shall be
in writing and shall be given either: (i) by facsimile, in which case
notice shall be deemed to have been given at the date and time
displayed on the sender's transmission confirmation receipt showing
the successful receipt thereof by the recipient; or (ii) by hand
delivery or Federal Express (or equivalent), in which case notice
shall be deemed to have been given at the time that records of the
delivery service indicate the writing was delivered to the addressee.
(b) Notice shall be sent:
If to GP, to: If to the Corporation, to:
11 Old Parham Road, St. 9 Myrtle Street, Douglas, Isle of Man
John's, Antigua
With a copy to:
Trina K. Fraser Facsimile Number: ___________
BrazeauSeller.LLP
750-55 Metcalfe Street
Ottawa, ON K1P 6L5
Facsimile Number: (613) 237-4001
If to GV, to:
_____________________
_____________________
Facsimile Number: ___________
or to such other address as a party may have specified in writing,
using the procedures specified above.
7. ENTIRE AGREEMENT AND BINDING EFFECT
This Agreement constitutes the entire agreement between the parties hereto
and supersedes all prior agreements, understandings, negotiations and
discussions, both written and oral, between the parties hereto with respect
to the subject matter hereof and are not intended to confer upon any other
person any rights or remedies hereunder except as expressly provided
herein. The parties have not relied upon any promises, representations,
warranties, agreements, covenants or undertakings, other than those
specifically set forth or referred to herein.
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8. APPLICABLE LAW; RESOLUTION OF DISPUTES
This Agreement and all questions relating to its validity, interpretation,
performance and enforcement (including, without limitation, provisions
concerning limitations of actions), shall be governed by and construed in
accordance with the laws of the Isle of Man, notwithstanding any
conflict-of-laws doctrines. All disputes arising hereunder shall be brought
in the courts of competent jurisdiction in the Isle of Man, and each of the
parties consents irrevocably to the jurisdiction and venue of such courts.
9. COUNTERPARTS
This Agreement may be executed in one or more counterparts and by
facsimile.
10. RELATIONSHIP OF PARTIES
Nothing in this Agreement constitutes any party to be an agent or partner
of the other party in any respect, and neither party will have any
authority whatsoever with respect to the property or business of the other
party except as expressly permitted.
WHEREFORE, The parties hereto have caused this Agreement to be executed and
delivered on the date first above written.
Executed as a deed by Executed as a deed by GOLDEN PALACE LTD.
RNG GAMING LIMITED acting through acting through two authorized officers:
two authorised officers:
/s/ Uri Levy /s/ Richarg G. Rowe
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Director _____________________ Director _____________________
Director/Secretary _____________ Director/Secretary ___________________
Executed as a deed by
GAMING VENTURES PLC acting through two
authorised officers:
/s/ Uri Levy
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Director _____________________
Director/Secretary _____________
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SCHEDULE A
DESCRIPTION OF SOFTWARE
The "Software" consists of the following software applications:
Multi player Blackjack Tournament software is a game in which players sit at a
blackjack table, play against the dealer, but compete against each other. The
concept is simple: all players `buy in' into the table with an equal amount of
"counter-chips", and they compete for a pre-determined number of rounds
("hands"). At the end of the last round, the player with the most chips is
declared the winner in the table and receives the relevant prize. The new
concept brings 24/7 availability to competitive blackjack players.
Each player is required to download a client software to his PC, and this client
application allows him to communicate with our main server and to play against
each other.
The software offers single and multi table online events where two to five
players are sitting in one multi player table to see who is the best player.
Once a predefined set number of players arrive, the game begins.
There are several game options that can be chosen by the players:
o Quick tournaments: "Shootouts" and "Heads up"
o Sit & Go tournaments: Single table (2-5 players) and multi table
o Tournaments: Regular and special
Multi table tournaments consist of a number of 5 players tables, allowing bigger
prizes and a more exciting tournament.
Back Office Management System (the "BACKOFFICE")
The Backoffice tool provides the Network Manager with game room management
capabilities. The Backoffice provides Tournaments creation and management module
which allows the game room management team the ability to manage the different
games which will be presented in the application main lobby, game related
customer service module, Game related marketing tools, Game related risk reports
and players activity reports.
The Backoffice provides the administrator the ability to monitor its users'
activity and to specify different permissions to different users in order to
insure proper conduct by the different users.
The software applications described above include:
1. the related source code, which consists of the human readable
embodiment of software computer code, which must be translated by a
process generally known as "compilation" into object code before such
software can be executed by a computer;
2. the related object code, which consists of the computer executable
embodiment of software computer code, which is derived from the source
code by a process generally known as "compilation" or any other
process that translates the source code or some intermediate code
derived from the source code into a form that can be executed by a
computer;
3. all documentation, algorithms, concepts, data, designs, flowcharts,
ideas, programming techniques, specifications and copy-rights related
to the Software;
4. all updates, upgrades, enhancements, additions or other modifications
of the above created during the Option Period; and
5. all copyrights related to the above.
SCHEDULE B
DESCRIPTION OF INTELLECTUAL PROPERTY
The "Intellectual Property" includes:
1. All provisional patents, patents, inventions and applications thereof
used in or relating to the Software or the creation of the Software,
and patents which may be issued out of current applications,
(including divisions, reissues, renewals, re-examinations,
continuations, continuations in part and extensions) applied for or
registered in any jurisdiction, including (without limitation) the
following:
a. ZFP-001PC (Serial No. PCT/US05/32790) filed 9/13/05,
b. Which claims priority to ZFP-001 (US Serial No. 11/166,462)
filed 6/24/05,
c. Which claims priority to ZFP-001PR (US Provisional Serial
No. 60/609,613) filed 9/14/04.
2. All trade-marks, trade names, service marks, and industrial designs
used in or related to the Software or the creation of the Software,
whether registered or not.
3. All trade secrets, technical information, concepts, methods,
processes, designs, drawings, know-how, schematics, diagrams, design
information, functional and technical specifications, inventions,
discoveries, ideas, algorithms, techniques, and other tangible and
intangible proprietary information, intellectual property, rights and
interests used in or related to the Software or the creation of the
Software.