STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT is
dated as of May 14, 2009 (this “Agreement”) by and
among Octavian Global Technologies, Inc. (the “Company”), Ziria
Enterprises Limited (“Ziria”), Xxxxxx
Xxxxxxxxxxxxxx (“HB”) and Austrian
Gaming Industries GmbH (“AGI” and collectively
with Ziria and HB, the “Stockholders”).
RECITALS
WHEREAS, the Stockholders are
presently the owners and holders of a majority of the issued and outstanding
shares of capital stock of the Company (the “Common Stock”) on a
non-diluted and fully-diluted basis (the shares subject to this Agreement,
including shares issuable pursuant to convertible instruments, warrants or
options, and such instruments, the “Shares”).
WHEREAS, the Stockholders wish
to set forth in this Agreement certain terms and conditions regarding the
ownership of the shares of Common Stock, including certain restrictions on the
transfer of such shares, and the management of the Company and the
Subsidiaries.
NOW, THEREFORE, in
consideration of the mutual agreements contained herein, the parties hereto
agree as follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement: the following terms
have the meanings set forth in this Section 1.1:
“Affiliate” means,
with respect to any Person, (a) any Person directly or indirectly controlling,
controlled by or under common control with such Person, (b) any Person directly
or indirectly owning or controlling 5% or more of any class of outstanding
voting securities of such Person or (c) any officer, director, general partner
or trustee of any such Person described in clause (a) or (b)
“Business Day” means
any day except Saturday, Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to
close.
“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Subsidiary” means any
subsidiary of the Company.
1
ARTICLE
II.
CAPITALIZATION,
GOVERNANCE AND MANAGEMENT OF THE COMPANY
2.1 Board of
Directors.
(a) The
Stockholders agree that the board of directors of the Company (the “Board”) shall consist
of five members which shall include each of the following:
(i) HB,
who shall also be the Chairman of the Board and the Chief Executive Officer of
the Company;
(ii) Designee
of AGI (the “AGI
Designee”);
(iii) Designee
of HB (the “HB
Designee”);
(iv) Xxxxx
Xxxxxxxxxxxxxx; and
(v) Xxxxx
Xxxxxxx.
(b) Except
as set forth in Section 2.1(c) below, no additional seats on the Board shall be
created and no other person or entity may be appointed to the Board without the
prior written consent of HB and AGI; provided, however, (i) AGI is
permitted to remove the AGI Designee and replace with a different designee who
shall in turn become the AGI Designee, at AGI’s sole discretion, (ii) HB is
permitted to remove the HB Designee and replace with a different
designee who shall in turn become the HB Designee, at HB’s sole discretion, and
(iii) HB is authorized to remove Xxxxx Xxxxxxxxxxxxxx and Xxxxx Xxxxxxx and
appoint in their place (with AGI’s prior written consent) two additional
independent directors to fill any such vacancy.
(c) The
Stockholders agree that, subject to the terms hereof, the management of the
Company shall be conducted in the manner that it has been conducted immediately
prior to the execution of this Agreement; provided that AGI shall have the
right, in its sole discretion, to cause the AGI Designee to be a member of the
Company’s executive team which position shall have such responsibilities as
shall be determined at the time of such naming (upon the reasonable satisfaction
of HB and the AGI Designee). Except as set forth herein or as may be
provided for in HB’s employment agreement with the Company (the “Employment
Agreement”), HB may not be removed as Chairman of the Board or Chief
Executive Officer absent (i) gross negligence, willful misconduct in the
performance of HB’s duties or a conviction of HB of a felony or (ii) the
unanimous consent of all members of the Board other than HB; and, provided such
removal is not as a result of Cause (as defined in the Employment Agreement),
gross negligence or willful misconduct in the performance of HB’s duties,
conviction of a felony by HB, violation of this Agreement by HB or Ziria through
gross negligence or willful misconduct or otherwise as a result of any material
violation by HB of the terms of the Employment Agreement, cash payment by the
Company to HB of: (1) the remainder of HB’s Base Salary (as defined in the
Employment Agreement) and (2) the issuance of any earn-out shares of Common
Stock to which HB would otherwise be entitled for the calendar year in which HB
is removed. Additionally, upon HB’s removal for Cause, gross
negligence or willful misconduct in the performance of HB’s duties, a conviction
of HB of a felony or violation by HB or Ziria of this Agreement through gross
negligence or willful misconduct or otherwise as a result of any material
violation by HB of the terms of the Employment Agreement, the Company shall have
the option to purchase for cash: (A) all or any portion of any outstanding
shares of Common Stock then held by Ziria and HB, including, without limitation
any Earn-Out Shares, at the greater of $3.10 (subject to adjustment for reverse
and forward stock splits and the like) and the average market price of the
Common Stock for the 30 day period immediately prior to such removal and (B) all
or any portion of any Common Stock Purchase Warrants or options held by Ziria
and HB for an amount equal to the Black Scholes Value of such warrants and
options as calculated pursuant to Section 3(e) of the Common Stock Purchase
Warrants issued pursuant to that certain Securities Purchase Agreement, dated
October 30, 2008, by and among the Company and the purchasers signatory
thereto. In the event the Company determines not to exercise the
foregoing option, AGI shall have the option to purchase all or any portion of
such Common Stock, Common Stock Purchase Warrants or options then held by Ziria
and HB. In the event HB’s removal by the Company is for any other
reason, the option of the Company set forth above shall be a binding obligation
of the Company. The rights, remedies, penalties and obligations of
the parties hereto are in addition to, and not in substitution for, the terms
and conditions of the Employment Agreement.
2
2.2 Meetings of the
Board. The holders of the Shares will vote at regular or
special meetings of stockholders, and give written consent with respect to, such
Shares that they own (or as to which they have voting power) to ensure that the
size of the Board shall be set and remain at five directors.
2.3 Director Fees and
Expenses. The Company shall pay to the independent directors such
reasonable fees as may be determined by a compensation committee to be created
at the Closing, such committee to consist of HB and the AGI
Designee. The Company will cause each non-employee director serving
on the Board to be reimbursed for all reasonable out-of-pocket costs and
expenses incurred by him or her in connection with such service in accordance
with compensation policies established by the Company’s compensation
committee.
2.4 Approvals by the
Board.
(a) Except
as required by applicable law and the by-laws of the Company, all actions
requiring the approval of the Board shall be approved by a majority of the
directors present at any duly convened Board meeting or by unanimous written
consent of the directors without a meeting, in each case in accordance with the
provisions of the Nevada Revised Statutes and the by-laws of the
Company.
(b) A
quorum for meetings of the Board shall consist of a majority of the total
authorized membership of the Board. If a quorum is not achieved at any duly
called meeting, such meeting may be postponed to a time no earlier than 48 hours
after written notice of such postponement has been given to the directors, and,
at any such postponed meeting, a quorum shall consist of a majority of the total
authorized membership of the Board. Meetings of the Board may be
called by the Chairman at any time, provided that at least 24 hours’ written
notice of such meeting has been provided to the directors or notice thereof has
been waived by each director.
3
(c) In
addition to any vote or consent of the Board or the stockholders of the Company
as required by applicable law and the by-laws of the
Company, the Company shall not take (or, to the extent applicable, permit any
Subsidiary to take) any of the following actions, or enter into any commitment
to take any of the following actions, without the prior approval of a majority
of the Board then in office at a duly called meeting of the Board (“Majority
Approval”):
(i) the
incurrence, assumption or refinancing of any indebtedness or liens for borrowed
money (including, without limitation, through capital leases, acting as a
surety, the issuance of debt securities or the guarantee of indebtedness of
another Person) in an amount less than $500,000USD per annum and not previously
approved by the Board;
(ii) the
incurrence of capital expenditures between $200,000 and $1,000,000;
(iii) enter
into any joint venture with or equity investment in any Person, including any
equity investment in any Subsidiary, in any amount less than
$250,000USD;
(iv) engage
in transactions that are material to the Company with Affiliates, including,
without limitation, contracts, arrangements, agreements or understandings with
any member of the Board or any Affiliate or entity owned or controlled by any
Board member or in which any Board member owns more than 5% of the equity of
such entity (and such affiliated Board member shall not be permitted to vote on
such matter or related matters);
(v) granting
or revoking any proxy or power attorney held by or for the benefit of the
Company or any Subsidiary, other than (1) powers of attorney granted to Company
employees or agents to permit the conduct of the Company’s ordinary course of
business and (2) for those matters for which Special Approval is
required;
(vi) making
a tax election or entering into any material agreement in respect of taxes,
including the settlement of any material tax controversy, or similar action
relating to the filing of any tax return or the payment of any tax, if such
election, agreement or action would reasonably be expected to result in any
direct tax liability for any of the Stockholders or any direct or indirect
holder of equity in any of the Stockholders;
(vii) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of
shares of Common Stock or other securities of the Company;
(viii) the
acquisition, disposition or encumbrance of any real estate for $500,000USD or
less; or
(ix) enter
into any agreement or understanding with respect to any of the
foregoing.
4
(d) In
addition to any vote or consent of the Board or the stockholders of the Company
required by applicable law, the Company shall not take (or, to the extent
applicable, permit any Subsidiary to take) any of the following actions, or
enter into any arrangement or contract to do any of the following actions,
without the prior approval of a majority of the Board then in office at a duly
called meeting of the Board, which must also include the approval of the AGI
Designee (“Special
Approval”):
(i) the
incurrence, assumption or refinancing of any indebtedness or liens for borrowed
money (including, without limitation, through capital leases, acting as a
surety, the issuance of debt securities or the guarantee of indebtedness of
another Person) in an amount greater than $500,000USD per annum;
(ii) any
amendment to the certificate of incorporation, by-laws or other organizational
document of the Company or any material subsidiary;
(iii) voluntary
election by the Company to liquidate or dissolve or to commence, or consent to
the filing of, bankruptcy or insolvency proceedings under applicable law or the
adoption of a plan with respect to any of the foregoing;
(iv) consent
to the appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for itself or any other entity;
(v) make
an assignment of its assets for the benefit of its creditors or an assignment of
the assets of another entity for the benefit of such entity’s
creditors;
(vi) any
amendment to, or granting of any waiver under, this Agreement in a manner
materially adverse to the Company;
(vii) approval
of the Annual Budget and Business Plan (the “Business Plan”) of
the Company and the Subsidiaries (and any material revisions thereto, including
any increases of capital expenditures that would result in aggregate capital
expenditures in excess of 20% of the amount budgeted for capital expenditures in
the Business Plan);
(viii) any
joint venture with or equity investment in any Person, including any equity
investment in any Subsidiary, in any amount more than $100,000USD;
(ix) incur
capital expenditures in excess of $1,000,000USD per annum;
(x) any
material transaction not contemplated in the most current Business
Plan;
5
(xi) the
commencement of any proposed transaction or series of related transactions
involving a (A) the sale of fifteen percent (15%) or more of the assets of the
Company to an Unaffiliated Person (as defined below), (B) a sale resulting in
more than 50% of the shares of Common Stock of the Company being held by an
Unaffiliated Person (C) a merger, consolidation, recapitalization or
reorganization of the Company with or into another Unaffiliated Person. “Unaffiliated Person”
means any Person who is not a Stockholder or an Affiliate of a
Stockholder;
(xii) any
acquisition by the Company or any Subsidiary of the stock, other equity
interests or assets of any Person (“Person” shall mean
any individual, corporation, limited liability company, limited or general
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivisions
thereof), in one transaction or a series of related transactions, or disposition
of assets of the Company or any Subsidiary or the capital stock or other equity
interests of any Subsidiary;
(xiii) the
issuance of Common Stock or Common Stock Equivalents other than pursuant to a
stock or option plan previously approved by the Board;
(xiv) create,
or authorize the creation of, or issue or obligate itself to issue shares of,
any additional class or series of capital stock if the same ranks pari passu or senior to the
Common Stock with respect to the distribution of assets on the liquidation,
dissolution or winding up of the Company, the right to the payment of dividends,
the right of redemption or any other rights inherent in or applicable to the
Common Stock, or increase the authorized number of shares of Common Stock, or
increase the authorized number of shares of any additional class or series of
capital stock of the same rank or that ranks junior to the
Common Stock with respect to the distribution of assets on the
liquidation, dissolution or winding up of the Company, the right to the payment
of dividends, the right of redemption or any other rights inherent in or
applicable to the Common Stock, other than issuances pursuant to an employee
stock option plan duly approved by the Board;
(xv) defining
or amending any material business practice or material policy of the Company or
any Subsidiary or any transaction
not in the ordinary course of business;
(xvi) any
payment or declaration of any dividend or other distribution on or in respect of
any equity of the Company, or any redemption of any equity of the
Company;
(xvii)
change the Company’s independent public accountants;
(xviii) any
material changes in any significant accounting policy of the Company or the
Subsidiaries, taken as a whole;
6
(xix) the
acquisition, disposition or encumbrance of any real estate for more than
$500,000USD;
(xx) creating
or modifying any bonus, pension, retirement, profit sharing, savings, deferred
compensation, incentive or other fringe, perquisite or employee benefit plans,
programs, policies, and/or any agreements or arrangements for or with executive
personnel or members of the Board, including, without limitation, employment,
service or severance agreements; or
(xxi) take
any action in furtherance of the foregoing.
(e) In
the event of any breach of this Section 2.4 by HB or Ziria, or conviction of a
felony by HB, or otherwise as a result of any material violation by HB of the
terms of the Employment Agreement, and upon receipt of AGI’s written notice of
such breach, there shall be a cure period of thirty (30) days in which HB may
cure such breach, and if not cured: (i) HB shall immediately resign his
positions as an officer, employee and member of the Board of the Company
(without the payment of any severance, any of the cash payments set forth in
Section 2.1(c) above or any other compensation), (ii) notwithstanding anything
contained in this Agreement to the contrary, AGI shall have the right, in its
sole discretion, to appoint new officers and directors to replace HB, the HB
Designee and Xxxxx Xxxxxxxxxxxxxx and (iii) immediately following the
appointments of such new directors, this Agreement shall be deemed terminated
and of no further force or effect.
2.5 Certain Actions, Voting
Proxy.
(a) Each
Stockholder shall vote all of its Shares and shall take all other necessary or
desirable actions within such Stockholder’s control (including, without
limitation, attending meetings in person or by proxy for purposes of obtaining a
quorum, execution of written consents in lieu of meetings and approval of
amendments and/or restatements of the Company’s certificate of incorporation or
by-laws), and the Company shall take all necessary and desirable actions within
its control (including, without limitation, calling special board and
stockholder meetings and approval of amendments and/or restatements of the
Company’s certificate of incorporation or by-laws), at regular or special
meetings of the Stockholders and/or give written notice with respect to such
Shares in accordance with the provisions of this Agreement.
(b) Each
Stockholder, in connection with any vote or action by written consent of the
stockholders of the Company relating to any matter (including, but not limited
to, any Transfer (as defined below) of the Shares or amendment of the Company’s
certificate of incorporation) requiring consent as specified in this Agreement,
shall vote all of its Shares: (i) against (and not act by written consent to
approve) such matter if such matter has not received such required consent, (ii)
for (or act by written consent to approve) any matter that has received such
required consent and which has been submitted to the stockholders of the Company
for approval and (iii) otherwise take or cause to be taken, all other reasonable
actions, at the expense of the Company, required, to the extent permitted by
applicable law, to prevent the taking of any action by the Company that has not
received such required consent, or to approve the taking of any such action that
has received such required consent. “Transfer” means,
directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate
or similarly dispose of, either voluntarily or involuntarily, or to enter into
any contract, option or other arrangement or understanding with respect to the
sale, transfer, assignment, pledge, encumbrance, hypothecation or similar
disposition of, any Shares owned by a Person or any interest (including but not
limited to a beneficial interest) in any Shares owned by a Person.
7
(c) Each
Stockholder hereby grants an irrevocable proxy to vote or act by written consent
with respect to such Stockholder’s Shares, and grant a consent, proxy or
approval in respect of such Shares, in the event that such Stockholder fails at
any time to vote or act by written consent with respect to any of its Shares in
the manner set forth in this Agreement. Each Stockholder agrees that the
irrevocable proxy set forth in this section will be valid for the term of this
Agreement and is given to secure the performance of the obligations of such
Stockholder under this Agreement, and that that each proxy hereby granted shall
be irrevocable and shall be deemed coupled with an interest and shall extend for
the term of this Agreement, or, if earlier, until the last date permitted by
applicable law. Except as expressly contemplated by this Section 2.5(c), no
Stockholder shall grant to any Person any proxy to exercise the rights of any
such Stockholder under this Agreement to which such Stockholder is a
party.
ARTICLE
III.
TRANSFERS;
CERTAIN COVENANTS
3.1 Transfer
Restrictions.
(a) No
Stockholder may Transfer any of its Shares except (i) to any Affiliate of a
Stockholder, (ii) as a Tag-Along Participant pursuant to Section 3.2 or as a
Selling Stockholder pursuant to Section 3.3, (iii) subject to receipt of
Majority Approval or (iv) as to HB and Ziria only, if such Transfer complies and
is permitted pursuant to that certain Lock-Up Agreement, dated October 30,
2008.
(b) Any
transferee of the Shares pursuant to Section 3.1(a) (such transferees, “Permitted
Transferee”), other than a Permitted Transferee pursuant to Section
3.1(a)(iv) which shall have no restrictions hereunder, shall, as a condition
precedent to the Transfer of such Shares to such transferee and in addition to
the requirements of the Company’s by-laws and certificate of incorporation, (i)
become a party to this Agreement by completing and executing a signature page
hereto (including the address of such party), (ii) execute all such other
agreements or documents as may reasonably be requested by the Company (which may
include such representations and warranties made by the transferee to the
Company as shall be reasonably requested by the Company), (iii) ensure with the
transferring Stockholders that any merger control or other regulatory
authorizations needed in connection with such Transfer are duly obtained, and
(iv) deliver such signature page and, if applicable, other agreements and
documents to the Company. Such Person shall, upon its satisfaction of such
conditions and acquisition of the Shares, be a Stockholder for all purposes of
this Agreement. Notwithstanding any such Transfer, the transferring Stockholders
shall not be released from\obligations under this Agreement without the written
consent of the non-transferring Stockholders.
8
(c) Any
Transfer or attempted Transfer of the Shares in violation of any provision of
this Agreement shall be void.
3.2 Tag-Along
Rights.
(a) In
the event of a proposed Transfer of Shares by a Stockholder (a “Transferring
Stockholder”) other than to a Permitted Transferee, each Stockholder
(other than the Transferring Stockholder) shall have the right to participate on
the same terms and conditions and for the same per Share consideration as the
Transferring Stockholder in the Transfer in the manner set forth in this Section
3.2. Prior to any such Transfer, following compliance with Section
3.4, the Transferring Stockholder shall deliver to the Company prompt written
notice (the “Transfer
Notice”), which the Company will forward to the non-Transferring
Stockholders (such stockholders, the “Tag-Along
Participants”) within 5 days of receipt thereof, which notice shall state
(i) the name of the proposed transferee, (ii) the number of Shares proposed to
be Transferred (the “Transferred
Securities”) and the percentage (the “Tag Percentage”) that
such number of Shares constitute of the total number of Shares owned by such
Transferring Stockholder, (iii) the proposed purchase price therefor, including
a description of any non-cash consideration sufficiently detailed to permit the
determination of the fair market value thereof as determined in good faith by
the Board, and (iv) the other material terms and conditions of the proposed
Transfer, including the proposed Transfer date (which date may not be less than
20 days after delivery to the Tag-Along Participants of the Transfer Notice).
Such notice shall be accompanied by a written offer from the proposed transferee
to purchase the Transferred Securities, which offer may be conditioned upon the
consummation of the sale by the Transferring Stockholder, or the most recent
drafts of the purchase and sale documentation between the Transferring
Stockholder and the transferee which shall make provision for the participation
of the Tag-Along Participants in such sale consistent with this Section
3.2.
(b) Each
Tag-Along Participant may elect to participate in the proposed Transfer to the
proposed transferee identified in the Transfer Notice by giving written notice
to the Company and to the Transferring Stockholder within the 15 day period
after the delivery of the Transfer Notice to such Tag-Along Participant, which
notice shall state that such Tag-Along Participant elects to exercise its rights
of tag-along under this Section 3.2 and shall state the maximum number of Shares
sought to be Transferred (which number may not exceed the product of (i) all
such Shares owned by such Tag-Along Participant plus the number of Shares owned
by any Affiliate Tag-Along Assignor of such Tag-Along Participant, multiplied by
(ii) the Tag Percentage). As used in this Agreement, the term “Affiliate Tag-Along
Assignor” with respect to any Stockholder shall mean an Affiliate (as
defined below) of such Stockholder that shall have waived, by means of written
notice to the Company and the Transferring Stockholder, its tag-along rights
pursuant to this Section 3.2 with respect to the applicable Transfer in favor of
such Stockholder. Each Tag-Along Participant shall be deemed to have
waived its right of tag-along with respect to the Transferred Securities
hereunder if it fails to give notice within the prescribed time period. The
proposed transferee of Transferred Securities will not be obligated to purchase
a number of Shares exceeding that set forth in the Transfer Notice, and in the
event such transferee elects to purchase less than all of the additional Shares
sought to be Transferred by the Tag-Along Participants, the number of Shares to
be Transferred by the Transferring Stockholder and each such Tag-Along
Participant shall be reduced so that each such Stockholder is entitled to sell
its Pro Rata Portion (as defined below) of the number of Shares the proposed
transferee elects to purchase. “Pro Rata Portion”
means: (a) for the purposes of Section 3.2, with respect to the Transferring
Stockholder or any Tag-Along Participant, with respect to any proposed Transfer,
on the applicable Transfer date, the number of Shares equal to the product of
(i) the total number of Shares to be Transferred to the proposed transferee and
(ii) the fraction determined by dividing (A) the total number of Shares owned by
such Transferring Stockholder or Tag-Along Participant (as applicable) as of
such date (on a fully diluted basis) plus the number of Shares owned by all
Affiliate Tag-Along Assignors of such Person by (B) the total number of Shares
owned by the Transferring Stockholder and all Tag-Along Participants and their
respective Affiliate Tag-Along Assignors as of such date (on a fully diluted
basis) and (b) for purposes of Section 3.4, with respect to any Stockholder, on
the date of any Initiator Notice, the number of Shares (but not in excess of the
amount so elected to purchase by such Stockholder) equal to (i) the total number
of Transfer Shares multiplied by (ii) a fraction determined by dividing (A) the
number of Shares owned by such Stockholder by (B) the total number of Shares
owned by all of the Purchasing Stockholders, all determined on a fully diluted
basis.
9
(c) Each
Stockholder participating in a sale pursuant to this Section 3.2 shall receive
consideration in the same form and per share amount after deduction of such
Stockholder’s proportionate share of the related expenses. Each Stockholder
participating in a sale pursuant to this Section 3.2 shall agree to make or
agree to the same customary representations, covenants, indemnities and
agreements as the Transferring Stockholder so long as they are made severally
and not jointly and the liabilities thereunder are borne on a pro rata basis based on
the consideration to be received by each Stockholder; provided, that any
general indemnity given by the Transferring Stockholder, applicable to
liabilities not specific to the Transferring Stockholder, to the transferee in
connection with such sale shall be apportioned among the Stockholders
participating in a sale pursuant to this Section 3.2 according to the
consideration received by each such Stockholder and shall not exceed such
Stockholder’s net proceeds from the sale; provided, further, that any
representation relating specifically to a Stockholder and/or its ownership of
the Shares to be Transferred shall be made only by that Stockholder. The fees
and expenses incurred in connection with a sale under this Section 3.2 and for
the benefit of all Stockholders (it being understood that costs incurred by or
on behalf of a Stockholder for his, her or its sole benefit will not be
considered to be for the benefit of all Stockholders), to the extent not paid or
reimbursed by the Company or the transferee or acquiring Person, shall be shared
by all the Stockholders on a pro rata basis, based on the consideration received
by each Stockholder in respect of its Shares to be Transferred; provided, that no
Stockholder shall be obligated to make any out-of-pocket expenditure prior to
the consummation of the transaction consummated pursuant to this Section 3.2
(excluding de minimis
expenditures). The proposed Transfer date may be extended beyond the date
described in the Transfer Notice to the extent necessary to obtain required
approvals of governmental entities and other required approvals and the Company
and the Stockholders shall use their respective commercially reasonable efforts
to obtain such approvals.
10
3.3 Drag Along
Right.
(a) If
any Stockholder proposes to Transfer all of its Shares, representing more than
50% of the Shares of the Company, and, for so long as such a Transfer requires
any approval hereunder, such Transfer has been so approved, then if requested by
the Stockholder(s) Transferring such Shares (the “Section 3.3 Transferring
Stockholder(s)”), each other Stockholder (each, a “Selling Stockholder”)
shall be required to sell all of the Shares held by it of the same type as any
of the Shares to be Transferred (or then convertible into any such
type).
(b) The
consideration to be received by a Selling Stockholder shall be the same form and
amount of consideration per share to be received by the Section 3.3 Transferring
Stockholder(s), and the terms and conditions of such sale shall be the same as
those upon which the Section 3.3 Transferring Stockholder(s) sells its Shares.
In connection with the transaction contemplated by Section 3.3(a) (the “Drag Along
Transaction”), each Selling Stockholder will agree to make or agree to
the same customary representations, covenants, indemnities and agreements as the
Section 3.3 Transferring Stockholder(s) so long as they are made severally and
not jointly and the liabilities thereunder are borne on a pro rata basis based on the
consideration to be received by each Stockholder; provided, that (i) any general
indemnity given by the Section 3.3 Transferring Stockholder(s), applicable to
liabilities not specific to the Section 3.3 Transferring Stockholder(s), to the
purchaser in connection with such sale shall be apportioned among the Selling
Stockholders according to the consideration received by each Selling Stockholder
and shall not exceed such Selling Stockholder’s net proceeds from the sale, (ii)
that any representation relating specifically to a Selling Stockholder and/or
its Shares shall be made only by that Selling Stockholder, and (iii) in no event
shall any Stockholder be obligated to agree to any non-competition covenant or
other similar agreement as a condition of participating in such
Transfer.
(c) The
fees and expenses incurred in connection with a sale under this Section 3.3 and
for the benefit of all Stockholders (it being understood that costs incurred by
or on behalf of a Stockholder for his, her or its sole benefit will not be
considered to be for the benefit of all Stockholders), to the extent not paid or
reimbursed by the Company or the transferee or acquiring Person, shall be shared
by all the Stockholders on a pro rata basis, based on the consideration received
by each Stockholder in respect of its Shares; provided that no
Stockholder shall be obligated to make any out-of-pocket expenditure prior to
the consummation of the transaction consummated pursuant to this Section 3.3
(excluding de minimis
expenditures).
(d) The
Section 3.3 Transferring Stockholder(s) shall provide written notice (the “Drag Along Notice”)
to each other Selling Stockholder of any proposed Drag Along Transaction as soon
as practicable following its exercise of the rights provided in Section 3.3(a).
The Drag Along Notice shall set forth the consideration to be paid by the
purchaser for the securities, the identity of the purchaser and the material
terms of the Drag Along Transaction.
11
(e) If
any holders of the Shares of any class are given an option as to the form and
amount of consideration to be received in the Drag Along Transaction, all
holders of the Shares of such class must be given the same option.
(f) Upon
the consummation of the Drag Along Transaction and delivery by any Selling
Stockholder of the duly endorsed certificate or certificates representing the
Shares held by such Selling Stockholder to be sold together with a stock power
duly executed in blank, the acquiring Person shall remit directly to such
Selling Stockholder, by wire transfer of immediately available funds, the
consideration for the securities sold pursuant thereto.
3.4 Right of First
Offer.
(a) Subject
to the terms and conditions specified in this Section 3.4, each Stockholder
shall have a right of first offer if any other Stockholder (the “Initiator”), proposes
to sell any Shares (the “Transfer Shares”)
owned by it other than in a Transfer permitted pursuant to Sections 3.1(a). Each
time the Initiator proposes so to sell any Transfer Shares, the Initiator must
first make an offering of the Transfer Shares to each Stockholder in accordance
with the following provisions of this Section 3.4.
(b) The
Initiator shall give written notice (the “Initiator Notice”) to
the Company and the other Stockholders stating its bona fide intention to sell
the Transfer Shares and specifying the number of Transfer Shares, and the
material terms and conditions (other than price) upon which the Initiator
proposes to sell such Transfer Shares.
(c) Upon
receipt of the Initiator Notice, each other Stockholder shall have 10 Business
Days (the “ROFO Notice
Period”) to offer to purchase all (and not less than all) the Transfer
Shares by delivering a written notice (a “ROFO Offer Notice”)
to the Initiator and the Company of such offer stating that it offers to
purchase such Transfer Shares on the terms specified in the Initiator Notice and
designating the price that it is offering to pay for such Transfer Shares (the
“Offer Price”).
Any ROFO Offer Notice shall be binding upon delivery and irrevocable without the
consent of the Initiator, provided that a Stockholder may revoke its ROFO Offer
Notice at any time within 20 Business Days following delivery thereof if it is
unable to secure financing for such purchase in an amount and on such terms and
conditions as are reasonably acceptable to such Stockholder. If the Offer Price
set forth in any ROFO Offer Notice is less than the Offer Price set forth in any
other ROFO Offer Notice, the Initiator shall, within 5 days after the expiration
of the ROFO Notice Period, deliver written notice to the other Stockholders and
the Company specifying the highest Offer Price set forth in any ROFO Notice,
whereupon each other ROFO Notice shall be deemed revoked, provided that each
Stockholder delivering any such revoked ROFO Offer Notice shall have the right,
exercisable within 10 Business Days after the expiration of the ROFO Notice
Period, to match the highest Offer Price by delivering a revised ROFO Offer
Notice to the Initiator and the Company. If more than one Stockholder
delivers a ROFO Offer Notice (including pursuant to the matching right set forth
in the proviso to the preceding sentence) that is not deemed revoked, such
Stockholder (the “Purchasing
Stockholders”) shall be allocated its Pro Rata Portion of the Transfer
Shares, unless otherwise agreed by such Stockholders.
12
(d) Within
10 Business Days after the expiration of the ROFO Notice Period, the Initiator
shall indicate to each Purchasing Stockholder whether it has accepted such
Purchasing Stockholder’s offer by sending irrevocable written notice of such
acceptance to the Purchasing Stockholders and the Company, and, subject to the
third sentence of Section 3.4(c), the Purchasing Stockholder(s) shall then be
obligated to purchase, and the Initiator shall then be obligated to sell, the
Transferred Shares on the terms and conditions set forth in the Initiator Notice
at the Offer Price and on the other terms set forth in the Purchasing
Stockholder’s ROFO Offer Notice.
(e) If
the Initiator does not accept any offer(s) made by a Purchasing Stockholder, or
if a Purchasing Stockholder delivers a ROFO Offer Notice in accordance with
Section 3.4(c), the Initiator may, during the 120-day period following the
expiration of the ROFO Notice Period, and subject to Section 3.1(c) and the
remaining restrictions on Transfers contained in this Agreement, enter into an
agreement for the sale of all the Transfer Shares to any Person at a price not
less than the highest Offer Price set forth in any ROFO Offer Notice and on
other economic terms not more favorable in the aggregate to the purchaser than
those specified in the Initiator Notice (it being understood that “economic
terms” shall not include customary representations and warranties with respect
to the Initiator, the Transfer Shares or the Company and the Subsidiaries and
indemnities with respect thereto). If the Initiator does not enter into an
agreement for the sale of the Transfer Shares within such period or, if such
agreement is not consummated within 120 days of the execution thereof (which
period shall be extended solely to the extent needed to obtain any required
governmental approvals, provided that the Initiator shall have used all
reasonable best efforts to obtain such approval in a timely manner), the right
provided hereunder shall be deemed to be revived and such Transfer Shares shall
not be offered unless first reoffered to the other Stockholders in accordance
with this Section 3.4.
3.5 Other Agreements. No
Stockholder may enter into any agreement or arrangement with any person with
respect to the Common Stock on terms inconsistent with the provisions of this
Agreement.
3.6 Directors and Officers’
Liability Insurance. The Company will use best efforts to
obtain directors’ and officers’ liability insurance with an insurer in the
amount of $3,000,000.
3.7 Procedure for
Transfers.
(a) Closing. Any Transfer
of Shares pursuant to the provisions of this Agreement shall be completed at the
principal executive offices of the Company (or any other mutually agreeable
location) at such time and on the date determined for such Transfer (the “Closing”).
13
(b) Conduct of
Business. Each Stockholder hereby agrees to use its or his
best efforts to ensure that the business of the Company is carried on in the
ordinary course until the completion of any proposed transfer of
Shares.
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTS; CONFIDENTIALITY
4.1 Representations and
Warranties. Each Stockholder hereby represents and warrants to
the other Stockholders as follows:
(a) such
Stockholder is neither a party to, nor bound by, an agreement regarding the
ownership of the Shares, other than this Agreement; and
(b) such
Stockholder is not a party to, bound by or subject to any indenture, mortgage,
lease, agreement, instrument, charter or by law provision, statute, regulation,
order, judgment, decree or law which would be violated, contravened or breached
by, or under which any default would occur as a result of the execution and
delivery by such Stockholder of this Agreement, or the performance by such
Stockholder of any of the terms hereof.
ARTICLE
V.
MISCELLANEOUS
5.1 Information
Rights. The Company shall deliver to AGI, within fifteen (15)
Business Days of receipt of written request therefore or any later date
determined by AGI, such information relating to the financial condition,
business, operations, product development, orders, prospects or corporate
affairs of the Company as AGI may reasonably request.
5.2 Termination. Subject
to the early termination of any provision as a result of an amendment to this
Agreement agreed to by the Company and the Stockholders as provided under
Section 5.5, or termination of this Agreement as a result of the breach of this
Agreement by any party (including, without limitation, breach of Section 2.4),
this Agreement shall terminate upon the earlier to occur of: (a) the unanimous
agreement of the Company and all then-current Stockholders and (b) five (5)
years from the date hereof. In the event this Agreement expires five
years from the date hereof, the parties hereby agree to use reasonable best
efforts in negotiating an extension of this Agreement. Nothing in
this Agreement shall relieve any party from any liability for the breach of any
obligations set forth in this Agreement.
5.3 Publicity. Unless
otherwise required by applicable law or the rules of any stock exchange, no
Stockholder may issue any press release or otherwise make any public
announcement or comment on this Agreement without the prior consent of each of
the Stockholders.
5.4 Further Assurances.
Each party hereto shall do and perform or cause to be done and performed all
such further acts and things, and shall execute and deliver all such further
agreements, certificates, instruments and documents, as any other party hereto
reasonably may request in order to carry out the provisions of this Agreement
and the consummation of the transactions contemplated hereby.
14
5.5 Amendment; Waivers,
etc. This Agreement may be amended, and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if any such amendment, action or omission to act, has been
approved by each Stockholder. The failure of any party to enforce any
of the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
Any Stockholder may waive (in writing) the benefit of any provision of this
Agreement with respect to itself for any purpose. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the Stockholder granting such
waiver in any other respect or at any other time.
5.6 Assignment. Neither
this Agreement nor any right or obligation arising under this Agreement may be
assigned by any party without the prior written consent of the other
parties.
5.7 Binding Effect. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns.
5.8 No Third Party
Beneficiaries. Nothing in this Agreement shall confer any rights upon any
Person other than the parties hereto and each such party’s respective heirs,
successors and permitted assigns.
5.9 Notices. All notices,
requests, demands, waivers and other communications required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given if (a) delivered personally, (b) mailed, certified or registered mail
with postage prepaid, (c) sent by reputable overnight courier or (d) sent by fax
or e-mail, as follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof):
If to HB
and Ziria
c/o
Octavian Global Technologies Inc.
1-0 Xxxx
Xxxxxx Xxxxxxxxx Xxxxxx
XX0
0XX
Xxxxxx
Xxxxxxx
Attention:
Xxxxxx Xxxxxxxxxxxxxx
e-mail:
X.Xxxxxxxxxxxxxx@xxxxxxxxxxxxxx.xx.xx
If to the
Company:
1-0 Xxxx
Xxxxxx Xxxxxxxxx Xxxxxx
XX0
0XX
Xxxxxx
Xxxxxxx
Attention:
Xxxxx Xxxxxxx
e-mail: X.Xxxxxxx@xxxxxxxxxxxxxx.xx.xx
15
With a
copy to:
Xxxxxxx,
Xxxxxxxxx & Xxxxx LLP
420
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx,
XX 00000
Attention:
Xxxxxx Xxxxxxx
e-mail: xxxxxxxx@xxxxxx.xxx
If to
AGI:
Austrian Gaming Industries
GmbH
Wixxxx Xxxxx000
0000 Xxxxxxxxxxxxxxx
Xxxxxxx
Attention: Jens Halle
e-mail:
XXxxxx@xxxxxxxxx.xxx
With a
copy to:
Ellenoff Xxxxxxxx & Schole
LLP
150 Xxxx 00xx Xxxxxx,
00xx
Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
e-mail:
xxxxxxxx@xxxxxx.xxx
If to any
other Stockholder, to its address set forth on the signature page of such
Stockholder to this Agreement with a copy (which shall not constitute notice) to
any party so indicated thereon. All such notices, requests, demands, waivers and
other communications shall be deemed to have been received (w) if by personal
delivery, on the day delivered, (x) if by certified or registered mail, on the
fifth Business Day after the mailing thereof, (y) if by overnight courier, on
the day delivered, or (z) if by fax or e-mail, on the day
delivered.
5.10 Severability. Any
term or provision of this Agreement which is invalid, illegal or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability without rendering invalid,
illegal or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity, illegality or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated herein are consummated as
originally contemplated to the fullest extent possible.
5.11 Headings. The
headings contained in this Agreement are for purposes of convenience only and
shall not affect the meaning or interpretation of this Agreement.
5.12 Entire Agreement.
This Agreement, together with the exhibits hereto, constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter
hereof.
16
5.13 Governing Law;
Jurisdiction. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (regardless of the laws that
might otherwise govern under applicable principles or rules of conflicts of law
to the extent such principles or rules are not mandatorily applicable by statute
and would require the application of the laws of another
jurisdiction). Each party irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby (and agrees not to commence any
such suit, action or other proceeding except in such courts). Each party further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party’s respective address set forth or referred to in
Section 5.9 shall be effective service of process for any such suit, action or
other proceeding. Each party irrevocably and unconditionally waives any
objection to the laying of venue of any such suit, action or other proceeding in
(i) the Supreme Court of the State of New York, New York County, and (ii) the
United States District Court for the Southern District of New York, that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
5.14 Waiver of
Jury Trial. Each party
hereby waives, to the fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated
hereby.
5.15 Enforcement. Each
party hereto acknowledges that money damages would not be an adequate remedy in
the event that any of the covenants or agreements in this Agreement are not
performed in accordance with its terms, and it is therefore agreed that in
addition to and without limiting any other remedy or right it may have, the
non-breaching party will have the right to an injunction, temporary restraining
order or other equitable relief in any court of competent jurisdiction enjoining
any such breach and enforcing specifically the terms and provisions hereof. In
the event that the Company or one or more Stockholders shall file suit to
enforce the covenants contained in this Agreement (or obtain any other remedy in
respect of any breach thereof), the prevailing party in the suit shall be
entitled to recover, in addition to all other damages to which it may be
entitled, the costs incurred by such party in conducting the suit, including,
without limitation, reasonable attorney’s fees and expenses.
5.16 Counterparts; Facsimile
Signatures. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument. This Agreement may be executed by facsimile
signature(s).
**********************
17
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their
authorized representatives as of the date first above written.
|
/s/
Harmen Brennikmeijer
|
||||
|
|
Xxxxxx
Xxxxxxxxxxxxxx
|
| ZIRIA ENTERPRISES LIMITED | ||||
|
By:
/s/ Harmen Brennikmeijer
|
||||
|
|
Name: Xxxxxx
Xxxxxxxxxxxxxx
|
|||
|
|
Title: Authorized
Signatory
|
|
AUSTRIAN
GAMING INDUSTRIES GMBH
|
||||
|
By:
/s/ Jens Halle, Xxxxx Xxxxxxxxxxx
|
||||
|
|
Name:
Jens Halle, Xxxxx Xxxxxxxxxxx
|
|||
|
|
Title:
Managing Director
|
| OCTAVIAN GLOBAL TECHNOLOGIES, INC. | ||||
|
By:
/s/ Xxxxx Xxxxxxx
|
||||
|
|
Name:
Xxxxx Xxxxxxx
|
|||
|
|
Title:
President
|
18
