EXHIBIT 10.11
Asset Acquisition Agreement
This Agreement is to be made effective on June 30, 1999 (the
"Effective Date") between XxxXxxxxx.xxx, Inc., a California corporation
("Assignor") and XxxxxxXx.xxx, Inc., a Delaware corporation ("Assignee") with
respect to the following facts:
Recitals
A. Assignor is the beneficial owner of the Internet domains listed
on Exhibit A hereto (collectively "Domains"), with full legal rights to register
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same in its own name or that of its nominee (s).
B. Assignor is also the beneficial owner, with the same re-
registration rights, of certain trademark/service xxxx registrations (listed on
Exhibit A hereto) and certain common law trademark/service xxxx rights in the
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Domains (collectively "Trademarks").
C. Assignor 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 xxxx.xxx,
xxxxxxxxx.xxx, xxxxx.xxx, xxxxxx.xxx, xxxxxxxxxxx.xxx, xxxxxxxxxx.xxx,
xxxxxxxx.xxx, xxxxxxx.xxx, xxxxxxx.xxx, xxxxxxxxxx.xxx, xxxxxxxxxx.xxx domains
(the "Content").
D. Assignor has agreed to assign the Domains, Trademarks (and
associated goodwill) and Content, on the terms set forth below.
E. The parties intend, by executing this Agreement, to cause the
assignment of the Domains, Trademarks and Content and to qualify as a
reorganization under the provisions of Sections 368 of the Internal Revenue Code
of 1986, as amended (the "Code"). By executing this Agreement, the parties
intend to adopt a plan of reorganization within the meaning of Section 368 of
the Code.
Agreement
1. Assignment. Assignor hereby assigns, transfers and conveys to Assignee all
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right, title and interest in the Domains, the InterNic (or other relevant body)
registrations of the same, the Trademarks (including all associated goodwill)
and Content. Assignor further waives all claims it has to the Domains,
Trademarks, and Content and agrees to cease all use of the same, and to require
such waiver and cessation by Epicenter Communications.
2. Consideration. In consideration of the assignments set forth in section 1
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hereof and Assignor's representations, warranties and covenants made hereunder:
a. Issuance of Stock. Assignee shall issue to Assignor 342,000 shares of
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Assignee's Common Stock (the "Shares").
b. Revenue Participation. Subject to the final sentence in this Section 2
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(b), for a period of two years from the Effective Date, Assignee shall pay to
Assignor or its nominee an amount equal to fifty percent (50%) of any revenues
received by Assignee, directly from the use and/or exploitation of the
Xxxxxxxxxx.xxx domain, including but not limited to sublicense fees or
royalties, domain sponsorship revenues, and advertising revenues (collectively,
the "Domain Revenues"). The Domain Revenues shall be due to Assignee on a
quarterly basis. Notwithstanding anything else herein, Assignee's maximum
payment due to Assignor hereunder for Assignor's share in the Domain Revenues
shall be limited to One Hundred Fifty Thousand Dollars ($150,000.00) per
calendar year, and upon payment of such $150,000 per year, Assignor or its
nominee, Assignee shall thereafter be entitled to retain all further Domain
Revenues for the relevant year and no further payments shall be due to Assignor
hereunder.
c. Records; Rights of Inspection. Assignee shall keep accurate records
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relating to the payments due to Assignor hereunder to the extent necessary and
useful in calculating the Domain Revenues due to Assignor. For two (2) years
after the Effective Date, upon not less than thirty (30) days' prior notice,
such records shall be open for inspection by a mutually agreed upon certified
public accountant in order to confirm Assignee's compliance with its payment
obligations described in Section 2(b) above. Such inspections shall be during
normal business hours and shall be at Assignor's expense, unless such inspection
discloses an underpayment of 5% or greater in which case Assignee shall be
responsible for such costs.
3. Further Assurances. Assignor shall assist Assignee in every proper way to
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evidence, record and perfect the assignments described in Section 1 above and to
perfect, obtain, maintain, enforce, and defend the rights assigned. For example,
Assignor agrees that it will immediately cause the record owner of the Domains
(Epicenter Communications) to apply for and effect re-registration of the
Domains and Trademarks in Assignee's name according to InterNic's (or other
relevant body's) current policy.
4. Representations; Warranties. Assignor represents and warrants to the
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Assignee that:
a. Assignor is the sole beneficial owner (other than the Assignee) of all
rights, title and interest in the Domains, Trademarks and Content,
subject only to the following:
(i) With respect to the Content that is available on xxxxxxxxxx.xxx,
xxxxxxxxxx.xxx, xxxxxxxx.xxx and xxxxxxx.xxx domains as of the
Effective Date of this Agreement and which is contributed by
Xxxxxxx Xxxxxxxxx, this right is subject to the limited license
granted to Xxxxxxx Xxxxxxxxx, respecting such Content to
incorporate portions of such Content solely in certain printed
publications prepared by Xxxxxxx Xxxxxxxxx, which use shall give
appropriate reference to PlanetRx as the owner of such Content;
and
(ii) With respect to the xxxxxxxxxxx.xxx and xxxxxxxxx.xxx Domains,
such right is subject to the restrictions specified in Exhibit
B.
b. After the Effective Date, Assignor will discontinue all further use of
the Domains, Trademarks and Content.
c. Assignor has full power and authority to enter into this Agreement,
and this Agreement constitutes Assignor's valid and legally binding obligation,
enforceable in accordance with its terms.
d. This Agreement is made with Assignor in reliance upon Assignor's
representation to Assignee, which by Assignor's execution of this Agreement
Assignor hereby confirms, that the Shares to be received by Assignor will be
acquired for investment for Assignor's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and that
Assignor has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, Assignor further
represents that Assignor does 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.
e. Assignor believes it has received all the information it considers
necessary or appropriate for deciding whether to acquire the Shares. Assignor
further represents that it has had an opportunity to ask questions and receive
answers from Assignee regarding the terms and conditions of the offering of the
Shares and the business, properties, prospects and financial condition of
Assignee.
f. Assignor acknowledges that it has relied on its 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 the
Assignee or any of its officers, employees, or agents.
g. Assignor acknowledges that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and experience in
financial, tax and business matters that it is capable of evaluating the merits
and risks of the assignments provided for herein and the investment in the
Shares. Assignor also represents it has not been organized for the purpose of
acquiring the Shares.
h. Assignor is an "accredited investor" within the meaning of Securities
and Exchange Commission ("SEC") Rule 501 of Regulation D, as presently in
effect.
i. Assignor understands that the Shares it is acquiring are characterized
as "restricted securities" under the federal securities laws inasmuch as they
are being acquired from Assignee 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
Investor represents that it is familiar with Securities and Exchange Commission
Rule 144, as presently in effect, and understands the resale limitations imposed
thereby and by the Act.
j. Without in any way limiting the representations set forth above,
Assignor further agrees 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 4, provided and to the extent this Section are then applicable,
and:
A. 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
B. (i) Assignor shall have notified Assignee of the proposed
disposition and shall have furnished Assignee with a detailed statement of the
circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by Assignee, Assignor shall have furnished Assignee with an opinion of
counsel, reasonably satisfactory to Assignee, that such disposition will not
require registration of such shares under the Act. It is agreed that Assignee
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
k. 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."
l. Other than the Domains, Trademarks and Content, no assets or
liabilities of Assignor shall be transferred to Assignee, including, but not
limited to, any and all liabilities, direct or indirect, contingent or
otherwise, of Assignor. Assignor shall indemnify and hold harmless Assignee and
its transferees, successors and assigns for any liabilities, contingent or
otherwise, associated with the Domains, Trademarks and Content, or otherwise
associated with the business of Assignor.
5. "Market Stand-Off" Agreement. Assignor hereby agrees that it will not,
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without the prior written consent of the managing underwriter, during the period
commencing on the date of the final prospectus relating to Assignee'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 Assignee or any securities convertible into or
exercisable or exchangeable for Common Stock (whether such shares or any such
securities are then owned by Assignor 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 5 and shall have the right,
power and authority to enforce the provisions hereof as though they were a party
hereto.
6. Miscellaneous. This Agreement shall be construed pursuant to the laws of
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the State of California without regard to conflicts of laws provisions thereof.
In the event of a dispute hereunder which the parties are not able themselves to
settle, either party may refer such dispute to binding arbitration before the
JAMS/ENDISPUTE tribunal in San Francisco, CA and the award issued in such
proceeding may be enforced in any court of competent jurisdiction. The
prevailing party in such arbitration or enforcement proceeding shall be awarded
its costs thereof, including reasonable attorneys' fees.
XxxXxxxxx.xxx XxxxxxXx.xxx, Inc.
By: By:
Xxxxxxx Xxxxxxxx, President Xxxxxxx X. Xxxxxxx, Chairman & CEO
Epicenter Communications
By:
Xxxxxxx Xxxxxxxx, President
Exhibit A
LIST OF DOMAINS
Acne .com
Xxxxxxxxxx.xxx
Xxxxxxxxxx.xxx
Xxxxxxxx.xxx
Xxxxxxxx.xxx
Xxxxxxxxx.xxx
Xxxxxxxxx-X.xxx
Xxxxxxxxx-X.xxx
Xxxxxxxxx.xxx
Xxxxxxxxxxxx.xxx
Xxxxxxxxx.xxx
Xxxxxxxxxxx.xxx
Xxxxxxxxxx.xxx
Xxxxxxxxxx.xxx
Xxxxxxxx.xxx
Xxxxxxxxxxx.xxx
Xxxxxxxx.xxx
Xxxxx.xxx
Xxxxxxxxx.xxx
Xxxxxx.xxx
List of Trademark/Service Xxxx Registrations
Xxxxxxxxxx.xxx, Reg. No. 2,076,603
Exhibit B
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Until May 12, 2004, for the domain names "xxxxxxxxx.xxx" and "xxxxxxxxxxx.xxx"
listed above ("Restricted Domains"), (a) eToys, Inc. has a right of first
refusal with respect to any sale, transfer, license, lease, mortgage or other
disposition of the Restricted Domains; and (b) the Company is prevented from
selling, transferring, licensing, leasing, mortgaging, or otherwise disposing
in whole or in part the Restricted Property to Xxxxxx.xxx, Toys-R-Us, iVillage,
Time-Warner, Lamaze, or any of their respective subsidiaries, affiliates, or
related parties or investors, or any other person or party that is engaged in
the business of advertising, marketing, promotion, publishing, distributing and
selling products, services, publications, information and content about or
related to babies, infants, toddlers, children, parents, and families through
the medium of the Internet and selling advertising and promotional opportunities
on its web sites.
