STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated the 10th day of
March, 2005, by and between Zone4Play Inc., a Nevada company (the "Buyer"), and
Netfun Ltd., an Israeli company, Reg. No. 513039982. (the "Seller").
WHEREAS, Buyer and Seller, pursuant to a Joint Venture Agreement (the "JV
Agreement") dated June 1, 2004, a copy of which is attached hereto as Exhibit A,
established Mix TV Ltd., an Israeli company (the "Company"), Reg. No. 513552950,
maintaining an office at Xxxxxx Xxxx, Xxxx 0, Xxx Xxxx, Xxxxxx;
WHEREAS, Buyer and Seller have decided to terminate the JV Agreement by
executing the JV Termination Agreement in the form attached hereto as Exhibit B,
immediately prior to the Closing Date (as defined below).
WHEREAS, Seller desires to exchange with Buyer, and Buyer desires to
exchange with Seller, 499 ordinary shares of the Company, for the consideration
and upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the provisions and the
respective agreements hereinafter set forth, the parties hereto hereby agree as
follows:
1. Purchase and Sale of Stock.
1.1 Agreement to Purchase and Sell. Upon the terms and subject to the
conditions set forth in this Agreement and upon the representations and
warranties made herein by each of the parties to the other, on the Closing Date
(as such term is hereinafter defined), Seller shall exchange and deliver to
Buyer, and Buyer shall acquire from Seller, 499 ordinary shares, par value NIS
0.01 per share, of the Company (the "Purchased Shares"), representing 49.9% of
the Company's issued and outstanding shares.
1.2 Purchase Price. Upon the terms and subject to the conditions set forth
in this Agreement, in reliance upon the representations, warranties, covenants
and agreements of the Seller contained herein, and in exchange for the Purchased
Shares, Buyer agrees to deliver to Seller a total of 625,000 shares of common
stock of Buyer (such number of shares having an aggregate value of $1,000,000
based upon the closing bid price of the share of common stock of the Buyer on
March 4th 2005 on the OTCBB), ("Buyer's Shares or the "Shares") to be issued to
the Seller upon the terms and subject to the conditions herein (the "Purchase
Price").
If, at any time or from time to time, there is any stock dividend, stock
split, recapitalization, or other similar change or adjustment made with respect
to the outstanding securities of the Buyer, the Shares shall be subject to such
adjustment.
1.3 Payment of Purchase Price. The Buyer's Shares shall be issued pursuant
to Section 1.5.6.
1.4 Closing. The closing of the transaction contemplated herein (the
"Closing") will be at the office of Buyer on or before March 24, 2005, or at
such other place or at such other date and time as
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Seller and Buyer may mutually agree. Such date and time of Closing is herein
referred to as the "Closing Date."
1.5 Transactions at Closing.
1.5.1 Seller and Buyer shall execute and deliver the JV Termination
Agreement.
1.5.2 Xxxxxxxxxx Trust Company Ltd. (the "Trustee") shall deliver to
Seller a share transfer deed signed by Trustee affecting the transfer of 299
ordinary shares of the Company to the name of Seller in the form attached hereto
as Exhibit C1, as per the terms of the Trustee Instructions attached hereto as
Exhibit C2.
1.5.3 Seller shall deliver to Buyer a share transfer deed signed by
the Seller affecting the transfer of the Purchased Shares to the name of the
Buyer in the form attached hereto as Exhibit D.
1.5.4 Buyer, on behalf of the Company, and Xx. Xxxx Xxxxx ("Cario")
shall execute an Employment Agreement with the Company in the form attached
hereto as Exhibit E.
1.5.5 Seller shall deliver to Buyer an Assignment Agreement to the
Company signed by Cario, assigning to the Company all of Carios's rights and
interests in and to Patent No. _________ and all related intellectual property
rights, and releasing the Company and Buyer from all claims in relation to the
Company intellectual property rights, in the form attached hereto as Exhibit F.
1.5.6 Buyer shall issue Buyer's Shares to Seller and deliver or
cause to be delivered to Seller a share certificate representing such Shares.
1.5.7 Buyer shall deliver to Seller a certificate of an officer of
the Buyer certifying resolutions of its Board of Directors authorizing execution
of this Agreement and the execution, performance and delivery of all agreements,
documents and transactions contemplated hereby.
1.5.8 Seller shall deliver to Buyer a certificate of an officer of
the Seller certifying resolutions of its Board of Directors authorizing
execution of this Agreement and the execution, performance and delivery of all
agreements, documents and transactions contemplated hereby
2. Representations and Warranties of Seller. Seller represents and warrants
to Buyer as follows:
2.1 Authorization; Validity and Effect of Agreements. The execution and
delivery of this Agreement and all agreements and documents contemplated hereby
by the Seller, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by all requisite corporate action. This
Agreement constitutes, and all agreements and documents contemplated hereby when
executed and delivered pursuant hereto will constitute, the valid and legally
binding obligations of the Seller enforceable in accordance with their terms.
2.2 Title to Purchased Shares. The Purchased Shares are duly authorized,
validly issued, fully paid and nonassessable and are owned by Seller free and
clear of all liens, encumbrances, charges, assessments and adverse claims. The
Purchased Shares are subject to no restrictions with respect to transferability
to Buyer in accordance with the terms of this Agreement. Upon transfer of the
Purchased Shares by Seller, Buyer will, as a result, receive good and marketable
title to all of the Purchased Shares, free and clear of all security interests,
liens, encumbrances, charges, assessments, restrictions and adverse claims.
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2.3 No Other Rights or Claims. Upon transfer of the Purchased Shares by
Seller, Seller will have no further rights with respect to the Company or any
claims against the Company except for the right to enforce the terms and
conditions of this Agreement. Upon the transfer of the Purchased Shares by
Seller, Seller hereby releases the Buyer and its, directors, officer, agents and
employees from all claims of any kind whatsoever that in any way relate directly
or indirectly to the Company, including any claims for the distribution of
capital accounts or profits.
2.4 Securities Act Matters.
2.4.1 The Seller acknowledges and agrees that the Shares have not been
registered under the U.S. Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder (collectively,
the "Securities Act") or under the securities laws of any state in the United
States, in reliance upon certain exemptive provisions of such statutes. The
Seller further recognizes and acknowledges that, because the said Shares have
not been registered, they may only be resold, assigned, transferred, pledged or
otherwise disposed of pursuant to an effective registration statement under the
Securities Act, or pursuant to a valid exemption from such registration
requirements. The Seller recognizes and acknowledges that Rule 144 promulgated
under the Securities Act ("Rule 144") (which facilitates routine sales of
securities in accordance with the terms and conditions of that Rule, including a
holding period requirement) is not now available for resale of the Shares, and
the Seller recognizes and acknowledges that, in the absence of the availability
of Rule 144, a sale pursuant to a claim of exemption from registration under the
Securities Act would require compliance with some other exemption under the
Securities Act, none of which are currently available.
2.4.2 The Seller further acknowledges and agrees as follows:
(i) The Seller understands that an investment in the Shares involves
a high degree of risk.
(ii) The Seller is acquiring the Shares solely for the Seller's
account and not with a present view toward resale or other distribution thereof,
though the Seller shall be permitted to dispose of the Shares in any lawful way
including the distribution of the Shares as a dividend to its shareholders, if
permitted under Section 6.3 of this Agreement.
(iii) The Buyer has made available to the Seller the opportunity to
ask questions of and receive complete and correct answers from representatives
of the Buyer concerning the business and financial condition of the Buyer and to
obtain any additional information relating thereto, all questions have been
answered to the Seller's satisfaction and the Seller has obtained such
information relating to the Buyer as deemed necessary to make an investment
decision regarding the Shares. The Seller has reviewed the Buyer's filings with
the U.S. Securities and Exchange Commission available at xxx.xxx.xxx.
(iv) The Seller understands that the Seller must bear the economic
risk of its investment in the Shares for an indefinite period of time.
(v) All aspects of the transactions contemplated by this Agreement
and all discussions related thereto took place in Israel.
(vi) The Seller has not been formed by a U.S. person principally for
the purpose of investing in securities not registered under the Securities Act.
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3. Representations and Warranties of Buyer. Buyer represents and warrants to
Seller as follows:
3.1 Authorization; Validity and Effect of Agreements. The execution and
delivery of this Agreement and all agreements and documents contemplated hereby
by Buyer, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by all requisite corporate action. This Agreement
constitutes, and all agreements and documents contemplated hereby when executed
and delivered pursuant hereto will constitute, the valid and legally binding
obligations of Buyer enforceable in accordance with their terms.
3.2 The execution, delivery and performance by it of this Agreement will
at all times comply with all applicable laws and regulations including those of
applicable regulatory and self-regulatory organizations
3.3 The Buyer's Shares, when issued at the Closing, will be validly
issued, fully paid, non-assessable, free and clear of any leans, encumbrances or
third party rights.
3.4 The authorized capital stock of the Buyer and the shares thereof
currently issued and outstanding are as set out in Exhibit H hereto. All of the
Buyer's outstanding shares have been duly and validly authorized.
3.5 Based on Seller's representation hereof, the offer and/or issuance of
the Shares to the Seller comply with all Federal securities Laws and no holder
of shares of Buyer has a right of recession or claim against the Buyer in this
respect.
3.6 The Buyer's shares of Common Stock are registered pursuant to section
12 (g) to the Securities Exchange Act of 1934 ("Securities Exchange Act") and
are traded on the OTC Bulletin Board market and the Buyer is not aware of any
reason or attempt for the delisting of the Buyer shares. The Buyer has timely
filed all report, schedules, forms, statements and other documents required to
be filed by it with the Securities and Exchange Commission pursuant to the
reporting requirements of the Exchange Act (hereinbefore referred to as
"Commission Documents") and if so failed to file such Commission Documents, the
failure shall not cause a material adverse effect upon the condition (financial
or otherwise), earnings, business or business prospects, properties or
operations of the Buyer and its subsidiaries (taken as a whole). The Commission
Documents do not contain any untrue or misleading statement of a material fact.
3.7 Since the last filing of the Commission Documents, to the Buyer's
knowledge, there has been no material adverse effect to the Buyer or its
business.
4. Registration of Shares. The Seller hereby declares its intent to sell the
Shares pursuant to the exclusions as per Rule 144 to the Act, and subject to the
required holding period. The Buyer undertakes to assist the Seller as shall be
required in order to facilitate the sale of the Shares by the Seller under Rule
144. Without limiting the generality of the above, the Buyer undertakes as
follows:
(a) Subject to compliance with the requirements of Rule 144, when the
Seller wishes to sell Shares, to provide the transfer agent of the Buyer, within
3 business days upon demand by the Seller, of an opinion or opinions, as the
case may be, of the Buyer counsel, consenting to the removal of the legend set
out in section 6.3 below from the Shares, and other issues which may be required
in order to facilitate the sale of the Shares to the public.
(b) The Buyer shall use its best efforts to maintain adequate current
information of the Buyer and fully comply with all Securities Exchange Act
reporting requirements in order to render Rule 144 exemption available for the
sale of the Shares.
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5. Conditions of Closing.
5.1 Buyer's Conditions of Closing. The obligation of Buyer to purchase and
pay for the Purchased Shares shall be subject to and conditioned upon the
satisfaction (or waiver by Buyer) at the Closing of each of the following
conditions:
(A) All representations and warranties of the Seller contained in
this Agreement shall be true and correct at and as of the Closing Date.
(B) Seller shall have delivered to Buyer certificates and other
instruments representing the Purchased Shares, together with all other documents
necessary or appropriate to validly transfer the Purchased Shares to Buyer free
and clear of all security interests, liens, encumbrances and adverse claims.
(C) Seller shall have delivered to Buyer a certificate of an officer
of the Seller certifying resolutions of its Board of Directors authorizing
execution of this Agreement and the execution, performance and delivery of all
agreements, documents and transactions contemplated hereby:
5.2 Seller's Conditions of Closing. The obligation of Seller to sell the
Company Shares shall be subject to and conditioned upon the satisfaction (or
waiver by Seller) at the Closing of each of the following conditions:
(A) All representations and warranties of Buyer contained in this
Agreement shall be true and correct at and as of the Closing Date.
(B) Buyer shall have effected payment of the Purchase Price in
accordance with Section 1.3 of this Agreement by delivering to Seller
certificates and other instruments representing Buyer's Shares.
(C) Buyer shall have delivered to Seller a certificate of an officer
of the Buyer certifying resolutions of its Board of Directors authorizing
execution of this Agreement and the execution, performance and delivery of all
agreements, documents and transactions contemplated hereby:
6. Affirmative Covenants.
6.1 Non-Competition. Seller will undertake, and will cause the current
individual and beneficial shareholders of Seller to undertake not to, directly
or indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director or in any other individual or
representative capacity, engage or participate or invest in, or become employed
by or render service or advice to, any business that is in direct competition
with the business of the Company for a period of three years from the date of
this Agreement, except upon express written consent of Company. For avoidance of
doubt and for the purposes of this agreement, direct competition shall be
considered as all SMSTV and/or Mobile Messaging TV applications incorporating
the use of mobile/handheld and/or linear telephones in the creation and
production of Enhanced and/or single-screen TV applications for broadcast TV as
well as any interactive game technology.
6.2 Non-Solicitation. Seller will undertake and will cause the current
individual and beneficial shareholders of Seller to undertake not to, for a
period of three years from the date of this Agreement, directly or indirectly:
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6.2.1 Influence or attempt to influence customers or suppliers of
Company, or any of its subsidiaries or affiliates, to divert their business to
any competitor of Company, and
6.2.2 solicit or recruit any employee of Company for the purpose of
being employed by him or by a competitor of Company and that he will not convey
any confidential information about other employees of Company to any other
person.
6.3 Transfer Restrictions. Seller undertakes and agrees that, Seller will
retain its entire interest in, and will not dispose or agree to dispose of any
interest in the Shares, unless pursuant to an effective registration statement
under the Securities Act covering the shares, or pursuant to a valid exemption
from such registration requirements. In addition, Seller agrees not to engage,
directly or indirectly, in any hedging transaction with respect to the Shares.
Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Buyer's Shares in contravention of the terms set out in this Agreement is void.
Seller agrees to the imprinting, so long as is required by applicable law
and the terms of this Agreement, of legends on the Shares in the following form:
THESE SHARES HAVE NOT BEEN REGISTERED WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN THE UNITED
STATES IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.
Seller hereby acknowledges that the Buyer's Shares may only be disposed of
in compliance with U.S. state and federal securities laws. In connection with
any transfer of Buyer's Shares, Buyer may require the transferor thereof to
provide to Buyer an opinion of counsel selected by the transferor and reasonably
acceptable to Buyer, the form and substance of such opinion shall be reasonably
satisfactory to Buyer, to the effect that such transfer does not require
registration of such transferred shares under the U.S. Securities Act of 1933,
as amended.
6.4 Taxes and Expenses.
6.4.1 Seller hereby covenants and agrees to assume and pay all taxes
imposed on Seller arising from or relating to the transactions as contemplated
by this Agreement. Except as otherwise specifically provided for in this
Agreement, Seller shall be responsible for and shall pay all costs, liabilities
and other obligations incurred by Seller in connection with the performance of
and compliance with all transactions, agreements and conditions contained in
this Agreement to be performed or complied with by Seller, including legal and
accounting fees. In no event shall any of such taxes, costs, liabilities or
other obligations be paid by or incurred on behalf of the Buyer or the Company.
6.4.2 Except as otherwise specifically provided for in this
Agreement, Buyer will assume and pay all costs, liabilities and other
obligations incurred by Buyer and/or the Company in
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connection with the performance of and compliance with all transactions,
agreements and conditions contained in this Agreement to be performed or
complied with by Buyer, including legal and accounting fees.
7. Miscellaneous.
7.1 Notice. Any notice required or permitted hereunder shall be in writing
and shall be sufficiently given if personally delivered or mailed by certified
or registered mail, return receipt requested, addressed as follows:
If to Buyer:
If to Seller: Xxxx Xxxxxx, 7 Xxxxxxxx Xxxxx Xx. Xxxxx Xxx,
Xxxxxx 00000, fax no. 000-0 0000000
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so personally
delivered or mailed.
7.2 Binding Effect; Benefits. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
successors, executors, administrators and assigns. Neither this Agreement nor
any of the parties' rights hereunder shall be assignable by any party hereto
without the prior written consent of the other parties hereto.
7.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Israel exclusive of the conflict of law
provisions thereof.
7.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
7.5 Incorporation of Exhibits and Schedules. All Exhibits and Schedules
attached hereto are by this reference incorporated herein and made a part hereof
for all purposes as if fully set forth herein.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first above
written.
SELLER:
NetFun Ltd.
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
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Title Director
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BUYER:
Zone4Play Inc.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
-------------------------
Title CEO
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EXHIBITS
The following exhibits have been omitted and will be supplementally furnished to
the Securities and Exchange Commission upon request:
Exhibit A - Joint Venture Agreement
Exhibit B - JV Termination Agreement
Exhibit C1 - share transfer deed signed by Trustee
Exhibit C2 - Trustee Instructions
Exhibit D - share transfer deed signed by the Seller
Exhibit E -Employment Agreement
Exhibit F - Assignment Agreement
Exhibit G - Intentionally Deleted
Exhibit H - The issued and outstanding authorized capital stock of the Buyer
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