AGREEMENT AMONG

 

 

Exhibit 10.1

 

1.	PacificNet Games International Corporation

2.	Octavian International Limited

3.	Emperor Holdings Limited

4.	Ziria Enterprises Limited

5.	PacificNet Inc.

 

For the Acquisition of 100％ Shares of

THIS AGREEMENT is made on    December 7, 2007.

 

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements and covenants hereinafter set forth, and intending to be legally bound hereby, the parties to this Agreement hereby agree as follows:

“3 Month LIBOR Rate”   the rate of interest at which banks in the London wholesale money market will borrow funds from each other for three months;

"BVI”   The British Virgin Islands;

“Claim”  all actions, suits, claims, or legal, administrative, arbitration, governmental or other procedures or investigations in respect of damages, losses, settlement payments, in respect of deficiencies, liabilities, costs, expenses and claims suffered, sustained, incurred or required to be paid in relation to this Agreement,

"Completion"   completion of the sale and purchase of the Sale Shares to the Purchaser in accordance with Clause 5 of this Agreement;

"Completion Date" on or before 6 p.m. Beijing Time on January 31, 2008(or such later date as the parties shall agree in writing);

"Conditions"   the conditions contained or referred to in Clause 4;

"Consideration"   the consideration payable for the sale and purchase of the Sale Shares of the Holding Company pursuant to Clause 3;

“Escrow Shares”  2,330,000 PACT Shares with the restrictions on such shares arising under the US federal securities laws;

“Escrow Agent”   An agent designated by the Purchaser that holds the Escrow Shares.

"ESA"  Executive Services Agreement with Harmen Brenninkmeijer

“Group ” those companies listed in Schedule 2, Part 1

“Gaming Segmentation Group”    The group of  companies and business units created by combining PacificNet Games Limited, Take1 Technologies, Guangdong Poly Blue Express Communications Co. Ltd,, Octavian, and any other companies that are directly involved in the gaming sector.

"Hong Kong”   Hong Kong Special Administrative Region of the PRC;

“PACT Shares”   Common Stock of PACT;

“PRC”   People’s Republic of China;

“RMB”   Chinese RenMinBi

 

"Sale Shares"   the 10,000 ordinary shares of £1.71 each of the Holding Company (that represents 100% of the Holding Company) such shares being beneficially owned by and registered in the name of the Seller set out in Part II of Schedule 1;

“$”   United States dollars, all amounts stated in this Agreement shall be United States dollars unless specified otherwise;

“United States”    United States of America;

“US GAAP”   United States Generally Accepted Accounting Principles

"VWAP"   The average of the Volume Weighted Average Price of the PACT Shares for each day in the period seven days prior and seven days after the Completion Date.

 

The purchase consideration for 100% of the equity interest of Holding Company shall consist of (i) the issuance and release of up to 2,330,000 PACT Shares (the “Stock Payment”) and (ii) cash consideration of up to $18,900,000 to be paid upon the completion of certain net profit performance targets (“Earn-Out Amounts”) set forth in Clause 3.5 below, in accordance with the schedule commencing in 2009 through 2012 (the “Earn-Out Years”, being 1 January to 31 December of each year).

 

Purchaser shall issue the Escrow Shares to Seller or its nominee(s) in accordance with the following:

 

(a)

Within 30 days of the signing of this agreement, Purchaser shall deliver to the Escrow Agent (designated by the Purchaser) the Escrow Shares, to be held under the terms of an escrow agreement to be entered into with the Escrow Agent. The Share Release schedule for Stock Payment is illustrated in Table 1 in Clause 3.4 below.

(b)	In exchange, Seller will transfer to the Purchaser the Sale Shares at the Completion Date.

3.3

3.3.1

In the event that:

 

 

 

the Escrow Agreement shall provide that the Escrow Shares shall be returned to Purchaser and this Agreement shall cease to have effect immediately after that time (but without prejudice to the parties accrued rights and liabilities under this Agreement at the time it ceases to have effect).

 

 

 

Table 1:

 

FYE = Fiscal Year Ending

Release Date	Number of Shares to be Released	Release Criteria based on Accumulated Net Profit
3.4.1.As soon as possible after the Completion Date but in any event within 20 working days after Completion Date.	1,230,000 Escrow Shares	None
3.4.2.Within 30 days from the receipt of the Auditors certification of the Net Profit for the FYE Dec. 31, 2008. provided that the Purchaser and PACT and Company shall use their best endeavours to obtain such certification by 31 March 2009	1,100,000 Escrow Shares , 900,000 Escrow Shares , 600,000 Escrow Shares , 300,000 Escrow Shares	The Company has achieved Net Profit for the FYE Dec. 31, 2008 not less than USD$ 4,000,000 The Company has achieved Net Profit for the FYE Dec. 31. 2008 not less than USD$3,000,000 The Company has achieved Net Profit for the FYE Dec. 31. 2008 not less than USD$2,0000,000 . The Company has achieved Net Profit for the FYE Dec. 31. 2008 not less than USD$1,000,000 .
Total Number of PACT Shares to be released from the Escrow	Maximum 2,330,000 Escrow Shares	The Seller will be entitled to all of the Escrow Shares if the Company has achieved Net Profit for the Fiscal Years ending on Dec. 31, 2008 not less than USD$4,000,000.  Any Escrow Shares that have not been released pursuant to 3.4.2, shall remain in the Escrow and roll over for each successive year if not earned in the previous fiscal year up to FY2012 based on growth in Net Profit of the Company of 20% based on the Net Profit of the previous fiscal year.  In the event that this is achieved, all Escrow Shares still in Escrow shall be released to the Seller.

 

 

 

 

(a)

In respect of the first Earn-Out Year:

 

(a)

the purpose of Clause 3.5.3

in each case including Net Profit attributable to associates and joint ventures on the same basis as above but deducting all written off bad debts attributable to associates and joint ventures on the same basis as above.

 

If a Relevant Circumstance, as defined in the ESA, occurs at any time before the end of the last Earn-Out Year, then subject to the Listing Rules of the NASDAQ stock exchange and the United States Security Exchange Commission, and Clause 16.3 of the ESA, any prospective Earn-Out Amount (being the maximum amount payable) is immediately due and payable to the Seller by issue of cash consideration, subject to Clause 3.5.7.    If the Relevant Circumstance that triggers this Clause is a takeover or scheme of arrangement, the Purchaser must pay such amounts prior to the record date for such takeover or scheme of arrangement.   If the Relevant Circumstance that triggers this Clause is a separate listing (IPO) for the Gaming Segmentation Group, the Purchaser must pay such amounts to the equivalent in stock in the new listed company.

(d)

When an Earn-Out Amount is due and payable to the Seller:

the Purchaser shall, subject only to the remainder of this sub clause (d) (iii), use its available cash (if any) to pay the Earn-Out Amount (or any shortfall).  If the Purchaser does not, in the reasonable opinion of a majority of its board of directors, have any availablecash, the payment of the Earn-Out Amount (or outstanding part thereof) shall be deferred until such time as:

 

at which time the Earn-Out Amount (or outstanding part thereof) shall be immediately paid to the Seller.  The decision of the board of the Purchaser referred to in this paragraph must be reached on the basis of reasonable relevant considerations, such considerations to include the advice of Kabani (or any replacement auditors for the Purchaser and its group from time to time)and reasonable evidence of the same must be given to the Seller;

(D)

then by reducing the prospective Earn-Out Amount for the first Earn-Out Year (if any) by the lesser of the value of that prospective Earn-Out Amount and the amount of the Claim outstanding after reduction of the prospective Earn-Out Amount for the second Earn-Out Year in accordance with Clause 3.5.7(a)(i)(C) ;

 

 

 

 

 

 

 

 

 

(a)

conduct its Business in the ordinary course and consistent with past practices;

(b)

use its best efforts to maintain in full force and effect the existence of the Companies;

 

(g)

at all times comply with the provisions of all contracts, agreements and leases to which the Companies are a party, unless contested in good faith by appropriate proceedings with the consent of the Purchaser; and

(h)

to use reasonable endeavors to procure that the key employees of the Companies at the date of this Agreement remain and continue as employees after completion except in the event of a breach of contract by such employee(s);

(a)

modify their Memorandum or Articles of Incorporation or Bylaws;

(b)

cause or permit their liquidation or dissolution;

(d)

make a general assignment for the benefit of their creditors;

(g)

effect any stock split, reclassification or combination;

 

 

 

 

 

 

 

5.2

Upon Completion the Seller, the Company, and the Holding Company shall deliver to the Purchaser:

 

 

 

 

 

 

 

6.2

Undertakings

Each of the Companies will implement all the necessary financial control procedures, certification and representation letters, as required by PACT’s management, audit committee, independent auditor, the US SEC, and the USA, Hong Kong,China, and their respective governments.

7.	RESTRICTIONS

 

 

 

 

 

7.5

Nothing in this Clause 7 shall apply to:

 

 

The Seller will indemnify and will keep indemnified and save harmless the Purchaser (for itself and as trustee for the Companies) from and against any and all losses, claims, damages (including lost profits, consequential damages, interest, penalties, fines and monetary sanctions) liabilities and costs incurred or suffered by the Purchaser by reason of, resulting from, in connection with, or arising in any manner whatsoever out of the breach of any Warranties or covenants or the inaccuracy of any representation of the Seller or the Warrantor contained in this Agreement including, but not limited to, any diminution in the value of the assets of and any payment made or required to be made by the Purchaser or the Companies or any subsidiary and any costs and expenses incurred as a result of such breach provided that the indemnity contained in this clause 9 shall be without prejudice to any other rights and remedies available to the Purchaser hereunder, at law or in equity.

The costs incurred by each party in relation to due diligence including auditing and valuation appraisal costs, fairness opinion letter, legal costs, and expenses and other incidental costs and disbursements in relation to negotiations leading up to the purchase of the Sale Shares and to the preparation, execution and carrying into effect of this Agreement shall be borne by the party incurring the same..  The Company will pay the auditor of the Purchaser and PACT, Kabani & Company, Inc. (“Kabani”), one-third of the audit cost for the full audit of the Company's financials on each of the 10th day, 40th day, and 70th day after the Completion Date.  The Seller and the Company undertake to cooperate and assist Kabani and the Purchaser and PACT to complete and file the audit report in an 8-K form to be filed with the US SEC within 70 days after the Completion Date.

This Agreement represents the entire and complete agreement between the parties in relation to the subject matter hereof and supersedes any previous agreement whether written or oral in relation thereto.  No variations to this Agreement shall be effective unless made or confirmed in writing and signed by all the parties hereto.

In the event that any provision of this Agreement is held to be unenforceable, illegal or invalid by any court of competent jurisdiction, the validity, legality or enforceability of the remaining provisions shall not be affected nor shall any subsequent application of such provisions be affected. In lieu of any such invalid, illegal or unenforceable provision, the parties hereto intend that there shall be added as part of this Agreement a provision as similar in terms to such invalid, illegal or unenforceable provision as may be possible and be valid, legal and enforceable.

This Agreement may be executed in counterparts with the same force and effect as if executed on a single document and all such counterparts shall constitute one and the same instrument.

Any notice required to be given under this Agreement shall be sufficiently given if delivered in person, forwarded by registered post or sent by overnight international couriers or facsimile transmission to the relevant party at its address, or fax number set out below (or such other address as the addressee has by five days prior written notice specified to the other parties):

Attn:               Victor Tong, President

Floor 23rd, Tower A, TimeCourt,

No.6 Shuguangxili,

Chaoyang District Beijing,

China.

To the Company, the Holding Company, the Seller, and the Warrantor:

Attn:                    Mr. Harmen Brenninkmeijer

Octavian International Limited

Address: Bury House, 1-3 Bury Street, Guildford,

Surrey, GU2 4 AW

United Kingdom

Alternative Address:        No.1 Theofilous Georgiades, Agios Athanasios, Limassol, Cyprus

 

 

 

 

This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.  The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of the courts of Hong Kong.

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, each of the Purchaser, the Holding Company, the Company and the Seller have duly executed, or has caused to be duly executed by their respective officers thereunto duly authorized, this Agreement as of the date first written above.

THE PURCHASER:  PACIFICNET GAMES INTERNATIONAL CORPORATION

By:	/s/ Victor Tong
Name:	Victor Tong
Title:	President

THE COMPANY: OCTAVIAN INTERNATIONAL LIMITED

By:	/s/ Harmen Breninnkmeijer
Name:	Harmen Breninnkmeijer
Title:

THE HOLDING COMPANY: EMPEROR HOLDINGS LIMITED

By:	/s/ Harmen Breninnkmeijer
Name:	Harmen Breninnkmeijer
Title:	Director

THE SELLER AND WARRANTOR: ZIRIA ENTERPRISES LIMITED

By:	/s/ Harmen Breninnkmeijer
Name:	Harmen Breninnkmeijer
Title:	Director

PACIFICNET INC.

By:	/s/ Victor Tong
Name:	Victor Tong
Title:	President

SCHEDULE 1

Company Name:  Octavian International Limited

 

Name of Shareholder (1)	Percentage of Shares held by the Shareholder
Emperor Holdings Limited	100%

Company Name:   Emperor Holdings Limited

Name of Shareholder (1)	Number of Shares held by the Shareholder
Ziria Enterprises Limited	2

PART III:                       THE SALE SHARES

Sale Shares: 2   ordinary shares of the Holding Company

 

SCHEDULE 2

Group Companies

Name of Group Company	Place of Incorporation	Company Number	Registered Office
Casino Amusement Technology Supplies Limited	United Kingdom	04871087	19 – 20 Bourne Court Southend Road Woodford Green Essex 1G8 8HD United Kingdom
Octavian International (Europe) Limited	United Kingdom	05854626	Bury House 1-3 Bury Street Guildford Surrey GU2 4AW
Octavian International Limited	United Kingdom	4185988	19 – 20 Bourne Court Southend Road Woodford Green Essex 1G8 8HD United Kingdom
Octavian International (Latin America) Limited	United Kingdom	05854627	Bury House 1-3 Bury Street Guildford Surrey GU2 4AW
Octavian Latin America S A	Columbia	830083714-7	Cra. 9A No 99-02 Office 803 Bogota Colombia
Octavian Italy S.R.L.	Italy	03521410237	Via della Valverde 87 37100 Verona Italy
Argelink S.A.	Argentina	N/A	Tte.Gral. Peron  932 Piso 1 1038 Capital Federal Argentina
ISHIR Octavian Technologies Private Limited	India	N/A	21-B/1, Friends Colony (West) New Delhi 110065 India

 

Name of Group Company	Casino Amusement Technology Supplies Limited
Issued Share Capital	1,000 fully paid ordinary shares
Shares Held by Company	100% of the issued capital
Other Shareholders and number of Shares Held	Nil
Other Securities on Issue	Nil
Name of Group Company	Octavian International Limited
Issued Share Capital	1,020 fully paid ordinary shares
Shares Held by Company	100% of the issued capital
Other Shareholders and number of Shares Held	Nil
Other Securities on Issue	Nil
Name of Group Company	Octavian International (Europe) Limited
Issued Share Capital	1,000 fully paid ordinary shares
Shares Held by Company	100% of the issued capital
Other Shareholders and number of Shares Held	Nil
Other Securities on Issue	Nil
Name of Group Company	Octavian International (Latin America) Limited
Issued Share Capital	1,000 fully paid ordinary shares
Shares Held by Company	100% of the issued capital
Other Shareholders and number of Shares Held	Nil
Other Securities on Issue	Nil
Name of Group Company	Octavian Latin America S A
Issued Share Capital	2,000 ordinary shares paid to COL$50,000 and unpaid to COL$50,000 each
Name of Group Company	Schedule 25 ISHIR Octavian Technologies Private Limited
Issued Share Capital	Schedule 26 50,000 fully paid equity shares of 10 Rupees each
Shares Held by Company	Schedule 27 74.9% of the issued capital, being 37,450 fully paidequity shares of 10 Rupees each
Other Shareholders and number of Shares Held	Schedule 28 ISHIR Infotech Private Limited - 12,550 fully paid equity shares of 10 Rupees each
Other Securities on Issue	Schedule 29 Nil

 

 

 

 

Shares Held by Company	89.7% of the issued capital, being 1,794 partly paid ordinary shares
Other Shareholders and number of Shares Held	Jose Antonio Paternosto L – 200 partly paid ordinary shares   Federico Botero Giraldo – 2 partly paid ordinary shares Jorge Diaz Cardenas – 2 partly paid ordinary shares Javier Zarate Lara – 2 partly paid ordinary shares
Other Securities on Issue	Nil
Name of Group Company	Octavian Italy S.R.L.
Issued Share Capital	Euro 50,000 (issued and fully paid)
Shares Held by Company	50% of the issued capital, being one quota with a nominal value of Euro 25,000
Other Shareholders and number of Shares Held	Euro Gruppo Giochi S.R.L – one quota with a nominal value of Euro 25,000
Other Securities on Issue	Nil
Name of Group Company	Argelink S.A.
Issued Share Capital	12,000 fully paid ordinary shares
Shares Held by Company	50% of the issued capital, being 6,000 fully paid ordinary shares
Other Shareholders and number of Shares Held	Mediciones Urbanas S.A. – 6,000 fully paid ordinary shares
Other Securities on Issue	Nil
Name of Group Company	ISHIR Octavian Technologies Private Limited
Issued Share Capital	50,000 fully paid equity shares of 10 Rupees each
Shares Held by Company	74.9% of the issued capital, being 37,450 fully paidequity shares of 10 Rupees each
Other Shareholders and number of Shares Held	ISHIR Infotech Private Limited - 12,550 fully paid equity shares of 10 Rupees each
Other Securities on Issue	Nil

 

Name of Group Company	Octavian International Limited
Directors	Harmen Brenninkmeijer Hans Zeidler
Secretary	Jacob Katz (in process of being replaced)
Auditor	Grant Thornton UK LLP
Name of Group Company	Casino Amusement Technology Supplies Limited
Directors	Harmen Brenninkmeijer Hans Zeidler Joel Katz (in process of being replaced)
Secretary	FS Secretarial Limited
Auditor	Grant Thornton UK LLP
Name of Group Company	Octavian International (Europe) Limited
Directors	Hans Zeidler
Secretary	Bruce Smith
Auditor	Grant Thornton UK LLP
Name of Group Company	Octavian International (Latin America) Limited
Directors	Hans Zeidler
Secretary	Bruce Smith
Auditor	Grant Thornton UK LLP
Name of Group Company	Octavian Latin America S A
Directors	Federico Botero Giraldo
Secretary	July Torres
Auditor	Myriam H De Campo

Name of Group Company	Octavian Italy S.R.L.
Directors	Mauro Crivellente
Secretary	EGG personnel
Auditor	Not required as to small under Italian civil codes
Name of Group Company	Argelink S.A.
Directors	Fabian Luis Grous Paternostro Jose Antonio
Secretary	Norma Ubhaches
Auditor	Raul Orzanco
Name of Group Company	ISHIR Octavian Technologies Private Limited
Directors	Sidharth Swarup Rishi Khanna Alistair Trond Borthwick Colin John McRae
Secretary	Not yet appointed
Auditor	Dewan P.N. Chopra

 

 

 

Dated this    th day of         .

 

Company Name:

Company Address:

This Confidentiality and Non-Circumvent Agreement (hereby referred to as the Agreement) is made effective on the abovementioned date (the Effective Date) between the abovementioned Companies and Pacificnet Games International Corporation and PacificNet Inc., with an office located at Floor 23rd, Tower A, TimeCourt, No.6 Shuguangxili, Chaoyang District Beijing, China. (hereby know as the Parties).

It is agreed and Understood that PacificNet own certain confidential and proprietary information that the Company, from time to time, may need or may have acquired in order to explore business or investment opportunity of mutual interest.

 

Confidential Information means any information and/or material which is proprietary to PacificNet, whether or not owned or developed by PacificNet, which is not generally know other than by PacificNet, and which either Party may obtain through any direct or indirect contact with the other Party. Confidential Information will be conspicuously identified when, or soon after, it is originally disclosed, as “Confidential” or “Proprietary”.

 

Confidential Information includes without limitation, business records and plans, customer and partner lists, investor and investee lists, bank and lending lists, trade secrets, pricing structures, business sources, computer programs,

names and expertise of employees and consultant and other technical, business, financial, customer and product development plans, forecasts, strategies and information. Confidential information does not include: matters of public knowledge; information rightfully received by the Company from a third Party without a duty of confidentiality; information independently developed by either Party; information disclosed by operation of law; information disclosed by PacificNet with the prior written consent of the Company; and any other information that PacificNet agrees in writing is not confidential.

 

The Company understands and acknowledges that Confidential Information has been developed or obtained by PacificNet by the investment of significant time, effort and expense, and that the Confidential Information is a valuable, special and unique asset of the respective Parties.  Therefore, the Company agree to hold in confidence and not to disclose the Confidential Information to any person, employee or entity [including their affiliates, subsidiaries, stockholders, partners, trading partners and other associated organizations (herein referred to as affiliates)][BRACKETS?] without the prior written consent of the other Party that owns the Confidential Information for a period of three (3) years from the Effective Date hereof unless Parties enter into a Relationship, [NEED TO DEFINE] in which case, this Agreement remains in effect for the term of the partnering agreement and after the termination of said partnering agreement or when all Confidential Information has been returned to its owner, whichever occur first.

 

Immediately upon the earlier of (i) the written request of the disclosing party or (ii) the termination of this Agreement, the receiving party will return to the disclosing party all Confidential Information of the disclosing party and all documents or media containing any such Confidential Information and any and all copies or extracts thereof, which remain the property of the disclosing party at all times.

Both Parties agree that neither Party shall circumvent the other Party with regards to any transaction resulting from the disclosure of Confidential Information from one Party to the other Party. Specifically, but without limitation, the Company will not approach PacificNet’s business partner(s), potential investor(s) and investee(s) in circumvention of PacificNet.  Each Party undertake not to directly contact deal with transact Business with or otherwise be involved with any Corporation, Partnership, Proprietorship, Trust, Individual, Affiliate, or other Entity introduced by either Party without the specific written permission of the Introducing Party.  In the event of circumvention of this agreement by either party, directly or indirectly, the circumvented party shall be entitled to legal monetary penalty equal to the maximum potential investment return and service it should realize from such a transaction plus any and all expenses, including, but nut limited to, all legal costs and expenses to recover the lost revenue.

 

This Agreement sets forth the entire understanding of the Parties regarding confidentiality and non-circumvention.  Any amendments must be in writing and signed by both Parties.  Each Party shall take reasonable steps to ensure that their Employees, Agents, Representatives, Officers, Independent Contractors Shareholders, Principals, Affiliates, and other Third Parties– also – abide by the provisions of this Agreement.  This Agreement shall not be assignable by either Party, and neither Party may delegate its duties under this Agreement, without prior written consent of the other Party.  This Agreement shall remain in effect until canceled in writing by both Parties. This agreement creates no obligation to purchase, sell, develop, research or disclose anything. It grants no license or right to use proprietary technology. It creates no agency or partnership. This agreement is governed by Minnesota and the US law. Injunctive relief can be granted for any breach of the agreement, as money damages would not cure the harm from the breach. It supersedes all prior nondisclosure or similar agreements between the parties as to the Proprietary Information disclosed after the Effective Date.  It binds the parties, their heirs, successors, subsidiaries, associates, affiliates, and assignees. Any controversy or claim arising out of this Agreement, which could not be settled amicably between the Parties themselves, shall be decided by arbitration in accordance with the International Chamber of Commerce (ICC) Rules of Arbitration and the Non-Circumvention and Non-Disclosure Laws and Provisions, in the nearest Regional ICC Court of Administration.  In any proceedings to interpret or enforce the agreement, the prevailing party shall receive from the other party costs and reasonable attorney fees, including costs and fees incurred in preparation therefore and on appeal therefrom.

THE PURCHASER:  Company A   and PacificNet Inc.

 

By:	_______________________________________
Name:	Victor Tong
Title:	President

The COMPANY:

By:	_________________________________________
Name:
Title: