EXHIBIT 10.6
DATED AS OF THE 2ND DAY OF JANUARY, 1999
PLAYSTAR WYOMING HOLDING CORP.
- AND -
CYBERSTATION COMPUTERS & SUPPORT INC.
SUBSCRIPTION AGREEMENT
TABLE OF CONTENTS
PAGE
SUBSCRIPTION AGREEMENT
THIS AGREEMENT made as of the 2nd day of January, 1999
AMONG:
PLAYSTAR WYOMING HOLDING CORP., a corporation organized and
existing under the laws of Antigua
("PlayStar")
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CYBERSTATION COMPUTERS & SUPPORT INC., a corporation organized
and existing under the laws of Ontario
("Cyberstation")
WHEREAS Cyberstation is engaged in the business of developing
proprietary software, systems and services used to provide electronic commerce
solutions that enable businesses to sell products and services on the Internet;
AND WHEREAS Cyberstation is the sole and exclusive owner of
all rights, titles and interest (including all patents, copyrights, trademarks,
service marks, trade names and trade secret rights) and to all software,
documentation, computer programs and the like comprising the intellectual
property and technology developed and used in the Business;
AND WHEREAS the authorized capital of Cyberstation consists of
an unlimited number of Common Shares, of which 600 Common Shares are issued and
outstanding;
AND WHEREAS PlayStar desires to subscribe for and purchase 400
Common Shares of Cyberstation which, upon issue, will represent 40% of the
issued and outstanding shares of Cyberstation on the terms set out herein;
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
. Where used herein or in any amendment or supplement hereof, unless the context
otherwise requires, the words and phrases with initial capitals set forth below
will have the meanings so set forth therein.
"AFFILIATE" of any Person means any Person directly or
indirectly controlling, controlled by, or under direct or
indirect common control with, such Person;
"AGREEMENT" means this Agreement, including the Exhibits and
Schedules to this Agreement as amended or supplemented from
time to time; and the expressions "ARTICLE", "SECTION", or
"SUBSECTION", "SCHEDULE" and "EXHIBIT" followed by a number or
letter means and refers to the specified Article, section,
subsection, Schedule or Exhibit of this Agreement;
"APPLICABLE LAW" means, with respect to any Person, property,
transaction, event or other matter, any law relating or
applicable to such Person, property, transaction, event or
other matter. Applicable law also includes, where appropriate,
any interpretation of the law (or any part) by any Person
having jurisdiction over it, or charged with its
administration or interpretation;
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"ASSETS" means all properties, assets, interests and rights of
Cyberstation including the following:
(a) the Software and the Intellectual Property;
(b) the Contracts;
(c) the License and Permits; and
(d) the Books and Records;
"BOOKS AND RECORDS" means all books, records, files and papers
Related to the Business or related to Cyberstation including,
without limitation, drawings, engineering information,
computer programs (including source code), software programs,
manuals and data, sales and advertising materials, sales and
purchases correspondence, trade association files, research
and development records and other records, and all copies and
recordings of the foregoing;
"BUSINESS" means the business carried on by and Cyberstation
at the Closing Date which primarily involves the business of
developing proprietary software, systems and services used to
provide electronic commerce solutions that enable businesses
to sell products and services on the Internet;
"BUSINESS DAY" means any day except Saturday, Sunday or any
day on which banks are generally not open for business in the
City of Toronto;
"CANADIAN DOLLARS" means the lawful currency of Canada;
"CLAIM" has the meaning ascribed thereto in Section 5.1;
"CLOSING" means completion of the transactions provided for in
this Agreement;
"CLOSING DATE" means February 16, 1999 or such earlier or
later date as may be agreed upon in writing by the Parties;
"CLOSING TIME" means the time of closing on the Closing Date
provided for in Section 9.1;
"COMMON SHARES" means common shares without nominal or par
value in the capital of Cyberstation;
"CONFIDENTIAL INFORMATION" has the meaning ascribed thereto in
Section 6.3(4);
"CONSENTS AND APPROVALS" means all consents and approvals
required to be obtained in connection with the execution and
delivery of this Agreement and the completion of the
transactions contemplated by this Agreement;
"CYBERSTATION" means Cyberstation Computers & Support Inc.;
"DIRECT CLAIM" has the meaning ascribed thereto in Section
5.3;
"FINANCIAL STATEMENTS" has the meaning ascribed thereto in
Section 4.1(10);
"GAAP" means those accounting principles which are recognized
as being generally accepted in Canada from time to time,
consistently applied;
"HARMFUL CODE" means any code or programming instructions that
are constructed with the ability to damage, interfere with, or
otherwise adversely affect computer programs, data files or
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hardware without consent or intent of the computer user. This
definition includes, but is not limited to, self-replicating
and self-propagating programming instructions called viruses
or worms;
"INDEMNIFIED PARTY" means, in relation to an Indemnifying
Party, the Party to this Agreement that may be indemnified by
such Indemnifying Party under Article 5;
"INDEMNIFYING PARTY" means, in relation to an Indemnified
Party, the Party to this Agreement that has agreed to
indemnify that Indemnified Party under Article 5;
"INTERIM PERIOD" means the period from the date of this
Agreement to the Closing;
"LAW" means any law, rule, statute, regulation, order,
judgment, decree, treaty or other requirement having the force
of law;
"LICENSES AND PERMITS" means all licenses, permits, filings,
authorizations, approvals or indicia of authority necessary
for the conduct of the Business;
"LIEN" means any lien, mortgage, charge, hypothec, pledge,
security interest, prior assignment, option, warrant, lease,
sublease, right to possession, encumbrance, claim, right or
restriction which affects, by way of a conflicting ownership
interest or otherwise, the right, title or interest in or to
any particular property;
"NOTICES" means the notices required to be given to any Person
under Applicable Law or pursuant to any contract or other
obligation to which Cyberstation is a Party or by which
Cyberstation is bound or which is applicable to any of the
Assets, in connection with the execution and delivery of this
Agreement or the completion of the transactions contemplated
by this Agreement;
"PARTY" means a party to this Agreement and any reference to a
party includes its successors and permitted assigns; and
"PARTIES" means every Party;
"PERSON" is to be broadly interpreted and to include an
individual, a corporation, a partnership, a trustee or any
unincorporated organization and words importing persons have a
similar meaning;
"RELATED TO THE BUSINESS" means, directly or indirectly, used
in, arising from, or relating in any manner to the Business;
"REPRESENTATIVES" has the meaning ascribed thereto in Section
6.2(4)(b);
"SHAREHOLDERS AGREEMENT" means the unanimous shareholders
agreement to be entered into among PlayStar, Xxxxx and
Conceicao, as shareholders of Cyberstation, and Cyberstation,
which shall be substantially in the form of Exhibit A hereto
and which, among other things, relates to the conduct of the
business and affairs of Cyberstation;
"SOFTWARE" means all Cyberstation's rights and interests in
all computer software, whether in source code, object code,
machine readable or human readable forms, and includes all
updates, upgrades, improvements and modifications thereto and
all associated documentation and technical information;
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"SUBSCRIBED SHARES" has the meaning ascribed thereto in
Section 2.1;
"TAX" or "TAXES"means all taxes, charges, fees, levies,
imposts and other assessments, including all income, sales,
use, goods and services, value added, capital, capital gains,
net worth, transfer, profits, withholding, payroll, employer
health, excise, real property and personal property taxes, and
any other taxes, custom duties, fees, assessments or similar
charges in the nature of a tax, including Canada Pension Plan
and provincial pension plan contributions, unemployment
insurance and employment insurance payments and workers
compensation premiums, together with any interest, fines and
penalties, imposed by any governmental agency (federal,
provincial or municipal), and whether or not disputed; and
"THIRD PARTY CLAIM" has the meaning ascribed thereto in
Section 5.3.
. The division of this Agreement into Articles and Sections, the insertion of
headings and the provision of any table of contents are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
. Unless the context requires otherwise, words importing the singular include
the plural and vice versa and words importing gender include all genders.
. If any payment is required to be made or other action is required to be taken
pursuant to this Agreement on a day which is not a Business Day, then such
payment or action shall be made or taken on the next Business Day.
. Except as otherwise expressly provided in this Agreement:
(a) unless otherwise specified, all dollar amounts
referred to in this Agreement are stated in Canadian
Dollars; and
(b) any payment contemplated by this Agreement shall be
made by cash, certified cheque or any other method
that provides immediately available funds.
. Any reference in this Agreement to any statute or any section thereof shall,
unless otherwise expressly stated, be deemed to be a reference to such statute
or section as amended, restated or re-enacted from time to time.
. Subject to the terms and conditions of this Agreement, PlayStar hereby
subscribes for and agrees to purchase, and Cyberstation agrees to issue and sell
to PlayStar, at the Closing 400 Common Shares (the "Subscribed Shares") for a
purchase price of Cdn$500,000. The Subscribed Shares shall represent 40% of the
issued and outstanding Common Shares of Cyberstation following such
subscription.
. At the Closing, Alves, Conceicao, PlayStar and Cyberstation shall enter into
the Shareholder Agreement which shall be substantially in the form of Exhibit A.
The Shareholder Agreement shall provide, among other things, that none of
Cyberstation, Xxxxx and Xxxxxxxxx nor any affiliate of any of them will engage,
directly or indirectly, in any online gaming activities without, among other
things, the prior written consent of PlayStar.
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. Cyberstation represents and warrants as follows and acknowledges that PlayStar
and PlayStar are relying on such representations and warranties as a material
inducement to entering into this Agreement and completing the transactions
contemplated by this Agreement:
(1)INCORPORATION AND POWER. Cyberstation is a corporation incorporated,
validly subsisting and in good standing as a private company under the laws of
Ontario and has full power and authority to own its Assets and to carry on the
Business as presently conducted by it. Cyberstation is duly qualified to do
business and is in good standing in all other jurisdictions where the conduct of
its business so requires. No act or proceeding has been taken by or against
Cyberstation in connection with the dissolution, liquidation, winding up,
bankruptcy or reorganization of Cyberstation.
(2)DUE AUTHORIZATION. Cyberstation has the corporate power, authority and
capacity to enter into this Agreement and all other agreements and instruments
to be executed by it as contemplated by this Agreement and to carry out its
obligations under this Agreement and such other agreements and instruments. The
execution and delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated by this
Agreement and such other agreements and instruments have been duly authorized by
all necessary corporate action on the part of Cyberstation, its directors and
its shareholders.
(3)AUTHORIZED AND ISSUED CAPITAL. The authorized capital of Cyberstation
consists of an unlimited number of Common Shares, of which 600 Common Shares are
validly issued and outstanding as fully paid and non-assessable shares in the
capital of Cyberstation.
(4)ISSUANCE OF SUBSCRIBED SHARES. The Subscribed Shares, when issued to
PlayStar pursuant to this Agreement, will be issued as fully paid and
non-assessable Common Shares in the capital of Cyberstation. Following the issue
of the Subscribed Shares, the issued and outstanding Common Shares will be owned
of record and beneficially as follows:
Xxxxx - 300 shares
Conceicao - 300 shares
PlayStar - 400 shares
(5)ENFORCEABILITY OF OBLIGATIONS. This Agreement constitutes a valid and
binding obligation of Cyberstation enforceable against it in accordance with its
terms subject, however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of the rights
of creditors or others and to the extent that equitable remedies such as
specific performance and injunctions are only available in the discretion of the
court from which they are sought. Cyberstation is not an insolvent Person within
the meaning of the BANKRUPTCY AND INSOLVENCY ACT (Canada) and will not become an
insolvent Person as a result of the Closing.
(6)ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement by Cyberstation and the completion (with any
required Consents and Approvals and Notices) of the transactions contemplated by
this Agreement do not and will not result in or constitute any of the following:
(a) a default, breach or violation or an event that, with
notice or lapse of time or both, would be a default,
breach or violation of any of the terms, conditions
or provisions of the articles or by-laws of
Cyberstation or of any Contract or any of the
Licenses and Permits;
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(b) an event which, pursuant to the terms of any Contract
or any of the Licenses and Permits, causes any right
or interest of Cyberstation to come to an end or be
amended in any way that is detrimental to the
Business or entitles any other Person to terminate or
amend any such right or interest;
(c) the creation or imposition of any Lien on any Asset;
or
(d) the violation of any Applicable Law applicable to or
affecting Cyberstation which is Related to the
Business.
(7) OWNERSHIP OF SHARES.
(a) Xxxxx and Xxxxxxxxx own, and at the Closing Time will
own, of record and beneficially all of the issued and
outstanding shares of Cyberstation.
(b) Other than this Agreement, there is no agreement,
option or other right or privilege outstanding in
favour of any Person for the purchase from
Cyberstation of the Business or of any of the shares
in the capital of Cyberstation.
(8)CORPORATE RECORDS. The minute books of each of Cyberstation contain
true, correct and complete copies of its articles, its by-laws, the minutes of
every meeting of its board of directors and every committee thereof and of its
shareholders and every written resolution of its directors and shareholders. The
share certificate book, register of shareholders, register of transfers and
register of directors and officers of Cyberstation are complete and accurate in
all material respects.
(9)BANKRUPTCY. Neither Cyberstation is an insolvent person within the
meaning of the BANKRUPTCY AND INSOLVENCY ACT (Canada) nor has made an assignment
in favour of its creditors nor a proposal in bankruptcy to its creditors or any
class thereof nor had any petition for a receiving order presented in respect of
it. Cyberstation has not initiated proceedings with respect to a compromise or
arrangement with its creditors or for its winding up, liquidation or
dissolution. No receiver has been appointed in respect of Cyberstation or any of
the Assets and no execution or distress has been levied upon any of the Assets.
(10) FINANCIAL STATEMENTS. Cyberstation has furnished PlayStar with the
unaudited financial statements of Cyberstation for the fiscal ended May 31,
1998, and the interim unaudited financial statements of Cyberstation for the
period ended December 31, 1998 (collectively, the "Financial Statements"), true
and complete copies of which are annexed as Schedule 4.1(10). The Financial
Statements have been prepared in accordance with GAAP. The balance sheets
contained in such Financial Statements fairly present the financial position of
Cyberstation as of its dates and the statements of earnings and retained
earnings contained in the Financial Statements fairly present the results of
operations for the periods indicated.
(11) TITLE TO ASSETS. Cyberstation has good and marketable title to all
the Assets, free and clear of any and all Liens. The Assets are sufficient to
permit the continued operation of the Business in substantially the same manner
as conducted in the year ended on the date of this Agreement. There is no
agreement, option or other right or privilege outstanding in favour of any
Person for the purchase from Cyberstation of the Business or of any of the
Assets out of the ordinary course of business.
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(12) LITIGATION. There is no action, suit, proceeding, claim, application,
complaint or investigation in any court or before any arbitrator or by any
regulatory body or governmental or non-governmental body pending or threatened
by or against Cyberstation Related to the Business or affecting the the Business
or the transactions contemplated by this Agreement, and there is no factual or
legal basis which could give rise to any such action, suit, proceeding, claim,
application, complaint or investigation. There are no judgments, orders, decrees
or awards before any court, department, commission, board, instrumentality or
arbitrator which affects the Assets or the Business.
(13) CONFLICTS OF INTEREST. No shareholder, director, officer or employee
of Cyberstation or any affiliate of any of the foregoing: (a) has any pecuniary
interest in any supplier or customer of the Business or in any other business
with which Cyberstation conducts business or with which Cyberstation is in
competition; (b) has any interest in the Assets; or (c) has any contractual or
other claim, express or implied, of any kind whatsoever against Cyberstation in
connection with the Business or Assets.
(14) RELATED ASSETS. Cyberstation does not own or has any interest in any
software, systems, services or other intellectual or industrial property rights
or shares of or interest in any Person involved in the development, sale or
other use of such software, systems, services or other intellectual or
industrial property rights.
(15) LICENSES AND PERMITS. To the knowledge of Cyberstation there are no
Licenses and Permits that are required to enable Cyberstation to carry on the
Business.
(16) UNDISCLOSED LIABILITIES. Cyberstation does not have any liabilities,
obligations, indebtedness or commitments, whether accrued, absolute, contingent
or otherwise, which are not disclosed in the Financial Statements or referred to
or disclosed herein, other than liabilities, obligations and indebtedness (i)
incurred in the normal course of business; and (ii) which do not exceed $25,000
in the aggregate.
(17) CONSENTS AND APPROVALS. No Consent or Approval of any Person is
required in connection with the execution and delivery of this Agreement and the
completion of the transaction contemplated by this Agreement.
(18) NOTICES. No Notice is required to be delivered to any Person in
connection with the execution and delivery of this Agreement and the completion
of the transactions contemplated by this Agreement.
(19) COMPLIANCE WITH LAWS. The Business has been operated, and the Assets
used, in compliance with all requirements of applicable federal, provincial and
municipal law, and all requirements of all governmental bodies or agencies
having jurisdiction over it. Cyberstation has not received any notice from any
federal, provincial or municipal authority or any insurance or inspection body,
that any of the properties, facilities, equipment or business procedures or
practices of the Business fails to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public authority or
body wherever located. There are no regulations or legislation pending before
any federal, provincial or municipal governmental body or legislature which, if
adopted, would have a materially adverse effect on the Business or the Assets.
(20) BROKERAGE FEES. Cyberstation has not entered into any agreement which
would entitle any Person to any valid claim against PlayStar or PlayStar for a
broker's commission, finder's fee or any like payment in respect of the
transactions contemplated by this Agreement.
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(21) FULL DISCLOSURE. Neither this Agreement, including all Exhibits and
Schedules, nor any other documents or instruments delivered by Cyberstation to
PlayStar in connection with this Agreement and the transactions contemplated by
this Agreement, contains or will contain any untrue statement of any material
fact or omits or will omit to state any material fact required to be stated to
make such statement, document or instrument not misleading. There has been no
event, transaction or information which has come to the attention of
Cyberstation that has not been disclosed to PlayStar in writing which could
reasonably, be expected to have a material adverse effect on the ongoing
operation by a reasonable and prudent operator of the Business or any material
part thereof, except for matters which affect businesses similar to do the
Business generally.
. PlayStar hereby represents and warrants to Cyberstation as follows and
acknowledges that Cyberstation is relying on such representations and warranties
in connection with the transactions provided for herein:
(1)INCORPORATION AND POWER. PlayStar is a corporation incorporated,
validly subsisting and in good standing under the laws of Antigua and has full
power and authority to own its properties and to carry on the business as
presently conducted by it.
(2)DUE AUTHORIZATION. PlayStar has the corporate power, authority and
capacity to enter into this Agreement and all other agreements and instruments
to be executed by it as contemplated by this Agreement and to carry out its
obligations under this Agreement and such other agreements and instruments. The
execution and delivery of this Agreement and such other agreements and
instruments and the completion of the transactions contemplated by this
Agreement and such other agreements and instruments have been duly authorized by
all necessary corporate action on the part of PlayStar.
(3)AUTHORIZED AND ISSUED CAPITAL. The authorized capital of PlayStar
consists of 50,000,000 Ordinary Shares, par value of US$0.0001 per share, and
1,000,000 shares of Series Preference Shares, par value US$0.0001 per share, of
which 28,592,644 Ordinary Shares of PlayStar are validly issued and outstanding
as fully paid and non-assessable shares in the capital of PlayStar. The Ordinary
Shares of PlayStar are quoted for trading on the NASDAQ Bulletin Board.
(4)ENFORCEABILITY OF OBLIGATIONS. This Agreement constitutes a valid and
binding obligation of PlayStar enforceable against PlayStar in accordance with
its terms subject, however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of the rights
of creditors or others and to the extent that equitable remedies such as
specific performance and injunctions are only available in the discretion of the
court from which they are sought. PlayStar is not an insolvent Person within the
meaning of the BANKRUPTCY AND INSOLVENCY ACT (Canada) and will not become an
insolvent Person as a result of the Closing.
(5)ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement by PlayStar and the completion (with any required
Consents and Approvals and Notices) of the transactions contemplated by this
Agreement do not and will not result in or constitute any of the following:
(a) a default, breach or violation or an event that, with
notice or lapse of time or both, would be a default,
breach or violation of any of the terms, conditions
or provisions of the articles or by-laws of PlayStar
or of any Contract to which PlayStar is a party or
bound or by which PlayStar or any of its assets or
its properties is bound or affected; or
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(b) the violation of any Applicable Law applicable to or
affecting PlayStar or any of its assets or its
properties.
(6)CONSENTS AND APPROVALS. Except for certain notifications and filings
with applicable regulatory authorities, there is no requirement for PlayStar or
PlayStar to make any filing with, give any notice to or obtain any licence,
permit, certificate, registration, authorization, consent or approval of, any
government or regulatory authority as a condition to the lawful consummation of
the transactions contemplated by this Agreement.
(7)LITIGATION. PlayStar is not a party to or, to PlayStar's best
knowledge, threatened with, any suit, action, arbitration or other legal or
administrative proceeding which would adversely affect PlayStar's obligations
under this Agreement.
(8)FULL DISCLOSURE. Neither this Agreement, including all Exhibits and
Schedules, nor any other documents or instruments delivered by PlayStar to
Cyberstation in connection with this Agreement and the transactions contemplated
by this Agreement, contains or will contain any untrue statements of any
material fact or omits or will omit to state any material fact required to be
stated to make such statement, document or instrument not misleading.
(1)The representations and warranties of Cyberstation contained in Section
4.1 or any other agreement, certificate or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years from the Closing
Date, and notwithstanding the Closing and any inspection or inquiries made by or
on behalf of PlayStar, shall continue in full force and effect for the benefit
of PlayStar, after which time Cyberstation shall be released from all
obligations in respect of such representations and warranties except with
respect to any Claims asserted by PlayStar in writing (setting out in reasonable
detail the nature of the Claim and approximate amount of such Claim) before the
expiration of such period.
(2)The representations and warranties of PlayStar contained in Section 4.2
or any other agreement, certificate or instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years from the Closing
Date, and notwithstanding the Closing, shall continue in full force and effect
for the benefit of Cyberstation, after which time PlayStar shall be released
from all obligations in respect of such representations and warranties except
with respect to any Claims asserted by Cyberstation in writing (setting out in
reasonable detail the nature of the Claim and the appropriate amount thereof)
before the expiration of such period.
. Cyberstation agrees to indemnify and save harmless PlayStar and PlayStar from
all losses, claims, damages, liabilities, deficiencies, costs and expenses (a
"Claim") which may be made or brought against an Indemnified Party or which it
may suffer or incur directly or indirectly as a result of or arising out of:
(a) any incorrectness in or breach of any representation
or warranty of Cyberstation contained in this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement; and
(b) any breach or non-performance of any covenant or
agreement on the part of Cyberstation under this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement.
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. PlayStar agrees to indemnify and save harmless Cyberstation in respect of any
Claim which may be made or brought against an Indemnified Party or which it may
suffer or incur directly or indirectly as a result of or arising out of:
(a) any incorrectness in or breach of any representation
or warranty of PlayStar contained in this Agreement
or in any agreement, instrument, certificate or other
document delivered pursuant to this Agreement;
(b) any breach or non-performance of any covenant or
agreement on the part of PlayStar under this
Agreement or in any agreement, instrument,
certificate or other document delivered pursuant to
this Agreement.
. If and Indemnified Party becomes aware of a Claim in respect of which
indemnification is provided pursuant to either of Section 5.1 or 5.2, as the
case may be the Indemnified Party shall promptly give written notice thereof to
the Indemnifying Party. Such notice shall specify whether the claim arises as a
result of a claim by a third Person against the Indemnified Party (a "Third
Party Claim") or whether the Claim does not so arise (a "Direct Claim"), and
shall also specify with reasonable particularity (to the extent that the
information is available)
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time effectively to contest the determination of
any liability susceptible of being contested, then the Liability of the
Indemnifying Party to the Indemnified Party under this Article shall be reduced
by the amount of any losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.
. In the case of a Direct Claim, the Indemnifying Party shall have 60 days
following receipt of notice of the Claim to make such investigation of the Claim
as is considered necessary or desirable. For the purpose of such investigation,
the Indemnified Party shall make available to the Indemnifying Party the
information relied upon by the Indemnified Party to substantiate the Claim,
together with all such other information as the Indemnifying Party may
reasonably request. If both parties agree at or prior to the expiration of such
60-day period (or any mutually agreed upon extension thereof) to the validity
and amount of such Claim, the Indemnifying Party shall immediately pay to the
Indemnified Party the full agreed upon amount of the claim, failing which the
matter shall be determined by a court of competent jurisdiction.
. In the case of a Third Party Claim, the Indemnifying Party shall have the
right, at its expense, to participate in or assume control of the negotiation,
settlement or defence of the Claim. If the Indemnifying Party elects to assume
such control, the Indemnifying Party shall reimburse the Indemnified Party for
all of the Indemnified Party's out-of-pocket expenses incurred as a result of
such participation or assumption. The Indemnified Party shall have the right to
participate in the negotiation, settlement or defence of such Third Party Claim
and to retain counsel to act on its behalf, provided that the fees and
disbursements of such counsel shall be paid by the Indemnified Party unless the
Indemnifying Party consents to the retention of such counsel at its expense or
unless the named parties to any action or proceeding include both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to the actual or potential differing interests between them
(such as the availability of different defences). The Indemnified Party shall
cooperate with the Indemnifying Party so as to permit the Indemnifying Party to
conduct such negotiation, settlement and defence and for this purpose shall
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preserve all relevant documents in relation to the Third Party Claim, allow the
Indemnifying Party access on reasonable notice to inspect and take copies of all
such documents and require its personnel to provide such statements as the
Indemnifying Party may reasonably require and to attend and give evidence at any
trial or hearing in respect of the Third Party Claim. If, having elected to
assume control of the negotiation, settlement or defence of the Third Party
Claim, the Indemnifying Party thereafter fails to conduct such negotiation,
settlement or defence with reasonable diligence, then the Indemnified Party
shall be entitled to assume such control and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim. If any Third Party Claim is of a nature such that (i) the
Indemnified Party is required by Applicable Law or the order of any court,
tribunal or regulatory body having jurisdiction, or (ii) it is necessary in the
reasonable view of the Indemnified Party acting in good faith and in a manner
consistent with reasonable commercial practices, in respect of (A) a Third Party
Claim by a customer relating to products or services supplied by the Business or
(B) a Third Party Claim relating to any Contract which is necessary to the
ongoing operations of the Business or any material part thereof in order to
avoid material damage to the relationship between the Indemnified Party and any
of its major customers or to preserve the rights of the Indemnified Party under
such an essential contract, to make a payment to any person (a "Third Party")
with respect to the Third Party Claim before the completion of settlement
negotiations or related legal proceedings, as the case may be, then the
Indemnified Party may make such payment and the Indemnifying Party shall,
promptly after demand by the Indemnified Party, reimburse the Indemnified Party
for such payment. If the amount of any liability of the Indemnified Party under
the Third Party Claim in respect of which such a payment was made, as finally
determined, is less than the amount which was paid by the Indemnifying Party to
the Indemnified Party, the Indemnified Party shall, promptly after receipt of
the difference from the Third Party, pay the amount of such difference to the
Indemnifying Party. If such a payment, by resulting in settlement of the Third
Party Claim, precludes a final determination of the merits of the Third Party
Claim and the Indemnified Party and the Indemnifying Party are unable to agree
whether such payment was unreasonable in the circumstances having regard to the
amount and merits of the Third Party Claim, then such dispute shall be referred
to and finally settled by binding arbitration from which there shall be no
appeal.
. If the Indemnifying Party fails to assume control of the defence of any Third
Party Claim, the Indemnified Party shall have the exclusive right to contest,
settle or pay the amount claimed. Whether or not the Indemnifying Party assumes
control of the negotiation, settlement or defence of any Third Party Claim, the
Indemnifying Party shall not settle any Third Party Claim without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that the liability of the Indemnifying
Party shall be limited to the proposed settlement amount if any such consent is
not obtained for any reason within a reasonable time after the request therefor.
. PlayStar shall be entitled to set-off the amount of any Claim submitted under
Section 5.1 as damages or by way of indemnification against any other amounts
payable by PlayStar to Cyberstation whether under this Agreement or otherwise.
. Cyberstation shall give to PlayStar and its agents access to Cyberstation and
all of Cyberstation's documents (including without limitation all contracts),
books and records relating to the current and past operations of the Business,
and shall permit PlayStar and its agents to make copies thereof, and
Cyberstation shall permit PlayStar to interview Cyberstation's employees during
reasonable business hours and upon reasonable prior notice.
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(1)Each Party shall (and shall cause each of its Representatives (as
defined below) to) hold in strictest confidence and not use in any manner, other
than as expressly contemplated by this Agreement, any Confidential Information
(as defined below) of the other Party.
(2)Section 6.2(1) shall not apply to the disclosure of any Confidential
Information where such disclosure is required by Applicable Law. In that case,
the Party required to disclose (or whose Representative is required to disclose)
shall, as soon as possible in the circumstances, notify the other Party of the
requirement. Upon receiving such notification, the other Party may take any
reasonable action to challenge the requirement, and the affected Party shall (or
shall cause the applicable Representative to), at the expense of the other
Party, assist the other Party in taking such reasonable action.
(3)Following the termination of this Agreement in accordance with the
provisions of either of Sections 8.2 or 8.4, each Party shall (and shall cause
each of its Representatives to) promptly, upon a request from the other Party,
return to the requesting Party all copies of any tangible items (other than this
Agreement), if any, which are or which contain Confidential Information of the
requesting Party; provided that if the Party so obligated to return Confidential
Information or its Representatives have prepared summaries or analyses
containing or concerning any Confidential Information, then such Party may,
instead of returning the summaries or analyses, destroy them and provide a
certificate to that effect to the requesting Party.
(4)For the purposes of this Section 6.2:
(a) "CONFIDENTIAL INFORMATION" of a Party at any time
means all information relating to such Party's
business (including business plans, way of doing
business, business results and prospects and customer
lists) which,
(i) at the time is of a confidential nature
(whether or not specifically identified as
confidential) and is known or should be
known by the other Party or its
Representatives as being confidential, and
(ii) has been or is from time to time made known
to or is otherwise learned by the other
Party or any of its Representatives as a
result of the matters provided for in this
Agreement,
including the following information:
(iii) the terms of this Agreement;
(iv) a Party's proprietary software; and
(v) a Party's business records,
but not including any information that at such time:
(vi) has become generally available to the public
other than as a result of a disclosure by
the other Party or any of its
Representatives;
(vii) was available to the other Party or its
Representatives on a non-confidential basis
before the date of this Agreement; or
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(viii) becomes available to the other Party or its
Representatives on a non-confidential basis
from a Person other than the first-mentioned
Party or any of its Representatives who is
not, to the knowledge of such other Party or
its Representatives, otherwise bound by
confidentiality obligations to such
first-mentioned Party in respect of such
information or otherwise prohibited from
transmitting the information to the other
Party or its Representatives; and
(b) "REPRESENTATIVES" with respect to any party means its
Affiliates and its and their respective directors,
officers, employees, agents and other representatives
and advisers.
. During the Interim Period, Cyberstation shall:
(a) not do any act or omit to do any act which would
cause a breach of representation, warranty, covenant
or agreement contained in this Agreement;
(b) carry on the Business in the normal course;
(c) not enter into any contract, agreement, commitment or
other arrangement with any party, other than
contracts in the ordinary course of its business;
(d) maintain and keep the Assets in good repair; and
(e) notify PlayStar immediately of any breach of any
representation or covenant in this Agreement.
. During the Interim Period, Cyberstation shall not and shall cause
Cyberstation's shareholders not to, take any action, directly or indirectly, to
encourage, initiate or engage in discussions or negotiations with, or provide
any information to any Person, other than PlayStar and its agents, concerning
any sale, transfer, assignment, license, merger or similar transaction involving
Cyberstation, its shares, or the Assets. Cyberstation shall notify PlayStar
promptly if any such discussions or negotiations are sought or if any proposal
for a sale, transfer, assignment, license, merger or similar transaction is
received or being considered.
. Cyberstation shall use its best efforts to obtain all Consents and Approvals
before the Closing Date at Cyberstation's own expense.
. Cyberstation shall update on or before the Closing, by amendment or
supplement, any of the information disclosure schedules referred to in this
Agreement and any other disclosure in writing from Cyberstation to PlayStar as
soon as reasonably possible after new or conflicting information comes to the
attention of Cyberstation. PlayStar shall not be obligated to accept any such
amendment or supplement and receipt of any such amendment or supplement shall
not be deemed to be a waiver or release by PlayStar of any provision of this
Agreement.
. Each Party shall promptly do execute, deliver, or cause to be done, executed
or delivered all further acts, documents and things in connection with this
Agreement that the other Party may reasonably require for the purpose of giving
effect to this Agreement.
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. At the Closing:
(a) the board of directors of PlayStar Sub shall consist
of seven directors comprised of Xxxxx, Xxxxxxx X.X.
Xxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxx Xxxxxxx
and two nominees of Xxxxx;
(b) Xxxxx shall be appointed Chief Executive Officer of
PlayStar Sub; and
(c) the board of directors of Cyberstation shall consist
of five directors of which PlayStar shall be entitled
to nominate two directors.
. The obligations of PlayStar to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, any or all of which PlayStar may waive in
its sole discretion:
(1) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Cyberstation in Section 4.1 shall be true and correct as if made on and as of
the Closing.
(2) PERFORMANCE OF AGREEMENTS. Cyberstation shall have performed and
complied with all of their covenants and agreements contained in this Agreement
which are required to be performed or complied with on or prior to the Closing.
(3) DUE DILIGENCE INVESTIGATIONS. PlayStar shall have conducted and
completed its investigation of Cyberstation, the Business, the Assets and
PlayStar, in its sole discretion, shall have been satisfied in all respects with
the results of such investigation and, in its sole discretion, shall have
determined to proceed with the transactions contemplated by this Agreement.
(4) NO LITIGATION. There shall be no litigation or proceedings:
(a) pending or threatened against any of the parties
hereto or against any of their respective Affiliates
or any of their respective directors or officers, or
involving the assets or properties of any of them,
for the purpose of enjoining, preventing or
restraining the completion of the transactions
contemplated hereby or otherwise claiming that such
completion is improper; or
(b) pending or threatened against any of the Parties or
against any of their respective Affiliates or any of
their respective directors or officers which in the
judgment of PlayStar, would make the completion of
the transactions contemplated by this Agreement
inadvisable.
(5) SHAREHOLDER AGREEMENT. Xxxxx and Conceicao shall have executed and
delivered to PlayStar the Shareholder Agreement substantially in the form of
Exhibit A.
(6) OPINION OF COUNSEL. Cyberstation shall have delivered to PlayStar a
favourable opinion of counsel to Cyberstation which shall be in a form
reasonably acceptable to PlayStar.
(7) NO ACTIONS, ETC. No action, suit, proceeding or investigation by or
before any court, administrative agency or other governmental authority shall
have been instituted or threatened, the effect of which would restrain, prohibit
or invalidate the transactions contemplated by this Agreement or affect the
right of PlayStar to own, after the Closing, the Subscribed Shares.
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(8)CONSENTS AND APPROVALS. All Consents and Approvals have been obtained.
(9)CERTIFICATE AS TO REPRESENTATIONS AND WARRANTIES. Cyberstation shall
have executed and delivered to PlayStar a certificate confirming the accuracy of
all of the representations and warranties of Cyberstation contained in this
Agreement.
(10) DELIVERIES. All documents required to be delivered by Cyberstation at
or prior to the Closing Date shall have been delivered to PlayStar at Closing.
. If any condition in Section 8.1 has not been fulfilled at or before the
Closing, then PlayStar in its sole discretion may, without limiting any rights
or remedies available to PlayStar or PlayStar at law or in equity, either:
(a) terminate this Agreement by Notice to Cyberstation,
in which event PlayStar and PlayStar shall be
released from its obligations under this Agreement to
complete the purchase of the Subscribed Shares; or
(b) waive compliance with any such condition without
prejudice to its right of termination in the event of
non-fulfilment of any other condition.
. The obligations of Cyberstation to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions, any or all of which Cyberstation may waive
in its sole discretion:
(1)REPRESENTATIONS AND WARRANTIES. The representations and warranties of
PlayStar set forth in Section 4.2 shall be true and correct as if made on and as
of the Closing.
(2)PERFORMANCE OF AGREEMENTS. PlayStar shall have performed and complied
with all of its covenants and agreements contained in this Agreement which are
required to be performed or complied with on or prior to the Closing.
(3)NO LITIGATION. There shall be no litigation or proceedings:
(a) pending or threatened against any of the parties
hereto or against any of their respective Affiliates
or any of their respective directors or officers, or
involving the assets or properties of any of them,
for the purpose of enjoining, preventing or
restraining the completion of the transactions
contemplated hereby or otherwise claiming that such
completion is improper; or
(b) pending or threatened against any of the Parties or
against any of their respective Affiliates or any of
their respective directors or officers which in the
judgment of Cyberstation, would make the completion
of the transactions contemplated by this Agreement
inadvisable.
(4)NO ACTIONS, ETC. No action, suit, proceeding or investigation by or
before any court, administrative agency or other governmental authority shall
have been instituted or threatened, the effect of which would restrain, prohibit
or invalidate the transactions contemplated by this Agreement.
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(5) SHAREHOLDER AGREEMENT. PlayStar shall have executed and delivered the
Shareholder Agreement substantially in the form of Exhibit A.
(6) DIRECTOR. Xxxxx shall have been appointed a director and Chief
Executive Officer of PlayStar.
(7) DELIVERIES. All documents required to be delivered by PlayStar and
PlayStar at or prior to Closing shall have been delivered to Cyberstation at
Closing. Shares shall have been received.
(8) OPINIONS OF COUNSEL. PlayStar shall have delivered to Cyberstation
favourable opinions of counsel to PlayStar and PlayStar Sub which will be in a
form reasonably acceptable to Cyberstation.
. If any condition in Section 8.3 shall not have been fulfilled at or before the
Closing, then Cyberstation in its sole discretion may, without limiting any
rights or remedies available to Cyberstation at law or in equity, either:
(a) terminate this Agreement by Notice to PlayStar in
which event Cyberstation shall be released from all
obligations under this Agreement; or
(b) waive compliance with any such condition without
prejudice to its right of termination in the event of
non-fulfilment of any other condition.
. The transactions provided for by this agreement shall be consummated (the
"Closing") at 10:00 a.m. (Toronto time) on the Closing Date, at the offices of
Blake, Xxxxxxx & Xxxxxxx, Toronto, Ontario, or at such other place and time as
Cyberstation and PlayStar shall mutually agree.
. At the Closing, Cyberstation shall deliver, or cause to be delivered, to
PlayStar:
(a) the certificate or certificates representing the
Subscribed Shares registered in the name of PlayStar
or its nominee;
(b) a certified resolution of the directors of
Cyberstation approving this Agreement and the issue
of the Subscribed Shares to PlayStar pursuant to the
terms hereof;
(c) a certificate signed by the President of Cyberstation
dated the Closing Date, confirming: (i) the truth and
accuracy of all of the representations and warranties
of Cyberstation contained in this Agreement as of
Closing Date and as of all times between the date
hereof and the Closing Date; (ii) all agreements and
covenants of Cyberstation required to have been
complied with have been complied with; and (iii) that
all necessary corporate action has been taken by
Cyberstation to authorize the consummation of the
transactions contemplated by this Agreement;
(d) a certificate signed by the Secretary or other
officer of Cyberstation, dated the Closing Date,
attaching the constating documents of Cyberstation,
the corporate resolutions of Cyberstation authorizing
the execution, delivery and performance by
Cyberstation of this Agreement and the certificate of
status of Cyberstation;
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(e) all Consents and Approvals;
(f) the Shareholders Agreement duly executed by
Cyberstation;
(g) opinions of counsel to Cyberstation, dated the
Closing Date, in form and content reasonably
acceptable to PlayStar; and
(h) all such other assurances, transfers, assignments,
consents, and such other agreements, documents and
instruments as may be reasonably required by PlayStar
to complete the transactions provided for in this
Agreement.
. At the Closing, PlayStar shall deliver or cause to be delivered to
Cyberstation:
(a) payment of the subscription price for the
Subscribed Shares to Cyberstation;
(b) a certified resolution of the sole director of
PlayStar approving this Agreement;
(c) certificates signed by the President of PlayStar and
by the President of PlayStar, dated the Closing Date,
confirming: (i) the truth and accuracy of all of the
representations and warranties of PlayStar contained
in this Agreement as of the Closing Date and as of
all times between the date hereof and the Closing
Date; (ii) that all agreements and covenants of
PlayStar required to have been complied with have
been complied with; and (iii) that all necessary
corporate action by PlayStar and PlayStar has been
taken to authorize the consummation of the
transactions contemplated by the Agreement;
(d) certificates signed by the Secretary or other officer
of PlayStar and of PlayStar Sub, dated the Closing
Date, attaching the respective constating documents
of PlayStar and PlayStar, the respective corporate
resolutions of PlayStar and PlayStar authorizing the
execution, delivery and performance by PlayStar and
PlayStar of this Agreement and certificates of status
of PlayStar and of PlayStar;
(e) the Shareholders Agreement duly executed by PlayStar;
(f) opinions of counsel to PlayStar and PlayStar Sub,
dated the Closing Date, in form and content
reasonably acceptable to Cyberstation.
. Each Party shall be responsible for its own legal and other expenses
(including any taxes imposed on such expenses) incurred in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement
and the transactions contemplated by this Agreement and for the payment of any
broker's commission, finder's fee or like payment payable by it in respect of
the transactions contemplated by this Agreement.
. Except to the extent otherwise required by law or with the prior consent of
the other Party, neither Party shall make any public announcement regarding this
Agreement or the transactions contemplated by this Agreement.
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(1) All notices and other communications hereunder shall be in writing and
shall be sent by certified mail, postage prepaid, return receipt requested; by
an overnight express courier services that provides written confirmation of
delivery; or by facsimile with confirmation, addressed as follows:
IF TO PLAYSTAR:
PlayStar Wyoming Holding Corp.
The Dollar Building
Nevis Street, Top Floor
St. John's, Antigua
WI
Fax: (000) 000-0000
Attention: Xxxxxxx X.X. Xxxxxx
With a copy (which shall not constitute notice) to:
Blake, Xxxxxxx & Xxxxxxx
Box 00
Xxxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: X. X. Xxxxx
IF TO CYBERSTATION:
Cyberstation Computers & Support Inc.
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxx
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxx
1 First Canadian Place
000 Xxxx Xxxxxx Xxxx
P.O. Box 160
Suite 700
Toronto, Ontario
M5X 1C7
Attention: Xxx Xxxxxx
Fax: (000) 000-0000
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(2)Any such communication so given or made shall be deemed to have been
given or made and to have been received on the day of delivery if delivered, or
on the day of faxing or sending by other means of recorded electronic
communication, provided that such day in either event is a Business Day and the
communication is so delivered, faxed or sent before 4:30 p.m. on such day.
Otherwise, such communication shall be deemed to have been given and made and to
have been received on the next following Business Day. Any such communication
sent by mail shall be deemed to have been given and made and to have been
received on the fifth Business Day following the mailing thereof; provided
however that no such communication shall be mailed during any actual or
apprehended disruption of postal services. Any such communication given or made
in any other manner shall be deemed to have been given or made and to have been
received only upon actual receipt.
(3)Any Party may change its address for receiving notice by giving notice
of a new address in the manner provided herein.
. This Agreement constitutes the entire agreement between the parties pertaining
to the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written. There are
no conditions, warranties, representations or other agreements between the
parties in connection with the subject matter of this Agreement (whether oral or
written, express or implied, statutory or otherwise) except as specifically set
out in this Agreement.
. Time shall be of the essence of this Agreement.
. If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
. This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the parties shall be governed
by, the laws of the Province of Ontario and the federal laws of Canada
applicable therein, and each Party hereby irrevocably and unconditionally
submits to the non-exclusive jurisdiction of the courts of such province and all
courts competent to hear appeals therefrom.
. A waiver of any default, breach or non-compliance under this Agreement is not
effective unless in writing and signed by the Party to be bound by the waiver.
No waiver shall be inferred from or implied by any failure to act or delay in
acting by a Party in respect of any default, breach or non-observance or by
anything done or omitted to be done by the other Party. The waiver by a Party of
any default, breach or non-compliance under this Agreement shall not operate as
a waiver of that Party's rights under this Agreement in respect of any
continuing or subsequent default, breach or non-observance (whether of the same
or any other nature).
. This Agreement may not be assigned by any Party without the prior written
consent of the other Parties. This Agreement shall be binding upon the parties
hereto, and their successors and permitted assigns.
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. This Agreement may be executed in any number of counterparts, by facsimile or
otherwise, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above.
PLAYSTAR WYOMING HOLDING CORP.
By:
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CYBERSTATION COMPUTERS & SUPPORT INC.
By:
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