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Title: |
Strategic Cooperation Agreement |
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Date: |
2001 |
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$42 |
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ID: |
#2160180 |
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STRATEGIC COOPERATION AGREEMENT
THIS STRATEGIC COOPERATION AGREEMENT (the "Agreement"), dated
as of this 8th day of June 2000, is made and entered into by and among eLOT,
Inc., a Virginia corporation ("Parent"), eLOTTONET Inc., a Delaware corporation
("Buyer"), and Plasmanet, Inc. a Delaware corporation ("Seller").
RECITALS
WHEREAS, Seller owns and operates Internet website entitled
"freelotto.com" (together with any other websites owned, sponsored or controlled
by Seller during the term of this Agreement relating to the Free Lottery
Business (as defined below), the "Seller Websites") and has developed a business
in connection therewith of providing users with free sweepstakes in lottery
format using advertising banners and email (the "Free Lottery Business");
WHEREAS, Parent, Buyer and Seller are parties to an Asset
Purchase Agreement, dated as of May 31, 2000 (the "Asset Purchase Agreement"),
pursuant to which Buyer has agreed to purchase, and Seller has agreed to sell,
the Internet website entitled "lottonet.com", including the URL "lottotrack.com"
(hereinafter referred to as the "Buyer Websites"), and substantially all of the
other assets of Seller related to the business conducted in connection with the
Buyer Websites, including without limitation, providing pay-to-play lottery
information and email results notification services with respect thereto (the
"Pay-to-Play Lottery Business"); and
WHEREAS, the parties desire to cooperate for the purpose of
obtaining Unique Users for Buyer and otherwise generating revenues for Buyer
from advertising and user fees.
NOW, THEREFORE, in consideration of the foregoing premises,
and the agreements and representations contained herein, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have
the following meanings:
{PAGE} 2
-2-
"Agreement" has the meaning specified in the first paragraph
of this Agreement.
"Asset Purchase Agreement" has the meaning specified in the
Recitals to this Agreement.
"Average Parent Stock Price" means the average (rounded to the
nearest cent) of the volume weighted averages (rounded to the nearest cent) of
the trading prices of the Parent Common Stock on the principal exchange or
trading market of the Parent Common Stock, as reported by Bloomberg Financial
Markets (or such other source as Parent and Seller shall agree) for the thirty
(30) trading days ending on the trading day immediately preceding the applicable
Measurement Date with respect to which the calculation in Section 2.2(c)(ii)(y)
or Section 2.2(d)(ii)(y), as the case may be, is made.
"Buyer" has the meaning specified in the first paragraph of
this Agreement.
"Buyer Websites" has the meaning specified in the Recitals to
this Agreement.
"Competing Companies" means: The Lottery Channel, Inc.
(Lottery.Com, Inc. if potential merger is successful); GTECH Holding
Corporation; Autotote Corporation, Walker Digital, Inc.
"Confidential Information" has the meaning specified in
Section 5.1.
"Disclosing Party" has the meaning specified in Section 5.1.
"Dispose" means to offer, pledge, sell, contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose.
"Event" has the meaning specified in Section 6.1(c).
"Free Lottery Business" has the meaning specified in the
Recitals to this Agreement.
"Indemnified Party" has the meaning specified in Section 7.2.
"Indemnifying Party" has the meaning specified in Section 7.2.
"Initial Shares" has the meaning specified in Section 2.1.
"Maximum Quarterly Unique User Amount" has the meaning set
forth in Section 2.2(e).
{PAGE} 3
-3-
"Measurement Date" means each March 31, June 30, September 30
and December 31, commencing on the first such date occurring after the date
hereof.
"Net Advertising Revenues" for any period means the gross
advertising revenues of Buyer for such period attributable to Unique Users
delivered by Seller to, and retained by, Buyer, less commission expense of Buyer
for such period attributable to such revenues, in each case determined
reasonably and in good faith by Parent.
"Opt-in Program" has the meaning specified in Section 3.1.
"Parent" has the meaning specified in the first paragraph of
this Agreement.
"Parent Common Stock" means the common stock, par value $0.01
per share, of Parent.
"Pay-to-Play Lottery Business" has the meaning specified in
the Recitals to this Agreement.
"Previous High Number of Unique Users" means, with respect to
each Measurement Date after the Measurement Date with respect to which
Subsequent Shares were first issued, subject to Section 2.2(e), the greatest
number of Unique Users provided by Seller and retained by Buyer as of any
Measurement Date prior to the Measurement Date in question.
"Promissory Note" means a non-interest bearing unsecured
promissory note of Buyer maturing three (3) years from the date of issuance (and
which may be repaid in whole or in part prior to maturity at any time); provided
that Buyer shall be obligated to redeem the Promissory Note on the fifth (5th)
business day following any day (the "Trigger Date") on which the Average Parent
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