Exhibit 10.1
Date: November 6, 2007
TO: Xxxxxx.xxx (UK) LTD
RE: GRANT LETTER
WHEREAS, Zone 4 Play Inc., (the "COMPANY"), Two Way Media Limited, ("TWM")
and Xxxxxx.xxx (UK) Ltd ("Winner") are parties to an "Interactive Fixed Odds
Betting Services Agreement," dated February 22, 2005 (the "OLD AGREEMENT") which
was terminated on November 5, 2007 , and pursuant to such termination Winner
waived any and all rights granted to it under the Old Agreement; and
WHEREAS pursuant to a certain Joint Venture Agreement dated November 5,
2007 (the "JOINT VENTURE AGREEMENT") the Company and TWM have incorporated a new
entity in Alderney bearing the name Two Way Gaming Limited ("TWG") to conduct
all gambling activity undertaken by them ; and
WHEREAS, the Company, in consideration for such waiver of rights by Winner
wishes to grant an option to Winner to purchase from the Company Shares of TWG;
and
WHEREAS, it was agreed that the option granted to Winner as described above
shall be governed by the terms and conditions of this Grant Letter, subject to
the receipt of all approvals required by law and the requirements of applicable
law.
NOW, THEREFORE, it is agreed as follows:
1. DEFINITIONS:
In this Agreement, the following terms when capitalized shall have the
following meanings:
1.1. "BOARD" means the Board of Directors of TWG.
1.2. "DATE OF GRANT" means the date of the grant of each Option, as set
forth herein below.
1.3. "EXERCISE PRICE" shall mean 0.1 Great British Pounds ((pound)0.1) per
Share.
1.4. "OPTION SHARES" means the Shares to be transferred and sold to Winner
upon the exercise of the Options.
1.5. "OPTIONS" means options to purchase the Shares as granted hereunder.
1.6. "OPTIONEE" and "YOU" shall mean and refer to Winner.
1.7. "SHARES"- 10,000 shares of common stock of TWG par value (pound)1.00
each.
1.8. "SUCCESSOR COMPANY" means any entity TWG is merged to or is acquired
by, in which TWG is not the surviving entity.
1.9. "TRANSACTION" means (i) the initial public offering of TWG's Shares
(hereinafter, an "IPO"), (ii) a merger, acquisition or reorganization
of TWG with one or more other entities in which TWG is not the
surviving entity and/or the shareholders of TWG hold less than fifty
percent (50%) in the merged entity, or (iii) a sale of all or
substantially all of the assets and/or the Shares of TWG.
2. GRANT OF OPTIONS
2.1. The Company hereby grants you, subject to the receipt of all approvals
required by law, Options to purchase from the Company such number of
Shares representing seven and one half (7.5%) percent of TWG's share
capital on a fully-diluted basis as at the date hereof (i.e. 750
Shares as at the date hereof), which Options shall be exercisable
solely upon the occurrence of a Transaction, as defined above. It is
explicitly declared and agreed that the number of Shares included in
the Option will constitute in any case, and will be adjusted if needed
in order to ensure they represent no less then 15% of the TWG's Shares
held by Z4P in the time of execution of the option. Notwithstanding
anything herein to the contrary, the Options are not afforded any
anti-dilution protections, but in case TWG is in need of an
investment, Winner will have the right to invest the necessary funds
in order to avoid dilution.
2.2. Z4P undertakes to take all necessary actions in order that this Grant
Letter becomes effective in accordance with the Company's and TWG's
founding documents and all the decisions of its governing bodies at
the time of execution of this Grant Letter and hereafter.
3. EXPIRATION.
Subject to the provisions of sections 8 and 9 below, the Options shall be in
effect until the first to occur of (a) the termination of the Joint Venture
Agreement, or (b) upon the dissolution or liquidation of TWG. For the avoidance
of any doubt, it is clarified that upon the termination of the Joint Venture
Agreement, for any reason, any unexercised Options shall immediately be void.
Without detracting from the foregoing, in the event that the Company knows that
the Joint Venture Agreement is about to terminate for any reason or that there
is to be a dissolution or liquidation of the TWG, it shall give Winner at least
ten (10) days prior written notice of the same so that Winner can timely
exercise its options hereunder before the termination of the Joint Venture
Agreement.
4. EXERCISE OF THE OPTIONS
4.1. METHOD OF EXERCISE. Upon the occurrence of a Transaction, Options
shall be exercised by Winner by giving written notice to the Company
and/or to any third party designated by the Company (the
"REPRESENTATIVE"), in such form and method as may be determined by the
Company, which exercise shall be effective upon receipt of such notice
by the Company and/or the Representative and the payment of the
Exercise Price at the Company's or the Representative's principal
office. The notice shall specify the number of Option Shares with
respect to which the Options are being exercised.
4.2. FORM OF PAYMENT OF EXERCISE PRICE. Payment for the exercise of the
Options shall be made in bank swift transfer, cash, check or cash
equivalent or in any other form as may be permitted by the Board in
its discretion, and shall accompany the issuance of the Options. The
exercise price of the Options hereunder is equal to (pound)75.00
(seventy five pounds sterling) as of today.
4.3. EXECUTION OF DOCUMENTS. In order for the Company to sell Option Shares
upon the exercise of any of the Options, you hereby agree and
undertake to sign any and all documents required by any applicable law
and/or by the incorporation documents of TWG.
4.4. CONDITIONS PRECEDENT. As a condition to the exercise of the Options,
the Company and/or TWG may require you to satisfy any qualifications
that may be reasonably necessary or appropriate to evidence compliance
with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be reasonably requested by the
Company and/or TWG.
4.5. FRACTIONAL SHARES. Company shall not be required to transfer and sell
any fractional Shares upon the exercise of the Options.
5. TRANSFERABILITY OF THE OPTIONS. The Options may not be assigned or
transferred without the Company's prior written approval of the transferee,
provided, however, that said approval shall not be required in the event of
a transfer and assignment of the Options to Winner (CY) Ltd.
6. PIGGYBACK REGISTRATION.
To the extent that the Option Shares carry any registration rights, the
same shall be deemed transferred to Winner upon the exercise of the Options
hereunder, subject to any terms and conditions imposed by TWG in connection
therewith. Winner and its assignees are entitled to Piggy back registration
rights in respect of the Option Shares.
7. [INTENTIONALLY OMITTED]
8. ADJUSTMENT.
8.1. To the extent that TWG affords rights of adjustment with respect to
any Shares in the case of a Transaction, the same shall apply with
respect to the Option Shares.
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8.2. If the outstanding Shares of TWG shall at any time be changed or
exchanged by declaration of a stock dividend (bonus shares), stock
split, combination or exchange of Shares, recapitalization, or any
other like event by or of TWG, and as often as the same shall occur,
then the number, class and kind of the Option Shares therefore granted
and the Exercise Price, shall be appropriately and equitably adjusted
so as to maintain the proportionate number of Option Shares as
reflects 15% of the TWG's shares held by Z4P, without changing the
aggregate Exercise Price, PROVIDED, HOWEVER, that no adjustment shall
be made by reason of the distribution of subscription rights (rights
offering) on outstanding Shares or other similar dilution event.
8.3. In the event that TWG undertakes a corporate reorganization involving
the transfer of its business activities to another entity in which the
Company becomes a shareholder as a Successor to its interests in the
TWG, Winner shall be entitled to 15% of the Company's share of such
new entity.
8.4. In the event that TWG conducts a private placement in which the
Company does not participate with the result that the Company's and
hence Winner's interest in TWG will be diluted, Winner shall be
entitled to participate in said private placement, subject to its
terms and conditions, solely in order to avoid a dilution of its 75%
interest in TWG.
9. RIGHTS AS A SHAREHOLDER. Winner shall not have any of the rights or
privileges of shareholders of TWG in respect of any Option Shares
purchasable upon the exercise of the Options, until Winner's exercise of
the Options and payment of the Exercise Price. Without detracting from the
foregoing, in the event of a Transaction, the Company shall be entitled to
receive from Winner 15% of any costs and expenses that the Company has
demonstrated that it has incurred or is required to incur in connection
with TWG until the time of the Transaction, reduced by the income owed to
Winner from TWG until the termination of the Old Agreement.
10. RESTRICTIONS ON TRANSFER OF OPTIONS AND OPTION SHARES.
10.1. Any transfer or sale of Option Shares shall be subject to the
provisions of the incorporation documents of TWG, the Shareholders
Agreement dated November 5, 2007 and applicable law, including, but
not limited to, the applicable securities laws and regulations.
10.2. Winner acknowledges that since the Shares of TWG are or may be
registered for trading in a public market, Winner's right to sell
Shares is and/or may be subject to limitations and restrictions
(including a lock-up period), as may be requested by TWG or its
underwriters, and Winner hereby unconditionally agrees and accepts any
such limitations. In order to enforce any of the restrictions set
forth herein, TWG may impose stop-transfer instructions with respect
to the exercised Shares. For the sake of avoiding any doubt, to the
extent that any partial lock-up or other similar restriction applies
to the Company, then such lock-up or restriction shall be deemed to
apply to both the Shares of the Company and of Winner on a pro rata
basis.
10.3. Winner shall not dispose of any Option Shares in transactions which
violate any applicable laws, rules and regulations.
10.4. To the extent applicable, Winner agrees that TWG shall have the
authority to endorse upon the certificate or certificates representing
the Option Shares such legends referring to the foregoing restrictions
on all certificates representing Shares of Shares subject to the
provisions of this Grant Letter and any other applicable restrictions
as it may deem appropriate (which do not violate Winner's rights under
this Grant Letter).
11. PURCHASE FOR INVESTMENT.
Winner is not giving any representations or warranties in connection with
its entering into this Option Agreement or its resulting purchase of the
Option Shares, and agrees that it shall indemnify and hold the Company
harmless in the event that the Company is required to incur any expenses of
undertaking the registration of said Option Shares.
12. TAXES.
Any tax consequences applicable to an Optionee and arising from the grant,
or exercise of the Options, from the payment for Option Shares covered
thereby or from any other event or act (of TWG, the Company and/or its
Subsidiaries or the Optionee) hereunder shall be borne solely by the
Optionee.
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13. GOVERNMENT REGULATIONS, LAW & JURISDICTION.
13.1. The granting and exercise of the Options hereunder, and Company's
obligation to sell and deliver Shares under the Options, are subject
to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may
be required. Nothing herein shall be deemed to require Company or TWG
to register the Shares under the securities laws of any jurisdiction.
13.2. This Grant Letter shall be governed by and construed and enforced in
accordance with the laws of the State of Israel as applicable to
contracts made and to be performed therein, without giving effect to
the principles of conflict of laws. The competent courts of the State
of Israel shall have sole jurisdiction in any matters pertaining to
this Grant Letter.
14. MISCELLANEOUS.
14.1. NO OBLIGATION TO EXERCISE OPTIONS. The grant and acceptance of these
Options imposes no obligation on Winner to exercise it.
14.2. CONFIDENTIALITY. The Parties each shall regard the information in
this Grant Letter and any document related to the Grant Letter as
confidential information and each of the Parties shall not reveal its
contents to anyone except when required by law or for the purpose of
gaining legal or tax advice.
14.3. ENTIRE AGREEMENT. This Grant Letter together with the exhibits hereto
constitute the entire agreement between the Company and Winner with
respect to Options granted hereunder, and supersedes all prior
agreements, understandings and arrangements, oral or written, between
Winner and the Company with respect to the subject matter hereof.
14.4. FAILURE TO ENFORCE - NOT A WAIVER. The failure of any party to
enforce at any time any provisions of this Grant Letter shall in no
way be construed to be a waiver of such provision or of any other
provision hereof.
14.5. BINDING EFFECT. This Grant Letter shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
14.6. TERMINATION OR AMENDMENT. Any amendment, change or termination of
this Grant Letter or any part of it, will be done only in writing
subject to consent and execution of both parties.
The Parties indicate their acceptance of the terms and conditions of this Grant
Letter by executing it at the space provided below.
Zone 4 Play Inc. Xxxxxx.xxx (UK) Ltd.
/s/ Uri Levi /s/ Xxxxxx Xxxxxx
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By: Xxx Xxxx By: Xxxxxx Xxxxxx
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Title: Acting CEO and CFO Title: CEO
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Date: 6/11/07 Date: 6/11/07
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