Exhibit 7
NASDAQ ESCROW AGREEMENT
This Agreement is made and entered into as of
the 14th day of December, 2000, by and among (i) Uproar
Inc., a Delaware corporation ("Acquiror"), (ii)
Xxxxxxxxxxxxxxxxxx.xxx, Inc., a Delaware corporation
("Target"), (iii) Xxxxxxxxx Xxxxxxx as the representative
(the "Stockholders' Nasdaq Fund Agent") of the stockholders
of Target (the "Target Stockholders"), and (iv) The Chase
Manhattan Bank, as escrow agent ("Escrow Agent").
WITNESSETH:
WHEREAS, Acquiror, Xxxxxxxxxxxxxxxxxx.xxx
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Acquiror ("Merger Sub"),
Target, the Stockholders' Nasdaq Fund Agent and the
Target Stockholders are parties to that certain
Agreement and Plan of Reorganization dated as of
December 6, 2000 (collectively, with all amendments,
schedules, letters, exhibits and certificates referred
to therein, the "Merger Agreement") and attached hereto
as Exhibit A, which provides for the merger of Merger
Sub with and into Target, with Target surviving as a
wholly-owned subsidiary of Acquiror (the "Merger"); and
WHEREAS, the Merger Agreement provides that
at the Effective Time, certain shares of Acquiror
Common Stock to be issued in the Merger and otherwise
distributable to the Target Stockholders pursuant
thereto will be deposited in escrow pursuant to this
Agreement;
NOW, THEREFORE, in consideration of the
mutual promises and covenants contained in the Merger
Agreement and herein, the parties agree as follows:
ARTICLE I
ESCROW
1.1 Defined Terms. Capitalized terms not defined
herein shall have the meaning assigned to such terms in
the Merger Agreement. All provisions of the Merger
Agreement shall be incorporated herein by reference as
if set forth in their entirety herein. If any term of
this Agreement is inconsistent with the terms of the
Merger Agreement, then the terms of the Merger
Agreement shall control.
1.2 Escrow Agreement. Acquiror and Target hereby
appoint the Escrow Agent as the escrow agent for the
purposes set forth in Article IX of the Merger
Agreement. At the Effective Time, the Stockholders'
Nasdaq Fund Agent, on behalf of the Target
Stockholders, shall deposit, or cause to be deposited,
into an escrow account with the Escrow Agent one or
more certificates in the name of "Chase Manhattan Bank,
as Escrow Agent" representing one million, ninety-three
thousand and twenty-seven shares (1,093,027) of
Acquiror Common Stock otherwise deliverable to such
Target Stockholders pursuant to Section 1.6 of the
Merger Agreement (collectively, the "Nasdaq Escrow
Shares"), which shares shall constitute the Nasdaq
Escrow Fund. The Escrow Agent will acknowledge receipt
of the Nasdaq Escrow Shares into
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the Nasdaq Escrow Fund to the Stockholders' Nasdaq Fund
Agent and the Acquiror and will hold such shares in
accordance with the terms and conditions hereof and of
Article IX of the Merger Agreement. The "Termination Date"
for purposes of this Agreement shall be the date that is the
earlier of (i) a Change of Control of Acquiror, (ii) six (6)
calendar months from the Effective Time and (iii) the date upon
which the stockholders of Acquiror approve the Merger.
A "Change of Control" for purposes of this Agreement
shall be (i) the acquisition of the Acquiror by another
entity by means of any transaction or series of related
transactions (including, without limitation, any
reorganization, merger or consolidation) that results
in the transfer of fifty percent (50%) or more of the
outstanding voting power of the Acquiror, or a sale of
all or substantially all of the assets of the Acquiror.
1.3 Escrow Fees. Acquiror agrees to (i) pay
Escrow Agent upon execution of this Escrow Agreement and
annually thereafter reasonable compensation for the
services to be rendered hereunder, which unless
otherwise agreed in writing, shall be as described in
Schedule A attached hereto, and (ii) pay or reimburse
Escrow Agent upon request for all expenses,
disbursements and advances, including reasonable
attorney's fees and expenses, incurred or made by it in
connection with the preparation, execution,
performance, delivery, modification and termination of
this Agreement.
1.4 Ownership and Vote of Shares. The Escrow
Agent shall, subject to the provisions of this Agreement and
the Merger Agreement, hold the Escrow Shares and any
distributions in respect thereof as agent for the
respective Target Stockholders. The Target Stockholders
shall not be entitled to exercise any voting or other
consensual rights pertaining to the Nasdaq Escrow
Shares or any part thereof. The Escrow Agent shall not
vote any of the Nasdaq Escrow Shares.
1.5 Distribution of Securities. Any and all
distributions of stock or any securities of Acquiror
issued in connection with the Nasdaq Escrow Shares
(including, without limitation, any shares issued
pursuant to any stock dividend, stock split, reverse
stock split, combination or reclassification thereof)
shall be the property of the Target Stockholders, shall
be deposited with the Escrow Agent and shall be treated
as Nasdaq Escrow Shares pursuant to the terms of this
Agreement.
1.6 Dividends. Subject to Section 1.5, cash
dividends or other property distributed in respect of Acquiror
Common Stock shall be delivered to the Target
Stockholders on a pro rata basis in accordance with the
number of shares of Target Common Stock held by the
Target Stockholders at the Effective Time and shall not
be deposited with or retained by the Escrow Agent.
ARTICLE II
RELEASE FROM ESCROW
2.1 Distribution On Termination Date.
(a) If the Termination Date occurs
pursuant to Section 1.2 (iii) above because the
stockholders of Acquiror approve the Merger, then upon
receipt of a memorandum
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of the parties stating that this Agreement has
terminated pursuant to Section 1.2(iii), the Escrow
Agent shall, within five (5) business days following
the receipt of the memorandum, deliver to the Target
Stockholders all of the Nasdaq Escrow Shares. Deliveries
of these shares to the Target Stockholders pursuant to this
provision shall be made on a pro rata basis in accordance
with the number of shares of Target Common Stock held by the
Target Stockholders at the Effective Time.
(b) If the Termination Date occurs
pursuant to Section 1.2 (ii) above because six (6)
months have passed since the Effective Date, then upon
receipt of (1) the Cash Payment (as defined below) and
(2) a memorandum of the parties stating that this
Agreement has terminated pursuant to Section 1.2 (ii),
the Escrow Agent shall, within five (5) business days
following the receipt of the Cash Payment and the
memorandum, (X) deliver to the Target Stockholders all
of the Cash Payment and (Y) deliver to the Acquiror all
of the Nasdaq Escrow Shares. Deliveries of the Cash
Payment to the Target Stockholders pursuant to this
provision shall be made on a pro rata basis in
accordance with the number of shares of Target Common
Stock held by the Stockholders at the Effective Time.
Upon receipt of the Nasdaq Escrow Shares, the Acquiror
shall cancel them. The aggregate amount of these pro
rata cash payments (the "Cash Payment") shall be
determined by multiplying the number of Nasdaq Escrow
Shares returned to the Acquiror by the closing price
per share of Acquiror's Common Stock on the Nasdaq
National Market on the day immediately prior to the
date of return of the Nasdaq Escrow Shares.
(c) If the Termination Date occurs
pursuant to Section 1.2 (i) above because there is a
Change of Control of the Acquiror, then upon receipt of
a memorandum of the parties stating that this Agreement
has terminated pursuant to Section 1.2 (i), the Escrow
Agent shall, within five (5) business days following
the receipt of the memorandum, deliver to the Target
Stockholders all of the Nasdaq Escrow Shares.
Deliveries of these shares to the Target Stockholders
pursuant to this provision shall be made on a pro rata
basis in accordance with the number of shares of Target
Common Stock held by the Target Stockholders at the
Effective Time.
2.2 Actions of the Stockholders' Nasdaq Fund Agent.
A decision, act, consent or instruction of the
Stockholders' Nasdaq Fund Agent shall constitute a
decision of all Target Stockholders for whom shares of
Acquiror Common Stock otherwise issuable to them are
deposited in the Nasdaq Escrow Fund and shall be final,
binding and conclusive upon each such Target
Stockholder, and the Escrow Agent and Acquiror may rely
upon any decision, act, consent or instruction of the
Stockholders' Nasdaq Fund Agent as being the decision,
act, consent or instruction of each and every such
Target Stockholder. The Escrow Agent is hereby
relieved from any liability to any person for any acts
done by it in accordance with such decision, act,
consent or instruction of the Stockholders' Nasdaq Fund
Agent.
ARTICLE III
AUTHORITY AND INDEMNIFICATION
3.1 Authority. Upon consummation of the Merger
and in consideration of the mutual promises and covenants set
forth in the Merger Agreement, the Target Stockholders
and
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Acquiror shall be deemed to have irrevocably
appointed the Escrow Agent to hold all of the Nasdaq
Escrow Fund for the account of the Target Stockholders
as provided in Section 9.1 of the Merger Agreement
subject to this Agreement until their release in
accordance with this Agreement.
3.2 Responsibilities of Escrow Agent.
(a) With respect to this Agreement, the
parties acknowledge and agree that Escrow Agent is acting
solely as an independent escrow agent pursuant to this
Agreement. The Escrow Agent undertakes to perform only
such duties as are expressly set forth herein and no
other or further duties or responsibilities shall be
implied.
(b) Escrow Agent shall not be required to
institute or defend any action involving any matters
referred to herein or which affected it or its duties or
liabilities hereunder unless required to do so by any
party to this Agreement and then only upon receiving
indemnity in accordance with Section 3.3 hereto,
against any and all claims, liabilities and expenses in
relation thereto. Except as otherwise contemplated by
Section 3.2(c) hereof, Escrow Agent shall not be
required to defend any legal proceedings which may be
instituted against Escrow Agent in respect to the
subject matter hereof. Except as otherwise
contemplated by Section 3.2(c) hereof, in the event any
action is instituted against Escrow Agent, Escrow Agent
may interplead the parties hereto and may deposit the
subject matter of this escrow into court and in such
event Escrow Agent shall be relieved and/or discharged
from any and all obligations and liabilities under and
pursuant hereto subject to any required permission of
the court in which such interpleader is filed.
(c) Escrow Agent may rely upon and shall
not be liable for acting or refraining from acting upon
any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have
been signed or presented by the proper party or parties
so long as Escrow Agent complies with the terms of this
Agreement. Escrow Agent shall be under no duty to
inquire into or investigate the validity, accuracy or
content of any such document. Escrow Agent shall have
no duty to solicit any payments which may be due it
hereunder. Escrow Agent shall not be liable for any
action taken or omitted by it in good faith except to
the extent that a court of competent jurisdiction
determines that the Escrow Agent's gross negligence or
willful misconduct was the primary cause of any loss to
the Acquiror or Target Stockholders. Escrow Agent may
execute any of its powers and perform any of its duties
hereunder directly or through agents or attorneys (and
shall be liable only for the careful selection of any
such agent or attorney) and may consult with counsel,
accountants and other skilled persons to be selected
and retained by it. Escrow Agent shall not be liable
for anything done, suffered or omitted in good faith by
it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons. In the
event that Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive
instructions, claims or demands from any party hereto
which, in its opinion, conflict with any of the
provisions of this Agreement, it shall be entitled to
refrain from taking any action and its sole obligation
shall be to keep safely all property held in escrow
until it shall be directed otherwise in writing by all
of the other parties hereto or by a final order or
judgment of a court of competent jurisdiction.
Anything in this Escrow Agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be
liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not
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limited to lost profits), even if the Escrow Agent has
been advised of the likelihood of such loss or damage
and regardless of the form of action.
3.3 Indemnity. Acquiror shall indemnify, defend
and save harmless Escrow Agent and its directors, officers,
agents and employees (the "Indemnitees") from all loss,
liability or expense (including the fees and expenses
of in house or outside counsel) arising out of or in
connection with (i) Escrow Agent's execution and
performance of this Agreement, except in the case of
any Indemnitee to the extent that such loss, liability
or expense is due to the gross negligence or willful
misconduct of such Indemnitee, or (ii) its following
any instructions or other directions from Acquiror or
the Stockholders' Nasdaq Fund Agent, except to the
extent that its following any such instruction or
direction is expressly forbidden by the terms of this
Agreement. The parties hereto acknowledge that the
foregoing indemnities shall survive the resignation or
removal of Escrow Agent or the termination of this
Agreement.
3.4 Participation. In no case shall Acquiror
or the Target Stockholders be liable under this Agreement
with respect to any lawsuit filed against Escrow Agent
unless Acquiror or the Target Stockholders, as the case
may be, are notified by Escrow Agent, by letter or by
telegram or telex confirmed by letter, of the
commencement of any such action within a reasonable
time after such person shall have been served with a
summons or other first legal process giving information
as to the nature and basis of the lawsuit, but failure
to so notify Acquiror and the Target Stockholders shall
not relieve them from any liability they may have
otherwise than on account of this Agreement. Acquiror
and the Target Stockholders shall each be entitled to
participate at their own expense in the defense of any
such lawsuit, and if one of the parties so elects
within a reasonable time after receipt of such notice,
upon receiving consent from the other party, such party
shall assume the defense of any lawsuit. In the event
that a party assumes the defense of any lawsuit, such
defense shall be conducted by counsel chosen by such
party and satisfactory to Escrow Agent. If counsel is
so retained, the defendant or defendants in the lawsuit
shall bear the fees and expenses of any additional
counsel thereafter retained by it or them.
3.5 Reliance. Escrow Agent shall not be responsible
for the genuineness of any certificate or signature,
and may rely conclusively upon and shall be protected
when acting upon any notice, affidavit, request,
consent, instruction or other instrument believed by it
in good faith to be genuine or to be signed or
presented by the proper person, or duly authorized, or
properly made. Escrow Agent shall have no
responsibility except for the performance of its
express duties hereunder and no additional duties shall
be inferred or implied by this Agreement.
ARTICLE IV
MISCELLANEOUS
4.1 Notices. Any notice or other communication
required or permitted to be given to the parties hereto
shall be deemed to have been given if personally
delivered (including personal delivery by facsimile),
or four days after mailing by certified or registered
mail, return receipt requested, first class postage
prepaid, addressed as follows (or at such other address
as the addressed party may have substituted by notice
pursuant to this Section 4.1):
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(a) If to Acquiror:
Uproar Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) If to the Stockholders' Nasdaq Fund Agent:
Xxxxxxxxx Xxxxxxx
c/o Xxxxxxxxxxxxxxxxxx.xxx, Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
(c) With copies to counsel as set forth in the
Merger Agreement.
If to the Escrow Agent:
The Chase Manhattan Bank
Capital Markets Fiduciary Services
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Escrow
Administration, 10th Floor
Fax No.: (000) 000-0000
(d) If to Target Stockholders, at the addresses
set forth on Schedule B hereto.
4.2 Amendment. The provisions of this Agreement may
be waived, altered, amended or supplemented, in whole
or in part, only by a writing signed by all of the
parties hereto.
4.3 Successor to Escrow Agent. Escrow Agent may
resign and be discharged from its duties or obligations
hereunder by giving ten (10) days' advance notice in
writing of such resignation to the other parties hereto
specifying a date when such resignation shall take
effect. The Escrow Agent shall have the right to
withhold upon its resignation or discharge an amount
equal to any amount due and owing to the Escrow Agent,
plus any costs and expenses the Escrow Agent shall
reasonably believe may be incurred by the Escrow Agent
in connection with the termination of the Nasdaq Escrow
Agreement; provided that any amounts withheld that are
not so incurred shall be returned to the new escrow
agent and the Nasdaq Escrow Fund to be governed in
accordance with this Agreement. Any corporation or
association into which the Escrow Agent may be merged
or converted or with which it may be consolidated, or
any corporation or association to which all or
substantially all the escrow business of the Escrow
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Agent's corporate trust line of business may be
transferred, shall be the Escrow Agent under this
Nasdaq Escrow Agreement without further act.
4.4 Termination. This Agreement shall terminate
upon the earlier of (i) the mutual written express agreement
of the parties hereto and (ii) when all of the Nasdaq
Escrow Shares have been released from escrow according
to the terms hereof. In a mutual written express
agreement of Acquiror and the Stockholders' Nasdaq Fund
Agent terminating this Agreement, the parties may
instruct the Escrow Agent to distribute the balance of
the Nasdaq Escrow Shares according to instructions
contained in such agreement and the Escrow Agent shall
so distribute the balance of the Nasdaq Escrow Shares
in accordance with such instructions.
4.5 Interpretation. The validity, construction,
interpretation and enforcement of this Agreement shall
be determined and governed by the laws of the State of
Delaware. The invalidity or unenforceability of any
provision of this Agreement or the invalidity or
unenforceability of any provision as applied to a
particular occurrence or circumstance shall not affect
the validity or enforceability of any of the other
provisions of this Agreement or any other application
of such provision, as the case may be.
4.6 Attorneys' Fees; Remedies. If any arbitration
is filed or instituted or any action at law or in equity
is necessary to enforce or interpret the terms of this
Agreement or to protect the rights obtained hereunder,
the prevailing party shall be entitled to its
reasonable attorneys' fees, costs, and disbursements in
addition to any other relief to which it may be
entitled. The rights and remedies of the parties under
this Agreement and the Merger Agreement and the other
agreements related thereto, and all other letters,
certificates or documents executed in connection
herewith and therewith are cumulative and not exclusive
of any rights, remedies, powers and privilege that may
otherwise be available to the parties hereto.
4.7 Counterparts and Facsimile. This Agreement
may be signed in one or more counterparts, each of which shall
be deemed an original and all of which shall constitute
one agreement. All signatures of the parties to this
Agreement may be transmitted by facsimile, and such
facsimile will, for all purposes, be deemed to be the
original signature of such party whose signature it
reproduces, and will be binding upon such party.
4.8 Transfer of Interests. No Target Stockholder
shall sell, transfer, pledge, hypothecate or otherwise
dispose of any Nasdaq Escrow Shares, or any interest
therein, prior to the distribution of such Escrow
Shares except in accordance with this Agreement.
4.9 Miscellaneous. Without the prior written
consent of the other parties, neither this Agreement nor any
right or interest hereunder may be assigned in whole or
in part by any party, except by Acquiror to one or more
entities controlling, controlled by or under common
control with Acquiror (with Acquiror remaining
responsible for its obligations hereunder).
Notwithstanding the foregoing, none of the rights or
duties of any of the parties under this Agreement shall
be affected by a merger or consolidation of the Escrow
Agent with any other entity. Nothing expressed or
implied in this Agreement is intended, nor shall it be
construed to confer (i) any rights, remedies,
obligations or liabilities, legal or equitable, other
than as provided by this Agreement, or (ii) otherwise
constitute any person (other than the Stockholder's
Nasdaq Fund Agent) a third party beneficiary under or
by reason of this
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Agreement (it being acknowledged that the Stockholders'
Nasdaq Fund Agent is a third party beneficiary of this
Agreement and is entitled to enforce relevant provisions
of this Agreement).
4.10 Governing Law, etc. This Escrow Agreement
shall be governed by and construed under the laws of the
State of Delaware. Each party hereto irrevocably
waives any objection on the grounds of venue, forum non-
conveniens or any similar grounds and irrevocably
consents to service of process by mail or in any other
manner permitted by applicable law and consents to the
jurisdiction of the courts located in the State of New
York. The parties further hereby waive any right to a
trial by jury with respect to any lawsuit or judicial
proceeding arising or relating to this Nasdaq Escrow
Agreement. No party to this Agreement is liable to any
other party for losses due to, or if it is unable to
perform its obligations under the terms of this
Agreement because of, acts of God, fire, floods,
strikes, equipment or transmission failure, or other
causes reasonably beyond its control.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have signed this
Agreement on the day and year first above written.
Uproar Inc.,
a Delaware corporation
By: /s/ XXXXXXX X. XXXX
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman of the Board and
Chief Executive Officer
Xxxxxxxxxxxxxxxxxx.xxx, Inc.,
a Delaware corporation
By: /s/ XXXX XXXXXX
-------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
Xxxxxxxxx Xxxxxxx,
As Stockholders' Nasdaq Fund Agent
By: /s/ XXXXXXXXX XXXXXXX
--------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Chairman of the Board
Chase Manhattan Bank,
As Escrow Agent
By: /s/ XXXXXX X. XXXXXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President
SCHEDULE A
ESCROW FEES
Escrow Agent's compensation:
15 basis points of the highest value of collateral held
on deposit per annum or any part thereof without
proration for partial years, subject to a minimum of
$7,500 per annum or any part thereof without proration
for partial years, (includes investment in a Chase
Manhattan Bank Money Market Account, Chase Manhattan
Bank Trust Account or The Chase Manhattan Bank Mutual
Fund known as the Vista Fund).
$75 per investment (excludes Money Market, Trust
Account or Vista Fund Investments).
SCHEDULE B
ADDRESSES OF TARGET STOCKHOLDERS
