DATED 2008
|
2008
|
NEW
MEDIA LOTTERY SERVICES PLC
-
and -
TRAFALGAR
CAPITAL SPECIALIZED INVESTMENT FUND
Xxxxxx
Xxxxxxx LLP
44
Southampton Buildings
London
WC2A 1AP
Tel:
000
0000 0000
Fax:
000
0000 0000
Ref:
DXB/HJM 1303887v5
Contents
|
Clause
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Page
No.
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1.
|
DEFINITIONS
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1
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2.
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LOAN
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5
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3.
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REPAYMENT
|
5
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||
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4.
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INTEREST
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5
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||
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5.
|
ISSUE
OF LOAN SHARES
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6
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||
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6.
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VOLUNTARY
CASH PAYMENT
|
7
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||
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7.
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ADDITIONAL
SUBSCRIPTION RIGHTS (WARRANTS)
|
8
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||
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8.
|
ISSUE
OF SHARES
|
9
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||
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9.
|
EXCHANGE
RATE MOVEMENTS
|
10
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||
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10.
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PAYMENT
OF COSTS, EXPENSES, FEES AND COMMISSIONS
|
11
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11.
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INDEMNITIES
|
11
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||
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12.
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SHORT
SALES
|
12
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13.
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SECURITY
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12
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||
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14.
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TERMINATION
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12
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15.
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COVENANTS
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13
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16.
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WITHHOLDING
AND GROSSING-UP
|
15
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17.
|
NOTICES
|
16
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||
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18.
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REMEDIES
AND WAIVERS
|
17
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19.
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GOVERNING
LAW AND JURISDICTION
|
17
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GENERAL
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17
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SCHEDULE
1 EVENTS OF DEFAULT
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18
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-1-
THIS
AGREEMENT
is made
on 2008
BETWEEN
|
(1)
|
NEW
MEDIA LOTTERY SERVICES PLC
(incorporated in the Republic of Ireland with registered number 410845)
whose registered office is at 00 Xx Xxxxx, Xxxxx Xxxxxx, Xxxxxx 0,
Xxxxxxx
(the “Company”);
and
|
|
(2)
|
TRAFALGAR
CAPITAL SPECIALIZED INVESTMENT FUND an
investment fund registered in Luxembourg as represented by its general
partner, TRAFALGAR
CAPITAL SARL,
a
corporation organised and existing under the laws of Luxembourg,
with its
principal place of business at 0-00 Xxx Xxxxxxx Xxxxx, XX 0000, Xxxxxxxxxx
L-1030 (the “Lender”).
|
BACKGROUND
The
Lender has agreed to advance to the Company a sum of up to €1,300,000
conditional on and subject to the terms set out in this Agreement.
IT
IS AGREED:
| 1. |
DEFINITIONS
|
| 1.1 |
In
this Agreement:
|
“Adjustment
Event”
means
any or all of the following:
|
(a)
|
any
allotment or issue of Ordinary Shares or securities exchangeable
for or
convertible into Ordinary Shares by the Company by way of capitalisation
of profits or reserves or
otherwise;
|
|
(b)
|
any
cancellation, purchase or redemption of Ordinary Shares, or any reduction
or repayment of Ordinary Shares, by the Company;
and
|
|
(c)
|
any
sub-division, consolidation or reorganisation of Ordinary Shares
by the
Company,
|
but
excluding any issue of Ordinary Shares of the Company pursuant to Clause 5
of
this Agreement;
“Admission”
means
the admission of the Ordinary Shares to trading on AIM;
-1-
“Affiliate”
means
any partnership, corporation or other legal entity controlled by the Lender
or
under common control of the Lender whether by way of voting power or power
to
control management and policies of such entity;
“AIM”
means
the market of that name operated by London Stock Exchange plc;
“AIM
Rules”
means
the rules from time to time published by London Stock Exchange plc in relation
to AIM;
“Bloomberg”
means
Bloomberg LP, a financial information provider;
“Closing
Date” means 30
May
2008;
“Closing
Date Exchange Rate” means
0.7855 (being the agreed UK pounds sterling/Euro spot exchange rate on the
date
prior to the Closing Date);
“Consolidation
Event”
has the
meaning given to it in Clause 15.1(f);
“Conversion
Amount” means
the
either the amount specified in, or the product of the Conversion Price and
the
number of Loan Shares set out in, a Loan Notice issued pursuant to Clause
5.1;
“Conversion
Price” means in
respect of any Loan Notice Date
the
lower of (i) the Fixed Conversion Price, and (ii) 85%
(eighty five) per cent of the lowest daily closing VWAP for the five consecutive
Trading Days immediately prior to the Loan Notice Date as reported by
Bloomberg;
“CREST”
means
the
relevant system (as defined in the Uncertificated Securities Regulations 2001,
as amended) and operated by Euroclear UK and Ireland Limited, in accordance
with
which securities may be held or transferred in uncertificated form;
“Delivery”
in
respect of any Loan Shares means credit of such shares to the Lender’s CREST
Account and “Deliver”
shall
be construed accordingly;
“Delivery
Date”
means
the date on which Loan Shares are Delivered pursuant to a Loan
Notice;
“Event
of Default” means
any
of the events listed in Schedule 1;
-2-
“Fixed
Conversion Price” means,
subject to Clause 15.2, 120%
of
the VWAP on the day prior to the Closing Date or if no VWAP is available on
such
date, the closing bid price on such date;
“Group”
means
the Company and its subsidiaries (as defined in s736 Companies Act 1985) from
time to time and “Group
Company”
shall
mean any of them;
“Lender’s
Bank Account”
means
the Lender’s account with Lloyds TSB Bank plc, Account Number 00000000, sort
code 30 97 81 or such other account as the Lender may from time to time notify
to the Company in writing;
“Lender’s
CREST Account”
means
such CREST account for which the Lender has provided details to the Company
or
such other account as the Lender may from time to time notify to the Company
in
writing;
“Loan”
means
the amount of €1,300,000
(to be advanced to the Company pursuant to Clause 2) or the principal amount
outstanding for the time being of that loan (including any interest compounded
with the Loan pursuant to Clause 4.1);
“Loan
Notice”
has the
meaning set out in Clause 5.1 of this Agreement;
“Loan
Notice Date” means
the
date of a Loan Notice;
“Loan
Notice Date Exchange Rate” means
the UK
pounds
sterling to Euro spot exchange rate as quoted in the London edition of the
Financial Times on a particular date;
“Loan
Shares”
means
the new Ordinary Shares to be issued to the Lender pursuant to this Agreement
(other than pursuant to Clause 7);
“Mandatory
Repayment”
has
the
meaning set out in Clause 3.2;
“Material
Adverse Change”
means an
event or circumstance that constitutes an adverse change in the assets,
financial or trading position of any Group Company such that it would be
reasonably likely to prevent the Company from being able fully and punctually
to
perform its payment obligations under this instrument;
“Ordinary
Shares”
means
ordinary shares of two-thirds of one xxxxx (0.666p) each in the capital of
the
Company (such shares to rank pari passu with all other ordinary shares from
time
to time in issue in the capital of the Company);
-3-
“Security
Deed” means
the
deed of debenture in the form agreed between the Company and the Lender to
be
entered into by the Company in favour of the Lender pursuant to which the
Company will grant security by way of fixed and floating charges over its assets
and its operating subsidiaries;
“Subscription
Notice”
has the
meaning set out in Clause 7.1 of this Agreement;
“Taxation”
any of
the following: (a) any tax, duty, impost or levy, past or present, of the United
Kingdom or elsewhere, whether governmental, state, provincial, local
governmental or municipal, including income tax (including income tax required
to be deducted or withheld from or accounted for in respect of any payment
under
section 203 of the Taxes Act or otherwise), corporation tax, advance corporation
tax, capital gains tax, inheritance tax, VAT, customs and other import or export
duties, rates, stamp duty, stamp duty reserve tax, national insurance and social
security contributions; and (b) any fine, penalty, surcharge, interest or other
imposition relating to any tax, duty, impost or levy mentioned in paragraph
(a)
of this definition or to any account, record, form, return or computation
required to be kept, preserved, maintained or submitted to any person for the
purposes of any such tax, duty, impost or levy;
“Taxes
Act”
means
the Income and Corporation Taxes Act 1988;
“Trading
Day”
means
any day during which AIM is open for business;
“Voluntary
Cash Payment”
means
any amount paid into the Lender’s Bank Account in accordance with Clause
6.1;
“Voluntary
Cash Payment Date” means the
date
of a Voluntary Cash Payment Notice;
“Voluntary
Cash Payment Date Exchange Rate” means in
relation to each Voluntary Cash Payment Date the UK
pounds
sterling to the Euro spot exchange rate as quoted in the London edition of
the
Financial Times on such Voluntary Cash Payment Date;
“Voluntary
Cash Payment Notice”
has the
meaning given to it in Clause 6.1; and
“VWAP”
means in
relation to any Trading Day, the volume weighted average price (as reported
by
Bloomberg) of the Ordinary Shares on AIM for that Trading Day.
| 1.2 |
References
in this Agreement to Clauses are to the clauses of this
Agreement.
|
-4-
| 2. |
LOAN
|
| 2.1 |
The
Lender shall advance the Loan to the Company on the date
of this Agreement.
|
| 2.2 |
The
Company shall use the Loan for the purposes of its working capital
requirements.
|
| 3. |
REPAYMENT
|
| 3.1 |
The
Company shall repay the Loan, together with all other amounts due
to the
Lender pursuant to this Agreement, on or before the date which is
24
months after the Closing Date.
Any such payments or repayments shall be made as set out in this
Agreement
and in particular any payment or repayment in cash may only be made
in
accordance with this Clause 3 or Clause
6.
|
| 3.2 |
The
Company shall redeem the Loan in equal monthly instalments (“Mandatory
Repayments”)
together with any interest due pursuant to Clause 4.1 below. Every
Mandatory Repayment shall be subject to a redemption premium of 12.5%
(twelve and a half per cent.). In the event that any Mandatory Repayment
is not made in full within 5 days of its due date, the Lender shall
have
the option (but not the obligation), by issue of a Loan Notice in
accordance with Clause 5, to receive Ordinary Shares in lieu of such
Mandatory Repayment. The Lender, in such circumstances, shall have
the
option of converting at the Conversion Price rather than the Fixed
Conversion Price and Clause 5.3 shall not
apply.
|
| 3.3 |
The
Company shall be prohibited from making any cash repayments, whether
as a
the Mandatory Repayment or Voluntary Cash Payment, at the Lender's
option,
when the Company's stock is trading above the Fixed Conversion
Price
|
| 4. |
INTEREST
|
| 4.1 |
The
Company shall pay interest to the Lender on the outstanding amount
of the
Loan at the rate of 8% (eight per cent.) per
annum to be paid monthly on the last day of each calendar month provided
that the Lender shall be permitted to deduct two interest payments
in
respect of the Loan on the principal sum advanced on the date of
this
Agreement.
|
| 4.2 |
If
the Company fails to pay any amount payable by it under this Agreement
on
its due date, interest shall accrue on the overdue amount from the
due
date up to the date of actual payment (both before and after judgment)
at
the rate of 12% (twelve per cent) per annum. Any interest accruing
under
this Clause 4.2 shall be immediately payable by the Company on demand
by the Lender. Any such interest (if unpaid) arising on an overdue
amount
will be compounded daily with the overdue amount but will remain
immediately due and payable.
|
-5-
| 5. |
ISSUE
OF LOAN SHARES
|
| 5.1 |
The
Company shall upon written notice (a “Loan
Notice”)
from the Lender at any time when any amounts are outstanding under
this
Agreement issue and Deliver to the Lender the Loan
Shares.
|
| 5.2 |
The
Loan Notice will specify either (at the option of the Lender) the
number
of Loan Shares to be issued pursuant to the Loan Notice or the £ sterling
amount to be converted (“Conversion
Amount”)
and the Conversion Price applicable to such Loan
Notice.
|
|
5.3
|
Unless
the Company agrees otherwise the Lender shall
not:
|
|
(a)
|
be
entitled to issue Loan Notices when the Conversion Price is less
than the
Fixed Conversion Price; and
|
|
(b)
|
issue
Loan Notices that would result in the Lender beneficially holding
in
excess of 2.99% of the entire issued share capital of the Company
from
time to time;
|
provided
that this Clause 5.3 shall not apply at any time on or after the Lender has
become entitled to terminate this Agreement pursuant to Clause 14.
|
5.4
|
Subject
to Clause 9.1, the number of Loan Shares to be issued and Delivered
by the
Company in respect of a Loan Notice (in the absence of such number
being
included in the Loan Notice) shall equal in £ sterling the number of Loan
Shares included in the relevant Loan Notice multiplied by the Conversion
Price.
|
|
5.5
|
The
amounts outstanding under this Agreement will be reduced on each
Delivery
Date by the Conversion Amount relating to that Loan Notice Date.
|
-6-
| 5.6 |
Notwithstanding
any other provision of this Agreement the Lender may, in its sole
discretion, elect to require the Company to satisfy in cash any amounts
due to the Lender pursuant to either (i) Clauses 4.2 or 8.5, or (ii)
any
provision of this Agreement after this Agreement has been terminated
in
accordance with Clause 14.
|
| 5.7 |
Any
payments received, or treated as being received pursuant to Clause
5.6, by
the Lender shall be applied:
|
| (a) |
firstly
to pay any fees, expenses or other amounts due pursuant to this
Agreement;
|
| (b) |
secondly
to pay any amounts due to the Lender in respect of interest pursuant
to
Clause 4.1 of this Agreement
to
the extent such interest has not been compounded with the Loan;
and
|
| (c) |
thirdly
to repay any amount of the Loan still
outstanding.
|
| 6. |
VOLUNTARY
CASH PAYMENT
|
| 6.1 |
Subject
to Clauses 6.5 and 3.3, the Company shall be entitled at any time
to make
a payment in cash in respect of any amount which is outstanding pursuant
to this Agreement by giving the Lender written notice no less than
three
Trading Days prior to the proposed date of payment (a “Voluntary
Cash Payment Notice”).
|
| 6.2 |
The
Voluntary Cash Payment Notice will specify the cash amount to be
paid by
the Company and the date of payment. Any amount to be so paid shall
be
transferred to the Lender’s Bank Account in cleared funds on the third
Trading Day after the service of a Voluntary Cash Payment
Notice.
|
| 6.3 |
Each
Voluntary Cash Payment shall be
applied:
|
| (a) |
firstly
to pay any fees, expenses or other amounts due pursuant to this
Agreement;
|
| (b) |
secondly
to pay any amounts due to the Lender in respect of interest pursuant
to
Clause 4.1 of this Agreement to the extent such interest has not
been
compounded with the Loan;
and
|
| (c) |
thirdly
to repay any amount of the Loan still
outstanding.
|
| 6.4 |
Any
part of a Voluntary Cash Payment which is applied pursuant to Clause
6.3(c) shall be subject to a redemption premium of 12.5% (twelve
and a
half per cent.) and the outstanding amount of the Loan shall
be reduced accordingly by an amount equal to the Voluntary Cash Payment
less 12.5% (twelve and a half per cent.) of the amount of such Voluntary
Cash Payment applied pursuant to Clause 6.3(c).
|
-7-
| 6.5 |
If
a Voluntary Cash Payment Notice is issued after or on the same date
as a
Loan Notice then the Loan Notice will be treated as having been received
first. The amounts received or treated as being received in respect
of the
Loan Notice will therefore be applied first (as set out in Clause
5) and
then any amounts received or treated as being received in respect
of the
Voluntary Cash Payment Notice will be applied (as set out in the
preceding
provisions of this Clause
6).
|
| 6.6 |
Notwithstanding
the remaining provisions of this Clause 6, the Company shall not
be
entitled to make a Voluntary Cash Payment if the VWAP immediately
prior to
the date of that Voluntary Cash Payment Notice is equal to or higher
than
the Fixed Conversion Price.
|
| 7. |
ADDITIONAL
SUBSCRIPTION RIGHTS
(WARRANTS)
|
| 7.1 |
The
Company shall (in addition to the Loan Shares referred to above)
upon
receipt of one or more written notices (the “Subscription
Notice”)
from the Lender at any time after the Closing Date and on or prior
to the
second anniversary of the Closing Date, issue to the Lender such
number of
Ordinary Shares as are specified in the Subscription Notice (the
“Warrant
Shares”).
|
| 7.2 |
The
Lender shall be entitled to issue Subscription Notices in respect
of up to
1,500,000 Ordinary Shares at a price of 5 xxxxx per Ordinary Share
(the
“Subscription
Price”).
|
| 7.3 |
In
the event the Lender has not issued a Subscription Notice prior to
the
second anniversary of the Closing Date the Company shall pay the
Lender
the sum of £60,000 in cash in consideration of the Lender agreeing to
forfeit the Warrant Shares. The Lender shall, following receipt of
such
sum of £60,000, not be entitled to issue a Subscription Notice.
|
| 7.4 |
The
Lender shall, within 3 Trading Days of any Warrant Shares being Delivered
to the Lender pursuant to Clause 7.1, pay in cash to the Company,
the sums
due in respect of the Warrant Shares as detailed in Clause 7.2
above.
|
| 7.5 |
Upon
an Adjustment Event, the number and nominal amount of Warrant Shares
to be
subscribed for subsequent to the Adjustment Event shall be increased
or,
as the case may be, reduced in due proportion and the Subscription
Price
shall be respectively decreased or, as the case may be, increased
in due
proportion and the Subscription Price shall be deemed adjusted accordingly
with effect from the record date for such Adjustment Event in each
case so
as to ensure that insofar as possible that, after such
adjustment:
|
-8-
| (a) |
the
total number of Warrant Shares which may be subscribed pursuant to
the
Subscription Rights is such that Warrant Shares when
allotted:
|
| (i) |
shall
be entitled to the same proportion of the total voting rights in
respect
of the Ordinary Shares in issue prior to such adjustment;
and
|
| (ii) |
shall
be entitled to participate in the same proportion in the profits
and
assets of the Company,
|
| (b) |
as
would have been the case immediately prior to the Adjustment Event
giving
rise to such adjustment.
|
| 8. |
ISSUE
OF SHARES
|
| 8.1 |
In
respect of any new Ordinary Shares, including Loan Shares or Warrant
Shares, to be issued to the Lender pursuant to this Agreement, the
Company
shall make application for Admission of the new Ordinary Shares,
as
soon as possible after receipt of a valid Loan Notice or Subscription
Notice (as the case may be). Any such Admission is expected to be
on the
third clear Trading Day after such application is
made.
|
| 8.2 |
The
relevant number of Ordinary Shares (including Loan Shares or Warrant
Shares) shall be Delivered within seven (7) days from the date on
which
the Loan Notice or Subscription Notice is received (or deemed to
have been
received, in accordance with Clause 17). Any breach of this Clause
8.2
will amount to a material breach of this Agreement which the Company
acknowledges may cause the Lender significant financial
loss.
|
| 8.3 |
On
or before the Trading Day immediately prior to the anticipated date
of
Admission of any new Ordinary Shares to be issued to the Lender pursuant
to this Agreement the following shall
occur:
|
| (a) |
the
Company shall, conditional only upon Admission of such Ordinary Shares,
allot and issue the relevant Ordinary Shares to the
Lender;
|
| (b) |
the
Company shall do all acts and things necessary to procure Admission
of the
relevant Ordinary Shares on the next following Trading Day;
and
|
| (c) |
the
Company shall give all necessary directions and instructions to its
registrars to procure that the relevant new Ordinary Shares are Delivered
to the Lender’s CREST Account on the date of
Admission.
|
-9-
| 8.4 |
The
Ordinary Shares to be issued to the Lender under this Agreement shall
be
allotted and issued by the Company fully paid and free from all claims,
charges, liens, encumbrances, equities and third party rights whatsoever
and will rank pari passu in all respects with the existing issued
Ordinary
Shares including the right to receive all dividends or other distributions
declared, made or paid after the date of their
allotment.
|
| 8.5 |
If
the Company fails to Deliver any Ordinary Shares in breach of or
in
accordance with its obligations under this Agreement to do so within
ten
(10) days after the date of the relevant Loan Notice or Subscription
Notice is received (or deemed to have been received, in accordance
with
Clause 17) then the Company shall, without prejudice to any other
rights
which the Lender may have under
this Agreement, pay by way of liquidated damages to the Lender an
amount
equal to 2% (two per cent.) of the then outstanding amount of the
Loan
within three (3) Trading Days. The parties agree that this represents
a
genuine pre-estimate of loss and is not in any way intended to be
a
penalty.
Further, such failure shall constitute an Event of Default which
may be
waived or remedied only with the express consent of the
Lender.
|
| 9. |
EXCHANGE
RATE MOVEMENTS
|
| 9.1 |
If
on any Loan Notice Date, the Loan Notice Date Exchange Rate is less
than
the Closing Date Exchange Rate then the number of Loan Shares to
be issued
shall be increased by the same percentage as results from dividing
the
Closing Date Exchange Rate by the relevant Loan Notice Date Exchange
Rate.
By way of example, if the number of Loan Shares to be issued in respect
of
a particular Loan Notice would, but for this Clause 9.1, be 1,000
and if
the Closing Date Exchange Rate is 1.50 and the relevant Loan Notice
Date
Exchange Rate is 1.45, then 1,035 Loan Shares will be issued in relation
to that Loan Notice.
|
| 9.2 |
If
on any Voluntary Cash Payment Date, the Voluntary Cash Payment Date
Exchange Rate is less than the Closing Date Exchange Rate then the
amount
of cash required to satisfy the amounts due pursuant to Clause 6.3
shall
be increased by the same percentage as results from dividing the
Closing
Date Exchange Rate by the relevant Voluntary Cash Payment Date Exchange
Rate.
By
way of example, if the amount of cash required to repay all amounts
due
pursuant to Clause 6.3(a) would, but for this Clause 9.2, be £1,000 and if
the Closing Date Exchange Rate is 1.50 and the relevant Voluntary
Cash
Payment Notice Date Exchange Rate is 1.45 then the amount of cash
from the
Voluntary Cash Payment required to repay all amounts due pursuant
to
Clause 6.3(a) will be £1,034.48.
Accordingly only the surplus over £1,034.48 from such Voluntary Cash
Payment will be applied (again in the same manner) towards any amounts
due
pursuant to Clause 6.3(b) and if any amount of the Voluntary Cash
Payment
remains after all amounts so due pursuant to Clause 6.3(b) have been
paid
then the surplus will be applied (again in the same manner and after
the
application of Clause 6.4) to pay amounts pursuant to Clause
6.3(c).
|
-10-
| 10. |
PAYMENT
OF COSTS, EXPENSES, FEES AND
COMMISSIONS
|
| 10.1 |
Each
of the parties shall pay its own fees and expenses (including the
fees of
any solicitors, accountants, or others engaged by such party) in
connection with this Agreement and the transactions contemplated
hereby,
except that the Company will pay to
the Lender the following:
|
| (a) |
the
sum of €10,000
in respect of a due diligence fee on the date of this Agreement (on
which
€5,000
has been paid prior to the date of this Agreement);
|
| (b) |
the
sum of €20,000
in respect of a structuring fee
on
the date of this Agreement (of which €10,000
has been paid prior to the date of this Agreement);
and
|
| (c) |
the
sum of €78,000
in respect of a facility commitment
fee.
|
| 10.2 |
The
legal and other fees and expenses referred to in Clause 10.1 shall
be paid
on or before the date of this Agreement unless otherwise stated.
The
Lender shall, to the extent that such amounts have not already been
paid,
be entitled to withhold such amounts from the advance of the Loan
to be
made pursuant to Clause 2.
|
| 11. |
INDEMNITIES
|
The
Company
shall, within three Trading Days of a demand from the Lender, pay to the
Lender
the amount of all costs and expenses (including legal fees and any
disbursements) properly and reasonably incurred by the Lender in connection
with
the enforcement of, or the preservation of any of the Lender’s rights under,
this Agreement and the Security Deed.
-11-
| 12. |
SHORT
SALES
|
The
Lender
shall not and shall procure that none of its Affiliates shall during the
term of
this Agreement enter into one or more binding contracts for the sale of Ordinary
Shares in excess of the total number of Ordinary Shares which the Lender
and its
Affiliates own, provided that for these purposes the Lender shall be treated
as
owning on the date of the Loan Notice or Subscription Notice, any Ordinary
Shares in respect of which a Loan Notice or Subscription Notice has been
issued
even though the Ordinary Shares have not been Delivered.
| 13. |
SECURITY
|
The
Company
shall ensure that it shall, no later than 30 days following the date of this
Agreement:
| (a) |
have
taken all action necessary to permit it to enter into the Security
Deed
including as may be required pursuant to sections 151 to 158 of the
Companies Act 1985 (or its Irish equivalent, if any);
|
| (b) |
duly
execute the Security Deed and deliver an executed original of the
Security
Deed to the Lender.
|
| 14. |
TERMINATION
|
| 14.1 |
The
Lender shall be entitled to terminate this Agreement by notice to
the
Company immediately at any time:
|
| (a) |
if
the Company fails to pay any amount payable by it under this Agreement
on
its due date;
|
| (b) |
the
Ordinary Shares cease to be traded on AIM;
|
| (c) |
there
shall occur any suspension of trading of the Ordinary Shares
on AIM while
any amount is outstanding under this
Agreement;
|
| (d) |
the
occurrence of any of the Events of Default as set out in Schedule
1.
|
| 14.2 |
If
this Agreement is terminated by the Lender in accordance with its
terms
then any part of the Loan which has not been advanced shall immediately
be
cancelled and any part of the Loan, together with accrued interest,
and
all other amounts accrued or outstanding under this Agreement shall
become
immediately due and payable and notwithstanding termination of this
Agreement, interest shall continue to run on all outstanding amounts
until
the date of actual payment in full of all outstanding
amounts.
|
-12-
| 15. |
COVENANTS
|
| 15.1 |
The
Company covenants to the Lender that (otherwise than with the prior
written consent of the Lender) whilst this Agreement is in place
it:
|
| (a) |
will
use all reasonable endeavours to maintain the Admission of the Ordinary
Shares to trading on AIM;
|
| (b) |
on
the Closing Date and on each day thereafter for so long as any amount
remains outstanding under this Agreement, that it has the necessary
shareholder authority to issue the requisite number of Loan Shares
required to satisfy a Loan Notice issued on that day in respect of
a
Conversion Amount equal to at least the then outstanding amount of
the
Loan including any interest capable of becoming due pursuant to Clause
4.1
together with the Warrant Shares in so far as the same have not been
previously issued allotted;
|
| (c) |
will
file in a timely manner all reports and other documents required
of it
under the Companies Act 1985, the Companies Act 2006, the AIM Rules
and
all other laws or regulations applicable to it in any jurisdiction
and
will not take any action or file any document to terminate or suspend
such
registration or to terminate or suspend the admission of its Ordinary
Shares to trading on AIM;
|
| (d) |
will
take all steps reasonably necessary to preserve and continue the
corporate
existence of the Company;
|
| (e) |
will
immediately notify the Lender upon its becoming aware of the issuance
by
the London Stock Exchange plc of any suspension or de-listing of
the
Ordinary Shares from trading on
AIM;
|
| (f) |
will
not, at any time after the date hereof, until expiry of this Agreement
effect any merger or consolidation of the Company whether by scheme
of
arrangement or otherwise with or into, or a transfer of all or any
substantial part of the assets or undertaking of the Company to another
entity (a “Consolidation
Event”)
unless the resulting successor or acquiring entity (if not the Company)
assumes by written instrument the obligation to either (i) deliver
to the
Lender such shares and/or securities as following such Consolidation
Event
the Lender is entitled to receive pursuant to this Agreement or (ii)
to
pay to the Lender in cash or by way of Voluntary Cash Payments the
balance
of all monies due and payable under the terms of this
Agreement.
|
-13-
| (g) |
will
not (unless as directed by a duly passed resolution of the shareholders
of
the Company) (i) modify the rights attaching to the Ordinary Shares
in
respect of the dividends or liquidation, nor (ii) issue any other
class of
share capital carrying any other rights which are more favourable
than
such rights currently granted to the Ordinary Shares;
|
| (h) |
will
not enter into any amalgamation, merger or demerger, reconstruction
or
joint venture or acquire any business or make any investment without
the
Lender’s consent not to be unreasonably withheld so long as none of the
covenants herein are contravened;
|
| (i) |
will
not create or permit to subsist any security interest on its present
or
future undertaking, property or assets or any part of them other
than
liens and rights of set-off arising by operation of law in the normal
course of business and retention of title clauses in contracts entered
into in the normal course of
business;
|
| (j) |
will
not enter into any material transaction or arrangement with any person
other than on reasonable market terms, other than to sell products
at a
below market price pursuant to pilot schemes or for marketing
purposes;
|
| (k) |
will
not incur any liability, actual or contingent, under any guarantee
of the
indebtedness of another person, and not lend any money to any person
other
than in the ordinary course of its trading
activities;
|
| (l) |
will
not declare or pay any dividends or make any other distribution of
income
or capital to its members while an Event of Default is continuing
and
except as permitted by the
Agreement;
|
| (m) |
will
not permit or agree to any variation of any rights attaching to the
whole
or any part of the assets other than in the ordinary course of its
trading
activities;
|
| (n) |
will
notify the Lender of any Event of Default immediately upon becoming
aware
of it;
|
-14-
| (o) |
will
effect and maintain such insurances as are prudently required to
protect
the assets and the business of the Group, including loss of
profits;
|
| (p) |
will
carry on the business of the Company in a proper and efficient manner
and
not make any substantial alteration to the nature or mode of conduct
of
the business of the Company and keep or cause to be kept proper books
of
account relating to it;
|
| (q) |
will
not incur any indebtedness outside of the ordinary course of its
business.
|
| 15.2 |
Should
the Company issue or sell Ordinary Shares to a third party
for less than the Fixed Conversion Price on the day prior to the date
of such issue or sale assuming such date was a Loan Notice Date,
the Fixed
Conversion Price shall be reset to an amount equal to eighty-five
percent
of such issue or sale price.
|
| 16. |
WITHHOLDING
AND GROSSING-UP
|
| 16.1 |
Except
as required by law, all payments due to the Lender under this Agreement
will be made free and clear of all deductions and withholdings (whether
in
respect of Taxation, set- off, counter-claim or
otherwise).
|
| 16.2 |
If
any deduction or withholding is required by law to be made from any
payment due to the Lender under this Agreement, the person who is
obliged
to make such payment will pay to the Lender such additional amount
as is
necessary to ensure that the Lender receives a net amount (after
the
deduction or withholding) equal to the amount which it would have
received
had the payment in question not been subject to the deduction or
withholding.
|
| 16.3 |
If
any payment received by the Lender under this Agreement from the
Company
(other than the fees and commissions referred to in Clauses 10.1
and 10.2
is subject to Taxation, the person who is obliged to make such payment
will pay to the Lender such additional amount as is necessary to
ensure
that the Lender receives and retains a net amount (after taking into
account such Taxation and any Taxation payable in respect of such
additional amount) equal to the full amount which it would have received
and retained had the payment in question not been subject to
Taxation.
|
-15-
| 17. |
NOTICES
|
| 17.1 |
Any
demand, notice or other communication given or made under or in connection
with this Agreement will be in writing and will, if otherwise given
or
made in accordance with this Clause
17
be
deemed to have been duly given or made as
follows:
|
| (a) |
if
sent by prepaid first class post, on the second Trading Day after
the date
of posting if posted in the UK for UK delivery and on the seventh
Trading
Day if posted for overseas delivery;
or
|
| (b) |
if
delivered by hand, upon delivery;
or
|
| (c) |
if
sent by facsimile or e-mail, on the day of
transmission;
|
provided
however
that, if it is delivered by hand or sent by facsimile or e-mail on a day
which
is not a Trading Day or after 4.00 pm London time on a Trading Day, it will
instead be deemed to have been given or made on the next Trading
Day.
| 17.2 |
Any
such demand, notice or other communication will, in the case of service
by
post or delivery by hand, be addressed (subject as provided in this
Clause) to the recipient at the recipient’s address stated in this
Agreement or at such other address as may from time to time be notified
in
writing by the recipient to the sender as being the recipient’s address
for service.
|
| 17.3 |
Any
such demand, notice or other communication will, in the case of service
by
facsimile or e-mail be sent to the recipient using the facsimile
number or
e-mail set out below.
|
| (a) |
fax
the Company: 00 0 000 000 0000 marked for the attention of the Chief
Financial Officer with a copy to 00 353 1 661 4581 marked for the
attention of Mr Xxxxxx Xxxxxxxx;
|
| (b) |
e-mail
the Company: xxxxxxx@xxxxxxx.xxx and xxxxx0@xxx.xxx with a
copy to
xxxxxxxxxx@xxxxxxxxxxxxxx.xx;
|
| (c) |
fax
the Lender:
x0 000-000-0000 marked for the attention of Xx Xxxxxx X.
Xxxxx;
|
| (d) |
e-mail
the Lender: xxxxxx@xxxxxxx.xxx.
|
-16-
| 17.4 |
The
provisions of this Clause
17
will not apply, in the case of service of court documents, to the
extent
that such provisions are inconsistent with Part 6 of the Civil Procedure
Rules.
|
| 18. |
REMEDIES
AND WAIVERS
|
No
failure
to exercise, nor any delay in exercising, on the part of the Lender, any
right
or remedy under this Agreement shall operate as a waiver, nor shall any single
or partial exercise of any right or remedy prevent any further or other exercise
or the exercise of any other right or remedy. The rights and remedies provided
in this Agreement are cumulative and not exclusive of any rights or remedies
provided by law.
| 19. |
GOVERNING
LAW
AND JURISDICTION
|
This
Agreement is governed by and is to be construed in accordance with English
law
and the courts of England have exclusive jurisdiction to settle any dispute
arising out of or in connection with this Agreement (including a dispute
regarding the existence, validity or termination of this Agreement)
| 20. |
GENERAL
|
| 20.1 |
This
Agreement represents the whole agreement and understanding between
the
parties and supersedes all other agreements and understandings between
the
parties or any of them relating to the subject matter of this Agreement.
|
| 20.2 |
A
person who is not a party to this Agreement shall have no right under
the
Contracts (Rights of Third Parties) Act 1999 to enforce any term
of this
Agreement but this shall not affect any right or remedy of a third
party
which exists or is available apart from that
Act.
|
|
20.3
|
This
Agreement may be executed in any number of counterparts all of which
when
taken together shall constitute a single
instrument.
|
THIS
AGREEMENT
has been
entered into as a Deed on the date stated at the beginning of this
Agreement.
-17-
SCHEDULE
1
EVENTS
OF DEFAULT
Each
of
the following is an Event of Default:
|
1.
|
failure
by the Company to pay in full on the due date any sum payable to
the
Lender under, and in the manner required by, this instrument or,
within
two Business Days after the due date, if such failure results solely
from
a technical problem in relation to the transfer of funds for which
the
Company is not responsible;
|
|
2.
|
any
representation, warranty or statement made by or in relation to the
Company in the Agreement, or in any document prepared by it or on
its
behalf and furnished under or in connection with the Agreement, is
materially incorrect as at the date on which it is made or deemed
to be
repeated, unless the underlying circumstances giving rise to the
breach
are remedied within five Business Days of such
date;
|
|
3.
|
failure
by the Company to comply duly and punctually with any of the obligations,
covenants or undertakings contained in this instrument or the Agreement
(other than those referred to in paragraphs 1 and 2 this Schedule
1) and,
in the case only of those obligations, covenants or undertakings
which are
capable of being remedied, such failure is not so remedied within
five
Business Days after the Company has become aware of the
breach;
|
|
4.
|
failure
to Deliver any Ordinary Shares in accordance with its obligations
under
this Agreement to do so within ten (10) days after the date of the
relevant Loan Notice or Subscription Notice is received (or deemed
to have
been received in accordance with Clause 17) as specified in Clause
8.5;
|
|
5.
|
any
Group Company suspends or threatens to suspend all or a substantial
part
of its operations, or all or a substantial part of a Group Company’s
assets are expropriated by any governmental or other competent
authority;
|
|
6.
|
a
meeting is convened or a petition is presented (unless it is demonstrated
to the reasonable satisfaction of the Lender that the petition is
frivolous or vexatious and such petition is set aside within 14 days
of
presentation), or an order is made or an effective resolution is
passed
for the winding-up of a Group Company, except for the purposes of
a
reconstruction or amalgamation whilst solvent on terms previously
approved
in writing by the Lender acting
reasonably;
|
-18-
|
7.
|
an
order is made or a petition is presented for the appointment of an
administrator to a Group Company (unless it is demonstrated to the
reasonable satisfaction of the Lender that the petition is frivolous
or
vexatious and such petition is set aside within 21 days of
presentation;
|
|
8.
|
a
distress, execution or other legal process is levied against any
of the
assets of a Group Company in respect of any single claim in excess
of
£50,000 (Fifty thousand pounds), and is not discharged or paid within
14
days;
|
|
9.
|
an
encumbrancer takes possession or a Receiver or administrative Receiver
is
appointed of the whole or any part of the assets or undertaking of
a Group
Company;
|
|
10.
|
a
Group Company:
|
|
(a)
|
ceases
or suspends generally payment of its debts, or announces an intention
to
do so, or is unable to pay its debts, or is deemed unable to pay
its debts
within the meaning of section 123 (1) (e) or (2) Insolvency Act
1986;
|
|
(b)
|
proposes,
or its directors make a proposal for, a voluntary arrangement under
part I
of the Insolvency Act 1986;
|
|
(c)
|
enters
into any composition or other arrangement for the benefit of its
creditors
generally or any class of creditors;
or
|
|
(d)
|
the
occurrence of a Material Adverse
Change;
|
|
(e)
|
litigation
is commenced against a Group Company which is likely to succeed and
which,
if successful, would result in a Material Adverse
Change;
|
|
(f)
|
any
borrowing by a Group Company is declared due and payable prior to
its
stated maturity or is placed on demand by reason of an Event of
Default;
|
|
(g)
|
any
money repayable on demand by a Group Company is not paid upon demand
being
made, unless such non-payment is with the agreement of the party
to whom
such money is owed;
|
-19-
|
(h)
|
any
event occurs which, under the applicable law of any relevant jurisdiction,
has an analogous or equivalent effect to any of the events described
in
paragraph 10(a) to 10(f) above; or
|
|
11.
|
any
breach of the Security Deed by a Group Company or failure to deliver
the
name in accordance with Clause 13.
|
-20-
|
SIGNED
as
a deed by
|
)
|
|
NEW
MEDIA LOTTERY SERVICES PLC
|
)
|
|
acting
by and
|
)
|
|
Director
|
|
|
Director/Secretary
|
|
SIGNED
as
a deed on behalf of
|
)
|
|
TRAFALGAR
CAPITAL SPECIALIZED
|
)
|
|
INVESTMENT
FUND acting
by
its general
|
)
|
|
partner
TRAFALGAR
CAPITAL SARL
|
)
|
-21-
