AGREEMENT
EXHIBIT
10.2
AGREEMENT
THIS
AGREEMENT
(the
“Agreement”), dated as of February 6, 2007, by and between AON Games Limited, a
company organized under the laws of the British Virgin Islands (“Aon”),
PacificNet Inc., a Delaware corporation (“PacificNet”), and Xxxx Investments
LLC, a Delaware limited liability company (“Xxxx”). Capitalized terms used, but
not otherwise defined herein, shall have the same meanings ascribed to such
terms in the Loan Agreement (as defined below.)
WHEREAS,
PacificNet Games Limited, a
company
organized under the laws of the British Virgin Islands (the “Company”), and Xxxx
have entered into that certain Loan Agreement, dated as of even date herewith
(as amended, supplemented or modified from time to time, the “Loan Agreement”),
and the Company has issued a Convertible Secured Promissory Note, in favor
of
Xxxx, dated as of even date herewith (the “Note”, and together with the
Agreement, the “Loan Documents”) pursuant to which Xxxx has agreed to lend to
the Company up to $5,000,000 (the “Loan”) all in accordance with and subject to
the terms and conditions set forth in the Loan Documents;
WHEREAS,
in
connection with the extension of the Loan, the parties hereto have agreed to
enter into this Agreement, which sets forth certain rights, restrictions and
obligations of the parties with respect to the transfer and sale of their shares
of the Company;
NOW,
THEREFORE,
in
consideration of the premises, the mutual covenants herein contained, and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and to induce Xxxx to extend credit to the Company, the parties
hereto agree as follows:
ARTICLE
I. LOCK
UP
Commencing
on the date hereof until the Maturity Date (the “Lock-Up Period”), Aon
irrevocably agrees that it will not offer, sell, contract to sell, pledge or
otherwise dispose of (or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by Aon or any of its officers, directors, stockholders, respective
affiliates or any person in
privity
with
Aon), directly or indirectly, any shares of the Company (the “Shares”)
beneficially owned, held or hereafter acquired by Aon (a “Prohibited Transfer”).
For the purposes of this Agreement, a Prohibited Transfer shall not include
a
sale during the Lock-Up Period of Shares by Aon to PacificNet as set forth
in
ARTICLE II herein.
ARTICLE
II. PURCHASE
OF AON’S SHARES
PacificNet
shall have the right, but not the obligation, at any time upon the occurrence
of
an event which would result in the dilution of PacificNet’s ownership of the
Company below 51% of the voting power of the Company, to purchase from Aon
such
number of Shares of the Company to regain such 51%. The purchase and sale of
the
Shares shall be on terms reasonably acceptable to and determined by the parties;
provided,
however,
that if
such purchase and sale under this Article II is triggered by Xxxx’x
participation in a Subsequent Financing, such sale shall be on the same terms,
conditions and price as the Subsequent Financing, except that Aon shall accept
payment of the purchase price of in cash, or in restricted shares of PacificNet.
ARTICLE
III. Tag-Along
Right.
(a) Transfer
of Stock.
Upon
the expiration of the Lock-Up Period, if AON receives from an unaffiliated
third
party of the Company (the “Third Party”) a bona
fide
offer to
purchase a portion of its shares of the Company (the “Third Party Offer”)
representing five percent (5%) or more of its aggregate ownership interest
in
the Company (the “Transfer”), which AON desires to accept, AON must comply with
the terms of this Article III; provided however, that once all obligations
in
respect of the Note which are guaranteed by Sino Mart Management Ltd. and Xxxxxx
Xxxx pursuant to that Guaranty dated of even date herewith shall have been
indefeasibly paid in full in cash or Conversion Shares (as defined in such
Guaranty) and performed and satisfied in full and the Note irrevocably
terminated, AON shall no longer be required to comply with such terms and this
Article III (including the right to participate in sales pursuant to Article
IV
granted in subparagraph (e) hereof) shall be of no further force and
effect.
(b) Right
of Inclusion.
Aon
shall provide the Third Party Offer in a written notice (the “Tag Along Notice”)
to the Company, PacificNet and to Xxxx and such Third Party Offer must offer
to
include Xxxx in the Transfer to the Third Party. The maximum number of shares
of
the Company that Xxxx may sell pursuant to such Third Party Offer (the “Maximum
Inclusion Shares”) shall be the product of (i) the number of shares of the
Company held by Xxxx at such time and (ii) a fraction, the numerator of which
is
the total number of shares of the Company the Third Party seeks to purchase
pursuant to the Third Party Offer and the denominator of which is the total
number of shares of the Company then issued and outstanding (on a fully-diluted
basis).
(c) Inclusion
Notice.
At any
time within seven (7) days of the date of the Tag-Along Notice, Xxxx may accept
the offer in the Tag-Along Notice by giving written notice to Aon, the Company
and PacificNet of its acceptance (the “Inclusion Notice”)
setting forth the total number of Xxxx’x shares to be purchased by the Third
Party (not to exceed the Maximum Inclusion Shares) pursuant to the terms and
conditions of the Third Party Offer. Xxxx shall not establish contact with
any
such Third Party or in any way, directly or indirectly, seek to negotiate with
such Third Party or otherwise interfere with or hinder any negotiations between
Aon and such Third Party, it being understood by all the parties hereto that
Aon
shall have sole power and authority to negotiate with and have all contact
with
any such Third Party.
(d) Closing.
Within
seven (7) days after the expiration of the period for Xxxx to deliver an
Inclusion Notice, Aon shall notify the Company, PacificNet and Xxxx of the
date,
time and place set for consummation of the Transfers to the Third Party (the
“Transfer Closing Date”). The Transfer Closing Date shall be a date mutually
agreed upon between Aon and the Third Party. On the Transfer Closing Date,
in
addition to any other terms of transfer as provided in the Third Party Offer,
Xxxx shall deliver to the Third Party (i) the certificates representing the
shares of the Company to be transferred, which shall be, free of all liens
and
encumbrances; and (ii) stock powers duly endorsed in blank; against delivery
by
the Third Party of all of the consideration to be received by Aon and Xxxx.
Upon
notice of the consummation of the Transfers to the Third Party, the Secretary
shall also cause such transfers to be reflected on the books of the
Company.
(e) Exclusions.
This
tag-along right shall not be available to Xxxx in the event of a sale and
purchase of shares in accordance with Article II herein. Notwithstanding the
foregoing, this tag along right may be exercised in the event PacificNet
exercises its right of first refusal in accordance with Article IV
below.
ARTICLE
IV. Right
of First Refusal
4.01 Upon
the
receipt by PacificNet of the Tag Along Notice referred to in Article III(b),
PacificNet shall have the right, but not the obligation, on the same terms,
conditions and price provided for in the Third Party Offer, to purchase all,
or
any portion of the shares included in the Third Party Offer.
4.02 If
PacificNet desires to purchase any or all of the shares included in the Third
Party Offer, PacificNet shall provide written notice to the Company, Aon and
Xxxx not later than 5:30 p.m. (Hong Kong time) on the third Business Day after
receipt of the Tag Along Notice. Such notice shall state the amount of
PacificNet’s participation, and that PacificNet has such funds ready, willing
and available to purchase the shares on the terms set forth in the Third Party
Offer. If Aon receives no notice from PacificNet as of such third Business
Day,
PacificNet shall be deemed to have notified Aon that it does not elect to
participate. Upon receipt of such written notice from PacificNet, Aon shall
immediately deliver to PacificNet all documents required to be executed in
connection with the purchase and sale and as set forth in Article III(d) shall
advise PacificNet of the closing date.
ARTICLE
V. GENERAL
PROVISIONS
5.01Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effectively given: (a) upon personal delivery to the party notified,
(b)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient, if not, then on the next business day, (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification
of
receipt. All communications shall be sent to Aon at Xxxx X, 00/X, Xxxxxxxxx
Xxx,
00 Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxx Xxxx, to Xxxx at 0000 Xxxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, XX 00000, XXX and to PacificNet at 23rd Floor, Building A,
TimeCourt, Xx.0 Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx, Xxxxxxx, Xxxxx, 000000, with
a
copy to Loeb & Loeb LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn:
Xxxxxxxx X. Xxxxxxxx, Esq., facsimile number (000) 000-0000, to or at such
other
address as the parties may designate by ten days advance written notice to
the
other parties hereto.
5.02Amendments
and Waivers.
The
provisions of this Agreement may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented
to
in writing by the parties hereto.
5.03 Entire
Agreement.
This
Agreement and the other Loan Documents contain the entire understanding between
the parties hereto with respect to the transactions contemplated herein and
such
understanding shall not be modified except in writing signed by or on behalf
of
the parties hereto.
5.04 Severability.
Wherever possible, each provision herein shall be interpreted in such manner
as
to be effective and valid under applicable law. Should any portion of this
Agreement be declared invalid for any reason in any jurisdiction, such
declaration shall have no effect upon the remaining portions of this Agreement.
Furthermore, the entirety of this Agreement shall continue in full force and
effect in all other jurisdictions and said remaining portions herein shall
continue in full force and effect in the subject jurisdiction as if this
Agreement had been executed with the invalid portions thereof
deleted.
5.05 Governing
Law.
This
Agreement is and shall be deemed to be a contract entered into and made pursuant
to the laws of Hong Kong and shall in all respects be governed, construed,
applied and enforced in accordance with the laws of said territory.
5.06 Headings.
The
section headings herein are included for convenience only and shall not be
deemed to be part of this Agreement.
5.07 Counterparts.
This
Agreement may be executed in one or more counterparts, which when taken together
shall constitute one and the same document.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
AON
GAMES
LIMITED
By:/s/
Xxxxxx Xxxxx
Name:
Xxxxxx Xxxxx
Title:
Director
By:/s/
Xxxxxx Xxxx
Name:
Xxxxxx Xxxx
Title:
President
XXXX
INVESTMENTS LLC
By:
/s/
Xxxxxxx X. Xxxxx
Name:
Xxxxxxx X. Xxxxx
Title:
President
