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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earlier event reported): December 10, 1998
NETLIVE COMMUNICATIONS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-12021 13-3848652
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(State of Incorporation (Commission File No.) (IRS Identification Number)
or other Jurisdiction)
330 16th Street
Brooklyn, New York 11215
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(Address of Principal Executive Offices)
(212) 343-7082
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(Registrant's Telephone Number Including Area Code)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On December 10, 1998, NetLive Communications, Inc. (the "Registrant")
sold, pursuant to the Agreement (as defined below), shares of its Common Stock
(as defined below) and Preferred Stock (as defined below) which in the
aggregate would equal, when fully issued and converted (as to the Preferred
Stock), approximately ninety percent (90%) of the Common Stock to several
Australian purchasers. Simultaneously with such purchase, the purchasers sold
all of the operating assets of a consumer electric goods business to the
Registrant. The Registrant previously had ceased its historic internet call
center business, and will continue this consumer electric goods business,
featuring electric blankets, foot warmers, fans, kettles, jugs, stainless steel
urns, steam and dry irons, toasters, hair care products, and mixers. These
transactions are described in detail below.
On December 10, 1998, pursuant to an Amended and Restated Stock
Purchase and Reorganization Agreement (the "Agreement") dated as of December
10, 1998 by and among the Registrant and Linda Industries Pty Limited ("Linda")
and Modara Oaks Pty Limited ("Modara"), each a newly formed Australian
subsidiary of the Registrant, and Budbox Pty Limited ("Budbox"), Playbyrne
Investments Pty Limited ("Playbyrne"), Newton Grace Pty Limited ("Newton
Grace"), Intercorp Group Pty Limited ("Intercorp"), Hallendon Pty Limited
("Hallendon"), each an Australian corporation, Geoffrey Russell Player ("Mr.
Player"), and Vicki Gaye Player ("Mrs. Player" and, collectively with Budbox,
Playbyrne, Newton Grace, Intercorp, Hallendon, and Mr. Player, the
"Purchasers"), the Registrant sold (the "NetLive Purchase") to the Purchasers,
for $10,000,000 Australian Dollars ("AUD"), an aggregate of (i) 27,200,000
shares of the Registrant's common stock, $0.0001 par value per share (the
"Common Stock") and (ii) 3,400,000 shares of the Registrant's non-voting Series
A Convertible Preferred Stock (the "Preferred Stock" and, collectively with the
Common Stock, the "Acquisition Securities"). Because the Registrant does not
currently have a sufficient number of authorized shares of Common Stock or
Preferred Stock to issue all of the Acquisition Securities, the Registrant only
was able to issue to the Purchasers 13,499,359 shares of Common Stock. The
Agreement provides, however, that the balance of the Acquisition Securities
will be issued immediately following a proposed 3.4 for 1 reverse stock split
(the "Reverse Split"). As a result, immediately following the Reverse Split the
Registrant will issue the balance of the Acquisition Securities (adjusted to
reflect the Reverse Split) and the Registrant then will have issued and
outstanding 9,000,000 shares of Common Stock, of which the Purchasers and their
assignees will own 8,000,000 shares (approximately 89%), and 1,000,000 shares
of Preferred Stock, which also will be owned by the Purchasers. The Preferred
Stock is convertible into up to 1,000,000 shares of Common Stock, so that upon
conversion the Registrant would have up to 10,000,000 shares of Common Stock
then issued and outstanding, of which the Purchasers and their assignees would
own up to 9,000,000 shares (90%).
As soon as practicable, the Registrant intends to seek shareholder
approval at a shareholders meeting for, among other items, the Reverse Split
and an amendment to its certificate of incorporation to increase its authorized
capital stock and to change its name.
Simultaneously with the NetLive Purchase, Linda and Modara (the
Registrant's wholly-owned Austrialian subsidiaries) purchased (the "Asset
Purchase") the operating assets (excluding cash and certain receivables) (the
"Operating Assets") and registered trade marks (the "Brand
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Names" and, collectively with the Operating Assets, the "Assets") of Newton
Grace (one of the Purchasers) for AUD $21,923,060.
The Asset Purchase consisted of the purchase by Linda of the Operating
Assets for AUD $16,923,060 and the purchase by Modara of the Brand Names for
AUD $5,000,000. Modara, in turn, licensed the Brand Names to Linda. Linda's
purchase was payable AUD $15,000,000 in cash and AUD $1,923,060 by delivery of
a promissory note. The cash portion of Linda's purchase price was funded in
part by a AUD $3,333,333 loan from its parent, the Registrant. Modara's
purchase of the Brand Names was funded by a AUD $5,000,000 loan from its
parent, the Registrant. The Registrant's loans to Linda and Modara each bear
interest at 9.20% per annum and provide for a term of five years.
The source of the purchase price for the NetLive Purchase was a
portion of the consideration delivered by Linda and Modara for the Asset
Purchase. The Asset Purchase, in turn, was funded in part by a AUD $10,000,000
loan (the "Loan") from National Australia Bank Limited (the "Bank") to Linda.
The Loan bears interest at a rate of 9.25% per annum and additionally requires
payment of a facility fee equal to 1.10% per annum on amounts outstanding
thereunder. The Loan matures on January 31, 1999, subject to extension by Linda
and the Bank. The Loan is secured by liens over all of Linda's assets, a
guarantee and indemnity for AUD $11,600,000 from the Registrant (including an
additional AUD $1,600,000 credit line which is being provided to Linda by the
Bank) supported by liens over all of the Registrant's assets, and guarantees
and indemnities for AUD $11,600,000 from Newton Grace, Budbox, Modara,
Playbyrne, Mr. Player, Mrs. Player, and others, certain of which are supported
by liens over all of their respective assets, including the shares of Common
Stock held by each of them.
Upon closing of the NetLive Purchase, all of the Registrant's officers
and directors, except for Adam Goldberg (who is remaining as Director of the
Registrant), resigned. The following individuals were then elected officers and
directors, to serve in such capacities until the next annual meeting of the
stockholders and Board of Directors: Geoffrey Russell Player, as Chief
Executive Officer, President, and Director; and Adam Goldberg, as Secretary.
The Registrant's resigning directors entered into a settlement
agreement with the former Chief Executive Officer, President, and Director of
the Registrant to resolve an action brought in the Supreme Court of the State
of New York captioned "Laurence Rosen, on behalf of the shareholders of NetLive
Communications, Inc. v. Kharitonov, et al" (Index No. 98-602056). At the
closing of the NetLive Purchase, the parties to this action executed a
Stipulation of Dismissal, mutual releases, and covenants not to sue.
The Registrant also sold 450,000 shares of Common Stock (pre-Reverse
Split) to an unaffiliated purchaser for $150,000 in a private placement
transaction.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The Asset Purchase is described in Item 1. above. The Seller in the
Asset Purchase is Newton Grace, one of the Purchasers in the NetLive Purchase.
Newton Grace, Budbox, Playbyrne, Mr. Player, and Mrs. Player are affiliated
with each other and they and their assignees will own up to 90% of the
Registrant's voting securities upon completion of the NetLive Purchase
(assuming conversion of the Preferred Stock).
For the year ended June 30, 1998, based upon the audited financial
statements of the company as prepared by PricewaterhouseCoopers, Newton Grace
had operating revenue of AUD $17,312,848 and operating profit after income tax
of AUD $1,368,458.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Financial statements for Newton Grace will be filed by amendment
within 60 days of the due date of this Report.
(b) Pro Forma Financial Information.
Pro forma financial information regarding the acquisition
of Newton Grace's assets will be filed by amendment within 60 days of the due
date of this Report.
(c) Exhibits:
2(a) Amended and Restated Stock Purchase and Reorganization
Agreement dated as of December 10, 1998 by and among NetLive
Communications, Inc., Linda Industries Pty Limited, Modara
Oaks Pty Limited, Budbox Pty Limited, Playbyrne Investments
Pty Limited, Newton Grace Pty Limited, Intercorp Group Pty
Limited, Hallendon Pty Limited, Geoffrey Russell Player, and
Vicki Gaye Player.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NETLIVE COMMUNICATIONS, INC.
By: /s/ Geoffrey Russell Player
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Name: Geoffrey Russell Player
Title: Chief Executive Officer and President
Dated: December 24, 1998
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AMENDED AND RESTATED
STOCK PURCHASE AND REORGANIZATION AGREEMENT
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NETLIVE COMMUNICATIONS, INC.
LINDA INDUSTRIES PTY LIMITED
MODARA OAKS PTY LIMITED
and
PLAYBYRNE INVESTMENTS PTY LIMITED
BUDBOX PTY LIMITED
NEWTON GRACE PTY LIMITED
INTERCORP GROUP PTY LIMITED
HALLENDON PTY LIMITED
GEOFFREY RUSSELL PLAYER
VICKI GAYE PLAYER
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Dated as of December 10, 1998
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AMENDED AND RESTATED
STOCK PURCHASE AND REORGANIZATION AGREEMENT
AMENDED AND RESTATED STOCK PURCHASE AND REORGANIZATION AGREEMENT dated
as of December 10, 1998 by and among NetLive Communications, Inc., a Delaware
corporation ("NetLive"), Linda Industries Pty Limited ACN 082 218 102, an
Australian corporation ("Linda"), Modara Oaks Pty Limited ACN 084 157 844, an
Australian corporation ("Modara"), Budbox Pty Limited ACN 050 213 271, an
Australian corporation ("Budbox"), Playbyrne Investments Pty Limited ACN 050
210 412, an Australian corporation ("Playbyrne"), Newton Grace Pty Limited ACN
006 087 369, an Australian corporation, ("Newton," and, together with Budbox
and Playbyrne the "Player Companies"), Intercorp Group Pty Limited ACN 082 594
241, an Australian corporation ("Intercorp"), Hallendon Pty Limited ACN 074 127
343, an Australian corporation ("Hallendon"), (Budbox, Playbyrne, Newton,
Intercorp and Hallendon are sometimes referred to herein individually as a
"Company" and collectively as the "Companies"), Geoffrey Russell Player ("Mr.
Player"), Vicki Gaye Player ("Mrs. Player") (Mr. Player, Mrs. Player and the
Companies are sometimes referred to herein individually as a "Purchaser" and
collectively as the "Purchasers").
WHEREAS, the parties hereto (except Modara) entered into a Stock
Purchase and Reorganization Agreement dated as of June 22, 1998 (the "Original
Agreement");
WHEREAS, the parties hereto and Modara desire and by execution hereof
hereby amend and restate the Original Agreement as provided herein;
WHEREAS, Newton is an Australian corporation engaged in the
manufacture and distribution of electric blankets, electric kettles and other
small electric appliances (the "Business");
WHEREAS, Linda is a newly formed Australian corporation formed for the
purpose of acquiring certain of the assets (the "Assets") of the Business as
described in Section 1.11 hereto;
WHEREAS, the capital stock of Linda consists of, or will prior to the
Closing (as hereinafter defined) consist of Ten Million (10,000,000) authorized
ordinary shares ("Linda Common Stock"), of which one (1) share is issued and
outstanding and owned, or will prior to the Closing be owned by NetLive;
WHEREAS, Modara is a newly formed Australian corporation formed for
the purpose of acquiring the registered trademarks of the Business;
WHEREAS, NetLive owns or prior to closing will own all twelve (12)
issued and outstanding ordinary shares of Modara;
WHEREAS, NetLive is a public corporation subject to the reporting
requirements of Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and its
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common stock, par value (U.S.) $.0001 per share (the "Common Stock"), and
warrants (the "Public Warrants") are quoted on the NASD Electronic Bulletin
Board (the "NASD BB");
WHEREAS, it is contemplated that the ratio among the number of shares
of Common Stock purchased by the Purchasers, the number of shares of Preferred
Stock purchased by the Purchasers and number of shares of Common Stock issued
and outstanding immediately prior to the Closing (including any shares of
Common Stock actually issued to Trevor Cock or his designee pursuant to Section
6.11 hereof) shall be 8 to 1 to 1 (the "Agreed Share Ratio");
WHEREAS, it is contemplated that the Purchasers shall purchase (the
"NetLive Purchase") from NetLive (on a pre-Reverse Split basis) an aggregate of
(i) Twenty Seven Million Two Hundred Thousand (27,200,000) shares of Common
Stock; and (ii) Three Million Four Hundred Thousand (3,400,000) shares of
non-voting Series A Convertible Preferred Stock (the "NetLive Preferred Stock,"
and, together with the Common Stock, the "NetLive Securities"), which amount of
NetLive Securities does not reflect the Reverse Split (as defined in Section
1.12 hereof);
WHEREAS, because the Certificate of Incorporation of NetLive currently
only authorizes twenty million (20,000,000) shares of capital stock consisting
of 19,000,000 shares of Common Stock and 1,000,000 shares of blank check
preferred stock, which amount is insufficient to provide the capital structure
of NetLive following the closing of the transactions contemplated hereby (the
"Transactions"), as negotiated by the parties hereto, the Purchasers shall at
the closing of the Transactions only receive stock certificates for 13,499,359
shares of Common Stock (on a pre-Reverse Split basis), but shall have the right
to receive the equivalent of the remaining 13,700,641 shares of Common Stock
(on a pre-Reverse Split basis) and the equivalent of the 3,400,000 shares of
NetLive Preferred Stock (on a pre-Reverse Split basis) (collectively, the "Post
Approval Shares"), immediately following the Stockholders' Approval (as defined
below);
WHEREAS, immediately following the closing of the Transactions,
NetLive and its new officers and directors shall take all actions necessary to
conduct a shareholders' meeting of the shareholders of NetLive to, among other
items, ratify the Transactions and have the NetLive stockholders approve the
Reverse Split (the "Stockholders' Approval");
WHEREAS, immediately following the ratification of the Transactions
and of the Reverse Split, NetLive shall issue to the Purchasers and their
assignees stock certificates of NetLive representing such number of shares of
Common Stock and NetLive Preferred Stock so that immediately following the
effective date of the Reverse Split and the issuance of the Post Approval
Shares, there are issued and outstanding 9,000,000 shares of Common Stock (of
which 8,000,000 shares shall be issued to and remain owned by the Purchasers
and their assignees), and 1,000,000 shares of NetLive Preferred (all of which
shall be owned by such persons);
WHEREAS, it is contemplated that immediately following the NetLive
Purchase, NetLive shall subscribe for and Linda shall allot to NetLive One
Million Six Hundred Sixty Six
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Thousand Six Hundred Sixty Seven (1,666,667) fully paid shares of Linda Common
Stock (the "Linda Shares") at par for an amount of One Million Six Hundred
Sixty Six Thousand Six Hundred Sixty Seven (AUD $1,666,667) Australian Dollars
(the "Linda Share Acquisition") on the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, it is contemplated that immediately following the NetLive
Purchase, and simultaneous with the Linda Share Acquisition, NetLive shall lend
to Linda, and Linda shall borrow from NetLive (the "Linda Loan") the sum of
Three Million Three Hundred Thirty Three Thousand Three Hundred Thirty Three
(AUD $3,333,333) Australian Dollars pursuant to a loan agreement in
substantially the form attached hereto as Exhibit A (the "Linda Loan
Agreement");
WHEREAS, it is contemplated that immediately following the NetLive
Purchase, and simultaneous with the Linda Share Acquisition, Linda will acquire
the Assets (the "Linda Business Sale") for Sixteen Million Nine Hundred Twenty
Three Thousand Sixty (AUD $16,923,060) Australian Dollars, subject to certain
adjustments as set forth in the Linda Business Sale Agreement (as hereinafter
defined);
WHEREAS, it is contemplated that immediately following the Linda Share
Acquisition, NetLive shall lend to Modara, and Modara shall borrow from NetLive
(the "Modara Loan") the sum of Five Million (AUD $5,000,000) Australian Dollars
pursuant to a loan agreement note in substantially the form attached hereto as
Exhibit B (the "Modara Loan Agreement");
WHEREAS, it is contemplated that immediately following the Brand Name
Purchase, pursuant to one or more trademark assignments substantially in the
form attached hereto as Exhibit C (the "Trademark Assignments") Modara will
acquire the registered trade marks used in connection with the Business and
identified in Schedule 0.01 hereof (the "Brand Names") for Five Million (AUD
$5,000,000) Australian Dollars (the "Brand Name Purchase");
WHEREAS, it is contemplated that immediately following the Linda Share
Acquisition, and simultaneous with the Modara Loan, Linda will enter into one
or more license agreements with Modara with respect to the Brand Names,
substantially in the form attached hereto as Exhibit D (the "Licenses");
WHEREAS, in order to consummate the Linda Asset Purchase, it is
contemplated that prior to the Linda Asset Purchase, Linda will secure a bank
loan or credit facility of no less than AUD $10,000,000 (the "Loan", which
funds shall be used together with other available funds of Linda and a
promissory note of Linda to purchase the Assets;
WHEREAS, it is contemplated that following the closing of the
Transactions, Linda will remain a wholly-owned subsidiary of NetLive and will
own substantially all of the Assets, other than the Brand Names (which will be
owned by Modara and licensed to Linda) and certain excluded receivables as
provided in the Linda Business Sale Agreement, as hereinafter defined, and
Modara also shall remain a wholly-owned subsidiary of NetLive.
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NOW, THEREFORE, in consideration of the mutual agreements recited
herein, the parties hereto hereby agree as follows:
ARTICLE I
THE TRANSACTIONS
1.01 The NetLive Purchase. The Purchasers shall pay NetLive at the
Closing the aggregate sum of Ten Million (AUD $10,000,000) Australian Dollars
in consideration of (i) the sale, transfer and delivery of 8,000,000 shares of
Common Stock (on a post-Reverse Split basis), and 1,000,000 shares of NetLive
Preferred Stock (on a post-Reverse Split basis), of which (i) on the Closing
Date, the Purchasers and their assignees shall receive stock certificates for
13,499,359 of Common Stock (on a pre-Reverse Split basis), and (ii)on or
immediately following the date of the Stockholders' Approval (the "Approval
Date") by the NetLive stockholders, at a duly held stockholders' meeting of,
among other items, (a) the Reverse Split and (b) the amendment of NetLive's
Certificate of Incorporation to reflect all changes thereto necessary or
expedient to effect the Transactions contemplated hereby (the "NetLive
Certificate Amendment") stock certificates for the Post Approval Shares so that
immediately following such issuance and taking into account the Reverse Split
there are issued and outstanding 9,000,000 shares of Common Stock (of which
8,000,000 are owned by the Purchasers and their assignees) and 1,000,000
NetLive Preferred Stock (also owned by such persons), all in such amounts as
are set forth in Schedule 1.01 hereof. Schedule 1.01 also sets forth certain
assignees of the Purchasers who will be assigned shares of Common Stock
immediately after the Closing. The NetLive Preferred Stock will have the terms
set forth in Section 1.02 of this Agreement.
1.02 NetLive Preferred Stock. The NetLive Preferred Stock will be a
newly authorized class of preferred stock to be issued by NetLive. The NetLive
Preferred Stock will be non-voting and have a liquidation value of U.S. $.0001
per share. The NetLive Preferred Stock will be convertible in the aggregate
into up to 1,000,000 shares of Common Stock of NetLive (on a post-Reverse Split
basis), as follows: for each (U.S.) $200,000 of Net Income (as defined below)
in excess of a sum in U.S. Dollars equivalent to AUD $3,571,429 at the then
prevailing currency exchange rate as listed by Citibank, N.A., for the fiscal
years ended 1999, 2000 and 2001, the Purchasers may, at their option, convert
up to an aggregate 200,000 shares of NetLive Preferred Stock into Common Stock
(such conversion rights to be exercisable by the Purchasers in proportion to
their respective holdings of Preferred Stock), up to a maximum aggregate of
1,000,000 shares of Common Stock (on a post-Reverse Split). On or immediately
following the Approval Date, NetLive shall have filed with the State of
Delaware a Certificate of Designation (the "Preferred Certificate") setting
forth the terms of the NetLive Preferred Stock, substantially in the form
attached hereto as Exhibit E. The Preferred Certificate shall be on the terms
and conditions as set forth herein and as mutually acceptable to the parties
hereto.
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1.03 Definitions. As used in this Article I, the following terms are
defined as follows:
(a) GAAP. United States generally accepted accounting principles
consistently applied.
(b) Net Income. In any given fiscal year, NetLive's audited
consolidated net after-tax income, computed by Price Waterhouse Coopers or
other major accounting firm then regularly retained by NetLive, in
accordance with GAAP and Regulation S-X promulgated under the Securities
Act of 1933, as amended (the "Act").
1.04 Regarding the NetLive Securities. With respect to their purchase
of the NetLive Securities, each Purchaser represents and warrants as follows
solely as to itself:
(a) The NetLive Securities to be acquired by such Purchaser pursuant
to the terms of this Agreement are being acquired for such Purchaser's own
account, with no present intention of transferring such securities or any
participation or interest therein (other than the transfer, pursuant to a
valid exemption from registration under the Act, of (i) 200,000 shares of
Common Stock (on a post-Reverse Split basis) from Intercorp to Intercorp
Group Holdings Pty Limited ACN 082 594 205 ("Intercorp Holdings"), an
Australian corporation and an affiliate of Intercorp; (ii) 500,000 shares
(the "Intercorp Shares") of Common Stock (on a post-Reverse Split basis)
from the Player Companies, or any of them, to Intercorp, to be transferred
no later than two years after the Closing Date pursuant to the terms of the
Intercorp Services Agreement (as hereinafter defined) and immediately
thereafter, from Intercorp to Intercorp Holdings; (iii) 50,000 shares of
Common Stock (on a post-Reverse Split basis) from the Player Companies, or
any of them, to Gusrae, Kaplan and Bruno; (iv) 50,000 shares of Common
Stock (on a post-Reverse Split basis), from the Player Companies, or any of
them, to Oak Point Investments, Inc., 100,000 shares of Common Stock (on a
post-Reverse Split basis) from the Player Companies, or any of them, to the
May Davis Group ("MDG"), and 100,000 shares of Common Stock (on a
post-Reverse Split basis) from the Player Companies, or any of them, to
Magic Consulting Group, Inc. ("Magic"), pursuant to oral arrangements
between the Player Companies and MDG and between the Player Companies and
Magic, each dated February 9, 1998 (the "Magic Arrangements"), each such
transfer in subsection (iv) contemplated to occur immediately after the
Closing), and without a view to the distribution of any portion thereof,
except in accordance with the Act.
(b) Except as may be required in connection with the Purchaser's
banking arrangements, including, without limitation the pledge of shares of
Common Stock to National Australia Bank Limited (the "Bank"), each
Purchaser will not sell, assign, transfer or encumber any of such
securities, or any shares
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of Common Stock acquired upon any exercise of the NetLive Preferred Stock,
unless (i) a registration statement under the Act with respect thereto is
in effect and the prospectus included therein meets the requirements of
Section 10 of the Act, (ii) a no-action letter is obtained from the staff
of the Securities and Exchange Commission (the "Commission") in respect of
such proposed sale, assignment, transfer or encumbering, or (iii) NetLive
has received a written opinion of counsel reasonably satisfactory to
NetLive that, after an investigation of the relevant facts, such counsel is
of the opinion that such proposed sale, assignment, transfer or encumbering
does not require registration under the Act. Each Purchaser understands
that the NetLive Securities are not being registered under the Act and must
be held indefinitely unless it is subsequently registered thereunder or an
exemption from such registration is available.
(c) Each Purchaser has been given the opportunity to ask questions of,
and receive answers from, NetLive concerning NetLive and the NetLive
Securities and to obtain such additional information, to the extent NetLive
possesses such information or can acquire it without unreasonable effort or
expense, necessary to verify the accuracy of same as the Purchasers
reasonably desire in order to evaluate NetLive and the NetLive Securities,
and the Purchasers have had the opportunity to discuss any questions
regarding NetLive or the NetLive Securities with his counsel or other
advisor. The Purchasers do not desire to receive any further information.
(d) The purchase of the NetLive Securities is a speculative investment
involving a high degree of risk, there is no guarantee that the Purchasers
will realize any gain from this investment, and the Purchasers could lose
the total amount of their investment.
(e) Each Purchaser has no need for liquidity in this investment in the
NetLive Securities.
(f) Each Purchaser is an "accredited investor," as such term is
defined in Rule 501 of Regulation D promulgated under the Act. Each
Purchaser has such experience and sophistication in such investments as to
make such Purchaser fully capable of evaluating the risks and investment
merits of an investment in the NetLive Securities.
(g) Each Purchaser is financially able to bear the economic risk of an
investment in the NetLive Securities, including the ability to hold the
NetLive Securities indefinitely, or to afford a complete loss of his or its
investment in the NetLive Securities.
(h) This Agreement constitutes the valid and binding obligation of
each of the Purchasers and is enforceable against each of the Purchasers in
accordance
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with its terms, except as may be limited by Australian and/or United
States bankruptcy laws and regulations.
(i) Each of the Companies is a corporation duly incorporated, validly
existing and in good standing under the laws of Australia. Each of the
Companies is duly qualified to conduct its business and is in good standing
as a foreign corporation in such jurisdictions as its business is now
conducted (except for such jurisdictions where the failure to so qualify
would not have a material adverse effect on such Company), and there has
not been any claim by any other jurisdiction to the effect that any Company
is required to qualify or otherwise be authorized to do business as a
foreign corporation therein.
(j) All requisite consents of governments and other regulatory
agencies, foreign or domestic, and of any other parties, required to be
received by or on the part of the Purchasers, to enable any of them to
enter into and carry out their purchase of the NetLive Securities in all
material respects, have been, or prior to the Closing (as defined in
Section 7.01 of this Agreement), will have been obtained.
1.05 The Linda Share Acquisition. Subject to the terms and conditions
of this Agreement, and in reliance on the representations and warranties set
forth herein and in the other Agreements (as hereinafter defined), immediately
following the NetLive Purchase, NetLive will subscribe for and Linda will allot
to NetLive the Linda Shares, free and clear of all liens, pledges,
encumbrances, charges and claims (collectively, "Liens") thereon, other than
Liens resulting primarily from (i) actions of NetLive, the Purchasers, or those
of Linda in connection with the Loan, and (ii) restrictions on transfer due to
United States or Australian federal or state securities laws, which
restrictions are in no way caused, in whole or in part, by any failure of Linda
to comply with such laws thereon.
1.06 Purchase Price of the Linda Shares. In consideration of the
allotment and delivery of the Linda Shares to NetLive in the Linda Share
Acquisition, on the Closing Date, NetLive will pay to Linda the subscription
monies of One Million Six Hundred Sixty Six Thousand Six Hundred Sixty Seven
(AUD $1,666,667) Australian Dollars.
1.07 The Linda Loan. Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties set forth
herein and in the other Agreements (as hereinafter defined), immediately
following the NetLive Purchase, NetLive will lend to Linda, in immediately
available funds, the sum of Three Million Three Hundred Thirty Three Thousand
Three Hundred Thirty Three (AUD $3,333,333) Australian Dollars, and Linda will
deliver to NetLive the Linda Loan Agreement, together with such instruments
securing Linda's obligations under the Linda Loan Agreement and such other
documents as may be contemplated by the Linda Loan Agreement.
1.08 The Modara Loan. Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties set forth
herein and in the other Agreements (as
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hereinafter defined), immediately following the Linda Share Acquisition,
NetLive will lend to Modara, in immediately available funds, the sum of Five
Million (AUD $5,000,000) Australian Dollars, and Modara and NetLive will
execute and deliver the Modara Loan Agreement, together with such instruments
securing Modara's obligations under the Modara Loan Agreement and such other
documents as may be contemplated by the Modara Loan Agreement.
1.09 The Brand Name Purchase. Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties set forth
herein and in the Trademark Assignments, immediately following the Linda Share
Acquisition, and simultaneous with the Modara Loan, Newton will deliver to
Modara fully executed Trademark Assignments, together with such other
instruments of transfer and other documents as may be necessary or expedient in
order to fully effect the Brand Name Purchase, and in consideration therefor,
Modara will transfer to Newton, in immediately available funds, the sum of Five
Million (AUD $5,000,000) Australian Dollars.
1.10 The Licenses. Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties set forth
herein, immediately following the Brand Name Purchase, Linda and Modara will
execute and deliver the Licenses.
1.11 The Linda Sale of Business. Immediately subsequent to or
simultaneously with the Linda Share Acquisition, Linda shall acquire the Assets
from Newton, pursuant to the terms and conditions of a Sale of Business
Agreement (the "Linda Sale of Business Agreement" and, together with the Linda
Loan Agreement Note, the Modara Loan Agreement, the Trademark Assignments, the
Licenses and this Agreement shall hereinafter be collectively referred to as
the "Agreements") substantially in the form attached hereto as Exhibit F, in
consideration of the payment by Linda to Newton of Sixteen Million Nine Hundred
Twenty Three Thousand Sixty (AUD $16,923,060) Australian Dollars (the "Asset
Purchase Price"). The Asset Purchase Price will consist of (i) AUD $15,000,000,
of which AUD $10,000,000 will be derived from the Loan, and (ii) AUD
$1,923,060, subject to certain adjustments as set forth in the Linda Sale of
Business Agreement, will be in the form of a promissory note substantially as
annexed to the Linda Sale of Business Agreement.
1.12 Reverse Stock Split. On or immediately following the Approval
Date, NetLive shall effect, in accordance with all applicable laws, rules and
regulations and its By-Laws and Certificate of Incorporation, including, but
not limited to, the Delaware General Corporation Laws and the Federal
Securities laws, a 3.4 to 1 reverse stock split (the "Reverse Split") of each
issued and outstanding share of Common Stock, so that immediately following
such Reverse Split and the subsequent issuance of certificates for the Post
Approval Shares, the issued and outstanding capital stock of NetLive is as set
forth in Section 1.13 below. NetLive reserves the right to alter the 3.4 to 1
Reverse Split ratio provided that the 8 to 1 to 1 Agreed Share Ratio is
maintained.
1.13 Issuance of Post-Approval Shares. Immediately following the
Reverse Split, NetLive shall transfer and deliver stock certificates
representing the previously purchased, but
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not issued Post Approval Shares so that immediately following the Reverse Split
and such issuance there are issued and outstanding 9,000,000 shares of Common
Stock (8,000,000 of which will be owned by the Purchasers and their assignees)
and 1,000,000 shares of NetLive Preferred Stock (all of which shall be owned by
such persons). Immediately upon such issuance and delivery, the Purchasers
shall pledge and deliver all such shares of Common and Preferred Stock to the
Bank, together with stock powers with respect thereto, executed in blank.
1.14 Cancellation of Options, Warrants, Etc. At or prior to the
Closing Date there will be no more than 25,000 (on a post-Reverse Split basis)
vested and outstanding options, warrants, and other rights to purchase shares
of Common Stock for which the exercise price is less than (U.S.) $13.25 (on a
post-Reverse Split basis) per share of Common Stock (collectively, the above
such options, warrants, and other rights to purchase shares of Common Stock for
which the exercise price per share of Common Stock is less than (U.S.) $13.25,
on a post-Reverse Split basis, are hereinafter referred to as "Rights"). All
Rights held by Andrew Schwartz, Michael Kharitonov, Jeffrey Wolf, Marcel Yung
and/or Adam Goldberg shall be canceled prior to Closing, and NetLive shall use
its best efforts to cancel all other vested and outstanding Rights prior to
Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BUDBOX
Budbox makes the following representations and warranties to NetLive.
NetLive, in executing, delivering and consummating this Agreement, has relied
and will rely upon the correctness and completeness of each of such
representations and warranties:
2.01 Valid Corporate Existence Qualification; Authority. Newton is a
corporation duly incorporated, validly existing and in good standing under the
laws of Australia. Newton has the corporate power to carry on the Business as
now conducted and to own the Assets. Newton is duly qualified to conduct the
Business and is in good standing as a foreign corporation in such jurisdictions
as the Business is now conducted (except for such jurisdictions where the
failure to so qualify would not have a material adverse effect on Newton), and
there has not been any claim by any other jurisdiction to the effect that
Newton is required to qualify or otherwise be authorized to do business as a
foreign corporation therein. The copies of Newton's Certificate of
Incorporation, as amended to date, which will be delivered to NetLive at
Closing (as defined in Section 7.01 of this Agreement), will be true and
complete copies of those documents as then in effect.
2.02 Capitalization. The authorized capital stock of Newton consists
of Ten Thousand (10,000) ordinary shares, $1.00 AUD par value per share, of
which twelve (12) shares are issued and outstanding.
2.03 Subsidiaries. Newton has no subsidiaries.
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2.04 Consents. Except as set forth in Schedule 2.04, all requisite
consents of governments and other regulatory agencies, foreign or domestic, and
of any other parties, required to be received by or on the part of the
Purchasers, to enable any of them to enter into and carry out all of the
transactions contemplated in this Agreement in all material respects, have
been, or prior to the Closing (as defined in Section 7.01 of this Agreement),
will have been obtained.
2.05 Binding Nature of Agreement. This Agreement constitutes each of
the Purchasers' valid and binding obligation and is enforceable in accordance
with its terms, except as may be limited by federal bankruptcy laws and
regulations.
2.06 Financial Statements. The audited financial statements of Newton
for the years ended June 30, 1998, 1997 and 1996 prepared by Price Waterhouse
Coopers (collectively, the "Business Financial Statements") previously
delivered to NetLive accurately reflect the income, expenses, assets and
liabilities in all material respects of the Business for the applicable periods
and at and as of the applicable dates. The Business Financial Statements were
prepared in accordance with GAAP and Regulation S-X under the Act. The Business
Financial Statements fairly represent the financial position of the Business at
the applicable dates and the results of operations of the Business for such
periods and disclose all material liabilities and debts.
2.07 Insurance. Schedule 2.07 to be delivered at the Closing, sets
forth a list and brief description of all insurance policies held by Newton as
of the date of the Closing. Except as set forth in Schedule 2.07, such policies
are valid, outstanding and enforceable policies, as to which premiums have been
paid currently.
2.08 Litigation, Compliance with Law. Except as set forth on Schedule
2.08, there are no actions, suits, proceedings or governmental investigations
relating to Newton or to any of the Assets or the Business pending or, to the
knowledge of Budbox, threatened, or any order, injunction, award or decree
outstanding against Newton or against or relating to any of the Assets or the
Business. Except as set forth in Schedule 2.08 to be delivered at the Closing,
to the best knowledge of Budbox, Newton is not in violation of any law,
regulation, ordinance, order, injunction, decree, award or other requirement of
any governmental body, court or arbitrator relating to the Assets or the
Business which violation could have a material adverse effect on Newton.
2.09 Real Property. Schedule 2.09 to be delivered at the Closing, sets
forth a brief description of all real property which is owned by, or leased to
Newton. Newton owns outright the fee simple title in and to the real properties
shown on Schedule 2.09, to be delivered at the Closing, as being owned by it,
free and clear of all claims, liens, mortgages, charges, or encumbrances of any
nature whatsoever, except as otherwise described on Schedule 2.09. The real
property leases described in Schedule 2.09 that relate to the leased properties
described therein are now in full force and effect, and all material amounts
payable thereunder have been paid. All uses of such owned or leased property by
Newton conform, in all material respects,
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to all applicable building and zoning ordinances, laws, and regulations and, in
the case of leased property, to all terms of the lease relating thereto.
2.10 Condition of Assets. Except for normal breakdowns and servicing
requirements, substantially all machinery and equipment regularly used in the
conduct of the Business is in reasonably good operating condition and repair,
ordinary wear and tear excepted.
2.11 Permits and Licenses. Schedule 2.11 sets forth all permits,
licenses, orders, franchises and approvals from all federal, state, local and
foreign governmental regulatory bodies held by Newton. Newton has all permits,
licenses, orders, franchises and approvals of all federal, state, local and
foreign governmental or regulatory bodies required of it to carry on the
Business as presently conducted in all material respects; all such other
permits, licenses, orders, franchise and approvals are in full force and
effect; and Newton is in compliance in all material respects with all
requirements, standards and procedures of the federal, state, local and foreign
governmental bodies which have issued such permits, licenses, orders,
franchises and approvals.
2.12 No Breach. Except as set forth in Schedule 2.12, neither the
execution and delivery of this Agreement nor compliance by the Purchasers with
any of the provisions hereof nor the consummation of the transaction
contemplated hereby will:
(a) violate or conflict with any provision of the Certificate of
Incorporation of Newton;
(b) violate or, alone or with notice of the passage of time, result in
the material breach or termination of, or otherwise give any contracting
party the right to terminate, or declare a material default under, the
terms of any agreement or other document or undertaking, oral or written to
which Newton is a party or by which it or any of the Assets may be bound
(except for such violations, conflicts, breaches or defaults as to which
required waivers or consents by other parties have been, or will, prior to
the Closing, be, obtained or which will not have a material adverse effect
on any of such entities);
(c) result in the creation of any lien, security interest, charge or
encumbrances upon any of the Assets pursuant to the terms of any such
agreement or instrument;
(d) violate any judgment, order, injunction, decree or award against,
or binding upon Newton or the Assets; or
(e) violate any law or regulation of any jurisdiction relating to
Newton or any of its securities or the Assets.
2.13 Due Diligence. To the best of Budbox's knowledge all documents
and other materials relating to Newton or the Business and provided to NetLive
in connection with the
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Transactions are true and correct in all material respects, other than those
materials which were superseded or corrected by written materials provided to
NetLive, which superseding or correcting materials are true and correct in all
material respects.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NETLIVE
NetLive makes the following representations and warranties to the
Purchasers. In executing this Agreement, the Purchasers have each relied and
will rely on the correctness and completeness of such representations and
warranties.
3.01 Valid Corporate Existence; Qualification. NetLive is a
corporation duly organized validly existing and in good standing under the laws
of the State of Delaware. NetLive has the corporate power to carry on its
business as now conducted and to own its assets. NetLive is duly qualified to
conduct business and is in good standing as a foreign corporation in those
jurisdictions set forth on Schedule 3.01, which are the only jurisdictions in
which NetLive is required to qualify in order to own its assets or properties
or to carry on its business as now conducted (except for such jurisdictions
where the failure to so qualify would not have a material adverse effect on
NetLive), and there has not been any claim by any other jurisdiction to the
effect that NetLive is required to qualify or otherwise be authorized to do
business as a foreign corporation therein (except for such jurisdictions where
the failure to so qualify would not have a material adverse effect on NetLive).
The copies of NetLive's Certificate of Incorporation (certified by the
Secretary of State of Delaware) and By-Laws (certified by NetLive's secretary),
as amended to date, which will be delivered to the Purchasers prior to the
Closing, are true and complete copies of those documents as now in effect. The
minute books of NetLive contain accurate records of all material meetings of
its Board of Directors and stockholders since its incorporation, and accurately
reflect in all material respects all transactions authorized by such persons in
such capacities including, without limitation, actions authorized by written
consent in lieu of a meeting.
3.02 Capitalization. The authorized, issued and outstanding Common
Stock, preferred stock, options and warrants, including the terms thereof
(namely, the amounts, the names of the holders thereof, the terms, and the
exercise prices with regard to all securities other than shares of Common
Stock, and with regard to Common Stock, the names and amounts held of record by
each NetLive stockholder, officer, director, affiliate, and any 5% or greater
stockholder known to NetLive), of NetLive is set forth on Schedule 3.02. Other
than the NetLive Securities to be issued pursuant to this Agreement, NetLive
has authorized (i) 19,000,000 shares of Common Stock, and (ii) 1,000,000 shares
of "blank check" preferred stock, of which as of the date hereof (i) 2,950,000
shares of Common Stock, and (ii) no shares of Preferred are issued and
outstanding. NetLive has 2,533,228 shares issuable upon outstanding options,
warrants, rights, calls, or other commitments or agreements (the "Derivative
Rights"). All of the issued and outstanding shares are duly authorized and
validly issued and outstanding, fully paid and nonassessable. Except for (i)
the Derivative Rights and the NetLive Securities to be issued
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pursuant hereto, (ii) the transactions to be effected in connection with the
Loan, and (iii) as set forth on Schedule 3.02 hereto, there are no
subscriptions, options, warrants, rights or calls or other commitments or
agreements to which NetLive is a party or by which any of its officers,
directors, or, to NetLive's best knowledge any of its affiliates or any other
person is bound, calling for the issuance, transfer, sale or other disposition
of any class of securities of NetLive.
3.03 Subsidiaries. There are no corporations, partnerships or other
business entities controlled by NetLive except as set forth on Schedule 3.03
(the "Subsidiaries"). As used herein, "controlled by" means (i) the ownership
of not less than 50% of the voting securities or other interests of a
corporation, partnership or other business entity, or (ii) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a corporation, partnership or other business entity,
whether through the ownership of voting shares, by contract or otherwise.
NetLive has not made any investments in, nor does it own, any of the capital
stock of, or any other proprietary interest in, any other corporation,
partnership or other business entity.
3.04 Consents. Except as set forth in Schedule 3.04, all requisite
consents of governmental and other regulatory agencies, foreign or domestic,
and of other parties required to be received by or on the part of NetLive to
enable NetLive to enter into and carry out this Agreement and the Transactions
in all material respects have been, or prior to the Closing will have been,
obtained.
3.05 Binding Nature of Agreement; Title to NetLive Securities. This
Agreement constitutes NetLive's valid and binding obligation and is enforceable
in accordance with its terms, except as may be limited by federal bankruptcy
laws and regulations. The NetLive Securities to be issued to the Purchasers,
when issued in accordance with the terms hereof, will be duly authorized,
validly issued and vest to each Purchaser, free and clear of any Liens, other
than Liens resulting primarily from (i) actions of the Purchasers, or any of
them, and (ii) restrictions on transfer due to federal or state securities
laws, which restrictions are in no way caused, in whole or in part, by any
failure of NetLive to comply with such laws.
3.06 Financial Statements. The books of account of NetLive fairly
reflect its income, expenses, assets and liabilities in all material respects.
The audited financial statements of NetLive for the years ended March 31, 1998,
1997 and 1996 and the unaudited financial statements for the three (3) months
ended June 30, 1998 (collectively, the "NL Financial Statements"), fairly
present the financial position of NetLive as at the said dates and the results
of its operations for such fiscal years and period in all material respects,
subject to (i) necessary adjustments, if any, upon discontinuance of NetLive's
business, and (ii) year end audit adjustments, the lack of footnotes, and other
presentation items.
3.07 Liabilities. Except as set forth on Schedule 3.07, as at June 30,
1998 (the "Balance Sheet Date"), NetLive had no material debts, liabilities or
obligations, contingent or absolute, other than those debts, liabilities and
obligations reflected or reserved against on NetLive's Balance Sheet, or in the
footnotes thereto, at the Balance Sheet Date (the "Balance
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Sheet"). Except as set forth on Schedule 3.07, from and after the Balance Sheet
Date through the date hereof, NetLive has not incurred any material debts,
liabilities or obligations, contingent or absolute, other than those arising in
the ordinary course of NetLive's business. Notwithstanding anything to the
contrary contained in this Agreement, the Purchasers acknowledge that as of
March 5, 1998 (and earlier with respect to preparatory measures taken) NetLive
has ceased its historic operations. As a result, for all purposes of this
Agreement, including, without limitation, the provisions of Articles III and
IV, all references to the ordinary and usual course of business, or words to
that effect, of NetLive shall include after such date preparing for and
implementing the winding up of its operations and related activities including,
without limitation, the termination of its personnel; settling and/or
negotiating the settlement of certain litigation, claims and contractual
commitments; preparing for a merger and/or other transactions analogous to the
transactions contemplated herein and similar activities.
3.08 Action Since Balance Sheet Date. Except as set forth in Schedule
3.08, since the Balance Sheet Date, NetLive has not: (i) issued or sold, or
agreed to issue or sell any of its capital stock, options, warrants, rights or
calls to purchase such stock, any securities convertible or exchangeable into
such capital stock or other corporate securities, or effected any subdivision
or other recapitalization affecting its capital stock; (ii) incurred any
material obligation or liability, absolute or contingent, except those arising
in the ordinary and usual course of its business; (iii) discharged or satisfied
any lien or encumbrance, except in the ordinary and usual course of business,
or paid or satisfied any liability, absolute or contingent, other than
liabilities as of the Balance Sheet Date and current liabilities incurred since
the Balance Sheet Date in the ordinary and usual course of business; (iv) made
any wage or salary increases or granted any bonuses other than wage and salary
increases and bonuses granted in accordance with its normal salary increase and
bonus policies; (v) mortgaged, pledged or subjected to any lien or other
encumbrance any of its properties or assets, or permitted any of its property
or assets to be subjected to any lien or other encumbrance, except in the
ordinary and usual course of business; (vi) sold, assigned or transferred any
of its properties or assets, except in the ordinary and usual course of
business; (vii) waived any rights of substantial value, or cancelled, modified
or waived any indebtedness for borrowed money held by it, except in the
ordinary and usual course of business; (ix) declared, paid or set aside any
dividends or other distributions or payments on its capital stock, or redeemed
or repurchased, or agreed to redeem or repurchase, any shares of its capital
stock; or (x) made any loans or advances to any person, or assumed, guaranteed,
endorsed or otherwise became responsible for the obligations of any person.
3.09 Adverse Developments. Except as otherwise expressly provided or
set forth in Schedule 3.09 hereto, or required by, this Agreement, since March
5, 1998, there have been no changes in the properties, operations or financial
condition of NetLive, other than those changes incurred in the ordinary course
of business, that have had a materially adverse effect upon the business of
NetLive.
3.10 Ownership of Assets. Schedule 3.10 provides a complete list of
all assets (tangible and intangible) of NetLive valued individually in excess
of Three Thousand (AUD $3,000) Australian Dollars. Except as set forth in
Schedule 3.10, NetLive owns outright, and has good
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and marketable title to all of its assets, properties and business (including
all assets reflected in the Balance Sheet, except as the same may have been
disposed of in the ordinary course of business since the Balance Sheet Date),
free and clear of all Liens. Schedule 3.10 sets forth a true and complete list
and brief description of all patents, copyrights, trademarks, trade names and
other similar intangible assets which are either owned or licensed by NetLive
or in which it has an interest. Except as set forth on Schedule 3.10, to the
knowledge of NetLive, no other person, firm or corporation has any proprietary
or other interest in any such intangible assets. Except as set forth on
Schedule 3.10, NetLive is not a party to or bound by any license or agreement
requiring the payment to any person, firm or corporation of any royalty. Except
as set forth on Schedule 3.10, NetLive does not know of, nor does it have
reasonable grounds to know of, any violation by others of the trademark, trade
name or patent rights of NetLive. NetLive, to the best of its knowledge is not
infringing upon any patent, copyright, trade name or trademark or otherwise
violating the rights of any third party with respect thereto, and no
proceedings have been instituted or, to the best of its knowledge are
threatened, and no claim has been received by NetLive alleging any such
violation.
3.11 Litigation, Compliance with Law. Except as set forth on Schedule
3.11, there are no actions, suits, proceedings, or governmental investigations
(or any investigation of any self-regulatory organization) relating to NetLive
or to any of its properties, assets or businesses pending or, to the best of
its knowledge, threatened, or any order, injunction, award or decree
outstanding against NetLive or against or relating to any of its properties,
assets or businesses. Except as set forth in Schedule 3.11, to the best of its
knowledge NetLive is not in violation of any law, regulation, ordinance, order,
injunction, decree, award or other requirements of any governmental body, court
or arbitrator relating to its properties, assets or business which violation
can be reasonably expected to have a material adverse effect on NetLive.
3.12 Agreements and Obligations; Performance. Except as listed on
Schedule 3.12 (the "Listed Agreements"), NetLive is not a party to, or bound by
any: (i) contract, arrangements, commitment or understanding which involves
aggregate payments or receipts in excess of (U.S.) $25,000 that cannot be
cancelled on thirty (30) days or less notice without penalty or premium or any
continuing obligation or liability; (ii) contractual obligation or contractual
liability of any kind to any NetLive stockholder; (iii) contract, arrangement,
commitment or understanding with its customers or any officer, employee,
stockholder, director, representative or agent thereof for the repurchase of
products, sharing of fees, the rebating of charges to such customers, bribes,
kickbacks from such customers or other similar arrangements; (iv) contract for
the purchase or sale of any materials, products or supplies which contain, or
which commits or will commit it for a fixed term; (v) contract of employment
with any officer or employee not terminable at will without penalty or premium
or any continuing obligation of liability; (vi) deferred compensation, bonus or
incentive plan or agreement not cancelable at will without penalty or premium
or any continuing obligation or liability: (vii) management or consulting
agreement not terminable at will without penalty or premium or any continuing
obligation or liability; (viii) lease for real or personal property (including
borrowings thereon), license or royalty agreement; (ix) union or other
collective bargaining agreement; (x) agreement, commitment or understanding
relating to the indebtedness for borrowed money; (xi) contract involving
aggregate payments or receipts of
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(U.S.) $10,000 or more which, by its terms, requires the consent of any party
thereto to the consummation of the transactions contemplated hereby; (xii)
contract containing covenants limiting the freedom of NetLive to engage or
compete in any line of business or with any person in any geographic area;
(xiii) contract or opinion relating to the acquisition or sale of any business;
(xiv) voting trust agreement or similar stockholders' agreement; (xiv) other
contract, agreement, commitment or understanding which materially affects any
of its properties, assets or business, whether directly or indirectly, or which
was entered into other than in the ordinary course of business. Except as set
forth on Schedule 3.12, NetLive has not during the last 36 months entered into
any of the types of contracts, arrangements, commitments or understandings with
any of its suppliers or customers referred to in item (iii) of this Section
3.12. A true and correct copy of each of the written Listed Agreements, has
been delivered to a representative of the Purchasers. To its knowledge NetLive
has in all material respects performed all obligations required to be performed
by it to date under all of the Listed Agreements, is not in default in any
material respect under any of the Listed Agreements and has received no notice
of any default or alleged default thereunder which has not heretofore been
cured or which notice has not heretofore been withdrawn. Except as set forth on
Schedule 3.12, to NetLive's knowledge no material default has occurred under
any of the Listed Agreements by any other party thereto or by any other person,
firm or corporation bound thereunder.
3.13 Inventories. The inventories, if any, of NetLive are accurately
reflected on the NL Financial Statements in all material respects.
3.14 Permits and Licenses. Schedule 3.14 sets forth all permits,
licenses, orders, franchises and approvals from all federal, state, local and
foreign governmental regulatory bodies held by NetLive. NetLive is in
compliance in all material respects with all requirements, standards and
procedures of the federal, state, local and foreign governmental bodies which
issued such permits, licenses, orders, franchises and approvals. No vans,
automobiles, trucks or other vehicles are owned or leased by NetLive.
3.15 Interest in Assets. Except as set forth on Schedule 3.15, no
stockholder of NetLive nor any members of his family nor any affiliate of a
stockholder of NetLive, owns any property or rights, tangible or intangible,
including without limitation technology and intellectual property rights, used
in or related, directly or indirectly, to the respective businesses of NetLive.
3.16 Salary Information. Schedule 3.16 contains a list of the names
and current salary rates of and bonus commitments to all present officers of
NetLive, and the names and current annual salary rates of all other persons
currently employed by, or consultant to, NetLive, or who receive compensation
from NetLive.
3.17 Employee Benefit Plans. NetLive does not maintain and is not
required to make contributions to any "pension" and "welfare" benefit plans
(within the respective meanings of Sections 4(2) and 4(1) of the Employee
Retirement Income Security Act of 1974, as amended).
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3.18 No Breach. Except for (i) any post-Closing actions specifically
contemplated hereby which require NetLive stockholders' and/or directors'
approval, (ii) any amendments to NetLive's Certificate of Incorporation and/or
By-Laws specifically contemplated hereby, and (iii) the Loan or otherwise
contemplated hereby, neither the execution and delivery of this Agreement nor
compliance by NetLive with any of the provisions hereof nor the consummation of
the Transactions contemplated hereby, will:
(a) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of NetLive;
(b) violate or, alone or with notice of the passage of time, result in
the material breach or termination of, or otherwise give any contracting
party the right to terminate, or declare a material default under, the
terms of any agreement or other document or undertaking, oral or written to
which NetLive is a party or by which it or any of its properties or assets
may be bound (except for such violations, conflicts, breaches or defaults
as to which required waivers or consents by other parties have been, or
will, prior to the Closing, be, obtained or which will not have a material
adverse effect on NetLive);
(c) result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of NetLive pursuant to the
terms of any such agreement or instrument;
(d) violate any judgment, order, injunction, decree or award against,
or binding upon, NetLive or upon any of its properties or assets; or
(e) violate any law or regulation of any jurisdiction relating to
NetLive or any of its securities, assets or properties.
3.19 Labor Discussions. Except with respect to the agreements listed
in Schedule 3.12, NetLive is not, and during the past three years has not been,
involved in any labor discussions with any unit or group seeking to become the
bargaining unit for any of its employees. With respect to said Agreements,
Schedule 3.19 sets forth a description of the status thereof, including any
demands or proposals with respect to the renewal, extension or replacement
thereof.
3.20 Environmental. As used in this Agreement, the term "Hazardous
Materials" shall mean any waste material which is regulated by any state or
local governmental authority in the states in which NetLive conducts business,
or the United States Government, including, but not limited to, any material or
substance which is (i) defined as "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste" under any provision of New York law, (ii) petroleum, (iii) asbestos,
(iv) designated as a "hazardous substance" pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. 1251 et seq. (33 U.S.C. 1321) or listed pursuant to
Section 307 of the Clean Water Act (33 U.S.C. 1317), (v) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation and
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Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6901), or (vi) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq.
(42 U.S.C. 9601). Except as set forth on Schedule 3.20, the current operations
of NetLive and its current and, to the best of its knowledge its past use
comply and then complied in all material respects with all applicable laws and
governmental regulations including all applicable federal, state and local
laws, ordinances, and regulations pertained to air and water quality. Hazardous
Materials, waste, disposal or other environmental matters, including the Clean
Water Act, the Clean Air Act, the Federal Water Pollution Control Act, the
Solid Waste Disposal Act, the Resource Conservation Recovery Act, and the
statutes, rules and regulations and ordinances or the state, city and country
in which NetLive's property is located.
3.21 Public Reports. Except as set forth on Schedule 3.21, NetLive has
filed in a timely manner with the Commission all reports required to be filed
pursuant to the Act and the Exchange Act. Such reports are accurate and
complete in all material respects and copies of such reports have been made
available to the Purchasers.
3.22 NetLive Securities. Subject, in the case of those NetLive
Securities to be issued post-Closing, to (i) NetLive stockholders' approval of
the Transactions, (ii) the filing of the NetLive Preferred Certificate, and
(iii) the implementation of the Reverse Split, the NetLive Securities to be
issued under this Agreement will be duly authorized and reserved for issuance
and, when issued in accordance with this Agreement, will be validly issued and
outstanding, fully paid and non-assessable and vest in the Purchasers free and
clear from any Liens, other than Liens resulting primarily from (i) actions of
the Purchasers, or any of them, and (ii) restrictions on transfer due to
federal and states securities laws, which restrictions are in no way caused, in
whole or in part, by any failure of NetLive to comply with such laws.
3.23 NASDAQ. NetLive's Common Stock and Warrants are listed for
quotation on NASD BB. Schedule 3.23 includes a list of all correspondence
NetLive has had with NASDAQ since June 30, 1997, other than notices and other
correspondence sent generally to NASDAQ listed companies.
3.24 Liquid Assets. As of September 24, 1998, NetLive had no less than
(i) (U.S.) $30,432 of cash, and (ii) (U.S.) $86,451 of liquid assets
(collectively the "Liquid Assets"). Schedule 3.24 lists all Liquid Assets, the
amount, the location and the persons who are authorized to withdraw such Liquid
Assets.
3.25 Credit Cards. Except as set forth on Schedule 3.25, no employee,
director or consultant of NetLive has NetLive corporate credit cards or similar
items.
3.26 Stockholders and Similar Agreements. Schedule 3.26 sets forth all
stockholders agreements, voting trusts and similar agreements relating,
directly and/or indirectly, to the voting of NetLive Securities, to which
NetLive is a party or, to NetLive's knowledge by which the securities of
NetLive and/or the holders thereof are bound (the "Voting Agreements").
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3.27 Insurance. Schedule 3.27 to be delivered at the Closing, sets
forth a list and brief description of all insurance policies held by NetLive as
of the date of the Closing. Except as set forth in Schedule 3.27, such policies
are in full force and effect and enforceable in accordance with their
respective terms. All premiums for such policies have been paid currently.
3.28 Due Diligence. To the best of NetLive's knowledge all documents
and other materials relating to NetLive or Linda and provided to the
Purchasers, or any of them, in connection with the Transactions are true and
correct in all material respects, other than those materials which were
superseded or corrected by written materials provided to the Purchasers, which
superseding or correcting materials are true and correct in all material
respects.
ARTICLE IV
PRE-CLOSING COVENANTS
Each of the parties hereto hereby covenants and agrees that, from
June 22, 1998, and until the Closing or earlier termination of this Agreement
pursuant to the terms hereof:
4.01 Access. Each shall afford to the officers, attorneys, accountants
and other authorized representatives of the other free and full access, during
regular business hours and upon reasonable notice, to its books, records,
personnel and properties (including, without limitation, the work papers
prepared by its auditors) so that each may have full opportunity to make such
review, examination and investigation as it may desire of their respective
businesses and affairs. Each will cause its employees, accountants and
attorneys to cooperate fully with said review, examination and investigation
and to make full disclosure to the other of all material facts affecting their
respective financial conditions and business operations.
4.02 Conduct of Business. Other than as may be contemplated by the
Agreements, or any of them, Newton and NetLive shall each conduct its business
only in the ordinary and usual course and make no material change in any of
their policies, and the Purchasers shall cause Newton to conduct the business
only in the ordinary and historic course and make no material change in any of
its policies without the prior written consent of the other, except NetLive
will take such reasonable action in the winding down of its historic business.
4.03 Insurance. Newton and NetLive shall maintain in force the
insurance policies listed on Schedules 2.07 and 3.27, respectively.
4.04 Liabilities. Neither Newton nor NetLive shall incur any
obligation or liability, absolute or contingent, except for those incurred in
the ordinary and usual course of their respective businesses (or in connection
with this transaction and the winding down of NetLive's business); nor shall
they pay any obligation or liability other than: (i) debts, liabilities, and
obligations set forth in their respective Balance Sheets; (ii) debts,
liabilities and obligations arising after the Balance Sheet Date in the
ordinary course of their respective businesses; and (iii) debts, liabilities
and obligations under the contracts, agreements, past practices,
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arrangements, relationships, documents and instruments listed, described or
contained in this Agreement or in the Schedules annexed to this Agreement.
4.05 No Breach. Each of the parties hereto will (i) use its best
efforts to assure that all of its representations and warranties contained
herein are true in all material respects (a) at and as of the date hereof,
except to the extent that they speak expressly as of an earlier date or to
reflect changes contemplated herein or in the other Agreements necessary to
consummate the Transactions and (b) to the extent required by Section 6.01 of
this Agreement, at and as of the Closing and no breach shall occur with respect
to any of its covenants, representations or warranties contained herein that
has not been cured by the Closing; (ii) not voluntarily take any action or do
anything which will cause a material breach of or default respecting such
covenants, representations or warranties; and (iii) promptly notify the other
of any event or fact which represents a breach or default.
4.06 No Negotiations. Other than in connection with the consummation
of the Transactions, neither Linda, Newton nor NetLive, nor any of their
respective officers or directors shall enter into or conduct negotiations, or
enter into any agreement or understanding, for the sale or possible sale of any
of its securities, business, or assets, with anyone other than the other unless
and until this Agreement is terminated in accordance with the terms hereto.
4.07 Other Approvals; Resignations. The parties shall use their best
efforts to obtain all approvals, consents and authorizations necessary to
authorize the Transactions on the terms and conditions set forth herein,
including the respective consents of the Board of Directors of each entity.
Except as set forth on Schedule 4.07 or in the Agreements, NetLive shall obtain
all written resignations of its current officers and directors which shall go
into effect simultaneously with the Closing and immediately prior to the
effectiveness of such resignations NetLive shall appoint a new slate of
officers and directors, which persons shall be as designated by the Purchasers
and shall be set forth on Schedule 4.07 hereto.
4.08 Other SEC/NASD Filings. NetLive shall file with the Commission
and the NASD all required (or which NetLive believes to be reasonably
advisable) forms and disclosure items in a timely manner, which forms and
disclosure items must be approved by legal counsel to NetLive and the
Purchasers prior to filing or disclosure, required and/or relating to this
Agreement and the Transactions.
4.09 Public Announcements. No party hereunder shall, without the
express written consent of NetLive and Budbox, which consent will not be
unreasonably withheld or delayed, make any announcement or otherwise disclose
any information regarding the Transactions other than as required by law or
otherwise deemed advisable in counsel's opinion to ensure compliance with
public disclosure requirements under the federal securities laws.
4.10 Reasonable Efforts. Upon the terms and subject to the conditions
provided herein, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to assist and to
cooperate with the other parties hereto in doing or causing to be
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done, all things necessary or advisable to consummate, in the most expeditious
manner practicable, the Transactions contemplated hereby.
ARTICLE V
CONDITIONS PRECEDENT TO THE OBLIGATIONS
TO NETLIVE TO CLOSE
The obligations of NetLive to enter into and complete the Closing is
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions, any one or more of which may be waived by NetLive (except
when the fulfillment of such condition is a requirement of law).
5.01 Representations and Warranties. All representations and
warranties of the Purchasers contained in this Agreement and in any written
statement, schedule or other documents delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be true and correct
in all material respects as of the date hereof, except to the extent that they
speak expressly as of an earlier date or to reflect changes contemplated herein
or in the other Agreements necessary to consummate the Transactions. Any
changes in information set forth in the Schedules hereto shall be set forth on
amended schedules which shall be delivered to NetLive at the Closing. Except as
set forth in such amended schedules, all representations and warranties of the
Purchasers contained in this Agreement and in any written statement, schedule
or other documents delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as of the Closing Date.
5.02 Covenants. The Purchasers shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by them prior to the Closing.
5.03 No Action. No action, suit, proceeding or investigation shall
have been instituted, and be continuing before a court or before or by a
governmental body or agency, and be unresolved, to restrain or to prevent or to
obtain damages in respect of, the carrying out of the transactions contemplated
hereby, or which might materially and adversely affect the right of NetLive to
consummate the Acquisition or to operate or control the assets, properties and
business of Linda after the Closing Date, or which might have a materially
adverse effect thereon.
5.04 No Material Adverse Change. There shall have been no materially
adverse change at the Closing Date in the business, assets and properties or
financial status of Newton since the date hereof.
5.05 Approvals by NetLive. The directors of NetLive shall have
approved the terms of this Agreement in accordance with all applicable laws,
rules and regulations.
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5.06 Approvals. The stockholders of Newton shall have approved the
terms of this Agreement and the Transactions in accordance with all required
and applicable laws. The Directors of each of the Companies shall have approved
the terms of this Agreement and the Transactions in accordance with all
required and applicable laws.
5.07 Purchaser Lock-Ups. Each of the Purchasers will have entered into
lock-up (collectively, the "Purchaser Lock-Ups") agreements with the
underwriter of NetLive's initial public offering (the "Underwriter"), in form
and substance as each of them and the Underwriter may mutually agree upon.
5.08 Severance Arrangements. Each of Jeffrey Wolf, Andrew Schwartz and
Michael Kharitonov will have approved the terms of their respective severance
arrangements (collectively, the "Severance Agreements"), which Severance
Agreements shall be deemed approved if they are on terms no less favorable to
Mr. Wolf, Mr. Schwartz and Mr. Kharitonov, respectively, as those terms set
forth on the term sheets (the "Term Sheets") attached hereto as Exhibit G.
5.09 Closing Documents. NetLive shall have received the documents set
forth in Articles 7.02 hereto in form and substance reasonably satisfactory to
NetLive and its legal counsel.
5.10 Bank Commitment. Linda shall have received a commitment from its
bank for the Loan, subject to the satisfaction of the conditions set forth in
the commitment.
5.11 Other Transactions. Each of the other Transactions contemplated
hereby shall be ready to close as and when contemplated hereby, and shall be on
the terms and conditions as set forth herein.
ARTICLE VI
CONDITIONS PRECEDENT TO THE
OBLIGATION OF THE PURCHASERS
The obligation of the Purchasers to enter into and complete the
Closing is subject to the fulfillment, prior to or on the Closing Date, of each
of the following conditions by NetLive, any one or more of which may be waived
by the Purchasers (except when the fulfillment of such condition is a
requirement of law).
6.01 Representations and Warranties. All representations and
warranties of NetLive contained in this Agreement and in any written statement,
schedule or other documents delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as of the date hereof, except to the extent that they speak expressly
as of an earlier date or to reflect changes contemplated herein or in the other
Agreements necessary to consummate the Transactions. Any changes in information
set forth in
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the Schedules hereto shall be set forth on amended schedules which shall be
delivered to the Purchasers at the Closing. Except as set forth in such amended
schedules, all representations and warranties of NetLive contained in this
Agreement and in any written statement, schedule or other documents delivered
pursuant hereto or in connection with the transactions contemplated hereby
shall be true and correct in all material respects as of the Closing Date.
6.02 Covenants. NetLive shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it prior to or at the Closing.
6.03 No Actions. No action, suit, proceedings or investigation shall
have been instituted, and be continuing, before a court or before or by a
governmental body or agency, or have been threatened, and be unresolved, by any
governmental body or agency to restrain or prevent, or obtain damages in
respect of, the carrying out of the transactions contemplated hereby.
6.04 Approvals by NetLive. The directors of NetLive shall have
approved the terms of this Agreement and, to the extent NetLive is a party, all
Transactions to be consummated at or immediately following the Closing, in
accordance with all applicable laws, rules and regulations.
6.05 Bank Commitment. Linda shall have received a commitment from its
bank for the Loan, subject to the conditions set forth in such commitment.
6.06 NetLive Lock-Ups. Each of Andrew Schwartz, Michael Kharitonov,
Jeffrey Wolf and their respective affiliates who collectively own in the
aggregate 478,175 shares of Common Stock (on a pre-Reverse Split basis), will
have entered into lock-up (collectively, the "NetLive Lock-Ups") agreements
with the Underwriter, in form and substance as each of them and the Underwriter
may mutually agree upon.
6.07 Payments Prior to Closing. Attached as Schedule 6.07 hereto is a
list of all persons and other entities to which NetLive anticipates making
payments prior to the Closing. To the extent NetLive (i) makes any payments to
any persons or other entities not set forth on Schedule 6.07, and (ii) such
payments exceed, in the aggregate, (U.S.) $20,000, any such payments in excess
of an aggregate (U.S.) $20,000 and individually in excess of (U.S.) $2,000
shall be subject to the prior written approval of Budbox. At the Closing,
NetLive shall provide written evidence, including bank statements, that, except
as set forth in Schedule 6.06, since March 11, 1998, no funds were paid
directly and/or indirectly to any of its stockholders, consultants, officers,
directors or their respective affiliates not in the ordinary course of
business, or as contemplated hereby, except for any payments made in settlement
of outstanding agreements on terms agreed to in writing by Mr. Player and
NetLive in the exercise of their reasonable discretion.
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6.08 Liabilities, Etc. Except as set forth on Schedule 6.08, there
shall be no direct or indirect liabilities, indebtedness or other financial or
similar obligations, contingent or otherwise, exceeding an aggregate of Five
Thousand (AUD $5000) Australian Dollars of NetLive outstanding.
6.09 Termination of Voting and Similar Agreements, Etc. Except as set
forth on Schedule 6.09, all Voting Agreements known to NetLive shall be
terminated in writing and, except as contemplated by Section 7.02(g) hereof, no
general or other release shall have been given, directly or indirectly, to any
officer, director, employee, consultant, stockholder of NetLive, or their
respective affiliates, with respect to any obligations or other liabilities in
any way relating to this Agreement, on or prior to the Closing Date.
6.10 Termination of Options, Warrants, Etc. The Purchasers shall have
received evidence reasonably satisfactory to the Purchasers and their counsel
that all options, warrants and similar rights to be canceled pursuant to
Section 1.14 hereof have been canceled.
6.11 Underwriter's Release. The Underwriter shall have provided
NetLive with a release of the terms of the underwriting agreement relating to
NetLive's 1996 IPO.
6.12 Trevor Cock. NetLive shall have sold 450,000 shares of Common
Stock (on a pre-Reverse Split basis), to Trevor Cock or his designee at a price
of (U.S.) $.33 1/3 per share ($150,000 in the aggregate) pursuant to an
exemption from registration under the Act.
6.13 Intercorp Services Agreement. The Player Companies shall have
delivered to Intercorp, pursuant to the terms of the service agreement among
The Player Companies, Intercorp and Mr. Player dated June 17, 1998, as amended,
attached hereto as Exhibit H (the "Intercorp Services Agreement"), Common Stock
certificates representing the Intercorp Shares, accompanied by all instruments
and documents, executed in blank, as shall be necessary to effectuate the
transfer of the Intercorp Shares to Intercorp, free and clear of all manner of
Liens, other than Liens resulting primarily from (i) actions of Intercorp, and
(ii) restrictions on transfer due to federal or state securities laws, which
restrictions are in no way caused, in whole or in part, by any failure of
Intercorp to comply with such laws; such Intercorp Shares and accompanying
instruments of transfer to be held in escrow until transfer is authorized
pursuant to the terms of the Intercorp Services Agreement.
6.14 Closing Documents. The Purchasers shall receive all of the
documents set forth in Sections 7.03 of this Agreement, which documents shall
be in form and substance reasonably satisfactory to the Purchasers and their
legal counsel.
6.15 Other Transactions. Each of the other Transactions contemplated
hereby shall be ready to close as and when contemplated hereby, and shall be on
the terms and conditions as set forth herein.
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ARTICLE VII
CLOSING
7.01 Location. The closing of the Transactions (the "Closing")
provided for herein shall take place at the office of Gusrae, Kaplan & Bruno,
120 Wall Street, 11th Floor, New York, New York 10005 at 10:00 a.m. o'clock
within three (3) business days following the satisfaction of all conditions
precedent set forth in Article V and Article VI of this Agreement or at such
other time and place as may be mutually agreed to by the parties hereto. Such
date is referred to in this Agreement as the "Closing Date."
7.02 Items to be Delivered by the Purchasers. At the Closing, the
Purchasers will deliver or cause to be delivered to NetLive:
(a) AUD $10,000,000, in immediately available funds, representing the
purchase price of the NetLive Securities in the NetLive Purchase;
(b) Secretary's Certificate of Newton, certifying as to (i) the
corporate authorization of the Transactions (as they relate to Newton);
(ii) the organizational documents of Newton (Certificate of Incorporation
and By-Laws, or their equivalents), (iii) the incumbency of any and all
Newton signatories in the Transactions; and (iv) the closing documents
executed in connection with the closing of the NetLive Purchase.
(c) Officers certificate of Newton (in a representative capacity
only);
(d) All schedules required by this Agreement, including amendments
thereto;
(e) Such evidence of the satisfaction of the conditions contained in
Section 6.11 hereof as shall be mutually agreed upon by the parties hereto;
(f) The Purchaser Lock-Ups;
(g) General written releases (other than as may be prohibited under
federal or state law) from NetLive in favor of Andrew Schwartz, Michael
Kharitonov, Jeffrey Wolf, Marcel Yung and Adam Goldberg, respectively; and
(h) Executed letters, signed by stockholders of NetLive holding no
less than a majority of the voting shares outstanding, (including, without
limitation, Trevor Cock, who will be a stockholder of NetLive upon the
Closing) indicating their intent to vote in favor of the Transactions.
(i) Such other resolutions, documents and certificates as are
reasonably requested by NetLive.
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7.03 Items to be Delivered by NetLive. At the Closing, NetLive will
deliver or cause to be delivered to the Purchasers:
(a) NetLive Common Stock certificates for 13,499,359 shares of Common
Stock, in the name of the Purchasers as set forth in Schedule 1.01 hereto,
together with stock powers with respect thereto, executed in blank, free
and clear of all manner of Liens, other than Liens resulting primarily from
(i) actions of the Purchasers, or any of them, or in connection with the
Loan and (ii) restrictions on transfer due to federal or state securities
laws, which restrictions are in no way caused, in whole or in part, by any
failure of NetLive to comply with such laws;
(b) Immediately subsequent to the Closing, NetLive shall deliver stock
certificates in the name of NetLive representing all of the 1,666,667 Linda
Shares in accordance with Section 1.06 hereof, together with stock powers
with respect thereto, executed in blank, free and clear of all manner of
Liens, other than Liens resulting primarily from (i) actions of the
Purchasers, or any of them, or those of Linda in connection with the Loan,
and (ii) restrictions on transfer due to federal or state securities laws,
which restrictions are in no way caused, in whole or in part, by any
failure of NetLive to comply with such laws;
(c) The NetLive Lock-Ups;
(d) Secretary's Certificate of NetLive, certifying as to, among other
items (i) the corporate authorization of the Transactions, to the extent
NetLive is a party; (ii) the organizational documents of NetLive; (iii) the
incumbency of any and all NetLive signatories in the Transactions; and (iv)
the closing documents executed in connection with the closing of the Linda
Share Acquisition;
(e) The original minute book, tax returns and all other original
records of NetLive, including, without limitation, all records of NetLive,
other than attorney work product and similar privileged information, held
by Esanu Katsky Korins & Siger, LLP will be delivered to the Purchasers at
or before the Closing Date;
(f) Good standing certificate;
(g) Except as set forth on Schedule 4.08, resignations of all current
officers and directors of NetLive;
(h) Secretary's certificate;
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(i) A record reasonably satisfactory to the Purchasers and supported
by documentation, of the use of the NetLive funds from the date hereof
through Closing;
(j) Such evidence of the satisfaction of the conditions contained in
Section 5.08 hereof as shall be mutually agreed upon by the parties hereto;
(k) Such other resolutions, documents and certificates as are
reasonably required by the Purchasers and their legal counsel; and
(l) Consents of the Directors of NetLive with respect to all
Transactions to be consummated at or immediately following the Closing, to
the extent NetLive is a party, and other actions contemplated hereby
including, but not limited to, the appointment of the new Directors of
NetLive immediately following the Closing Date and the required consents of
the Board of Directors of Linda and evidence of the ownership of Linda and
Modara by NetLive.
ARTICLE VIII
POST-CLOSING ACTIONS TO BE TAKEN BY NETLIVE
8.01 Actions. As soon as reasonably practicable following the Closing
NetLive shall take the following actions:
(a) Stockholder Ratification. Prepare and file with the SEC a proxy
statement (the "Proxy Statement"), to obtain at a NetLive stockholders'
meeting the required consents (or ratification, as the case may be), of
NetLive stockholders in accordance with the Act, the Exchange Act and
applicable Delaware law for (i) the Transactions on the terms and
conditions set forth herein; (ii) the Reverse Split of each of the issued
and outstanding shares of Common Stock and options and warrants so that
immediately following such Reverse Split (or on a date certain following
such approval and the issuance of the stock certificates for the
Post-Approval Shares), NetLive will have issued and outstanding 9,000,000
shares of Common Stock (of which the Purchasers and their assignees shall
own 8,000,000 shares), and the 1,000,000 NetLive Preferred shares (which
shall be owned by the Purchasers and their assignees), (iii) a name change
of NetLive to "Linda Industries, Inc.;" (iv) an amendment to the NetLive
1996 Stock Option Plan (the "Plan") to reserve 1,000,000 shares (on a
post-Reverse Stock Split basis) for issuance upon stock options issued
thereunder; and (v) an amendment to the Certificate of Incorporation of
NetLive increasing the authorized Common Stock of NetLive to 33,000,000
shares and the blank check preferred stock to 2,000,000 (or such number as
the NetLive Board of Directors shall so approve); (vi) such other items as
the NetLive Board of Directors subsequent to the Closing shall approve,
provided that the NetLive
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Board of Directors shall not approve any items which would in any way
conflict with or are otherwise contrary to the terms of this Agreement; and
(vii) the ratification of the Severance Agreements. The parties hereto
agree that the Proxy Statement shall be in conformity with Section 14 of
the Exchange Act and all other applicable laws, rules and regulations.
(b) Reverse Split. As provided elsewhere herein, NetLive shall
effectuate the Reverse Split in accordance with applicable law following
the effective date of the Stockholder Approval.
(c) Issuance of Stock Certificates for Post-Approval Shares. NetLive
shall following the Reverse Split deliver or cause to be delivered to the
Purchasers (and their assignees) the Post Approval Shares accompanied by
all instruments and documents as in the opinion of counsel to the
Purchasers shall be necessary to effectuate the transfer of the Post
Approval Shares free and clear of all manner of Liens, other than Liens
resulting primarily from (i) actions of the Purchasers, or any of them, or
those of Linda in connection with the Loan, and (ii) restrictions on
transfer due to federal or state securities laws, which restrictions are in
no way caused, in whole or in part, by any failure of NetLive to comply
with such laws.
(d) Other Actions. Such other actions as are necessary and/or
advisable in the sole judgment of the Board of Directors to effectuate the
intent and actions of this Agreement.
8.02 Best Efforts. The Purchasers and NetLive will in all capacities
use their best efforts to directly and indirectly cause NetLive and all of its
subsidiaries (including LIP and Modara) to consummate the Transactions promptly
in accordance with the terms hereof and the exhibits hereto and will take no
action or fail to act to impede, delay or frustrate the same, including,
without limitation, duly preparing the Proxy Statement in conformity with all
applicable laws. To the extent permitted by applicable law, notwithstanding
anything to the contrary provided herein or elsewhere, in no event shall any
party take any action to rescind or unwind the Transactions, or any of them.
8.03 Post-Approval Shares. Notwithstanding anything to the contrary
provided herein or elsewhere, Post-Approval, the Purchasers shall receive only
the Common Stock and Preferred Stock necessary for the parties to reach the
Agreed Share Ratio. Thus, to the extent the Reverse Split ratio is altered in
the reasonable discretion of NetLive's then-current management or shares of
Common Stock are not in fact issued to Trevor Cock or his designee as is
contemplated by Section 6.11, the number of shares to be issued to the
Purchasers shall be adjusted accordingly.
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ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.01 Survival. The parties hereto agree that their respective
representations and warranties contained in this Agreement or delivered on
their behalf pursuant hereto shall terminate at the Closing.
9.02 Indemnification. Each of the Purchasers, severally and not
jointly agrees to save, defend and indemnify NetLive and its officers and
directors against and hold them harmless from any and all Liabilities, of every
kind, nature and description, fixed or contingent (including, without
limitation, legal counsel fees and expenses in connection with any action,
claim or proceeding relating to such liabilities) (collectively, "Damages"),
provided such Damages are based solely and exclusively upon any breach of any
representation or warranty of such particular Purchaser contained in Article I
of this Agreement. Budbox agrees to save, defend and indemnify NetLive and its
officers and directors against and hold them harmless from any and all Damages
arising out of or by reason of any breach of any representation or warranty of
Budbox contained in this Agreement; provided, further, no Purchaser shall be
liable for any Damages caused by the actions of another Purchaser. NetLive
agrees to save, defend and indemnify the Purchasers and their respective
officers, directors and stockholders, if applicable, and hold them harmless
from any and all Damages, resulting or arising from or otherwise relating to
any failure by NetLive to perform or otherwise fulfill or comply with any
undertaking, agreement or obligation of NetLive hereunder or by reason of any
breach of any representation or warranty of NetLive contained herein. The party
providing indemnification under either of the two previous sentences is
referred to as the "Indemnifying Party" and the party receiving the benefit of
indemnification is referred to as the "Indemnified Party."
9.03 Defense of Claims. The Indemnified Party agrees to notify the
Indemnifying Party with reasonable promptness of any claim asserted against it
in respect of which the Indemnifying Party may be liable under this Agreement,
which notification shall be accompanied by a written statement setting forth
the basis of such claim and the manner of calculation thereof. The Indemnifying
Party shall have the right to defend any such claim at its own expense and with
counsel of its choice; provided, however, that such counsel shall have been
approved by the Indemnified Party prior to engagement, which approval shall not
be unreasonably withheld or delayed; and provided further, that the Indemnified
Party may participate in such defense, if it so chooses, with its own counsel
and at its own expense.
9.04 Directors' and Officers' Insurance. The Purchasers shall use
their best efforts to cause NetLive to cause Andrew Schwartz, Michael
Kharitonov, Jeffrey Wolf, Marcel Yung and Adam Goldberg (the "Former Directors
and Officers") to be covered for a period of four (4) years from the Closing
Date by the directors' and officers' liability insurance ("D&O Insurance")
policy maintained by NetLive with respect to acts or omissions occurring at or
prior to the Closing which were committed by persons in their capacity as
officers and or directors; provided that (i) NetLive may substitute therefor
policies of at least the same coverage and
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amounts containing terms and conditions which are not less advantageous than
such policy; (ii) in no event shall NetLive be required to expend more than
200% of the current amount expended by NetLive for such insurance (which shall
not diminish NetLive's obligation to expend up to such amount if required in
order to maintain such D&O Insurance on such terms and in such amounts), and
(iii) in no event shall NetLive be required to continue such coverage in the
event NetLive no longer covers its directors and officers with such D&O
Insurance for any reason, including, without limitation, the dissolution of
NetLive. In the event that, in order to maintain D&O Insurance for the Former
Directors and Officers and for NetLive's then current directors and officers,
NetLive is required to either (a) expend more than 200% of the current amount
expended by NetLive for such insurance or (b) maintain D&O Insurance coverage
on less favorable terms, to the extent NetLive shall choose to maintain D&O
Insurance coverage on less favorable terms, the Former Directors and Officers
shall be covered by D&O Insurance on no less favorable terms than the then
current directors and officers. The provisions of this Section 9.04, which
shall survive the Closing hereunder, are intended to be for the benefit of, and
shall be enforceable by, each of the Former Directors and Officers and their
respective heirs and representatives.
ARTICLE X
TERMINATION AND WAIVER
10.01 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions provided
for herein abandoned at any time prior to the Closing Date:
(a) By mutual consent of NetLive and the Purchasers;
(b) By NetLive on the date sixty (60) days from the date hereof if (i)
any of the conditions set forth in Article 5 hereof shall not have been
fulfilled and shall not have been waived; or (ii) the Purchasers fail to
obtain such third party consents as may be required to consummate the
Transactions, on or prior to such date unless waived by NetLive;
(c) The Purchasers on the date sixty (60) days from the date hereof if
any of the conditions set forth in Article 6 hereof shall not have been
fulfilled by such date, and shall not have been waived;
(d) By NetLive and vice versa by the Purchasers, if (i) any material
legal action or proceeding shall have been instituted or threatened seeking
to restrain, prohibit, invalidate or otherwise affect the consummation of
the transactions contemplated by this Agreement which makes it inadvisable,
in the judgment of the other, to consummate same; provided, however, that
the right to terminate this Agreement under this Section shall not be
available to any party whose failure to fulfill any obligation under this
Agreement was the cause of, or
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<PAGE>
resulted in, the failure to consummate the Transactions contemplated
hereby to such date.
In the event that this Agreement is terminated as described above,
this Agreement shall be void and of no force and effect, without any liability
or obligation on the part of any of the parties hereto except for any liability
which may arise pursuant to Section 9.02. Any such termination shall be without
prejudice to the rights of any party arising out of the wilful breach by any
other party of any provision of this Agreement.
10.02 Waiver. Any condition to the performance of any party hereto
which legally may be waived on or prior to the Closing Date may be waived at
any time by the party entitled to the benefit thereof by action taken or
authorized by an instrument in writing executed by the relevant party or
parties. The failure of any party at any time or times to require performance
of any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same. No waiver by any party of the breach of any
term, covenant, representation or warranty contained in this Agreement as a
condition to such party's obligations hereunder shall release or affect any
liability resulting from such breach, and no waiver of any nature, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of any
breach of any other term, covenants, representation or warranty of this
Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01 Expenses. Each of the parties hereto shall bear its own expenses
in connection herewith.
11.02 Confidential Information. Each party agrees that such party and
its representatives will hold in strict confidence all information and
documents received from the other parties and, if the transactions herein
contemplated shall not be consummated, each party will continue to hold such
information and documents in strict confidence and will return to such other
party all such documents (including the documents annexed to this Agreement)
then in such receiving party's possession without retaining copies thereof:
provided, however, that each party's obligations under this Section 11.02 to
maintain such confidentiality shall not apply to any information or documents
that are in the public domain at the time furnished by the others or that
become in the public domain thereafter through any means other than as a result
of any act of the receiving party or of its agents, officers, directors or
stockholders which constitutes a breach of this Agreement, or that are required
by applicable law to be disclosed (including, without limitation, any and all
disclosure requirements under Section 14 of the Exchange Act and any and all
other requirements under the federal securities laws).
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<PAGE>
11.03 Modification, Termination or Waiver. This Agreement may be
amended, modified, superseded or terminated, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but only by a
written instrument executed by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce the
same.
11.04 Notices. Any notice or other communication required or which may
be given hereunder shall be in writing and either be delivered personally or by
reputable overnight delivery service, or be mailed, certified or registered
mail, postage prepaid, as follows:
If to the Purchasers to:
The addresses set forth on Schedule 1.01
With a copy to:
Gusrae, Kaplan & Bruno
120 Wall Street - 11th Floor
New York, New York 10005
Attention: Lawrence G. Nusbaum, Esq.
If to any officer, director or other person who acted as a
representative of NetLive prior to the Closing Date, to:
Andrew J. Schwartz
24 South Monroe Street
Denver, Colorado 80209
With a copy to:
Esanu, Katsky, Korins & Siger, LLP
605 Third Avenue - 16th Floor
New York, New York 10158
Attention: Gregory K. Marks, Esq.
The parties may change the persons and addresses to which the notices
or other communications are to be sent to it by giving written notice of any
such change in the manner provided herein for giving notice.
11.06 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto; provided, however, that no assignment of any rights or delegation of
any obligations provided for herein may be made by
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<PAGE>
any party without the express consent of the other parties, and except that
NetLive may assign this Agreement to an affiliate of NetLive.
11.07 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof.
11.08 Schedules and Exhibits. All Schedules and Exhibits annexed
hereto and the documents and instruments referred to herein or required to be
delivered simultaneously herewith or at the Closing are expressly made a part
of this Agreement as fully as though completely set forth herein, and all
references to this Agreement herein or in any of such Schedules, documents or
instruments shall be deemed to refer to and include all such Schedules,
documents and instruments.
11.09 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within that state, excluding the choice of
law rules thereof. All parties hereto irrevocably (i) consent to the
jurisdiction of the federal courts of the County and State of New York for any
action relating to this Agreement and agree not to raise the defense of forum
non conveniens, and (ii) agree that service may be effected thereon by courier
or certified mail, return receipt requested, at the respective addresses set
forth herein.
11.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but which together shall
constitute one and the same instrument.
11.11 Section Headings. The section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
11.12 Currency Conversion Ratio. Whenever any currency conversion is
required hereunder it shall be calculated at the exchange rate of (AUD) $1.00
to (U.S.) $0.70.
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<PAGE>
WITNESS the execution of this Agreement as of the date first above
written.
NETLIVE COMMUNICATIONS, INC.
By: /s/ Ian Joel Polkinghorne
---------------------------------------
Ian Joel Polkinghorne, Solicitor,
Sydney, under Power of Attorney
LINDA INDUSTRIES PTY LIMITED
By: /s/ Ian Joel Polkinghorne
---------------------------------------
Ian Joel Polkinghorne, Solicitor,
Sydney, under Power of Attorney
MODARA OAKS PTY LIMITED
By: /s/ Ian Joel Polkinghorne
---------------------------------------
Ian Joel Polkinghorne, Solicitor,
Sydney, under Power of Attorney
BUDBOX PTY LIMITED
By: /s/ Geoffrey Player
--------------------------------
Name: Geoffrey Player
Title: Managing Director
/s/ Geoffrey Player
--------------------------------
Geoffrey Russel Player
/s/ Vicki Gaye Player
--------------------------------
Vicki Gaye Player
NEWTON GRACE PTY LIMITED
By: /s/ Geoffrey Player
--------------------------------
Name: Geoffrey Player
Title: Director
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<PAGE>
PLAYBYRNE INVESTMENTS PTY LIMITED
By: /s/ Geoffrey Player
--------------------------------
Name: Geoffrey Player
Title: Director
INTERCORP GROUP PTY LIMITED
By: /s/ Liberty Wakim
--------------------------------
Name: Liberty Wakim
Title: Director
HALLENDON PTY LIMITED
By: /s/ Liberty Wakim
--------------------------------
Name: Liberty Wakim
Title: Director
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<PAGE>
LIST OF SCHEDULES TO THE AGREEMENT
0.01 Brand Names
1.01 Purchasers and Assignees
2.04 Consents
2.07 Insurance
2.08 Litigation, Compliance with Law
2.09 Real Property
2.11 Permits and Licenses
2.12 Breaches
3.01 Corporate Existence; Foreign Qualifications
3.02 Capitalization
3.03 Subsidiaries
3.04 Consents
3.07 Liabilities
3.08 Action Since Balance Sheet Date
3.09 Adverse Developments
3.10 Ownership of Assets
3.11 Litigation, Compliance with Law
3.12 Agreements and Obligations; Performance
3.14 Permits and Licenses
3.15 Interest in Assets
3.16 Salary Information
3.19 Labor Discussions
3.20 Environmental
3.21 Public Reports
3.23 NASDAQ
3.24 Liquid Assets
3.25 Credit Cards
3.26 Stockholders and Similar Agreements
3.27 Insurance
4.07 Other Approvals; Resignations
6.07 Payments Prior to Closing
6.08 Liabilities, Etc.
6.09 Termination of Voting and Similar Agreements, Etc.
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<PAGE>
LIST OF EXHIBITS
A Form of Linda Loan Agreement Note
B Form of Modara Loan Agreement Note
C Form of Trademark Assignments
D Form of Licenses
E Form of Certificate of Designation
F Form of Linda Sale of Business Agreement, including
promissory note
G Severance Term Sheet
H Form of Intercorp Services Agreement
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<PAGE>
Schedule 1.01 - The Purchasers and Assignees
All of the 13,499,359 pre-Reverse Shares of NetLive Common Stock to
be issued on the Closing Date shall be issued pro-rata on the Closing Date in
proportion to the total number of shares of Common Stock, such persons are
ultimately entitled to receive as set forth below.
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES TOTAL NUMBER OF SHARES TO BE RECEIVED
TO BE RECEIVED ON A ON A PRE-REVERSE SPLIT BASIS
POST-REVERSE SPLIT BASIS ----------------------------
------------------------- COMMON COMMON AT PREFERRED AT
PURCHASERS COMMON PREFERRED AT CLOSING POST-APPROVAL POST-APPROVAL
- ---------- ------ --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Geoffrey Russell Player 500,000 0 843,710 856,290 0
Vicki Gaye Player 250,000 0 421,855 428,145 0
Playbyrne Investments Pty Limited 3,000,000 1,000,000 5,062,260 5,137,740 3,400,000
Budbox Pty Limited 2,600,000 0 4,387,292 4,452,708 0
Newton Grace Pty Limited 1,385,000 0 2,337,076 2,371,924 0
Intercorp Group Pty Limited 200,000 0 337,484 342,516 0
Hallendon Pty Limited 65,000 0 109,682 111,318 0
- --------------------- --------- --------- ---------- ---------- ---------
TOTAL 8,000,000 1,000,000 13,499,359 13,700,641 3,400,000
</TABLE>
<TABLE>
<CAPTION>
COMMON COMMON
IMMEDIATELY IMMEDIATELY
FOLLOWING FOLLOWING PREFERRED
ASSIGNEES COMMON PREFERRED CLOSING POST-APPROVAL POST-APPROVAL
- --------- ------ --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Gusrae Kaplan & Bruno 50,000 0 84,371 85,629 0
Intercorp Group Holdings Pty Limited* 700,000 0 1,181,194 1,198,806 0
Oak Point Investment, Inc. 50,000 0 84,371 85,629 0
Magic Consulting Group, Inc. 100,000 0 168,742 171,258 0
May Davis Group, Inc. 100,000 0 168,742 171,258 0
- --------------- --------- - --------- --------- -
TOTAL 1,000,000 0 1,687,420 1,712,580 0
</TABLE>
* 200,000 shares of Common Stock (on a post-Reverse Split basis) are to be
transferred from Intercorp Group Pty Ltd. to Intercorp Group Holdings Pty Ltd.
immediately following the Closing, and 500,000 shares of Common Stock (on a
post-Reverse Split basis) are to be held in escrow and transferred from one or
more of the Player Companies no later than two years after the Closing Date
pursuant to the terms of the Intercorp Services Agreement.
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<PAGE>
Geoffrey Russell Player
48-78 Hanna Street
Noble Park
Victorian 3174
AUSTRALIA
Vicki Gaye Player
48-78 Hanna Street
Noble Park
Victorian 3174
AUSTRALIA
Playbyrne Investments Pty Limited
48-78 Hanna Street
Noble Park
Victorian 3174
AUSTRALIA
Budbox Pty Limited
48-78 Hanna Street
Noble Park
Victorian 3174
AUSTRALIA
Newton Grace Pty Limited
48-78 Hanna Street
Noble Park
Victorian 3174
AUSTRALIA
Intercorp Group Pty Limited
23 Welwyn Avenue
East Brighton
Victorian 3174
AUSTRALIA
Hallendon Pty Limited
23 Welwyn Avenue
East Brighton
Victorian 3174
AUSTRALIA
Tervor Cock
2 Grove Avenue
West Mersea
Essex CO58SAE
ENGLAND
<PAGE>
Purchaser Notice Addresses:
For The Player Companies, Geoffrey Player and Vicki Player:
48-78 Hanna Street
Noble Park
Victoria 3174 Australia
For Intercorp and Hallendon:
23 Welwyn Avenue
East Brighton
Victoria 3187 Australia
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