EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 12, 1998
BY AND AMONG
INFOSPACE, INC.,
OUTPOST NETWORK, INC.,
CERTAIN SHAREHOLDERS OF
OUTPOST NETWORK, INC.,
AND OUTPOST ACQUISITION, INC.
CONTENTS
ARTICLE 1 - TERMS OF MERGER...............................................................................1
Section 1.1 The Merger..............................................................................1
Section 1.2 Effective Date of the Merger............................................................2
Section 1.3 Articles of Incorporation of the Surviving Corporation..................................2
Section 1.4 Bylaws of the Surviving Corporation.....................................................2
Section 1.5 Corporate Governance....................................................................2
Section 1.6 Conversion of Shares....................................................................3
Section 1.7 Acquisition Common Stock................................................................3
Section 1.8 No Fractional Shares....................................................................3
Section 1.9 Exchange of Shares; Stock Transfer Books................................................4
Section 1.10 Treasury and Other Stock...............................................................4
Section 1.11 Exercise of Stock Rights...............................................................4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF OUTPOST AND PRINCIPAL SHAREHOLDERS...........................4
Section 2.1 Corporate Organization..................................................................5
Section 2.2 Binding Agreement.......................................................................5
Section 2.3 OutPost Stock...........................................................................5
Section 2.4 Properties..............................................................................5
Section 2.5 Interest in Assets......................................................................6
Section 2.6 Effective Agreement.....................................................................6
Section 2.7 Defaults of Others......................................................................6
Section 2.8 Litigation..............................................................................6
Section 2.9 Insurance...............................................................................7
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Section 2.10 Employee Benefits, Retirement and Welfare Plans........................................7
Section 2.11 Employees..............................................................................7
Section 2.12 Labor Relations........................................................................8
Section 2.13 Absence of Certain Changes.............................................................8
Section 2.14 Compliance with Laws...................................................................8
Section 2.15 Environmental..........................................................................8
Section 2.16 Governmental Licenses, Etc.............................................................8
Section 2.17 Officers and Directors; Powers of Attorney.............................................9
Section 2.18 Statements True, Complete and Correct..................................................9
Section 2.19 Virtual Outlet.........................................................................9
Section 2.20 Contracts.............................................................................10
Section 2.21 Status of Contracts...................................................................11
Section 2.22 Commissions...........................................................................11
Section 2.23 Tax Returns...........................................................................11
Section 2.24 Financial Information.................................................................12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF INFOSPACE...................................................12
Section 3.1 Corporate Organization.................................................................12
Section 3.2 Binding Agreement......................................................................12
Section 3.3 Effective Agreement....................................................................12
Section 3.4 Commissions............................................................................13
Section 3.5 Statements True, Complete and Correct..................................................13
Section 3.6 InfoSpace Stock........................................................................13
Section 3.7 Financial Information..................................................................13
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Section 3.8 No Agreements..........................................................................14
Section 3.9 Litigation.............................................................................14
Section 3.10 Tax Returns...........................................................................14
ARTICLE 4 COVENANTS......................................................................................14
Section 4.1 OutPost's and the Principal Shareholders' Negative Covenants...........................14
Section 4.2 OutPost's and Principal Shareholders' Affirmative Covenants............................15
Section 4.3 InfoSpace's Affirmative Covenant.......................................................16
Section 4.4 Post-Closing...........................................................................16
Section 4.5 Notifications as to Representations....................................................17
ARTICLE 5 CONDITIONS TO INFOSPACE'S OBLIGATION TO CLOSE..................................................17
Section 5.1 Representations and Warranties True at Closing.........................................17
Section 5.2 Compliance with Agreement..............................................................18
Section 5.3 No Material Change.....................................................................18
Section 5.4 No Injunction..........................................................................18
Section 5.5 Casualty...............................................................................18
Section 5.6 Shareholder Consents...................................................................19
Section 5.7 Certificate of Fulfillment of Conditions...............................................19
Section 5.8 Limitation on Liabilities..............................................................19
Section 5.9 Employment of Key Individuals..........................................................19
Section 5.10 Resignation of OutPost Officers and Directors.........................................19
Section 5.11 Appraisal Rights......................................................................19
Section 5.12 Investment Certificate................................................................20
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ARTICLE 6 CONDITIONS TO OUTPOST'S AND PRINCIPAL
SHAREHOLDERS' OBLIGATIONS TO CLOSE..................................................................20
Section 6.1 Representations and Warranties True at Closing.........................................20
Section 6.2 Compliance with Agreement..............................................................20
Section 6.3 No Injunction..........................................................................20
Section 6.4 Certificate of Fulfillment of Conditions...............................................21
Section 6.5 Offering Memorandum....................................................................21
Section 6.6 Shareholder Consents...................................................................21
Section 6.7 Due Diligence..........................................................................21
ARTICLE 7 THE CLOSING....................................................................................21
Section 7.1 Closing................................................................................21
Section 7.2 OutPost's and Principal Shareholders' Performance......................................21
Section 7.4 InfoSpace's Performance................................................................22
Section 7.5 Failure to Close.......................................................................23
ARTICLE 8 ANNOUNCEMENTS..................................................................................23
ARTICLE 9 TERMINATION AND ABANDONMENT....................................................................23
Section 9.1 Reasons for Termination................................................................23
Section 9.2 Effect of Termination..................................................................23
ARTICLE 10 RESTRICTIONS ON TRANSFER......................................................................24
ARTICLE 11 INDEMNITIES...................................................................................24
Section 11.1 Principal Shareholder and Recent Investor Indemnities.................................24
Section 11.2 InfoSpace's Indemnity.................................................................26
Section 11.3 Procedure and Participation...........................................................26
Section 11.4 Survival of Indemnification; Exclusive Remedy.........................................27
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ARTICLE 12 MISCELLANEOUS.................................................................................27
Section 12.1 Notices...............................................................................27
Section 12.2 Entire Agreement; Amendment...........................................................29
Section 12.3 Counterparts..........................................................................29
Section 12.4 Expenses..............................................................................29
Section 12.5 Further Assurances....................................................................29
Section 12.6 Construction..........................................................................29
Section 12.7 Joint and Several Obligations.........................................................29
Section 12.8 Governing Law.........................................................................30
Section 12.9 Cooperation...........................................................................30
Section 12.10 Severability.........................................................................30
Section 12.11 Survival.............................................................................30
Section 12.12 Headings.............................................................................30
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THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into
this 12th day of May, 1998, by and among InfoSpace, Inc., a Delaware corporation
("InfoSpace"); OutPost Network, Inc., a Washington corporation ("OutPost"), the
shareholders of OutPost listed on the signature page for this Agreement (which
shareholders are either designated therein as each a "Principal Shareholder" and
collectively, the "Principal Shareholders" or each as a "Recent Investor" and
collectively, the "Recent Investors"), and OutPost Acquisition, Inc., a
Washington corporation ("Acquisition"). The term "Shareholder" is used from
time to time herein and refers to any shareholder of OutPost. The term
"Principal Shareholder" or "Principal Shareholders" does not refer to or include
any Recent Investor.
RECITALS
WHEREAS, Acquisition is a recently formed Washington corporation and
InfoSpace is the owner of all of the issued and outstanding shares of the common
stock of Acquisition;
WHEREAS, the parties intend that, subject to the terms and conditions
hereinafter set forth, Acquisition be merged with and into OutPost pursuant to
this Agreement and the Articles of Merger (the "Articles of Merger")
substantially in the form of Exhibit 1A attached hereto (the "Merger");
WHEREAS, the Merger is intended to qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1996, as
amended (the "Code"); and
WHEREAS, the respective Boards of Directors of InfoSpace, OutPost and
Acquisition have approved the Merger pursuant to this Agreement and the Articles
of Merger;
NOW, THEREFORE, in order to consummate the Merger and in consideration of
the mutual representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 - TERMS OF MERGER
SECTION 1.1 THE MERGER
Subject to the terms and conditions of this Agreement and the laws of the
State of Washington, InfoSpace, Acquisition and OutPost shall execute and file,
among other things, the Articles of Merger in the Office of the Secretary of
State of the State of Washington (the "Washington Secretary of State") pursuant
to which the separate existence of Acquisition shall cease and Acquisition shall
be merged with and into OutPost on the Effective Date (as defined in Section
1.2). Acquisition and OutPost are sometimes collectively referred to as the
"Constituent Corporations" and OutPost is sometimes referred to as the
"Surviving Corporation."
SECTION 1.2 EFFECTIVE DATE OF THE MERGER
The Merger shall become effective on the date the Articles of Merger and
any other documents required by the Business Corporation Act of the State of
Washington (the "Corporation Law") shall be duly executed, acknowledged or
verified and filed with the Washington Secretary of State in accordance with the
Corporation Law (the "Effective Date"). If the Washington Secretary of State
requires any changes in the Articles of Merger as a condition to filing the
Articles of Merger, InfoSpace, Acquisition, OutPost and the Principal
Shareholders will execute necessary revisions incorporating such changes,
provided such changes are not materially inconsistent with or result in any
material changes in the terms of this Agreement or the Articles of Merger.
SECTION 1.3 ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION
At the Effective Date and without any further action on the part of the
Constituent Corporations, the Articles of Incorporation of OutPost, shall be and
remain the Articles of Incorporation of the Surviving Corporation. Such
Articles of Incorporation may thereafter be altered, amended or repealed in
accordance with the provisions thereof or applicable law. As of the date this
Agreement is executed, the Restated Articles of Incorporation, as amended, are
in effect in the form of Exhibit 1.3A. As of the Effective Date, the Restated
Articles of Incorporation, as amended, shall have been further amended as set
forth in Exhibit 1.3B. Prior to or as of the Effective Date, no other
amendments or restatements shall have been made to the Restated Articles of
Incorporation as amended, or, except as specifically set forth herein.
SECTION 1.4 BYLAWS OF THE SURVIVING CORPORATION
At the Effective Date and without any further action on the part of the
Constituent Corporations, the Bylaws of OutPost, a copy of which is attached
hereto as Exhibit 1.4, shall be and remain the Bylaws of the Surviving
Corporation, until altered, repealed or amended in accordance with the
provisions thereof and applicable law. Prior to or as of the Effective Date, no
other amendments or restatements shall have been made to the Bylaws except as
specifically set forth herein.
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SECTION 1.5 CORPORATE GOVERNANCE
1.5.1 As of the Effective Date, the directors and officers of OutPost
shall have resigned and at the Effective Date, the shareholder of the Surviving
Corporation shall elect replacement directors and the new directors shall elect
replacement officers of the Surviving Corporation, each of such persons to hold
office, subject to the applicable provisions of the Articles of Incorporation
and Bylaws of the Surviving Corporation, and applicable law.
1.5.2 As of the Effective Date, InfoSpace shall have amended its
certificate of incorporation to provide for a board consisting of five (5)
directors, and InfoSpace, Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, the
Xxxxxxx Family Trust, Xxxx Xxxx, Xxxx Xxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxx
Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx Partners LLC, The Xxxxxx Group, Inc., and
Xxxxx Xxxxxx shall have entered into a Voting Agreement in the form of Exhibit
1.5.2.
SECTION 1.6 CONVERSION OF SHARES
Upon the effectiveness of the Merger, the manner of converting and
exchanging the shares of the Constituent Corporations shall be as follows:
InfoSpace shall issue a total of not more than 3,000,000 shares of its Common
Stock, par value $.0001/share. Each issued and outstanding share of the Common
Stock of OutPost (the "OutPost Stock") shall, by virtue of the Merger and
without any action on the part of the holder thereof, automatically be converted
into a fraction (the "Conversion Ratio") of one fully paid and nonassessable
share of Common Stock of InfoSpace ("InfoSpace Common"). The Conversion Ratio
shall be a fraction with a numerator equal to 3,000,000, and a denominator equal
to the total number of shares of OutPost Stock issued and outstanding
immediately prior to the Effective Date. On or after the Effective Date, all
certificates representing shares of OutPost Stock shall be surrendered to the
Secretary of the Surviving Corporation, whereupon there shall be issued to the
respective holder of each such certificate a certificate representing the number
of shares of InfoSpace Common into which such shares have been converted as
provided herein.
SECTION 1.7 ACQUISITION COMMON STOCK
Each share of common stock, no par value, of Acquisition ("Acquisition
Common Stock") issued and outstanding immediately prior to the Merger shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be automatically converted into and exchangeable for one share of the common
stock, no par value, of the Surviving Corporation.
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SECTION 1.8 NO FRACTIONAL SHARES
No fractional share of InfoSpace Common will be issued in the Merger, but,
in lieu thereof, each holder of OutPost Stock who would otherwise be entitled to
a fraction of a share of InfoSpace Common (after aggregating all fractional
shares of InfoSpace Common to be received by such holder) will be entitled to
receive an amount of cash (rounded to the nearest whole cent) equal to the
product of (a) the fraction multiplied by (b) $2.00.
SECTION 1.9 EXCHANGE OF SHARES; STOCK TRANSFER BOOKS
On the Effective Date of the Merger, each holder of an outstanding
certificate or certificates theretofore representing shares of OutPost Stock
shall be entitled, upon surrender of such certificate or certificates to the
Surviving Corporation, to receive in respect of each share represented by such
certificate or certificates, InfoSpace Common in accordance with Section 1.6 and
if applicable, cash in accordance with Section 1.8. The cash payment, if any,
shall be made by corporate check of InfoSpace made payable to the holder of
record of OutPost Stock as shown on Schedule 2.3 in respect of which payment is
being made. At the Effective Date of the Merger there shall be no further
registry of transfers on the records in respect of OutPost Stock outstanding
immediately prior to the Effective Date of the Merger. If any payment is to be
made in the form of a check payable to a name other than that in which the
certificate for OutPost Stock surrendered is registered, or if InfoSpace Common
is to be issued in a name other than that in which the certificate for OutPost
Stock surrendered is registered, it shall be a condition of such distribution
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such payment or
InfoSpace Common shall pay to the Surviving Corporation any transfer or other
taxes required, or shall establish to the satisfaction of the Surviving
Corporation that such taxes have been paid or are not applicable. If, after the
Effective Date of the Merger, certificates are presented to the Surviving
Corporation, they shall be cancelled and exchanged for such cash payment and
InfoSpace Common as provided herein.
SECTION 1.10 TREASURY AND OTHER STOCK
All shares of OutPost Stock which are held by OutPost as treasury shares
(if any) shall cease to exist as of the Effective Date, without any conversion
thereof or exchange with respect thereto.
SECTION 1.11 EXERCISE OF STOCK RIGHTS
On the Effective Date, any option, warrant or other right to purchase
shares of OutPost Stock ("OutPost Options"), which is outstanding on the
Effective Date, shall be cancelled unless exercised prior to the Effective Date.
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ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF
OUTPOST AND PRINCIPAL SHAREHOLDERS
Each of the Principal Shareholders and OutPost jointly and severally
represent and warrant to InfoSpace, as follows; provided however that Xxxx
Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, the Xxxxxxx Family Trust, Xxxxxx Partners LLC,
Xxxxxxx X. Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxxx, and The Xxxxxx Group,
Inc. (the "Recent Investors") make only those representations and warranties set
forth in the second sentence of Section 2.3, and in Sections 2.2 and 2.8.2
below, and such representations and warranties are made severally and not
jointly by each Recent Investor.
SECTION 2.1 CORPORATE ORGANIZATION
OutPost is a corporation duly organized, validly existing and in good
standing under the laws of the State of Washington; has the corporate power and
authority to own, operate and lease its properties as presently owned, operated
and leased and to carry on its business as it is now being conducted. OutPost
owns no interest in any corporation, partnership, joint venture or other entity
or association.
SECTION 2.2 BINDING AGREEMENT
This Agreement, upon due execution by InfoSpace and the other parties
hereto, will constitute the legal, valid and binding obligations of OutPost, the
Principal Shareholders, and the Recent Investors, enforceable in accordance with
its terms, except as same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally.
SECTION 2.3 OUTPOST STOCK
Schedule 2.3 sets forth a complete an accurate description of the number of
shares of OutPost Stock that will be issued and outstanding as of the Effective
Date. As of the Effective Date, the OutPost Stock described in Schedule 2.3
shall be duly authorized and issued, fully paid and non-assessable. Except for
the agreements described in Schedule 2.3, neither OutPost nor any Principal
Shareholder or Recent Investor is a party to any written or oral agreement,
understanding, arrangement or commitment with respect to the OutPost Stock or
which imposes any obligation on OutPost, or any Principal Shareholder or Recent
Investor or creates or may create any rights in any person regarding OutPost
Stock, or any rights to acquire any capital stock or other interest in OutPost.
No shares of preferred stock in OutPost will be issued and outstanding as of the
Effective Date, and no other shares of OutPost Stock shall be issued and
outstanding except as described in Schedule 2.3.
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SECTION 2.4 PROPERTIES
OutPost has good and marketable title to all of the assets used in its
business as conducted on the date hereof (the "Assets"). As of the Effective
Date, the Assets will be free and clear of all encumbrances, liens, security
interests and charges of every kind and character. None of the Assets is
subject to a contract, option or commitment for sale; and all the Assets are
owned by OutPost. All such Assets are in OutPost's possession or under its
control.
SECTION 2.5 INTEREST IN ASSETS
OutPost has not granted, and there is not outstanding, any option, right,
agreement or other obligation pursuant to which any party could claim a right to
acquire in any way all or any part of or interest in the Assets.
SECTION 2.6 EFFECTIVE AGREEMENT
The execution, delivery and performance of this Agreement by OutPost and
the Principal Shareholders and the consummation of the transactions contemplated
herein do not require the consent, waiver, approval, license or authorization of
any person or public authority; do not conflict with, result in a breach of or
constitute a default under any applicable law, judgment, order, injunction,
decree, rule or regulation, or ruling of any court or government instrumentality
or the Articles of Incorporation or Bylaws of OutPost, or with or without the
giving of notice and/or the passage of time, any mortgage, deed of trust,
license, lease, indenture or other agreement or any instrument or any order,
judgment or any other restriction of any kind or character, to which OutPost or
any Principal Shareholder is a party or by which OutPost or any Principal
Shareholder or any of their respective properties may be bound; do not give to
others any right to terminate, or result in termination of, any such
instruments; do not result in termination of any provisions of such instruments;
and do not result in the creation of any lien, charge or encumbrance on any of
the Assets.
SECTION 2.7 DEFAULTS OF OTHERS
Neither OutPost nor any Principal Shareholder has received any notice,
formal or otherwise, from any other party with whom OutPost has any material
contractual arrangement of a failure to comply with or default (without regard
to any requirement of notice or grace period or both) in the observance or
performance of any material term, condition, or provision of any such
contractual agreement which may affect the Assets.
SECTION 2.8 LITIGATION
2.8.1 Except with respect to a possible breach of contract suit threatened
by Xxxxxxx X. Xxxxxxxx, there is no suit, action, arbitration, legal,
administrative or other
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proceeding pending or threatened which may materially adversely affect the
Assets, OutPost's ability to conduct its business after the Closing, or
Principal Shareholders' ability to perform any of their obligations under this
Agreement. There is no governmental regulation, rule, law or investigation
pending or threatened which may materially adversely affect the business of
OutPost, or Principal Shareholders' ability to perform any of their obligations
under this Agreement.
2.8.2 The Principal Shareholders (and the Recent Investors) are not
subject to, or party to or otherwise bound by, any suit, action or other legal
proceeding, or any suit, action or other legal proceeding, or any order, writ,
injunction, decree or ruling of any federal, state or local court, governmental
agency or quasi-governmental authority which would prohibit or impair any such
Principal Shareholder's or Recent Investor's power to execute and deliver this
Agreement, or perform any of their respective obligations under this Agreement.
SECTION 2.9 INSURANCE
Schedule 2.9 sets forth a correct and complete list of all of the policies
of insurance and fidelity or surety bonds maintained by OutPost. OutPost has
received no notices of any outstanding requirements or recommendations from any
insurance company that issued a policy with respect to any of the properties and
assets of OutPost during the previous five years, from any board of fire
underwriters of other body exercising similar functions or from any governmental
authority requiring or recommending that (i) any repair or other material work
be done on or with respect to any of the properties and assets owned, used or
occupied by OutPost; or (ii) any material, equipment or facilities be installed
on, or in connection with, any of the properties or assets owned, used or
occupied by OutPost.
SECTION 2.10 EMPLOYEE BENEFITS, RETIREMENT AND WELFARE PLANS
Except as set forth on Schedule 2.10, there are no employee welfare or
benefit plans sponsored by OutPost or in which OutPost employees, as OutPost
employees, participate. The Principal Shareholders have delivered to InfoSpace
all documents that set forth the terms of or otherwise relating to each such
plan and all personnel, payroll, and employment manuals and policies. OutPost
has performed all of its obligations under all such plans.
SECTION 2.11 EMPLOYEES
Schedule 2.11 hereto contains a list of all persons employed by OutPost
(singly, an "Employee" and collectively, the "Employees"), together with (i) the
amount of the current annualized salary or hourly wage of such person, (ii)
whether such person is considered in due course for discretionary bonuses,
together with the amount of such bonus paid to such person by OutPost with
respect to the period ended December 00,
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0000, (xxx) whether any such person is contractually or otherwise entitled to
any non-discretionary bonus with respect to all or part of the year ending
December 31, 1997 and, if so, the method of computation of such bonus, (iv)
whether any such person is contractually or otherwise entitled to any commission
with respect to all or part of the year ending December 31, 1997 and, if so, the
method of computation and the amount (or estimated amount) of commissions that
will be payable for the year ending December 31, 1997, and (v) whether such
person is involved in the development of the "Virtual Outlet" technology.
SECTION 2.12 LABOR RELATIONS
OutPost is in compliance with all federal, state and local laws and
regulations respecting employment and employment practices, terms and conditions
of employment and wages and hours. OutPost is not a party to any collective
bargaining agreement, and there is no strike, dispute, grievance, controversy or
other labor trouble existing or threatened against OutPost, and no grounds for
any such action.
SECTION 2.13 ABSENCE OF CERTAIN CHANGES
Since December 31, 1997, there has not been:
2.13.1 any material damage, destruction or loss (whether or not
covered by insurance) affecting the Assets or the results of operations of
OutPost; or
2.13.2 any sale, transfer, pledge, mortgage, abandonment or other
disposition of any of the Assets, or any agreement to do so, except in the
ordinary course of business.
SECTION 2.14 COMPLIANCE WITH LAWS
OutPost is in material compliance with all laws, regulations, or
governmental orders relating to the Assets or the business. OutPost has not
been charged with a violation of any law, regulation, or governmental order
relating to the Assets or the business. OutPost is not in default or violation
of or with respect to any judgment, order, injunction or decree of any court or
governmental instrumentality adversely affecting the Assets or the business.
SECTION 2.15 ENVIRONMENTAL
No Hazardous Substances have been released at, in or under OutPost's
premises, or have migrated into or under such premises. No Hazardous Substances
have migrated from the Facility, or been disposed of offsite. No toxic
substances, as regulated under the Toxic Substances Control Act ("TSCA"), 15
U.S.C. (S)(S) 2601 through 2671 and any
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regulations promulgated pursuant thereto, or otherwise, have ever been used by
OutPost at its premises or elsewhere.
SECTION 2.16 GOVERNMENTAL LICENSES, ETC.
OutPost has all governmental licenses (including Occupational Safety and
Health Administration or environmental agency licenses) required, if any, for
the conduct of its business and all such licenses, which are listed in Schedule
2.16 hereto, are currently in full force and effect. (i) There have been no
material violations of any of the terms and conditions of any such licenses,
(ii) there is no action pending or threatened by any governmental authority
seeking to cancel, revoke, rescind, limit, or terminate any such license, (iii)
consummation of the transactions contemplated by this Agreement will neither
result in a violation of any of the terms and conditions of any such license or
of any statute or regulation under which it was issued nor impair the validity
of any such license, and (iv) each such license shall remain in full force and
effect in accordance with its terms.
SECTION 2.17 OFFICERS AND DIRECTORS; POWERS OF ATTORNEY
Schedule 2.17 hereto contains a list of all officers and directors of
OutPost, and no person holds general or special powers of attorney from OutPost.
SECTION 2.18 STATEMENTS TRUE, COMPLETE AND CORRECT
The statements about OutPost contained herein, in the Exhibits, the
Schedules, or in any Offering Memorandum delivered to the Shareholders by
InfoSpace in connection with the Merger (the "Offering Memorandum") or in any
other written documents executed and delivered at the Closing which are required
under this Agreement by or on behalf of OutPost or the Principal Shareholders,
are true, complete and correct in all material respects, and such statements
contained herein, in the Exhibits, the Schedules, the Offering Memorandum and
such other documents do not omit any material fact which, if disclosed, might
reasonably have been expected to affect the decision of InfoSpace to enter into
this Agreement. The statements and information of the Principal Shareholders
contained in the Exhibits, the Schedules, the Offering Memorandum and such other
documents shall be deemed to constitute representations and warranties of
Principal Shareholders under this Agreement to the same extent as if herein set
forth in full.
SECTION 2.19 VIRTUAL OUTLET
OutPost owns the entire and exclusive right, title and interest in and to
the "Virtual Outlet" technology ("VO"), free and clear of any and all liens,
encumbrances, interests or other restrictions of any kind. OutPost has filed
and is vigorously prosecuting a U.S. patent relating to certain aspects of VO
and is the sole and exclusive owner of all rights in
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and to such patent application and any and all Letters Patent which may be
granted or issued in connection with VO. VO is an original work and no portion
of VO has been copied from any other person or infringes or otherwise violates
the copyright, trade secret, confidentiality, contract or license rights of any
third party. To the best of OutPost's knowledge, VO does not infringe the patent
or trademark rights of any third party. There are no patent infringement suits
or asserted patent infringement claims pertaining to VO pending or threatened as
of the date of this Agreement and OutPost is not aware of any potential patent
infringement claims. OutPost is not operating under or paying royalties under
any patent license or technical information agreement applicable to VO, nor is
it committed in any way to enter into any such agreement. No third party has any
license or other rights in or to VO. VO is not fully developed.
SECTION 2.20 CONTRACTS
Except as set forth on Schedule 2.21 or any other Schedule hereto, OutPost
is not a party to or bound by:
(a) any contract for the purchase, sale or lease of real property or
any option to purchase or sell real property;
(b) any indebtedness, obligation or liability for borrowed money, or
liability for the deferred purchase price of property in excess of $5,000, or
any instrument guaranteeing any indebtedness, obligation or liability, or any
obligation to incur any of the foregoing;
(c) any joint venture, partnership or other arrangement involving a
sharing of profits involving OutPost;
(d) any agreement that is material to the business of OutPost and
which includes provisions regarding minimum volumes or volume discounts,
excluding outstanding price quotations;
(e) any agreement that is material to the business of OutPost and
pursuant to which a rebate, discount, bonus, commission or other payment with
respect to the sale of any product or service of OutPost will be payable or
required after the Effective Date;
(f) any guarantee of the obligations of OutPost's customers,
suppliers, officers, directors, employees or Affiliates or others;
(g) any consignment, distributor, dealer, manufacturer's
representative, sales agency, advertising representative or advertising or
public relations contract that is material to OutPost;
(h) any agreement limiting OutPost's ability to engage in any business
anywhere in the world;
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(i) any contract which provides for, or relates to, any non-
competition or confidentiality arrangement with any Person, including any
current or former officer or employee of OutPost;
(j) any contract or group of related contracts for capital
expenditures in excess of $5,000 for any single project or related series of
projects;
(k) any contract which involves payments or receipts by the Company of
more than $5,000; or
(l) any contract not made in the ordinary course of business.
SECTION 2.21 STATUS OF CONTRACTS
Each of the leases, contracts and other agreements listed on Schedule 2.21
(collectively, the "Material Contracts"), constitutes a valid and binding
obligation of the Company and, to the knowledge of OutPost or any of the
Principal Shareholders, the other parties thereto, and is in full force and
effect and each of the Material Contract (except for those Material Contracts
which by their terms will expire prior to the Closing Date or will be otherwise
terminated prior to the Closing Date in accordance with the provisions hereof)
will continue in full force and effect after the Closing Date, in each case
without breaching the terms thereof or resulting in the forfeiture or impairment
of any rights thereunder and without the consent, approval or act of, or the
making of any filing with, any other party. OutPost has fulfilled and performed
its obligations under each of the Material Contracts and OutPost is not in, or,
to the knowledge of OutPost and the Principal Shareholders, alleged to be in,
breach or default under, nor is there or, to the knowledge of OutPost and the
Principal Shareholders, is there alleged to be any basis for termination of any
of the Material Contracts. To the knowledge of OutPost or any of the Principal
Shareholders, no other party to any of the Material Contracts has breached or
defaulted thereunder. No event has occurred and no condition or state of facts
exists which, with the passage of time or the giving of notice or both, would
constitute such a default or breach by OutPost or, to the knowledge of OutPost,
or any of the Principal Shareholders, by any other party. OutPost is not
currently renegotiating any of the Material Contracts or paying damages in lieu
of performance thereunder.
SECTION 2.22 COMMISSIONS
There is no agent, broker, investment banker, finder or other person or
firm who would have any valid claim against OutPost for a commission, finder's
fee or brokerage fee in connection with this Agreement or any of the
transitions, transfers or assignments contemplated hereby.
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SECTION 2.23 TAX RETURNS
OutPost has filed on or before their respective due dates or extensions
thereof all federal, state and local tax returns and reports as are required to
be filed; all such returns are true, correct and complete; and to the best of
its knowledge, OutPost has duly paid or accrued in full for any federal, state
and local taxes or other charges due or claimed to be due to any federal, state
or local taxing authorities, including, without limitation, employee withholding
amounts. There are no tax liens upon any property or assets of OutPost other
than liens for current taxes not yet paid or payable. No federal, state or local
tax returns of OutPost are currently under examination by any taxing authority,
and, to the best of its knowledge, if any such examination is hereafter made and
the results are determined adversely to OutPost, such results will not have a
material adverse effect on the operations of OutPost taken as a whole as if
determined prior to the Merger. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to assessment of any
federal, state or local income tax.
SECTION 2.24 FINANCIAL INFORMATION
Schedule 2.25 contains the unaudited financial statements of OutPost for
the periods ending December 31, 1997 and December 31, 1996, which accurately
present the matters set forth therein.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF INFOSPACE
InfoSpace represents and warrants to the OutPost Shareholders, as follows:
SECTION 3.1 CORPORATE ORGANIZATION
InfoSpace is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the corporate power
and authority to own, operate and lease its properties as presently owned,
operated and leased and to carry on its business as it is now being conducted.
InfoSpace's only subsidiary is Acquisition.
SECTION 3.2 BINDING AGREEMENT
This Agreement, upon its execution by OutPost and the Principal
Shareholders, will constitute the legal, valid and binding obligation of
InfoSpace, enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally.
SECTION 3.3 EFFECTIVE AGREEMENT
The execution, delivery and performance of this Agreement by InfoSpace and
consummation by it of the transactions contemplated herein do not require the
consent,
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waiver, approval, license or authorization of any person or public authority; do
not conflict with, result in a breach of or constitute a default under any
applicable law, judgment, order, injunction, decree, rule or regulation, or
ruling of any court or governmental instrumentality or the charter and governing
documents of InfoSpace, or, with or without notice of and/or the passage of
time, any mortgage, deed of trust, license, indenture or other agreement or
other instrument, or any order, judgment or any other restriction of any kind or
character to which InfoSpace is a party or by which InfoSpace may be bound; do
not give to others any right to terminate, or result in termination of, any such
instruments; and do not result in termination of any provision of such
instruments.
SECTION 3.4 COMMISSIONS
There is no agent, broker, investment banker, finder or other person or
firm who would have any valid claim against OutPost or the Shareholders for a
commission, finder's fee or brokerage fee in connection with this Agreement or
any of the transactions, transfers or assignments contemplated hereby.
SECTION 3.5 STATEMENTS TRUE, COMPLETE AND CORRECT
The statements about InfoSpace contained herein, in the Exhibits, the
Schedules, and the Offering Memorandum or in any other written documents
executed and delivered at the Closing which are required under this Agreement by
or on behalf of InfoSpace are true, complete and correct in all material
respects, and such statements contained herein, the Exhibits, the Schedules, the
Offering Memorandum and such other documents do not omit any material fact
which, if disclosed, might reasonably have been expected to affect the decision
of the Principal Shareholders to enter into this Agreement. The statements and
information of InfoSpace contained in the Exhibits, the Schedules, the Offering
Memorandum and such other documents shall be deemed to constitute
representations and warranties of InfoSpace under this Agreement to the same
extent as if herein set forth in full.
SECTION 3.6 INFOSPACE STOCK
Subject to the terms of this Agreement, the shares of InfoSpace Stock to be
issued to OutPost Shareholders pursuant hereto, as of the Effective Date, will
be duly authorized and issued, fully paid, and non-assessable. As of the
Effective Date, InfoSpace will have authorized not more than a total of
55,000,000 shares of stock, consisting of not more than 40,000,000 shares of
Common Stock, $.0001 par value/share, and 15,000,000 shares of Preferred Xxxxx,
x.0000 par value/share. As of the date of this Agreement, InfoSpace has issued
and outstanding 22,155,510 shares of Common Stock, and no shares of Preferred
Stock. As of the Effective Date, not more than 5,000,000 shares of InfoSpace
Stock will be reserved for issuance under the InfoSpace, Inc. 1996 Flexible
Stock Incentive Plan, as amended (the "InfoSpace Plan). As of the Effective
Date, options to acquire up to 2,451,000 shares of Common Stock have been
granted pursuant to the Plan.
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As of the date of this Agreement, warrants to acquire up to 3,500,000 shares of
the Common Stock will be outstanding. Between the date of this Agreement is
executed and the Effective Date, or soon thereafter, certain changes to
InfoSpace's capitalization, as described in Schedule 3.6, may occur.
SECTION 3.7 FINANCIAL INFORMATION
Schedule 3.7 contains the audited financial statements of InfoSpace, which
are to be delivered to the Shareholders in connection with the Offering
Memorandum (as defined below), and which have been prepared in accordance with
generally accepted accounting principles by an independent certified public
accounting firm, and fairly present the matters set forth therein.
SECTION 3.8 NO AGREEMENTS
As of the Effective Date, and except as disclosed in Section 3.6, InfoSpace
is not a party to any written or oral agreement, understanding, arrangement or
commitment with respect to the InfoSpace Stock that would be violated by the
Merger or which imposes any obligation on any InfoSpace Shareholder, or creates
or may create any rights in any person, regarding InfoSpace Stock, or any rights
to acquire any capital stock or other interest in InfoSpace. There are no
preemptive rights to the shares of InfoSpace Stock to be issued pursuant hereto.
SECTION 3.9 LITIGATION
Except as set forth in Schedule 3.9, there is no suit, action, arbitration,
legal, administrative or other proceeding pending or threatened which may
materially adversely affect InfoSpace or the Merger.
SECTION 3.10 TAX RETURNS
InfoSpace has filed on or before their respective due dates or extensions
thereof all federal, state and local tax returns and reports as are required to
be filed; all such returns are true, correct and complete; and to the best of
its knowledge, InfoSpace has duly paid or accrued in full for any federal, state
and local taxes or other charges due or claimed to be due to any federal, state
or local taxing authorities, including, without limitation, employee withholding
amounts. There are no tax liens upon any property or assets of InfoSpace other
than liens for current taxes not yet paid or payable. No federal state or local
tax returns of InfoSpace are currently under examination by any taxing
authority, and, to the best of its knowledge, if any such examination is
hereafter made and the results are determined adversely to InfoSpace, such
results will not have a material adverse effect on the operations of InfoSpace
taken as a whole as if determined prior to the Merger. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
assessment of any federal, state or local income tax.
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ARTICLE 4 COVENANTS
SECTION 4.1 OUTPOST'S AND THE PRINCIPAL SHAREHOLDERS' NEGATIVE COVENANTS
Between the date hereof and the Effective Date, Principal Shareholders and
OutPost covenant that they will not, except with InfoSpace's written consent:
4.1.1 Take any action or permit to exist any condition which would
cause any of the representations and warranties of the Principal Shareholders
and OutPost contained in this Agreement to be untrue in any material respect on
the Effective Date.
4.1.2 Enter into any agreement or undertaking affecting OutPost, the
business or the Assets, other than in the ordinary course of business.
SECTION 4.2 OUTPOST'S AND PRINCIPAL SHAREHOLDERS' AFFIRMATIVE COVENANTS
Between the date hereof and the Effective Date, and post-Effective Date as
applicable, Principal Shareholders and OutPost will:
4.2.1 Use their reasonable efforts to (A) complete the transactions
contemplated herein; and (B) continue to operate OutPost's business as a going
concern.
4.2.2 At all reasonable times give to InfoSpace and its
representatives full access during normal business hours to all of the
properties, books and records of OutPost relating to the business and furnish
InfoSpace with such information concerning the operation of the business as
InfoSpace may reasonably require.
4.2.3 Maintain in force the existing hazard and liability insurance
policies, or comparable coverage, for the Assets, and, whether or not covered by
such insurance, repair, replace, or restore any of the Assets which may be
damaged, destroyed or stolen.
4.2.4 Cause all liens, charges or encumbrances on any of the Assets
to be satisfied, terminated and removed.
4.2.5 Obtain all necessary consents of the Principal Shareholders to
consummate the transactions contemplated herein, including without limitation
the formal consent of the Board of Directors of OutPost and of the Principal
Shareholders of OutPost.
4.2.6 Cause all liabilities of OutPost as of March 4, 1998, for
products or services acquired from, or amounts (including without limitation
taxes, including employee payroll taxes, interest and penalties) or accounts
payable owed to, any governmental or private entity or person, including without
limitation any amounts owing to InfoSpace in connection with advertising
agreements between OutPost and InfoSpace, relating to or arising out of the
operation of OutPost prior to March 4, 1998 in excess of
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the sum of (i) $35,000, plus (ii) any amounts owing to InfoSpace accrued as of
February 1, 1998, and all subsequent months (collectively, the "Financial
Liabilities"), to be fully paid and discharged.
4.2.7 Even after Closing, not disclose or otherwise use the
proprietary or confidential business information of InfoSpace contained in the
Offering Memorandum, except that Principal Shareholders may use such information
for purposes of determining whether to approve the Merger.
4.2.8 Any termination costs, including without limitation, severance
pay, accrued vacation benefits, relating to those employees of OutPost who will
be terminated as of the Effective Date, shall be a liability of the Principal
Shareholders. From and after the Effective Date, InfoSpace shall have no
liability to any such person, except with those it negotiates terms of
employment as described in Section 5.9.
SECTION 4.3 INFOSPACE'S AFFIRMATIVE COVENANT
InfoSpace covenants that:
4.3.1 In advance of Closing and the special meeting of the OutPost
Shareholders called to obtain Shareholder approval of the Merger, it will
distribute to the OutPost Shareholders the Offering Memorandum, together with
certain financial information.
4.3.2 It will use its reasonable efforts to (A) complete the
transactions contemplated herein; and (B) continue to operate InfoSpace's
business.
4.3.3 It will negotiate the terms of employment of the persons listed
in Section 5.9 in good faith, but the final terms of such arrangements must be
deemed satisfactory to InfoSpace in its discretion.
SECTION 4.4 POST-CLOSING
After the Effective Date, InfoSpace and each of the Principal Shareholders
respectively agree that each will:
4.4.1 Promptly take such actions and properly execute and deliver
such further instruments as, in the reasonable opinion of InfoSpace, may be
necessary to assure, complete and evidence the transactions provided for in this
Agreement.
4.4.2 In the event any Principal Shareholder receives any payment of
monies relating to the Assets or the business which was or should have been
directed to OutPost directly, such Principal Shareholder will promptly forward
such payment to the Surviving Corporation.
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4.4.3 In no event will any Shareholder do business independent of the
Surviving Corporation using the name "OutPost" or any word confusingly similar
to "OutPost" after the Closing.
4.4.4 InfoSpace will grant options to acquire a total of 298,000
shares of InfoSpace Stock to the persons listed in Section 5.9. InfoSpace shall
determine how the pool of 298,000 shares shall be allocated among such persons,
the vesting period, and the other terms of such grants, except however, that the
exercise price per share shall be $.01.
SECTION 4.5 NOTIFICATIONS AS TO REPRESENTATIONS
In the event that any party shall at any time, either before or after the
Effective Date, determine that any representation or warranty of either party
contained in this Agreement is not true or correct in any material respect as of
the date made, or that any covenant has been breached, such party shall promptly
give the other party written notice thereof, including a description of such
inaccuracy or breach. Upon learning of such inaccuracy or breach, the party
whose representation or warranty was not true or which breached a covenant shall
have twenty (20) business days to cure such inaccuracy or breach, and if so
cured, such conditions shall be deemed timely satisfied, and the Effective Date
shall, to the extent needed, be extended to the date of such satisfaction. Any
postponement of the Effective Date pursuant to this provision shall not be a
waiver of any claim an aggrieved party may have as a result of any such breach.
ARTICLE 5 CONDITIONS TO INFOSPACE'S OBLIGATION TO CLOSE
The obligation of InfoSpace to consummate the transactions contemplated
herein shall be subject to the fulfillment on or prior to the Effective Date of
the following conditions, which conditions OutPost, the Principal Shareholders
and the Recent Investors agree to use their reasonable best efforts to fulfill,
and which InfoSpace may elect to waive in its sole discretion (InfoSpace agrees
to use reasonable efforts to cooperate with the Principal Shareholders and the
Recent Investors as Principal Shareholders or Recent Investors may reasonably
request in order to facilitate the Principal Shareholders' or the Recent
Investors', as the case may be, satisfying these conditions):
SECTION 5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING
The representations and warranties made by OutPost, the Principal
Shareholders and the Recent Investors herein shall be true, complete and correct
in all material respects on and as of the Effective Date with the same effect as
though such representations and warranties had been made or given on and as of
the Effective Date. It is understood that in determining whether there has been
any material misrepresentation or material adverse
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event, all occurrences and adverse events shall be aggregated to determine the
applicability or breach of the provisions of this Agreement.
SECTION 5.2 COMPLIANCE WITH AGREEMENT
OutPost and the Principal Shareholders shall have performed and complied
with all of their material obligations under this Agreement which are to be
performed or complied with by them prior to or at the Closing.
SECTION 5.3 NO MATERIAL CHANGE
Since December 31, 1997, there shall not have been, nor to the knowledge of
OutPost or the Principal Shareholder shall there have been threatened to be, any
event, condition or circumstance which would materially and adversely affect the
Assets or InfoSpace's prospects for successfully operating the business, and
there shall be no material adverse factors relating to the business which have
not been disclosed in writing to InfoSpace.
SECTION 5.4 NO INJUNCTION
As of the Effective Date,
5.4.1 there shall be no injunction or restraining order of any nature
issued by any court of competent jurisdiction or by any administrative body or
agency which directs or which has the effect of directing that this Agreement or
any material transaction contemplated hereby shall not be consummated as herein
provided or which may materially affect the Assets or InfoSpace's ability to
conduct business;
5.4.2 there shall be no investigation, action or other proceeding
pending before any court or governmental authority or threatened against
OutPost, or any of the directors or officers of OutPost, or in connection with
this Agreement, or the consummation of the transactions contemplated by this
Agreement, which may in the opinion of InfoSpace (after consideration of any
defense) materially and adversely affect the Assets or InfoSpace's ability to
conduct the business; and
5.4.3 none of the parties hereto shall have received from any
governmental authority any notice (oral or written) of any potential litigation,
civil, criminal or administrative, against any Shareholder or InfoSpace for a
violation alleged to arise out of the consummation of the transactions
contemplated hereby.
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SECTION 5.5 CASUALTY
5.5.1 The Assets shall not have been adversely affected in any
material way by, or sustained any material loss, whether or not insured, as a
result of any fire, flood, accident, explosion, strike, labor disturbance, riot,
act of God or the public enemy or other calamity or casualty, unless all such
loss or damage resulting therefrom shall have been fully cured, repaired or
restored by Principal Shareholders prior to the Effective Date, as it may be
postponed pursuant to Section 4.5 hereof.
5.5.2 If any such casualty losses occur between the date hereof and
the Effective Date which do not materially and adversely affect the Assets or
InfoSpace's ability to conduct the business, OutPost shall repair the damage at
its cost and expense and all insurance proceeds and claims in connection
therewith shall belong to OutPost.
SECTION 5.6 SHAREHOLDER CONSENTS
The Merger shall have been approved by the OutPost Shareholders in
accordance with the Washington Business Corporation Act.
SECTION 5.7 CERTIFICATE OF FULFILLMENT OF CONDITIONS
The Principal Shareholders shall have delivered to InfoSpace a certificate
of the Principal Shareholders certifying in such detail as InfoSpace may
reasonably specify their respective fulfillment of the conditions set forth in
this Article 5.
SECTION 5.8 LIMITATION ON LIABILITIES
The total Financial Liabilities of OutPost as of March 4, 1998, including
those owed by OutPost to InfoSpace in connection with certain advertising
agreements, shall not exceed the sum of (i) $35,000 plus (ii) any amounts owing
to InfoSpace accrued as of February 1, 1998, and all subsequent months.
SECTION 5.9 EMPLOYMENT OF KEY INDIVIDUALS
InfoSpace shall have concluded employment negotiations satisfactory to it
in its sole discretion with Xxxx Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxx, Xxxx
XxXxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxx Xxxxxxx, and Xxxxx Xxxxxxx.
With the exception of such persons, the employment by OutPost of all other
persons shall be terminated as of the Effective Date.
SECTION 5.10 RESIGNATION OF OUTPOST OFFICERS AND DIRECTORS
As of the Effective Date, all of the existing officers and directors of
OutPost shall have tendered their written resignations from their positions with
OutPost.
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SECTION 5.11 APPRAISAL RIGHTS
Following the completion of the OutPost shareholder meeting called to
obtain approval of the Merger, no OutPost Shareholder shall have satisfied the
requirements to qualify as a dissenting shareholder, as set forth in RCW
23B.13.210.
SECTION 5.12 INVESTMENT CERTIFICATE
InfoSpace shall have received an executed Investment Certificate in the
form of Exhibit 5.12 attached hereto from each OutPost Shareholder.
ARTICLE 6 CONDITIONS TO OUTPOST'S AND PRINCIPAL
SHAREHOLDERS' OBLIGATIONS TO CLOSE
The obligation of OutPost and the Principal Shareholders to consummate the
transactions contemplated herein shall be subject to the fulfillment on or prior
to the Effective Date of the following conditions, which conditions InfoSpace
agrees to use its reasonable best efforts to fulfill (OutPost and the Principal
Shareholders agree to use reasonable efforts to cooperate with InfoSpace as
InfoSpace may reasonably request in order to facilitate InfoSpace's satisfying
these conditions):
SECTION 6.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING
The representations and warranties made by InfoSpace herein shall be true,
complete and correct in all material respects on and as of the Effective Date
with the same effect as though such representations and warranties had been made
or given on and as of the Effective Date. It is understood that in determining
whether there has been any material misrepresentation or material adverse event,
all occurrences and adverse events shall be aggregated to determine the
applicability or breach of the provisions of this Agreement.
SECTION 6.2 COMPLIANCE WITH AGREEMENT
InfoSpace shall have performed and complied with all of its material
obligations under this Agreement which are to be performed or complied with by
it prior to or at the Closing.
SECTION 6.3 NO INJUNCTION
As of the Effective Date (unless otherwise specified),
6.3.1 there shall be no injunction or restraining order of any nature
issued by any court of competent jurisdiction or by any administrative body or
agency which directs or which has the effect of directing that this Agreement or
any material transaction contemplated hereby shall not be consummated as herein
provided; and
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6.3.2 none of the parties hereto shall have received from any
governmental authority any notice (oral or written) or any potential litigation,
civil, criminal or administrative, against the Principal Shareholders or
InfoSpace for a violation alleged to arise out of the consummation of the
transactions contemplated hereby.
SECTION 6.4 CERTIFICATE OF FULFILLMENT OF CONDITIONS
InfoSpace shall have delivered to the Principal Shareholders a certificate
of InfoSpace certifying in such detail as the Principal Shareholders may
reasonably specify the fulfillment of the conditions set forth in Sections 6.1,
6.2 and 6.3 of this Agreement.
SECTION 6.5 OFFERING MEMORANDUM
In advance of the special meeting of the OutPost Shareholders held for the
purpose of obtaining OutPost Shareholder approval of the Merger, InfoSpace shall
have delivered the Offering Memorandum in a form approved by its board of
directors to the OutPost Shareholders, and any information regarding OutPost
shall be in a form approved by the OutPost Board of Directors, together with
associated financial information about OutPost and InfoSpace that is consistent
with the covenants made herein and any financial information that has previously
been provided to the OutPost Shareholders.
SECTION 6.6 SHAREHOLDER CONSENTS
The OutPost Shareholders shall have authorized and consented to the
transactions contemplated herein.
SECTION 6.7 DUE DILIGENCE
The Board of Directors of OutPost shall have conducted a satisfactory due
diligence review of InfoSpace's books and records.
ARTICLE 7 THE CLOSING
SECTION 7.1 CLOSING
Subject to the terms and conditions of this Agreement, the execution of any
final documents, instruments, agreements or other items, or actions necessary to
effect the Merger, shall take place on or before the Effective Date, as defined
in Section 1.2, at the offices of Xxxxxx, Xxxxxxxx & Xxxxx, 0000 Xxxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx.
SECTION 7.2 OUTPOST'S AND PRINCIPAL SHAREHOLDERS' PERFORMANCE
On the Effective Date, OutPost and the Principal Shareholders, as the case
may be, agree to deliver or cause to be delivered to InfoSpace the following:
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7.3.1 The minute books, stock record books, seals and certificates of
OutPost;
7.3.2 Copies of the Articles of Incorporation (and all amendments
thereto) of OutPost certified, as of a recent date, by the Secretary of State
of Washington, copies of the Bylaws (and all amendments thereto) of OutPost
certified, as of the Effective Date, by a duly authorized officer of OutPost and
copies of the resolutions of the Board of Directors and the OutPost Shareholders
approving the Merger, certified, as of the Effective Date, by a duly authorized
officer of OutPost;
7.3.3 Certificates of good standing and tax status letter of recent
date from appropriate officials in Washington showing OutPost to be a
corporation validly existing, in good standing, with all taxes, including sales
taxes, paid (to the extent the same are due and payable);
7.3.4 Evidence of official searches by the secretary of state or
other appropriate official of each state in which OutPost or any subsidiary of
OutPost is qualified to do business, dated not earlier than ten (10) business
days before Closing, showing no effective financing statements filed under the
Uniform Commercial Code against the assets of OutPost, and evidence of judgment
and federal tax lien searches with respect to OutPost and each of its
subsidiaries showing no such lien or judgment and dated not earlier than ten
business days before the Closing;
7.3.5 A certificate of Principal Shareholders in accordance with and
to the effect set forth in Section 5.7 hereof.
SECTION 7.4 INFOSPACE'S PERFORMANCE
On the Effective Date, InfoSpace agrees to deliver or cause to be delivered
to Principal Shareholders the following:
7.4.1 A copy of the resolutions adopted by the Board of Directors of
InfoSpace authorizing and approving the execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement,
certified by the Secretary of InfoSpace.
7.4.3 A certificate of good standing from appropriate officials in
Delaware, and of qualification to conduct business as a foreign corporation from
appropriate officials in Washington, both of recent date, and showing InfoSpace
to be a corporation validly existing, in good standing, and in the State of
Washington qualified as a foreign corporation. On the Effective Date, InfoSpace
further agrees to reimburse Xxxx X. Xxxxxxx for all unreimbursed amounts paid by
Xxxx X. Xxxxxxx to or on behalf of OutPost in order to cover OutPost's costs of
operation for the period from March 4, 1998, until the Effective Date.
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SECTION 7.5 FAILURE TO CLOSE
If for any reason the transactions contemplated by this Agreement are not
consummated on the Effective Date or any mutually agreed extension thereof, both
parties agree that any and all documents, instruments or other information
pertaining to the business and/or operations of either party, which was
exchanged in anticipation of consummation of the transactions contemplated by
this Agreement, shall be returned to the supplying party, without retaining
copies thereof.
ARTICLE 8 ANNOUNCEMENTS
InfoSpace, OutPost and Principal Shareholders agree that between the date
of this Agreement and the Effective Date, any communications, press releases,
public announcements or other publicity proposed to be released or permitted by
either party concerning this Agreement or the transactions hereby contemplated
shall be subject to prior review by and written approval of the other party.
ARTICLE 9 TERMINATION AND ABANDONMENT
SECTION 9.1 REASONS FOR TERMINATION
This Agreement and the transactions contemplated herein may be terminated
and abandoned prior to or at the Closing for the following reasons:
9.1.1 By the mutual written consent of InfoSpace and OutPost.
9.1.2 By InfoSpace, if (i) by the Effective Date, the conditions set
forth in Article 5 hereof have not been met, and have not been waived by
InfoSpace, or (ii) due to any material cause beyond the control of InfoSpace,
the parties are unable to consummate the transactions contemplated herein.
9.1.3 By the Principal Shareholders, if (i) by the Effective Date,
the conditions set forth in Article 6 hereof have not been met, and have not
been waived by the Principal Shareholders, or (ii) due to any material cause
beyond the control of OutPost, InfoSpace or the Principal Shareholders are
unable to consummate the transactions contemplated herein.
9.1.4 By either OutPost or InfoSpace, if the Effective Date is not by
or before June 30, 1998.
SECTION 9.2 EFFECT OF TERMINATION
A termination pursuant to Section 9.1.2 or Section 9.1.3 above shall be
without prejudice to any other remedy the terminating party may have as a result
of the failure of the other party to perform.
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ARTICLE 10 RESTRICTIONS ON TRANSFER
Each certificate evidencing shares of InfoSpace Common issued to any
OutPost Shareholder in connection with the Share Exchange shall bear a legend in
substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES ACTS AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND ANY SUCH APPLICABLE STATE SECURITIES ACTS
OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
ARTICLE 11 INDEMNITIES
SECTION 11.1 PRINCIPAL SHAREHOLDER AND RECENT INVESTOR INDEMNITIES
11.1.1 PRINCIPAL SHAREHOLDERS' INDEMNITY. To the extent provided
below in this Article 11, the Principal Shareholders (but not the Recent
Investors, except as expressly stated herein) jointly and severally agree to
indemnify and save InfoSpace, OutPost and their respective officers, directors,
employees and agents (the "InfoSpace Indemnified Parties") harmless from and
against all expenses, claims, charges, losses, damages, fines or penalties,
including without limitation reasonable attorneys' fees, incurred by any of the
InfoSpace Indemnified Parties in defending or resisting any claims, actions or
proceedings or in enforcing this indemnity (hereinafter "Damages"), arising out
of, based upon, resulting from or in connection with any breach, inaccuracy,
failure to perform or satisfy, or violation of any representations, warranties,
obligations or covenants of OutPost or the Principal Shareholders contained,
disclosed or set forth in this Agreement or in any document (including any
Schedule or Exhibit) furnished by OutPost or the Principal Shareholders to
InfoSpace pursuant to or in connection with this Agreement.
11.1.1(a) FINANCIAL LIABILITIES. In the event a party makes a claim
against an InfoSpace Indemnified Party for a Financial Liability that was not
satisfied as of the Effective Date, the Principal Shareholders (but not the
Recent Investors) agree to provide for the payment of the same up to a total of
$250,000. It is understood that in order to generate the cash necessary to pay
any such amounts the Recent Investors or any one or more of them will agree to
purchase from the Principal Shareholders, and the Principal Shareholders will
agree to sell, shares of InfoSpace Stock held by the Principal Shareholders at
the equivalent price of five cents per share of OutPost common stock determined
immediately before the closing. If the amount received by the Principal
Shareholders on the sale of all of their shares of such InfoSpace Stock to the
Recent
-24-
Investors is less than the amount needed to reimburse InfoSpace for Financial
Liabilities it has paid (not to exceed $250,000), then the Recent Investors
agree to reimburse InfoSpace for any such deficiency. Such reimbursement may be
made by any or all the Recent Investors.
11.1.1(b) SETTLEMENT BY STOCK ISSUANCE. To address any possible
liability that may be settled by issuance of shares of InfoSpace Stock, at the
closing a portion of the shares of InfoSpace stock otherwise distributable to
the OutPost shareholders that is equal to 100,000 shares of OutPost stock on a
converted basis will be set aside and remain undistributed (the "escrowed
shares"). If any stock is to be issued in settlement of claims against OutPost
arising out of or relating to the conduct of its business prior to or as of the
Effective Date, the escrowed shares shall be used to satisfy that obligation.
If a Claim is to be resolved by the payment of cash or cash equivalents, such
payment obligation shall be deemed a Financial Liability subject to the
provisions of subparagraph 11.1.1(a) above. Upon expiration of the indemnity
period provided in Section 11.4, any remaining unissued escrowed shares shall be
issued to the former OutPost shareholders on a prorata basis, determined as of
the time immediately after the closing.
11.1.1(c) OTHER DAMAGES. In the event an InfoSpace Indemnified Party
incurs other Damages, the Principal Shareholders agree to indemnify such
InfoSpace Indemnified Party for such Damages in the manner provided in this
subparagraph. Payment of the indemnification responsibility shall be made
solely by the return to InfoSpace of shares of stock in InfoSpace held by such
Principal Shareholders that were acquired in the Merger. If the value of all
such stock held by those Principal Shareholders is not adequate to compensate
for such other Damages, then the Recent Investors agree to return to InfoSpace
up to 25% of the InfoSpace stock that was acquired by all Recent Investors in
the Merger (the "Reimbursement Stock Pool"). If any of the Recent Investors
acquired stock from the Principal Shareholders so that the Principal
Shareholders could satisfy any Financial Liabilities as provided in subparagraph
11.1.1(a) above, then the Recent Investors will also agree to include such
shares in calculating the number of shares in the Reimbursement Stock Pool. The
return of shares by the Recent Investors shall be made by such of the Recent
Investors as the Recent Investors shall agree. For purposes of satisfying this
obligation, the InfoSpace stock held by the Principal Shareholders and the
Recent Investors will be valued based on the last "valuing transaction" or, if
none, at $2.00 per share. A "valuing transaction" is one involving a sale or
transfer of InfoSpace stock as the result of a good faith arm's length
negotiation.
11.1.1(d) AGREEMENT NOT TO TRANSFER SHARES. The Principal
Shareholders and the Recent Investors agree that during the indemnification
period set forth in Section 11.4 below, they shall retain the shares of stock in
InfoSpace received by them in exchange for their shares of OutPost on the
Effective Date; provided, however, that during such period such shares may be
sold or transferred to any other Principal Shareholder or Recent Investor in
which case such shares shall remain subject to the
-25-
indemnification responsibilities of the party transferring the same, (i.e., if
the shares are transferred by a Principal Shareholder to a Recent Investor, the
shares shall remain liable to satisfy the obligations of the Principal
Shareholder, without regard to the 25% limitation for shares held by Recent
Investors set forth in subparagraph 11.1.1(c)), and the party making such
transfer shall be released from any indemnification responsibility that is
subject to satisfaction solely by the transfer of such shares.
11.1.2 RECENT INVESTORS. Each Recent Investor, severally and not
jointly, agrees to indemnify and save the InfoSpace Indemnified Parties harmless
from and against all Damages arising out of, based upon, resulting from, or in
connection with any breach, inaccuracy, failure to perform or satisfy, or
violation of any representation, warranty, obligation or covenant expressly made
by him, her or it herein.
SECTION 11.2 INFOSPACE'S INDEMNITY
InfoSpace agrees to indemnify and save the Principal Shareholders and the
Recent Investors harmless from and against all Damages that the Principal
Shareholders or the Recent Investors may suffer, sustain, incur or become
subject to whether directly or indirectly, arising out of, based upon, resulting
from or in connection with (a) any breach, inaccuracy, failure to perform or
satisfy, or violation of any representations, warranties, obligations or
covenants of InfoSpace contained, disclosed or set forth in this Agreement or in
any document (including any Schedule or Exhibit) furnished by InfoSpace pursuant
to or in connection with this Agreement, or (b) the operation of the business or
ownership of the Assets after the Effective Date.
SECTION 11.3 PROCEDURE AND PARTICIPATION
11.3.1 If any matter shall arise which a party seeking
indemnification believes to be covered by the indemnification provisions
hereunder, the party seeking indemnification shall give written notice thereof
to the other party promptly (in no event more than forty-five (45) days) after
it learns of the existence of such matter (the "Indemnification Claim"). The
party from whom indemnification is sought shall have the following options (i)
deny liability for the Indemnification Claim, or (ii) if the Indemnification
Claim does not involve a third party, to acknowledge liability for such claim,
or (iii) if the Indemnification Claim does involve a third party, to undertake
at its cost and expense (including legal fees, court costs and interest charges
but excluding legal fees which indemnities may incur in monitoring the
proceedings after the assumption of the indemnification obligation by
indemnitor) action appropriate to the matter, including, but not limited to, the
right to assume the defense of any claims, demands, or actions or protest of any
tax. The parties shall cooperate fully in any such action, making available to
each books or records necessary thereto.
11.3.2 If the party from whom indemnification is sought does not
exercise either option (ii) or option (iii) above within twenty (20) days of
such notice (or such
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shorter time specified in such notice as the circumstances of the matter may
dictate) the party seeking indemnification shall be free to dispose of the
matter in such manner as it may determine in good faith to be in its best
interest. If the party from whom indemnification is sought exercises option (i)
above, and if the parties do not amicably dispose of the claim for
indemnification within thirty (30) days, the party seeking indemnification may
bring action on the claim. If the party from whom indemnification is sought does
not exercise any of the options outlined above within twenty (20) days after the
date of the original notice seeking indemnification, the party from whom
indemnification is sought shall be conclusively presumed to have agreed to the
claim for indemnification. Either party may offset any amounts owed by such
party to the other party hereto against amounts claimed as Damages pursuant to
this Article 11.
SECTION 11.4 SURVIVAL OF INDEMNIFICATION; EXCLUSIVE REMEDY
After the Effective Date the indemnification provided for in this Article
11 shall be the exclusive remedy provided to the parties for any breach of this
Agreement or any of its terms. Such indemnification obligations shall survive
the Effective Date for a period of twelve months; provided, however, that any
claim for indemnification for any Damages arising from a failure to withhold or
pay taxes (including without limitation, employee payroll taxes) to any federal,
state or local governmental authority shall survive for a period of twenty-four
months after the Effective Date. Notwithstanding the foregoing, any
indemnification obligation created herein shall terminate and be of no further
force or effect on the closing of any initial public offering of stock in
InfoSpace pursuant to an effective registration statement filed under the U.S.
Securities Act of 1933, as amended.
Any claim for indemnification that is not made within the time periods set
forth in this subparagraph shall be forever barred as against all potential
indemnifying parties.
ARTICLE 12 MISCELLANEOUS
SECTION 12.1 NOTICES
Any notices or communications required or permitted hereunder shall be
sufficiently given if sent by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
To InfoSpace: 0000 - 000xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxx
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With a copy to: Xxxxx X. Xxxxxxxxx
Xxxxxx Xxxxxxxx & Xxxxx
Second & Seneca Bldg.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
To Principal Shareholders: Xxxx Xxxxxx
____________________________
____________________________
Xxxx Xxxx
____________________________
____________________________
Xxxxx Xxxxxx
____________________________
____________________________
With a copy to: Xxxxxx X. Xxxxxxx
Xxxx Xxxxxxx & Cleveland
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
To Recent Investors: Xxxx X. Xxxxxxx
Western Wireless Corporation
0000 XX Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
With a copy to: Xxxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx, P.S.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
or such other address as shall be furnished by like notice by such party.
Notices shall be deemed to have been duly given at the time delivered by hand,
if personally delivered; five business days after being deposited in the mail,
first class postage prepaid, return receipt requested, if mailed; when receipt
confirmed, if sent by an overnight air courier service guaranteeing next day
delivery.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective successors. Nothing herein expressed or
implied is intended to confer upon any person, other than the parties executing
this Agreement and their permitted assignees, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
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SECTION 12.2 ENTIRE AGREEMENT; AMENDMENT
This Agreement and the Schedules, Exhibits and appendices attached hereto
and to be attached hereto, and the documents delivered pursuant hereto,
constitute the entire Agreement and understanding between the parties hereto and
supersede and revoke any prior agreement or understanding relating to the
subject matter of this Agreement. No change, amendment, termination or
attempted waiver of any of the provisions hereof shall be binding upon any
party, unless said act is in writing and signed by the President or other senior
officer of the party to be bound.
SECTION 12.3 COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute but one and the same instrument.
SECTION 12.4 EXPENSES
Whether or not the transactions herein contemplated shall be consummated,
the parties hereto will each pay their own fees, expenses and disbursements and
those of their professional advisors in connection with the subject matter of
this Agreement and all other costs and expenses incurred in performing and
complying with all conditions to be performed under this Agreement. Any such
fees, expenses or disbursements incurred by OutPost shall be subject to the
covenant of OutPost and the Principal Shareholders set forth in Section 4.2.6.
SECTION 12.5 FURTHER ASSURANCES
Upon reasonable request from time to time, the parties hereto will deliver
and/or execute such further instruments which are necessary to or appropriate
with respect to the consummation of the transactions contemplated by this
Agreement. None of the documents or instruments requested hereunder shall
contain an undertaking or representation not contained in this Agreement or
inconsistent with the understanding and representations contained in this
Agreement.
SECTION 12.6 CONSTRUCTION
Within this Agreement, the singular shall include the plural and the plural
shall include the singular, and any gender shall include all other genders, all
as the meaning and the context of this Agreement shall require.
SECTION 12.7 JOINT AND SEVERAL OBLIGATIONS
All obligations of the Principal Shareholders hereunder shall be the joint
and several obligations of all Principal Shareholders.
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SECTION 12.8 GOVERNING LAW
This Agreement shall be governed and enforced and the rights and
liabilities of all parties hereto shall be construed in accordance with the
internal laws of the State of Washington, without giving effect to any conflict
of laws provisions.
SECTION 12.9 COOPERATION
The parties hereto will cooperate fully with each other and their
respective counsel and accountants in connection with all steps to be taken as
part of their obligations under this Agreement.
SECTION 12.10 SEVERABILITY
The unenforceability or invalidity of any part or parts of this Agreement
shall not affect the enforceability or validity of the balance of the Agreement,
which shall remain in full force and effect.
SECTION 12.11 SURVIVAL
The covenants, agreements, representations and warranties of the parties
contained herein or in any certificate or other writing or Exhibits delivered
pursuant hereto or in connection herewith shall survive the Closing of the
transactions contemplated herein.
SECTION 12.12 HEADINGS
The headings of the sections of this Agreement are inserted for convenience
only and shall not constitute a part hereof.
[The remainder of this pageintentionally left blank.]
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IN WITNESS WHEREOF, the undersigned parties, acting through their duly
authorized agents, have caused this Agreement to be duly executed as of the day
and year first written above.
Principal Shareholders:
PRINCIPAL SHAREHOLDERS:
/s/ Xxxx Xxxxxx /s/ Xxxx Xxxx /s/ Xxxxx Xxxxxx
---------------------- ---------------------- --------------------------
Xxxx Xxxxxx Xxxx Xxxx Xxxxx Xxxxxx
RECENT INVESTORS:
/s/ Xxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxxxx Xxxxxxx
---------------------- ------------------------ --------------------------
Xxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxxx Xxxxxxx Family Trust,
by Xxxxxx Xxxxxxx, Trustee
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxxx Xxxxxxx /s/ Xxxxx X. Xxxxxxx
---------------------- ---------------------- --------------------------
Xxxxxxx X. Xxxxxxxx Xxxxxx Xxxxxxx Xxxxx X. Xxxxxxx
The Xxxxxx Group, Inc.: Xxxxxx Partners LLC:
By [illegible] By [illegible]
--------------------------- ----------------------------
Its: Chairman Its: Manager
------------------------ -------------------------
InfoSpace, Inc.: OutPost Acquisition, Inc.:
By Xxxxxx Xxxx By Xxxxxx Xxxx
--------------------------- ----------------------------
Its: Its:
----------------------- --------------------------
OutPost Network, Inc.:
By [illegible]
---------------------------
Its: President/CEO
------------------------
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EXHIBIT 1A
TO THE AGREEMENT AND PLAN OF MERGER
ARTICLES OF MERGER OF
OUTPOST NETWORK, INC.
AND
OUTPOST ACQUISITION, INC.
Pursuant to the provisions of RCW 23B.11.050, the following Articles of
Merger are executed for the purpose of merging OUTPOST ACQUISITION, INC., a
Washington corporation (the "Merging Corporation") into OUTPOST NETWORK, INC., a
Washington corporation (the "Surviving Corporation").
1. The Plan of Merger is attached hereto as Exhibit A.
---------
2. The merger was duly approved by the shareholders of the Merging
Corporation and the Surviving Corporation pursuant to the provisions of RCW
23B.11.030.
DATED this ___ day of ______________, 1998.
OUTPOST NETWORK, INC.
By:
----------------------------------------------
Signature
----------------------------------------------
Print/Type Name
----------------------------------------------
Title
OUTPOST ACQUISITION, INC.
By:
----------------------------------------------
Signature
----------------------------------------------
Print/Type Name
----------------------------------------------
Title
-2-
EXHIBIT 1A
TO THE AGREEMENT AND PLAN OF MERGER
PLAN OF MERGER
OF
OUTPOST NETWORK, INC.
AND
OUTPOST ACQUISITION, INC.
WHEREAS, this is a Plan of Merger dated May ____ 1998, between OutPost
Network, Inc., a Washington corporation (hereinafter referred to as the
"Surviving Corporation" or sometimes as "OutPost"), and OutPost Acquisition,
Inc., a Washington corporation (hereinafter referred to as the "Merging
Corporation" or sometimes as "Acquisition") (the Surviving Corporation and
Merging Corporation are sometimes collectively referred to as the "Constituent
Corporations"); and
WHEREAS, the Board of Directors of both corporations hereto deem it
desirable and in the best interests of the corporations and their shareholders
that Acquisition be merged into OutPost;
NOW, THEREFORE, in consideration of the mutual promises and covenants, and
subject to the conditions herein set forth, the merging corporations agree as
follows:
1. THE MERGER. The corporations shall be merged into a single corporation
by Acquisition merging into and with OutPost, the Surviving Corporation, which
corporation shall survive the merger pursuant to the provisions of RCW
23B.11.010, et. seq. Upon such merger, the separate corporate existence of
-------
Acquisition shall cease and the Surviving Corporation shall become the owner,
without other transfer, of all of the rights, obligations and property of the
Merging Corporation.
2. Effective Date of Merger. The merger shall become effective on the
date the Articles of Merger and any other documents required by the Business
Corporation Act of the State of Washington (the "Corporation Law") shall be duly
executed, acknowledged or verified and filed with the Washington Secretary of
State in accordance with the Corporation Law (the "Effective Date"). If the
Washington Secretary of State requires any changes in the Articles of Merger as
a condition to filing the Articles of Merger, both the Surviving Corporation and
the Merging Corporation will execute
necessary revisions incorporating such changes, provided such changes are not
materially inconsistent with or result in any material changes in the terms of
the Agreement and Plan of Merger dated as of May __, 1998, by and among
InfoSpace, Inc., OutPost Network, Inc., Certain Principal Shareholders of
OutPost Network, Inc. and OutPost Acquisition, Inc. (hereinafter referred to as
the "Agreement and Plan").
3. ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. At the
Effective Date and without any further action on the part of the Constituent
Corporations, the restated Articles of Incorporation of OutPost, as amended, a
copy of which is attached hereto as Exhibit 1, shall be and remain the Articles
---------
of Incorporation of the Surviving Corporation. Such Articles of Incorporation
may thereafter be altered, amended or repealed in accordance with the provisions
thereof or applicable law.
4. BYLAWS OF THE SURVIVING CORPORATION. At the Effective Date and without
any further action on the part of the Constituent Corporations, the Bylaws of
the OutPost, a copy of which is attached hereto as Exhibit 2, shall be and
---------
remain the Bylaws of the Surviving Corporation, until altered, repealed or
amended in accordance with the provisions thereof and applicable law.
5. CORPORATE GOVERNANCE. As of the Effective Date, the directors and
officers of OutPost shall have resigned and at the Effective Date, the
shareholder of the Surviving Corporation shall elect replacement directors, and
the new directors shall elect replacement officers of the Surviving Corporation,
each of such persons to hold office, subject to the applicable provisions of the
Articles of Incorporation and Bylaws of the Surviving Corporation, and
applicable law.
6. CONVERSION OF SHARES. Upon the effectiveness of the merger, the manner
of converting and exchanging the shares of the Constituent Corporations shall be
as follows: InfoSpace, Inc., a Delaware corporation (hereinafter referred to as
"InfoSpace"), shall issue a total of not more than 3,000,000 shares of its
common stock, par value $.0001/share. Each issued and outstanding share of the
common stock of OutPost (collectively "OutPost Stock") shall, by virtue of the
merger and without any action on the part of the holder thereof, automatically
be converted into a fraction (the "Conversion Ratio") of one fully paid and
nonassessable share of common stock of InfoSpace ("InfoSpace Common"). The
Conversion Ratio shall be a fraction with a numerator equal to 3,000,000, and a
denominator equal to the total number of shares of OutPost Stock issued and
outstanding immediately prior to the Effective Date. On or after the Effective
Date, all certificates representing shares of OutPost Stock shall be surrendered
to the Secretary of the Surviving Corporation, whereupon there shall be issued
to the respective holder of each such certificate a certificate representing the
number of shares of InfoSpace Common into which such shares have been converted
as provided herein.
-2-
7. ACQUISITION COMMON STOCK. Each share of common stock, no par value, of
Acquisition ("Acquisition Common Stock") issued and outstanding immediately
prior to the merger shall, by virtue of the merger and without any action on the
part of the holder thereof, be automatically converted into and exchangeable for
one share of the common stock, no par value, of the Surviving Corporation.
8. NO FRACTIONAL SHARES. No fractional share of InfoSpace Common will be
issued in the merger, but, in lieu thereof, each holder of OutPost Stock who
would otherwise be entitled to a fraction of a share of InfoSpace Common (after
aggregating all fractional shares of InfoSpace Common to be received by such
holder) will be entitled to receive an amount of cash (rounded to the nearest
whole cent) equal to the product of (a) the fraction multiplied by (b) $2.00.
9. EXCHANGE OF SHARES; STOCK TRANSFER BOOKS. On the Effective Date of the
merger, each holder of an outstanding certificate or certificates theretofore
representing shares of OutPost Stock shall be entitled, upon surrender of such
certificate or certificates to the Surviving Corporation, to receive in respect
of each share represented by such certificate or certificates, InfoSpace Common
in accordance with Section 1.6 of the Agreement and Plan, and if applicable,
cash in accordance with Section 1.8 of the Agreement and Plan. The cash
payment, if any, shall be made by corporate check of InfoSpace made payable to
the holder of record of OutPost Stock as shown on Schedule 2.3 of the Agreement
and Plan in respect of which payment is being made. At the Effective Date of
the merger there shall be no further registry of transfers on the records in
respect of OutPost Stock outstanding immediately prior to the Effective Date of
the merger. If any payment is to be made in the form of a check payable to a
name other than that in which the certificate for OutPost Stock surrendered is
registered, or if InfoSpace Common is to be issued in a name other than that in
which the certificate for OutPost Stock surrendered is registered, it shall be a
condition of such distribution that the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such payment or InfoSpace Common shall pay to the Surviving
Corporation any transfer or other taxes required, or shall establish to the
satisfaction of the Surviving Corporation that such taxes have been paid or are
not applicable. If, after the Effective Date of the merger, certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for such cash payment and InfoSpace Common as provided herein.
10. TREASURY AND OTHER STOCK. All shares of OutPost Stock which are held
by OutPost as treasury shares (if any) shall cease to exist as of the Effective
Date, without any conversion thereof or exchange with respect thereto.
11. EXERCISE OF STOCK RIGHTS. On the Effective Date, any option, warrant
or other right to purchase shares of OutPost Stock ("OutPost Options"), which is
outstanding on the Effective Date, shall be cancelled unless exercised prior to
the Effective Date.
-3-
12. SHAREHOLDER APPROVAL. This Plan of Merger shall be submitted to the
shareholders of each corporation for their approval in the manner provided by
applicable laws of the State of Washington at meetings to be held on or before
May 20, 1998, or at such other time as the Board of Directors of each
corporation shall agree. After approval by a vote of the holders of not less
than two-thirds (2/3rds) of the issued and outstanding shares of each
corporation entitled to vote thereon, the Articles of Merger shall be filed as
required by the laws of the State of Washington.
13. ABANDONMENT OF MERGER. In accordance with the terms of the Agreement
and Plan, the Board of Directors of either corporation may, in its discretion,
abandon this merger, subject to the rights of third parties under any contracts
relating thereto, without further action or approval by the shareholders of the
corporation, at any time prior to the filing date of the Articles of Merger with
the Secretary of State.
14. EXECUTION IN COUNTERPARTS. This Plan of Merger may be executed in any
number of counterparts and all such counterparts and copies shall be and
constitute an original instrument.
I CERTIFY, under penalty of perjury under the laws of the State of
Washington, that the foregoing is true and correct to the best of my knowledge.
DATED May ___, 1998.
SURVIVING CORPORATION:
OUTPOST NETWORK, INC., a Washington corporation
By
-----------------------------------------------
Its
-------------------------------------------
-4-
I CERTIFY, under penalty of perjury under the laws of the State of
Washington, that the foregoing is true and correct to the best of my knowledge.
DATED May ___, 1998.
MERGING CORPORATION:
OUTPOST ACQUISITION, INC., a Washington
corporation
By
-----------------------------------------------
Its
-------------------------------------------
-5-
EXHIBIT 1.5.2
VOTING AGREEMENT
----------------
THIS VOTING AGREEMENT (the "Agreement") is made as of this _____ day of
May, 1998 among Xxxxxx Xxxx, Xxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, the Xxxxxxx
Family Trust, Xxxx Xxxxxx, Xxxx Xxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxxx
X. Xxxxxxx, Xxxxxx Partners LLC, The Xxxxxx Group, Inc. and Xxxxx Xxxxxx
(collectively, the "Shareholders"), and shall be effective as of the Effective
Date as defined in the Agreement and Plan of Merger by and among InfoSpace,
Inc., OutPost Network, Inc., certain shareholders of OutPost Network, Inc. and
OutPost Acquisition, Inc. dated as of May ___, 1998. From time to time, Xxxx
X. Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, the Xxxxxxx Family Trust, Xxxx Xxxxxx, Xxxx
Xxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx Partners
LLC, The Xxxxxx Group, Inc., and Xxxxx Xxxxxx shall be collectively referred to
herein as the "Former OutPost Shareholders."
RECITALS:
The Shareholders desire to provide for the election of nominees of
particular persons as directors of InfoSpace, Inc., a Delaware corporation (the
"Company") during the term of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. Term. This Agreement shall terminate on the earlier to occur of
----
(i) 6:00 P.M. Pacific Time on the second anniversary of this Agreement; or (ii)
the closing of an underwritten registered public offering of the Company's
common stock at a public offering price per share equal to or greater than $5.00
per share and from which the gross proceeds of sale exceed $10,000,000.
2. Election of Directors.
---------------------
(a) At any meeting of the shareholders of the Company (or in
connection with any action taken by written consent of the shareholders of the
Company) for the purpose of electing directors, Mr. Xxxxxx Xxxx shall vote the
shares of InfoSpace common and/or preferred stock entitled to vote and held by
him so as to elect the following nominees as directors of the Company: first,
for four persons who are nominated by Xx. Xxxx; and second, for Mr. Xxxx Xxxxxx,
or another nominee of the Former OutPost Shareholders who then hold stock in the
Company.
(b) At any meeting of the shareholders of the Company (or in
connection with any action taken by written consent of the shareholders of the
Company)
for the purpose of electing directors, the Former OutPost Shareholders who then
held stock in the Company shall each vote the shares of InfoSpace common and/or
preferred stock entitled to vote and held by such Former OutPost Shareholders so
as to elect the following nominees as directors of the Company: first, for four
persons who are nominated by Xx. Xxxx; and second, for Mr. Xxxx Xxxxxx, or
another nominee of the Former OutPost Shareholders.
3. Resignation or Termination of Xxxx Xxxxxx. During the term
-----------------------------------------
hereof, in the event Xx. Xxxxxx resigns from employment by OutPost Network, Inc.
("OutPost"), a wholly-owned subsidiary of the Company, he shall concurrently
resign from his positions as a director of the Company and of OutPost, and the
Former OutPost Shareholders who then hold shares in the Company shall nominate a
replacement director to serve until the next annual meeting of shareholders for
the Company. In the event Xx. Xxxxxx'x employment is terminated by OutPost, and
Xx. Xxxxxx does not immediately resign from his positions as a director of the
Company and of OutPost, then the Shareholders (with the exception of Xx. Xxxxxx)
shall call a special meeting of the shareholders of the Company for the purpose
of voting whether to remove Xx. Xxxxxx as a director for the Company. The
Shareholders (with the exception of Xx. Xxxxxx) agree to vote their shares in
favor of removal, and upon such event, the Former OutPost Shareholders (except
Xx. Xxxxxx) who then hold stock in the Company shall nominate a replacement
director to serve until the next annual meeting of shareholders for the Company.
4. Modification. This Agreement may only be amended by a written
------------
instrument signed by each of the Shareholders.
5. Binding Effect. This Agreement may not be assigned by any
--------------
Shareholder without the consent of the other Shareholders, which may be withheld
in each such Shareholder's sole discretion. Except as expressly provided to the
contrary herein, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their permitted successors and each such successor
shall be expressly obligated to be bound by all of the terms and conditions of
this Agreement. Shares sold by the Shareholders shall not be bound by the terms
of this Agreement and the legend set forth in Section 8 shall not remain on such
shares. This Agreement runs personally to the signatories hereof (and permitted
successors) and is not an incident of ownership of the Company's stock.
6. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of Washington as applied to contracts
entered into by Washington residents and wholly to be performed within
Washington.
-2-
7. 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.
8. Notices. Communications to the parties hereunder shall be given
-------
in writing and shall be deemed effectively given upon personal delivery or upon
dispatch via registered or certified mail to a party at its address hereinafter
shown below its signature or at such other address as such party may designate
by 10 days advance written notice to the other party.
9. Legend. Each certificate for the InfoSpace Shares owned by the
------
Shareholders shall bear the following legend:
The securities represented hereby are subject to restrictions upon voting
which are set forth in that certain "Voting Agreement" dated May ___, 1998. A
copy of such Voting Agreement may be obtained from the Company or its legal
counsel.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
--------------------------------------------------
Xxxxxx Xxxx
0000 - 000xx Xxxxxx X. X.
Xxxxxxx, Xxxxxxxxxx 00000
--------------------------------------------------
Xxxx X. Xxxxxxx
0000 X.X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
--------------------------------------------------
Xxxxxxx X. Xxxxxxxxx
0000 X.X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
THE XXXXXXX FAMILY TRUST
-3-
By:
----------------------------------------------
Xxxxxx Xxxxxxx, Trustee
0000 X.X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
-------------------------------------------------
Xxxx Xxxxxx
(Street Address)
(City/State) (Zip)
--------------------------------------------------
Xxxx Xxxx
(Street Address)
(City/State) (Zip)
--------------------------------------------------
Xxxxx Xxxxxx
(Street Address)
(City/State) (Zip)
--------------------------------------------------
Xxxxxxx X. Xxxxxxxx
(Street Address)
(City/State) (Zip)
--------------------------------------------------
Xxxxxx Xxxxxxx
(Street Address)
(City/State) (Zip)
-4-
--------------------------------------------------
Xxxxx X. Xxxxxxx
(Street Address)
(City/State) (Zip)
XXXXXX PARTNERS LLC
By:
----------------------------------------------
Its:
-----------------------------------------
(Street Address)
(City/State) (Zip)
THE XXXXXX GROUP, INC.
By:
----------------------------------------------
Its:
-----------------------------------------
(Street Address)
(City/State) (Zip)
-5-
SCHEDULE 2.3
On April 8, 1998, the Board of Directors for OutPost unanimously adopted
the proposed Plan of Merger of OutPost with Acquisition and recommended its
approval to the OutPost shareholders. On April 9, 1998 (the "Record Date"),
notice of a special shareholders' meeting to be held April 30, 1998 for
consideration of the proposed merger was given to shareholders of record holding
the three million five hundred eighty two thousand seven hundred fifty
(3,582,750) outstanding common shares of OutPost Stock. The shareholders of
record on the Record Date are set forth on Schedule 2.3A.
On the Record Date, OutPost was in default with respect to convertible
debentures held by various individuals ("Convertible Debenture Holders")
totaling approximately Five Hundred Forty Thousand Dollars ($540,000). OutPost
and the Convertible Debenture Holders have agreed in principle, subject to
execution of definitive agreements, that the debentures will be surrendered in
exchange for the issuance of ten million eight hundred thousand (10,800,000)
shares of OutPost common stock. Thereafter, the Convertible Debenture Holders
shall have right as shareholders in OutPost, and shall have waived any and all
other rights previously existing under the convertible debentures.
OutPost's Board of Directors has previously authorized the issuance of
warrants permitting the holders thereof to purchase up to Eight Million Nine
Hundred Thirty Six Thousand (8,936,000) shares of OutPost Stock upon providing
OutPost with notice of exercise and the tender of the exercise price of one cent
($0.01) per share of OutPost Stock. These rights are held by the individuals
and entities identified on Schedule 2.3B.
OutPost's Board of Directors will recommend to its shareholders that
OutPost's Articles of Incorporation be amended prior to the Effective Date to
eliminate the Series B preferred shares and increase authorized common stock to
Thirty Five Million (35,000,000) shares.
OutPost and a former employee have settled, subject to execution of
definitive documents, the former employee's claim that he was entitled to an
equity interest in OutPost. Prior to Effective Date, Fifty Thousand (50,000)
shares of OutPost Common Stock will be issued to Xxxxxxx Xxxxxxxx for no
additional consideration.
OutPost has agreed to issue two million (2,000,000) shares of its common
stock to Xxxxxx Xxxxxxxx and one million (1,000,000) shares of its common stock
to The Xxxxxx Group in connection with financial consulting services rendered by
each of them to OutPost during 1997 and continuing to the Effective Date. These
additional three million (3,000,000) shares shall be issued prior to the
Effective Date.
Prior to the Effective Date, OutPost may issue up to five million six
hundred thirty one thousand two hundred fifty (5,631,250) shares for payment of
Five Cents ($0.05) per share to creditors and/or existing shareholders. Such
consideration will be paid in cash or as a reduction of amounts payable by
OutPost to such prospective shareholders. The names of all shareholders or
creditors who may acquire shares as described in this paragraph are set forth on
Schedule 2.3C. As of the Effective Date no more than thirty two million
(32,000,000) shares of OutPost Stock shall be outstanding.
-2-
SCHEDULE 3.6
InfoSpace is currently negotiating a financing transaction that would
involve the issuance of shares of InfoSpace Common. Definitive agreements have
not yet been finalized. As of the date of this Agreement, the parties to that
negotiation contemplate an investment of $3,000,000 to acquire 1,500,000 shares
of InfoSpace Common at a price of $2/share. The contemplated investment also
includes the issuance of warrants to acquire up to 3,750,000 shares of InfoSpace
Common, which warrants would have a term of ten years and staggered exercise
prices. The warrants are subject to a right of repurchase by InfoSpace, which
right is reduced based on the investor's performance in assisting InfoSpace
obtain additional financing over the course of approximately the next four
years.
InfoSpace is also considering entering into a significant distribution
agreement with a third party. Such a distribution agreement would be in
furtherance of InfoSpace's overall aim of increasing its viewership over the
Internet. Concluding such a distribution agreement would involve a substantial
financial commitment by InfoSpace, and InfoSpace may make another offering of
shares of InfoSpace Common and warrants to acquire InfoSpace Common in order to
raise additional capital so as to meet this financial commitment. OutPost and
its shareholders should be aware that in pursuing its business plan, InfoSpace
(1) may assume significant financial obligations, and (2) contemplates issuing
shares of InfoSpace Common in order to raise sufficient funds to meet such
obligations. The issuance of the shares and warrants discussed in the first
paragraph of this Schedule 3.6, and the potential issuance of additional shares
of InfoSpace Common Stock and warrants to acquire InfoSpace Common discussed in
this second paragraph of Schedule 3.6, would result in dilution of the former
OutPost Shareholders' interest in InfoSpace.
SCHEDULE 3.9
LITIGATION
1. InfoSpace is involved in a dispute with a former consultant who claims
the right to purchase shares of InfoSpace stock in connection with consulting
services. The dispute is being mediated and the maximum number of InfoSpace
shares that could be subject to purchase in connection therewith is 3,500,000.
2. A complaint for federal trademark infringement and unfair competition,
statutory unfair practices, and common law trademark infringement and unfair
competition was filed in U.S. District Court for the Northern District of
California on February 18, 1998 by Infospace, Inc., a California corporation,
against InfoSpace.
3. A complaint for specific performance, tortious termination of
employment, fraud, breach of fiduciary duty, intentional infliction of emotional
distress, and for injunctive relief was filed in Superior Court of California,
County of Santa Xxxxx on May 15, 1998 by Xxxxxxxx Xxxxxxxxxxx, also known as
Xxxx Xxxxxx, a former employee of InfoSpace, against InfoSpace, Xxxxxx Xxxx,
and certain unnamed defendants.
EXHIBIT 5.12
INVESTMENT CERTIFICATE
The undersigned shareholder (the "Shareholder") of OutPost Network, Inc., a
Washington corporation ("OutPost"), will be receiving shares (the "Shares") of
the common stock, par value $.0001/share, of InfoSpace, Inc., a Delaware
corporation ("InfoSpace"), in connection with a transaction in which InfoSpace's
wholly-owned subsidiary, OutPost Acquisition, Inc., a Washington corporation
("Acquisition"), will be merged with and into OutPost (the "Merger"). The
Merger is to be accomplished in accordance with the terms of an Agreement and
Plan of Merger dated as of May ___, 1998 among InfoSpace, Acquisition, OutPost
and the OutPost shareholders named therein (the "Merger Agreement"). As a
condition to the Merger, the Shareholder hereby represents as follows:
1. The Shareholder has received and reviewed the Offering Memorandum
prepared in connection with the Merger, which includes copies of the following:
(a) The Merger Agreement;
(b) Certain financial statements of InfoSpace; and
(c) Certain financial statements of OutPost.
2. The Shareholder is acquiring all of the Shares for the Shareholder's
own account and not with a view to or for sale in connection with any
distribution of the Shares. The Shareholder specifically represents that the
entire legal and beneficial interest in the Shares is being acquired for, and
will be held for, the Shareholder's account only and not for the account of, or
otherwise on behalf of, any other person.
3. The Shareholder understands that the Shares to be issued in the Merger
will not be registered under the Securities Act of 1933, as amended (the "Act"),
in reliance upon an exemption from the registration requirements of the Act.
4. The Shareholder hereby agrees that he/she will not sell, transfer,
assign, pledge, hypothecate or otherwise dispose of the Shares absent an
effective Registration Statement under the Act covering such disposition, or
without InfoSpace first receiving an opinion of counsel, which may be counsel
for InfoSpace, reasonably acceptable to InfoSpace, and shall be to the effect
that such sale, transfer, assignment, pledge, hypothecation or other disposition
is or will be exempt from the registration and prospectus delivery requirements
of the Act and the registration or qualification requirements of any applicable
state securities laws.
5. The Shareholder understands and agrees that all certificates evidencing
the Shares to be issued to the Shareholder will bear substantially the following
legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES ACTS AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND ANY SUCH APPLICABLE STATE SECURITIES ACTS
OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
6. Check one: [ ] the Shareholder is an accredited investor as defined in
Rule 501(a) of Regulation D as adopted by the U.S. Securities and Exchange
Commission, or [ ] the Shareholder is not an accredited investor, but
acknowledges that Xxxx X. Xxxxxxx has acted as the Shareholder's purchaser
representative (as defined in Rule 501(h) of Regulation D as adopted by the U.S.
Securities and Exchange Commission) in connection with evaluating the merits and
risks of the Merger, and the Shareholder, acting together with Xx. Xxxxxxx, has
such knowledge and experience in financial and business matters, that the
Shareholder is capable of evaluating the merits and risks of the prospective
investment.
Dated: __________, 1998
------------------------------------------
Signature of Shareholder
-------------------------------------------------
Print/Type Name
CONFIRMED AND ACCEPTED:
INFOSPACE, INC.
By:
---------------------------------
Xxxxxx Xxxx, Its President
-2-
