Agreement and Plan of Merger - Uproar Inc. and Take Aim Holdings Ltd.
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.
<PAGE> 2
TABLE OF CONTENTS
Page
----
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)
<PAGE> 3
Page
----
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)
<PAGE> 4
Page
----
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)
<PAGE> 5
SCHEDULES
Schedule 1.7(d) - Employee Stock Options to be Converted
Schedule 2.1(a)(i) - Exceptions to Company Qualifications
Schedule 2.1(a)(ii) - Company Charter Documents
Schedule 2.1(b)(i) - Exceptions to Subsidiary Qualifications
Schedule 2.1(b)(ii) - Subsidiary Charter Documents
Schedule 2.2(a)(i) - Voting Debt
Schedule 2.2(a)(ii) - Company Issuance Obligations
Schedule 2.2(a)(iii) - Company Shareholders; Principal Offices and Residences
Schedule 2.2(b) - Subsidiary Capitalization
Schedule 2.2(c) - Equity Investments
Schedule 2.3 - Directors and Officers
Schedule 2.5 - Consents and Approvals
Schedule 2.7 - Material Changes
Schedule 2.8(a) - Contracts
Schedule 2.8(b) - Contract Defaults
Schedule 2.10 - Litigation
Schedule 2.11 - Tax Matters
Schedule 2.12 - Compliance with Regulations and Orders
Schedule 2.13(b) - Foreign Plans
Schedule 2.14(a) - Intellectual Property
Schedule 2.14(b) - IP Licenses
Schedule 2.14(c) - IP Exceptions
Schedule 2.14(d) - Third Party Challenges
Schedule 2.14(f) - Contested Proceedings
Schedule 2.14(g) - Server Capacity
Schedule 2.15 - Undisclosed Liabilities
Schedule 2.16 - Agreements Not Affected by the Merger
Schedule 2.17 - Employee Matters
Schedule 2.19 - Dealings with Affiliates
Schedule 6.6 - Power of Attorney
EXHIBITS
Exhibit A - Articles of Merger (BVI)
Exhibit B - Plan of Merger (BVI)
Exhibit C - Certificate of Merger (Delaware)
Exhibit D - Employment Agreement
Exhibit E - Company Option Agreement
Exhibit F - Registration Rights Agreement
Exhibit G - Company Option Plan
(iv)
<PAGE> 6
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.
W I T N E S S E T H:
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
<PAGE> 7
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)).
-2-
<PAGE> 8
(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
-3-
<PAGE> 9
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.
-4-
<PAGE> 10
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
-5-
<PAGE> 11
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.
-6-
<PAGE> 12
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
-7-
<PAGE> 13
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
-8-
<PAGE> 14
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
-9-
<PAGE> 15
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.
-10-
<PAGE> 16
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
-11-
<PAGE> 17
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
-12-
<PAGE> 18
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.
-13-
<PAGE> 19
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
-14-
<PAGE> 20
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.
-15-
<PAGE> 21
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.
-16-
<PAGE> 22
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".
-17-
<PAGE> 23
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
-18-
<PAGE> 24
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
-19-
<PAGE> 25
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);
-20-
<PAGE> 26
(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.
-21-
<PAGE> 27
(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.
-22-
<PAGE> 28
"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
-23-
<PAGE> 29
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.
-24-
<PAGE> 30
"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.
-25-
<PAGE> 31
"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.
-26-
<PAGE> 32
"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.
-27-
<PAGE> 33
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
-28-
<PAGE> 34
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
-29-
<PAGE> 35
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
-30-
<PAGE> 36
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.
UPROAR INC.
By__________________________________
Name: Kenneth D. Cron
Title: Chairman of the Board and
Chief Executive Officer
UPROAR ACQUISITION CORPORATION
By__________________________________
Name: Kenneth D. Cron
Title: President
-31-
<PAGE> 37
TAKE AIM HOLDINGS LTD.
By__________________________________
Name:
Title:
SHOVAL CORPORATION INC.
By__________________________________
Name:
Title:
ORNET INC.
By__________________________________
Name:
Title:
____________________________________
YORAM MOSHE
____________________________________
ZEHAVA HAR ADIR
____________________________________
GILAD SIMHONI
HI TECH GROUP G.M.B.H
By__________________________________
Name:
Title:
-32-
<PAGE> 38
PROSEED CAPITAL HOLDINGS LTD.
By__________________________________
Name:
Title:
____________________________________
DAVID CHIJNER
____________________________________
RUTH ASSAF
____________________________________
RAN BIRON
AMANET TECHNOLOGIES LTD
By__________________________________
Name:
Title:
____________________________________
PETER MICHAEL KENDE
____________________________________
ILAN SHAHAM
MERTENS HOFFMAN MANAGEMENT
CONSULTANTS LTD
By__________________________________
Name:
Title:
-33-
<PAGE> 39
SPGF PLACEMENTS ET GESTION
FIDUCIAIRE S.A.
By__________________________________
Name:
Title:
____________________________________
CHAIM WEISS
OPAL MANAGEMENT & HOLDINGS LTD
By__________________________________
Name:
Title:
____________________________________
SHMUEL BAR OR
PILGON MANAGEMENT & HOLDINGS
LTD
By__________________________________
Name:
Title:
____________________________________
RON FISCH
____________________________________
HAIM HOFFMAN
-34-
<PAGE> 40
SHELRON INTERNET LTD.
By__________________________________
Name:
Title:
____________________________________
GADI OREN
YUDO INC.
By__________________________________
Name:
Title:
TOMBSTONE GROUP LIMITED
By__________________________________
Name:
Title:
GEMINI SYSTEMS CORPORATION N.V.
By__________________________________
Name:
Title:
A.G.T. TELEVISION PRODUCTIONS
(1999) LTD.
By__________________________________
Name:
Title:
-35-
<PAGE> 41
TEKA HOLDINGS LTD.
By__________________________________
Name:
Title:
LOGICO INVESTMENTS LTD.
By__________________________________
Name:
Title:
HERZOG, FOX & NEEMAN TRUST
COMPANY LTD
By__________________________________
Name:
Title:
____________________________________
DORON STERN
____________________________________
ANDREW KAYE
RECRUIT.COM LLC
By__________________________________
Name:
Title:
-36-