Exhibit 2.01
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (this "Agreement") is made and entered into
as of September 28, 1999 (the "Agreement Date") by and among XXXXXXXX.XXX, INC.,
a Delaware corporation ("Snowball"), AMERITRACK, INC., a South Carolina
corporation ("AmeriTrack") and all of the security holders of AmeriTrack (each a
"Shareholder," and collectively, the "Shareholders"). The names and addresses
of each Shareholder, and the shares of AmeriTrack Stock (as defined below) owned
by each Shareholder, are set forth on Exhibit A attached hereto.
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RECITALS
A. The Shareholders now own, and will own as of the Closing Date (as
defined below) all of the AmeriTrack Stock.
B. The parties intend that, subject to the terms and conditions of this
Agreement, Snowball will purchase all of the AmeriTrack Stock from the
Shareholders in exchange for the consideration described herein so that Snowball
shall acquire and own, as of the Closing Date, all of the issued and outstanding
securities of AmeriTrack.
C. The representations and warranties of AmeriTrack and the Shareholders
herein are a material inducement to Snowball to enter into this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms will have the meanings
set forth below. Other defined terms are set forth in context in the text.
1.1 "Advance Payment" means that certain $25,000.00 advance made by
Snowball to AmeriTrack pursuant to that certain letter of intent dated as of
September 7, 1999, less any amount of such Advance Payment that has been repaid
by AmeriTrack prior to the Closing.
1.2 "AmeriTrack Ancillary Agreements" means, collectively, each
agreement, certificate or document (other than this Agreement) which AmeriTrack
is to enter into as a party thereto, or is to otherwise execute and deliver,
pursuant to or in connection with this Agreement.
1.3 "AmeriTrack Derivative Securities" means, collectively: (a) any
warrant, option, right or other security that entitles the holder thereof to
purchase or otherwise acquire any shares of the share capital of AmeriTrack
(collectively, "AmeriTrack Stock Rights"); (b) any note, debenture, evidence of
indebtedness, stock or other security of AmeriTrack that is convertible into or
exchangeable for any shares of the share capital of AmeriTrack of any class or
series or any AmeriTrack Stock Rights (each, an "AmeriTrack Convertible
Security"); and (c) any warrant, option, right, note, evidence of indebtedness,
stock or other security that entitles the holder thereof to purchase or
otherwise acquire any AmeriTrack Stock Rights or any AmeriTrack Convertible
Security.
1.4 "AmeriTrack Stock" means all of the issued and outstanding shares
of the share capital of AmeriTrack.
1.5 "Cash Consideration" shall mean $1 million in cash.
1.6 "Cash Escrow Amount" shall mean 25% of the Cash Consideration,
together with any interest accrued thereon, to be held in escrow as provided in
Section 2.4.
1.7 "Contingent Amount" shall mean 25% of the Cash Consideration, to
be paid pursuant to Section 2.5.
1.8 A Shareholder's "Percentage Interest" means, with respect to each
Shareholder, the percentage of the total amount of AmeriTrack Stock owned by all
the Shareholders that is owned by such Shareholder. Each Shareholder's
Percentage Interest is set forth opposite such Shareholder's name on Exhibit A
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under the column titled "Percentage Interest".
1.9 "Purchase Price" means, collectively: (a) an aggregate of 30,000
shares of Snowball Common Stock, $0.001 par value; and (b) the Cash
Consideration.
1.10 "Purchaser Representative" shall mean Azalea Capital, L.L.C.
1.11 "Registered User Milestone" means the completion of a
registration process by 55,000 users of AmeriTrack's High School Alumni website
including at a minimum (i) agreement to the terms and conditions of an end user
license agreement acceptable to Snowball setting forth an acceptance of terms,
benefits of joining, service limitations, service changes and discontinuation,
privacy policy, rights granted, limitations on liability and other relevant
legal and marketing information, and (ii) an opportunity for the user to accept
or decline email notices of various services and programs being offered by the
registering party. Snowball acknowledges that the registration process employed
on the High School Alumni website on September 10, 1999 complies with the
foregoing requirements.
1.12 "Shareholder Ancillary Agreements" means, collectively, the
Escrow Agreement, the Stock Powers, IRS Form W-8 or Form W-9 and each other
agreement, certificate or document (other than this Agreement) which a
Shareholder is to enter into as a party thereto, or is to otherwise execute and
deliver, pursuant to or in connection with this Agreement.
1.13 "Snowball Derivative Securities" means, collectively: (a) any
warrant, option, right or other security that entitles the holder thereof to
purchase or otherwise acquire any shares of the share capital of Snowball
(collectively, "Snowball Stock Rights"); (b) any note, debenture, evidence of
indebtedness, stock or other security of Snowball that is convertible into or
exchangeable for any shares of the share capital of Snowball of any class or
series or any
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Snowball Stock Rights (each, a "Snowball Convertible Security"); and (c) any
warrant, option, right, note, evidence of indebtedness, stock or other security
that entitles the holder thereof to purchase or otherwise acquire any Snowball
Stock Rights or any Snowball Convertible Security.
1.14 "Snowball Ancillary Agreements" means, collectively, the Escrow
Agreement and each other agreement, certificate or document (other than this
Agreement) which Snowball is to enter into as a party thereto, or is to
otherwise execute and deliver, pursuant to or in connection with this Agreement.
1.15 "Split" means the 3 for 2 forward stock split of the Snowball
Common Stock approved by Snowball's Board of Directors on September 1, 1999.
2. SALE AND PURCHASE OF THE AMERITRACK STOCK
2.1 Sale and Delivery of the AmeriTrack Stock. Subject to the terms
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and conditions of this Agreement, at the Closing, each of the Shareholders
hereby agrees to sell, assign, transfer and convey to Snowball, and Snowball
agrees to purchase, all AmeriTrack Stock owned by such Shareholder as of the
Closing and all right, title and interest thereto, including without limitation
any cause of action arising out of the acquisition or ownership by such
Shareholder of such AmeriTrack Stock, in exchange for Snowball's payment to such
Shareholder of each such Shareholder's respective portion of the consideration
specified in Section 2.2 below. Each Shareholder agrees to deliver to Snowball
at the Closing all the share certificates and any other documents representing
the AmeriTrack Stock ("AmeriTrack Certificates") owned by such Shareholder at
the Closing, accompanied by a stock power for each such AmeriTrack Certificate,
duly executed in blank, in substantially the form of Exhibit B attached hereto
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(the "Stock Power"). The sale by the Shareholders and Snowball's purchase of
the AmeriTrack Stock pursuant to this Agreement is sometimes referred to as the
"Purchase Transaction".
2.2 Payment of the Purchase Price.
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(a) Total Amounts Payable at Closing. Subject to the terms and
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conditions of this Agreement, Snowball hereby agrees to: (i) pay to the
Shareholders in the aggregate at the Closing a total amount equal to the
Purchase Price minus the Escrow Amount and minus the Contingent Amount and minus
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the Advance Payment (such total net amount being referred to herein as the
"Closing Payment"); and (ii) transfer to the Escrow Agent at the Closing an
amount equal to the Escrow Amount. The deduction of the Advance Payment from
the amounts paid to the Shareholders at the Closing will satisfy in full
AmeriTrack's obligation to repay the Advance Payment to Snowball.
(b) Payments to Each Shareholder at Closing. The Closing Payment
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shall be allocated among and paid to each of the Shareholders as set forth on
Exhibit A according to each Shareholder's Percentage Interest. Snowball will
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deliver the Closing Payment by wire transfer to Xxxxxx Xxxxx Xxxxxx & Xxxxxxx,
LLP, counsel to AmeriTrack, for distribution to the Shareholders.
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(c) Reduction of Purchase Price. The Cash Consideration portion of
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the Purchase Price shall be reduced dollar for dollar to the extent that the
balance sheet liabilities of AmeriTrack as of the Closing are greater than zero
other than AmeriTrack's obligations to PSIWeb, Inc. under that certain agreement
dated August 31, 1999.
2.3 The Closing. The consummation of the Purchase Transaction
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pursuant to this Agreement (the "Closing") will take place at the offices of
Fenwick & West LLP, 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000 on
September 28, 1999, at 10:00 a.m. PST, or at such other place or on such other
date and/or time as Snowball and AmeriTrack shall agree in writing (such date,
the "Closing Date"). The parties agree that facsimile signatures will be deemed
the same as original signatures with respect to all documents delivered at the
Closing.
2.4 Withholding and Allocation of Escrow Amount. At the Closing,
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Snowball shall withhold from the Purchase Price, and deliver to Greater Bay
Trust Company or a similar institution, as escrow agent (the "Escrow Agent"),
pursuant to the provisions of an escrow agreement (the "Escrow Agreement") in
substantially the form attached hereto as Exhibit C: (i) 50% of the Snowball
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Common Stock to be issued to the Shareholders in accordance with Section 2.2
(rounded down to the nearest whole number of shares to be issued to each
Shareholder) (the "Escrow Shares"), and (ii) the Cash Escrow Amount (together
with the Escrow Shares, collectively as the "Escrow Amount"). The Escrow Amount
will be held by the Escrow Agent from the Closing until the earlier of (a) one
(1) year after the Closing Date (the "Escrow Period") or (b) release of the
Escrow Amount or a portion thereof in accordance with the Escrow Agreement. The
Cash Escrow Amount held in the escrow fund will be invested in an interest-
bearing account or money market instrument. Any interest payable on the Cash
Escrow held in the escrow fund will be added to the Escrow Amount in the escrow
fund and become a part thereof. The Shareholders shall be deemed to have
consented to and approved: (i) the use of the Escrow Amount as collateral for
AmeriTrack's indemnification obligations under Section 11.2 in the manner set
forth in the Escrow Agreement, (ii) the appointment of Xxxxx X. Xxxxxxxxxxx,
Xx., and in the absence of Xxxxx X. Xxxxxxxxxxx, Xx., R. Xxxxxxx Xxxxxx on
behalf of Azalea Capital, L.L.C., as the representative of the Shareholders (the
"Representative") and as the attorney-in-fact and agent for and on behalf of
each Shareholder, and the taking by the Representative of any and all actions
and the making of any decisions required or permitted to be taken by him in
connection with the Escrow Amount (including, without limitation, the exercise
of the power to: authorize delivery to Snowball of Escrow Shares and Cash Escrow
Amount in satisfaction of claims by Snowball; agree to, negotiate, enter into
settlements and compromises of and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims; resolve any claim
made pursuant to Section 11.2; and take all actions necessary in the judgment of
the Representative for the accomplishment of the foregoing) and (iii) to all of
the other terms, conditions and limitations in the Escrow Agreement. Any
distribution of all or a portion of the escrow fund to the Shareholders shall be
made in accordance with the Shareholders' Percentage Interest.
2.5 Contingent Amount. On and after the Closing, subject to the
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terms and conditions of this Section 2.5, Snowball agrees to pay to the
Shareholders the Contingent Amount in $25,000 increments as follows: At the
Closing, Snowball will pay $25,000 of the
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Contingent Amount for each Registered User Milestone achieved prior to the
Closing. Upon the achievement of each additional Registered User Milestone
following the Closing, Snowball will pay $25,000 of the Contingent Amount, with
interest, until the Contingent Amount has been paid in full. The Contingent
Amount paid under this Section 2.5 shall be allocated among and paid to each of
the Shareholders according to such Shareholder's Percentage Interest. Payment of
each increment of the Contingent Amount shall be made by Snowball to the
Shareholders in cash or other immediately available funds within ten (10) days
after the end of each calendar month in which the applicable Registered User
Milestone is reached, pursuant to instructions to be provided by the
Shareholders to Snowball. Interest shall accrue from the Closing Date on the
Contingent Amount outstanding from time to time until paid in full at the fixed
simple rate per annum equal to five percent (5.0%) calculated based upon a 360-
day year and the actual number of days elapsed. Within ten (10) days after the
end of each calendar month after the Closing Date, Snowball shall furnish the
Representative a certified written statement, setting forth the number of users
of the High School Alumni website who completed a registration process complying
with Section 1.11 of this Agreement (a "Registered User", and collectively the
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"Registered Users") on each day of such calendar month. Snowball agrees to cause
such registration process to be maintained in accordance with Section 1.11
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following the Closing until the Contingent Amount is paid in full. Following the
Closing, Snowball will cause AmeriTrack keep accurate records in sufficient
detail to enable the number of Registered Users completing a registration
process after the Closing Date to be determined. Upon any dispute between the
Shareholders and Snowball regarding the calculation of the number of Registered
Users, the Representative shall be permitted to examine said records, at the
expense of the Shareholders, subject to reasonable confidentiality obligations,
during usual business hours to the extent necessary to verify the number of
Registered Users.
2.6 Further Assurances. If, at any time after the Closing, Snowball
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considers or is advised that any further instruments, deeds, assignments or
assurances are reasonably necessary to consummate or perfect the Purchase
Transaction as contemplated hereby or any of the other transactions contemplated
hereby or to carry out the purposes and intent of this Agreement, then Snowball,
AmeriTrack and their respective officers and directors may, and each Shareholder
requested to do so by Snowball shall, promptly execute and deliver all such
proper instruments, deeds, assignments and assurances and do all other things
reasonably necessary to consummate or perfect the sale and transfer of the
AmeriTrack Stock to Snowball as contemplated hereby and any of the other
transactions contemplated hereby and to carry out the purposes and intent of
this Agreement, in the name of AmeriTrack or otherwise.
2.7 Waiver and Release. Each of the Shareholders hereby disclaims,
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waives and releases all right, title and interest in and to (of record or
beneficially), and any claims (legal or equitable) to, any and all AmeriTrack
Stock and any and all AmeriTrack Derivative Securities, other than to the shares
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of AmeriTrack Stock listed opposite such Shareholder's name on Exhibit A. Each
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of the Shareholders hereby releases Snowball and AmeriTrack from any and all
debts, liabilities, obligations, other than Purchase Price, claims and causes of
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action, other than claims or causes of action based on, related to or arising
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from a breach by Snowball of this Agreement or any Shareholder's Ancillary
Agreements or Snowball Ancillary Agreements, which such Shareholder now has,
ever has had, or ever claims to have had, that are based on,
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related to or arising from (a) ownership of any right, title and interest in and
to any AmeriTrack Stock or any AmeriTrack Derivative Securities, (b) rights to
equity ownership of AmeriTrack or equity interests in AmeriTrack; (c) rights to
equity based appreciation in the value of AmeriTrack; (d) any other legal,
economic or beneficial interest in AmeriTrack or its business; (e) any right
such Shareholder may have had to exercise any preemptive right, right of first
refusal or similar rights, voting rights or registration rights of any kind;
and/or (f) any promises, covenants, contracts or representations with respect to
the matters referred to in clauses (a), (b), (c), (d) or (e) above, other than
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the shares AmeriTrack Stock listed opposite such Shareholder's name on
Exhibit A.
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2.8 Affiliate Agreement. Snowball will pay AmeriTrack all payments
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owed to AmeriTrack under that certain Affiliate Agreement dated as of June 25,
1999 through September 26, 1999. No other payments will be due by Snowball
under such agreement after such date.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders hereby represents and warrants to Snowball
that all the statements set forth below in this Section 3 are true, correct and
complete as of the Agreement Date and will be true, correct and complete as of
the Closing Date:
3.1 Organization of Certain Shareholders. If such Shareholder is a
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corporation, partnership, limited liability company, trust or other entity, such
Shareholder is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation and the individual signing this
Agreement and/or any of the Shareholder Ancillary Agreements on behalf of such
Shareholder is a duly authorized representative of such Shareholder who has
valid authority to execute and deliver this Agreement and such Shareholder
Ancillary Agreements on behalf of such Shareholder.
3.2 Authorization of Transactions. Such Shareholder has full power,
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capacity and authority (including, if such Shareholder is a corporation, full
corporate power and authority) to execute and deliver this Agreement and the
Shareholder Ancillary Agreements, and to perform its obligations hereunder and
thereunder. This Agreement and the Shareholder Ancillary Agreements are, or
when executed by the Shareholder will be, valid and binding obligations of such
Shareholder, enforceable against such Shareholder in accordance with their
respective terms, subject to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of creditors generally, and (b)
rules of law governing specific performance, injunctive relief and other
equitable remedies.
3.3 AmeriTrack Stock. Such Shareholder owns of record and
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beneficially, and has good, valid and marketable title to, all of the shares of
AmeriTrack Stock set forth opposite such Shareholder's name on Exhibit A, free
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and clear of any restrictions on transfer (other than restrictions imposed by
applicable securities laws, if any), taxes, security interests, liens, pledges,
mortgages, charges, encumbrances, options, warrants, purchase rights, contracts,
commitments, calls, equities, claims and demands. Such Shareholder does not
own, of record or beneficially, any AmeriTrack Stock except as specified in
Exhibit A or any AmeriTrack Derivative Securities. Such Shareholder is not a
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party to any voting trust, proxy or other
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agreement or understanding with respect to the voting of any share capital of
AmeriTrack or the registration of any shares of share capital of AmeriTrack.
3.4 Disclosure of Information. Such Shareholder has received or has
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had full access to all the information it considers necessary or appropriate to
make an informed investment decision with respect to the Snowball Common Stock
to be acquired by such Shareholder under this Agreement (the "Snowball
Securities"). Such Shareholder further has had an opportunity to ask questions
and receive answers from Snowball, the Purchaser Representative, AmeriTrack, and
AmeriTrack's management regarding the terms and conditions of the Purchase
Transaction and to obtain additional information (to the extent Snowball
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to such Shareholder or to
which such Shareholder had access.
3.5 Investment Experience. Such Shareholder understands that the
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acquisition of the Snowball Securities involves substantial risk. Such
Shareholder individually or together with his or her Purchaser Representative
has experience as an investor in securities of companies in the development
stage and acknowledges that such Shareholder is able to fend for itself, can
bear the economic risk of such Shareholder's investment in the Snowball
Securities and individually or together with his or her Purchaser Representative
has such knowledge and experience in financial or business matters that such
Shareholder is capable of evaluating the merits and risks of this investment in
the Snowball Securities and protecting its own interests in connection with this
investment. The Purchaser Representative has received no remuneration from
Snowball in connection with such advice.
3.6 Investment Representations. Each Shareholder hereby agrees,
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represents and warrants as follows:
(a) Acquisition for Own Account. The Snowball Securities to be
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acquired by such Shareholder hereunder will be acquired for investment for such
Shareholder's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the Securities Act,
and such Shareholder has no present intention of selling, granting any
participation in, or otherwise distributing the same. If not an individual,
such Shareholder also represents that such Shareholder has not been formed for
the specific purpose of acquiring Snowball Securities.
(b) Restricted Securities. Such Shareholder understands that the
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Snowball Securities are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from Snowball in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, such Shareholder represents that such Shareholder is familiar
with Rule 144 of the U.S. Securities and Exchange Commission, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. Such Shareholder understands that Snowball is under no
obligation to register any of the Snowball Securities acquired hereunder. Such
Shareholder understands that no public market now exists for any of the Snowball
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Securities and that it is uncertain whether a public market will ever exist for
the Snowball Securities.
(c) Further Limitations on Disposition. Without in any way limiting
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the representations set forth above, such Shareholder further agrees not to make
any disposition of all or any portion of the Snowball Securities unless and
until: (i) there is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or (ii) such Shareholder shall have
notified Snowball of the proposed disposition and, except as set forth in clause
(d) below, shall have furnished Snowball with a statement of the circumstances
surrounding the proposed disposition, and, at the expense of such Shareholder or
its transferee, with an opinion of counsel, reasonably satisfactory to Snowball,
that such disposition will not require registration of such securities under the
Securities Act.
(d) Legends. It is understood that the certificates evidencing the
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Snowball Securities will bear the legend set forth below and any legend required
by state securities laws:
The securities represented hereby have not been registered
under the Securities Act of 1933, as amended (the "Act"), or under the
securities laws of certain states. These securities are subject to
restrictions on transferability and resale and may not be transferred
or resold except as permitted under the Act and the applicable state
securities laws, pursuant to registration or exemption therefrom.
investors should be aware that they may be required to bear the
financial risks of this investment for an indefinite period of time.
The issuer of these securities may require an opinion of counsel in
form and substance satisfactory to the issuer to the effect that any
proposed transfer or resale is in compliance with the Act and any
applicable state securities laws.
The legend set forth above shall be removed by Snowball from any certificate
evidencing Snowball Securities; and no opinion of counsel will be required in
connection with the transfer of Snowball Securities: (i) to the extent that such
Snowball Securities are held by nonaffiliates of Snowball and may, in Snowball's
reasonable opinion, all be sold within a three month period in accordance with
Rule 144 promulgated under the Act; or (ii) upon delivery to Snowball of an
opinion by counsel, reasonably satisfactory to Snowball, that a registration
statement under the Securities Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which Snowball issued the Snowball Securities. In addition,
Snowball will not require an opinion of counsel in connection with a transfer of
Snowball Securities by a Shareholder to Snowball, an Indemnified Person (as
defined in Section 11.2 below) or another Shareholder so long as (i) in the
opinion of Snowball's counsel such transfer may be made without such a
registration statement being in effect and without jeopardizing the exemption or
exemption from
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registration pursuant to which Snowball issued the Snowball Securities; and (ii)
such transferee makes the representations and warranties made in Sections 3.4,
3.5 and 3.6 hereof and agrees to be bound by the terms and conditions of such
sections.
4. REPRESENTATIONS AND WARRANTIES OF AMERITRACK
AmeriTrack hereby represents and warrants to Snowball that the
statements set forth below in this Section 4 are true, correct and complete as
of the Agreement Date and will be true, correct and complete as of the Closing
Date, except as is otherwise expressly set forth in the AmeriTrack Disclosure
Schedule attached as Exhibit D hereto (the "AmeriTrack Disclosure Schedule"),
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which statements in such AmeriTrack Disclosure Schedule shall be deemed to be
representations and warranties made by AmeriTrack under this Section 4:
4.1 Organization and Good Standing. AmeriTrack is a company duly
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organized, validly existing and in good standing under the laws of South
Carolina. AmeriTrack has the power and authority to own, operate and lease its
respective properties and to carry on its respective business as now conducted
and as proposed to be conducted, and is duly qualified to transact business as a
foreign company in each jurisdiction in which such qualification is required.
4.2 Power, Authorization and Validity. AmeriTrack has the right,
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power, legal capacity and authority to enter into, execute, deliver and perform
its obligations under this Agreement and all AmeriTrack Ancillary Agreements and
AmeriTrack has all requisite power and authority to consummate all of the
transactions contemplated by this Agreement and by all AmeriTrack Ancillary
Agreements. The execution, delivery and performance of this Agreement and each
of the AmeriTrack Ancillary Agreements by AmeriTrack have been duly and validly
approved and authorized by all necessary action on the part of AmeriTrack's
board of directors and shareholders. This Agreement and the AmeriTrack
Ancillary Agreements are, or when executed by AmeriTrack will be, valid and
binding obligations of AmeriTrack enforceable in accordance with their
respective terms, subject to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of creditors generally, and (b)
rules of law governing specific performance, injunctive relief and other
equitable remedies.
4.3 Capitalization of AmeriTrack.
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4.3.1 Outstanding Stock. The authorized share capital of
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AmeriTrack consists entirely of 1,000,000 shares of Common Stock, no par value,
of which 610,632 shares are issued and outstanding, all of which shares are now
owned and held (and all of which shares will at the Closing be owned and held)
only by the Shareholders listed on Exhibit A in the respective amounts of each
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such class (as applicable) shown for each such Shareholder on Exhibit A. No
other shares
or fractional shares of the share capital of AmeriTrack are (or will at Closing
be) authorized, issued or outstanding. All issued and outstanding shares of
AmeriTrack Stock have been duly authorized and validly issued, are fully paid
and nonassessable, are not subject to any claim, lien, preemptive right, or
right of rescission, and have been offered, issued, sold and delivered by
AmeriTrack (and, if applicable, transferred) in compliance with all requirements
of applicable law, AmeriTrack's Articles of Incorporation, Bylaws and other
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charter documents and all agreements to which AmeriTrack is a party. AmeriTrack
has no liability for any dividends declared or accrued but unpaid.
4.3.2 No Options, Warrants or Rights. As of the Agreement Date there
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are no AmeriTrack Derivative Securities outstanding and as of the Closing date
there will be no AmeriTrack Derivative Securities outstanding. No shares of
AmeriTrack Stock are reserved for issuance under any stock purchase, stock
option or other benefit plan.
4.3.3 No Voting or Other Arrangements. There are no voting
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agreements, voting trusts, rights of repurchase, rights of first refusal or
other restrictions applicable to any of AmeriTrack's outstanding securities or
to the sale of any shares of AmeriTrack Stock to Snowball hereunder.
4.4 Subsidiaries. AmeriTrack has no subsidiaries and no interest,
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direct or indirect, in any corporation, partnership, limited liability company,
joint venture or other business entity.
4.5 No Violations. Neither the execution and delivery of this
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Agreement or any AmeriTrack Ancillary Agreement, nor the consummation of the
Purchase Transaction or any of the other transactions contemplated hereby or
thereby, will conflict with, or (with or without notice or lapse of time, or
both) result in a termination, breach, impairment or violation of: (i) any
provision of the Articles of Incorporation, Bylaws or other charter documents of
AmeriTrack as currently in effect; (ii) to AmeriTrack's knowledge, any federal,
state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to AmeriTrack or the assets or properties of AmeriTrack;
or (iii) any AmeriTrack Agreement (as defined in Section 4.11).
4.6 Litigation. There is no action, suit, arbitration, mediation,
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proceeding, claim or investigation pending against AmeriTrack (or against any
officer or director of AmeriTrack) before any court, administrative agency or
arbitrator, nor, to the best of AmeriTrack's knowledge, has any such action,
suit, proceeding, arbitration, mediation, claim or investigation been
threatened, nor to the best of AmeriTrack's knowledge is there any basis for any
person, firm, corporation or other entity, to assert a claim against AmeriTrack.
There is no judgment, decree, injunction, rule or order of any governmental
entity or agency, court or arbitrator outstanding against AmeriTrack.
4.7 Taxes. AmeriTrack has: (a) timely filed all national, state,
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local and foreign tax returns required to be filed by it; (b) timely paid all
taxes required by such tax returns to be paid by it in respect of all periods
for which returns have been filed; (c) has timely withheld and paid to the
appropriate taxing authorities all taxes and other payments required to be
withheld by it from salaries and other compensatory payments paid or payable by
it to employees or other service providers paid or payable by it; (d) timely
made all necessary estimated tax payments; and (e) no material liability for
taxes. AmeriTrack has not received any notification that any issues have been
raised (and are currently pending) by any taxing authority (including but not
limited to any income, franchise, sales or use tax authority) regarding
AmeriTrack.
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4.8 Liabilities. AmeriTrack has no debt, liability or obligation of
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any nature (whether intercompany or owed to third parties), whether accrued,
absolute, contingent or otherwise, and whether due or to become due, except for
those shown on Section 4.8 to the AmeriTrack Disclosure Schedule.
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4.9 Assets.
------
4.9.1 Assets Generally. Section 4.9 to the AmeriTrack Disclosure
---------------- -----------
Schedule lists all of the tangible and intangible assets of AmeriTrack,
including without limitation all AmeriTrack IP Rights ("Assets"). AmeriTrack has
good and marketable title to the Assets, free and clear of all liens, mortgages,
security interests, claims, charges, restrictions or encumbrances. All Assets
are in good condition and repair, normal wear and tear excepted, and all leases
of real or personal property to which AmeriTrack is a party are fully effective
and afford AmeriTrack, as the case may be, peaceful and undisturbed possession
of the real or personal property that is the subject of the lease. AmeriTrack
does not own any real property.
4.9.2 Database. Without limiting the foregoing, the
--------
xxxxxxxxxxxxxxxx.xxx database included within the Assets is in good working
order as currently configured and is operable, and will be operable, without
anything other than minor maintenance, for a period of ninety (90) days
following the Closing; provided, however, AmeriTrack makes no representation or
-------- -------
warranty regarding any modifications or other changes to the
xxxxxxxxxxxxxxxx.xxx database implemented by Snowball or its agents or
independent contractors before or after the Closing Date, or the continued
operation of the xxxxxxxxxxxxxxxx.xxx database following the Closing as a result
of such modifications or other changes during such ninety (90) day period.
4.10 Absence of Certain Changes. Since June 30, 1999, there has not
--------------------------
been with respect to AmeriTrack: (a) any material adverse change in the
condition (financial or otherwise), properties, assets, liabilities, businesses,
operations, results of operations or prospects of AmeriTrack; (b) material
damage, destruction or loss of any Asset, whether or not covered by insurance;
(c) action prohibited by Section 6.1.1; or (d) agreement or arrangement made by
-------------
AmeriTrack to take any action which, if taken prior to the Agreement Date, would
have made any representation or warranty of AmeriTrack or the Shareholders set
forth in this Agreement untrue or incorrect.
4.11 Contracts and Commitments. Section 4.11 to the AmeriTrack
------------------------- ------------
Disclosure Schedule sets forth a list of each of the written or oral contracts,
agreements, commitments or other instruments to which AmeriTrack is a party or
to which AmeriTrack or any of its assets or properties is bound (collectively,
the "AmeriTrack Agreements"). A copy of each such agreement or document has
been delivered to Snowball. Except as provided in Section 4.11 of the
------------
AmeriTrack Disclosure Schedule, no consent or approval of any third party is
required to ensure that following the Closing each AmeriTrack Agreement shall
continue to be in full force and effect without any breach or violation thereof
caused by virtue of the transactions contemplated hereby. AmeriTrack is not in
breach or default of, and has not breached or been in default of, any AmeriTrack
Agreement.
11
4.12 Intellectual Property.
---------------------
4.12.1 AmeriTrack owns, or has the irrevocable right to use,
sell or license all Intellectual Property Rights (as defined below) necessary or
required for the conduct of its business as presently conducted and as presently
proposed to be conducted (such Intellectual Property Rights being hereinafter
collectively referred to as the "AmeriTrack IP Rights"). AmeriTrack is the legal
and beneficial owner of all rights, including all Intellectual Property Rights,
in and to the Assets.
4.12.2 AmeriTrack has not violated, and the conduct of its
business and use, marketing, sale or distribution of any Asset does not violate,
any license or agreement between AmeriTrack and any third party or infringe or
misappropriate any Intellectual Property Right of any third party. AmeriTrack
has not received any notice asserting any such violation, infringement or
misappropriation or any conflict with the rights of any other party, and, to the
best knowledge of AmeriTrack, there is no basis for any such assertion. To the
best knowledge of AmeriTrack, no employee or agent of or consultant to
AmeriTrack is in violation of any term of any third party employment,
nondisclosure, noncompetition or similar contract or agreement with respect to
the performance of services for AmeriTrack.
4.12.3 AmeriTrack has taken reasonable and practicable steps, in
accordance with prevailing industry standards, designed to protect, preserve and
maintain the secrecy and confidentiality of all material AmeriTrack IP Rights.
All officers, employees, agents and consultants of AmeriTrack having access to
proprietary information have executed and delivered to AmeriTrack an agreement
regarding the protection of such proprietary information and the assignment of
inventions to AmeriTrack, in the form provided to Snowball and copies of all
such agreements executed by all such persons have been delivered to Snowball.
4.12.4 Section 4.12 to the AmeriTrack Disclosure Schedule
------------
contains a list of all worldwide applications, registrations, filings and other
formal actions made or taken pursuant to federal, state and foreign laws by
AmeriTrack to secure, perfect or protect its interest in AmeriTrack IP Rights.
4.12.5 As used herein, the term "Intellectual Property Rights"
means, collectively, all worldwide industrial and intellectual property rights,
including, without limitation, patents, trademarks, trade dress rights, trade
names, service marks, Internet domain names, copyrights, and all applications,
registrations and rights pertaining thereto, "moral rights", inventions, trade
secrets, know-how, customer lists, software source code and object code,
algorithms, architecture, structure, display screens, layouts, development tools
and all documentation and media constituting, describing or relating to the
above.
4.13 Compliance with Laws. AmeriTrack has complied, and is now and at
--------------------
the Closing Date will be in compliance, in all material respects, with all
applicable national, state, local or foreign laws, ordinances, regulations, and
rules, and all orders, writs, injunctions, awards, judgments, and decrees
applicable to it or to its assets, properties and business, including without
limitation all environmental, zoning and labor laws and regulations. AmeriTrack
holds
12
all permits, licenses and approvals from, and has made all filings with, third
parties, including government agencies and authorities, that are necessary in
connection with its present business.
4.14 Employment. To AmeriTrack's knowledge, AmeriTrack is in
----------
compliance in all material respects with all applicable laws, agreements and
contracts relating to employment, employment practices, wages, hours, and terms
and conditions of employment, including, but not limited to, employee
compensation matters in each of the jurisdictions in which it conducts business.
Section 4.14 to the AmeriTrack Disclosure Schedule lists each employee of
------------
AmeriTrack and each employment, severance or other similar contract, arrangement
or policy, each employee benefit plan (if any) and each plan or arrangement
providing for compensation or benefits for employees, consultants or directors
which is entered into, maintained or contributed to by AmeriTrack and covers any
employee or former employee or consultant or former consultant of AmeriTrack.
4.14 No Brokers. Neither AmeriTrack nor any of the Shareholders is
----------
under any obligation for the payment of any fees or expenses of any investment
banker, broker or finder in connection with the origin, negotiation or execution
of this Agreement or in connection with the transactions contemplated hereby.
4.15 Disclosure. To AmeriTrack's knowledge, neither this Agreement,
----------
the AmeriTrack Disclosure Schedule nor any of the certificates or documents to
be delivered by AmeriTrack and/or the Shareholders to Snowball under this
Agreement, taken together, contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which such
statements were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF SNOWBALL
Snowball hereby represents and warrants to AmeriTrack that the
statements set forth below in this Section 5 are true, correct and complete as
of the Agreement Date and will be correct and complete as of the Closing Date:
5.1 Organization and Good Standing. Snowball 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 and to carry on its business as now conducted and as proposed to
be conducted.
5.2 Power, Authorization and Validity.
---------------------------------
5.2.1 Snowball has the right, power and authority to enter into,
execute and perform its obligations under this Agreement and the Snowball
Ancillary Agreements. The execution, delivery and performance of this Agreement
and the Snowball Ancillary Agreements by Snowball have been duly and validly
approved and authorized by all necessary corporate action on the part of
Snowball.
13
5.2.2 This Agreement and the Snowball Ancillary Agreements are,
or when executed by Snowball will be, valid and binding obligations of Snowball,
enforceable in accordance with their respective terms, subject to the effect, if
any, of (a) applicable bankruptcy and other similar laws affecting the rights of
creditors generally, and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies.
5.3 Capitalization of Snowball. The following representations
--------------------------
reflect the fact that Snowball has authorized the Split but that the Split may
not have become effective prior to the execution of this Agreement. The
authorized share capital of Snowball consists entirely of 25,000,000 shares of
Common Stock, $0.001 par value, prior to the Split, which number is expected to
be 35,000,000 shares of Common Stock, $0.001 par value post-Split, and
20,000,000 shares of Preferred Stock, of which 9,990,110 are designated Series A
Preferred Stock, $0.001 par value and 5,000,000 are designated Series B
Preferred Stock, $0.001 par value. As of the Agreement Date, Snowball had
19,335,500 shares of Common Stock pre-Split and 29,003,250 shares of Common
Stock post-Split (i) issued and outstanding; (ii) subject to options or warrants
to purchase shares of Snowball Common Stock; (iii) issuable upon conversion of
shares of outstanding Series A Preferred Stock and Series B Preferred Stock; and
(iv) reserved for issuance under Snowball's 1999 Equity Incentive Plan. No
other shares of the share capital of Snowball are (or will at Closing be)
authorized, issued or outstanding. Except as set forth above and except for the
right of first refusal held by certain holders of Snowball's preferred stock,
there are no Snowball Derivative Securities outstanding. The last price per
share (on an as-converted to Common Stock basis) of the Series B Preferred Stock
sold and issued by Snowball prior to the Closing date was $6.33 pre-Split ($4.22
on an as-converted to Common Stock basis post-Split), and the last options to
purchase shares of Snowball Common Stock issued prior to the Closing had an
exercise price of $3.00 per share Pre-Split and $2.00 per share Post-Split.
5.4 No Violations. Neither the execution and delivery of this
-------------
Agreement or any Snowball Ancillary Agreement, nor the consummation of the
Purchase Transaction or any of the other transactions contemplated hereby or
thereby, nor Snowball's discussion or negotiation with AmeriTrack of the
Purchase Transaction or any of the other transactions contemplated hereby, will
conflict with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of: (i) any provision of the
Certificate of Incorporation, Bylaws or other charter documents of Snowball as
currently in effect; (ii) to Snowball's knowledge, any federal, state, local or
foreign judgment, writ, decree, order, statute, rule or regulation applicable to
Snowball or the assets or properties of Snowball; or (iii) any agreement,
contract, commitment or instrument that is material to the business of Snowball.
5.5 Litigation. There is no action, suit, arbitration, mediation,
----------
proceeding, claim or investigation pending against Snowball (or against any
officer or director of Snowball) before any court, administrative agency or
arbitrator, nor, to the best of Snowball's knowledge, has any such action, suit,
proceeding, arbitration, mediation, claim or investigation been threatened. To
Snowball's knowledge, there is no basis for any person, firm, corporation or
other entity, to assert a claim against Snowball based upon Snowball's entering
into this Agreement or consummating the transactions contemplated hereby. There
is no judgment,
14
decree, injunction, rule or order of any governmental entity or agency, court or
arbitrator outstanding against Snowball.
5.6 Financial Statements. Attached as Exhibit E are the following
-------------------- ---------
financial statements of Snowball: the unaudited balance sheet of Snowball at
July 31, 1999 (the "Snowball Balance Sheet") and the unaudited income statements
of Snowball for the period ended July 31, 1999 (collectively, the "Snowball
Financial Statements"). The Snowball Financial Statements are (a) in accordance
with and accurately reflect the books and records of Snowball, and (b) fairly
present the financial condition of Snowball at the dates therein indicated and
the results of operations for the periods therein specified.
5.7 Disclosure of Information. Snowball has received or has had full
-------------------------
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the AmeriTrack Stock to be acquired
by Snowball under this Agreement. Snowball further has had an opportunity to
ask questions and receive answers from AmeriTrack and its officer and director
regarding the terms and conditions of the Purchase Transaction and to obtain
additional information (to the extent AmeriTrack possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Snowball or to which Snowball had access.
5.8 Investment Experience. Snowball understands that the acquisition
---------------------
of the AmeriTrack Stock involves substantial risk. Snowball has experience as
an investor in securities of companies in the development stage and acknowledges
that it is able to fend for itself, can bear the economic risk of its investment
in the AmeriTrack Stock and has such knowledge and experience in financial or
business matters that Snowball is capable of evaluating the merits and risks of
this investment in the AmeriTrack Stock and protecting its own interests in
connection with this investment.
5.9 Investment Representations. Snowball hereby agrees, represents
--------------------------
and warrants as follows:
(a) Acquisition for Own Account. The AmeriTrack Stock to be
---------------------------
acquired by Snowball hereunder will be acquired for investment for Snowball's
own account, not as a nominee or agent, and not with a view to the public resale
or distribution thereof within the meaning of the Securities Act, and Snowball
has no present intention of selling, granting any participation in, or otherwise
distributing the same. Snowball also represents that it has not been formed for
the specific purpose of acquiring the AmeriTrack Stock.
(b) Restricted Securities. Snowball understands that the shares
---------------------
of the AmeriTrack Stock are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the Shareholders in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances.
(c) Legends. It is understood that the certificates evidencing
-------
the AmeriTrack Stock on the Closing Date will bear the legends set forth below:
15
(i) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAW
(ii) THE RIGHTS OF SHAREHOLDERS IN A STATUTORY CLOSE
CORPORATION MAY DIFFER MATERIALLY FROM THE RIGHTS OF SHAREHOLDERS IN OTHER
CORPORATIONS. COPIES OF THE ARTICLES OF INCORPORATION AND THE BYLAWS,
SHAREHOLDERS' AGREEMENTS, AND OTHER DOCUMENTS, ANY OF WHICH MAY RESTRICT
TRANSFERS AND AFFECT VOTING AND OTHER RIGHTS, MAY BE OBTAINED BY A SHAREHOLDER
ON WRITTEN REQUEST TO THE CORPORATION.
5.10 No Brokers. Snowball is not under any obligation for the
----------
payment of any fees or expenses of any investment banker, broker or finder in
connection with the origin, negotiation or execution of this Agreement or in
connection with the transactions contemplated hereby.
5.11 Disclosure. To Snowball's knowledge, neither this Agreement nor
----------
any of the certificates or documents to be delivered by Snowball under this
Agreement, taken together, contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which such
statements were made, not misleading.
6. COVENANTS OF AMERITRACK AND THE SHAREHOLDERS
6.1 By AmeriTrack. During the period from the Agreement Date until
-------------
the earlier to occur of (i) the Closing or (ii) the termination of this
Agreement in accordance with Section 10, AmeriTrack hereby covenants and agrees
with Snowball as follows:
6.1.1 Maintenance of Business. AmeriTrack will carry on and
-----------------------
preserve its business and its relationships with customers, suppliers,
employees, consultants and others in substantially the same manner as it has
prior to the date hereof. If AmeriTrack becomes aware of a material
deterioration in the relationship with any material customer, supplier, key
employee, consultant or business partner, AmeriTrack will promptly bring such
information to the attention of Snowball in writing and, if requested by
Snowball, will exert its diligent efforts to restore the relationship.
AmeriTrack will not, without the prior written consent of Snowball: (a) borrow
or lend any money; (b) encumber, or permit to be encumbered or, except as set
forth in Section 6.1.1 to the AmeriTrack Disclosure Schedule, sell, transfer or
-------------
dispose of any of its Assets; (c) make any payment or commitment or incur any
liability or obligation in excess of $1,000; (d) declare, set aside or pay any
cash or stock dividend or make any distribution in respect of any of its share
capital; (e) enter into, amend or terminate any contract, agreement or license;
(f) waive or release any material right or claim; (g) issue, sell, create or
authorize any shares of its share capital or issue, grant or create any
AmeriTrack Derivative Securities; (h) change its capital
16
structure; (i) merge, consolidate or reorganize with, or acquire, any entity or
enter into any negotiations, discussions or agreement for such purpose; (j)
amend its charter documents; (k) license any of its technology or Intellectual
Property Rights; (l) change any material insurance coverage; or (m) agree to do
any of the things described in the preceding clauses (a) through (l).
6.1.2 Access to Information. Until the Closing, AmeriTrack will
---------------------
allow Snowball and its agents reasonable access to the files, books, records and
offices of AmeriTrack, including, without limitation, any and all information
relating to the Intellectual Property Rights, contracts, leases, licenses,
commitments, taxes, and real, personal and intangible property and financial
condition of AmeriTrack. AmeriTrack will cause its accountants to cooperate
with Snowball and its agents in making available all financial and tax
information reasonably requested, including without limitation the right to
examine all working papers pertaining to all financial statements and tax
returns, prepared or audited by such accountants.
6.2 By AmeriTrack and the Shareholders. During the period from
----------------------------------
the Agreement Date until the earlier to occur of (i) the Closing or (ii) the
termination of this Agreement in accordance with Section 10, AmeriTrack and each
of the Shareholders hereby covenants and agrees with Snowball as follows:
6.2.1 Advice of Changes. AmeriTrack and each Shareholder
-----------------
will promptly advise Snowball in writing of any event occurring subsequent to
the date of this Agreement that would render any representation or warranty of
AmeriTrack or the Shareholders contained in this Agreement or the AmeriTrack
Disclosure Schedule, if made on or as of the date of such event or the Closing
Date, untrue or inaccurate in any material respect.
6.2.2 Necessary Consents. In addition to their obligations
------------------
under Section 2.6, AmeriTrack, each of its officers, directors and employees,
and each of the Shareholders will use their respective commercially reasonable,
diligent efforts to promptly obtain such written consents and take such other
actions as may be necessary to allow the consummation of the transactions
contemplated hereby and to allow Snowball to carry on AmeriTrack's business
after the Closing.
6.2.3 No Other Negotiations. From the Agreement Date until
---------------------
the earlier of termination of this Agreement in accordance with Section 10 or
the consummation of the transactions contemplated hereby, none of AmeriTrack,
its officers, directors and employees, nor any of the Shareholders will, and
will not authorize, encourage or permit, any officer, director, employee,
shareholder or affiliate of AmeriTrack, or any other person, on its or their
behalf to, directly or indirectly, solicit, facilitate, discuss, negotiate or
accept or enter into or encourage any offer, inquiry or proposal received from,
or any agreement with, any other party, furnish to any person any information
with respect to, or otherwise cooperate with, facilitate or encourage any effort
or attempt by any person (other than Snowball), concerning any agreement or
transaction regarding the possible (a) acquisition of or merger or other
business combination with AmeriTrack; (b) disposition of all or any substantial
portion of the business, assets or securities of AmeriTrack by sale, license or
others, other than as disclosed on Section 6.2.3 of the Disclosure Schedule; (c)
-------------
purchase by AmeriTrack of all or substantially all the business, assets or
17
securities of another company; (d) license of technology of AmeriTrack other
than in the ordinary course of business; or (e) provision or delivery of any
confidential information of AmeriTrack to any party other than Snowball
concerning any such possible transaction. AmeriTrack and the Shareholders, as
applicable, will promptly notify Snowball orally and in writing of any such
offers, inquiries or proposals, the principal terms of the same and the identity
of the party making the same.
6.2.4 Satisfaction of Conditions Precedent. AmeriTrack, its
------------------------------------
directors and officers and each of the Shareholders will use their respective
commercially reasonable, diligent efforts to promptly satisfy or cause to be
satisfied all the conditions precedent which are set forth in Section 9; to
promptly cause the transactions contemplated by this Agreement to be consummated
in accordance with the provisions of this Agreement; and, without limiting the
generality of the foregoing, to obtain all consents and authorizations of third
parties and to make all filings with, and give all notices to, third parties
that may be necessary or reasonably required in order to effect the transactions
contemplated hereby.
6.2.5 Provision of Audited Financial Statements. AmeriTrack and
-----------------------------------------
the Shareholders will cause a balance sheet and a statement of operations and
cash flows from inception through August 31, 1999, audited by a qualified
accounting firm reasonably acceptable to Snowball and prepared in accordance
with GAAP applied on a consistent basis with prior periods, to be delivered to
Snowball on or before the date 30 days following the Closing Date, at no expense
to Snowball.
6.2.6 Opinion of Counsel. AmeriTrack and the Shareholders will
------------------
take such actions as are necessary in oder for Xxxxxx Xxxxx Xxxxxx & Xxxxxxx,
LLP to be able to deliver and to deliver an opinion of counsel in substantially
the form of Exhibit G, including customary qualifications and assumptions
---------
reasonably acceptable to Snowball, on or before the date 20 days following the
Closing Date, at no expense to Snowball.
7. SNOWBALL COVENANTS
During the period from the Agreement Date until the earlier to occur
of (i) the Closing or (ii) the termination of this Agreement in accordance with
Section 10, Snowball covenants and agrees as follows:
7.1 Advice of Changes. Snowball will promptly advise AmeriTrack in
-----------------
writing of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of Snowball contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect, including without limitation any
material change in the capital structure of Snowball.
7.2 Satisfaction of Conditions Precedent. Snowball will use its
------------------------------------
diligent efforts to promptly satisfy or cause to be satisfied all the conditions
precedent which are set forth in Section 8, to cause the transactions
contemplated by this Agreement to be consummated in accordance with the terms of
this Agreement, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
18
and give all notices to, third parties that may be necessary or reasonably
required on its part in order to effect the transactions contemplated hereby.
8. CONDITIONS TO OBLIGATIONS OF AMERITRACK AND THE SHAREHOLDERS
The obligations of AmeriTrack and the Shareholders to consummate the
sale of the AmeriTrack Stock to Snowball and any other transactions contemplated
by this Agreement are subject to the fulfillment or satisfaction, on and as of
the Closing, of each of the following conditions (any one or more of which may
be waived by AmeriTrack and the Shareholders in their sole discretion, but only
in a writing signed by AmeriTrack and Shareholders collectively holding at least
a majority of the then outstanding shares of AmeriTrack Stock):
8.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Snowball set forth in Section 5 shall be true and accurate in
every material respect on and as of the Closing with the same force and effect
as if they had been made at the Closing, and AmeriTrack shall have received a
certificate to such effect executed by Snowball's President or any Vice
President.
8.2 Covenants. Snowball shall have performed and complied in all
---------
material respects with all of its covenants contained in Section 7 on or before
the Closing, and AmeriTrack shall have received a certificate to such effect
signed by Snowball's President or any Vice President.
8.3 Documents. Snowball shall have executed and delivered to
---------
AmeriTrack all the Snowball Ancillary Agreements.
8.4 Consulting Agreement. Snowball shall have executed and delivered
--------------------
the Consulting Agreement with Xxxxx X. Xxxxxxxxxxx, Xx. in the form attached
hereto as Exhibit F (the "Consulting Agreement").
---------
9. CONDITIONS TO OBLIGATIONS OF SNOWBALL
The obligations of Snowball hereunder to consummate the purchase of
the AmeriTrack Stock, the payment of the Purchase Price and any other
transactions contemplated by this Agreement are subject to the fulfillment or
satisfaction, on and as of the Closing, of each of the following conditions (any
one or more of which may be waived by Snowball in its sole discretion, but only
in a writing signed by Snowball):
9.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Shareholders set forth in Section 3 and the
representations and warranties of AmeriTrack set forth in Section 4 shall each
be true and accurate in every material respect on and as of the Closing with the
same force and effect as if they had been made at the Closing, and Snowball
shall have received certificates to such effect executed by AmeriTrack's
President.
19
9.2 Covenants. AmeriTrack and each of the Shareholders shall have
---------
performed and complied in all material respects with all of their respective
covenants contained in Section 6 on or before the Closing, and Snowball shall
have received certificates to such effect signed by AmeriTrack's President.
9.3 Documents. AmeriTrack, the Shareholders and the Representative
---------
shall have executed and delivered to Snowball all the AmeriTrack Ancillary
Agreements and all the Shareholder Ancillary Agreements, as applicable.
9.4 Consulting Agreement. Xxxxx X. Xxxxxxxxxxx, Xx. shall have
--------------------
executed and delivered to Snowball the Consulting Agreement.
9.5 Resignation of Directors and Officers. The directors and
-------------------------------------
officers of AmeriTrack in office immediately prior to the Closing shall have
resigned effective as of the Closing, unless otherwise directed by Snowball.
9.6 Sale of URLs. Xxxxx X. Xxxxxxxxxxx, Xx. will have entered into a
------------
URL Transfer Agreement in form satisfactory to Snowball under which Xx.
Xxxxxxxxxxx will have assigned to Snowball all URLs he owns which are in any way
related to the coverage and/or registration of domestic high school alumni on
the internet.
9.7 Elimination of Liabilities. AmeriTrack will have satisfied all
--------------------------
outstanding liabilities of AmeriTrack other than AmeriTrack's obligations to
PSIWeb, Inc. on or before the Closing.
10. TERMINATION OF AGREEMENT
10.1 Prior to or at the Closing.
--------------------------
10.1.1 Mutual Termination. This Agreement may be terminated
------------------
at any time prior to or at the Closing by the mutual written consent of Snowball
and AmeriTrack, approved by their respective Boards of Directors; and the
consent of the Shareholders shall not be required to terminate this Agreement
provided such termination has been approved by the AmeriTrack Board of
Directors.
10.1.2 By Snowball.
-----------
(a) This Agreement may be terminated by Snowball if
the conditions precedent set forth in Section 9 shall have not been complied
with, waived or performed and such noncompliance or nonperformance shall not
have been cured or eliminated (or by its nature cannot be cured or eliminated)
by AmeriTrack and/or the Shareholders on or before Midnight, Pacific Standard
Time on October 15, 1999 (the "Termination Date").
(b) In addition, Snowball may terminate this Agreement
at any time prior to or at the Closing if any of the representations and
warranties of AmeriTrack or Shareholders in Sections 3 and 4 of this Agreement
were incorrect, untrue or false in any material
20
respect as of the Agreement Date or are incorrect, untrue or false in any
material respect as of the proposed Closing Date or AmeriTrack and/or the
Shareholders have breached any of their respective covenants under Section 6 of
this Agreement in any material respect, and AmeriTrack and/or the Shareholders
have not cured such breach prior to the earlier of: (i) the Closing; (ii) five
(5) days after Snowball has given AmeriTrack written notice of its intention to
terminate this Agreement pursuant to this subsection 10.1.2(b); or (iii) the
Termination Date.
10.1.3 By AmeriTrack and the Shareholders.
----------------------------------
(a) This Agreement may be terminated by AmeriTrack
with the written consent of shareholders owning at least a majority of the
outstanding AmeriTrack Stock if the conditions precedent set forth in Section 8
shall have not been complied with, waived or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by Snowball on or before the Termination Date.
(b) In addition, AmeriTrack, with the written consent
of shareholders owning at least a majority of the outstanding AmeriTrack Stock
may terminate this Agreement at any time prior to or at the Closing if any of
the representations and warranties of Snowball in Section 5 of this Agreement
were incorrect, untrue or false in any material respect as of the Agreement Date
or are incorrect, untrue or false in any material respect as of the proposed
Closing Date or Snowball has breached any of its covenants under Section 7 of
this Agreement in any material respect, and Snowball has not cured such breach
prior to the earlier of (i) the Closing, (ii) five (5) days after AmeriTrack and
the Shareholders owning at least a majority of the outstanding AmeriTrack Stock
have given Snowball written notice of their intention to terminate this
Agreement pursuant to this subsection 10.1.3(b) or (iii) the Termination Date.
Any termination of this Agreement under this Section 10 will be effective upon
delivery of notice of termination by the terminating party to the other party or
parties hereto.
10.2 No Liability for Proper Termination. Any termination of this
-----------------------------------
Agreement in accordance with the applicable provisions of this Section 10 will
be without further obligation or liability of any party in favor of the other
party or parties hereto or to its stockholders, directors or officers; provided,
--------
however, that nothing herein will limit the obligation of AmeriTrack, the
-------
Shareholders and Snowball for any willful breach hereof or failure to use their
diligent efforts to cause the transactions contemplated hereby to be
consummated, as set forth in Sections 6.2.4 and 7.4 hereof, respectively. In
-------------- ---
the event of the termination of this Agreement pursuant to this Section 10, this
----------
Agreement shall thereafter become void and have no effect and each party shall
be responsible for its own expenses incurred in connection herewith. The terms
of that certain Mutual Non-Disclosure Agreement, dated July 29, 1999 by and
between Snowball and AmeriTack shall survive any termination of this Agreement.
21
11. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; LIMITATION
11.1 Survival of Representations. Subject to Section 11.2(b) below,
--------------------------- ---------------
all representations, warranties and covenants of AmeriTrack, Snowball and the
Shareholders contained in this Agreement shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
party, only until that date which is the earlier of (i) the termination of this
Agreement or (ii) except as to breaches or violations of Sections 3.1, 3.2, 3.3,
-----------------------
4.3 and 4.7, two (2) years following the Closing Date, provided that there shall
--- ---
be no limit with respect to claims arising out of a representation or warranty
that a Shareholder knew at the Closing Date was false or a Shareholder's fraud.
11.2 Agreements to Indemnify. Each of the Shareholders hereby agrees
-----------------------
to indemnify and hold harmless Snowball and its officers, directors, agents and
employees, and each person, if any, who controls or may control Snowball within
the meaning of the Securities Act (hereinafter referred to collectively as
"Indemnified Persons") from and against any and all Indemnified Losses. For
purposes of this Agreement, "Indemnified Losses" means all claims, demands,
actions, causes of actions, losses, costs, damages, liabilities and expenses
including, without limitation, reasonable legal fees:
(a) Arising out of any misrepresentation or breach of or default
in connection with any of the representations or warranties given or made by
such Shareholder in Section 3 of this Agreement or any certificate, instrument,
or agreement delivered at Closing by or on behalf of such Shareholder pursuant
hereto; or
(b) Resulting from any failure of any such Shareholder to have
good, valid and marketable title to the issued and outstanding AmeriTrack Stock
held by such Shareholder, free and clear of all liens, claims, pledges, options,
adverse claims, assessments or charges of any nature whatsoever; or
(c) Arising out of any misrepresentation or breach of or default
in connection with any of the representations, warranties and covenants given or
made by AmeriTrack in this Agreement or any certificate, instrument, or
agreement delivered at Closing by or on behalf of AmeriTrack pursuant hereto
(other than with respect to changes in the truth or accuracy of the
representations and warranties under this Agreement after the date hereof if
AmeriTrack has advised Snowball of such changes in an update to the AmeriTrack
Disclosure Schedule delivered prior to the Closing and Snowball has nonetheless
proceeded with the Closing).
The liability of the Shareholders under clauses (a) and (b) above will be
several and not joint. The liability of the Shareholders under clause (c) above
will be joint and several.
11.3 Limitations on Indemnification. Anything contained in this
------------------------------
Agreement to the contrary notwithstanding: (a) Shareholders shall not be liable
for any claim for indemnification asserted by any Indemnified Person or by any
party pursuant to any provision of this Agreement after the second (2nd)
anniversary date of the Closing; (b) Shareholders'
22
aggregate liability for such indemnification claims under this Agreement shall
not exceed One Million Dollars ($1,000,000.00) and shall be limited as to each
Shareholder to the amount of the Purchase Price received or receivable by such
Shareholder; and (c) Shareholders shall not become liable for any such
indemnification claims under this Agreement unless and until the aggregate of
all such claims exceeds Fifteen Thousand Dollars ($15,000.00), and then only to
the extent of such excess over $15,000.00 and up to the amount limitation in
Section 11.3(b) above in the aggregate. The limitations of this Section 11.3
--------------- ------------
shall apply to all claims for indemnification under this Agreement except: (x)
claims arising out of a representation or warranty that a Shareholder knew at
the Closing Date was false or a Shareholder's fraud; and (y) claims arising
under Sections 3.1, 3.2, 3.3, 4.3, and 4.7.
---------------------- --- ---
11.4 Exclusive Remedies. Anything contained in this Agreement to the
------------------
contrary notwithstanding, the indemnification rights set forth in this Article
-------
11, all of which are subject to the terms, limitations, and restrictions of this
--
Article 11, shall be the exclusive remedy after Closing for monetary damages
----------
sustained by the Indemnified Persons as a result of a breach of a
representation, warranty, covenant, or agreement under this Agreement. Such
limitations set forth in this Article 11 shall not impair the rights of
----------
Snowball: (a) to seek non-monetary equitable relief, including (without
limitation) specific performance or injunctive relief to redress any default or
breach of this Agreement; or (b) to seek enforcement, collection, damages, or
such non-monetary equitable relief to redress any default or breach of any
consulting agreement, xxxx of sale, assignment, assumption (or other transfer
document), consent, or other agreement to be delivered at Closing hereunder. In
connection with the seeking of any non-monetary equitable relief, each of the
Shareholders acknowledges and agrees that Snowball would be damaged irreparably
in the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
the Shareholders agree that Snowball shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
competent court having jurisdiction over the parties (subject to the provisions
of Section 12.1 below).
------------
11.5 Limitation of Snowball Liability. Anything contained in this
--------------------------------
Agreement to the contrary notwithstanding: (a) Snowball shall not be liable
pursuant to any provision of this Agreement after the second (2nd) anniversary
date of the Closing; (b) Snowball's aggregate liability under this Agreement
shall not exceed One Million Dollars ($1,000,000.00); and (c) Snowball shall not
become liable under this Agreement unless and until the aggregate of all claims
exceeds Fifteen Thousand Dollars ($15,000.00), and then only to the extent of
such excess over $15,000.00 and up to the amount limitation in Section 11.5(b)
---------------
above in the aggregate. The limitations of this Section 11.5 shall apply to all
------------
claims under this Agreement except (i) a failure to pay the Purchase Price in
accordance with the terms of this Agreement; (ii) claims arising under Section
5.3; and (iii) claims arising out of a representation or warranty that Snowball
knew at the Closing Date was false or Snowball's fraud. The limitations of
liability under this Section 11.5 do not apply to any claims arising out of the
Consulting Agreement.
23
11.6 Assignment. To the extent that the Shareholders shall have
----------
actually paid indemnity damages to or on behalf of the Indemnified Persons,
Indemnified Persons shall make a non-exclusive assignment to the Shareholders
(as their interests may appear) of the remedies, rights, and claims, if any, of
the Indemnified Persons against any and all third parties for the same
liability, including, but not limited to, remedies, rights and claims against
(i) liability insurers and other insurance companies whose obligation to ensure
against such liability arose with respect to AmeriTrack prior to the Closing and
(ii) any other person which has indemnified the Indemnified Persons for such
liability. The parties shall cooperate reasonably in the pursuit of any such
remedies, rights, and claims.
11.7 Payment Priority. Any Indemnified Loss to be paid to an
----------------
Indemnified Person pursuant to this Article 11 by any one or more of the
----------
Shareholders shall be satisfied first out of the Escrow Shares, and second out
of the Cash Escrow Amount to the extent available under the Escrow Agreement;
provided, however, any Shareholder shall be entitled, at his option, to pay or
reimburse the Indemnified Person in whole or in part for his portion of such
Indemnified Loss by transferring to the Indemnified Person shares of Snowball
Common Stock retained by such Shareholder at the time, if any. For purpose of
payment for a Indemnified Loss pursuant to this Article 11, the value per share
----------
of the Snowball Common Stock shall be the fair market value on the date of
payment of such Indemnified Loss, which fair market value shall not be less than
the book value per share on such date of payment.
11.8 Notice of Claim.
---------------
(a) As used herein, the term "Claim" means a claim for
indemnification under Section 11.2 hereof made by Snowball or any Indemnified
Person against any Shareholder based upon any alleged Indemnified Loss
including, without limitation, an Indemnified Loss related to a Third-Party
Claim. The term "Third-Party Claim" means a written claim, written demand or
other formal or informal written complaint, whether or not perfected, made by a
third party against Snowball or any Indemnified Person causing or threatening an
Indemnified Loss. Promptly upon becoming aware of any Claim, Snowball will give
the Representative written notice of such Claim hereof (the "Notice of Claim").
Snowball may give a Notice of Claim at any time on or prior to the close of the
period specified in Section 11.3(a), and no Notice of Claim may be given after
the close of such period. No delay on the part of Snowball or any Indemnified
Person in giving the Representative a Notice of Claim prior to the close of such
period shall relieve any Shareholder from any of such Shareholder's obligations
under this Section 11 unless (and then only to the extent) that such Shareholder
is materially prejudiced by such delay.
(b) Content of Notice of Claim. Each Notice of Claim given by
--------------------------
Snowball pursuant to Section 11.8(a) shall be set forth in writing and shall
contain the following information to the extent it is reasonably available to
Snowball:
(i) A brief description in reasonable detail of the facts,
circumstances or events giving rise to the Claim based on Snowball's good faith
belief thereof, including, if applicable, the identity and address of the third-
party who has asserted a Third-Party
24
Claim against Snowball (to the extent reasonably available to Snowball) and
copies of any demand or complaint representing such Third-Party Claim.
(ii) Snowball's statement of the amount of damages claimed,
and if in connection with a Third-Party Claim, based on facts alleged in such
Third-Party Claim which, if true, would give rise to damages as an Indemnified
Loss or, in the event a Third-Party Claim fails to specify the maximum amount of
damages, Snowball's good faith estimate upon advice of legal counsel of the
reasonably foreseeable maximum amount of damages arising thereunder that will
ultimately be incurred by Snowball and/or other Indemnified Persons in
connection with such Third-Party Claim (whether in connection with a direct
claim or Third-Party Claim, "Alleged Damages").
(c) Defense of Third-Party Claims. Subject to rights of or
-----------------------------
duties to any insurer or other third person having liability therefor, Snowball
shall defend any Third-Party Claim and Snowball shall be entitled to recover the
reasonable costs and expenses incurred by Snowball in connection with such
defense (including but not limited to reasonable attorneys fees, other
professionals' and experts' fees and court or arbitration costs) as part of its
Claim, to the extent provided in this Section 11. The parties agree to cooperate
fully with each other in connection with the defense, negotiation or settlement
of any such Third-Party Claim. Without limiting the foregoing, the Shareholders:
(X) may, in their sole discretion and expense, employ counsel to represent them
(in addition to counsel employed by Snowball) in any such matter, and in such
event counsel selected by the Indemnified Persons shall be required to cooperate
with such counsel of the Shareholders in such defense, compromise or settlement
for the purpose of informing and sharing information with such Shareholders; and
(Y) shall, at their own expense, provide such assistance as may be reasonably
requested by the Indemnified Persons in connection with the defense and
settlement of any such Third-Party Claim.
12. MISCELLANEOUS
12.1 Governing Law. Except as otherwise expressly provided herein,
-------------
the internal laws of the State of California (irrespective of its choice of law
principles) will govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto. Any dispute arising under or in relation to this Agreement
shall be resolved in either the United States District Court, Northern District
of California, or the United Xxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx xx Xxxxx Xxxxxxxx;
provided however, that (a) in the event that litigation is instituted against
Snowball, such litigation shall only be instituted in the United States District
Court, Northern District of California; and (b) in the event that litigation is
instituted against the Shareholders, such litigation shall only be instituted in
the United States Xxxxxxxx Xxxxx, Xxxxxxxx xx Xxxxx Xxxxxxxx; and provided
further however, that once litigation is commenced as set forth above, counter-
claims or cross-claims may be instituted, at the option of the counter-claimant
or cross-claimant, in the court in which such litigation is pending.
12.2 Assignment; Binding Upon Successors and Assigns. No party
-----------------------------------------------
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other
25
parties hereto, except that Snowball may assign its respective rights and/or
obligations to any wholly-owned subsidiary of Snowball, provided that Snowball
--------
guarantees the performance of such subsidiary. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.3 Severability. If any provision of this Agreement, or the
------------
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
12.4 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and the
same instrument.
12.5 Other Remedies. Except as otherwise provided herein, any and
--------------
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law on such
party, and the exercise of any one remedy will not preclude the exercise of any
other.
12.6 Amendment and Waivers. Any term or provision of this Agreement
---------------------
may be amended prior to the Closing by the written consent of Snowball,
AmeriTrack and those Shareholders collectively holding at least a majority of
the then outstanding AmeriTrack Stock, and, after the Closing by Snowball and
the Shareholders (or their successors in interest) who immediately prior to the
Closing held a majority of the AmeriTrack Stock. The observance of any term,
condition or provision of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound thereby or for whose benefit such condition was
provided except that a waiver on behalf of the Shareholders need only be signed
by the Shareholders collectively holding at least a majority of the then
outstanding AmeriTrack Stock. In addition, at any time prior to the Closing,
the Shareholders (acting by written consent of the holders of a majority of the
AmeriTrack Stock) and each of AmeriTrack and Snowball (by action taken by its
respective Board of Directors) may, to the extent legally allowed: (i) extend
the time for the performance of any of the obligations or other acts of the
other; (ii) waive any inaccuracies in the representations and warranties made to
it contained herein or in any document delivered pursuant hereto; and (iii)
waive compliance with any of the agreements or conditions for its benefit
contained herein. The failure of any party to enforce any of the provisions
hereof will not be construed to be a waiver of the right of such party
thereafter to enforce such provisions or any other provisions.
12.7 Expenses. Each party hereto will pay its respective fees and
--------
expenses of its own attorneys, accountants, investment bankers, advisors and
other professionals incurred in connection with this Agreement and the
transactions contemplated hereby.
26
12.8 Notices. All notices and other communications required or
-------
permitted under this Agreement will be in writing and will be either hand
delivered in person, sent by telecopier, sent by certified or registered first
class mail, postage pre-paid, or sent by internationally recognized express
courier service. Such notices and other communications will be effective upon
receipt if hand delivered or sent by telecopier, five (5) days after mailing if
sent by mail, and one (l) day after dispatch if sent by express courier, to the
following addresses, or to such other addresses or fax number as any party may
notify the other parties in accordance with this Section:
(i) If to Snowball:
--------------
Xxxxxxxx.xxx, Inc.
Executive Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: President
Fax Number:
with a copy to:
--------------
Fenwick & West LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Fax Number: (000) 000-0000
(ii) If to Shareholders:
------------------
Xxxxx X. Xxxxxxxxxxx, Xx., as Representative
0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Fax Number: N/A.
with a copy to:
--------------
Xxxxxx Xxxxx Xxxxxx & Xxxxxxx, LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: X. Xxxxx XxXxxx, Jr., Esq.
Fax Number: (000) 000-0000
12.9 Construction of Agreement. This Agreement has been negotiated
-------------------------
by the respective parties hereto and their attorneys and the language hereof
will not be construed for or against any party.
12.10 Further Assurances. Each party agrees to cooperate fully with
------------------
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and
27
reflect the transactions described herein and contemplated hereby and to carry
into effect the intent and purposes of this Agreement.
12.11 Absence of Third Party Beneficiary Rights. No provisions of
-----------------------------------------
this Agreement are intended, nor will be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner, employee, agent, consultant or any
party hereto or any other person or entity unless otherwise specifically
provided otherwise herein, and, except as so provided, all provisions hereof
will be personal solely among the parties to this Agreement; provided that
Indemnified Persons may be third party beneficiaries solely with respect to the
provisions of Article 11 of this Agreement.
----------
12.13 Public Announcement. At a time consistent with Snowball's
-------------------
corporate policy, and in any event no later than 45 days after the Closing,
Snowball and AmeriTrack will issue a press release approved by Snowball and the
Representative announcing the purchase and sale of stock contemplated hereby.
Thereafter, Snowball may issue such press releases, and make such other
disclosures regarding the transactions contemplated hereby, as it determines are
required under applicable securities laws or regulatory rules. Prior to the
publication of the press release issued upon execution of this Agreement (unless
this Agreement has been terminated), no party hereto shall make any public
announcement relating to this Agreement or the transactions contemplated hereby.
12.14 Attribution to Xxxxx Xxxxxxxxxxx, Xx. As soon as is
-------------------------------------
practically possible after the Closing, and in any event no later than 45 days
after the Closing, Snowball shall cause AmeriTrack to place on the
xxxxxxxxxxxxxxxx.xxx website a statement that has been reasonably approved by
Xxxxx X. Xxxxxxxxxxx, Xx. which attributes the site's creation to Xxxxx X.
Xxxxxxxxxxx, Xx.
12.15 Entire Agreement. This Agreement, the Exhibits and Schedules
----------------
hereto and the AmeriTrack Disclosure Schedule constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto.
28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XXXXXXXX.XXX, INC. AMERITRACK, INC.
/s/ Xxxx Xxxx /s/ Xxxxx X. Xxxxxxxxxxx, Xx.
By: ____________________________ By: ______________________________
Xxxx Xxxx
Name: __________________________ Xxxxx X. Xxxxxxxxxxx, Xx.
President and CEO
Title: _________________________ President
[SIGNATURE PAGE TO STOCK EXCHANGE AGREEMENT]
29
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SHAREHOLDER
/s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxxxxxxxx, Xx.
/s/ Xxx Xxxxxxxxxxx
------------------------------------
Xxx Xxxxxxxxxxx
/s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxx Xxxxxxx
------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxxxxx X. Xxxxx
------------------------------------
Xxxxxxxxx X. Xxxxx
Azalea Capital, L.L.C.
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Principal
/s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxx Xxxxxxx
------------------------------------
Xxx Xxxxxxx
By: ________________________________
Name: ______________________________
Title: _____________________________
[SIGNATURE PAGE TO STOCK EXCHANGE AGREEMENT]
30
