EXHIBIT 1
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| BETWEEN:
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7293411 CANADA INC., a Canadian corporation with its office at Place Mercantile,
Suite 1700, 000 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxx, X0X 0X0; |
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(the “Borrower”) |
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| AND:
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XXXX XXXX MING, also known as XXXXXXX XXXX, domiciled at Early Light International
Centre Xx. 0 Xx Xx Xxxxx Xxxxxx Xxxx, XX, Xxxx Xxxx; |
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(the “Lender”) |
WHEREAS the Borrower has expressed an interest to the Board of Directors of Optimal Group Inc. (the
“Target”) to acquire all of the outstanding Class “A” shares of the Target (the “Shares”),
including Shares issuable upon conversion, exchange or exercise of options and warrants, at a price
of no greater than US$2.40 per Share in cash (the “Proposed Transaction”);
WHEREAS the Lender has committed to provide to the Borrower an amount, in cash, of up to fifteen
million U.S. dollars (US$15,000,000), to ensure that the required funds are available to make full
payment for the Shares that the Borrower has offered to acquire pursuant to the Proposed
Transaction upon the terms and subject to the conditions set forth or referred to in a commitment
letter, dated December 17, 2009, signed by the Lender and agreed to and accepted by the Borrower;
AND WHEREAS the Lender wishes to lend the above-stated sum to the Borrower, subject to the terms
and conditions of this Agreement and the Escrow Agreement made between the Borrower, the Lender and
Fraser Xxxxxx Casgrain LLP (“the Escrow Agreement”);
NOW, THEREFORE, for good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged) and in consideration of the covenants hereinafter set forth, the parties agree
as follows:
| 1.1 |
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The Loan. The Lender agrees, on the terms and conditions of this Agreement and subject to
the Escrow Agreement, to loan and hereby does loan to the Borrower an aggregate principal
amount of fifteen million U.S. dollars (US$15,000,000) (the “Loan”), the receipt of which is
hereby acknowledged by the Borrower. |
| 1.2 |
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Use of Proceeds. The Borrower shall use the proceeds of the Loan to (a) purchase all of the
Shares pursuant to: (i) the terms and conditions of the offer for the purchase of all of the
Shares (the “Offer”) as set forth in a support agreement between the Borrower and the Target
(the “Support Agreement”); (ii) any compulsory acquisition rights arising as a result of the
Offer; and (iii) any second stage “going private” transaction to effect the acquisition of all
of the Shares not tendered to the Offer, (collectively, the “Transaction”); (b) purchase,
terminate or otherwise defease all options, warrants or |
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other rights to acquire Shares; and (c) pay fees and transaction expenses in relation to the
Transaction (“Transaction Expenses”), (collectively, the “Approved Purpose”), and not for
any other purpose. |
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Subject to the provisions of Section 9.2 hereof, the Loan is granted for a term of five
years (5) years effective as of the date hereof. |
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The Loan or any portion thereof outstanding from time to time, shall bear interest as of the
date hereof and until repayment in full at the rate of Seven and one half percent (71/2%) per
annum, calculated yearly and not in advance, with interest calculated at the same rate on
any arrears. |
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The Borrower undertakes to: |
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(a) |
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execute the Support Agreement; |
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(b) |
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make all reasonable efforts to ensure that the Transaction is concluded; |
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(c) |
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apply the proceeds of the Loan to the Approved Purpose; and |
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(d) |
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execute all documents granting the Pledge (as hereinafter defined) following
the conclusion of the Transaction. |
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The obligations of the Borrower to the Lender pursuant to this Agreement, including, without
limitation, the repayment of the Loan, together with interest thereon, and all other amounts
payable hereunder (collectively, the “Secured Obligations”), shall be secured by the
following: |
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(a) |
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a pledge on all of the Shares acquired by the Borrower pursuant to the Offer
and all Shares subsequently acquired by the Borrower, in favour of the Lender (the
“Pledge”); and |
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(b) |
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the Hypothec, as such term is defined in Section 8.1(h). |
| 6.1 |
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Pre-Transaction Repayment. In the event where: |
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(a) |
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the Support Agreement is not executed by March 16, 2010, or |
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(b) |
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subsequent to the execution of the Support Agreement, the Transaction is not
concluded by June 30, 2010, |
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then, subject to Section 6.2 below, the Borrower shall immediately repay the full amount of
the Loan to the Lender, less all Transaction Expenses. |
| 6.2 |
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Special Covenant. In the event that, subsequent to the execution of the Support Agreement,
the Transaction is not concluded by June 30, 2010 due to (a) the Borrower’s failure to make
the “Offer” (as such term is defined in the Support Agreement) pursuant to Section 2.1 of the
Support Agreement or (b) the Borrower’s failure to close the Transaction in accordance with
the Support Agreement (hereinafter collectively referred to as a “Borrower Breach”), the
Borrower and the Lender acknowledge and agree that the proceeds of the Loan, less any amounts
for Transaction Expenses, must remain in the account of the Borrower and no repayment may be
made to the Lender hereunder until: |
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(a) |
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all Transaction Expenses have been paid, and |
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(b) |
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any claims directly resulting from the Borrower Breach (a “Borrower Breach
Claim”) have been settled, any judgment for damages pursuant to a Borrower Breach Claim
has been paid, or the Target has granted a full discharge to the Borrower in connection
with any Borrower Breach Claim, it being understood that the payment of any amounts
reasonably necessary to settle such Borrower Breach Claim or to compensate the Target
under such circumstances shall be deemed to constitute an “Approved Purpose” and
default in repayment under such circumstance shall be deemed to constitute an Event of
Default. |
| 6.3 |
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Post-Transaction Scheduled Repayment. Provided that the Transaction is concluded and that no
Event of Default (as hereinafter defined) has occurred, the following provisions shall apply: |
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(a) |
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Mandatory Initial Payment. The Borrower shall make a mandatory payment
of at least five million U.S. dollars (US$5,000,000) no later than forty (40) days
following the conclusion of the Transaction; |
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(b) |
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Annual Payments. The Borrower shall also repay an amount of no less
than 10% of the outstanding balance on each anniversary date of this Agreement
commencing in 2011. Without limiting the generality of the foregoing, the Loan must be
repaid no later than five years from the date hereof (the “Due Date”). |
| 6.4 |
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Prepayment. Notwithstanding the foregoing, but provided that the Transaction is concluded,
the Borrower may repay the Loan in whole or in part at any time prior to the Due Date without
premium or penalty. |
| 6.5 |
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Place of Payment. The Borrower shall make payments hereunder by wire transfer to an account
designated by the Lender. |
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| 7. |
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REPRESENTATIONS AND WARRANTIES |
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The Borrower represents and warrants to the Lender as follows: |
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(a) |
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Existence: The Borrower is a corporation duly created and validly
existing under the laws of Canada and has all necessary power and authority to own its
assets and to carry on its business. |
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(b) |
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Authority: The Borrower has the power, capacity and authority to enter
into this Agreement and the Pledge and to do all such acts and things and execute and
deliver all such other documents required hereunder or thereunder to be done, observed
or performed by it in accordance with their terms. |
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(c) |
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No Violation or Breach: The execution, delivery and performance by the
Borrower of the Pledge do not: (i) violate the articles or by-laws of the Borrower or
any resolutions passed by its directors or shareholders, as the case may be; or (ii)
contravene any applicable law binding on or affecting the Borrower. |
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(d) |
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No Approvals Required: No consent, authorization, approval or other
action by, and no publication, notice to or filing or registration with, any
governmental authority is required for the due execution, delivery and performance by
the Borrower of this Agreement or the Pledge to ensure the validity or enforceability
thereof against it. |
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(e) |
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Authorization and Validity: This Agreement and the Pledge have been
duly authorized, and once executed and delivered by the Borrower shall constitute valid
and legally binding obligations of the Borrower, enforceable against it in accordance
with the provisions thereof except as such enforceability may be limited by applicable
laws relating to bankruptcy, insolvency, reorganization or other creditors rights. |
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(f) |
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No Default: No Event of Default (as hereinafter defined) has occurred
and is continuing. |
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(g) |
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No Actions or Proceedings: There is no present or pending action or
proceeding against or affecting the Borrower before any court, administrative tribunal,
governmental agency or arbitrator which could reasonably be expected to have a material
adverse effect. |
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(h) |
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Full Disclosure: The disclosure of information by the Borrower in
respect hereof has been undertaken in good faith with a view to accuracy and
completeness and there is no material information or other material facts known to the
Borrower in relation to its assets, liabilities, business or condition that has not
been disclosed to the Lender that would make the representations, warranties, and
covenants herein misleading. |
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| 8. |
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COVENANTS OF THE BORROWER |
| 8.1 |
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Affirmative Covenants. The Borrower covenants with the Lender as follows: |
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(a) |
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Payment and Performance: The Borrower shall duly and punctually pay or
cause to be paid the obligations as and when due hereunder, and shall perform and
observe all of its obligations under this Agreement and the Pledge. |
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(b) |
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Compliance with Applicable Laws: The Borrower shall comply in all
material respects with all applicable laws. |
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(c) |
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Taxes: The Borrower shall duly and punctually pay and discharge all
taxes upon it or its assets when they become due, except where the same may be
contested in good faith by appropriate proceedings. |
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(d) |
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Notice of Defaults: The Borrower shall advise the Lender promptly in
writing upon becoming aware of any Event of Default. |
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(e) |
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Cooperation with the Lender: The Borrower shall use all reasonable
efforts to cooperate with the Lender in order to perfect and maintain the Pledge and
the priority thereof. |
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(f) |
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Further Acquisition. After the Borrower’s take up and payment for the
Shares deposited under the Offer, the Borrower shall make reasonable efforts to acquire
all of the Shares not tendered to the Offer, pursuant to the terms of Section 1.2. |
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(g) |
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Amalgamation. Within a reasonable time of having obtained all of the
Shares, the Borrower shall amalgamate with the Target. |
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(h) |
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Hypothec. Within a reasonable time of the Borrower having amalgamated
with the Target, the amalgamated entity shall grant a hypothec over all of its assets
in favour of the Lender, securing the Secured Obligations (the “Hypothec”). |
| 8.2 |
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Negative Covenants. The Borrower covenants with the Lender as follows: |
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(a) |
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No Lien: The Borrower shall not, without the prior written consent of
the Lender, which consent shall not be unreasonably withheld, encumber or charge any
assets comprising the Pledge with a lien ranking ahead of the Pledge. |
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(b) |
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No Asset Dispositions: The Borrower shall not, without the prior
written consent of the Lender, transfer, lease or otherwise dispose of any assets
comprising the Pledge. |
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(c) |
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No Assignment: The Borrower shall not assign any of its rights or
cause any person to assume any of its obligations hereunder without the prior written
consent of the Lender, which shall not be unreasonably withheld, provided however that
the Borrower may amalgamate with the Target (as provided under the terms hereof)
without the consent of the Lender. |
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(d) |
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Use of Proceeds: The Borrower shall not, without the prior written
consent of the Lender, which consent shall not be unreasonably withheld, use all or any
part of the Loan for the benefit or on behalf of any person other than for the Approved
Purpose. |
| 9.1 |
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Events of Default. The Borrower shall be in default hereunder if, following the conclusion of
the Transaction, any of the following events (each an “Event of Default”) shall occur (unless
remedied within the prescribed delays or either waived or renounced to in writing by the
Lender): |
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(a) |
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if the Borrower fails to make any payment of any amount with respect to the
Loan when due and fails to make payment within fifteen (15) days after notice is given
to the Borrower by the Lender that such payment is due and unpaid; or |
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(b) |
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if the Borrower fails to carry out or observe any of its other obligations and
undertakings hereunder not otherwise contemplated by this Section 9.1 and the Borrower
has not remedied the default within thirty (30) days following the date on which the
Lender has given written notice thereof to the Borrower; or |
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(c) |
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if judgment is executed against all or substantially all of its assets,
property or undertaking; or |
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(d) |
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if the Borrower makes a general assignment for the benefit of its creditors or
a proposal under the Bankruptcy and Insolvency Act (Canada), shall otherwise
acknowledge its insolvency or shall be declared or become bankrupt or insolvent. |
| 9.2 |
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Recourses. If an Event of Default occurs and is continuing, the Lender may, at its option,
declare immediately due and payable, notwithstanding any provision to the contrary effect in
this Agreement, the entire amount of the Loan then outstanding, in principal and interest. |
| 9.3 |
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Relations with the Borrower. The Lender may grant delays, take security or renounce thereto,
accept compromises, grant acquittals and releases and otherwise negotiate with the Borrower as
it deems advisable without in any way diminishing the liability of the Borrower or prejudicing
the rights of the Lender. |
| 10.1 |
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Notices. All notices, requests, demands and other communication under this Agreement shall be
in writing and shall be deemed given or made upon the respective parties at the following
address: |
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Place Mercantile
Suite 1700,
000 Xxxxxxxxxx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxx, X0X 0X0 |
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Attention: Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000 |
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Early Light International Centre
Xx. 0 Xx Xx Xxxxx Xxxxxx Xxxx,
XX, Xxxx Xxxx |
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Attention: Xxxxxxx Xxxx
Facsimile: _________ |
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Any notice hereunder may be served by sending the same by a nationally recognized overnight
courier, addressed to the party concerned, by personal delivery or a facsimile transmission.
Any notice given by overnight courier shall be deemed to have been served two (2) days after
the date upon which it was posted and any notice served by personal delivery shall be deemed
to have been served upon receipt. Notice served by telecopy shall be deemed to have been
served on dispatch. Unless and until otherwise notified, addresses for the service of notice
are addressed as specified above. Any party may unilaterally designate a different address
by giving notice of each such change in the manner specified above to each party. |
| 10.2 |
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Severability. Should any portion or provision of this Agreement be declared invalid, illegal
or unenforceable in any jurisdiction, then such portion or provision shall be deemed to be
severable from this Agreement as to such jurisdiction and in any event such illegality,
invalidity or unenforceability shall not affect the remainder hereof. |
| 10.3 |
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Assignment. All rights of the Lender under this Agreement shall inure to the benefit of its
successors or assigns and all obligations of the Borrower shall bind the Borrower’s heirs,
executors and administrators and successors. |
| 10.4 |
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Entire Agreement. This Agreement and the Pledge contain the entire understanding of the
parties relating to the obligations herein set out and supersede any prior understanding or
agreements of the parties concerning such obligations. In case of any inconsistency of
provisions between this Agreement and any document required to be delivered hereunder, the
provisions of this Agreement will govern. |
| 10.5 |
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Extended Meanings. Words used in the singular form may include the plural and the plural may
include the singular. |
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| 10.6 |
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Sections and Headings. The captions set forth in this Agreement are for convenience only and
shall not be considered as part of this Agreement or to in any way limit or amplify the terms
and provisions hereof. |
| 10.7 |
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No Waiver. No waiver by any of the parties hereto of any breach of any covenant, term,
undertaking or provisions of this Agreement shall be deemed to be a waiver of any preceding or
succeeding breach of the same of any such covenant, term, understanding or provision. |
| 10.8 |
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Amendments. No amendment, modification or waiver of any provision of this Agreement or
consent to any departure by the Borrower from any provision of this Agreement shall be
effective unless it is in writing and signed by the Lender and the Borrower, and then the
amendment, modification, waiver or consent shall be effective only in the specific instance
and / or for the specific purpose for which it is given. |
| 10.9 |
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Counterparts. This Agreement may be executed in one or more counterparts, each of which shall
for all purposes be deemed to be an original and all of which shall constitute the same
instrument, but only one of which need be produced. |
| 10.10 |
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Choice of Law. This Agreement shall be governed by and construed in accordance with the laws
of the Province of Québec and each party hereto irrevocably submits to the jurisdiction of
courts located in Québec with respect to the adjudication of any dispute arising hereunder. |
| 10.11 |
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Language. The parties acknowledge having specifically requested that this Agreement as well
as all other documents relating thereto be drawn up in the English language only. Les parties
reconnaissent avoir spécifiquement exigé que ce contrat de même que tous les documents s’y
rattachant soient rédigés en langue anglaise uniquement. |
[signature page follows]
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IN WITNESS WHEREOF, the parties have duly executed this agreement as of the day and year first
above written.
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7293411 CANADA INC.
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Per: |
/s/
Xxxxxxx Xxxxxxxx |
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Xxxxxxx Xxxxxxxx, President |
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/s/
Xxxx Xxxx Xxxx |
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XXXX XXXX XXXX, also known as
XXXXXXX XXXX |
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