EXHIBIT 2.1
JOINT VENTURE AND
STOCK PURCHASE AGREEMENT
This Joint Venture and Stock Purchase Agreement (this "Agreement") is
entered into as of December 6, 1999 (the "Effective Date") between Interactive
Network Inc, a California corporation ("IN") and Two Way TV Ltd., a corporation
organized under the laws of England and Wales ("TW") (IN and TW are hereinafter
collectively referred to as "Purchasers" and each individually as a
"Purchaser").
RECITALS
A. IN has been, among other things, in the business of developing,
marketing and selling certain software and hardware products for interactive
television systems and other telecommunications uses, and has developed valuable
intellectual property related to such products and services.
B. TW is, among other things, in the business of designing,
developing and licensing certain technology useful for interactive television
and other telecommunications applications, and has developed valuable
intellectual property related to such technology.
C. Subject to the conditions set forth herein, IN and TW have agreed
to establish a Delaware corporation (the "Company") to develop, market and
supply digital (as well as analog) interactive and related services, products
and technology in the Territory (as defined in the Joint Venture License
Agreement in the form attached hereto as Exhibit A among the Company, IN and TW
(the "Joint Venture License Agreement")).
D. Subject to the conditions set forth herein, IN and TW have agreed
to enter into a Stockholders Agreement with the Company in the form attached
hereto as Exhibit B (the "Stockholders Agreement"), an Investor Rights Agreement
with the Company in the form attached hereto as Exhibit C (the "Investor Rights
Agreement" and, together with this Agreement and the Stockholders Agreement, the
"Corporate Documents"), and the Joint Venture License Agreement to establish and
govern the operations of the Company. Subject to the conditions set forth
herein, IN and TW also have agreed to enter into a Termination and License
Agreement in the form attached hereto as Exhibit D (the "Termination and License
Agreement") with respect to the license of certain of IN's patents directly to
TW for use outside of the Territory described above.
Now, therefore, the parties hereto agree to the following:
1. PURCHASE OF SHARES. On the Closing Date (as defined in Section 6)
------------------
and subject to the terms and conditions of this Agreement, each Purchaser shall
purchase from the Company, and the Purchasers shall cause the Company to sell to
each Purchaser, 2,500,000 shares of the Company's common stock (the "Shares") at
a purchase price of $500,000 (the
"Purchase Price") or $0.20 per Share. Upon its receipt of the entire Purchase
Price, the Purchasers shall cause the Company to issue a duly executed stock
certificate evidencing the Shares registered in each Purchaser's name in
accordance with Section 14.
2. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER. Each Purchaser
------------------------------------------------
represents and warrants that:
(a) Organization. Purchaser is a corporation duly
------------
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, it has the corporate power and is authorized
under its charter documents to carry on its business as now conducted, and it is
qualified to transact business and is in good standing in its jurisdiction of
incorporation.
(b) Authorizations. Purchaser has performed all corporate
--------------
actions and received all corporate authorizations necessary to execute and
deliver each of the Corporate Documents and (subject to Section 6(i)) to perform
its obligations thereunder and each of the Corporate Documents is, or when
executed and delivered shall be, valid, binding and enforceable against it
(subject to applicable principles of equity and bankruptcy and insolvency laws).
(c) Governmental Licenses. Purchaser has the power and
---------------------
authority and all material governmental licenses, authorizations, consents and
approvals to be obtained within that jurisdiction of incorporation to own its
assets, carry on its business and to execute, deliver, and perform its
obligations under the Corporate Documents (but only to the extent that failure
to do so would not have a material adverse effect on the Company's business).
(d) Third Parties. Except as described in Section 6(i) or
-------------
as may be required (with respect to notices required to be made after the
Effective Date, which notices shall be filed in a timely manner) by the
Securities and Exchange Commission, the National Association of Securities
Dealers or NASDAQ, there are no (A) non-governmental third parties or (B)
governmental or regulatory entities in the United States who are entitled to any
notice of the transaction, licenses and services contemplated hereunder or whose
consent is required to be obtained by Purchaser for the consummation of the
transaction contemplated hereunder.
(e) No Claims. To the best of Purchaser's knowledge, (a) no
---------
claims have been made in respect of the Corporate Documents and no demands of
any third party have been made pertaining to them, and (b) no proceedings have
been instituted or are pending or threatened that challenge the rights of
Purchaser in respect thereof.
3. INDEMNIFICATION.
---------------
(a) TW Obligation. TW shall defend, indemnify and hold
-------------
harmless the Company, IN and their officers, shareholders, and employees from
and against all costs, expenses and losses (including reasonable attorneys' fees
and costs) incurred through claims of any third parties against the Company or
IN based on a breach by TW of any representation or warranty made in the
Corporate Documents.
(b) IN Obligation. IN shall defend, indemnify and hold
-------------
harmless the Company and TW and their officers, shareholders, and employees from
and against all costs,
2
expenses and losses (including reasonable attorneys' fees and costs) incurred
through claims of third parties against the Company or TW based on a breach by
IN of any representation or warranty made in the Corporate Documents.
(c) Condition to Obligations. The indemnification
------------------------
obligations herein are contingent upon (i) the indemnified Party ("Indemnified
Party") giving prompt written notice to the Indemnifying Party(s) ("Indemnifying
Party") of any such claim, (ii) the Indemnified Party allowing the Indemnifying
Party(s) to control the defense and settlement of any such claim, and (iii) the
Indemnified Party fully assisting, at the Indemnifying Party's (or Parties')
expense, in the defense; provided, however, that without relieving the
-------- -------
Indemnifying Party of its obligations hereunder or impairing the Indemnifying
Party's right to control the defense or settlement thereof, the Indemnified
Party may elect to participate through separate counsel in the defense of any
such claim, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (a) the employment of counsel by such Indemnified
Party has been authorized in writing by the Indemnifying Party, (b) the
Indemnified Party shall have reasonably concluded that there exists a material
conflict of interest between the Indemnifying Party and such Indemnified Party
in the conduct of the defense of such claim (in which case the Indemnifying
Party shall not have the right to control the defense or settlement of such
claim on behalf of such Indemnified Party) or (c) the Indemnifying Party shall
not have employed counsel to assume the defense of such claim within a
reasonable time after notice of the commencement thereof. In each of such cases
the reasonable fees and expenses of counsel shall be at the expense of the
Indemnifying Party.
(d) Survival. Notwithstanding any other provision of this
--------
Agreement, the provisions of this Section 3 are intended to and shall survive
termination of this Agreement so as to cover all claims instituted within the
period set forth in the applicable statute of limitations.
4. RESTRICTIVE LEGENDS. Purchaser understands and agrees that the
-------------------
Company will place the legends set forth in the Stockholders Agreement, or
similar legends on any stock certificate(s) evidencing the Shares, together with
any other legends that may be required by state or federal securities laws, the
Company's Certificate of Incorporation or Bylaws, any other agreement between
Purchaser and the Company or any agreement between Purchaser and any third
party.
5. IN SHAREHOLDER APPROVAL COVENANTS. Each of TW and IN acknowledge
---------------------------------
and agree that the non-exclusive licenses to be granted by each of TW and IN
pursuant to the Joint Venture License Agreement shall each become an exclusive
license, pursuant to Section 2 of the Joint Venture License Agreement, upon the
approval by the shareholders of IN of such exclusivity (the "Shareholder
Approval"). In connection therewith, IN agrees and covenants that:
(a) IN, its affiliates and their respective officers,
directors, employees, representatives and agents shall immediately cease any
discussions or negotiations with any parties with respect to any Third Party
Action (defined below). Neither IN nor any of its affiliates shall, nor shall IN
authorize or permit any of its or their respective officers, directors,
employees, representatives or agents to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with or provide
any non-public information to any person or
3
group (other than TW or any designees of TW) concerning any Third Party Action;
provided, however, that nothing herein will prevent the IN board of directors
(the "IN Board") from taking and disclosing to IN's shareholders a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), with regard to any tender or
exchange offer. IN shall promptly notify TW in the event it receives any
proposal or inquiry concerning a Third Party Action, including the terms and
conditions thereof and the identity of the party submitting such proposal; and
shall advise TW from time to time of the status and any material developments
concerning the same.
(b) The IN Board shall recommend the Shareholder Approval to the
IN shareholders. Except as set forth in this Section 5(b), the IN Board shall
not withdraw its recommendation of the Shareholder Approval or approve or
recommend, or cause IN to enter into any agreement with respect to, any Third
Party Action. Notwithstanding anything else herein, if the IN Board by a
majority vote determines in its good faith judgment, after consultation with and
based upon the advice of counsel reasonably acceptable to TW, that it is
required to do so in order to comply with its fiduciary duties, the IN Board may
withdraw its recommendation of the Shareholder Approval or approve or recommend
a Superior Proposal (defined below), but in each case only (i) after providing
reasonable written notice to TW (a "Notice of Superior Proposal"), advising TW
that the IN Board has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal and identifying the person making
such Superior Proposal; and (ii) if TW does not, within five (5) business days
of TW's receipt of the Notice of Superior Proposal, make an offer that the IN
Board by a majority vote determines in its good faith judgment to be at least as
favorable to IN's shareholders as such Superior Proposal; provided, however,
that IN shall not be entitled to consummate any agreement with respect to a
Superior Proposal unless and until the payments required pursuant to Section
5(d) are made. Any disclosure that the IN Board may be compelled to make with
respect to the receipt of a proposal for a Third Party Action or otherwise in
order to comply with its fiduciary duties or Rule 14d-9 or 14e-2 will not
constitute a violation of this Agreement provided that such disclosure states
that no action will be taken by the IN Board in violation of this Section 5(b).
(c) For the purposes of this Agreement, "Third Party Action"
means the occurrence of any of the following events: (i) the acquisition of IN
by merger or otherwise by any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than TW or any affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of any material
portion of the assets or equity interests of IN, except to the extent such
acquisition would not affect the terms of the Corporate Documents, the Joint
Venture License Agreement or the Termination and License Agreement; (iii) the
adoption by IN of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (iv) any other action of IN that would prevent the
licenses described in the first paragraph of this Section 5 from becoming
exclusive. For purposes of this Agreement, a "Superior Proposal" means any bona
fide proposal that, if consummated, would prevent the licenses described in the
first paragraph of this Section 5 from becoming exclusive and otherwise on terms
that the IN Board by a majority vote determines in its good faith judgment to be
more favorable to IN's shareholders than such licenses becoming exclusive.
4
(d) Without limiting any of the restrictions set forth in
this Section 5, in the event that IN consummates any agreement with respect to a
Third Party Action, then IN shall pay to TW a fee of $150,000, plus the
reasonable out-of-pocket expenses incurred by TW in connection with this
transaction (which expenses shall not exceed $100,000), within one (1) business
day of such consummation.
(e) IN shall prepare and distribute, as promptly as
practicable, a proxy statement in connection with the Shareholder Approval
described in this Section 5. IN shall consult with TW in connection with such
proxy statement and Shareholder Approval process, and shall allow TW to review
drafts of such proxy statement and reasonably participate in IN shareholder
presentations. IN shall consider in good faith any comments made by TW with
respect to proxy statement drafts. TW shall provide all information reasonably
requested by IN in connection with the preparation of any such proxy statement.
6. CONDITIONS TO CLOSING. The obligations of each Purchaser to
---------------------
purchase the Shares at the closing (the initial purchase of the Shares which
shall take place at the offices of Orrick, Herrington & Sutcliffe LLP, counsel
to TW, 400 Sansome Street, San Francisco, California 94111, at 9:00 a.m. on such
date occurring within three (3) business days of the satisfaction of the
condition set forth in Section 6(i) below or as otherwise mutually agreed upon
by the parties (the "Closing" or "Closing Date")) are subject to the fulfillment
to its satisfaction, on or prior to the Closing Date, of the following
conditions:
(a) Company Name. The Purchasers shall in good faith have
------------
agreed upon a name for the Company.
(b) Filing of the Certificate. The Company's Certificate of
-------------------------
Incorporation in the form attached hereto as Exhibit E shall have been filed
with the Secretary of State of Delaware.
(c) Organizational Minutes. The Board of Directors of the
----------------------
Company shall have adopted its organizational minutes in a form satisfactory to
the Purchasers.
(d) Bylaws. The Board of Directors of the Company shall
------
have adopted the Company's Bylaws in the form attached hereto as Exhibit F.
(e) Joint Venture License Agreement. The Company and the
-------------------------------
Purchasers shall have executed and delivered the Joint Venture License Agreement
in the form attached hereto as Exhibit A.
(f) Stockholders Agreement. The Company and the Purchasers
-----------------------
shall have executed and delivered the Stockholders Agreement in the form
attached hereto as Exhibit B.
(g) Investor Rights Agreement. The Company and the
-------------------------
Purchasers shall have executed and delivered the Investor Rights Agreement in
the form attached hereto as Exhibit C.
5
(h) Termination and License Agreement. The Purchasers shall
---------------------------------
have executed and delivered the Termination and License Agreement in the form
attached hereto as Exhibit D.
(i) Bankruptcy Court Approval. IN shall have received
-------------------------
bankruptcy court approval of a joint stipulation with regard to the Termination
and License Agreement in a form satisfactory to the Purchasers.
(j) Representations and Warranties. Each Purchaser shall
------------------------------
have delivered a certificate stating that (i) the representations and warranties
made by such Purchaser in Section 3 hereof are true and correct on the Closing
Date with the same force and effect as if they had been made on and as of that
date and (ii) the representations and warranties set forth on Exhibit G are true
and correct on the Closing Date.
IN and TW shall use their best efforts to effect the Closing, subject to the
conditions set forth herein, promptly upon the satisfaction of the condition set
forth in Section 6(i) above.
7. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and the
------------------------------------
transfer of the Shares will be subject to and conditioned upon compliance by the
Company and Purchaser with all applicable state and federal laws and regulations
and with all applicable requirements of any stock exchange or automated
quotation system on which the Company's common stock may be listed or quoted at
the time of such issuance or transfer.
8. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
----------------------
inure to the benefit of the successors and assigns of the Company and the
Purchaser's heirs, executors, administrators, successors and assigns.
9. GOVERNING LAW; SEVERABILITY. This Agreement will be governed by
---------------------------
and construed in accordance with the laws of the State of Delaware, excluding
that body of laws pertaining to conflict of laws. If any provision of this
Agreement is determined by a court of law to be illegal or unenforceable, then
such provision will be enforced to the maximum extent possible and the other
provisions will remain fully effective and enforceable.
10. NOTICES. Any notice required or permitted hereunder will be given
-------
in writing and will be deemed effectively given upon personal delivery, six (6)
days after deposit in the United States mail by certified or registered mail
(return receipt requested), one (1) business day after its deposit with any
return receipt express courier (prepaid), or one (1) business day after
transmission by telecopier, addressed to the other party at its address (or
facsimile number, in the case of transmission by telecopier) as shown below its
signature to this Agreement, or to such other address as such party may
designate in writing from time to time to the other party.
11. FURTHER INSTRUMENTS. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
12. HEADINGS. The captions and headings of this Agreement are
--------
included for ease of reference only and will be disregarded in interpreting or
construing this Agreement. All references herein to Sections will refer to
Sections of this Agreement.
6
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
and understanding of the parties with respect to the subject matter of this
Agreement, and supersedes all prior understandings and agreements, whether oral
or written, between the parties hereto with respect to the specific subject
matter hereof.
14. TITLE TO SHARES. The exact spelling of the name under which each
---------------
Purchaser will take title to the Shares is that name listed on the signature
page hereto. Each Purchaser desires to take title to the Shares as a
corporation.
15. PUBLIC ANNOUNCEMENT. The Purchasers may announce the existence of
-------------------
the Purchasers' relationship and this Agreement only at a time and in a form to
be mutually determined, except for any such disclosure required by law,
governmental authorities or stock exchanges.
7
IN WITNESS WHEREOF, each Purchaser has caused this Agreement to be
executed in duplicate, by its duly authorized representative, as of the
Effective Date.
Two Way TV Ltd.
By: /s/ Piers Wilson
------------------------------
Name: Piers Wilson
Title: Finance Director
Interactive Network, Inc.
By: /s/ Bruce W. Bauer
------------------------------
Name: Bruce W. Bauer
Title: President and Chief Executive Officer
8