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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BY AND AMONG
STUPIDPC, INC.,
WEBCAT ONLINE, INC.,
AND
TRUCO ENTERPRISES, INC.
DATED AS OF SEPTEMBER 29, 2000
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is entered into as of this 29th day of
September, 2000, by and among STUPIDPC, INC., a Georgia corporation
("Purchaser"), WEBCAT ONLINE, INC., a Texas corporation ("Webcat"), and TRUCO
ENTERPRISES, INC., a Texas corporation and sole shareholder of Webcat
("Shareholder").
RECITALS:
A. Webcat is engaged in the business of furnishing online
proprietary software that specializes in marketing, building and hosting
affordable websites for small to medium size companies, associations and
consumers (the "Webcat Business").
B. Shareholder owns 100% of the issued and outstanding capital
stock of Webcat.
C. Shareholder desires to sell to Purchaser, and Purchaser
desires to acquire from Shareholder, that number of shares of the issued and
outstanding stock in Webcat (the "Stock") which will, at Closing (as defined in
Section 1.1) represent 51% of Webcat's fully diluted equity interests, including
stock, options (and stock reserved for any options or other stock incentive
plan), warrants, calls, convertible notes, and any agreement, commitment or
other right that would obligate Webcat or its shareholder to issue, deliver or
sell shares of Webcat's capital stock or to grant, extend or enter into any such
equity interest (collectively, "Fully Diluted Equity Interests"), on the terms
and subject to the conditions set forth herein (the "Acquisition").
D. The Board of Directors and sole shareholder of Webcat, and the
Board of Directors of Purchaser, have approved the Acquisition, upon the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants, representations,
conditions and agreements set forth herein, it is hereby agreed as follows:
ARTICLE I
PURCHASE AND SALE OF THE STOCK
1.1 SALE OF STOCK. At the closing of the Acquisition (the
"Closing"), Purchaser shall purchase, and Shareholder shall sell, the Stock.
1.2 CLOSING AND CLOSING DATE. Unless this Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.1, and subject to the satisfaction or waiver of
the conditions set forth in Article V, the Closing will take place as promptly
as practicable (and in any event upon or within three business days after
satisfaction of the conditions set forth in Article V) (the "Closing Date") at
the offices of Red Hot Law Group of Ashley LLC, 000 Xxxx Xxxxxxxxx Xx., Xxx.
000, Xxxxxxx, XX 00000, unless another date or place is agreed to by the
parties.
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1.3 CLOSING DELIVERIES. In addition to the deliveries specified in
Article V, Shareholder shall, at the Closing, deliver, or cause to be delivered,
to Purchaser: (a) one or more certificates, representing all of the Stock,
accompanied by stock powers duly endorsed to Purchaser in each case in proper
form for transfer, and with all stock transfer, and any other required
documentary stamps, affixed thereto; (b) subject to Section 4.7, the
resignations of such of the officers and members of the Board of Directors of
Webcat as designated by Purchaser, if any, executed and dated as of the Closing
Date; (c) evidence to Purchaser's satisfaction of cancellation of Webcat's
indebtedness to Shareholder in an aggregate amount of $500,000; and (d) the
stock books and ledgers, minute books, corporate seals and other corporate
records of Webcat; all against the receipt by Shareholder of (collectively, the
"Purchase Price"): (i) a check, or a wire transfer of immediately available
funds to an account designated by Shareholder, not less than three business days
prior to Closing, of an amount equal to $200,000, subject to Section 1.4; (ii)
870,000 shares of Purchaser's Common Stock, no par value per share ("Purchaser
Shares"); provided, however, that Purchaser Shares shall not, at the time of the
Closing, be registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act") or any other securities laws; and (iii) a stock purchase
warrant, substantially in the form of Exhibit "A" (the "Warrants"), providing
for Shareholder to be entitled to purchase 500,000 shares of Purchaser's Common
Stock at $1.00 per share; provided, however, that neither the Warrants nor, at
the time of the Closing, the underlying shares (the "Warrant Shares") shall be
registered under the Securities Act or any other securities laws.
1.4 CLOSING BALANCE SHEET. Webcat shall prepare, in accordance
with GAAP (as defined in Section 2.6) and consistent with the accounting
practices reflected in the Webcat Financial Statements (as so defined), as of
the close of business on August 31, 2000, a closing balance sheet of Webcat (the
"Closing Balance Sheet"), subject to Purchaser's review and acceptance.
Notwithstanding anything to the contrary in Section 1.3(i), if the Closing
Balance Sheet reflects the net of current assets less current liabilities
(excluding Webcat's debt to Shareholder, as reflected in Schedule 2.8) to be
less than $0, then to the extent of such deficit the cash portion of the
Purchase Price shall be decreased.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WEBCAT AND SHAREHOLDER
Webcat and Shareholder, jointly and severally, represent and warrant to
Purchaser as follows, which representations and warranties shall survive the
Closing in accordance with Section 8.1.
2.1 ORGANIZATION AND QUALIFICATION. Webcat is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Webcat has the requisite power and authority to carry on the Webcat
Business as it is now being conducted and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure so to qualify could not
have a material adverse effect on the Webcat Business or on the properties or
assets of Webcat. Set forth on Schedule 2.1 is a list of any states in which
Webcat is qualified to do business. Complete and correct copies of the Articles
of
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Incorporation and Bylaws of Webcat as in effect on the date hereof are attached
to Schedule 2.1. The minute book of Webcat, a true and complete copy of which
has been delivered to Purchaser or shall be at the Closing, (a) accurately
reflects all action taken by the Board of Directors or sole shareholder of
Webcat at meetings of Webcat's Board of Directors or sole shareholder, as the
case may be; and (b) contains true and complete copies, or originals, of the
respective minutes of all meetings or consent actions of the Board of Directors
or sole shareholder.
2.2 AUTHORITY. Each of Webcat and Shareholder has the necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
hereof and the consummation of the transactions contemplated hereby by Webcat
have been duly and validly authorized and approved by Webcat's Board of
Directors and Shareholder, and no other corporate proceedings on the part of
Webcat, its Board of Directors or Shareholder are necessary to authorize or
approve this Agreement or to consummate the transactions contemplated hereby
(including the Acquisition). This Agreement has been duly executed and delivered
by Webcat and Shareholder, and assuming the due authorization, execution and
delivery by Purchaser constitutes the valid and binding obligation of Webcat and
Shareholder, enforceable against Webcat and Shareholder in accordance with its
terms subject, in each case, to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing.
2.3 CAPITALIZATION.
(a) Webcat has authorized capital stock consisting of one
million five hundred thousand shares, comprising (i) 1 million shares of Common
Stock, $0.01 par value per share, of which 1,000 shares are outstanding; and
(ii) 500,000 shares of Preferred Stock, $0.01 par value per share. The Stock
comprises 51% of the Fully Diluted Equity Interests of Webcat and is validly
issued and outstanding, fully paid and nonassessable, and there are no
preemptive rights in respect thereof. The Stock was issued in accordance with
applicable federal and state securities laws. There are no options, warrants,
calls, convertible notes, agreements, commitments or other rights presently
outstanding that would obligate Webcat or Shareholder to issue, deliver or sell
shares of Webcat's capital stock, or to grant, extend or enter into any such
option, warrant, call, convertible note, agreement, commitment or other right.
In addition to the foregoing, as of the date hereof, Webcat has no bond,
debenture, note or other indebtedness issued or outstanding that has voting
rights in Webcat.
(b) The Stock is free and clear of any lien, charge,
security interest, pledge, option, right of first refusal, voting proxy or other
voting agreement, or encumbrance of any kind or nature other than restrictions
on transfer imposed by federal and state securities laws (any of the foregoing,
a "Lien").
2.4 SUBSIDIARIES. Webcat has no subsidiaries and does not
otherwise own or control, directly or indirectly, any equity interest, or any
security convertible into an equity interest, in any corporation, partnership,
limited liability company, joint venture, association or other business entity
(any of the foregoing, an "Entity").
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2.5 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS. Except as set
forth on Schedule 2.5, none of (i) the execution and delivery hereof by Webcat
or Shareholder, (ii) the consummation by Webcat and Shareholder of the
transactions contemplated hereby (including the Acquisition) or (iii) compliance
by Webcat with any of the provisions hereof will:
(a) conflict with or violate the Articles of
Incorporation or Bylaws of Webcat;
(b) result in a violation of any statute, ordinance,
rule, regulation, order, judgment or decree applicable to Webcat or Shareholder,
or by which Webcat or any of its properties or assets may be bound or affected;
(c) result in a violation or breach of, or constitute a
default (or an event that, with notice or lapse of time or both, would become a
default) under, or give to any other any right of termination, amendment,
acceleration or cancellation of, any note, bond, mortgage or indenture, or any
material contract, agreement, arrangement, lease, license, permit, judgment,
decree, franchise or other instrument or obligation, to which Webcat is a party
or by which Webcat or any of its properties or assets may be bound or affected;
(d) result in the creation of any Lien on any of the
property or assets of Webcat; or
(e) require any consent, waiver, license, approval,
authorization, order, permit, registration or filing with, or notification to
(any of the foregoing being a "Consent"), (i) any government or subdivision
thereof, whether domestic or foreign, or any administrative, governmental or
regulatory authority, agency, commission, court, tribunal or body, whether
domestic, foreign or multinational (any of the foregoing, a "Governmental
Entity"); or (ii) any other individual or Entity (collectively, a "Person").
2.6 FINANCIAL STATEMENTS. Webcat has heretofore furnished
Purchaser with a true and complete copy of (a) the audited financial statements
of Webcat for the six month period ended December 31, 1999; and (b) the
unaudited financial statements of Webcat for the seven month period ended July
31, 2000 (all of the foregoing collectively herein referred to as the "Webcat
Financial Statements"). Except as disclosed therein, the Webcat Financial
Statements have been prepared in accordance with U.S generally accepted
accounting principles ("GAAP") (except for the absence of footnotes and, in the
case of the Webcat Financial Statements for the period ended July 31, 2000,
normal year end adjustments) consistently followed throughout the period
indicated, and present fairly, in all material respects, the financial position
and operating results of Webcat as of the dates, and during the periods,
indicated therein.
2.7 ABSENCE OF CHANGES. Except as provided in Schedule 2.7 and
except as contemplated hereby, since July 31, 2000 (a) Webcat has not entered
into any transaction that was not in the ordinary course of business; (b) except
for sales of services and licenses of software in the ordinary course of
business, there has been no sale, assignment, transfer, mortgage, pledge,
encumbrance or lease of any material asset or property of Webcat; (c) there has
been (i) no declaration or payment of a dividend, or any other declaration,
payment or distribution of any type or nature to any shareholder of Webcat in
respect of their stock, whether in cash or property, and
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(ii) no purchase or redemption of any share of capital stock of Webcat; (d)
there has been no declaration, payment, or commitment for the payment, by
Webcat, of a bonus or other additional salary, compensation, or benefit to any
employee or director of Webcat that was not in the ordinary course of business,
except for normal year-end bonuses paid in the ordinary course of business; (e)
there has been no release, compromise, waiver or cancellation of any debt to or
claim by Webcat, or waiver of any right of Webcat; (f) there have been no
capital expenditures in excess of $5,000 for any single item, or $25,000 in the
aggregate; (g) there has been no change in accounting methods or practices or
revaluation of any asset of Webcat (other than the Webcat Accounts Receivable
(as defined in Section 2.26) written down in the ordinary course of business in
excess of $5,000 for any single Webcat Accounts Receivable, or $25,000 in the
aggregate); (h) there has been no material damage or destruction to, or loss of,
physical property (whether or not covered by insurance) adversely affecting the
Webcat Business or the operations of Webcat; (i) there has been no loan by
Webcat, or guaranty by Webcat of any loan, to any employee or director of
Webcat; (j) Webcat has not ceased to transact business with any customer that,
as of the date of such cessation, represented more than 5% of the annual gross
revenues of Webcat; (k) there has been no termination or resignation of any key
employee or officer of Webcat, and to the knowledge of Webcat, no such
termination or resignation is threatened; (l) there has been no amendment or
termination of any material oral or written contract, agreement or license
related to the Webcat Business, to which Webcat is a party or by which Webcat is
bound, except in the ordinary course of business, or except as expressly
contemplated hereby; (m) Webcat has not failed to satisfy any of its debts,
obligations or liabilities related to the Webcat Business or the assets of
Webcat as the same become due and owing (except for Webcat Accounts Payable (as
defined in Section 2.27) payable in accordance with past practices and in the
ordinary course of business); (n) there has been no agreement or commitment by
Webcat to do any of the foregoing; and (o) there has been no other event or
condition of any character pertaining to and materially and adversely affecting
the assets, business or financial condition of Webcat other than general
economic or other events or conditions affecting businesses generally.
2.8 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 2.8,
Webcat has no debt, liability or obligation of any kind, whether accrued,
absolute or otherwise, including any liability or obligation on account of taxes
or any governmental charge or penalty, interest or fine, except (a) liabilities
incurred in the ordinary course of business after July 31, 2000, that would not,
whether individually or in the aggregate, have a material adverse impact on the
business or financial condition of Webcat; (b) liabilities reflected on the
Webcat Financial Statements; and (c) liabilities incurred as a result of the
transactions contemplated hereby.
2.9 TITLE TO PROPERTIES. Except as set forth on Schedule 2.9,
Webcat has good and marketable title to all tangible property and assets used in
the Webcat Business (other than leasehold interests), and good and valid title
to its leasehold interests, in each case, free and clear of any and all Liens
other than Permitted Liens (as defined in Section 8.9).
2.10 EQUIPMENT. Set forth on Schedule 2.10 is a true and correct
list of all items of tangible personal property (including computer hardware)
necessary for or used in the operation of the Webcat Business in the manner in
which it has been and is now operated by Webcat (the "Webcat Equipment"), except
for personal property having a net book value of less than $1,000.
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Except as set forth on Schedule 2.10, each material item of the Webcat Equipment
is in good condition and repair, ordinary wear and tear excepted.
2.11 INTELLECTUAL PROPERTY; YEAR 2000 COMPLIANCE.
(a) Set forth on Schedule 2.11(a) is a true and complete
list of all material proprietary technology, patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service xxxx
rights and copyrights (and all pending applications for any of the foregoing)
used by Webcat in the conduct of the Webcat Business (together with unlisted
trade secrets and know how used in the conduct of the Webcat Business, the
"Webcat Intellectual Property Rights"). Webcat owns, or is validly licensed or
otherwise has the right to use or exploit, as currently used or exploited, all
of the Webcat Intellectual Property Rights, free of any obligation to make any
payment (whether of a royalty, license fee, compensation or otherwise). No
claims are pending or, to the knowledge of Webcat, have been threatened, that
Webcat is infringing or otherwise adversely affecting the rights of any Person
with regard to any Webcat Intellectual Property Right or that any Webcat
Intellectual Property Right is invalid or unenforceable. To Webcat's knowledge,
no Person is infringing upon the rights of Webcat with respect to any Webcat
Intellectual Property Right nor has any Person threatened to do so. Neither
Webcat nor any employee, agent or independent contractor of Webcat, in
connection with the performance of such Person's services with Webcat, has used,
appropriated or disclosed, directly or indirectly, any trade secret or other
proprietary or confidential information of any other Person, or otherwise
violated any confidential relationship with any other Person.
(b) Set forth on Schedule 2.11(b) is a true and complete
list of all material computer software used by Webcat in the conduct of the
Webcat Business (the "Webcat Software"). Webcat currently owns, licenses, or
otherwise has the legal right to use, all of the Webcat Software (including any
upgrade, alteration or enhancement with respect thereto), and all of the Webcat
Software is being used in compliance with any applicable license or other
agreement. Neither Webcat nor any Affiliate thereof continues to use any
software developed or furnished by Lucid Technologies, Inc. ("LTI") or otherwise
relating to Webcat's Software Development Agreement with LTI.
(c) Set forth on Schedule 2.11(c) is a correct and
complete list, in all material respects, of all domain names (i) registered to
or used by Webcat, (ii) the registration fees for which are paid by Webcat or
(iii) registered to any employee of Webcat relating to the Webcat Business
(collectively, "Domain Names"). Webcat owns and has registered, or is validly
licensed or otherwise has the right to use, the Domain Names.
(d) Except as set forth on Schedule 2.11(d) all employees
of Webcat who participated in the creation or contributed to the development of
Webcat Intellectual Property Rights or Domain Names were employees of Webcat at
the time of rendering such services and such services were within the scope of
their employment or such employees have otherwise validly assigned such
Intellectual Property Rights or Domain Names to Webcat.
2.12 REAL PROPERTY. Except as set forth on Schedule 2.12:
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(a) Webcat has a good and valid leasehold interest in all real
property (including all buildings, improvements and fixtures thereon) used in
the operation of the Webcat Business (the "Webcat Real Property"). Webcat does
not own any real property. Except for Permitted Liens, and for the items set
forth on Schedule 2.12, there are no Liens on Webcat's interest in any of the
Webcat Real Property. Schedule 2.12 lists (i) each county and state where any
Webcat Real Property is located; and (ii) where Webcat has leased or owned any
real property within the last five years.
(b) There are no parties in possession of any portion of the
Webcat Real Property other than Webcat, whether as sublessees, subtenants at
will or trespassers.
(c) To the knowledge of Webcat, there is no law, ordinance, order,
regulation or requirement now in existence or under active consideration by any
Governmental Entity, that would require, under the provisions of any of the
Webcat Leases (as defined in Section 2.13) or otherwise, any material
expenditure by Webcat to modify or improve any of the Webcat Real Property to
bring it into compliance therewith.
2.13 LEASES. Schedule 2.13 sets forth a list of all leases pursuant
to which Webcat leases, as lessor or lessee, real or personal property used in
operating the Webcat Business or otherwise (the "Webcat Leases"). Copies of the
Webcat Leases, all of which have previously been provided to Purchaser, are true
and complete copies thereof. All of the Webcat Leases are in full force and
effect, unimpaired by any act or omission of Webcat, and are valid, binding and
enforceable against Webcat and, to the knowledge of Webcat, against the other
parties thereto, in accordance with their respective terms, and there is not
under any such Webcat Lease any existing material default by Webcat, or, to the
knowledge of Webcat, by any other party thereto, or any condition or event that,
with notice or lapse of time or both, would constitute a default. Webcat has not
received notice that the lessor of any of the Webcat Leases intends to cancel,
suspend or terminate such Webcat Lease or to exercise or not exercise any option
thereunder.
2.14 CONTRACTS. Schedule 2.14 sets forth a true and complete list
of all contracts, agreements and commitments (whether written or oral) to which
Webcat is, directly or indirectly, a party (in its own name or as a successor in
interest), or by which Webcat or any of its properties or assets is otherwise
bound, including any service agreements, customer agreements, supplier
agreements, agreements to lend or borrow money, stockholder agreements,
employment agreements, agreements relating to Webcat Intellectual Property
Rights and the like (collectively, the "Webcat Contracts"); excepting only those
Webcat Contracts which involve less than $10,000 and are cancelable, without
penalty, on no more than 90 days' notice. The aggregate value of all payment
obligations and rights to receive payment, under agreements, contracts and
commitments (whether oral or in writing) to which Webcat is a party or by which
Webcat or any of its properties or assets is otherwise bound, and that are not
listed on Schedule 2.14, is less than $50,000 (calculating such value by adding
together the value of rights and obligations, and not by determining the net
amount thereof).
True and complete copies of all Webcat Contracts (or a true and
complete narrative description of any oral Webcat Contract) have previously been
provided to Purchaser. Neither Webcat nor, to the knowledge of Webcat, any other
party to any of the Webcat Contracts (x) is in
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material default under (nor does there exist any condition that, with notice or
lapse of time or both, would cause a default under) any of the Webcat Contracts,
or (y) has waived any right it may have under any of the Webcat Contracts, the
waiver of which would have a material adverse effect on the business, assets or
financial condition or prospects of Webcat. All of the Webcat Contracts
constitute the valid and binding obligations of Webcat, enforceable in
accordance with their respective terms, and, to the knowledge of Webcat, of the
other parties thereto. None of Webcat's client or other Contracts is subject to
any condition relating to the gender of Webcat's shareholder, nor is any such
Contract subject to cancellation, termination, renegotiation or modification in
connection with the Acquisition or relating to the gender of Webcat's owner.
2.15 DIRECTORS AND OFFICERS. Schedule 2.15 sets forth an accurate
list of the name of each director and officer of Webcat and the position(s) held
by each.
2.16 PAYROLL INFORMATION. Webcat has previously provided Purchaser
with a true and complete copy of the payroll report of Webcat dated within 30
days of the date hereof, showing all current employees or contractors of Webcat
and their current levels of compensation, other than bonuses and other
extraordinary compensation, all of which bonuses and other extraordinary
compensation are set forth in Schedule 2.16. Webcat has paid all compensation
required to be paid to employees or contractors of Webcat on or prior to the
date hereof other than compensation (and bonuses pursuant to arrangements
described in Schedule 2.16) accrued in the current pay period.
2.17 LITIGATION. Except as set forth on Schedule 2.17, there is no
suit, action, claim, investigation or proceeding pending or, to the knowledge of
Webcat, threatened against or affecting Webcat, the Shareholder (relating to
Webcat) or the Webcat Business, nor is there any judgment, decree, injunction or
order of any applicable Governmental Entity or arbitrator outstanding against
Webcat, or against the Shareholder (relating to Webcat).
2.18 EMPLOYEE BENEFIT PLANS/LABOR RELATIONS.
(a) Except as disclosed in Schedule 2.18, there are no
employee benefit plans, agreements or arrangements maintained by Webcat,
including (i) "employee benefit plans" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"); (ii)
current or deferred compensation, pension, profit sharing, vacation or severance
plans or programs; or (iii) medical, hospital, accident, disability or death
benefit plans (all of the foregoing, collectively, the "Webcat Benefit Plans").
All the Webcat Benefit Plans are administered in accordance with, and are in
material compliance with, all applicable laws and regulations. No default exists
with respect to the obligations of Webcat under any Webcat Benefit Plan.
(b) Webcat is not a party to any collective bargaining
agreement; no collective bargaining agent has been certified as a representative
of any employee of Webcat; no representation campaign or election is now in
progress with respect to any employee of Webcat; and there are no material labor
disputes, grievances, controversies, strikes or requests for union
representation pending, or, to the knowledge of Webcat, threatened, relating to
or affecting any Webcat employee. To the knowledge of Webcat, no event has
occurred that is likely to give rise to any such dispute, controversy, strike or
request for representation.
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2.19 ERISA.
(a) Without limiting the generality of Section 2.18(a),
all Webcat Benefit Plans that are subject to ERISA have been administered in
accordance with, and are in material compliance with, the applicable provisions
of ERISA. Each of the Webcat Benefit Plans that is intended to meet the
requirements of Section 401(a) of the Code has been approved as to form by the
Internal Revenue Service to meet such requirements within the meaning of such
provision. None of the Webcat Benefit Plans is subject to Title IV of ERISA or
Section 412 of the Internal Revenue Code of 1986, as amended (the "Code").
Webcat has not engaged in any nonexempt "prohibited transactions," as such term
is defined in Section 4975 of the Code or Section 406 of ERISA, involving the
Webcat Benefit Plans that would subject Webcat to the penalty or tax imposed
under Section 502(i) of ERISA or Section 4975 of the Code. Webcat has not
engaged in any transaction described in Section 4069 of ERISA within the last
five years. Except as disclosed in Schedule 2.19 or pursuant to the terms of the
Webcat Benefit Plans, neither the execution and delivery hereof nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation or golden parachute)
becoming due to any manager or other employee of Webcat, (ii) increase any
benefit otherwise payable under any of the Webcat Benefit Plans or (iii) result
in the acceleration of the time of payment or vesting of any such benefit to any
extent.
(b) No notice of a "reportable event," within the meaning
of Section 4043 of ERISA, for which the 30-day reporting requirement has not
been waived, has been required to be filed for any of the Webcat Benefit Plans
that is an "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA and that is intended to meet the requirements of Section 401(a) of the
Code, or by any entity that is considered one employer with Webcat under Section
4001 of ERISA or Section 414 of the Code, within the 12-month period ending on
the Closing Date. Webcat has not incurred any liability to the Pension Benefit
Guaranty Corporation in respect of any of the Webcat Benefit Plans that remains
unpaid.
2.20 TAXES. Except as set forth on Schedule 2.20:
(a) Webcat has duly and timely filed all federal, state
and local or foreign income, franchise, excise, real and personal property and
any other tax returns and reports, including extensions, required to have been
filed by Webcat on or prior to the Closing Date. Webcat has duly and timely paid
all taxes and other governmental charges, and all interest and penalties with
respect thereto, required to be paid by it (whether by way of withholding or
otherwise) to any federal, state, local or other taxing authority (except to the
extent the same are being contested in good faith, and adequate reserves
therefor have been provided in the Webcat Financial Statements). As of the
Closing Date, all deficiencies proposed as a result of any audit have been paid
or settled.
(b) Webcat is not a party to, or bound by, or otherwise
in any way obligated under, any tax sharing or similar agreement. Webcat has not
elected to be taxed as an "S" corporation under the Code, or if as indicated on
Schedule 2.20 it has so elected, it has made a
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proper filing and valid election and is in compliance with all requirements
therefore, and all such elections remain in place and shall remain in place
through the Closing Date.
(c) Webcat has consented to have the provisions of
Section 341(f)(2) of the Code (or comparable state law provisions) apply to it,
and Webcat has not agreed or been requested to make any adjustment under Section
481(c) of the Code by reason of a change in accounting method or otherwise.
2.21 COMPLIANCE WITH APPLICABLE LAWS. Webcat holds all material
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary to own, lease or operate all of its assets and
properties, as appropriate, and to carry on the Webcat Business as now conducted
(the "Webcat Permits"). To the knowledge of Webcat, Webcat is in material
compliance with all applicable laws, ordinances and regulations and the terms of
the Webcat Permits. Except as set forth on Schedule 2.21, all of the Webcat
Permits are fully assignable in connection with the Acquisition. Schedule 2.21
sets forth a true and complete list of all Webcat Permits, true and complete
copies of which have previously been provided to Purchaser.
2.22 BOARD OF DIRECTORS/SHAREHOLDER CONSENT. Both the Board of
Directors of Webcat and Shareholder have adopted and approved this Agreement and
the transactions contemplated hereby (including the Acquisition).
2.23 BROKERS. Except as set forth on Schedule 2.23, no broker or
finder is entitled to any broker's, banker's or finder's fee or other commission
in connection with the transactions contemplated hereby as a result of
arrangements made by or on behalf of Webcat.
2.24 ENVIRONMENTAL MATTERS.
(a) To the knowledge of Webcat, no real property
currently or formerly owned or operated by Webcat or any subsidiary is
contaminated with any Hazardous Substance (as hereinafter defined).
(b) Webcat is not a party to any litigation or
administrative proceeding nor, to the knowledge of Webcat, is any litigation or
administrative proceeding threatened against it, that, in either case, asserts
or alleges that Webcat (i) violated any Environmental Law (as hereinafter
defined); (ii) is required to clean up, remove or take remedial or other
responsive action due to the disposal, deposit, discharge, leak or other release
of any Hazardous Substance; or (iii) is required to pay all or a portion of the
cost of any past, present or future cleanup, removal or remedial or other action
that arises out of or is related to the disposal, deposit, discharge, leak or
other release of any Hazardous Substance.
(c) To the knowledge of Webcat, there are not now nor
have there previously been tanks or other facilities on, under, or at any real
property owned, leased, used or occupied by Webcat containing materials that, if
known to be present in soil or ground water, would require cleanup, removal or
other remedial action under Environmental Law.
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(d) Webcat is not subject to any judgment, order or
citation related to or arising out of any Environmental Law and, to the
knowledge of Webcat, has not been named or listed as a potentially responsible
party by any Governmental Entity in a matter related to or arising out of any
Environmental Law.
(e) For purposes hereof, (i) the term "Environmental Law"
means any federal, state or local law (including statutes, regulations,
ordinances, codes, rules, judicial opinions and other governmental restrictions
and requirements) relating to the discharge of air pollutants, water pollutants,
noise, odors or process waste water, or otherwise relating to the environment or
hazardous or toxic substances; and (ii) the term "Hazardous Substance" means any
toxic or hazardous substance that is regulated by or under authority of any
Environmental Law, including any petroleum products, asbestos or polychlorinated
biphenyls.
2.25 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as
provided in Schedule 2.25, no officer, director, shareholder or employee of
Webcat and no family member (including a spouse, parent, sibling or lineal
descendent) of any of the foregoing has any direct or indirect material interest
in any material customer, supplier or competitor of Webcat, or in any Person
from whom or to whom Webcat leases any real or personal property, or in any
other Person with whom Webcat is doing business whether directly or indirectly
(including as a debtor or creditor), whether in existence as of the Closing Date
or proposed, other than the ownership of stock of publicly traded corporations.
2.26 ACCOUNTS RECEIVABLE. All accounts, notes, contracts and other
receivables of Webcat (collectively, the "Webcat Accounts Receivable") were
generated by Webcat in the ordinary course of business arising from bona fide
transactions. There are no set-offs, counterclaims or disputes asserted with
respect to any Webcat Accounts Receivable that would result in claims in excess
of the reserve for bad debts set forth on the Webcat Financial Statements and,
to the knowledge of Webcat and subject to such reserve, all Webcat Accounts
Receivable are collectible in full. Webcat has previously provided Purchaser
with a true and complete aging report dated within 30 days of the date hereof,
showing the time elapsed since invoice date for all Webcat Accounts Receivable
as of such date.
2.27 ACCOUNTS PAYABLE. All material accounts, notes, contracts and
other amounts payable of Webcat (collectively, the "Webcat Accounts Payable")
are currently within their respective terms, and are neither in default nor
otherwise past due by more than 90 days. Webcat has previously provided
Purchaser with a true and complete aging report dated within 30 days of the date
hereof, showing the time elapsed since invoice date for all Webcat Accounts
Payable as of such date.
2.28 INSURANCE. Shareholder currently maintains for Webcat, in full
force and effect, all insurance policies that are required to be maintained for
the conduct of the Webcat Business or the ownership of its property (both real
and personal) (collectively, the "Webcat Insurance Policies"). The Webcat
Insurance Policies are listed on Schedule 2.28, and true and complete copies of
all Webcat Insurance Policies have previously been provided to Purchaser. Webcat
(a) is not in default regarding any material provisions of any Webcat Insurance
Policy; (b) has paid all premiums due thereunder; (c) has not failed to present
any material notice or material claim
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thereunder in a due and timely fashion; or (d) has not committed any act or
suffered any condition that would materially adversely affect its ability to
continue any Webcat Insurance Policy or to obtain renewal thereof on the same or
comparable terms.
2.29 BANKRUPTCY. Webcat has not filed a petition or request for
reorganization or protection or relief under the bankruptcy laws of the United
States or any state or territory thereof or any other jurisdiction, made any
general assignment for the benefit of creditors, or consented to the appointment
of a receiver or trustee, including a custodian under the United States
bankruptcy laws, whether such receiver or trustee is appointed in a voluntary or
involuntary proceeding.
2.30 ACCREDITED INVESTOR; INVESTMENT PURPOSE. Shareholder
represents, with respect to the Purchaser Shares, Warrants and Warrant Shares
(collectively, "Purchaser Securities") that it (a) is an "accredited investor"
as such term is defined in Rule 501 of Regulation D promulgated by the
Securities and Exchange Commission ("SEC") under the Securities Act; (b) is
acquiring Purchaser Shares and Warrants solely for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof; and (c) shall not, directly or indirectly, offer,
transfer, sell, pledge, hypothecate or otherwise dispose of (any of the
foregoing, a "Transfer") any Purchaser Securities (or solicit any offer to buy,
purchase or otherwise acquire or take a pledge of any such securities) except in
compliance with the Securities Act and the rules and regulations thereunder, and
other applicable laws, rules and regulations.
2.31 RESTRICTIONS ON TRANSFER. Shareholder acknowledges that (a)
Purchaser Shares received by it hereunder have not been registered under the
Securities Act, nor have the Warrants or Warrant Shares; (b) restrictive legends
shall be placed on the certificates representing Purchaser Shares; (c) any
Transfer of Purchaser Securities may only be made in accordance with the
requirements of the Securities Act and any other applicable securities laws; and
(d) appropriate stop-transfer instructions shall be issued to Purchaser's
transfer agent with respect to Purchaser Shares.
2.32 ABILITY TO BEAR RISK; ACCESS TO INFORMATION; SOPHISTICATION.
Shareholder represents and warrants that (a) its financial situation is such
that it can afford to bear the economic risk of holding Purchaser Securities
acquired by it hereunder for an extended period; (b) it can afford to suffer the
complete loss of such Purchaser Securities; (c) it has been granted the
opportunity to ask questions of, and receive answers from, representatives of
Purchaser concerning the terms and conditions of Purchaser Securities and to
obtain any additional information that it deems necessary; and it has met with
such representatives, received answers to its questions and does not require
additional information in connection with the Acquisition; and (d) its knowledge
and experience in financial and business matters is such that it is capable of
evaluating the merits and risk of ownership of Purchaser Securities.
2.33 ACKNOWLEDGEMENT. Shareholder acknowledges that it has received
Purchaser's Prospectus, dated February 11, 2000, with respect to Amendment No. 4
to its registration statement on Form SB-2, Purchaser's Form 10-KSB for the year
ended December 31, 1999; and Purchaser's Form 10-QSB for the three month period
ended March 31, 2000 (collectively, "Purchaser's Public Information").
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2.33 DISCLOSURE. No statement of fact by Webcat or Shareholder
contained herein and no written statement of fact furnished by Webcat or
Shareholder to Purchaser in connection herewith contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements herein or therein contained, in light of the circumstances in
which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Webcat and Shareholder, which
representations and warranties shall survive the Closing in accordance with
Section 8.1, as follows:
3.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Purchaser has the requisite power and authority to carry on its business as it
is now being conducted and is duly qualified or licensed to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure so to qualify could not have a
material adverse effect on the business, properties or assets of Purchaser.
Complete and correct copies of the Articles of Incorporation and Bylaws of
Purchaser as in effect on the date hereof are attached to a closing and
incumbency certificate, substantially in the form of Exhibit "B" ("Purchaser's
Closing Certificate").
3.2 AUTHORITY. Purchaser has the necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by Purchaser have been duly
and validly authorized and approved by its board of directors, and no other
corporate or shareholder proceedings on the part of Purchaser, or its board of
directors or shareholders, are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Purchaser, and assuming the due authorization,
execution and delivery hereof by Webcat and Shareholder, constitutes the valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general application relating to or affecting creditors'
rights and to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing.
3.3 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS. Except as set
forth on Schedule 3.3, none of the execution and delivery hereof by Purchaser,
the consummation by Purchaser of the transactions contemplated hereby, or
compliance by Purchaser with any of the provisions hereof, will:
(a) conflict with or violate the governing documents of
Purchaser;
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(b) result in a violation of any statute, ordinance,
rule, regulation, order, judgment or decree applicable to Purchaser, or by which
Purchaser or its properties or assets may be bound or affected;
(c) result in the creation of any Lien on the property or
assets of Purchaser; or
(d) require any Consent of (i) any Governmental Entity
(except for compliance with any applicable requirements of any applicable
securities laws or of the SEC or NASDAQ); or (ii) any other Person.
3.4 LITIGATION. Except as set forth on Schedule 3.4 or in
Purchaser's Public Information, there is no suit, action, claim, investigation
or proceeding pending or, to the knowledge of Purchaser, threatened against or
affecting Purchaser, nor is there any judgment, decree, injunction or order of
any applicable Governmental Entity or arbitrator outstanding against Purchaser.
3.5 BROKERS. Except as disclosed on Schedule 3.5, no broker or
finder is entitled to any broker's or finder's fee in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Purchaser.
3.6 PURCHASER SHARES. When delivered to Shareholder in accordance
with the terms hereof, Purchaser Shares will be (i) duly authorized, fully paid
and nonassessable; and (ii) free and clear of all Liens other than restrictions
imposed by federal and state securities laws or by any applicable xxxxxxx
xxxxxxx policy of Purchaser.
3.7 PURCHASER'S PUBLIC INFORMATION. As of their respective filing
dates with the SEC, Purchaser's Public Information (a) did not contain any
untrue statement of material facts or omit to state material facts required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading; and (b) complied
in all material respects with the applicable requirements of the Securities Act
and the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations promulgated thereunder. Since Purchaser's most
recent filing under the Exchange Act, there have been no changes in the assets,
business or financial condition of Purchaser, which changes could reasonably be
expected to have a "material adverse effect" on Purchaser; except, however, for
any such change disclosed to Webcat and to Shareholder in connection with the
Acquisition or as disclosed on Schedule 3.7. For the purpose of the preceding
sentence, changes having a "material adverse effect" on Purchaser exclude any
change that is or may be attributable to or result or may result from (i) the
public announcement of the transactions contemplated hereby, including the
Acquisition; (ii) changes in general economic conditions or changes affecting
the industry in which Purchaser operates, or capital markets, generally; (iii)
any public announcement of Purchaser's intention to file a registration
statement under the Securities Act; or (iv) changes in the trading prices of
Purchaser's Common Stock not caused primarily by changes in the operations,
earnings, assets, properties, business or financial condition of Purchaser.
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ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 CONDUCT OF BUSINESS BY WEBCAT PENDING THE ACQUISITION. From
and after the date hereof, prior to the Closing Date, except as contemplated
hereby, unless Purchaser shall otherwise agree in advance in writing, Webcat
shall carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and use reasonable
efforts to (i) preserve intact its present business organizations, (ii) keep
available the services of its employees and (iii) preserve its relationships
with customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that its goodwill and on-going business
shall not be impaired in any material respect at the Closing Date. Without
limiting the generality of the foregoing, and except as contemplated hereby,
unless Purchaser shall otherwise agree in advance in writing, prior to the
Closing Date, Webcat shall not, directly or indirectly:
(a) (i) declare, set aside, or pay any dividend on, or
make any other distribution in respect of, any of its shares of capital stock,
(ii) split, combine or reclassify any of its shares of capital stock, or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for, shares of its capital stock, or (iii) purchase, redeem or
otherwise acquire, any shares of capital stock of Webcat or any other equity
security thereof or any right, warrant or option to acquire any such share or
other security;
(b) issue, deliver, sell, pledge or otherwise encumber
any shares of capital stock, any other voting security issued by Webcat or any
security convertible into, or any right, warrant or option to acquire any such
share or voting security, grant any option, warrant or other stock or right, or
alter or allow the acceleration of vesting or exercise of any outstanding
option, warrant or such right;
(c) amend its Articles of Incorporation or Bylaws, or
other comparable organizational documents;
(d) acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any Entity or division thereof, or (ii) any
assets that are material, individually or in the aggregate, to Webcat;
(e) subject to a Lien (other than a Permitted Lien) or
sell, lease or otherwise dispose of any of its properties or assets, or license
or transfer any Webcat Intellectual Property Right (except for non-exclusive
licenses in the ordinary course of business consistent with past practices), or
revalue any asset or (except as required by GAAP) make any change in accounting
methods, principles or practices;
(f) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person or issue or sell any debt
security of Webcat, guarantee any debt security of another Person or enter into
any "keep well" or other agreement to maintain the financial condition of
another Person, make any loan, advance (excluding advances to employees, not
exceeding $5,000, in the ordinary course of business of Webcat consistent with
past practices) or
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capital contribution to, or investment in, any other Person, or settle or
compromise any material claim or litigation;
(g) pay any bonus to any employee, contractor, officer,
director or shareholder on or after the date hereof other than in the ordinary
course of business of Webcat consistent with past practices;
(h) enter into any "golden parachute" or other severance
arrangement with any employee, officer or manager, or increase or otherwise
change the rate or nature of the compensation (including wages, salaries,
benefits and bonuses) payable to any employee, officer or manager, except
pursuant to existing compensation and fringe benefit plans, practices and
arrangements that have been disclosed in writing to Purchaser, or enter into,
renew, or allow the renewal of, any employment, consulting or other similar
agreement with any employee, contractor, officer, director or shareholder, or
amend or modify any Webcat Benefit Plan in any material respect or adopt any
other such plan;
(i) enter into any new contract or agreement (other than
a customer agreement entered into in the ordinary course of business consistent
with past practices), or lease, involving an obligation in excess of $25,000, or
amend, waive any material default under, terminate (except for such as terminate
by their own terms) or modify in any material respect any Webcat Contract or
Lease; or
(j) authorize any of, or commit or agree to take any of,
the foregoing actions.
4.2 ACCESS TO INFORMATION. From the date hereof through the
Closing Date, Webcat shall afford to Purchaser and Purchaser's accountants,
counsel and other representatives reasonable access during normal business hours
(and at such other times as the parties may mutually agree) upon reasonable
prior notice to Webcat, which shall not be unreasonably withheld, to its
respective properties, books, contracts, commitments, records and personnel and,
during such period, Webcat shall furnish promptly to Purchaser all information
concerning Webcat's business, properties and personnel as Purchaser may
reasonably request. Purchaser, and its accountants, counsel and other
representatives, shall, in the exercise of the rights described in this Section
4.2, not unduly interfere with the operation of the business of Webcat. Webcat
shall furnish Purchaser with prompt written notice of any event or occurrence
that would cause any of Webcat's or Shareholder's representations and warranties
hereunder to become incomplete, misleading or inaccurate. Within 20 days after
the end of each month ending after the date hereof, Webcat shall furnish
Purchaser with a copy of the monthly financial reports of Webcat prepared after
the date of the Webcat Financial Statements (including any months after such
date and prior to the date hereof) for each such month, including balance sheet
and operating statements. All of the foregoing financial statements should
comply with the requirements regarding financial statements described in Section
2.6.
4.3 FILINGS; TAX ELECTIONS. Webcat shall promptly provide
Purchaser with copies of all filings made by Webcat with any Governmental Entity
in connection herewith and the transactions contemplated hereby. Webcat shall,
before settling or compromising any material income tax
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liability, consult with Purchaser and its advisors as to the positions and
elections that will be taken or made with respect to such matter.
4.4 PUBLIC ANNOUNCEMENTS. Each party agrees to consult with each
other prior to any public announcement relating to the Acquisition and the
timing, content and dissemination of any public announcement will be subject to
the mutual approval of the parties, except to the extent that a party is not
reasonably able to consult in a timely manner with, or obtain the approval of,
the other party in situations in which disclosures are required or appropriate
(with respect to either party hereto) by applicable law, including securities
laws, or by NASDAQ or other exchange rules.
4.5 TRANSFER AND GAINS TAXES AND CERTAIN OTHER TAXES AND EXPENSES.
Purchaser agrees that, to the extent it is legally able to do so, it will pay
all real property transfer, gains and other similar taxes and all documentary
stamps, filing fees, recording fees and sales and use taxes, if any, and any
penalties or interest with respect thereto, payable in connection with
consummation of the Acquisition.
4.6 CONFIDENTIALITY. All employees or contractors of Webcat
immediately prior to the Closing Date shall enter into a non-solicitation and
confidentiality agreement with Purchaser, substantially in the form of Exhibit
"C" (the "Non-Solicitation and Confidentiality Agreements").
4.7 BOARD REPRESENTATION; CONSULTING. For a period of two years
after the Closing, (i) Xxx Xxxxxx and Xxxx Xxxxxx will continue on Webcat's
Board of Directors, without compensation but with Webcat furnishing directors'
and officers' liability insurance to the reasonable satisfaction of Xxx Xxxxxx
and Xxxx Xxxxxx; (ii) Xxx Xxxxxx and Xxxx Xxxxxx will, upon Purchaser's next
annual meeting, be entitled to two seats on Purchaser's Board of Directors
(which Board shall comprise no fewer than five members), at nominal
($1,000/year) compensation and with Purchaser furnishing directors' and
officers' liability insurance to the reasonable satisfaction of Xxx Xxxxxx and
Xxxx Xxxxxx; and (iii) Shareholder shall enter into a consulting agreement with
Purchaser, substantially in the form of Exhibit "D-1" (the "Consulting
Agreement"). Furthermore, Xxx Xxxxxx and Xxxx Xxxxxx shall enter into
assignments of works, and confidentiality and non-compete agreements, with
Purchaser, substantially in the form of Exhibit "D-2" (the "Individual
Agreements").
4.8 SAM'S WHOLESALE CLUB. As to Webcat's potential business with
Sam's Wholesale Club, Purchaser will pay Shareholder a 10% commission (and will
recognize Shareholder as its exclusive sales representative) on all sales or
renewals of internet related products sold under that relationship. This
arrangement will last for a period of 25 years hereafter, whether or not Sam's
deals directly with Purchaser (or its affiliate) or with Webcat without
Shareholder's involvement, unless that relationship is sooner terminated or
expires; other exclusive or non-exclusive arrangements or product lines may be
added by mutual agreement.
4.9 EXCLUSIVE CUSTOMERS. Upon Webcat reaching certain sales
revenues with Sam's Wholesale Club, as detailed below, the specified fraction of
the 490 shares of Webcat being retained by Shareholder shall be sold to
Purchaser for the specified additional percentage of Purchaser Common Stock:
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Annualized run rate Additional fraction of shares Additional percentage
(based on any consecutive of Webcat to be sold by of Purchaser Common Stock
six month period) Shareholder to Purchaser in consideration
$ 2.5 - $ 5 million 1/7 6% of fully diluted*
$ 5.01 - $7.5 million 1/7 6% of fully diluted*
$ 7.51 - $ 10 million 1/7 6% of fully diluted*
$10.01 - $12.5 million 1/7 6% of fully diluted*
$12.51 - $ 15 million 1/7 6% of fully diluted*
$15.01 - $ 20 million 1/7 6% of fully diluted*
$20.01 million + 1/7 (balance) 6% of fully diluted*
(* denotes the percentage after the issuance of such block of shares as if all
options and warrants had been exercised, and all convertible securities had been
converted) provided, however, that the foregoing rights must be exercised within
one year of achievement of such sales thresholds. At and as a condition to the
Closing, Purchaser and Shareholder shall enter into a Shareholders' Agreement
substantially in the form of Exhibit "E" (the "Shareholders' Agreement").
4.10 REGISTRATION RIGHTS.
(a) Purchaser will use best efforts to have a
registration statement in respect of Purchaser Shares, along with the Warrant
Shares and the stock of new investors, as well as one million shares of
Purchaser's common stock in respect of shares potentially issuable under Section
4.9, filed with the SEC within 10 business days following the Closing, will bear
all costs of such filing and will use its commercially reasonable efforts to
cause such registration statement to become effective as soon as possible
thereafter. Webcat and Shareholder shall cooperate fully in this process.
Purchaser will use commercially reasonable efforts to keep this registration
statement effective for two years thereafter.
(b) During the two year period following the Closing, at
any time or from time to time if Purchaser proposes to file one or more
registration statements under the Securities Act with respect to an underwritten
offering by Purchaser for its own account of shares of Purchaser Common Stock
(other than (i) a registration statement on Form S-4 or S-8, or any substitute
form that is adopted by the SEC; or (ii) a registration filed in connection with
an exchange offer or the offering of securities solely to Purchaser's
then-existing security holders) (a "Piggyback Registration"), Purchaser will
give notice of such proposed filing to Shareholder as soon as practicable, and
such notice will offer Shareholder the opportunity to register such number of
shares of Purchaser's Common Stock received by Shareholder hereunder as
Shareholder may request (which request must be made in writing and shall specify
(i) the legal name of Shareholder, (ii) the number of such shares to be
registered, (iii) the intended methods of disposition thereof, and (iv) the
nature of any position, office or other material relationship Shareholder or any
affiliate thereof has had within the past three years with Purchaser or any of
its predecessors or affiliates). Notwithstanding any provision hereof to the
contrary, Purchaser shall not be required to include such shares in the
securities to be registered pursuant to a registration statement on any form
that limits the amounts of securities that may be registered by the issuer if,
and to the extent that, such inclusion would make the use of such form
unavailable.
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Purchaser will use its commercially reasonable efforts to cause the managing
underwriter(s) of such proposed underwritten offering to permit the particular
shares requested to be included in a Piggyback Registration to be included on
the same terms and conditions as the identical securities, if any, of Purchaser
included therein; and will use its commercially reasonable efforts to cause such
managing underwriter(s) to permit the sale or other disposition of such shares
in accordance with Shareholder's intended method of distribution thereof.
Shareholder will have the right to withdraw its request for inclusion of such
shares in any registration statement pursuant to this provision by giving
written notice to Purchaser of such withdrawal at least 10 business days prior
to the date on which the SEC declares effective the registration statement for
such Piggyback Registration. Purchaser may withdraw such registration statement
at any time prior to the time it becomes effective, provided that it gives
notice of such withdrawal to Shareholder and, unless Shareholder has withdrawn
its request as aforesaid, will reimburse Shareholder for all reasonable
out-of-pocket fees and expenses incurred with respect thereto prior to
Purchaser's withdrawal (other than legal fees and expenses of counsel or other
advisors to Shareholder). Furthermore, in the event that the managing
underwriter(s) advise Purchaser that in their opinion the number of shares
requested to be included in such registration exceeds the number that can be
included in such offering without adversely affecting the marketability of the
offering or the price or other terms thereof (the "Maximum Number"), Purchaser
may limit the number of shares included in such registration to the Maximum
Number, and the shares registered will be selected in the following order of
priority: (i) first, securities Purchaser proposes to sell, and (ii) second,
shares of Purchaser's Common Stock covered by Piggyback Registration requests
and all other securities to be included in such registration of holders who have
registration rights, pro rata among such holders on the basis of the number of
shares requested to be included in such registration. Underwriting commissions
related to requested registration, and any registration expenses required to be
paid by seller under applicable law, shall not be borne by Purchaser.
Notwithstanding anything to the contrary in this provision, if Purchaser advises
the prospective seller that Purchaser has pending or is in the process of a
material transaction (including a financing transaction), the disclosure of
which would, in the good faith judgment of Purchaser's Board of Directors,
materially and adversely affect Purchaser, then Purchaser may defer the filing
of the registration statement for up to 90 days.
(c) During the two year period following the Closing, for
so long as Shareholder owns at least 1% of Purchaser's Common Stock, Shareholder
will be entitled to make one request that Purchaser effect the registration
under the Securities Act of all or a portion of Purchaser Shares received by
Shareholder hereunder (a "Demand Registration"). Shareholder's request must be
made in writing and shall specify (i) the legal name of Shareholder, (ii) the
number of such Purchaser Shares to be registered, (iii) the intended methods of
disposition thereof, and (iv) the nature of any position, office or other
material relationship Shareholder or any affiliate thereof has had within the
past three years with Purchaser or any of its predecessors or affiliates).
Shareholder will have the right to withdraw its request for registration of such
Purchaser Shares by giving written notice to Purchaser of such withdrawal at
least 10 business days prior to the date on which the SEC declares effective the
registration statement therefor. Upon a Demand Registration request, Purchaser
will use its commercially reasonable efforts to effect the prompt registration
under the Securities Act of such Purchaser Shares. Purchaser will bear
registration expenses exclusive of underwriting discounts and commissions.
Notwithstanding anything to the contrary in this provision, if Purchaser advises
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the prospective seller that Purchaser has pending or is in the process of a
material transaction (including a financing transaction), the disclosure of
which would, in the good faith judgment of Purchaser's Board of Directors,
materially and adversely affect Purchaser, then Purchaser may defer the filing
of the registration statement for up to 90 days. Such deferral shall be limited
to once every 180 days.
4.11 INTERCOMPANY LOAN. Upon Closing, Purchaser will lend $250,000
to Webcat for working capital purposes, in consideration for Webcat's demand
note, substantially in the form of Exhibit "F" (the "Webcat Demand Note"). The
use of proceeds and allocation will be mutually agreed.
4.12 JOINT OWNERSHIP OF WEBCAT TECHNOLOGY. For the purposes of this
provision, (a) "Webcat Technology" shall mean all software, source code, object
code, text, graphics, data structures, or other content at present utilized or
to be utilized in the future, on or in connection with the Webcat web site
located at the URL xxx.xxxxxxxxxxxx.xxx and any other related or successor web
sites (the "Webcat Sites"); and (b) "Intellectual Property" shall mean all
rights in and to any copyrights, patents, trademarks, trade secrets,
confidential information and all other property rights that are legally
cognizable now or in the future are embodied in the Webcat Technology. The
parties agree that all Intellectual Property shall be jointly and equally owned
by WebCat and Purchaser, whether created by Webcat or Purchaser individually or
jointly. Accordingly, each of Webcat and Purchaser hereby unconditionally and
irrevocably assigns to the other, an undivided right, title and interest that
they may hold now or may acquire in the future, in and to the Intellectual
Property, such that each such party will own and continue to own jointly an
undivided and unrestricted 50% interest in and to the Intellectual Property. In
the event that either such party has any rights in and to any Intellectual
Property that cannot be assigned as provided herein, then such party hereby
grants to the other, and its respective successors and assigns, an
unconditional, non-exclusive, worldwide, royalty-free, fully paid license or
sublicense to use such Intellectual Property without restriction. The term of
such license will be the duration of the party's rights in the Intellectual
Property which are unassignable to the other. In the event that a party has any
rights in and to any Intellectual Property that cannot be assigned, licensed or
sublicensed to the other, such party hereby irrevocably and unconditionally
waives the enforcement of all such rights, and all claims and causes of action
of any kind with respect to any of the foregoing against the other, its
distributors, customers, clients or other licensees, whether now known or
hereafter to become known and agree at the request of the other party and its
respective successors and assigns, to consent to and join in any action to
enforce such rights and to procure a waiver of such rights from the holders of
such rights. It is expressly agreed that any software or other materials,
content or information that Purchaser has developed or will develop in the
future, which is not used on or in connection with the Webcat Sites, is not
considered to be Webcat Technology and will remain the sole property of
Purchaser.
4.13 FURTHER ASSURANCES. From time to time after the Closing Date,
upon the reasonable request of any party hereto, the other party or parties
hereto shall execute and deliver or cause to be executed and delivered such
further instruments, and take such further action, as the requesting party may
reasonably request in order to effectuate fully the purposes, terms and
conditions hereof. Without limiting the generality of the foregoing, Webcat
shall use its
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commercially reasonable efforts to obtain all Consents from third Persons or
Governmental Entities required in connection with the Acquisition, and to obtain
and file as appropriate releases or terminations of all Liens, other than
Permitted Liens, required to have been disclosed by Webcat or Shareholder
hereunder.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS TO OBLIGATIONS OF WEBCAT AND SHAREHOLDER TO EFFECT
THE ACQUISITION. The obligations of Webcat and Shareholder to effect the
Acquisition shall be subject to the fulfillment at or prior to the Closing Date
of the following conditions:
(a) Purchaser shall have performed in all material
respects its agreements contained herein required to be performed at or prior to
the Closing Date, and the representations and warranties of Purchaser contained
herein shall be true when made and (except for representations and warranties
made as of a specified date, which need only be true as of such date) at and as
of the Closing Date as if made at and as of such time, except as contemplated
hereby;
(b) Purchaser shall have obtained all of the Consents, if
any, listed on Schedule 5.1(b);
(c) there shall have been delivered to the applicable
counterparty at the Closing, duly executed by Purchaser (or, if applicable, by
Webcat), the Consulting Agreement, and the Non-Solicitation and Confidentiality
Agreements;
(d) the appropriate officers of Purchaser shall have
executed and delivered to Webcat at the Closing, Purchaser's Closing
Certificate, and Purchaser shall have delivered to Webcat a corporate
certificate of good standing for Purchaser, and a copy of the Articles of
Incorporation for Purchaser, as certified by the Secretary of State of Georgia;
and
(e) Webcat shall have received from Purchaser such other
documents as Webcat's counsel shall have reasonably requested, in form and
substance reasonably satisfactory to Webcat's counsel.
5.2 CONDITIONS TO OBLIGATIONS OF PURCHASER TO EFFECT THE
ACQUISITION. The obligations of Purchaser to effect the Acquisition shall be
subject to the fulfillment, at or prior to the Closing Date, of the following
conditions:
(a) Webcat and Shareholder shall have performed in all
material respects their respective agreements contained herein required to be
performed at or prior to the Closing Date, and the representations and
warranties of Webcat and Shareholder contained herein shall be true when made
and (except for representations and warranties made as of a specified date,
which need only be true as of such date) at and as of the Closing Date as if
made at and as of such time, except as contemplated hereby;
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(b) the appropriate respective officers of Webcat and
Shareholder shall have executed and delivered to Purchaser at the Closing,
closing and incumbency certificates, substantially in the form of Exhibits "G-1"
and "G-2", respectively, and Webcat shall have delivered to Purchaser a
corporate certificate of good standing for Webcat, as certified by the
Comptroller of Public Accounts of the State of Texas, and a copy of the Articles
of Incorporation for Webcat, as certified by the Secretary of State of Texas;
(c) Webcat and Shareholder shall have obtained or caused
to be obtained all of the Consents, if any, listed on Schedule 5.2(c);
(d) there shall have been delivered to Purchaser at the
Closing, duly executed by the applicable counterparty(ies), the Consulting
Agreement, the Individual Agreements, the Non-Solicitation and Confidentiality
Agreements, the Shareholders' Agreement and the Webcat Demand Note;
(e) Purchaser shall have received from Webcat or
Shareholder, as the case may be, such other documents as Purchaser's counsel
shall have reasonably requested, in form and substance reasonably satisfactory
to Purchaser's counsel, including an intellectual property rights assignment
agreement with WW Exchange, Inc. and a disk containing all of the source code;
(f) Purchaser shall have obtained the proceeds of its
further financing on commercially reasonable terms at least in an amount
sufficient to consummate the transactions contemplated hereby and to fund the
Closing Date working capital needs of Purchaser, including the intercompany loan
referred to in Section 4.11; and
(g) Purchaser shall have received evidence satisfactory
to it that at the Closing the assets and properties used in the Webcat Business
and the Stock are free and clear of all Liens other than Permitted Liens.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY PURCHASER.
(a) Purchaser shall indemnify and hold Shareholder and
Webcat's directors, officers and employees (collectively, the "Webcat
Indemnified Parties") harmless from and against, and agrees promptly to defend
each of the Webcat Indemnified Parties from and reimburse each of the Webcat
Indemnified Parties for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including reasonable attorney's
fees and other legal costs and expenses) (singularly, a "Webcat Loss" or,
collectively, the "Webcat Losses") that any of the Webcat Indemnified Parties
may at any time suffer or incur, or become subject to, as a result of or in
connection with:
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(i) any breach or inaccuracy of any of
the representations and warranties made by Purchaser in or pursuant hereto, or
in any instrument, certificate or affidavit delivered by Purchaser at the
Closing in accordance with the provisions hereof;
(ii) any failure by Purchaser to carry
out, perform, satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations hereunder or under any of the documents
and materials executed and delivered by Purchaser pursuant hereto; and
(iii) any suit, action or other proceeding
arising out of, or in any way related to, any of the matters referred to in this
Section 6.1(a).
(b) Notwithstanding any other provision hereof to the
contrary, Purchaser shall not have any liability under Section 6.1(a)(i) above
(i) unless the aggregate of all Webcat Losses for which Purchaser would be
liable but for this sentence exceeds, on a cumulative basis, an amount equal to
$25,000 (the "Basket"), and then only to the extent of such excess, (ii) for
amounts in excess of $1.5 million (the "Cap"), in the aggregate, and (iii)
unless Shareholder has asserted a claim with respect to the matters set forth in
Section 6.1(a)(i), or 6.1(a)(iii) to the extent applicable to Section 6.1(a)(i),
within 12 months of the Closing Date.
6.2 INDEMNIFICATION BY SHAREHOLDER.
(a) Shareholder shall indemnify and hold Purchaser and
its shareholders, directors, officers and employees (collectively, the
"Purchaser Indemnified Parties") harmless from and against, and agrees to defend
promptly each of Purchaser Indemnified Parties from and reimburse each of
Purchaser Indemnified Parties for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including reasonable attorneys'
fees and other legal costs and expenses) (singularly, a "Purchaser Loss" or,
collectively, the "Purchaser Losses") that any of Purchaser Indemnified Parties
may at any time suffer or incur, or become subject to, as a result of or in
connection with:
(i) any breach or inaccuracy of any of
the representations and warranties made by Shareholder or Webcat in or pursuant
hereto, or in any instrument, certificate or affidavit delivered by any of the
same at the Closing in accordance with the provisions hereof;
(ii) any failure by Webcat or
Shareholder to carry out, perform, satisfy and discharge any of their respective
covenants, agreements, undertakings, liabilities or obligations hereunder or
under any of the documents and materials executed and delivered by any of them
pursuant hereto; and
(iii) any suit, action or other
proceeding arising out of, or in any way related to, any of the matters referred
to in this Section 6.2(a).
(b) Notwithstanding the above, Shareholder shall not have
any liability under Section 6.2(a)(i) above (i) unless the aggregate of all
Purchaser Losses for which Shareholder would be liable but for this sentence
exceeds, on a cumulative basis, an amount equal to the Basket, and then only to
the extent of such excess, (ii) for amounts in excess of the Cap, in the
aggregate,
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and (iii) unless Purchaser has asserted a claim with respect to the matters set
forth in Sections 6.2(a)(i), or 6.2(a)(iii) to the extent applicable to Section
6.2(a)(i), within 12 months of the Closing Date, except with respect to the
matters arising under Sections 2.18(a), 2.19, 2.20 or 2.24, in which event
Purchaser must have asserted a claim within the applicable statute of
limitations; provided, however, that notwithstanding the foregoing clauses (i)
and (ii), neither the Basket nor the Cap shall apply to or limit any liability
relating to the Software Development Agreement, regardless of whether that
contract, or any litigation or threat thereof, is disclosed in connection
herewith.
6.3 NOTIFICATION OF CLAIMS; ELECTION TO DEFEND.
(a) A party entitled to be indemnified pursuant to
Section 6.1 or 6.2, as the case may be (the "Indemnified Party"), shall notify
the party liable for such indemnification (the "Indemnifying Party") in writing
of any claim or demand (a "Claim") that the Indemnified Party has determined has
given or could give rise to a right of indemnification hereunder. Subject to the
Indemnifying Party's right to defend in good faith third party claims as
hereinafter provided, the Indemnifying Party shall satisfy its obligations under
this Article VIII within 30 days after the receipt of written notice thereof
from the Indemnified Party. Any amounts paid thereafter shall include interest
thereon for the period commencing at the end of such 30-day period and ending on
the actual date of payment, at a rate of 10% per annum, or, if lower, at the
highest rate of interest permitted by applicable law at the time of such
payment.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any Claim pursuant to Section 6.3(a), and if such Claim
relates to a Claim asserted by a third party against the Indemnified Party that
the Indemnifying Party acknowledges is a Claim for which it must indemnify or
hold harmless the Indemnified Party under Section 6.1 or 6.2, as the case may
be, then the Indemnifying Party shall have the right, at its sole cost and
expense, to employ counsel reasonably acceptable to the Indemnified Party to
defend any such Claim asserted against the Indemnified Party. Notwithstanding
anything to the contrary in the preceding sentence, if the Indemnified Party (i)
reasonably believes that its interests with respect to a Claim (or any material
portion thereof) are in conflict with the interests of the Indemnifying Party
with respect to such Claim (or portion thereof) and (ii) promptly notifies the
Indemnifying Party, in writing, of the nature of such conflict, then the
Indemnified Party shall be entitled to choose, at the sole cost and expense of
the Indemnifying Party, independent counsel to defend such Claim (or the
conflicting portion thereof). The Indemnified Party shall have the right to
participate in the defense of any Claim, at its own expense (except to the
extent provided in the preceding sentence), but the Indemnifying Party shall
retain control over such litigation (except as provided in the preceding
sentence). The Indemnifying Party shall notify the Indemnified Party in writing,
as promptly as possible (but in any case before the due date for the answer or
response to a Claim) after receipt of the notice of Claim given by the
Indemnified Party to the Indemnifying Party under Section 6.3(a), of its
election to defend in good faith any such third party Claim. For so long as the
Indemnifying Party is defending in good faith any such Claim asserted by a third
party against the Indemnified Party, the Indemnified Party shall not settle or
compromise such Claim without the prior written consent of the Indemnifying
Party. The Indemnified Party shall cooperate with the Indemnifying Party in
connection with any such defense and shall make available to the Indemnifying
Party or its agents all records and other materials in the Indemnified Party's
possession reasonably required by
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the Indemnifying Party for its use in contesting any third party Claim;
provided, however, that the Indemnifying Party shall have agreed, in writing, to
keep such records and other materials confidential except (i) to the extent
required for defense of the relevant Claim, or (ii) as required by law, rule or
regulation or court order. Whether or not the Indemnifying Party elects to
defend any such Claim, the Indemnified Party shall have no obligation to do so.
Within 30 days after a final determination (including a settlement) has been
reached with respect to any Claim contested pursuant to this Section 6.3(b), the
Indemnifying Party shall satisfy its obligations hereunder with respect thereto.
Any amount paid thereafter shall include interest thereon for the period
commencing at the end of such 30-day period and ending on the actual date of
payment, at a rate of 10% per annum, or, if lower, at the highest rate of
interest permitted by applicable law at the time of such payment. If the
Indemnifying Party has assumed the defense of a third party Claim in accordance
with this Section 6.3, then the Indemnifying Party shall have the right to
settle such Claim, provided that (i) it is solely for money damages and (ii) the
Indemnifying Party has made arrangements for the payment of such damages in a
manner reasonably satisfactory to the Indemnified Party. Notwithstanding the
foregoing, if the Indemnifying Party does not receive timely notice of a third
party Claim, then its obligations to indemnify terminate to the extent that it
has been materially and irrevocably prejudiced thereby.
6.4 DETERMINATION OF LOSS AND AMOUNT. For purposes of determining
whether any Loss has occurred, or the amount of any such Loss, the
representations, warranties, covenants and agreements of the parties set forth
herein or in any other instrument, certificate or affidavit delivered in
connection herewith shall be considered without regard to any materiality or
knowledge qualifier set forth herein or therein.
6.5 REMEDY. Indemnification shall be the exclusive post-Closing
remedy hereunder.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual written consent of Purchaser and
Shareholder;
(b) by Shareholder, upon a material breach hereof on the
part of Purchaser which has not been cured and which would cause any condition
set forth in Section 5.1 to be incapable of being satisfied by November 1, 2000;
(c) by Purchaser, upon a material breach hereof on the
part of Webcat or Shareholder which has not been cured and which would cause any
condition set forth in Section 5.2 to be incapable of being satisfied by
November 1, 2000;
(d) by Purchaser or Webcat if any court of competent
jurisdiction shall have issued, enacted, entered, promulgated or enforced any
order, judgment, decree, injunction or ruling
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which restrains, enjoins or otherwise prohibits the Acquisition and such order,
judgment, decree, injunction or ruling shall have become final and
nonappealable; or
(e) by either Purchaser or Webcat if the Acquisition
shall not have been consummated on or before November 1, 2000 (provided the
terminating party is not otherwise in material breach of its representations,
warranties or obligations hereunder).
7.2 FEES AND EXPENSES.
(a) Whether or not the Acquisition is consummated, all
costs and expenses incurred in connection herewith and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses; provided, however, that Shareholder shall pay all fees and expenses
(including agents, counsel and other advisors) of Webcat and itself.
(b) If the Acquisition is not consummated because of a
material breach hereof by any party, then the nonbreaching party or parties
shall be entitled to pursue all legal and equitable remedies against the
breaching party for such breach, including (as to Purchaser, in addition to its
remedies at law or otherwise in equity) specific performance, and all fees and
expenses incurred by the nonbreaching party or parties in connection with
enforcing its or their rights hereunder with respect to such breach shall be
paid by the breaching party.
(c) Webcat and Shareholder hereby acknowledge that
Webcat, the Webcat Business, properties and assets, and the Stock are unique,
and that Purchaser has no adequate remedy at law if Webcat or Shareholder
materially breaches this Agreement; and Purchaser is therefore entitled to bring
an action for specific performance hereof, and Webcat and Shareholder agree that
they shall not contest any such action on the grounds that Purchaser has an
adequate remedy at law.
7.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
7.4 WAIVER. At any time prior to the Closing Date, the parties
hereto may, to the extent permitted by applicable law, (i) extend the time for
the performance of any of the obligations or other acts of any other party
hereto, (ii) waive any inaccuracies in the representations and warranties by any
other party contained herein or in any documents delivered by any other party
pursuant hereto and (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 SURVIVAL; RECOURSE. None of the agreements contained herein
shall survive the Acquisition, except that (i) the covenants contained in
Article IV and the obligations to indemnify
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contained in Article VI shall survive the Acquisition indefinitely (except to
the extent a shorter period of time is explicitly specified therein) and (ii)
the representations and warranties made in Articles II and III shall survive the
Acquisition, and shall survive any independent investigation by the parties, and
any dissolution, merger or consolidation of Webcat or Purchaser, and shall bind
the legal representatives, assigns and successors of Webcat, Shareholder and
Purchaser, for a period of 12 months after the Closing Date (other than the
representations and warranties contained in Sections 2.18(a), 2.19, 2.20 and
2.24, which shall survive for the applicable statute of limitations).
8.2 NOTICES. All notices or other communications hereunder shall
be in writing and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in Person, by fax (with confirmation of receipt), by
recognized overnight delivery service or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to Webcat or Shareholder: C/o Webcat Online Inc.
00000 Xxxx Xxxxxxx Xx.
Xxxxxx, XX 00000
Attention: Xx. Xxx Xxxxxx and Mr. Xxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Gardere & Xxxxx, LLP
0000 Xxx Xx., Xxx. 0000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx and Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to Purchaser: sTupidPC, Inc.
0000 Xxxxx Xxxx Xx., Xxx. X
Xxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Red Hot Law Group of Ashley LLC
000 Xxxx Xxxxxxxxx Xx., Xxx. 000
Xxxxxxx, XX 00000
Attention: Xxxx Siavage and Xxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
8.3 ENTIRE AGREEMENT. The exhibits and schedules hereto are
incorporated herein by reference. This Agreement and the documents, schedules
and instruments referred to herein and to
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be delivered pursuant hereto constitute the entire agreement between the parties
pertaining to the subject matter hereof, and supersede all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof. There are no other
representations or warranties, whether written or oral, between the parties in
connection the subject matter hereof, except as expressly set forth herein.
8.4 ASSIGNMENTS; PARTIES IN INTEREST. Neither this Agreement nor
any of the rights, interests or obligations hereunder may be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, which consent shall not be unreasonably
withheld. Subject to the preceding sentence, this Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing herein,
express or implied, is intended to or shall confer upon any Person not a party
hereto any right, benefit or remedy of any nature whatsoever under or by reason
hereof, except as otherwise provided herein.
8.5 GOVERNING LAW. This Agreement, shall be governed in all
respects by the laws of the State of Georgia (without giving effect to the
provisions thereof relating to conflicts of law).
8.6 HEADINGS; INTERPRETATION; INCORPORATION. The descriptive
headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation hereof. Words
such as "herein," "hereof," "hereto," "hereunder" or the like shall refer to
this Agreement as a whole. The words "include" or "including" shall be by way of
example rather than by limitation. The words "or," "either" or "any" shall not
be exclusive. Any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms. The parties hereto have participated jointly in the
negotiation and drafting hereof; accordingly, no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship
hereof. References to Sections, Articles, Schedules or Exhibits shall, unless
the context otherwise requires, be to Sections, Schedules or Exhibits hereof.
The Schedules and Exhibits hereto are incorporated herein by reference.
8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including by fax, each of which shall be deemed an original but
all of which taken together shall constitute a single agreement.
8.8 SEVERABILITY. If any term or other provision hereof is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, then all other conditions and provisions hereof shall nevertheless
remain in full force and effect so long as the economics or legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon determination that any term or other provision hereof
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
8.9 CERTAIN DEFINITIONS. As used herein:
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(a) the term "Permitted Liens" shall mean (a) Liens for
taxes, assessments or other governmental charges or levies not yet due; (b)
statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law created in the ordinary course of
business for amounts not yet due; (c) Liens (other than any Lien imposed by
ERISA) incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other types of
social security; (d) minor defects of title, easements, rights-of-way,
restrictions and other similar charges or encumbrances not materially detracting
from the value of the Webcat Real Property or interfering with the ordinary
conduct of any of the Webcat Business; and (e) those Liens listed on Schedule
8.9;
(b) (i) any representation or warranty stated to be made
"to the knowledge" of a party shall refer to such party's actual knowledge and
also to knowledge that a reasonably prudent business person would have had; and
(ii) any representation or warranty stated to be made "to the knowledge of
Webcat" shall refer to the knowledge, subject to clause (i) above, of
Shareholder, Xxx Xxxxxx or Xxxx Xxxxxx; and
(c) the term "subsidiary" or "subsidiaries" means, any
Entity of which the relevant party (either alone or through or together with any
other subsidiary) owns, directly or indirectly, stock or other equity interests
the holders of which are entitled to more than 50% of the vote for the election
of the board of directors or other governing body of such Entity.
- SIGNATURES ON THE FOLLOWING PAGE -
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IN WITNESS WHEREOF, Purchaser, Webcat and Shareholder have caused this
Agreement to be signed and delivered by their respective duly authorized
officers as of the date first written above.
"WEBCAT"
WEBCAT ONLINE, INC.
By: /s/
-------------------------------------------
Name:
-----------------------------------------
Title: CEO
----------------------------------------
"PURCHASER"
STUPIDPC, INC.
By: /s/ Xxxx Xxxxxxx
-------------------------------------------
Name: Xxxx Xxxxxxx
-----------------------------------------
Title: President/CEO
----------------------------------------
"SHAREHOLDER"
TRUCO ENTERPRISES, INC.
By: /s/
-------------------------------------------
Name:
-----------------------------------------
Title: CEO
----------------------------------------
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Schedule 2.1
States Where Qualified to do Business
1. Texas
33
Schedule 2.5
Conflicts, Filings and Consents
Third party consents required (and being sought by Shareholder and Webcat):
1. Assignment of Commercial Lease for office space at 00000 Xxxx
Xxxxxxx Xx., Xxxxxx, XX, from Truco Enterprises, Inc. to Webcat Online, Inc.
2. Assignment of Quick Lease Agreement for computer equipment leased from
IBM Credit Corporation, from Truco Enterprises, Inc. to Webcat Online, Inc.
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Schedule 2.7
Absence of Changes
NONE
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Schedule 2.8
Undisclosed Liabilities - Exceptions
a) Promissory Note for $22,790.00, dated July 31, 2000, between
the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
b) Promissory Note for $39,906.59, dated June 30, 2000, between
the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
c) Promissory Note for $22,474.48, dated May 31, 2000, between
the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
d) Promissory Note for $50,420.14, dated April 30, 2000, between
the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
e) Promissory Note for $60,132.78, dated March 31, 2000, between
the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
f) Promissory Note for $33,407.43, dated February 29, 2000,
between the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
g) Promissory Note for $31,365.16, dated January 31, 2000,
between the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
h) Promissory Note for $56,836.80, dated December 31, 1999,
between the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
i) Promissory Note for $15,948.12, dated November 30, 1999,
between the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
j) Promissory Note for $38,544.73, dated October 31, 1999,
between the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
k) Promissory Note for $20,397.98, dated September 30, 1999,
between the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
l) Promissory Note for $53,291.91, dated August 31, 1999,
between the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
m) Promissory Note for $48,234.59, dated July 31, 1999, between
the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
n) Promissory Note for $25,468.80, dated August 31, 2000,
between the Company ("Promisor") and Truco Enterprises, Inc. ("Payee").
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Schedule 2.9
Title to Properties - Exceptions
1. Lease between IBM Credit Corporation and Truco Enterprises, Inc, dated
February 4, 1998. Lease is for various computer equipment being used by Webcat.
2. Equipment Lease Agreement between Webcat Online, Inc., and The Manifest
Group, dated September 29, 1999. Lease is for various computer equipment being
used by Webcat.
37
Schedule 2.10
Equipment List
See attached Fixed Asset Listing
38
Schedule 2.11(a)
Intellectual Property Rights
NONE
39
Schedule 2.11(b)
Software
DRPPG - PHYSICIANS
MINIWEBCAT
SUPERWEBCAT
HUBFINDER
SOMWBA FINDER
QISV
TRA
40
Schedule 2.11(c)
Domain Names
- xxxxxxxxxxxx.xxx
- xxxxxxxxxx.xxx
- xxxxxxxxxxx.xxx
- xxxxxxxxxxxx.xxx
- xxxxxxxxxxxxxxx.xxx
- xxxxxxxxxx.xxx
- xxxxxxxxxxxxx.xxx
- xxxxxxxxxxxxxxxx.xxx
- xxxxxxxxxxxx.xxx
- xxxxxxxxxxxxxxx.xxx
- xxxxxxxxxxxx.xxx
41
Schedule 2.11(d)
Exceptions to Protection of Intellectual Property
The following current and former employees never signed any confidentiality
agreements with Webcat Online, Inc.:
- Xxxxxx Xxxxx
- Xxxxx Xxxx
- Xxxxx Xxxxxxxxx
- Xxx Xxxxxxx
- Xxx Xxxxxxx
- Xxxxx Xxxxxx
- Xxxx XxXxxx
- Xxxx Xxxxx
- Xxxxx Xxxxx
- Xxx Xxxxx
- Xxxxx Xxxxxxx, III
- Xxx Xxxx
- Xxxxx Xxxx
- Xxx Xxxxxxx
42
Schedule 2.12
Real Property
NONE
43
Schedule 2.13
Webcat Online, Inc. Leases
1. Commercial Lease for office space at 00000 Xxxx Xxxxxxx Xxxxx, Xxxxxx,
Xxxxx, 00000, between Truco Enterprises, Inc. and Warehouse Properties, dated
November 17, 1998.
2. Quick Lease Agreement for computer equipment between Truco Enterprises,
Inc. and IBM Credit Corporation, dated February 4, 1998.
3. Equipment Lease Agreement for computer equipment between Webcat Online,
Inc. and The Manifest Group, dated September 29, 1999.
44
Schedule 2.14
Webcat Online, Inc. Contracts
1. Access Service Agreement and Service Order between Webcat Online, Inc.
and Verio, Inc.
2. Quick Lease Agreement for computer equipment between Truco Enterprises,
Inc. and IBM Credit Corporation, dated February 4, 1998.
3. Commercial Lease for office space at 00000 Xxxx Xxxxxxx Xxxxx, Xxxxxx,
Xxxxx, 00000, between Truco Enterprises, Inc. and Warehouse Properties, dated
November 17, 1998.
4. Equipment Lease Agreement for computer equipment between Webcat Online,
Inc. and The Manifest Group, dated September 29, 1999.
5. Agreement between Truco Enterprises, Inc. and Webcat Online, Inc.
regarding website hosting.
45
Schedule 2.15
Officers and Directors
Xxx X. Xxxxxx CEO, Secretary and Director
Xxxxx X. Silver President and Director
46
Schedule 2.16
Extraordinary Compensation
NONE
47
Schedule 2.17
Litigation
NONE
48
Schedule 2.18
Employee Benefit Plans/Labor Relations
1. Truco Enterprises 401(k)
2. Truco Enterprises 125 Cafeteria Plan
3. Truco Humana Employers Health Plan
4. Disability & ADD insurance
49
Schedule 2.19
ERISA
NONE
50
Schedule 2.20
Taxes - Exceptions
NONE
51
Schedule 2.21
Permits
1. Texas Sales and Use Tax Permit, Taxpayer Number 1-75-2724796-3.
52
Schedule 2.23
Brokers
1. Xxxxx Xxxxxxxxx
53
Schedule 2.25
Interest in Customers, Suppliers, Competitors
NONE
54
Schedule 2.28
Insurance
1. Atlantic Mutual Policy #40-15-13
2. Association Casualty Insurance Policy Number AC-WC-017231
55
Schedule 3.3
Conflicts, Filings, Consents
1. Board of Directors of sTupidPC, Inc. (subsection d)
2. The Webcat Stock is being pledged to one or more investors in sTupidPC,
Inc. in connection with financing of the Acquisition.
56
Schedule 3.4
Litigation
1. Highwoods Realty Limited Partnership v. sTupidPC, Inc., Case No.
00CVD7341, General Court of Justice, District Court Division, Forsyth County,
North Carolina. Plaintiff is claiming damages in excess of $123,000 for breach
of a Lease Agreement, dated November 12, 1999.
57
Schedule 3.5
Brokers
NONE
58
Schedule 3.7
Disclosure of Certain Information
1. Although correctly reflected in the Company's Form SB-2, the notes to
the auditors' financial statements in its most recent Forms 10K-SB and 10Q-SB do
not reflect the authorized capital structure as set forth in the Company's
Revised and Restated Articles of Incorporation (attached to the Company's
Closing Certificate).
59
Schedule 5.1(b)
Consents Required for Closing
1. sTupid PC, Inc. Board of Directors
60
Schedule 5.2(c)
Consents
1. Board of Directors of Truco Enterprises, Inc.
2. Board of Directors of Webcat Online, Inc.
61
Schedule 8.9
Permitted Liens
NONE
62
EXHIBIT "A"
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH STATE LAWS. NEITHER THIS WARRANT NOR
THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED,
ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND SUCH STATE LAWS OR IN A TRANSACTION WHICH
IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND SUCH
STATE LAWS.
STUPIDPC, INC.
STOCK PURCHASE WARRANT
COMMON STOCK
Warrant No. __ Atlanta, GA
Original Issue Date: September __, 2000 500,000 shares
THIS CERTIFIES THAT, FOR VALUE RECEIVED, TRUCO ENTERPRISES, INC., a
Texas corporation (the "Holder"), is entitled, subject to the terms and
conditions hereof, any time or from time to time on or after the Original Issue
Date set forth above until 5:00 p.m., Eastern Time, on the tenth anniversary of
the Original Issue Date set forth above, or if such date is not a day on which
the Company is open for business, then the next succeeding day on which the
Company is open for business (such date is the "Expiration Date"), but not
thereafter, to purchase up to Five Hundred Thousand shares of the no par value
Common Stock ("Common Stock") of STUPIDPC, INC., a Georgia corporation (the
"Company"), at the price of $1.00 per share (the "Exercise Price"), such number
of shares and Exercise Price being subject to adjustment upon the occurrence of
the contingencies set forth in this Warrant. The shares of Common Stock issuable
from time to time upon exercise hereof are sometimes referred to herein as the
"Warrant Shares."
This Warrant is subject to the following additional terms and
conditions:
SECTION 1.1 VESTING OF WARRANT. This Warrant is granted in
consideration of the extinguishment of $500,000 of debt of Webcat Online, Inc.
to the Holder. The Warrant Shares granted under this Warrant are, subject to the
other provisions hereof, fully vested and exercisable.
SECTION 1.2 TRANSFERABILITY AND AUTHORIZATION.
(a) Restrictions on Transfer; Registration of Transfers and
Exchanges. Notwithstanding any implication to the contrary contained herein, the
Warrant may not be transferred by Holder prior to exercise, and any attempt to
transfer the Warrant shall be void and of no force and effect. Prior to any
proposed transfer of the Warrants or the Warrant Shares, unless such transfer is
made pursuant to an effective registration statement under the Securities Act,
the transferring Holder shall deliver to the Company an opinion of counsel,
reasonably satisfactory in form and substance to the Company, to the effect that
the Warrants or Warrant Shares, as applicable, may be sold or otherwise
transferred without registration under the Securities Act and applicable state
laws. No Warrants may be transferred to any successor
63
holder unless the issuance of Warrant Shares to such holder upon the exercise of
such Warrants would be exempt from registration under the Securities Act.
Notwithstanding the foregoing, each holder of Warrants or Warrant Shares agrees
that it shall not transfer such securities for 180 days after any public
offering of Common Stock (or security convertible into Common Stock) by the
Company unless the managing underwriter for such offering decides such
restriction is unnecessary, and each holder agrees to execute any agreement or
document reasonably requested by any such underwriter which relates to such
restriction.
Subject to the foregoing, upon any registration of transfer, a new
Warrant shall be issued to the transferee holder(s) and the surrendered Warrant
shall be canceled and disposed of by the Company.
(b) Authorization of Shares. All shares of Common Stock that may be
issued upon the exercise of rights represented by this Warrant will be, upon
exercise of this Warrant in accordance with Section 2 hereof, duly authorized,
validly issued, fully paid and nonassessable, and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue). The Company will, until
the earlier of exercise of this Warrant or the Expiration Date, reserve the
number of Warrant Shares required to satisfy its obligation hereunder.
SECTION 2. EXERCISE OF WARRANT.
(a) Exercise Notice. This Warrant may, at the option of the holder, be
exercised in whole or in part from time to time by delivering to the Company at
its principal business office, to the attention of the Chief Executive Officer,
or to any transfer agent for the Common Stock, on or before 5:00 p.m., Eastern
Time, on the Expiration Date, (i) a written notice of such holder's election to
exercise this Warrant (the "Exercise Notice"), which notice may be in the form
of the Notice of Exercise attached hereto, properly executed and completed by
the holder or, if applicable, an authorized officer thereof; (ii) the aggregate
exercise price, payable at the holder's election (A) in cash, by certified or
official bank check payable to the order of the Company, in an amount equal to
the product of the Exercise Price MULTIPLIED BY the number of Warrant Shares
specified in the Exercise Notice, (B) by delivering for surrender and
cancellation to the Company, such portion of this Warrant with an aggregate
Surrender Value (as hereinafter defined), as of the date of such exercise, equal
to such product, or (C) through any combination thereof; and (iii) this Warrant
(the items specified in (i), (ii) and (iii) are collectively the "Exercise
Materials"). If a mutilated Warrant is surrendered to the Company, or if the
holder claims and submits an affidavit or other evidence satisfactory to the
Company to the effect that the Warrant has been lost, destroyed or wrongfully
taken, then the Company will issue a replacement Warrant Certificate; provided,
however, that the Company may reasonably require that any such holder must
furnish an indemnity bond, or other form of indemnity, sufficient in the
reasonable judgment of the Company to protect the Company from any loss that it
may suffer if a Warrant is replaced in such circumstances. For purposes of
clause (ii) above, the "Surrender Value" of this Warrant is equal to the Fair
Market Value, as of the date of such surrender, of the Warrant Shares issuable
upon the exercise hereof, MINUS the aggregate Exercise Price of this Warrant;
and such "Fair Market Value" means (x) if shares of the Common Stock are then
listed or admitted to trading on any national securities exchange or traded on
any national market system, the average of the daily closing prices for the 20
trading days before such date; (y) if no shares of Common Stock are then listed
or admitted to trading on any national securities exchange or traded on any
national market system, the average of the reported closing bid and asked prices
thereof on such date in the over-the-counter market as shown by the Nasdaq Stock
Market or, if such shares are not then quoted in such system, as published by
the National Quotation Bureau, Incorporated or any similar successor
organization, and in either case as reported by any member firm of the New York
Stock Exchange selected by the Company; or (z) if no shares of Common Stock are
then listed or admitted to trading on any national securities exchange or traded
on any national market system,
64
if no closing bid and asked prices thereof are then so quoted or published in
the over-the-counter market, the Fair Market Value of a Warrant Share as
determined in good faith by the Company's Board of Directors.
(b) Effective Date. Upon timely receipt of the Exercise Materials, the
Company will, as promptly as practicable, execute or cause to be executed and
delivered to the holder one or more certificates representing the number of
Warrant Shares specified in the Exercise Notice, together with cash in lieu of
any fraction of a share, and (x) if the Warrant is exercised in full, a copy of
this Warrant marked "Exercised" or (y) if the Warrant is partially exercised, a
copy of this Warrant marked "Partially Exercised" together with a new Warrant on
the same terms for the unexercised balance of the Warrant Shares. The stock
certificate(s) shall be registered in the name of the holder of this Warrant or
such other name or names as shall be designated in the Exercise Notice in
accordance herewith. The date on which the Warrant shall be deemed to have been
exercised (the "Effective Date"), also being the date on which the person or
entity in whose name any certificate evidencing the Common Stock issued upon the
exercise hereof is issued shall be deemed to have become the holder of record of
such shares, shall be the date the Company receives the Exercise Materials,
irrespective of the date of delivery of the stock certificate(s), except that,
if such date is not a business day of the Company, then the Effective Date shall
be the next succeeding such business day.
SECTION 3. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. If the
Company (1) pays a dividend or makes a distribution on its Common Stock in
shares of its stock, (2) subdivides or reclassifies its outstanding shares of
Common Stock into a greater number of shares, (3) combines or reclassifies its
outstanding shares of Common Stock into a smaller number of shares, or (4)
issues by reclassification of its Common Stock any shares of its capital stock
(other than reclassification arising solely as a result of a change in the par
value or no par value of the Common Stock), then the number of Warrant Shares
issuable hereunder and the Exercise Price in effect immediately prior to such
action shall be proportionately adjusted so that the holder of any Warrant
thereafter exercised shall receive the aggregate number and kind of shares of
capital stock of the Company which it would have received immediately following
such action if such Warrant had been exercised immediately prior to such action
for the same aggregate consideration that such holder would have paid if such
Warrant had been exercised immediately prior to such action. The adjustment
shall become effective immediately after the record date in the case of a
dividend or distribution and immediately after the effective date in the case of
a subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur. The Company shall not
issue shares of Common Stock as a dividend or distribution on any class of
capital stock other than Common Stock unless (i) the Warrant holder also
receives such dividend or distribution on a ratable basis or (ii) the
appropriate adjustment to the number of Warrant Shares issuable hereunder and
Exercise Price is made under this Section 3.
SECTION 4. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION OR MERGER.
(a) Reclassification or Reorganization. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company that does not constitute a Mandatory Exercise
Transaction as defined in Section 4(b) (a "Conversion Transaction"), the Company
shall, as a condition precedent to any such Conversion Transaction, cause
effective provisions to be made so that Holder shall have the right thereafter
by exercising this Warrant, at any time prior to the Expiration Date, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon the consummation of such Conversion Transaction by a
holder of the number of shares of Common Stock which might have been purchased
upon exercise of this Warrant immediately prior to such Conversion Transaction.
Any such provision shall include provision for adjustments that will be as
nearly equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions will similarly
65
apply to successive Conversion Transactions. Notwithstanding any implication to
the contrary, any transaction that constitutes a Mandatory Exercise Transaction
under Section 4(b) shall not be deemed to constitute a Conversion Transaction.
(b) Mandatory Exercise of Warrant Rights. For so long as this Warrant
shall be outstanding, if the Company proposes to enter into a Mandatory Exercise
Transaction (as hereinafter defined), then in any such case, the Company will
cause to be mailed to the holder, at the address of such holder as shown on the
books of the Company, at least 20 days prior to the date such proposed Mandatory
Exercise Transaction is to be effectuated, a notice containing (i) a brief
description of the proposed Mandatory Exercise Transaction; and (ii) the date
upon which such proposed Mandatory Exercise Transaction is to take place. The
failure to give such notice, however, shall not affect the validity of any
proposed Mandatory Exercise Transaction for which the notice was required to be
given but shall relieve the holder of its obligation to exercise its warrants
pursuant to this provision. During the period beginning on the date of the
Company's giving of such notice and ending on the date which is five days prior
to the date upon which such proposed Mandatory Exercise Transaction is to take
place, as set forth in the notice (the "Mandatory Exercise Period"), the holder
must exercise the right, in accordance herewith, to purchase all of the Warrant
Shares which the holder is entitled to purchase hereunder. If the holder fails
to so exercise such right within the Mandatory Exercise Period, then (unless the
Company has failed to give the notice required hereunder) this Warrant shall
immediately become canceled, null and void, and of no further legal force or
effect. For purposes hereof, a "Mandatory Exercise Transaction" shall mean any
of the following: (A) any merger or consolidation of the Company with or into
any corporation or other entity that is not a wholly-owned subsidiary of the
Company, other than a merger in which the Company or a wholly-owned subsidiary
of the Company is the surviving corporation; (B) any sale or disposition of all
or substantially all of the assets of the Company to a person or entity other
than a wholly-owned subsidiary of the Company; or (C) any other transaction or
series of transactions, including stock purchases, recapitalizations,
combinations and consolidations, pursuant to which one or more third parties
acquires 80% or more of the Company.
SECTION 5. NOTICE OF ADJUSTMENTS. Upon any adjustment of the Exercise
Price and any increase or decrease in the number of shares of Common Stock
purchasable upon the exercise of this Warrant, then, and in each such case, the
Company, within 30 days after any such adjustment, shall give written notice
thereof to the registered holder of this Warrant at the address of such holder
as shown on the books of the Company, which notice shall state the Exercise
Price as adjusted and the increased or decreased number of shares issuable upon
the exercise of this Warrant, setting forth in reasonable detail the method of
calculation of each. The absence of such notice shall not be deemed to nullify
the effect of any such adjustment.
SECTION 6. CHARGES, TAXES AND EXPENSES. The Company will pay all
documentary stamp taxes and other governmental charges (excluding all foreign,
federal or state income, franchise, property, estate, inheritance, gift or
similar taxes) in connection with the issuance or delivery of the Warrant, as
well as all such taxes attributable to the initial issuance or delivery of
Warrant Shares upon the exercise of the Warrant and payment of the aggregate
Exercise Price. The Company shall not, however, be required to pay any tax that
may be payable in respect of any subsequent transfer of the Warrant or any
transfer involved in the issuance and delivery of Warrant Shares in a name other
than that in which the Warrant to which such issuance relates were registered,
and, if any such tax would otherwise be payable by the Company, no such issuance
or delivery shall be made unless and until the person requesting such issuance
has paid to the Company the amount of any such tax, or it is established to the
reasonable satisfaction of the Company that any such tax has been paid. Without
limiting the generality of the foregoing, in the event that certificates for
shares of Common Stock are requested to be issued in a name other than the name
of the holder, this Warrant when surrendered for exercise shall, subject to all
other
66
applicable conditions hereof, be accompanied by an instrument of transfer in
form and substance satisfactory to the Company, duly executed by the holder.
SECTION 7. CERTAIN OBLIGATIONS OF THE COMPANY. The Company agrees that
it will not establish or increase the par value of the shares of any Common
Stock which are issuable upon exercise of this Warrant above the then prevailing
Exercise Price hereunder and that, before taking any action which would cause an
adjustment reducing the Exercise Price hereunder below the then par value, if
any, of the shares of any Common Stock issuable upon exercise hereof, the
Company will take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and non assessable shares of Common Stock at the Exercise Price as so adjusted.
SECTION 8. MISCELLANEOUS.
(a) This Warrant shall be binding upon and shall inure to the benefit
of any successors or assigns of the Company and, subject to restrictions on
transfer described or referred to herein, of the holder and of the Common Stock
issued or issuable upon the exercise hereof. The Company shall be entitled to
deem and treat the registered holder hereof as the absolute owner of the
Warrant, including for the purpose of any exercise hereof, notwithstanding any
purported notice to the contrary.
(b) No holder of this Warrant, as such, shall be entitled to vote or
receive dividends (except as provided in Section 3 or be deemed to be a
stockholder of the Company for any purpose.
(c) This Warrant may be divided into separate Warrants covering one
Warrant Share or any whole multiple thereof, for the total number of Warrant
Shares then issuable upon exercise of this Warrant at any time, or from time to
time, upon the request of the registered holder of this Warrant and the
surrender of the same to the Company for such purpose. Such subdivided Warrants
shall be issued promptly by the Company following any such request and shall be
of the same form and tenor as this Warrant, except for any requested change in
the name of the registered holder stated herein, subject to restrictions on
transfer described or referred to herein.
(d) Section headings are for convenience of reference only. "Including"
means including, without limitation.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and delivered by its duly authorized officers and its corporate seal to be
affixed hereto, as of the Original Issue Date.
STUPIDPC, INC.,
By:
----------------------------------------
[SEAL]
67
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To: STUPIDPC, INC.
The undersigned holder of the attached Stock Purchase Warrant (the
"Warrant") hereby irrevocably elects to exercise the Warrant for, and to
purchase thereunder, [all] [_________________] [cross out inapplicable phrase]
of the number of whole shares of Common Stock of STUPIDPC, INC. issuable upon
exercise of the Warrant and hereby surrenders the Warrant and delivers to
STUPIDPC, Inc., the aggregate Exercise Price for such shares, in accordance with
the Warrant.
The undersigned herewith requests that the certificates for such shares
be issued in the name of, and delivered to the undersigned, whose address is
________________________ and social security or tax identification number is
______________.
If such number of shares is less than all of the shares of Common Stock
purchasable under the Warrant, the undersigned requests that a new Warrant
representing the remaining balance of such shares be registered in the name of
the undersigned at the foregoing address.
By:
-----------------------------------------
Dated:
------------------------------------
NOTICE
The signature above must correspond to the name as written upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
68
EXHIBIT "B"
STUPIDPC, INC.
CLOSING CERTIFICATE
I, Xxxx Xxxxxxx, do hereby certify in my official capacity and
not individually that:
1. I am the duly elected, qualified and acting Secretary of
sTupidPC, Inc., a Georgia corporation ("Purchaser").
2. I am familiar with the terms of the Purchase and Sale
Agreement dated as of the ____ day of September, 2000 ("Purchase Agreement") by
and among Purchaser, Webcat Online, Inc. ("Webcat"), and Truco Enterprises, Inc.
3. I make this Certificate on behalf of Purchaser pursuant to the
provisions of Section 5.1(d) of the Purchase Agreement with the intention that
it shall be relied upon by Webcat.
4. Purchaser has performed in all material respects all
agreements, obligations and covenants contained in the Purchase Agreement
required to be performed by it at or prior to the "Closing Date" (as defined in
the Purchase Agreement).
5. Purchaser's representations and warranties contained in the
Purchase Agreement are true and correct in all material respects as of the date
hereof, as if made at and as of such time (except for representations and
warranties made as of a specified date, which need only be true as of such
date), except as otherwise provided in the Purchase Agreement.
6. Attached hereto as Annex "A" is a true and correct copy of the
Articles of Incorporation of Purchaser. No amendment to or modification of such
Articles of Purchaser has been made since the date thereof, nor have any
resolutions been adopted, or other actions been taken, by the Board of Directors
or shareholders of Purchaser for the purpose of effecting any such amendment or
modification. No resolution has been adopted by the Board of Directors or
shareholders of Purchaser contemplating the merger, liquidation or dissolution
of Purchaser.
7. Attached hereto as Annex "B" is a true and correct copy of the
Bylaws of Purchaser. No amendment to or modification of the Bylaws of Purchaser
has been made, nor has any action been taken by the Board of Directors or
shareholders of Purchaser for the purposes of effecting any such amendment or
modification.
8. Attached hereto as Annex "C" is a true and correct copy of
resolutions duly adopted by the Board of Directors of Purchaser dated September
__, 2000. The resolutions set forth in Annex "C" were duly adopted and have not
been amended or revoked and are now in full force and effect.
9. The persons named below are, as of the date hereof, duly
elected and qualified officers of Purchaser, holding the respective offices set
forth opposite their names below, and their signatures are set forth opposite
their names below:
69
Name Title Signature
---- ----- ---------
Xxxxxxx X. (Bart) Xxxxxxx President ____________________
Xxxxxxx X. (Bart) Xxxxxxx Secretary ____________________
IN WITNESS WHEREOF, I have executed this Certificate in my official
capacity, as of this ______ day of ___________________, 2000.
______________________, Secretary
70
ANNEX "A"
ARTICLES OF INCORPORATION
[ATTACHED HERETO]
71
ANNEX "B"
BYLAWS
[ATTACHED HERETO]
72
ANNEX "C"
RESOLUTIONS
[ATTACHED HERETO]
73
EXHIBIT "C"
CONFIDENTIALITY AND NONSOLICITATION AGREEMENT
THIS AGREEMENT is made and entered into on the date set forth
below, by and between sTupidPC, Inc., a Georgia corporation ("Company,"
including, where the context permits, its subsidiaries), and the undersigned
Company employee or contractor ("Undersigned").
For and in consideration of the retention or continued
retention of Undersigned by Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Undersigned recognizes and acknowledges that Company has
developed or retains certain Trade Secrets (as defined below) and Confidential
Information (as defined below) which are not generally available to the public,
and will continue to invest considerable effort and expense in developing unique
and distinctive products and services. Due to the nature of Undersigned's
relationship with Company, Undersigned may have frequent direct and indirect
contact with various clients of Company and may be presented with, have access
to, and/or participate in the development of both Trade Secrets and Confidential
Information. These Trade Secrets and Confidential Information constitute
valuable, special and unique assets of both Company and its clients. Any
misappropriation, unauthorized use or disclosure of such Confidential
Information and Trade Secrets would cause irreparable harm to Company.
Undersigned recognizes and agrees that Company must take reasonable steps to
safeguard the confidentiality of such information.
2. For the reasons recited above, Undersigned covenants and
agrees to all of the following:
(a) During the term of this Agreement and for a period of
three years after termination of this Agreement for any reason, and, with
respect to Trade Secrets, for as long as they continue to be Trade Secrets of
Company, Undersigned will hold in a confidential capacity for the benefit of
Company, and shall not directly or indirectly use or disclose, except as
authorized by Company in connection with the performance of Undersigned's
duties, any Confidential Information or Trade Secrets that Undersigned may have
or acquire (whether or not developed or compiled by Undersigned) prior to or
during the term of this Agreement.
(b) Upon request of Company, and in any event upon the
termination of employment with Company for any reason, Undersigned will deliver
to Company all memoranda, notes, records, media, documentation, disks, manuals,
files, other documents and tangible materials of any kind, and all copies
thereof in any form, concerning or containing Trade Secrets or Confidential
Information that are in Undersigned's possession, whether made or compiled by
Undersigned or furnished to Undersigned by Company.
(c) All Works (as defined below) shall be and remain the
property of Company. Undersigned will promptly disclose to Company any such
Works. Undersigned assigns to Company all right, title and interest in and to
any and all Works, information, proprietary and property rights therein.
Undersigned shall perform any acts that may be deemed necessary or desirable by
Company to evidence more fully transfer of ownership of the Works to Company to
the fullest extent possible, including the making of further written assignments
in a form determined by Company.
3. For purposes of this Agreement, the following definitions
shall apply:
74
(a) "Trade Secrets" means information including technical
or nontechnical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
product plans, or a list of actual or potential customers or suppliers, which:
(i) derives economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use; and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.
Trade Secrets also include any information described in this paragraph that
Company obtains from another party that Company treats as proprietary or
designates as Trade Secrets, whether or not owned or developed by Company. Trade
Secrets shall include to the extent consistent with the foregoing, source and
object code, flowcharts, algorithms, coding sheets, sub-routines, compilers,
assemblers, design concepts and related technical documentation and manuals.
(b) "Confidential Information" means data or information,
other than Trade Secrets, that is of value to Company and is not generally known
to competitors of Company. To the extent consistent with the foregoing,
Confidential Information includes lists of any information about Company's
executives and employees, marketing techniques, price lists, pricing policies,
Company's business methods, and contracts and contractual relations with
Company's customers and suppliers. Confidential Information also includes any
information described in the paragraph which Company obtains from another party
and which Company treats as proprietary or designates as confidential
information, whether or not owned or developed by Company.
(c) "Works" means any and all works of authorship,
inventions, discoveries, and work product, whether or not patentable, and in
whatever form, which have been or are created, made or developed by Undersigned
in the course of employment, and relates in any way to the current or future
business of Company.
(d) The terms "Trade Secrets" and "Confidential
Information" shall not include any materials or information of the types
specified above to the extent that such materials or information: (i) are or
become publicly known by others engaged in the same business or activities in
which Company utilized, developed or otherwise acquired such information; or
(ii) are known to Undersigned prior to employment, having been lawfully received
from parties other than Company; or (iii) are furnished to others by Company
with no restriction on disclosure. Failure to xxxx any of the Trade Secrets or
Confidential Information as confidential shall not affect their status as Trade
Secrets or Confidential Information under this Agreement.
(e) "Including" means including, without limitation.
4. Undersigned agrees that Undersigned, during his business
relationship with Company and for a period of one year following his termination
of business relationship with Company for any reason, will not solicit for
employment, attempt to employ or affirmatively assist any other person or entity
in employing or soliciting for employment any person employed by Company.
5. If any provision or any part of any provision of this
Agreement shall not be valid for any reason, then such provision shall be
entirely severable from, and shall have no effect upon, the remainder of this
Agreement. Any such invalid provision shall be subject to partial enforcement to
the extent necessary to protect the interest of Company.
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6. This Agreement shall inure to the benefit of, and be binding
upon, any successor in interest of Company, whether by merger, consolidation,
transfer of all or substantially all of Company's assets or otherwise, and this
Agreement shall be binding upon the Undersigned's heirs, administrators,
executors, successors and assigns.
7. This Agreement and the rights and liabilities of the parties
to the Agreement will be determined in accordance with the internal laws of the
State of Georgia.
8. The intent of this Agreement is to provide Company with all
remedies afforded to it under applicable law. Undersigned acknowledges and
agrees that Company will suffer irreparable harm in the event Undersigned
breaches any of Undersigned's obligations under this Agreement and that monetary
damages may be inadequate to compensate Company for such breaches. Accordingly,
Undersigned agrees that Company will, in addition to any other remedies
available to it at law or equity, be entitled to injunctive relief to enforce
the terms of this Agreement.
9. This Agreement together with, if applicable, the employment or
consulting agreement between the parties constitute the entire agreement between
Company and Undersigned with respect to the subject matter hereof, and
supersedes any prior agreements or understandings, whether oral or written,
between Company and Undersigned with respect to such subject matter. No
amendment or waiver of this Agreement or any provision hereof shall be effective
unless in writing, signed by both of the parties.
IN WITNESS WHEREOF, Company and Undersigned have executed this
Agreement this _______day of __________________, 2000.
STUPIDPC, INC. UNDERSIGNED:
BY:
------------------------------ --------------------------------
NAME: Print Name:
---------------------------- --------------------
TITLE:
----------------------------
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EXHIBIT "D-1"
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made as of this ____ day of
September, 2000, by and between sTupidPC, Inc., a Georgia corporation
("Company"), and Truco Enterprises, Inc., a Texas corporation ("Consultant").
Whereas, (i) Company has entered into a Purchase and Sale Agreement,
dated as of September __, 2000 ("Purchase Agreement") with Consultant and Webcat
Online, Inc. ("Webcat"), providing for Company to purchase 51% of the capital
stock in Webcat; (ii) Company desires to obtain consulting and similar services
and Consultant desires to contract with Company to perform such services; and
(iii) in connection with the business relationship between the parties,
Consultant has or will have access to Trade Secrets and Confidential Information
and frequent opportunity for contact with business partners, affiliates,
investors, contractors, joint venture partners, distributors, vendors, suppliers
and customers ("Business Contacts") of Company or Webcat (collectively with
Company, "Company Group"), including Sam's Club, who use, license or purchase
Company technology, goods or services in some manner;
Now, therefore, in consideration hereof and of Company consummating the
transaction contemplated in the Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Consultancy. Consultant shall serve as an independent
consultant to Company for a period commencing on the date hereof and continuing
for a period of two years (together with any extension agreed upon in writing by
the parties, the "Term").
2. Consideration. Company will compensate Consultant, in equal
monthly installments, as follows: (a) in the first year, 48,000 shares of
Company's Common Stock, to be registered in connection with the registration of
"Purchaser Shares" as defined in the Purchase Agreement; and (b) in the second
year, $48,000. Any expenses incurred by Consultant in connection with services
rendered hereunder shall be subject to Company's prior written approval.
Expenses shall be reimbursable only if reasonable and actually incurred,
supported by itemized receipts, and in accordance with any Company rules,
policies or guidelines furnished to Consultant from time to time.
3. Confidentiality. Company has invested and will continue to
invest considerable effort and expense in the development of technology and the
provision of products and services, and has taken steps and will continue to
take steps necessary to protect the secrecy of the Confidential Information and
Trade Secrets of Company Group and its Business Contacts, as applicable.
(a) Consultant acknowledges and agrees that Consultant's
position with Company will afford Consultant an opportunity to
access Confidential Information and Trade Secrets of Company
Group and its Business Contacts which are not generally
available to the public. The misappropriation, unauthorized
use or disclosure of such Confidential Information and Trade
Secrets may or could cause irreparable harm to Company and its
Business Contacts. Consultant recognizes and agrees that
Company shall have the right to take reasonable steps to
safeguard the confidentiality of such information.
(b) Consultant agrees to hold the Confidential Information and
Trade Secrets in a confidential capacity for the benefit of
Company and its Business Contacts and shall not
77
directly or indirectly use or disclose, except as authorized
by Company, any Confidential Information and Trade Secrets
that Company Group may have or acquire (whether or not
developed or compiled by Company) during the Term.
(c) Consultant agrees not to divulge, and to make all
reasonable efforts to prevent from disclosure, to any Person,
either during or after the Term, any Confidential Information
or Trade Secrets obtained or developed by Consultant during
the Term. Immediately upon the expiration or termination
hereof, Consultant agrees to deliver to Company all documents
which are furnished by Company Group to Consultant, which were
prepared by Consultant in performance of the Services, or
which Consultant otherwise received in connection with the
provision of Services. Consultant shall use Confidential
Information only in performance of the Services. After
expiration or earlier termination hereof, Consultant shall
make no further use of any Confidential Information.
(d) Consultant's nondisclosure and confidentiality obligations
as set forth herein shall remain in effect with respect to
Trade Secrets, for so long as Company Group or the Business
Contact is entitled to protection of rights in such Trade
Secrets under applicable law, and with respect to Confidential
Information during the Term and for a period of three years
thereafter.
The foregoing obligations shall survive the Term.
4. Inventions. All Inventions (as they pertain to the business of
the Company or Webcat) shall be works made for hire (including as such term is
defined in 17 U.S.C. Section 101, et. seq.) and shall become and remain the sole
and exclusive property of Company. Consultant shall promptly notify Company in
writing of all Inventions so conceived or made by Consultant, whether solely or
jointly with others. During the Term, Consultant agrees to do all things
reasonably necessary to assist in establishing and maintaining Company's rights
to all Inventions (with the Company paying all associated costs actually
incurred), including the following:
(a) Consultant shall promptly disclose to Company all
information with respect to Inventions;
(b) Whenever reasonably requested so to do by Company,
Consultant shall promptly execute and assign, without
requiring Company to furnish any further consideration
therefor, any and all applications, assignments and other
instruments which Company shall deem necessary to apply for
and obtain patents, trademarks, or copyrights of the United
States and of any foreign countries or other jurisdictions for
such Inventions to assign and convey to Company, or Company's
nominee, the sole and exclusive right, title and interest in
and to any applications or copyrights, trademarks, or patents
thereon, or otherwise to effect such assignment and to protect
and enforce such rights; and
(c) Whenever reasonably requested so to do by Company,
Consultant shall deliver to Company evidence for interference
purposes or other legal proceedings and testify in any
interference or other legal proceedings.
The foregoing obligations shall survive the Term.
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5. Definitions. As used herein:
(a) "Confidential Information" means all information not
generally known to the public owned, used or possessed by the
Company Group or any Person (meaning, for purposes hereof, any
person or entity, including any company, partnership, limited
liability company, trust, association or organization)
directly or indirectly controlled by, controlling or under
common control with the Company disclosed to Consultant or
known to Consultant as a consequence of or through performance
of Services for the Company, whether or not related to
Consultant's duties for the Company. Information shall be
considered, for the purposes hereof, to be Confidential
Information if not known by the public generally, even though
such information has been disclosed to one or more third
parties pursuant to any agreement entered into by the Company.
Confidential Information shall not include information that is
publicly available (other than information so available
through breach hereof) or is obtained rightfully from third
parties without duty to keep it confidential. Confidential
Information includes all confidential or proprietary
information of and of value to the Company Group or its
Business Contacts, other than Trade Secrets (but including
such information held by a court of competent jurisdiction not
to rise to the level of a Trade Secret).
(b) "Inventions" means any and all discoveries, including
ideas, findings, reports, written material that is eligible
for copyright under the U.S. or other copyright law, papers,
notes, disclosures, developments, improvements, concepts,
processes, methods, formulas, compositions, compositions of
matter, procedures, algorithms, devices, drawings, trademarks,
works of authorship, inventions, discoveries, techniques,
trade secrets, specifications, models, source codes, object
codes, software, diagrams, flow charts, mask works,
techniques, articles, products, manufacture and machines, as
well as improvements thereof or know-how related thereto,
whether copyrightable or patentable or not, relating to the
present business of the Company or Webcat, including any
Competitive Business, whether during or prior to the Term.
(c) "Control" (including, with correlative meanings, the terms
"controlled by," "controlling" and "under common control
with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such
Person, whether through ownership of voting securities, by
contract or otherwise; Control is presumed by the ownership
(legal or beneficial) of over 20% of the applicable Person.
(d) "Competitive Business" means the business of furnishing
online proprietary software that specializes in marketing,
building and hosting affordable websites for small to medium
size companies, associations and consumers; and of selling or
distributing computer hardware or related equipment.
(e) "Trade Secrets" means information of the Company Group or
its Business Contacts, without regard to form, including
information relating to Inventions, processes, systems,
methods, procedures, concepts, algorithms, patterns, software,
compositions, trademarks, techniques, designs, drawings,
specifications, models, technical or nontechnical data, source
code, object code, compilations, documentation, diagrams, flow
charts, mask works, research, manufacturing, products,
patents, patent applications, copyrights, copyright
applications, trademarks, trademark applications, programs,
machinery, materials, cost of
79
production, contract forms, prices, pricing policies, plans,
volume of sales, promotional methods, identity or information
about customers or suppliers, marketing, purchasing,
accounting, employees, employee compensation or other
information of a similar nature, or any other information
which (i) derives economic value, actual or potential, from
not being generally known to, or not being readily
ascertainable by proper means by, other Persons who could
obtain economic value from its disclosure or use and (ii) is
the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
6. Representations of Consultant. Consultant represents and
warrants to Company that all Inventions shall to its knowledge be Consultant's
original works of authorship and (as to existing Inventions) the use or
commercial exploitation thereof shall not subject the Company to any claim of
infringement of any copyright, patent or other proprietary right of any other
Person, whether such rights are afforded under the laws of the United States or
any other country or jurisdiction or otherwise.
7. Consultant/Taxes and Independent Contractor Status. Consultant
is not an agent or employee of Company and is not authorized to act on behalf of
Company. Consultant and Company agree that:
(a) Consultant is an independent consultant for tax purposes
and the Consultant and the Company will each file all tax and
information returns and pay all applicable taxes on that
basis. Consultant hereby agrees to indemnify and hold Company,
its officers, directors, Affiliates and employees harmless of
and from any and all costs, liabilities or damages arising out
of Consultant's failure to timely or properly file and pay all
withholding or other taxes applicable to any payments made to
Consultant hereunder. Consultant hereby irrevocably waives any
present or future entitlement to any benefits under Company's
health, retirement, pension, benefit or welfare plans.
(b) Anything herein to the contrary notwithstanding, the
parties acknowledge and agree that Company shall have no right
to control the manner, means or method by which Consultant
performs the Services. Rather, Company shall be authorized
hereunder only to: (1) direct Consultant as to the elements of
the particular Services to be performed, the result desired to
be achieved and when the Services are to be completed; (2)
inform Consultant as to where and when such Services are to be
performed; and (3) supervise and assess the performance of the
Services by Consultant for the limited purposes of assuring
that the Services have been performed and determining the
result of the Consultant's efforts.
8. Consultant/Non-Competition and Non-Solicitation. Consultant
agrees that it shall not, directly or indirectly, during the Term and for a
period of 24 months from and after the expiration or earlier termination hereof
("Restricted Period"):
(a) Control, own, manage, operate or be employed by (including
as a consultant, agent or independent contractor), participate
in or be engaged in (including as a partner, member or
stockholder) any business or activity that is a Competitive
Business;
(b) solicit, entice or persuade, other than on behalf of
Company, or attempt to or actually divert, take away or remove
from Company, any Person which is, or during the Term has
been, an advertiser, agent, supplier, client, customer or the
like of Company Group. Without limiting the generality of the
foregoing, Consultant shall not, on Consultant's own behalf or
on behalf of any Person, solicit, contact, call upon,
communicate with or attempt to communicate with any Business
Contact of Company
80
Group with a view to develop, enhance, license, sell or
provide any technology, product or service competitive with
any technology, product, or service sold, provided or under
development by Company Group during the period of two years
immediately preceding the date of cessation of Consultant's
business relationship with Company. This restriction shall
apply only to Business Contacts of Company with whom
Consultant had "Contact" during such two year period.
"Contact" means: interaction between Consultant and the
Business Contact which takes place to further the business
relationship or to provide products or perform services on
behalf of Company Group;
(c) solicit, procure, recommend or suggest to, directly or
indirectly, any advertiser, agent, supplier, client, customer
or the like of Company that the business they do with Company
Group be curtailed, reduced or placed with any other Person,
or otherwise interfere with any such Person's business
relationship with Company Group (including making any negative
statements or other communications, in whatever form, about
any of them); or
(d) solicit for employment, attempt to employ or affirmatively
assist anyone else in employing or soliciting for employment,
an employee or consultant of Company Group. This restriction
shall apply only to Company Group employees or consultants
with whom Consultant has had Contact during the preceding two
year period.
The foregoing obligations shall survive the Term.
9. Reasonableness; Remedies. Company and Consultant agree that
the covenants contained in Sections 3, 4 and 8 are reasonable and necessary for
the protection of the interests of Company. Consultant acknowledges that a
violation of Sections 3, 4 or 8 may give rise to immediate and irreparable
injury to Company inadequately compensable in damages. Accordingly, in addition
to other remedies provided by law or equity, upon a breach by Consultant of any
of the covenants contained in Sections 3, 4 or 8, Company shall be entitled to
have a court of competent jurisdiction order equitable relief, including
temporary or permanent injunctive relief against Consultant, prohibiting any
such contemplated or further breach of such covenants, and Consultant shall not
assert in any such action that Company has an adequate remedy at law. This
Section shall survive the expiration hereof.
10. Miscellaneous.
a. Assignment. This is a personal service contract. Consultant
shall not transfer or assign this Agreement or any interest
herein, directly, indirectly or by operation of law, nor
delegate any obligation hereunder, without the prior written
consent of Company. Any attempted assignment otherwise shall
be void. This Agreement shall inure to the benefit of any
successor in interest of Company, whether by merger,
consolidation, transfer of all or substantially all of
Company's assets, or otherwise.
b. Governing Law; Interpretation. This Agreement shall be
governed by and construed in accordance with Georgia law,
without giving effect to any conflicts of law rules. The
headings in the Agreement are intended for convenience only
and shall not be used to determine the rights and obligations
of the parties. References to Sections shall, unless otherwise
indicated, be to Sections hereof. The words "hereof," "herein"
or the like shall refer to this Agreement as a whole. The
Exhibits hereto are incorporated herein. "Including" means
including, without limitation.
81
c. Enforcement. If Company or Consultant must enforce any of
its rights herein through legal proceedings, including
arbitration, then Consultant or Company, as the case may be,
shall reimburse the prevailing party for all reasonable costs
and expenses, including attorneys' fees, incurred in
connection with such enforcement.
d. Severability. If any provision hereof is held to be
unenforceable for any reason, then it shall be adjusted rather
than voided, if possible, in order to achieve the intent of
the parties to the extent possible. In any event, all other
provisions hereof shall be deemed valid and enforceable to the
full extent possible.
e. Waiver. This waiver of any term or condition contained
herein by any party shall not be construed as a waiver of a
subsequent breach or failure of the same term or condition or
a waiver of any other term or condition contained herein.
Delay or failure to exercise any right or remedy shall not be
deemed the waiver thereof.
f. Entire Agreement; Amendment; Counterparts. This Agreement
contains the entire agreement of the parties relating to its
subject matter and supersedes any and all prior and
contemporaneous agreements, negotiations, correspondence,
understandings and communications of the parties, whether oral
or written. This Agreement may not be modified or amended
except in writing, signed by both parties. This Agreement may
be executed in multiple counterparts, including by fax, each
of which shall be deemed an original, but which together
constitute one and the same agreement.
IN WITNESS WHEREOF, Consultant has executed and delivered this
Agreement, and Company has executed and delivered this Agreement by its duly
authorized officer, effective as of the date first written above.
sTupidPC, Inc. Truco Enterprises, Inc.
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
82
EXHIBIT "D-2"
ASSIGNMENT OF WORKS AND CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
This Assignment of Works and Confidentiality and Noncompetition
Agreement ("Agreement") is made as of this ____ day of September, 2000, by and
between sTupidPC, Inc., a Georgia corporation ("Company"), and
_________________________ (the "Undersigned").
Whereas, (i) Company has entered into a Purchase and Sale Agreement,
dated as of September __, 2000 ("Purchase Agreement") with Webcat Online, Inc.
("Webcat") and Truco Enterprises, Inc. ("Truco"), providing for Company to
purchase from Truco 51% of the capital stock in Webcat; (ii) the Undersigned is
an officer and director of Webcat and Truco and is a shareholder of Truco; and
(iii) in connection with the business relationship between the parties, the
Undersigned has or will have access to Trade Secrets and Confidential
Information and frequent opportunity for contact with business partners,
affiliates, investors, contractors, joint venture partners, distributors,
vendors, suppliers and customers ("Business Contacts") of Company or Webcat
(collectively with Company, "Company Group"), including Sam's Club, who use,
license or purchase Company technology, goods or services in some manner;
Now, therefore, in consideration hereof, of the payment of $10.00 and
of Company consummating the transaction contemplated in the Purchase Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Assignment of Works. The Undersigned, a resident of the State
of Texas, assigns and conveys to Company all worldwide right, title and interest
in and to certain works of authorship, inventions, discoveries, improvements or
creations that have been or will be created, invented, conceived, reduced to
practice, authored, developed or delivered by Undersigned either solely or
jointly with others, with respect to business plans, financial projections,
business and marketing strategy, computer software programs and documentation
related to the business of Company or Webcat, including any material that is a
"work made for hire," and any modifications, amendments, translations, upgrades,
updates, enhancements, derivative works and any other changes to or attendant
thereto, including worldwide trademark, copyright, trade secret, patent and all
other proprietary rights (collectively, the "Works") whenever such Works were or
will be created, invented, conceived, reduced to practice, authored, developed
or were or are delivered to Company or Webcat. To the extent that any of the
Works is not a "work made for hire," the Undersigned hereby assigns all
proprietary rights, including copyright, to Company without further
compensation.
Company shall have the right to use the whole of the Works, any part or
parts thereof, or none of the Works, as Company sees fit. Company may alter the
Works, add to them, or combine them with any other work or works at its sole
discretion. Notwithstanding the foregoing, all original material created in
whole or part by the Undersigned as part of the Works or as part of the process
of creating the Works, including but not limited to programs, listings,
printouts, documentation, notes, flow charts, and programming aids, shall be the
property of Company whether or not Company uses such material. No rights in the
Works are reserved by the Undersigned. All programs, specifications,
documentation and all other technical information prepared in whole or in part
by the Undersigned in connection with the Works is, will become and remain
Company's sole property.
83
The Undersigned agrees that he will not seek any form of intellectual
property protection for any rights in any of the Works. Undersigned irrevocably
waives its moral rights in the Works. The Undersigned shall have no rights and
shall not communicate to any third party the nature of or details relating to
the Works. The Undersigned agrees that he shall do, at Company's expense, any
and all acts, and to execute any and all instruments which Company may
reasonably request, to vest in Company or its nominees ownership of all Works.
This obligation shall survive the "Term" as defined in the Consulting Agreement,
of even date herewith, between Company and Truco (the "Consulting Agreement";
for purposes hereof, "Term" means the Term as defined therein).
2. Confidentiality. Company has invested and will continue to
invest considerable effort and expense in the development of technology and the
provision of products and services, and has taken steps and will continue to
take steps necessary to protect the secrecy of the Confidential Information and
Trade Secrets of Company Group and its Business Contacts, as applicable.
(a) The Undersigned acknowledges and agrees that Consultant's
position with Company will afford Consultant an opportunity to
access Confidential Information and Trade Secrets of Company
Group and its Business Contacts which are not generally
available to the public. The misappropriation, unauthorized
use or disclosure of such Confidential Information and Trade
Secrets may or could cause irreparable harm to Company and its
Business Contacts. Consultant recognizes and agrees that
Company shall have the right to take reasonable steps to
safeguard the confidentiality of such information.
(b) The Undersigned agrees to hold the Confidential
Information and Trade Secrets in a confidential capacity for
the benefit of Company and its Business Contacts and shall not
directly or indirectly use or disclose, except as authorized
by Company, any Confidential Information and Trade Secrets
that Company Group may have or acquire (whether or not
developed or compiled by Company) during the Term.
(c) The Undersigned agrees not to divulge, and to make all
reasonable efforts to prevent from disclosure, to any Person,
either during or after the Term, any Confidential Information
or Trade Secrets obtained or developed by the Undersigned
during the Term. Immediately upon the expiration or
termination hereof, the Undersigned agrees to deliver to
Company all documents which are furnished by Company Group to
the Undersigned, which were prepared by the Undersigned, or
which the Undersigned otherwise received. After the Term, the
Undersigned shall make no further use of any Confidential
Information.
(d) The Undersigned's nondisclosure and confidentiality
obligations as set forth herein shall remain in effect with
respect to Trade Secrets, for so long as Company Group or the
Business Contact is entitled to protection of rights in such
Trade Secrets under applicable law, and with respect to
Confidential Information during the Term and for a period of
three years thereafter.
The foregoing obligations shall survive the Term.
3. Inventions. All Inventions (as they pertain to the business of
Company or Webcat) shall be works made for hire (including as such term is
defined in 17 U.S.C. Section 101, et. seq.) and shall become and remain the sole
and exclusive property of Company. The Undersigned shall promptly notify Company
in writing of all Inventions so conceived or made by the Undersigned, whether
solely or jointly with others. During the Term, the Undersigned agrees to do all
things reasonably necessary to assist in establishing and
84
maintaining Company's rights to all Inventions (with Company paying for all
associated costs actually incurred), including the following:
(a) the Undersigned shall promptly disclose to Company all
information with respect to Inventions;
(b) Whenever reasonably requested so to do by Company, the
Undersigned shall promptly execute and assign, without
requiring Company to furnish any further consideration
therefor, any and all applications, assignments and other
instruments which Company shall deem necessary to apply for
and obtain patents, trademarks, or copyrights of the United
States and of any foreign countries or other jurisdictions for
such Inventions to assign and convey to Company, or Company's
nominee, the sole and exclusive right, title and interest in
and to any applications or copyrights, trademarks, or patents
thereon, or otherwise to effect such assignment and to protect
and enforce such rights; and
(c) Whenever reasonably requested so to do by Company, the
Undersigned shall deliver to Company evidence for interference
purposes or other legal proceedings and testify in any
interference or other legal proceedings.
The foregoing obligations shall survive the Term.
4. Definitions. As used herein:
(a) "Confidential Information" means all information not
generally known to the public owned, used or possessed by the
Company Group or any Person (meaning, for purposes hereof, any
person or entity, including any company, partnership, limited
liability company, trust, association or organization)
directly or indirectly controlled by, controlling or under
common control with the Company disclosed to the Undersigned
or known to the Undersigned. Information shall be considered,
for the purposes hereof, to be Confidential Information if not
known by the public generally, even though such information
has been disclosed to one or more third parties pursuant to
any agreement entered into by the Company. Confidential
Information shall not include information that is publicly
available (other than information so available through breach
hereof) or is obtained rightfully from third parties without
duty to keep it confidential. Confidential Information
includes all confidential or proprietary information of and of
value to the Company Group or its Business Contacts, other
than Trade Secrets (but including such information held by a
court of competent jurisdiction not to rise to the level of a
Trade Secret).
(b) "Inventions" means any and all discoveries, including
ideas, findings, reports, written material that is eligible
for copyright under the U.S. or other copyright law, papers,
notes, disclosures, developments, improvements, concepts,
processes, methods, formulas, compositions, compositions of
matter, procedures, algorithms, devices, drawings, trademarks,
works of authorship, inventions, discoveries, techniques,
trade secrets, specifications, models, source codes, object
codes, software, diagrams, flow charts, mask works,
techniques, articles, products, manufacture and machines, as
well as improvements thereof or know-how related thereto,
whether copyrightable or patentable or not, relating to the
present business of the Company or Webcat, including any
Competitive Business, whether during or prior to the Term.
85
(e) "Control" (including, with correlative meanings, the terms
"controlled by," "controlling" and "under common control
with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such
Person, whether through ownership of voting securities, by
contract or otherwise; Control is presumed by the ownership
(legal or beneficial) of over 20% of the applicable Person.
(f) "Competitive Business" means the business of furnishing
online proprietary software that specializes in marketing,
building and hosting affordable websites for small to medium
size companies, associations and consumers; and of selling or
distributing computer hardware or related equipment.
(e) "Trade Secrets" means information of the Company Group or
its Business Contacts, without regard to form, including
information relating to Inventions, processes, systems,
methods, procedures, concepts, algorithms, patterns, software,
compositions, trademarks, techniques, designs, drawings,
specifications, models, technical or nontechnical data, source
code, object code, compilations, documentation, diagrams, flow
charts, mask works, research, manufacturing, products,
patents, patent applications, copyrights, copyright
applications, trademarks, trademark applications, programs,
machinery, materials, cost of production, contract forms,
prices, pricing policies, plans, volume of sales, promotional
methods, identity or information about customers or suppliers,
marketing, purchasing, accounting, employees, employee
compensation or other information of a similar nature, or any
other information which (i) derives economic value, actual or
potential, from not being generally known to, or not being
readily ascertainable by proper means by, other Persons who
could obtain economic value from its disclosure or use and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
5. Representations of the Undersigned. The Undersigned represents
and warrants to Company that all Inventions shall be the Undersigned's original
works of authorship and (as to existing Inventions) the use or commercial
exploitation thereof shall not subject the Company to any claim of infringement
of any copyright, patent or other proprietary right of any other Person, whether
such rights are afforded under the laws of the United States or any other
country or jurisdiction or otherwise.
6. The Undersigned/Non-Competition and Non-Solicitation. the
Undersigned agrees that it shall not, directly or indirectly, during the Term
and for a period of 24 months from and after the expiration or earlier
termination hereof ("Restricted Period"):
(a) Control, own, manage, operate or be employed by (including
as a consultant, agent or independent contractor), participate
in or be engaged in (including as a partner, member or
stockholder) any business or activity that is a Competitive
Business;
(b) solicit, entice or persuade, other than on behalf of
Company, or attempt to or actually divert, take away or remove
from Company, any Person which is, or during the Term has
been, an advertiser, agent, supplier, client, customer or the
like of Company Group. Without limiting the generality of the
foregoing, the Undersigned shall not, on the Undersigned's own
behalf or on behalf of any Person, solicit, contact, call
upon, communicate with or attempt to communicate with any
Business Contact of Company Group with a view to develop,
enhance, license, sell or provide any technology, product
86
or service competitive with any technology, product, or
service sold, provided or under development by Company Group
during the Term. This restriction shall apply only to Business
Contacts of Company with whom the Undersigned had "Contact"
during such period. "Contact" means: interaction between the
Undersigned and the Business Contact which takes place to
provide products or perform services on behalf of Company
Group;
(c) solicit, procure, recommend or suggest to, directly or
indirectly, any advertiser, agent, supplier, client, customer
or the like of Company that the business they do with Company
Group be curtailed, reduced or placed with any other Person,
or otherwise interfere with any such Person's business
relationship with Company Group (including making any negative
statements or other communications, in whatever form, about
any of them); or
(d) solicit for employment, attempt to employ or affirmatively
assist anyone else in employing or soliciting for employment,
an employee or consultant of Company Group. This restriction
shall apply only to Company Group employees or consultants
with whom the Undersigned has had Contact during the preceding
two year period.
The foregoing obligations shall survive the Term.
7. Reasonableness; Remedies. Company and the Undersigned agree
that the covenants contained in Sections 2, 3, and 6 are reasonable and
necessary for the protection of the interests of Company. The Undersigned
acknowledges that a violation of Sections 2, 3, and 6 may give rise to immediate
and irreparable injury to Company inadequately compensable in damages.
Accordingly, in addition to other remedies provided by law or equity, upon a
breach by the Undersigned of any of the covenants contained in Sections 2, 3,
and 6 Company shall be entitled to have a court of competent jurisdiction order
equitable relief, including temporary or permanent injunctive relief against the
Undersigned, prohibiting any such contemplated or further breach of such
covenants, and the Undersigned shall not assert in any such action that Company
has an adequate remedy at law. This Section shall survive the Term.
8. Miscellaneous.
(a) Governing Law; Interpretation. This Agreement shall be
governed by and construed in accordance with Georgia law,
without giving effect to any conflicts of law rules. The
headings in the Agreement are intended for convenience only
and shall not be used to determine the rights and obligations
of the parties. References to Sections shall, unless otherwise
indicated, be to Sections hereof. The words "hereof," "herein"
or the like shall refer to this Agreement as a whole.
"Including" means including, without limitation.
(b) Enforcement. If either party must enforce any of its
rights here in through legal proceedings, including
arbitration, then the other shall reimburse such party for all
reasonable costs and expenses, including attorneys' fees,
incurred in connection with such enforcement.
(c) Severability. If any provision hereof is held to be
unenforceable for any reason, then it shall be adjusted rather
than voided, if possible, in order to achieve the intent of
the parties to the extent possible. In any event, all other
provisions hereof shall be deemed valid and enforceable to the
full extent possible.
87
(d) Waiver. This waiver of any term or condition contained
herein by any party shall not be construed as a waiver of a
subsequent breach or failure of the same term or condition or
a waiver of any other term or condition contained herein.
Delay or failure to exercise any right or remedy shall not be
deemed the waiver thereof.
(e) Entire Agreement; Amendment; Counterparts. This Agreement
contains the entire agreement of the parties relating to its
subject matter and supersedes any and all prior and
contemporaneous agreements, negotiations, correspondence,
understandings and communications of the parties, whether oral
or written. This Agreement may not be modified or amended
except in writing, signed by both parties. This Agreement may
be executed in multiple counterparts, including by fax, each
of which shall be deemed an original, but which together
constitute one and the same agreement.
IN WITNESS WHEREOF, the Undersigned has executed and delivered this
Agreement, and Company has executed and delivered this Agreement by its duly
authorized officer, effective as of the date first written above.
sTupidPC, Inc.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
UNDERSIGNED: ATTEST/WITNESS:
Signed: Signed:
---------------------------- ----------------------------
Name (Print):
----------------------
88
EXHIBIT "E"
SHAREHOLDERS AGREEMENT BETWEEN STUPIDPC, INC. AND TRUCO ENTERPRISES, INC.
THIS SHAREHOLDERS AGREEMENT (the "Agreement") is made as of this __ day
of _________, 2000, by and between STUPIDPC, INC., a Georgia corporation and
TRUCO ENTERPRISES, INC., a Texas corporation (individually a "Shareholder" and
collectively the "Shareholders") with respect to certain shares of stock of
WEBCAT ONLINE, INC., a Texas corporation (hereinafter referred to as the
"Corporation").
WITNESSETH
WHEREAS, the Corporation has authorized capital stock consisting of One
Million (1,000,000) shares of $0.01 par value common stock (the "Stock") of
which the following amounts are presently issued, outstanding, and owned of
record by the Shareholders:
Shareholders Number of Shares Percentage Ownership
------------ ---------------- --------------------
StupidPC, Inc. 510 51%
Truco Enterprises, Inc. 490 49%
TOTAL: 1,000 100%
WHEREAS, it is the intention of the parties to restrict the transfer of
the shares of stock that they own in the Corporation (the "Stock") and to
provide a market for the sale of such Stock upon the occurrence of certain
events, as provided in this Agreement and in the Stock Purchase Agreement, dated
as of September __, 2000, among the Corporation and the Shareholders (the
"Purchase Agreement");
NOW, THEREFORE, in consideration of the promises and mutual obligations
contained herein, the parties hereto agree as follows:
1. Representations and Warranties of the Shareholders.
Each Shareholder hereby represents and warrants to the other that it
owns its Stock free and clear of all liens, restrictions, pledges and
encumbrances, that it has made no disposition of its Stock not recorded on the
books and records of the Corporation, and that it has granted no proxy rights,
options or other voting rights with respect to any of its Stock.
2. Restrictions Upon the Transfer of the Stock.
No Shareholder shall have the right to grant any security interest in,
or lien or encumbrance on, or make any sale, transfer or other disposition of,
Stock other than a disposition permitted by this Agreement or the Purchase
Agreement.
2.1 Financial Difficulty or Involuntary Transfer.
89
2.1.1 Financial Difficulty. A Shareholder's Stock
shall become subject to sale pursuant to this Agreement, when the Shareholder
does any of the following:
(a) Obtains for itself an order for relief under the
United States Bankruptcy Code, or becomes subject
to such an order that is not released within 30
days:
(b) Obtains an order or decree of insolvency under
state law, or becomes subject to such an order
that is not released within 30 days;
(c) Makes an assignment for the benefit of creditors;
or
(d) Consents to or suffers an attachment or execution
on any substantial part of its assets that are
not released within 30 days.
2.1.2 Involuntary or Other Voluntary Transfer. A
Shareholder's Stock shall become subject to sale, pursuant to this Agreement,
when that Shareholder's Stock becomes subject to involuntary transfer (as for
example, the Stock is to be transferred pursuant to a court order) or is
proposed to be transferred voluntarily by a Shareholder in a transaction not
otherwise covered by this Agreement.
2.1.3 Non-Transferring Shareholder's Options. Upon
any such event described in Section 2.1.1 or Section 2.1.2, the non-transferring
Shareholder shall have an option to purchase for a period of six months after
the date of such event any amount of such Shareholder's Stock it desires to
purchase at a price equal to the Fair Market Value as described in Section 2.2
and pursuant to the terms contained in Section 2.4.
2.2 Purchase Price. The purchase price of stock in
reference to Section 2.1.1 and 2.1.2 shall be its Fair Market Value. Fair Market
Value shall mean the fair market value of the Corporation, on a per share basis,
as determined on the last day of the calendar month immediately preceding the
month in which the event requiring such determination occurs, or the date of
such occurrence if it falls on the last day of the calendar month, and as so
determined, such price shall be final and binding on all parties. Fair Market
Value shall be determined by a third party proficient in market evaluation of
like businesses in like industries and mutually acceptable to the Shareholders
(which acceptance shall not be unreasonably withheld).
2.3 RIGHT OF FIRST REFUSAL. Except as otherwise provided
in this Agreement, if a Shareholder (the "Selling Shareholder") shall desire to
sell, transfer or assign all or any portion of Selling Shareholder's Stock
(collectively "Transfer"), the Selling Shareholder shall first obtain a bona
fide cash offer ("Offer") for the purchase of the Stock, or portion thereof,
that Selling Shareholder desires to sell, transfer or assign. An Offer for
purposes of this Agreement shall mean a good faith offer, in writing, entered
into with a third party unaffiliated with the Selling Shareholder (such
unaffiliated third party hereinafter referred to as the "Proposed Purchaser"),
with the intent to purchase and sell, and without fraud or collusion.
90
Prior to any proposed Transfer, the Selling Shareholder shall give
written notice (the "Transfer Notice") of the proposed Transfer to the other
Shareholder. A copy of the Offer, and all other documents in connection with the
proposed Transfer, shall be attached to the Transfer Notice. The Transfer Notice
shall set forth all the material terms of the proposed Transfer, including (i)
the name and address of the Proposed Purchaser, (ii) the number of shares
proposed to be transferred (the "Transfer Stock"), (iii) the total consideration
to be paid and the consideration to be paid per Transfer Share, and (iv) the
method of payment. The Transfer Notice shall provide that the other Shareholder
shall have the right to purchase all or less than all of the Transfer Stock in
accordance with the terms and conditions of this Agreement.
Upon receipt of the Shareholder Notice, the other Shareholder shall
have 15 days in which to accept the offer to purchase the Transfer Stock by
delivering a written notice to that effect to the Selling Shareholder. The
closing for the purchase shall be held within 30 days following expiration of
the 15 day period after the date of the Shareholder Notice.
The other Shareholder who elects to purchase Stock pursuant to this
Section 2.3 shall pay for their Stock in cash at closing or, at its option, in
the same manner and on the same terms as specified in the Transfer Notice. Upon
receipt of payment of the purchase price as provided in this Section 2.3, the
Selling Shareholder shall execute and deliver any and all instruments and
documents necessary to effectuate the transfer of the Transfer Stock to the
other Shareholder, free and clear of any and all taxes, debts, claims,
judgments, liens or encumbrances.
If all of the Transfer Stock is not purchased by other Shareholder
under the provisions of this Section 2.3, then the Transfer Stock may be
transferred, subject to the restrictions set forth herein, to the Proposed
Purchaser at any time within 60 days after the date of the Transfer Notice but
only in accordance with the price and terms specified therein. If no transfer is
made within such 60 day period, then the Selling Shareholder and the Stock shall
again be subject to this Agreement.
3. Legend on Stock
3.1 Form of Legend. Upon the execution of this Agreement,
each Shareholder shall surrender to the Corporation all of its certificates
representing the Stock in the Corporation. The Secretary shall endorse each
certificate conspicuously with substantially the following legend:
"The Stock represented by this certificate is held
subject to, and transfer of such Stock is restricted by, the
terms of a Shareholders Agreement, dated as of September __,
2000, a copy of which is on file at the office of the
Corporation. No pledge or transfer of any share represented by
this certificate shall be valid unless made in accordance with
the terms of said Agreement."
After such endorsement, each of the certificates so
surrendered shall be returned to the Shareholder owning such certificate.
Thereafter, all certificates representing Stock in the Corporation shall bear a
substantially identical endorsement. A copy of this Agreement shall be filed
with the Secretary of the Corporation.
4. Notices
91
Any and all notices, offers, demands or elections required or
permitted to be made under this Agreement shall be in writing, signed by the
party giving such notice, and mailed via certified mail, return receipt
requested, postage prepaid, and addressed to the Shareholders at their
respective addresses shown below, or to such other addresses as any of them, by
written notice to the others, may from time to time designate:
TO: STUPIDPC, INC. TO: TRUCO ENTERPRISES, INC.
0000 Xxxxx Xxxx Xx., Ste. A 00000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxx Attention: Xx. Xxx Xxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
With a copy to: With a copy to:
Red Hot Law Group of Ashley, LLC Gardere & Xxxxx, LLP
Attention: Xx. Xxx Xxxxxxx 0000 Xxx Xx., Xxx. 0000
000 X. Xxxxxxxxx Xx., Xxxxx 000 Xxxxxx, XX 00000
Xxxxxxx, XX 00000 Attn.: Xxxxx Xxxxxxxxx/Xxxxx
Telephone: (000) 000-0000 Xxxxxxx
Fax: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000
5. Remedies
Stock subject to this Agreement is not readily marketable and,
for that reason and other reasons, the parties will be irreparably damaged if
this Agreement is not specifically enforced. In this regard, the parties declare
that it is impossible to measure in money the damages that will accrue to a
Shareholder having rights under this Agreement by reason of a failure of another
to perform any obligation under this Agreement. Therefore, this Agreement,
including the provisions of Section 2, shall be enforceable by specific
performance or other equitable remedy cumulative with and not exclusive of any
other remedy. If any person shall institute any action or proceeding to enforce
the provisions of this Agreement, any person subject to this Agreement against
whom such action or proceeding is brought hereby waives the claim or defense
that the person instituting the action or proceeding has an adequate remedy at
law, and no person shall in any action or proceeding put forward the claim or
defense that an adequate remedy at law exists. Should any dispute concerning the
transfer of Stock arise under this Agreement, an injunction may be issued
restraining the transfer of such Stock pending the determination of such
dispute.
6. Liabilities.
If any Shareholder obtains Stock from another Shareholder
pursuant to the terms of this Agreement such that the selling Shareholder no
longer owns any Stock, the acquirer shall use his best efforts to obtain the
release of such other Shareholder from all contingent liabilities incurred in
connection with the business of the Corporation, including any liabilities of
such
92
other Shareholder as guarantor of or surety upon obligations of any of the
Corporation to lenders and lessors.
7. Miscellaneous.
7.1 Applicable Law. This Agreement is executed and
delivered in the State of Georgia, and this Agreement shall be construed and
enforced in accordance with the laws of the State of Georgia.
7.2 Construction. Titles or captions of sections
contained in this Agreement are inserted only as a matter of convenience and for
reference, and in no way define, limit, extend or prescribe the scope of this
Agreement or the intent of any provision. "Including" means including, without
limitation.
7.3 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, including by fax, each of which
shall be deemed an original, but all of which together shall constitute one and
the same Agreement.
7.4 Further Acts. Each party agrees to perform any
further acts and to execute and deliver any instruments or documents that may be
necessary or reasonably deemed advisable to carry out the purposes of this
Agreement.
7.5 Gender. Where the context so requires, the masculine
gender shall be construed to include the female, a Corporation, a trust, or
other entity, and the singular shall be construed to include the plural and the
plural the singular.
7.6 Severability. Should any part of this Agreement shall
be held void, voidable or otherwise unenforceable by a court of law or equity,
nothing contained in this Agreement shall limit the enforceability of any other
part.
7.7 After-Acquired Stock. This Agreement shall apply to
all Stock acquired by a Shareholder, either prior to or after the execution of
this Agreement.
7.8 Entire Agreement.This Agreement and the Purchase
Agreement contain the entire understanding between the parties hereto, and
supersedes all other oral and written agreements or understandings between them.
7.9 Successors and Assigns and Survivor. This Agreement
shall be binding upon and shall inure to the benefit of the Shareholders, their
respective heirs, successors, successors-in-title, legal representatives and
lawful assigns. No party shall have the right to assign this Agreement, or any
interest under this Agreement, without the prior written consent of the other
parties. Any attempted assignment otherwise shall be void. Notwithstanding
anything to the contrary contained in this Agreement, no attempted disposition
shall be valid unless and until the acquirer of such interest agrees in writing
to accept and be bound by all the terms and conditions of this Agreement, in
which case all such terms and conditions shall inure to the benefit of and be
binding upon such acquirer, his successors and permitted assigns to the same
93
extent as if such acquirer had originally been a party to this Agreement. The
provisions of this Agreement shall survive the termination of business
relationship of any Shareholder of the Corporation and any sale of Stock by any
Shareholder hereunder.
7.10 Waiver. Each Shareholder declares that he fully
understands the terms and provisions of this Agreement, that he has been fully
informed of his legal rights and liabilities, that he believes that the
provisions of the Agreement are fair, just and reasonable and that he signs this
Agreement freely and voluntarily, acting under the advice of independent legal
counsel.
7.11 Amendment. This Agreement may not be amended or
terminated orally, and no amendment, termination or attempted waiver shall be
valid unless in writing and signed by each party hereto.
[SIGNATURES ON FOLLOWING PAGE]
94
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in Atlanta, GA on the date first above written.
SHAREHOLDERS:
STUPID PC, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
TRUCO ENTERPRISES, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
95
EXHIBIT "F"
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF ABSENT REGISTRATION OF
SUCH SECURITIES UNDER SAID ACT AND SUCH LAWS UNLESS BORROWER
RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED.
DEMAND PROMISSORY NOTE
Principal Sum: $250,000 Dallas, TX Issue Date: September __, 2000
FOR VALUE RECEIVED, WEBCAT ONLINE, INC., a Texas corporation
("Borrower"), promises to pay to the order of STUPIDPC, Inc., a Georgia
corporation, or any subsequent holder of this Note (the initial or any such
subsequent holder being hereafter referred to as "Holder"), at such place as
Holder hereof may from time to time designate in writing, the principal sum of
Two Hundred Fifty Thousand Dollars and No/100 Cents ($250,000.00) with simple
interest accruing at a rate of ten percent (10%) per annum unless Borrower is in
default.
(1) The entire principal sum and all accrued interest shall be due
and payable on DEMAND, without any requirements of presentment, which is hereby
waived. All sums shall be paid in lawful money of the United States of America.
All principal and accrued interest shall be due and payable in one lump sum
within 10 days of written demand to Borrower. However, interest shall be paid
monthly in arrears on the second day of each month, the first such payment
commencing on November 2, 2000. Borrower may pre-pay all or part of the
principal and accrued interest without penalty.
(2) An Event of Default shall occur under this Note if Borrower
shall (i) fail to pay any amount due and payable hereunder, and such failure
shall continue for 15 days after notice thereof, (ii) file a petition in
bankruptcy or petition to take advantage of any insolvency act, (iii) make an
assignment for the benefit of its creditors, (iv) consent to the appointment of
a receiver of itself or of the whole or any substantial part of its property,
(v) have a petition in bankruptcy filed against it which petition is not removed
or discharged within 30 days from the date of filing, or be adjudicated a
bankrupt, or (vi) file a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law or
statute of the United States or any state thereof.
(3) It is hereby expressly agreed that upon the occurrence or
existence of an Event of Default, all principal shall, at the option of Holder,
become immediately due and payable, anything contained herein to the contrary
notwithstanding, time being of the essence of this Note. Interest shall accrue
from and after an Event of Default at the lesser of (a) the rate of 12% per
annum; or (b) the maximum rate permitted by applicable law.
(4) If this Note is not paid within 10 days of written demand,
Borrower promises to pay all costs of collection, including, but not limited to,
reasonable attorney's fees.
(5) Borrower hereby waives presentation for payment, protest and
demand, notice of protest, demand, dishonor, and nonpayment of this Note, and
consents that Holder may extend the time of payment or otherwise modify the
terms of payment of any part of the debt evidenced by this Note, and such
consents shall not alter nor diminish the liability of Borrower.
96
[SIGNATURE PAGE TO DEMAND PROMISSORY NOTE]
IN WITNESS WHEREOF, this Note has been executed and delivered by
Borrower on the date first above written.
WEBCAT ONLINE, INC.
BY:
-----------------------------------
NAME:
---------------------------------
TITLE:
--------------------------------
[SEAL]
97
EXHIBIT "G-1"
WEBCAT ONLINE, INC.
CLOSING CERTIFICATE
I, Xxx X. Xxxxxx, do hereby certify in my official capacity and not
individually that:
1. I am the duly elected, qualified and acting Secretary of
Webcat Online, Inc., a Texas corporation ("Webcat").
2. I am familiar with the terms of the Purchase and Sale
Agreement dated as of the ____ day of September, 2000 (the "Purchase Agreement")
by and among Webcat, sTupidPC, Inc., a Georgia corporation ("Purchaser") and
Truco Enterprises, Inc., a Texas corporation ("Shareholder").
3. I make this Certificate on behalf of Webcat pursuant to the
provisions of Section 5.2(b) of the Purchase Agreement with the intention that
it shall be relied upon by Purchaser.
4. Webcat has performed in all material respects all agreements,
obligations and covenants contained in the Purchase Agreement required to be
performed by it at or prior to the "Closing Date" (as defined in the Purchase
Agreement).
5. Webcat's representations and warranties contained in the
Purchase Agreement are true and correct in all material respects as of the date
hereof, as if made at and as of such time (except for representations and
warranties made as of a specified date, which need only be true as of such
date), except as otherwise provided in the Purchase Agreement.
6. Attached hereto as Annex "A" is a true and correct copy of the
Articles of Incorporation of Webcat. No amendment to or modification of the
Articles of Incorporation of Webcat has been made since the date thereof, nor
have any resolutions been adopted, or other actions been taken, by the Board of
Directors or sole shareholder of Webcat for the purpose of effecting any such
amendment or modification. No resolution has been adopted by the Board of
Directors or sole shareholder of Webcat contemplating the merger, liquidation or
dissolution of Webcat.
7. Attached hereto as Annex "B" is a true and correct copy of the
Bylaws of Webcat. No amendment to or modification of the Bylaws of Webcat has
been made, nor has any action been taken by the Board of Directors or sole
shareholder of Webcat for the purposes of effecting any such amendment or
modification.
8. Attached hereto as Annex "C" is a true and complete copy of
resolutions duly adopted by the Board of Directors and sole shareholder of
Webcat dated _________, 2000. The resolutions set forth in Annex "C" were duly
adopted and have not been amended or revoked and are now in full force and
effect.
9. The persons named below are, as of the date hereof, duly
elected and qualified officers of Webcat, holding the respective offices set
forth opposite their names below, and their signatures are set forth opposite
their names below:
98
Name Title Signature
---- ----- ---------
Xxxxx X. Silver President _________________________
Xxx X. Xxxxxx Secretary _________________________
IN WITNESS WHEREOF, I have executed this Certificate in my official
capacity, as of this ______ day of _____________, 2000.
-----------------------------------
Xxx X. Xxxxxx, Secretary
I, Xxxxx X. Silver, President of Webcat, do hereby certify that Xxx X.
Xxxxxx is the duly elected and qualified Secretary of Webcat, and that the
signature appearing above is his genuine signature.
------------------------------------
Xxxxx X. Silver, President
99
ANNEX "A"
ARTICLES OF INCORPORATION
[ATTACHED HERETO]
100
ANNEX "B"
BYLAWS
[ATTACHED HERETO]
101
ANNEX "C"
RESOLUTIONS
[ATTACHED HERETO]
102
EXHIBIT "G-2"
TRUCO ENTERPRISES, INC.
CLOSING CERTIFICATE
I, Xxx X. Xxxxxx, do hereby certify in my official capacity and not
individually that:
1. I am the duly elected, qualified and acting Secretary of Truco
Enterprises, Inc., Inc., a Texas corporation ("Truco").
2. I am familiar with the terms of the Purchase and Sale
Agreement dated as of the ____ day of _____________, 2000 (the "Purchase
Agreement") by and among Webcat Online, Inc., a Texas corporation, sTupidPC,
Inc., a Georgia corporation ("Purchaser") and Truco.
3. I make this Certificate on behalf of Truco pursuant to the
provisions of Section 5.2(b) of the Purchase Agreement with the intention that
it shall be relied upon by Purchaser.
4. Truco has performed in all material respects all agreements,
obligations and covenants contained in the Purchase Agreement required to be
performed by it at or prior to the "Closing Date" (as defined in the Purchase
Agreement).
5. Truco's representations and warranties contained in the
Purchase Agreement are true and correct in all material respects as of the date
hereof, as if made at and as of such time (except for representations and
warranties made as of a specified date, which need only be true as of such
date), except as otherwise provided in the Purchase Agreement.
6. Attached hereto as Annex "A" is a true and correct copy of the
Articles of Incorporation of Truco. No amendment to or modification of the
Articles of Incorporation of Truco has been made since the date thereof, nor
have any resolutions been adopted, or other actions been taken, by the Board of
Directors or shareholders of Truco for the purpose of effecting any such
amendment or modification. No resolution has been adopted by the Board of
Directors or shareholders of Truco contemplating the merger, liquidation or
dissolution of Truco.
7. Attached hereto as Annex "B" is a true and correct copy of the
Bylaws of Truco. No amendment to or modification of the Bylaws of Truco has been
made, nor has any action been taken by the Board of Directors or shareholders of
Truco for the purposes of effecting any such amendment or modification.
8. The persons named below are, as of the date hereof, duly
elected and qualified officers of Truco, holding the respective offices set
forth opposite their names below, and their signatures are set forth opposite
their names below:
103
Name Title Signature
---- ----- ---------
Xxxxx X. Silver President _________________________
Xxx X. Xxxxxx Secretary _________________________
IN WITNESS WHEREOF, I have executed this Certificate in my official
capacity, as of this ______ day of _________________, 2000.
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Xxx X. Xxxxxx, Secretary
I, Xxxxx X. Silver, President of Webcat, do hereby certify that Xxx X.
Xxxxxx is the duly elected and qualified Secretary of Truco, and that the
signature appearing above is his genuine signature.
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Xxxxx X. Silver, President
104
ANNEX "A"
ARTICLES OF INCORPORATION
[ATTACHED HERETO]
105
ANNEX "B"
BYLAWS
[ATTACHED HERETO]
