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EXHIBIT 10.18
COMMON STOCK EXCHANGE AGREEMENT
THIS COMMON STOCK EXCHANGE AGREEMENT (this "Agreement") is entered into as
of June 11, 1999, by and among XXXXXXX.XXX, INC., a Delaware corporation having
its principal place of business at 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xx Xxxx,
Xxxxxxxxxx 00000 ("Medibuy"), and Xxxx Xxxxxxx ("Xxxxxxx"), the sole stockholder
of Xxxxx.xxx, Inc., a Delaware corporation ("Hippo"), residing at 0000 Xxxxxx
Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000.
WHEREAS, Xxxxxxx owns 4,500,000 shares of common stock of Hippo, which
constitute all the outstanding capital stock of Hippo ("Hippo Shares");
WHEREAS, Medibuy desires to acquire all of the Hippo Shares and Xxxxxxx
desires to acquire shares of Medibuy Common Stock on the terms and conditions
set forth herein; and
WHEREAS, the parties intend that the exchange of shares contemplated by
this Agreement shall be considered a reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO EXCHANGE SHARES.
1.1 AGREEMENT. At the Closing (defined below), Medibuy shall issue to
Xxxxxxx four hundred thousand (400,000) shares of Common Stock of Medibuy (the
"Medibuy Shares") and Xxxxxxx shall assign and transfer to Medibuy all of the
Hippo Shares.
1.2 CLOSING. The closing of the sale and issuance of the Medibuy
Shares and the transfer and assignment of the Hippo Shares under this Agreement
(the "Closing") shall take place at 5:00 p.m. on the date hereof, at the offices
of Xxxxxx Godward LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx
00000 or at such other time or place as Medibuy and Xxxxxxx may mutually agree
(such date is hereinafter referred to as the "Closing Date").
1.3 DELIVERY. At the Closing, subject to the terms and conditions
hereof, (i) Xxxxxxx will deliver to Medibuy one or more certificates
representing all of the Hippo Shares; duly endorsed for transfer to Medibuy, and
(ii) Medibuy will deliver to Xxxxxxx a certificate representing the Medibuy
Shares.
2. REPRESENTATIONS AND WARRANTIES.
2.1 Each of Medibuy and Xxxxxxx (each a "Party") makes the following
certifications and representations with respect to its acquisition of the
Medibuy Shares and the Hippo Shares, respectively:
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(a) It is acquiring the shares solely for its account for
investment and not with a view to or for sale or distribution of the shares.
Each Party also represents that the entire legal and beneficial interests of the
securities it is acquiring is being acquired for, and will be held for its
account only.
(b) The parties have determined that the value of the shares
being exchanged pursuant to this Agreement are equivalent.
(c) It understands that the shares have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), on the basis that
no distribution or public offering of the shares is to be effected. Each Party
realizes that the basis for the exemption may not be present if, notwithstanding
its representations, it has in mind merely acquiring the shares for a fixed or
determinable period in the future, or for a market rise, or for sale if the
market does not rise. Neither Party has such intention.
2.2 POWER AND AUTHORITY.
(a) Medibuy represents and warrants to Xxxxxxx that it has all
requisite legal and corporate power to execute and deliver this Agreement, to
issue and sell the Medibuy Shares under this Agreement, and to perform its
obligations under the terms of this Agreement, including all exhibits and
schedules hereto.
(b) Xxxxxxx represents and warrants to Medibuy that he has all
requisite legal power to execute and deliver this Agreement, to transfer and
assign the Hippo Shares under this Agreement, and to carry out and perform his
obligations under the terms of this Agreement, including all exhibits and
schedules hereto.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF XXXXXXX.
Xxxxxxx hereby represents and warrants to Medibuy as follows:
3.1 TITLE TO SHARES.
(a) Xxxxxxx (i) is the record and beneficial owner of all of the
Hippo Shares, representing 100% of the issued and outstanding capital stock of
Hippo, (ii) has good and valid title to all of such shares and (iii) has the
absolute right, power and the authority to sell, transfer and deliver all such
shares, in each case free and clear of all liens, security interests, judgments
or any other encumbrances. There are no options, warrants, rights, calls,
commitments or other rights related to the issuance of capital stock or other
securities of Hippo.
(b) Xxxxxxx has not, at any time, (i) made a general assignment
for the benefit of creditors, (ii) filed, or had filed against Xxxxxxx, any
bankruptcy petition or similar filing, (iii) suffered the attachment or other
judicial seizure of all or a substantial portion of Xxxxxxx' assets, (iv)
admitted in writing Xxxxxxx' inability to pay Xxxxxxx' debts as they become due,
(v) been convicted of, or pleaded guilty to, any felony, (vi) taken or been the
subject of any action that may have an adverse effect on Xxxxxxx' ability to
comply with or perform any of
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Xxxxxxx' covenants or obligations under this Agreement or any of the agreements
contemplated by this Agreement, (vii) been subject to any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality that may have an adverse effect on Xxxxxxx' ability to comply
with or perform any of Xxxxxxx' covenants or obligations under this Agreement or
any of the agreements contemplated by this Agreement or (viii) obtained any
loans or incurred any indebtedness for which any property, assets or securities
of Hippo is pledged as collateral and there are no liens, security interests,
judgments or any other encumbrances on any of the properties, assets or
securities of Hippo imposed in connection with any indebtedness or other
obligations of Xxxxxxx.
(c) There is no action, suit, proceeding or investigation
pending, and no person has threatened to commence any action, suit, proceeding
or investigation, that would reasonably be expected to have an adverse effect on
the ability of Xxxxxxx to comply with or perform any of Xxxxxxx' covenants or
obligations under this Agreement or any of the agreements contemplated by this
Agreement. No event has occurred, and no claim, dispute or other condition or
circumstance exists, that would reasonably be expected to directly or indirectly
give rise to or serve as a basis for the commencement of any such action, suit,
proceeding or investigation.
3.2 NO LIABILITIES. Except for ordinary course of business liabilities
and legal fees incurred in connection with the organization of Hippo or this
transaction, which in the aggregate shall not exceed $10,000 at the Closing,
Hippo has no outstanding liabilities, whether known, unknown or contingent or of
any nature whatsoever, and Xxxxxxx' proposed purchase of shares hereunder will
not violate or cause a default under any agreement or other instrument or
obligation of Hippo or Xxxxxxx.
3.3 PROPRIETARY ASSETS.
(a) Exhibit A contains a list of all registered patents,
trademarks, service marks, trade names and copyrights ("Registered Proprietary
Assets") that are owned by or licensed to Hippo or that are otherwise used by
Hippo in Hippo's business.
(b) Hippo has taken all measures and precautions reasonably
necessary to protect the confidentiality and value of each Registered
Proprietary Asset identified or required to be identified in Exhibit A and each
other unregistered patent, trademark, service xxxx, tradename, copyrights, trade
secret and other proprietary rights ("Additional Proprietary Assets"). Hippo has
good and valid title to all of the Registered Proprietary Assets and Additional
Proprietary Assets (collectively the "Proprietary Assets") owned by it, free and
clear of all liens, security interests, judgments or any other encumbrances, and
has a valid right to use and otherwise exploit, and to license others to use and
otherwise exploit, all Proprietary Assets licensed to or used by it. Such
Proprietary Assets consist of all Proprietary Assets necessary to enable Hippo
to conduct its business as presently conducted.
(c) Hippo is not infringing, and has not at any time infringed,
or received any written notice of any actual, alleged, possible or potential
infringement of any Proprietary Asset owned or used by any other person. No
other person is infringing, and no
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Proprietary Asset owned or used by any other person infringes or conflicts with,
any Proprietary Asset owned or used by or licensed to Hippo.
3.4 ADDITIONAL INVESTMENT REPRESENTATIONS.
(a) Xxxxxxx recognizes that the Medibuy Shares being acquired by
him must be held indefinitely unless the Medibuy Shares are subsequently
registered under the Securities Act or an exemption from such registration is
available. Xxxxxxx recognizes that Medibuy has no obligation to register the
Medibuy Shares or to comply with any exemption from such registration.
(b) Xxxxxxx is aware that the Medibuy Shares may not be sold
pursuant to Rule 144 adopted under the Securities Act ("Rule 144") unless
certain conditions are met and until Xxxxxxx has held the Medibuy Shares for at
least one year. Among the conditions for use of the Rule is the availability of
current information to the public about Medibuy. Xxxxxxx understands that there
is no such information available and Medibuy will likely have no plans to make
such information available.
(c) Xxxxxxx further agrees not to make any disposition of all or
any part of the Medibuy Shares being acquired in any event unless and until: (i)
the Medibuy Shares are transferred pursuant to Rule 144, and Medibuy shall have
received from Xxxxxxx documentation acceptable to Medibuy that a sale of the
Medibuy Shares has occurred in accordance with all of the provisions of Rule
144, as in effect from time to time; or (ii) there is then in effect a
registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement; or (iii) (A) Xxxxxxx shall have notified Medibuy of the proposed
disposition and shall have furnished Medibuy with a detailed statement of the
circumstances surrounding the proposed disposition, (B) Xxxxxxx shall have
furnished Medibuy with an opinion of counsel for Xxxxxxx to the effect that such
disposition will not require registration of such Medibuy Shares under the
Securities Act, and (C) such opinion of counsel for Xxxxxxx shall have been
concurred in by Medibuy's counsel and Medibuy shall have advised Xxxxxxx of such
concurrence.
(d) Xxxxxxx understands and agrees that all certificates
evidencing the Medibuy Shares to be issued to Xxxxxxx shall bear a legend
substantially in the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED."
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3.5 PRE-CLOSING COVENANTS. Prior to the Closing, Xxxxxxx has:
(a) caused Hippo to conduct its business in the ordinary course
and has refrained from taking any action that would cause any representation or
warranty made herein to be untrue or materially misleading;
(b) complied with, and has caused Hippo to comply with,
contractual obligations of Hippo and legal requirements applicable to Hippo;
(c) permitted Medibuy and any of its employees, agents and
representatives to have reasonable access to Hippo's books and records of
account;
(d) permitted Medibuy and any of its employees, agents and
representatives to contact Hippo's accountants and key employees of Hippo for
the purpose of completing its due diligence;
(e) provided Medibuy with copies of all documents related to the
business of Hippo;
(f) provided Medibuy with such other instruments, agreements and
documents as Medibuy may reasonably request in order to complete its due
diligence review of Hippo; and
(g) obtained any and all consents, permits and waivers necessary
or appropriate for consummation of the transactions contemplated by this
Agreement.
4. STOCK RESTRICTION.
4.1 RESTRICTED SHARES AND VESTING. Subject to the limitations
contained herein, two hundred thirty six thousand (236,000) of the Medibuy
Shares (the "Restricted Shares") acquired by Xxxxxxx will be subject to a
Repurchase Option in favor of Medibuy as described in Section 4.2 below. The
Repurchase Option will lapse (and the Restricted Shares will become vested) at
the following rate: shares shall be released from the Repurchase Option in equal
monthly installments of 6,555.56 shares beginning on June 1, 1999 and on the 1st
day of each month thereafter, until all the stock is released from the
Repurchase Option as of June 1, 2002.
4.2 REPURCHASE OPTION. The Restricted Shares shall be subject to the
following repurchase option:
(a) In the event that Xxxxxxx' service as an employee, director
or consultant with Medibuy ceases for any reason (including his death), or no
reason, with or without cause, then Medibuy shall have an irrevocable option for
a period of ninety (90) days after said cessation of such service as an
employee, director or consultant with Medibuy to repurchase from Xxxxxxx, as the
case may be, for a purchase price of $0.1125 (the "Purchase Price"), up to but
not exceeding the number of shares of the Restricted Shares that have not
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vested as of such cessation date in accordance with the provisions of the Notice
as of such termination date (the "Repurchase Option").
(b) In addition, and without limiting the foregoing Repurchase
Option, if at any time during the term of the Repurchase Option, if both of the
following occur: (i) there is a Change in Control, which is defined as any of
the following: (a) a dissolution or liquidation of Medibuy; (b) a merger or
consolidation involving Medibuy in which Medibuy is not the surviving
corporation; (c) a reverse merger in which Medibuy is the surviving corporation
but the shares of Medibuy's Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of other securities, cash or otherwise; or (d) any other capital
reorganization in which more than fifty percent (50%) of the shares of Medibuy
entitled to vote are exchanged; and (ii) Xxxxxxx' service as an employee,
director or consultant of Medibuy is terminated without Cause (as defined below)
or is voluntarily terminated for Good Reason (as defined below) within one (1)
month before or twelve (12) months after a Change in Control, then the
Repurchase Option shall terminate and all of the Restricted Shares subject to
the Repurchase Option shall fully vest. The Repurchase Option may be assigned to
any successor of Medibuy in a Change of Control, and the Repurchase Option shall
apply if Xxxxxxx' service as an employee, director or consultant with Medibuy
had ceased with such successor on the same basis as set forth above subject only
to the acceleration provisions set forth in the preceding sentence. In that
case, references herein to the "Company" shall be deemed to refer to such
successor. For purposes of this Section 4, the following definitions apply:
(i) "Cause" means, with respect to the involuntary
termination of Xxxxxxx' service with Medibuy, misconduct, including: (i)
conviction of any felony or any crime involving moral turpitude or dishonesty;
(ii) participation in a fraud or act of dishonesty against Medibuy or an
affiliate; (iii) conduct that, based upon a good faith and reasonable factual
investigation and determination by Medibuy, demonstrates gross unfitness to
serve; or (iv) intentional, material violation of any agreement with Medibuy, or
of any statutory duty to Medibuy, that is not corrected within thirty (30) days
after written notice thereof. Physical or mental disability shall not constitute
"Cause." For purposes of this definition, "Company" shall include an affiliate
of Medibuy and a successor to Medibuy.
(ii) "Good Reason" means, with respect to the voluntary
termination of service of Xxxxxxx in connection with a Change in Control, (i)
reduction of Xxxxxxx' rate of compensation as in effect immediately prior to the
Change in Control by greater than ten percent (10%), except to the extent the
compensation of other similarly situated persons are accordingly reduced, (ii)
failure to provide a package of benefit/compensation plans that, taken as a
whole, provide substantially similar benefits to those in which Xxxxxxx is
entitled to participate immediately prior to the Change in Control (except that
such person's contributions for participation in such benefits may be raised to
the extent of any cost increases imposed by third parties) or any action by
Medibuy that would adversely affect Xxxxxxx' participation or reduce Xxxxxxx'
benefits under any of such plans, (iii) a change in Xxxxxxx' responsibilities,
authority, titles or offices resulting in diminution of position, excluding for
this purpose an isolated, insubstantial and inadvertent action not taken in bad
faith that is remedied by Medibuy
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promptly after notice thereof is given by such person, (iv) if Xxxxxxx' services
require proximity to Medibuy's offices, a request that Xxxxxxx relocate to a
worksite that is more than fifty (50) miles from Xxxxxxx' prior worksite, unless
Xxxxxxx accepts such relocation opportunity, (v) a material reduction in
Xxxxxxx' duties, (vi) a failure or refusal of any successor company to assume
the obligations of Medibuy under an agreement with Xxxxxxx or (vii) a material
breach by Medibuy of any of the material provisions of an agreement with
Xxxxxxx. For purposes of this definition, "Company" shall include an affiliate
of Medibuy and a successor to Medibuy.
(c) This Agreement is not an employment contract and nothing in
this Agreement shall be deemed to create in any way whatsoever any obligation on
the part of Xxxxxxx to continue in the employment or other service of Medibuy,
or of Medibuy to continue Xxxxxxx in the employment or other service of Medibuy.
(d) Xxxxxxx acknowledges that in the event that the Restricted
Shares' fair market value, as determined in good faith by the Board of Directors
of Medibuy, is equal to or exceeds the Purchase Price on the date that Xxxxxxx'
service as an employee, director or consultant with Medibuy or with an Affiliate
ceases, Medibuy shall have the right to exercise its Repurchase Option to the
extent permitted by law.
4.3 EXERCISE OF REPURCHASE OPTION. The Repurchase Option shall be
exercised by giving written notice of exercise delivered or mailed as provided
in Section 5.8. Upon providing such notice and payment or tender of the purchase
price, Medibuy shall become the legal and beneficial owner of the Restricted
Shares being purchased and all rights and interests therein or related thereto.
4.4 ADJUSTMENTS TO SHARES. If from time to time during the term of the
Repurchase Option there is any stock dividend or liquidating dividend or
distribution of cash and/or property, stock split or other change in the
character or amount of any of the outstanding securities of Medibuy, then, in
such event, any and all new, substituted or additional securities or other
property to which Xxxxxxx is entitled by reason of his ownership of Restricted
Shares will be immediately subject to the Repurchase Option and be included in
the word "Shares" for all purposes of the Repurchase Option with the same force
and effect as the shares of Restricted Shares then subject to the Repurchase
Option. While the total Purchase Price shall remain the same after each such
event, the Purchase Price per share of Restricted Shares upon exercise of the
Repurchase Option shall be appropriately adjusted to reflect such change in
Medibuy's securities.
4.5 RESTRICTIVE LEGENDS. Xxxxxxx acknowledges that in addition to the
legend required under Section 3.4(d), all certificates representing Restricted
Shares subject to the provisions of the Repurchase Option shall bear a legend
thereon in substantially the following form:
"THE RESTRICTED SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AN OPTION SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND
THE REGISTERED HOLDER, OR ANY PREDECESSOR IN INTEREST, A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION. ANY TRANSFER
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OR ATTEMPTED TRANSFER OF ANY RESTRICTED SHARES SUBJECT TO SUCH OPTION IS
VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE ISSUER OF THESE
SHARES."
4.6 SECTION 83(b) ELECTION. Xxxxxxx understands that Section 83(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary
income the difference between the amount paid for the Restricted Shares and the
fair market value of the Restricted Shares as of the date any restrictions on
the Restricted Shares lapse. In this context, "restriction" includes the right
of Medibuy to buy back the Restricted Shares pursuant to the Repurchase Option
set forth in this Section 4 above. Xxxxxxx understands that he may elect to be
taxed at the time the Restricted Shares were purchased, rather than when and as
the Repurchase Option expires, by filing an election under Section 83(b) (an
"83(b) Election") of the Code with the Internal Revenue Service within thirty
(30) days from the date of the effectiveness of the Repurchase Option. Even if
the fair market value of the Restricted Shares at the time of the execution of
this Agreement equals the amount paid for the Restricted Shares, the 83(b)
Election must be made to avoid income under Section 83(b) in the future. Xxxxxxx
understands that failure to file such an 83(b) Election in a timely manner may
result in adverse tax consequences for Xxxxxxx. Xxxxxxx further understands that
an additional copy of such 83(b) Election is required to be filed with his
federal income tax return for the calendar year in which the date of this
Agreement falls. Xxxxxxx acknowledges that the foregoing is only a summary of
the effect of United States federal income taxation with respect to purchase of
the Restricted Shares hereunder, and does not purport to be complete. Xxxxxxx
further acknowledges that Medibuy has directed Xxxxxxx to seek independent
advice regarding the applicable provisions of the Code, the income tax laws of
any municipality, state or foreign country in which Xxxxxxx may reside, and the
tax consequences of Xxxxxxx' death. Xxxxxxx assumes all responsibility for
filing an 83(b) Election and paying all taxes resulting from such election or
the lapse of the restrictions on the Restricted Shares.
4.7 ESCROW OF UNVESTED RESTRICTED SHARES. As security for Xxxxxxx'
faithful performance of the terms of this Agreement and to insure the
availability for delivery of Xxxxxxx' Restricted Shares upon exercise of the
Repurchase Option herein provided for, Xxxxxxx agrees, at the closing hereunder
(or as soon thereafter as practicable) to deliver (or have Medibuy deliver on
Xxxxxxx' behalf) to and deposit with the Secretary of Medibuy, as escrow agent
in this transaction (the "Escrow Agent"), the assignment separate from the
certificate duly endorsed (with date and number of shares left blank) in the
form attached hereto as Exhibit B, together with a certificate or certificates
evidencing all of the Restricted Shares subject to the Repurchase Option; said
documents are to be held by the Escrow Agent and delivered by said Escrow Agent
pursuant to the Joint Escrow Instructions of Medibuy and Xxxxxxx set forth in
Exhibit C attached hereto and incorporated herein by this reference, which
instructions shall also be delivered to the Escrow Agent at the closing
hereunder (or as soon thereafter as practicable).
4.8 LIMITATIONS ON TRANSFER. In addition to any other restrictions set
forth herein or that may exist relating to a proposed transfer of Restricted
Shares, Xxxxxxx shall not sell or transfer any of the Restricted Shares subject
to the Repurchase Option or any interest therein so long as such Restricted
Shares are subject to the Repurchase Option.
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4.9 REFUSAL TO TRANSFER. Medibuy shall not be required (i) to transfer
on its books any Restricted Shares of Medibuy which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement or
(ii) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom such shares shall have been
so transferred.
4.10 RIGHTS OF XXXXXXX. Subject to the provisions of Sections 4.7,
4.8, 4.9 and 4.10 above, Xxxxxxx (but not any unapproved transferee) shall,
during the term of this Agreement, exercise all rights and privileges of a
stockholder with respect to the Restricted Shares deposited in escrow. Xxxxxxx
shall be deemed to be the holder for purposes of receiving any dividends that
may be paid with respect to such Restricted Shares and for the purpose of
exercising any voting rights relating to such Restricted Shares, even if some or
all of such Restricted Shares have not yet vested and been released from the
Repurchase Option.
4.11 FURTHER EXECUTION. The parties agree to execute such further
instruments and to take such further action as reasonably may be necessary to
carry out the intent of this Agreement.
5. ESCROW AND INDEMNIFICATION
5.1 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. All of
Xxxxxxx' covenants, representations and warranties contained in Section 3 of
this Agreement shall survive the Closing and continue until the first
anniversary of the Closing Date.
5.2 SATISFACTION AND INDEMNIFICATION BY XXXXXXX. Xxxxxxx will be
responsible for all liabilities incurred by Hippo prior to the Closing Date
which exceed the cash assets of Hippo at the Closing, provided that existing
cash accounts of Hippo as of the Closing Date are first applied in full to
satisfy such liabilities. Xxxxxxx shall satisfy all remaining liabilities of
Hippo outstanding at the Closing by the three-month anniversary of the Closing
Date. Xxxxxxx shall indemnify and hold Medibuy harmless from all liabilities,
including all costs and damages related to satisfaction of the liabilities that
are outstanding at the Closing. Subject to the other provisions of this Section
5, during the period beginning on the Closing Date and ending one year following
the Closing Date, Xxxxxxx shall indemnify and hold harmless Medibuy from and
against any and all claims, expenses and losses, including without limitation,
reasonable attorneys' fees and legal expenses, suffered or incurred by Medibuy
resulting from any breach or inaccuracy of any of Xxxxxxx' covenants,
representations and warranties contained in Section 3 of this Agreement.
5.3 ESCROW FUND FOR INDEMNITY CLAIMS. As security for Steven's
faithful performance of obligations under this Section 5 and to insure the
availability for delivery of the Medibuy Shares upon the assertion of an Escrow
Claim (as defined below), Xxxxxxx hereby pledges 80,000 Medibuy Shares which are
not subject to the Repurchase Option (the "Pledged Shares"), and all dividends,
cash instruments, and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares against claims arising under Section 5.2 (the "Escrow
Fund"). Xxxxxxx agrees, at the Closing hereunder (or as soon as practicable
thereafter) to deliver (or have Medibuy deliver
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on Xxxxxxx' behalf) to and deposit with the Secretary of Medibuy an assignment
separate from certificate duly endorsed (with the date and number of shares left
blank) in the form attached hereto as Exhibit B, together with a certificate or
certificates representing the Pledged Shares; said documents are to be held by
Medibuy pending release of the Pledged Shares.
5.4 METHOD OF ASSERTING INDEMNITY CLAIM. In the event Medibuy becomes
aware of a third-party claim which Medibuy believes may result in a demand
against the Escrow Fund or if Medibuy incurs any costs or liabilities for which
it is entitled to indemnity, Medibuy shall promptly notify Xxxxxxx in writing of
such claim or liability pursuant to Section 7.8 of this Agreement, and Xxxxxxx
shall be entitled to immediately satisfy such liability or participate in any
defense of such claim. Medibuy and Xxxxxxx shall in good faith to defend or
settle any third-party claim. Medibuy shall have the right in its sole
discretion to settle any third party claim; provided, however, that except with
the consent of Xxxxxxx, no settlement of any claim with third-party claimants
shall be determinative of the amount of any claim against the Escrow Fund (the
"Escrow Claim"). The failure by Medibuy to give written notice to Xxxxxxx of a
third-party claim and claim against the Escrow Fund which is prejudice to
Xxxxxxx' ability to defend against a claim shall not impair Medibuy's right to
settle the third-party claim, but shall prevent a claim against the Escrow Fund
relating to the claim. Medibuy and Xxxxxxx shall endeavor to agree in good faith
upon the Escrow Claim, and in the absence of such agreement, shall seek
arbitration pursuant to Section 7.16 of this Agreement.
5.5 CLAIMS AGAINST ESCROW FUND. Upon determination of the amount
claimed against the Escrow Fund, Xxxxxxx may, at his sole option, settle the
Escrow Claim by (a) written notification to Medibuy within seven (7) calendar
days (the "Option Period") of the later of (i) notification given to Xxxxxxx
pursuant to Section 5.4 above or (ii) settlement of the third-party claim and
(b) payment to Medibuy in immediately available funds of the amount of the
Escrow Claim. Upon expiration of the Option Period, Medibuy shall be entitled to
receive out of the Escrow Fund such number of the Pledged Shares as shall be
obtained by dividing the Escrow Claim by the then fair market value of the
Pledged Shares as determined by the Medibuy Board of Directors in good faith.
5.6 LIMITATION OF LIABILITY AND INDEMNIFICATION. In no event shall the
aggregate liability of Xxxxxxx under this Section 5 exceed the amount of the
Escrow Fund plus $50,000. The remedies provided in this Section 5 shall
constitute the sole and exclusive remedies and recourse of Medibuy against
Xxxxxxx available for any liabilities arising under Section 5.2.
5.7 TERMINATION OF ESCROW FUND. The Escrow Fund shall terminate
immediately on the first day following the first anniversary of the Closing
Date, provided, however, the Escrow Fund shall continue past the scheduled
termination if at such time there exists an Escrow Claim or outstanding
liability that has not been satisfied by Xxxxxxx. Release of the Pledged Shares
shall not result in the release of any Restricted Shares from the provisions of
the Joint Escrow Instructions.
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6. CONDITIONS TO CLOSING.
6.1 MEDIBUY COUNSEL LEGAL OPINION. Xxxxxxx' obligations to transfer
and assign the Hippo Shares and perform his obligations under this Agreement
shall be conditioned upon his receipt at the Closing from legal counsel to the
Company an opinion addressed to him, dated as of the Closing Date, in a form
reasonably acceptable to Xxxxxxx and his legal counsel.
6.2 XXXXXXX' AND HIPPO' COUNSEL LEGAL OPINION. Medibuy's obligations
to issue the Medibuy Shares and perform its obligations under this Agreement
shall be conditioned upon its receipt at the Closing from legal counsel to
Xxxxxxx and Hippo an opinion addressed to Medibuy, dated as of the Closing Date,
in a form reasonably acceptable to Medibuy and its legal counsel.
7. MISCELLANEOUS.
7.1 MARKET STAND-OFF AGREEMENT. Xxxxxxx acknowledges and agrees that
Medibuy (or a representative of the underwriters) may, in connection with the
first underwritten registration of the offering of any securities of Medibuy
under the Securities Act, require that Xxxxxxx not sell or otherwise transfer or
dispose of any Common Stock or any other stock or other securities of Medibuy
during such period (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of Medibuy filed under the
Securities Act as may be requested by Medibuy or the representative of the
underwriters; provided that all officers and directors of Medibuy who then hold
common stock (or other securities of Medibuy) enter into similar agreements.
Xxxxxxx further agrees that Medibuy may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
7.2 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of California as such laws are applied to agreements
between California residents entered into and performed entirely in California.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Securities from time to time.
7.4 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, any
related agreements and the other documents delivered pursuant hereto, constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
7.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
11.
12
7.6 AMENDMENT AND WAIVER. This Agreement may be amended or modified
only upon the written consent of both parties.
7.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or any related
agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character on any party's part of any breach, default or
noncompliance under this Agreement or any related agreements or any waiver on
such party's part of any provisions or conditions of the Agreement or any
related agreements must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or any related agreements, by law, or otherwise afforded to any
party, shall be cumulative and not alternative.
7.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five (5) days after having been sent by certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to Medibuy and Xxxxxxx
at the addresses as set forth in the first introductory paragraph of this
Agreement or at such other address as such party may designate by ten (10) days
advance written notice to the other party hereto.
7.9 ATTORNEYS' FEES. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
7.10 TAX TREATMENT. The parties hereto agree that the exchange
contemplated under this Agreement shall be treated as a tax-free exchange of
shares of equal value pursuant to a reorganization under Section 368(a)(1)(B)
and the parties shall take no position inconsistent with such treatment.
7.11 TITLES AND SUBTITLES. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
12.
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7.13 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 7.13 being untrue.
7.14 CONFIDENTIALITY. Each party hereto agrees that, except with the
prior written consent of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement or any related agreements,
discussions or negotiations relating to this Agreement or any related
agreements, the performance of its obligations hereunder or the ownership of the
Securities purchased hereunder. The provisions of this Section 5.14 shall be in
addition to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by the parties hereto.
7.15 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
7.16 ARBITRATION. Medibuy and Xxxxxxx agree that any dispute or
controversy arising out of, relating to or in connection with the
interpretation, validity, construction, performance, breach or termination of
this Agreement shall be settled by binding arbitration to be held in San Diego
County, California, in accordance with rules established by the American
Arbitration Association as then in effect (the "Rules"). The parties shall agree
in good faith upon the selection of an arbitrator pursuant to the Rules. The
arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator shall be final, conclusive and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator's decision
in any court of competent jurisdiction. Costs of arbitration are to be borne
equally by both parties.
[THIS SPACE INTENTIONALLY LEFT BLANK]
13.
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IN WITNESS WHEREOF, the parties hereto have executed the COMMON STOCK
EXCHANGE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY:
XXXXXXX.XXX, INC.
By: /s/ XXXXXX XXXXXX
------------------------------------
Name: Xxxxxx Xxxxxx
----------------------------------
Title: Chief Executive Officer
---------------------------------
/s/ XXXX XXXXXXX
---------------------------------------
XXXX XXXXXXX
EXECUTION PAGE TO
COMMON STOCK EXCHANGE AGREEMENT
15
LIST OF EXHIBITS
Exhibit A Hippo Proprietary Assets
Exhibit B Assignment Separate From Certificate
Exhibit C Joint Escrow Instructions
2.
16
EXHIBIT A
HIPPO PROPRIETARY ASSETS
3.
17
EXHIBIT B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, XXXX XXXXXXX hereby sells, assigns and transfers unto
XXXXXXX.XXX, INC. (the "Company"), _______ (______) shares of the Common Stock
of the Company standing in Xxxx Xxxxxxx' name on the books of the Company
represented by Certificate No.(s) ____________, herewith and does hereby
irrevocably constitute and appoint the Secretary of the Company attorney to
transfer the said stock on the books of the Company with full power of
substitution in the premises.
Dated: ______________
/s/ XXXX XXXXXXX
---------------------------------------
Xxxx Xxxxxxx
1.
18
EXHIBIT C
JOINT ESCROW INSTRUCTIONS
Corporate Secretary
XXXXXXX.XXX, INC.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xx Xxxx, XX 00000
Dear Sir or Madam:
As Escrow Agent for both XXXXXXX.XXX, INC., a Delaware corporation
("Medibuy"), and the undersigned Xxxx Xxxxxxx ("Xxxxxxx") of Restricted Shares
of Medibuy, you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Common Stock Exchange
Agreement (together, "Agreement"), dated as of June 11, 1999, to which a copy of
these Joint Escrow Instructions is attached as Exhibit C, in accordance with the
following instructions (all capitalized terms used but not defined herein shall
have the same meanings given them in the Agreement):
1. In the event Medibuy or an assignee shall elect to exercise the
Repurchase Option set forth in the Agreement, Medibuy or its assignee will give
to Xxxxxxx and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of Medibuy. Xxxxxxx and Medibuy hereby irrevocably authorize
and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to Medibuy against the
simultaneous delivery to you of the purchase price (which may include suitable
acknowledgment of cancellation of indebtedness) of the number of shares of stock
being purchased pursuant to the exercise of the Repurchase Option.
3. Xxxxxxx irrevocably authorizes Medibuy to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as specified in the Agreement.
Xxxxxxx does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities and other property all documents of assignment and/or
transfer and all stock certificates necessary or appropriate to make all
securities negotiable and complete any transaction herein contemplated.
19
4. This escrow shall terminate upon expiration or exercise in full of the
Repurchase Option, whichever occurs first.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Xxxxxxx,
you shall deliver all of same to Xxxxxxx and shall be discharged of all further
obligations hereunder; provided, however, that if at the time of termination of
this escrow you are advised by Medibuy that the property subject to this escrow
is the subject of a pledge or other security agreement, you shall deliver all
such property to the pledgeholder or other person designated by Medibuy.
6. Except as otherwise provided in these Joint Escrow Instructions, your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties or
their assignees. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Xxxxxxx while
acting in good faith and any act done or omitted by you pursuant to the advice
of your own attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel (including without
limitation the firm of Cooley Godward LLP) and other experts as you may deem
necessary to properly advise you in connection with your obligations hereunder,
may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of Medibuy or if you shall resign by written notice
to each party. In the event of any such termination, Medibuy may appoint any
officer or assistant officer of Medibuy as
20
successor Escrow Agent and Xxxxxxx hereby confirms the appointment of such
successor or successors as his attorney-in-fact and agent to the full extent of
your appointment.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities, you
may (but are not obligated to) retain in your possession without liability to
anyone all or any part of said securities until such dispute shall have been
settled either by mutual written agreement of the parties concerned or by a
final order, decree or judgment of a court of competent jurisdiction after the
time for appeal has expired and no appeal has been perfected, but you shall be
under no duty whatsoever to institute or defend any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
any United States Post Box, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties hereunto entitled at the
following addresses, or at such other addresses as a party may designate by five
(5) days' written notice to each of the other parties hereto:
COMPANY: XXXXXXX.XXX, INC.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xx Xxxx, XX 00000
XXXXXXX: Xxxx Xxxxxxx
0000 Xxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
With a copy to:
Xxxxxx X. X'Xxxxx
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
SECRETARY: Corporate Secretary
XXXXXXX.XXX, INC.
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xx Xxxx, XX 00000
16. By signing these Joint Escrow Instructions you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
21
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" or "your" herein refer to the
original Escrow Agent and to any and all successor Escrow Agents. It is
understood and agreed that Medibuy may at any time or from time to time assign
its rights under the Agreement and these Joint Escrow Instructions in whole or
in part.
Very truly yours,
XXXXXXX.XXX, INC.
Signature: /s/ XXXXXX XXXXXX
-----------------------------
Printed Name: Xxxxxx Xxxxxx
--------------------------
Title: Chief Executive Officer
---------------------------------
XXXXXXX:
/s/ XXXX XXXXXXX
----------------------------------------
Xxxx Xxxxxxx
ESCROW AGENT:
/s/ XXXXXX XXXXXXX
-------------------------------------
Corporate Secretary
