SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 16, 1999
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Playstar Wyoming Holding Corp.
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(Exact name of Registrant as Specified in its Charter)
Antigua 000-24929 52-209-8787
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
The Dollar Building, Nevis Street, Top Floor, St. John's, Antigua
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (268) 562-0075
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
Pursuant to the terms and conditions set forth in the Master Agreement, dated as
of January 2, 1999, by and among Playstar Wyoming Holding Corp. (the "Company"),
Cyberstation Limited, a corporation organized and existing under the laws of St.
Kitts ("Cyberstation") and Joseph Alves and Alicia Da Conceicao (the "Master
Agreement"), on February 16, 1999, the Company completed a transaction whereby
the Company issued 5,000,000 of its ordinary shares, valued at U.S. $.31 per
share, to Cyberstation in consideration for Cyberstation's grant to Players
Limited, a wholly-owned Antigua subsidiary of the Company ("Playstar Sub"), of
an exclusive perpetual royalty-free license to use, in certain designated
territories, Cyberstation's intellectual property and company software, either
owned at the date of closing or acquired or developed by Cyberstation
thereafter.
As part of the foregoing transaction, the Company and Cyberstation consummated
the following transactions: (i) pursuant to a Subscription Agreement, dated as
of January 2, 1999 (the "Subscription Agreement"), by and between the Company
and Cyberstation Computers & Support Inc., a corporation organized and existing
under the laws of Ontario ("Cyberstation Computers"), the Company purchased 400
common shares of Cyberstation Computers and, in connection therewith, the
Company entered into a Shareholder Agreement, dated as of February 16, 1999,
with Cyberstation Computers and each of Joseph Alves and Alicia Da Conceicao
(the "Shareholder Agreement"); (ii) Cyberstation entered into License
Agreements, dated as of February 16, 1999, with each of Cyberstation Computers
and Playstar Sub; (iii) Cyberstation transferred to the Company 50% of the
issued and outstanding shares of Net Engine St. Kitts Limited, a corporation
organized and existing under the laws of St. Kitts, (iv) Cyberstation granted to
Playstar Sub an option to acquire certain software programs and systems
(including source codes) developed by Cyberstation for use in marketing and
administration of casino gaming on the internet and (v) Cyberstation granted to
Playstar Sub an option, expiring on December 31, 2009, to purchase for a nominal
amount, all of the issued and outstanding shares of capital stock of Dreamplay
Research Corporation, a corporation organized and existing under the laws of
Ontario.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, EXHIBITS.
(c) EXHIBITS
10.1 Master Agreement, dated as of January 2, 1999, by and among the Company,
Cyberstation, Joseph Alves and Alicia Da Conceicao.
10.2 Form of Playstar Licence Agreement, dated as of February 16, 1999, by and
between Cyberstation and the Playstar Sub.
10.3 Form of Dreamplay Option Agreement, dated as of February 16, 1999, by and
among Cyberstation, the Playstar Sub and Dreamplay Research Corporation.
10.4 Form of Management Services Agreement, dated as of February 16, 1999, by
and between the Company and Cyberstation.
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10.5 Form of Cyberstation Licence Agreement, dated as of February 16, 1999, by
and between Cyberstation and Cyberstation Computers.
10.6 Subscription Agreement, dated as of January 2, 1999, by and between the
Company and Cyberstation Computers.
10.7 Shareholder Agreement, dated as of February 16, 1999, by and among the
Company, Cyberstation Computers and Joseph Alves and Alicia Da Conceicao.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
PLAYSTAR WYOMING HOLDING CORP.
Date: April 15, 1999 By: /s/ WILLIAM F.E. TUCKER
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William F.E. Tucker
SCHEDULE 1.1
DESIGNATED TERRITORY
Andorra
Anguilla
Antigua
Bahamas
Bahrein
Barbados
Belize
Bermuda
British Virgin Islands
Campione
Cayman Islands
CI - Guernsey
CI - Jersey
Cook Islands
Costa Rica
Cyprus
Gibraltar
Greece
Isle of Man
Jamaica
Liberia
Liechtenstein
Luxembourg
Macao
Malta
Monaco
Montserrat
Nauru
Netherland Antilles
Panama
St. Kitts & Nevis
Tonga
Turks & Caicos
Trinidad & Tobago
Vanatu
Vatican
Western Samoa
SCHEDULE 4.1(8)(a)
LIST OF COMPANY SOFTWARE
Cash Engine
Mail Engine
Post Engine
MP3 Engine
Bank Engine
Casino Module
EXHIBIT 10.1
DATED AS OF THE 2ND DAY OF JANUARY, 1999
PLAYSTAR WYOMING HOLDING CORP.
- AND -
CYBERSTATION LIMITED
- AND -
JOSEPH ALVES AND ALICIA DA CONCEICAO
MASTER AGREEMENT
TABLE OF CONTENTS
PAGE
MASTER AGREEMENT
THIS AGREEMENT made as of the 2nd day of January, 1999
AMONG:
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PLAYSTAR WYOMING HOLDING CORP., a corporation organized and
existing under the laws of Antigua
("PlayStar")
- and -
CYBERSTATION LIMITED, a corporation organized and existing
under the laws of St. Kitts
(the "Company")
- and -
JOSEPH ALVES and ALICIA DA CONCEICAO, both of the Province of
Ontario and being kep person employees of the Company
("Alves" and "Conceicao", respectively)
WHEREAS the Company is engaged in the business of developing
proprietary software, systems and services used to provide electronic commerce
solutions that enable businesses to sell products and services on the Internet;
AND WHEREAS the Company is the sole and exclusive owner of all
rights, titles and interest (including all patents, copyrights, trademarks,
service marks, trade names and trade secret rights) and to all software,
documentation, computer programs and the like comprising the intellectual
property and technology developed and used in the Business;
AND WHEREAS the Company has agreed to grant to PlayStar Sub an
exclusive perpetual royalty-free license to use the proprietary software and
intellectual property owned by the Company upon the terms set out in the
PlayStar License Agreement attached hereto as Exhibit A;
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
. Where used herein or in any amendment or supplement hereof, unless the context
otherwise requires, the words and phrases with initial capitals set forth below
will have the meanings so set forth therein.
"AFFILIATE" of any Person means any Person directly or
indirectly controlling, controlled by, or under direct or
indirect common control with, such Person;
"AGREEMENT" means this Agreement, including the Exhibits and
Schedules to this Agreement as amended or supplemented from
time to time; and the expressions "ARTICLE", "SECTION", or
"SUBSECTION", "SCHEDULE" and "EXHIBIT" followed by a number or
letter means and refers to the specified Article, section,
subsection, Schedule or Exhibit of this Agreement;
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"APPLICABLE LAW" means, with respect to any Person, property,
transaction, event or other matter, any law relating or
applicable to such Person, property, transaction, event or
other matter. Applicable law also includes, where appropriate,
any interpretation of the law (or any part) by any Person
having jurisdiction over it, or charged with its
administration or interpretation;
"ASSETS" means all properties, assets, interests and rights of
the Company including the following:
(a) the Software and the Intellectual Property;
(b) the Contracts;
(c) the License and Permits; and
(d) the Books and Records;
"BOOKS AND RECORDS" means all books, records, files and papers
Related to the Business or related to the Company including,
without limitation, drawings, engineering information,
computer programs (including source code), software programs,
manuals and data, sales and advertising materials, sales and
purchases correspondence, trade association files, research
and development records and other records, and all copies and
recordings of the foregoing;
"BUSINESS" means the business carried on by the Company at the
Closing Date which primarily involves the business of
developing proprietary software, systems and services used to
provide electronic commerce solutions that enable businesses
to sell products and services on the Internet;
"BUSINESS DAY" means any day except Saturday, Sunday or any
day on which banks are generally not open for business in the
City of Toronto;
"CANADIAN DOLLARS" means the lawful currency of Canada;
"CASINO MODULE" means the software programs and systems
(including source codes) developed by the Company for use in
marketing and administration of casino gaming on the Internet;
"CLAIM" has the meaning ascribed thereto in Section 5.1;
"CLOSING" means completion of the transactions provided for in
this Agreement;
"CLOSING DATE" means February 16, 1999 or such earlier or
later date as may be agreed upon in writing by the Parties;
"CLOSING TIME" means the time of closing on the Closing Date
provided for in Section 9.1; "COMPANY" means Cyberstation
Limited;
"COMPANY INTELLECTUAL PROPERTY" means all Intellectual
Property owned by the Company, excluding the Company Software;
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"COMPANY SOFTWARE" means all Software, the title to which is
owned by the Company including the Software identified in
Schedule 4.1(8)(a);
"CONFIDENTIAL INFORMATION" has the meaning ascribed thereto in
Section 6.3(4);
"CONSENTS AND APPROVALS" means all consents and approvals
required to be obtained in connection with the execution and
delivery of this Agreement and the completion of the
transactions contemplated by this Agreement other than any
consents and approvals required to be obtained by PlayStar in
connection with the issuance and listing of the Consideration
Shares;
"CONSIDERATION SHARES" has the meaning ascribed thereto in
Section 3.1;
"CYBERSTATION" means Cyberstation Computers & Support Inc., an
Ontario Corporation;
"CYBERSTATION LICENSE AGREEMENT" means the license agreement
to be entered into between the Company, as licensor, and
Cyberstation, as licensee, which shall be substantially in the
form of Exhibit D;
"DESIGNATED TERRITORY" means the countries and geographic
territories identified in Schedule 1.1;
"DIRECT CLAIM" has the meaning ascribed thereto in Section
5.3;
"DREAMPLAY" means DreamPlay Research Corporation, an Ontario
corporation;
"DREAMPLAY OPTION AGREEMENT" means the option agreement to be
entered into between the Company, as optionor, and PlayStar
Sub, as optionee, which will be substantially in the form of
Exhibit B hereto pursuant to which the Company will grant to
PlayStar Sub an option to acquire all of the issued and
outstanding shares of DreamPlay at a total price of $100 at
any time on or before December 31, 2009;
"GAAP" means those accounting principles which are recognized
as being generally accepted in Canada from time to time,
consistently applied;
"HARMFUL CODE" means any code or programming instructions that
are constructed with the ability to damage, interfere with, or
otherwise adversely affect computer programs, data files or
hardware without consent or intent of the computer user. This
definition includes, but is not limited to, self-replicating
and self-propagating programming instructions called viruses
or worms;
"INDEMNIFIED PARTY" means, in relation to an Indemnifying
Party, the Party to this Agreement that may be indemnified by
such Indemnifying Party under Article 5;
"INDEMNIFYING PARTY" means, in relation to an Indemnified
Party, the Party to this Agreement that has agreed to
indemnify that Indemnified Party under Article 5;
"INTELLECTUAL PROPERTY" means all rights of the Company to and
interests in:
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(a) all business and trade names, designs, logos and
service marks Related to the Business, including
"Cash Engine", "Mail Engine" "Post Engine", "MP3
Engine" and "Bank Engine";
(b) all inventions, patents, patent rights and patent
applications (including all reissues, divisions,
continuations, continuations-in-part and extensions
of any patent or patent application), industrial
designs and applications for registration of
industrial designs Related to the Business;
(c) all copyrights and trade-marks (whether used with
wares or services and including the goodwill
attaching to such trade-marks), registrations and
applications for trade-marks and copyrights (and all
future income from such trade-marks and copyrights)
Related to the Business;
(d) all processes, data, trade secrets, designs,
know-how, technologies in development, website
domains, domain names and related software, user
interfaces, source code, object code, algorithms,
architecture, structure, display screens, layouts,
development tools, instructions, templates,
evaluation software and hardware, formulae and
information, manufacturing, engineering and other
drawings and manuals, technology, processes, designs,
lab journals, note books, data, blueprints, research
and development reports, agency agreements, technical
information, technical assistance, engineering data,
design and engineering specifications, and similar
material recording or evidencing expertise or
information Related to the Business;
(e) all other intellectual and industrial property rights
throughout the world Related to the Business;
(f) all licences to the Company of the intellectual
property listed in items (a) to (e) above;
(g) all future income and proceeds from any of the
intellectual property listed in items (a) to (e)
above and the licences listed in item (f) above; and
(h) all rights to damages and profits by reason of the
infringement of any of the intellectual property
listed in items (a) to (e) above;
"INTERIM PERIOD" means the period from the date of this
Agreement to the Closing;
"LAW" means any law, rule, statute, regulation, order,
judgment, decree, treaty or other requirement having the force
of law;
"LICENSED SOFTWARE" means all Software other than the Company
Software;
"LICENSES AND PERMITS" means all licenses, permits, filings,
authorizations, approvals or indicia of authority necessary
for the conduct of the Business;
"LIEN" means any lien, mortgage, charge, hypothec, pledge,
security interest, prior assignment, option, warrant, lease,
sublease, right to possession, encumbrance, claim, right or
restriction which affects, by way of a conflicting ownership
interest or otherwise, the right, title or interest in or to
any particular property;
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"MANAGEMENT SERVICES AGREEMENT" means the management services
agreement to be entered into between PlayStar, as employer,
and Cyberstation Limited, a St. Kitts company, as service
provider, which shall be substantially in the form of Exhibit
C;
"NASDAQ" means National Association of Securities Dealers
Automated Quotation System;
"NET ENGINE" means Net Engine St. Kitts Limited, a St. Kitts
corporation of which Alves and Conceicao own at least 50% of
the issued shares;
"NOTICES" means the notices required to be given to any Person
under Applicable Law or pursuant to any contract or other
obligation to which the Company is a Party or by which the
Company is bound or which is applicable to any of the Assets,
in connection with the execution and delivery of this
Agreement or the completion of the transactions contemplated
by this Agreement;
"ORDINARY SHARES OF PLAYSTAR" means ordinary shares, par value
US$0.0001, in the capital of PlayStar;
"PARTY" means a party to this Agreement and any reference to a
party includes its successors and permitted assigns; and
"PARTIES" means every Party;
"PERSON" is to be broadly interpreted and to include an
individual, a corporation, a partnership, a trustee or any
unincorporated organization and words importing persons have a
similar meaning;
"PLAYSTAR LICENSE AGREEMENT" means the license agreement to be
entered into between the Company, as licensor, and PlayStar
Sub, as licensee, which shall be substantially in the form of
Exhibit A hereto;
"RELATED TO THE BUSINESS" means, directly or indirectly, used
in, arising from, or relating in any manner to the Business;
"REPRESENTATIVES" has the meaning ascribed thereto in Section
6.2(4)(b);
"SECURITIES ACT", "SEC", and "REGULATION S" have the
respective meanings assigned thereto in Section 3.5;
"SOFTWARE" means all the Company's rights and interests in all
computer software, including without limitation, the computer
software shown in Schedule 4.1(8)(a) whether in source code,
object code, machine readable or human readable forms, and
includes all updates, upgrades, improvements and modifications
thereto and all associated documentation and technical
information;
"TAX" or "TAXES"means all taxes, charges, fees, levies,
imposts and other assessments, including all income, sales,
use, goods and services, value added, capital, capital gains,
net worth, transfer, profits, withholding, payroll, employer
health, excise, real property and personal property taxes, and
any other taxes, custom duties, fees, assessments or similar
charges in the nature of a tax, including Canada Pension Plan
and provincial pension plan contributions, unemployment
insurance and employment
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insurance payments and workers compensation premiums, together
with any interest, fines and penalties, imposed by any
governmental agency (federal, provincial or municipal),
and whether or not disputed;
"THIRD PARTY CLAIM" has the meaning ascribed thereto in
Section 5.3; and
"YEAR 2000 COMPLIANT" has the meaning ascribed thereto in
Section 4.1(14).
. The division of this Agreement into Articles and Sections, the insertion of
headings and the provision of any table of contents are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
. Unless the context requires otherwise, words importing the singular include
the plural and vice versa and words importing gender include all genders.
. If any payment is required to be made or other action is required to be taken
pursuant to this Agreement on a day which is not a Business Day, then such
payment or action shall be made or taken on the next Business Day.
. Except as otherwise expressly provided in this Agreement:
(a) unless otherwise specified, all dollar amounts
referred to in this Agreement are stated in Canadian
Dollars; and
(b) any payment contemplated by this Agreement shall be
made by cash, certified cheque or any other method
that provides immediately available funds.
. Any reference in this Agreement to any statute or any section thereof shall,
unless otherwise expressly stated, be deemed to be a reference to such statute
or section as amended, restated or re-enacted from time to time.
. The following schedules form part of this Agreement:
Schedule 1.1 - Designated Territories
Schedule 4.1(8)(a) - List of Company Software
. The following exhibits form part of this Agreement:
Exhibit A - Form of PlayStar License Agreement
Exhibit B - Form of DreamPlay Option Agreement
Exhibit C - Form of Management Services Agreement
Exhibit D - Form of Cyberstation License Agreement
. At the Closing, the Company will grant to PlayStar Sub an option to acquire
the Casino Module for a purchase price of $100.00, such option to become
effective at such time as the Management Services Agreement is terminated.
. At the Closing, the Company shall enter into the DreamPlay Option Agreement
pursuant to which the Company shall grant to PlayStar Sub an irrevocable option
to purchase all of the issued and outstanding shares in the capital of DreamPlay
for a total purchase price of $100, at any time on or before December 31, 2009.
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. At the Closing, the Company shall transfer, or cause to be transferred to
PlayStar, 50% of the issued and outstanding shares of Net Engine.
. Subject to the terms and conditions of this Agreement, at the Closing, the
Company and PlayStar Sub shall enter into the PlayStar License Agreement which
shall be substantially in the form of Exhibit A hereto with PlayStar Sub.
Pursuant to the PlayStar License Agreement, the Company will grant to PlayStar
Sub an exclusive perpetual royalty-free license to use, in the Designated
Territory, all Company Intellectual Property and Company Software now owned or
hereafter acquired or developed by the Company in consideration for the issue to
the Company at Closing of 5,000,000 Ordinary Shares of PlayStar (the
"Consideration Shares"). For the purposes of this Agreement, each Consideration
Share shall be valued at US$0.31, being the closing market price of the Ordinary
Shares of PlayStar on NASDAQ on December 31, 1998. Concurrent with the execution
of the PlayStar License Agreement, the Company shall enter into an exclusive
perpetual royalty-free license agreement substantially in the form of Exhibit D
hereto which shall provide Cyberstation, or a wholly-owned subsidiary of
Cyberstation, with a similar license in respect of all territory not covered by
the Designated Territory.
(1)The Company acknowledges that the Consideration Shares have not been
registered with the Securities Exchange Commission (the "SEC") under the UNITED
STATES SECURITIES ACT OF 1933, as amended (the "Securities Act"), or the
securities laws of any state or foreign country. The Consideration Shares are
being issued pursuant to an exemption from registration under Regulation S
("Regulation S") promulgated under the Securities Act. The securities may not be
offered, sold or otherwise transferred in the United States or to US Persons (as
such term is defined in Regulation S) unless the securities are registered under
the Securities Act and applicable state and foreign laws, or such offers sales
and transfers are made pursuant to available exemption from the requirements of
these laws. In view of the foregoing restrictions, the Company, Alves and
Conceicao fully understand and agree that they must bear the economic risk of
such Person's acquisition for an indefinite period of time unless the securities
are subsequently registered under the Securities Act and under the applicable
securities laws of such states or unless an exemption from such registration is
available in the opinion of counsel for the holder, which counsel and opinion
are reasonably satisfactory to counsel to PlayStar. The Company is acquiring the
Consideration Shares for the Company's own account, for investment and not with
a view to resale or distribution except in compliance with the Securities Act.
(2) Neither the Company nor any Affiliate of the Company is a United
States Person (as defined in Regulation S);
(3) The Company is aware that an exemption from the registration
requirements of the Securities Act pursuant to Rule 144 promulgated thereunder
is not presently available; that PlayStar has no obligation to make available an
exemption from the registration requirements pursuant to such Rule 144 or any
successor rule for resale of the Consideration Shares; and that even if an
exemption under Rule 144 were available, Rule 144 permits only routine sales of
securities in limited amounts in accordance with the terms and conditions of
such Rule 144.
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(4) In accordance with the foregoing, the Company agrees to the placement
of a legend on any certificate or other document evidencing the Consideration
Shares, stating that they have not been registered under the Securities Act (and
a stop transfer order may be placed with respect thereto).
. Each of the Company, Alves and Conceicao represents and warrants as follows
and acknowledges that PlayStar and PlayStar are relying on such representations
and warranties as a material inducement to entering into this Agreement and
completing the transactions contemplated by this Agreement:
(1) INCORPORATION AND POWER. The Company is a corporation incorporated,
validly subsisting and in good standing under the laws of St. Kitts and has full
power and authority to own its Assets and to carry on the Business as presently
conducted by it. The Company is duly qualified to do business and is in good
standing in all other jurisdictions where the conduct of its business so
requires. No act or proceeding has been taken by or against the Company in
connection with the dissolution, liquidation, winding up, bankruptcy or
reorganization of the Company.
(2) DUE AUTHORIZATION. The Company has the corporate power, authority and
capacity to enter into this Agreement and all other agreements and instruments
to be executed by it as contemplated by this Agreement and to carry out its
obligations under this Agreement and such other agreements and instruments. The
execution and delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated by this
Agreement and such other agreements and instruments have been duly authorized by
all necessary corporate action on the part of the Company, its directors and its
shareholders.
(3) ENFORCEABILITY OF OBLIGATIONS. This Agreement constitutes a valid and
binding obligation of the Company enforceable against it in accordance with its
terms subject, however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of the rights
of creditors or others and to the extent that equitable remedies such as
specific performance and injunctions are only available in the discretion of the
court from which they are sought. The Company is not an insolvent Person within
the meaning of the BANKRUPTCY AND INSOLVENCY ACT (Canada) and will not become an
insolvent Person as a result of the Closing.
(4) ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement by the Company and the completion (with any
required Consents and Approvals and Notices) of the transactions contemplated by
this Agreement do not and will not result in or constitute any of the following:
(a) a default, breach or violation or an event that, with
notice or lapse of time or both, would be a default,
breach or violation of any of the terms, conditions
or provisions of the articles or by-laws of the
Company or of any Contract or any of the Licenses and
Permits;
(b) an event which, pursuant to the terms of any Contract
or any of the Licenses and Permits, causes any right
or interest of the Company to come to an end or be
amended in any way that is detrimental to the
Business or entitles any other Person to terminate or
amend any such right or interest;
(c) the creation or imposition of any Lien on any Asset;
or
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(d) the violation of any Applicable Law applicable to or
affecting the Company which is Related to the
Business.
(5) CORPORATE RECORDS. The minute books of each of the Company contain
true, correct and complete copies of its articles, its by-laws, the minutes of
every meeting of its board of directors and every committee thereof and of its
shareholders and every written resolution of its directors and shareholders.
(6) BANKRUPTCY. The Company is not an insolvent person within the meaning
of the BANKRUPTCY AND INSOLVENCY ACT (Canada) nor has made an assignment in
favour of its creditors nor a proposal in bankruptcy to its creditors or any
class thereof nor had any petition for a receiving order presented in respect of
it. The Company has not initiated proceedings with respect to a compromise or
arrangement with its creditors or for its winding up, liquidation or
dissolution. No receiver has been appointed in respect of the Company or any of
the Assets and no execution or distress has been levied upon any of the Assets.
(7) TITLE TO ASSETS. The Company have good and marketable title to all the
Assets, free and clear of any and all Liens. The Assets are sufficient to permit
the continued operation of the Business in substantially the same manner as
conducted in the year ended on the date of this Agreement. There is no
agreement, option or other right or privilege outstanding in favour of any
Person for the purchase from the Company of the Business or of any of the Assets
out of the ordinary course of business.
(8) SOFTWARE
(a) Schedule 4.1(8)(a) lists all Company Software. The
Company is the exclusive owner of all right, title
and interest in and to the Company Software, and the
Company has the right to use, execute, reproduce,
display, advertise, modify, prepare or have prepared
derivative works based upon, and has the right to
distribute, exploit, sell, transfer, license, or
lease, including the right to transfer and assign to
PlayStar free and clear of any Liens, all versions
and releases of the Company Software. The Company is
in possession of (i) the source code and object code
for all Company Software; and (ii) all other
documentation and know-how required for the effective
use of the Company Software.
(b) No person other than the Company has any right or
interest of any kind or nature in or with respect to
the Company Software or any portion thereof including
any right to sell, license, lease, transfer,
distribute use or otherwise exploit the Company
Software or any portion thereof. There has been no
disclosure of the Company Software other than through
the licensing of object code versions of the Company
Software.
(c) The Company is in possession of all documentation,
technical specifications and know-how required to
permit the Company to understand, operate, maintain
and support the Company Software and use the Company
Software as currently used in the Business or as
offered or represented to the Company's customers or
potential customers.
(d) To the knowledge of the Company, the Company Software
is free from material programming errors and defects
of workmanship and materials when maintained and
operated in accordance with the Company's
documentation and user guides.
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(e) All Software sold by the Company has contained
appropriate proprietary legends and copyright notices
displayed in or on such Software. In no instance has
the eligibility of the Company Software for
protection under applicable copyright law been
forfeited to the public domain by omission of any
required notice or any other action.
(f) No saleable version of the Software contains any
disabling mechanism or protection feature designed to
prevent its use. The Software contains no Harmful
Code.
(9) INTELLECTUAL PROPERTY
(a) The Company is the sole registered and beneficial
owner of the Company Intellectual Property and has
the right to use and assign the use of the Company
Intellectual Property and to transfer the Company
Intellectual Property to PlayStar.
(b) The Company is the only owner of the Company
Intellectual Property and is entitled to the
exclusive and uninterrupted use of such Company
Intellectual Property without payment of any royalty
or other fees and has the right to bring actions for
infringement of the Company Intellectual Property. No
past or present shareholder, officer, director or
employee of the Company or any third party has any
right, title or interest in any of the Company
Intellectual Property or Company Software, and all
such Persons have waived their moral rights in any
copyright works within the Company Intellectual
Property and the Company Software.
(c) There are no outstanding rights, or licences or
permissions granted by the Company to any Person or
entity to use, sell, license, lease, transfer or
otherwise exploit the Intellectual Property.
(d) There are no outstanding rights, licenses or
permissions granted to the Company by any other
Person to use any part of the Intellectual Property
owned by other Persons.
(e) The Company has the right to use all of the
Intellectual Property. The Company represents and
warrants that it has no knowledge that the Company's
use of such trademarks infringes the rights of any
other Person.
(f) No Person has challenged the validity of the Company
Intellectual Property or the Company's rights to,
title to or interest in any of the Intellectual
Property.
(g) Neither the use of the Intellectual Property nor the
conduct of the Business has infringed or currently
infringes upon the industrial or intellectual
property rights of any other Person.
(h) No other Person has infringed the Company's rights to
the Intellectual Property, and the Company has
diligently protected its legal and moral rights to
the exclusive use of the Intellectual Property,
including Intellectual Property relating to the
Software.
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(i) There is no governmental prohibition or restriction
on the use of the Intellectual Property.
(j) All employees of the Company (whether or not employed
in connection with the Business) have agreed to
maintain the confidentiality of confidential
Intellectual Property.
(10) YEAR 2000 COMPLIANCE. The Company Software is Year 2000 Compliant.
"Year 2000 Compliant" means that the Data Processing System, the Software, and
the data and files comprised within the Assets, including the Books and Records,
will operate and interface, both internally and externally, without error,
interruption, inconsistency, generation of incorrect values or invalid results,
malfunction or inaccuracy with respect to time, dates, years, centuries or leap
years, including without limitation correctly and unambiguously (i) using,
recognizing, calculating, comparing, manipulating, managing, inputting,
outputting, transferring, communicating, storing, retrieving, sorting,
sequencing, displaying, referencing and indicating time, dates, years, centuries
(including without limitation single century and multi-century formulas) and
leap years, prior to, during and beyond the year 2000; (ii) performing
calculations to accommodate same century and multi-century formulas and calendar
date values; (iii) performing leap year calendar date references and other
calculations involving leap years; and, (iv) providing calendar date data
interface functionality reflecting the century. Any disclaimer or limitation of
liability by the Company, whether set out in this Agreement or otherwise, shall
not apply to this representation and warranty.
(11) LITIGATION. There is no action, suit, proceeding, claim, application,
complaint or investigation in any court or before any arbitrator or by any
regulatory body or governmental or non-governmental body pending or threatened
by or against the Company Related to the Business or affecting the the Business
or the transactions contemplated by this Agreement, and there is no factual or
legal basis which could give rise to any such action, suit, proceeding, claim,
application, complaint or investigation. There are no judgments, orders, decrees
or awards before any court, department, commission, board, instrumentality or
arbitrator which affects the Assets or the Business.
(12) CONFLICTS OF INTEREST. No shareholder, director, officer or employee
of the Company or any affiliate of any of the foregoing: (a) has any pecuniary
interest in any supplier or customer of the Business or in any other business
with which the Company conducts business or with which the Company is in
competition; (b) has any interest in the Assets; or (c) has any contractual or
other claim, express or implied, of any kind whatsoever against the Company in
connection with the Business or Assets.
(13) RELATED ASSETS. Neither the Company, nor Alves, nor Conceicao owns or
has any interest in any software, systems, services or other intellectual or
industrial property rights or shares of or interest in any Person involved in
the development, sale or other use of such software, systems, services or other
intellectual or industrial property rights.
(14) LICENSES AND PERMITS. To the knowledge of the Company, there are no
Licenses and Permits that are required to enable the Company to carry on the
Business.
(15) CONSENTS AND APPROVALS. No Consent or Approval of any Person is
required in connection with the execution and delivery of this Agreement and the
completion of the transaction contemplated by this Agreement.
(16) NOTICES. No Notice is required to be delivered to any Person in
connection with the execution and delivery of this Agreement and the completion
of the transactions contemplated by this Agreement.
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<PAGE>
(17) COMPLIANCE WITH LAWS. The Business has been operated, and the Assets
used, in compliance with all requirements of applicable federal, provincial and
municipal law, and all requirements of all governmental bodies or agencies
having jurisdiction over it. The Company has not received any notice from any
federal, provincial or municipal authority or any insurance or inspection body,
that any of the properties, facilities, equipment or business procedures or
practices of the Business fails to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public authority or
body wherever located. There are no regulations or legislation pending before
any federal, provincial or municipal governmental body or legislature which, if
adopted, would have a materially adverse effect on the Business or the Assets.
(18) BROKERAGE FEES. The Company has not entered into any agreement which
would entitle any Person to any valid claim against PlayStar or PlayStar for a
broker's commission, finder's fee or any like payment in respect of the
transactions contemplated by this Agreement.
(19) FULL DISCLOSURE. Neither this Agreement, including all Exhibits and
Schedules, nor any other documents or instruments delivered by the Company to
PlayStar in connection with this Agreement and the transactions contemplated by
this Agreement, contains or will contain any untrue statement of any material
fact or omits or will omit to state any material fact required to be stated to
make such statement, document or instrument not misleading. There has been no
event, transaction or information which has come to the attention of the Company
that has not been disclosed to PlayStar in writing which could reasonably, be
expected to have a material adverse effect on the ongoing operation by a
reasonable and prudent operator of the Business or any material part thereof,
except for matters which affect businesses similar to do the Business generally.
. PlayStar hereby represents and warrants to the Company as follows and
acknowledges that the Company is relying on such representations and warranties
in connection with the transactions provided for herein:
(1)INCORPORATION AND POWER. PlayStar is a corporation incorporated,
validly subsisting and in good standing under the laws of Antigua and has full
power and authority to own its properties and to carry on the business as
presently conducted by it.
(2)DUE AUTHORIZATION. PlayStar has the corporate power, authority and
capacity to enter into this Agreement and all other agreements and instruments
to be executed by it as contemplated by this Agreement and to carry out its
obligations under this Agreement and such other agreements and instruments. The
execution and delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated by this
Agreement and such other agreements and instruments have been duly authorized by
all necessary corporate action on the part of PlayStar.
(3)ENFORCEABILITY OF OBLIGATIONS. This Agreement constitutes a valid and
binding obligation of PlayStar enforceable against PlayStar in accordance with
its terms subject, however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of the rights
of creditors or others and to the extent that equitable remedies such as
specific performance and injunctions are only available in the discretion of the
court from which they are sought. PlayStar is not an insolvent Person within the
meaning of the BANKRUPTCY AND INSOLVENCY ACT (Canada) and will not become an
insolvent Person as a result of the Closing.
(4)ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement by PlayStar and the completion (with any required
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<PAGE>
Consents and Approvals and Notices) of the transactions contemplated by this
Agreement do not and will not result in or constitute any of the following:
(a) a default, breach or violation or an event that, with
notice or lapse of time or both, would be a default,
breach or violation of any of the terms, conditions
or provisions of the articles or by-laws of PlayStar
or of any Contract to which PlayStar is a party or
bound or by which PlayStar or any of its assets or
its properties is bound or affected; or
(b) the violation of any Applicable Law applicable to or
affecting PlayStar or any of its assets or its
properties.
(5)CONSENTS AND APPROVALS. Except for certain notifications and filings
with applicable regulatory authorities, there is no requirement for PlayStar or
PlayStar to make any filing with, give any notice to or obtain any licence,
permit, certificate, registration, authorization, consent or approval of, any
government or regulatory authority as a condition to the lawful consummation of
the transactions contemplated by this Agreement.
(6)LITIGATION. PlayStar is not a party to or, to PlayStar's best
knowledge, threatened with, any suit, action, arbitration or other legal or
administrative proceeding which would adversely affect PlayStar's obligations
under this Agreement.
(7)FULL DISCLOSURE. Neither this Agreement, including all Exhibits and
Schedules, nor any other documents or instruments delivered by PlayStar to the
Company in connection with this Agreement and the transactions contemplated by
this Agreement, contains or will contain any untrue statements of any material
fact or omits or will omit to state any material fact required to be stated to
make such statement, document or instrument not misleading.
(1)The representations and warranties of the Company contained in Section
4.1 or any other agreement, certificate or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years from the Closing
Date, and notwithstanding the Closing and any inspection or inquiries made by or
on behalf of PlayStar, shall continue in full force and effect for the benefit
of PlayStar, after which time the Company shall be released from all obligations
in respect of such representations and warranties except with respect to any
Claims asserted by PlayStar in writing (setting out in reasonable detail the
nature of the Claim and approximate amount of such Claim) before the expiration
of such period.
(2)The representations and warranties of PlayStar contained in Section 4.2
or any other agreement, certificate or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years from the Closing
Date, and notwithstanding the Closing, shall continue in full force and effect
for the benefit of the Company, after which time PlayStar shall be released from
all obligations in respect of such representations and warranties except with
respect to any Claims asserted by the Company in writing (setting out in
reasonable detail the nature of the Claim and the appropriate amount thereof)
before the expiration of such period.
. Each of the Company, Alves and Conceicao agrees to indemnify and save harmless
PlayStar and PlayStar from all losses, claims, damages, liabilities,
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<PAGE>
deficiencies, costs and expenses (a "Claim") which may be made or brought
against an Indemnified Party or which it may suffer or incur directly or
indirectly as a result of or arising out of:
(a) any incorrectness in or breach of any representation
or warranty of the Company contained in this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement; and
(b) any breach or non-performance of any covenant or
agreement on the part of the Company under this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement.
. PlayStar agrees to indemnify and save harmless the Company in respect of any
Claim which may be made or brought against an Indemnified Party or which it may
suffer or incur directly or indirectly as a result of or arising out of:
(a) any incorrectness in or breach of any representation
or warranty of PlayStar contained in this Agreement
or in any agreement, instrument, certificate or other
document delivered pursuant to this Agreement;
(b) any breach or non-performance of any covenant or
agreement on the part of PlayStar under this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement.
. If and Indemnified Party becomes aware of a Claim in respect of which
indemnification is provided pursuant to either of Section 5.1 or 5.2, as the
case may be the Indemnified Party shall promptly give written notice thereof to
the Indemnifying Party. Such notice shall specify whether the claim arises as a
result of a claim by a third Person against the Indemnified Party (a "Third
Party Claim") or whether the Claim does not so arise (a "Direct Claim"), and
shall also specify with reasonable particularity (to the extent that the
information is available)
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time effectively to contest the determination of
any liability susceptible of being contested, then the Liability of the
Indemnifying Party to the Indemnified Party under this Article shall be reduced
by the amount of any losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.
. In the case of a Direct Claim, the Indemnifying Party shall have 60 days
following receipt of notice of the Claim to make such investigation of the Claim
as is considered necessary or desirable. For the purpose of such investigation,
the Indemnified Party shall make available to the Indemnifying Party the
information relied upon by the Indemnified Party to substantiate the Claim,
together with all such other information as the Indemnifying Party may
reasonably request. If both parties agree at or prior to the expiration of such
60-day period (or any mutually agreed upon extension thereof) to the validity
and amount of such Claim, the Indemnifying Party shall immediately pay to the
Indemnified Party the full agreed upon amount of the claim, failing which the
matter shall be determined by a court of competent jurisdiction.
. In the case of a Third Party Claim, the Indemnifying Party shall have the
right, at its expense, to participate in or assume control of the negotiation,
settlement or defence of the Claim. If the Indemnifying Party elects to assume
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<PAGE>
such control, the Indemnifying Party shall reimburse the Indemnified Party for
all of the Indemnified Party's out-of-pocket expenses incurred as a result of
such participation or assumption. The Indemnified Party shall have the right to
participate in the negotiation, settlement or defence of such Third Party Claim
and to retain counsel to act on its behalf, provided that the fees and
disbursements of such counsel shall be paid by the Indemnified Party unless the
Indemnifying Party consents to the retention of such counsel at its expense or
unless the named parties to any action or proceeding include both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to the actual or potential differing interests between them
(such as the availability of different defences). The Indemnified Party shall
cooperate with the Indemnifying Party so as to permit the Indemnifying Party to
conduct such negotiation, settlement and defence and for this purpose shall
preserve all relevant documents in relation to the Third Party Claim, allow the
Indemnifying Party access on reasonable notice to inspect and take copies of all
such documents and require its personnel to provide such statements as the
Indemnifying Party may reasonably require and to attend and give evidence at any
trial or hearing in respect of the Third Party Claim. If, having elected to
assume control of the negotiation, settlement or defence of the Third Party
Claim, the Indemnifying Party thereafter fails to conduct such negotiation,
settlement or defence with reasonable diligence, then the Indemnified Party
shall be entitled to assume such control and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim. If any Third Party Claim is of a nature such that (i) the
Indemnified Party is required by Applicable Law or the order of any court,
tribunal or regulatory body having jurisdiction, or (ii) it is necessary in the
reasonable view of the Indemnified Party acting in good faith and in a manner
consistent with reasonable commercial practices, in respect of (A) a Third Party
Claim by a customer relating to products or services supplied by the Business or
(B) a Third Party Claim relating to any Contract which is necessary to the
ongoing operations of the Business or any material part thereof in order to
avoid material damage to the relationship between the Indemnified Party and any
of its major customers or to preserve the rights of the Indemnified Party under
such an essential contract, to make a payment to any person (a "Third Party")
with respect to the Third Party Claim before the completion of settlement
negotiations or related legal proceedings, as the case may be, then the
Indemnified Party may make such payment and the Indemnifying Party shall,
promptly after demand by the Indemnified Party, reimburse the Indemnified Party
for such payment. If the amount of any liability of the Indemnified Party under
the Third Party Claim in respect of which such a payment was made, as finally
determined, is less than the amount which was paid by the Indemnifying Party to
the Indemnified Party, the Indemnified Party shall, promptly after receipt of
the difference from the Third Party, pay the amount of such difference to the
Indemnifying Party. If such a payment, by resulting in settlement of the Third
Party Claim, precludes a final determination of the merits of the Third Party
Claim and the Indemnified Party and the Indemnifying Party are unable to agree
whether such payment was unreasonable in the circumstances having regard to the
amount and merits of the Third Party Claim, then such dispute shall be referred
to and finally settled by binding arbitration from which there shall be no
appeal.
. If the Indemnifying Party fails to assume control of the defence of any Third
Party Claim, the Indemnified Party shall have the exclusive right to contest,
settle or pay the amount claimed. Whether or not the Indemnifying Party assumes
control of the negotiation, settlement or defence of any Third Party Claim, the
Indemnifying Party shall not settle any Third Party Claim without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that the liability of the Indemnifying
Party shall be limited to the proposed settlement amount if any such consent is
not obtained for any reason within a reasonable time after the request therefor.
. PlayStar shall be entitled to set-off the amount of any Claim submitted under
Section 5.1 as damages or by way of indemnification against any other amounts
payable by PlayStar to the Company whether under this Agreement or otherwise.
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<PAGE>
. The Company shall give to PlayStar and its agents access to the Company and
all of the Company's documents (including without limitation all contracts),
books and records relating to the current and past operations of the Business,
and shall permit PlayStar and its agents to make copies thereof, and the Company
shall permit PlayStar to interview the Company's employees during reasonable
business hours and upon reasonable prior notice.
(1)Each Party shall (and shall cause each of its Representatives (as
defined below) to) hold in strictest confidence and not use in any manner, other
than as expressly contemplated by this Agreement, any Confidential Information
(as defined below) of the other Party.
(2)Section 6.2(1) shall not apply to the disclosure of any Confidential
Information where such disclosure is required by Applicable Law. In that case,
the Party required to disclose (or whose Representative is required to disclose)
shall, as soon as possible in the circumstances, notify the other Party of the
requirement. Upon receiving such notification, the other Party may take any
reasonable action to challenge the requirement, and the affected Party shall (or
shall cause the applicable Representative to), at the expense of the other
Party, assist the other Party in taking such reasonable action.
(3)Following the termination of this Agreement in accordance with the
provisions of either of Sections 8.2 or 8.4, each Party shall (and shall cause
each of its Representatives to) promptly, upon a request from the other Party,
return to the requesting Party all copies of any tangible items (other than this
Agreement), if any, which are or which contain Confidential Information of the
requesting Party; provided that if the Party so obligated to return Confidential
Information or its Representatives have prepared summaries or analyses
containing or concerning any Confidential Information, then such Party may,
instead of returning the summaries or analyses, destroy them and provide a
certificate to that effect to the requesting Party.
(4)For the purposes of this Section 6.2:
(a) "CONFIDENTIAL INFORMATION" of a Party at any time
means all information relating to such Party's
business (including business plans, way of doing
business, business results and prospects and customer
lists) which,
(i) at the time is of a confidential nature
(whether or not specifically identified as
confidential) and is known or should be
known by the other Party or its
Representatives as being confidential, and
(ii) has been or is from time to time made known
to or is otherwise learned by the other
Party or any of its Representatives as a
result of the matters provided for in this
Agreement,
including the following information:
(iii) the terms of this Agreement;
(iv) a Party's proprietary software; and
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(v) a Party's business records,
but not including any information that at such time:
(vi) has become generally available to the public
other than as a result of a disclosure by
the other Party or any of its
Representatives;
(vii) was available to the other Party or its
Representatives on a non-confidential basis
before the date of this Agreement; or
(viii) becomes available to the other Party or its
Representatives on a non-confidential basis
from a Person other than the first-mentioned
Party or any of its Representatives who is
not, to the knowledge of such other Party or
its Representatives, otherwise bound by
confidentiality obligations to such
first-mentioned Party in respect of such
information or otherwise prohibited from
transmitting the information to the other
Party or its Representatives; and
(b) "REPRESENTATIVES" with respect to any party means its
Affiliates and its and their respective directors,
officers, employees, agents and other representatives
and advisers.
. During the Interim Period, the Company shall, and shall cause the Company to:
(a) not do any act or omit to do any act which would
cause a breach of representation, warranty, covenant
or agreement contained in this Agreement;
(b) maintain and keep the Assets in good repair; and
(c) notify PlayStar immediately of any breach of any
representation or covenant in this Agreement.
. During the Interim Period, the Company shall not and shall cause the Company's
shareholders not to, take any action, directly or indirectly, to encourage,
initiate or engage in discussions or negotiations with, or provide any
information to any Person, other than PlayStar and its agents, concerning any
sale, transfer, assignment, license, merger or similar transaction involving the
Company, its shares, the Company or the Assets. The Company shall notify
PlayStar promptly if any such discussions or negotiations are sought or if any
proposal for a sale, transfer, assignment, license, merger or similar
transaction is received or being considered.
. The Company shall use its best efforts to obtain all Consents and Approvals
before the Closing Date at the Company's own expense.
. The Company shall update on or before the Closing, by amendment or supplement,
any of the information disclosure schedules referred to in this Agreement and
any other disclosure in writing from the Company to PlayStar as soon as
reasonably possible after new or conflicting information comes to the attention
of the Company. PlayStar shall not be obligated to accept any such amendment or
supplement and receipt of any such amendment or supplement shall not be deemed
to be a waiver or release by PlayStar of any provision of this Agreement.
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. At the Closing, PlayStar Sub will enter into the Management Services Agreement
with Cyberstation Limited, a St. Kitts company which shall be substantially in
the form of Exhibit C.
. Each Party shall promptly do execute, deliver, or cause to be done, executed
or delivered all further acts, documents and things in connection with this
Agreement that the other Party may reasonably require for the purpose of giving
effect to this Agreement.
. PlayStar agrees to use reasonable efforts to ensure that the Consideration
Shares will be registered under the Securities Act as soon as reasonably
practicable following the Closing.
. The obligations of PlayStar to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, any or all of which PlayStar may waive in
its sole discretion:
(1) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company, Alves and Conceicao in Section 4.1 shall be true and correct as if
made on and as of the Closing.
(2) PERFORMANCE OF AGREEMENTS. The Company shall have performed and
complied with all of their covenants and agreements contained in this Agreement
which are required to be performed or complied with on or prior to the Closing.
(3) DUE DILIGENCE INVESTIGATIONS. PlayStar shall have conducted and
completed its investigation of the Company, the Business, the Assets and
PlayStar, in its sole discretion, shall have been satisfied in all respects with
the results of such investigation and, in its sole discretion, shall have
determined to proceed with the transactions contemplated by this Agreement.
(4) GOOD TITLE. PlayStar shall be satisfied that the Company is the owner
with good and marketable title to the Company Intellectual Property and the
Company Software, in each case, free and clear of any and all Liens.
(5) NO LITIGATION. There shall be no litigation or proceedings:
(a) pending or threatened against any of the parties
hereto or against any of their respective Affiliates
or any of their respective directors or officers, or
involving the assets or properties of any of them,
for the purpose of enjoining, preventing or
restraining the completion of the transactions
contemplated hereby or otherwise claiming that such
completion is improper; or
(b) pending or threatened against any of the Parties or
against any of their respective Affiliates or any of
their respective directors or officers which in the
judgment of PlayStar, would make the completion of
the transactions contemplated by this Agreement
inadvisable.
(6) REGULATORY APPROVAL. All regulatory approvals required for the issue
of the Consideration Shares shall have been received.
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(7) LICENSE AGREEMENTS. The Company shall have executed and delivered the
PlayStar License Agreement and the Cyberstation License Agreement substantially
in the form of Exhibit A and Exhibit D, respectively.
(8) MANAGEMENT SERVICES AGREEMENT. Cyberstation Limited shall have
executed and delivered the Management Services Agreement substantially in the
form of Exhibit C.
(9) DREAMPLAY OPTION AGREEMENT. The Company shall have executed and
delivered the DreamPlay Option Agreement substantially in the form of Exhibit B
hereto.
(10) NET ENGINE. PlayStar Sub shall have received a transfer of 50% of the
issued and outstanding shares in the capital of Net Engine;
(11) CASINO MODULE. PlayStar Sub will have received an option in form
reasonably satisfactory to PlayStar in respect of the purchase of the Casino
Module as provided in Section 3.2.
(12) OPINIONS OF COUNSEL. The Company shall have delivered to PlayStar a
favourable opinions of counsel to the Company which shall be in a form
reasonably acceptable to PlayStar.
(13) NO ACTIONS, ETC. No action, suit, proceeding or investigation by or
before any court, administrative agency or other governmental authority shall
have been instituted or threatened, the effect of which would restrain, prohibit
or invalidate the transactions contemplated by this Agreement.
(14) CONSENTS AND APPROVALS. All Consents and Approvals have been
obtained.
(15) CERTIFICATE AS TO REPRESENTATIONS AND WARRANTIES. Each of the
Company, Alves and Conceicao shall have executed and delivered to PlayStar a
certificate confirming the accuracy of all of the representations and warranties
of the Company, Alves and Conceicao contained in this Agreement.
(16) DELIVERIES. All documents required to be delivered by the Company at
or prior to the Closing Date shall have been delivered to PlayStar at Closing.
. If any condition in Section 8.1 has not been fulfilled at or before the
Closing, then PlayStar in its sole discretion may, without limiting any rights
or remedies available to PlayStar or PlayStar at law or in equity, either:
(a) terminate this Agreement by Notice to the Company, in
which event PlayStar and PlayStar shall be released
from its obligations under this Agreement to cause
PlayStar Sub to enter into the PlayStar License
Agreement; or
(b) waive compliance with any such condition without
prejudice to its right of termination in the event of
non-fulfilment of any other condition.
. The obligations of the Company to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, any or all of which the Company may waive
in its sole discretion:
(1) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
PlayStar set forth in Section 4.2 shall be true and correct as if made on and as
of the Closing.
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(2) PERFORMANCE OF AGREEMENTS. PlayStar shall have performed and complied
with all of its covenants and agreements contained in this Agreement which are
required to be performed or complied with on or prior to the Closing.
(3) NO LITIGATION. There shall be no litigation or proceedings:
(a) pending or threatened against any of the parties
hereto or against any of their respective Affiliates
or any of their respective directors or officers, or
involving the assets or properties of any of them,
for the purpose of enjoining, preventing or
restraining the completion of the transactions
contemplated hereby or otherwise claiming that such
completion is improper; or
(b) pending or threatened against any of the Parties or
against any of their respective Affiliates or any of
their respective directors or officers which in the
judgment of the Company, would make the completion of
the transactions contemplated by this Agreement
inadvisable.
(4) NO ACTIONS, ETC. No action, suit, proceeding or investigation by or
before any court, administrative agency or other governmental authority shall
have been instituted or threatened, the effect of which would restrain, prohibit
or invalidate the transactions contemplated by this Agreement.
(5) PLAYSTAR LICENSE AGREEMENT. PlayStar Sub shall have executed and
delivered the PlayStar License Agreement substantially in the form of Exhibit A.
(6) MANAGEMENT SERVICES AGREEMENT. PlayStar Sub shall have executed and
delivered the Management Services Agreement substantially in the form of Exhibit
C.
(7) DIRECTOR. Alves, or his nominee, shall have been appointed a director
and Chief Executive Officer of PlayStar Sub.
(8) DELIVERIES. All documents required to be delivered by PlayStar and
PlayStar at or prior to Closing shall have been delivered to the Company at
Closing.
(9) REGULATORY APPROVAL. All regulatory approvals required for the issue
of the Consideration Shares shall have been received.
(10) OPINIONS OF COUNSEL. PlayStar shall have delivered to the Company
favourable opinions of counsel to PlayStar and PlayStar Sub which will be in a
form reasonably acceptable to the Company.
. If any condition in Section 8.3 shall not have been fulfilled at or before the
Closing, then the Company in its sole discretion may, without limiting any
rights or remedies available to the Company at law or in equity, either:
(a) terminate this Agreement by Notice to PlayStar in
which event the Company shall be released from all
obligations under this Agreement; or
(b) waive compliance with any such condition without
prejudice to its right of termination in the event of
non-fulfilment of any other condition.
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. The transactions provided for by this agreement shall be consummated (the
"Closing") at 10:00 a.m. (Toronto time) on the Closing Date, at the offices of
Blake, Cassels & Graydon, Toronto, Ontario, or at such other place and time as
The Company and PlayStar shall mutually agree.
. At the Closing, the Company shall deliver, or cause to be delivered, to
PlayStar:
(a) a certified resolution of the directors of the
Company approving this Agreement;
(b) a certificate signed by the President of the Company,
Alves and Conceicao dated the Closing Date,
confirming: (i) the truth and accuracy of all of the
representations and warranties of the Company
contained in this Agreement as of Closing Date and as
of all times between the date hereof and the Closing
Date; (ii) all agreements and covenants of the
Company required to have been complied with have been
complied with; and (iii) that all necessary corporate
action has been taken by the Company to authorize the
consummation of the transactions contemplated by this
Agreement;
(c) a certificate signed by the Secretary or other
officer of the Company, dated the Closing Date,
attaching the constating documents of the Company,
the corporate resolutions of the Company authorizing
the execution, delivery and performance by the
Company of this Agreement and the certificate of
status of the Company;
(d) all Consents and Approvals;
(e) the PlayStar License Agreement duly executed by the
Company;
(f) the Cyberstation License Agreement executed by
Cyberstation and the Company;
(g) certificates representing 50% of the issued shares of
Net Engine endorsed in blank for transfer;
(h) the Management Services Agreement duly executed by
Cyberstation Limited;
(i) the DreamPlay Option Agreement signed by the Company;
(j) an option duly executed by the Company in favour of
PlayStar Sub to purchase the Casino Module as
provided in Section 2.1;
(k) opinion of counsel to the Company, dated the Closing
Date, in form and content reasonably acceptable to
PlayStar; and
(l) all such other assurances, transfers, assignments,
consents, and such other agreements, documents and
instruments as may be reasonably required by PlayStar
to complete the transactions provided for in this
Agreement.
At the Closing, PlayStar shall deliver or cause to be delivered to The Company:
(a) share certificates for the Consideration Shares duly
issued and registered in the name of The Company or
its nominee;
-22-
<PAGE>
(b) a certified resolution of the sole director of
PlayStar approving this Agreement and the issue of
the Consideration Shares to the Company pursuant to
the terms hereof;
(c) certificates signed by the President of PlayStar and
by the President of PlayStar, dated the Closing Date,
confirming: (i) the truth and accuracy of all of the
representations and warranties of PlayStar contained
in this Agreement as of the Closing Date and as of
all times between the date hereof and the Closing
Date; (ii) that all agreements and covenants of
PlayStar required to have been complied with have
been complied with; and (iii) that all necessary
corporate action by PlayStar and PlayStar has been
taken to authorize the consummation of the
transactions contemplated by the Agreement;
(d) certificates signed by the Secretary or other officer
of PlayStar and of PlayStar Sub, dated the Closing
Date, attaching the respective constating documents
of PlayStar and PlayStar, the respective corporate
resolutions of PlayStar and PlayStar authorizing the
execution, delivery and performance by PlayStar and
PlayStar of this Agreement and certificates of status
of PlayStar and of PlayStar;
(e) the PlayStar License Agreement duly executed by
PlayStar Sub;
(f) the Shareholders Agreement duly executed by PlayStar;
(g) the Management Services Agreement duly executed by
PlayStar Sub; and
(h) opinions of counsel to PlayStar and PlayStar Sub,
dated the Closing Date, in form and content
reasonably acceptable to The Company.
. Each Party shall be responsible for its own legal and other expenses
(including any taxes imposed on such expenses) incurred in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement
and the transactions contemplated by this Agreement and for the payment of any
broker's commission, finder's fee or like payment payable by it in respect of
the transactions contemplated by this Agreement.
. Except to the extent otherwise required by law or with the prior consent of
the other Party, neither Party shall make any public announcement regarding this
Agreement or the transactions contemplated by this Agreement.
(1) All notices and other communications hereunder shall be in writing and
shall be sent by certified mail, postage prepaid, return receipt requested; by
an overnight express courier services that provides written confirmation of
delivery; or by facsimile with confirmation, addressed as follows:
IF TO PLAYSTAR:
PlayStar Wyoming Holding Corp.
The Dollar Building
Nevis Street, Top Floor
St. John's, Antigua
WI
Fax: (268) 562-0076
Attention: William F.E. Tucker
-23-
<PAGE>
With a copy (which shall not constitute notice) to:
Blake, Cassels & Graydon
Box 25
Commerce Court West
Toronto, Ontario
M5L 1A9
Fax: (416) 863-2653
Attention: R. A. Bondy
IF TO ALVES OR CONCEICAO, ADDRESSED TO ALVES AND/OR CONCEICAO,
AS THE CASE MAY BE:
Cyberstation Computers & Support Inc.
121 Richmond Street West
Suite 1104
Toronto, Ontario
M5H 2G4
Attention: Joseph Alves
Fax: (416) 860-9380
With a copy (which shall not constitute notice) to:
Sereda & Sereda
1 First Canadian Place
100 King Street West
P.O. Box 160, Suite 700
Toronto, Ontario
M5X 1C7
Attention: Joe Sereda
Fax: (416) 203-0606
IF TO THE COMPANY:
Cyberstation Limited
6 Horizons Villas
Fort Tyson
Frigate Bay
St. Kitts, WI
Attention: The President
Fax: (869) 466-7668
-24-
<PAGE>
With a copy (which shall not constitute notice) to:
Sereda & Sereda
1 First Canadian Place
100 King Street West
P.O. Box 160, Suite 700
Toronto, Ontario M5X 1C7
Attention: Joe Sereda
Fax: (416) 203-0606
(2) Any such communication so given or made shall be deemed to have been
given or made and to have been received on the day of delivery if delivered, or
on the day of faxing or sending by other means of recorded electronic
communication, provided that such day in either event is a Business Day and the
communication is so delivered, faxed or sent before 4:30 p.m. on such day.
Otherwise, such communication shall be deemed to have been given and made and to
have been received on the next following Business Day. Any such communication
sent by mail shall be deemed to have been given and made and to have been
received on the fifth Business Day following the mailing thereof; provided
however that no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication given or made
in any other manner shall be deemed to have been given or made and to have been
received only upon actual receipt.
(3) Any Party may change its address for receiving notice by giving notice
of a new address in the manner provided herein.
. This Agreement constitutes the entire agreement between the parties pertaining
to the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written. There are
no conditions, warranties, representations or other agreements between the
parties in connection with the subject matter of this Agreement (whether oral or
written, express or implied, statutory or otherwise) except as specifically set
out in this Agreement.
. Time shall be of the essence of this Agreement.
. If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
. This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the parties shall be governed
by, the laws of the Province of Ontario and the federal laws of Canada
applicable therein, and each Party hereby irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
. A waiver of any default, breach or non-compliance under this Agreement is not
effective unless in writing and signed by the Party to be bound by the waiver.
No waiver shall be inferred from or implied by any failure to act or delay in
acting by a Party in respect of any default, breach or non-observance or by
anything done or omitted to be done by the other Party. The waiver by a Party of
any default, breach or non-compliance under this Agreement shall not operate as
a waiver of that Party's rights under this Agreement in respect of any
continuing or subsequent default, breach or non-observance (whether of the same
or any other nature).
-25-
<PAGE>
. This Agreement may not be assigned by any Party without the prior written
consent of the other Parties. This Agreement shall be binding upon the parties
hereto, and their successors and permitted assigns.
. This Agreement may be executed in any number of counterparts, by facsimile or
otherwise, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above.
PLAYSTAR WYOMING HOLDING CORP.
By: /s/ JOSEPH ALVES
----------------------------------
CYBERSTATION LIMITED
By: /s/ ALICIA DA CONCEICAO
----------------------------------
EXHIBIT 10.2
EXHIBIT A
PLAYSTAR LICENCE AGREEMENT
THIS AGREEMENT made as of the 16th day of February, 1999
BETWEEN:
CYBERSTATION LIMITED, a corporation organized and existing
under the laws of St. Kitts
(the "Company")
- and -
PLAYERS LIMITED, a corporation organized and existing under
the laws of Antigua
("Players")
WHEREAS PlayStar Wyoming Holding Corp., Cyberstation Computers
& Support Inc. ("Cyberstation"), the Company and Joseph Alves and Alicia Da
Conceicao have entered into an agreement made as of the 2nd day of January, 1999
(the "Master Agreement"), to which this Agreement forms Exhibit "A";
AND WHEREAS the Company is engaged in the business of
developing proprietary software, systems and services used to provide electronic
commerce solutions that enable businesses to sell products and services on the
Internet;
AND WHEREAS the Company is the sole and exclusive owner of all
rights, titles and interest (including all patents, copyrights, trademarks,
service marks, trade names and trade secret rights) and to all software,
documentation, computer programs and the like comprising the intellectual
property and technology developed and used in the Business;
AND WHEREAS, pursuant to Section 3.1 of the Master Agreement,
at Closing, the Company is to enter into this Agreement with Players;
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration set
forth in the Master Agreement and in the Shareholders Agreement, the Parties
hereto covenant and agree as follows:
<PAGE>
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. Where used herein or in any amendment or supplement hereof,
unless the context otherwise requires, the words and phrases with initial
capitals set forth below will have the meanings so set forth therein.
"AGREEMENT" means this Agreement, including the Exhibits and
Schedules to this Agreement as amended or supplemented from
time to time; and the expressions "ARTICLE", "SECTION", or
"SUBSECTION", "SCHEDULE" and "EXHIBIT" followed by a number or
letter means and refers to the specified Article, section,
subsection, Schedule or Exhibit of this Agreement;
"BUSINESS" means the business carried on by the Company at the
Closing Date (as such term is defined in the Master Agreement)
which primarily involves the business of developing
proprietary software, systems and services used to provide
electronic commerce solutions that enable businesses to sell
products and services on the Internet;
"BUSINESS DAY" means any day except Saturday, Sunday or any
day on which banks are generally not open for business in the
City of Toronto;
"CANADIAN DOLLARS" means the lawful currency of Canada;
"CASINO MODULE" means the software programs and systems
(including source codes) developed by the Company for use in
marketing, administration and/or game playing activities
related to casino style gaming on the Internet;
"COMPANY INTELLECTUAL PROPERTY" means (i) all existing
Intellectual Property, the title to which is owned by the
Company; and (ii) all Intellectual Property hereafter acquired
or developed by the Company, the title to which is owned by
the Company, excluding the Company Software, excluding any
trade-marks or trade names in that Schedule;
"COMPANY SOFTWARE" means all existing Software (including,
without limitation, the Casino Module, Cash Engine, Mail
Engine, Post Engine, MP3 Engine and Bank Engine software
applications) and all Software hereafter acquired or developed
by the Company, the title to which is owned by the Company,
including the Software identified in Schedule 4.1(8)(a) to the
Master Agreement;
"DESIGNATED TERRITORY" means the countries and geographic
territories identified in Schedule 1.1 to the Master
Agreement;
"HARMFUL CODE" means any code or programming instructions that
are constructed with the ability to damage, interfere with, or
otherwise adversely affect computer programs, data files or
hardware without consent or intent of the computer user. This
definition includes, but is not limited to, self-replicating
and self-propagating programming instructions called viruses
or worms;
"INTELLECTUAL PROPERTY" means all rights and interests in:
(a) all inventions, patents, patent rights and patent
applications (including all reissues, divisions,
continuations, continuations-in-part and extensions
of any patent or patent application), industrial
designs and applications for registration of
industrial designs;
-2-
<PAGE>
(b) all copyrights, registrations and applications for
copyrights (and all future income from such
copyrights);
(c) all processes, data, trade secrets, designs,
know-how, technologies in development, website
domains, domain names and related software, user
interfaces, source code, object code, algorithms,
architecture, structure, display screens, layouts,
development tools, instructions, templates,
evaluation software and hardware, formulae and
information, manufacturing, engineering and other
drawings and manuals, technology, processes, designs,
lab journals, note books, data, blueprints, research
and development reports, agency agreements, technical
information, technical assistance, engineering data,
design and engineering specifications, and similar
material recording or evidencing expertise or
information; and
(d) all other intellectual and industrial property rights
throughout the world, excluding any and all trademark
rights
"PARTY" means a party to this Agreement and any reference to a
party includes its successors and permitted assigns; and
"PARTIES" means every Party;
"PERSON" is to be broadly interpreted and to include an
individual, a corporation, a partnership, a trustee or any
unincorporated organization and words importing persons have a
similar meaning;
"SOFTWARE" means all rights and interests in all computer
software, whether in source code, object code, machine
readable or human readable forms, and includes all updates,
upgrades, improvements and modifications thereto and all
associated documentation and technical information;
"YEAR 2000 COMPLIANT" has the meaning ascribed thereto in
Section 4.1(10) of the Master Agreement.
1.2 HEADINGS. The division of this Agreement into Articles and Sections, the
insertion of headings and the provision of any table of contents are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.3 NUMBER AND GENDER. Unless the context requires otherwise, words importing
the singular include the plural and vice versa and words importing gender
include all genders.
1.4 BUSINESS DAYS. If any payment is required to be made or other action is
required to be taken pursuant to this Agreement on a day which is not a Business
Day, then such payment or action shall be made or taken on the next Business
Day.
1.5 STATUTE REFERENCES. Any reference in this Agreement to any statute or any
section thereof shall, unless otherwise expressly stated, be deemed to be a
reference to such statute or section as amended, restated or re-enacted from
time to time.
1.6 SCHEDULES. Any schedules to this Agreement which have been duly signed by
the Parties hereto shall form part of this Agreement.
-3-
<PAGE>
ARTICLE 2
GRANT OF LICENCES
2.1 COMPANY SOFTWARE LICENCE
(a) The Company hereby grants to Players an exclusive,
irrevocable, perpetual royalty-free licence to fully
exploit the Company Software (including, without
limitation, the right to use, execute, reproduce,
display, advertise or distribute the Company Software
in the Designated Territory.
(b) Players shall be entitled to a licence concurrent
with this Agreement under any copyright relating to
the Company Software to the extent that Players would
otherwise be infringing such copyright by exercising
any of the rights granted in subsection 2.1(a). In
the event this Agreement survives the term of such
copyright, such copyright licence shall terminate
upon the expiration of such copyright.
2.2 COMPANY INTELLECTUAL PROPERTY LICENCE
(a) The Company hereby grants to Players an exclusive,
irrevocable, perpetual royalty-free licence to fully
exploit the Company Intellectual Property (including,
without limitation: (a) the right to make, construct
and use any invention, patentable or otherwise, and
to sell such invention to others to be used; (b) the
right to use, reproduce and distribute any works
subject to copyright protection; and (c) the right to
make, import, sell, rent or offer or expose for sale
or rent any industrial design, registrable or
otherwise) in the Designated Territory.
(b) Players shall be entitled to a licence concurrent
with this Agreement under any patent, industrial
design, copyright or other registered intellectual
property right owned by the Company to the extent
that Players would otherwise be infringing such
patent, industrial design, copyright or registered
intellectual property right by exercising any of the
rights granted in subsection 2.2(a). In the event
this Agreement survives the term of any such patent,
industrial design, copyright or registered
intellectual property right, any licence thereunder
shall terminate upon the expiration of such right.
2.3 SUBLICENSING. Players may sublicense and authorize others to sublicense any
or all of the rights granted to it pursuant to Sections 2.1 and 2.2 above.
2.4 NO TRADE-MARK LICENCE. Nothing in this Agreement shall give Players any
right to use any trade-mark or trade name of the Company. In the event Players
wishes to use any trade-mark or trade name of the Company, Players and the
Company shall enter into a Trade-mark Licence Agreement, the terms and
conditions of which shall be mutually agreed upon by the Parties.
2.5 DELIVERY OF COMPANY SOFTWARE TO PLAYERS
(a) EXISTING COMPANY SOFTWARE. The Company shall promptly
provide Players with a copy of all existing Company
Software, in binary formats, and with all associated
documentation and technical information required for
the effective use thereof.
-4-
<PAGE>
(b) COMPANY SOFTWARE HEREAFTER ACQUIRED OR DEVELOPED. The
Company shall provide Players with a copy of all
Company Software hereafter acquired or developed, in
binary formats, and with all associated documentation
and technical information required for the effective
use thereof, immediately upon the request of Players
or in any event, from time to time.
ARTICLE 3
MODIFICATIONS AND IMPROVEMENTS
3.1 BY PLAYERS
(a) TO COMPANY SOFTWARE. Players hereby assigns all
right, title and interest in and to any updates,
upgrades, improvements and modifications which
Players hereafter makes to the Company Software, to
the Company. The Company acknowledges and agrees that
such updates, upgrades, improvements or modifications
shall form part of the Company Software licensed to
Players in Article 2 hereof.
(b) TO COMPANY INTELLECTUAL PROPERTY. Any updates,
upgrades, improvements or modifications made at any
time by Players to the Company Intellectual Property
shall be owned by Players.
3.2 BY COMPANY. Any updates, upgrades, improvements or modifications made at any
time by the Company or by another licensee of the Company Software to the
Company Software shall be owned by the Company. Any updates, upgrades,
improvements or modifications made by the Company to the Company Intellectual
Property shall be owned by the Company. The Company acknowledges and agrees that
any updates, upgrades, improvements or modifications hereafter made by the
Company or by another licensee of the Company Software to the Company Software
shall form part of the Company Software licensed to Players in Article 2 hereof.
Similarly, the Company acknowledges and agrees that any updates, upgrades,
improvements or modifications hereafter made by the Company to the Company
Intellectual Property shall form part of the Company Intellectual Property
licensed to Players in Article 2.
3.3 SHARING OF COMPANY SOFTWARE AND COMPANY INTELLECTUAL PROPERTY WITH
CYBERSTATION. Without limiting the scope of the licences granted in Sections 2.1
and 2.2 above, the Company acknowledges and agrees that Players is entitled to
disclose to and share with Cyberstation (another licensee of the Company
Software) any updates, upgrades, improvements or modifications which Players
makes to the Company Software or to the Company Intellectual Property and that
Cyberstation is entitled to disclose to and share with Players any updates,
upgrades, improvements or modifications which Cyberstation makes to the Company
Software or to the Company Intellectual Property. Further, the Company
acknowledges and agrees that Players and Cyberstation are entitled to jointly
develop updates, upgrades, improvements or modifications to the Company Software
or to the Company Intellectual Property. Nothing in this Section 3.3 obligates
either Players or Cyberstation to jointly develop any such updates, upgrades,
improvements or modifications to the Company Software or to the Company
Intellectual Property or to disclose or share any updates, upgrades,
improvements or modifications which it makes to the Company Software or to the
Company Intellectual Property with one another.
-5-
<PAGE>
ARTICLE 4
WARRANTIES
4.1 The Company represents and warrants for the term of this Agreement and for a
period of five (5) years from the date of termination of this Agreement as
follows:
(1) COMPANY SOFTWARE
(a) The Company is the exclusive owner of all right,
title and interest in and to the Company Software,
and the Company has the right to use, execute,
reproduce, display or advertise and has the right to
distribute, exploit, sell, transfer, license or
lease, including the right to license the rights set
forth in Article 2, to Players. The Company is in
possession of (i) the source code and object code for
all Company Software; and (ii) all other
documentation and know-how required for the effective
use of the Company Software.
(b) Except for the rights granted to Players hereunder
and to Cyberstation as contemplated in Section 3.1 of
the Master Agreement, no person other than the
Company has any right or interest of any kind or
nature in or with respect to the Company Software or
any portion thereof including any right to sell,
license, lease, transfer, distribute, use or
otherwise exploit the Company Software or any portion
thereof. There has been no disclosure of the Company
Software, other than to Players hereunder and to
Cyberstation as contemplated in Section 3.1, through
the licensing of binery versions of the Company
Software.
(c) The Company is in possession of all documentation,
technical specifications and know-how required to
permit Players to understand, operate, maintain,
support and modify the Company Software and use the
Company Software for the purposes for which it is
intended. All source code for the Company Software is
sufficiently documented in the source code to enable
a reasonably skilled developer in that environment to
understand, modify, compile, maintain, operate, and
otherwise utilize all aspect of the related software
without reference to other sources of information.
(d) To the knowledge of the Company, the Company Software
is free from material programming errors and defects
of workmanship and materials when maintained and
operated in accordance with the Company's
documentation and user guides.
(e) In no instance has the eligibility of the Company
Software for protection under applicable copyright
law been forfeited to the public domain by omission
of any required notice or any other action.
(f) The Company Software contains no Harmful Code.
(2) COMPANY INTELLECTUAL PROPERTY
(a) The Company is the sole registered and beneficial
owner of the Company Intellectual Property and has
the right to use and license the use of the Company
Intellectual Property hereunder.
(b) The Company is the only owner of the Company
Intellectual Property and is entitled to the
exclusive and uninterrupted use of such Company
Intellectual Property. No past or present
shareholder, officer, director or employee of the
-6-
<PAGE>
Company or Cyberstation or any third party has any
right, title or interest in any of the Company
Intellectual Property of Company Software, with the
exception of any rights granted to Cyberstation as
contemplated in Section 3.1 of the Master Agreement.
A ll such Persons have waived their moral rights in
any copyright works within the Company Intellectual
Property and the Company Software.
(c) No Person has challenged the validity of the Company
Intellectual Property or the Company's rights to,
title to or interest in any of the Company
Intellectual Property.
(d) Neither the use of the Company Intellectual Property
has infringed or currently infringes upon the
industrial or intellectual property rights of any
other Person.
(e) No other Person has infringed the Company's rights to
the Company Intellectual Property, and the Company
has diligently protected its legal and moral rights
to the exclusive use of the Company Intellectual
Property, including Intellectual Property relating to
the Company Software.
(3) YEAR 2000 COMPLIANCE. The Company Software is Year 2000
Compliant.
ARTICLE 5
TERM AND TERMINATION
5.1 TERM. This Agreement and the licences granted hereunder shall be effective
as of the date first written above and shall continue in perpetuity, unless
terminated upon the mutual agreement of the Parties.
ARTICLE 6
GENERAL
6.1 NOTICES
(1) All notices and other communications hereunder shall be in writing
and shall be sent by certified mail, postage prepaid, return receipt requested;
by an overnight express courier services that provides written confirmation of
delivery; or by facsimile with confirmation, addressed as follows:
IF TO THE COMPANY:
Cyberstation Limited
6 Horizons Villas
Fort Tyson
Frigate Bay
St. Kitts, WI
Attention: The President
Fax: (869) 466-7668
-7-
<PAGE>
With a copy (which shall not constitute notice) to:
Sereda & Sereda
1 First Canadian Place
100 King Street West
P.O. Box 160, Suite 700
Toronto, Ontario
M5X 1C7
Attention: Joe Sereda
Fax: (416) 203-0606
IF TO PLAYERS:
PlayStar Wyoming Holding Corp.
The Dollar Building
Nevis Street, Top Floor
St. John's, Antigua, WI
Attention: William F.E. Tucker
Fax: (268) 562-0076
With a copy (which shall not constitute notice) to:
Blake, Cassels & Graydon
Box 25
Commerce Court West
Toronto, Ontario M5L 1A9
Attention: R. A. Bondy
Fax: (416) 863-2653
(2) Any such communication so given or made shall be deemed to have
been given or made and to have been received on the day of delivery if
delivered, or on the day of faxing or sending by other means of recorded
electronic communication, provided that such day in either event is a Business
Day and the communication is so delivered, faxed or sent before 4:30 p.m. on
such day. Otherwise, such communication shall be deemed to have been given and
made and to have been received on the next following Business Day. Any such
communication sent by mail shall be deemed to have been given and made and to
have been received on the fifth Business Day following the mailing thereof;
provided however that no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication given or made
in any other manner shall be deemed to have been given or made and to have been
received only upon actual receipt.
(3) Any Party may change its address for receiving notice by giving
notice of a new address in the manner provided herein.
6.2 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements, understandings, negotiations and discussions, whether oral
or written.
6.3 TIME OF ESSENCE. Time shall be of the essence of this Agreement.
-8-
<PAGE>
6.4 SEVERABILITY. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
6.5 GOVERNING LAW. This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the Province of Ontario and the federal laws
of Canada applicable therein, and each Party hereby irrevocably and
unconditionally submits to the non-exclusive jurisdiction of the courts of such
province and all courts competent to hear appeals therefrom.
6.6 WAIVER. A waiver of any default, breach or non-compliance under this
Agreement is not effective unless in writing and signed by the Party to be bound
by the waiver. No waiver shall be inferred from or implied by any failure to act
or delay in acting by a Party in respect of any default, breach or
non-observance or by anything done or omitted to be done by the other Party. The
waiver by a Party of any default, breach or non-compliance under this Agreement
shall not operate as a waiver of that Party's rights under this Agreement in
respect of any continuing or subsequent default, breach or non-observance
(whether of the same or any other nature).
6.7 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by either Party
without the prior written consent of the other Party. This Agreement may be
assigned by either Party (i) upon notice to the other Party; and (ii) subject to
the new assignee agreeing to the terms and conditions of this Agreement. This
Agreement shall be binding upon the parties hereto, and their successors and
permitted assigns.
6.8 COUNTERPART EXECUTION. This Agreement may be executed in any number of
counterparts, by facsimile or otherwise, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above.
CYBERSTATION LIMITED
By:
--------------------------------------
Stuart Brazier, Authorized Signing Officer
PLAYERS LIMITED
By:
--------------------------------------
William F.E. Tucker, President
-9-
EXHIBIT 10.3
EXHIBIT B
DREAMPLAY OPTION AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 16th day of February,
1999
BETWEEN:
CYBERSTATION LIMITED, a company organized and existing under
the laws of St. Kitts
(hereinafter referred to as the "Cyberstation")
OF THE FIRST PART
- and -
PLAYERS LIMITED, a corporation organized and existing under
the laws of Antigua
(hereinafter referred to as the "Players")
OF THE SECOND PART
- and -
DREAMPLAY RESEARCH CORPORATION, a corporation organized and
existing under the laws of the Province of Ontario
(hereinafter referred to as the "Company")
OF THE THIRD PART
WHEREAS Cyberstation owns all of the issued and outstanding
shares of the Company;
AND WHEREAS Cyberstation has agreed to grant Players options
to purchase such shares;
NOW THEREFORE, in consideration of the premises and the
respective covenants and agreements herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties, hereto, the parties hereto hereby covenant
and agree as follows:
1. In this Agreement:
"EXPIRY DATE" has the meaning ascribed thereto in Section 3 of
this Agreement;
<PAGE>
"OPTION" has the meaning ascribed thereto in Section 2 of this
Agreement;
"OPTIONED SHARES" means all of the issued and outstanding
Common Shares in the capital of the Company;
"PURCHASE PRICE" has the meaning ascribed thereto in Section 2
of this Agreement; and
"TERM OF THE OPTION" has the meaning ascribed thereto in
Section 3 of this Agreement;
2. Cyberstation hereby grants to Players, subject to the terms and conditions
hereinafter set forth, an irrevocable option (the "Option") to subscribe for the
Optioned Shares at a total price of $100.00 (the "Purchase Price").
3. Players shall have the right to exercise the Option with respect to all or
any part of the Shares from time to time in accordance with the provisions of
this Agreement commencing on the date hereof and expiring on December 31, 2009
(such date being herein called the "Expiry Date" and such period of time being
herein called the "Term of the Option"). On the Expiry Date, the Option shall
forthwith expire and terminate and be of no further force or effect whatsoever
as to such of the Optioned Shares in respect of which the Option has not then
been exercised.
The Option hereby granted shall be exercisable at any time during the
term of the Option by Players delivering or sending by prepaid registered mail a
notice in writing addressed to Cyberstation to the attention of the
Secretary-Treasurer, which notice shall specify therein that the Option is being
exercised and shall be accompanied by cheque in the amount of the Purchase
Price. Any such mailed notice and payment shall be deemed received on the fifth
day following that date on which an envelope containing same was deposited duly
addressed, registered and postage prepaid, in a mail box or post office. Upon
any such exercise of Option as aforesaid, Cyberstation shall deliver to Players
within five business days following receipt by Cyberstation of any such notice
of exercise of the Option and payment certificates in the name of Players
representing in aggregate Optioned Shares.
4. Nothing herein contained or done pursuant hereto shall obligate Players to
purchase or pay for the Optioned Shares.
5. The Company hereby covenants and agrees that, so long as the Option is
outstanding, it will not issue any shares or enter into any agreements,
subscriptions, warrants, options or commitments, nor grant any rights or
privileges capable of becoming an agreement, subscription, warrant, option or
commitment obligating the Company to issue any additional shares or other
securities.
6. (a) In the event of any subdivision, division or
reclassification of the Optioned Shares of the Company at any
time prior to the Expiry Date into a greater number of shares,
the Company shall deliver at the time of any exercise
thereafter of the Option such additional number of Optioned
Shares as would have resulted from such subdivision, division
or reclassification if such Option had been exercised prior to
the date of such subdivision, division or reclassification.
(b) In event of any consolidation or change of the Optioned Shares
at any time prior to the Expiry Date into a lesser number of
shares, the number of Optioned Shares delivered by the Company
on any exercise thereafter of the Option shall be reduced to
such number of Optioned Shares as would have resulted from
such consolidation or change if such Option had been exercised
prior to the date of such consolidation or change.
-2-
<PAGE>
(c) If any capital reorganization or reclassification of the
capital stock of the Company, or the consolidation or merger,
or amalgamation of the Company with another company, or the
sale of all or substantially all of the assets to another
corporation, shall be effected, then as a condition of such
reorganization, reclassification, consolidation, merger,
amalgamation or sale, lawful and adequate provision shall be
made whereby Players shall thereafter have the right to
purchase and receive upon the basis and upon the terms and
conditions specified in the Option and in lieu of the Optioned
Shares immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby, such shares of
stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding Optioned
Shares equal to the number of Optioned Shares immediately
theretofore purchasable and receivable upon the exercise of
the rights represented hereby had such reorganization,
reclassification, consolidation, merger, amalgamation or sale
not taken place and in any such case, appropriate provision
shall be made with respect to the rights and interests of
Players to the end that provisions hereof shall thereafter be
applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the
exercise hereof. The Company shall not effect any such
consolidation, merger, amalgamation or sale, unless prior to
or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such
consolidation or merger or amalgamation or the corporation
purchasing such assets shall assume by written instrument
executed and mailed or delivered to Players at the address of
Players appearing on the books of the Company, the obligation
to deliver to Players such shares or stock, securities or
assets as, in accordance with the foregoing provisions,
Players may be entitled to purchase.
7. Players shall have no rights whatsoever as a shareholder in respect of any of
the Shares (including any right to receive dividends or other distributions
therefrom or thereon) other than in respect of Optioned Shares in respect of
which Players shall have exercised the Option in the manner provided herein and
which Players shall have actually taken up and paid for.
8. Time shall be of the essence of this Agreement.
9. This Agreement may not be assigned by any party hereto in whole or in part
without the prior written consents of the other parties thereto.
10. In this Agreement, the masculine gender includes the feminine and neuter
genders and vice-versa, and the singular includes the plural and vice-versa, as
the context may require.
11. This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their successors and permitted assigns.
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<PAGE>
IN WITNESS WHEREOF this Agreement has been executed on the
date first above written.
CYBERSTATION LIMITED
By:
-------------------------------------------
Stuart Brazier, Authorized Signing Officer
PLAYERS LIMITED
By:
-------------------------------------------
William F.E. Tucker, President
DREAMPLAY RESEARCH CORPORATION
By:
-------------------------------------------
Joseph Alves, President
EXHIBIT 10.4
EXHIBIT C
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT made as of the 16th day of February, 1999
BETWEEN:
PLAYSTAR WYOMING HOLDING CORP., a corporation organized and
existing under the laws of Antigua
(hereinafter referred to as "PlayStar")
- and -
CYBERSTATION LIMITED, a corporation organized and existing
under the laws of St. Kitts
(hereinafter referred to as the "Service Provider")
WHEREAS PlayStar and its subsidiaries (collectively referred
to as the "Company") are engaged in the business of (i) developing proprietary
software, systems and services used to provide electronic commerce solutions
that enable businesses to sell products and services on the Internet; and (ii)
providing on-line gaming activities;
AND WHEREAS the Service Provider has agreed to provide to the
Company certain management services as provided for herein;
AND WHEREAS the Service Provider has agreed to use, and it is
a condition of this agreement that the Service Provider uses, Joseph Alves
("Alves") and Alicia Da Conceicao ("Conceicao"), of Toronto, Ontario, primarily
for the purposes of providing the services provided herein;
AND WHEREAS the parties wish to record this agreement in
writing.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration
of the mutual covenants herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged by each
party, the parties agree as follows:
ARTICLE 1
1.1 PROVISION OF MANAGEMENT SERVICES. During the term of this Agreement, the
Service Provider agrees to provide to the Company such management and
administrative services as may be required by the Company and its board of
directors, including:
<PAGE>
(a) the services of Alves and Conceicao, subject to the
exception provided in Section 1.3, on a full-time
basis; and
(b) planning assistance and advice.
The Service Provider agrees to make Alves and Conceicao
available to the Company to perform such duties as may from time to time be
assigned or delegated by the board of directors of the Company (the "Board").
The Service Provider, Alves and Conceicao shall perform these duties in
accordance with the instructions of the Board and the Company's policy insofar
as they relate to the electronic commerce business operations of the Company.
1.2 TERM OF AGREEMENT. The Term of this Agreement shall mean the period
beginning on February 16, 1999 and terminating on the date on which the first of
the following occurs:
(a) the termination of this Management Services Agreement
as provided for in Article 4;
(b) in the event that either or both of Alves and
Conceicao cease to be employed by the Service
Provider or ceases to be available to perform, or is
for any reason unable to perform, the services
provided for herein at any time thereafter, upon
notice given by PlayStar to the Service Provider;
(c) June 30, 2002.
1.3 SPECIFIC DUTIES AND RESPONSIBILITIES. Without limiting the generality of
Section 2.1 or any other provision of this Agreement, the Service Provider
shall, and shall cause Alves and Conceicao to:
(a) perform their duties in a competent and professional
manner and act in the best interests of the Company;
(b) ensure that the business and operations of the
Company are conducted in a proper and efficient
manner;
(c) faithfully serve the Company and use their best
efforts to promote its interests;
(d) cause Alves to report to the Board and perform such
services and duties necessary or appropriate for the
running of the electronic commerce business of the
Company; and
(e) unless prevented by ill health and except for
reasonable vacations and other absences approved by
the Board, cause Alves and Conceicao to devote the
whole of their time, attention and ability to the
business and affairs of the Company.
Nothing in this Agreement shall prevent Alves and Conceicao
from acting as officers, directors and employees of Cyberstation Computers &
Support Inc. (`Cyberstation') or any affiliates of Cyberstation.
1.4 PROHIBITED INVESTMENTS. The Service Provider shall not be an investor,
shareholder, joint venturer, or partner (each, an "Investor") in any enterprise,
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<PAGE>
association, corporation, joint venture, or partnership (each, an "Investment")
if the Investment (i) conflicts with the interests of the Company, (ii) requires
the Service Provider's involvement in the management or operation of the
Investment (recognizing that the Service Provider is permitted to monitor the
Investment, as would any prudent investor), or (iii) interferes with the
performance of the Service Provider's duties and obligations hereunder.
ARTICLE 2
2.1 BUSINESS DAY. "Business Day" as used in this Agreement shall mean any day
except Saturday, Sunday or any statutory or civic holiday in the Province of
Ontario.
2.2 BASE MANAGEMENT FEE. The base management fee of the Service Provider shall
be $160,000 per annum (the "Base Management Fee") payable on the 15th and last
day of each month. The Company may withhold from any amounts payable under this
Agreement such federal or provincial taxes and other statutory remittances as
shall be required by law to be so withheld.
2.3 PROFIT SHARING PAYMENTS
(1) The Service Provider shall be entitled to receive profit sharing
payments from PlayStar and Players Limited ("Players"), a wholly-owned
subsidiary of PlayStar, which payments shall be based upon the amount of Pre-Tax
Profits (as defined below) of PlayStar and Players for (i) the six month fiscal
period ending June 30, 1999, and (ii) each of the financial years ending June
30, 2000 (the "First Financial Year"), June 30 2001 (the "Second Financial
Year") and June 30, 2002 (the "Third Financial Year") as shown below:
(a) in respect of the six months ended June 30, 1999:
(i) if Players has Pre-Tax Profits for such
period, the Service Provider shall be
entitled to a payment equal to 15% of the
amount of such Pre-Tax Profits; and
(ii) if PlayStar has Pre-Tax Profits in excess of
US$500,000 for such period, the Service
Provider shall be entitled to a payment
equal to 10% of the amount of such excess;
(b) in respect of the First Financial Year:
(i) if Players has Pre-Tax Profits for such
financial year, the Service Provider shall
be entitled to a payment equal to 15% of the
amount of such Pre-Tax Profits; and
(ii) if PlayStar has Pre-Tax Profits in excess of
US$1,000,000 for such financial year, the
Service Provider shall be entitled to a
payment equal to 10% of the amount of such
excess;
(c) in respect of the Second Financial Year:
(i) if Players has Pre-Tax Profits for such
financial year, the Service Provider shall
be entitled to a payment equal to 15% of the
amount of such Pre-Tax Profits; and
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<PAGE>
(ii) if PlayStar has Pre-Tax Profits in excess of
US$2,000,000 for such financial year, the
Service Provider shall be entitled to a
payment equal to 10% of the amount of such
excess;
(d) in respect of the Third Financial Year:
(i) if Players has Pre-Tax Profits for such
financial year, the Service Provider shall
be entitled to a payment equal to 15% of the
amount of such Pre-Tax Profits; and
(ii) if PlayStar has Pre-Tax Profits in excess of
US$3,000,000 for such financial year, the
Service Provider shall be entitled to a
payment equal to 10% of the amount of such
excess.
(2) For the purposes of this Agreement, Pre-Tax Profits of PlayStar and
Players for (a) the six months ended June 30, 1999 means the net income before
deduction of any income taxes as shown on its unaudited financial statements for
such six month period, and (b) any financial year means the net income before
deduction of any income taxes as, in the case of PlayStar, shown on its audited
financial statements for such financial year and in the case of Players, on its
unaudited financial statements prepared by Players in connection with the
preparation of the audited financial statements of PlayStar for such financial
year. In determining Pre-Tax Profits, no charge shall be made in respect of any
options granted below fair market.
(3) The financial statements referred to in subsection 2.3(2) shall be
prepared in accordance with US generally accepted accounting principles
consistently applied. In the event of any dispute with respect to the amount of
the Pre-Tax Profits, such dispute shall be determined by the auditors of
PlayStar.
(4) Any profit sharing payments earned by the Service Provider in
respect of any financial year shall be paid by PlayStar or Players, as the case
may be, within 30 days of completion of the audited financial statements of
PlayStar for such financial year.
2.4 STOCK OPTIONS
(1) PlayStar shall grant the Service Provider, or if directed by the
Service Provider, to Alves and/or Conceicao, three options (the "Options") to
acquire an aggregate of 5,000,000 ordinary shares in the capital of PlayStar
(the "Ordinary Shares") pursuant to an option agreement which shall be
substantially in the form of Annex "A" hereto. The Options are to vest and to be
on terms and conditions set out below:
(a) an option (the "First Option") to acquire 1,000,000
Ordinary Shares exercisable at a price of US$0.25 per
share shall vest on the earlier of (i) the end of the
First Financial Year provided that the Pre-Tax
Profits of PlayStar for such financial year equal to
or exceed US$1,000,000, (ii) the end of the Second
Financial Year provided that the cumulative Pre-Tax
Profits of PlayStar for the First Financial Year and
the Second Financial Year equal to or exceed
US$3,000,000, and (iii) the end of the Third
Financial Year provided that the cumulative Pre-Tax
Profits of PlayStar for the First Financial Year, the
Second Financial Year and the Third Financial Year
equal to or exceed US$6,000,000;
-4-
<PAGE>
(b) an option (the "Second Option") to acquire 2,000,000
Ordinary Shares exercisable at a price of US$0.50 per
share shall vest on the earlier of (i) the end of the
Second Financial Year provided that either (A) the
Pre-Tax Profits of PlayStar for such financial year
equal or exceed US$2,000,000, or (B) the cumulative
Pre-Tax Profits of PlayStar for the First Financial
Year and the Second Financial Year equal or exceed
US$3,000,000, and (ii) the end of the Third Financial
Year provided that the cumulative Pre-Tax Profits of
PlayStar for the First Financial Year, the Second
Financial Year and the Third Financial Year equal or
exceed US$6,000,000; and
(c) an option (the "Third Option") to acquire 2,000,000
Ordinary Shares exercisable at a price of US$1.00
shall vest at the end of the Third Financial Year
provided that either (i) the Pre-Tax Profits of
PlayStar for such financial year equal or exceed
US$3,000,000, or (ii) the cumulative Pre-Tax Profits
of PlayStar for the First Financial Year, the Second
Financial Year and the Third Financial Year equal or
exceed US$6,000,000.
(2) Each of the Options and any rights of the Service Provider with
respect to them shall terminate on December 31, 2002.
(3) In the event that the Ordinary Shares of PlayStar are split or
consolidated or otherwise affected, the number of Ordinary Shares represented by
the Options that have not been exercised shall automatically be adjusted in
proportion to such split, consolidation or other effect.
2.5 EXPENSES INCIDENTAL TO EMPLOYMENT. The Company shall reimburse the Service
Provider for the Service Provider's travel and other expenses or disbursements
reasonably and necessarily incurred or made in connection with the Company's
business, provided that the Service Provider shall substantiate expenses by
furnishing to the Company such evidence relating to expenses for which the
Service Provider seeks reimbursement as may be required in accordance with
Company policy.
ARTICLE 3
3.1 NON-COMPETITION. The Service Provider acknowledges that the Service
Provider's services are unique and extraordinary. The Service Provider also
acknowledges that the Service Provider's position will give the Service Provider
access to confidential information of substantial importance to the Company and
its business. During the Non-Competition Period, the Service Provider shall not,
either individually or in partnership or jointly or in conjunction with any
other entity or organization, as principal, agent, consultant, lender,
contractor, employer, employee, investor, shareholder or in any other manner,
directly or indirectly, advise, manage, carry on, establish, control, engage in,
invest in, offer financial assistance or services to, or permit the Service
Provider name or any part thereof to be used by:
(a) any on-line gaming activities within:
(i) the world, or
(ii) Europe, Asia, Australia, Africa, South
America and North America, or
(iii) Europe, Asia, South America and North
America, or
(iv) South America and North America; or
-5-
<PAGE>
(b) any activities related to the development of
proprietary software, systems and services used to
provide electronic commerce solutions that enable
businesses to sell products and services on the
Internet within the countries and territories listed
in Schedule 1.1 to the Master Agreement dated as of
January 2, 1999 among PlayStar, Cyberstation
Computers & Support Inc., Cyberstation Limited and
Alves and Conceicao,
in either case, of the same nature as or of a similar nature to the business of
the Company, its affiliated or subsidiary companies or any business in which the
Company, its affiliated or subsidiary companies is engaged. For purposes of this
Agreement, "Non-Competition Period" means a period beginning on the date of
termination of this Agreement and ending three years after the Term of this
Agreement.
3.2 OTHER SERVICE PROVIDERS, CUSTOMERS. The Service Provider agrees that during
the Non-Competition Period, neither the Service Provider nor any entity with
whom the Service Provider is at the time affiliated shall, directly or
indirectly, hire or offer to hire or entice away or in any other manner persuade
or attempt to persuade any officer, employee, agent, supplier or customer of the
Company to discontinue or alter any one of their or its relationship with the
Company.
3.3 CONFIDENTIALITY. Except in the normal and proper course of the Service
Provider's duties hereunder, the Service Provider will not use for the Service
Provider's own account or disclose to anyone else, during or after the Term of
this Agreement, any confidential or proprietary information or material relating
to the Company's operations or business which the Service Provider obtains from
the Company or its officers or employees, agents, suppliers or customers or
otherwise by virtue of the Service Provider's employment by the Company.
Confidential or proprietary information or material includes, without
limitation, the following types of information or material, both existing and
contemplated, regarding the Company: corporate information, including
contractual licensing arrangements, plans, strategies, tactics, policies,
resolutions, patent, trade-mark and trade name applications, and any litigation
or negotiations; information concerning suppliers, marketing information,
including sales, investment and product plans, customer lists, strategies,
methods, customers, prospects and market research data; financial information,
including cost and performance data, debt arrangements, equity structure,
investors and holdings; operational and scientific information, including trade
secrets; technical information, including technical drawings and designs; and
personnel information, including personnel lists, resumes, personnel data,
organizational structure and performance evaluations.
3.4 RETURN OF DOCUMENTS. The Service Provider agrees that all documents
(including software and information in machine-readable form) of any nature
pertaining to activities of the Company, including the information or materials
referred to in Section 3.3 hereof, in the Service Provider's possession now or
at any time during the Term of this Agreement, are and shall be the property of
the Company and that all such documents and all copies of them shall be
surrendered to the Company whenever requested by the Company.
3.5 BLUE PENCIL. If any court determines that any provision contained in this
Agreement including, without limitation, a restrictive covenant or any part
thereof is unenforceable because of the duration or geographical scope of the
provision or for any other reason, the duration or scope of the provision, as
the case may be, shall be reduced so that the provision becomes enforceable and,
in its reduced form, the provision shall then be enforceable and shall be
enforced.
3.6 ACKNOWLEDGEMENT. The Service Provider acknowledges that, in connection with
the Service Provider's employment by the Company, the Service Provider will
receive or will become eligible to receive substantial benefits and
compensation. The Service Provider acknowledges that the Service Provider's
-6-
<PAGE>
employment by the Company and all compensation and benefits and potential
compensation and benefits to the Service Provider from such employment will be
conferred by the Company upon the Service Provider only because and on condition
of the Service Provider's willingness to commit the Service Provider's best
efforts and loyalty to the Company, including protecting the Company's right to
have its confidential information protected from non-disclosure by the Service
Provider and abiding by the confidentiality, non-competition and other
provisions herein. The Service Provider understands the Service Provider's
duties and obligations as set forth in Article 3 and agrees that such duties and
obligations would not unduly restrict or curtail the Service Provider's
legitimate efforts to earn a livelihood following any termination of the Service
Provider's employment with the Company. The Service Provider agrees that the
restrictions contained in Article 3 are reasonable and valid and all defences to
the strict enforcement thereof by the Company are waived by the Service
Provider. The Service Provider further acknowledges that irreparable damage
would result to the Company if the provisions of Sections 3.1 through 3.4 are
not specifically enforced, and agrees that the Company shall be entitled to any
appropriate legal, equitable, or other remedy, including injunctive relief, in
respect of any failure or continuing failure to comply with the provisions of
Sections 3.1 through 3.4.
ARTICLE 4
4.1 TERMINATION FOR CAUSE. The Company may immediately terminate this Agreement
at any time for just cause by written notice to the Service Provider. Without
limiting the foregoing, any one or more of the following events shall constitute
just cause:
(1) theft, dishonesty, or other similar behaviour by the Service
Provider or Alves or Conceicao;
(2) breach of trust by the Service Provider or by Alves or
Conceicao;
(3) any neglect of duty or misconduct of the Service Provider or
Alves or Conceicao in discharging any of the Service Provider's duties and
responsibilities hereunder;
(4) any conduct of the Service Provider or Alves or Conceicao which is
materially detrimental or embarrassing to the Company, including but not limited
to the Service Provider being convicted of a criminal offense other than crimes
relating to cryptography;
(5) the Service Provider's or Alves' or Conceicao's acceptance of a
gift of any kind, other than on behalf of the Company or gifts of nominal or
inconsequential value, from any source directly or indirectly related to the
Service Provider's engagement with the Company, unless prior approval by the
Board has been obtained;
(6) any default of the Service Provider's material obligations under
this Agreement that is not cured in all material respects within 10 days of
written notification thereof to the Service Provider by the Company; or
(7) any failure of or refusal by the Service Provider or by Alves or by
Conceicao to comply with the material policies, rules and regulations of the
Company that is not cured in all material respects by the Service Provider
within 10 days of written notification thereof to the Service Provider by the
Company.
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<PAGE>
If the Company terminates this Agreement for cause under this Section 4.1, the
Company shall not be obligated to make any further payments under this Agreement
except amounts due and owing at the time of the termination.
4.2 EFFECT OF TERMINATION ON STOCK OPTIONS. Upon termination of the Service
Provider's employment pursuant to Section 4.1 the Service Provider will be
entitled to exercise the Options which have already vested in accordance with
Section 2.4 (but not any Options which have not vested) during the period of 60
days following such termination or resignation.
4.3 RESULTS OF TERMINATION. Upon termination or resignation of the Service
Provider's employment pursuant to this Article 4, this Agreement and the
engagement of the Service Provider shall be wholly terminated, with the
exception of the clauses specifically contemplated to continue in full force and
effect beyond the termination of this Agreement, including those set out in
Article 3 and Section 4.2.
ARTICLE 5
5.1 REPRESENTATIONS AND WARRANTIES. The Service Provider represents and warrants
to the Company that the execution and performance of this Agreement will not
result in or constitute a default, breach, or violation, or an event that, with
notice or lapse of time or both, would be a default, breach, or violation, of
any understanding, agreement or commitment, written or oral, express or implied,
to which the Service Provider is a party or by which the Service Provider or the
Service Provider's property is bound. The Service Provider shall defend,
indemnify and hold the Company harmless from any liability, expense or claim
(including solicitor's fees incurred in respect thereof) by any person in any
way arising out of, relating to, or in connection with any incorrectness of
breach of the representations and warranties in this Section 5.1.
ARTICLE 6
6.1 RIGHTS AND WAIVERS. All rights and remedies of the parties are separate and
cumulative, and none of them, whether exercised or not, shall be deemed to be to
the exclusion of any other rights or remedies or shall be deemed to limit or
prejudice any other legal or equitable rights or remedies which either of the
parties may have.
6.2 WAIVER. Any purported waiver of any default, breach or non-compliance under
this Agreement is not effective unless in writing and signed by the party to be
bound by the waiver. No waiver shall be inferred from or implied by any failure
to act or delay in acting by a party in respect of any default, breach or
non-observance or by anything done or omitted to be done by the other party. The
waiver by a party of any default, breach or non-compliance under this Agreement
shall not operate as a waiver of that party's rights under this Agreement in
respect of any continuing or subsequent default, breach or non-observance
(whether of the same or any other nature).
6.3 SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of the prohibition or unenforceability and shall be severed from
the balance of this Agreement, all without affecting the remaining provisions of
this Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction.
6.4 NOTICES
(1) Any notice, certificate, consent, determination or other
communication required or permitted to be given or made under this Agreement
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<PAGE>
shall be in writing and shall be effectively given and made if (i) delivered
personally, (ii) sent by courier, or (iii) sent by fax or other similar means of
electronic communication, in each case to the applicable address set out below:
IF TO THE COMPANY, TO:
Players Limited
c/o PlayStar Wyoming Holding Corp.
The Dollar Building
Nevis Street, Top Floor
St. John's, Antigua, WI
Attention: Chairman of the Board
Fax: (268) 562-0076
IF TO THE SERVICE PROVIDER, TO:
Cyberstation Limited
6 Horizon Villas
Fort Tyson
Frigate Bay St. Kitts, WI
Attention: The President
Fax: (869) 466-7668
(2) Any such communication so given or made shall be deemed to have
been given or made and to have been received on the day of delivery if
delivered, or on the day of faxing or sending by other means of recorded
electronic communication, provided that the day in either event is a Business
Day and the communication is so delivered, faxed or sent prior to 4:30 p.m. on
that day. Otherwise, the communication shall be deemed to have been given and
made and to have been received on the next following Business Day. Any such
communication given or made in any other manner shall be deemed to have been
given or made and to have been received only upon actual receipt.
(3) Any party may from time to time change its address under this
Section 6.4 by notice to the other party given in the manner provided by this
Section.
6.5 TIME OF ESSENCE. Time shall be of the essence of this Agreement in all
respects.
6.6 SUCCESSORS AND ASSIGNS. This Agreement shall enure to the benefit of, and be
binding on, the parties and their respective heirs, administrators, executors,
successors and permitted assigns. The Service Provider shall not assign or
transfer, whether absolutely, by way of security or otherwise, all or any part
of the Service Provider's rights or obligations under this Agreement without the
prior consent of the Company, which may be arbitrarily withheld.
6.7 AMENDMENT. No amendment of this Agreement will be effective unless made in
writing and signed by the parties.
6.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements, understandings, negotiations and discussions, whether oral
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<PAGE>
or written. There are no conditions, warranties, representations or other
agreements between the parties in connection with the subject matter of this
Agreement (whether oral or written, express or implied, statutory or otherwise)
except as specifically set out in this Agreement.
6.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable in that Province and shall be treated, in all respects, as an Ontario
contract.
6.10 HEADINGS. The division of this Agreement into Sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
6.11 FURTHER ASSURANCES. The parties shall execute such other documents,
agreements and instruments as may be necessary to give effect to the
arrangements contemplated by this Agreement, or any of them.
6.12 COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which when taken
together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF the parties have executed this Agreement.
PLAYSTAR WYOMING HOLDING CORP.
By:
------------------------------------------
William F.E. Tucker, President
CYBERSTATION LIMITED
By:
------------------------------------------
Stuart Brazier, Authorized Signing Officer
-10-
EXHIBIT 10.5
EXHIBIT D
CYBERSTATION LICENCE AGREEMENT
THIS AGREEMENT made as of the 16th day of February, 1999
BETWEEN:
CYBERSTATION LIMITED, a corporation organized and existing
under the laws of St. Kitts
(the "Company")
- and -
CYBERSTATION COMPUTERS & SUPPORT INC., a corporation organized
and existing under the laws of the Province of Ontario
("Cyberstation")
WHEREAS PlayStar Wyoming Holding Corp., Cyberstation, the
Company and Joseph Alves and Alicia Da Conceicao have entered into an agreement
made as of the 2nd day of January, 1999 (the "Master Agreement"), to which this
Agreement forms Exhibit "D";
AND WHEREAS the Company is engaged in the business of
developing proprietary software, systems and services used to provide electronic
commerce solutions that enable businesses to sell products and services on the
Internet;
AND WHEREAS the Company is the sole and exclusive owner of all
rights, titles and interest (including all patents, copyrights, trademarks,
service marks, trade names and trade secret rights) and to all software,
documentation, computer programs and the like comprising the intellectual
property and technology developed and used in the Business;
AND WHEREAS, pursuant to Section 3.1 of the Master Agreement,
at Closing, the Company is to enter into this Agreement with Cyberstation;
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration set
forth in the Master Agreement and in the Shareholders Agreement, the Parties
hereto covenant and agree as follows:
<PAGE>
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS. Where used herein or in any amendment or supplement hereof,
unless the context otherwise requires, the words and phrases with initial
capitals set forth below will have the meanings so set forth therein.
"AGREEMENT" means this Agreement, including the Exhibits and
Schedules to this Agreement as amended or supplemented from
time to time; and the expressions "ARTICLE", "SECTION", or
"SUBSECTION", "SCHEDULE" and "EXHIBIT" followed by a number or
letter means and refers to the specified Article, section,
subsection, Schedule or Exhibit of this Agreement;
"BUSINESS" means the business carried on by the Company and
Cyberstation at the Closing Date (as such term is defined in
the Master Agreement) which primarily involves the business of
developing proprietary software, systems and services used to
provide electronic commerce solutions that enable businesses
to sell products and services on the Internet;
"BUSINESS DAY" means any day except Saturday, Sunday or any
day on which banks are generally not open for business in the
City of Toronto;
"CANADIAN DOLLARS" means the lawful currency of Canada;
"COMPANY INTELLECTUAL PROPERTY" means (i) all existing
Intellectual Property, the title to which is owned by the
Company; and (ii) all Intellectual Property hereafter acquired
or developed by the Company, the title to which is owned by
the Company, excluding the Company Software, excluding any
trade-marks or trade names in that Schedule;
"COMPANY SOFTWARE" means all existing Software (including,
without limitation, the Cash Engine, Mail Engine, Post Engine,
MP3 Engine and Bank Engine software applications) and all
Software hereafter acquired or developed by the Company, the
title to which is owned by the Company, including the Software
identified in Schedule 4.1(8)(a) to the Master Agreement;
"DESIGNATED TERRITORY" means the world except for the
countries and geographic territories identified in Schedule
1.1 to the Master Agreement;
"HARMFUL CODE" means any code or programming instructions that
are constructed with the ability to damage, interfere with, or
otherwise adversely affect computer programs, data files or
hardware without consent or intent of the computer user. This
definition includes, but is not limited to, self-replicating
and self-propagating programming instructions called viruses
or worms;
"INTELLECTUAL PROPERTY" means all rights and interests in:
(a) all inventions, patents, patent rights and patent
applications (including all reissues, divisions,
continuations, continuations-in-part and extensions
of any patent or patent application), industrial
designs and applications for registration of
industrial designs;
(b) all copyrights, registrations and applications for
copyrights (and all future income from such
copyrights);
-2-
<PAGE>
(c) all processes, data, trade secrets, designs,
know-how, technologies in development, website
domains, domain names and related software, user
interfaces, source code, object code, algorithms,
architecture, structure, display screens, layouts,
development tools, instructions, templates,
evaluation software and hardware, formulae and
information, manufacturing, engineering and other
drawings and manuals, technology, processes, designs,
lab journals, note books, data, blueprints, research
and development reports, agency agreements, technical
information, technical assistance, engineering data,
design and engineering specifications, and similar
material recording or evidencing expertise or
information; and
(d) all other intellectual and industrial property rights
throughout the world, excluding any and all trademark
rights
"PARTY" means a party to this Agreement and any reference to a
party includes its successors and permitted assigns; and
"PARTIES" means every Party;
"PERSON" is to be broadly interpreted and to include an
individual, a corporation, a partnership, a trustee or any
unincorporated organization and words importing persons have a
similar meaning;
"SOFTWARE" means all rights and interests in all computer
software, whether in source code, object code, machine
readable or human readable forms, and includes all updates,
upgrades, improvements and modifications thereto and all
associated documentation and technical information;
"YEAR 2000 COMPLIANT" has the meaning ascribed thereto in
Section 4.1(10) of the Master Agreement.
1.2 HEADINGS. The division of this Agreement into Articles and Sections, the
insertion of headings and the provision of any table of contents are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.3 NUMBER AND GENDER. Unless the context requires otherwise, words importing
the singular include the plural and vice versa and words importing gender
include all genders.
1.4 BUSINESS DAYS. If any payment is required to be made or other action is
required to be taken pursuant to this Agreement on a day which is not a Business
Day, then such payment or action shall be made or taken on the next Business
Day.
1.5 STATUTE REFERENCES. Any reference in this Agreement to any statute or any
section thereof shall, unless otherwise expressly stated, be deemed to be a
reference to such statute or section as amended, restated or re-enacted from
time to time.
1.6 SCHEDULES. Any schedules to this Agreement which have been duly signed by
the Parties hereto shall form part of this Agreement.
-3-
<PAGE>
ARTICLE 2
GRANT OF LICENCES
2.1 COMPANY SOFTWARE LICENCE
(a) The Company hereby grants to Cyberstation an
exclusive, irrevocable, perpetual royalty-free
licence to fully exploit the Company Software
(including, without limitation, the right to use,
execute, reproduce, display, advertise or distribute
the Company Software in the Designated Territory.
(b) Cyberstation shall be entitled to a licence
concurrent with this Agreement under any copyright
relating to the Company Software to the extent that
Cyberstation would otherwise be infringing such
copyright by exercising any of the rights granted in
subsection 2.1(a). In the event this Agreement
survives the term of such copyright, such copyright
licence shall terminate upon the expiration of such
copyright.
2.2 COMPANY INTELLECTUAL PROPERTY LICENCE
(a) The Company hereby grants to Cyberstation an
exclusive, irrevocable, perpetual royalty-free
licence to fully exploit the Company Intellectual
Property (including, without limitation: (a) the
right to make, construct and use any invention,
patentable or otherwise, and to sell such invention
to others to be used; (b) the right to use, reproduce
and distribute any works subject to copyright
protection; and (c) the right to make, import, sell,
rent or offer or expose for sale or rent any
industrial design, registrable or otherwise) in the
Designated Territory.
(b) Cyberstation shall be entitled to a licence
concurrent with this Agreement under any patent,
industrial design, copyright or other registered
intellectual property right owned by the Company to
the extent that Cyberstation would otherwise be
infringing such patent, industrial design, copyright
or registered intellectual property right by
exercising any of the rights granted in subsection
2.2(a). In the event this Agreement survives the term
of any such patent, industrial design, copyright or
registered intellectual property right, any licence
thereunder shall terminate upon the expiration of
such right.
2.3 SUBLICENSING. Cyberstation may sublicense and authorize others to sublicense
any or all of the rights granted to it pursuant to Sections 2.1 and 2.2 above.
2.4 NO TRADE-MARK LICENCE. Nothing in this Agreement shall give Cyberstation any
right to use any trade-mark or trade name of the Company. In the event
Cyberstation wishes to use any trade-mark or trade name of the Company,
Cyberstation and the Company shall enter into a Trade-mark Licence Agreement,
the terms and conditions of which shall be mutually agreed upon by the Parties.
2.5 DELIVERY OF COMPANY SOFTWARE TO CYBERSTATION
(a) EXISTING COMPANY SOFTWARE. The Company shall provide
Cyberstation with a copy of all existing Company
Software, in binary formats, and with all associated
documentation and technical information required for
the effective use thereof.
(b) COMPANY SOFTWARE HEREAFTER ACQUIRED OR DEVELOPED. The
Company shall provide Cyberstation with a copy of all
Company Software hereafter acquired or developed, in
binary formats, and with all associated documentation
-4-
<PAGE>
and technical information required for the effective
use thereof, immediately upon the request of
Cyberstation or in any event, from time to time.
ARTICLE 3
MODIFICATIONS AND IMPROVEMENTS
3.1 BY CYBERSTATION
(a) TO COMPANY SOFTWARE. Cyberstation hereby assigns all
right, title and interest in and to any updates,
upgrades, improvements and modifications which
Cyberstation hereafter makes to the Company Software,
to the Company. The Company acknowledges and agrees
that such updates, upgrades, improvements or
modifications shall form part of the Company Software
licensed to Cyberstation in Article 2 hereof.
(b) TO COMPANY INTELLECTUAL PROPERTY. Any updates,
upgrades, improvements or modifications made at any
time by Cyberstation to the Company Intellectual
Property shall be owned by Cyberstation.
3.2 BY COMPANY. Any updates, upgrades, improvements or modifications made at any
time by the Company or by another licensee of the Company Software to the
Company Software shall be owned by the Company. Any updates, upgrades,
improvements or modifications made by the Company to the Company Intellectual
Property shall be owned by the Company. The Company acknowledges and agrees that
any updates, upgrades, improvements or modifications hereafter made by the
Company or by another licensee of the Company Software to the Company Software
shall form part of the Company Software licensed to Cyberstation in Article 2
hereof. Similarly, the Company acknowledges and agrees that any updates,
upgrades, improvements or modifications hereafter made by the Company to the
Company Intellectual Property shall form part of the Company Intellectual
Property licensed to Cyberstation in Article 2.
3.3 SHARING OF COMPANY SOFTWARE AND COMPANY INTELLECTUAL PROPERTY WITH PLAYER.
Without limiting the scope of the licences granted in Sections 2.1 and 2.2
above, the Company acknowledges and agrees that Cyberstation is entitled to
disclose to and share with Players Limited ("Players") (another licensee of the
Company Software) any updates, upgrades, improvements or modifications which
Cyberstation makes to the Company Software or to the Company Intellectual
Property and that Players is entitled to disclose to and share with Cyberstation
any updates, upgrades, improvements or modifications which Cyberstation makes to
the Company Software or to the Company Intellectual Property. Further, the
Company acknowledges and agrees that Players and Cyberstation are entitled to
jointly develop updates, upgrades, improvements or modifications to the Company
Software or to the Company Intellectual Property. Nothing in this Section 3.3
obligates either Players or Cyberstation to jointly develop any such updates,
upgrades, improvements or modifications to the Company Software or to the
Company Intellectual Property or to disclose or share any updates, upgrades,
improvements or modifications which it makes to the Company Software or to the
Company Intellectual Property with one another.
-5-
<PAGE>
ARTICLE 4
WARRANTIES
4.1 The Company represents and warrants for the term of this Agreement and for a
period of five (5) years from the date of termination of this Agreement as
follows:
(1) COMPANY SOFTWARE
(a) The Company is the exclusive owner of all right,
title and interest in and to the Company Software,
and the Company has the right to use, execute,
reproduce, display or advertise, distribute, exploit,
sell, transfer, license or lease, including the right
to license the rights set forth in Article 2, to
Cyberstation. The Company is in possession of (i) the
source code and object code for all Company Software;
and (ii) all other documentation and know-how
required for the effective use of the Company
Software.
(b) Except for the rights granted to Cyberstation
hereunder and to Players as contemplated in Section
3.1 of the Master Agreement, no person other than the
Company has any right or interest of any kind or
nature in or with respect to the Company Software or
any portion thereof including any right to sell,
license, lease, transfer, distribute, use or
otherwise exploit the Company Software or any portion
thereof. There has been no disclosure of the Company
Software, other than to Cyberstation hereunder and to
Players as contemplated in Section 3.1, through the
licensing of binery versions of the Company Software.
(c) The Company is in possession of all documentation,
technical specifications and know-how required to
permit Cyberstation to understand, operate, maintain,
support and modify the Company Software and use the
Company Software for the purposes for which it is
intended. All source code for the Company Software is
sufficiently documented in the source code to enable
a reasonably skilled developer in that environment to
understand, modify, compile, maintain, operate, and
otherwise utilize all aspect of the related software
without reference to other sources of information.
(d) To the knowledge of the Company, the Company Software
is free from material programming errors and defects
of workmanship and materials when maintained and
operated in accordance with the Company's
documentation and user guides.
(e) In no instance has the eligibility of the Company
Software for protection under applicable copyright
law been forfeited to the public domain by omission
of any required notice or any other action.
(f) The Company Software contains no Harmful Code.
(2) COMPANY INTELLECTUAL PROPERTY
(a) The Company is the sole registered and beneficial
owner of the Company Intellectual Property and has
the right to use and license the use of the Company
Intellectual Property hereunder.
(b) The Company is the only owner of the Company
Intellectual Property and is entitled to the
exclusive and uninterrupted use of such Company
Intellectual Property. No past or present
shareholder, officer, director or employee of the
Company or Cyberstation or any third party has any
right, title or interest in any of the Company
-6-
<PAGE>
Intellectual Property of Company Software, with the
exception of any rights granted to Players as
contemplated in Section 3.1 of the Master Agreement.
All such Persons have waived their moral rights in
any copyright works within the Company Intellectual
Property and the Company Software.
(c) No Person has challenged the validity of the Company
Intellectual Property or the Company's rights to,
title to or interest in any of the Company
Intellectual Property.
(d) Neither the use of the Company Intellectual Property
has infringed or currently infringes upon the
industrial or intellectual property rights of any
other Person.
(e) No other Person has infringed the Company's rights to
the Company Intellectual Property, and the Company
has diligently protected its legal and moral rights
to the exclusive use of the Company Intellectual
Property, including Intellectual Property relating to
the Company Software.
(3) YEAR 2000 COMPLIANCE. The Company Software is Year 2000
Compliant.
ARTICLE 5
TERM AND TERMINATION
5.1 TERM. This Agreement and the licences granted hereunder shall be effective
as of the date first written above and shall continue in perpetuity, unless
terminated upon the mutual agreement of the Parties.
ARTICLE 6
GENERAL
6.1 NOTICES
(1) All notices and other communications hereunder shall be in writing
and shall be sent by certified mail, postage prepaid, return receipt requested;
by an overnight express courier services that provides written confirmation of
delivery; or by facsimile with confirmation, addressed as follows:
IF TO THE COMPANY:
Cyberstation Limited
6 Horizons Villas
Fort Tyson
Frigate Bay
St. Kitts, WI
Attention: The President
Fax: (869) 466-7668
-7-
<PAGE>
With a copy (which shall not constitute notice) to:
Sereda & Sereda
1 First Canadian Place
100 King Street West
P.O. Box 160, Suite 700
Toronto, Ontario M5X 1C7
Attention: Joe Sereda
Fax: (416) 203-0606
IF TO CYBERSTATION:
Cyberstation Computers & Support Inc.
121 Richmond Street West
Suite 1104
Toronto, Ontario
M5H 2G4
Attention: Joseph Alves
Fax: (416) 860-9380
With a copy (which shall not constitute notice) to:
Sereda & Sereda
1 First Canadian Place
100 King Street West
P.O. Box 160, Suite 700
Toronto, Ontario
M5X 1C7
Attention: Joe Sereda
Fax: (416) 203-0606
(2) Any such communication so given or made shall be deemed to have
been given or made and to have been received on the day of delivery if
delivered, or on the day of faxing or sending by other means of recorded
electronic communication, provided that such day in either event is a Business
Day and the communication is so delivered, faxed or sent before 4:30 p.m. on
such day. Otherwise, such communication shall be deemed to have been given and
made and to have been received on the next following Business Day. Any such
communication sent by mail shall be deemed to have been given and made and to
have been received on the fifth Business Day following the mailing thereof;
provided however that no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication given or made
in any other manner shall be deemed to have been given or made and to have been
received only upon actual receipt.
(3) Any Party may change its address for receiving notice by giving
notice of a new address in the manner provided herein.
6.2 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements, understandings, negotiations and discussions, whether oral
or written.
6.3 TIME OF ESSENCE. Time shall be of the essence of this Agreement.
-8-
<PAGE>
6.4 SEVERABILITY. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
6.5 GOVERNING LAW. This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the Province of Ontario and the federal laws
of Canada applicable therein, and each Party hereby irrevocably and
unconditionally submits to the non-exclusive jurisdiction of the courts of such
province and all courts competent to hear appeals therefrom.
6.6 WAIVER. A waiver of any default, breach or non-compliance under this
Agreement is not effective unless in writing and signed by the Party to be bound
by the waiver. No waiver shall be inferred from or implied by any failure to act
or delay in acting by a Party in respect of any default, breach or
non-observance or by anything done or omitted to be done by the other Party. The
waiver by a Party of any default, breach or non-compliance under this Agreement
shall not operate as a waiver of that Party's rights under this Agreement in
respect of any continuing or subsequent default, breach or non-observance
(whether of the same or any other nature).
6.7 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by either Party
without the prior written consent of the other Party. This Agreement may be
assigned by either Party (i) upon notice to the other Party; and (ii) subject to
the new assignee agreeing to the terms and conditions of this Agreement. This
Agreement shall be binding upon the parties hereto, and their successors and
permitted assigns.
6.8 COUNTERPART EXECUTION. This Agreement may be executed in any number of
counterparts, by facsimile or otherwise, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above.
CYBERSTATION LIMITED
By:
---------------------------------------------
Stuart Brazier, Authorized Signing Officer
CYBERSTATION COMPUTERS & SUPPORT INC.
By:
---------------------------------------------
Joseph Alves, President
-9-
EXHIBIT 10.6
DATED AS OF THE 2ND DAY OF JANUARY, 1999
PLAYSTAR WYOMING HOLDING CORP.
- AND -
CYBERSTATION COMPUTERS & SUPPORT INC.
SUBSCRIPTION AGREEMENT
TABLE OF CONTENTS
PAGE
SUBSCRIPTION AGREEMENT
THIS AGREEMENT made as of the 2nd day of January, 1999
AMONG:
PLAYSTAR WYOMING HOLDING CORP., a corporation organized and
existing under the laws of Antigua
("PlayStar")
- and -
CYBERSTATION COMPUTERS & SUPPORT INC., a corporation organized
and existing under the laws of Ontario
("Cyberstation")
<PAGE>
WHEREAS Cyberstation is engaged in the business of developing
proprietary software, systems and services used to provide electronic commerce
solutions that enable businesses to sell products and services on the Internet;
AND WHEREAS Cyberstation is the sole and exclusive owner of
all rights, titles and interest (including all patents, copyrights, trademarks,
service marks, trade names and trade secret rights) and to all software,
documentation, computer programs and the like comprising the intellectual
property and technology developed and used in the Business;
AND WHEREAS the authorized capital of Cyberstation consists of
an unlimited number of Common Shares, of which 600 Common Shares are issued and
outstanding;
AND WHEREAS PlayStar desires to subscribe for and purchase 400
Common Shares of Cyberstation which, upon issue, will represent 40% of the
issued and outstanding shares of Cyberstation on the terms set out herein;
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
. Where used herein or in any amendment or supplement hereof, unless the context
otherwise requires, the words and phrases with initial capitals set forth below
will have the meanings so set forth therein.
"AFFILIATE" of any Person means any Person directly or
indirectly controlling, controlled by, or under direct or
indirect common control with, such Person;
"AGREEMENT" means this Agreement, including the Exhibits and
Schedules to this Agreement as amended or supplemented from
time to time; and the expressions "ARTICLE", "SECTION", or
"SUBSECTION", "SCHEDULE" and "EXHIBIT" followed by a number or
letter means and refers to the specified Article, section,
subsection, Schedule or Exhibit of this Agreement;
"APPLICABLE LAW" means, with respect to any Person, property,
transaction, event or other matter, any law relating or
applicable to such Person, property, transaction, event or
other matter. Applicable law also includes, where appropriate,
any interpretation of the law (or any part) by any Person
having jurisdiction over it, or charged with its
administration or interpretation;
-2-
<PAGE>
"ASSETS" means all properties, assets, interests and rights of
Cyberstation including the following:
(a) the Software and the Intellectual Property;
(b) the Contracts;
(c) the License and Permits; and
(d) the Books and Records;
"BOOKS AND RECORDS" means all books, records, files and papers
Related to the Business or related to Cyberstation including,
without limitation, drawings, engineering information,
computer programs (including source code), software programs,
manuals and data, sales and advertising materials, sales and
purchases correspondence, trade association files, research
and development records and other records, and all copies and
recordings of the foregoing;
"BUSINESS" means the business carried on by and Cyberstation
at the Closing Date which primarily involves the business of
developing proprietary software, systems and services used to
provide electronic commerce solutions that enable businesses
to sell products and services on the Internet;
"BUSINESS DAY" means any day except Saturday, Sunday or any
day on which banks are generally not open for business in the
City of Toronto;
"CANADIAN DOLLARS" means the lawful currency of Canada;
"CLAIM" has the meaning ascribed thereto in Section 5.1;
"CLOSING" means completion of the transactions provided for in
this Agreement;
"CLOSING DATE" means February 16, 1999 or such earlier or
later date as may be agreed upon in writing by the Parties;
"CLOSING TIME" means the time of closing on the Closing Date
provided for in Section 9.1;
"COMMON SHARES" means common shares without nominal or par
value in the capital of Cyberstation;
"CONFIDENTIAL INFORMATION" has the meaning ascribed thereto in
Section 6.3(4);
"CONSENTS AND APPROVALS" means all consents and approvals
required to be obtained in connection with the execution and
delivery of this Agreement and the completion of the
transactions contemplated by this Agreement;
"CYBERSTATION" means Cyberstation Computers & Support Inc.;
"DIRECT CLAIM" has the meaning ascribed thereto in Section
5.3;
"FINANCIAL STATEMENTS" has the meaning ascribed thereto in
Section 4.1(10);
"GAAP" means those accounting principles which are recognized
as being generally accepted in Canada from time to time,
consistently applied;
"HARMFUL CODE" means any code or programming instructions that
are constructed with the ability to damage, interfere with, or
otherwise adversely affect computer programs, data files or
-3-
<PAGE>
hardware without consent or intent of the computer user. This
definition includes, but is not limited to, self-replicating
and self-propagating programming instructions called viruses
or worms;
"INDEMNIFIED PARTY" means, in relation to an Indemnifying
Party, the Party to this Agreement that may be indemnified by
such Indemnifying Party under Article 5;
"INDEMNIFYING PARTY" means, in relation to an Indemnified
Party, the Party to this Agreement that has agreed to
indemnify that Indemnified Party under Article 5;
"INTERIM PERIOD" means the period from the date of this
Agreement to the Closing;
"LAW" means any law, rule, statute, regulation, order,
judgment, decree, treaty or other requirement having the force
of law;
"LICENSES AND PERMITS" means all licenses, permits, filings,
authorizations, approvals or indicia of authority necessary
for the conduct of the Business;
"LIEN" means any lien, mortgage, charge, hypothec, pledge,
security interest, prior assignment, option, warrant, lease,
sublease, right to possession, encumbrance, claim, right or
restriction which affects, by way of a conflicting ownership
interest or otherwise, the right, title or interest in or to
any particular property;
"NOTICES" means the notices required to be given to any Person
under Applicable Law or pursuant to any contract or other
obligation to which Cyberstation is a Party or by which
Cyberstation is bound or which is applicable to any of the
Assets, in connection with the execution and delivery of this
Agreement or the completion of the transactions contemplated
by this Agreement;
"PARTY" means a party to this Agreement and any reference to a
party includes its successors and permitted assigns; and
"PARTIES" means every Party;
"PERSON" is to be broadly interpreted and to include an
individual, a corporation, a partnership, a trustee or any
unincorporated organization and words importing persons have a
similar meaning;
"RELATED TO THE BUSINESS" means, directly or indirectly, used
in, arising from, or relating in any manner to the Business;
"REPRESENTATIVES" has the meaning ascribed thereto in Section
6.2(4)(b);
"SHAREHOLDERS AGREEMENT" means the unanimous shareholders
agreement to be entered into among PlayStar, Alves and
Conceicao, as shareholders of Cyberstation, and Cyberstation,
which shall be substantially in the form of Exhibit A hereto
and which, among other things, relates to the conduct of the
business and affairs of Cyberstation;
"SOFTWARE" means all Cyberstation's rights and interests in
all computer software, whether in source code, object code,
machine readable or human readable forms, and includes all
updates, upgrades, improvements and modifications thereto and
all associated documentation and technical information;
-4-
<PAGE>
"SUBSCRIBED SHARES" has the meaning ascribed thereto in
Section 2.1;
"TAX" or "TAXES"means all taxes, charges, fees, levies,
imposts and other assessments, including all income, sales,
use, goods and services, value added, capital, capital gains,
net worth, transfer, profits, withholding, payroll, employer
health, excise, real property and personal property taxes, and
any other taxes, custom duties, fees, assessments or similar
charges in the nature of a tax, including Canada Pension Plan
and provincial pension plan contributions, unemployment
insurance and employment insurance payments and workers
compensation premiums, together with any interest, fines and
penalties, imposed by any governmental agency (federal,
provincial or municipal), and whether or not disputed; and
"THIRD PARTY CLAIM" has the meaning ascribed thereto in
Section 5.3.
. The division of this Agreement into Articles and Sections, the insertion of
headings and the provision of any table of contents are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
. Unless the context requires otherwise, words importing the singular include
the plural and vice versa and words importing gender include all genders.
. If any payment is required to be made or other action is required to be taken
pursuant to this Agreement on a day which is not a Business Day, then such
payment or action shall be made or taken on the next Business Day.
. Except as otherwise expressly provided in this Agreement:
(a) unless otherwise specified, all dollar amounts
referred to in this Agreement are stated in Canadian
Dollars; and
(b) any payment contemplated by this Agreement shall be
made by cash, certified cheque or any other method
that provides immediately available funds.
. Any reference in this Agreement to any statute or any section thereof shall,
unless otherwise expressly stated, be deemed to be a reference to such statute
or section as amended, restated or re-enacted from time to time.
. Subject to the terms and conditions of this Agreement, PlayStar hereby
subscribes for and agrees to purchase, and Cyberstation agrees to issue and sell
to PlayStar, at the Closing 400 Common Shares (the "Subscribed Shares") for a
purchase price of Cdn$500,000. The Subscribed Shares shall represent 40% of the
issued and outstanding Common Shares of Cyberstation following such
subscription.
. At the Closing, Alves, Conceicao, PlayStar and Cyberstation shall enter into
the Shareholder Agreement which shall be substantially in the form of Exhibit A.
The Shareholder Agreement shall provide, among other things, that none of
Cyberstation, Alves and Conceicao nor any affiliate of any of them will engage,
directly or indirectly, in any online gaming activities without, among other
things, the prior written consent of PlayStar.
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. Cyberstation represents and warrants as follows and acknowledges that PlayStar
and PlayStar are relying on such representations and warranties as a material
inducement to entering into this Agreement and completing the transactions
contemplated by this Agreement:
(1)INCORPORATION AND POWER. Cyberstation is a corporation incorporated,
validly subsisting and in good standing as a private company under the laws of
Ontario and has full power and authority to own its Assets and to carry on the
Business as presently conducted by it. Cyberstation is duly qualified to do
business and is in good standing in all other jurisdictions where the conduct of
its business so requires. No act or proceeding has been taken by or against
Cyberstation in connection with the dissolution, liquidation, winding up,
bankruptcy or reorganization of Cyberstation.
(2)DUE AUTHORIZATION. Cyberstation has the corporate power, authority and
capacity to enter into this Agreement and all other agreements and instruments
to be executed by it as contemplated by this Agreement and to carry out its
obligations under this Agreement and such other agreements and instruments. The
execution and delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated by this
Agreement and such other agreements and instruments have been duly authorized by
all necessary corporate action on the part of Cyberstation, its directors and
its shareholders.
(3)AUTHORIZED AND ISSUED CAPITAL. The authorized capital of Cyberstation
consists of an unlimited number of Common Shares, of which 600 Common Shares are
validly issued and outstanding as fully paid and non-assessable shares in the
capital of Cyberstation.
(4)ISSUANCE OF SUBSCRIBED SHARES. The Subscribed Shares, when issued to
PlayStar pursuant to this Agreement, will be issued as fully paid and
non-assessable Common Shares in the capital of Cyberstation. Following the issue
of the Subscribed Shares, the issued and outstanding Common Shares will be owned
of record and beneficially as follows:
Alves - 300 shares
Conceicao - 300 shares
PlayStar - 400 shares
(5)ENFORCEABILITY OF OBLIGATIONS. This Agreement constitutes a valid and
binding obligation of Cyberstation enforceable against it in accordance with its
terms subject, however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of the rights
of creditors or others and to the extent that equitable remedies such as
specific performance and injunctions are only available in the discretion of the
court from which they are sought. Cyberstation is not an insolvent Person within
the meaning of the BANKRUPTCY AND INSOLVENCY ACT (Canada) and will not become an
insolvent Person as a result of the Closing.
(6)ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement by Cyberstation and the completion (with any
required Consents and Approvals and Notices) of the transactions contemplated by
this Agreement do not and will not result in or constitute any of the following:
(a) a default, breach or violation or an event that, with
notice or lapse of time or both, would be a default,
breach or violation of any of the terms, conditions
or provisions of the articles or by-laws of
Cyberstation or of any Contract or any of the
Licenses and Permits;
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<PAGE>
(b) an event which, pursuant to the terms of any Contract
or any of the Licenses and Permits, causes any right
or interest of Cyberstation to come to an end or be
amended in any way that is detrimental to the
Business or entitles any other Person to terminate or
amend any such right or interest;
(c) the creation or imposition of any Lien on any Asset;
or
(d) the violation of any Applicable Law applicable to or
affecting Cyberstation which is Related to the
Business.
(7) OWNERSHIP OF SHARES.
(a) Alves and Conceicao own, and at the Closing Time will
own, of record and beneficially all of the issued and
outstanding shares of Cyberstation.
(b) Other than this Agreement, there is no agreement,
option or other right or privilege outstanding in
favour of any Person for the purchase from
Cyberstation of the Business or of any of the shares
in the capital of Cyberstation.
(8)CORPORATE RECORDS. The minute books of each of Cyberstation contain
true, correct and complete copies of its articles, its by-laws, the minutes of
every meeting of its board of directors and every committee thereof and of its
shareholders and every written resolution of its directors and shareholders. The
share certificate book, register of shareholders, register of transfers and
register of directors and officers of Cyberstation are complete and accurate in
all material respects.
(9)BANKRUPTCY. Neither Cyberstation is an insolvent person within the
meaning of the BANKRUPTCY AND INSOLVENCY ACT (Canada) nor has made an assignment
in favour of its creditors nor a proposal in bankruptcy to its creditors or any
class thereof nor had any petition for a receiving order presented in respect of
it. Cyberstation has not initiated proceedings with respect to a compromise or
arrangement with its creditors or for its winding up, liquidation or
dissolution. No receiver has been appointed in respect of Cyberstation or any of
the Assets and no execution or distress has been levied upon any of the Assets.
(10) FINANCIAL STATEMENTS. Cyberstation has furnished PlayStar with the
unaudited financial statements of Cyberstation for the fiscal ended May 31,
1998, and the interim unaudited financial statements of Cyberstation for the
period ended December 31, 1998 (collectively, the "Financial Statements"), true
and complete copies of which are annexed as Schedule 4.1(10). The Financial
Statements have been prepared in accordance with GAAP. The balance sheets
contained in such Financial Statements fairly present the financial position of
Cyberstation as of its dates and the statements of earnings and retained
earnings contained in the Financial Statements fairly present the results of
operations for the periods indicated.
(11) TITLE TO ASSETS. Cyberstation has good and marketable title to all
the Assets, free and clear of any and all Liens. The Assets are sufficient to
permit the continued operation of the Business in substantially the same manner
as conducted in the year ended on the date of this Agreement. There is no
agreement, option or other right or privilege outstanding in favour of any
Person for the purchase from Cyberstation of the Business or of any of the
Assets out of the ordinary course of business.
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<PAGE>
(12) LITIGATION. There is no action, suit, proceeding, claim, application,
complaint or investigation in any court or before any arbitrator or by any
regulatory body or governmental or non-governmental body pending or threatened
by or against Cyberstation Related to the Business or affecting the the Business
or the transactions contemplated by this Agreement, and there is no factual or
legal basis which could give rise to any such action, suit, proceeding, claim,
application, complaint or investigation. There are no judgments, orders, decrees
or awards before any court, department, commission, board, instrumentality or
arbitrator which affects the Assets or the Business.
(13) CONFLICTS OF INTEREST. No shareholder, director, officer or employee
of Cyberstation or any affiliate of any of the foregoing: (a) has any pecuniary
interest in any supplier or customer of the Business or in any other business
with which Cyberstation conducts business or with which Cyberstation is in
competition; (b) has any interest in the Assets; or (c) has any contractual or
other claim, express or implied, of any kind whatsoever against Cyberstation in
connection with the Business or Assets.
(14) RELATED ASSETS. Cyberstation does not own or has any interest in any
software, systems, services or other intellectual or industrial property rights
or shares of or interest in any Person involved in the development, sale or
other use of such software, systems, services or other intellectual or
industrial property rights.
(15) LICENSES AND PERMITS. To the knowledge of Cyberstation there are no
Licenses and Permits that are required to enable Cyberstation to carry on the
Business.
(16) UNDISCLOSED LIABILITIES. Cyberstation does not have any liabilities,
obligations, indebtedness or commitments, whether accrued, absolute, contingent
or otherwise, which are not disclosed in the Financial Statements or referred to
or disclosed herein, other than liabilities, obligations and indebtedness (i)
incurred in the normal course of business; and (ii) which do not exceed $25,000
in the aggregate.
(17) CONSENTS AND APPROVALS. No Consent or Approval of any Person is
required in connection with the execution and delivery of this Agreement and the
completion of the transaction contemplated by this Agreement.
(18) NOTICES. No Notice is required to be delivered to any Person in
connection with the execution and delivery of this Agreement and the completion
of the transactions contemplated by this Agreement.
(19) COMPLIANCE WITH LAWS. The Business has been operated, and the Assets
used, in compliance with all requirements of applicable federal, provincial and
municipal law, and all requirements of all governmental bodies or agencies
having jurisdiction over it. Cyberstation has not received any notice from any
federal, provincial or municipal authority or any insurance or inspection body,
that any of the properties, facilities, equipment or business procedures or
practices of the Business fails to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public authority or
body wherever located. There are no regulations or legislation pending before
any federal, provincial or municipal governmental body or legislature which, if
adopted, would have a materially adverse effect on the Business or the Assets.
(20) BROKERAGE FEES. Cyberstation has not entered into any agreement which
would entitle any Person to any valid claim against PlayStar or PlayStar for a
broker's commission, finder's fee or any like payment in respect of the
transactions contemplated by this Agreement.
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<PAGE>
(21) FULL DISCLOSURE. Neither this Agreement, including all Exhibits and
Schedules, nor any other documents or instruments delivered by Cyberstation to
PlayStar in connection with this Agreement and the transactions contemplated by
this Agreement, contains or will contain any untrue statement of any material
fact or omits or will omit to state any material fact required to be stated to
make such statement, document or instrument not misleading. There has been no
event, transaction or information which has come to the attention of
Cyberstation that has not been disclosed to PlayStar in writing which could
reasonably, be expected to have a material adverse effect on the ongoing
operation by a reasonable and prudent operator of the Business or any material
part thereof, except for matters which affect businesses similar to do the
Business generally.
. PlayStar hereby represents and warrants to Cyberstation as follows and
acknowledges that Cyberstation is relying on such representations and warranties
in connection with the transactions provided for herein:
(1)INCORPORATION AND POWER. PlayStar is a corporation incorporated,
validly subsisting and in good standing under the laws of Antigua and has full
power and authority to own its properties and to carry on the business as
presently conducted by it.
(2)DUE AUTHORIZATION. PlayStar has the corporate power, authority and
capacity to enter into this Agreement and all other agreements and instruments
to be executed by it as contemplated by this Agreement and to carry out its
obligations under this Agreement and such other agreements and instruments. The
execution and delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated by this
Agreement and such other agreements and instruments have been duly authorized by
all necessary corporate action on the part of PlayStar.
(3)AUTHORIZED AND ISSUED CAPITAL. The authorized capital of PlayStar
consists of 50,000,000 Ordinary Shares, par value of US$0.0001 per share, and
1,000,000 shares of Series Preference Shares, par value US$0.0001 per share, of
which 28,592,644 Ordinary Shares of PlayStar are validly issued and outstanding
as fully paid and non-assessable shares in the capital of PlayStar. The Ordinary
Shares of PlayStar are quoted for trading on the NASDAQ Bulletin Board.
(4)ENFORCEABILITY OF OBLIGATIONS. This Agreement constitutes a valid and
binding obligation of PlayStar enforceable against PlayStar in accordance with
its terms subject, however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of the rights
of creditors or others and to the extent that equitable remedies such as
specific performance and injunctions are only available in the discretion of the
court from which they are sought. PlayStar is not an insolvent Person within the
meaning of the BANKRUPTCY AND INSOLVENCY ACT (Canada) and will not become an
insolvent Person as a result of the Closing.
(5)ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement by PlayStar and the completion (with any required
Consents and Approvals and Notices) of the transactions contemplated by this
Agreement do not and will not result in or constitute any of the following:
(a) a default, breach or violation or an event that, with
notice or lapse of time or both, would be a default,
breach or violation of any of the terms, conditions
or provisions of the articles or by-laws of PlayStar
or of any Contract to which PlayStar is a party or
bound or by which PlayStar or any of its assets or
its properties is bound or affected; or
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<PAGE>
(b) the violation of any Applicable Law applicable to or
affecting PlayStar or any of its assets or its
properties.
(6)CONSENTS AND APPROVALS. Except for certain notifications and filings
with applicable regulatory authorities, there is no requirement for PlayStar or
PlayStar to make any filing with, give any notice to or obtain any licence,
permit, certificate, registration, authorization, consent or approval of, any
government or regulatory authority as a condition to the lawful consummation of
the transactions contemplated by this Agreement.
(7)LITIGATION. PlayStar is not a party to or, to PlayStar's best
knowledge, threatened with, any suit, action, arbitration or other legal or
administrative proceeding which would adversely affect PlayStar's obligations
under this Agreement.
(8)FULL DISCLOSURE. Neither this Agreement, including all Exhibits and
Schedules, nor any other documents or instruments delivered by PlayStar to
Cyberstation in connection with this Agreement and the transactions contemplated
by this Agreement, contains or will contain any untrue statements of any
material fact or omits or will omit to state any material fact required to be
stated to make such statement, document or instrument not misleading.
(1)The representations and warranties of Cyberstation contained in Section
4.1 or any other agreement, certificate or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years from the Closing
Date, and notwithstanding the Closing and any inspection or inquiries made by or
on behalf of PlayStar, shall continue in full force and effect for the benefit
of PlayStar, after which time Cyberstation shall be released from all
obligations in respect of such representations and warranties except with
respect to any Claims asserted by PlayStar in writing (setting out in reasonable
detail the nature of the Claim and approximate amount of such Claim) before the
expiration of such period.
(2)The representations and warranties of PlayStar contained in Section 4.2
or any other agreement, certificate or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years from the Closing
Date, and notwithstanding the Closing, shall continue in full force and effect
for the benefit of Cyberstation, after which time PlayStar shall be released
from all obligations in respect of such representations and warranties except
with respect to any Claims asserted by Cyberstation in writing (setting out in
reasonable detail the nature of the Claim and the appropriate amount thereof)
before the expiration of such period.
. Cyberstation agrees to indemnify and save harmless PlayStar and PlayStar from
all losses, claims, damages, liabilities, deficiencies, costs and expenses (a
"Claim") which may be made or brought against an Indemnified Party or which it
may suffer or incur directly or indirectly as a result of or arising out of:
(a) any incorrectness in or breach of any representation
or warranty of Cyberstation contained in this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement; and
(b) any breach or non-performance of any covenant or
agreement on the part of Cyberstation under this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement.
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<PAGE>
. PlayStar agrees to indemnify and save harmless Cyberstation in respect of any
Claim which may be made or brought against an Indemnified Party or which it may
suffer or incur directly or indirectly as a result of or arising out of:
(a) any incorrectness in or breach of any representation
or warranty of PlayStar contained in this Agreement
or in any agreement, instrument, certificate or other
document delivered pursuant to this Agreement;
(b) any breach or non-performance of any covenant or
agreement on the part of PlayStar under this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement.
. If and Indemnified Party becomes aware of a Claim in respect of which
indemnification is provided pursuant to either of Section 5.1 or 5.2, as the
case may be the Indemnified Party shall promptly give written notice thereof to
the Indemnifying Party. Such notice shall specify whether the claim arises as a
result of a claim by a third Person against the Indemnified Party (a "Third
Party Claim") or whether the Claim does not so arise (a "Direct Claim"), and
shall also specify with reasonable particularity (to the extent that the
information is available)
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time effectively to contest the determination of
any liability susceptible of being contested, then the Liability of the
Indemnifying Party to the Indemnified Party under this Article shall be reduced
by the amount of any losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.
. In the case of a Direct Claim, the Indemnifying Party shall have 60 days
following receipt of notice of the Claim to make such investigation of the Claim
as is considered necessary or desirable. For the purpose of such investigation,
the Indemnified Party shall make available to the Indemnifying Party the
information relied upon by the Indemnified Party to substantiate the Claim,
together with all such other information as the Indemnifying Party may
reasonably request. If both parties agree at or prior to the expiration of such
60-day period (or any mutually agreed upon extension thereof) to the validity
and amount of such Claim, the Indemnifying Party shall immediately pay to the
Indemnified Party the full agreed upon amount of the claim, failing which the
matter shall be determined by a court of competent jurisdiction.
. In the case of a Third Party Claim, the Indemnifying Party shall have the
right, at its expense, to participate in or assume control of the negotiation,
settlement or defence of the Claim. If the Indemnifying Party elects to assume
such control, the Indemnifying Party shall reimburse the Indemnified Party for
all of the Indemnified Party's out-of-pocket expenses incurred as a result of
such participation or assumption. The Indemnified Party shall have the right to
participate in the negotiation, settlement or defence of such Third Party Claim
and to retain counsel to act on its behalf, provided that the fees and
disbursements of such counsel shall be paid by the Indemnified Party unless the
Indemnifying Party consents to the retention of such counsel at its expense or
unless the named parties to any action or proceeding include both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to the actual or potential differing interests between them
(such as the availability of different defences). The Indemnified Party shall
cooperate with the Indemnifying Party so as to permit the Indemnifying Party to
conduct such negotiation, settlement and defence and for this purpose shall
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<PAGE>
preserve all relevant documents in relation to the Third Party Claim, allow the
Indemnifying Party access on reasonable notice to inspect and take copies of all
such documents and require its personnel to provide such statements as the
Indemnifying Party may reasonably require and to attend and give evidence at any
trial or hearing in respect of the Third Party Claim. If, having elected to
assume control of the negotiation, settlement or defence of the Third Party
Claim, the Indemnifying Party thereafter fails to conduct such negotiation,
settlement or defence with reasonable diligence, then the Indemnified Party
shall be entitled to assume such control and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim. If any Third Party Claim is of a nature such that (i) the
Indemnified Party is required by Applicable Law or the order of any court,
tribunal or regulatory body having jurisdiction, or (ii) it is necessary in the
reasonable view of the Indemnified Party acting in good faith and in a manner
consistent with reasonable commercial practices, in respect of (A) a Third Party
Claim by a customer relating to products or services supplied by the Business or
(B) a Third Party Claim relating to any Contract which is necessary to the
ongoing operations of the Business or any material part thereof in order to
avoid material damage to the relationship between the Indemnified Party and any
of its major customers or to preserve the rights of the Indemnified Party under
such an essential contract, to make a payment to any person (a "Third Party")
with respect to the Third Party Claim before the completion of settlement
negotiations or related legal proceedings, as the case may be, then the
Indemnified Party may make such payment and the Indemnifying Party shall,
promptly after demand by the Indemnified Party, reimburse the Indemnified Party
for such payment. If the amount of any liability of the Indemnified Party under
the Third Party Claim in respect of which such a payment was made, as finally
determined, is less than the amount which was paid by the Indemnifying Party to
the Indemnified Party, the Indemnified Party shall, promptly after receipt of
the difference from the Third Party, pay the amount of such difference to the
Indemnifying Party. If such a payment, by resulting in settlement of the Third
Party Claim, precludes a final determination of the merits of the Third Party
Claim and the Indemnified Party and the Indemnifying Party are unable to agree
whether such payment was unreasonable in the circumstances having regard to the
amount and merits of the Third Party Claim, then such dispute shall be referred
to and finally settled by binding arbitration from which there shall be no
appeal.
. If the Indemnifying Party fails to assume control of the defence of any Third
Party Claim, the Indemnified Party shall have the exclusive right to contest,
settle or pay the amount claimed. Whether or not the Indemnifying Party assumes
control of the negotiation, settlement or defence of any Third Party Claim, the
Indemnifying Party shall not settle any Third Party Claim without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that the liability of the Indemnifying
Party shall be limited to the proposed settlement amount if any such consent is
not obtained for any reason within a reasonable time after the request therefor.
. PlayStar shall be entitled to set-off the amount of any Claim submitted under
Section 5.1 as damages or by way of indemnification against any other amounts
payable by PlayStar to Cyberstation whether under this Agreement or otherwise.
. Cyberstation shall give to PlayStar and its agents access to Cyberstation and
all of Cyberstation's documents (including without limitation all contracts),
books and records relating to the current and past operations of the Business,
and shall permit PlayStar and its agents to make copies thereof, and
Cyberstation shall permit PlayStar to interview Cyberstation's employees during
reasonable business hours and upon reasonable prior notice.
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<PAGE>
(1)Each Party shall (and shall cause each of its Representatives (as
defined below) to) hold in strictest confidence and not use in any manner, other
than as expressly contemplated by this Agreement, any Confidential Information
(as defined below) of the other Party.
(2)Section 6.2(1) shall not apply to the disclosure of any Confidential
Information where such disclosure is required by Applicable Law. In that case,
the Party required to disclose (or whose Representative is required to disclose)
shall, as soon as possible in the circumstances, notify the other Party of the
requirement. Upon receiving such notification, the other Party may take any
reasonable action to challenge the requirement, and the affected Party shall (or
shall cause the applicable Representative to), at the expense of the other
Party, assist the other Party in taking such reasonable action.
(3)Following the termination of this Agreement in accordance with the
provisions of either of Sections 8.2 or 8.4, each Party shall (and shall cause
each of its Representatives to) promptly, upon a request from the other Party,
return to the requesting Party all copies of any tangible items (other than this
Agreement), if any, which are or which contain Confidential Information of the
requesting Party; provided that if the Party so obligated to return Confidential
Information or its Representatives have prepared summaries or analyses
containing or concerning any Confidential Information, then such Party may,
instead of returning the summaries or analyses, destroy them and provide a
certificate to that effect to the requesting Party.
(4)For the purposes of this Section 6.2:
(a) "CONFIDENTIAL INFORMATION" of a Party at any time
means all information relating to such Party's
business (including business plans, way of doing
business, business results and prospects and customer
lists) which,
(i) at the time is of a confidential nature
(whether or not specifically identified as
confidential) and is known or should be
known by the other Party or its
Representatives as being confidential, and
(ii) has been or is from time to time made known
to or is otherwise learned by the other
Party or any of its Representatives as a
result of the matters provided for in this
Agreement,
including the following information:
(iii) the terms of this Agreement;
(iv) a Party's proprietary software; and
(v) a Party's business records,
but not including any information that at such time:
(vi) has become generally available to the public
other than as a result of a disclosure by
the other Party or any of its
Representatives;
(vii) was available to the other Party or its
Representatives on a non-confidential basis
before the date of this Agreement; or
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<PAGE>
(viii) becomes available to the other Party or its
Representatives on a non-confidential basis
from a Person other than the first-mentioned
Party or any of its Representatives who is
not, to the knowledge of such other Party or
its Representatives, otherwise bound by
confidentiality obligations to such
first-mentioned Party in respect of such
information or otherwise prohibited from
transmitting the information to the other
Party or its Representatives; and
(b) "REPRESENTATIVES" with respect to any party means its
Affiliates and its and their respective directors,
officers, employees, agents and other representatives
and advisers.
. During the Interim Period, Cyberstation shall:
(a) not do any act or omit to do any act which would
cause a breach of representation, warranty, covenant
or agreement contained in this Agreement;
(b) carry on the Business in the normal course;
(c) not enter into any contract, agreement, commitment or
other arrangement with any party, other than
contracts in the ordinary course of its business;
(d) maintain and keep the Assets in good repair; and
(e) notify PlayStar immediately of any breach of any
representation or covenant in this Agreement.
. During the Interim Period, Cyberstation shall not and shall cause
Cyberstation's shareholders not to, take any action, directly or indirectly, to
encourage, initiate or engage in discussions or negotiations with, or provide
any information to any Person, other than PlayStar and its agents, concerning
any sale, transfer, assignment, license, merger or similar transaction involving
Cyberstation, its shares, or the Assets. Cyberstation shall notify PlayStar
promptly if any such discussions or negotiations are sought or if any proposal
for a sale, transfer, assignment, license, merger or similar transaction is
received or being considered.
. Cyberstation shall use its best efforts to obtain all Consents and Approvals
before the Closing Date at Cyberstation's own expense.
. Cyberstation shall update on or before the Closing, by amendment or
supplement, any of the information disclosure schedules referred to in this
Agreement and any other disclosure in writing from Cyberstation to PlayStar as
soon as reasonably possible after new or conflicting information comes to the
attention of Cyberstation. PlayStar shall not be obligated to accept any such
amendment or supplement and receipt of any such amendment or supplement shall
not be deemed to be a waiver or release by PlayStar of any provision of this
Agreement.
. Each Party shall promptly do execute, deliver, or cause to be done, executed
or delivered all further acts, documents and things in connection with this
Agreement that the other Party may reasonably require for the purpose of giving
effect to this Agreement.
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. At the Closing:
(a) the board of directors of PlayStar Sub shall consist
of seven directors comprised of Alves, William F.E.
Tucker, Peter Miller, Bill Kertes, Michael Mandell
and two nominees of Alves;
(b) Alves shall be appointed Chief Executive Officer of
PlayStar Sub; and
(c) the board of directors of Cyberstation shall consist
of five directors of which PlayStar shall be entitled
to nominate two directors.
. The obligations of PlayStar to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, any or all of which PlayStar may waive in
its sole discretion:
(1) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Cyberstation in Section 4.1 shall be true and correct as if made on and as of
the Closing.
(2) PERFORMANCE OF AGREEMENTS. Cyberstation shall have performed and
complied with all of their covenants and agreements contained in this Agreement
which are required to be performed or complied with on or prior to the Closing.
(3) DUE DILIGENCE INVESTIGATIONS. PlayStar shall have conducted and
completed its investigation of Cyberstation, the Business, the Assets and
PlayStar, in its sole discretion, shall have been satisfied in all respects with
the results of such investigation and, in its sole discretion, shall have
determined to proceed with the transactions contemplated by this Agreement.
(4) NO LITIGATION. There shall be no litigation or proceedings:
(a) pending or threatened against any of the parties
hereto or against any of their respective Affiliates
or any of their respective directors or officers, or
involving the assets or properties of any of them,
for the purpose of enjoining, preventing or
restraining the completion of the transactions
contemplated hereby or otherwise claiming that such
completion is improper; or
(b) pending or threatened against any of the Parties or
against any of their respective Affiliates or any of
their respective directors or officers which in the
judgment of PlayStar, would make the completion of
the transactions contemplated by this Agreement
inadvisable.
(5) SHAREHOLDER AGREEMENT. Alves and Conceicao shall have executed and
delivered to PlayStar the Shareholder Agreement substantially in the form of
Exhibit A.
(6) OPINION OF COUNSEL. Cyberstation shall have delivered to PlayStar a
favourable opinion of counsel to Cyberstation which shall be in a form
reasonably acceptable to PlayStar.
(7) NO ACTIONS, ETC. No action, suit, proceeding or investigation by or
before any court, administrative agency or other governmental authority shall
have been instituted or threatened, the effect of which would restrain, prohibit
or invalidate the transactions contemplated by this Agreement or affect the
right of PlayStar to own, after the Closing, the Subscribed Shares.
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<PAGE>
(8)CONSENTS AND APPROVALS. All Consents and Approvals have been obtained.
(9)CERTIFICATE AS TO REPRESENTATIONS AND WARRANTIES. Cyberstation shall
have executed and delivered to PlayStar a certificate confirming the accuracy of
all of the representations and warranties of Cyberstation contained in this
Agreement.
(10) DELIVERIES. All documents required to be delivered by Cyberstation at
or prior to the Closing Date shall have been delivered to PlayStar at Closing.
. If any condition in Section 8.1 has not been fulfilled at or before the
Closing, then PlayStar in its sole discretion may, without limiting any rights
or remedies available to PlayStar or PlayStar at law or in equity, either:
(a) terminate this Agreement by Notice to Cyberstation,
in which event PlayStar and PlayStar shall be
released from its obligations under this Agreement to
complete the purchase of the Subscribed Shares; or
(b) waive compliance with any such condition without
prejudice to its right of termination in the event of
non-fulfilment of any other condition.
. The obligations of Cyberstation to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, any or all of which Cyberstation may waive
in its sole discretion:
(1)REPRESENTATIONS AND WARRANTIES. The representations and warranties of
PlayStar set forth in Section 4.2 shall be true and correct as if made on and as
of the Closing.
(2)PERFORMANCE OF AGREEMENTS. PlayStar shall have performed and complied
with all of its covenants and agreements contained in this Agreement which are
required to be performed or complied with on or prior to the Closing.
(3)NO LITIGATION. There shall be no litigation or proceedings:
(a) pending or threatened against any of the parties
hereto or against any of their respective Affiliates
or any of their respective directors or officers, or
involving the assets or properties of any of them,
for the purpose of enjoining, preventing or
restraining the completion of the transactions
contemplated hereby or otherwise claiming that such
completion is improper; or
(b) pending or threatened against any of the Parties or
against any of their respective Affiliates or any of
their respective directors or officers which in the
judgment of Cyberstation, would make the completion
of the transactions contemplated by this Agreement
inadvisable.
(4)NO ACTIONS, ETC. No action, suit, proceeding or investigation by or
before any court, administrative agency or other governmental authority shall
have been instituted or threatened, the effect of which would restrain, prohibit
or invalidate the transactions contemplated by this Agreement.
-16-
<PAGE>
(5) SHAREHOLDER AGREEMENT. PlayStar shall have executed and delivered the
Shareholder Agreement substantially in the form of Exhibit A.
(6) DIRECTOR. Alves shall have been appointed a director and Chief
Executive Officer of PlayStar.
(7) DELIVERIES. All documents required to be delivered by PlayStar and
PlayStar at or prior to Closing shall have been delivered to Cyberstation at
Closing. Shares shall have been received.
(8) OPINIONS OF COUNSEL. PlayStar shall have delivered to Cyberstation
favourable opinions of counsel to PlayStar and PlayStar Sub which will be in a
form reasonably acceptable to Cyberstation.
. If any condition in Section 8.3 shall not have been fulfilled at or before the
Closing, then Cyberstation in its sole discretion may, without limiting any
rights or remedies available to Cyberstation at law or in equity, either:
(a) terminate this Agreement by Notice to PlayStar in
which event Cyberstation shall be released from all
obligations under this Agreement; or
(b) waive compliance with any such condition without
prejudice to its right of termination in the event of
non-fulfilment of any other condition.
. The transactions provided for by this agreement shall be consummated (the
"Closing") at 10:00 a.m. (Toronto time) on the Closing Date, at the offices of
Blake, Cassels & Graydon, Toronto, Ontario, or at such other place and time as
Cyberstation and PlayStar shall mutually agree.
. At the Closing, Cyberstation shall deliver, or cause to be delivered, to
PlayStar:
(a) the certificate or certificates representing the
Subscribed Shares registered in the name of PlayStar
or its nominee;
(b) a certified resolution of the directors of
Cyberstation approving this Agreement and the issue
of the Subscribed Shares to PlayStar pursuant to the
terms hereof;
(c) a certificate signed by the President of Cyberstation
dated the Closing Date, confirming: (i) the truth and
accuracy of all of the representations and warranties
of Cyberstation contained in this Agreement as of
Closing Date and as of all times between the date
hereof and the Closing Date; (ii) all agreements and
covenants of Cyberstation required to have been
complied with have been complied with; and (iii) that
all necessary corporate action has been taken by
Cyberstation to authorize the consummation of the
transactions contemplated by this Agreement;
(d) a certificate signed by the Secretary or other
officer of Cyberstation, dated the Closing Date,
attaching the constating documents of Cyberstation,
the corporate resolutions of Cyberstation authorizing
the execution, delivery and performance by
Cyberstation of this Agreement and the certificate of
status of Cyberstation;
-17-
<PAGE>
(e) all Consents and Approvals;
(f) the Shareholders Agreement duly executed by
Cyberstation;
(g) opinions of counsel to Cyberstation, dated the
Closing Date, in form and content reasonably
acceptable to PlayStar; and
(h) all such other assurances, transfers, assignments,
consents, and such other agreements, documents and
instruments as may be reasonably required by PlayStar
to complete the transactions provided for in this
Agreement.
. At the Closing, PlayStar shall deliver or cause to be delivered to
Cyberstation:
(a) payment of the subscription price for the
Subscribed Shares to Cyberstation;
(b) a certified resolution of the sole director of
PlayStar approving this Agreement;
(c) certificates signed by the President of PlayStar and
by the President of PlayStar, dated the Closing Date,
confirming: (i) the truth and accuracy of all of the
representations and warranties of PlayStar contained
in this Agreement as of the Closing Date and as of
all times between the date hereof and the Closing
Date; (ii) that all agreements and covenants of
PlayStar required to have been complied with have
been complied with; and (iii) that all necessary
corporate action by PlayStar and PlayStar has been
taken to authorize the consummation of the
transactions contemplated by the Agreement;
(d) certificates signed by the Secretary or other officer
of PlayStar and of PlayStar Sub, dated the Closing
Date, attaching the respective constating documents
of PlayStar and PlayStar, the respective corporate
resolutions of PlayStar and PlayStar authorizing the
execution, delivery and performance by PlayStar and
PlayStar of this Agreement and certificates of status
of PlayStar and of PlayStar;
(e) the Shareholders Agreement duly executed by PlayStar;
(f) opinions of counsel to PlayStar and PlayStar Sub,
dated the Closing Date, in form and content
reasonably acceptable to Cyberstation.
. Each Party shall be responsible for its own legal and other expenses
(including any taxes imposed on such expenses) incurred in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement
and the transactions contemplated by this Agreement and for the payment of any
broker's commission, finder's fee or like payment payable by it in respect of
the transactions contemplated by this Agreement.
. Except to the extent otherwise required by law or with the prior consent of
the other Party, neither Party shall make any public announcement regarding this
Agreement or the transactions contemplated by this Agreement.
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<PAGE>
(1) All notices and other communications hereunder shall be in writing and
shall be sent by certified mail, postage prepaid, return receipt requested; by
an overnight express courier services that provides written confirmation of
delivery; or by facsimile with confirmation, addressed as follows:
IF TO PLAYSTAR:
PlayStar Wyoming Holding Corp.
The Dollar Building
Nevis Street, Top Floor
St. John's, Antigua
WI
Fax: (268) 562-0076
Attention: William F.E. Tucker
With a copy (which shall not constitute notice) to:
Blake, Cassels & Graydon
Box 25
Commerce Court West
Toronto, Ontario
M5L 1A9
Fax: (416) 863-2653
Attention: R. A. Bondy
IF TO CYBERSTATION:
Cyberstation Computers & Support Inc.
121 Richmond Street West
Suite 1104
Toronto, Ontario
M5H 2G4
Attention: Joseph Alves
Fax: (416) 860-9380
With a copy (which shall not constitute notice) to:
Sereda & Sereda
1 First Canadian Place
100 King Street West
P.O. Box 160
Suite 700
Toronto, Ontario
M5X 1C7
Attention: Joe Sereda
Fax: (416) 203-0606
-19-
<PAGE>
(2)Any such communication so given or made shall be deemed to have been
given or made and to have been received on the day of delivery if delivered, or
on the day of faxing or sending by other means of recorded electronic
communication, provided that such day in either event is a Business Day and the
communication is so delivered, faxed or sent before 4:30 p.m. on such day.
Otherwise, such communication shall be deemed to have been given and made and to
have been received on the next following Business Day. Any such communication
sent by mail shall be deemed to have been given and made and to have been
received on the fifth Business Day following the mailing thereof; provided
however that no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication given or made
in any other manner shall be deemed to have been given or made and to have been
received only upon actual receipt.
(3)Any Party may change its address for receiving notice by giving notice
of a new address in the manner provided herein.
. This Agreement constitutes the entire agreement between the parties pertaining
to the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written. There are
no conditions, warranties, representations or other agreements between the
parties in connection with the subject matter of this Agreement (whether oral or
written, express or implied, statutory or otherwise) except as specifically set
out in this Agreement.
. Time shall be of the essence of this Agreement.
. If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
. This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the parties shall be governed
by, the laws of the Province of Ontario and the federal laws of Canada
applicable therein, and each Party hereby irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
. A waiver of any default, breach or non-compliance under this Agreement is not
effective unless in writing and signed by the Party to be bound by the waiver.
No waiver shall be inferred from or implied by any failure to act or delay in
acting by a Party in respect of any default, breach or non-observance or by
anything done or omitted to be done by the other Party. The waiver by a Party of
any default, breach or non-compliance under this Agreement shall not operate as
a waiver of that Party's rights under this Agreement in respect of any
continuing or subsequent default, breach or non-observance (whether of the same
or any other nature).
. This Agreement may not be assigned by any Party without the prior written
consent of the other Parties. This Agreement shall be binding upon the parties
hereto, and their successors and permitted assigns.
-20-
<PAGE>
. This Agreement may be executed in any number of counterparts, by facsimile or
otherwise, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above.
PLAYSTAR WYOMING HOLDING CORP.
By:
--------------------------------------
CYBERSTATION COMPUTERS & SUPPORT INC.
By:
--------------------------------------
-21-
EXHIBIT 10.7
SHAREHOLDER AGREEMENT
THIS AGREEMENT made as of the 16th day of February, 1999
AMONG:
PLAYSTAR WYOMING HOLDING CORP., a corporation organized and
existing under the laws of Antigua
("PlayStar")
- and -
JOSEPH ALVES and ALICIA DA CONCEICAO, both of the Province of
Ontario and being the sole shareholders of Cyberstation
("Alves" and "Conceicao", respectively)
- and -
CYBERSTATION COMPUTERS & SUPPORT INC., a corporation organized
and existing under the laws of Ontario
(the "Corporation")
WHEREAS the authorized capital of the Corporation consisted of
an unlimited number of Common Shares, of which 1,000 Common Shares are issued
and outstanding;
AND WHEREAS Alves, Conceicao and PlayStar are the registered
and beneficial owners of all of the issued and outstanding Common Shares of the
Corporation;
AND WHEREAS Cyberstation International has granted to each of
PlayStar and the Corporation an exclusive perpetual royalty-free license by to
use the Licensed Property in the areas designated in each license;
AND WHEREAS the Shareholders wish to enter into this Agreement
to, among other things, provide for the management of the Corporation and to
regulate dealings with their investments in the Corporation;
AND WHEREAS it is the intention of the Parties that this
Agreement should constitute a unanimous shareholder agreement with respect to
the Corporation;
<PAGE>
NOW THEREFORE for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the Parties agree as follows:
. Where used herein or in any amendment or supplement hereof, unless the context
otherwise requires, the words and phrases with initial capitals set forth below
will have the meanings so set forth therein.
"ACCEPTANCE NOTICE" has the meaning given in Section 4.5;
"ACT" means the BUSINESS CORPORATIONS ACT (Ontario);
"AFFILIATE" means, with respect to any Person, any other
Person who directly or indirectly controls, is controlled by,
or is under direct or indirect common control with, such
Person, and includes any Person in like relation to an
Affiliate. A Person is deemed to control another Person if
such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies
of such other Person, whether through the ownership of voting
securities, by contract or otherwise; and the term
"controlled" has a corresponding meaning;
"AGREEMENT" means this Agreement, including the Schedules to
this Agreement, as it or they may be amended or supplemented
form time to time, and the expressions "HEREOF", "HEREIN",
"HERETO", "HEREUNDER", "HEREBY" and similar expressions refer
to this Agreement and not to any particular Section or other
portion of this Agreement;
"ARM'S LENGTH" shall have the same meaning as that term is
given in the INCOME TAX ACT (Canada);
"ARTICLES OF INCORPORATION" means the articles of
incorporation of the Corporation, as amended or restated from
time to time in accordance with the provisions of this
Agreement and the Act;
"BOARD" means the board of directors of the Corporation;
"BUDGET" means the estimates of proposed and committed
expenditures and the subject matter of each expenditure with
respect to the development of the Licensed Property for the
subject period and a statement of objectives and plans with
respect to such expenditures;
"BUSINESS DAY" means any day except Saturday, Sunday or any
day on which banks are generally not open for business in the
City of Toronto;
"BUSINESS OF THE CORPORATION" means the business of the
activities associated with being the business of developing
proprietary software, systems and services used to provide
electronic commerce solutions that enable businesses to sell
products and services on the Internet;
"BUYER" has the meaning given in Section 5.1;
"BY-LAWS" means the by-laws of the Corporation in the form
enacted on the date hereof and any additions or amendments
thereto made after the date hereof;
-2-
<PAGE>
"CLAIMS" means all claims, damages (direct, indirect,
consequential or otherwise), losses, liabilities (whether
accrued, actual, contingent or otherwise), demands, suits,
judgments, causes of action, legal proceedings, penalties or
other sanctions and any costs and expenses arising in
connection therewith, including legal fees and disbursements
on a solicitor and own client basis (including all such legal
fees and disbursements in connection with any appeals), and
all accounting and professional fees and disbursements;
"COMMON SHARES" means the common shares of the Corporation
issued and outstanding from time to time;
"CONFIDENTIAL INFORMATION" of a Party means all information
(and all documents and other tangible items which record
information, whether on paper, in computer readable format or
otherwise) relating to such Party's business (including,
without limitation, business plans, property, way of doing
business or business results or prospects) which:
(a) at the time concerned is either protectable as a
trade secret under Applicable Law, or is otherwise of
a confidential nature (and is known or should have
been known by the other Party or its Representatives
as being of a confidential nature), and
(b) has been or is from time to time made known to or is
otherwise learned by the other Party or any of its
Representatives as a result of the relationship under
this Agreement,
including, without limitation, the following information:
(c) the terms of this Agreement;
(d) a Party's proprietary software; and
(e) a Party's business records,
but not including any information or documents or other
tangible items which at the time in question:
(f) have become generally available to the public other
than as a result of a disclosure by the other Party
or any of its Representatives;
(g) were available to the other Party or its
Representatives on a non-confidential basis before
the date of this Agreement; or
(h) become available to the other Party or its
Representatives on a non-confidential basis from a
Person other than the first-mentioned Party or any of
its Representatives who is not, to the knowledge of
such other Party or its Representatives, otherwise
bound by confidentiality obligations to such
first-mentioned Party or otherwise prohibited from
transmitting the information to the other Party or
its Representatives;
-3-
<PAGE>
"CYBERSTATION LICENSE AGREEMENT" means the license agreement
dated the date hereof entered into between Cyberstation
International, as licensor, and Cyberstation, as licensee with
respect to the Licensed Property; "CYBERSTATION INTERNATIONAL"
means Cyberstation International Limited, a St. Kitts company;
"DECLINING OFFEREE" has the meaning given in Section 4.7;
"DIRECTOR" means a person occupying the position of director
of the Corporation, and "Directors" means every Director;
"EQUITY SECURITIES" means the y issued and outstanding Common
Shares and any other shares in the capital of the Corporation
issued and outstanding at any time in the future, and any
rights, warrants, options or other instruments entitling the
holder, whether or not on a contingency, to acquire from the
Corporation shares of the Corporation, and any instruments
convertible or exchangeable, whether or not on a contingency,
into any of the foregoing;
"EQUITY SECURITYHOLDER" means the holder of any Equity
Security;
"FAIR MARKET VALUE" means the cash value of Equity Securities
as if determined in an open and unrestricted market in a
transaction between informed and prudent parties acting at
Arm's Length and under no compulsion to act, without a premium
for control or discount for minority interest, as established
by a national firm of business valuators retained by the
Corporation and selected by the Board without the
participation of directors, if any, nominated by a Shareholder
that has an interest in the transaction pursuant to which the
value of Equity Securities is being established;
"GAAP" means those accounting principles that are recognized
as being generally accepted in Canada from time to time as set
forth in the HANDBOOK published by the Canadian Institute of
Chartered Accountants, consistently applied;
"LICENSED PROPERTY" means the software and intellectual
property licensed by Cyberstation International to PlayStar
and to Cyberstation pursuant to the PlayStar License Agreement
and the Cyberstation License Agreement;
"LIEN" means any encumbrance, charge, pledge, hypothecation,
security interest, lien (whether statutory or otherwise),
prior assignment, option to purchase or adverse claim;
"OFFERED SECURITIES" has the meaning given in Section 4.5;
"OVERSUBSCRIPTION" has the meaning given in Section 6.1(2);
"PARTY" means a party to this Agreement and any reference to a
Party includes its successors and permitted assigns; and
"PARTIES" means every Party;
"PERSON" is to be broadly interpreted and includes an
individual, a corporation, a partnership, a trust, an
unincorporated organization, the government of a country or
any political subdivision thereof, or any agency or department
of any such government, and the executors, administrators or
other legal representatives of an individual in such capacity;
-4-
<PAGE>
"PLAYSTAR" means PlayStar Wyoming Holding Corp. and its
successors and permitted assigns;
"PLAYSTAR APPROVAL" means, in the case of a vote on a
resolution by the Board or a committee of the Board, the
approval of at least one PlayStar Director and, in the case of
a vote on a resolution or other matter by the Shareholders,
the approval of PlayStar;
"PLAYSTAR DIRECTOR" means a Director who was nominated by
PlayStar;
"PLAYSTAR LICENSE AGREEMENT" means the license agreement dated
the date hereof entered into between the Company, as licensor,
and PlayStar Sub, as licensee, with respect to the Licensed
Property;
"PLAYSTAR SUB" means Players Limited, an Antigua company and a
wholly-owned subsidiary of PlayStar;
"PROPORTION" has the meaning given in Section 6.1(2);
"REPRESENTATIVES" with respect to any Party means its
Affiliates and its or their respective directors, officers,
employees, agents and other representatives;
"SALE DATE" has the meaning given in Section 4.5;
"SELLER" has the meaning given in Section 4.5;
"SELLING NOTICE" has the meaning given in Section 4.5;
"SHAREHOLDER" means a Person listed in Schedule A so long as
that Person is the registered and beneficial owner of any
Equity Securities; and "SHAREHOLDERS" means every Shareholder;
"TAG-ALONG DEMAND" has the meaning given in Section 4.7;
"TAG-ALONG NOTICE" has the meaning given in Section 4.7;
"TAG-ALONG OFFER" has the meaning given in Section 4.7;
"TAGGING SECURITIES" has the meaning given in Section 4.7;
"THIRD PARTY" has the meaning given in Section 4.5; and
"TRANSFER" of an interest in any Equity Securities includes
any sale, exchange, transfer, assignment, gift, pledge,
encumbrance, hypothecation, alienation, transmission or other
transaction, whether direct or indirect and whether voluntary,
involuntary or by operation of law, by which the legal or
beneficial ownership of, or a security interest or other
interest in, the interest passes from one Person to another,
or to the same Person in a different capacity, whether or not
for value, and any change of Control of the legal or
beneficial owner of the interest or any Person that Controls,
directly or indirectly, such legal or beneficial owner of the
interest, other than a change of Control resulting from the
transmission of the interest of a deceased or incompetent
-5-
<PAGE>
Shareholder to the personal representative of such Shareholder
for so long as the interest continues to be held by the
personal representative of such Shareholder, and "TO TRANSFER"
and "TRANSFERRED" and similar expressions have corresponding
meanings.
. The division of this Agreement into Articles and Sections, the insertion of
headings and the provision of any table of contents are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
. Unless the context requires otherwise, words importing the singular include
the plural and vice versa and words importing gender include all genders.
. If any payment is required to be made or other action is required to be taken
pursuant to this Agreement on a day which is not a Business Day, then such
payment or action shall be made or taken on the next Business Day.
. Except as otherwise expressly provided in this Agreement, all dollar amounts
referred to in this Agreement are stated in Canadian Dollars and any payment
contemplated by this Agreement shall be made by cash, certified cheque or any
other method that provides immediately available funds.
. In calculating interest payable under this Agreement for any period of time,
the first day of such period shall be included and the last day of such period
shall be excluded.
. Any reference in this Agreement to any statute or any section thereof shall,
unless otherwise expressly stated, be deemed to be a reference to such statute
or section as amended, restated or re-enacted from time to time.
. Unless the context requires otherwise, references in this Agreement to
Articles, Sections or Schedules are to Articles, Sections or Schedules of this
Agreement.
. In addition to any requirements of the Act, the Corporation shall not take or
effect or agree to take or effect any of the actions with respect to the
following matters without the prior approval of the Board and PlayStar Approval:
(a) the amendment of the Articles, the making or repeal
of any by-law;
(b) the sale of a material asset of the Corporation out
of the ordinary course of business or the granting of
an option for such sale;
(c) the creation, issuance or amendment of any Equity
Securities, including any Shares, unless the
pre-emptive rights provided for in Article 6 of this
Agreement have been complied with;
(d) the acquisition of any assets unrelated to or not
necessary for, the conduct of the Business of the
Corporation and for greater certainty, this clause
does not relate to the acquisition of any assets
related to software, banking or electronic commerce;
(e) the carrying on, directly or indirectly, of any
on-line gaming activity;
-6-
<PAGE>
(f) the taking of any steps to wind-up, dissolve or
terminate the corporate existence of the Corporation
or any assignment for the general benefit of the
creditors of the Corporation or the making of any
proposal under the BANKRUPTCY AND INSOLVENCY ACT
(Canada) or any proceedings relating to it under any
reorganization, arrangement, readjustment of debt or
liquidation law including the COMPANIES' CREDITORS
ARRANGEMENTS ACT (Canada);
(g) approving any amendment to the Cyberstation License
Agreement;
(h) the giving of financial assistance, by means of loan,
guarantee or otherwise, to any Person.
. The number of directors to be elected shall be fixed at five, of which three
shall be nominated by Alves and Conceicao and two by PlayStar. If the number of
directors is increased, PlayStar shall be entitled at all times to nominate that
number of directors, rounded up to the nearest whole number, represented by the
proportion of issued and outstanding Common Shares owned by it. Directors shall
be elected annually. All Shareholders shall vote their Equity Shares to elect
such nominees. A Shareholder may choose not to nominate anyone for election as a
Director or may nominate the same Person as another Shareholder nominates; in
each case, the number of directors shall be reduced accordingly. A vacancy among
the Directors shall be filled by the Shareholder whose nominee has ceased to
hold office as a director. A Shareholder has the exclusive right at any time to
remove any Director nominated by it and fill the vacancy created by the removal
of its nominee. All nominees of each Shareholder other than nominees of PlayStar
shall at all times be resident Canadians as such term is defined in the Act.
. Notwithstanding any provision contained in the By-laws, notice of any meeting
of the Board shall, unless waived, be given not less than seven days (exclusive
of the day on which the notice is delivered or sent but inclusive of the day by
which notice is given) before the meeting is to take place, such notice to
include or be accompanied by a general description of the matters to be dealt
with at the meeting.
. At least one PlayStar Director shall be a member of each committee of the
Board.
. Notwithstanding any contrary provision in the By-laws, the quorum for any
meeting of the Board or a committee of the Board shall be three directors, at
least one of whom shall be an PlayStar Director. A meeting shall be adjourned
for lack of a quorum by notice to all directors to a date at least 7 days
following the adjourned meeting. At any such reconvened meeting, the quorum
shall be not less than two-fifths of the directors and a PlayStar Director shall
not be required to constitute a quorum. If a director is unable to attend or if
it is unreasonable to expect a director to attend, all of the Shareholders shall
(at the request of the Shareholder which nominated such director and for the
duration of the reconvened meeting) replace that nominee with a nominee of such
Shareholder who is willing and able to attend the reconvened meeting, and at
such meeting the replacement nominee shall have all the rights and obligations
which the absent nominee would have had. Such replacement shall be done in
accordance with Section 2.2 prior to the reconvened meeting.
. One of the directors nominated by the owner of the greatest number of Common
Shares and subsequently elected to the Board shall act as Chairman. In
identifying which of such nominees is to so serve as Chairman, the nominator
shall use reasonable efforts to accommodate the preferences of the other
Shareholders. Notwithstanding any contrary provision in the By-laws, at any
meeting of the Board or any committee of the Board, the Chairman, in the case of
an equality of votes, will not be entitled to a second, casting or other
tie-breaking vote.
-7-
<PAGE>
. The Corporation shall at all times maintain at its registered office proper
books of account, which shall contain accurate and complete records of all
transactions, receipts, expenses, assets and liabilities of the Corporation and
shall provide all Shareholders reasonable access to them. Each Shareholder
acknowledges that all records, material and information pertaining to the
Corporation and any copies thereof obtained by any Shareholder are and shall
remain the exclusive property of the Corporation.
. The Corporation and shall prepare and provide to the Shareholders:
(a) within 30 days of the end of the first, second and
third fiscal quarters of each fiscal year, unaudited
consolidated quarterly financial statements including
a balance sheet as at the end of such quarter year
and statements of income and changes in financial
position for such quarter period with comparatives to
the same fiscal quarters in the immediately preceding
fiscal year;
(b) within 60 days of the end of each fiscal year,
audited consolidated financial statements including
without limitation a balance sheet prepared at the
end of such year, statements of income, changes in
financial position and changes in retained earnings
for such fiscal year, with comparatives for the
immediately preceding fiscal year; and
(c) such other information, accounts, data and
projections reasonably and practicably obtainable by
the Corporation as any Shareholder may reasonably
request from time to time.
. The Corporation shall maintain a system of accounting and reporting
established and administered in accordance with GAAP and satisfactory to the
Corporation's auditors or accountants. All financial statements and other
reporting made pursuant to Section 3.2 shall be prepared in accordance with GAAP
applied consistently with prior periods.
. The Corporation shall permit Persons designated by any Shareholder to visit
and inspect, at the Shareholder's expense, any properties of the Corporation, to
examine the books, data and financial records of the Corporation and to discuss
its affairs, finances and accounts with the financial officers of the
Corporation, all at such reasonable times and as often as may reasonably be
requested by the Shareholder. The Persons designated by the Shareholder pursuant
to this section may include accountants or management consultants or others
appointed by the Shareholder to examine all or any aspect of the operations of
the Corporation, and the Corporation agrees to answer any inquiries which such
Persons may make fully and fairly and to the best of its ability. The
Corporation agrees that such Persons may, in the course of their investigations,
discuss the business and affairs of the Corporation with the officers, directors
and employees of the Corporation and with the auditors or accountants of the
Corporation and others reasonably expected to have knowledge of the relevant
matters. The Corporation acknowledges that such Persons may prepare reports to
the Shareholder concerning the financial position and business prospects of the
Corporation and the Shareholder shall have no obligation to disclose the content
of such reports to the Corporation or any other Shareholder. Shareholders shall
have no duty to make any such visits, inspections or examinations or to have any
such discussions and shall not incur any liability or obligation nor lose any
rights for not making the same.
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<PAGE>
. No Equity Securities of the Corporation or any interest therein shall be
Transferred and no Agreement or commitment shall be made to Transfer any Equity
Securities except in each case either with the consent of all the Shareholders
or pursuant to the applicable provisions of this Agreement, and any attempt to
do so without such consent or not pursuant to such provisions shall be void. The
Corporation shall not register or permit the registration of any transfer of
Equity Shares made otherwise than in compliance with the provisions of this
Agreement.
. Notwithstanding the provisions of Section 4.1 of this Agreement, any
Shareholder shall be permitted to transfer or otherwise dispose of all but not
part of the Equity Securities owned by him or it:
(a) if a corporate Shareholder, to an Affiliate, or
(b) if an individual Shareholder, to his spouse, any of
his children (or a trust or trusts established solely
or primarily for any such person or persons provided,
however, that where any such trust is not established
solely for the benefit of such person(s), the
remaining beneficiaries thereunder shall consist of
other members of such Shareholder's family and/or
organizations having philanthropic or charitable
goals) or to a corporation controlled by any one or
more of such persons,
provided that no such transfer or other disposition shall be effective until
PlayStar shall have consented in writing, which consent shall not be
unreasonably withheld, and the transferee shall have entered into an agreement
with PlayStar and the other Parties hereto (which agreement shall not constitute
a novation without the specific written agreement of the other parties hereto)
whereby such transferee agrees:
(i) to assume and be bound by all the obligations of the transferor
along with and not instead of the transferor and to be subject
to all the restrictions to which the transferor is subject
under the terms of this agreement; and
(ii) to retransfer such Equity Securities to the transferor if the
transferor shall cease to have DE FACTO control of the
transferee.
. This Agreement shall constitute consent by the Shareholders, as required by
the Articles of Incorporation, to any Transfer of Equity Securities made in
accordance with the provisions of this Agreement.
. A Shareholder may pledge all of its Equity Securities to a financial
institution to secure BONA FIDE loans to such Shareholder by such institution,
provided that such institution agrees in writing with all the Parties hereto
that in the event of realization it will be bound by the terms of Articles 4 and
5 INTER ALIA to sell such Equity Securities pursuant to Section 4.4 and, until
realization, the voting rights attached to such Equity Securities shall be
exercisable only by such Shareholder. Any Shareholder whose Equity Securities
have been realized upon shall continue to be bound by its obligations under this
Agreement arising or occurring on or before the date of realization.
. A Shareholder who desires to sell (the "Seller") all, but not less than all of
the Equity Securities owned by it (the "Offered Securities") shall give notice
(the "Selling Notice") to the other Shareholders (the "Other Shareholders") of
its intention so to do. The Selling Notice shall state the price per security at
which the Seller is prepared to sell the Offered Securities, shall provide that
the purchase price is to be paid in full on the completion of the sale and shall
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<PAGE>
state the proposed date of sale (the "Sale Date"), which shall not be less than
30 days nor more than 60 days after the date on which the Selling Notice is
given to the Other Shareholders. In such event, unless all the Other
Shareholders and the Seller otherwise agree, the following provisions shall
govern such purchase and sale:
(a) The Selling Notice shall be deemed to be an offer,
irrevocable within the time hereinafter specified for
acceptance, by the Seller to sell the Offered
Securities to the Other Shareholders.
(b) Within 30 days after receipt of the Selling Notice,
each Other Shareholder may give to the Seller a
notice of acceptance (an "Acceptance Notice") which
shall set forth the number of Offered Securities
which such Other Shareholder is willing to purchase
from the Seller.
(c) If the Other Shareholders collectively are prepared
to purchase all or more than all of the Offered
Securities, then the Other Shareholders shall be
entitled to purchase the Offered Equity Securities as
nearly as may be in proportion to the number of
Equity Securities then held by them respectively. If
all of the Other Shareholders do not claim their
respective proportions, the unclaimed Offered
Securities shall be allocated so as to satisfy the
unsatisfied claims of Other Shareholders for Offered
Securities in excess of their proportions and, if the
claims in excess are more than sufficient to exhaust
such unclaimed Offered Securities, the unclaimed
Offered Securities shall be divided among the
remaining Other Shareholders in proportion to their
holdings of Equity Securities immediately before the
delivery of the Selling Notice. The allocation method
set out in this paragraph shall be, if necessary,
repetitively applied until either (i) all Offered
Securities are accepted, or (ii) all claims of the
Other Shareholders for Offered Securities are
satisfied. An Other Shareholder shall not be bound to
purchase any Offered Securities in excess of the
number which it agreed to purchase in its Acceptance
Notice.
(d) If none of the Other Shareholders accepts the offer
or the Other Shareholders collectively are not
prepared to purchase all of the Offered Securities,
then the Seller may, but need not, sell all or only
some of the Offered Securities to the Other
Shareholders as they may agree and may, but need not,
sell all or only some of the Offered Securities to
any other Person with whom the Seller deals at Arm's
Length (a "Third Party") within 90 days after the
Sale Date at a price per security not less than the
price per security and on terms and conditions not
more favourable than the terms and conditions on
which the Seller is required first to offer to sell
the Equity Securities to the Other Shareholders
pursuant to this Section 4.4. In the event that the
Seller does not sell the Offered Securities to a
Third Party within such 90 day period, then the
provisions of this Agreement shall once again apply
and so on from time to time.
(e) If the Seller has received, before the date of the
Selling Notice, a BONA FIDE offer from a Third Party
to purchase the Offered Securities for cash which the
Seller wishes to accept, then the Seller shall send a
copy of such offer to each Other Shareholder with the
Selling Notice and the terms and conditions of sale
set forth in the Selling Notice shall be the same as
those set forth in such offer, and the Sale Date
proposed shall not be less than 30 days nor more than
60 days after the date on which the Selling Notice is
given to each Other Shareholder. By delivering a
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<PAGE>
Selling Notice, the Seller represents and warrants to
each Other Shareholder that no direct or indirect
collateral benefit or supplementary consideration
(whether or not in the nature of money, property,
securities or other benefits or opportunities) has
been or is to be paid or received by the Third Party
or any other Person with whom the Third Party does
not deal at Arm's Length, in connection with the
Third Party's offer and that such offer is not made
as part of or in connection with any other
transaction. Each such Other Shareholder shall be
entitled to obtain from the Seller all documents
relevant to this issue of collateral benefit or
supplementary consideration.
. No Party may sell Equity Securities as a part of or incidental to the sale of
any other assets or any other transaction in such a manner as would frustrate
the application of Section 4.5.
. If the Seller proposes to sell the Offered Securities to a Third Party
pursuant to Section 4.5, then the Seller shall, within 10 days following the
expiry of the 30 day period referred to in Section 4.5(b), give written notice
(the "Tag-Along Notice") of the identity of the Third Party and the price and
other material terms of the transaction (which shall be consistent with the
requirements of Section 4.5) to each of the Other Shareholders (a "Declining
Offeree") who elected not to exercise its right to purchase such Offered
Securities. A Declining Offeree may, not later than 10 days after receipt of the
Tag-Along Notice, deliver to the Seller a notice in writing invoking the
provisions of this Section 4.7 (a "Tag-Along Demand"). The Tag-Along Demand
shall be irrevocable and shall bind the Declining Offeree to sell all but not
less than all of the Equity Securities (the "Tagging Securities") owned by the
Declining Offeree to the Third Party, in accordance with the provisions of this
Section 4.7. If a Declining Offeree delivers a Tag-Along Demand, then the Seller
shall not complete the sale to the Third Party of any of the Offered Securities
unless the Third Party has delivered to the Declining Offeree an offer in
writing (the "Tag-Along Offer") to purchase the Tagging Securities from the
Declining Offeree. The Tag-Along Offer shall contain only such terms and
conditions as are identical to those upon which the Shareholder proposes to sell
to the Third Party the Offered Securities pursuant to Section 4.5, provided that
the offer price per Equity Security, which shall be specified in the Tag-Along
Offer, shall be the same consideration as, or the cash equivalent of, the
consideration per Equity Security at which the Shareholder proposes to sell the
Offered Securities to the Third Party pursuant to Section 4.5. The closing date
and other closing arrangements for the purchase and sale transaction between the
Declining Offeree and the Third Party shall be specified in the Tag-Along Offer
and shall be the same, MUTATIS MUTANDIS, as those specified between the Third
Party and the Shareholder.
. Each Seller who sells any Equity Securities pursuant to the provisions of this
Agreement shall hereby be deemed to warrant to each other Shareholder who
purchases such Equity Securities (such purchasing Shareholder being referred to
in this Article 5 as the "Buyer") that, at the time of closing of the
transaction of purchase and sale in question, (i) the Seller shall have good and
marketable title to such Equity Securities and (ii) the Buyer will acquire such
Equity Securities free of Liens, and in addition the Seller shall hereby be
deemed to agree to indemnify and save the Buyer harmless against any loss
suffered by the Buyer as a result of there being Liens on or any defect in the
title of the Seller to such Equity Securities.
. Unless otherwise provided for herein, each purchase and sale of Equity
Securities between Shareholders pursuant to this Agreement shall, unless
otherwise expressly provided herein or agreed upon by all parties to such
purchase and sale, be completed at the offices of the solicitors of the
Corporation at Toronto, Ontario on the 30th day after the date of the last
notice given by the Buyer or the Seller, as the case may be, pursuant to the
applicable sections of this Agreement.
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<PAGE>
. At the time of closing of any purchase of Equity Securities of the Corporation
as set forth in Section 5.2, the Seller shall table:
(a) a certificate or certificates representing the Equity
Securities being sold by the Seller, duly endorsed by
the appropriate person in blank for transfer with
signatures guaranteed by a Canadian chartered bank,
trust company or member of a Canadian stock exchange
and transfers of any Equity Securities being sold in
such form as the Buyer may reasonably require;
(b) in the case of a sale of Equity Securities by a
person which is not a natural person, such
authorizing resolutions, orders and other instruments
as the solicitors for the Buyer shall reasonably
consider necessary to effect and evidence a valid
transfer of such Equity Securities;
(c) evidence of the consent of the directors or
shareholders to the transfer of Equity Securities in
question as required by the Articles of
Incorporation;
(d) the resignation of the Seller's nominees as directors
of the Corporation and releases executed by the
Seller's nominees, if any, as directors and officers
of the Corporation in form satisfactory to the Buyer
acting reasonably in respect of Claims against the
Corporation and the Purchaser for compensation and
indemnification arising from having been a director
or officer of the Corporation; and
(e) either provide the Buyer with evidence reasonably
satisfactory to the Buyer that the Vendor is not then
a non-resident of Canada within the meaning of the
INCOME TAX ACT (Canada) or provide the Purchaser with
a certificate pursuant to subsection 116(2) of the
INCOME TAX ACT (Canada), with a certificate limit in
an amount of not less than the purchase price for the
Equity Securities; provided that if such evidence or
certificate is not forthcoming, the Buyer shall be
entitled to make the payment of tax required under
the INCOME TAX ACT (Canada) and to deduct the amount
of the payment from the purchase price for the Equity
Securities;
Each Buyer shall pay for such Equity Securities by draft or cheque drawn or
certified by a reasonably creditworthy bank or like financial institution. If
the Seller fails to comply with the requirements set out in this section, the
Buyer shall, in addition to its other rights, including its right to specific
performance, be entitled to rescind the related agreement of purchase and sale
and shall have an action for damages. The Seller hereby irrevocably constitutes
and appoints any Person who at the date of closing is a Director or officer of
the Corporation, a true and lawful attorney-in-fact and agent for, in the name
of and on behalf of the Seller to execute and deliver all documents, instruments
and corporate records as may be necessary to effectively transfer and assign the
Seller's Equity Securities to the Buyer on the books of the Corporation. Such
appointment and power of attorney being coupled with an interest, shall not be
revoked by the insolvency, bankruptcy or incapacity of the Seller and the Seller
hereby ratifies and confirms and agrees to ratify and confirm all that such
attorney may lawfully do or cause to be done by virtue of the provisions hereof.
. If, on the date of closing of any sale and purchase of Equity Securities of
the Corporation, the Seller is indebted to the Corporation in an amount recorded
on the books of the Corporation and verified by the auditor, then unless
otherwise agreed in writing between the Corporation and the Seller, each Buyer
shall pay the purchase price payable therefor by him to the Corporation by
tabling and delivering to the Secretary of the Corporation, at the time of
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<PAGE>
closing of such purchase and sale, the purchase price for such Equity Securities
and the Corporation shall apply the total purchase price proceeds to repayment
of the indebtedness of the Seller to the Corporation. If such proceeds exceed
such indebtedness, the Corporation shall pay the excess over to the Seller at
the time of closing of such purchase and sale. In the event that the Seller
sells all of the Equity Securities of the Corporation owned by him and the
indebtedness of the Seller to the Corporation exceeds the proceeds of such sale,
then the Seller shall at the date of closing pay the balance of such
indebtedness to the Corporation to retire such indebtedness.
. If, on the date of closing of any sale and purchase of Equity Securities of
the Corporation, the Corporation is indebted to the Seller all of whose Equity
Securities are purchased by other Shareholders pursuant to Article 4, or if such
Seller is the guarantor of any indebtedness of the Corporation, the Buyers
shall, at the time of closing, purchase such indebtedness at a price equal to
the outstanding amount thereof plus accrued interest PRO RATA in accordance with
the number of Equity Securities purchased by them and cause any such guarantee
to be released.
. No Equity Securities of the Corporation shall be Transferred, whether pursuant
to any provision of Article 4 or otherwise, by the Corporation or a Shareholder
to any Person other than a Shareholder until the proposed transferee or
purchaser executes and delivers to the parties hereto an agreement to the same
effect as this Agreement and any further agreement with respect to the
Corporation to which the Shareholders are then, or are then required to be,
party, and unless the proposed transferee or purchaser, on becoming a party to
this Agreement, would be in compliance with its provisions including without
limitation Article 8 hereof. Upon the proposed transferee or purchaser so doing,
such agreements shall enure to the benefit of and be binding upon all of the
parties to them as if all had executed and delivered the same agreements.
. Any Shareholder who sells all of the Equity Securities of the Corporation
owned by it in accordance with the terms of this Agreement shall thereafter be
released and discharged from the performance of all of its covenants and
obligations hereunder from and after the date of such sale and compliance by the
transferee with Section 5.6 except from its obligations under Article 8 and any
other obligations under this Agreement which by their terms are to survive any
such sale.
(1) If the Corporation wishes at any time or from time to time to issue
Equity Securities, then the Corporation shall first offer the Equity Shares to
the Shareholders in accordance with the provisions of Section 6.1(2), but the
Shareholders shall have no pre-emptive right on the issuance of Equity
Securities:
(a) for consideration other than money;
(b) as a share dividend; or
(c) pursuant to the exercise of conversion privileges,
options or rights to acquire additional Equity
Securities previously granted by the Corporation.
(2) The Corporation shall first offer to issue Equity Securities to the
Shareholders in accordance with the following provisions:
(a) The offer to issue Equity Securities shall be made by
notice given to each Shareholder. The notice shall
set out a description of the Equity Securities to be
offered, the proposed use of the proceeds of the
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<PAGE>
issue, the purchase price and the purchase date which
shall be a date not earlier than 30 days after the
date of such notice.
(b) Each Shareholder shall have the right to subscribe
for and purchase up to that number of the Equity
Securities mentioned in the notice (referred to in
this Section 6.1 as such Shareholder's "Proportion")
which is equal to the number determined by
multiplying the total number of Equity Securities
offered by a fraction, the numerator of which shall
be the number of Common Shares owned by such
Shareholder at the date of such notice and the
denominator of which shall be the total number of
Common Shares owned by all the Shareholders at the
date of such notice. A Shareholder may subscribe for
a number of such Equity Securities in excess of its
Proportion (an "Oversubscription") but shall have no
right to purchase Equity Securities in excess of its
Proportion except as provided in this Section 6.1(2).
Such subscription rights shall be exercised by the
Shareholder by giving notice of acceptance to the
Corporation within 15 days after the receipt of the
notice from the Corporation. If the Shareholder does
exercise such subscription rights, it shall
subscribe, purchase and pay for such Equity
Securities on the purchase date set forth in the
notice of the Corporation.
(c) If all the Shareholders do not subscribe for any or
all of their respective Proportions, then the Equity
Securities not subscribed for shall be used to
satisfy the Oversubscriptions and if the
Oversubscriptions exceed the unsubscribed Equity
Securities, then the unsubscribed Equity Securities
shall be divided among the Shareholders who submitted
Oversubscriptions PRO RATA to their relative
Proportions, but no Shareholder shall be bound to
take any such Equity Securities in excess of the
amount it so desires.
. If any of the Equity Securities of any issue are not subscribed for and taken
up in accordance with the provisions of Section 6.1(2), then the Corporation
may, during the period of 30 days following the expiry of the offer to the
Shareholders, offer to sell the Equity Securities not taken up by the
Shareholders to any other Person, provided that the price at which such Equity
Securities may be allotted and issued shall not be less than the subscription
price offered to the Shareholders and the terms of payment shall not be more
favourable than the terms offered to the Shareholders, and provided further that
such purchaser or purchasers shall, at the time of purchase, agree to become a
party to this Agreement and be bound by the provisions of this Agreement.
.
(1)Each Party shall (and shall cause each of its Representatives (as
defined below) to) hold in strictest confidence and not use in any manner
whatsoever, other than as expressly contemplated by this Agreement, any
Confidential Information (as defined below) of the other Party.
(2)Section 7.1(1) shall not apply to the disclosure of any Confidential
Information where such disclosure is required by Applicable Law. In that case,
the Party required to disclose (or whose Representative is required to disclose)
shall, as soon as possible in the circumstances, notify the other Party of the
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<PAGE>
requirement. Upon receiving such notification the other Party may, if it wishes,
take any reasonable action to challenge the requirement, and such disclosing
Party shall (or shall cause the applicable Representative to), at the expense of
the other Party, assist the other Party in taking such reasonable action.
(3)Following the termination of this Agreement, each Party shall (and
shall cause each of its Representatives to) promptly, following a request from
the other Party, return to the requesting Party all copies of any tangible items
(other than this Agreement), if any, which are or which contain Confidential
Information of the requesting Party; provided however that if the Party so
obligated to return Confidential Information or its Representatives have
prepared summaries or analyses containing or concerning any Confidential
Information, such Party may, instead of returning the summaries or analyses,
destroy them and provide a certificate to that effect to the requesting Party.
. Each of the Corporation, Alves and Conceicao agrees that such Party will not,
nor will it permit an affiliate of such Party to, engage directly or indirectly
in any on-line gaming activity during the term of this Agreement or for a period
of one year following its termination without the prior written consent of
PlayStar.
. Pursuant to the PlayStar License Agreement and the Cyberstation License
Agreement, Cyberstation International has granted to each of PlayStar Sub and
the Corporation an exclusive perpetual royalty-free license to exploit the
Licensed Property in the areas designated in their respective License
Agreements. PlayStar and the Corporation agree that it is in their mutual
interest to jointly develop the Licensed Property and enhancements thereto.
The Corporation and PlayStar agree to use their reasonable efforts to prepare
and agree upon a Budget for the development of enhancements to the Licensed
Property annually and to agree upon a fair and reasonable apportionment of costs
relating to such Budget.
. Each Shareholder and each successor transferee (at the time it becomes a party
to this Agreement) hereby represents and warrants to the other Shareholders and
to the Corporation that it:
(a) has capacity and authority to enter into this
Agreement and to perform its obligations hereunder;
(b) is not a party to, bound by or subject to any
indenture, mortgage, 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 Shareholder of this Agreement or the
performance by such Shareholder of any of the terms
of this Agreement;
(c) has duly authorized, executed and delivered this
Agreement and that this Agreement constitutes a
legal, valid and binding obligation of it enforceable
in accordance with its terms except as such
enforcement may be limited by applicable bankruptcy,
insolvency and other laws affecting the enforcement
of creditors' rights and subject to general equitable
principles;
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<PAGE>
(d) owns beneficially and of record the Equity Securities
which are expressed to be owned by it in the recitals
to this Agreement;
(e) is neither party to nor bound by any agreement
regarding the ownership of its Equity Securities,
other than this Agreement or as contemplated hereby;
(f) is complying with its obligations under this
Agreement; and
(g) will ensure that each of the foregoing
representations and warranties will continue to be
true and correct for so long as the Shareholder holds
any Equity Securities.
. This Agreement, together with any Schedules attached to this Agreement and any
agreements and documents to be delivered pursuant to the terms of this
Agreement, constitutes the entire agreement between the Parties pertaining to
the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written. There are
no conditions, representations, warranties or other agreements between the
Parties in connection with the subject matter of this Agreement, whether oral or
written, express or implied, statutory or otherwise, except as specifically set
out in this Agreement.
. In the event of inconsistency between this Agreement and the Articles of
Incorporation or By-laws, this Agreement shall apply, and the Parties shall
immediately make all changes to the Articles of Incorporation and By-laws as are
necessary and lawful to render them consistent with this Agreement.
. No amendment of this Agreement will be effective unless made in writing and
signed by the Parties.
. A waiver of any default, breach or non-compliance under this Agreement is not
effective unless in writing and signed by the Party to be bound by the waiver.
No waiver shall be inferred from or implied by any failure to act or delay in
acting by a Party in respect of any default, breach, non-observance or by
anything done or omitted to be done by another Party. The waiver by a Party of
any default, breach or non-compliance under this Agreement shall not operate as
a waiver of that Party's rights under this Agreement in respect of any
continuing or subsequent default, breach or non-compliance (whether of the same
or any other nature).
. Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such prohibition or unenforceability and shall be severed from the balance of
this Agreement, all without affecting the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
. Time shall be of the essence of this Agreement in all respects.
(1)Any notice or other communication required or permitted to be given by
this Agreement shall be in writing and shall be effectively given and made if
(i) delivered personally; or (ii) sent by prepaid courier service; or (iii) sent
by registered mail; or (iv) sent prepaid by fax or other similar means of
electronic communication, in each case to the applicable address set out below:
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IF TO PLAYSTAR:
PlayStar Wyoming Holding Corp.
The Dollar Building
Nevis Street, Top Floor
St. John's, Antigua, WI
Attention: William F.E. Tucker
Fax: (268) 562-0076
With a copy (which shall not constitute notice) to:
Blake, Cassels & Graydon
Box 25
Commerce Court West
Toronto, Ontario M5L 1A9
Attention: R. A. Bondy
Fax: (416) 863-2653
IF TO ALVES OR CONCEICAO, ADDRESSED TO ALVES AND/OR CONCEICAO,
AS THE CASE MAY BE:
c/o Cyberstation Computers & Support Inc.
121 Richmond Street West
Suite 1104
Toronto, Ontario
M5H 2G4
Attention: Joseph Alves
Fax: (416) 860-9380
With a copy (which shall not constitute notice) to:
Sereda & Sereda
1 First Canadian Place
100 King Street West
P.O. Box 160, Suite 700
Toronto, Ontario
M5X 1C7
Attention: Joe Sereda
Fax: (416) 203-0606
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IF TO CYBERSTATION:
Cyberstation Computers & Support Inc.
121 Richmond Street West
Suite 1104
Toronto, Ontario
M5H 2G4
Attention: Joseph Alves
Fax: (416) 860-9380
With a copy (which shall not constitute notice) to:
Sereda & Sereda
1 First Canadian Place
100 King Street West
P.O. Box 160, Suite 700
Toronto, Ontario
M5X 1C7
Attention: Joe Sereda
Fax: (416) 203-0606
(2)Any notice or other communication so given shall be deemed to have been
given and received on the day of delivery if delivered, or on the day of faxing
or sending by other means of recorded electronic communication, provided that
such day is a Business Day and such notice or other communication is so
delivered, faxed or sent before 4:30 p.m. on such day. Otherwise, such notice or
communication shall be deemed to have been given and received on the next
following Business Day. Any notice or other communication sent by registered
mail shall be deemed to have been given and received on the fifth Business Day
following the mailing thereof; provided however that no such notice or other
communication shall be mailed during any actual or apprehended disruption of
postal services. Any such notice or other communication given in any other
manner shall be deemed to have been given and received only upon actual receipt.
(3)Any Party may from time to time change its address under this Section
10.7 by notice to the other Parties given in the manner provided by this
Section.
. Any tender of documents pursuant to this Agreement may be made upon the
Parties or their respective solicitors.
. Nothing in this Agreement shall be deemed in any way or for any purpose to
constitute any Party the partner of any other Party.
. This Agreement shall enure to the benefit of, and be binding on, the Parties
and their respective heirs, executors, administrators, successors and permitted
assigns. Except as otherwise provided herein, no Shareholder may assign or
transfer, whether absolutely, by way of security or otherwise, all or any part
of its rights or obligations under this Agreement without the prior written
consent of the other Shareholders. From and after such time as a Shareholder
ceases to hold any Equity Securities, such Shareholder shall cease to be
entitled to any further rights under the provisions of this Agreement but shall
not be relieved of any obligations under this Agreement which arose in respect
of such Equity Security holding up to and including such time.
. The Parties acknowledge and agree that all restrictions contained in this
Agreement are reasonable and valid and that all defences to the strict
enforcement thereof are hereby waived, and that the rights, privileges,
restrictions and conditions set forth in this Agreement are special and unique
such that a breach thereof cannot be adequately compensated through an award of
damages. Accordingly, any Party shall be entitled to temporary and permanent
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injunctive relief and for an order for specific performance against every other
Party who is in breach of this Agreement without the necessity of having to
prove damages. Any remedy set forth in or contemplated by this Agreement shall
be in addition to and not in substitution for or dependent upon any other
remedy.
. The provisions of this Agreement relating to Shares shall apply MUTATIS
MUTANDIS to any securities into which the Shares or any of them may be converted
or changed, to any securities of the Corporation resulting from a
reclassification, subdivision or consolidation of any Shares, to any securities
of the Corporation which are received by the Shareholders as a dividend in kind,
and to any securities of the Corporation or of any successor body corporate
which may be received by the Shareholders on an amalgamation, reorganization,
merger or combination of the Corporation.
. This Agreement shall come into force and be effective as of and from the date
of this Agreement appearing on the first page hereof and will continue in full
force until the earlier of the date upon which this Agreement is terminated by
the written agreement of the Shareholders or the Corporation is dissolved
pursuant to the Act (provided that if the Corporation is dissolved and is
subsequently revived pursuant to the Act, the dissolution shall be deemed not to
have occurred for the purposes of this Section).
. This Agreement constitutes a written agreement among all of the shareholders
of the Corporation restricting the powers of the Directors to manage or
supervise the management of the business and affairs of the Corporation within
the meaning of the Act.
. All certificates evidencing Shares shall have the following legend endorsed
thereon:
"The Corporation and the securities evidenced by this
certificate are subject to, and the disposition and transfer
of such securities are restricted by, a unanimous shareholder
agreement, a copy of which may, at the request of any
shareholder of the Corporation, be examined at the principal
business office of the Corporation during normal business
hours."
. Each Party shall promptly do, execute, deliver or cause to be done, executed
and delivered all further acts, documents and things in connection with this
Agreement that another Party may reasonably require for the purposes of giving
effect to this Agreement.
. This Agreement shall be construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable in the Province of Ontario and
shall be treated in all respects as an Ontario contract. Each of the Parties
irrevocably attorns to the jurisdiction of the courts of the Province of
Ontario.
. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which taken together shall be
deemed to constitute one and the same instrument. Counterparts may be executed
either in original or faxed form and the Parties adopt any signatures received
by a receiving fax machine as original signatures of the Parties; provided,
however, that any Party providing its signature in such manner shall promptly
forward to the other Party an original of the signed copy of this Agreement
which was so faxed.
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<PAGE>
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
on the date first written above.
PLAYSTAR WYOMING HOLDING CORP.
By:
--------------------------------------
William F.E. Tucker, President
JOSEPH ALVES
ALICIA DA CONCEICAO
CYBERSTATION COMPUTERS & SUPPORT INC.
By:
--------------------------------------
Joseph Alves, President
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