EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
among
XXXXXXX.XXX INC.
SHAMU ACQUISITION, INC.
and
XXXXXXX.XXX INC.
Dated as of January 20, 2000
CONTENTS
ARTICLE I - THE MERGER....................................................................................1
1.1 The Merger..............................................................................1
1.2 The Closing.............................................................................2
1.3 Effective Date and Time.................................................................2
1.4 Articles of Incorporation of the Surviving Corporation..................................2
1.5 Bylaws of the Surviving Corporation.....................................................2
1.6 Directors and Officers..................................................................3
1.7 Conversion of Shares....................................................................3
1.7.1 Exchange Ratio...............................................................3
1.7.2 Exchange of Certificates.....................................................6
1.7.3 No Fractional Shares.........................................................7
1.7.4 No Further Transfers.........................................................7
1.8 Amendment to Provide for Alternative Merger Structures..................................7
1.9 Option Grants...........................................................................8
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................8
2.1 Organization............................................................................9
2.2 Enforceability..........................................................................9
2.3 Capitalization..........................................................................9
2.4 Subsidiaries and Affiliates.............................................................11
2.5 No Approvals; No Conflicts..............................................................11
2.6 SEC Documents; Financial Statements.....................................................12
2.7 Absence of Certain Changes or Events....................................................14
2.8 Taxes...................................................................................15
2.9 Property................................................................................18
2.10 Contracts...............................................................................19
2.10.1 Material Contracts...........................................................19
2.10.2 Required Consents............................................................20
2.11 Claims and Legal Proceedings............................................................21
2.12 Labor and Employment Matters............................................................21
2.13 Employee Benefit Plans..................................................................22
2.13.1 Employee Benefit Plan Listing................................................22
2.13.2 Documents Provided...........................................................22
2.13.3 Compliance...................................................................23
2.13.4 Qualification................................................................24
2.13.5 Contributions and Premium Payments...........................................24
2.13.6 Related Employers............................................................24
2.13.7 Certain Pension Plans........................................................24
2.13.8 Post-Termination Benefits....................................................24
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2.13.9 Parachute Payments...........................................................25
2.13.10 Suits, Claims and Investigations.............................................25
2.13.11 Payments Resulting from Transactions.........................................25
2.13.12 Definitions..................................................................25
2.14 Intellectual Property...................................................................26
2.14.1 General......................................................................26
2.14.2 Company Technology...........................................................27
2.14.3 Third Party Technology.......................................................27
2.14.4 Trademarks...................................................................28
2.14.5 Intellectual Property Rights.................................................28
2.14.6 Maintenance of Rights........................................................28
2.14.7 Third Party Claims...........................................................29
2.14.8 Infringement by the Company..................................................29
2.14.9 Confidentiality..............................................................29
2.14.10 Warranty Against Defects.....................................................30
2.14.11 Domain Names.................................................................30
2.14.12 Year 2000....................................................................30
2.14.13 Participating Developers.....................................................31
2.15 Corporate Books and Records.............................................................31
2.16 Licenses, Permits, Authorizations, etc..................................................32
2.17 Compliance With Laws....................................................................32
2.18 Insurance...............................................................................32
2.19 Brokers or Finders......................................................................33
2.20 Absence of Questionable Payments........................................................33
2.21 Bank Accounts...........................................................................33
2.22 Customers and Suppliers.................................................................34
2.23 Accounts Receivable.....................................................................34
2.24 Creditors' List.........................................................................34
2.25 Insider Interests.......................................................................34
2.26 Compliance With Environmental Laws......................................................35
2.27 Information Supplied by the Company.....................................................35
2.28 Full Disclosure.........................................................................36
2.29 Xxxx-Xxxxx-Xxxxxx.......................................................................36
3.1 Organization............................................................................37
3.2 Enforceability..........................................................................37
3.3 Securities..............................................................................37
3.4 No Approvals or Notices Required; No Conflicts With Instruments.........................37
3.5 Information Supplied by XxxxXxx.xxx or Merger Sub.......................................38
3.6 Full Disclosure.........................................................................38
3.7 Capitalization..........................................................................39
3.8 SEC Documents; Financial Statements.....................................................39
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3.9 Compliance With Laws....................................................................40
3.10 Tax Matters.............................................................................40
ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX.XXX AND MERGER SUB............................41
4.1 Accuracy of Representations and Warranties..............................................41
4.2 Performance of Agreements...............................................................41
4.3 Opinion of Counsel for the Company......................................................42
4.4 Compliance Certificate..................................................................42
4.5 Material Adverse Change.................................................................42
4.6 Approvals and Consents..................................................................42
4.7 Proceedings and Documents; Secretary's Certificate......................................42
4.8 Non-U.S. Real Property Holding Corporation Affidavit....................................43
4.9 Compliance With Laws....................................................................43
4.10 Legal Proceedings.......................................................................43
4.11 Noncompetition Arrangements.............................................................43
4.12 Termination of Certain Agreements.......................................................43
4.13 Exercise or Termination of Stock Purchase Rights; Conversion of
Convertible Securities..................................................................44
4.14 Company Option Plan.....................................................................44
4.15 Consents to Merger......................................................................44
4.16 Resignations............................................................................44
4.17 Tax Clearance Certificates..............................................................45
4.18 Releases of Liens.......................................................................45
4.19 Stockholder Approval....................................................................45
4.20 Affiliate Letters.......................................................................45
4.21 Voting Agreements.......................................................................45
4.22 S-4.....................................................................................45
4.23 Agreements With Certain Stockholders of the Company.....................................45
4.24 Employment and Consulting Agreements....................................................46
4.25 Lock-Up Agreements......................................................................46
4.26 Tax Opinion.............................................................................46
4.27 No Dissenters Rights....................................................................46
4.28 Board Actions...........................................................................46
ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY............................................47
5.1 Accuracy of Representations and Warranties..............................................47
5.2 Performance of Agreements...............................................................47
5.3 Compliance Certificate..................................................................47
5.4 Legal Proceedings.......................................................................47
5.5 Material Adverse Change.................................................................48
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5.6 Approvals and Consents..................................................................48
5.7 Compliance With Laws....................................................................48
5.8 Opinion of Counsel......................................................................48
5.9 S-4.....................................................................................48
5.10 Tax Opinion.............................................................................48
ARTICLE VI - COVENANTS....................................................................................49
6.1 Conduct of Business by the Company Pending the Merger...................................49
6.2 Access to Information; Confidentiality..................................................51
6.3 No Alternative Transactions.............................................................51
6.4 Notification of Certain Matters.........................................................52
6.5 Further Action; Commercially Reasonable Efforts.........................................53
6.6 Publicity...............................................................................53
6.7 Bring-Down Capitalization Schedule......................................................54
6.8 Execution of All Operative Documents....................................................54
6.9 Stockholder Approval....................................................................54
6.10 Preparation of S-4......................................................................54
6.11 XxxxXxx.xxx Common Stock................................................................55
6.12 Retirement of Indebtedness..............................................................55
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER...........................................................55
7.1 Termination.............................................................................55
7.2 Effect of Termination...................................................................56
ARTICLE VIII - GENERAL....................................................................................56
8.1 Survival................................................................................56
8.2 Tax Matters - Reorganization Treatment..................................................57
8.3 Expenses................................................................................57
8.4 Notices.................................................................................57
8.5 Severability............................................................................58
8.6 Entire Agreement........................................................................59
8.7 Assignment..............................................................................59
8.8 Parties in Interest.....................................................................59
8.9 Governing Law; Venue....................................................................59
8.10 Headings................................................................................59
8.11 Counterparts............................................................................60
8.12 Waiver of Jury Trial....................................................................60
8.13 Amendment...............................................................................60
8.14 Waiver..................................................................................60
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EXHIBITS
2 -- Company Disclosure Memorandum
4.3 -- Form of Opinion of Counsel for the Company
4.8 -- FIRPTA Affidavit
4.11 -- Form of Confidentiality, Invention Assignment and Non-Raiding
Agreement
4.20 -- Form of Affiliate Letter
4.21 -- Form of Voting Agreement
4.24A -- Form of Employment Agreement
4.24B -- Form of Consulting Agreement
4.25A -- Form of Lock-Up Agreement between XxxxXxx.xxx and White
4.25B -- Form of Lock-Up Agreement between XxxxXxx.xxx and
New Horizons, LP
5.8 -- Form of Opinion of Xxxxxxx Coie
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger ("Agreement") dated as of January 20, 2000, by
and among XxxxXxx.xxx Inc., a Washington corporation ("XxxxXxx.xxx"), Shamu
Acquisition, Inc., a Washington corporation and wholly owned subsidiary of
XxxxXxx.xxx ("Merger Sub") and Xxxxxxx.xxx Inc., a Nevada corporation (the
"Company").
RECITALS
A. The Company XxxxXxx.xxx and Merger Sub believe it advisable and in their
respective best interests to effect a merger of the Company and Merger Sub
pursuant to this Agreement (the "Merger").
B. The Board of Directors of the Company have approved this Agreement and
the Merger as required by applicable law.
C. The Boards of Directors of XxxxXxx.xxx and Merger Sub have approved this
Agreement and the Merger as required by applicable law.
D. It is intended that the Merger will qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
In consideration of the terms hereof, the parties hereto agree as follows:
ARTICLE I - THE MERGER
1.1 The Merger
Upon the terms and subject to the conditions hereof, (a) at the Effective
Time (as defined in Section 1.3) the separate existence of the Company shall
cease and the Company shall be merged with and into Merger Sub (Merger Sub as
the surviving corporation after the Merger is sometimes referred to herein as
the "Surviving Corporation") and (b) from and after the Effective Time, the
Merger shall have all the effects of a merger under the laws of the state of
Washington and the state of Nevada and other applicable law.
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1.2 The Closing
Subject to the terms and conditions of this Agreement, the closing of the
Merger (the "Closing") shall take place on the earliest practicable business day
(the "Closing Date") after the satisfaction or waiver of the conditions set
forth in Articles IV and V at 10 a.m. local time at the offices of Xxxxxxx Coie
LLP, 1201 Third Avenue, 48th Floor, Seattle, Washington, or such other date,
time or location as XxxxXxx.xxx and the Company shall agree.
1.3 Effective Date and Time
On the Closing Date and subject to the terms and conditions hereof,
articles of merger and a certificate of merger (the "Articles of Merger"),
complying with the applicable provisions of the Washington Business Corporation
Act ("Washington Law") and the Nevada General Corporation Law ("Nevada Law") and
in such form and executed in such manner as required by Washington Law and
Nevada Law, shall be delivered for filing with the Secretary of State of the
state of Washington (the "Washington Secretary") and the Secretary of State of
the state of Nevada (the "Nevada Secretary"). The Merger shall become effective
on the date (the "Effective Date") and at the time (the "Effective Time") of
filing of the Articles of Merger or at such other time as may be specified in
the Articles of Merger as filed. If the Washington Secretary or the Nevada
Secretary requires any changes in the Articles of Merger as a condition to
filing or issuing its certificate to the effect that the Merger is effective,
XxxxXxx.xxx, Merger Sub and the Company will execute any necessary revisions
incorporating such changes, provided such changes are not inconsistent with and
do not result in any material change in the terms of this Agreement.
1.4 Articles of Incorporation of the Surviving Corporation
At the Effective Time, the Articles of Incorporation of Merger Sub shall be
the Articles of Incorporation of the Surviving Corporation; provided, however,
that Article I thereof shall be amended to read as follows: "The name of this
corporation is Xxxxxxx.xxx Inc." Thereafter, the Articles of Incorporation of
the Surviving Corporation may be amended in accordance with their terms and as
provided by law.
1.5 Bylaws of the Surviving Corporation
At the Effective Time, the Bylaws of Merger Sub as in effect immediately
prior to the Effective Time shall become the Bylaws of the Surviving
Corporation. Thereafter, the Bylaws may be amended or repealed in accordance
with their terms and the Articles of Incorporation of the Surviving Corporation
and as provided by law.
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1.6 Directors and Officers
At the Effective Time, the directors and officers of the Company shall
resign and the directors of Merger Sub shall continue in office as the directors
of the Surviving Corporation and the officers of Merger Sub shall continue in
office as the officers of the Surviving Corporation, and such directors and
officers shall hold office in accordance with and subject to the Articles of
Incorporation and Bylaws of the Surviving Corporation.
1.7 Conversion of Shares
1.7.1 Exchange Ratio
As of the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof:
(a) All shares of any class of capital stock of the Company held by the
Company as treasury shares shall be canceled.
(b) Each issued and outstanding share of common stock, par value $.001 per
share, of the Company (the "Company Common Stock") that is issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive from XxxxXxx.xxx a number of shares of XxxxXxx.xxx common
stock, par value $.001 per share (the "XxxxXxx.xxx Common Stock"), determined by
dividing (a) the XxxxXxx.xxx Base Shares (as defined below) by (b) the Fully
Diluted Common Stock Number (as defined below). The quotient derived in Section
1.7.1(b) shall be rounded to three decimal points and shall be referred to
herein as the "Exchange Ratio." The "XxxxXxx.xxx Base Shares" shall mean the
total number of shares of XxxxXxx.xxx Common Stock to be issued in the Merger,
which shall be equal to the number of shares determined by dividing (a)
$44,900,000 by (b) $17.31 (the "Base Price"). The "Fully Diluted Common Stock
Number" shall mean the total number of shares of Company Common Stock
outstanding immediately prior to the Effective Time on a fully diluted basis, as
set forth on Schedule 2.3 to the Company Disclosure Memorandum, which
calculation assumes (x) the exercise on a cash or cashless basis, as the case
may be, of all outstanding rights, warrants or options, vested or unvested, to
acquire Company Common Stock, regardless of restrictions on exercise or
conversion and (y) the conversion of all outstanding securities and notes
convertible at any time into Company Common Stock (such rights, warrants, notes,
options and convertible securities referenced in clauses (x) and (y) being
referred to herein as "Stock Purchase Rights"); provided, however, that the term
"Fully Diluted Common Stock Number" shall not include (i) the convertible note
referenced in that certain letter agreement dated December 9, 1999 between
Momentous Inc. Pension and Trust
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("Momentous") and the Company (the "Momentous Note"), (ii) that certain
Convertible Promissory Note in favor of Alpine Capital LLC ("Alpine Capital")
dated August 27, 1999 (the "Alpine Capital Note"), (iii) that certain
Convertible Promissory Note, dated December 22, 1999 (the "XxxxXxx.xxx Note"),
and any (iv) options granted pursuant to that stock option agreement dated July
26, 1999, between Astra Ventures LLC ("Astra Ventures") and the Company that are
unexercised as of the Effective Time, provided that such options terminate as of
the Effective Time by their terms or by later agreement of Astra Ventures. The
shares of XxxxXxx.xxx Common Stock so issued shall be referred to herein as the
"Closing Shares." The number of shares of XxxxXxx.xxx Common Stock to be issued
at the Closing to each stockholder under this Section 1.7.1(b) shall be
calculated by aggregating all shares of Company Common Stock held by each such
stockholder, so that such number of shares of XxxxXxx.xxx Common Stock to be
issued shall be equal to the number of shares of Company Common Stock held by
such stockholder multiplied by the Exchange Ratio, with fractional shares
rounded up to the nearest whole number pursuant to Section 1.7.3 hereof.
(c) The aggregate number of Closing Shares shall be subject to adjustment
as follows:
(i) In the event that any Company Liability (as defined below) exists
as of the date that is immediately prior to the Closing Date, the aggregate
number of Closing Shares shall be reduced by that number of shares of
XxxxXxx.xxx Common Stock determined by dividing the dollar amount of the Company
Liability by the Base Price. "Company Liability" shall mean all liabilities,
debts or obligations, contingent or otherwise, existing as of the Closing Date
immediately prior to the Effective Time, the value of which shall not exceed the
value of the XxxxXxx.xxx Base Shares (as measured by multiplying the Base Price
by the number of XxxxXxx.xxx Base Shares), including without limitation, all
outstanding liability to (1) Astra Ventures, (2) employees of the Company based
on change of control provisions in such employees' respective employment
agreements, (3) Alpine Capital, (4) Xxx Xxxxx, as an earn-out under a Share
Purchase Agreement among Xxx Xxxxx, International Barter Corp. and Barter
Business Exchange Inc., dated February 28, 1999 and promissory note dated March
2, 1999 (the "BBE Purchase Agreement and Note"), (5) Momentous and (6) various
lessors, lenders and vendors created in connection with the execution of
miscellaneous leases and other agreements; provided, however, that Company
Liability shall not include, in each case existing at the Closing, (x) any
outstanding indebtedness and accrued interest payable to XxxxXxx.xxx pursuant to
the XxxxXxx.xxx Note, (y) any payables or accrued expenses incurred in the
ordinary course of business (provided such payables and accrued expenses do not
exceed in the aggregate $225,000) and (z) any non-cash or barter trade dollar
liabilities. Any
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outstanding liability referenced in (1) through (6) above shall be deemed a
Company Liability in the event such liability is retired or paid off prior to
the Effective Time. The dollar amount of Company Liability shall be reduced by
any amounts received by the Company from option holders or warrant holders as a
result of the cash exercise of stock options or warrants between the date hereof
and the Effective Date. The Company shall cause to be prepared and delivered to
XxxxXxx.xxx, on the date that is two days immediately prior to the Closing Date,
a schedule, certified by the Company's Chief Financial Officer and in form and
substance satisfactory to XxxxXxx.xxx, as to the dollar amount of the Company
Liability, which schedule shall include a break down of the dollar amounts of
each liability, debt and obligation comprising the Company Liability.
(ii) In the event XxxxXxx.xxx reasonably determines between the date
hereof and March 1, 2000 as a result of its financial due diligence
investigation and tax assessment of the Company that the Company and its
subsidiaries, taken as a whole, have liabilities or obligations (whether
absolute, accrued or contingent) that are not (a) accrued or reserved against in
the Company Balance Sheet (as defined in Section 2.6) or reflected in the notes
thereto, (b) disclosed in the financial statements of the Company filed as a
part of the Company SEC Documents (as defined in Section 2.6) or (c) disclosed
in the Company Disclosure Memorandum (as defined in the preamble to Article II)
(an "Undisclosed Liability"), then the aggregate number of Closing Shares shall
be reduced by that number of shares of XxxxXxx.xxx Common Stock determined by
dividing the aggregate dollar amount of such Undisclosed Liabilities (up to
$1,000,000) by the Base Price. In the event that XxxxXxx.xxx's accountants and
the Company's accountants disagree as to whether a liability or obligation is an
Undisclosed Liability (a "Disputed Liability"), then XxxxXxx.xxx and the Company
shall cause such accountants to promptly choose an independent financial expert
mutually agreeable to the Company's accountants and XxxxXxx.xxx's accountants,
and such independent financial expert shall determine whether the Disputed
Liability is an Undisclosed Liability. The fees of such independent financial
expert shall be paid by XxxxXxx.xxx, provided, however, that if such independent
financial expert determines that the Disputed Liability is an Undisclosed
Liability, the amount of such fees shall reduce the number of Closing Shares by
treating such amount as if it were an Undisclosed Liability. Undisclosed
payables and expenses incurred in the ordinary course of business shall not be
deemed Undisclosed Liabilities, provided that such payables and expenses do not
exceed $225,000.
(d) Holders of shares of Company Common Stock who have complied with all
the requirements for perfecting dissenters' rights, as required under Nevada
Law, shall be entitled to their rights under Nevada Law with respect to such
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shares (the "Dissenting Shares"). Notwithstanding the foregoing, if any holder
of Dissenting Shares shall effectively withdraw or lose (through failure to
perfect or otherwise) the right to dissent, then, as of the later of the
Effective Time and the occurrence of such event, such holder's shares shall
automatically be converted into and represent the right to receive the shares of
XxxxXxx.xxx Common Stock to which such holder is then entitled under this
Agreement and Nevada Law, without interest thereon and upon surrender of the
certificate representing such shares. Notwithstanding any provision of this
Agreement to the contrary, any Dissenting Shares held by a Shareholder who has
perfected dissenters' rights for such shares in accordance with Nevada Law shall
not be converted into ShopNow Common Stock pursuant to this Section 1.7.1.
1.7.2 Exchange of Certificates
(a) As soon as practicable after the Effective Time, XxxxXxx.xxx shall
cause Continental Stock Transfer & Trust (the "Exchange Agent") to mail to each
holder of record of Company Common Stock as of the Effective Time (i) a letter
of transmittal (which shall be in customary form and specify that delivery shall
be effected, and risk of loss and title to the certificates of Company Common
Stock shall pass, only upon delivery of such certificates to the Exchange Agent)
and (ii) instructions for use in effecting the surrender of such certificates in
exchange for certificates representing XxxxXxx.xxx Common Stock. Upon surrender
of a certificate of Company Common Stock for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal and such other documents as
the Exchange Agent shall require, the holder of such certificate shall be
entitled to receive in exchange therefor the number of whole shares of
XxxxXxx.xxx Common Stock to which the holder of Company Common Stock is entitled
pursuant to Section 1.7.1 hereof. The certificate so surrendered shall forthwith
be canceled. Notwithstanding any other provision of this Agreement, until
holders of certificates of Company Common Stock have surrendered them for
exchange as provided herein, (i) no dividends or other distributions shall be
paid with respect to any shares represented by such certificates, and (ii)
without regard to when such certificates are surrendered for exchange as
provided herein, no interest shall be paid on any dividends or other
distributions. Upon surrender of a certificate of Company Common Stock, there
shall be paid to the holder of such certificate the amount of any dividends or
other distributions which theretofore became payable, but which were not paid by
reason of the foregoing, with respect to the number of whole shares of
XxxxXxx.xxx Common Stock represented by the certificate or certificates issued
upon such surrender. If any certificate for XxxxXxx.xxx Common Stock is to be
issued in a name other than in which the certificate of Company Common Stock
surrendered in exchange therefore is registered, it shall be a condition of such
exchange that the person requesting such
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exchange pay any transfer or other taxes required by reason of the issuance of
certificates for such shares of XxxxXxx.xxx Common Stock in a name other than
that of the registered holder of the certificate surrendered, or establish to
the satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. In connection with its undertakings pursuant to this Section
1.7.2, the Exchange Agent shall be entitled to withhold any income taxes as
required by the Code.
(b) The shares of XxxxXxx.xxx Common Stock that each stockholder shall be
entitled to receive pursuant to the Merger shall be deemed to have been issued
at the Effective Time, and no interest shall accrue on any of the Closing
Shares.
1.7.3 No Fractional Shares
No certificates or scrip representing fractional shares of XxxxXxx.xxx
Common Stock shall be issued by virtue of the Merger. The aggregate number of
shares of XxxxXxx.xxx Common Stock a stockholder is entitled to receive pursuant
to Section 1.7.1(b) shall be rounded to the nearest whole number of shares, with
.5 being rounded up.
1.7.4 No Further Transfers
After the Effective Time, there shall be no transfers of any shares of
Company Common Stock on the stock transfer books of the Surviving Corporation.
Any XxxxXxx.xxx Common Stock made available to the Exchange Agent and not
exchanged for certificates of Company Common Stock within one year after the
Effective Time and any dividends and distributions held by the Exchange Agent
for payment or delivery to the holders of unsurrendered certificates
representing Company Common Stock and unclaimed at the end of such one year
period shall be redelivered or repaid by the Exchange Agent to XxxxXxx.xxx,
after which time any holder of certificates of Company Common Stock who has not
theretofore delivered or surrendered such certificates to the Exchange Agent,
subject to applicable law, shall look as a general creditor only to XxxxXxx.xxx
for payment of the XxxxXxx.xxx Common Stock and any such dividends or
distributions. Notwithstanding any provision of this Agreement, none of
XxxxXxx.xxx, the Exchange Agent, the Surviving Corporation or any other party
hereto shall be liable to any holder of Company Common Stock for any XxxxXxx.xxx
Common Stock or dividends or distributions delivered to a public official
pursuant to applicable abandoned property, escheat or similar law.
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1.8 Amendment to Provide for Alternative Merger Structures
If at any time prior to the Closing Date, XxxxXxx.xxx elects to have the
Company be the Surviving Corporation or elects to have the Company merge
directly into XxxxXxx.xxx or to have a different subsidiary of XxxxXxx.xxx merge
with the Company in a forward or reverse triangular merger, the parties shall
promptly enter into an amendment to this Agreement to so provide, so long as
such action does not result in a breach of a representation or warranty set
forth in Article II, or the inability to satisfy any of the conditions set forth
in Articles IV and V hereof.
1.9 Option Grants
No later than thirty days after the Effective Time, XxxxXxx.xxx will act to
grant nonqualified stock options (the "New Options") under its Amended and
Restated 1999 Non-Officer Stock Option Plan, or such other plan having
substantially similar terms as XxxxXxx.xxx shall determine in its sole
discretion, to acquire an aggregate of 600,000 shares of XxxxXxx.xxx Common
Stock in the numbers specified and to the members of the management of the
Company immediately prior to the Effective Time (the "Management Members") and
to employees of the Company immediately prior to the Effective Time (the
"Retained Employees"), who have been offered and accepted employment with
XxxxXxx.xxx or the Surviving Corporation and commence employment with
XxxxXxx.xxx or the Surviving Corporation after the Effective Time (with the
allocation of such grants among such Management Members and Retained Employees
to be mutually acceptable to XxxxXxx.xxx and Liad Meidar and Xxxxxx Xxxxx,
except that 250,000 of such New Options shall be allocated to Liad Meidar). Such
New Options shall have an exercise price of $15.58 per share. One-third of the
New Options shall be vested upon the one-year anniversary of the Closing Date,
and the remaining balance of the New Options shall vest on a quarterly basis
over a period of two years following the one-year anniversary of the Closing
Date.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
Except as is otherwise set forth with appropriate Section references in the
Company Disclosure Memorandum attached as Exhibit 2 (the "Company Disclosure
Memorandum"), each of which exceptions shall specifically identify or
cross-reference the provision of this Article II to which such exception
relates, and in order to induce XxxxXxx.xxx and Merger Sub to enter into and
perform this Agreement and the other agreements and documents attached hereto as
exhibits that are required to be completed and/or executed pursuant to this
Agreement (collectively, the "Operative Documents"), the Company represents and
warrants to XxxxXxx.xxx and Merger Sub as of the date of this Agreement and as
of the Closing Date as follows in this Article II.
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For the purposes of Sections 2.7 through 2.29 of this Article II, the term
"Company" shall refer to the Company and all of its subsidiaries.
2.1 Organization
The Company is a corporation duly organized and validly existing under the
laws of the state of Nevada. The Company's subsidiaries are duly organized and
validly existing under the laws of the jurisdictions in which they are
organized. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the
Operative Documents delivered by the Company or to which the Company is a party,
and to consummate, subject to the approval of the Merger by the stockholders of
the Company, the transactions contemplated hereby and thereby. The Company and
its subsidiaries are duly qualified and licensed as a foreign corporations to do
business and are in good standing in each jurisdiction in which the character of
the properties occupied, owned or held under lease or the nature of the business
conducted by the Company and its subsidiaries makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed
would not have a material adverse effect on the financial condition, property,
business or results of operations of the Company and its subsidiaries, taken as
a whole.
2.2 Enforceability
All corporate action on the part of the Company and its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and the Operative Documents delivered by the
Company or to which the Company is a party, the consummation of the Merger, and
the performance of all the Company's obligations under this Agreement and the
Operative Documents delivered by the Company or to which the Company is a party,
has been taken, subject to the approval of the Merger by the stockholders of the
Company. This Agreement and each of the Operative Documents to which the Company
is a party, has been duly executed and delivered by the Company and this
Agreement is, and each of the Operative Documents delivered by the Company or to
which the Company is a party is, a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms.
2.3 Capitalization
(a) The authorized capital stock of the Company consists of 25,000,000
shares of Company Common Stock, par value $.001 per share and 10,000,000 shares
of Preferred Stock, none of which shares of Preferred Stock are issued and
outstanding.
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(b) The issued and outstanding capital stock of the Company consists solely
of 6,077,253 shares of Company Common Stock (collectively, the "Outstanding
Shares"). The Outstanding Shares are, and immediately prior to the Closing will
be, duly authorized and validly issued, fully paid and nonassessable, and issued
in compliance with all applicable federal and state securities laws. True and
correct copies of the stock records of the Company showing all issuances of
capital stock of the Company since inception have been delivered to XxxxXxx.xxx
or its counsel.
(c) As of the date of this Agreement and as of the Closing Date, and except
as contemplated by this Agreement, there are no outstanding rights of first
refusal or offer, preemptive rights, Stock Purchase Rights or other agreements,
either directly or indirectly, for the purchase or acquisition from the Company
or any stockholder of any shares of Company Common Stock or any securities
convertible into or exchangeable for shares of Company Common Stock other than
(i) options to purchase up to (A) 679,000 shares of Company Common Stock that
have been granted under the Company's 1998 Stock Option Plan (the "Company
Option Plan"), (B) 630,000 shares of Company Common Stock that have been granted
pursuant to a stock option agreement dated July 26, 1999, between Astra Ventures
and the Company, (C) 40,000 shares of Company Common Stock that have been
granted pursuant to a stock option agreement between Xxxxx Xxxxxxxx and the
Company, (ii) 1,333,333 shares of Company Common Stock issuable upon conversion
of that certain Convertible Promissory Note dated August 27, 1999 in favor of
Alpine Capital LLC (the "Alpine Capital Note"), (iii) 183,333 shares of Company
Common Stock issuable upon exercise of that certain warrant dated August 27,
1999 issued to Alpine Capital LLC (the "Alpine Capital Warrant"), (iv) 706,000
shares of Company Common Stock issuable upon exercise of outstanding E Warrants
and (v) shares of Company Common Stock issuable upon conversion of the Momentous
Note. Set forth on Schedule 2.3 to the Company Disclosure Memorandum is a
spreadsheet accurately reflecting the number of options and other Stock Purchase
Rights outstanding, the grant or issue dates, vesting schedules and exercise or
conversion prices thereof and, in each case, the identities of the holders and
an indication of their relationships to the Company (if any exist other than a
security holder). The Company has delivered to XxxxXxx.xxx or its counsel true
and correct copies of the Company Option Plan, all stock option agreements,
board resolutions and exercise documentation relating to options granted
thereunder and granted to Astra Ventures and Xxxxx Xxxxxxxx and all agreements
with respect to Stock Purchase Rights. Schedule 2.3 to the Company Disclosure
Memorandum also identifies all options, warrants or other Stock Purchase Rights
that have been offered in connection with any employee or consulting agreement
but that, as of the date hereof, have not been issued or granted.
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(d) Except as contemplated by this Agreement, the Company is not a party or
subject to any agreement or understanding and there is no agreement or
understanding between any Persons (as defined in Section 2.5) that affects or
relates to the voting or giving of written consents with respect to any
securities of the Company or the voting by any director of the Company. No
stockholder or any affiliate thereof is indebted to the Company, and the Company
is not indebted to any stockholder or any affiliate thereof. The Company is not
under any contractual or other obligation to register any of its presently
outstanding securities or any of its securities that may hereafter be issued.
(e) All rights of refusal, co-sale rights and registration rights granted
by the Company with respect to the Company Common Stock or Stock Purchase Rights
of the Company are described on Schedule 2.3 to the Company Disclosure
Memorandum.
(f) All options, Stock Purchase Rights and shares of Company Common Stock
have been granted or issued at fair market value, as determined by the Company's
Board of Directors at the date of grant or issuance.
2.4 Subsidiaries and Affiliates
The Company does not own, directly or indirectly, any ownership, equity, or
voting interest in, any corporation, partnership, joint venture or other entity,
and has no agreement or commitment to purchase any such interest.
2.5 No Approvals; No Conflicts
The execution, delivery and performance of this Agreement and the Operative
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby will not
(a) constitute a violation (with or without the giving of notice or lapse
of time, or both) of any provision of law or any judgment, decree, order,
regulation or rule of any court or other governmental authority applicable to
the Company;
(b) require any consent, approval or authorization of, or declaration,
filing or registration with, any person, corporation, partnership, joint
venture, association, organization, other entity or governmental or regulatory
authority (a "Person"), except for (i) approval by the stockholders of the
Company, (ii) the filing of all documents necessary to consummate the Merger
with the Washington Secretary and the Nevada Secretary, (iii) the filing of a
premerger notification report and all other required documents by XxxxXxx.xxx
and the Company, and the expiration of all applicable waiting periods, under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
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of 1976, as amended (the "HSR Act"), and (iv) any filings with the Securities
and Exchange Commission (the "SEC") including such reports and information as
may be required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act and the rules and regulations promulgated by
the SEC under the Exchange Act or the Securities Act and the declaration of the
effectiveness of the S-4 (as defined in Section 2.27) by the SEC;
(c) result in a default under (with or without the giving of notice or
lapse of time, or both), or acceleration or termination of, or the creation in
any party of the right to accelerate, terminate, modify or cancel, any
agreement, lease, note or other restriction, encumbrance, obligation or
liability to which the Company is a party or by which it is bound or to which
its assets are subject;
(d) result in the creation of any liens, mortgages, pledges, deeds of
trust, security interests, charges, encumbrances or other adverse claims of
interest of any kind (each, an "Encumbrance") upon any assets of the Company or
the Outstanding Shares;
(e) conflict with or result in a breach of or constitute a default under
any provision of the Company's Articles of Incorporation or Bylaws, or
(f) invalidate or adversely affect any permit, license or authorization or
status used in the conduct of the Company's business.
2.6 SEC Documents; Financial Statements
(a) The Company has filed all forms, reports and documents required to be
filed by it with the SEC since June 8, 1998 (the date the Company first became a
reporting Company under the Exchange Act) through the date of this Agreement
(collectively, the "Company SEC Documents"). As of their respective filing
dates, the Company SEC Documents complied in all material respects with the
requirements of the Exchange Act or the Securities Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
filing dates, the financial statements of the Company included in the Company
SEC Documents (the "Company Financial Statements") complied as to form in all
material respects with all applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and were
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied (except as may be indicated in the notes thereto) and
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fairly presented, in all material respects, the consolidated financial position
of the Company and its subsidiaries as at the dates thereof and the results of
their operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal, recurring audit adjustments not material in
scope or amount). There has been no change in the Company's accounting policies
or the methods of making accounting estimates or changes in estimates that are
material to the Company Financial Statements, except as described in the notes
thereto. The balance sheet of the Company as of September 30, 1999 is herein
referred to as the "Company Balance Sheet".
(b) The Company has delivered to XxxxXxx.xxx copies of the Company's
unaudited consolidated balance sheet as of September 30, 1999, and income
statement and statement of cash flows for the period ended September 30, 1999.
Such financial statements: (i) are in accordance with the books and records of
the Company; (ii) fairly present in all material respects the Company's
financial condition at the date therein indicated and the results of operations
for the period therein indicated and the results of operations for the period
therein specified; and (iii) have been prepared in accordance with GAAP applied
on a consistent basis (except for the absence of any footnotes required by
GAAP).
(c) The Company has heretofore furnished to XxxxXxx.xxx a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
(d) The Company and its subsidiaries, taken as a whole, have no liabilities
or obligations (whether absolute, accrued or contingent) except (i) liabilities,
obligations or contingencies that are accrued or reserved against in the Company
Balance Sheet or reflected in the notes thereto or disclosed in the financial
statements of the Company filed as a part of the Company SEC Documents, (ii)
liabilities, obligations or contingencies that would not have a material adverse
effect on the business, operations, prospects or financial condition of the
Company, or (iii) additional liabilities, obligations or contingencies reserved
against since the date of the Company Balance Sheet that (x) have arisen in the
ordinary course of business and (y) are accrued or reserved against on the books
and records of the Company and its subsidiaries.
(e) Except as disclosed in the Company SEC Documents as filed and amended
before the date hereof and as contemplated by this Agreement, since
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September 30, 1999, no material adverse change in the business, financial
condition, results of operations or prospects of Company has occurred.
2.7 Absence of Certain Changes or Events
Except for transactions specifically contemplated in this Agreement, since
the date of the Company Balance Sheet, neither the Company nor any of its
officers or directors in their representative capacities on behalf of the
Company have:
(a) taken any action or entered into or agreed to enter into any
transaction, agreement or commitment other than in the ordinary course of
business;
(b) forgiven or canceled any indebtedness or waived any claims or rights of
material value (including, without limitation, any indebtedness owing by any
stockholder, officer, director, employee or affiliate of the Company);
(c) granted any increase in the compensation of directors, officers,
employees or consultants;
(d) suffered any change having a material adverse effect on the Company's
business operations, assets, liabilities (absolute, accrued, contingent or
otherwise), condition (financial or otherwise) or prospects;
(e) borrowed or agreed to borrow any funds, incurred or become subject to,
whether directly or by way of assumption or guarantee or otherwise, any
obligations or liabilities (absolute, accrued, contingent or otherwise) in
excess of $10,000 individually or in excess of $20,000 in the aggregate, except
liabilities and obligations that are incurred in the ordinary course of business
and consistent with past practice, or increased, or experienced any change in
any assumptions underlying or methods of calculating, any bad debt, contingency
or other reserves;
(f) paid, discharged or satisfied any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of claims, liabilities and obligations reflected or reserved
against in the Company Balance Sheet or incurred in the ordinary course of
business and consistent with past practice since the date of the Company Balance
Sheet, or prepaid any obligation having a fixed maturity of more than 90 days
from the date such obligation was issued or incurred;
(g) knowingly permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any Encumbrance;
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(h) purchased or sold, transferred or otherwise disposed of any of its
material properties or assets (real, personal or mixed, tangible or intangible);
(i) disposed of or permitted to lapse any rights to the use of any
trademark, trade name, patent or copyright, or disposed of or disclosed to any
Person without obtaining an appropriate confidentiality agreement from any such
Person any trade secret, formula, process or know-how not theretofore a matter
of public knowledge;
(j) made any single capital expenditure or commitment in excess of $10,000
for additions to property, plant, equipment or intangible capital assets or
otherwise or made aggregate capital expenditures in excess of $20,000 for
additions to property, plant, equipment or intangible capital assets or
otherwise;
(k) made any change in accounting methods or practices or internal control
procedure;
(l) issued any capital stock or other securities, or declared, paid or set
aside for payment any dividend or other distribution in respect of its capital
stock, or redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of capital stock or other securities of the Company, or otherwise
permitted the withdrawal by any of the holders of Company Common Stock of any
cash or other assets (real, personal or mixed, tangible or intangible), in
compensation, indebtedness or otherwise, other than payments of compensation in
the ordinary course of business and consistent with past practice;
(m) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets (real, personal or mixed, tangible or intangible) to
any of the stockholders or any of the Company's officers, directors or employees
or any affiliate of any of the stockholders of the Company or of the Company's
officers, directors or employees, except compensation paid to officers and
employees at rates not exceeding the rates of compensation paid during the
fiscal year last ended and except for advances for travel and other
business-related expenses; or
(n) agreed, whether in writing or otherwise, to take any action described
in this Section 2.7.
2.8 Taxes
(a) (i) All Tax Returns (as defined below) required to be filed by or on
behalf of the Company have been timely filed and all such Tax Returns were (at
the time they were filed) and are true, correct and complete in all respects;
(ii) all Taxes (as
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defined below) of the Company (whether or not reflected on any Tax Return) have
been fully and timely paid; (iii) no waivers of statutes of limitation have been
given or requested with respect to the Company in connection with any Tax
Returns covering the Company with respect to any Taxes payable by it; (iv) no
taxing authority in a jurisdiction where the Company does not file Tax Returns
has made a claim, assertion or threat to the Company that the Company is or may
be subject to taxation by such jurisdiction, and the Company has never been
subject to state taxes (other than payroll taxes that were fully and timely
withheld and paid) in any state other than Washington; (v) the Company has duly
and timely withheld from employee salaries, wages and other compensation and
paid over to the appropriate governmental authority all amounts required to be
so withheld and paid over for all periods under all applicable laws; (vi) there
are no liens with respect to Taxes on any of the Company's property or assets
other than liens for current Taxes not yet payable; (vii) there are no Tax
rulings, requests for rulings, or closing agreements relating to the Company
that could affect the liability for Taxes or the amount of taxable income of the
Company for any period (or portion of a period) after the date hereof; and
(viii) any adjustment of Taxes of the Company made by the IRS (as defined below)
in any examination that is required to be reported to the appropriate state,
local or foreign taxing authorities has been reported, and any additional Taxes
due with respect thereto have been paid.
(b) Neither the Company nor any other Person on behalf of the Company (i)
has filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company;
(ii) has executed or entered into a closing agreement pursuant to Section 7121
of the Code or any predecessor provision thereof or any similar provision of
state, local or foreign law; or (iii) has agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company or has notice that a governmental authority has proposed any such
adjustment or change in accounting method.
(c) There is no outstanding dispute or claim concerning any Tax liability
of the Company, nor to the knowledge of the Company is any such claim or dispute
pending. Schedule 2.8 to the Company Disclosure Memorandum lists all Tax Returns
filed with respect to the Company for taxable periods ended on or after the
Company's inception or the inception of any predecessor that have been audited,
and indicates those Tax Returns that currently are the subject of audit. The
Company has delivered to XxxxXxx.xxx correct and complete copies of all Tax
Returns, examination reports and statements of deficiencies assessed against or
agreed to by the Company since the Company's inception.
-16-
(d) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(e) The Company is not a party to any Tax allocation or sharing agreement.
The Company (i) has not been a member of a Tax Group (as defined below) filing a
consolidated income Tax Return under Section 1501 of the Code (or any similar
provision of state, local or foreign law) and (ii) does not have any liability
for Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local or foreign law) or by operation of law or as a
transferee or successor by contract or otherwise.
(f) The unpaid Taxes of the Company (i) did not, as of December 31, 1999,
exceed the reserve for Tax liability set forth on the face (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) of the Company Balance Sheet and (ii) do not exceed that
reserve as adjusted for the passage of time and operations in the ordinary
course of business through the Closing Date.
(g) The aggregate net income tax losses (including net operating losses) of
the Company have exceeded its taxable income for all periods and there has been
no ownership change, as defined in Section 382(g) of the Code (or any comparable
provision of state or local or foreign law), with respect to the Company during
or after any taxable period in which the Company incurred a net operating loss.
The Company has no liability for unpaid income taxes. (including any liability
for penalties or interest with respect to such taxes). The Company has never
owed income taxes for any tax year (including the portion of the tax year ending
on the date hereof).
(h) All options that the Company has treated as incentive stock options
under Section 421 of the Code meet the requirements of Section 422 of the Code.
As used in this Agreement, the following terms shall have the following
meanings:
"Taxes" means all foreign, federal, state, county or local taxes, charges,
fees, levies, imposts, duties and other assessments, including, but not limited
to, any income, alternative minimum or add-on, estimated, gross income, gross
receipts, sales, use, transfer, transactions, intangibles, ad valorem,
value-added, franchise, registration, title, license, capital, paid-up capital,
profits, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, real property, recording, personal property, federal highway use,
commercial rent, environmental (including, but not limited to, taxes under
Section 59A of the Code) or windfall profit tax, custom, duty or other tax,
-17-
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalties or additions to tax; and "Tax" means any
of the foregoing Taxes.
"Tax Group" means any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which the Company is now
or was formerly a member.
"Tax Returns" means any return, declaration, report, claim or refund,
information return, statement or other similar document relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
2.9 Property
(a) The Company owns no real property other than the leasehold interests
described on Schedule 2.9(a) to the Company Disclosure Memorandum (the "Real
Property"). The Company has delivered to XxxxXxx.xxx or its counsel true and
complete copies of all written leases, subleases, rental agreements, contracts
of sale, tenancies or licenses relating to the Real Property and written
summaries of the terms of any oral leases, subleases, rental agreements,
contracts of sale, tenancies or licenses to which the Real Property is subject.
(b) Schedule 2.9(b) to the Company Disclosure Memorandum contains a
complete and accurate list of each item of personal property having a value in
excess of $10,000 that is owned, leased, rented or used by the Company (the
"Personal Property"); provided that such list need not describe the Technology
or the IP Rights (as defined in Sections 2.14.2 and 2.14.5, respectively),
listed on Schedule 2.14 to the Company Disclosure Memorandum. The Company has
delivered to XxxxXxx.xxx true and complete copies of all leases, subleases,
rental agreements, contracts of sale, tenancies or licenses to which the
Personal Property is subject. The gross value of the Company's assets (including
the assets of Cascade Trade Association) at the time of the Company's
reincorporation as a Nevada corporation did not exceed $500,000.
(c) The Real Property and the Personal Property include all the properties
and assets (whether real, personal or mixed, tangible or intangible) (other
than, in the case of the Personal Property, property rights with an individual
value of less than $10,000 and the Technology and IP Rights) reflected in the
Company Balance Sheet. The Real Property and the Personal Property include all
material property used in the business of the Company, other than the Technology
and IP Rights. The Company's offices and other structures and its Personal
Property are in good operating condition and repair, normal wear and tear
excepted, are adequate for the uses to which they are
-18-
being put, and, to the Company's knowledge, comply in all material respects with
applicable safety and other laws and regulations.
(d) The Company's leasehold interest in each parcel of the Real Property is
free and clear of all Encumbrances. To the Company's knowledge, each lease of
any portion of the Real Property is valid, binding and enforceable in accordance
with its terms against the parties thereto and against any other Person with an
interest in such Real Property, the Company has performed in all material
respects all obligations imposed on it thereunder, and neither the Company nor,
to the knowledge of the Company, any other party thereto is in default
thereunder, nor is there any event that with notice or lapse of time, or both,
would constitute a default thereunder by the Company or, to the knowledge of the
Company, by any other party. The Company has not granted any lease, sublease,
tenancy or license of, or entered into any rental agreement or contract of sale
with respect to, any portion of the Real Property.
(e) The Personal Property is free and clear of all Encumbrances, and, other
than leased Personal Property that is so noted on the list supplied pursuant to
Section 2.9(b), the Company owns such Personal Property. To the Company's
knowledge, each lease, license, rental agreement, contract of sale or other
agreement to which the Personal Property is subject is valid, binding and
enforceable in accordance with its terms against the parties thereto, the
Company has performed in all material respects all obligations imposed on it
thereunder, and neither the Company nor, to the knowledge of the Company, any
other party thereto is in default thereunder, nor is there any event that with
notice or lapse of time, or both, would constitute a default by the Company or,
to the knowledge of the Company, any other party thereunder. The Company has not
granted any lease, sublease, tenancy or license of any portion of the Personal
Property, except in the ordinary course of business.
2.10 Contracts
2.10.1 Material Contracts
As of the date of this Agreement, all of the Company's "material contracts"
as such term is defined under Item 601 of Regulation S-K, have been filed under
the Exchange Act. Except to the extent that such agreements have expired by
their own terms, each agreement disclosed by the Company under the Exchange Act
is in full force and effect, except where the failure to be in full force and
effect would not have a material adverse affect on the business condition of the
Company. None of the parties to any of such agreements have terminated, except
when such agreements have expired under their own terms. The Company has
provided to XxxxXxx.xxx lease documents for any real or personal property in
which the amount of payments that the Company is required to make on an annual
basis exceeds $20,000 and that have not
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been filed as an exhibit to any Company SEC Documents. Except as set forth on
Schedule 2.10.1 to the Company Disclosure Memorandum and the Company SEC
Documents, the Company has no
(a) contracts with directors, officers, stockholders, employees, agents,
consultants, advisors, salespeople, sales representatives, distributors or
dealers that cannot be canceled by the Company within 30 days' notice without
liability, penalty or premium, any agreement or arrangement providing for the
payment of any bonus or commission based on sales or earnings, or any
compensation agreement or arrangement affecting or relating to former employees
of the Company;
(b) employment agreement, whether express or implied, or any other
agreement for services that contains severance or termination pay liabilities or
obligations;
(c) noncompetition agreement or other arrangement that would prevent the
Company from carrying on its business anywhere in the world;
(d) notice that any party to any material contract intends to cancel,
terminate or refuse to renew such contract (if such contract is renewable) or
materially modify such contract;
(e) material dispute with any of its suppliers, material customers,
distributors, OEM resellers, licensors or licensees;
(f) product distribution agreement, development agreement or license
agreement as licensor or licensee (except for standard nonexclusive software
licenses granted to end-user customers in the ordinary course of business, the
form of which has been provided to XxxxXxx.xxx, or standard licenses purchased
by the Company for off-the-shelf software);
(g) joint venture contract or arrangement or any other agreement that
involves a sharing of profits with other persons;
(h) instrument evidencing indebtedness for borrowed money by way of a
direct loan, sale of debt securities, purchase money obligation, conditional
sale or guarantee, or otherwise, except for trade indebtedness incurred in the
ordinary course of business, and except as disclosed in the Company Financial
Statements; and
(i) agreements or commitments to provide indemnification, except as
provided in the Company's Articles of Incorporation, Bylaws and under Nevada
Law.
-20-
2.10.2 Required Consents
The execution and delivery of this Agreement and the performance of the
obligations of the Company hereunder will not constitute a default under any
material contracts or agreements to which the Company is currently a party or by
which the Company currently is bound and do not require the consent or waiver of
any other party to any such contract or agreement, except for those consents
and/or waivers listed on Schedule 2.10.2 to the Company Disclosure Memorandum,
all of which will be obtained on or prior to the Closing.
2.11 Claims and Legal Proceedings
Except as set forth on Schedule 2.11 and Schedule 2.14 to the Company
Disclosure Memorandum, there are no claims, actions, suits, arbitrations,
mediations, investigations or proceedings pending or, to the knowledge of the
Company, threatened against the Company before or by any court or governmental
or nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other Person. To the knowledge of the Company, except as
set forth on Schedule 2.11 and Schedule 2.14 to the Company Disclosure
Memorandum, there is no valid basis for any claim, action, suit, arbitration,
proceeding or investigation before or by any Person. There are no outstanding or
unsatisfied judgments, orders, decrees or stipulations to which the Company is a
party. Schedule 2.11 to the Company Disclosure Memorandum sets forth a
description of any material disputes that have been settled or resolved by
litigation or arbitration since the Company's inception.
2.12 Labor and Employment Matters
There are no material labor disputes, employee grievances or disciplinary
actions pending or, to the knowledge of the Company, threatened against or
involving the Company or any of its present or former employees. The Company has
complied in all material respects with all provisions of law relating to
employment and employment practices, terms and conditions of employment, wages
and hours. The Company is not engaged in any unfair labor practice and has no
liability for any arrears of wages or Taxes or penalties for failure to comply
with any such provisions of law. There is no labor strike, dispute, slowdown or
stoppage pending or, to the knowledge of the Company, threatened against or
affecting the Company, and the Company has not experienced any work stoppage or
other labor difficulty since its incorporation. No collective bargaining
agreement is binding on the Company. The Company has no knowledge of any
organizational efforts presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company. Each employee, officer and
consultant of the Company has executed a nondisclosure agreement in the form
provided to XxxxXxx.xxx. To the knowledge of the Company, no employee (or
-21-
person performing similar functions) of the Company is in violation of any such
agreement or any employment agreement, noncompetition agreement, patent
disclosure agreement, invention assignment agreement, proprietary information
agreement or other contract or agreement relating to the relationship of such
employee with the Company or any other party.
Schedule 2.12 to the Company Disclosure Memorandum lists (a) the names and
current compensation amounts of all directors and officers of the Company; (b)
the wage rates for non-salaried and non-officer salaried employees of the
Company by classification, and all union contracts (if any); (c) all group
insurance programs in effect for employees of the Company; and (d) the names and
current compensation packages of all independent contractors and consultants of
the Company. The Company is not in default with respect to any of its
obligations referred to in clause (b) above and has no, and will not incur any,
obligation or liability for severance or back pay owed through or by virtue of
the Merger. Except as disclosed on Schedule 2.12 to the Company Disclosure
Memorandum, all employees of the Company are employed on an "at will" basis, and
are eligible to work and are lawfully employed in the United States.
2.13 Employee Benefit Plans
2.13.1 Employee Benefit Plan Listing
Schedule 2.13.1 to the Company Disclosure Memorandum contains a complete
and accurate list of all Employee Benefit Plans (as defined below). The Company
does not have any agreement, arrangement, commitment or obligation to create,
enter into or contribute to any additional Employee Benefit Plan or to modify
any existing Employee Benefit Plan. There has been no amendment, interpretation
or other announcement or communication (written or oral) by the Company (or any
other Person) relating to, or change in participation or coverage under, any
Employee Benefit Plan that, either alone or together with other such occurrences
or events, could materially increase the expense of maintaining the Employee
Benefit Plans above the level of expense incurred with respect thereto for the
most recent fiscal year included in the Company Financial Statements. The terms
of each Employee Benefit Plan permit the Company to amend or terminate such
Employee Benefit Plan at any time and for any reason without penalty or material
expense.
2.13.2 Documents Provided
The Company has delivered to XxxxXxx.xxx true, correct and complete copies
(or, in the case of unwritten Employee Benefit Plans, descriptions) of all
Employee Benefit Plans (and all amendments thereto), along with, to the extent
applicable to the
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particular Employee Benefit Plan, copies of the following: (a) the last three
annual reports (Form 5500 series) filed with respect to such Employee Benefit
Plan; (b) all summary plan descriptions, summaries of material modifications and
material employee manuals and communications filed or distributed with respect
to such Employee Benefit Plan during the last three years; (c) all contracts and
agreements (and any amendments thereto) relating to such Employee Benefit Plan,
including, without limitation, all trust agreements, investment management
agreements, annuity contracts, insurance contracts, bonds, indemnification
agreements and service provider agreements; (d) all written communications
relating to the amendment, creation or termination of such Employee Benefit
Plan, or an increase or decrease in benefits, acceleration of payments or
vesting or other events that could result in liability to the Company sent or
received during the last three years; (e) all correspondence to or from any
governmental entity or agency relating to such Employee Benefit Plan sent or
received during the last three years; (f) all COBRA (as defined below) and HIPAA
(as defined below) forms and notices currently in use; and (g) all coverage and
nondiscrimination tests performed with respect to such Employee Benefit Plan for
the last three years.
2.13.3 Compliance
With respect to each Employee Benefit Plan: (a) such Employee Benefit Plan
is, and at all times since inception has been, maintained, administered,
operated and funded in all respects in accordance with its terms and in material
compliance with all applicable requirements of all applicable laws, statutes,
orders, rules and regulations, including, without limitation, ERISA (as defined
below), COBRA, HIPAA and the Code; (b) the Company, each fiduciary of such
Employee Benefit Plan and all other Persons have, at all times, properly
performed all obligations in all material respects, whether arising by operation
of law or by contract, required to be performed by any of them in connection
with such Employee Benefit Plan; (c) all reports, Tax Returns, information
returns and other information and returns relating to such Employee Benefit Plan
required to be filed with any governmental entity or agency have been accurately
completed and timely and properly filed; (d) all notices, statements, reports
and other disclosure required to be given or made to participants in such
Employee Benefit Plan or their beneficiaries have been accurately completed and
timely and properly disclosed or provided; (e) neither the Company nor any
fiduciary of such Employee Benefit Plan has engaged in any transaction or acted
or failed to act in a manner that violates the fiduciary requirements of ERISA
or any other applicable law; (f) no transaction or event has occurred or is
threatened or about to occur (including, without limitation, any of the
transactions contemplated in or by this Agreement or any of the other Operative
Documents) that constitutes or could constitute a "prohibited transaction," as
defined in Section 4975 of the Code or Section 406 or 407 of ERISA;
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and (g) the Company has not incurred, and there exists no condition or set of
circumstances in connection with which the Company, XxxxXxx.xxx, Merger Sub or
any of their affiliates could incur, directly or indirectly, any material
liability or expense (except for routine contributions and benefit payments)
under ERISA, the Code or any other applicable law, statute, order, rule or
regulation with respect to such Employee Benefit Plan or pursuant to any
indemnification or similar agreement related to such Employee Benefit Plan.
2.13.4 Qualification
No Employee Benefit Plan is intended to be qualified under Section 401(a)
2.13.5 Contributions and Premium Payments
All contributions, premiums and other payments due or required to be paid
to (or with respect to) each Employee Benefit Plan have been timely paid, or, if
not yet due, have been fully reserved for, and specifically identified in, the
Closing Balance Sheet.
2.13.6 Related Employers
The Company is not, and has never been, a member of (a) a controlled group
of corporations, within the meaning of Section 414(b) of the Code, (b) a group
of trades or businesses under common control, within the meaning of Section
414(c) of the Code, (c) an affiliated service group, within the meaning of
Section 414(m) of the Code, or (d) any other group of Persons treated as a
single employer under Section 414(o) of the Code.
2.13.7 Certain Pension Plans
The Company does not maintain or contribute to, and has never maintained or
contributed to (or been obligated to contribute to), any multiemployer plan as
defined in Section 3(37) or Section 4001(a)(3) of ERISA or 414(f) of the Code,
any multiple employer plan within the meaning of Section 4063 or 4064 of ERISA
or Section 413(c) of the Code or any employee benefit plan, fund, program,
contract or arrangement that is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA.
2.13.8 Post-Termination Benefits
Neither the Company nor any Employee Benefit Plan provides or has any
obligation to provide (or contribute toward the cost of) post-employment or
post-termination benefits of any kind, including, without limitation, death and
medical
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benefits, with respect to any current or former officer, employee, agent,
director or independent contractor of the Company, other than (a) continuation
coverage mandated by Sections 601 through 608 of ERISA and Section 4980B(f) of
the Code, and (b) deferred compensation that is accrued as a current liability
on the Closing Balance Sheet.
2.13.9 Parachute Payments
The Company has not made any payments, is not obligated to make any
payments and is not a party to any agreement that could obligate it to make any
payments that would not be deductible under Section 280G of the Code (or any
similar provision of state, local or foreign law).
2.13.10 Suits, Claims and Investigations
There are no actions, suits or claims (other than routine claims for
benefits) pending or, to the knowledge of the Company, threatened with respect
to (or against the assets of) any Employee Benefit Plan, nor, to the knowledge
of the Company, is there a basis for any such action, suit or claim. No Employee
Benefit Plan is currently under investigation, audit or review, directly or
indirectly, by the IRS, the DOL (as defined below) or any other governmental
entity or agency, and, to the knowledge of the Company, no such action is
contemplated or under consideration by the IRS, the DOL or any other
governmental entity or agency.
2.13.11 Payments Resulting from Transactions
Except as set forth on Schedule 2.13.11 to the Company Disclosure
Memorandum, either the execution and delivery of this Agreement or the other
Operative Documents nor the consummation of the transactions contemplated in (or
by) this Agreement or the other Operative Documents (either alone or together
with any other transaction or event) will (a) entitle any individual to
severance pay, unemployment compensation or any other payment from the Company,
XxxxXxx.xxx, Merger Sub, any of their affiliates or any Employee Benefit Plan,
(b) increase the amount of compensation due to any individual, (c) result in any
benefit or right becoming established or increased, or accelerate the time of
payment or vesting of any benefit, under any Employee Benefit Plan, or (d)
require the Company, XxxxXxx.xxx, Merger Sub or any of their affiliates to
transfer or set aside any assets to fund or otherwise provide for any benefits
for any individual.
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2.13.12 Definitions
As used in this Agreement, the following terms shall have the following
meanings:
(a) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
(b) "DOL" means the United States Department of Labor.
(c) "Employee Benefit Plan" means any retirement, pension, profit sharing,
deferred compensation, stock bonus, savings, bonus, incentive, cafeteria,
medical, dental, vision, hospitalization, life insurance, accidental death and
dismemberment, medical expense reimbursement, dependent care assistance, tuition
reimbursement, disability, sick pay, holiday, vacation, severance, change of
control, stock purchase, stock option, stock appreciation rights, fringe benefit
or other employee benefit plan, fund, policy, program, contract, arrangement or
payroll practice (including, without limitation, any "employee benefit plan," as
defined in Section 3(3) of ERISA) or any employment, consulting or personal
services contract, whether written or oral, qualified or nonqualified, or funded
or unfunded, (i) sponsored, maintained or contributed to by the Company or to
which the Company is a party, (ii) covering or benefiting any current or former
officer, employee, agent, director or independent contractor of the Company (or
any dependent or beneficiary of any such individual), or (iii) with respect to
which the Company has (or could have) any obligation or liability.
(d) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(e) "HIPAA" means the Health Insurance Portability and Accountability Act
of 1997, as amended.
(f) "IRS" means the United States Internal Revenue Service.
2.14 Intellectual Property
2.14.1 General
The Company owns or is licensed and has all rights that are required to
conduct its business as now conducted and as proposed to be conducted in and to
the following: (a) all products, tools, computer programs, specifications,
source code, object code, graphics, devices, techniques, algorithms, methods,
processes, procedures, packaging, trade dress, formulae, drawings, designs,
improvements, discoveries, concepts, user interfaces, development and other
tools, content, inventions (whether or not patentable
-26-
or copyrightable and whether or not reduced to practice), designs, logos,
themes, know-how, concepts and other technology that are now, or during the two
years prior to the date of this Agreement have been, or currently are proposed
to be, developed, produced, used, marketed or sold by the Company (collectively,
the "Technology-Related Assets"); and (b) all intellectual property and other
proprietary rights in the Technology-Related Assets, including, without
limitation, all trade names, trademarks, domain names, service marks, logos,
brand names and other identifiers, trade secrets, copyrights and domestic and
foreign letters patent, and the registrations, applications, renewals,
extensions and continuations (in whole or in part) thereof, all goodwill
associated therewith and all rights and causes of action for infringement,
misappropriation, misuse, dilution or unfair trade practices associated
therewith.
2.14.2 Company Technology
Schedule 2.14.2 to the Company Disclosure Memorandum sets forth a list of
all products and tools developed, produced, used, marketed or sold by the
Company during the two years prior to the date of this Agreement, together with
all prior versions, predecessors or precursors to such products or tools
(collectively, the "Products"). Except for the Third Party Technologies (as
defined in Section 2.14.3 hereof), the Company owns all right, title and
interest in and to the following (collectively, the "Technology"), free and
clear of all Encumbrances: (a) the Products, together with any and all codes,
techniques, software tools, formats, designs, user interfaces, content related
thereto; (b) any and all updates, enhancements, corrections, modifications,
improvements and new releases related to the items set forth in clause (a)
above; (c) any and all technology and work in progress related to the items set
forth in clauses (a) and (b) above; and (d) all inventions, discoveries,
processes, designs, trade secrets, know-how and other confidential or
proprietary information related to the items set forth in clauses (a), (b), and
(c) above. The Technology, excluding the Third Party Technologies (as defined
below), is sometimes referred to herein as the "Company Technology."
2.14.3 Third Party Technology
Schedule 2.14.3 to the Company Disclosure Memorandum sets forth a list of
all Technology used in the Company's business for which the Company does not own
all right, title and interest (collectively, the "Third Party Technologies"),
and all license agreements or other contracts pursuant to which the Company has
the right to use (in the manner used by the Company, or intended or necessary
for use with the Company Technology) the Third Party Technologies (the "Third
Party Licenses"), indicating, with respect to each of the Third Party
Technologies listed therein, the owner thereof and the Third Party License
applicable thereto. The Company has the lawful right to
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use (free of any material restriction) (a) all Third Party Technology that is
incorporated in or used in the development or production of the Company
Technology and (b) all other Third Party Technology necessary for the conduct of
the Company's business as now conducted and as proposed to be conducted. To the
Company's knowledge, all Third Party Licenses are valid, binding and in full
force and effect; the Company and, to the knowledge of the Company, each other
party thereto has performed in all material respects his, her or its obligations
thereunder; and neither the Company nor, to the knowledge of the Company, any
other party thereto is in material default thereunder, nor to knowledge of the
Company has there occurred any event or circumstance that with notice or lapse
of time or both would constitute a default or event of default on the part of
the Company or, to the knowledge of the Company, any other party thereto or give
to any other party thereto the right to terminate or modify any Third Party
License. The Company has not received notice that any party to any Third Party
License intends to cancel, terminate or refuse to renew such Third Party License
or to exercise or decline to exercise any option or right thereunder.
2.14.4 Trademarks
Schedule 2.14.4 to the Company Disclosure Memorandum sets forth a list of
all trademarks, trade names, brand names, service marks, logos or other
identifiers for the Products or otherwise used by the Company in its business
(the "Marks"). The Company has full legal and beneficial ownership, free and
clear of any Encumbrances, of all rights conferred by use of the Marks in
connection with the Products or otherwise in the Company's business and, as to
those Marks that have been registered in the United States Patent and Trademark
Office, by federal registration of the Marks.
2.14.5 Intellectual Property Rights
Schedule 2.14.5 to the Company Disclosure Memorandum sets forth all
patents, patent applications, copyright registrations (and applications
therefor) and trademark registrations (and applications therefor) (collectively,
the "IP Registrations") associated with the Company Technology and the Marks.
The Company owns all right, title and interest, free and clear of any
Encumbrances, in and to the IP Registrations, together with any other rights in
or to any copyrights (registered or unregistered), rights in the Marks
(registered or unregistered), trade secret rights and other intellectual
property rights (including, without limitation, rights of enforcement) contained
or embodied in the Company Technology and the Marks (collectively, the "IP
Rights").
2.14.6 Maintenance of Rights
Except as set forth on Schedule 2.14.6 to the Company Disclosure
Memorandum, the Company has not conducted its business, and has not used or
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enforced (or, to the knowledge of the Company, failed to use or enforce) the IP
Rights, in a manner that would result in the abandonment, cancellation or
unenforceability of any item of the IP Rights or the IP Registrations, and the
Company has not taken (or, to the knowledge of the Company, failed to take) any
action that would result in the forfeiture or relinquishment of any IP Rights or
IP Registrations. Except as set forth in Schedule 2.14.6 to the Company
Disclosure Memorandum, the Company has not granted to any third party any rights
or permissions to use any of the Technology or the IP Rights. To the knowledge
of the Company, except pursuant to reasonably prudent safeguards, (a) no third
party has received any confidential information relating to the Technology or
the IP Rights and (b) the Company is not under any contractual or other
obligation to disclose to any third party any Company Technology.
2.14.7 Third Party Claims
Except as set forth on Schedule 2.14.7 to the Company Disclosure
Memorandum, (a) the Company has not received any notice or claim (whether
written, oral or otherwise) challenging the Company's ownership or rights in the
Company Technology or the IP Rights or claiming that any other person or entity
has any legal or beneficial ownership with respect thereto; (b) all the IP
Rights are legally valid and enforceable without any material qualification,
limitation or restriction on their use, and the Company has not received any
notice or claim (whether written, oral or otherwise) challenging the validity or
enforceability of any of the IP Rights; and (c) to the knowledge of the Company,
no other person or entity is infringing or misappropriating any part of the IP
Rights or otherwise making any unauthorized use of the Company Technology.
2.14.8 Infringement by the Company
Except as set forth on Schedule 2.14.8 to the Company Disclosure
Memorandum, (a) the use of any of the Technology in the Company's business as
now conducted and as currently planned to be conducted does not and will not
infringe, violate or interfere with or constitute an appropriation of any right,
title or interest (including, without limitation, any patent, copyright or trade
secret right) held by any other person or entity, and there have been no claims
made with respect thereto; (b) the use of any of the Marks and other IP Rights
in the Company's business will not infringe, violate or interfere with or
constitute an appropriation of any right, title or interest (including, without
limitation, any patent, copyright, trademark or trade secret right) held by any
other person or entity, and there have been no claims made with respect thereto;
and (c) the Company has not received any notice or claim (whether written, oral
or otherwise) regarding any infringement, misappropriation, misuse, abuse or
other interference with any third party intellectual property or proprietary
rights
-29-
(including, without limitation, infringement of any patent, copyright, trademark
or trade secret right of any third party) by the Company, the Technology or the
Marks or other IP Rights, or claiming that any other entity has any claim of
infringement with respect thereto.
2.14.9 Confidentiality
Except as set forth on Schedule 2.14.9 to the Company Disclosure
Memorandum, (a) the Company has not disclosed any source code regarding the
Technology to any person or entity other than an employee or consultant of the
Company who is under a written nondisclosure agreement; (b) the Company has at
all times maintained and diligently enforced commercially reasonable procedures
to protect all confidential information relating to the Technology; (c) neither
the Company nor any escrow agent is under any contractual or other obligation to
disclose the source code or any other proprietary information included in or
relating to the Technology; and (d) the Company has not deposited any source
code relating to the Technology into any source code escrows or similar
arrangements. If, as disclosed on Schedule 2.14.9 to the Company Disclosure
Memorandum, the Company has deposited any source code to the Technology into
source code escrows or similar arrangements, no event has occurred that has or
could reasonably form the basis for a release of such source code from such
escrows or arrangements.
2.14.10 Warranty Against Defects
Except as set forth in Schedule 2.14.10 to the Company Disclosure
Memorandum, the Technology is free from known material defects and substantially
conforms to the applicable specifications, documentation and samples of such
Technology.
2.14.11 Domain Names
Schedule 2.14.11 to the Company Disclosure Memorandum sets forth a list of
all Internet domain names used by the Company in its business (collectively, the
"Domain Names"). The Company has, and at the Effective Time the Surviving
Corporation will have, a valid registration and all material rights (free of any
material restriction) in and to the Domain Names, including, without limitation,
all rights necessary to continue to conduct the Company's business as it is
currently conducted and proposed to be conducted following the Effective Time.
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2.14.12 Year 2000
Each hardware, software and firmware product used by the Company in its
business (collectively, the "Software") accurately processes date data
(including, but not limited to, calculating, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries, including, without
limitation, leap year calculations, without a material decrease in the
functionality of the Software. The Software is designed to be used prior to,
during and after the calendar year 2000 A.D. and will operate during each such
time period without material error relating to date data, specifically including
any error relating to, or the product of, date data that represents or
references different centuries or more than one century. Without limiting the
generality of the foregoing, the Software (a) will not abnormally end or provide
invalid or incorrect results as a result of date data, specifically including
date data that represents or references different centuries or more than one
century; (b) has been designed to ensure material year 2000 compatibility,
including, but not limited to, date data century recognition, calculations that
accommodate same century and multi-century formulas and date values, and date
data interface values that reflect the century; and (c) includes "Year 2000
Capabilities," meaning that the Software (i) will manage and manipulate data
involving dates, including single century formulas and multicentury formulas,
and will not cause an abnormally ending scenario within the application or
generate incorrect values or invalid results involving such dates; (ii) provides
that all date-related user interface functionalities and data fields include the
indication of century; and (iii) provides that all date-related data interface
functionalities include the indication of century.
2.14.13 Participating Developers
Schedule 2.14.13 to the Company Disclosure Memorandum contains a complete
list of all Participating Developers (as defined below), specifying for each
relationship between the Participating Developer and the Company (e.g.,
employee, contractor, etc.), all dates during which the relationship was in
effect and a list of any documents or other items relating to such relationship.
The Company has furnished to XxxxXxx.xxx or its counsel full and complete copies
of such documents and other items identified in Schedule 2.14.13. "Participating
Developer" means any person or entity that has, at any time and in any way,
participated or contributed to the Development of any IP Rights or any of the
Company Technology. "Development" means create, author, design, engineer,
invent, modify, discover, reduce to practice or develop. Each Participating
Developer has signed a nondisclosure agreement in the form provided to
XxxxXxx.xxx, and such agreement transfers to the named transferee any and all
right, title and interest which the named Participating Developer may have or
acquire in and to the IP Rights and the Technology.
-31-
2.15 Corporate Books and Records
The Company has furnished to XxxxXxx.xxx or its representatives for their
examination true and complete copies of (a) the Articles of Incorporation and
Bylaws of the Company as currently in effect, including all amendments thereto,
(b) the minute books of the Company, and (c) the stock transfer books of the
Company. Such minutes reflect all meetings of the Company's stockholders, Board
of Directors and any committees thereof since the Company's inception, and such
minutes accurately reflect in all material respects the events of and actions
taken at such meetings. Such stock transfer books accurately reflect all
issuances and transfers of shares of capital stock of the Company since its
inception.
2.16 Licenses, Permits, Authorizations, etc.
Except as identified on Schedule 2.16 to the Company Disclosure Memorandum,
the Company has received all currently required material governmental approvals,
authorizations, consents, licenses, orders, registrations and permits of all
agencies, whether federal, state, local or foreign (the "Permits"). The Company
is in compliance in all material respects with the terms of all Permits, and all
the Permits are valid and in full force and effect, and no proceeding is
pending, or to the knowledge of the Company, threatened, the object of which is
to revoke, limit or otherwise affect any of the Permits. The Company has not
received any notifications of any asserted present failure by it to have
obtained any Permit, or any past and unremedied failure to obtain such items.
2.17 Compliance With Laws
Except as described on Schedule 2.17 to the Company Disclosure Memorandum,
the business and operations of the Company have been conducted in compliance in
all material respects with all federal, state, local and foreign laws, rules,
regulations, ordinances, decrees and orders applicable to it, to its employees
or to the Real Property and the Personal Property, including, without
limitation, all such laws, rules, regulations, ordinances, decrees and orders
relating to intellectual property protection, antitrust matters, consumer
protection, currency exchange, environmental protection, equal employment
opportunity, health and occupational safety, pension and employee benefit
matters, securities and investor protection matters, labor and employment
matters and trading-with-the-enemy matters, except where the failure to so
conduct its business and operations would not be reasonably likely to have a
material adverse effect on the business or financial condition of the Company
and its subsidiaries, taken as a whole. The Company has not received any
notification of any asserted present or past unremedied failure by the Company
to comply with any of such laws, rules, regulations, ordinances, decrees or
orders.
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2.18 Insurance
The Company Disclosure Memorandum sets forth a true and correct list of all
insurance policies maintained by the Company and includes the policy number,
amount of coverage and contact information for each such policy. The Company
maintains commercially reasonable levels of (a) insurance on its property
(including leased premises) that insures against loss or damage by fire or other
casualty and (b) insurance against liabilities, claims and risks of a nature and
in such amounts as are normal and customary in the Company's industry for
companies of similar size and financial condition. All insurance policies of the
Company are in full force and effect, all premiums with respect thereto covering
all periods up to and including the date this representation is made have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy or binder. Such policies or binders are sufficient
for compliance with all requirements of law currently applicable to the Company
and of all agreements to which the Company is a party, will remain in full force
and effect through the respective expiration dates of such policies or binders
without the payment of additional premiums, and will not in any way be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement. The Company has not been refused any insurance with respect to its
assets or operations, nor has its coverage been limited, by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance.
2.19 Brokers or Finders
The Company has not incurred, and will not incur, directly or indirectly,
as a result of any action taken by or on behalf of the Company, any liability
for brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Merger, this Agreement or any transaction contemplated
hereby.
2.20 Absence of Questionable Payments
Neither the Company nor, to the Company's knowledge, any director, officer,
agent, employee or other Person acting on behalf of the Company has used any
Company funds for improper or unlawful contributions, payments, gifts or
entertainment, or made any improper or unlawful expenditures relating to
political activity to domestic or foreign government officials or others. The
Company has reasonable financial controls to prevent such improper or unlawful
contributions, payments, gifts, entertainment or expenditures. Neither the
Company nor, to the Company's knowledge, any current director, officer, agent,
employee or other Person acting on behalf of the Company has accepted or
received any improper or unlawful contributions, payments, gifts or
expenditures. The Company has at all times complied, and is in compliance, in
all respects with the Foreign Corrupt Practices Act
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and all foreign laws and regulations relating to prevention of corrupt practices
and similar matters.
2.21 Bank Accounts
Schedule 2.21 to the Company Disclosure Memorandum sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains safe deposit boxes or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access to such safe deposit boxes or
accounts.
2.22 Customers and Suppliers
Schedule 2.22 to the Company Disclosure Memorandum sets forth (a) a
complete and accurate list of the customers of the Company accounting for 5% or
more of the Company's revenues during the fiscal year last ended and the period
ended December 31, 1999, showing the approximate total revenues from each such
customer during the fiscal year last ended and the period ended December 31,
1999 and (b) a complete and accurate list of the suppliers of the Company from
whom the Company has purchased 5% or more of the goods or services purchased by
the Company in the fiscal year last ended and the period ended December 31,
1999. The Company has not received any notice from its customers or suppliers
that would cause it, in its reasonable judgment, to expect any material
modification to its relationship with any customer or supplier named on such
Schedule 2.22 to the Company Disclosure Memorandum.
2.23 Accounts Receivable
All accounts receivable of the Company reflected in the Company Balance
Sheet ("Accounts"), or existing at the Effective Time, represent sales actually
made in the ordinary course of business and were recorded in the Company's books
consistent with the presentation applied in the Company Financial Statements for
the year ended March 31, 1999. Except as described on Schedule 2.23 to the
Company Disclosure Memorandum, the bad debt reserves and sales return allowances
reflected in the Company Balance Sheet are adequate. Set forth on Schedule 2.23
to the Company Disclosure Memorandum are a full and complete list and aging
study of all Accounts. To the knowledge of the Company, all Accounts existing
and remaining unpaid at the Effective Time will be collectible by the Surviving
Corporation in the ordinary course of business, consistent with past practice.
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2.24 Creditors' List
Schedule 2.24 to the Company Disclosure Memorandum sets forth a full,
complete and accurate list of all creditors of Company, with the amount payable
to each such creditor as of the date hereof.
2.25 Insider Interests
Except as set forth on Schedule 2.25 to the Company Disclosure Memorandum,
no stockholder or officer or director of the Company has any interest (other
than as a stockholder of the Company) (a) in any Real Property, Personal
Property, Technology or IP Rights used in or directly pertaining to the business
of the Company, including, without limitation, inventions, patents, trademarks
or trade names, or (b) in any agreement, contract, arrangement or obligation
relating to the Company, its present or prospective business or its operations.
Except as set forth on Schedule 2.25 to the Company Disclosure Memorandum or as
contemplated by this Agreement, there are no agreements, understandings or
proposed transactions between the Company and any of its officers, directors,
stockholders, affiliates or any affiliate thereof. The Company and its officers
and directors have no interest, either directly or indirectly, in any entity,
including, without limitation, any corporation, partnership, joint venture,
proprietorship, firm, licensee, business or association (whether as an employee,
officer, director, stockholder, agent, independent contractor, security holder,
creditor, consultant or otherwise), other than ownership of capital stock
comprising less than 1% of any publicly held company, that presently (i)
provides any services, produces and/or sells any products or product lines, or
engages in any activity that is the same, similar to or competitive with any
activity or business in which the Company is now engaged or proposes to engage;
(ii) is a supplier, customer or creditor; or (iii) has any direct or indirect
interest in any asset or property (real or personal, tangible or intangible) of
the Company or any property (real or personal, tangible or intangible) that is
necessary or desirable for the present or currently anticipated future conduct
of the Company's business.
2.26 Compliance With Environmental Laws
Neither the Company nor, to the knowledge of the Company, any other Person
(including, without limitation, any previous owner, lessee or sublessee) has
treated, stored or disposed of any material amounts of petroleum products,
hazardous waste, hazardous substances, pollutants or contaminants on the Real
Property, or any real property previously owned, leased, subleased or used by
the Company in the operation of its business, in violation of any applicable
foreign, federal, state or local statutes, regulations or ordinances, or common
law, in each case as in existence at or prior to the Closing. To the knowledge
of the Company, there have been no releases of any
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material amounts of petroleum, petroleum products, hazardous waste, hazardous
substances, pollutants or contaminants on, at or from any assets or properties,
including, without limitation, the Real Property, owned, leased, subleased or
used by the Company in the operation of its business during the time such assets
or properties were owned, leased, subleased or used by the Company (or, to the
knowledge of the Company, prior to such time), including, without limitation,
any releases of any material amounts of petroleum, petroleum products, hazardous
waste, hazardous substances, pollutants or contaminants in violation of any law.
2.27 Information Supplied by the Company
None of the information supplied or to be supplied by the Company or its
subsidiaries, auditors, attorneys, financial advisors or other consultants or
advisors for inclusion in (i) the registration statement on Form S-4, and any
amendment thereto, to be filed under the Securities Act with the SEC by
XxxxXxx.xxx in connection with the issuance of the XxxxXxx.xxx Common Stock in
or as a result of the Merger (the "S-4"), or (ii) the proxy statement and any
amendment or supplement thereto to be distributed in connection with Company's
meetings of stockholders to vote upon this Agreement and the transactions
contemplated hereby (the "Proxy Statement" and, together with the prospectus
included in the S-4, the "Proxy Statement/Prospectus") will, in the case of the
Proxy Statement and any amendment or supplement thereto, at the time of the
mailing of the Proxy Statement and any amendment or supplement thereto, and at
the time of the meeting of stockholders of the Company to vote upon this
Agreement and the transactions contemplated hereby, or, in the case of the S-4,
as amended or supplemented, at the time it becomes effective and at the time of
any post-effective amendment thereto and at the time of the meeting of
stockholders of the Company, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they are
made, not misleading or necessary to correct any statement in any earlier filing
with the SEC of such Proxy Statement/Prospectus or any amendment or supplement
thereto or any earlier communication (including the Proxy Statement/Prospectus)
to stockholders of the Company with respect to the transactions contemplated by
this Agreement.
2.28 Full Disclosure
Neither this Agreement or the Operative Documents (including, but not
limited to, the Company Financial Statements and all information in the Company
Disclosure Memorandum and the other Exhibits hereto) contains any untrue
statement by the Company of a material fact or omits to state a material fact
necessary in order to make the statements so made or information so delivered
not misleading.
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2.29 Xxxx-Xxxxx-Xxxxxx
The Company is its own ultimate parent entity as defined under the rules
and regulations promulgated under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "Xxxx-Xxxxx-Xxxxxx Act"). The Company is not a $10
million person as defined thereunder. The Company is not "engaged in
manufacturing" for purposes of the Xxxx-Xxxxx-Xxxxxx Act.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
XXXXXXX.XXX AND MERGER SUB
In order to induce the Company to enter into and perform this Agreement and
the Operative Documents, XxxxXxx.xxx and Merger Sub jointly and severally
represent and warrant to the Company as follows in this Article III:
3.1 Organization
XxxxXxx.xxx is a corporation duly organized and validly existing under the
laws of the state of Washington. Merger Sub is a corporation duly organized and
validly existing under the laws of the state of Washington. Each of XxxxXxx.xxx
and Merger Sub has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement and the Operative
Documents to which it is a party and to consummate the transactions contemplated
hereby and thereby. All the issued and outstanding shares of capital stock of
Merger Sub are held of record and beneficially by XxxxXxx.xxx.
3.2 Enforceability
All corporate action on the part of XxxxXxx.xxx and Merger Sub and their
respective officers, directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement and the Operative
Documents, the consummation of the Merger and the performance of all their
respective obligations under this Agreement and the Operative Documents has been
taken or will be taken prior to the Effective Time. This Agreement and each of
the Operative Documents has been duly executed and delivered by each of
XxxxXxx.xxx and Merger Sub, as applicable, and this Agreement and each of the
Operative Documents is a legal, valid and binding obligation of each of
XxxxXxx.xxx and Merger Sub, as applicable, enforceable against each of them in
accordance with its terms.
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3.3 Securities
The Closing Shares to be issued pursuant to this Agreement have been, or
will be prior to the Effective Time, duly authorized for issuance, and such
Closing Shares, when issued and delivered pursuant to this Agreement, shall be
validly issued, fully paid and nonassessable.
3.4 No Approvals or Notices Required; No Conflicts With Instruments
The execution, delivery and performance of this Agreement and the Operative
Documents by Merger Sub and XxxxXxx.xxx, as applicable, and the consummation by
them of the transactions contemplated hereby and thereby will not
(a) constitute a violation (with or without the giving of notice or lapse
of time, or both) of any provision of law or any judgment, decree, order,
regulation or rule of any court or other governmental authority applicable to
XxxxXxx.xxx or Merger Sub;
(b) require any consent, approval or authorization of, or declaration,
filing or registration with, any Person, except (i) compliance with applicable
securities laws; (ii) the filing of all documents necessary to consummate the
Merger with the Washington Secretary and the Nevada Secretary; (iii) the filing
of a premerger notification report and all other required documents by
XxxxXxx.xxx and the Company, and the expiration of all applicable waiting
periods, under the HSR Act; and (iv) any filings with the SEC including such
reports and information as may be required under the Exchange Act, the
Securities Act and the rules and regulations promulgated by the SEC under the
Exchange Act or the Securities Act and the declaration of the effectiveness of
the S-4 by the SEC; or
(c) conflict with or result in a breach of or constitute a default under
any provision of the Articles of Incorporation or Bylaws of XxxxXxx.xxx or
Merger Sub.
3.5 Information Supplied by XxxxXxx.xxx or Merger Sub
None of the information supplied or to be supplied by XxxxXxx.xxx or its
subsidiaries, auditors, attorneys, financial advisors, other consultants or
advisors or Merger Sub for inclusion in the S-4 or the Proxy
Statement/Prospectus, will, in the case of the Proxy Statement and any amendment
or supplement thereto, at the time of the mailing of the Proxy Statement and any
amendment or supplement thereto, and at the time of any meeting of stockholders
of the Company to vote upon this Agreement and the transactions contemplated
hereby, or in the case of the S-4, as amended or supplemented, at the time it
becomes effective and at the time of any post-effective
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amendment thereto and at the time of the meeting of stockholders of the Company,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they are made, not misleading or
necessary to correct any statement in any earlier filing with the SEC of such
Proxy Statement/Prospectus or any amendment or supplement thereto or any earlier
communication (including the Proxy Statement/Prospectus) to stockholders of the
Company with respect to the transactions contemplated by this Agreement.
3.6 Full Disclosure
Neither this Agreement or the Operative Documents contains any untrue
statement by XxxxXxx.xxx or Merger Sub of a material fact or omits to state a
material fact necessary in order to make the statements so made or information
so delivered not misleading.
3.7 Capitalization
(a) The authorized capital stock of XxxxXxx.xxx consists of 200,000,000
shares of XxxxXxx.xxx Common Stock, par value $.001 per share, 42,923,035 of
which are issued and outstanding as of December 31, 1999, and 5,000,000 shares
of Preferred Stock, $.001 par value per shares, none of which are issued and
outstanding as of_December 31, 1999. As of December 31, 1999, there are
7,586,112 shares of XxxxXxx.xxx Common Stock reserved for issuance upon the
exercise of outstanding stock options under the XxxxXxx.xxx 1999 Non-Officer
Stock Option Plan and 1996 Combined Incentive and Nonqualified Stock Option
Plan. The Shares of XxxxXxx.xxx Common Stock to be issued pursuant to the Merger
in accordance with Section 1.7.1 and the shares of XxxxXxx.xxx Common Stock
which will be issued upon exercise of the options granted in accordance with
Section 1.9 have been duly and validly authorized, have been reserved for
issuance and upon issuance in accordance with the terms hereof or thereof, will
be duly authorized, validly issued, fully paid and nonassessable.
3.8 SEC Documents; Financial Statements
(a) XxxxXxx.xxx has filed all forms, reports and documents required to be
filed by it with the SEC since September 28, 1999 through the date of this
Agreement (collectively, the "XxxxXxx.xxx SEC Documents"). As of their
respective filing dates, the XxxxXxx.xxx SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such XxxxXxx.xxx SEC Documents, and none of the XxxxXxx.xxx SEC Documents
contained any untrue
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statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective filing dates, the financial statements of XxxxXxx.xxx included in the
XxxxXxx.xxx SEC Documents (the "XxxxXxx.xxx Financial Statements") complied as
to form in all material respects with all applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto and
were prepared in accordance with GAAP consistently applied (except as may be
indicated in the notes thereto) and fairly presented, in all material respects,
the consolidated financial position of XxxxXxx.xxx and its subsidiaries as at
the dates thereof and the results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring audit adjustments not material in scope or amount). There has been no
change in XxxxXxx.xxx's accounting policies or the methods of making accounting
estimates or changes in estimates that are material to the XxxxXxx.xxx Financial
Statements, except as described in the notes thereto.
(b) Except as disclosed in the XxxxXxx.xxx SEC Documents as filed and
amended before the date hereof and as contemplated by this Agreement, since
September 30, 1999, no material adverse change in the business, financial
condition, results of operations or prospects of XxxxXxx.xxx has occurred.
Changes in the trading prices of XxxxXxx.xxx Common Stock or a public offering
of XxxxXxx.xxx Common Stock shall not be deemed material adverse changes under
this Agreement.
3.9 Compliance With Laws
The business and operations of XxxxXxx.xxx have been conducted in
compliance in all material respects with all federal, state, local and foreign
laws, rules, regulations, ordinances, decrees and orders applicable to it, to
its employees or to its property, including, without limitation, all such laws,
rules, regulations, ordinances, decrees and orders relating to intellectual
property protection, antitrust matters, consumer protection, currency exchange,
environmental protection, equal employment opportunity, health and occupational
safety, pension and employee benefit matters, securities and investor protection
matters, labor and employment matters and trading-with-the-enemy matters, except
where the failure to so conduct its business and operations would not be
reasonably likely to have a material adverse effect on the business or financial
condition of XxxxXxx.xxx and its subsidiaries, taken as a whole. XxxxXxx.xxx has
not received any notification of any asserted present or past unremedied failure
by XxxxXxx.xxx to comply with any of such laws, rules, regulations, ordinances,
decrees or orders.
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3.10 Tax Matters
Solely for tax purposes, ShopNow represents the following:
(a) It has no present plan or intention to cause Merger Sub to issue, after
the Merger, additional shares of Merger Sub stock (or rights to acquire shares
of Merger Sub stock) or take any other action that would result in XxxxXxx.xxx
losing control of Merger Sub, as defined in Section 368(c) of the Code.
(b) XxxxXxx.xxx has no present plan or intention to directly or indirectly
(including through a party related to XxxxXxx.xxx within the meaning of Treasury
Regulation 1.368-1(e)(3)) reacquire any of its stock issued pursuant to the
Merger such that the Merger would fail the "continuity of proprietary interest"
requirement set forth in Treasury Regulation Section 1.368-1(e).
(c) It has no present plan or intention to: (i) cause Merger Sub to sell,
transfer or otherwise dispose of any of its assets or of any of the assets
acquired from the Company except for dispositions made in the ordinary course of
business or for the payment of expenses incurred by the Company in connection
with the Merger; (ii) liquidate Merger Sub; (iii) merge Merger Sub with or into
another corporation including ShopNow or any of its affiliates; or (iv) to sell,
distribute or otherwise dispose of the stock of Merger Sub, other than as would
be allowed by Section 368(a)(2)(C) of the Code or the corresponding Treasury
Regulations.
(d) It is ShopNow's present plan or intention to cause Merger Sub to
continue the Company's historic business or use a significant portion of the
Company's historic business assets in a business within the meaning of Treasury
Regulation 1.368-1(d).
ARTICLE IV - CONDITIONS PRECEDENT TO OBLIGATIONS
OF XXXXXXX.XXX AND MERGER SUB
The obligations of XxxxXxx.xxx and Merger Sub to perform and observe the
covenants, agreements and conditions hereof to be performed and observed by them
at or before the Closing shall be subject to the satisfaction of the following
conditions, which may be expressly waived only in writing signed by XxxxXxx.xxx
and Merger Sub:
4.1 Accuracy of Representations and Warranties
The representations and warranties of the Company contained herein
(including applicable Exhibits or Schedules to the Company Disclosure
Memorandum) and in the
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Operative Documents shall have been true and correct in all material respects
when made and, except (a) for changes contemplated by this Agreement and the
Operative Documents, (b) for representations and warranties qualified by
materiality which shall be correct in all respects and (c) to the extent that
such representations and warranties speak as of an earlier date, shall be true
and correct in all material respects as of the Closing Date, as though made on
that date.
4.2 Performance of Agreements
The Company shall have performed in all material respects all obligations
and agreements and complied with all covenants contained in this Agreement or
any Operative Document to be performed and complied with by it at or prior to
the Closing.
4.3 Opinion of Counsel for the Company
XxxxXxx.xxx shall have received the opinion letter of Xxxxxx & Xxxxxxx LLP,
counsel for the Company, dated the Closing Date in the form attached hereto as
Exhibit 4.3.
4.4 Compliance Certificate
XxxxXxx.xxx shall have received a certificate of the President and the
Chief Financial Officer of the Company, dated the Closing Date, in form and
substance reasonably satisfactory to XxxxXxx.xxx, (a) certifying that the
conditions to the obligations of XxxxXxx.xxx and Merger Sub in Sections 4.1,
4.2, 4.5, 4.6, 4.12, and 4.13 have been fulfilled, and (b) verifying the
accuracy of the information contained in the Option Consideration Spreadsheet
(as defined below).
4.5 Material Adverse Change
Since the date of the Company Balance Sheet and through the Closing, there
shall not have occurred any change that is or is reasonably likely to be
materially adverse to the Company's business, financial condition, operations,
properties or prospects. Changes in the trading prices of the Company Common
Stock shall not be deemed a material adverse change.
4.6 Approvals and Consents
All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary for the consummation of the transactions contemplated hereby,
including, if applicable, approvals or notices required by the Xxxx-Xxxxx-Xxxxxx
Act, or for the continued
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operation of the Company, shall have been obtained, and all waiting periods
specified by law shall have passed. All other consents, approvals and notices
referred to in this Agreement shall have been obtained or delivered.
4.7 Proceedings and Documents; Secretary's Certificate
XxxxXxx.xxx shall have received a certificate of the Secretary of the
Company, in form and substance reasonably satisfactory to XxxxXxx.xxx, as to the
authenticity and effectiveness of the actions of the Board of Directors of the
Company and the stockholders authorizing the Merger and the transactions
contemplated by this Agreement and the Operative Documents. Copies of (a) the
Company's Articles of Incorporation, certified by the Nevada Secretary, (b) the
Company's Bylaws, certified by the Secretary of the Company, and (c) the
resolutions of the Board of Directors of the Company and the stockholders
relating to the transactions contemplated by this Agreement and the Operative
Documents shall be attached to such certificate.
4.8 Non-U.S. Real Property Holding Corporation Affidavit
XxxxXxx.xxx shall have received from the Company, pursuant to Section 1445
of the Code, a Foreign Investment in Real Property Tax Act Affidavit in the form
attached hereto as Exhibit 4.8.
4.9 Compliance With Laws
The effectiveness of the Merger and the performance by XxxxXxx.xxx, Merger
Sub, and the Company of their respective obligations pursuant to this Agreement
and the Operative Documents shall be legally permitted by all laws and
regulations to which XxxxXxx.xxx, Merger Sub, the Company and the stockholders
of the Company are subject.
4.10 Legal Proceedings
No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened that would enjoin, restrain, condition
or prevent consummation of this Agreement or any Operative Document.
4.11 Noncompetition Arrangements
Each of the Management Members and Retained Employees who has been offered
and has accepted employment with XxxxXxx.xxx shall have executed the XxxxXxx.xxx
standard form of Intellectual Property Agreement (Confidentiality,
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Invention Assignment, Non-raiding and Noncompetition) in the form attached
hereto as Exhibit 4.11 and each such agreement shall be in full force and effect
on the Closing Date.
4.12 Termination of Certain Agreements
Any and all rights of refusal, co-sale rights and registration rights for
the benefit of the holders of Company Common Stock, or Stock Purchase Rights set
forth in the Company Disclosure Memorandum, shall have terminated. The Company
shall also terminate the following agreements: (i) the BBE Purchase Agreement
and Note, (ii) the Share Pledge Agreement Among International Barter Corp., Xxx
Xxxxx and Barter Business Exchange Inc., dated Xxxxx 0, 0000, (xxx) all
employment agreements with current Ubarter employees (including, without
limitation, those employment agreements with Xxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxx
Xxxxx, Xxxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxx,
Xxxxxxxx Xxxxx and Xxxxxxx Xxxxxx and Xxxxxxx Xxxx), (iii) the Alpine Capital
Note and Alpine Capital Warrant (as to registration rights) (iv) the Share
Purchase Agreement, dated May 12, 1999, among Xxxx Xxxxxx, Xxxxx Xxxxxx, the
Company and Barter Business Exchange (Windsor), Inc. (as to registration rights)
and (v) all agreements with Astra Ventures and Momentous. In addition, the
Company shall withdraw its Registration Statement on Form SB-2, as amended.
4.13 Exercise or Termination of Stock Purchase Rights; Conversion of Convertible
Securities
Any and all Stock Purchase Rights (including all options to purchase shares
of the Company's Common Stock) and any and all securities and notes convertible
at any time into Company Common Stock, vested and unvested, and regardless of
restrictions on exercise or conversion, shall have been exercised or converted
(for cash or on a cashless basis) for shares of Company Common Stock, or shall
have been terminated, as the case may be, immediately prior to the Effective
Time.
4.14 Company Option Plan
The Company shall accelerate the vesting of all options issued and
outstanding under the Company Option Plan and shall make such amendments to the
Company Option Plan as are reasonably requested by XxxxXxx.xxx. The Company
shall make all tax withholdings with respect to the exercise of options
following such acceleration as required by law and prior to the Effective Time.
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4.15 Consents to Merger
Schedule 2.10.2 to the Company Disclosure Memorandum lists certain
agreements, leases, notes or other documents identified in the schedules to the
Company Disclosure Memorandum that, by their terms require consent or waiver to
consummate the Merger. Unless otherwise set forth in Schedule 2.10.2 to the
Company Disclosure Memorandum, the Company shall have received and shall have
delivered to XxxxXxx.xxx or its counsel written consents to the Merger or
waivers, as applicable, from each of the parties (other than the Company) to
such agreements, leases, notes or other documents, which consents or waivers, as
the case may be, shall be reasonably satisfactory in all respects to
XxxxXxx.xxx.
4.16 Resignations
XxxxXxx.xxx and Merger Sub shall have received copies of the resignations,
effective as of the Effective Time, of all the directors and officers of the
Company.
4.17 Tax Clearance Certificates
The Company shall provide to XxxxXxx.xxx tax clearance certificates from
those states, including but not limited to Nevada, in which the Company is
engaged in business.
4.18 Releases of Liens
Prior to the Effective Time, except as agreed to in writing by XxxxXxx.xxx,
the Company shall obtain the release of any and all Encumbrances with respect to
any of the Company's assets except for such Encumbrances that are incurred in
the ordinary course of the Company's business and are not material.
4.19 Stockholder Approval
This Agreement and the Merger shall have been approved by the Company's
stockholders as required by the Company's Articles of Incorporation and
applicable law.
4.20 Affiliate Letters
The Company shall have delivered or caused to be delivered to XxxxXxx.xxx
an Affiliate Letter substantially in the form of Exhibit 4.20 from each of those
Persons who were, on the date on which the requisite number of consents or votes
has been obtained to approve the Merger, "affiliates" of the Company within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act.
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4.21 Voting Agreements
Xxxxxx Xxxxx and New Horizons, LP (the "Key Stockholders") shall have
executed, concurrently with the execution of this Agreement, and have fulfilled
the terms of, voting agreements in the form of Exhibit 4.21.
4.22 S-4
The S-4 shall have become effective under the Securities Act and shall not
be the subject of any stop order or proceedings seeking a stop order and the
Proxy Statement shall not be at the Effective Time subject to any proceedings
commenced or threatened by the SEC.
4.23 Agreements With Certain Stockholders of the Company
XxxxXxx.xxx and Astra Ventures shall have entered into an agreement wherein
at the Closing, in exchange for the termination of all obligations of the
Company to or agreements with Astra Ventures, XxxxXxx.xxx shall pay to Astra
Ventures $675,000 in cash and that number of shares of XxxxXxx.xxx Common Stock
determined by dividing $675,000 by $17.31. XxxxXxx.xxx and Momentous shall have
entered into an agreement wherein at the Closing XxxxXxx.xxx shall issue to
Momentous a warrant to purchase 20,000 shares of XxxxXxx.xxx Common Stock in
exchange for the cancellation and retirement of all indebtedness under the
Momentous Note. Such warrant shall have a one-year term and an exercise price
equal to the closing sales price of XxxxXxx.xxx Common Stock as reported on the
Nasdaq National Market on the trading day immediately preceding the Effective
Time.
4.24 Employment and Consulting Agreements
XxxxXxx.xxx and Liad Meidar shall have entered into an Employment Agreement
in substantially the form attached hereto as Exhibit 4.24A. XxxxXxx.xxx and
Xxxxxx Xxxxx shall have entered into a Consulting Agreement substantially in the
form attached hereto as Exhibit 4.24B.
4.25 Lock-Up Agreements
XxxxXxx.xxx shall have entered into Lock-Up Agreements in substantially the
form attached hereto as Exhibit 4.25A with Xxxxxx Xxxxx and Liad Meidar.
XxxxXxx.xxx and New Horizons LP shall have entered into the Lock-Up Agreement in
substantially the form attached hereto as Exhibit 4.25B.
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4.26 Tax Opinion
XxxxXxx.xxx shall have received an opinion from Xxxxxxx Coie LLP to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, Xxxxxxx Coie LLP shall be
entitled to rely upon customary representation letters signed by the Company,
XxxxXxx.xxx and Merger Sub.
4.27 No Dissenters Rights
Holders of not more than 5% of the outstanding shares of Company Common
Stock shall have delivered before the Effective Time timely written notice of
such holders' intent to demand payment as dissenting shareholders for such
shares in accordance with Nevada Law.
4.28 Board Actions
The Company shall provide XxxxXxx.xxx or its counsel with evidence
reasonably satisfactory to XxxxXxx.xxx or its counsel that all corporate actions
reflected in the minutes of the Company and all stock issuances and options
grants have been duly authorized by the board of directors of the Company.
ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY
The obligations of the Company to perform and observe the covenants,
agreements and conditions hereof to be performed and observed by it at or before
the Closing shall be subject to the satisfaction of the following conditions,
which may be expressly waived only in writing signed by the Company.
5.1 Accuracy of Representations and Warranties
The representations and warranties of XxxxXxx.xxx and Merger Sub contained
herein and in the Operative Documents shall have been true and correct in all
material respects when made and, except (a) for changes contemplated by this
Agreement and the Operative Documents and (b) to the extent that such
representations and warranties speak as of an earlier date, shall be true and
correct as of the Closing Date as though made on that date.
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5.2 Performance of Agreements
XxxxXxx.xxx and Merger Sub shall have performed in all material respects
all obligations and agreements and complied with all covenants contained in this
Agreement or any Operative Document to be performed and complied with by them at
or prior to the Closing.
5.3 Compliance Certificate
The Company shall have received a certificate of an officer of XxxxXxx.xxx,
dated the Closing Date, in form and substance reasonably satisfactory to the
Company, certifying that the conditions to the obligations of the Company in
Sections 5.1, 5.2, 5.5 and 5.6 have been fulfilled.
5.4 Legal Proceedings
No order of any court or administrative agency shall be in effect that
enjoins, restrains, conditions or prohibits consummation of this Agreement or
any Operative Document, and no litigation, investigation or administrative
proceeding shall be pending or threatened which would enjoin, restrain,
condition or prevent consummation of this Agreement or any Operative Document.
5.5 Material Adverse Change
Since the date of this Agreement and through the Closing, there shall not
have occurred any material change in the business, financial condition,
operations, properties or prospects of XxxxXxx.xxx. Changes in the trading
prices of XxxxXxx.xxx Common Stock or a public offering of XxxxXxx.xxx Common
Stock shall not be deemed material adverse changes under this Agreement.
5.6 Approvals and Consents
All transfers of permits or licenses and all approvals of or notices to
public agencies, federal, state, local or foreign, the granting or delivery of
which is necessary on the part of XxxxXxx.xxx and Merger Sub for the
consummation of the transactions contemplated hereby, shall have been obtained,
and all waiting periods specified by law shall have passed. All other consents,
approvals and notices on the part of XxxxXxx.xxx and Merger Sub referred to in
this Agreement shall have been obtained or delivered.
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5.7 Compliance With Laws
The effectiveness of the Merger and the performance by XxxxXxx.xxx, Merger
Sub and the Company of the obligations hereunder and under the Operative
Documents shall be legally permitted by all laws and regulations to which
XxxxXxx.xxx, Merger Sub and the Company are subject.
5.8 Opinion of Counsel
The Company shall have received the opinion letter of Xxxxxxx Coie LLP,
counsel for XxxxXxx.xxx and Merger Sub, dated the Closing Date, in the form of
Exhibit 5.8.
5.9 S-4
The S-4 shall have become effective under the Securities Act and shall not
be the subject of any stop order or proceedings seeking a stop order and the
Proxy Statement shall not be at the Effective Time subject to any proceedings
commenced or threatened by the SEC.
5.10 Tax Opinion
The Company shall have received an opinion from Xxxxxx & Whitney LLP to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, Xxxxxx & Xxxxxxx LLP
shall be entitled to rely upon customary representation letters signed by the
Company, XxxxXxx.xxx and Merger Sub.
ARTICLE VI - COVENANTS
Between the date of this Agreement and the Effective Time, the parties
covenant and agree as set forth in this Article VI.
6.1 Conduct of Business by the Company Pending the Merger
Unless XxxxXxx.xxx shall otherwise agree in writing, the Company covenants
and agrees to conduct the Company's business between the date of this Agreement
and the Effective Time in and only in, and the Company shall not take any action
except in, the ordinary course of business and in a manner consistent with past
practice and in accordance with applicable law; and the Company shall use its
reasonable best efforts to preserve intact the business organization of the
Company, to keep available the services of the current officers, employees and
consultants of the Company and to preserve the current relationships of the
Company with, and the goodwill of,
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customers, suppliers and other Persons with which the Company has significant
business relations. By way of amplification and not limitation, except as
otherwise contemplated by this Agreement, the Company shall not, between the
date of this Agreement and the Effective Time, directly or indirectly do, or
propose to do, any of the following without the prior written consent of
XxxxXxx.xxx:
(a) amend or otherwise change the Company's Articles of Incorporation or
Bylaws;
(b) except for the issuance of shares of Company Common Stock upon the
exercise or conversion of currently outstanding Stock Purchase Rights, issue,
sell, contract to issue or sell, pledge, dispose of, grant, encumber or
authorize the issuance, sale, pledge, disposition, grant or Encumbrance of (i)
any shares of capital stock of any class of the Company, (ii) any assets of the
Company, except in the ordinary course of business and in a manner consistent
with past practice or (iii) any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom interest)
of the Company;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock or other securities, property or otherwise, with respect
to any of its capital stock;
(d) reclassify, combine, split, subdivide, redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock or other securities;
(e) (i) acquire (including, without limitation, by merger, consolidation,
or acquisition of stock or assets) any corporation, partnership, other business
organization or division thereof or any material amount of assets; (ii) incur
any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans or advances, except in the
ordinary course of business and consistent with past practice; (iii) enter into
any contract or agreement other than in the ordinary course of business,
consistent with past practice; (iv) authorize any single capital expenditure
which is in excess of $50,000 or capital expenditures which are, in the
aggregate, in excess of $200,000 for the Company taken as a whole; (v) enter
into any agreement in which the obligation of the Company exceeds $50,000 or
which shall not terminate or be subject to termination for convenience within 30
days following execution; (vi) license any Technology or IP Rights; or (vii)
enter into or amend any contract, agreement, commitment or arrangement with
respect to any matter set forth in this subsection (e);
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(f) enter into or amend any employment, consulting or agency agreement, or
increase the compensation payable or to become payable to its officers,
employees, agents or consultants, or grant any severance or termination pay to,
or enter into any employment or severance agreement with, any director, officer
or other employee of the Company, or establish, adopt, enter into or amend any
Employee Benefit Plan, collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance, benefit or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting methods, policies or procedures (including, without limitation,
procedures with respect to the payment of accounts payable and collection of
accounts receivable);
(h) make any Tax election or settle or compromise any Tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice;
(j) take any action that would or is reasonably likely to result in any of
the representations or warranties of the Company set forth in this Agreement
being untrue in any material respect, or in any covenant of the Company set
forth in this Agreement being breached, or in any of the conditions to the
Merger specified in Article IV not being satisfied; or
(k) agree to do any of the foregoing.
6.2 Access to Information; Confidentiality
From the date hereof to the Effective Time, the Company shall, and shall
cause the officers, directors, employees and agents of the Company to, afford
the officers, employees and agents of XxxxXxx.xxx access at all reasonable times
to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and shall furnish XxxxXxx.xxx with
all financial, operating and other data and information as XxxxXxx.xxx , through
its officers, employees or agents, may reasonably request. From the date hereof
until the Effective Time, the Company shall provide XxxxXxx.xxx with monthly and
other financial statements of the Company as they become available internally at
the Company, all of which financial statements shall fairly present the
financial position and results of operations of the Company as
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of the dates and for the periods therein specified. No investigation pursuant to
this Section 6.2 shall affect any representation or warranty in this Agreement
of any party hereto or any condition to the obligations of the parties hereto.
The parties shall continue to comply with and to perform their respective
obligations under the Mutual Nondisclosure Agreement between XxxxXxx.xxx and the
Company entered into as of December 17, 1999.
6.3 No Alternative Transactions
(a) Unless this Agreement shall have been terminated in accordance with its
terms, the Company shall not, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any Person relating to any acquisition or purchase of
all or (other than in the ordinary course of business) any material portion of
the assets of, or any equity interest in, the Company or any business
combination with the Company (an "Alternative Transaction"), or participate in
any negotiations regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate or negotiate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing. The Company shall notify XxxxXxx.xxx
promptly if any such proposal or offer, or any inquiry or contact with any
Person with respect thereto, is made and shall, in any such notice to
XxxxXxx.xxx, indicate in reasonable detail the identity of the Person making
such proposal, offer, inquiry or contact and the terms and conditions of such
proposal, offer, inquiry or contact. The Company agrees not to release any third
party from, or waive any provision of, any confidentiality or standstill (e.g.,
agreement not to invest in or seek change of control of the Company) agreement
to which the Company is a party. Notwithstanding the foregoing, in the event the
Company receives a bona fide offer or proposal from any third party regarding an
Alternative Transaction (an "Offer") the Company may accept such Offer (after
complying with Section 6.3(b) below) if the board of directors of the Company
reasonably determines after due consideration of the factual basis and the
advice of counsel experienced in such matters that such action is required by
law; provided, however, that any such action by the Company shall be deemed a
breach of this Section 6.3 for purposes of determining whether the Company must
pay the Termination Fee described in Section 7.2.
(b) In the event the Company receives an Offer as described in the last
sentence of Section 6.3(a), then the Company shall, prior to accepting such
Offer or entering into any definitive agreement with respect to the Offer,
notify XxxxXxx.xxx in writing of: (a) all of the terms and conditions of such
Offer (which notice shall include a copy of any term sheets and proposed
definitive agreements reflecting such terms and conditions and include the
identity of the third party or parties making the
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Offer); (b) the Company's intention of accepting the Offer on such terms and
conditions; and (c) the Company's agreement to enter into a proposed Alternative
Transaction with XxxxXxx.xxx on terms and conditions substantially similar to
those set forth in the Offer (a "Notice of Offer"). XxxxXxx.xxx will have 10
days from the receipt of such Notice of Offer (the "Exclusivity Period") to
deliver written notice to the Company of XxxxXxx.xxx's acceptance of the
Company's offer to enter into an agreement with the Company providing for a
Alternative Transaction on terms and conditions substantially similar to those
set forth in the Notice of Offer (a "Notice of Acceptance"); provided, however,
that to the extent that the consideration being offered to the Company in the
Offer consists of property other than cash or securities, then XxxxXxx.xxx's
acceptance shall, in lieu of such noncash property or securities, provide for
the payment of other consideration to the Company of substantially equivalent
fair market value. The Company agrees that it will not accept any Offer, enter
into any definitive agreement providing for, or otherwise consummate any
Alternative Transaction with any third party other than XxxxXxx.xxx until the
expiration of the Exclusivity Period. If XxxxXxx.xxx delivers a Notice of
Acceptance to the Company prior to the expiration of the Exclusivity Period,
then XxxxXxx.xxx and the Company shall, within 20 days following receipt of the
Notice of Acceptance, enter into an agreement, on final terms and conditions to
be negotiated in good faith between them, providing for a Alternative
Transaction on the terms and conditions provided for in the Notice of Offer and
Notice of Acceptance.
6.4 Notification of Certain Matters
Each party shall give prompt notice to the other parties of (a) the
occurrence or nonoccurrence of any event that would be reasonably likely to
cause any representation or warranty made by such party contained in this
Agreement to be untrue or inaccurate in any material respect and (b) any
material failure by such party to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 6.4 shall not
limit or otherwise affect the remedies available to the parties hereunder.
6.5 Further Action; Commercially Reasonable Efforts
Upon the terms and subject to the conditions hereof, each of the parties
hereto shall use commercially reasonable efforts to take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, including, without limitation,
using commercially reasonable efforts to obtain all waivers, licenses, permits,
consents, approvals, authorizations,
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qualifications and orders of governmental authorities and parties to contracts
with the Company as are necessary for the consummation of the transactions
contemplated hereby and to fulfill the conditions to the Merger. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement or the Operative Documents, each party
to this Agreement shall use commercially reasonable efforts to promptly take all
such action. After the Closing, each party hereto, at the request of and without
any further cost or expense to the other parties, shall take any further actions
reasonably necessary or desirable to carry out the purposes of this Agreement or
any Operative Document, to vest in the Surviving Corporation full title to all
properties, assets and rights of the Company and to effect the issuance of the
Closing Shares pursuant to the terms and conditions hereof.
6.6 Publicity
No party hereto shall issue any press release or otherwise make any
statements to any third party with respect to this Agreement or the transactions
contemplated hereby other than the issuance by XxxxXxx.xxx of a press release
announcing this Agreement and the transactions contemplated hereby or as
required by law. Any party who is required by law to make any such disclosure
must provide notice in advance of the disclosure to all other parties. Such
notice shall contain (a) the contents of the proposed disclosure; (b) the
reasons that the party contemplating disclosure believes that disclosure is
required by law; and (c) the proposed time and place of such disclosure.
6.7 Bring-Down Capitalization Schedule
No later than three days prior to the Closing, the Company shall deliver to
XxxxXxx.xxx an updated version of Schedule 2.3 to the Company Disclosure
Memorandum (Capitalization). The updated Schedule 2.3 shall be deemed an
amendment to Schedule 2.3 attached hereto.
6.8 Execution of All Operative Documents
Each party shall execute at or prior to the Closing each Operative Document
to which he, she or it is a party.
6.9 Stockholder Approval
The Company will call a special Stockholders Meeting as soon as practicable
but in no event later than 30 days after the Form S-4 is declared effective by
the SEC to submit this Agreement, the Merger and related matters for the
consideration and approval of the Company's Stockholders ("Company Stockholders
Meeting"). Such
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approval will be recommended by the Company's Board of Directors, subject to the
fiduciary obligations of its directors. Such meeting will be called, held and
conducted, and any proxies will be solicited, in compliance with applicable law.
6.10 Preparation of S-4
The Company will as promptly as practicable provide to XxxxXxx.xxx and its
counsel for inclusion within the Proxy Statement/Prospectus and the S-4 in a
form reasonably satisfactory to XxxxXxx.xxx and its counsel, such information
concerning the Company, its operations, capitalization, technology, share
ownership and other information as XxxxXxx.xxx or its counsel may reasonably
request. By February 15, 2000, or as soon as practicable thereafter, XxxxXxx.xxx
and the Company shall prepare and file with the SEC the Proxy Statement and any
other documents required by the Exchange Act in connection with the Merger, and
XxxxXxx.xxx shall prepare and file with the SEC the S-4, in which the Proxy
Statement will be included as a part of the prospectus. Each of XxxxXxx.xxx and
the Company shall use its commercially reasonable best efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing. Prior to the effective date of the S-4, XxxxXxx.xxx shall also take
any action required to be taken under any applicable federal or state securities
or blue sky laws in connection with the issuance of the XxxxXxx.xxx Common Stock
in the Merger. The Company agrees that the Proxy Statement/Prospectus will
comply as to form in all material respects with the provisions of all applicable
laws, including the provisions of the Exchange Act and the rules and regulations
of the SEC thereunder, except that no representation is made by the Company with
respect to information supplied by XxxxXxx.xxx specifically for inclusion
therein. XxxxXxx.xxx agrees that the S-4 and the Proxy Statement/Prospectus will
comply as to form in all material respects with the provisions of all applicable
laws including the provisions of the Securities Act and the Exchange Act and the
rules and regulations of the SEC thereunder, except that no representation is
made by XxxxXxx.xxx with respect to information supplied by the Company
specifically for inclusion therein.
6.11 XxxxXxx.xxx Common Stock
XxxxXxx.xxx agrees to authorize for listing on the Nasdaq National Market
the shares of XxxxXxx.xxx Common Stock comprising the Closing Shares by filing
with the Nasdaq National Market a Notification of Listing of Additional Shares
(or such other form as may be required by the Nasdaq National Market) as soon as
reasonably practicable after the Closing or otherwise in accordance with the
rules and regulations of the Nasdaq National Market.
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6.12 Retirement of Indebtedness
Immediately prior to the Effective Time, XxxxXxx.xxx agrees to pay off all
outstanding indebtedness of the Company under the Alpine Capital Note.
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1 Termination
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding approval of this Agreement by
the stockholders):
(a) by mutual written consent of the Company and XxxxXxx.xxx;
(b) by either the Company or XxxxXxx.xxx, if the Merger has not been
consummated by June 22, 2000; provided, however, that the right to terminate
this Agreement under this subsection (b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by either the Company or XxxxXxx.xxx, if there shall be any law or
regulation that makes consummation of the Merger illegal or if any judgment,
injunction, order or decree enjoining XxxxXxx.xxx, Merger Sub or the Company
from consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and non-appealable; provided, however, that the party
seeking to terminate this Agreement pursuant to this subsection (c) shall have
used all reasonable efforts to remove such judgment, injunction, order or
decree;
(d) by the Company, in the event of a material breach by XxxxXxx.xxx or
Merger Sub of any representation, warranty or agreement contained herein that
has not been cured or is not curable by June 22, 2000; or
(e) by XxxxXxx.xxx, in the event of a material breach by the Company of any
representation, warranty or agreement contained herein that has not been cured
or is not curable by June 22, 2000.
(f) by either XxxxXxx.xxx or the Company upon written notice to the other
party, in the event that the Undisclosed Liability as determined in accordance
with Section 1.7.1(c)(ii) exceeds $1,000,000 and the parties are unable to agree
within 15 days after the date such Undisclosed Liability is determined to any
adjustment to the Closing Shares.
-56-
7.2 Effect of Termination
(a) Except as specifically provided in this Section 7.2, in the event of
the termination of this Agreement pursuant to Section 7.1 hereof, there shall be
no further obligation on the part of any party hereto, except that nothing
herein shall relieve any party from liability for any willful breach hereof.
(b) If XxxxXxx.xxx shall terminate this Agreement pursuant to (i) Section
7.1(b) by reason of the Company's failure or inability to satisfy the conditions
to the Merger or (ii) Section 7.1(e) by reason of the Company's breach of the
covenants contained in Sections 6.1, 6.3 or 6.6 (a "Breakup Termination"), and
the Company consummates an Alternative Transaction on or before the one-year
anniversary of such termination, the Company shall: (i) pay to XxxxXxx.xxx upon
the closing of the Alternative Transaction a termination fee (the "Termination
Fee"), equal to 20% of the aggregate value of cash and non-cash consideration
(including the assumption of any liabilities of the Company) received and to be
received by the Company and/or its stockholders in respect of such Alternative
Transaction in excess of $45 million.
ARTICLE VIII - GENERAL
8.1 Survival
All representations and warranties contained in this Agreement or in the
Operative Documents or in any certificate delivered pursuant hereto or thereto
shall terminate upon the Effective Time. The covenants and agreements contained
in this Agreement shall survive and continue until all obligations with respect
thereto shall have been performed or satisfied or shall have been terminated in
accordance with their terms.
8.2 Tax Matters - Reorganization Treatment
Solely for tax purposes and except as otherwise required by law,
XxxxXxx.xxx shall, and shall cause Merger Sub and the Company to: (a) report the
Merger as a reorganization under Section 368(a)(1) of the Code on all applicable
U.S. federal, state and local Tax Returns (as defined in Section 2.8) and (b)
keep records and file in connection with their respective U.S. federal and state
Tax Returns all such information as may be required by Treasury Regulation
Section 1.368-3.
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8.3 Expenses
If the transactions contemplated by this Agreement are not consummated,
each party shall pay its own fees and expenses incident to the negotiation,
preparation and execution of this Agreement and the Operative Documents
(including legal and accounting fees and expenses); provided, however, that the
attorneys' fees and expenses of the prevailing party in any action brought
hereunder shall be paid by the other party to such action. If the transactions
contemplated by this Agreement are consummated, XxxxXxx.xxx will pay the
reasonable fees and expenses of the Company and the Key Stockholders incident to
the negotiation, preparation and execution of this Agreement and the Operative
Documents (other than the costs and expenses of the attorneys, accountants and
other representatives of the Key Stockholders in excess of $10,000, which excess
expenses shall remain the responsibility of the Key Stockholders). The
stockholders of the Company shall pay any and all brokerage or finders' fees or
agents' commissions or any similar charges incurred in connection with the
Merger and set forth on Schedule 2.19 to the Company Disclosure Memorandum.
8.4 Notices
Any notice, request or demand desired or required to be given hereunder
shall be in writing given by personal delivery, confirmed facsimile transmission
or overnight courier service, in each case addressed as respectively set forth
below or to such other address as any party shall have previously designated by
such a notice. The effective date of any notice, request or demand shall be the
date of personal delivery, the date on which successful facsimile transmission
is confirmed or the date actually delivered by a reputable overnight courier
service, as the case may be, in each case properly addressed as provided herein
and with all charges prepaid.
TO XXXXXXX.XXX OR MERGER SUB:
XxxxXxx.xxx Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000 Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
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Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
TO THE COMPANY:
Xxxxxxx.xxx Inc.
0000 0xx Xxxxxx Xxxxx 000
Xxxxxxx, XX 00000
Fax: (000)000-0000
Attention: Xxxxxx X. Xxxxx
with a copy to:
Xxxxxx & Xxxxxxx LLP
U.S. Bank Building Center
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxx
8.5 Severability
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision 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 in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
8.6 Entire Agreement
This Agreement, the Operative Documents, that certain Non-Disclosure
Agreement dated on or about December 17, 1999, and the XxxxXxx.xxx Note,
constitute the entire agreement among the parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and thereof (including, without limitation, the Letter of
Intent, dated
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December 20, 1999, between XxxxXxx.xxx, the Company, and the Key Stockholders).
8.7 Assignment
This Agreement shall not be assigned by operation of law or otherwise;
provided, however, that Merger Sub's rights and obligations may be assigned to
and assumed by XxxxXxx.xxx or any other corporation wholly owned (directly or
through intermediate wholly owned subsidiaries) by XxxxXxx.xxx.
8.8 Parties in Interest
This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their respective successors, heirs, legal representatives and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
8.9 Governing Law; Venue
This Agreement shall be governed by, and construed in accordance with, the
laws of the state of Washington applicable to contracts executed in and to be
performed in that state. The parties irrevocably consent to the jurisdiction and
venue of the state and federal courts located in King County, Washington in
connection with any action relating to this Agreement (except to the extent
provisions of Nevada Law apply to the Merger).
8.10 Headings
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.11 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
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8.12 Waiver of Jury Trial
Each of XxxxXxx.xxx, the Company and Merger Sub hereby irrevocably waives
all right to trial by jury in any action, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating to this
Agreement, the transactions contemplated hereby or the actions of such parties
in the negotiation, administration, performance and enforcement hereof.
8.13 Amendment
This Agreement may not be amended except by an instrument in writing signed
by XxxxXxx.xxx, Merger Sub and the Company.
8.14 Waiver
At any time prior to the Effective Time, any party hereto may (a) extend
the time for the performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
or parties to be bound thereby.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement and Plan of Merger as of the date and year first above written.
XXXXXXX.XXX INC.
------------------------------------------
Name -------------------------------------
Its -------------------------------------
SHAMU ACQUISITION, INC.
------------------------------------------
Name -------------------------------------
Its -------------------------------------
XXXXXXX.XXX INC.
------------------------------------------
Name -------------------------------------
Its -------------------------------------
EXHIBIT 4.3
OPINION OF COUNSEL TO XXXXXXX.XXX INC.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing and in good standing under
the laws of the State of Nevada. The Company has all necessary corporate power
and corporate authority to own, operate and lease its properties and to conduct
its business as now conducted as described in the Prospectus/Proxy Statement.
2. The Company has the corporate power and authority to execute, deliver
and perform its obligations under the Merger Agreement . The Merger Agreement
has been duly authorized, executed and delivered by the Company.
3. The Merger Agreement is a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to qualifications.
4. Neither the execution and delivery by the Company of the Merger
Agreement nor the consummation by the Company of the Merger contemplated therein
nor the performance by the Company of its obligations thereunder and the
consummation of the Merger will (a) constitute a violation of any federal,
Nevada or Washington state statute, regulation or rule having the force of law,
(b) cconstitute a material default (or with the provision of notice or lapse of
time or both would constitute a maertial default) under the provisions of any
agreement included as an exhibit to the Company's Annual Report on Form 10-KSB
for the year ended March 31, 1999, or by any report filed with the SEC
subsequent thereto or as set forth in Schedule 2.10.1 to the Company Disclosure
Memorandum, to which the Company is a party or to which the Company or its
properties is bound or affected, or (c) violate the Articles or Bylaws of the
Company.
5. The authorized capital stock of the Company consists of 25,000,000
shares of Company Common Stock and 10,000,000 shares of Preferred Stock, $.001
par value per share. All the shares of the Company's capital stock issued and
outstanding immediately prior to the Effective Time are duly authorized, validly
issued, nonassessable and fully paid. To our knowledge, except as set forth in
Section 2.3 of the Merger Agreement and Schedule 2.3(c) to the Disclosure
Memorandum, and based solely on a review of copies of the Company's
capitalization records and minute book and a certificate from Company officers,
there are no outstanding rights of first refusal or offer, preemptive rights,
Stock Purchase Rights or
other agreements for the purchase or acquisition from the Company of any
additional shares of capital stock of the Company or any securities convertible
into or exercisable or exchangeable for shares of capital stock of the Company,
and the Company is not committed to issue or grant any such rights, Stock
Purchase Rights or other agreements.
6. To our knowledge, there is no legal or governmental proceeding pending
or threatened to which the Company is a party that we believe is likely to have
a material adverse effect on the ability of the Company to consummate the
transactions contemplated by the Merger Agreement.
7. To our knowledge, no authorization of any domestic governmental or
regulatory authority is required for the execution and delivery of the Merger
Agreement on behalf of the Company or for the Merger, except such as have been
obtained, other than compliance with applicable securities laws, the filing of
the Articles of Merger with the Nevada Secretary of State and the filing of the
Agreement of Merger with the Washington Secretary of State, together with an
officers' certificate executed by Purchaser and an officers' certificate
executed by the Company, as contemplated by Section 1.3 of the Merger Agreement
and as required by Nevada Law and Washington Law.
8. Subject to the filing of the Articles of Merger with the Nevada
Secretary of State and the filing of the Agreement of Merger with the Washington
Secretary of State, together with an officers' certificate executed by Purchaser
and an officers' certificate executed by the Company, the Merger shall become
effective under Nevada law on the date and at the time set forth in the
Agreement of Merger.
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EXHIBIT 4.8
NOTICE OF NON-U.S. REAL PROPERTY HOLDING CORPORATION
STATUS PURSUANT TO TREASURY REGULATION SECTION 1.897-2(h)(2)
Pursuant to an Agreement and Plan of Merger among XxxxXxx.xxx Inc., a
Washington corporation ("XxxxXxx.xxx"), Shamu Acquisition, Inc., a Washington
corporation and wholly owned subsidiary of XxxxXxx.xxx ("Merger Sub") and
Xxxxxxx.xxx Inc., a Nevada corporation (the "Company"), dated as of January __,
2000 (the "Merger Agreement"), the Company will merge with and into Merger Sub,
with Merger Sub being the surviving corporation (the "Merger"). In the Merger,
all of the treasury shares of the Company will be cancelled, all of the
outstanding capital stock of the Company and options to acquire capital stock of
the Company will be automatically converted into the right to receive shares of
XxxxXxx.xxx, and all of the outstanding shares of Merger Sub will be
automatically converted into shares of the Company.
Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that a transferee of a U.S. Real Property Interest (as that term is
defined in Section 897(c)(1)(A)(ii) of the Code) must withhold tax if the
transferor is not a U.S. person. In order to confirm that the XxxxXxx.xxx, as
transferee, is not required to withhold tax upon the receipt of the Company's
capital stock in the Merger, the undersigned hereby certifies as follows:
1. The capital stock of the Company to be received by XxxxXxx.xxx pursuant
to the Merger Agreement does not constitute a U.S. Real Property Interest;
2. The determination in Paragraph 1 above is based on a determination by
the Company that the Company is not and has not been a U.S. Real Property
Holding Corporation (as that term is defined in Section 897(c)(2) of the Code)
during the five-year period preceding the date of this Notice, as indicated
below;
3. the Company is not a foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the Code and the Income
Tax Regulations);
4. the Company's U.S. employer identification number is 00-0000000;
5. the Company's office address is 00000 Xxxxxxxxxxxxx Xxxx. #000, Xxxxxxx,
XX 00000; and
6. the Company hereby authorizes XxxxXxx.xxx to file this notice in its
behalf with the Internal Revenue Service within 30 days after the date this
notice is delivered to XxxxXxx.xxx.
This Notice is made in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2). the Company understands that any false
statement contained herein could be punished by fine, imprisonment or both.
Under penalties of perjury, the undersigned officer hereby declares that he
has examined this notice and, to the best of his knowledge and belief, it is
true, correct and complete, and the undersigned officer further declares that he
has authority to sign this document on behalf of the Company.
Xxxxxxx.xxx Inc.
Dated: -------------, 2000 By: --------------------------------
Title: -----------------------------
[SIGNATURE PAGE TO FIRPT CERTIFICATE]
----------------, 2000
Assistant Commissioner (International)
Director, Officer of Compliance
OP:I:C:E: 666
950 L'Enfant Plaza South, S.W.
COMSTAT Building
Washington, D.C. 20024
Re: Notice of Non-U.S. Real Property Holding Corporation Status
Ladies and Gentlemen:
This Certificate is being provided by Xxxxxxx.xxx, Inc., a Nevada
corporation ("the Company"), pursuant to the requirements of Treasury Regulation
Section 1.897-2(h)(2).
The attached Notice of Non-U.S. Real Property Holding Corporation Status
Pursuant to Treasury Regulation Section 1.897-2(h)(2) was not requested by a
foreign interest holder. Such Notice was requested by XxxxXxx.xxx, a Washington
corporation ("XxxxXxx.xxx"), the transferee of the stock of the Company. The
Company is located at 00000 Xxxxxxxxxxxxx Xxxx. #000, Xxxxxxx, XX 00000. The
Company's Taxpayer Identification Number is 00-0000000.
The interests in question, shares of the Company capital stock to be
received by XxxxXxx.xxx pursuant to an Agreement and Plan of Merger, are not
U.S. Real Property Interests, as that term is defined in Section
897(c)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended.
Under penalties of perjury, the undersigned officer hereby declares that he
has examined this Certificate and the attachment Notice and, to the best of his
knowledge and belief, they are true, correct and complete, and the undersigned
officer further declares that he has authority to sign this document on behalf
of the Company.
Xxxxxxx.xxx Inc.
Dated: -------------, 2000 By: --------------------------------
Title: -----------------------------
EXHIBIT 4.11
XXXXXXX.XXX INC.
INTELLECTUAL PROPERTY AGREEMENT
(Confidentiality, Invention Assignment, Nonraiding and Noncompetition)
I, the undersigned employee, agree as follows for the benefit of
XXXXXXX.XXX INC., its parents, subsidiaries and affiliates (collectively,
"XxxxXxx.xxx"):
1. Confidentiality. I agree that information that is not generally known to
the public to which I have been or will be exposed as a result of my being
employed by XxxxXxx.xxx is confidential information that is and shall remain the
exclusive property of XxxxXxx.xxx. This includes information developed by me,
alone or with others, or entrusted to XxxxXxx.xxx by its customers or others. I
acknowledge that this confidential information constitutes a valuable asset of
XxxxXxx.xxx. I will hold XxxxXxx.xxx's confidential information in strict
confidence, and not disclose or use it except as authorized by XxxxXxx.xxx and
for XxxxXxx.xxx's benefit. If anyone tries to compel me to disclose any of
XxxxXxx.xxx's confidential information, by subpoena or otherwise, I will
immediately notify XxxxXxx.xxx so that XxxxXxx.xxx may take any actions it deems
necessary to protect its interests. My agreements to protect XxxxXxx.xxx's
confidential information apply both while I am employed by XxxxXxx.xxx and after
my employment by XxxxXxx.xxx ends, regardless of the reason it ends.
My obligations under the prior paragraph shall end two years after (a) my
employment by XxxxXxx.xxx ends or (b) I return to XxxxXxx.xxx all materials
(including documents and electronic media) that contain any of XxxxXxx.xxx's
confidential information, whichever occurs later.
XxxxXxx.xxx's confidential information includes, without limitation,
information relating to XxxxXxx.xxx's trade secrets, research and development,
product or service development plans, design specifications, inventions,
know-how, software (including source code and object code), policies and
procedures, teaching materials, manufacturing, engineering, purchasing,
accounting, marketing, sales, customers, customer lists, suppliers, financial
status or employees.
I understand that this agreement does not limit my right to use my own
general knowledge and experience, whether or not gained while employed by
XxxxXxx.xxx, or my right to use information that is or becomes generally known
to the public through no fault of my own, but I have the burden in any dispute
of showing that information is not XxxxXxx.xxx's confidential information.
I understand it is XxxxXxx.xxx's policy not to improperly obtain or use
confidential, proprietary or trade secret information that belongs to third
parties, including others who have employed or engaged me or who have entrusted
confidential information to me. I will not use for XxxxXxx.xxx's benefit or
disclose to XxxxXxx.xxx confidential, proprietary or trade secret information
that belongs to others unless I advise XxxxXxx.xxx that the information belongs
to a third party and both XxxxXxx.xxx and the owners of the information consent
to the disclosure and use.
2. Inventions, Copyrights and Patents. XxxxXxx.xxx owns all Inventions and
Works I make, conceive, develop, discover, reduce to practice or fix in a
tangible medium of expression, alone or with others, either (a) during my
employment by XxxxXxx.xxx (including past employment, and whether or not during
working hours), or (b) within one year after my employment ends if the Invention
or Work results from any work I performed for XxxxXxx.xxx or involves the use or
assistance of XxxxXxx.xxx's facilities, materials, personnel or confidential
information. XxxxXxx.xxx also owns all Inventions and Works of mine that I bring
to XxxxXxx.xxx that are used in the course of XxxxXxx.xxx's business or that are
incorporated into any Inventions or Works that belong to XxxxXxx.xxx.
I will promptly disclose to XxxxXxx.xxx, will hold in trust for
XxxxXxx.xxx's sole benefit, will assign to XxxxXxx.xxx and hereby do assign to
XxxxXxx.xxx all Inventions and Works described in the prior paragraph, including
all copyrights (including renewal rights), patent rights and trade secret
rights, vested and contingent. I will waive and hereby do waive any moral rights
I have or may have in the Inventions and Works described in the prior paragraph.
I agree that all Works I produce within the scope of my employment (which shall
include all Works I produce related to XxxxXxx.xxx's business, whether or not
done during regular working hours) shall be considered "works made for hire" so
that XxxxXxx.xxx will be considered the author of the Works under the federal
copyright laws. At XxxxXxx.xxx's direction and expense I will execute all
documents and take all actions necessary or convenient for XxxxXxx.xxx to
document, obtain, maintain or assign its rights to these Inventions and Works.
XxxxXxx.xxx shall have full control over all applications for patents or other
legal protection of these Inventions and Works.
"Inventions" means discoveries, developments, concepts, ideas, improvements
to existing technology, processes, procedures, machines, products, services,
teaching methods, compositions of matter, formulas, algorithms, computer
programs and techniques, and all other matters ordinarily intended by the word
"invention," whether or not patentable or copyrightable. "Inventions" also
includes all records and expressions of those matters. "Works" means original
works of authorship, including interim work product, modifications and
derivative works, and all similar matters, whether or not copyrightable.
2
I understand that this agreement does not apply to any Invention or Work of
mine for which no equipment, supplies, facilities or trade secret information of
XxxxXxx.xxx was used and which was developed entirely on my own time, unless (a)
the Invention or Work relates directly to XxxxXxx.xxx's business or actual or
demonstrably anticipated research or development, or (b) the Invention or Work
results from any work I performed for XxxxXxx.xxx.
3. XxxxXxx.xxx Materials. I will safeguard and return to XxxxXxx.xxx when
my employment ends, or sooner if XxxxXxx.xxx requests, all documents and
property in my care, custody or control relating to my employment or
XxxxXxx.xxx's business, including without limitation any documents that contain
XxxxXxx.xxx's confidential information.
4. Nonraiding of Employees. So long as I am employed by XxxxXxx.xxx and for
eighteen (18) months after my employment ends (twelve (12) months if I did not
serve as a manager during my last 12 months of employment), regardless of the
reason it ends, I will not directly or indirectly solicit any employee to leave
his or her employment with XxxxXxx.xxx to provide services for me or anyone
else. This includes that I will not (a) disclose to any third party the names,
backgrounds or qualifications of any XxxxXxx.xxx employees or former employees
or otherwise identify them as potential candidates for employment: (b)
personally or through any other person approach, recruit or otherwise solicit
employees or former employees of XxxxXxx.xxx to work for any other employer; or
(c) participate in any pre-employment interviews with any person who was
employed by XxxxXxx.xxx while I was employed by XxxxXxx.xxx. This paragraph
shall not restrict the solicitation of any former XxxxXxx.xxx employee after the
employee has been gone from XxxxXxx.xxx for at least six months.
5. No Disparagement or Interference. I will not disparage XxxxXxx.xxx or
its business, customers, products or services and will not interfere with
XxxxXxx.xxx's relationships with its customers, employees, vendors, bankers or
others. This applies both while I am employed by XxxxXxx.xxx and for twenty-four
(24) months after my employment by XxxxXxx.xxx ends, regardless of the reason it
ends.
6. Other Employment While Employed by XxxxXxx.xxx. While I am employed by
XxxxXxx.xxx I will not do work that competes with or relates to any of
XxxxXxx.xxx's products, services or activities without first obtaining
XxxxXxx.xxx's written permission. Any business opportunities related to
XxxxXxx.xxx's business that I learn of or obtain while employed by XxxxXxx.xxx
(whether or not during working hours) belong to XxxxXxx.xxx, and I will pursue
them only for XxxxXxx.xxx's benefit.
7. Noncompetition After Employment by XxxxXxx.xxx Ends. For twelve (12)
months after my employment by XxxxXxx.xxx ends, provided that I either leave
XxxxXxx.xxx voluntarily or am terminated by XxxxXxx.xxx for cause, I will not,
directly or indirectly: (a) sell, market or propose to sell or market products
or services
3
that compete or will compete with XxxxXxx.xxx's then existing or reasonably
anticipated products or services ("Competing Products or Services") in any
geographic area where XxxxXxx.xxx's products or services are then marketed, (b)
design or develop Competing Products or Services, (c) work for or with, or
provide services or information to, any person or entity that (i) sells, markets
or proposes to sell or market Competing Products or Services in any geographic
area where XxxxXxx.xxx's products or services are then marketed, or (ii) is
designing or developing Competing Products or Services, or (d) solicit, acquire,
provide services to, or conduct any competing business from or with any
XxxxXxx.xxx customer (as defined below) with whom I had substantial contact on
XxxxXxx.xxx's behalf within twelve (12) months before my employment by
XxxxXxx.xxx ended.
For purposes of this paragraph, XxxxXxx.xxx's customers shall include those
corporations, organizations, facilities, and individuals to whom XxxxXxx.xxx was
providing products or services, or had proposals outstanding for the provision
of products or services, within twelve (12) months before my employment by
XxxxXxx.xxx ended.
If I wish to consider a particular employment opportunity that may be
prohibited by this paragraph, I understand that I may request a review and
written release by XxxxXxx.xxx if the potentially competitive situation is
determined by XxxxXxx.xxx to not represent a significant competitive exposure. I
acknowledge that a written release is the only means by which the noncompetition
provision in this agreement can be waived. I understand that in cases where this
noncompetition provision does not apply, I am still subject to all other
obligations I have to XxxxXxx.xxx, including my obligations related to
XxxxXxx.xxx's inventions, copyrights and confidential information.
8. Disclosure of Other Work. Before I undertake any work for myself or
anyone else, during my employment by XxxxXxx.xxx or within eighteen (18) months
after my employment by XxxxXxx.xxx ends (twelve (12) months if I did not serve
as a manager during my last 12 months of employment), that will involve subject
matter related to XxxxXxx.xxx's activities, I will fully disclose the proposed
work to XxxxXxx.xxx.
9. Reasonableness of Terms. I acknowledge that the terms of this agreement
are reasonably necessary to protect XxxxXxx.xxx's legitimate business interests.
I acknowledge that if my employment with XxxxXxx.xxx ends my experience and
capabilities are such that I can obtain employment that does not violate this
agreement, and that an injunction to enforce this agreement will not prevent me
from earning a reasonable livelihood.
10. Future Consulting or Employment for XxxxXxx.xxx. If my employment
relationship with XxxxXxx.xxx ends but XxxxXxx.xxx employs me again or engages
me as a consultant, then this agreement shall apply to my later employment(s) or
engagement(s) unless they follow a period of a year or more during which I was
neither
4
employed nor engaged by XxxxXxx.xxx. If this agreement becomes applicable to a
consulting relationship, the references in this agreement to my employment by
XxxxXxx.xxx shall be treated, as appropriate, as referring to my consulting
relationship with XxxxXxx.xxx.
11. No Guarantee of Employment. I understand this agreement is not a
guarantee of continued employment. My employment is terminable at any time by
XxxxXxx.xxx or me, with or without cause or prior notice, unless otherwise
provided in a written employment agreement.
12. No Conflicting Agreements. I am not a party to any agreements, such as
confidentiality or noncompetition agreements, that limit my ability to perform
my duties for XxxxXxx.xxx. I agree to indemnify XxxxXxx.xxx and hold XxxxXxx.xxx
harmless from any legal actions that result from a prior employment agreement.
13. Miscellaneous. If I breach this agreement it will cause XxxxXxx.xxx
irreparable harm. If I breach or threaten to breach this agreement, XxxxXxx.xxx
will be entitled to injunctive or other equitable relief as well as money
damages. If I breach this agreement, I will hold in trust for XxxxXxx.xxx all
income I receive as a result of the violation. I consent to XxxxXxx.xxx
notifying anyone to whom I may provide services of the existence and terms of
this agreement. In any lawsuit arising out of or relating to this agreement or
my employment, including without limitation arising from any alleged tort or
statutory violation, the prevailing party shall recover their reasonable costs
and attorneys fees, including on appeal. This agreement shall be governed by the
internal laws of the state of Washington without giving effect to provisions
thereof related to choice of laws or conflict of laws. Venue and jurisdiction of
any lawsuit involving this agreement or my employment shall exist exclusively in
state and federal courts in King County, Washington, unless injunctive relief is
sought by XxxxXxx.xxx and, in XxxxXxx.xxx's judgment, may not be effective
unless obtained in some other venue. If any part of this agreement is held to be
unenforceable, it shall not affect any other part. If any part of this agreement
is held to be unenforceable as written, it shall be enforced to the maximum
extent allowed by applicable law. My obligations under this agreement supplement
and do not limit other obligations I have to XxxxXxx.xxx, including without
limitation under the law of trade secrets. This agreement shall be enforceable
regardless of any claim I may have against XxxxXxx.xxx. This agreement shall
survive the termination of my employment, however caused. The waiver of any
breach of this agreement or failure to enforce any provision of this agreement
shall not waive any later breach. This agreement is binding on me, my heirs,
executors, personal representatives, successors and assigns, and benefits
XxxxXxx.xxx and its successors and assigns. This agreement is the final and
complete expression of my agreement on these subjects, and may be amended only
in a writing signed by XxxxXxx.xxx and me.
DATED this --- day of --------------, 1999.
5
EMPLOYEE:
------------------------------
Name:
6
EXHIBIT 4.20
FORM OF AFFILIATE LETTER
XxxxXxx.xxx Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of Xxxxxxx.xxx Inc., a Nevada corporation (the "Company"), as
the term "affiliate" is defined for purposes of paragraphs (c) and (d) of Rule
145 of the rules and regulations (the "Rules and Regulations") promulgated by
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of January __ 2000 (the "Agreement"),
among XxxxXxx.xxx Inc., a Washington corporation ("XxxxXxx.xxx"), Shamu
Acquisition, Inc., a Washington corporation and a wholly owned subsidiary of
XxxxXxx.xxx ("Merger Sub") and the Company, the Compan will merge with and into
Merger Sub, with Merger Sub being the surviving corporation (the "Merger").
As a result of the proposed Merger, I will receive shares of common stock,
par value $.001 per share, of XxxxXxx.xxx (the "XxxxXxx.xxx Common Stock") in
exchange for shares of the Company's capital stock owned by me.
I represent, warrant and covenant to XxxxXxx.xxx that in the event I
receive any shares of XxxxXxx.xxx Common Stock as a result of the proposed
Merger:
1. I shall not make any sale, transfer, or other disposition of the shares
of XxxxXxx.xxx Common Stock that I may acquire in connection with the Merger in
violation of the Securities Act or the Rules and Regulations.
2. I have carefully read this letter and the Agreement and discussed the
requirements of such documents and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of the shares of XxxxXxx.xxx Common
Stock, to the extent I felt necessary, with my legal counsel.
3. I have been advised that the issuance of XxxxXxx.xxx Common Stock
pursuant to the Merger has been registered under the Securities Act on a
Registration Statement on Form S-4. I have also been advised, however, that, to
the extent that I am considered an "affiliate" of the Company at the time the
Merger Agreement is
submitted for a vote of the shareholders of the Company, any public offering or
sale by me of any shares of XxxxXxx.xxx Common Stock that I receive pursuant to
the Merger will, under current law, require either (i) the further registration
under the Securities Act of any shares of XxxxXxx.xxx Common Stock to be sold by
me, (ii) compliance with Rule 145 under the Securities Act or (iii) the
availability of another exemption from such registration under the Securities
Act.
4. I also understand that stop transfer instructions will be given to
XxxxXxx.xxx's transfer agent with respect to the shares of XxxxXxx.xxx Common
Stock that will be received by me in the Merger and that there will be placed on
the certificates for the XxxxXxx.xxx Common Stock issued to me, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
BETWEEN THE REGISTERED HOLDER HEREOF AND XXXXXXX.XXX, INC., A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF XXXXXXX.XXX,
INC."
It is understood and agreed that XxxxXxx.xxx shall remove promptly such
stop transfer instructions and legend and will deliver substitute certificates
without such legend upon: (i) one year from the date the undersigned acquired
the XxxxXxx.xxx Common Stock received in the Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) two years from the date
the undersigned acquired the XxxxXxx.xxx Common Stock received in the Merger and
the provisions of Rule 145(d)(3) are then applicable to the undersigned, or
(iii) delivery by me of an opinion of counsel to XxxxXxx.xxx, which opinion and
counsel shall be reasonably satisfactory to XxxxXxx.xxx, or a "no-action" letter
obtained by the undersigned from the staff of the Commission, to the effect that
the restrictions imposed by Rule 145 under the Securities Act no longer apply to
the undersigned.
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of the Company as described in the first paragraph of
this letter or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
-2-
For so long as and to the extent necessary to permit me to sell the shares
of XxxxXxx.xxx Common Stock pursuant to Rule 145 and, to the extent applicable,
Rule 144 under the Act, XxxxXxx.xxx shall use its reasonable best efforts to (i)
file, on a timely basis, all reports and data required to be filed with the
Commission by it pursuant to Section 13 of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and (ii) furnish to me upon request a written
statement as to whether XxxxXxx.xxx has complied with such reporting
requirements during the 12 months preceding any proposed sale of shares of
XxxxXxx.xxx Common Stock by me under Rule 145. XxxxXxx.xxx has filed all reports
required to be filed with the Commission under Section 13 of the 1934 Act since
the time it became subject to the reporting requirements of the 1934 Act.
-3-
Very truly yours,
-----------------------------------
By
-----------------------------------
Name
-----------------------------------
Title
Accepted this --- day of
-----------, 2000 by
XXXXXXX.XXX, INC.
By: -----------------------------------
Name: ----------------------------
Title: ---------------------------
-4-
EXHIBIT 4.21
VOTING AGREEMENT
VOTING AGREEMENT, dated as of January --, 2000 (the "Voting Agreement"), by
and between XxxxXxx.xxx Inc. ("Parent") and --------------------- (the
"Shareholder").
WHEREAS, Parent, Shamu Acquisition, Inc. ("Merger Sub"), and Xxxxxxx.xxx
Inc. (the "Company") are entering into an Agreement and Plan of Merger of even
date herewith (the "Merger Agreement") which provides (subject to the conditions
set forth therein) for the merger of Merger Sub with and into the Company (the
"Merger").
WHEREAS, this Voting Agreement is required to be executed and delivered by
the Shareholder to Parent and Parent would not enter into the Merger Agreement
without the execution and delivery of this Voting Agreement;
WHEREAS, the Shareholder owns the shares of Company Common Stock (the
"Common Stock") and the options and/or warrants to purchase shares of Common
Stock as identified on Annex I hereto (such shares, together with all shares of
Common Stock and capital stock of the Company, if any, subsequently acquired by
the Shareholder during the term of this Voting Agreement, being referred to as
the "Shares"); and
WHEREAS, in order to induce Parent to enter into the Merger Agreement, the
Shareholder has agreed to enter into and perform his, her or its obligations
under this Voting Agreement.
NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the Shareholder and Parent agree as follows:
I. Agreement to Vote Shares
The Shareholder shall vote or cause to be voted, or execute a written
consent with respect to, the Shares (a) in favor of adoption and approval of the
Merger Agreement and all transactions relating thereto or contemplated thereby
at every meeting of the shareholders of the Company at which such matters are
considered and at every adjournment thereof and in connection with every
proposal to take action by written consent with respect thereto, and (b) against
any proposal by a party other than Parent to merge or consolidate with the
Company or any subsidiary of the Company or to sell all or substantially all the
assets of or any sales of equity interest in the Company or any subsidiary of
the Company at every meeting of the shareholders of the Company at which such
matters are considered and at every adjournment thereof and in connection with
every proposal to take action by written consent with respect thereto.
II. No Voting Trusts
The Shareholder agrees that the Shareholder will not, nor will the
Shareholder permit any entity under the Shareholder's control to, deposit any
Shares in a voting trust or subject the
VOTING AGREEMENT XxxxXxx.xxx Inc.
Shares to any agreement, arrangement or understanding with respect to the voting
of the Shares inconsistent with this Voting Agreement.
III. Limitation on Sales
During the term of this Voting Agreement, the Shareholder agrees not to
sell, assign, transfer, pledge, encumber or otherwise dispose of any of the
Shares except to Parent.
IV. Letter of Transmittal
At the Effective Time (as defined in the Merger Voting Agreement), the
Shareholder shall execute and deliver the letter of transmittal sent to
Shareholder by the Exchange Agent (as that term is defined in the Merger
Agreement) along with a certificate or certificates representing the Shares to
Parent or the Exchange Agent.
V. Waiver of Dissenter's Rights
The Shareholder hereby irrevocably and unconditionally waives, and agrees
to cause to be waived and to prevent the exercise of, any rights of appraisal,
any dissenters' rights and any similar rights relating to the Merger that the
Shareholder may have by virtue of the ownership of any outstanding Shares.
VI. Tax Matters
(a) The Shareholder shall timely pay all transfer, documentary, sales, use,
stamp, registration and other taxes arising from or relating to the transactions
contemplated by the Merger Agreement, to the extent they relate specifically to
the issuance of shares of Parent Common Stock to Shareholder, and Shareholder
shall, at his or its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration, and other taxes.
(b) The Shareholder shall not take a position on any tax returns
inconsistent with the treatment of the Merger for tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, unless compelled by any taxing authority. Neither Parent nor Merger Sub
makes any representation or warranty with respect to any tax consequences to the
Shareholder arising under the Merger Agreement or as a result of the Merger.
VII. Representations and Warranties of Shareholder
The Shareholder represents and warrants to Parent as follows:
A. Authority; No Approvals; No Conflicts; No Liens
The Shareholder has the necessary power or capacity (as the case may be)
and authority to execute this Voting Agreement, to make the representations,
warranties and covenants herein and to perform the obligations hereunder. This
Voting Agreement is duly executed and is a legal, valid and binding obligation
of the Shareholder, enforceable in accordance with its terms.
VOTING AGREEMENT XxxxXxx.xxx Inc.
-2-
The execution, delivery and performance of this Voting Agreement by the
Shareholder will not (a) constitute a violation (with or without the giving of
notice or lapse of time or both) of any provision of any law applicable to the
Shareholder, (b) require any consent, approval or authorization of, or notice
to, any person, corporation, partnership, domestic or foreign governmental
authority or other organization or entity or (c) result in a default under, an
acceleration or termination of, or the creation in any party of the right to
accelerate, terminate, modify or cancel, any material agreement, lease, note or
other restriction, encumbrance, obligation or liability to which the Shareholder
is a party or by which the Shareholder is bound or (d) result in the creation or
imposition of any lien on any of the Shares of Company Capital Stock held by the
Shareholder.
B. Ownership of Shares
Annex I hereto correctly sets forth, as of the date of this Voting
Agreement, the number of shares of Common Stock owned beneficially and of record
by the Shareholder and the number of options or warrants to purchase shares of
Common Stock held by the Shareholder. The Shareholder owns beneficially and of
record the Shares set forth opposite such Shareholder's name on Annex I free and
clear of any lien, encumbrance, preemptive right, right of first offer or
refusal, or other prior claim, and delivery by the Shareholder to Merger Sub of
the certificates representing the Shares at the Closing (as defined in the
Merger Agreement) will transfer to Merger Sub good and valid title to the Shares
and Merger Sub will acquire record and beneficial ownership of the Shares, free
and clear of any lien, encumbrance, preemptive right, right of first offer or
refusal, or other prior claim.
C. Claims Against the Company
The Shareholder does not have any past, present or contemplated claims
against the Company or any of its officers and directors.
X. Xxxx-Xxxxx-Xxxxxx
The Shareholder is his, her or its own ultimate parent entity as defined
under the rules and regulations promulgated under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976. The Shareholder either (i) is not a $10
million person as defined under the Xxxx-Xxxxx-Xxxxxx Act or (ii) is a $10
million person but is acquiring the Parent Common Stock solely for the purpose
of investment within the meaning of 16 C.F.R. 802.9.
E. Accuracy of Representations
The representations and warranties contained in this Voting Agreement are
accurate in all respects as of the date of this Voting Agreement and will be
accurate in all respects at all times through the Effective Time.
VIII. Specific Performance
The Shareholder acknowledges that in the event of any breach of this Voting
Agreement by the Shareholder, Parent would be irreparably harmed, no adequate
remedy at law or in
VOTING AGREEMENT XxxxXxx.xxx Inc.
-3-
damages would exist and damages would be difficult to determine. Accordingly,
the Shareholder agrees that injunctive relief or other equitable remedy, in
addition to all remedies at law or in damages, is the appropriate remedy for any
such failure and will not oppose the granting of such relief on the basis that
Parent has an adequate remedy at law. The Shareholder agrees that it will not
seek, and agrees to waive any requirement for, the securing or posting of a bond
in connection with the seeking or obtaining of such equitable relief by Parent.
In addition to all other rights or remedies to which Parent may be entitled, in
the event of a default in the Shareholder's performance of the Shareholder's
obligations under this Voting Agreement, the Shareholder shall be liable to
Parent for all litigation costs and attorneys' fees incurred by Parent in
connection with the enforcement of any of its rights or remedies against the
Shareholder.
IX. Non-Exclusivity
The rights and remedies of Parent under this Voting Agreement are not
exclusive of or limited by any other rights or remedies which it may have,
whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative).
X. Term of Voting Agreement; Termination
The term of this Voting Agreement shall commence on the date hereof and
terminate upon the earlier to occur of (i) the Effective Time (as defined in the
Merger Agreement), or (ii) the date on which the Merger Agreement is terminated
in accordance with its terms. Upon such termination, no party shall have any
further obligations or liabilities hereunder; provided, however, such
termination shall not relieve any party from liability for any breach of this
Voting Agreement prior to such termination.
XI. Entire Voting Agreement
This Voting Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
and understandings between the parties with respect thereto.
XII. Assignment; Binding Effect
Except as provided herein, neither this Voting Agreement nor any of the
interests or obligations hereunder may be assigned or delegated by the
Shareholder and any attempted or purported assignment or delegation of any of
such interests or obligations shall be void. Subject to the preceding sentence,
this Voting Agreement shall be binding upon the Shareholder and his, her or its
heirs, estate, executors, personal representatives, successors and assigns, and
shall inure to the benefit of Parent and its successors and assigns. This Voting
Agreement shall be binding upon any person or entity to whom any Shares are
transferred.
XIII. Indemnification
The Shareholder shall hold harmless and indemnify Parent from and against,
and shall compensate and reimburse Parent for, any loss, damage, claim,
liability, fee (including reasonable attorneys' fees), demand, cost or expense
(regardless of whether or not such loss,
VOTING AGREEMENT XxxxXxx.xxx Inc.
-4-
damage, claim, liability, fee, demand, cost or expense relates to a third-party
claim) that is directly or indirectly suffered or incurred by Parent, or to
which Parent becomes subject, and that arises directly or indirectly from, or
relates directly or indirectly to, any inaccuracy in or breach of any
representation, warranty, covenant or obligation of the Shareholder contained in
this Voting Agreement.
XIV. Expenses
All costs and expenses incurred in connection with the transactions
contemplated by this Voting Agreement shall be paid by the party incurring such
costs and expenses.
XV. Notices
Any notice or other communication required or permitted to be delivered to
Parent or the Shareholder under this Voting Agreement shall be in writing and
shall be deemed properly delivered, given and received when delivered (by hand,
by registered mail, by courier or express delivery service or by facsimile
confirmation obtained) to the address or facsimile number set forth beneath the
name of such party below (or to such other address or facsimile number as such
party shall have specified in a written notice given to the other party):
If to the Shareholder:
At the address or facsimile number set forth on the signature page.
With a copy to:
If to Parent:
XxxxXxx.xxx Inc.
000 Xxxxx Xxxxxx Xxxxx, xxxxx 000 Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx
With a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxxx
Fax: (000) 000-0000
VOTING AGREEMENT XxxxXxx.xxx Inc.
-5-
XVI. Miscellaneous
A. Termination of Rights
Effective upon, and subject to the consummation of, the Merger, any past,
present or future rights that the Shareholder may have pursuant to any
agreement, contract or understanding relating to corporate governance,
registration rights, rights of first refusal or first offer and similar rights
shall terminate.
B. Severability
If any provision of this Voting Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability, and the
remainder of this Voting Agreement shall not be affected.
C. Capacity
The covenants contained herein shall apply to the Shareholder solely in his
or her capacity as a shareholder of the Company, and no covenant contained
herein shall apply to the Shareholder in his or her capacity as an officer
and/or director of the Company.
D. Counterparts
This Voting Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
E. Headings
All Section headings herein are for convenience of reference only and are
not part of this Voting Agreement, and no construction or reference shall be
derived therefrom.
F. Choice of Law
This Voting Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Washington, without reference to its conflicts of law principles.
G. WAIVER OF JURY TRIAL
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS VOTING
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
VOTING AGREEMENT XxxxXxx.xxx Inc.
-6-
H. Amendment or Modification
This Voting Agreement may be amended, modified and supplemented only by
written agreement of all parties.
VOTING AGREEMENT XxxxXxx.xxx Inc.
-7-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Voting Agreement as of the date first written above.
SHAREHOLDER
-----------------------------------------
By:
Address: --------------------------------
--------------------------------
Fax:
XXXXXXX.XXX INC.
-----------------------------------------
NAME: -----------------------------------
TITLE:-----------------------------------
VOTING AGREEMENT XxxxXxx.xxx Inc.
-8-
ANNEX I
Number of Shares Options/Warrants
of Common Stock to Purchase Shares
Name of Shareholder State of Residency Owned of Common Stock d
------------------- ------------------ ----- -----------------
VOTING AGREEMENT XxxxXxx.xxx Inc.
-9-
SPOUSAL CONSENT
I am the spouse of the Shareholder named in the Voting Agreement. I
understand that I may consult independent legal counsel as to the effect of this
Voting Agreement and the consequences of my execution of this Voting Agreement
and, to the extent I felt it necessary, I have discussed such matters with legal
counsel. I hereby confirm this Voting Agreement and agree that it shall bind my
interest in the Shares, if any.
------------------------------
Shareholder's Spouse's Name
VOTING AGREEMENT XxxxXxx.xxx Inc.
-10-
EXHIBIT 4.24A
FORM OF
EMPLOYMENT AGREEMENT
between
XXXXXXX.XXX INC.
and
LIAD Y. MEIDAR
Dated as of -----------, 2000
--------------------------------------------------------------------------------
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of -----------,
2000, is made between XxxxXxx.xxx Inc., a Washington corporation ("Employer"),
and Liad Y. Meidar ("Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Employer, Shamu Acquisition, Inc., a Washington Corporation
(the "Merger Sub"), and Xxxxxxx.xxx Inc., a Nevada corporation (the "Company"),
and certain principal shareholders of the Company have entered into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which the Company will
merge with and into Merger Sub, with Merger Sub being the surviving corporation
(the "Merger");
WHEREAS, Employer desires to retain the services of Employee upon the terms
and conditions set forth herein;
WHEREAS, Employee is willing to provide services to Employer upon the terms
and conditions set forth herein; and
WHEREAS, the execution of this Agreement by the parties hereto is a
condition to the effectiveness of the Merger.
A G R E E M E N T S:
- - - - - - - - - -
NOW, THEREFORE, for and in consideration of the foregoing premises and
for other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, Employer and Employee hereby agree as follows:
1. EMPLOYMENT
Employer shall employ Employee and Employee shall accept employment by
Employer as a Senior Vice President of Employer. Employee shall report directly
to an Executive Vice President of Employer.
2. ATTENTION AND EFFORT
Employee shall devote all of his entire productive time, ability, attention
and effort to Employer's business and shall skillfully serve its interests
during the term of this Agreement; provided, however, that Employee may devote
reasonable periods of time to (a) engaging in personal investment activities,
(b) serving in an advisory
--------------------------------------------------------------------------------
capacity and/or on the Board of Directors of other corporations, if such service
would not otherwise be prohibited by the Inventions Agreement (as defined below)
and (c) engaging in charitable or community service activities, so long as none
of the foregoing additional activities materially interfere with Employee's
duties under this Agreement.
3. TERM
Employee's employment by Employer will be "at will," and either Employee or
Employer may terminate the employment relationship at any time with or without
Cause or Good Reason (each as defined in Section 8 hereof). Unless earlier
terminated pursuant to Section 7, the term of this Agreement shall commence on
the date hereof and terminate one year from the date hereof.
4. COMPENSATION
During the term of this Agreement, Employer agrees to pay or cause to be
paid to Employee, and Employee agrees to accept in exchange for the services
rendered hereunder by him, the following compensation:
4.1 Base Salary
Employee's compensation shall consist of an annual base salary of One
Hundred Twenty-Five Dollars ($125,000) before all customary payroll deductions.
Such annual base salary shall be paid in substantially equal installments and at
the same intervals as other employees of Employer are paid. The Board of
Directors or Chief Executive Officer of Employer shall determine any increases
in the amount of the annual base salary in future years.
4.2 Bonus
Employee shall be eligible to receive bonuses according to the standard
terms and consistent with the practices by which bonuses payable to other
executives of Employer are determined.
4.3 Stock Options
Employee shall be granted options to purchase 250,000 shares of Employer's
common stock at an exercise price of $15.58 per share pursuant to Employer's
1999 Nonofficer Employee Stock Option Plan, or any successor plan that may be
adopted by Employer (the "Options"). Subject to Section 8, one-third of such
options shall vest on the one-year anniversary of the Closing (as defined in the
Merger Agreement), with the remaining balance of such options vesting on a
quarterly basis over the
--------------------------------------------------------------------------------
-2-
remaining two-year period. Such option grant shall be subject to the execution
by Employee of a stock option letter agreement, which shall be in the form of
Employer's standard stock option agreement except that it shall contain a
provision whereby all options shall automatically and fully vest upon the
termination of Employee by Employer without Cause (as defined below) or if
Employee terminates employment for Good Reason (as defined below).
4.4 Expenses
Employer shall reimburse Employee for reasonable business expenses incurred
on behalf of Employer upon presentation of appropriate receipts in accordance
with Employer's written policies with respect thereto.
4.4 Withholding
Employer may withhold from any amounts payable under this Agreement such
federal, state or local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
5. INVENTIONS AGREEMENT
Concurrent herewith, Employee shall execute and deliver to Employer the
Employer's standard form of Intellectual Property Agreement (Confidentiality,
Invention Assignment, Nonraiding and Noncompetition), substantially in the form
attached hereto as Exhibit A (the "Inventions Agreement.")
6. BENEFITS
During the Term of this Agreement, Employee shall be entitled to
participate on a basis no less favorable than other employees of Employer in
similar position and authority, subject to and in accordance with applicable
eligibility requirements, in fringe benefit programs made available to similarly
situated employees of Employer, as those programs may currently exist or be
modified from time to time. Employee shall be entitled to annual paid vacation
accruing at the rate of four weeks per year of employment and otherwise
consistent with Employer's existing vacation policy, and as amended from time to
time; provided, however, that Employee shall not be entitled to take more than
two consecutive weeks of vacation, nor more than two weeks of vacation in any
three month period.
7 TERMINATION
Employment of Employee pursuant to this Agreement may be terminated as
follows, but in any case, the provisions of section 7 hereof and Section 8.1(b)
shall
--------------------------------------------------------------------------------
-3-
survive the termination of this Agreement and the termination of Employee's
employment hereunder:
7.1 By Employer
With or without Cause, Employer may terminate the employment of Employee at
any time during the term of employment upon giving Notice of Termination (as
defined below).
7.2 By Employee
Employee may terminate his employment at any time, for any reason, upon
giving Notice of Termination.
7.3 Automatic Termination
This Agreement and Employee's employment hereunder shall terminate
automatically upon the death or total disability of Employee. The term "total
disability" as used herein shall mean Employee's inability to perform the duties
set forth in section 1 hereof for a period or periods aggregating 120 calendar
days in any 12-month period as a result of physical or mental illness, loss of
legal capacity or any other cause beyond Employee's control, unless Employee is
granted a leave of absence by the Board of Directors of Employer. Employee and
Employer hereby acknowledge that Employee's ability to perform the duties
specified in section 1 hereof is of the essence of this Agreement. Termination
hereunder shall be deemed to be effective (a) at the end of the calendar month
in which Employee's death occurs or (b) immediately upon a determination by the
Board of Directors of Employer of Employee's total disability, as defined
herein.
7.4 Notice
The term "Notice of Termination" shall mean at least 5 days' written notice
of termination of Employee's employment, during which period Employee's
employment and performance of services shall continue; provided, however, that
Employer may, upon notice to Employee and without reducing Employee's
compensation during such period, excuse Employee from any or all of his duties
during such period. The effective date of the termination of Employee's
employment hereunder shall be the date on which such 5-day period expires.
--------------------------------------------------------------------------------
-4-
8. TERMINATION PAYMENTS
In the event of termination of the employment of Employee, all compensation
and benefits set forth in this Agreement shall terminate except as specifically
provided in this Section 8:
8.1 Termination by Employer
(a) If Employer terminates Employee's employment with or without Cause,
Employee shall be entitled to receive any unpaid annual base salary and fringe
benefits which have accrued for services already performed as of the date
termination of Employee's employment becomes effective.
(b) If Employer terminates Employee's employment without Cause, then the
Options to which Employee is entitled to receive pursuant to Section 4.3 shall
automatically and fully vest.
8.2 Termination by Employee
In the case of the termination of Employee's employment by Employee other
than for Good Reason, Employee shall not be entitled to any payments or benefits
hereunder, other than those set forth in section 8.1(a) hereof. In the case of
termination of Employee's employment by Employee for Good Reason, Employee shall
be entitled to all payments and benefits set forth in Sections 8.1(a) and (b).
8.3 Termination Because of Death or Total Disability
In the event of a termination of Employee's employment because of his death
or total disability, Employee or his personal representative shall receive the
payments and benefits set forth in section 8.1(a).
8.4 Payment Schedule
All payments under this section 8 shall be made to Employee at the same
interval as payments of salary were made to Employee immediately prior to
termination.
8.5 Good Reason
"Good Reason" means without Employee's express written consent:
(a) a change in the Employee's status, title, position or
responsibilities (including reporting responsibilities) that represents a
substantial reduction in the status, title, position or responsibilities as
in effect
--------------------------------------------------------------------------------
-5-
immediately prior thereto; or any removal of the Employee from or failure
to reappoint or reelect the Employee to any of such positions, except in
connection with the termination of the Employee's employment for Cause, as
a result of his or her total disability or death, or by the Employee other
than for Good Reason;
(b) a material reduction in the Employee's annual base salary;
(c) failure by the Employer to timely pay, or reduction by the
Employer of, Employee's benefits under Section 6 of this Agreement;
(d) the breach of any material provision of this Agreement by the
Employer, including, without limitation, failure by the Employer to cause
any successor to the Employer to expressly agree to and assume the terms
and provisions of this Agreement.
8.6 Cause
Wherever reference is made in this Agreement to termination being with or
without Cause, the term "Cause" shall mean (i) any act of fraud or embezzlement
by Employee; (ii) any breach by Employee of the Inventions Agreement entered
into with Employer; (iii) the conviction of Employee of a misdemeanor or felony
involving an act of dishonesty, moral turpitude, deceit or fraud; (iv) current
use by Employee of illegal substances, (v) any act of deception, fraud,
misrepresentation or dishonesty by Employee, (vi) any material misconduct by
Employee in connection with his or her responsibilities as an employee or
otherwise which materially impairs Employer's business, good will or reputation
or which materially compromises Employee's ability to represent Employer with
the public; (vii) Employee's willful and material failure to perform his or her
lawful duties as an employee of Employer as determined by one or more senior
executives of Employer in good faith and the failure to "cure" such misconduct
within a period of five days following Employee's receipt of written notice of
such misconduct; or (viii) any other material violation of any provision of this
Agreement.
9. REPRESENTATIONS AND WARRANTIES
In order to induce Employer to enter into this Agreement, Employee
represents and warrants to Employer as follows:
9.1 No Violation of Other Agreements
Neither the execution nor the performance of this Agreement by Employee
will violate or conflict in any way with any other agreement by which Employee
may be
--------------------------------------------------------------------------------
-6-
bound, or with any other duties imposed upon Employee by corporate or other
statutory or common law.
9.2 Patents, Etc.
Employee has prepared and attached hereto as Schedule 1 a list of all
inventions, patent applications and patents made or conceived by Employee prior
to the date hereof which are subject to prior agreement or which Employee
desires to exclude from the Inventions Agreement, or, if no such list is
attached, Employee hereby represents and warrants to Employer that there are no
such inventions, patent applications or patents.
10. NOTICE AND CURE OF BREACH; BOARD OF DIRECTORS
Whenever a breach of this Agreement by either party is relied upon as
justification for any action taken by the other party pursuant to any provision
of this Agreement, before such action is taken, the party asserting the breach
of this Agreement shall give the other party at least 5 days' prior written
notice of the existence and the nature of such breach before taking further
action hereunder and shall give the party purportedly in breach of this
Agreement the opportunity to correct such breach during the 5-day period.
11. FORM OF NOTICE
All notices given hereunder shall be given in writing, shall specifically
refer to this Agreement and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission or by registered or certified mail,
return receipt requested, at the address set forth below or at such other
address as may hereafter be designated by notice given in compliance with the
terms hereof:
If to Employee: Liad Y. Meidar
0000 Xxxxxxx Xxxxxx, 000
Xxxxxxx, XX 98121Fax: 206/443-1760
Copy to: Lasher, Holzapfel, Sperry & Xxxxxxxx PLLC
0000 Xxx Xxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: 206/000-0000
Attention: Xxxxxx X. Xxxxxxxxx
If to Employer: XxxxXxx.Xxx Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000 North
--------------------------------------------------------------------------------
-7-
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx
Copy to: Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Xx.
If notice is mailed, such notice shall be effective upon mailing, or, if notice
is personally delivered or sent by telecopy or other electronic facsimile
transmission, it shall be effective upon receipt.
12. ASSIGNMENT
This Agreement is personal to Employee and shall not be assignable by
Employee. Employer may assign its rights hereunder to (a) any corporation
resulting from any merger, consolidation or other reorganization to which
Employer is a party or (b) any corporation, partnership, association or other
person to which Employer may transfer all or substantially all of the assets and
business of Employer existing at such time. All the terms and provisions of this
Agreement shall be binding on and shall inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns.
13. WAIVERS
No delay or failure by any party hereto in exercising, protecting or
enforcing any of its rights, titles, interests or remedies hereunder, and no
course of dealing or performance with respect thereto, shall constitute a waiver
thereof. The express waiver by a party hereto of any right, title, interest or
remedy in a particular instance or circumstance shall not constitute a waiver
thereof in any other instance or circumstance. All rights and remedies shall be
cumulative and not exclusive of any other rights or remedies.
14. ARBITRATION
Any controversies or claims arising out of or relating to this Agreement
shall be fully and finally settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect (the "AAA Rules"), conducted by one arbitrator either mutually agreed
upon by Employer and Employee or chosen in accordance with the AAA Rules, except
that the parties thereto shall have any right to discovery as would be permitted
by the Federal Rules of Civil Procedure for a period of 90 days following the
commencement of such arbitration and the
--------------------------------------------------------------------------------
-8-
arbitrator thereof shall resolve any dispute which arises in connection with
such discovery. The prevailing party shall be entitled to costs, expenses and
reasonable attorneys' fees, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
15. AMENDMENTS IN WRITING
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, or consent to any departure therefrom by either
party hereto, shall in any event be effective unless the same shall be in
writing, specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by Employer
and Employee, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by Employer and Employee.
16. APPLICABLE LAW
This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by, and construed and
enforced in accordance with, the laws of the state of Washington, without regard
to any rules governing conflicts of laws.
17. SEVERABILITY
If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, including, without
limitation, the duration of such provision, its geographical scope or the extent
of the activities prohibited or required by it, then, to the full extent
permitted by law (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to reform such
provision to the extent necessary for such provision to be enforceable under
applicable law.
18. HEADINGS
All headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
--------------------------------------------------------------------------------
-9-
19. COUNTERPARTS
This Agreement, and any amendment or modification entered into pursuant to
section 15 hereof, may be executed in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute one and the same
instrument.
20. ENTIRE AGREEMENT
This Agreement, the Merger Agreement and the Operative Documents (as
defined in the Merger Agreement) and the Inventions Agreement, on and as of the
date hereof, constitute the entire agreement between Employer and Employee with
respect to the subject matter hereof, and all prior or contemporaneous oral or
written communications, understandings or agreements between Employer and
Employee with respect to such subject matter are hereby superseded and nullified
in their entireties.
IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.
EMPLOYEE:
-----------------------------------------
Liad Y. Meidar
EMPLOYER:
XXXXXXX.XXX INC.
By --------------------------------------
Name: -----------------------------------
Title: ----------------------------------
--------------------------------------------------------------------------------
-10-
SCHEDULE 1
1. A provisional patent application filed October 12, 1999 for a system
which recommends web sites that would be of interest to the user based
on a complex pattern matching algorithm which takes into account the
past navigating behavior of the user and that of others with a similar
background who have demonstrated interests in the same concepts and
future improvements thereto.
2. A provisional patent application filed on November 15, 1999 for an
alternative payments system and future improvements thereto.
--------------------------------------------------------------------------------
-11
EXHIBIT 4.24B
XxxxXxx.xxx
Independent Services Agreement
(Limited Engagement)
This Agreement dated as of -----------, 2000, is made by XxxxXxx.xxx (the
"Company") and Xxxxxx Xxxxx ("Contractor"). The Company and Contractor agree as
follows:
1. Services
Contractor will provide consulting services to the Company on an as needed
basis as mutually agreed upon from time to time by the parties (the "Services").
2. Performance
Contractor shall perform the Services in a prompt and efficient manner in
accordance with the terms and conditions set forth in this Agreement. Contractor
shall comply with all applicable laws, regulations and other requirements of any
applicable governmental authority in Contractor's performance of the Services.
Upon request, Contractor shall furnish the Company with written progress reports
regarding the status of the Services being performed. Contractor shall not
delegate or subcontract performance of the Services to any other person or
entity without the Company's prior written consent.
3. Compensation
The Company shall pay Contractor $5,000 per month, provided that Contractor
work at least 100 hours per month, a portion of which (to be determined by
mutual agreement between Contractor and the Company) shall be in the Company's
Seattle offices.
The Company shall remit compensation owed to Contractor upon submission of
a reasonably detailed invoice, describing the hours worked and the Services
performed.
4. Noncompetition and Confidentiality
(a) Contractor and the Company agree that the Services to be performed by
Contractor have a unique value to the Company and, if used in
competition with the Company, could cause serious and irreparable harm to the
Company. Contractor will likely develop goodwill for the Company through
personal contact with customers, suppliers, strategic partners or others who
have business relationships with the Company. This goodwill, which is a
proprietary asset of the Company, may follow Contractor after his or her
engagement with the Company terminates. Accordingly, Contractor agrees that, for
a period of nine (9) months following termination of his or her engagement with
the Company for any reason, Contractor will not, without securing the prior
written permission of the Company, directly or indirectly:
(1) be employed by, act as an agent for, or consult with or otherwise
perform Services for a Competitor (as defined below);
(2) own any equity interest in, manage or participate in the
management (as an officer, director, partner, member or otherwise) of,
or be connected in any other manner with, a Competitor (except that
this shall not restrict Contractor from owning less than one percent
(1%) of the equity interests of any publicly held entity); or
(3) induce, attempt to induce or assist others to induce any employee,
officer, director, agent, independent contractor, consultant,
customer, strategic partner, licensor, licensee, supplier or other
service provider of the Company to terminate a relationship with,
cease providing services or products to, or purchasing products or
services from, the Company.
For purposes of this Agreement, a "Competitor" means any individual or
entity that is directly or indirectly engaged, or is preparing to engage, in any
business which is competitive with any business in which the Company is engaged,
or is preparing to engage, at the time Contractor's engagement with the Company
terminates. Contractor agrees that the duration of the restrictions in this
paragraph shall be extended by the duration of any period during which
Contractor is in violation of the restrictions.
(b) Contractor acknowledges that, due to the nature of the business of the
Company, there is no geographical limitation on the restrictions in the
preceding paragraph. the Company and Contractor agree and stipulate that, in
light of all of the facts and circumstances relating to the relationship that
exists and is expected to exist between the Company and Contractor, these
restrictions (including but not limited to the scope of the restricted
activities and the duration and lack of
geographic extent of the restrictions) are fair and reasonably necessary for the
protection of the goodwill and other protectable interests of the Company. If a
court of competent jurisdiction should decline to enforce any of these
restrictions, Xxxxxxx.xxx and Contractor agree that the restrictions shall be
deemed to be reformed to restrict Contractor's ability to compete with
Xxxxxxx.xxx to the maximum extent, in time, scope of activities, and geography,
that the court shall find enforceable.
(d) Contractor shall keep confidential and not disclose, without the
Company's prior written consent, any information received or otherwise learned
from the Company including, without limitation, information regarding the
Services or the Company's finances, plans, marketing, customers, vendors,
products, technology, research and know how (collectively, the "Confidential
Information"). Contractor will use the Confidential Information solely for the
performance of the Services. Upon the Company's request or in any event upon
completion of the Services, Contractor will return to the Company all notes,
data, documents, media and other items containing, or relating in any way to the
Confidential Information and any copies in Contractor's possession or control.
5. Ownership
5.1 All materials accumulated, authored, developed or first reduced to
practice by Contractor in performance of the Services (collectively the
"Results"), together with all proprietary rights associated with ownership of
the Results, shall be the exclusive property of the Company and shall be
promptly disclosed and furnished to the Company by Contractor. The Company and
Contractor expressly agree that the Results are part of a collective work and,
to the extent legally permissible, constitute "work made for hire"; and that the
Company shall be considered the "author" of the Results for purposes of 17 USC.
xx.xx. 101 and 201 and the other applicable copyright laws. If any Result is not
part of a collective work or otherwise does not constitute "work made for hire,"
Contractor irrevocably assigns to the Company, without separate compensation,
all right, title and interest in and to such Result together with all associated
United States and foreign patent, copyright, trade secret and other proprietary
rights including the rights of registrations and renewal.
5.2 Contractor shall take, at the Company's expense, all actions during or
after the performance of the Services reasonably requested by the Company for
the implementation of this Section 5 or to evidence, perfect or protect the
Company's ownership of the Results and associated proprietary rights (including
the execution, acknowledgment and delivery of instruments of conveyance, patent,
copyright, trademark or other proprietary right registration applications or
other documents).
6. Termination
Either party may terminate the Services at any time, with or without cause,
by providing 30 days prior written notice of termination to the other party..
Except for termination by the Company as a result of Contractor's breach of this
Agreement, upon termination the Company shall pay Contractor at the agreed rate
for the Services performed prior to such termination in complete satisfaction of
the Company's obligations under this Agreement. Contractor shall deliver to the
Company the Results in their then current condition. This Agreement shall
survive the completion of any work performed and/or the termination of the
Services under this Agreement.
7. Third Party Intellectual Property
Contractor will not disclose to the Company or use in performance of the
Services any trade secrets, inventions, works of authorship or other
intellectual property of a third party which Contractor is not lawfully entitled
to disclose or use. Contractor agrees to indemnify and hold harmless the Company
from and against any and all claims, losses, costs, liabilities, damages and
expenses (including, but not limited to, reasonable attorneys' fees) arising out
of or in connection with any breach by Contractor of this Section.
8. Independent Contractor
Contractor shall be and act as an independent contractor (and not as an
employee, agent or representative of the Company) in the performance of the
Services for the Company. Contractor shall: (a) not be entitled to any worker's
compensation, pension, retirement, insurance or other benefits afforded to
employees of the Company; (b) provide for all federal income tax and other
withholding relating to Contractor's compensation; (c) pay all social security,
unemployment and other employer taxes relating to Contractor's employment or
compensation; (d) provide all worker's compensation and other insurance relating
to Contractor's employment; and (e) perform all reporting, recordkeeping,
administrative and similar functions relating to Contractor's employment or
compensation. Upon request, Contractor shall provide the Company evidence of
compliance with the foregoing. Contractor shall not be entitled to, and shall
not attempt to, create or assume any obligation, express or implied, on behalf
of the Company. This Agreement shall not be construed as creating an
association, joint venture, partnership or franchise relationship between the
parties.
9. Injunctive Relief; Costs
Contractor acknowledges that any breach by Contractor of Section 2, 4, 5,
8, 10 or 11 of this Agreement will cause irreparable injury to the Company for
which financial recovery would be incomplete. In the event of such breach, the
Company shall be entitled to injunctive relief or other equitable remedy. The
rights and remedies of the Company under this Section are in addition to all
other remedies.
Further, in any legal action or proceeding in connection with this
Agreement (e.g., to recover damages or other relief), the prevailing party will
be entitled to recover its reasonable attorneys' fees and other costs incurred.
10. Assignment
Contractor shall not assign all or any part of this Agreement or any work
performed, by operation of law or otherwise, without the prior written consent
of the Company.
11. Governing Law; Jurisdiction; Venue
This Agreement will be governed by the laws of the state of Washington
without regard to principles of conflicts of law. Contractor irrevocably
consents to the jurisdiction and venue of the state and federal courts located
in King County, Washington in connection with any action relating to this
Agreement. Contractor will not bring any action relating to this Agreement in
any other court.
12. Entire Agreement
This Agreement constitutes the entire agreement, and supersedes all prior
agreements of the Company and Contractor, relating to the Services.
XxxxXxx.xxx Inc. Xxxxxx Xxxxx
By: By:
-------------------------- -----------------------------
Its: Its:
-------------------------- -----------------------------
EXHIBIT 4.25A
Lock-Up Agreement
This Lock-Up Agreement (this "Agreement") is dated as of ----------, 2000,
between XxxxXxx.xxx Inc., a Washington corporation ("XxxxXxx.xxx"), and
-------------- (the "Shareholder").
Recitals
WHEREAS, XxxxXxx.xxx, Shamu Acquisition, Inc. ("Merger Sub") and
Xxxxxxx.xxx Inc (the "Company") entered into an Agreement and Plan of Merger,
dated January __, 2000, (the "Merger Agreement") which provides (subject to the
conditions set forth therein) for the merger of Merger Sub with and into the
Company (the "Merger").
WHEREAS, this Agreement is required to be executed and delivered by
Shareholder to XxxxXxx.xxx and XxxxXxx.xxx would not enter into the Merger
Agreement without the execution and delivery of this Agreement;
WHEREAS, as a result of the Merger, XxxxXxx.xxx will issue to Shareholder
------ shares of common stock of XxxxXxx.xxx ("XxxxXxx.xxx Common Stock") in
exchange for all the shares of common stock of the Company held by Shareholder
(such shares of XxxxXxx.xxx Common Stock, as adjusted for stock splits,
consolidations and the like, being referred to as the "Shares"); and
WHEREAS, in order to induce XxxxXxx.xxx to enter into the Merger Agreement,
the Shareholder has agreed to enter into and perform his, her or its obligations
under this Agreement.
NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the Shareholder and XxxxXxx.xxx agree as follows:
1. Restriction on Sale of Shares
Shareholder shall not directly or indirectly sell, convey, pledge, offer or
otherwise transfer or dispose of, voluntarily or involuntarily, any of the
Shares held by Shareholder until after the six-month anniversary of the
Effective Date (as that term is defined in the Merger Agreement). After the
six-month anniversary of the Effective Date, 50% of the Shares shall be free
from the transfer restrictions of this Section 1 and may be transferred by
Shareholder to the extent permitted by applicable law, and the balance of such
Shares shall remain subject to the transfer restrictions of this
Section. After the one year anniversary of the Effective Date, the balance of
the Shares shall be free from the transfer restrictions of this Section 1 and
may be transferred to the extent permitted by applicable law. The share
certificates representing the Shares shall bear legends indicating that such
Shares are subject to the provisions of this Agreement. Such legends shall only
be removed after such provisions have expired. The foregoing legends shall be
removed by XxxxXxx.xxx as promptly as practicable after receipt of notice from
Shareholder that the foregoing restriction periods have expired. Shareholder
agrees and consents to the entry of stop transfer instructions with
XxxxXxx.xxx's transfer agent against the transfer of Shares subject to the
transfer restrictions of this Section 1.
2. Sales of up to $1 Million
Notwithstanding the restrictions on transfer set forth in Section 1, during
the period between the Effective Date and the one-year anniversary of the
Effective Date, Shareholder shall be entitled to transfer that number of Shares
having an aggregate gross sales price (as measured at the time of the sale) of
not more than $1 million (the "De Minimus Exception"). Such transfers shall only
be made only through unsolicited brokers' transactions and to the extent
permitted by applicable law. In event a portion of the Shares are not subject to
the restrictions on transfer set forth in Section 1, then Shareholder shall
first be required to sell Shares not subject to transfer restrictions in
calculating the $1 million De Minimus Exception.
3. General Provisions
3.1 Governing Law
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Washington applicable to contracts executed in and to be
performed entirely in such State, without reference to any rules governing
conflict of laws.
3.2 Headings
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
-2-
3.3 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in counterparts, each of which when executed shall be deemed to be
an original but all of which taken together shall constitute one agreement.
-3-
IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
XXXXXXX.XXX INC.:
---------------------------------------
By:
Title:
SHAREHOLDER:
---------------------------------------
Name:
EXHIBIT 4.25B
Lock-Up Agreement
This Lock-Up Agreement (this "Agreement") is dated as of -------, 2000,
between XxxxXxx.xxx Inc., a Washington corporation ("XxxxXxx.xxx"), and New
Horizons L.P. (the "Shareholder").
Recitals
WHEREAS, XxxxXxx.xxx, Shamu Acquisition, Inc. ("Merger Sub") and
Xxxxxxx.xxx Inc (the "Company") entered into an Agreement and Plan of Merger,
dated January __, 2000, (the "Merger Agreement") which provides (subject to the
conditions set forth therein) for the merger of Merger Sub with and into the
Company (the "Merger").
WHEREAS, this Agreement is required to be executed and delivered by
Shareholder to XxxxXxx.xxx and XxxxXxx.xxx would not enter into the Merger
Agreement without the execution and delivery of this Agreement;
WHEREAS, as a result of the Merger, XxxxXxx.xxx will issue to Shareholder
------ shares of common stock of XxxxXxx.xxx ("XxxxXxx.xxx Common Stock") in
exchange for all the shares of common stock of the Company held by Shareholder
(such shares of XxxxXxx.xxx Common Stock being referred to as the "Shares"); and
WHEREAS, in order to induce XxxxXxx.xxx to enter into the Merger Agreement,
the Shareholder has agreed to enter into and perform his, her or its obligations
under this Agreement.
NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the Shareholder and XxxxXxx.xxx agree as follows:
1. Restriction on Sale of Shares
Until after the date that is 180 days after the Effective Date (as that
term is defined in the Merger Agreement), Shareholder shall not directly or
indirectly sell, convey, pledge, offer or otherwise transfer or dispose of,
voluntarily or involuntarily, in any 30 day period that number of Shares equal
to more than 10% of the Shares issued to Shareholder in the Merger (as adjusted
for stock splits, consolidations and the like). After the date that is 180 days
after the Effective Date, the Shares shall be free from the transfer
restrictions of this Section 1 and may be transferred to the extent
permitted by applicable law. The share certificates representing the Shares
shall bear legends indicating that such Shares are subject to the provisions of
this Agreement. Such legends shall only be removed after such provisions have
expired. The foregoing legends shall be removed by XxxxXxx.xxx as promptly as
practicable after receipt of notice from Shareholder that the foregoing
restriction period has expired. Shareholder agrees and consents to the entry of
stop transfer instructions with XxxxXxx.xxx's transfer agent against the
transfer of Shares subject to the transfer restrictions of this Section 1.
2. General Provisions
2.1 Governing Law
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Washington applicable to contracts executed in and to be
performed entirely in such State, without reference to any rules governing
conflict of laws.
2.2 Headings
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
2.3 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in counterparts, each of which when executed shall be deemed to be
an original but all of which taken together shall constitute one agreement.
-2-
IN WITNESS WHEREOF, the parties hereto have entered into and signed
this Agreement as of the date and year first above written.
XXXXXXX.XXX INC.:
---------------------------------------
By:
Title:
NEW HORIZONS L.P.:
---------------------------------------
Name:
Title:
-3-
EXHIBIT 5.8
OPINION OF COUNSEL TO XXXXXXX.XXX AND PURCHASER
Based upon the examinations, assumptions, qualifications and exceptions
stated herein, we are of the opinion that:
1. XxxxXxx.xxx is a corporation validly existing and in good standing under
the Washington Business Corporation Act (the "WBCA").
2. Purchaser is a corporation validly existing and in good standing under
the WBCA. All of the issued and outstanding shares of capital stock of Purchaser
are owned of record by XxxxXxx.xxx.
3. Each of XxxxXxx.xxx and Purchaser has the corporate power and authority
to execute, deliver and perform its obligations under the Merger Agreement. The
Merger Agreement have been duly authorized, executed and delivered by
XxxxXxx.xxx. The Merger Agreement have been duly authorized, executed and
delivered by Purchaser.
4. The Merger Agreement is a legal, valid and binding obligation of
XxxxXxx.xxx, enforceable against XxxxXxx.xxx in accordance with its terms. The
Merger Agreement is a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.
5. The execution and delivery by XxxxXxx.xxx of the Merger Agreement, the
performance by XxxxXxx.xxx of its obligations thereunder and the consummation of
the Merger will not (a) constitute a violation of any federal or Washington
state statute, regulation or rule having the force of law, or any provision of
the WBCA, (b) to our knowledge, require any material authorization or any
material consent or approval of any domestic governmental or regulatory
authority that has not been obtained, other than compliance with applicable
securities laws, the filing of the Agreement of Merger with the Washington
Secretary of State and the filing of the Articles of Merger with the Nevada
Secretary of State, or (c) violate the Restated Articles of Incorporation or
Bylaws of XxxxXxx.xxx.
6. The execution and delivery by Purchaser of the Merger Agreement, the
performance by Purchaser of its obligations thereunder and the consummation of
the Merger will not (a) constitute a violation of any federal or Washington
state statute, regulation or rule having the force of law, or any provision of
the WBCA, (b) to our knowledge, require any material authorization or any
material consent or approval of
February 7, 2000
Page 2
any domestic governmental or regulatory authority that has not been obtained,
other than compliance with applicable securities laws, the filing of the
Agreement of Merger with the Washington Secretary of State and the filing of the
Articles of Merger with the Nevada Secretary of State, or (c) violate the
Articles of Incorporation or Bylaws of Purchaser.
7. The shares of XxxxXxx.xxx's Common Stock to be issued pursuant to the
Merger Agreement have been duly authorized for issuance, and such shares, when
issued and delivered to the shareholders of the Company in accordance with the
terms of the Merger Agreement, shall be validly issued, fully paid and
nonassessable.
8. To our knowledge, there is no legal or governmental proceeding pending
or threatened to which XxxxXxx.xxx or Purchaser is a party which we believe is
likely to have a material adverse effect on the ability of XxxxXxx.xxx or
Purchaser to consummate the transactions contemplated by the Merger Agreement.
9. Subject to the filing of the Articles of Merger with the Nevada
Secretary of State and the Agreement of Merger with the Washington Secretary of
State, the Merger shall become effective under the WBCA on the date and at the
time set forth in the Agreement of Merger.
10. The Registration Statement has become effective under the Securities
Act and, to our knowledge, no stop order proceedings with respect thereto have
been instituted or are pending or threatened under the Securities Act.
