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EXHIBIT 2.2
ASSET ACQUISITION AGREEMENT
This Asset Acquisition Agreement (the "Agreement") is to be made
effective on October 26, 1999 (the "Effective Date") between Power Reserve,
Inc., a California corporation ("Seller"), certain shareholders of Seller set
forth on the signature pages hereto (the "Shareholders") and Xxxxxxx.xxx, Inc.,
a Delaware corporation ("Xxxxxxx.xxx") with respect to the following facts:
RECITALS
A. Seller is the registered owner of the Internet domains listed on
Exhibit A hereto (the "Domains").
B. Seller is also the beneficial owner, with the same registration
rights of certain trademark/service xxxx registrations and certain common law
trademark/service xxxx rights in the Domains (collectively "Trademarks") (listed
on Exhibit B hereto).
C. Seller owns the content and end user information (including e-mail
addresses) available at the Domains and also the content and end user
information (including e-mail addresses) available at the xxxxxxxx.xxx domains
(the "Content").
D. Seller has agreed to assign the Domains, Trademarks (and associated
goodwill) and Content, on the terms set forth below.
E. Seller intends to adopt a plan of reorganization under the
provisions of Section 368 of the Internal Revenue Code, as amended (the "Code").
AGREEMENT
1. Assignment. The Seller hereby assigns, transfers and conveys to
Xxxxxxx.xxx all right, title and interest (including but not limited to any and
all rights and interest under common law) in the Domains, the InterNic (or other
relevant body) registrations of the same, the Trademarks and the Content. Seller
further waives all claims it has to the Domains, Trademarks and Content and
agrees to cease all use of the Domains, Trademarks and Content.
2. Consideration. In consideration of the assignments set forth in
Section 1 hereof and Seller's representations, warranties and covenants made
hereunder, Xxxxxxx.xxx agrees to issue to Seller 332,500 duly authorized,
validly issued, fully paid and non-assessable shares of Xxxxxxx.xxx Common Stock
(appropriately adjusted for any stock split, dividend, combination or other
recapitalization) (the "Shares").
3. Liabilities. It is understood and agreed that Xxxxxxx.xxx will not
assume any direct or indirect debts, obligations or liabilities of the Seller of
any nature, whether absolute, accrued, contingent, liquidated or otherwise, and
whether due or to become due, asserted or unasserted, known or unknown. Xxxxxxx
Xxxxx and Xxxx Xxxxx (together the "Indemnifying
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Shareholders") jointly and severally, shall indemnify and hold harmless
Xxxxxxx.xxx and its transferees, successors and assigns for any liabilities,
contingent or otherwise, associated with the Domains, Trademarks and Content
(including but not limited to claims of trademark infringement) or otherwise
associated with the business of Seller for a period of five years from the
Closing; provided, however, that the amount, if any, to be paid by Indemnifying
Shareholders to Xxxxxxx.xxx under this Section 3 shall not exceed two million
six hundred thousand dollars ($2,600,000).
4. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place on October ___, 1999 at the offices of
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx and Xxxxxxxxx, LLP, 0000 Xxxxxxx xx
Xxxxx Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (or such other time or by
facsimile as the parties may agree).
5. Further Assurances. The Seller shall assist Xxxxxxx.xxx in every
proper way to evidence, record and perfect the assignments described in Section
1 above and to perfect, obtain, maintain, enforce, and defend the rights
assigned. For example, the Seller agrees that it will immediately apply for and
effect re-registration of the Domains and Trademarks in Xxxxxxx.xxx's name
according to InterNic's (or other relevant body's) current policy. Seller
intends to liquidate in accordance with Section 368 of the Code. Xxxxxxx.xxx
does not make any representation as to the applicability of Section 368 of the
Code.
6. Representations; Warranties. The Seller and each of the
Shareholders, jointly and severally, represent and warrant to Xxxxxxx.xxx that:
a. Seller is the sole owner (other than Xxxxxxx.xxx) of all
rights, title and interest in the Domains, Trademarks, Content and Contracts to
be transferred by Seller.
b. After the Closing, the Seller and Shareholders will
discontinue all further use of the Domains, Trademarks and Content.
c. Seller and Shareholders have full power and authority to
enter into this Agreement, and this Agreement constitutes a valid and legally
binding obligation of Seller and the Shareholders, enforceable in accordance
with its terms.
d. Neither the execution, delivery or performance of this
Agreement nor the consummation of the transactions contemplated thereby,
including without limitation the sale of the Domains, Trademarks and Content to
Xxxxxxx.xxx and Xxxxxxx.xxx's exercise of control over the Domains, Trademarks
and Content after Closing, will conflict with any material contract or result in
the creation of any lien, claim, security interest or encumbrance (collectively,
"Lien") on the Domains, Trademarks and Content pursuant to, or relieve any third
party of any obligation to the Seller or give any third party the right to
terminate or accelerate any obligation.
e. The Seller and the Shareholders acknowledge that
Xxxxxxx.xxx will not be responsible for any income, sales, use, excise or other
tax that arises out of or results from the sale of the Domains, Trademarks and
Content.
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f. The Seller and the Shareholders represent that there are
currently no pending, or to the knowledge of Seller and Shareholders, threatened
lawsuits, administrative proceedings or reviews, or formal or informal
complaints or investigations (including any regarding trademark infringement) by
any individual or other entity against or relating to the Seller or the
Shareholders, Domains, Trademarks and Content.
g. This Agreement is made with Seller and Shareholders in
reliance upon Seller's and Shareholders' representations to Xxxxxxx.xxx, which
by Seller's and Shareholders' execution of this Agreement Seller and
Shareholders hereby confirm, that the Shares to be received by Seller and
Shareholders will be acquired for investment for their own accounts, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and they each have no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Seller and each Shareholder further represent that, other than a
distribution to the Shareholders from Seller, Seller and Shareholders do not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any of the Shares.
h. Seller and Shareholders believe they have received all the
information they considers necessary or appropriate for deciding whether to
acquire the Shares. Seller and Shareholders further represent that they have had
an opportunity to ask questions and receive answers from Xxxxxxx.xxx regarding
the terms and conditions of the offering of the Shares and the business,
properties, prospects and financial condition of Xxxxxxx.xxx.
i. Seller and Shareholders acknowledge that they have each
relied on their own tax advisors for the advice regarding the tax consequences
of the transactions contemplated by this Agreement and has not received tax
advice with respect thereto from Xxxxxxx.xxx or any of its officers, employees,
or agents.
j. Seller and Shareholders acknowledge that they are each able
to fend for themselves, can bear the economic risk of the investment, and have
such knowledge and experience in financial, tax and business matters that they
are capable of evaluating the merits and risks of the assignments provided for
herein and the investment in the Shares. Seller also represents it has not been
organized for the purpose of acquiring the Shares.
k. Seller and Shareholders are each "accredited investors"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
l. Seller and each Shareholder understands that the Shares
being acquired are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from Xxxxxxx.xxx in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, such Seller and each Shareholder represents
that each is familiar with Securities and Exchange Commission Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Act.
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m. Without in any way limiting the representations set forth
above, Seller and Shareholders each further agree not to make any disposition of
all or any portion of the Shares unless and until the transferee has agreed in
writing for the benefit of the Company to be bound by this Section 6, provided
and to the extent this Section are then applicable, and:
(i) There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(ii) (A) Seller and Shareholders shall have notified
Xxxxxxx.xxx of the proposed disposition and shall have furnished Xxxxxxx.xxx
with a detailed statement of the circumstances surrounding the proposed
disposition, and (B) if reasonably requested by Xxxxxxx.xxx, Seller and
Shareholders shall have furnished Xxxxxxx.xxx with an opinion of counsel,
reasonably satisfactory to Xxxxxxx.xxx, that such disposition will not require
registration of such shares under the Act. It is agreed that Xxxxxxx.xxx will
not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
n. It is understood that the certificates evidencing the
Shares may bear one or all of the following legends:
"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."
o. The Seller and shareholder Xxxxxxx Xxxxx each represent
that for a period of two (2) years from the date of this Agreement, Seller and
Xx. Xxxxx will not without the prior written consent of the Chief Executive
Officer of Xxxxxxx.xxx, which shall not unreasonably be withheld (except as an
employee of Xxxxxxx.xxx or a subsidiary of Xxxxxxx.xxx), directly or indirectly,
(i) (A) Participate or engage in the design,
development, manufacture, production, marketing, sale or servicing of any
product related to the Domains, Trademarks and Content or (B) provide any
service for any entity whose primary business is to develop or provide products
and/or services similar to the Domains, Trademarks and Content (the "Business")
in the international internet business (the "Geographic Scope of Employee's
Business") or
(ii) Permit the name of Seller or Xx. Xxxxx to be
used in connection with a competitive Business.
With respect to the representations and warranties contained in Section 6(a),
(d), (e) and (f), Messrs. Xxxxxx and Xxxxx make such representations to their
knowledge, and without any independent investigation or verification.
7. Representations; Warranties. Xxxxxxx.xxx represents, warrants and
covenants to the Seller that:
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a. Xxxxxxx.xxx is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Ashford
Buying Company is a wholly-owned subsidiary of Xxxxxxx.xxx.
b. Xxxxxxx.xxx has full power and authority to enter into this
Agreement, and this Agreement constitutes a valid and legally binding obligation
of Xxxxxxx.xxx, enforceable in accordance with its terms.
c. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate any
provision of the certificate of incorporation or bylaws of Xxxxxxx.xxx, or any
provision of any material agreement or instrument to which Xxxxxxx.xxx is a
party.
d. Prior to the first anniversary of the Closing, Xxxxxxx.xxx
will file an additional listing application with Nasdaq National Market to list
the Shares. In addition, Xxxxxxx.xxx will take all action required to provide
Current Public Information as defined in Rule 144(c).
8. "Market Stand-Off" Agreement. Seller hereby agrees that it will not,
without the prior written consent of the managing underwriter, during the period
commencing on the date of the final prospectus relating to Xxxxxxx.xxx's initial
public offering and ending on the date specified by the Company and the managing
underwriter (such period not to exceed one hundred eighty (l80) days) (i) lend,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock of Xxxxxxx.xxx or any securities convertible into or
exercisable or exchangeable for Common Stock (whether such shares or any such
securities are then owned by Seller or are thereafter acquired), or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
underwriters in connection with the Company's initial public offering are
intended third party beneficiaries of this Section 8 and shall have the right,
power and authority to enforce the provisions hereof as though they were a party
hereto.
9. Miscellaneous. This Agreement shall be construed pursuant to the
laws of the state of Texas without regard to conflicts of laws provisions
thereof. Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, shall be settled in Xxxxxx County, Texas, by arbitration
in accordance with the National Rules for the American Arbitration Association.
The decision of the arbitrator shall be final and binding on the parties, and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The parties hereby agree that the arbitrator shall
be empowered to enter an equitable decree mandating specific enforcement of the
terms of this Agreement. Employee hereby consents to personal jurisdiction of
the state and federal courts located in the State of Texas for any action or
proceeding arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.
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10. Liquidated Damages. The parties agree that the actual damages that
might be sustained by Xxxxxxx.xxx by reason of the breach by Xxxxxxx Xxxxx or
Xxxx Xxxxx of Section 6o are uncertain and would be difficult to ascertain and
that the sum of $3,750,000 would be reasonable compensation for such breach.
Xxxxxxx Xxxxx and Xxxx Xxxxx hereby promise to pay, and Xxxxxxx.xxx hereby
agrees to accept, such sum as liquidated damages, and not as a penalty, in the
event of such breach. The parties agree that the damages received by Xxxxxxx.xxx
pursuant to this section and pursuant to Section 10 of the Asset Acquisition
Agreement of even date herewith between Xxxxxxx.xxx and Xxxxxxx Xxxxx shall not,
in the aggregate, exceed $3,750,000.
11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties here to have executed this Agreement
effective as of the date first written above.
POWER RESERVE, INC.
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title:
SHAREHOLDERS
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
/s/ Xxxx Xxxxx
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Xxxx Xxxxx
XXXXXXX.XXX, INC.
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: President and Chief Operating Officer
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EXHIBIT A
LIST OF DOMAINS
Xxxxxxxx.xxx
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EXHIBIT B
LIST OF TRADEMARK/SERVICE XXXX REGISTRATIONS
TZ
(COMMON LAW)
Timezone
Xxxxxxxx.xxx
