<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
UBARTER.COM INC.
----------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.001 PER SHARE
---------------------------------------
(Title of Class of Securities)
90345610
-------------------------------------
(CUSIP Number of Class of Securities)
Alan D. Koslow with a copy to: Edmund Belsheim
ShopNow.com Inc. Perkins Coie LLP
411 First Avenue South, Suite 200 North 1201 Third Avenue, Suite 4800
Seattle, WA 98104 Seattle, WA 98101
(206) 223-1996 (206) 583-8888
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
DECEMBER 20, 1999
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box / /
NOTE. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. SEE Rule 13d-7(b)
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 10 Pages)
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SCHEDULE 13D
- ----------------------------------- -------------------------------
CUSIP NO. 90345610 PAGE 2 OF 10 PAGES
-----------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ShopNow.com Inc. 91-1628103
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
2 (b) / /
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC or OO
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
5
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Washington
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 1,337,896(1)
--------------------------------------------------------
SHARES SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY Not applicable
--------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON 1,337,896(1)
--------------------------------------------------------
WITH SHARED DISPOSITIVE POWER
10
Not applicable
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,337,896(1)
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
12
- --------------------------------------------------------------------------------
- ----------------------
(1) The shares that are the subject of this filing are purchasable by
ShopNow.com Inc. ("ShopNow") upon exercise of a Call Option issued to ShopNow
by Steven White, on December 20, 1999 (the "Call Option"), and described in
Item 4 of this report. Prior to the exercise of the Call Option, ShopNow is
not entitled to any rights as a stockholder of Ubarter as to the shares
covered by the Call Option. ShopNow expressly disclaims any beneficial
ownership of any of the shares of common stock, $.001 par value, (the "Common
Stock") of Ubarter which are purchasable by ShopNow upon the exercise of the
Call Option.
<PAGE>
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
approximately 22%(2)
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO
- --------------------------------------------------------------------------------
- ----------------------
(2) This percentage is based on 6,031,920 shares of Common Stock
outstanding as of November 10, 1999, as indicated in Ubarter's most recent
filing with the Securities and Exchange Commission.
<PAGE>
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the common stock, $0.001 par value per
share (the "Common Stock"), of Ubarter.com Inc., a Nevada corporation
("Ubarter"). The principal executive and business office of Ubarter is
located at 21400 International Blvd., #207, Seattle, Washington 98198.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is filed by ShopNow.com Inc., a Washington
corporation ("ShopNow"). ShopNow.com Inc. is a leading e-commerce enabling
company for business-to-business and business-to-consumer e-commerce.
ShopNow.com operates an e-commerce network known as the ShopNow Network,
which is comprised on online access to over 40,000 businesses and over 6
million shoppers. The ShopNow.com portal is an online marketplace for
connecting buyers and sellers worldwise and provides a range of
business-to-business e-commerce products and services. The address of
ShopNow's principal executive and business office is 411 First Avenue South,
Suite 200 North, Seattle, Washington 98104.
The following provides certain information as to the directors and
executive officers of ShopNow:
DIRECTORS:
- -------------------------------------------------------------------------------
NAME PRINCIPAL OCCUPATION AND BUSINESS ADDRESS
- -------------------------------------------------------------------------------
Dwayne M. Walker Chairman of the Board, President and Chief Executive
Officer of ShopNow
411 First Avenue South, Suite 200 North
Seattle, WA 98104
- -------------------------------------------------------------------------------
Jacob I. Friesel Executive Vice President-Sales and Marketing and
Director of 24/7 Media
24/7 Media, Inc.
1250 Broadway, 28th Floor
New York, NY 10001
- -------------------------------------------------------------------------------
David M. Lonsdale President and Chief Executive Officer of Upper Case
Inc.
Upper Case Inc.
4000 Burton Drive
Santa Clara, CA 95054
- -------------------------------------------------------------------------------
Bret R. Maxwell Vice Chairman of First Analysis Corporation
First Analysis Corporation
The Sears Tower, Suite 950
223 South Wacker Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------
Mark C. McClure President and Chief Executive Officer of Cobra Golf,
Inc.
Cobra Golf, Inc.
7101 Obelisco Circle
- -------------------------------------------------------------------------------
Page 4 of 10
<PAGE>
- -------------------------------------------------------------------------------
Carlsbad, CA 92008
- -------------------------------------------------------------------------------
John R. Snedegar President and Chief Executive Officer of Micro
General Corporation
Micro General Corporation
2510 North Red Hill Avenue, Suite 230
Santa Ana, CA 92705-5542
- -------------------------------------------------------------------------------
Mark H. Terbeek Independent Management Consultant
First Analysis Corporation
The Sears Tower, Suite 950
223 South Wacker Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------
Eytan Lombrosso Senior Vice President -- Card Member Services
Chase Manhattan Bank
Chase Cardmember Services
Global Business Development
2 Chase Manhattan Plaza
16th Floor
New York, NY 10081
- -------------------------------------------------------------------------------
EXECUTIVE OFFICERS:
- -------------------------------------------------------------------------------
NAME PRINCIPAL OCCUPATION AND BUSINESS ADDRESS(1)
- -------------------------------------------------------------------------------
Dwayne M. Walker Chief Executive Officer, President and Chairman of
the Board
- -------------------------------------------------------------------------------
Joe E. Arciniega, Jr. Chief Operating Officer
- -------------------------------------------------------------------------------
Jeffrey B. Haggin Executive Vice President
- -------------------------------------------------------------------------------
Alan D. Koslow Executive Vice President, Chief Financial Officer,
General Counsel and Secretary
- -------------------------------------------------------------------------------
Ganapathy Krishnan, Ph.D. Executive Vice President and Chief Technology Officer
- -------------------------------------------------------------------------------
Othniel D. Palomino Executive Vice President, Corporate Development
- -------------------------------------------------------------------------------
William D. Pittman Executive Vice President and Chief Technical
Architect
- -------------------------------------------------------------------------------
Anne-Marie K. Savage Executive Vice President, E-Commerce Services
- -------------------------------------------------------------------------------
(1) The present principal occupation of all executive officers of
ShopNow is with ShopNow. The business address of all executive officers is
ShopNow.com Inc., 411 First Avenue South, Suite 200 North, Seattle,
Washington 98104.
During the last five years, neither ShopNow nor, to the best of its
knowledge, any of its directors or executive officers has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or
Page 5 of 10
<PAGE>
administrative body of competent jurisdiction as a result of which he or she
is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws. To the
best of ShopNow's knowledge, each director and executive officer of ShopNow
is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
As more fully described below, pursuant to the terms of the Call
Option (as defined in the response to Item 4), ShopNow will have the right to
purchase from time to time, but not later than April 30, 2000, up to
1,337,896 shares of Common Stock at a price of $6.00 per share. If ShopNow
purchases the Common Stock pursuant to the Call Option, ShopNow anticipates
that the funds to finance such purchase would come from working capital,
although no definite determination has been made at this time as to the
source of such funds.
ITEM 4. PURPOSE OF TRANSACTION
(a)-(j) On December 20, 1999, Ubarter entered into a letter of
intent (the "Letter") with ShopNow pursuant to which ShopNow proposed to
acquire Ubarter (the "Proposed Merger"). A copy of the Letter is incorporated
herein by reference as Exhibit 1. The Letter provides that ShopNow will
acquire all of the Ubarter's equity for $45 million (with a reduction for all
liabilities of Ubarter as of the closing date other than certain specified
noncash liabilities) payable in shares of ShopNow's common stock valued at
the lower of (i) $20 per share and (ii) the average daily closing sales price
of ShopNow's common stock as reported on the Nasdaq National Market on each
of the ten trading days immediately prior to the execution of the definitive
acquisition agreement.
The Proposed Merger is subject to completion of due diligence,
execution of definitive agreements and receipt of all necessary consents and
approvals, including approval of the board of directors of Ubarter and of
ShopNow and of the shareholders of Ubarter and the receipt of regulatory
approval. Ubarter has agreed to pay a termination fee to ShopNow under
certain circumstances if the acquisition contemplated by the Letter is not
consummated. The transaction is expected to be completed sometime in early
2000.
As a part of execution of the Letter, Steven White, Ubarter's Chief
Executive Officer, and New Horizons L.P. have agreed to vote their shares in
favor of approval of the acquisition contemplated by the Letter and, upon
execution of definitive agreements relating to the acquisition, to enter into
a voting agreement to vote in favor of approval of the transactions
contemplated by the Letter. In addition, for $1,000 and other valuable
consideration, Mr. White has given ShopNow an option (the "Call Option") to
purchase, pursuant to the terms and conditions thereof, up to 1,337,896 fully
paid and nonassessable shares of Common Stock at a price of $6.00 per share.
A copy of the Call Option is incorporated herein by reference as Exhibit 2.
The Call Option provides that ShopNow may exercise the Call Option, in whole
or in part, at any time but not later than April 30, 2000; provided, however,
the Call Option shall immediately terminate if (i) ShopNow decides not to
pursue the Proposed Merger on terms substantially the same as those set forth
in the Letter, (ii) if ShopNow decides not to pursue the Proposed Merger as a
result of ShopNow's due diligence investigation of Ubarter, (iii) in the
event ShopNow's board of directors does not approve the
Page 6 of 10
<PAGE>
execution of the definitive agreement and the Proposed Merger or (iv) if
Ubarter, Steven White and ShopNow agree to terminate the binding provisions
of the Letter by mutual written consent.
As a part of the execution of the Letter, ShopNow provided Ubarter a
$2.0 million short-term bridge loan in the form of a Convertible Promissory
Note due upon demand at any time after June 22, 2000 (the "Note"). The Note
is incorporated herein by reference as Exhibit 3. If the acquisition of
Ubarter is not completed, the then unpaid principal balance of the Note will
convert into shares of common stock upon the conversion prices as set forth
in the Note. Under certain circumstances, in the event of conversion of the
Note into shares of Ubarter's Common Stock, Ubarter will issue ShopNow a
warrant to purchase shares of Common Stock.
The Call Option is intended to increase the likelihood that the
Proposed Merger will be completed. The Call Option may have the effect of
discouraging persons who might now or in the future be interested in
acquiring all of, or a significant interest in, Ubarter's securities or its
assets before the completion of the Proposed Merger.
Except as set forth in this Schedule 13D, the Letter, the Call
Option, and the Note, neither ShopNow nor any of its directors or officers
listed in Item 2 herein has any plans or proposals that relate to or that
would result in or relate to any of the actions specified in subparagraphs
(a) through (j) of this Item 4.
ITEM 5. INTEREST IN SECURITIES OF UBARTER
(a)-(b) Pursuant to the Call Option, ShopNow is deemed to have
beneficial ownership of, and sole voting and dispositive power with respect
to, the 1,337,896 shares of Common Stock subject to the Call Option and,
accordingly, is deemed to beneficially own such shares of Common Stock. Based
on the number of shares of Common Stock subject to the Call Option, if
ShopNow were to exercise the Call Option for all 1,337,896 shares subject to
the Call Option, ShopNow would own approximately 22% of the outstanding
Common Stock (based upon the 6,031,920 shares of Common Stock outstanding on
November 10, 1999, as indicated in Ubarter's most recent filing with the
Securities and Exchange Commission). If ShopNow were to exercise the Call
Option, it would have sole voting and dispositive power with respect to the
shares of Common Stock purchased thereby. Because the shares are held by
Steven White, ShopNow disclaims beneficial ownership of all the shares of
Common Stock to which the Call Option relates. Other than as set forth in
this Item 5, to the best of ShopNow's knowledge, neither ShopNow nor any
subsidiary or affiliate of ShopNow, nor any of its or their executive
officers and directors beneficially owns any shares of the Common Stock.
(c) Except as described herein, neither ShopNow nor, to the best of
its knowledge, any of its directors or officers listed in Item 2 herein has
effected any transactions in the Common Stock during the past 60 days.
(d) So long as ShopNow has not exercised the Call Option, ShopNow
does not have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, any of the Common Stock.
(e) Not applicable.
Page 7 of 10
<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF UBARTER
Pursuant to the Letter, Steven White and New Horizons L.P. (the "Key
Shareholders") agreed to vote in favor of the adoption and approval of the
definitive agreement and the Proposed Merger. The Key Shareholders agreed
that upon execution of the definitive agreement they will execute voting
agreements/proxies to vote all their shares as set forth in the previous
sentence and to appoint ShopNow as their attorney and proxy with respect to
such matters.
The descriptions of the Letter, the Call Option, the Note and the
Warrant do not purport to be complete and are qualified in their entirety by
the provisions of these agreements.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT
NUMBER
1 Letter of Intent dated December 20, 1999, between Ubarter.com Inc.,
ShopNow.com Inc., Steven White and New Horizons L.P., Incorporated by
reference to Exhibit 10.1 of the ShopNow.com Inc. current report on
Form 8-K, dated December 20, 1999.
2 Call Option between Steven White and ShopNow.com Inc.
3 Convertible Promissory Note dated December 22, 1999.
Page 8 of 10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: December 30, 1999 SHOPNOW.COM INC.
/S/ ALAN D. KOSLOW
---------------------------------------
By: Alan D. Koslow
Its: Executive Vice President, Chief
Financial Officer, Secretary and
General Counsel
Page 9 of 10
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER
1 Letter of Intent dated December 20, 1999, between Ubarter.com Inc.,
ShopNow.com Inc., Steven White and New Horizons L.P., Incorporated by
reference to Exhibit 10.1 of the ShopNow.com Inc. current report on
Form 8-K, dated December 20, 1999.
2 Call Option between Steven White and ShopNow.com Inc.
3 Convertible Promissory Note dated December 22, 1999.
Page 10 of 10
<PAGE>
CALL OPTION
THIS IS TO CERTIFY that, for $1,000 and other value received and
subject to these terms and conditions, ShopNow.com Inc. ("HOLDER"), is
entitled to exercise this Call Option to purchase 1,337,896 fully paid and
nonassessable shares (the "SHARES") of the Common Stock (the "COMMON STOCK")
of Ubarter.com Inc., a Nevada corporation (the "COMPANY"), from Steven White
(the "SHAREHOLDER") at a price per share of $6.00.
This Call Option may be exercised by the Holder, at any time after
the date of issuance, but not later than April 30, 2000, in whole or in part,
by delivering to the Shareholder (a) this Call Option, (b) a certified or
cashier's check payable to the Shareholder in the amount of the Exercise
Price multiplied by the number of shares for which this Call Option is being
exercised (the "PURCHASE PRICE"), and (c) the Notice of Exercise attached as
EXHIBIT A duly completed and executed by the Holder. Upon exercise, the
Holder shall be entitled to receive from the Company a stock certificate in
proper form representing the number of shares of Common Stock so purchased.
Notwithstanding the foregoing, this Call Option shall immediately terminate
if (i) Holder terminates the binding provisions of that certain Letter of
Intent, dated December 20, 1999, among Holder, the Company, the Shareholder
and New Horizons LLC (the "LOI"), pursuant to Paragraph J(iii), J(iv) or J(v)
thereof or (ii) the Company and Holder terminate the binding provisions of
the LOI pursuant to Paragraph J(i) thereof.
Within 10 days after the payment of the Purchase Price following the
exercise of this Call Option (in whole or in part), the Shareholder shall (a)
cause the Company, at Holder's expense, to issue in the name of and deliver
to the Holder a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock to which the Holder shall be entitled
upon such exercise, and (b) grant a new Call Option of like tenor to purchase
up to that number of shares of Common Stock, if any, as to which this Call
Option has not been exercised if this Call Option has not expired. The Holder
shall for all purposes be deemed to have become the holder of record of such
shares of Common Stock on the date this Call Option was exercised,
irrespective of the date of delivery of the certificate or certificates
representing the Common Stock; provided that, if the date such exercise is
made is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of record of such shares of
Common Stock at the close of business on the next succeeding date on which
the stock transfer books are open.
The Shareholder hereby represents and warrants to the Holder that
(i) the Shareholder owns beneficially and of record the Shares, free and
clear of any liens, mortgages, pledges, deeds of trust, security interests,
charges, encumbrances or other adverse claims of interest of any kind; (ii)
the Shareholder has the
<PAGE>
necessary power and capacity (as the case may be) and authority to execute
this Call Option, to make the representations, warranties and covenants
herein and to perform the obligations hereunder; (iii) this Call Option is
duly executed and is a legal, valid and binding obligation of the
Shareholder, enforceable in accordance with its terms; and (iv) the
execution, delivery and performance of this Call Option by the Shareholder
will not (a) constitute a violation (with or without the giving of notice or
lapse of time or both) of any provision of any law applicable to the
Shareholder, (b) require any consent, approval or authorization of, or notice
to, any person, corporation, partnership, domestic or foreign governmental
authority or other organization or entity or (c) result in a default under,
an acceleration or termination of, or the creation in any party of the right
to accelerate, terminate, modify or cancel, any material agreement, lease,
note or other restriction, encumbrance, obligation or liability to which the
Shareholder is a party or by which the Shareholder is bound or (d) result in
the creation or imposition of any lien on any of the Shares held by the
Shareholder.
This Call Option shall be governed by and construed under the laws
of the state of Washington without regard to principles of conflict of laws.
The parties irrevocably consent to the jurisdiction and venue of the state
and federal courts located in King County, Washington in connection with any
action relating to this Call Option.
[The remainder of this page is intentionally left blank.]
2
<PAGE>
IN WITNESS WHEREOF, the Shareholder and the Holder have caused this
Call Option to be duly executed by its duly authorized officers, effective as
of the date written above.
SHAREHOLDER: /s/ Steven White
-----------------------
Steven White
HOLDER: ShopNow.com Inc.
By: /s/ Alan D. Koslow
-------------------------------------------------
Name: Alan D. Koslow
-----------------------------------------------
Title: Executive Vice President, Chief Financial
----------------------------------------------
Officer, Secretary, General Counsel
3
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
To: Steven White
The undersigned hereby irrevocably elects to purchase ___________
shares of shares of the Common Stock (the "COMMON STOCK") Ubarter.com Inc., a
Nevada corporation (the "COMPANY"), issuable upon the exercise of the
attached Call Option and requests that Steven White cause the Company to
issue certificates for such shares in the name of and delivered to the
address of the undersigned, at the address stated below and, if said number
of shares shall not be all the shares that may be purchased pursuant to the
attached Call Option, that a new Call Option evidencing the right to purchase
the balance of such shares be executed in the name of, and delivered to, the
undersigned at the address stated below.
Payment enclosed in the amount of $___________.
Dated: ________________
Name of Holder of Call Option: ShopNow.com Inc.
Address: 411 First Avenue S, Suite 200N
Seattle, WA 98104
By:__________________________________
Name:________________________________
Title:_______________________________
<PAGE>
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
CONVERTIBLE PROMISSORY NOTE
$2,000,000.00 December 22, 1999
Seattle, Washington
For value received, Ubarter.com, Inc., a Nevada corporation (the
"COMPANY"), promises to pay to ShopNow.com Inc., a Washington corporation
(the "HOLDER"), the principal sum of Two Million Dollars ($2,000,000.00).
Interest shall accrue from the date of this Note on the unpaid principal
amount at a rate equal to eight and one-half percent (8.5%) per annum, simple
interest. Interest will be computed on the basis of a 360-day year of twelve
30-day months. This Note is subject to the following terms and conditions.
1. MATURITY. Subject to Section 2, principal and all accrued and
unpaid interest under this Note shall be due and payable upon demand by the
Holder at any time after June 22, 2000 (the "MATURITY DATE"). Notwithstanding
the foregoing, the entire unpaid principal sum of this Note, together with
all accrued and unpaid interest thereon, shall become immediately due and
payable in the event of any Event of Default (as defined below).
2. CONVERSION.
(a) TERMINATION OF LOI. The entire principal amount of and
accrued and unpaid interest on this Note shall automatically be converted
into fully paid and nonassessable shares of the Company's common stock
("COMMON STOCK") upon the earlier to occur of (1) the termination of the
binding provisions (the "BINDING PROVISIONS") of that certain Letter of
Intent, dated December 20, 1999, among Holder, the Company, Steven M. White
and New Horizons LP (the "LOI"), by Holder pursuant to Paragraph J(ii) of the
LOI, (2) the termination of the Binding Provisions by the Company pursuant to
Paragraphs J(iii) of the LOI, (3) the acceptance by the Company of a proposal
to effect an Alternative Transaction (as defined in the LOI), (4) the failure
of the transaction contemplated in the LOI to be consummated on or before the
date designated for the Closing (as defined in the LOI) for any reason other
than the Company's closing conditions not being satisfied on or prior to such
date due to any omission or affirmative act of Holder, (5) the termination of
the Binding Provisions by the Company and Holder pursuant to Paragraph J(i)
of the LOI, (6) the termination of the Binding Provisions by the Company
pursuant to Paragraph J(ii) of the LOI, (7) termination of the Binding
Provisions by Holder pursuant to Paragraphs J(iii), J(iv) or J(v) of the LOI,
or (8) the failure of the Company's closing conditions to the transaction
proposed in the LOI to be satisfied on or prior to the date designated for
the Closing due to any omission or affirmative act of Holder.
-1-
<PAGE>
(b) NUMBER OF SHARES ISSUED UPON TERMINATION BY THE COMPANY. Upon
the conversion of this Note due to the occurrence of an event represented by
clauses (1), (2), (3) or (4) of Section 2(a) above, the number of shares of
Common Stock to be issued upon such conversion shall be equal to the quotient
obtained by dividing (x) the entire principal amount of this Note plus
accrued and unpaid interest by (y) $2.15 (the "COMPANY TERMINATION CONVERSION
PRICE"), rounded to the nearest whole share.
(c) NUMBER OF SHARES ISSUED UPON TERMINATION BY HOLDER. Upon the
conversion of this Note due to the occurrence of an event represented by
clauses (5), (6), (7) or (8) of Section 2(a) above, the number of shares of
Common Stock to be issued upon such conversion shall be equal to the quotient
obtained by dividing (x) the entire principal amount of this Note plus
accrued and unpaid interest by (y) $3.58 (the "HOLDER TERMINATION CONVERSION
PRICE"), rounded to the nearest whole share.
(d) WARRANT COVERAGE.
(i) In the event of a conversion of this Note pursuant to
clauses (1), (2), (3) or (4) of Section 2(a) above, the Company shall issue
to Holder a warrant to purchase a number of shares of Common Stock equal to
the quotient of (A) 125% times the entire principal amount of this Note plus
accrued and unpaid interest divided by (B) the Company Termination Conversion
Price. Such warrant shall have a term of 7 years and an exercise price equal
to the Company Termination Conversion Price, rounded to the nearest whole
share. The form of warrant is attached as Appendix A hereto.
(ii) In the event of a conversion of this Note pursuant to
clauses (5), (6), (7) or (8) of Section 2(a) above, the Company shall issue
to Holder a warrant to purchase a number of shares of Common Stock equal to
the quotient of (i) 50% times the entire principal amount of this Note plus
accrued and unpaid interest divided by (ii) the Holder Termination Conversion
Price. Such warrants shall have a term of 7 years and an exercise price equal
to the Holder Termination Conversion Price, rounded to the nearest whole
share. The form of warrant is attached as Appendix A hereto.
(e) MECHANICS AND EFFECT OF CONVERSION. No fractional shares of
the Company's capital stock will be issued upon conversion of this Note. In
lieu of any fractional share to which the Holder would otherwise be entitled,
the Company will pay to the Holder in cash the amount of the unconverted
principal and interest balance of this Note that would otherwise be converted
into such fractional share. Upon conversion of this Note pursuant to this
Section 2, the Holder shall surrender this Note, duly endorsed, at the
principal offices of the Company or any transfer agent of the Company. At its
expense, the Company will, as soon as practicable thereafter, issue and
deliver to such Holder, at such principal office, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock to which such Holder is entitled upon such conversion, together with
any other securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to the
Holder for any cash amounts payable as described herein. Upon conversion of
this Note, the Company will be forever released from all of its obligations
and liabilities under this
-2-
<PAGE>
Note with regard to that portion of the principal amount and accrued interest
being converted including without limitation the obligation to pay such
portion of the principal amount and accrued interest.
3. PAYMENT. All payments shall be made in lawful money of the United
States of America at such place as the Holder hereof may from time to time
designate in writing to the Company. Payment shall be credited first to the
accrued interest then due and payable and the remainder applied to principal.
Prepayment of this Note may not be made prior to the Maturity Date, unless
agreed to in writing by the Holder.
4. TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions of
this Note shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Notwithstanding the foregoing, (i) the
Holder may not assign, pledge, or otherwise transfer this Note without the
prior written consent of the Company, except for transfers to affiliates and
(ii) the Company may not assign, pledge, or otherwise transfer this Note
without the prior written consent of the Holder. Subject to the preceding
sentence, this Note may be transferred only upon surrender of the original
Note for registration of transfer, duly endorsed, or accompanied by a duly
executed written instrument of transfer in form satisfactory to the Holder.
Thereupon, a new note for the same principal amount and interest will be
issued to, and registered in the name of, the transferee. Interest and
principal are payable only to the registered holder of this Note.
5. GOVERNING LAW. This Note and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State
of Washington, without giving effect to principles of conflicts of law.
6. NOTICES. Any notice required or permitted by this Note shall be
in writing and shall be deemed sufficient upon delivery, when delivered
personally or by a nationally-recognized delivery service (such as Federal
Express or UPS), or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, addressed to the
party to be notified at such party's address as set forth below or as
subsequently modified by written notice.
7. AMENDMENTS AND WAIVERS. Any term of this Note may be amended or
waived only with the written consent of the Company and the Holder. Any
amendment or waiver effected in accordance with this Section 7 shall be
binding upon the Company, the Holder and each transferee of the Note.
8. SHAREHOLDERS, OFFICERS AND DIRECTORS NOT LIABLE. In no event
shall any shareholder, officer or director of the Company be liable for any
amounts due or payable pursuant to this Note.
9. NOTICE AND PRESENTMENT. The Company hereby waives demand, notice,
presentment, protest and notice of dishonor.
-3-
<PAGE>
10. SEVERABILITY. If one or more provisions of this Note are held to
be unenforceable under applicable law, such provision shall be excluded from
this Note, and the balance of this Note shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
11. ATTORNEYS' FEES. The Company and all endorsers of this Note
agree to pay the Holder's reasonable expenses and costs in collecting and
enforcing this Note, including reasonable attorneys' fees.
12. HOLDER AS OWNER. The Company may deem and treat the holder of
record of this Note as the absolute owner for all purposes regardless of any
notice to the contrary.
13. EVENTS OF DEFAULT. If any of the events specified in this
Section 13 shall occur (an "EVENT OF DEFAULT"), the Holder may, so long as
such condition exists, declare the outstanding principal and accrued but
unpaid interest immediately due and payable by notice in writing to the
Company:
(a) The institution of proceedings by the Company to be
adjudicated as bankrupt or insolvent, the filing of a petition or answer or
consent seeking reorganization or release under the federal Bankruptcy Act,
or any other applicable federal or state law, the appointment of a receiver,
liquidator or trustee, an assignment for the benefit of creditors, or the
taking of corporate action by the Company in furtherance of any such action;
(b) If, within 60 days after the commencement of an action
against the Company (and service of process on the Company) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action
shall not have been resolved in favor of the Company or all orders or
proceedings thereunder affecting the operations or the business of the
Company stayed, or if the stay of any such order or proceeding shall
thereafter be set aside, or if, within 60 days after the appointment without
the consent or acquiescence of the Company of any trustee, receiver or
liquidator of the Company, such appointment shall not have been vacated;
(c) Failure to pay the principal of and interest on this Note
when due;
(d) The adoption of any plan of liquidation, dissolution or
winding up of the Company, or the involuntary occurrence thereof; or
(e) Material breach by the Company of any provision of this Note
(other than the payment obligations described in clause (c) above), where
such breach is not cured within ten (10) days after the Company receives
written notice of the same from the Holder.
14. COVENANTS OF THE COMPANY. For so long as any principal remains
outstanding under the Note, the Company shall not, without first obtaining
the consent of Holder:
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<PAGE>
(a) issue equity securities or options, warrants, rights or
convertible securities; other than for customary grants of options to new
hires not to exceed in the aggregate 50,000
(b) amend the Company's Articles of Incorporation or Bylaws in
any manner adverse to Holder;
(c) lease, sell, license or otherwise transfer all or
substantially all of its assets;
(d) create or assume any indebtedness for borrowed money that is
pari passu or senior in right of payment to the obligations under the Note;
(e) pay any dividends or other distributions on the capital
stock of the Company, or repurchase or redeem any Common Stock, other than
pursuant to vesting or repurchase provisions under equity incentive programs
maintained by the Company;
(f) grant any unusual or extraordinary bonuses, benefits or
other forms of direct or indirect compensation to any employee, officer,
director or consultant if the direct or indirect result of such action would
be likely to result in (i) the insolvency or bankruptcy of the Company or
(ii) an Event of Default;
(g) directly or indirectly make any payments on existing
indebtedness other than regularly scheduled installments of principal and
interest nor make any payment on any existing indebtedness which would
violate the terms of such indebtedness or any agreement related thereto; or
(h) cause the net loss on the Company's income statement to
increase by more than $500,000 in any individual month.
15. COMPANY REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants that:
(a) It is a corporation duly incorporated, validly existing and
in good standing under the laws of the state of Nevada. The Company has all
requisite corporate power and authority to carry on its business as presently
conducted, and to carry out the transactions contemplated in this Note. The
Company is duly qualified to transact business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so
qualified would have a material adverse effect on the Company's financial
condition, business, operations or property.
(b) The execution, delivery and performance by the Company of
this Note has been duly authorized by all requisite action of the Company and
its directors and shareholders. This Note has been duly executed and
delivered by the Company, and this Note constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
-5-
<PAGE>
(c) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Note, except for filings pursuant to the federal
securities laws and to applicable state Blue Sky laws.
(d) The Company is not in default (i) under its Articles of
Incorporation or its Bylaws; (ii) under any material contract, agreement or
instrument to which the Company is a party or by which it or any of its
property is bound or affected, including without limitation any material
indenture, mortgage, lease, license or purchase or sales order, other than
any default arising from the failure to the Company to register the shares of
the Company's common stock in accordance with section 1.9 of that certain
Share Purchase Agreement dated February 28, 1999, among the registrant,
Barter Business Exchange Inc. and Bob Bagga; or (iii) with respect to any
order, writ, injunction or decree of any court or of any federal, state,
municipal or other domestic or foreign governmental department, commission,
board, bureau, agency or instrumentality. To the knowledge of the Company,
there presently exists no material default by any party other than the
Company to any of the foregoing, and no condition, event or act which
constitutes, or which after notice, lapse of time or both would constitute, a
material default by the Company or any other party under any of the foregoing.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
COMPANY:
UBARTER.COM, INC.
By: /s/ Steven White
-------------------------------
Name: Steven White
-----------------------------
(print)
Title: President
----------------------------
Address: 21400 International Blvd., #207
--------------------------
Seattle, WA 98198
AGREED AND ACCEPTED:
SHOPNOW.COM INC.
By: /s/ Alan D. Koslow
-----------------------------
Name: Alan D. Koslow
---------------------------
(print)
Title: Executive Vice President,
Chief Financial Officer,
Secretary, General Counsel
--------------------------
Address: 411 First Avenue S., Suite 200N
Seattle, WA 98104
[SIGNATURE PAGE TO CONVERTIBLE SUBORDINATED PROMISSORY NOTE]
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<PAGE>
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
UBARTER.COM, INC.
STOCK PURCHASE WARRANT
Date:
----------------------
This certifies that ShopNow.com Inc. or its assigns (the "HOLDER"),
for value received, is entitled to purchase from Ubarter.com, Inc., a Nevada
corporation (the "COMPANY"), a number of fully paid and nonassessable shares
of the Company's common stock (the "COMMON STOCK") equal to the Warrant
Amount (as defined below) divided by the Stock Purchase Price (as defined
below) (such number of shares, the "WARRANT SHARES"). For purposes of the
foregoing, the following definitions apply:
(A) The "WARRANT AMOUNT" shall be [one hundred twenty five
percent (125%)][fifty percent (50%)] of the outstanding principal
balance of and any accrued but unpaid interest under that certain
Convertible Promissory Note, dated as of December 22, 1999, issued to
Holder by the Company (the "NOTE").
(C) The "STOCK PURCHASE PRICE" shall be [$2.15][$3.58].
(D) The "FULLY DILUTED NUMBER" shall mean at any given time
the total number of shares of Common Stock outstanding on a fully
diluted basis, which calculation assumes (x) the exercise of all then
outstanding rights, warrants or options, vested or unvested, to acquire
the Company's common stock, regardless of restrictions on exercise or
conversion and (y) the conversion of all then outstanding securities
(including, without limitation, any preferred stock) and notes
convertible at any time into the Company's common stock (other than the
Note).
This Warrant may be exercised at any time or from time to time up to
and including the earliest to occur of (i) 5:00 p.m. Pacific time on
[seven years from issuance] or (ii) the consummation of a firm commitment
underwritten public offering pursuant to a registration statement under the
Securities Act of 1933, as amended (the "EXPIRATION DATE"), upon surrender to
the Company at its principal office (or at such other location as the Company
may advise Holder in writing) of this Warrant properly endorsed with the Form
of Subscription attached hereto duly filled in and signed and upon payment in
cash or by check of the aggregate Stock Purchase Price for the number of
Warrant Shares for which this Warrant is being exercised
<PAGE>
determined in accordance with the provisions hereof. The Stock Purchase Price
and the number of Warrant Shares are subject to adjustment as provided in
Section 4 below.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. This
Warrant is exercisable at the option of the Holder of record hereof, at any
time or from time to time, up to the Expiration Date for all and any part of
the Warrant Shares (but not for a fraction of a share). The Company agrees
that the Warrant Shares purchased under this Warrant shall be and are deemed
to be issued to the Holder hereof as the record owner of such shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares. Certificates for the Warrant
Shares so purchased, together with any other securities or property to which
the Holder hereof is entitled upon such exercise, shall be delivered to the
Holder hereof by the Company at the Company's expense within a reasonable
time after the rights represented by this Warrant have been so exercised. In
case of a purchase of less than all the Warrant Shares, the Company shall
cancel this Warrant and execute and deliver a new Warrant or Warrants of like
tenor for the balance of the Warrant Shares purchasable under the Warrant
surrendered upon such purchase to the Holder hereof within a reasonable time,
not exceeding fifteen (15) days after the date of such surrender. Each stock
certificate so delivered shall be in such denominations as may be requested
by the Holder hereof and shall be registered in the name of such Holder or
such other name as shall be designated by such Holder.
2. CONVERSION OF WARRANT.
2.1 RIGHT TO CONVERT. In addition to, and without limiting, the
other rights of the Holder hereunder, the Holder shall have the right (the
"CONVERSION RIGHT") to convert this Warrant or any part hereof into Warrant
Shares at any time and from time to time during the term hereof. Upon
exercise of the Conversion Right, the Company shall deliver to the Holder,
without payment by the Holder of any Stock Purchase Price or any cash or
other consideration, that number of Warrant Shares computed using the
following formula:
x = y (a-b)
-------
a
Where: x = the number of Warrant Shares to be issued to the Holder
y = the number of Warrant Shares purchasable pursuant to this Warrant
a = the Fair Market Value of one Warrant Share as of the Conversion Date
b = the Stock Purchase Price
2.2 METHOD OF EXERCISE. The Conversion Right may be exercised by
the Holder by the surrender of this Warrant to the Company, together with a
written notice specifying that the Holder intends to exercise the Conversion
Right and indicating the number of Warrant Shares to be acquired upon
exercise of the Conversion Right. Such conversion shall be effective upon the
Company's receipt of this Warrant, together with the conversion notice, or on
such later
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<PAGE>
date as is specified in the conversion notice (the "CONVERSION DATE") and, at
the Holder's election, may be made contingent upon the closing of the
Company's initial public offering of any securities pursuant to a
registration statement under the Securities Act of 1933, as amended (the
"SECURITIES ACT"); provided that the foregoing shall not create any
obligation on the part of the Company to undertake any public offering of
securities. Certificates for the Warrant Shares so acquired shall be
delivered to the Holder within a reasonable time, not exceeding fifteen (15)
days after the Conversion Date. If applicable, the Company shall, upon
surrender of this Warrant for cancellation, deliver a new Warrant evidencing
the rights of the Holder to purchase the balance of the Warrant Shares which
Holder is entitled to purchase hereunder.
2.3 FAIR MARKET VALUE. "FAIR MARKET VALUE" of a share of Warrant
Shares as of a particular date means: (i) if traded on an exchange or quoted
on The Nasdaq National Market, then the prior trading day's closing price,
(ii) if conversion is effective as of the closing of the Company's initial
public offering of any securities pursuant to a registration statement under
the Securities Act, the "price to public" specified for such shares in the
final prospectus for such public offering, (iii) if actively traded
over-the-counter, then the average of the most-recently reported bid and ask
prices and (IV) otherwise, the price as determined in good faith by the Board
of Directors of the Company.
3. RESERVATION OF SHARES. The Company covenants and agrees that the
Company will use its best efforts to cause a sufficient number of shares of
authorized but unissued Common Stock to be authorized when and as required to
provide for the exercise or conversion of the rights represented by this
Warrant. The Company will further take all such action as may be necessary to
assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable securities law or regulation.
4. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The
Stock Purchase Price and the number of shares purchasable upon the exercise
or conversion of this Warrant shall be subject to adjustment from time to
time upon the occurrence of certain events described in this Section 4. Upon
each adjustment of the Stock Purchase Price, the Holder of this Warrant shall
thereafter be entitled to purchase, at the Stock Purchase Price resulting
from such adjustment, the number of shares obtained by multiplying the Stock
Purchase Price in effect immediately prior to such adjustment by the number
of shares purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Stock Purchase Price resulting from
such adjustment.
4.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company
shall at any time subdivide any of its outstanding shares of the same class
and series as the Warrant Shares into a greater number of shares, the Stock
Purchase Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case any outstanding shares of
the same class and series as the Warrant Shares shall be combined into a
smaller number of shares, the Stock Purchase Price in effect immediately
prior to such combination shall be proportionately increased.
4.2 DIVIDENDS, RECLASSIFICATION. If at any time or from time to
time any holders of securities of the same class and series as the Warrant
Shares shall have received or become entitled to receive, without payment
thereof,
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<PAGE>
(A) any shares of the Company's Preferred Stock, Common Stock
or any shares of stock or other securities which are at any time directly or
indirectly convertible into or exchangeable for Common Stock (collectively,
"COMPANY STOCK"), or any rights or options to subscribe for, purchase or
otherwise acquire any of the foregoing by way of dividend or other
distribution;
(B) any cash paid or payable otherwise than as a regular
periodic cash dividend at a rate which is substantially consistent with past
practice (or, in the case of an initial dividend, at a rate which is
substantially consistent with industry practice); or
(C) any shares of the Company's Preferred Stock, Common Stock
or other or additional stock or other securities or property (including cash)
by way of spinoff, split-up, reclassification, combination of shares or
similar corporate rearrangement; (other than shares of the same class and
series as the Warrant Shares issued as a stock split, adjustments in respect
of which shall be covered by the terms of Section 4.1 above),
then and in each such case, the Holder hereof shall, upon
the exercise or conversion of this Warrant, be entitled to receive, in
addition to the number of shares of such capital stock receivable thereupon,
and without payment of any additional consideration thereof, the amount of
stock and other securities and property (including cash in the cases referred
to in clauses (B) and (C) above) which such Holder would hold on the date of
such exercise or conversion had he or it been the Holder of record of such
capital stock as of the date on which holders of such capital stock received
or became entitled to receive such shares and/or all other additional stock
and other securities and property.
4.3 CONVERSION OR REDEMPTION. Should all of the Company's capital
stock of the same class and series as the Warrant Shares be, or if
outstanding would be, at any time prior to the expiration of this Warrant or
any portion thereof, redeemed or converted into shares of Company Stock, then
this Warrant shall immediately become exercisable or convertible for that
number of shares of Common Stock equal to the number of shares of the Common
Stock that would have been received if this Warrant had been exercised in
full and the capital stock received thereupon had been simultaneously
converted immediately prior to such event, and the Stock Purchase Price shall
be immediately adjusted to equal the quotient obtained by dividing (x) the
aggregate Stock Purchase Price of the maximum number of shares of capital
stock for which this Warrant was exercisable or convertible immediately prior
to such conversion or redemption, by (y) the number of shares of Common Stock
for which this Warrant is exercisable or convertible immediately after such
conversion or redemption.
4.4 ANTIDILUTION. In case the Company shall at any time prior to
the expiration of this Warrant, issue any shares of Common Stock (other than
(i) shares issued as a stock dividend or stock split as provided in Section
4.2 or (ii) options to purchase equity securities of the Company pursuant to
the Company's stock incentive plans) for a consideration per share that is
less than the Stock Purchase Price, then on the date of such issue the Stock
Purchase Price shall be reduced to a price (calculated to the nearest cent)
equal to the quotient of (a) the sum of (i) the per share consideration
received by the Company in such issue plus (ii) the product of the Fully
Diluted Number immediately prior to the issuance times the Stock Purchase
Price divided by (b) the Fully Diluted Number immediately after the issuance.
-4-
<PAGE>
In the case of the issuance of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock, or options to purchase or rights to subscribe
for such convertible or exchangeable securities, other than options to
purchase equity securities of the Company pursuant to the Company's stock
incentive plans, the following provisions shall apply:
(i) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to subscribe
for Common Stock shall be deemed to have been issued at the time such options
or rights were issued for a consideration equal to the consideration received
by the Company upon the issuance of such options or rights plus the minimum
purchase price provided in such options or rights for the Common Stock
covered thereby, but no further adjustment to the Stock Purchase Price shall
be made for the actual issuance of Common Stock upon the exercise of such
options or rights in accordance with their terms;
(ii) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights
to subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the
time such securities were issued or such options or rights were issued for a
consideration equal to the consideration received by the Company for any such
securities and related options or rights, plus the additional consideration,
if any, to be received by the Company upon the conversion or exchange of such
securities or the exercise of any related options or rights, but no further
adjustment to the Stock Purchase Price shall be made for the actual issuance
of Common Stock upon the conversion or exchange of such securities in
accordance with their terms;
(iii) if such options, rights or convertible or exchangeable
securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the Company, or decrease in the
number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Stock Purchase Price computed upon the original issue
thereof, and any subsequent adjustments based thereon, shall, upon such
increase or decrease becoming effective, be recomputed to reflect such
increase or decrease with respect to such options, rights and securities not
already exercised, converted or exchanged prior to such increase or decrease
becoming effective, but no further adjustment to the Stock Purchase Price
shall be made for the actual issuance of Common Stock upon the exercise of
any such options or rights or the conversion or exchange of such securities
in accordance with their terms;
(iv) upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Stock Purchase Price shall promptly be readjusted to such Stock Purchase
Price as would have been obtained had the adjustment which was made upon the
issuance of such options, rights or securities or options or rights related
to such securities been made upon the basis of the issuance of only the
number of shares of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such securities or upon
the exercise of the options or rights related to such securities.
-5-
<PAGE>
4.5 CALCULATION OF CONSIDERATION. In the case of an issue of
additional shares of Common Stock for cash, the consideration received by the
Company shall be deemed to be the net cash proceeds received for such shares.
In the case of an issue of additional shares of Common Stock for noncash
consideration, the Company's Board of Directors shall determine the value of
such consideration and such determination, unless shown by the Holder to have
been made other than in good faith, shall be conclusive.
4.6 OTHER NOTICES. If at any time:
(A) the Company shall declare any cash dividend upon its
shares of the same class and series as the Warrant Shares;
(B) the Company shall declare any dividend upon its shares of
the same class and series as the Warrant Shares payable in stock or make any
special dividend or other distribution to the holders of its shares of the
same class and series as the Warrant Shares;
(C) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or any merger in which
shareholders of the Company prior to such merger hold less than 50% of the
voting power of the capital stock of the surviving corporation after such
merger, or the sale of all or substantially all of the Company's assets, or a
transaction, whether effected in a single transaction or a series of related
transactions, in which 50% or more of the voting power of the capital stock
of the Company is transferred (an "ACQUISITION");
(D) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(E) the Company shall take or propose to take any other
action, notice of which is actually provided to or is required to be
provided, pursuant to any written agreement, to holders of its shares of the
same class and series as the Warrant Shares,
then, in any one or more of said cases, the Company shall give,
by first class mail, postage prepaid, addressed to the Holder of this Warrant
at the address of such Holder as shown of the books of the Company, (i) at
least 20 days prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividends or
distribution rights or for determining rights to vote in respect of any such
reorganization, reclassification, Acquisition, dissolution, liquidation or
winding-up, and (ii) in the case of any such reorganization,
reclassification, Acquisition, dissolution, liquidation or winding-up, at
least 20 days prior written notice of the date when the same shall take
place. Any notice given in accordance with the foregoing clause (i) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of shares of the same class and series
as the Warrant Shares shall be entitled thereto. Any notice given in
accordance with the foregoing clause (ii) shall also specify the date on
which the holders of shares of the same class and series as the Warrant
Shares shall be entitled to exchange their stock for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, Acquisition, dissolution, liquidation or
winding-up, as the case may be.
-6-
<PAGE>
5. ISSUE TAX. The issuance of certificates for shares of the Warrant
Shares shall be made without charge to the Holder of the Warrant for any
issue tax in respect thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the then Holder of the Warrant being transferred.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder
in respect of meetings of shareholders for the election of directors of the
Company or any other matters or any rights whatsoever as a shareholder of the
Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised or converted.
7. UNREGISTERED SECURITY. Each holder of this Warrant acknowledges
that this Warrant and the Warrant Shares have not been registered under the
Securities Act, and agrees not to sell, pledge, distribute, offer for sale,
transfer or otherwise dispose of this Warrant, any Warrant Shares issued upon
its exercise in the absence of (i) an effective registration statement under
the Securities Act as to this Warrant or such Warrant Shares and registration
or qualification of this Warrant or such Warrant Shares under any applicable
federal or state securities law then in effect, or (ii) an opinion of
counsel, satisfactory to the Company, that such registration and
qualification are not required. Each certificate or other instrument for
Warrant Shares issued upon the exercise of this Warrant shall bear a legend
substantially to the foregoing effect.
8. TRANSFERABILITY. Subject to the provisions of Section 7 hereof,
this Warrant and all rights hereunder are not transferable, in whole or in
part, except for transfers to affiliates upon surrender of the Warrant with a
properly executed assignment (in the form attached hereto) at the principal
office of the Company.
9. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be amended, waived or modified upon written consent of the Company and
the Holder.
10. NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof or the Company shall
be delivered or shall be sent by certified or registered mail, postage
prepaid, to each such Holder at its address as shown on the books of the
Company or to the Company at its principal executive offices.
11. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant.
12. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws
of the State of Washington, without giving effect to the conflict of laws
principles thereof.
-7-
<PAGE>
13. LOST WARRANTS OR STOCK CERTIFICATES. The Company represents and
warrants to the Holder hereof that upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any Warrant or stock certificate and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate, the Company at its expense
will make and deliver a new Warrant or stock certificate, of like tenor, in
lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any
fractional share, pay the Holder entitled to such fraction a sum in cash
equal to such fraction multiplied by the then effective Stock Purchase Price.
[Signature Page Follows.]
-8-
<PAGE>
IN WITNESS WHEREOF, the Company and the Holder have caused this
Warrant to be duly executed by its duly authorized officers, effective as of
the date written above.
COMPANY: Ubarter.com, Inc.
By: ______________________________________
Name: ____________________________________
Title: _____________________________________
HOLDER: ShopNow.com Inc.
By: _______________________________________
Name: ____________________________________
Title: _____________________________________
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To:
The undersigned, the Holder of the within Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _____________ ____________________________
(_____________) shares of ____________ Stock of Ubarter.com, Inc. and
herewith makes payment of ____________________ Dollars ($__________) thereof,
and requests that the certificates for such shares by issued in the name of,
and delivered to ________________________________, whose address is
____________________________________________.
The undersigned represents that it is acquiring such ________________
Stock for its own account for investment and not with a view to or for sale in
connection with any distribution thereof (subject, however, to any requirement
of law that the disposition thereof shall at all times by within its control).
DATED: ___________________
___________________________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
___________________________________________
___________________________________________
(Address)
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, the Holder of the within
Warrant, hereby sells, assigns and transfers all of the rights of the
undersigned under the within Warrant, with respect to the number of shares of
________________ Stock covered thereby set forth herein below, unto:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
DATED: ___________________
____________________________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the Warrant)
