EXHIBIT 4
ESCROW AGREEMENT
This Agreement is made and entered into on this 14th day of
December, 2000, by and among (i) Uproar Inc., a Delaware
corporation ("Acquiror"), (ii) Trafficmarketplace.com, Inc., a
Delaware corporation ("Target"), (iii) Frederick Krueger as the
representative (the "Target Stockholders' Agent") of the
stockholders of Target (the "Target Stockholders"), and
(iv) The Chase Manhattan Bank, as escrow agent ("Escrow Agent").
WITNESSETH:
WHEREAS, Acquiror, Merger Sub, Target, the Target
Stockholders' Agent and the Target Stockholders are parties to
that certain Agreement and Plan of Reorganization dated as of
December 6, 2000 (collectively, with all schedules, letters,
exhibits and certificates referred to therein, the "Merger
Agreement") and attached hereto as Exhibit A, which provides for
the merger of Merger Sub with and into Target, with Target
surviving as a wholly-owned subsidiary of Acquiror (the
"Merger"); and
WHEREAS, the Merger Agreement provides that at the
Effective Time, certain shares of Acquiror Common Stock to be
issued in the Merger and otherwise distributable to the Former
Target Stockholders pursuant thereto will be deposited in escrow
pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises
and covenants contained in the Merger Agreement and herein, the
parties agree as follows:
ARTICLE I
ESCROW
1.1 Defined Terms. Capitalized terms not defined herein
shall have the meaning assigned to such terms in the Merger
Agreement. All provisions of the Merger Agreement shall be
incorporated herein by reference as if set forth in their
entirety herein. If any term of this Agreement is inconsistent
with the terms of the Merger Agreement, then the terms of the
Merger Agreement shall control.
1.2 Escrow Agreement. Acquiror and Target hereby appoint
the Escrow Agent as the escrow agent for the purposes set forth
in Article VIII of the Merger Agreement. At the Effective Time,
the Target Stockholders' Agent, on behalf of the Target
Stockholders, shall deposit, or cause to be deposited, into
an escrow account with the Escrow Agent one or more certificates
in the name of "Chase Manhattan Bank, as Escrow Agent"
representing ten percent (10%) of the amount of Acquiror Common
Stock otherwise deliverable to such Target Stockholder
pursuant to Section 1.6 of the Merger Agreement (collectively,
the "Escrow Shares") which shares, together with distributions
thereof pursuant to Section 1.5 of this Agreement, shall
constitute the Escrow Fund. The Escrow Agent will acknowledge
receipt of the Escrow Shares into the Escrow Fund to the
Target Stockholders' Agent and the Acquiror and
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will hold such shares in accordance with the terms and
conditions hereof and of Article VIII of the Merger Agreement.
The "Termination Date" shall be the date that is twelve (12)
calendar months from the Closing Date.
1.3 Escrow Fees. Acquiror agrees to (i) pay Escrow
Agent upon execution of this Escrow Agreement and annually
thereafter reasonable compensation for the services to be
rendered hereunder, which unless otherwise agreed in writing,
shall be as described in Schedule A attached hereto, and
(ii) pay or reimburse Escrow Agent upon request for all
expenses, disbursements and advances, including reasonable
attorney's fees and expenses, incurred or made by
it in connection with the preparation, execution,
performance, delivery, modification and termination of this
Agreement.
1.4 Ownership and Vote of Shares. The Escrow Agent
shall, subject to the provisions of this Agreement and the
Merger Agreement, hold the Escrow Shares and any distributions
in respect thereof as agent for the respective Target
Stockholders. All Escrow Shares in the Escrow Fund shall be
available for distribution by the Escrow Agent, subject to the
provisions of this Agreement and the Merger Agreement, to
reimburse Acquiror in respect of any Damages which are
indemnifiable pursuant to the Merger Agreement. The Target
Stockholders shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Escrow Shares or
any part thereof for any purpose not inconsistent with the
terms of this Agreement or the Merger Agreement. The Escrow
Agent shall from time to time deliver to the Target
Stockholders' Agent, who shall deliver to the Target
Stockholders, such proxies, consents or other documents as
may be necessary to enable the Target Stockholders to
exercise such rights. In the absence of exercise of such
voting rights, the Escrow Agent shall not vote any of the
Escrow Shares.
1.5 Distribution of Securities. Any and all distributions
of stock or any securities of Acquiror Common Stock issued in
connection with the Escrow Shares (including, without
limitation, any shares issued pursuant to any stock dividend,
stock split, reverse stock split, combination or
reclassification thereof) shall be the property of the Target
Stockholders, shall be deposited with the Escrow Agent and
shall be treated as Escrow Shares pursuant to the terms of
this Agreement.
1.6 Dividends. Subject to Section 1.5, cash dividends
or other property distributed in respect of Acquiror Common
Stock shall be delivered to the Target Stockholders on a pro
rata basis in accordance with the number of shares of Target
Common Stock held by the Target Stockholders at the Effective
Time and shall not be deposited with or retained by the Escrow
Agent.
ARTICLE II
RELEASE FROM ESCROW
2.1 Claims upon Escrow Fund. Upon receipt by the
Escrow Agent (on or before the Termination Date) of an
Officer's Certificate from Acquiror stating that (i) Acquiror
has incurred Damages in an aggregate stated amount and
(ii) is entitled to payment from the Escrow Fund in a
specified number of shares, the Escrow Agent shall,
subject to the provisions
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of Section 2.2 of this Agreement, deliver to Acquiror
the specified number of shares of Acquiror Common Stock
to indemnify Acquiror for the Damages claimed.
In the event that the number of shares of Acquiror Common
Stock in the Escrow Fund is less than the number required
to pay the Damages claimed by the Acquiror in any Officer's
Certificate, Escrow Agent shall, subject to the provisions
of this Agreement, distribute to the Acquiror the remaining
Acquiror Common Stock held in the Escrow Fund.
2.2 Objections to Claims. For a period of forty-five
(45) days after delivery to the Escrow Agent of an Officer's
Certificate, the Escrow Agent shall make no delivery of
Acquiror Common Stock or other property pursuant to
Section 2.1 hereof unless the Escrow Agent shall have received
written authorization from the Target Stockholders' Agent to
make such delivery. After the expiration of such forty-five
(45) day period, the Escrow Agent shall make delivery of the
Acquiror Common Stock or other property in the Escrow Fund in
accordance with Section 2.1 hereof, provided that no such
payment or delivery may be made if the Target Stockholders'
Agent shall object in a written statement to any claim made
in the Officer's Certificate, and such statement shall have
been delivered to the Escrow Agent prior to the expiration
of such forty-five (45) day period.
2.3 Contested Claims. In case the Target Stockholders'
Agent shall object in writing to any claim or claims by
Acquiror made in any Officer's Certificate as provided in
Section 2.2, the Target Stockholders' Agent and Acquiror
shall attempt in good faith for sixty (60) days to agree
upon the rights of the respective parties with respect to
each of such claims. If the Target Stockholders' Agent and
Acquiror should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties
and shall be furnished to the Escrow Agent. The Escrow Agent
shall be entitled to rely on any such memorandum and shall
distribute the Acquiror Common Stock or other property
from the Escrow Fund in accordance with the terms thereof.
If the parties have not resolved the dispute during such
sixty (60) day period as evidenced by an executed memorandum
then the parties will resolve the dispute by final, binding
award (the "Award") of an arbitrator as provided in Section
8.8 of the Merger Agreement. The Award shall be provided to
the Escrow Agent and the Escrow Agent shall be entitled to
rely on any such Award and shall distribute the Acquiror
Common Stock or other property from the Escrow Fund in
accordance with the terms thereof.
2.4 No Fractional Shares. No fractional shares shall
be delivered to satisfy any Damages claims. Instead, in the
event that the Escrow Shares to be so delivered from the
Escrow Fund would include a fractional share, the parties
hereto agree that the Target Stockholders' Agent and the
Acquiror may round such fraction to a whole share in such
manner as they may agree in their sole and absolute discretion.
2.5 Distribution Upon Termination of Escrow Period.
Within five (5) business days following the Termination Date,
the Escrow Agent shall deliver to the Former Target
Stockholders all of the Acquiror Common Stock in the Escrow
Fund in excess of any amount of such Acquiror Common Stock
reasonably necessary to satisfy any unsatisfied or disputed
claims for Damages specified in any Officer's Certificate
delivered to the Escrow Agent on or before the Termination
Date and any unsatisfied or disputed claims by the Target
Stockholders' Agent under Section 8.9(d) of the Merger
Agreement. As soon as the Escrow Agent has received a
memorandum of the parties stating that all such claims
have been resolved
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or an Award has been entered with regard to all disputed
claims, the Escrow Agent shall promptly deliver to the Former
Target Stockholders all Acquiror Common Stock remaining in the
Escrow Fund and not required to satisfy such claims. All
distributions from the Escrow Fund to the Former Target
Stockholders shall be made on a pro rata basis in accordance
with the number of shares of Target Common Stock held by the
Target Stockholders at the Effective Time.
2.6 Actions of the Target Stockholders' Agent. A
decision, act, consent or instruction of the Target
Stockholders' Agent shall constitute a decision of all
Target Stockholders for whom shares of Acquiror Common Stock
otherwise issuable to them are deposited in the Escrow Fund
and shall be final, binding and conclusive upon each such
Target Stockholder, and the Escrow Agent and Acquiror may
rely upon any decision, act, consent or instruction of the
Target Stockholders' Agent as being the decision, act, consent
or instruction of each and every such Target Stockholder. The
Escrow Agent is hereby relieved from any liability to any
person for any acts done by it in accordance with such
decision, act, consent or instruction of the Target
Stockholders' Agent.
ARTICLE III
AUTHORITY AND INDEMNIFICATION
3.1 Authority. Upon consummation of the Merger and in
consideration of the mutual promises and covenants set forth
in the Merger Agreement, the Target Stockholders and Acquiror
shall be deemed to have irrevocably appointed the Escrow Agent
to hold all of the Escrow Fund for the account of the Target
Stockholders as provided in Section 8.3 of the Merger
Agreement subject to this Agreement until their release in
accordance with this Agreement.
3.2 Responsibilities of Escrow Agent.
(a) With respect to this Agreement, the parties
acknowledge and agree that Escrow Agent is acting solely as
an independent Escrow Agent pursuant to this Agreement. The
Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no other or further duties
or responsibilities shall be implied.
(b) Escrow Agent shall not be required to institute
or defend any action involving any matters referred to herein
or which affected it or its duties or liabilities hereunder
unless required to do so by any party to this Agreement and
then only upon receiving indemnity in accordance with Section
3.3 hereto, against any and all claims, liabilities and
expenses in relation thereto. Except as otherwise contemplated
by Section 3.2(c) hereof, Escrow Agent shall not be required
to defend any legal proceedings which may be instituted
against Escrow Agent in respect to the subject matter hereof.
Except as otherwise contemplated by Section 3.2(c) hereof, in
the event any action is instituted against Escrow Agent, Escrow
Agent may interplead the parties hereto and may deposit the
subject matter of this escrow into court and in such event
Escrow Agent shall be relieved and/or discharged from any and
all obligations and liabilities under and pursuant hereto
subject to any required permission of the court in which such
interpleader is filed.
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(c) Escrow Agent may rely upon and shall not be
liable for acting or refraining from acting upon any written
notice, instruction or request furnished to it hereunder and
believed by it to be genuine and to have been signed or
presented by the proper party or parties so long as Escrow
Agent complies with the terms of this Agreement. Escrow Agent
shall be under no duty to inquire into or investigate the
validity, accuracy or content of any such document. Escrow
Agent shall have no duty to solicit any payments which may be
due it hereunder. Escrow Agent shall not be liable for any
action taken or omitted by it in good faith except to the
extent that a court of competent jurisdiction determines
that the Escrow Agent's gross negligence or willful misconduct
was the primary cause of any loss to the Acquiror or Target
Stockholders. Escrow Agent may execute any of its powers and
perform any of its duties hereunder directly or through agents
or attorneys (and shall be liable only for the careful
selection of any such agent or attorney) and may consult
with counsel, accountants and other skilled persons to be
selected and retained by it. Escrow Agent shall not be liable
for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel,
accountants or other skilled persons. In the event that Escrow
Agent shall be uncertain as to its duties or rights hereunder
or shall receive instructions, claims or demands from any
party hereto which, in its opinion, conflict with any of the
provisions of this Agreement, it shall be entitled to refrain
from taking any action and its sole obligation shall be to
keep safely all property held in escrow until it shall be
directed otherwise in writing by all of the other parties
hereto or by a final order or judgment of a court of competent
jurisdiction. Anything in this Escrow Agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be liable
for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits),
even if the Escrow Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action.
3.3 Indemnity. Acquiror and the Target Stockholders shall
jointly and severally indemnify, defend and save harmless
Escrow Agent and its directors, officers, agents and employees
(the "Indemnitees") from all loss, liability or expense
(including the fees and expenses of in house or outside
counsel) arising out of or in connection with (i) Escrow
Agent's execution and performance of this Agreement, except
in the case of any Indemnitee to the extent that such loss,
liability or expense is due to the gross negligence or willful
misconduct of such Indemnitee, or (ii) its following any
instructions or other directions from Acquiror or the Target
Stockholders' Agent, except to the extent that its following
any such instruction or direction is expressly forbidden by
the terms of this Agreement. The parties hereto acknowledge
that the foregoing indemnities shall survive the resignation
or removal of Escrow Agent or the termination of this
Agreement. The parties hereby grant Escrow Agent a lien on,
right of set-off against and security interest in the Escrow
Fund for the payment of any claim for indemnification,
compensation, expenses and amounts due hereunder, provided
however, that the Target Stockholders' liability to Escrow
Agent hereunder shall be limited to the Escrow Shares on
deposit in the Escrow Fund at the time of contribution.
3.4 Participation. In no case shall Acquiror or the
Target Stockholders be liable under this Agreement with
respect to any lawsuit filed against Escrow Agent unless
Acquiror or the Target Stockholders, as the case may be,
are notified by Escrow Agent, by letter or by telegram or
telex confirmed by letter, of the commencement of any such
action within a reasonable time after such person shall have
been served with a summons or other first legal process
giving information as to the nature and basis of the lawsuit,
but failure to so notify
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Acquiror and the Target Stockholders shall not relieve
them from any liability they may have otherwise than on
account of this Agreement. Acquiror and the Target
Stockholders shall each be entitled to participate at their
own expense in the defense of any such lawsuit, and if one
of the parties so elects within a reasonable time after
receipt of such notice, upon receiving consent from the
other party, such party shall assume the defense of any
lawsuit. In the event that a party assumes the defense of
any lawsuit, such defense shall be conducted by counsel
chosen by such party and satisfactory to Escrow Agent. If
counsel is so retained, the defendant or defendants in the
lawsuit shall bear the fees and expenses of any additional
counsel thereafter retained by it or them.
3.5 Reliance. Escrow Agent shall not be responsible
for the genuineness of any certificate or signature, and may
rely conclusively upon and shall be protected when acting
upon any notice, affidavit, request, consent, instruction or
other instrument believed by it in good faith to be genuine
or to be signed or presented by the proper person, or duly
authorized, or properly made. Escrow Agent shall have no
responsibility except for the performance of its express
duties hereunder and no additional duties shall be inferred
or implied by this Agreement.
ARTICLE IV
MISCELLANEOUS
4.1 Notices. Any notice or other communication
required or permitted to be given to the parties hereto
shall be deemed to have been given if personally delivered
(including personal delivery by facsimile), or four days
after mailing by certified or registered mail, return receipt
requested, first class postage prepaid, addressed as follows
(or at such other address as the addressed party may have
substituted by notice pursuant to this Section 4.1):
(a) If to Acquiror:
Uproar Inc.
240 West 35th Street
New York, NY 10001
Attention: General Counsel
Facsimile No.: (917) 351-2896
Telephone No.: (212) 714-9500
(b) If to the Target Stockholders' Agent:
Frederick Krueger
c/o Trafficmarketplace.com, Inc.
10940 Wilshire Boulevard
Los Angeles, CA 90024
Fax No.: (310) 526-4899
(c) With copies to counsel as set forth in the
Merger Agreement.
If to the Escrow Agent:
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The Chase Manhattan Bank
Capital Markets Fiduciary Services
450 West 33rd Street
New York, NY 10001-2697
Attention: Escrow Administration, 10th Floor
Fax No.: (212) 946-8156
(d) If to Target Stockholders, at the addresses set
forth on Schedule B hereto.
4.2 Amendment. The provisions of this Agreement may be
waived, altered, amended or supplemented, in whole or in
part, only by a writing signed by all of the parties hereto.
4.3 Successor to Escrow Agent. Escrow Agent may resign
and be discharged from its duties or obligations hereunder
by giving ten (10) days' advance notice in writing of such
resignation to the other parties hereto specifying a date
when such resignation shall take effect. The Escrow Agent
shall have the right to withhold upon its resignation or
discharge an amount equal to any amount due and owing to the
Escrow Agent, plus any costs and expenses the Escrow Agent
shall reasonably believe may be incurred by the Escrow Agent
in connection with the termination of the Escrow Agreement;
provided that any amounts withheld that are not so incurred
shall be returned to the new escrow agent and the Escrow Fund
to be governed in accordance with this Agreement. Any
corporation or association into which the Escrow Agent may be
merged or converted or with which it may be consolidated, or
any corporation or association to which all or substantially
all the escrow business of the Escrow Agent's corporate trust
line of business may be transferred, shall be the Escrow Agent
under this Escrow Agreement without further act.
4.4 Termination. This Agreement shall terminate upon the
earlier of (i) the mutual written express agreement of the
parties hereto and (ii) when all of the Escrow Shares have
been released from escrow according to the terms hereof. In
a mutual written express agreement of Acquiror and the Target
Stockholders' Agent terminating this Agreement, the parties
may instruct the Escrow Agent to distribute the balance of the
Escrow Shares according to instructions contained in such
agreement and the Escrow Agent shall so distribute the balance
of the Escrow Shares in accordance with such instructions.
4.5 Interpretation. The validity, construction,
interpretation and enforcement of this Agreement shall be
determined and governed by the laws of the State of Delaware.
The invalidity or unenforceability of any provision of this
Agreement or the invalidity or unenforceability of any
provision as applied to a particular occurrence or circumstance
shall not affect the validity or enforceability of any of the
other provisions of this Agreement or any other application of
such provision, as the case may be.
4.6 Attorneys' Fees; Remedies. If any arbitration is filed
or instituted or any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or to protect
the rights obtained hereunder, the prevailing party shall be
entitled to its reasonable
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attorneys' fees, costs, and disbursements in addition to any
other relief to which it may be entitled. The rights and
remedies of the parties under this Agreement and the Merger
Agreement and the other agreements related thereto, and
all other letters, certificates or documents executed in
connection herewith and therewith are cumulative and not
exclusive of any rights, remedies, powers and privilege
that may otherwise be available to the parties hereto.
4.7 Counterparts and Facsimile. This Agreement may be
signed in one or more counterparts, each of which shall be
deemed an original and all of which shall constitute one
agreement. All signatures of the parties to this Agreement
may be transmitted by facsimile, and such facsimile will,
for all purposes, be deemed to be the original signature of
such party whose signature it reproduces, and will be binding
upon such party.
4.8 Transfer of Interests. No Target Stockholder shall
sell, transfer, pledge, hypothecate or otherwise dispose of
any Escrow Shares, or any interest therein, prior to the
distribution of such Escrow Shares except in accordance with
this Agreement.
4.9 Miscellaneous. Without the prior written consent of
the other parties, neither this Agreement nor any right or
interest hereunder may be assigned in whole or in part by any
party, except by Acquiror to one or more entities controlled
by Acquiror (with Acquiror remaining responsible for its
obligations hereunder). Notwithstanding the foregoing, none
of the rights or duties of any of the parties under this
Agreement shall be affected by a merger or consolidation of
the Escrow Agent with any other entity. Nothing expressed or
implied in this Agreement is intended, nor shall it be
construed to confer (i) any rights, remedies, obligations
or liabilities, legal or equitable, other than as provided
by this Agreement, or (ii) otherwise constitute any person
(other than the Target Stockholder's Agent) a third party
beneficiary under or by reason of this Agreement (it being
acknowledged that the Target Stockholders' Agent is a third
party beneficiary of this Agreement and is entitled to
enforce relevant provisions of this Agreement).
4.10 Governing Law, etc. This Escrow Agreement shall be
governed by and construed under the laws of the State of
Delaware. Each party hereto irrevocably waives any objection
on the grounds of venue, forum non-conveniens or any similar
grounds and irrevocably consents to service of process by mail
or in any other manner permitted by applicable law and
consents to the jurisdiction of the courts located in the
State of New York. The parties further hereby waive any right
to a trial by jury with respect to any lawsuit or judicial
proceeding arising or relating to this Escrow Agreement. No
party to this Agreement is liable to any other party for losses
due to, or if it is unable to perform its obligations under
the terms of this Agreement because of, acts of God, fire,
floods, strikes, equipment or transmission failure, or other
causes reasonably beyond its control.
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IN WITNESS WHEREOF, the parties have signed this
Agreement on the day and year first above written.
UPROAR INC.,
A DELAWARE CORPORATION
By: /s/ KENNETH D. CRON
--------------------------
Name: Kenneth D. Cron
Title: Chairman of the Board and Chief
Executive Officer
TRAFFICMARKETPLACE.COM, INC.,
A DELAWARE CORPORATION
By: /s/ EVAN RIFKIN
----------------------
Name: Evan Rifkin
Title: Chief Executive Officer
FREDERICK KRUEGER,
AS TARGET STOCKHOLDERS' AGENT
By: /s/ FREDERICK KRUEGER
----------------------------
Name: Frederick Krueger
Title: Chairman of the Board
CHASE MANHATTAN BANK,
AS ESCROW AGENT
By: /s/ ROBERT L. STANISLARO
-------------------------------
Name: Robert L. Stanislaro
Title: Vice President
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SCHEDULE A
ESCROW FEES
ESCROW AGENT'S COMPENSATION:
15 basis points of the highest value of collateral held
on deposit per annum or any part thereof without
proration for partial years, subject to a minimum of
$7,500 per annum or any part thereof without proration
for partial years, (includes investment in a Chase
Manhattan Bank Money Market Account, Chase Manhattan
Bank Trust Account or The Chase Manhattan Bank Mutual
Fund known as the Vista Fund).
$75 per investment (excludes Money Market, Trust Account
or Vista Fund Investments).
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SCHEDULE B
ADDRESSES OF TARGET STOCKHOLDERS
