EXHIBIT 4.4
ASSET PURCHASE AND SALE AGREEMENT
between
VALICERT, INC.,
as Buyer
and
TRADENABLE, INC.,
as Seller
AS OF DECEMBER 12, 2001
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement") is made as of the
12th day of December, 2001 (the "Commencement Date"), by and between ValiCert,
Inc., a Delaware corporation ("Buyer") and Tradenable, Inc., a Delaware
corporation ("Seller").
RECITALS
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Buyer desires to purchase, and Seller desires to sell, certain assets of
Seller's business on the terms and subject to the conditions contained in this
Agreement.
AGREEMENT
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NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement and for
other good and valuable consideration, the parties agree as follows:
ARTICLE 1. SALE AND PURCHASE OF ASSETS
Subject to the terms and conditions set forth in this Agreement, Seller
shall sell, convey, transfer, assign and deliver to Buyer, and Buyer agrees to
purchase from Seller at the Closing, the assets described in this Article 1, on
the Closing Date, as the same shall exist on the Closing Date, in such condition
and location as the same exist on the Closing Date, all of which are
collectively referred to as the "Assets" and individually referred to as an
"Asset," including:
1.1 Tangible Assets. The personal tangible property, including but not
limited to computers, diskettes, laboratory equipment, and network equipment,
set forth on Schedule 1.1 hereto (hereafter collectively referred to as the
"Tangible Assets").
1.2 Intellectual Property.
(a) The trademarks, service marks, domain names, slogans, logos,
trade names, trade dress, fictional business names, brand names, and the like,
including without limitation the marks "Tradenable" and "i-Escrow", including
any modifications thereof and all applications, whether based upon intent to use
or use or any registrations or renewals thereof, and all goodwill associated
therewith, or related thereto, set forth on Schedule 1.2(a) hereto
(collectively, "Trademarks");
(b) The patents, patent applications, patent disclosures, industrial
designs and inventions (whether or not patentable and whether or not reduced to
practice), including, without limitation, continuation, divisional,
continuation-in-part, or reissue patent applications and registrations issuing
thereon and renewals or extensions thereof, excluding all tangible media
relating thereto (collectively "Patents"), set forth on Schedule 1.2(b) hereto;
(c) Seller's works of authorship and copyrights thereon and
registrations, applications therefor and renewals thereof, set forth on Schedule
1.2(c) hereto (collectively "Copyrights");
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(d) The information, including, without limitation, computer
software, data, databases, works of authorship, mask works, technology, trade
secrets and other confidential information, know-how, proprietary processes,
formulae, algorithms, models, drawings, designs, refinements, extensions,
improvements, modifications, user interfaces, customer lists, partner lists,
prospect lists, inventions, discoveries, concepts, ideas, techniques, research
and development methods, source codes, object codes, methodologies, any formula,
pattern, compilation, program, device, method, technique, or process, and, with
respect to all of the foregoing, related confidential data or information that
(1) derives independent economic value, actual or potential, from not being
generally known to the public or to other persons who can obtain economic value
from its disclosure or use and (2) is the subject of efforts to maintain its
secrecy (collectively, "Trade Secrets"), set forth on Schedule 1.2(d) hereto;
(e) The Trademarks, Patents, Copyrights and Trade Secrets are
hereafter referred to collectively as the "Intellectual Properties".
1.3 Cash. Cash in the amount of one million seven hundred fifty thousand
dollars ($1,750,000) to be received in the account of Buyer by wire transaction
on or before the Closing Date ("Initial Cash Payment"), and a promissory note,
in substantially the form attached hereto as Exhibit A (the "Note"), executed by
Seller in the amount of seven hundred fifty thousand dollars ($750,000)
("Remaining Cash Payment"), to be delivered to Buyer on or before the Closing
Date.
1.4 Excluded Assets. Notwithstanding anything to the contrary contained in
the preceding sections of this Article 1, there shall be excluded from the
Assets and retained by Seller the following assets (collectively, the "Excluded
Assets"):
(a) Cash and Investments. Except for the Cash specified in Section
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1.4, cash on hand or in bank accounts, and any other cash equivalents as of the
Closing Date, including without limitation certificates of deposit, commercial
paper, treasury bills, asset or money market accounts and all such similar
accounts or investments, or notes or other entitlements evidencing loans
receivable.
(b) Accounts Receivable. Any accounts receivable to the extent they
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reflect services performed by Seller prior to the Closing Date.
(c) Contracts. Any agreement, contract, license, legally binding
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commitment, instrument, understanding or arrangement, whether written or oral,
in each case, as amended, supplemented, waived or otherwise modified, between
Seller and any third party (the "Contracts").
(d) Certain Customer Lists. Customer data which, in the opinion of
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Buyer, cannot be transferred to Buyer without violation of applicable privacy
laws.
(e) Tradenable Website. The Tradenable website of
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xxx.xxxxxxxxxx.xxx, including without limitation the content and operation of
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such website, but excluding the URL of xxx.xxxxxxxxxx.xxx, which shall be
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licensed to Seller as set forth in Section 11.2 and that shall revert to Buyer
at the conclusion of the time period set forth in Section 11.2 herein.
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(f) i-Escrow's Business, Assets and Liabilities. The business of
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providing consumer escrow services of i-Escrow, Inc., a wholly owned subsidiary
of Seller, including, without limitation, the agreements, assets, liabilities
and obligations of such consumer escrow services business, other than those
assets included within the Assets and identified in this Agreement.
ARTICLE 2. LIABILITIES
2.1 Excluded Liabilities. Buyer shall not assume and shall not be liable
for, and Seller shall retain and, as between Buyer and Seller, remain solely
liable for and obligated to discharge, all of the debts, commitments,
obligations and other liabilities arising out of the operation of or relating to
the Assets arising on or prior to the Closing Date, whether known or unknown,
accrued or not accrued, fixed or contingent.
ARTICLE 3. PURCHASE AND PAYMENT
3.1 Consideration from Buyer to Seller. In consideration for the transfer
and assignment by Seller of the Assets and in consideration of the
representations, warranties, covenants and indemnities of Seller set forth
herein, including the Initial Cash Payment, Buyer shall, within five (5)
business days after the Closing, deliver to the Seller a Certificate for seven
hundred twenty-eight thousand two hundred (728,200) shares of common stock of
the Buyer dated the Closing Date ("Initial Shares"). At such time as Seller
delivers to Buyer the Remaining Cash Payment, Buyer shall, within five (5)
business days after such delivery, deliver to Seller a Certificate for two
hundred seventy-one thousand eight hundred (271,800) shares of common stock of
Buyer dated the Closing Date ("Remaining Shares") and cancel the Note. The
Initial Shares, and to the extent issued, the Remaining Shares are referred to
collectively as the "Shares." If Seller has not paid the note within 120 days of
the Closing Date, Buyer shall at the end of 120 days after the Closing, have the
right to cancel the Note and Buyer's obligation to deliver the Remaining Shares.
3.2 Tax Liability Arising Out of the Agreement. Buyer shall assume the
transfer taxes arising out of transfer of the Assets. No other tax liabilities
shall be assumed by Buyer, other than taxes with respect to the Assets accruing
on or after the Closing.
3.3 Allocation of Purchase Price. Buyer and Seller agree that the purchase
price set forth in Section 3.1 above shall be allocated among the Assets as set
forth on Schedule 1 hereto, based upon the fair market value of the Assets as
reasonably determined by Buyer and Seller and as may be required by the
applicable provisions of the Internal Revenue Code of 1986, as amended, and that
any and all tax returns and filings of Buyer or Seller shall be made on a basis
consistent with such allocation, unless otherwise required by an applicable
taxing authority.
3.4 Bulk Sale Laws. Buyer hereby waives compliance by Seller with any bulk
sale or similar laws or statutes.
ARTICLE 4. PRE-CLOSING AGREEMENTS AND COVENANTS
4.1 Access to Information. Seller shall afford Buyer and its
representatives reasonable access to the books, accounts, records, contracts and
documents of or relating to the Assets in
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Seller's possession or control, subject to reasonable requirements that Buyer
not interfere with the operations and activity of the Seller's business. Prior
to the Closing Date, Seller shall provide Buyer with all amendments, updates and
revisions of any such documents relating to the Assets.
4.2 Confidentiality. As further described in the Mutual Nondisclosure
Agreement between Buyer and Seller dated November 29, 2001 (the "Mutual
Nondisclosure Agreement"), Seller and Buyer shall not use or disclose to others,
or permit the use or disclosure of, any and all non-public information furnished
by each to the other (including confidential information transmitted by each to
its officers, directors, shareholders, representatives, accountants, counsel,
advisors or bankers) in the course of negotiations relating to this Agreement
and the business and financial reviews and investigations referred to in this
Agreement, except as set forth in the Mutual Nondisclosure Agreement.
4.3 Exclusivity. Seller agrees that Buyer shall have the exclusive right
to consummate the transactions contemplated herein for a period of ten days from
the date of this Agreement ("Exclusive Period"), and during such Exclusive
Period, Seller agrees that neither Seller, nor any representative of Seller: (a)
will initiate, solicit or encourage, directly or indirectly, any inquiries, or
the making or implementation of any proposal or offer with respect to financing,
management, leasing, a merger, acquisition, consolidation or similar transaction
involving, or any purchase of, all or any portion of the Assets (any such
inquiry, proposal or offer being hereinafter referred to as an "Acquisition
Proposal" and any such transaction being hereinafter referred to as an
"Acquisition"); or (b) will engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal; or (c) will continue
any existing activities, discussions or negotiations with any parties conducted
prior to the date of the execution of the Memorandum of Understanding between
Buyer and Seller dated November 28, 2001 ("Memorandum of Understanding") with
respect to any Acquisition Proposal or Acquisition and will take the necessary
steps to inform the individuals or entities referred to above of the obligations
undertaken by Seller in this Section 4.23.
4.4 Continued Efforts. Seller shall use commercially reasonable efforts to
(a) cause to be fulfilled and satisfied all of the conditions to the Closing
which are the responsibility of Seller; (b) cause to be performed all of the
matters required upon the Closing which are the responsibility of Seller; and
(c) take such steps and do such acts as may be necessary to make all of its
warranties and representations true and correct as of the Closing Date with the
same effect as if the same had been made, and this Agreement had been dated, as
of the Closing Date.
Buyer shall use commercially reasonable efforts to (a) cause to be
fulfilled and satisfied all of the conditions to the Closing which are the
responsibility of Buyer; (b) cause to be performed all of the matters required
upon the Closing which are the responsibility of Buyer; (c) take such steps and
do such acts as may be necessary to make all of its warranties and
representations true and correct as of the Closing with the same effect as if
the same had been made, and this Agreement had been dated, as of the Closing
Date.
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4.5 Third Party and Governmental Consents. Where applicable, Seller shall
use commercially reasonable efforts to obtain the consents from all of the third
parties which are necessary to the consummation of the transactions contemplated
hereby on or prior to the Closing Date.
4.6 Maintenance of Assets Prior to Closing. Seller agrees that, commencing
from the date of execution of the Memorandum of Understanding and through the
Closing, Seller shall use commercially reasonable efforts:
(a) maintain the Assets in the same working order and condition in
which they existed as of the date of the Memorandum of Understanding, ordinary
wear and tear excepted;
(b) not sell, lease, license, pledge, grant, encumber or otherwise
dispose of any of the Assets;
(c) keep available the services of the employees set forth on the
Employee List (as defined in Section 4.7 below); and
(d) not grant compensation or benefit increases to any employees set
forth on the Employee List.
4.7 Seller's Employees. In connection with the acquisition of the Assets,
(i) Seller shall continue to pay, through midnight on the Closing Date or other
mutually agreed date, payroll and payroll taxes and any other expenses (except
for accrued vacation) related to all employees of Seller set forth on Schedule
4.7 hereto (the "Employee List") and (ii) from midnight on the Closing Date,
Buyer shall assume responsibility as the employer of those employees set forth
on the Employee List, provided that in no event is Buyer responsible for any
claims by employees, officers, directors, independent contractors or
consultants, regarding matters taking place or relating to periods prior to the
Closing Date (including, but not limited to, claims relating to salaries,
severance or vacation or sick leave or any other employee benefits). Seller
agrees to remain solely liable for any such claims and to indemnify Buyer
against any such claims. Nothing in any provision of this Agreement is intended
to confer upon any employee, officer, director, independent contractor or
consultant of Seller or such employee's legal representative or heirs any rights
as a third party beneficiary or otherwise or any remedies of any kind whatsoever
under or by reason of this Agreement, or the transactions contemplated hereby,
including without limitation any rights of continued employment. All rights and
obligations created by this Agreement are solely between Buyer and Seller.
Notwithstanding anything in this Agreement to the contrary, Buyer hereby agrees
to permit each employee of Seller set forth on the Employee List, who accepts
employment with Buyer, to perform work for Seller, at Seller's request, for up
to twenty percent (20%) of such employee's work week (but no less than ten (10)
hours per week) for a maximum of sixty (60) working days commencing with the
Closing Date, and Buyer hereby agrees to pay the compensation, benefits and
other expenses of such employees in connection therewith.
4.8 Registration and Listing of Shares. Buyer will use commercially
reasonable efforts to cause its common stock to continue to be registered under
Sections 12(b) or 12(g) of the Securities and Exchange Act of 1934, as amended
("Exchange Act"), will comply in all material
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respects with its reporting and filing obligations under the Exchange Act, will
comply with all requirements related to any registration statement filed
pursuant to this Agreement.
4.9 Registration Rights Agreement. Buyer and Seller shall enter into the
Registration Rights Agreement in substantially the form attached hereto as
Exhibit B (the "Registration Rights Agreement").
ARTICLE 5. CONDITIONS TO CLOSING - BUYER
The obligations of Buyer to consummate the purchase of the Assets at
Closing shall be subject to the satisfaction of the following conditions
precedent, any or all of which may be waived by Buyer in writing:
5.1 Accuracy of Representations and Performance of Seller. To the best
knowledge of Seller's current management, the representations and warranties of
Seller contained in this Agreement shall be true and correct when made and at
and as of the Closing Date with the same force and effect as though made on and
as of such date; each and all of the conditions and covenants to be performed or
satisfied by Seller hereunder at or prior to the Closing Date shall have been
duly performed or satisfied.
5.2 Absence of Litigation. On the Closing Date, no suit, action or other
proceeding, or injunction or final judgment relating thereto, relating to the
Assets shall be threatened or pending before any court or governmental or
regulatory official or agency.
5.3 Bills of Sale. Seller shall have executed and delivered to Buyer the
Xxxx of Sale in the form contained in Schedule 5.3 hereto (the "Xxxx of Sale")
for purposes of conveying the Assets to Buyer.
5.4 Note. Seller shall have executed and delivered to Buyer the Note in
substantially the form attached hereto as Exhibit A.
5.5 Registration Rights Agreement. Seller shall have executed and
delivered to Buyer the Registration Rights Agreement in substantially the form
attached hereto as Exhibit B.
5.6 Key Employees. The Key Employees identified by Buyer and listed on
Schedule 5.5 hereto shall have accepted offers of employment from Buyer.
5.7 Approval of Seller's Shareholders. Seller shall provide documentation
that the holders of two-thirds of the outstanding preferred stock of Seller,
voting as a single class, and majority of the outstanding capital stock of
Seller (common stock and preferred stock, on an as-converted-to-common stock
basis), voting together as a single class, have approved the terms of this
Agreement.
ARTICLE 6. CONDITIONS TO CLOSING - SELLER
The obligations of Seller to consummate the sale of the Assets at Closing
shall be subject to the satisfaction of the following conditions precedent, any
or all of which may be waived by Seller in writing:
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6.1 Accuracy of Representations and Performance of Buyer. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct when made and at and as of the Closing Date with the same force
and effect as though made on and as of such date; each and all of the conditions
and covenants to be performed or satisfied by Buyer hereunder at or prior to the
Closing Date shall have been duly performed or satisfied.
6.2 Absence of Certain Litigation. On the Closing Date, no suit, action or
other proceeding, or injunction or final judgment relating thereto, shall be
threatened in writing or pending before any court or governmental or regulatory
official or agency, in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby (provided that any such suit, action or
other proceeding which would not have a material effect on the transactions
contemplated hereby shall not constitute a failure to satisfy this condition),
and no investigation that might result in any such suit, action or proceeding
shall be pending.
6.3 Ancillary Agreements. Buyer shall have executed and delivered to
Seller the Registration Rights Agreement and the Xxxx of Sale.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as provided to the contrary in the disclosure schedule attached
hereto as Schedule 7 (the "Disclosure Schedule"), Seller represents and warrants
to Buyer that the following facts and circumstances are true and correct on and
as of the Commencement Date:
7.1 Organization and Good Standing. Seller is a corporation duly organized
and validly existing under the laws of the State of Delaware, and has all
requisite corporate power and authority to its properties. Seller has all
requisite power and authority to execute and deliver, and perform its
obligations under, this Agreement.
7.2 Authorization. The execution and delivery of this Agreement and
performance by Seller of its obligations hereunder, and all transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of Seller's Board of Directors and stockholders. This
Agreement has been, and the other agreements and documents required to be
delivered by Seller, in accordance with the provisions hereof (the "Seller's
Documents") will be duly executed and delivered on behalf of Seller by an
authorized officer of Seller; and this Agreement constitutes, and Seller's
Documents when executed and delivered will constitute, the valid and binding
obligations of Seller, enforceable in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws from time to time in effect affecting creditor's
rights generally and by legal and equitable limitations on the availability of
specific remedies.
7.3 No Governmental or Other Authorization Required. No authorization or
approval of, or filing with, any governmental agency, authority or other body or
any other third persons will be required in connection with Seller's execution
and delivery of this Agreement or the consummation by Seller of the transactions
contemplated hereby.
7.4 Title to Assets. To the best knowledge of Seller's current management,
Seller has, and at Closing will have, good and marketable title to all the
Assets, free and clear of all
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encumbrances. Seller is not a party to, nor are the Assets subject to, any
judgment, judicial order, writ, injunction or decree that materially adversely
affects the Assets or the use thereof by Seller.
7.5 Taxes. To the best knowledge of Seller's current management, there are
no pending assessments, asserted deficiencies or claims for additional taxes
that affect or pertain to the Assets that have not been paid.
7.6 Litigation; Claims; Defaults. To the best knowledge of Seller's
current management, Seller has not been served with any currently effective
summons or complaint and there is no action or suit, equitable or legal, to
which Seller is a party, nor any administrative, arbitration or other proceeding
pending or, to the best knowledge of Seller's current management, threatened
against Seller in respect of the Assets.
7.7 Compliance with Laws. To the best knowledge of Seller's current
management, Seller has complied, and through the Closing will continue to
comply, in all material respects with federal, state and local laws, rules and
regulations applicable to the Assets.
7.8 No Inconsistent Agreements. Seller has not entered into any memorandum
of understanding, letter of intent or other similar agreement, written or oral,
with any other party, which would be inconsistent with the terms of this
Agreement.
7.9 Intellectual Property Rights. To the best knowledge of Seller's
current management, Seller owns all right, title and interest and all related
patent, copyright, trademark, trade secrets and similar proprietary rights in
all Intellectual Properties. To the best knowledge of Seller's current
management, Seller has received no notice that it is infringing upon, violating
or otherwise acting adversely, or by operating the Assets would infringe upon,
violate or otherwise act adversely, to the right or claimed right of any person
or entity under or with respect to any rights relating to the Intellectual
Properties of any other person or entity and Seller (after reasonable
investigation) does not know of any likely basis therefor. Seller has not
granted source rights to any of the Intellectual Properties. To the best
knowledge of Seller's current management, Seller is not aware of any action,
suit, proceeding or investigation pending or currently threatened against Seller
or any other third party which relate to the Seller's ownership or use of any
Intellectual Properties of Seller.
7.10 Dissenter's Rights. Neither the Agreement, nor the transactions
contemplated by the Agreement, provide Seller's shareholders with dissenter's
rights as described in California Corporations Code Chapter 1300.
7.11 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS
ARTICLE 7, SELLER DOES NOT MAKE OR GIVE ANY WARRANTY REGARDING THE ASSETS SOLD
TO BUYER PURSUANT TO THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS
ARTICLE 7, ALL SUCH ASSETS ARE SOLD, AS THE CASE MAY BE, "AS IS" WITHOUT ANY
WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE. IN PARTICULAR, ANY AND
ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
EXPRESSLY DISCLAIMED AND EXCLUDED.
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7.12 Investment Representations. Seller understands that the Shares have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"). Seller also understands that the Shares are being issued
pursuant to an exemption from registration contained in the Securities Act based
in part upon Seller's representations contained in this Agreement. Seller hereby
represents and warrants as follows:
(a) Seller Bears Economic Risk and Can Protect Its Interests. Seller
represents that by reason of its, or of its management's, business or financial
knowledge and experience, Seller has the capacity to protect its own interests
in connection with the transactions contemplated herein. Seller must bear the
economic risk of this investment indefinitely unless the Shares are registered
pursuant to the Securities Act or an exemption from registration is available.
(b) Acquisition for Own Account. Seller is acquiring the Shares for
Seller's own account for investment only and not with a view towards their
public resale or distribution, except to the extent covered by an effective
Registration Statement.
(c) Publications. Seller is aware of no publication of any
advertisement in connection with the transactions contemplated herein or the
issuance of the Shares.
(d) Accredited Investor. Seller represents that it is an "accredited
investor" within the meaning of Regulation D under the Securities Act.
(e) Buyer Information. Seller has had an opportunity to discuss
Buyer's business, management and financial affairs with management of Buyer.
Seller has also had the opportunity to ask questions of and receive answers
from, Buyer and its management regarding the terms and conditions of this
investment.
(f) Rule 144. Seller acknowledges and agrees that the Shares are
characterized as "restricted securities" under the Securities Act and that such
Shares may not be resold unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.
7.13 Stockholder Vote. The approval of two-thirds of the outstanding
preferred stock of Seller, voting as a single class, and majority of the
outstanding capital stock of Seller (common stock and preferred stock, on an
as-converted-to-common stock basis), voting together as a single class, is
required to approve the transactions contemplated herein pursuant to Seller's
Certificate of Incorporation, bylaws, and applicable laws.
7.14 Disclosure. No representation or warranty by Seller in this Agreement
or any Schedule or Exhibit hereto, or any statement, list or certificate
furnished or to be furnished by Seller pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading or necessary in order to provide a prospective purchaser
of the Assets with proper information to such assets. To the best knowledge of
Seller's current management, all copies of agreements furnished to Buyer by
Seller hereunder are true and correct. Seller has disclosed all material adverse
facts relating to the Assets.
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ARTICLE 8. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
8.1 Organization and Good Standing. Buyer is a corporation duly organized
and validly existing under the laws of the State of Delaware. Buyer possesses
all requisite power and authority to own, operate and lease its properties and
carry on its business, and to execute and deliver, and perform its obligations
under, this Agreement.
8.2 Authorization. The execution and delivery of this Agreement and
performance by Buyer of its obligations hereunder, and all transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of Buyer. This Agreement has been, and the other agreements
and documents required to be delivered by Buyer in accordance with the
provisions hereof (the "Buyer's Documents") will be, duly executed and delivered
by Buyer; and this Agreement constitutes, and Buyer's Documents when executed
and delivered will constitute, the valid and binding obligations of Buyer,
enforceable in accordance with their respective terms, except as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or similar laws
from time to time in effect affecting creditor's rights generally and by legal
and equitable limitations on the availability of specific remedies. Buyer has
all necessary corporate power and authority to issue and deliver the Shares. The
Shares, when issued in compliance with the provisions of this Agreement, will be
duly authorized and validly issued, fully paid, non-assessable, free and clear
of all liens, taxes and encumbrances except for restrictions on transfer
contained in applicable federal and state securities laws, and issued in
compliance with federal securities laws and the securities laws of the State of
Delaware and the State of California.
8.3 Capital Stock. As of November 30, 2001, the authorized capital stock
of Buyer consists of 100,000,000 shares of Common Stock, par value $.001 per
share, of which 24,616,354 shares are issued and outstanding, and 2,000,000
shares of Preferred Stock, par value $.001 per share, none of which is issued
and outstanding.
8.4 Commission Filings and Financial Statements. Buyer has filed all
forms, reports and documents (the "SEC Documents") required to be filed by it
with the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the case may be, and the rules and regulations of the Commission
thereunder since July 27, 2000 through the date of this Agreement. As of their
respective filing dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the Commission thereunder applicable to
such SEC Documents, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
filing dates, the financial statements of Buyer included in the SEC Documents
complied as to form in all material respects with the applicable accounting
requirements and the rules and regulations of the Commission thereunder and were
prepared in accordance with generally accepted accounting principles
consistently applied (except as may be indicated in the notes thereto) and
fairly presented, in all material respects, the financial position of Buyer as
at the
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dates thereof and the results of operations and cash flows of Buyer for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring audit adjustments not material in scope or amount).
ARTICLE 9. THE CLOSING
9.1 Date and Location. The consummation of the transfer and delivery of
the Assets to Buyer and the receipt of the consideration therefor by Seller
shall constitute the "Closing" and the date of the Closing will be referred to
herein as the "Closing Date." Unless otherwise mutually agreed to by the
parties, the Closing shall take place at 10:00 a.m., Pacific Standard Time, at
the offices of Xxxx Xxxx Xxxx & Freidenrich LLP, 000 Xxxxxxxx Xxxxxx, Xxxx Xxxx,
XX 00000-0000 on December 14, 2001.
ARTICLE 10. POST-CLOSING COVENANTS
10.1 Delivery of Assets. Seller will cause the Assets to be delivered to
locations and via the methods designated by Buyer, at Buyer's expense,
immediately after the Closing. Seller and Buyer hereby agree that title to the
Assets will pass to Buyer at the Closing.
10.2 Distribution of Shares. Prior to the initial filing of the
Registration Statement with the SEC, Seller shall provide to Buyer a
certificate, executed by the Chief Executive Officer of Seller, showing the full
name of each proposed transferee of the Shares ("Proposed Transferee") and
stating that each Proposed Transferee qualifies as an Accredited Investor within
the meaning of Regulation D of the Securities Act. At Buyer's sole discretion,
Buyer shall have the option, after notification to Seller via e-mail or
telephone, to contact any Proposed Transferee to obtain information about such
Proposed Transferee's alleged status as an Accredited Investor, including
requiring any Proposed Transferee to complete a questionnaire revealing
information about such Proposed Transferee's financial status. Seller shall
cooperate with any such inquiry by Buyer. If Buyer determines, after
notification to Seller via e-mail or telephone, in Buyer's opinion, that a
Proposed Transferee does not qualify as an Accredited Investor, or does not
receive sufficient information to determine a Proposed Transferee's investor
status, Seller agrees that such Proposed Transferee shall not receive any of the
Shares and shall not be included in any Registration Statement filed by Buyer in
connection with this transaction.
10.3 Non-Competition. Seller covenants that for three years from the date
of this Agreement, it shall not solicit or attempt to solicit any of the Key
Employees to terminate his employment with Buyer in order to become an employee,
consultant, or independent contract of Seller or any of Seller's Affiliates or
Successors. Seller further covenants that for three years from the date of this
Agreement, it shall not , without first obtaining written approval of Buyer,
directly or indirectly engage in any Competing Activities. For purposes of this
subsection 10.3, "Competing Activities" means activities consisting of or
related to operation of the Assets as utilized by Buyer in Buyer's present
business, except for activities expressly permitted by the License Agreement and
Ownership in Article 11 herein, until such time as the License Agreement
expires.
11
ARTICLE 11. INTELLECTUAL PROPERTY LICENSE AND OWNERSHIP.
11.1 Software License. Buyer hereby grants Seller a perpetual,
non-exclusive, non-transferable (except as described below and in Section 11.3),
worldwide, fully paid up, royalty-free license to use, reproduce and modify the
software, as identified on Schedule 11.1 hereto, as in existence on the Closing
Date ("Software") in source and object code solely in connection with, and for
the purpose of, providing the consumer escrow services stated as of the date of
this Agreement at the website: xxxx://xxx.xxxxxxxxxx.xxx ("Site"). The license
-------------------------
granted herein specifically excludes any right on the part of Seller to grant
further sublicenses to the Software, other than to comply with agreements of
Seller executed prior to the date of this Agreement.
11.2 Marks License. ValiCert grants Tradenable a limited time,
non-exclusive, non-transferable, worldwide, fully paid up, royalty free license
to use, display and reproduce the Marks, as identified on Schedule 11.2 hereto,
solely on the Site, solely in connection with, and for the purpose of providing
the consumer escrow services stated as of the date of this Agreement at the Site
("Marks License"), for a period of up to 150 days following the Closing Date.
The Marks License granted in this Section 11.2 shall automatically expire at the
end of the period set forth in the prior sentence.
11.3 Seller's Ability to Comply with Sumitomo Agreement. Notwithstanding
anything to the contrary herein, Buyer hereby grants to Seller all rights
necessary for Seller to comply with the terms of the that certain IP Agreement,
dated as of November 22, 2001, and related intellectual property agreements,
among Seller, Sumitomo Mitsui Banking Corporation and i-Escrow Japan, Limited
pursuant to which Seller granted perpetual licenses to certain of Seller's
intellectual property.
11.4 Assignation. The Marks and License may be assigned to any person that
acquires the consumer escrow services business of Seller and that is not a
direct competitor of Buyer. Seller shall cause such person to agree to the same
conditions of the Marks License. In addition, such person shall be excluded from
granting any sublicenses.
11.5 Ownership. Buyer retains all right, title, and interest in and to the
Software and the Marks, including any intellectual property rights therein, and
grants no rights or licenses except those expressly specified above. Seller
retains all right, title and interest in and to the Site, including any
intellectual property rights and content therein.
11.6 No support or updates to the Software. The Software is licensed
solely as it exists on the Closing Date, and the license does not include, or
entitle Seller (or any sublicensee) to, any support, updates, later versions,
modifications, improvements, bug fixes, error corrections, or the like, for the
Software.
11.7 Delivery. Seller acknowledges that Seller has possession of the
Software and Marks as of the date of this Agreement.
11.8 Covenants of Buyer. EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUYER MAKES
NO WARRANTIES WITH RESPECT TO THE SOFTWARE AND MARKS, WHICH ARE PROVIDED "AS
IS," AND BUYER EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES WITH RESPECT TO
THE SOFTWARE AND MARKS
12
WHETHER EXPRESS, IMPLIED, OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, TITLE AND
NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
11.9 Term and Termination. The licenses described in this Section 11 shall
commence on the Closing Date and continue until termination as provided herein
(the "Term"), except for the license granted in Section 11.2 ("Marks License")
which shall expire at the time set forth therein. Either party may terminate the
licenses described in this Section 11 for the other party's material breach upon
thirty (30) days' prior written notice of such breach, and failure of the
breaching party to cure such breach within such thirty (30) day period.
11.10 Effect of Termination. Upon termination, (a) all licenses granted in
this Section 11 shall immediately terminate; (b) Seller shall immediately cease
its use, display, and/or reproduction of the Software and Marks, and, at the
option of Buyer, shall return or destroy, at Buyer's option, any and all copies
of the Software and Marks, whether in whole or in part; (c) each party shall, at
the option of the other party, promptly return or destroy the other party's
confidential information, and any complete or partial copies of such
information, and all documents, summaries, or other materials derived from such
confidential information, and shall shortly thereafter provide written
certification that all such materials have been returned or destroyed.
ARTICLE 12. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
12.1 Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement or in connection with the
negotiation, execution or performance of this Agreement shall survive the
Closing until the expiration of one (1) year from the Closing Date, and,
thereafter, to the extent a claim is made prior to such expiration with respect
to any breach of such representation, warranty or agreement, until such claim is
finally determined or settled. Any right to assert a claim for indemnification
under this Article 12 shall expire one (1) year following the Closing.
12.2 Indemnification Obligation of Seller.
(a) Until one (1) year after the Closing, Seller shall reimburse,
indemnify and hold harmless Buyer and its successors and assigns (each an
"Indemnified Buyer Party") against and in respect of any and all damages,
losses, deficiencies, liabilities, costs and expenses (including assessments,
legal fees, litigation costs, fines and judgments) ("Losses") incurred or
suffered by any Indemnified Buyer Party that result from, relate to or arise out
of:
(i) any actual or purported liabilities and obligations of
Seller, and any claims and demands made in respect thereof, whether or not known
or asserted at or prior to the Closing Date, relating to the Assets;
(ii) the operation of the Assets, or of any action or inaction
relating to the Assets by Seller or any director, officer, employee, agent,
representative or subcontractors of Seller on or prior to the Closing Date;
13
(iii) any misrepresentation, breach of warranty, or
nonfulfillment of any agreement or covenant on the part of Seller under this
Agreement or any misrepresentation in or omission from any certificate,
schedule, written statement, document or instrument furnished to Buyer pursuant
hereto or in connection with the negotiation, execution or performance of this
Agreement;
(iv) any and all actions, suits, claims or legal,
administrative, arbitration, governmental or other proceedings or investigations
against any Indemnified Buyer Party to the extent relating to Seller or the
Assets to the extent the reason therefor or subject thereof arose or occurred
prior to the Closing Date or which result from or arise out of any action or
inaction prior to the Closing Date of Seller or any director, officer, employee,
agent, representative or subcontractor of Seller, except for those which Buyer
specifically assumes pursuant to this Agreement.
Seller shall remain liable to any Indemnified Buyer Party for
any Losses arising out of Seller's use of the Assets as permitted by the
Intellectual Property License and Ownership described in Section 11 hereto.
(b) Notwithstanding anything to the contrary contained in this
Agreement:
(i) the maximum aggregate amount of indemnifiable Losses
arising out of or resulting from the causes enumerated in Section 12.2(a) that
may be recovered from Seller shall not exceed the Shares, and for purposes of
determining the number of Shares to be applied to satisfy an indemnifiable Loss,
the parties agree that the fair market value of a Share shall be $2.76;
(ii) no indemnification payment by Seller with respect to any
indemnifiable Losses otherwise payable under Section 12.2(a) and arising out of
or resulting from the causes enumerated in Section 12.2(a) shall be payable
until such time as all such indemnifiable Losses shall aggregate to more than
$50,000, after which xxxx Xxxxxx shall be liable in full for all indemnifiable
Losses (including the first $50,000); and
(iii) the Shares shall provide the sole and exclusive remedy
against Seller for breaches of the representations, warranties, covenants and
agreement contained in this Agreement or any agreement related thereto,
provided, however, that this provision shall not limit any rights or claims
based on fraudulent or intentional misrepresentation, bad faith or willful
misconduct.
12.3 Notice of Claims. Upon obtaining knowledge thereof, Indemnified Buyer
Party shall promptly notify the relevant indemnifying party in writing of any
damage, claim, loss, liability or expense which the indemnified party has
determined has given or could give rise to a claim (such written notice being
hereinafter referred to as a "Notice of Claim"). A Notice of Claim shall contain
a brief description of the nature and estimated amount of any such claim giving
rise to a right of indemnification.
14
12.4 Defense of Third Party Claims. With respect to any claim or demand
set forth in a Notice of Claim, relating to a third party claim, the
indemnifying party may defend, in good faith and at its expense, any such claim
or demand, and the indemnified party, at its expense, shall have the right to
participate in the defense of any such third party claim. So long as the
indemnifying party is defending in good faith any such third party claim, the
indemnified party shall not settle or compromise such third party claim. If
indemnifying party does not so elect to defend any such third party claim, the
indemnified party shall have no obligation to do so.
12.5 Limitation on Indemnification. No claim for indemnity under this
Agreement shall be asserted by, and no liability for such indemnity shall be
enforced against, Seller to the extent Buyer has theretofore received, or is
entitled to receive, indemnification, insurance proceeds or otherwise been
compensated. In addition, in determining the Losses for any particular loss
suffered by Buyer, the amount of the indemnity claimed by Buyer pursuant to this
Agreement shall be net of tax effects so as to reduce the Losses to the extent
of any tax savings realized, or that should have been realized, by Buyer. All
indemnification rights under this Agreement are without duplication.
ARTICLE 13. MISCELLANEOUS PROVISIONS
13.1 Announcements. No party shall issue any press release or make any
public announcement relating to the subject matter of this Agreement without the
prior written approval of the other party; provided, however, that either party
may make any public disclosure it believes in good faith is required by
applicable law without the prior consent of the other party.
13.2 Expenses. Except as otherwise provided herein, each of the parties
shall pay all of its own costs and expenses incurred or to be incurred by it in
the negotiation and preparation of this Agreement and carrying out the
transactions contemplated by this Agreement, including legal fees. In no event
shall Buyer be liable for the legal fees or expenses of Seller incurred as a
result of this transaction or otherwise.
13.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures on this
Agreement delivered by fax or telecopier shall be considered original signatures
for purposes of effectiveness of this Agreement.
13.4 Severability. If any provision of this Agreement or the application
thereof to any person, entity or circumstance shall be invalid or unenforceable
to any extend the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected
thereby and shall be enforced to the greatest extend permitted by law.
13.5 Exhibits; Headings. All references herein to Exhibits are to the
Exhibits attached hereto, which shall be incorporated in and constitute a part
of this Agreement by such reference. The headings, titles and subtitles used in
this Agreement are used for convenience only and shall not limit or otherwise
affect the meaning of this Agreement.
13.6 Construction. This Agreement has been negotiated by Buyer and Seller
and their respective legal counsel, and legal or equitable principles that might
require the construction of
15
this Agreement or any provision hereof against the party drafting this Agreement
shall not apply in any construction or interpretation of this Agreement.
13.7 Assignment. The rights and obligations of the parties to this
Agreement or any interest in this Agreement shall not be assigned, transferred,
hypothecated, pledged or otherwise disposed of without the prior written consent
of the nonassigning party which consent may be withheld in such party's sole
discretion.
13.8 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if delivered by telecopier (with notice of
receipt), or if served personally on the party to whom notice is to be given; or
if delivered by overnight private carrier, on the date of delivery; or on the
third day after mailing if mailed to the party to whom notice is to be given by
first class mail, certified, postage prepaid, and properly addressed as
following:
To Seller: Tradenable, Inc.
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Telecopier: (000) 000-0000
With a copy (which shall not constitute notice but which is nonetheless required
for notice) each to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
To Buyer:
ValiCert, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, CFO
Telecopier: (000) 000-0000
16
With a copy (which shall not constitute notice but which is nonetheless required
for notice) to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set for above.
13.9 Applicable Law. The terms, conditions and other provisions of this
Agreement and any documents or instruments delivered in connection with it shall
be governed and construed according to the internal laws of the State of
Delaware (other than the choice of law rules thereof) except as to matters of
law concerning the internal corporate affairs of any corporate entity which is a
party to or the subject of this Agreement, and as to those matters, the
jurisdiction under which such entity derives its powers shall govern.
13.10 Dispute Resolution. Buyer and Seller shall attempt to resolve
disputes between them arising out of or in connection with this Agreement
through good faith negotiations as provided herein. The parties agree that
disputes shall be fully discussed by the functional representatives of Buyer and
Seller in an attempt to achieve a prompt resolution of such dispute. Such
representatives shall meet and fully discuss such dispute in an attempt to
achieve a prompt resolution of the dispute. In the event that such dispute shall
not be promptly resolved by the mutual agreement of such representatives, Buyer
and Seller shall be free to pursue any remedies available at law or in equity.
13.11 Additional Instruments and Assistance. Each party hereto shall from
time to time execute and deliver such further instruments, provide additional
information and render such further assistance as the other party or its counsel
may reasonably request in order to complete and perfect the transactions
contemplated herein, including, but not limited to instruments of transfer and
conveyance as shall be reasonably deemed necessary or appropriate by Buyer to
vest in or confirm to Buyer good and marketable title to all of the Assets, free
and clear of any and all liens, security interests, mortgages, charges or
encumbrances of any kind.
13.12 Entire Agreement, Amendments and Waivers. This Agreement, together
with all Exhibits and Schedules hereto, and the Mutual Nondisclosure Agreement
constitute the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no representations, warranties or other agreements among
the parties in connection with the subject matter hereof except as set forth
specifically herein or contemplated hereby. No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
17
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
[SIGNATURE PAGE FOLLOWS]
18
IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
and Sale Agreement as of the first date written above.
BUYER: SELLER:
ValiCert, Inc. Tradenable, Inc.
By: Xxxxxx Xxxxx By: Xxxxxxx Xxxxx
Chief Executive Officer Chief Executive Officer
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxxx Xxxxx
---------------- -----------------
Exhibit A
---------
Note
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
---------------
$750,000 December 21, 0000
Xxxxxxxx Xxxx, Xxxxxxxxxx
FOR VALUE RECEIVED, Tradenable, Inc., a Delaware corporation (the
"Company"), promises to pay to ValiCert, Inc. (the "Holder"), or its registered
------- ------
assigns, the principal sum of $750,000 or such lesser amount as shall then equal
the outstanding principal amount hereof, together with interest from the date of
this Note on the unpaid principal balance at a rate equal to eight percent (8%)
per annum. The interest rate shall be computed on the basis of the actual number
of days elapsed and a year of 365 days. All unpaid principal, together with the
balance of unpaid and accrued interest and other amounts payable hereunder,
shall be due and payable on demand at any time after April 20, 2002 (the
"Maturity Date").
-------------
The following is a statement of the conditions to which this Note is
subject.
Capitalized terms not defined herein have the meaning ascribed to them in
the Asset Purchase and Sale Agreement between the parties dated December 12,
2001.
Definitions. As used in this Note, the following capitalized terms have
-----------
the following meanings:
(a) "Obligations" shall mean all principal and accrued interest due
-----------
hereunder.
(1) Prepayment. This Note may be prepaid in whole or in part at any time
----------
by the Company only with the prior written consent of Holder. Any such
prepayment will be applied first to interest accrued on this Note and second, if
the amount of prepayment exceeds the amount of all accrued interest, to the
payment of principal of this Note.
(2) Release of Shares from Escrow Upon Payment in Full of Obligations.
-----------------------------------------------------------------
Upon receipt by Holder of payment in full of the Obligations, or any portion
thereof, prior to the Maturity Date, Holder shall promptly deliver to the
Company a certificate for the Remaining Shares, or portion thereof, as
applicable.
(3) Payment. Payment shall be made in lawful tender of the United States.
-------
Payor hereby waives demand, notice presentment, protest and notice of dishonor.
(4) Successors and Assigns. Subject to the restrictions on transfer
----------------------
described in Section 6 and restrictions on assignment described in Section 7
below, the rights and obligations of the Company and the Holder of this Note
shall be binding upon and benefit the successors, assigns, heirs, administrators
and transferees of the parties.
(5) Waiver and Amendment. Any provision of this Note may be amended,
--------------------
waived or modified upon the written consent of the Company and the Holder. Any
amendment or waiver effected in accordance with this Section 5 shall be binding
upon the Company, the Holder and each transferee of a Note.
(6) Transfer by Holder. This Note may not be transferred, in whole or in
------------------
part, by the Holder without the prior written consent of the Company.
(7) Assignment by Company. Neither this Note nor any of the rights,
---------------------
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by the Company, without the prior written
consent of the Holder.
(8) Notices. Any notice, request or other communication required or
-------
permitted hereunder shall be given as set forth in Section 13.8 of the Purchase
Agreement.
(9) Expenses; Waivers. If action is instituted to collect this Note, the
-----------------
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
(10) Governing Law. This Note and all actions arising out of or in
-------------
connection with this Note shall be governed by and construed in accordance with
the laws of the State of California, without regard to the conflicts of law
provisions of the State of California or of any other state.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as
of the date first written above.
TRADENABLE, INC.
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Xxxxxxx Xxxxx, Chief Executive Officer
Exhibit B
---------
Registration Rights Agreement
