EXHIBIT 10.4
BARTERONE MEMBERSHIP INTEREST SALE AGREEMENT
This BarterOne Membership Interest Sale Agreement ("Agreement") dated
and effective as of DECEMBER 16, 1998 (the "Effective Date"), by and between
Energy Trading Company, a PECO Energy Company subsidiary and a Delaware
corporation with offices at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000 ("ETCO"
or "Seller") and World Wide Web NetworX Corporation, a Delaware corporation with
offices at 0000 Xxxxxx Xxx, Xxxxx 000, Xx. Xxxxxx, XX 00000 ("WWWX" or
"Purchaser") (collectively, the "Parties").
BACKGROUND
A. WHEREAS, Seller is a principal member and majority owner of BarterOne, LLC
("BarterOne") a Delaware limited liability company established with Global Trade
Group ("GTG") which owns, among other things, the rights to a worldwide,
perpetual license to the ORBIT System technology; and
B. WHEREAS, WWWX is a developer of Internet related products and services and is
represented by Xxxxxx Xxxx ("Xxxx") the majority shareholder in WWWX; and
C. WHEREAS Xxxx is also a current employee of PECO Energy Company ("PECO
Energy") assigned to manage BarterOne's operations and is currently an actual or
potential Member of BarterOne depending on the interpretation or occurrence of
certain events; and
D. WHEREAS the Parties desire that WWWX purchase the Seller's 51% membership
interest in BarterOne and satisfy any and all obligations Seller may have to
Xxxx Xxxxxx with respect to this transaction; and
E. WHEREAS this transaction has been approved by GTG as evidenced by GTG's
consent attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties intending to be legally bound, agree as
follows:
1. PURCHASE AND SALE. Subject to the terms and conditions of this Agreement, on
the Closing Date, as defined herein, Seller will sell to WWWX and WWWX will
purchase all of Seller's 51% Member Ownership Interest in BarterOne ("ETCO's
Interest").
2. PAYMENTS. In consideration for the Member Ownership Interest, WWWX (A) shall
satisfy any obligations Seller may have to Xxxx Xxxxxx resulting from his sale
of ETCO's Interest in BarterOne, and provide to Seller upon Closing Xxxxxx'x
consent and waiver of all future claims against Seller, and (B) shall pay Seller
the following payments:
2.1. NONREFUNDABLE DEPOSITS PAID BY XXXX:
2.1.1 $250,000.00 payable by certified or cashier's check upon
execution hereof; and
2.1.2 Shares of WorldWide Web Networx Corporation ("WWWX")
common stock delivered upon the execution hereof equal to
1.2 times $250,000.00 as of the quoted price per share
(the average between the bid and ask) at the close of
trading the day prior to execution of this Agreement.
2.2 AT CLOSING:
2.2.1 WWWX shall pay to ETCO $230,000.00 payable by certified
or cashier's check; and a certain unencumbered equity
interest in NEWCO, a company owning the undivided assets
of BarterOne, depending on the amount of third party
funding received by NEWCO in exchange for NEWCO ownership,
as described in 2.2.2. Funding is defined as any of the
following individual or combined sources of capital:
equity, or
INITIALS [RAS]
[RDK]
funding guaranteed to be dispersed to NEWCO over a period
not to exceed three years. Funding guarantees will be
acceptable only (A) if supported with an irrevolcable
letter of credit equal to the amount of the funding
guaranteed, or (B) if supported in the form of an
irrevocable corporate guarantee of a corporation whose net
worth, as certified by an independent auditor, is equal to
at least ten (10) times the amount of the corporate
guarantee. ETCO's ownership interest shall be reduced as
set forth below as and when NEWCO receives funding.
2.2.2 ETCO shall be given the following ownership in NEWCO:
(i) if $ 0.00 funding, ETCO receives 33.33% of
NEWCO;
(ii) if $1,000,000 in funding, ETCO receives12.5% of
NEWCO;
(iii) if $2,000,000 in funding, ETCO receives10.0% of
NEWCO;
(iv) if $3,000,000 in funding, ETCO receives 7.5% of
NEWCO;
(v) if $4,000,000 in funding, ETCO receives 5.0% of
NEWCO;
2.2.3 If the shares of WWWX transferred to ETCO pursuant to
2.1.2 has a market value less than $250,000.00 as of the
market close the day before Closing, (based on the average
of the bid and ask quoted price), Purchaser shall transfer
additional shares of WWWX to ETCO so that, at Closing, as
determined from the prior day's market close, the value of
WWWX stock owned by ETCO equals $250,000.00.
2.2.4 If the shares of WWWX transferred to ETCO pursuant to
2.1.2 has a market value greater than $250,000.00 as of
the market close the day before Closing, (based on the
average of the bid and ask quoted price) then the Seller
shall transfer shares in WWWX equal to the difference
between the total value of shares of WWWX held and
$250,000.00, back to WWWX, so that, at Closing, the value
of WWWX stock owned by ETCO equals $250,000.00.
2.3. FORFEITURE OF DEPOSITS. If Purchaser fails to make the Payments
described in 2.2 above for any reason except a material breach of
this Agreement by Seller, the Payments made pursuant to 2.1 shall
be forfeited to Seller as liquidated damages.
2.4. ON-GOING BUDGET Upon execution hereof, WWWX will fund all
expenditures made by Xxxxxx Xxxx and Xxxx Xxxxxx on behalf of
BarterOne. Energy Trading Company will continue to provide its
employees, Xxxxxx Xxxx and Xxxx Xxxxxx, who shall remain subject
to the PECO Code of Conduct, with office accommodations until
funding or March 1, 1999, whichever comes first.
2.5. FUTURE ETCO OBLIGATIONS ETCO shall have no further obligation to
contribute further funding or capital to BarterOne.
2.6. FUTURE ETCO RIGHTS. ETCO shall retain and continue to have any and
all rights available to an owner of a minority membership interest
in BarterOne and/or NEWCO, and WWWX. ETCO shall be subject to a
pari passu dilution of its 5% NEWCO interest, along with the other
shareholders, for funding Actually Received by NEWCO in excess of
$4,000,000.
3. TITLE. At Closing, provided that Purchaser has paid all Payments described in
section 2 hereof, Seller shall transfer to Purchaser ETCO's Interest free and
clear of all liens an encumbrances.
4. CLOSING. Closing shall occur on or before March 1, 1999, at Purchaser's
option and upon providing Seller 5 days prior written notice. Closing shall
occur at Seller's offices, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx XX.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants:
5.1 ORGANIZATION AND STANDING OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, has all requisite power and authority
INITIALS [RAS]
[RDK]
2
to own an interest in BarterOne and to carry on the business of
Seller as presently conducted. Seller is in good standing and
qualified to do business in the Commonwealth of Pennsylvania.
5.2 AUTHORITY OF SELLER. Seller has all necessary corporate power and
authority to make, execute, deliver and consummate this Agreement,
and has taken all necessary actions required to be taken to
authorize Seller to execute and deliver this Agreement and to
perform its obligations, undertakings and agreements to be
observed and performed hereunder. This Agreement has been duly
executed and delivered by Seller and is valid and binding
agreement of Seller, and enforceable against Seller in accordance
with its terms.
5.3 TITLE TO ASSETS. Seller has, and on the Closing Date, will have,
good, indefeasible and marketable title in an to ETCO's Interest,
and will transfer and convey the interest to Purchaser free and
clear of any mortgages, pledges, liens, claims, security
interests, charges, options, restrictions, rights of first offer
or encumbrances of any nature whatsoever.
5.4 CONSENTS. No consent or approval of any person or entity is
required in connection with the transfer of ETCO's Interest.
5.5 LITIGATION AND COMPLIANCE WITH LAWS. Seller is not engaged in or a
party to or threatened with any legal action, suit, investigation
or other proceeding arising with respect to ETCO's Interest by or
before any Court, arbitration or administrative agency, and Seller
does not know of any basis for any such action, investigation or
proceeding. There are no outstanding orders, rulings, decrees,
judgments or stipulations relating to or arising in connections
with ETCO's Interest to which Seller is a party or by which Seller
is bound, by or with any court, arbitrator or administrative
agency. Seller has complied with the requirements of all federal
state and local laws, regulations, judgments, injunctions,
decrees, court orders and administrative orders regarding such
assets, including, without limitation, in compliance with the
requirements of all federal, state and local laws, regulations and
administrative orders.
5.6 NO VIOLATION. Neither the execution and delivery of this Agreement
by Seller and the performance by Seller hereunder, nor the
consummation of the transactions contemplated hereby, will
violate, conflict with, result in the breach of or accelerate the
performance required by any of the terms, conditions or provisions
of the Articles of Incorporation or By-laws of Seller, or any
covenant, agreement or understanding to which Seller is a party or
any order, ruling, decree, judgment, arbitration award or
stipulation to which Seller is subject, or constitute a default
thereunder or result in the creation or imposition of any lien,
charge or encumbrance thereunder upon any of the Assets, or allow
any person or entity to accelerate any debt secured by any Asset,
or allow any person or entity to interfere with Purchaser's full
use and enjoyment of any of the Assets.
5.7 DISCLOSURE. No representations or warranties made by Seller in
this Agreement and no statements made by Seller in any
certificate, schedule, exhibit or other writing delivered by
Seller or referred to in or pursuant to this Agreement contain, or
at the date of its delivery will contain, any untrue statement of
material fact or omit or will omit any statement of a material
fact necessary to make complete, accurate and not misleading every
representation, warranty and statement of Seller set forth in this
Agreement or any such certificate, schedule, exhibit or other
writing.
6. REPRESENTATIONS AND WARRANTIES OF WWWX AND XXXX WWWX and Xxxx represent and
warrant to Seller:
6.1 ORGANIZATION AND STANDING OF PURCHASER. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite power and
authority to own, lease and operate its business as presently
conducted. Purchaser is in good standing and qualified to do
business in the State of New Jersey.
6.2 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly by
Purchaser and Seller without the intervention of any broker or
INITIALS [RAS]
[RDK]
3
finder. Purchaser has not engaged, consented to, or authorized any
broker, investment banker or third party to act on its behalf
directly or indirectly, as a broker or finder in connection with
the transactions contemplated by this Agreement. Purchaser agrees
to hold Seller harmless from and against all claims by third
parties based upon a relationship or alleged relationship with
Purchaser for brokerage or finders' fees or commissions in
connection with the execution of this Agreement or the
consummation of the transactions contemplated hereby.
6.3 AUTHORITY OF PURCHASER. Purchaser has all necessary power and
authority to make, execute, deliver and consummate this Agreement
and has taken all necessary actions required to be taken to
execute and deliver this Agreement and to perform all of its
obligations, undertakings and agreements to be observed and
performed by it hereunder. This Agreement has been duly executed
and delivered by Purchaser and is a valid and binding agreement of
Purchaser.
6.4 NO VIOLATION. Neither the execution and delivery of this Agreement
by Purchaser and the performance by Purchaser hereunder, nor the
consummation of the transactions contemplated hereby, will
violate, conflict with, result in the breach of or accelerate the
performance required by any of the terms, conditions or provisions
of the Articles of Incorporation or By-laws of Purchaser, or any
covenant, agreement or understanding to which Purchaser is a party
or any order, ruling, decree, judgment, arbitration award or
stipulation to which Purchaser is subject.
6.5 FULL DISCLOSURE. At the direction of ETCO and GTG, Xxxxxx Xxxx has
been actively pursuing the funding of BarterOne for an extended
period of time. Xxxxxx Xxxx has disclosed, either in writing, any
major offer to buy and/or purchase the assets of BarterOne, or to
fund or otherwise support the operations of BarterOne from
identified third parties. Xxxxxx Xxxx has been in direct and
indirect contact with numerous other brokers, funders, financial
institutions, corporations, and individuals, among others,
regarding the funding and/or purchase of BarterOne. As of the
Effective Date, Xxxxxx Xxxx is continuing to pursue funding
arrangements with the following:
6.5.1 Trinity American Financial (Xxx Xxxxxxx);
6.5.2 Wareforce;
6.5.3 Ices/XX Xxxxx;
6.5.4 Golenberg, Guren, Swerdlow;
6.5.5 Xxxxxxx, Xxxxx;
6.5.6 Xx Xxxxx;
6.5.7 Xxxxx Xxxxxxx & Co.
6.5.8 ARTRA Group Inc.
6.5.9 Textron Corporation
7. DUE DILIGENCE. WWWX has relied solely upon his own judgment, and not upon
any representation of any kind by Seller or anyone else. Purchaser is aware
of BarterOne's financial condition, operations, assets and obligations
through its due diligence and through its relationship with Xxxx.
7.1 WWWX has performed the due diligence procedures it has deemed
necessary to complete this transaction, and has received all
requested documents and information from ETCO. WWWX has reviewed,
among other things, the software license and development
agreements for the Orbit system.
7.2 Purchaser has reviewed and understands the benefits and
obligations which shall be applicable to Purchaser upon Closing as
described in the BarterOne Operating Agreement and the
Restructuring Agreement thereto.
8. CONDITIONS TO WWWX'S OBLIGATIONS. All obligations of WWWX to close under
this Agreement are subject to the following conditions (which may be waived
only at WWWX's option) existing on the Closing Date or such other date as
the context may required:
8.1 REPRESENTATIONS AND WARRANTIES. Each of Seller's representations
and warranties in this Agreement shall be true on the Closing Date
as though such representations and warranties
INITIALS [RAS]
[RDK]
4
were made and each such exhibit and schedule were delivered at and
as of the Closing Date, and there shall have been delivered to
WWWX a certificate to that effect, dated the Closing Date, signed
by a duly authorized officer of Seller.
8.2 PERFORMANCE. Seller shall have performed and complied with all
covenants, agreements and conditions required by this Agreement to
be performed or complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing.
8.3 LIENS AND ENCUMBRANCES. As of the Closing Date of ETCO's Interest
shall be free and clear of all liens, security interests,
encumbrances, charges or restrictions, except as specifically
permitted herein.
8.4 LITIGATION. No suit or proceeding challenging the transaction
provided for under this Agreement shall have been overtly
threatened or commenced.
8.5 CORPORATE ACTION. All corporate and shareholder action necessary
for Seller to consummate the transactions and contemplated
hereunder shall have been properly taken
9. CONDITIONS TO SELLER'S OBLIGATIONS. All obligations of Seller to close under
this Agreement are subject to the fulfillment as of the Closing Date of each of
the following conditions (which may be waived only at Seller's option) existing
on the Closing Date or such other date as the context may required:
9.1 REPRESENTATIONS AND WARRANTIES. Each of WWWX's and Xxxx'x
representations and warranties in this Agreement shall be true at
the Closing Date as though said representations and warranties
were made at and as of the Closing Date.
9.2 PERFORMANCE. WWWX shall have complied with and performed all
covenants and conditions of this Agreement required to be
performed and complied with by it on or before the Closing Date.
9.3 LITIGATION. No suit or proceeding challenging the transaction
provided for under this Agreement shall be overtly threatened or
commenced.
9.4 APPROVAL AND RELEASE OF OBLIGATIONS. All Members of BarterOne have
approved this sale and each executes a respective mutual release
of obligations, liabilities.
9.5 SEVERANCE AGREEMENTS. Xxxxxx Xxxx and Xxxx Xxxxxx, CEO of
BarterOne, execute the severance agreements with PECO Energy
attached hereto as Exhibit "B".
10. EXPENSES. Each Party hereto shall pay all of its expenses, in connection
with the authorization, preparation, execution and performance of this
Agreement, including, without limitation all fees and expenses of agents,
representatives, counsel, accountants, consultants, brokers and finders.
11. GENERAL.
11.1.SEVERABILITY. In the event that any provision or part of this
Agreement is held invalid or unenforceable by a court or other
tribunal or competent jurisdiction, then the same shall be deemed
severed and separate from the other provisions of this Agreement
which shall remain in full force and effect. To the extent
enforcement is limited, then the provision or provisions so
affected shall be deemed to have been modified to reflect the
limitation in the enforcement.
11.2.GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Pennsylvania,
as if executed and to be performed wholly within the Commonwealth
of Pennsylvania. All actions, legal or otherwise, instituted by
the Parties under this Agreement must be filed in a federal or
state court located in Pennsylvania.
11.3. ENTIRE AGREEMENT. This Agreement is the entire agreement and
understanding between the Parties with respect to the covered
subject matter and supersedes all prior and
INITIALS [RAS]
[RDK]
5
contemporaneous agreements, understandings, representations and
warranties, whether oral or written.
11.4.SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained herein or arising out of this Agreement
or otherwise in connection herewith (individually and
collectively, the "Representations") shall survive the Closing for
a period of three (3) years.
11.5.EXECUTION OF COUNTERPARTS. For the convenience of the parties,
this Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
11.6.NOTICES. All notices which are required or may be given pursuant
to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if delivered personally, or by
certified mail, postage prepaid as follows:
If to Purchaser: World Wide Web NetworX Corporation
0000 Xxxxxx Xxx, Xxxxx 000
Xx. Xxxxxx, XX 00000
Attention: Xxxxxx Xxxx
If to Seller: Energy Trading Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
with a copy to:
PECO Energy Company
0000 Xxxxxx Xxxxxx, X00-0
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx
11.7 ASSIGNMENT, SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the parties hereto, their heirs, personal
representatives, successors and assigns.
11.8 APPLICABLE LAWS. This Agreement shall be construed and governed by
the internal laws, and not the law of conflicts, of the
Commonwealth of Pennsylvania.
12. TERMINATION
12.1 This Agreement may be terminated prior to Closing at any time:
12.1.1 By the mutual written agreement of Purchaser and Seller;
12.1.2 If (A) Seller breaches any of its representations,
warranties or covenants hereunder, or (B) any material element of
Seller's performance hereunder fails, and (C) Purchaser so
notifies Seller in writing and Seller fails to cure such default
within a period of 10 days;
12.1.3 if (A) Purchaser breaches any of its representations,
warranties or covenants hereunder, or (B) any material element of
Purchaser's performance hereunder fails, and (C) Seller so
notifies Purchaser in writing and Purchaser fails to cure such
default within a period of 10 days.
12.2 If terminated pursuant to 12.1.1 or 12.1.2, all payments (stock
and cash) previously made by WWWX and ETCO shall be returned as
WWWX's sole remedy.
13. CONFIDENTIALITY.
INITIALS [RAS]
[RDK]
6
13.1 Each party agrees that this transaction and any and all
information learned or obtained by it from the other shall be
confidential and agrees not to disclose any such information to
any person whatsoever other than as is necessary for the purpose
of effecting the transaction contemplated by this Agreement;
provided, however, that Seller may, at its election, disclose such
transaction to Seller's employees in the manner and at the time
selected by Seller. Disclosure of this Agreement by WWWX or Xxxx
for purposes of funding is not a violation of this clause.
13.2 Upon execution hereof, Seller and Purchaser shall disseminate the
mutually agreeable press release attached hereto as Exhibit C.
14. BEST EFFORTS. Each of the parties covenants to use its best efforts to cause
the satisfaction of all conditions to Closing to be performed by it or satisfied
on its part prior to Closing.
15. MODIFICATION. This Agreement may be amended, modified and supplemented only
by written agreement of the parties hereto.
16. WAIVER. Any failure of Seller or Purchaser to comply with any obligation,
covenant, agreement, or condition herein may be expressly waived in writing by
Purchaser in the case of any such failure by Seller or by Seller in the case of
any such failure by Purchaser, but such waiver or failure to insist upon strict
compliance shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the day and year first above written.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the
date first written above.
ENERGY TRADING COMPANY WORLD WIDE WEB NEWORX,
CORPORATION
By: //s// Xxxxxx X. Xxxxx By: //s// Xxxxxx Xxxx
-------------------------- -------------------------
Name: Xxxxxx X. Xxxxx
--------------------------
Title: Vice President Title: President
-------------------------- -------------------------
7
