SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (the “Agreement”) is made as of the 20th day of October 2013, by and among BREEDIT Ltd., an Israeli company (the "Company"), Xxxx Xxxxx ID No. 000000000 of 00 Xxxxx Xxx Xx., Xxxxxxxxxx, Xxxxxx (the “Founder”), and ProGaming Platforms Corp., a limited liability corporation organized under the laws of the State of Delaware (the "Investor"). The Company and the Investor are referred to, collectively herein as the “Parties” and separately as a “Party”).
WHEREAS, the board of directors of the Company (the
“Board”) has determined that it is in the best interests of the Company to raise
capital by means of the issuance of Ordinary Shares nominal value NIS 1.00 each (the
"Ordinary Shares"); and
WHEREAS, the capital to be raised was determined to be up to a sum in
NIS equal to USD 1,000,000, which, other than the Initial Sum (as defined below), shall be
based on an exchange rate published by the central bank of Israel, on the actual date of
payment/transfer of the Investment Amount, or any part thereof, but in any event no less
than NIS 3.6 per USD 1.00 (the "Investment Amount" and the "Minimum
Exchange Rate", respectively); and
WHEREAS, the Parties have agreed that the Investor, as part the
Investment Amount, shall invest in the Company a sum in NIS that is equal to USD 245,000,
which, notwithstanding the above, shall be based on a fixed exchange rate of NIS 3.6 per
USD 1.00 (i.e. NIS 882,000) (the "Initial Sum"); and
WHEREAS, the Investor has undertaken to raise for the benefit of the
Company the balance amount which is equal to the Investment Amount less the Initial Sum
(the "Reminder Amount"), in the manner described herein below and shall, to this
end, use its best efforts to provide, or cause to be provided, to the Company, by it or by
other investors, the Remainder Amount, at the Investor's sole discretion and subject to
the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein,
the parties hereby agree as follows:
1. Sale and Issuance of Shares; Closing; Post Closing Actions
1.1. Deal Terms
(a) Sale and Issuance of Shares. Subject to the terms and conditions
hereof, at the Closing (as defined below), the Company shall issue and sell to the
Investor, and the Investors shall purchase from the Company, an aggregate amount of 200
Ordinary Shares of the Company (the "Purchased Shares"), constituting 66.67% of
the Company's issued and outstanding share capital as of the Closing, and 60% of the
Company's issued and outstanding share capital on a fully diluted basis, after the
adoption of the Plan, as contemplated under Section 7.7 hereunder.
(b) Investor Option to Founder. As soon as practicable after the Closing
but in any event no later than 90 business days thereafter, the Investor shall issue to
the Founder options to purchase 9.99% of the aggregate number of stock of the Investor
(which shall mean to include (i) the Investor's issued and outstanding stock capital on
the date hereof, plus (ii) the number of Investor stock to be issued to third parties that
shall invest the Initial Sum in Investor's capital, plus (iii) the number of Investor
stock issuable upon the conversion of certain notes in the amount of US$ 70,000 issued by
the Investor) (the "Founder Option"), at an exercise price equal to the lower of
(a) USD 0.05 per stock, or (b) the price per stock paid by the first Qualified Investor.
The Founder Option shall vest over a period of three (3) years from issuance on a
quarterly basis. All other terms of the Founder Option shall be as specified in Schedule
1.1(b) hereto. Without derogating from the Investor's obligations set forth above, the
Investor shall use reasonable efforts to adopt a stock option plan under the Israeli Tax
Ordinance for employees of Israeli subsidiaries, under which the Founder Option shall be
granted.
For example, if the Investor raises the Initial Sum at a price per share of US$ 0.05, then
the Founder Option shall be for the purchase of approximately 6,063,638 Investor shares
(calculated as 9.99% of the aggregate number of shares (i) of the Investor's issued and
outstanding share capital on the date hereof (52,197,055 shares), plus (ii) 5,000,000
shares of the Investor to be issued to third parties that shall invest the Initial Sum in
Investor's capital, plus (iii) 3,500,000 Investor shares issuable upon the conversion of
notes in the amount of US$ 70,000 issued by Investor, which in total is equal to
60,697,055.
(c) The Founder is granted an anti-dilution protection up to an
aggregate raising of funding for the Company, commencing on the date hereof (including the
Initial Sum), in any manner whatsoever, whether by way of equity investments, loans,
guarantees, capital notes or any other way, of a sum equal to the Investment Amount
(computed based on the exchange rate determined for the Initial Sum, and the actual
exchange rate determined for the Remainder Amount subject to the Minimum Exchange Rate)
(the "Founder's Anti Dilution Protection"). Therefore, the Founder's holding
percentage in the Company immediately following the Closing shall not be affected if the
Remainder Amount shall be invested in the Company, in whole or in part, by the Investor or
by any other person or entity which is not the Investor. In the event of a dilution event
of the Founder's holding percentage immediately following the Closing, resulting from any
equity investments, loans, guarantees, capital notes or any other way in the Company of
the Investment Amount, or part thereof, in a single transaction or a series of
transactions thereof, then Company shall within three (3) business days thereafter issue
to the Founder additional Ordinary Shares for no additional consideration, so that the
number of Ordinary Shares held by the Founder in the Company thereafter shall represent
the same percentage holdings in the Company that they represented immediately following
the Closing and prior to the actual said transaction or series of transactions thereof.
Any additional Ordinary Shares of the Company issued to the Founder pursuant to this
Section 1.1(c) shall, upon their issuance, be duly authorized, validly and lawfully
issued, fully paid and non-assessable and shall not be subject to, or trigger, any
anti-dilution or pre-emptive rights of any shareholder of the Company whether under law,
the Company's Amended Articles (as such term is defined below) as in effect from time to
time, or otherwise.
1.2. The Closing
The Closing shall be held at the offices of CBLS Law Offices, No. 5 Azrieli Center, Square
Tower, 35th Floor, Tel Aviv, within one (1) business day following compliance with the
Closing Condition in Section 1.2.A(b) (i.e the obtaining of a signed copy of the Academic
Institution Agreement as defined below), or at such other time and place as the Company
and the Investor shall mutually agree in advance in writing, and in any event subject to
the Closing Conditions having been met ("Closing Date").
At the Closing, the following transactions shall occur simultaneously (no transaction
shall be deemed to have been completed or any document delivered until all such
transactions have been completed and all required documents delivered, unless such
transaction is specifically waived by the other Party in writing):
1.2.A Company Actions at Closing
(a) Company Resolutions and Documents. The Company shall have delivered
to the Investor the following resolutions:
(1) Resolutions of the Company's shareholders in the form attached
hereto as Schedule 1.2A(a)(1)(i) by which (i) the shareholders of the Company unanimously
approve the adoption of the Articles of Association of the Company in the form attached
hereto as Schedule 1.2A(a)(1)(ii) (the “Amended Articles”), and (ii) all
shareholders unanimously approved the terms of this Agreement and the transactions
hereunder;
(2) True and correct copies of resolutions of the Board (i) issuing and
allotting all of the Purchased Shares to the Investor and approving all other transactions
contemplated herein, in the form attached hereto as Schedule 1.2A(a)(2)(i); and (ii)
assigning signature rights in the Company, in the form attached hereto as Schedule
1.2A(a)(2)(ii);
(3) The Company shall deposit with the Escrow Agent (as such term is
defined below) (i) a validly executed share certificates covering the Purchased Shares
dated as of the Closing Date, issued in the name of the Investor, in the form attached
hereto as Schedule 1.2A(a)(3)(i) (the "Share Certificate"). The Escrow Agent
shall transfer the Share Certificate to the Investor according to the irrevocable letter
of instructions attached hereby as Annex 1; and (ii) a signed Board resolution, in the
form attached hereto as Schedule 1.2A(a)(3)(ii), pursuant to which in the event the
Investor does not transfer the entire balance of the Initial Sum according to terms and
within the time frames set forth herein, all the Purchased Shares held by the Investor
shall immediately convert into deferred shares. "deferred shares" for purposes
hereof shall mean such shares which entitle the holder thereof to no rights whatsoever
except the right to receive payment of the shares' par value upon the liquidation or
dissolution of the Company out of such funds which remain available following such
liquidation or dissolution;
(b) A signed copy of the Software License Agreement, entered into by the
Company with a leading academic institution in Israel ("Academic Institution"
and the "Academic Institution Agreement", respectively);
(c) The Founder and the Company shall have executed and delivered to the
Investor the Consulting Agreement, substantially in the form attached hereto as Schedule
1.2A(c).
1.2.B Investor Actions at Closing
(a) (i) the Investor shall pay directly into the Company's bank account,
or into the Escrow Account (as defined below), at the Investor's discretion, an amount in
US$ 61,250 (based on the NIS/US$ fixed exchange rate of NIS 3.6 per USD 1.00 (i.e. NIS
220,500)) (the "On Account Amount"), on account of the Initial Sum in
immediately available funds; and (ii) the balance of the Initial Sum (which is the amount
equal to the Initial Amount less the On Account Amount), shall be transferred by the
Investor within 30 business days after the Closing Date in immediately available funds to
Xxxxxxx, Luchtenstein Trust Company Ltd. (the "Escrow Agent"), No.
_______________ in Bank Hapoalim B.M., Swift Code: _________________ (the "Escrow
Account"), to be held by the Escrow Agent on behalf of the Company and the Investor.
The Escrow Agent shall transfer the Initial Sum to the Company according to the
irrevocable letter of instructions attached hereby as Annex 1.
(b) Investor's Resolutions and Documents. The Investor shall have
delivered to the Company the following resolutions:
(1) True and correct copies of resolutions of the Investor's board of
directors, in the form attached hereto as Schedule 1.2B(b)(1) approving all transactions
contemplated herein;
(2) The Investor shall deposit a power of attorney with the Escrow Agent
irrevocably empowering the Founder to vote the Purchased Shares of the Investor on any
matter brought before the Company's shareholder general meetings and/or any other
shareholders meeting of the Company (or any such other adjournment by any class of
shareholders of the Company attended by the Investor) (the "POA"), in the form
attached hereto as Schedule 1.2B(b)(2). The Parties hereby instruct the Escrow Agent to
transfer the POA to the Founder only in the event that the Investor fails to fund an
amount called by the Company pursuant to a Capital Call in accordance with the provisions
of Section 1.3 below, at any time prior to the investment of the full Investment Amount in
the Company. To this end, the Company's written confirmation to the Escrow Agent stating
the Investor's failure thereof shall suffice for the Escrow Agent to transfer said POA as
set forth herein above.
1.3. Subsequent Closings
(a) The Remainder Amount shall be raised by the Company from the
Investor or third parties, from time to time based on capital calls initiated by the
Company ("Capital Calls"), based on Company's needs for the 12-month period
following each Capital Call, provided that in no event the Capital Calls exceed in total
the Remainder Amount. The first Capital Call shall be delivered to the Investor not prior
than the lapse of 8 (eight) months following the Closing Date, and shall apply to the
Company's capital needs for the 12-month period commencing 12 months after the Closing
Date. Together with each Capital Call the Company shall deliver to the Investor an updated
budget for the 12-month period covered by such Capital Call (the "Updated
Budget"). A Capital Call shall be delivered to the Investor no later than 4 (four)
months prior to the date on which the Company requires such funds.
(b) Investor shall be afforded a period of at up to 1 (one) month to
notify the Company in writing whether it intends to fund the Capital Call. In the event
that the Investor does not notify the Company in writing that it commits to provide the
full amount of the Capital Call within the 1 (one) month period, and in any event no later
than 3 months prior to the commencement of the 12-month period covered in the Updated
Budget and in relation to which the Company made the Capital Call, then the Company shall
have the right to approach third party investors with the intent to raise such funds from
them. Notwithstanding the foregoing, the Investor shall have a right of first offer with
respect to any funding agreed between the Company and said third party (without derogating
from the Founder's Anti-Dilution Protection right), by way of furnishing Company with a
firm, unqualified written undertaking within no later than 5 business days after receiving
notice of such third party offer from Company, in which the Investor shall commit in
writing to the entire investment amount committed by said third party. Partial acceptance
shall be deemed a rejection by the Investor to exercise its right of first offer as set
forth herein.
(c) It is clarified that in the event that the Remainder Amount is
raised from Investor, then at the sole discretion of the Investor, it shall be registered
as a premium on the Purchased Shares or in return for capital notes which will not bear
interest, will not be linked to any index and will not have a repayment date, and shall
only be entitled to participate in the distribution of the Company's assets in case of
liquidation pari-passu with the other holders of shares in the Company as if the monies
invested against such capital notes were invested in return for the Purchased Shares held
by the holders of such capital notes.
1.4. Post Closing Actions
The Parties agree, undertake and covenant that they shall each take all actions, promptly
after the Closing Date and no later than within the time prescribed under applicable law,
as may be necessary to perfect the consummation of this Agreement. Without derogating from
the generality of the above:
(a) The Company shall register the allotment of the Purchased Shares to
the Investor in the register of shareholders of the Company and the Israeli Companies
Registrar (the "Registrar");
(b) The Company shall file with the Registrar the Amended Articles, in
place of the previous articles of association of the Company, as filed;
(c) The Company shall file with the Registrar the appointment of the
Board member appointed by the Investor;
(d) The Company shall have the Board approve the Plan (as defined in
Section 7.6 below), in compliance with the terms in Section 7.6 below;
(e) The Company shall have the Board approve a budget for the Company
with respect to the 12-month period commencing on the Closing Date;
(f) The Investor shall issue to the Founder the option to purchase the
9.99% aggregate number of stock of the Investor in compliance with the Founder Option and
the terms set forth in Section 1.1(b) above;
(g) The Company shall act in the Company's bank account (the
"Company Account") simultaneously as follows: (i) the Founder shall no longer be
personally liable in the Company Account; and (ii) the Company shall no longer have a
credit line in the Company Account.
1.5. Defined Terms Used in this Agreement
In addition to the terms defined above, the following terms used in this Agreement shall
be construed to have the meaning set forth or referenced below.
“Affiliate” means with respect to any person or entity (a “Person”)
any person which, directly or indirectly, controls, is controlled by, or is under common
control with such person, including, without limitation, any partner, officer, director,
or member of such person and any venture capital fund now or hereafter existing which is
controlled by or under common control with one or more general partners or shares the same
management company with such person.
“Material Adverse Effect” means a material adverse effect on the business,
assets (including intangible assets), liabilities, financial condition, property,
prospects or results of operations of the Company.
"Qualified Investor" means the first investor or several investors that will
invest an aggregate sum of $100,000 in the share capital of the Investor.
2. Representations and Warranties of the Company
The Company hereby represents and warrants to the Investor, and acknowledges that the
Investor is entering into this Agreement in reliance thereon, as follows:
2.1. Organization, Good Standing, Corporate Power and Qualification. The
Company is a corporation duly organized, validly existing and in good standing under the
laws of the State of Israel and has all requisite corporate power and authority to carry
on its business as presently conducted and as proposed to be conducted.
2.2. Capitalization
(a) The authorized share capital of the Company immediately prior to the
Closing is NIS 1,000 divided into 1,000 Ordinary Shares, of which 100 are issued and
outstanding. The authorized share capital of the Company immediately following the Closing
shall be NIS 1,000 divided into 1,000 Ordinary Shares, of which 300 shall be issued and
outstanding, and 33 Ordinary Shares shall be reserved for issuance to Company's employees,
directors and officers, as part of the Plan.
(b) Except for the transactions contemplated by this Agreement and as
set forth in the cap table attached hereto as Annex 1 (the "Cap Table"), there
are no other share capital, preemptive rights, convertible securities, outstanding
warrants, options or other rights to subscribe for, purchase or acquire from the Company
any share capital of the Company and there are no contracts or binding commitments
providing for the issuance of, or the granting of rights to acquire, any share capital of
the Company or under which the Company is, or may become, obligated to issue any of its
securities.
2.3. Subsidiaries. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, and is not a participant in
any partnership, joint venture or other business association.
2.4. Authorization. All corporate actions required to be taken by the
Board and shareholders in order to authorize the Company to enter into the Agreement, and
to issue the Purchased Shares, have been taken or will be taken prior to the Closing. The
Agreement, following the Closing Date, shall constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with their
respective terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general application
relating to or affecting the enforcement of creditors’ rights generally, or (ii) as
limited by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies.
2.5. Valid Issuance of Shares. Without derogating from the Investor's
undertaking set forth in Sections 1.2.B.(a) and 1.3(a), and the Company's rights under
Sections 1.2.A(a)(3)(ii) and 1.2.B(b)(2), the Purchased Shares, when issued, sold and
delivered in accordance with the terms and for the consideration set forth in this
Agreement, will be validly issued, fully paid and non-assessable and free of restrictions
on transfer other than restrictions on transfer under this Agreement, the Amended
Articles, applicable laws, liens, claims, encumbrances or third party rights of any kind,
and duly registered in the name of the Investor in the Company's register of shareholders.
To this end, the Founder's signature affixed to the Agreement hereto shall constitute the
Founder's irrevocable waiver of any and all participation rights and/or preemptive rights,
right of first refusal, anti-dilution rights, conversion rights or any other such similar
rights, whether granted by law or by way of agreements, in connection with the issuance of
the Purchased Shares by the Company to the Investor pursuant to this Agreement.
2.6. Litigation. There is no claim, action, suit, proceeding,
arbitration, complaint, charge or investigation pending or to the Company's knowledge,
currently threatened against the Company and any of its officers, directors or key
employee, or against the Company’s properties, or with regard to the Company’s
business; There is no action, suit, proceeding or investigation by the Company pending or
which the Company intends to initiate.
2.7. Intellectual Property
(a) All of the Company's ownership and possession pertaining to
intellectual property is set forth in the Academic Institution Agreement (the
"Company IP"). Other than as otherwise set forth in the Academic Institution
Agreement, there are no outstanding options, licenses, agreements, claims, encumbrances or
shared ownership interests of any kind relating to the Company IP, nor is the Company
bound by or a party to any options, licenses or agreements of any kind with respect to the
Company IP.
(b) The Founder has entered into written agreements with the Company
assigning to the Company all rights in Company IP to the extent developed in the course of
its entrepreneurship toward the establishment of the Company, including without
limitation, the Company's website and any and all software and related documents already
developed or currently under development by the Founder.
(c) The Company has not received any communications alleging that the
Company has violated or, by conducting its business, would violate any of the patents,
trademarks, service marks, trade names, copyrights, trade secrets or other proprietary
rights or processes of any other person or entity.
2.8. Compliance with Other Instruments. The Company is not in default
(a) under its Articles of Association or other formative documents, or, to its knowledge,
under any material agreement it is a party; or (b) to its knowledge, with respect to any
law, statute, ordinance, regulation, order, writ, injunction, decree, or judgment of any
court, which default, in any such case, would have a Material Adverse Effect on the
financial condition or business of the Company. To its knowledge, no third party is in
default under any material agreement, contract or other instrument, document or agreement
to which the Company is a party or by which it or any of its property is affected.
2.9. No Breach. Neither the execution and delivery of this Agreement and
the other agreements contemplated hereby or ancillary hereto nor compliance by the Company
with the terms and provisions hereof or thereof, will conflict with, or result in a breach
or violation of, any of the terms, conditions and provisions of: (i) the Company's
Articles of Association, or other governing instruments of the Company, (ii) any
agreement, contract, lease, license or commitment to which the Company is a party or to
which it is subject, or (iii) to its knowledge, applicable law. Such execution, delivery
and compliance will not (a) give to others any rights, including rights of termination,
cancellation or acceleration, in or with respect to any agreement, contract or commitment
referred to in this paragraph, or to any of the properties of the Company, or (b)
otherwise require the consent or approval of any person, which consent or approval has not
heretofore been obtained.
2.10. Interested Party Transactions. To the best knowledge of the
Company, other than as set forth in Schedule 2.10, no officer, director or shareholder of
the Company, or any affiliate of any such person or entity or the Company, has or has had,
either directly or indirectly a beneficial interest in any contract or agreement to which
the Company is a party or by which it may be bound or affected, except for normal
compensation for services for employees and/or consultants, which has been disclosed to
the Investor and which have been duly approved by the Board of Directors and/or the
shareholders of the Company in accordance with Israeli law. To the Company's knowledge,
other than as set forth in Schedule 2.10, there are no existing arrangements or proposed
transactions between the Company and any officer, director, or holder of more than five
percent (5%) of the share capital of the Company, or any affiliate or associate of any
such person. The Company hereby represents that, other than as set forth in Schedule 2.10,
no employee, shareholder, officer, or director of the Company is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee credit) to
any of them.
2.11. Financial Statements. The Company has no approved financial
statements. As of Closing, the Company shall have no liabilities (other than liabilities
in the ordinary course of business, including without limitation liabilities towards
employees for termination notice periods and severance pay), debts or obligations, whether
accrued, absolute or contingent in excess of an aggregate sum of US$ 45,000.
2.12. Ownership of Assets. Except as set forth in Schedule 2.12(a), the
Company does not currently lease or license any property. The Company does not own any
assets other than those set forth in Schedule 2.12(a) hereto and other than as set forth
in the Financial Statements. The Company has good and marketable title to all of its
assets; such assets are not subject to any mortgage, pledge, lien, security interest,
conditional sale agreement, encumbrance or charge. The Company is not in default or in
breach of any material provision of its leases or license, and to the Company's knowledge,
the Company holds a valid leasehold or licensed interest in the property it leases or
licenses. The Company’s shareholders do not own or possess, in their individual or
any other capacity, any property or other asset which is material, individually or in the
aggregate, to the financial condition, operations or business of the Company.
2.13. Contracts. The Company has no employment or consulting contracts,
deferred compensation agreements or bonus, incentive, profit-sharing, or pension plans
currently in force and effect, or any understanding with respect to any of the foregoing.
2.14. Taxes. To the best of its knowledge, the Company is currently not
liable for any tax (whether income tax, capital gains tax, or otherwise). The Company has
withheld and paid to the appropriate taxing authority all taxes it is required to withhold
from amounts paid to any person including any of its employees.
2.15. Brokers. No agent, broker, investment banker, person or firm
acting in a similar capacity on behalf of or under the authority of the Company is or will
be entitled to any broker's or finder's fee or any other commission or similar fee,
directly or indirectly, on account of any action taken by the Company in connection with
any of the transactions contemplated under this Agreement. The Company agrees to indemnify
and hold the Investor harmless from and against any claim or liability resulting from any
party claiming any such commission or fee, if such claims shall be contrary to the
foregoing statement.
2.16. Full Disclosure. To Company's knowledge, no representation or
warranty of the Company contained in this Agreement and no certificate furnished to the
Investor at the Closing contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
It is clarified that any disclosure of any fact made in connection with any provision
hereof or included in any schedule or annex hereto, shall be deemed to cover any
disclosure required under any other provision hereof.
3. Company and Founder - Indemnification; Survival of Representation and
Warranties
3.1 Compensation by the Company. Subject to the following limitations of
indemnification provisions, the Company agrees to protect, defend, compensate, indemnify,
and hold harmless the Investor against and in respect of all direct loss, direct
liability, direct damage, direct cost, or direct expense, (including reasonable legal fees
and expenses) (collectively: “Loss”), as and when incurred by the Investor, due
to any material breach or falsity of any of the representations, warranties, or covenants
of the Company contained in Section 2 above.
3.2 Indemnity Procedure. The indemnification obligation under this
Section 3 shall be contingent on Investor: (i) immediately after receipt by the Investor
of notice of the commencement of any action, proceeding, or investigation by a third party
in respect of which indemnity may be sought (a "Claim"), shall notify the
Company; (ii) the Company shall assume the defense of the Claim with counsel reasonably
satisfactory to the Investor, and the fees and expenses of such counsel shall be borne by
the Company; (iii) the Investor will reasonably cooperate with the Company in the defense
of any Claim for which the Company assumes the defense and Company shall bear Investor's
documented out-of-pocket expenses in relation thereto. The Company shall not be liable for
a settlement made by the Investor in any Claim affected without the Company’s advance
written consent. The Company shall not unreasonably withhold its consent to a settlement
of such Claim if the settlement shall not inflict on Company any liability to which
Company is not otherwise exposed by virtue of the provisions of this Agreement (taking
into account and without derogation from the limitation of liability provisions). The
Company shall not enter into any settlement in any Claim, unless such settlement includes
a general release of the Investor with no payment by the Investor of consideration and
without an admission of liability.
3.3 Founder's Indemnity. Founder agrees to indemnify and hold harmless
the Investor, against any and all loss, liability, claim, damage and reasonable expense
(including, but not limited to, any and all expenses reasonably incurred in investigating,
preparing or defending against any litigation commenced or threatened or any claim
whatsoever) arising out of or based upon (a) any false representation or warranty or
material breach or material failure to comply with any covenants or agreement made by the
Founder herein or in any other document furnished by the Founder to the Investor as part
of this Agreement, (b) any action for securities law violations instituted against the
Investor which is finally resolved by judgment against Investor, or (c) the Founder shall
indemnify the Company and the Investor in the event of any claim or demand by a former
employer of the Founder or any affiliate thereof against the Company, the Investor or the
Founder, as finally resolved by a non-appealable judgment, regarding breach of contract,
violation of property rights or violation of any other right or obligation by the Founder
in connection thereto. Notwithstanding the aforementioned, the Founder's liability under
this Agreement, including without limitation, under the provisions of this Section 3,
shall be limited to the transfer of the shares of the Company held by the Founder at the
time of claim (the number of shares of the Company to be transferred to the Investor shall
be equal to the value of loss suffered by the Investor divided by the fair market value of
the Founder's shares as then in effect) and the Founder shall indemnify by transferring
such shares and not by any other means of indemnification; The remedy provided under this
Section 3 shall be the Company and/or the Investor's sole and exclusive remedy against the
Founder provided, however, that such limitation shall not apply to any fraud or willful
misconduct by the Founder. Notwithstanding the foregoing, the Investor and Company shall
not be entitled to indemnification for incidental or indirect losses.
3.4 Time Limitation. The Company and the Founder shall have no liability
(and such liability shall be fully discharged and any cause of action shall be
extinguished) and a claim by the Investor for indemnification based on the representations
and warranties of the Company and the Founder shall be forever barred, unless such claim
is brought by the earlier of (i) twenty-four (24) months following the Closing, provided
that, the representations and warranties of the Company in Sections 2.2 (capitalization),
2.7 (Intellectual Property) and 2.14 (taxes) shall survive and remain in full force and
effect until the lapse of the statute of limitations regarding such matter; (ii) the sale
of all, or substantially all of the Company’s assets or shares (including by way of
merger or the like), or (iii) the initial public offering of the Company’s
securities.
3.5 Threshold. Without derogation from other limitations with regard to
indemnification herein, no claims shall be asserted against the Company or the Founder
unless the aggregate Loss claimed exceeds US$ 15,000 (Fifteen Thousand USD), in which
event the Investor shall be entitled to indemnification for all Loss from the first
dollar.
4. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company, that:
4.1. Authorization. The Investor has full power and authority to enter
into the Agreement. The Agreement, to which the Investor is party, when executed and
delivered by the Investor, will constitute valid and legally binding obligations of the
Investor, enforceable in accordance with their terms. All corporate actions required to be
taken by the Investor's board of directors and shareholders in order to authorize the
Investor to enter into the Agreement, including without limitation the issuance of the
Founder Option, have been taken or will be taken prior to Closing.
4.2. Enforceability. The Agreement, when executed and delivered by the
Investor, will constitute the valid, binding and enforceable obligations of the Investor.
4.3. Experience. The Investor is an experienced investor in securities
of companies in an early development stage and acknowledges that they are able to fend for
themselves, can bear the economic risks of such investment in the Shares (including the
complete loss thereof) and has such knowledge and experience in financial or business
matters that they are capable of evaluating the merits and risks of this investment in the
Shares.
4.4. Financial Resources. The Investor has and at the Closing shall have
the financial resources necessary to fulfill its obligations under this Agreement and the
transactions contemplated hereby.
4.5. Authorized Stock Capital. The authorized stock capital of the
Investor consists of 500,000,000 shares of Common Stock $0.01 par value per share.
Immediately prior to Closing, there were 52,197,055 shares of Common Stock issued and
outstanding and no stock of Investor's Preferred Stock issued and outstanding. Immediately
prior to Closing, no shares of Common Stock were reserved for issuance, including without
limitation, for issuance upon the exercise of outstanding options and warrants. All issued
and outstanding shares of Common Stock have been duly authorized and validly issued and
are fully paid and non-assessable. As of the date hereof and on the Closing Date, there
are no outstanding or authorized options, warrants, rights, calls, commitments, preemptive
rights, subscriptions, claims of any character, convertible or exchangeable securities, or
other contracts, contingent or otherwise, relating to Common Stock or any capital stock or
capital stock equivalent or other nominal interest in the Investor, which relate to the
Investor (collectively, “Company Equity Interests”) pursuant to which the
Investor is or may become obligated to issue or sell shares of its capital stock or other
equity interests or any securities convertible into, or exchangeable for, or evidencing
the right to subscribe for, any Investor Equity Interests. There are no outstanding
obligations of the Investor to repurchase, redeem or otherwise acquire any outstanding
securities of the Investor or any Investor Equity Interests. No bonds, debentures, notes
or other indebtedness having the right to vote on any matters on which Investor's
stockholders may vote are issued or outstanding as of the date hereof.
4.6. Company SEC Reports; Financial Statements
(a) The Investor has timely filed with the SEC all registration
statements, prospectuses, reports, schedules, forms, proxy statements, certifications and
other documents (including exhibits and all other information incorporated by reference
therein) required to be filed by the Investor (the “Investor SEC Reports”). The
Investor SEC Reports (i) were prepared and will be prepared (when filed after the date of
this Agreement and as of the Closing Date) in all material respects in accordance with the
requirements of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act") or the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange
Act"), as the case may be, and (ii) did not at the time they were filed and will not,
when filed after the date of this Agreement, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under which they
were made, not misleading, except to the extent corrected by a subsequent Investor SEC
Report filed with the SEC prior to the date of this Agreement.
(b) Each of the consolidated financial statements of the Investor
(including, in each case, any notes thereto) contained in the Investor SEC Reports (the
“Investor Financial Statements”) was prepared and will be prepared (when filed
after the date of this Agreement) in accordance with GAAP (except as may be indicated in
the notes thereto) and presented fairly and will present fairly (when filed after the date
of this Agreement) in all material respects the consolidated financial position and
consolidated results of operations of the Investor as of the respective dates thereof and
for the respective periods indicated therein, except as otherwise noted therein and
subject, in the case of unaudited statements, to normal year-end audit adjustments in
amounts that are immaterial in nature and amounts consistent with past experience.
4.7. Disclosure of Information. The Investor has been afforded the
opportunity to ask questions of officers or other representatives of the Company
concerning the business of the Company, and it has reviewed and inspected all of the data
and information provided to it by the Company in connection with this Agreement. The
Investor is buying the Purchased Shares only for investment, for its own account, and
without any present intention to sell or distribute the Purchased Shares.
4.8. No Public Market. The Investor understands that no public market
now exists for the Purchased Shares, and that the Company has made no assurances that a
public market will ever exist for the Purchased Shares.
4.9. No Breach. Neither the execution and delivery of this Agreement or
any Schedule or agreement attached or ancillary thereto, nor performance by it of the
respective terms thereof, will conflict with, or result in a breach or violation of, any
of the terms, conditions and provisions of: (i) any of the Investor's corporate documents
(if and to the extent applicable), (ii) any judgment, order, injunction, decree, or ruling
of any court or governmental authority, domestic or foreign, to which the Investor is
aware and subject, (iii) any agreement, contract, lease, license or commitment to which
the Investor is party or to which it is subject, or (iv) applicable laws. Such execution,
delivery and performance will not require the consent or approval of any person, which
consent or approval has not heretofore been obtained or which will be obtained by the
Closing.
5. Investor - Indemnification; Survival of Representation and Warranties
5.1 Compensation by the Investor. Subject to the following indemnity
procedure, the Investor agrees to protect, defend, compensate, indemnify, and hold
harmless the Company and Founder against and in respect of all Losses, as and when
incurred by the either of them, respectively, due to any material breach or falsity of any
of the representations, warranties, or covenants of the Investor contained in Section 4
above.
5.2 Indemnity Procedure. The indemnification obligation under this
Section 5 shall be in compliance with the indemnity procedure set forth in Section 3.1
above, mutatis mutandis.
5.3 Threshold. No claims shall be asserted against the Investor unless
the aggregate Loss claimed exceeds US$ 15,000 (Fifteen Thousand USD), in which event the
Company and/or the Founder shall be entitled to indemnification for all Loss from the
first dollar.
6. Conditions to the Investor’s Obligations at the Closing. The
obligations of the Investor to purchase the Purchased Shares at the Closing are subject to
the fulfillment, on or before the Closing, of each of the following conditions, unless
otherwise waived:
6.1 Qualifications. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of any state that are required in connection
with the lawful issuance and sale of the Purchased Shares pursuant to this Agreement shall
be obtained and effective as of the Closing Date.
6.2 Representations and Warranties. The representations and warranties
made by the Company in this Agreement shall have been true and correct when made, and
shall be true and correct as of the Closing as if made on the Closing Date.
6.3 Covenants. All covenants, agreements, and conditions contained in
this Agreement to be performed or complied with by the Company prior to the Closing shall
have been performed or complied with by the Company, as the case may be.
6.4 Delivery of Documents. All of the documents to be delivered by the
Company pursuant to Section 1.2.A shall be in the form attached hereto.
6.5 Proceedings and Documents. The Investor shall have received all
counterpart originals or certified or other copies of all corporate and other proceedings
in connection with the transactions contemplated by this Agreement, as set forth in
Section 1.2.A herein above, and all documents and instruments incident to such
transactions in the form set forth in Section 1.2.A herein above.
6.6 Absence of Material Adverse Changes. From the date hereof until the
Closing, there will have been no Material Adverse Effect in the financial or business
condition of the Company, in the sole judgment of the Investor.
6.7 No restraining order or injunction. From the date hereof until
Closing, no restraining order, injunction or other legal process or order of any
governmental authority shall be in effect which purports to prevent the Company from
performing its obligations hereunder or any portion thereof.
6.8 No dissolution or liquidation. From the date hereof until Closing,
the Company shall not have filed, or had filed against it, any proceeding seeking the
dissolution or liquidation of the Company or the appointment of a receiver over the
Company’s assets, nor shall the Company have made a general assignment for the
benefit of creditors or have declared that it is unable to pay its obligations as they
come due.
7. Conditions of the Company’s Obligations at Closing. The
obligations of the Company to sell the Purchased Shares to the Investor at the Closing are
subject to the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
7.1 Representations and Warranties. The representations and
warranties of the Investor contained in this Agreement shall be true and correct in all
material respects as of such Closing.
7.2 Performance. The Investor shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before and at Closing.
7.3 No restraining order or injunction. From the date hereof until the
Closing, no restraining order, injunction or other legal process or order of any
governmental authority shall be in effect which purports to prevent the Investor from
performing its obligations hereunder or any portion thereof.
8. Affirmative Covenants.
8.1 Use of Proceeds. The Company will use the proceeds of the issuance
and allotment of the Purchased Shares in accordance with the Budget as may be amended from
time to time by the Board, which decision shall include the consent of the Board member
appointed by the Founder.
8.2 Employment Matters. The Company shall procure that: (i) its
employees shall not be obligated under contract or agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would materially interfere
with such employees’ ability to promote the interest of the Company or that would
conflict with the Company’s business; (ii) neither the employment by the Company of
any of its employees (including the Founder), nor its engagement with its consultants,
constitutes or is likely, to Company's knowledge, to constitute a breach of any of such
persons’ obligations to third parties; (iii) any and all employment contracts with
any officer or employee or any other consultant or person of Company, may be terminated by
it at its sole discretion, without liability, in compliance with applicable law, or within
thirty (30) days or less ; and (iv) it shall not employ any person who will have access to
confidential information with respect to the Company and its operations unless such person
has executed and delivered a proprietary information and non-competition agreement.
8.3 No Sale by Founder. Founder shall be subject to a prohibition on
sales, transfers, pledges and other dispositions of his shares in the Company, in a manner
that Founder will not, without the consent of the Investor, sell any of his Company shares
for a period of thirty six (36) months as of the Closing Date (the "Founder No Sale
Period"). Notwithstanding the foregoing, during each one third of the Founder No Sale
Period, the Founder shall be entitled to sell up to 10% of his Company shares. All such
sales by Founder shall be subject to the provisions of the Amended Articles.
8.4 No Sale by Investor. The Investor shall be subject to a prohibition
on sales, transfers, pledges and other dispositions of the Purchased Shares, in a manner
that Investor will not, without the consent of the Founder, sell any of his Purchased
Shares for a period of thirty six (36) months as of the Closing Date (the "Investor
No Sale Period"). Notwithstanding the foregoing, during each one third of the
Investor No Sale Period, the Investor shall be entitled to sell up to 10% of his Purchased
Shares. All such sales by Investor shall be subject to the provisions of the Amended
Articles.
8.5 Registration Rights. The Company and the Investor each undertakes,
the Company towards the Investor and the Investor towards the Founder, to provide the
respective other party with the same registration rights that, to the extent applicable to
the Company, the Company grants in the future to an investor in the Company, and to the
extent applicable to the Investor, the Investor grants in the future to an investor in the
Investor, on a pro-rata and pari passu basis (subject to customary cut backs), and shall
make the such applicable party a party to any agreement in which such registration rights
are granted.
8.6 Information Rights. The Company shall deliver to the Investor: (i)
its audited annual financial statements, drawn up in accordance with generally accepted
accounting principles in the Israeli GAAP ("GAAP") within 45 days of the end of
each calendar year (the “Audited Financial Statements”); (ii) its unaudited,
reviewed, quarterly financial statements drawn up in accordance with GAAP, within 15 days
after the end of each calendar quarter (the “Unaudited Financial Statements”).
The Audited Financial Statements and the Unaudited Financial Statements are collectively
referred to as the “Financial Statements”. Company's obligation under this
Section 7.5 is subject to the Investor bearing all costs and expenses to be incurred by
the Company in connection with the preparation of the Financial Statements, by undertaking
and directly paying the auditors their costs and expenses in connection thereto. The
Financial Statements shall be true and correct in all material respects, in accordance
with the books and records of the Company and prepared in accordance with GAAP, and shall
fairly and accurately present in all material respects the financial position of the
Company as of relevant dates and the results of its operations for the period then ended.
Company acknowledges that Investor is a publicly traded company and that the Financial
Statements shall be disclosed to the Investor’s shareholders. Furthermore, Company
undertakes to assist Investor in the incorporation of its Financial Statements into the
public disclosures of Investor.
8.7 Filing of ESOP. The Company shall, within 90 days following the
Closing, have approved by the Board a share option plan in compliance with the Israeli Tax
Ordinance for incentivizing Company's directors, officers, consultants and employees (the
"Plan"), for the purchase of 10% of the Company's issued and outstanding share
capital on a fully diluted basis (calculated on the Closing date), whether by way of
direct issuance of Ordinary Shares or by issuance of other securities convertible into
Ordinary Shares, and within the time period set forth herein have the Plan filed with the
Israeli tax authorities.
8.8 Confidentiality. Each party hereto undertakes not to make public (by
way of an announcement or by press release or in any other manner) the other party's
identity without such other party's prior written consent. The Company, Founder and the
Investors and any person acting on their behalf, shall keep the existence of this
Agreement and the terms therein, as well as the representation and warranties included
herein in strict confidence, and neither party shall disclose or issue any public
statement or press release concerning this transaction without the prior written approval
of the other party of the substance and form of any such statement or release, except as,
and only to the extent required, (a) to exercise any of its rights or fulfill any of its
obligations under the terms herein, (b) by either party to its attorneys, accountants,
consultants, and other professionals to the extent necessary to obtain their services in
connection with making or monitoring this Agreement, provided such professionals are
obligated to such party to keep any such information confidential pursuant to a written
agreement or by nature, or (c) as may be required under applicable law. It is acknowledged
that (i) the Investors may provide such information as needed to its respective investment
committees, board of directors, partners and other persons involved in the transaction on
their behalf on a “need to know” basis, subject to standard confidentiality
agreements, and (ii) the Investor is a US publicly traded company and as such is subject
to disclosure requirements under applicable laws and regulations (including securities
laws), and therefore it shall be entitled to issue public statements in connection with
the engagement hereunder, to the minimal extent required under such laws and regulations.
Without derogating from the above, Investor agrees to comply fully with all the
confidentiality undertakings imposed on the Company in the Academic Institution Agreement.
9. Miscellaneous
9.1 Further Assurances. Each of the parties hereto shall perform such
further acts and execute such further documents as may reasonably be necessary to carry
out and give full effect to the provisions of this Agreement and the intentions of the
parties as reflected thereby. Without derogating from the generality of the above, the
Company, Founder and officers shall make best reasonable efforts to ensure the timely
delivery of the Company's GAAP based Audited Financial Statement and Unaudited Financial
Statements in compliance with Section 8.6 above.
9.2 Transfer; Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
9.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may also be executed and delivered
by facsimile signature and in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.
9.4 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies on any person other than the Parties.
9.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
9.6 Expenses. All of the expenses incurred by the Company and/or Founder
in connection with the preparation, execution and consummation of this Agreement and with
the transactions contemplated herein shall be paid by the Company and all of the
Investor’s expenses in such connection shall be paid by the Investor.
9.7 Governing Law & Forum. This Agreement shall be governed and
construed under the laws of the State of Israel and the exclusive place of jurisdiction in
any matter arising out of or in connection with this Agreement shall be the applicable Tel
Aviv Court.
9.8 Arbitration. Any dispute, controversy or claim arising in relation
to this Agreement, including with regard to its validity, invalidity, breach, enforcement
or termination, will be referred to a single arbitrator, who shall be appointed by mutual
consent of the parties hereto. (Xxxxx Xxxxxx). If the parties hereto fail to appoint such
arbitrator within 14 days of a written notice of dispute from either party, the Head of
the Israeli Bar Association shall appoint such arbitrator. Arbitration proceedings shall
take place in Tel Aviv, Israel, and shall be conducted according to the rules of
substantive law. The arbitrator will not be bound by rules of evidence or procedure and
will give the reasons for his judgment. The arbitrator's decision shall be final and
enforceable in any court. This paragraph shall constitute an arbitration agreement between
the parties hereto.
9.9 Notices. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed electronic mail
or facsimile if sent during normal business hours of the recipient, and if not so
confirmed, then on the next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) one (1)
day after deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent to the
respective parties at their address as set forth below, or to such e-mail address,
facsimile number or address as subsequently modified by written notice given in accordance
with this Section 8.7:
If to Investor:
ProGaming Platforms Corp.
00 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX
X.X.X.
Fax: 000-000-0000
Attn: Xxxx Xxxx, CEO
With a copy to: Xxxxxxx, Xxx-Xxx, Luchtenstein, Schottenfels, Law
Offices
Fax: x000 0 0000000
Attn: Xxxx Xxxxxxx.
If to the Company BREEDIT Ltd.
00 Xxxxx Xxx Xx.
Xxxxxxxxxx, Xxxxxx
Attn: Xxxx Xxxxx
With a copy to: Xxxxxxx, Xxx-Xxx, Luchtenstein, Schottenfels, Law
Offices
Fax: x000 0 0000000
Attn: Xxxx Xxxxxxx.
If to the Founder: Xxxx Xxxxx
9.10 Amendments and Waivers. Any term of this Agreement may be amended,
terminated or waived only with the written consent of all of the parties hereto.
9.11 Severability. The invalidity of unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other provision.
9.12 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon any breach or default of
any other party under this Agreement, shall impair any such right, power or remedy of such
non-breaching or non-defaulting 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 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 in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and not
alternative.
9.13 Entire Agreement. This Agreement (including the Schedules hereto,
if any) and the Amended Articles constitute the full and entire understanding and
agreement between the parties with respect to the subject matter hereof, and any other
written or oral agreement relating to the subject matter hereof existing between the
parties are expressly canceled, including without limitation the Term Sheet.
(Signatures on Following Page)
The Parties have executed this Share Purchase Agreement as of the date first written
above.
BREEDIT LTD. (COMPANY)
By: /s/ Xxxx Xxxxx
Xxxx Xxxxx, CEO
PROGAMING PLATFORMS CORP. (INVESTOR)
By: /s/ Xxxx Xxxx
Xxxx Xxxx, CEO
XXXX XXXXX (FOUNDER)
By: /s/ Xxxx Xxxxx
