Preview | Agreement of Merger |

Table Of Contents


			Page
SECTION 1. DESCRIPTION OF TRANSACTION			1
1.1 Merger of Merger Sub into the Company			1
1.2 Effect of the Merger			1
1.3 Closing; Effective Time			2
1.4 Articles of Association; Directors			2
1.5 Effect on Share Capital			2
1.6 Closing of the Company’s Transfer Books			3
1.7 Exchange of Certificates			3
1.8 Further Action			5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY			5
2.1 Subsidiaries; Due Organization; Qualification to do Business			6
2.2 Articles of Association and Memorandum of Association			6
2.3 Capitalization; Rights to Acquire Stock			6
2.4 SEC Filings; Financial Statements			8
2.5 Absence of Changes			10
2.6 Title to Assets			12
2.7 Loans; Merchants			12
2.8 Real Property; Equipment; Real Property Leases			13
2.9 Intellectual Property			13
2.10 Contracts			17
2.11 Liabilities			20
2.12 Compliance with Legal Requirements			21
2.13 Certain Business Practices			21
2.14 Governmental Authorizations			21
2.15 Tax Matters			22
2.16 Employee and Labor Matters; Benefit Plans			25
2.17 Environmental Matters			30
2.18 Insurance			31
2.19 Transactions with Affiliates			31
2.20 Legal Proceedings; Orders			31

Table Of Contents
(CONTINUED)


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2.21 Authority; Binding Nature of Agreement			32
2.22 Inapplicability of Anti-takeover Statutes			32
2.23 Vote Required			32
2.24 Non-Contravention; Consents			33
2.25 Fairness Opinion			34
2.26 Financial Advisor			34
2.27 Full Disclosure			34
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB			34
3.1 Due Organization; Etc.			34
3.2 Authority; Noncontravention			35
3.3 Binding Nature of Agreement			35
3.4 No Vote Required			35
3.5 Financing			35
3.6 Stock Ownership			35
3.7 Disclosure			35
SECTION 4. CERTAIN COVENANTS OF THE COMPANY			36
4.1 Access and Investigation			36
4.2 Operation of the Company’s Business			37
4.3 No Solicitation			41
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES			42
5.1 Proxy Statement			42
5.2 Merger Proposal; Company Shareholders’ Meeting			43
5.3 Israeli Regulatory Matters			45
5.4 Other Regulatory Approvals			46
5.5 Stock Options and Company ESPP			47
5.6 Employee Benefits			49
5.7 Indemnification of Officers and Directors			50
5.8 Additional Agreements			51
5.9 Disclosure			52

Table Of Contents
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5.10 Resignation of Directors			52
5.11 Internal Controls			52
5.12 Approval of Sole Shareholder of Merger Sub; Notification to Registrar of Companies			52
5.13 Tax Matters			53
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB			53
6.1 Accuracy of Representations			53
6.2 Performance of Covenants			54
6.3 Antitrust Approvals			54
6.4 Investment Center Approval			54
6.5 Shareholder Approval			54
6.6 Certificate			54
6.7 No Company Material Adverse Effect			54
6.8 No Restraints			54
6.9 No Governmental Litigation			55
6.10 Sarbanes-Oxley Certifications			55
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY			55
7.1 Accuracy of Representations			55
7.2 Performance of Covenants			56
7.3 Shareholder Approval			56
7.4 Certificate			56
7.5 Antitrust Approvals			56
7.6 No Restraints			56
SECTION 8. TERMINATION			56
8.1 Termination			56
8.2 Effect of Termination			59
8.3 Expenses; Termination Fees			59
SECTION 9. MISCELLANEOUS PROVISIONS			61

iii

AGREEMENT OF MERGER

This Agreement of Merger is made and entered into as of June 1, 2005, by and among eBay Inc., a Delaware corporation (“Parent”), Harbour Acquisition Ltd., an Israeli company under the control of Parent (“Merger Sub”), and Shopping.com Ltd., an Israeli company (the “Company”). Certain capitalized terms used in this Agreement are defined in Exhibit A.

Recitals

A. Parent, Merger Sub and the Company intend to effect a merger of Merger Sub with and into the Company in accordance with this Agreement and the applicable provisions of the Companies Law (the “Merger”). Upon consummation of the Merger, Merger Sub will cease to exist, and the Company will become an indirect wholly-owned subsidiary of Parent.

B. The respective boards of directors of Parent, Merger Sub and the Company have approved this Agreement, the Merger and the Contemplated Transactions.

C. In order to induce Parent to enter into this Agreement and cause the Merger to be consummated, concurrently with the execution and delivery of this Agreement, certain shareholders of the Company are executing Shareholder Undertakings (the “Shareholder Undertakings”) in favor of Parent and granting irrevocable proxies to a mutually-agreed-upon proxyholder, pursuant to which such shareholders are undertaking certain obligations and irrevocably directing the proxyholder to vote all securities of the Company beneficially owned by them in favor of the approval of this Agreement and the Merger.

Agreement

The parties to this Agreement, intending to be legally bound, agree as follows:

SECTION 1. Description of Transaction

1.1 Merger of Merger Sub into the Company. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined in Section 1.3), and in accordance with Section 314 through 327 of the Companies Law, Merger Sub (as the target company (Chevrat Ha ‘Ya’ad)) shall be merged with and into the Company (as the absorbing company (HaChevra Ha ‘Koletet)), and the separate existence of Merger Sub shall cease. The Company will continue as the surviving corporation in the Merger (the “Surviving Corporation”).

1.2 Effect of the Merger. The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the Companies Law. Pursuant to the Merger, the Surviving Corporation will succeed to and assume all of the rights, properties and obligations of Merger Sub and the Company in accordance with the Companies Law. Following the Merger, the Surviving Corporation shall: (a) be governed by the laws of the State of Israel; and (b) maintain a registered office in the State of Israel.

1.3 Closing; Effective Time. The closing of the Merger and the consummation of those transactions contemplated by this Agreement that are to be consummated at the time of the Merger (the “Closing”) shall take place at the offices of Cooley Godward LLP, 3175 Hanover Street, Palo Alto, California, on a date to be designated by Parent (the “Closing Date”), which shall be no later than the second business day after the satisfaction or waiver of the last to be satisfied or waived of the conditions set forth in Sections 6 and 7 (other than the conditions set forth in Sections 6.6 and 7.4, which by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions). The Merger shall become effective upon the issuance of the Certificate of Merger by the Companies Registrar in accordance with Section 323(5) of the Companies Law (the “Effective Time”).

1.4 Articles of Association; Directors. Unless otherwise determined by Parent prior to the Effective Time:

(a) the Articles of Association of the Surviving Corporation shall be the same as the Articles of Association of the Company in effect at the Effective Time until thereafter amended in accordance with the Companies Law and such Articles of Association; and

(b) the directors of the Surviving Corporation immediately after the Effective Time shall be the respective individuals who are directors of Merger Sub immediately prior to the Effective Time.

1.5 Effect on Share Capital.

(a) At the Effective Time, by virtue of, and simultaneously with, the Merger and without any further action on the part of Parent, Merger Sub, the Company or any shareholder of the Company:

(i) any Company Ordinary Shares held by the Company or any wholly owned Subsidiary of the Company (or held by the Company as dormant shares (Menayot Redumot)) immediately prior to the Effective Time shall be canceled and shall cease to exist, and no consideration shall

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			Page
9.1 Amendment			61
9.2 Extension; Waiver			61
9.3 No Survival of Representations and Warranties			62
9.4 Entire Agreement; Counterparts; Exchanges by Facsimile or Electronic Delivery			62
9.5 Applicable Law; Jurisdiction			62
9.6 Disclosure Schedule			63
9.7 Attorneys’ Fees			63
9.8 Assignability; No Third Party Rights			63
9.9 Notices			63
9.10 Cooperation			65
9.11 Severability			65
9.12 Construction			66