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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 7, 2000
AMONG
UPROAR INC.,
UPROAR ACQUISITION CORPORATION,
TAKE AIM HOLDINGS LTD.
AND
THE SHAREHOLDERS AND WARRANT HOLDERS OF TAKE AIM HOLDINGS LTD.
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TABLE OF CONTENTS
ARTICLE I THE MERGER.................................................1
1.1 The Merger.......................................................1
1.2 Filing...........................................................1
1.3 Effective Time of the Merger.....................................2
1.4 Certificate of Incorporation.....................................2
1.5 By-Laws..........................................................2
1.6 Directors and Officers...........................................2
1.7 Conversion.......................................................2
1.8 Surrender of Shares..............................................3
1.9 Actions Taken at Closing.........................................3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SELLERS................................................3
2.1 Corporate Organization, Etc......................................3
2.2 Capital Structure................................................4
2.3 Books and Records................................................5
2.4 Authorization; Binding Effect....................................5
2.5 Absence of Violations or Conflicts...............................5
2.6 Financial Statements.............................................5
2.7 Absence of Certain Changes.......................................5
2.8 Contracts........................................................6
2.9 Title and Related Matters........................................6
2.10 Litigation......................................................7
2.11 Tax Matters.....................................................7
2.12 Compliance with Law and Applicable Government Regulations.......7
2.13 No ERISA Plans; Foreign Plans...................................7
2.14 Intellectual Property...........................................7
2.15 Absence of Undisclosed Liabilities..............................9
2.16 Agreements Not Affected by the Merger...........................9
2.17 Employee Matters................................................9
2.18 Brokers' and Finders' Fees.................................... 10
2.19 Dealings with Affiliates.......................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS.............10
3.1 Title to Company Stock..........................................10
3.2 Authorization; Binding Effect...................................10
3.3 Investment Representations......................................10
(i)
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...........11
4.1 Corporate Organization, Etc.................................... 11
4.2 Authorization; Binding Effect...................................11
4.3 No Violation................................................... 12
4.4 Brokers' and Finders' Fees......................................12
4.5 Financial Statements; SEC Filings...............................12
4.6 Capital Structure...............................................12
ARTICLE V COVENANTS OF THE COMPANY AND THE SELLERS..................13
5.1 Regular Course of Business......................................13
5.2 Amendments......................................................13
5.3 Capital Changes; Pledges........................................13
5.4 Dividends.......................................................13
5.5 Indebtedness....................................................13
5.6 Certain Other Actions...........................................13
5.7 Full Access and Disclosure......................................14
5.8 Back-up of Site.................................................14
ARTICLE VI OTHER AGREEMENTS..........................................14
6.1 Further Assurances..............................................14
6.2 No Solicitation or Negotiation..................................14
6.3 No Termination of Sellers' Obligations by Subsequent Incapacity,
Dissolution, Etc...............................................15
6.4 Deliveries After Closing........................................15
6.5 Public Announcements............................................15
6.6 Sellers' Representative.........................................15
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND
ACQUISITION...............................................15
7.1 Representations and Warranties..................................16
7.2 Performance of Agreements.......................................16
7.3 No Proceedings or Litigation....................................16
7.4 Joinder.........................................................16
7.5 Employment Agreements...........................................16
7.6 Resignation of Officers and Directors of Subsidiaries...........16
7.7 Liquidation of Omninet..........................................16
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND
THE SELLERS...............................................16
8.1 Representations and Warranties..................................16
8.3 Employment Agreements...........................................17
8.4 Registration Rights Agreement...................................17
(ii)
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8.5 No Material Adverse Change......................................17
ARTICLE IX CLOSING...................................................17
9.1 Closing.........................................................17
ARTICLE X TERMINATION...............................................17
10.1 Events of Termination..........................................17
10.2 Effect of Termination..........................................18
ARTICLE XI SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION..............18
11.1 Survival of Representations, Warranties and Covenants..........18
11.2 Indemnification................................................18
11.3 Indemnification Procedure......................................19
11.4 General........................................................21
ARTICLE XII DEFINITIONS...............................................21
ARTICLE XIII MISCELLANEOUS.............................................27
13.1 Expenses.......................................................27
13.2 Governing Law..................................................27
13.3 Jurisdiction...................................................27
13.4 Table of Contents; Captions....................................27
13.5 Notices........................................................27
13.6 Parties in Interest............................................28
13.7 Counterparts...................................................29
13.8 Entire Agreement...............................................29
13.9 Amendments.....................................................29
13.10 Severability..................................................29
13.11 Third Party Beneficiaries.....................................29
13.12 Legend........................................................29
13.13 Injunctive Relief.............................................29
13.14 Delays or Omissions...........................................30
13.15 No Strict Construction........................................30
(iii)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
August 7, 2000 (the "Execution Date"), among UPROAR INC., a Delaware corporation
(the "Purchaser"), UPROAR ACQUISITION CORPORATION, a Delaware corporation and a
wholly owned subsidiary of Purchaser ("Acquisition"), TAKE AIM HOLDINGS LTD., a
company organized under the laws of The Territory of British Virgin Islands (the
"Company"), and the shareholders and warrant holders of the Company listed on
the signature pages hereto (each a "Seller" and, collectively, the "Sellers").
Capitalized terms used in this Agreement and not otherwise defined herein shall
have the respective meanings set forth in Article XII.
WITNESSETH:
WHEREAS, Acquisition desires to merge with the Company and the
Company desires that Acquisition be merged with the Company so that Acquisition
will be the surviving corporation, all upon the terms and subject to the
conditions set forth herein and in accordance with the laws of the State of
Delaware and the Territory of British Virgin Islands; and
WHEREAS, the terms and conditions of such merger, the mode of
carrying the same into effect, the manner of converting the capital stock of the
Company into the right to receive stock of the Purchaser and such other terms
and conditions as may be required or permitted to be stated in this Agreement,
are set forth below.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time, the Company shall be
merged with and into Acquisition upon the terms and conditions hereinafter set
forth in accordance with the requirements of the laws of the State of Delaware
and of The Territory of British Virgins Islands (the "Merger"). Thereupon, the
corporate existence of Acquisition, with all its rights, privileges, immunities,
powers and purposes, shall continue unaffected and unimpaired by the Merger as
the corporation surviving the Merger, and the separate existence of the Company
shall cease upon the Merger becoming effective as herein provided, and thereupon
the Company and Acquisition shall be a single corporation (herein sometimes
referred to as the "Surviving Company").
1.2 Filing. As soon as practicable following fulfillment of
the conditions specified in Article VII and Article VIII, and provided that this
Agreement has not been terminated and abandoned pursuant to Article X,
Acquisition and the Company will cause (a) an executed counterpart of the
Articles of Merger in substantially the form attached hereto as Exhibit A (the
"Articles of Merger") and an executed counterpart of the Plan of Merger in
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substantially the form attached hereto as Exhibit B (the "Plan of Merger") to be
filed with the Registrar of International Business Companies of The Territory of
British Virgins Islands in accordance with the provisions of Sections 76-79 of
The International Business Companies Ordinance, Cap. 291 (the "IBC"), and (b) an
executed counterpart of a Certificate of Merger in substantially the form
attached hereto as Exhibit C (the "Certificate of Merger") to be filed with the
office of the Secretary of State of the State of Delaware in accordance with the
provisions of Section 252 of the Delaware General Corporation Law (the "DGCL").
1.3 Effective Time of the Merger. The Merger shall be
effective at the time that the filing of the counterpart of the Certificate of
Merger with the Secretary of State of the State of Delaware referred to in
Section 1.2 is completed, which time is herein sometimes referred to as the
"Effective Time." The Merger shall have the effects set forth in Sections 76-79
of the IBC and Section 259 of the DGCL.
1.4 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Acquisition shall be the Certificate of
Incorporation of the Surviving Company until the same shall thereafter be
amended in accordance with applicable law.
1.5 By-Laws. The By-laws of Acquisition as in effect
immediately prior to the Effective Time shall continue unchanged as the by-laws
of the Surviving Company until the same shall thereafter be amended in
accordance with applicable law.
1.6 Directors and Officers. At the Effective Time, the members
of the Board of Directors of Acquisition immediately prior to the Effective Time
shall constitute the members of the Board of Directors of the Surviving Company.
At the Effective Time, the officers of Acquisition immediately prior to the
Effective Time shall become the officers of the Surviving Company in the same
capacities they respectively held in Acquisition.
1.7 Conversion. (a) At the Effective Time, and in addition to
any rights obtained pursuant to Section 1.7(b), each holder of Preferred Stock
shall, by virtue of the Merger and without any action on the part of such
holder, be entitled to receive a number of shares of Purchaser Common Stock
equal to the number of shares of Preferred Stock held by such holder as set
forth on Schedule 2.2(a)(iii) multiplied by a fraction, the numerator of which
is the Preference Amount and the denominator of which is the Purchaser Common
Stock Execution Date Price. Anything contained in this Agreement to the contrary
notwithstanding, the aggregate number of shares of Purchaser Common Stock that
the holders of Preferred Stock shall be entitled to receive pursuant to this
Section 1.7(a) (such aggregate number of shares, the "Aggregate Section 1.7(a)
Share Amount") shall not exceed 1,333,334.
(b) At the Effective Time, each holder of Company Stock shall,
by virtue of the Merger and without any action on the part of such holder, be
entitled to receive a number of shares of Purchaser Common Stock equal to the
number of shares of Company Stock held by such holder immediately prior to the
Effective Time multiplied by a fraction, the numerator of which is equal to
1,333,334 minus the Aggregate Section 1.7(a) Share Amount and the denominator of
which is the number of shares of Company Stock outstanding at the Effective Time
(but after termination of all Issuance Obligations as contemplated by Section
1.7(d)).
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(c) At the option of the Purchaser, cash may be paid to any
holder of Company Stock in lieu of fractional shares of Purchaser Common Stock,
such payment to be calculated at the rate of $7.50 per share of Purchaser Common
Stock.
(d) At the Effective Time, without any further action on the
part of Purchaser, Purchaser shall assume the Company Option Plan and the
Company Option Agreement. At the Effective Time, all Issuance Obligations for
Company Stock (other than those options set forth on Schedule 1.7(d) hereto,
which shall be converted into options for Purchaser Common Stock in accordance
with the provisions of the Company Option Plan) shall immediately expire and
terminate and be of no value.
1.8 Surrender of Shares. At the Effective Time, each holder of
a certificate or certificates theretofore representing issued and outstanding
shares of Company Stock may surrender such certificates to the Purchaser and
receive in exchange therefor the number of shares of Purchaser Common Stock such
holder is entitled to receive pursuant to Section 1.7. In case any delivery
pursuant to this Section 1.8 is to be made to a holder other than the registered
owner of a surrendered certificate, it shall be a condition of such delivery
that the certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that all applicable transfer and other similar
taxes shall have been paid. Until surrendered in accordance with the provisions
of this Section 1.8, the certificate or certificates which immediately prior to
the Effective Time represented issued and outstanding shares of Company Stock
shall represent for all purposes the right to receive Purchaser Common Stock
pursuant to Section 1.7.
1.9 Actions Taken at Closing. At the Closing, (a) the Company
shall deliver to the Purchaser the various certificates, instruments and
documents required to be delivered to the Purchaser by the Company and/or the
Sellers as a condition precedent to the Purchaser's obligations hereunder
pursuant to Article VII, (b) the Purchaser shall deliver to the Sellers'
Representative the various certificates, instruments and documents required to
be delivered to the Company and/or the Sellers by the Purchaser as a condition
precedent to the Company's and each Seller's obligations hereunder pursuant to
Article VIII and (c) the Company shall execute and file with the Register of
International Business Companies of The Territory of British Virgin Islands the
Articles of Merger and the Plan of Merger and with the Secretary of State of the
State of Delaware the Certificate of Merger, and in any event such other
instruments as may be required by either such authority.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
The Company and each Seller, jointly and severally, represent
and warrant to the Purchaser as follows:
2.1 Corporate Organization, Etc. (a) The Company is a company
duly organized and validly existing under the laws of The Territory of British
Virgin Islands with full company power and authority to carry on its business as
it is now being conducted and to own, operate and
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lease its properties and assets. Except as set forth in Schedule 2.1(a)(i)
hereto, the Company is duly qualified or licensed to do business in each
jurisdiction in which the conduct of its business requires it to be so qualified
or licensed except where failure to be so qualified or licensed would not have a
Material Adverse Effect. True, complete and correct copies of the Company's
memorandum of association and articles of association as presently in effect are
set forth in Schedule 2.1(a)(ii) hereto.
(b) Except as set forth in Schedule 2.1(b)(i) hereto, each
Subsidiary is an entity duly organized and validly existing under the laws of
its jurisdiction of incorporation with full entity power and authority to carry
on its business as now being conducted and to own, operate and lease its
properties and assets. Each Subsidiary is duly qualified or licensed to do
business in each jurisdiction in which the conduct of its business requires it
to be so qualified or licensed except where failure to be so qualified or
licensed would not have a Material Adverse Effect. True, complete and correct
copies of each Subsidiary's certificate of incorporation and by-laws (or
equivalent documents) as presently in effect are set forth in Schedule
2.1(b)(ii) hereto.
2.2 Capital Structure. (a) The authorized capital stock of the
Company consists of 4,000,000 shares of Ordinary Stock and 1,000,000 shares of
Preferred Stock, of which 1,492,133 shares of Ordinary Stock and 935,099 shares
of Preferred Stock are issued and outstanding. Each issued and outstanding share
of Ordinary Stock and Preferred Stock is validly issued, fully paid and
nonassessable and free of preemptive rights. Except as set forth in Schedule
2.2(a)(i) hereto, the Company does not have any outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote)
with the shareholders of the Company on any matter ("Voting Debt"). Except as
set forth on Schedule 2.2(a)(ii) hereto, there are no outstanding Issuance
Obligations obligating the Company to issue or sell any capital stock of the
Company or to grant, extend or enter into any such Issuance Obligation. Schedule
2.2(a)(iii) hereto sets forth a true and complete list of the record owners of
all Ordinary Stock and Preferred Stock and the number of shares of Ordinary
Stock and/or Preferred Stock owned and the principal corporate office (for
entity owners) or the residence (for individual owners) address for each such
owner.
(b) Schedule 2.2(b) hereto sets forth (i) the name and
jurisdiction of incorporation of each Subsidiary, (ii) a complete description of
the authorized capital stock of each Subsidiary, (iii) the number of issued and
outstanding shares of capital stock of each Subsidiary and (iv) the record
owners of such shares. Except as set forth in Schedule 2.2(b), all of the
outstanding capital stock of, or ownership interests in, each Subsidiary is
owned by the Company, directly or indirectly, free and clear of all Liens. All
of the issued and outstanding shares of capital stock of each Subsidiary are
validly existing, fully paid and non-assessable. No Subsidiary has outstanding
Voting Debt and no Subsidiary is bound by, obligated under or party to an
Issuance Obligation with respect to any security of such Subsidiary.
(c) Except for the Company's interest in the Subsidiaries, and
except as set forth in Schedule 2.2(c) hereto, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
Person.
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2.3 Books and Records. The minute books of the Company and the
Subsidiaries that have been made available to the Purchaser for inspection are
complete and correct in all material respects and set forth all material
proceedings of the shareholders and directors of the Company and the
Subsidiaries. A true and complete list of the incumbent directors and officers
of the Company and each Subsidiary is set forth in Schedule 2.3 hereto.
2.4 Authorization; Binding Effect. The Company has full power
and authority to enter into this Agreement and the agreements contemplated
hereby and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and all other agreements
and transactions contemplated hereby have been duly authorized by the Board of
Directors and shareholders of the Company, and no other corporate proceedings on
the part of such directors or shareholders are necessary to authorize this
Agreement or any of the transactions contemplated hereby. This Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other similar laws relating to or affecting
creditors' rights generally and to general principles of equity (regardless of
whether the issue of enforceability is considered in a proceeding in equity or
at law) .
2.5 Absence of Violations or Conflicts. Except as set forth in
Schedule 2.5 hereto, the execution, delivery and performance by the Company of
this Agreement, and all other agreements contemplated hereby, and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Company, do not and will not (a) conflict with or result in a breach of the
terms, conditions or provisions of, (b) constitute a default or event of default
under (with due notice, lapse of time or both), (c) result in the creation of
any Lien upon any of the Company's capital stock or assets pursuant to, (d) give
any third party the right to accelerate any obligation under, (e) result in a
violation of, or (f) require any authorization, consent, approval, exemption or
other action by, notice to or filing with any Authority pursuant to, the
constituent documents of the Company or, to the Knowledge of the Company, any
applicable Regulation, Order or Contract to which the Company is subject. The
Company will comply in all material respects with all applicable Regulations and
Orders in connection with the execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
2.6 Financial Statements. The Company has delivered to the
Purchaser its consolidated balance sheet at December 31, 1999 and its
consolidated statements of income, changes in shareholders' equity and cash
flows for the period from November 24, 1999 to December 31, 1999, all certified
by Somekh Chaikin (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis throughout the period indicated, and fairly present the financial
condition and operating results of the Company and its Subsidiaries as at the
date, and for the period, indicated.
2.7 Absence of Certain Changes. Except as set forth on
Schedule 2.7 hereto, since December 31, 1999 there has not been any (a) Material
Adverse Change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of the Company and the Subsidiaries taken
as a whole; (b) damage, destruction or loss, whether covered by insurance or
not, having a Material Adverse Effect, with regard to the Company's or any
Subsidiary's property or business; (c) declaration, setting aside or payment of
any dividend or distribution (whether
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in cash, stock or property) in respect of the Company's or any Subsidiary's
capital stock, or any redemption or other acquisition of such stock by the
Company or any Subsidiary; (d) material increase in the compensation payable to
or to become payable by the Company or any Subsidiary to any of its respective
employees or any adoption of or material increase in any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with any such employee; (e) entry by the Company or any Subsidiary into any
material Contract not in the ordinary course of business, including without
limitation any borrowing or capital expenditure; (f) change by the Company or
any Subsidiary in accounting methods or principles; (g) failure by the Company
or any Subsidiary to promptly pay and discharge current liabilities consistent
with past practices; or (h) Lien placed on any property of the Company or any
Subsidiary other than Permitted Liens.
2.8 Contracts. (a) Except as set forth in Schedule 2.8(a)
hereto, neither the Company nor any Subsidiary is a party to any written or oral
(i) pension, profit sharing, employee stock purchase or other plan providing for
deferred or other compensation to employees or any other employee benefit plan
or any Contract with any labor union; (ii) Contract relating to loans to any
officer, director or Affiliate of the Company or any Subsidiary; (iii) Contract
relating to the borrowing of money or the mortgaging, pledging or encumbering of
any asset; (iv) Guarantee of any obligation; (v) Contract under which the
Company or any Subsidiary has advanced or loaned any Person amounts in the
aggregate exceeding $10,000; (vi) Contract pursuant to which the Company or any
Subsidiary is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by the Company; (vii) warranty
Contract with respect to its services rendered or its products sold or leased;
(viii) Contract or non-competition provision in any Contract prohibiting it from
freely engaging in any business or competing anywhere in the world; (ix)
Contract with independent agents, brokers, dealers or distributors which provide
for annual payments in excess of $10,000; (x) employment, consulting, sales,
commissions, advertising or marketing Contract which provides for annual
payments in excess of $10,000; (xi) Contract providing for "take or pay" or
similar unconditional purchase or payment obligations; (xii) any other Contract
which involves a payment in excess of $10,000 annually or having a term in
excess of one year; or (xiii) any Contract that requires the consent of any
Person in connection with the execution, delivery or performance of this
Agreement.
(b) Except as set forth in Schedule 2.8(b) hereto, the Company
and each Subsidiary has performed in all material respects all obligations
required to be performed by it and is not in default in any material respect
under or in breach of nor in receipt of any claim of default or breach under any
Contract to which it is subject, and, to the Knowledge of the Company, no event
has occurred, or is expected to occur, which with the passage of time or the
giving of notice or both would result in a default, breach or event of
non-compliance under any material Contract to which the Company or any
Subsidiary is subject.
2.9 Title and Related Matters. Neither the Company nor any
Subsidiary owns any real property. The Company and/or the Subsidiaries have good
and marketable title to all assets reflected in the Financial Statements or
acquired after December 31, 1999 (except for assets disposed of in the ordinary
course of business subsequent to December 31, 1999), free and clear of all
Liens, except Permitted Liens.
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2.10 Litigation. Except as set forth in Schedule 2.10 hereto,
there is no action, suit, proceeding at law or in equity, arbitration or
administrative or other proceeding by or before any Authority pending or, to the
Knowledge of the Company, threatened against the Company or any Subsidiary, nor
is there any Order outstanding against the Company or any Subsidiary. Neither
the Company nor any Subsidiary is subject to any judgment, order or decree
entered in any lawsuit or proceeding in which the Company or any Subsidiary was
a party.
2.11 Tax Matters. Except as set forth in Schedule 2.11 hereto,
the Company and each Subsidiary has timely filed all Tax Returns required to be
filed by, or with respect to, the Company or any Subsidiary and has paid all
Taxes and Tax liabilities of the Company and each Subsidiary due or claimed to
be due by all Taxing Authorities. Neither the Company nor any Subsidiary has
requested any extension of time within which to file or send any Tax Return. All
Taxes which are required to be withheld or collected by the Company or any
Subsidiary have been duly withheld or collected and, to the extent required,
have been paid to the proper Taxing Authority or properly segregated or
deposited as required by applicable law, except as described in Schedule 2.11.
Neither the Company or any Subsidiary has been the subject of an audit or other
examination of Taxes by a Taxing Authority nor has the Company or any Subsidiary
received any notice from any Taxing Authority relating to any issue which could
affect the Tax liability of the Company or any Subsidiary.
2.12 Compliance with Law and Applicable Government
Regulations. Except as set forth in Schedule 2.12 hereto, since January 1, 2000,
the Business has been operated in all material respects in compliance with all
applicable Regulations and Orders. There are no actions, suits, proceedings at
law or in equity, arbitrations or administrative or other proceedings pending
or, to the Knowledge of the Company, threatened, nor has the Company or any
Subsidiary received any written notice, regarding any violation of any
Regulation or Order enforced by any Authority claiming jurisdiction over the
Company or any Subsidiary.
2.13 No ERISA Plans; Foreign Plans. (a) None of the Company,
any Subsidiary or any ERISA Affiliate has ever maintained or contributed to (or
had an obligation to contribute to) any Plan.
(b) Except as set forth in Schedule 2.13(b) hereto, each
Foreign Plan has been maintained in substantial compliance with its terms and
with the requirements of any and all applicable laws, statutes, rules,
regulations and orders and has been maintained, where required, in good standing
with all relevant Authorities. All contributions required to be made with
respect to a Foreign Plan have been timely made. Neither the Company nor any
Subsidiary has incurred any obligation in connection with the termination of or
withdrawal from any Foreign Plan. The present value of the accrued benefit
liabilities (whether or not vested) under each Foreign Plan, determined as at
December 31, 1999 on the basis of reasonable actuarial assumptions, did not
exceed the current value of the assets of such Foreign Plan allocable to such
benefit liabilities at such date.
2.14 Intellectual Property. (a) Schedule 2.14(a) hereto sets
forth all domestic and foreign patents, patent applications, trademarks, service
marks and other indicia of origin, trademark and service mark registrations and
applications for registrations thereof, registered
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copyrights and applications for registration thereof, Internet domain names and
universal resource locators, inventions (whether or not patentable), invention
disclosures, corporate and business names, trade names, brand names and computer
software programs used or held for use in, and material to, the Business. Except
as set forth on Schedule 2.14(a), the Intellectual Property listed on Schedule
2.14(a) and owned (as opposed to licensed) by the Company has been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, United States Copyright Office, a duly authorized and accredited domain
name registrar, the appropriate offices in the various states of the United
States or the appropriate offices of other jurisdictions (foreign and domestic),
and each such registration, filing and issuance remains in full force and
effect. Copies of all items of Intellectual Property which have been reduced to
writing or other tangible form have been delivered by the Company to the
Purchaser (including without limitation true and complete copies of all related
licenses, and amendments and modifications thereto).
(b) Except as set forth in Schedule 2.14(b) hereto, neither
the Company nor any Subsidiary is a party to any license or agreement, whether
as licensor, licensee or otherwise, with respect to any of the Intellectual
Property. To the extent any Intellectual Property is used under license in the
Business, no notice of a material default has been sent or received by the
Company or any Subsidiary under any such license which remains uncured, and the
execution, delivery and performance of the Company's obligations hereunder will
not result in such a default. Each such license agreement is a legal, valid and
binding obligation of each party thereto, enforceable in accordance with the
terms thereof.
(c) Except as set forth in Schedule 2.14(c) hereto, the
Company or a Subsidiary owns or is licensed to use all of the Intellectual
Property, free and clear of any Liens, without obligation to pay any royalty or
any other fees with respect thereto, and the operation of the Business requires
no material rights under intellectual property other than the Intellectual
Property. To the Knowledge of the Company, neither the Company's nor any
Subsidiary's use of the Intellectual Property infringes any intellectual
property rights of any third party in any material respect. No Intellectual
Property has been cancelled, abandoned or otherwise terminated, and all renewal
fees in respect thereof have been duly paid. The Company or a Subsidiary has the
exclusive right to file, prosecute and maintain each application and
registration with respect to the Intellectual Property that is owned by the
Company or any Subsidiary.
(d) Except as set forth in Schedule 2.14(d) hereto, neither
the Company nor any Subsidiary has received any written notice from any third
party challenging the right of the Company or any Subsidiary to use any of the
Intellectual Property. Neither the Company nor any Subsidiary has made any claim
in writing of a violation, infringement, misuse or misappropriation by any third
party of its rights to, or in connection with, any Intellectual Property.
(e) To the Knowledge of the Company, there is no pending or
threatened claim by any third party of a violation, infringement, misuse or
misappropriation by the Company or any Subsidiary of any intellectual property
owned by any third party, or of the invalidity of any patent or registration of
a copyright, trademark, service mark, domain name or trade name included in
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the Intellectual Property. To the Knowledge of the Company, neither the Company
nor any Subsidiary knows of any valid basis for any such claim.
(f) Except as set forth in Schedule 2.14(f) hereto, there are
no interferences or other contested proceedings, either pending or, to the
Knowledge of the Company, threatened, in the United States Copyright Office, the
United States Patent and Trademark Office or any Authority relating to any
pending application with respect to Intellectual Property.
(g) Except as set forth in Schedule 2.14(g) hereto, each
Internet domain name and universal resource locator (including, without
limitation, http://www.ibetcha.com) constituting Intellectual Property (all such
items, together with any content and other materials accessible and/or displayed
thereon, collectively referred to as the "Sites") directs and resolves to the
appropriate Internet protocol address, and is and has been maintained and
accessible to Internet users on those certain computers used by the Company
and/or any Subsidiary to make the Sites so accessible (the "Server")
approximately 24 hours per day, seven days per week ("24/7"), and are
operational for downloading content from the Server on a 24/7 basis. The Company
has fully operational back-up copies of the Sites (and all related software,
databases and other information), made from the current versions of the Sites as
accessible to Internet users on the Server (and copied directly therefrom). Such
back-up copies are kept in a safe and secure environment, fit for the back-up of
media, and are not located at the same location as the Server.
2.15 Absence of Undisclosed Liabilities. Neither the Company
nor any Subsidiary has any material obligation or liability of any nature
(matured or unmatured, fixed or contingent, due or to become due) other than
those (i) set forth or adequately provided for in the balance sheet included in
the Financial Statements, (ii) incurred in the ordinary course of business since
December 31, 1999, (iii) incurred in connection with the execution of this
Agreement or (iv) set forth on Schedule 2.15 hereto.
2.16 Agreements Not Affected by the Merger. Except as set
forth in Schedule 2.16 hereto, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of the Company or any Subsidiary, (ii) materially increase any
benefits otherwise payable by the Company or any Subsidiary to its respective
employees, agents, consultants and directors or (iii) result in the acceleration
of the time of payment or vesting of any such benefits.
2.17 Employee Matters. Except as set forth in Schedule 2.17
hereto, each of the Company and each Subsidiary is in compliance in all material
respects with all currently applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment,
wages, hours and occupational safety and health and employment practices, and is
not engaged in any unfair labor practice. Except as set forth in Schedule 2.17,
each of the Company and each Subsidiary has withheld all amounts required by law
or by agreement to be withheld from the wages, salaries and other payments to
employees, and neither the Company nor any Subsidiary is liable for any arrears
of wages or any taxes or any penalty for failure to comply with any of the
foregoing. Except as set forth in Schedule 2.17, neither the
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Company nor any Subsidiary is liable for any payment to any trust or other fund
or to any Authority with respect to unemployment compensation benefits, social
security or other benefits or obligations for employees (other than routine
payments to be made in the normal course of business and consistent with past
practice). Except as set forth in Schedule 2.17, there are no pending claims
against the Company or any Subsidiary under any workers compensation plan or
policy or for long term disability. There are no controversies pending or, to
the Knowledge of the Company, threatened between the Company or any Subsidiary
and any of its respective employees, which controversies have or could
reasonably be expected to result in a claim before any agency, court or
tribunal, foreign or domestic. Neither the Company nor any Subsidiary is a party
to any collective bargaining agreement or other labor unions contract, and the
Company knows of no activities or proceedings of any labor union attempting to
organize any such employees. To the Knowledge of the Company, no employee of the
Company or any Subsidiary is in violation of any term of any employment
contract, patent disclosure agreement, noncompetition agreement or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company or such Subsidiary because of the nature
of the Business or with respect to the use of trade secrets or proprietary
information of others.
2.18 Brokers' and Finders' Fees. Neither the Company nor any
Subsidiary has incurred, nor will any of them incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or investment
bankers' fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
2.19 Dealings with Affiliates. Schedule 2.19 hereto sets forth
a complete and accurate list, including the parties, of all oral or written
Contracts to which the Company or any Subsidiary is, will be or has been a
party, and to which any Seller, Affiliate of the Company or employee of the
Company is also a party. Neither the Company nor any Subsidiary has made any
payments, loaned any funds or property or made any credit arrangement with any
Seller, Affiliate of the Company or employee of the Company, except for the
payment of employee salaries and director compensation in the ordinary course of
business or as set forth on Schedule 2.19.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally and not jointly, represents and
warrants to the Purchaser as follows:
3.1 Title to Company Stock. The Seller owns (or as of the
Effective Time will own) the Company Stock set forth for such Seller on Schedule
2.2(a)(iii) free and clear of all Liens. No Person other than the Seller has any
interest, direct, contingent or otherwise, in such Company Stock.
3.2 Authorization; Binding Effect. The Seller has all
necessary power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms.
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3.3 Investment Representations. (a) The Purchaser Common Stock
to be acquired by the Seller pursuant to this Agreement will be acquired for the
Seller's own account and not with a view to, or intention of, distribution
thereof in violation of the Securities Act, or any applicable foreign or state
securities laws, and the Purchaser Common Stock will not be disposed of in
contravention of the Securities Act or any applicable foreign or state
securities laws.
(b) The Seller is able to evaluate the risks and benefits of
the investment in the Purchaser Common Stock. The Seller is domiciled in, and
the certificates representing the Purchaser Common Stock to be acquired by the
Seller pursuant to this Agreement will come to rest in, the jurisdiction
specified for such Seller on Schedule 2.2(a)(iii).
(c) The Seller is able to bear the economic risk of the
investment in the Purchaser Common Stock for an indefinite period of time and
acknowledges that the Purchaser Common Stock has not been registered under the
Securities Act and, thus, cannot be sold unless subsequently registered under
the Securities Act or an exemption from such registration is available.
(d) The Seller (i) is not a "U.S. person" as defined in Rule
902 of Regulation S promulgated under the Securities Act and has executed this
Agreement outside the United States and/or (ii) is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to each Seller as
follows:
4.1 Corporate Organization, Etc. Each of the Purchaser and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to carry on its respective business as it is now being conducted and
to own, operate and lease its properties and assets. Each of the Purchaser and
Acquisition is duly qualified or licensed to do business in each jurisdiction in
which the conduct of its business requires it to be so qualified or licensed.
The Purchaser has delivered to each Seller true and complete copies of the
Purchaser's Certificate of Incorporation, as amended to date, and by-laws, as in
effect on the date hereof.
4.2 Authorization; Binding Effect. Each of the Purchaser and
Acquisition has full corporate power and authority to enter into this Agreement
and the agreements contemplated hereby and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and all other agreements and transactions contemplated hereby have
been duly authorized by the Board of Directors of the Purchaser and the Board of
Directors of Acquisition, and no other corporate proceedings on the part of such
directors, the Purchaser or Acquisition are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement constitutes
the legal, valid and binding obligation of each
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of the Purchaser and Acquisition, enforceable against each of the Purchaser and
Acquisition in accordance with its terms.
4.3 No Violation. The execution, delivery and performance by
the Purchaser and Acquisition of this Agreement, and all other agreements
contemplated hereby, and the fulfillment of and compliance with the respective
terms hereof and thereof by the Purchaser and Acquisition, do not and will not
(a) conflict with or result in a breach of the terms, conditions or provisions
of, (b) result in a violation of, or (c) require any authorization, consent,
approval, exemption or other action by, notice to, or filing with any Authority
pursuant to, the certificate of incorporation or by-laws of the Purchaser or
Acquisition or, to the knowledge of the Purchaser, any applicable Regulation,
Order or Contract to which the Purchaser or Acquisition is subject. The
Purchaser will comply in all material respects with all applicable Regulations
and Orders in connection with its execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
4.4 Brokers' and Finders' Fees. Neither the Purchaser nor
Acquisition has incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or investment
bankers' fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
4.5 Financial Statements; SEC Filings. The Purchaser has made
available to the Company and each Seller its audited financial statements on a
consolidated basis for the fiscal year ended December 31, 1999, all certified by
KPMG LLP, and its unaudited financial statements on a consolidated basis as at
and for the three-month period ended March 31, 2000 (collectively, the
"Purchaser Financial Statements"). The Purchaser Financial Statements have been
prepared in accordance with GAAP (except that the unaudited financial statements
do not have notes thereto) applied on a consistent basis through the periods
indicated and with each other. The Purchaser Financial Statements fairly present
the financial condition and operating results of the Purchaser and its
consolidated subsidiaries as of the date, and for the periods, indicated
therein, subject to normal year-end audit adjustments. The Purchaser has also
made available to the Company and each Seller copies of all filings made to date
by the Purchaser with the SEC pursuant to the Exchange Act. No such filings with
the SEC contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.6 Capital Structure. The authorized capital stock of the
Purchaser consists of 112,000,000 shares of common stock, par value $0.01 per
share (the "Purchaser Common Stock"), of which 28,043,394 shares were issued and
outstanding on July 25, 2000, and 48,000,000 shares of preferred stock, par
value $0.01 per share, none of which is issued and outstanding on the date
hereof. There are no other outstanding shares of capital stock or voting
securities and no outstanding commitments to issue any shares of capital stock
or voting securities, other than pursuant to the exercise of various outstanding
stock options or pursuant to the provisions of the Internet Game Development
Agreement. All outstanding shares of Purchaser Common Stock are duly authorized,
validly issued, fully paid and non-assessable, and are not subject to preemptive
rights or rights of first refusal created by statute, the certificate of
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incorporation or by-laws of the Purchaser or any agreement to which the
Purchaser is a party or by which it is bound. Except for the Purchaser's right
to repurchase any unvested shares under the Purchaser's stock incentive plans,
there are no commitments or agreements of any character to which the Purchaser
is a party or by which it is bound obligating the Purchaser to repurchase or
redeem, or cause to be repurchased or redeemed, any shares of capital stock of
the Purchaser. Upon issuance, each share of Purchaser Common Stock into which
the Ordinary Stock and Preferred Stock is to be converted pursuant to Section
1.7 will be duly authorized and issued, fully paid and non-assessable.
ARTICLE V
COVENANTS OF THE COMPANY AND THE SELLERS
Until the Effective Date, except as otherwise consented to or
approved by the Purchaser in writing, the Company and the Sellers agree that
they shall act, or refrain from acting where required hereinafter, to comply
(and in the case of the Sellers, to cause the Company to comply) with the
following:
5.1 Regular Course of Business. The Company shall (and shall
cause each Subsidiary to) operate the Business diligently and in good faith,
consistent with past management practices; maintain all of its properties in
customary repair, order and condition, reasonable wear and tear excepted;
maintain (except for expiration due to lapse of time) all leases and Contracts
in effect without change except as expressly provided herein; comply in all
material respects with the provisions of all Regulations and Orders applicable
to the Company or such Subsidiary; not cancel, release, waive or compromise any
debt, claim or right in its favor having a value in excess of $10,000; and not
alter the rate or basis of compensation of any of its officers, directors or
employees.
5.2 Amendments. Except as required for the transactions
contemplated in this Agreement, no change or amendment shall be made in the
memorandum of association or articles of association of the Company or the
comparable constituent documents of any Subsidiary. Neither the Company nor any
Subsidiary shall merge into or consolidate with any other Person or change the
character of its business.
5.3 Capital Changes; Pledges. Neither the Company nor any
Subsidiary shall issue or sell any shares of its capital stock, any securities
convertible into shares of its capital stock or any Voting Debt or become
obligated with respect to any Issuance Obligation, and the Company shall not
sell, transfer, pledge or otherwise encumber any capital stock of any
Subsidiary.
5.4 Dividends. Neither the Company or any Subsidiary shall
declare, pay or set aside for payment any dividend or other distribution in
respect of its capital stock, nor shall the Company or any Subsidiary, directly
or indirectly, redeem, purchase or otherwise acquire any shares of its capital
stock.
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5.5 Indebtedness. Neither the Company nor any Subsidiary shall
incur, assume or Guarantee any Indebtedness.
5.6 Certain Other Actions. Neither the Company nor any
Subsidiary shall take any action which, if taken prior to the date hereof, would
have been required to be disclosed on Schedule 2.7.
5.7 Full Access and Disclosure. The Company shall grant the
Purchaser and its counsel, accountants, agents and other authorized
representatives reasonable access during normal business hours to the Company's
and each Subsidiary's properties, books and records in order that the Purchaser
may have full opportunity to make such reasonable investigations as it shall
desire to make of the affairs of the Company and the Subsidiaries, and the
Company shall cause its and the Subsidiaries' respective officers, employees and
auditors to furnish such additional financial and operating data and other
information with respect to the Business as the Purchaser shall from time to
time reasonably request.
5.8 Back-up of Site. The Company shall keep, in a safe and
secure environment, fit for the back-up of media, and not located at the same
location of the Server, a fully operational back-up copy of each Site. The
Company shall ensure that such back-up copy of the Site shall be made from the
then current version of each Site as accessible to Internet users on the Server,
and copied directly from the Server, no less than once every two weeks until the
consummation of the Merger.
ARTICLE VI
OTHER AGREEMENTS
The parties hereto further agree as follows:
6.1 Further Assurances. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use its respective best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Regulations and
Orders to consummate and make effective as promptly as possible the transactions
contemplated by this Agreement, and to cooperate with each other in connection
with the foregoing, including without limitation using all reasonable efforts
(a) to obtain all necessary waivers, consents and approvals from other parties
to loan agreements, leases, mortgages and other Contracts, (b) to obtain all
necessary Permits, consents, approvals and authorizations as are required to be
obtained under any Regulation, (c) to lift or rescind any injunction or
restraining order or other Order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby and (d) to fulfill all
conditions to the obligations of the parties under this Agreement.
6.2 No Solicitation or Negotiation. Unless and until this
Agreement is terminated, neither the Sellers nor the Company shall, and each
shall use its best efforts to cause its directors, officers, employees,
representatives, agents, advisors, accountants and attorneys not
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to, initiate or solicit, directly or indirectly, any inquiries or the making of
any proposal with respect to, or engage in negotiations concerning, or provide
any confidential information or data to any Person with respect to, or have any
discussions with any Person relating to, any acquisition, business combination
or purchase of all or any significant asset of, or any equity interest in,
directly or indirectly, the Company or any Subsidiary, or otherwise facilitate
any effort or attempt to do or seek any of the foregoing, and shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
6.3 No Termination of Sellers' Obligations by Subsequent
Incapacity, Dissolution, Etc. Each Seller specifically agrees that the
obligations of such Seller hereunder, including, without limitation, obligations
pursuant to Article XI or any powers or rights granted to the Sellers'
Representative, shall not be terminated by the dissolution of such Seller, by
operation of law or by the death or incapacity of any individual Seller.
6.4 Deliveries After Closing. From time to time after the
Closing, at the Purchaser's request and without expense to the Company and
without further consideration from the Purchaser or the Company, each Seller
shall execute and deliver such other instruments of conveyance and transfer and
take such other action as the Purchaser reasonably may require to convey,
transfer to and vest in the Purchaser and to put the Purchaser in possession of
any rights or property to be conveyed, transferred or delivered hereunder.
6.5 Public Announcements. Except as otherwise required by
applicable law (and then only after prior consultation), none of the Purchaser,
Acquisition, the Company or any Seller, or any Affiliate, representative or
shareholder of any such Person, shall disclose any of the terms of this
Agreement to any third party, or issue any press release or any other public
disclosure regarding this Agreement or any transaction contemplated hereby,
without the prior written consent of the Company and the Purchaser.
6.6 Sellers' Representative. Each of the Sellers has granted
to the Sellers' Representative a power of attorney to act for such Seller in all
capacities with respect to the transactions contemplated by this Agreement, and
the execution and delivery of this Agreement by the Sellers shall constitute
their ratification of such arrangement. A true and correct copy of such power of
attorney is set forth on Schedule 6.6 hereto. Each of the Purchaser,
Acquisition, the Company and each Seller acknowledges that the Sellers'
Representative is not a fiduciary and shall not become liable to any Seller in
any way as a result of any action taken with respect to this Agreement. The
designation and appointment of the Sellers' Representative is irrevocable and
shall not be affected by the subsequent death, incapacity, insolvency or
dissolution of any Seller. The Sellers' Representative shall be indemnified by
the Sellers for any expense or liability that it incurs in connection with its
action as Sellers' Representative (including, but not limited to, any liability
owing to any Seller resulting from any negligent action or omission on the part
of the Sellers' Representative), and each of the Sellers hereby approves any and
all actions taken by the Sellers' Representative in such capacity.
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND ACQUISITION
The obligations of the Purchaser and Acquisition under this
Agreement shall be subject to the satisfaction, on or before the Effective Time,
of each of the following conditions unless waived in writing by the Purchaser:
7.1 Representations and Warranties. The representations and
warranties of the Company and the Sellers contained in Article II and Article
III of this Agreement shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if such representations and
warranties had been made on and as of such date, and the Company and the
Sellers' Representative shall have delivered to the Purchaser a certificate,
dated the Closing Date, to such effect.
7.2 Performance of Agreements. Each of the agreements of the
Company and/or any Seller to be performed prior to the Effective Time pursuant
to the terms of this Agreement shall have been duly performed in all material
respects, and the Company and the Sellers' Representative shall have delivered
to the Purchaser a certificate, dated the Closing Date, to such effect.
7.3 No Proceedings or Litigation. No preliminary or permanent
injunction or other Order issued by a court of competent jurisdiction or by any
Authority, or any Regulation or Order promulgated or enacted by any Authority,
shall be in effect which would prevent the consummation of the transactions
contemplated by this Agreement.
7.4 Joinder. All of the existing shareholders and warrant
holders of the Company shall have executed this Agreement, or a counterpart
hereof, and shall have delivered at the Closing stock certificates representing
all of the Company Stock, together with stock powers executed in blank.
7.5 Employment Agreements. Each of Tal Cohen and Omer Shvili
shall have executed and delivered an Employment Agreement.
7.6 Resignation of Officers and Directors of Subsidiaries.
There shall have been delivered to the Purchaser the written resignations,
effective as of the Closing Date, of each officer and director of each
Subsidiary.
7.7 Liquidation of Omninet. Omninet Inc., a company organized
under the laws of Barbuda and Antigua, shall have been liquidated and dissolved.
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ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE SELLERS
The obligations of the Company and each Seller under this
Agreement shall be subject to the satisfaction, on or before the Effective Time,
of each of the following conditions unless waived in writing by the Company and
the Sellers' Representative:
8.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Article IV of this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if such representations and warranties had been made on and as of
such date, and the Purchaser shall have delivered to the Sellers' Representative
a certificate, dated the Closing Date, to such effect.
8.2 No Proceedings or Litigation. No preliminary or permanent
injunction or other Order issued by a court of competent jurisdiction or by any
Authority, or any Regulation or Order promulgated or enacted by any Authority,
shall be in effect which would prevent the consummation of the transactions
contemplated by this Agreement.
8.3 Employment Agreements. The Purchaser shall have executed
and delivered an Employment Agreement with respect to each of Tal Cohen and Omer
Shvili.
8.4 Registration Rights Agreement. The Purchaser shall have
executed and delivered the Registration Rights Agreement, and the Registration
Rights Agreement shall be in full force and effect.
8.5 No Material Adverse Change. No development or change shall
have occurred since the date of this Agreement with respect to the Purchaser
which might reasonably be expected to have a material adverse effect in respect
of the business, operations, properties, assets or condition (financial or
otherwise) of the Purchaser, it being understood that a decline in the price of
Purchaser Common Stock shall not in and of itself constitute such a development
or change.
ARTICLE IX
CLOSING
9.1 Closing. Unless this Agreement shall have been terminated
or abandoned pursuant to the provisions of Article X hereof, a closing of the
transactions contemplated by this Agreement (the "Closing") shall be held at
10:00 A.M. on August 11, 2000, at the offices of White & Case LLP, 1155 Avenue
of the Americas, New York, New York 10036, or at such other time, date or place
as the Purchaser and the Sellers' Representative shall designate in writing. The
date on which the Closing occurs is herein referred to as the "Closing Date".
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ARTICLE X
TERMINATION
10.1 Events of Termination. This Agreement may be terminated
at any time prior to the Closing:
(a) by the written consent of the Purchaser and the Sellers'
Representative;
(b) by Purchaser, if there has been a material violation or
breach by the Company or any Seller of any covenant, representation or warranty
contained in this Agreement which has prevented the satisfaction of any
condition to the obligation of the Purchaser and Acquisition to close the
transactions contemplated by this Agreement pursuant to Article VII and such
violation or breach has not been waived by the Purchaser or, with respect to a
covenant breach, cured within ten days after written notice thereof from
Purchaser and prior to August 31, 2000;
(c) by the Company, if there has been a material violation or
breach by the Purchaser or Acquisition of any covenant, representation or
warranty contained in this Agreement which has prevented the satisfaction of any
condition to the obligation of the Company and the Sellers to close the
transactions contemplated by this Agreement pursuant to Article VIII and such
violation or breach has not been waived by the Sellers' Representative or, with
respect to a covenant breach, cured within ten days after written notice thereof
from the Sellers' Representative and prior to August 31, 2000; or
(d) by either the Company or the Purchaser if the transactions
contemplated hereby have not been consummated by August 31, 2000; provided,
however, that neither the Company nor the Purchaser shall be entitled to
terminate this Agreement pursuant to this Section 10.1(d) if such party's breach
of this Agreement (or Acquisition's breach, with respect to the Purchaser, or
any Seller's breach, with respect to the Company) has prevented the consummation
of the transactions contemplated hereby.
10.2 Effect of Termination. In the event that this Agreement
shall be terminated pursuant to Section 10.1, all further obligations of the
parties hereto under this Agreement (other than pursuant to Sections 6.5 and
13.1) shall terminate without further liability or obligation of the terminating
party to the other parties hereto; provided, however, that no party shall be
released from liability hereunder if this Agreement is terminated and the
transactions abandoned by reason of (a) any failure of such party to have
performed its obligations hereunder or (b) any misrepresentation made by such
party with respect to any matter set forth herein, and in the event of a
termination pursuant to Section 10.1(b) or 10.1(c), the terminating party shall
have all rights and remedies available under this Agreement or pursuant to
applicable law.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
11.1 Survival of Representations, Warranties and Covenants.
Except for the
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representations and warranties of the Company and each Seller set forth in
Sections 2.2(a) and 2.18 and of each Seller set forth in Sections 3.1 and 3.3,
each of which shall survive indefinitely, the respective representations and
warranties of the Purchaser, the Company and each Seller contained in this
Agreement shall not survive the Closing. The respective covenants of the
Purchaser, Acquisition, the Company and each Seller contained in this Agreement
shall survive the Closing for the applicable statute of limitations period.
11.2 Indemnification. (a) The Purchaser hereby agrees to
indemnify and hold each Seller and its respective officers, directors,
Affiliates, agents, heirs, legatees, successors and permitted assigns harmless
from all damages, losses, claims, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively, "Damages")
incurred or suffered as a result of or arising out of the breach of any covenant
or agreement made or to be performed by the Purchaser or Acquisition pursuant to
this Agreement.
(b) Each Seller, jointly and severally, hereby agrees to
indemnify and hold the Purchaser and its officers, directors, Affiliates
(including, after the Closing, the Subsidiaries), agents, successors and
permitted assigns harmless from all Damages incurred or suffered as a result of
or arising out of (i) the failure of any representation or warranty made by any
Seller in Article II of this Agreement or by the Company in this Agreement which
survives the Closing to be true and correct as of the Closing Date, (ii) any
Taxes owing in connection with the transfer of Omninetworks (Israel) Ltd. from
Omninet Inc. to the Company or (iii) the breach of any covenant or agreement
made or to be performed by the Company pursuant to this Agreement on or prior to
the Closing Date.
(c) Each Seller, severally and not jointly, hereby agrees to
indemnify and hold the Purchaser and its officers, directors, Affiliates
(including, after the Closing, the Subsidiaries), agents, successors and
permitted assigns harmless from any and all Damages incurred or suffered as a
result of or arising out of (i) the failure of any representation or warranty
made by such Seller in Article III of this Agreement which survives the Closing
to be true and correct as of the Closing Date or (ii) the breach of any covenant
or agreement made or to be performed by such Seller pursuant to this Agreement.
(d) Anything contained in this Article XI to the contrary
notwithstanding, the Purchaser shall not be liable pursuant to Section 11.2(a)
until the aggregate liability of the Purchaser with respect thereto exceeds
$100,000 (the "Threshold"), at which point the Purchaser shall be responsible
for all indemnifiable Damages that may arise (including the original $100,000
thereof), irrespective of the Threshold.
(e) The aggregate amount of Damages recoverable from the
Purchaser pursuant to this Article XI shall not exceed the greater of $5,000,000
and the Aggregate Notional Share Value.
(f) Anything contained in this Article XI to the contrary
notwithstanding, no Seller shall be liable pursuant to Section 11.2(b) until the
aggregate liability of the Sellers with respect thereto exceeds the Threshold,
at which point the Sellers shall be responsible for all
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indemnifiable Damages that may arise (including the original $100,000 thereof),
irrespective of the Threshold.
(g) The aggregate amount of Damages recoverable from any
Seller pursuant to this Article XI shall not exceed an amount equal to the
product of (i) the Notional Purchaser Share Value and (ii) the number of shares
of Purchaser Common Stock into which such Seller's Company Stock became
convertible at the Effective Date. The aggregate amount of Damages recoverable
from all Sellers pursuant to this Article XI shall not exceed the greater of
$5,000,000 and the Aggregate Notional Share Value.
11.3 Indemnification Procedure. (a) Any Person seeking
indemnification (the "Indemnified Party") from any other Person (the
"Indemnifying Party") with respect to any claim, demand, action, proceeding or
other matter pursuant to Section 11.2 (a "Claim") shall promptly notify the
Indemnifying Party in writing of the existence of the Claim, setting forth in
reasonable detail the facts and circumstances pertaining thereto and the basis
for the Indemnified Party's right to indemnification.
(b) If any third party shall notify any Indemnified Party with
respect to any matter which may give rise to a Claim for indemnification against
the Indemnifying Party under this Agreement, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is
materially prejudiced by such failure to give notice. Thereafter, the
Indemnified Party shall deliver to the Indemnifying Party, within five days
after the Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party relating to
the Claim. Upon receipt of notice of a Claim, the Indemnifying Party shall be
entitled, at its option and at its cost and expense, to assume the defense of
such Claim by notifying the Indemnified Party thereof within 30 days of
receiving such notice. In addition:
(i) the Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice reasonably satisfactory
to the Indemnified Party;
(ii) the Indemnified Party may retain separate co-counsel at
its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel (A) to
the extent the Indemnified Party concludes reasonably based upon
written advice of counsel that a material conflict of interest exists
between the Indemnified Party and Indemnifying Party or (B) the named
parties to any such action (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party and such
Indemnified Party shall have been advised in writing by counsel that
there may be one or more legal defenses available to the Indemnified
Party which (1) are not available to the Indemnifying Party or (2)
available to the Indemnifying Party but the assertion of which would be
adverse to the interest of the Indemnified Party);
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(iii) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the matter
without the prior written consent of the Indemnifying Party (such
consent not to be unreasonably delayed or withheld); and
(iv) the Indemnifying Party will not consent (without the
consent of the Indemnified Party, such consent not to be unreasonably
delayed or withheld) to the entry of any judgment or enter into any
settlement which does not include a provision whereby the plaintiff or
claimant in the matter releases the Indemnified Party from all
liability with respect thereto.
(c) If no Indemnifying Party notifies the Indemnified Party
within 30 days after the Indemnified Party has given notice of the matter that
the Indemnifying Party is assuming the defense thereof, then the Indemnified
Party may defend against, or enter into any settlement with respect to, the
matter in any manner it reasonably may deem appropriate, without prejudice to
any of its rights hereunder, subject, however, to the provisions of Section
11.3(b)(iii), and provided that giving or the failure to give notice by the
Indemnifying Party with respect to defense of a Claim shall not be an
acknowledgment by the Indemnifying party of any liability with respect to such
Claim.
11.4 General. (a) Each Indemnified Party shall be obligated in
connection with any Claim to use all commercially reasonable efforts to obtain
any insurance proceeds available to such Indemnified Party with regard to the
applicable Claim under all relevant insurance policies. The amount which an
Indemnifying Party is or may be required to pay pursuant to this Article XI
shall be reduced (retroactively, if necessary) by any insurance proceeds
received or other amounts actually recovered (net of any direct collection
costs) by or on behalf of the relevant Indemnified Party in reduction of the
related Damages. If an Indemnified Party shall have received the entire payment
required by this Agreement in respect of Damages and shall subsequently receive
insurance proceeds or other amounts in respect of such Damages, then such
Indemnified Party shall promptly repay to the Indemnifying Party a sum equal to
the amount of such insurance proceeds or other amounts actually received (net of
any direct collection costs).
(b) In addition to the requirements of Section 11.4(a), each
of the Indemnified Party and the Indemnifying Party shall be obligated in
connection with any Claim for indemnification under this Article XI to use
commercially reasonable efforts to mitigate Damages upon and after becoming
aware of any event which could reasonably be expected to give rise to such
Damages. In addition, the Indemnified Party and the Indemnifying Party shall
cooperate in the defense or prosecution, as the case may be, of such Claim. Such
cooperation shall include the retention and, upon request of the Indemnifying
Party, the provision to the Indemnifying Party of all records and information
that are reasonably relevant to such Claim and the making available of employees
to provide any relevant confirmation. The Indemnified Party further agrees to
take such other actions as may be reasonably requested by the Indemnifying Party
(not including asserting or bringing any action, counterclaim, cross-complaint,
suit or other similar proceeding) to mitigate any Damages for which the
Indemnifying Party will otherwise be liable, subject to the obligation of the
Indemnifying Party to reimburse the Indemnified Party for any costs incurred in
connection therewith.
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(c) With the exception of any claims of fraud, the parties
hereto agree that the indemnity provisions of this Article XI shall be the
exclusive remedy for all claims of misrepresentation, breach or indemnification
relating to the transactions contemplated by this Agreement.
ARTICLE XII
DEFINITIONS
12.1 Definitions. When used in this Agreement the following
terms shall have the respective meanings specified therefore below (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Acquisition" shall have the meaning set forth in the preamble
to this Agreement.
"Affiliate" of any Person means any Person directly or
indirectly controlling, controlled by, or under common control with, such
Person; provided that, for the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or partnership interests, by Contract or
otherwise.
"Aggregate Notional Share Value" means the product of
1,333,334 and the Notional Purchaser Share Value.
"Aggregate Section 1.7(a) Share Amount" shall have the meaning
set forth in Section 1.7(a).
"Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Articles of Merger" shall have the meaning as set forth in
Section 1.2.
"Authority" means any governmental, regulatory or
administrative body, agency, commission, board, arbitrator or authority, any
court or judicial authority or any recognized public, private or industry
regulatory authority, whether international, national, federal, state or local.
"Business" means the business of the Company and/or any
Subsidiary as presently conducted.
"Certificate of Merger" shall have the meaning as set forth in
Section 1.2.
"Claim" shall have the meaning as set forth in Section
11.3(a).
"Closing" shall have the meaning set forth in Section 9.1.
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"Closing Date" shall have the meaning set forth in Section
9.1.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code as in effect at the
date of this Agreement.
"Company" shall have the meaning set forth in the preamble to
this Agreement.
"Company Option Agreement" shall mean the Take Aim Holdings
Ltd. Stock Option Agreement adopted by the Company on August 11, 2000 and in the
form attached hereto as Exhibit E.
"Company Option Plan" shall mean the Take Aim Holdings Ltd.
1999-2000 Stock Incentive Plan adopted by the Company on August 11, 2000 and in
the form attached hereto as Exhibit G.
"Company Stock" means the Ordinary Stock and the Preferred
Stock.
"Contract" means any agreement, contract, license, commitment,
instrument or other binding arrangement or understanding, whether written or
oral.
"Damages" shall have the meaning set forth in Section 11.2(a).
"DGCL" shall have the meaning set forth in Section 1.2.
"Effective Time" shall have the meaning set forth in Section
1.3.
"Employment Agreement" means an agreement substantially in the
form attached hereto as Exhibit D.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Company or any Subsidiary would
be deemed to be a "single employer" within the meaning of Section 414(b), (c),
(m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, and
the rules and regulations promulgated thereunder, as from time to time in
effect.
"Execution Date" shall have the meaning set forth in the
preamble of this Agreement.
"Financial Statements" shall have the meaning set forth in
Section 2.6.
"Foreign Plan" means any pension, retirement, insurance,
health or other plan, fund (including, without limitation, any superannuation
fund) or similar program established or
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maintained outside the United States by the Company or any Subsidiary primarily
for the benefit or welfare of employees of the Company or any Subsidiary
residing outside the United States.
"GAAP" means United States generally accepted accounting
principles.
"Guarantee" means any guarantee or other contingent liability
(other than any endorsement for collection or deposit in the ordinary course of
business) with respect to any obligation of another Person, through an agreement
or otherwise, including without limitation (i) any endorsement or discount with
recourse or undertaking substantially equivalent to or having an economic effect
similar to a guarantee in respect of any such obligation, (ii) any Contract to
purchase, or to advance or supply funds for the payment or purchase of, any such
obligation or (iii) any Contract to make any loan, advance or capital
contribution to or other investment in, or to otherwise provide funds to or for,
such other Person in respect of enabling such Person to satisfy an obligation or
to assure a minimum equity, working capital or other balance sheet condition in
respect of any such obligation.
"IBC" shall have the meaning set forth in Section 1.2.
"Indebtedness" with respect to any Person means any obligation
of such Person for borrowed money, but in any event shall include (i) any
obligation or liability incurred for all or any part of the purchase price of
property or other assets, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the ordinary course
of business, (ii) the face amount of all letters of credit issued for the
account of such Person and all drafts drawn thereunder, (iii) capitalized lease
obligations and (d) all Guarantees of such Person.
"Indemnified Party" shall have the meaning set forth in
Section 11.3(a).
"Indemnifying Party" shall have the meaning set forth in
Section 11.3(a).
"Intellectual Property" means all domestic and foreign
patents, patent applications, trademarks, service marks and other indicia of
origin, trademark and service mark registrations and applications for
registrations thereof, copyrights and applications for registration thereof,
Internet domain names and universal resource locators, inventions (whether or
not patentable), invention disclosures, moral and economic rights of authors and
inventors (however denominated), technical data, customer lists, corporate and
business names, trade names, trade dress, brand names, know how, formulae,
methods (whether or not patentable), designs, processes, procedures, technology,
source codes, object codes, computer software programs, databases, data
collectors, technology, trade secrets and other proprietary information or
material of any type, whether written or unwritten, owned by the Company and/or
any Subsidiary or used in connection with, and material to, the Business (and
all goodwill associated with, and all improvements and refinements of, any of
the foregoing).
"Internet Game Development Agreement" means the Internet Game
Development dated January 12, 1999 among Pearson Television Limited, Pearson
Television North America, Inc., Pearson Television, Inc., Pearson Television
Netherlands (a branch of Pearson Television France EURL) and the Purchaser, as
from time to time in effect.
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"Issuance Obligation" means, with respect to any Person, any
outstanding or authorized option, warrant, call, right or subscription, claim of
any character, obligation, convertible or exchangeable security or other
commitment, contingent or otherwise, to which such Person is a party or by which
it is bound obligating such Person or any subsidiary of such Person to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of such Person or any of such Person's subsidiaries or obligating
such Person or any of such Person's subsidiaries to grant, extend or enter into
any such option, warrant, call, right or agreement.
"Knowledge of the Company" means the actual knowledge of
either Omer Shvili or Tal Cohen.
"Lien" means any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, claim, easement, charge, restriction on transfer or
otherwise, or interest of another Person of any kind or nature.
"Material Adverse Change" means any developments or changes
which would have a Material Adverse Effect.
"Material Adverse Effect" means any circumstances, state of
facts or matters which might reasonably be expected to have a material adverse
effect in respect of the business, operations, properties, assets or condition
(financial or otherwise) of the Company and the Subsidiaries taken as a whole.
"Merger" shall have the meaning as set forth in Section 1.1.
"Notional Purchaser Share Value" means the closing price for a
share of Purchaser Common Stock as reported by Nasdaq on the trading day
immediately preceding the Closing Date.
"Ordinary Stock" means Ordinary Shares of the Company, par
value $0.01 per share.
"Order" means any decree, order, judgment, injunction, rule,
ruling, Lien, voting right or consent of or by an Authority.
"Permitted Liens" means (i) Liens for Taxes if such Taxes
shall not be due and payable or if the validity thereof is being contested in
good faith, (ii) Liens consisting of zoning or planning restrictions or
regulations, easements, permits, restrictive covenants, encroachments and other
restrictions or limitations on the use of real property or irregularities in, or
exceptions to, title thereto which do not materially detract from the value of,
or impair the use of, such property by the Company or a Subsidiary, (iii) any
Lien on or referred to in the Financial Statements and (iv) Liens of mechanics,
workmen, repairmen or similar Liens (inchoate or otherwise), which individually
or in the aggregate are not material.
"Person" means any corporation, partnership, joint venture,
company, trust, organization, entity, Authority or natural person.
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"Plan" means any "employee benefit plan" as defined in Section
3(3) of ERISA subject to Title I of ERISA or any "plan" subject to Section 4975
of the Code.
"Plan of Merger" shall have the meaning set forth in Section
1.2.
"Preference Amount" means, with respect to any holder of
Preferred Stock, $2.481 plus simple interest on such amount computed at the rate
of 8% per annum from and including the relevant Preferred Stock acquisition date
for such holder as set forth on Schedule 2.2(a)(iii) to but excluding the date
on which the Effective Time occurs.
"Preferred Stock" means Series A Preferred Shares of the
Company, par value $0.01 per share.
"Purchaser" shall have the meaning set forth in the preamble
to this Agreement.
"Purchaser Common Stock" shall have the meaning set forth in
Section 4.6.
"Purchaser Common Stock Execution Date Price" means the
closing price for a share of Purchaser Common Stock as reported by Nasdaq on the
date of this Agreement.
"Purchaser Financial Statements" shall have the meaning set
forth in Section 4.5.
"Registration Rights Agreement" means an agreement
substantially in the form attached hereto as Exhibit F.
"Regulation" means any rule, law, code, statute, regulation,
ordinance, requirement, announcement or other binding action of or by an
Authority.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, and the
rules and regulations promulgated thereunder, as from time to time in effect.
"Seller" shall have the meaning set forth in the preamble to
this Agreement.
"Sellers' Representative" means Tulchinsky-Stern Trust Company
Ltd.
"Server" shall have the meaning as set forth in Section
2.14(g).
"Site" shall have the meaning as set forth in Section 2.14(g).
"Subsidiary" means any corporation or other entity 50% or more
of the outstanding shares of capital stock or other equity interests of which
are owned directly, or through one or more intermediaries, by the Company or
which is held pursuant to the terms of a voting trust on behalf of the Company.
"Surviving Company" shall have the meaning set forth in
Section 1.1.
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"Tax Returns" means federal, state, foreign and local tax
reports, returns, information returns, statements and other similar documents
relating to Taxes.
"Taxes" means all taxes, assessments, charges, duties, fees,
levies or other governmental charges, including, without limitation, all
federal, state, local, foreign and other income, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding and other
taxes, assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding and whether
or not requiring the filing of a Tax Return), estimated taxes, deficiency
assessments, additions to tax and penalties and interest with respect thereto.
"Taxing Authorities" means the Internal Revenue Service and
any Authority which has the right to impose Taxes on the Company, any Subsidiary
or any Seller.
"Threshold" shall have the meaning set forth in Section
11.2(d).
"24/7" shall have the meaning set forth in Section 2.14(g).
"Voting Debt" shall have the meaning set forth in Section 2.2.
ARTICLE XIII
MISCELLANEOUS
13.1 Expenses. The Purchaser shall bear its own expenses and
the expenses of Acquisition, including without limitation legal fees and
expenses, with respect to this Agreement and the transactions contemplated
hereby. The Company shall bear the Company's and the Sellers' reasonable
expenses, including without limitation reasonable legal fees and expenses, with
respect to this Agreement and the transactions contemplated hereby.
13.2 Governing Law. The interpretation and construction of
this Agreement, and all matters relating hereto, shall be governed by the laws
of the State of New York applicable to agreements executed and to be performed
solely within such state.
13.3 Jurisdiction. Any judicial proceeding brought against any
of the parties to this Agreement or any dispute arising out of this Agreement or
related hereto may be brought in the courts of the State of New York, or in the
United States District Court for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the parties to this Agreement
waives any and all rights to a trial by jury in connection with any such
proceeding or dispute and accepts the exclusive jurisdiction of such courts and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement.
13.4 Table of Contents; Captions. The table of contents and
article and section captions used herein are for reference purposes only, and
shall not in any way affect the meaning or interpretation of this Agreement.
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13.5 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when delivered by hand, by mail with
postage paid, by overnight receipted courier service or by facsimile
transmission:
(a) If to the Company, to:
Take Aim Holdings Ltd.
13, Noah Moses Street
Tel Aviv 67442
Israel
Attn: Mr. Tal Cohen
Fax: (972) 3696-3635
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with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Matthew D. Bloch, Esq.
Fax: (212) 310-8007
(b) If to the Sellers' Representative or to any Seller,
in care of:
Tulchinsky, Stern & Co., Adv.
22 Kanfei-Nesharim Street
Riger Federman Building
Jerusalem, Israel
Attn: Doron Stern, Adv.
Fax: (011) (972) (2) 6513133
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Matthew D. Bloch, Esq.
Fax: (212) 310-8007
(c) If to the Purchaser or Acquisition, to:
Uproar Inc.
240 West 35th Street
New York, NY 10001
Attn: Robert D. Marafioti, Esq.
Fax: (917) 351-2896
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attn: Anthony F. Kahn, Esq.
Fax: (212) 354-8113
or to such other Person or address as any party shall furnish by notice to the
Purchaser, the Company and the Sellers' Representative in writing.
13.6 Parties in Interest. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto without the
prior written consent of the other parties
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hereto. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
13.7 Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
13.8 Entire Agreement. This Agreement, including the Schedules
and Exhibits which form a part hereof, contains the entire understanding of the
parties hereto with respect to the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties
hereto with respect to such subject matter, including without limitation the
letter of intent dated May 12, 2000 among the Purchaser, the Company and certain
Sellers; provided, however, that the Confidentiality Agreement, dated May 12,
2000, between the Purchaser and the Company shall remain in full force and
effect until the consummation of the Merger.
13.9 Amendments. This Agreement may not be changed orally, but
only by an agreement in writing signed by the Purchaser, the Company and the
Sellers' Representative.
13.10 Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
13.11 Third Party Beneficiaries. Each party hereto intends
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any Person (including, without limitation, any employee of the
Purchaser, the Company or any Subsidiary) other than the parties hereto and the
Indemnified Parties.
13.12 Legend. In addition to any other legends otherwise
required, all certificates representing the Purchaser Common Stock being issued
pursuant to this Agreement shall bear a legend in substantially the following
form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE OR FOREIGN SECURITIES LAWS.
SUCH SHARES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED
EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS
OF THE SECURITIES ACT AND ALL APPLICABLE STATE AND FOREIGN
SECURITIES LAWS, PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN A TRANSACTION OTHERWISE IN COMPLIANCE WITH
APPLICABLE FEDERAL, STATE AND FOREIGN SECURITIES LAWS.
13.13 Injunctive Relief. The parties hereto agree that in the
event of a breach of any provision of this Agreement, the aggrieved party or
parties may be without an adequate remedy at law. The parties therefore agree
that in the event of a breach of any provision of this
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Agreement, the aggrieved party or parties may elect to institute and prosecute
proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of such provision, as well as to
obtain damages for breach of this Agreement. By seeking or obtaining any such
relief, the aggrieved party shall not be precluded from seeking or obtaining any
other relief to which it may be entitled.
13.14 Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any party to this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such party nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing.
13.15 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event any ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by all parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provision of this Agreement.
IN WITNESS WHEREOF, each of the Purchaser, Acquisition, the
Company and each Seller has executed this Agreement as of the date first above
written.
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